Civil Law Reviewer 2008

UNIVERSITY OF THE PHILIPPINES
COLLEGE OF LAW
Bar Operations 2008
CIVIL LAW
Bar Operations Head │ Arianne Reyes
Academics Head │ Henry Aguda

Ryan Balisacan
Subject Committee │ Dianne Ducepec * Michelle Dy *

Jeifan Dizon * Erwin Arandia *
Tin Rondario * Margaret Ching*
Kitchie Piñgol * Gem Hirang *
Lora Inguito * Quino Reyes *
Easter Castro * Nino Gonzales *
Peach Raymundo
Information Management Chino Baybay [Head] * Simoun

Salinas [Deputy] * Rania Joya
Committee │ [Design & Lay-out] * Ludee
Pulido [Documentations] * Linus
Madamba * Des Mayoralgo *
Jillian De Dumo * Mike Ocampo
* Abel Maglanque * Edan Marri
R. Cañete
PERSONS & FAMILY RELATIONS CIVIL LAW
Persons and Family Relations

TABLE OF CONTENTS
I. Civil Personality 3
II. Citizenship and Domicile 6
III. Marriage 6
IV. Void Marriages 8
V. Voidable Marriages 11
VI. Legal Separation 14
VII. Rights and Obligations Between Husband and Wife 16
VIII. Property Relations Between Spouses 16
IX. The Family 25
X. Paternity and Filiation 26
XI. Adoption 29
XII. Support 32
XIII. Parental Authority 32
XIV. Funerals 34
100% UP LAW UP BAROPS 2008 Page 2 of 325

I. CIVIL PERSONALITY Effect of Death:

The effect of death upon the rights and
obligations of the deceased is determined by
A. CONCEPT AND CLASSES OF PERSONS
law, by contract and by will (Art 42, par. 2).
Person - any being, natural (Art. 40, CC) or
Doubt as to the order of death:
juridical (Art. 42, CC), susceptible to legal
If they are called to succeed each other,
rights and obligations, and can be a subject of
whoever alleges the death of one prior to the
legal relations.
other, shall prove the same. In the absence of
proof, it is presumed that they died at the
Kinds of Capacity: (Art. 37, CC)
same time, and there will be no transmission
of rights from one to the other. (Art. 43, CC)
Juridical Capacity Capacity to Act
Fitness to be the subject Power to do acts Joaquin v. Navarro
of legal relations. with legal effect 93 Phil 257 (1953)
Inherent in every Acquired and The rule on Art. 43 was not applied in
natural person may be lost determining whether the mother or the son
Subject to died first. There were eyewitnesses who can
Lost only through death certain give evidence as to who died first. It is only
restrictions applied when it is impossible to determine
Inherent and who died first that the presumption applies.
Conditional and
ineffaceable attribute of
variable, it is
man; attaches to him by
acquired and
the mere fact of his 2. Juridical persons
may be lost.
being a man.
Kinds of juridical persons: (Art. 44, CC)
Kinds of persons: 1. The State and its political subdivisions;

2. Other corporations, institutions and
1. Natural persons entities for public interest or purpose,
created by law;
General Rule: 3. Corporations, partnerships and
Birth determines personality (Art 40). Death associations for private interest or
extinguishes civil personality (Art 42). purpose to which the law grants a
juridical personality.
Exception:
A conceived child is considered born for all
purposes that are FAVORABLE to it, provided Governing laws:
it be born later (Art 40, 2nd clause) with the
following circumstances: Juridical Person Governing law
State Constitution
a. It is alive at the time it is completely Political Charter
delivered from the mother's womb. subdivision
b. But if the fetus had an intra-uterine life Public corporation Charter
of less than seven months, it should Private corporation Corporation Code,
survive for at least 24 hours after its Articles of
complete delivery. (Art. 41, CC) Incorporation and By-
Laws
Test of life: complete respiration.
Partnerships Stipulations of the
parties and
Burden of proof:
suppletorily by the
The presumption is that it was alive and the
general provisions on
burden of proof is on the party who alleges
partnership
the contrary.
Juridical persons may acquire and possess
Geluz v. CA
property of all kinds, incur obligations, and
G.R. No. 16439 (1961)
bring civil or criminal actions (Art. 46, CC).
An unborn fetus is not endowed with
personality. Parents of an unborn fetus
cannot sue for damages on its behalf as the
fetus, having no personality, does not have
rights which it can pass on. The family,
however, can recover moral damages.

B. CAPACITY TO ACT AND Effect on Marriage:

RESTRICTIONS THEREON - Marriage contracted by any minor is
VOID.
Presumption of Capacity:
Effect on Crimes:
Standard Oil Co. v. Arenas - 9 years and below= EXEMPT from
19 Phil 363 (1911) criminal liability. (Art. 12, RPC)
To prove insanity, it has to be proven that: - Over 9 years and under 15 = EXEMPT,
(1) The monomania of wealth was habitual (Art. 12, RPC)
and that it contributed to mental perturbation; - Unless he acted with
(2) that the act was caused by the discernment = Penalty is
monomania itself; (3) that the monomania lowered by at least 2 degrees.
existed at the moment he signed the surety. (Art. 68, RPC)
Capacity to act is presumed unless previously - 15 years and below 18 = MITIGATING
declared incapable by the court. circumstance. (Art. 13, RPC)
Restrictions/limitations on capacity to
act: (Art. 38, 39, CC,) 2. Insanity
1. Minority Effect on Contracts:

2. Insanity or imbecility - Insane persons cannot give consent to a
3. State of being deaf-mute contract. (Art. 1327, CC)
4. Prodigality - Contracts entered into during a lucid
5. Civil interdiction interval are valid. (Art. 1328, CC)
6. Family relations - The incapacitated person is not obliged
7. Alienage to make any restitution except insofar as
8. Absence he has been benefited. (Art. 1399, CC)
9. Married women (Art. 2259, CC)
Effect on Crimes:
- Insane persons are EXEMPT from
1. Minority criminal liability unless they acted during
a lucid interval. (Art. 12, RPC)
RA 6809 – Majority commences at the age of
18 years. Effect on Marriage:
- A marriage is VOIDABLE if either party
Effect on Contracts: was of unsound mind at the time of the
- Minors cannot give consent to a marriage.
contract. (Art. 1327, CC). - Except: When the insane person, after
- The parent’s consent is binding on the coming to reason, freely cohabited with
minor. (Shields v. Gross, 58 NY 2d 338) the other.
- If one of the parties to a contract is a
minor, the contract is voidable. (Art. Dumaguin v. Reynolds
1390, CC) 10 Phil. 381 (1952)
- If both parties are minors, the contract The presumption of mental incapacity in a
is unenforceable. (Art. 1403, CC) person under guardianship for mental
- Persons who are capable cannot allege derangement may be rebutted by evidence.
the incapacity of the other party. (Art. That person may enter a valid contract
1379, CC) provided it is proven—
- The minor is not obliged to make 1. That he was not insane at the time he
restitution except insofar as he has been entered into the contract, and
benefited. (Art. 1399, CC) 2. That his mental defect did not affect
- If there is active representation by the his capacity to appreciate the meaning
minors that they are of legal age, the and significance of the transaction.
contract is valid. (Mercado v. Espiritu, 37
Phil. 215)
- If there is only passive representation, 3. State of being deaf-mute
the contract is not valid. The fraud must
be actual and not constructive. Mere - Deaf-mutes cannot give consent to a
silence does not constitute fraud. contract. (Art. 1327, CC)
However, the minors must make - If the testator is a deaf-mute, he must
restitution to the extent they profited personally read the will. If unable to
from the money received. (Braganza v. read, he must designate 2 persons to
de Villa Abrille, 105 Phil. 456) read it and communicate to him the
contents thereof. (Art. 807, CC)
- Deaf-mutes can’t be witnesses to a will.
(Art. 820, CC)

8. Absence
4. Prodigality
General Rule:
Martinez v. Martinez Absence of 7 years + unknown whether the
1 Phil. 182 absentee still leaves = presumed dead for all
To make a person legally unfit to run his own purposes.
affairs, his acts of prodigality must show:
1. A morbid mind, and Except:
2. A tendency to spend or waste the For the purpose of opening his succession, in
estate so as to expose the family to which case, the absentee is presumed dead
want or deprive the forced heirs of after 10 years. If disappeared after the age
their inheritance. of 75 years, 5 years will be sufficient. (Art.
390, CC)
5. Civil Interdiction Rule:

The following are presumed dead for ALL
Civil interdiction deprives the offender during purposes, including the division of estate
the time of his sentence of the following among the heirs: (VA-A-D)
rights— (PA-G-MA-MD)
1. Parental authority, 1. A person on board a vessel during a
2. Guardianship as to the person or sea voyage, or an aeroplane which is
property of any ward, missing, who has not been heard of for
3. Marital authority, 4 years since the loss of the vessel or
4. Management his property aeroplane;
5. Disposition of his property (Art. 34, 2. A person in the armed forces who has
RPC) taken part in war, and has been
missing for 4 years;
3. A person who has been in danger of
6. Family Relations death under other circumstances and
existence has not been known for 4
Effect on Crimes: years. (Art. 391, CC)
- No criminal liability if one acts in defense
of spouse, ascendants, descendants, Administration and enjoyment of
brothers or sisters, relatives by affinity conjugal partnership where one spouse is
and consanguinity within the 4th civil absent:
degree provided the requisites in Art. 11
and 12 of RPC are followed. - The other spouse may assume sole
- Mitigating circumstance: If one acts in powers of administration.
immediate vindication of a grave offense - These powers to NOT include disposition
committed against his spouse, or encumbrance without court authority
ascendants, or relatives by affinity or written consent of the other spouse.
within the same degrees. (Art. 13, RPC) - Effect of want of authority/consent:
VOID disposition or encumbrance.
Effect on Marriage: - BUT, the transaction is construed as a
- Incestuous and void – Marriages CONTINUING OFFER on the part of the
between ascendants and descendants; consenting spouse and the 3rd person.
between brothers and sisters, whether - It may be perfected as a binding
full or half blood. (Art. 37, FC) contract upon the acceptance by the
other spouse or authorization by the
Effect on Prescription: court before the offer is withdrawn by
- Prescription does not run between either or both offerors. (Art. 124, FC)
husband and wife. (Art. 1109, CC)
Effect on Property Relations: 9. Married Women

- Husband and wife cannot sell property to
each other except: General Rule:
- When separation of property A married woman may not sue or be sued
was agreed in the marriage alone without joining her husband.
settlements;
- When there has been a judicial Except: (Rule 3, Sec. 4, ROC)
separation of property. (Art. 1. When they are judicially separated.
1490, CC) 2. If they have in fact been separated for
at least 1 year;
7. Alienage 3. When there is a separation of property
agreed upon in the marriage
settlements;

4. If the administration of all the property  Domicile of parents of a person at

in the marriage has been transferred to the time he was born.
her; 2. Domicile of Choice
5. When the litigation is between husband  Domicile chosen by a person,
and wife; changing his domicile of origin.
6. If the suit concerns her paraphernal  A 3rd requisite is necessary –
property; intention not to return to one’s
7. When the action is upon the civil domicile as his permanent place.
liability arising from a criminal offense; 3. Domicile by Operation of Law (i.e.,
8. If the litigation is incidental to the Article 69, domicile of minor)
profession, occupation or business in
which she is engaged; Construction of “residence”:
9. In any of the civil action referred to in
Art. 25-35 CC. - Although “residence” and “domicile” are
10. In an action upon a quasi-delict. used interchangeably, they are NOT
synonymous in connection with
Note: In cases #7-9, the husband must be citizenship, jurisdiction, limitations,
joined as party defendant if Art. 163, par. 3 school privileges, probate and
applies. succession. (Uytengsu v. Republic,
1954)
II. CITIZENSHIP AND DOMICILE - As used in the Naturalization Law,

residence means actual and
substantial residence, not domicile.
A. FILIPINO CITIZENS
(Uytengsu v. Republic, 1954)
- HOWEVER, in election law, residence is
1. Those who are citizens of the synonymous with domicile.
Philippines at the time of the adoption (Romualdez-Marcos v. Comelec, 1995)
of the 1987 Constitution;
2. Those whose fathers or mothers are
citizens of the Philippines;
3. Those born before January 17, 1973,
III. MARRIAGE
of Filipino mothers, who elect
Philippine citizenship upon reaching the A. DEFINITION AND NATURE OF
age of majority; and MARRIAGE
4. Those who are naturalized in
accordance with law. (Art IV, §1, 1987 Definition of Marriage:
Consti.) 1. A special contract
2. of permanent union
B. DOMICILE 3. between a man and a woman
4. entered into in accordance with law
For Natural Persons: 5. for the establishment of conjugal and
The place of their habitual residence (Art. 50, family life.
CC). 6. It is the foundation of the family and
7. an inviolable social institution
For Juridical Persons: 8. whose nature, consequences, and
The place where their legal representation is incidents are governed by law and not
established, or where they exercise their subject to stipulation,
primary functions, unless there is a law or 9. except that marriage settlements may fix
other provision that fixes the domicile (Art. the property relations during the marriage
51, CC). within the limits provided by this Code.
(Art. 1, FC)
Domicile vs. Residence:
While domicile is permanent (there is intent to
remain), residence is temporary and may be Breach of promise to marry:
changed anytime (there is no necessary intent
to remain). Tanjanco v. CA
18 SCRA 994
Requisites of Domicile: Breach of promise to marry is not an
actionable wrong. The fact that the woman
1. Physical Presence agreed to have sexual intercourse for a year
2. Intent to remain permanently does not constitute seduction but mutual
passion.
Kinds of Domicile:
Wassmer v. Velez
1. Domicile of Origin 12 SCRA 648

While mere breach is not an actionable wrong, contracting parties having good faith that he
Velez is still liable under Art. 21 of the Civil had authority to do so (Art 35, par. 2)
Code which provides that when a person
willfully causes loss or injury contrary to good
custom, he shall compensate the latter for C. FORMAL REQUISITES OF MARRIAGE
damages (costs of the wedding preparations). (SO-ML-MC)
It is the abuse of right which can be a cause
for moral or material damages. 1. Authority of the solemnizing officer;
2. A valid marriage license;
Trinidad v. CA 3. Marriage ceremony (Art 3, FC)
289 SCRA 188 (1998)
Absence of a marriage certificate is not proof
of absence of marriage. To prove the fact of a. Authority of solemnizing officer
marriage, the following would constitute
competent evidence: (1) the testimony of Who are authorized to solemnize
witnesses to matrimony; (2) the couple’s marriages? (JPSMCM)
public cohabitation; and (3) birth and 1. Any incumbent member of the judiciary
baptismal certificates of children born during within the court’s jurisdiction (Art. 7, par.
the union. 1);
2. Any priest, rabbi, imam, or minister of any
Presumption of marriage: church or religious sect
In case of doubt, all presumptions favor the a. Must be authorized by his church or
solidarity of the family. Thus, every religious sect.
intendment of law or facts leans towards the b. Must be registered with the civil
validity of marriage, the indissolubility of the registrar general.
marriage bonds, etc. (Art. 221, FC) c. Must act within the limits of the
written authority granted by the
B. ESSENTIAL REQUISITES OF MARRIAGE Church.
d. At least one of the parties must be a
1. Legal Capacity of contracting parties member of the church or religious
who must be Male and Female; sect to which the solemnizing officer
2. Consent freely given in the presence of belongs. (Art. 7, par. 2)
the solemnizing officer. (Art. 2, FC) 3. Ship captain or airplane chief in the
following cases;
Jones v. Hallahan a. Where one or both of the parties are
501 S.W. 2d 588 in articulo mortis,
A license to enter into a same-sex marriage is b. While the ship is at sea or
a nullity since the parties are incapable of c. While the plane is in flight, or
entering into a marriage as the term is d. At stopovers or ports of call (Art 7,
defined. Marriage is defined by law as one par. 3; Art 31, FC).
entered into by a man and a woman. 4. Any military commander of a unit to which
a chaplain is assigned, in the absence of
People v Santiago the latter (Art 7, par. 4 FC);
51 Phil 68 a. Can only solemnize marriages in
When a person only married another to avoid articulo mortis between persons
prosecution because he raped her the same within the zone of military operation,
morning, the marriage is void for absence of whether members of the armed
consent on the part of the rapist. It was a forces or civilians (Art 32, FC).
mere ruse for him to escape criminal liability. 5. Consul-general, consul, or vice consul (Art.
7, par. 5 FC)
a. Can solemnize marriages between
Effects of absence of and defect in the Filipino citizens abroad. The issuance
requisites of marriage: (Art. 4, FC) of the marriage license and the
duties of the local civil registrar shall
Absence Defect Irregularity also be performed by said consular
Essential Void* Voidable official. (Art. 10, FC)
Formal Void* No effect on 6. Mayors (LGC)
validity but
party b. Marriage License
responsible
will be Marriages exempt from marriage license
liable. requirement: (ARMC)
1. Marriage in articulo mortis (Art. 27, FC)
*Except when it is solemnized by an 2. Marriage in remote and inaccessible places
unauthorized person with either or both (Art. 28, FC)

3. Marriages by Muslims and cultural 2. Marriage in a remote place in accordance

minorities. (Art. 33, FC) with Art. 29;
4. Marriage by parties with who have 3. Where both of the parties request the
cohabited for at least 5 years. (Art. 34, solemnizing officer in writing, in which
FC) case the marriage may be solemnized at a
house or place designated by then in a
Ninal v Badayog sworn statement.
GR 133778 (2000)
There must be no legal impediment during the
entire five or more years that the parties are D. MARRIAGES CELEBRATED ABROAD
living as husband and wife.
General Rule:
Things to do at the local civil registrar: Marriages solemnized outside the RP in
a) File an application of marriage license accordance with the law of the foreign country
at the proper local civil registrar. (Art. shall be valid in the Philippines (lex loci
11, FC) celebrationis). (Art. 26, FC)
b) Present birth or baptismal certificate.
(Art. 12, FC) Exceptions: (AgeBI53PIPP)
c) If aged 18-21 years, present parental
consent. (Art. 14, FC) 1. Marriage between persons below 18
d) If aged 21-25, present parental years old – Art. 35(1)
advice. (Art. 15, FC) 2. Bigamous or polygamous marriage –
e) If aged 18-25, present certificate of Art. 35(4)
marriage counseling from your priest. 3. Mistake in identity – Art. 35 (5)
(PD 965) 4. Marriages void under Article 53 – Art.
f) Pay the required fees. (Art 19, FC) 35 (6)
g) If foreigner, present certificate of 5. Psychological incapacity – Art. 36
legal capacity issued by diplomat or 6. Incestuous marriages – Art. 37
consular officials. (Art. 21, FC) 7. Marriage void for reasons of public
policy – Art. 38
c. Marriage Ceremony
There is no particular form or religious rite IV. VOID MARRIAGES

required by law. (Art. 6, FC)
A. GROUNDS
Minimum requirements by law:
1. The contracting parties appear personally
a. Under Art. 35
before the solemnizing officer
1. Contracted by anyone below 18 years old,
2. They declare in the presence of at least
even with consent of parents
two witnesses of legal age,
2. Solemnized by anyone not authorized to
3. That they take each other as husband and
do so,
wife
a. except when one or both parties
4. The declaration shall be contained in the
believe that the solemnizing officer
marriage certificate,
had authority to do so.
5. Which shall be signed by the contracting
3. There is no marriage license,
parties and their witnesses and attested
a. except in marriage under
by the solemnizing officer. (Art. 6, FC)
exceptional circumstances
4. It is bigamous or polygamous,
Note: In a marriage in articulo mortis, when
a. except when first spouse has been
one or both parties are unable to sign the
absent for four years, or two years
marriage certificate, it shall be sufficient for
under extraordinary circumstances,
one of the witnesses to write the name of said
and the remaining spouse has a
party, which shall be attested by the
well-founded belief that the absent
solemnizing officer. (Art 6, par. 2)
spouse is dead, and is judicially
declared presumptively dead. (Art.
Places where marriage may be
41)
celebrated (CCO): (Art. 8, FC)
5. There is a mistake in identity of the other
contracting party.
General Rule:
6. The subsequent marriage is void under
1. Chambers of the judge or in open court;
Art. 53:
2. Church, chapel, or temple
a. Marriage is void when Art. 52 is
3. Office of the Consul-general, consul, or
not complied with: the following
vice-consul, as the case may be.
must be recorded in the
appropriate civil registry:
Exceptions:
1. Marriage in articulo mortis;

i. Judgment of annulment or Terre v. Terre

of absolute nullity of 211 SCRA 6
marriage; Parties are not allowed to assume that their
ii. Partition and distribution of marriage is void even if such is the fact. They
the properties of the must file an action for declaration of nullity
spouses under Art. 40 before they remarry.
iii. Delivery of presumptive
legitimes of the children. Atienza v. Brillantes
243 SCRA 32
b. Under Art. 36 Art. 40 is applicable to remarriages entered
7. Psychological incapacity of any contracting into after the effectivity of the Family Code,
party, at the time of the celebration of the regardless of the date of the first marriage.
marriage, to comply with the essential The Family Code retroacts to the extent that it
marital obligations. does not impair rights.
c. Under Art. 37 Domingo v. CA

(Incestuous Relationships) 226 SCRA 572 (1993)
8. Between ascendants and descendants of A marriage void for lack of marriage license
any degree, legitimate or illegitimate. still needs a judicial declaration of such fact
9. Between brothers and sisters, whether full even for a purpose OTHER than remarriage
or half-blood, legitimate or illegitimate. (e.g. liquidation, partition, distribution and
separation of property between spouses,
d. Under Art. 38 custody and support of children, and delivery
(For Reasons of Public Policy) of the latter’s presumptive legitime). Art. 40
10. Between collateral blood relatives, not mean that JDN can only be invoked for
legitimate or illegitimate, up to the fourth purposes of remarriage.
civil degree.
11. Between step-parents and step-children. PSYCHOLOGICAL INCAPACITY
12. Between parents-in-law and children-in- (Art. 36, FC)
law.
13. Between adopting parent and adopted Chi Ming Tsoi v. CA
child. 266 SCRA 234 (1997)
14. Between the surviving spouse of the Psychological incapacity involves the
adopting parent and the adopted child. senseless, constant, and prolonged refusal to
15. Between the surviving spouse of the comply with the essential marital obligations.
adopted child and the adopter. Procreation is one of the essential marital
16. Between an adopted child and a legitimate obligations under the Family Code. The
child of the adopter. prolonged refusal of a spouse to have sex with
17. Between adopted children of the same his spouse, even though capable, is equivalent
adopter. to psychological incapacity.
18. Between parties where one, with the
intention to marry the other, killed that
other person's spouse, or his or her own Santos v. CA
spouse. G.R. 112109 (1995)
Psychological incapacity under Art. 36, FC is
The following CAN marry each other: not meant to comprehend all possible cases of
1. Brother-in-law and sister-in-law psychoses. It should refer, rather, to no less
2. Stepbrother and stepsister than a mental (not physical) incapacity that
3. Guardian and ward causes a party to be truly incognitive of the
4. Adopted child and illegitimate child of basic marital covenants that concomitantly
the adopted must be assumed and discharged by the
parties to the marriage. Psychological
e. Under Art. 44 incapacity must be characterized by (a)
Subsequent marriage contracted under Art. 41 gravity, (b) juridical antecedence, and (c)
and both parties are in bad faith. incurability.
Declaration of nullity of marriage Carating-Siayngco v. Siayngco

- The action imprescriptible. (Art. 39, G.R. No. 158896 (2004)
FC) Sexual infidelity, per se, does not constitute
- For purposes of remarriage, the nullity psychological incapacity. It must be shown
of a previous marriage may be invoked that respondent’s unfaithfulness is a
solely on the basis of a final judicial manifestation of a disordered personality
declaration of nullity (JDN) of the which makes him completely unable to
previous marriage. (Art. 40, FC) discharge the essential obligations of the
marital state and not merely due to his ardent
wish to have a child of his own flesh and

blood. Mere showing of irreconcilable 1. The appearance of the Solicitor General

differences and conflicting personalities does is no longer necessary.
not constitute psychological incapacity. 2. Expert opinion need not be alleged, as
long as the physical manifestations of
psychological incapacity at the time of
Republic v. Quintero-Hamano
celebration of marriage are alleged.
G.R. No. 149498 (2004)
In proving psychological incapacity, there
Tenebro v. CA
should be no distinction between an alien
G.R. No. 150758 (2004)
spouse and a Filipino spouse. We cannot be
The subsequent judicial declaration of nullity
lenient in the application of the rules merely
of marriage on the ground of psychological
because the spouse alleged to be
incapacity does not retroact to the date of the
psychologically incapacitated happens to be a
celebration of the marriage insofar as the
foreign national. The medical and clinical rules
Philippine penal laws are concerned.
to determine psychological incapacity were
formulated on the basis of studies of human
As such, an individual who contracts a second
behavior in general.
or subsequent marriage during the
subsistence of a valid marriage is criminally
Republic v. Molina
liable for bigamy, notwithstanding the
268 SCRA 198 (1997),
subsequent declaration that the second
Guidelines for the interpretation of Art. 36:
marriage is void ab initio on the ground of
1. The burden of proof to show the nullity of psychological incapacity.
the marriage belongs to the plaintiff.
2. The root cause of the psychological Buenaventura v. CA
incapacity must be: G.R. No. 127358 (2005)
By declaring the petitioner as psychologically
a. medically or clinically identified, incapacitated (hence beyond the control of the
b. alleged in the complaint, party because of an innate inability), the
c. sufficiently proven by the experts,* possibility of awarding moral damages on the
d. clearly explained in the decision. same set of facts was negated.
3. The incapacity must be proven to be
existing at “the time of the celebration” of The award of moral damages should be
the marriage. predicated, not on the mere act of entering
4. Such incapacity must also be shown to be into the marriage, but on specific evidence
medically or clinically permanent or that it was done deliberately and with malice
incurable. by a party who had knowledge of his or her
5. Such illness must be grave enough to disability and yet willfully concealed the same
bring about the disability of the party to
assume the essential obligations of
Mallion v. Alcantara
marriage.
G.R. No. 141528
6. The essential marital obligations must be
Res judicata applies to a petition for nullity of
those embraced by Articles 68 up to 71 of
marriage due to lack of marriage license,
the Family Code as regards the husband
where a prior petition for nullity of marriage
and wife as well as Articles 220, 221, and
based on psychological incapacity had been
225 of the same Code in regard to parents
denied. There is only one cause of action for
and their children.
both petitions—the nullity of the marriage.
7. Interpretations given by the National
Appellate Matrimonial tribunal of the
Moreover, in the first case, petitioner
Catholic Church in the Philippines, should
impliedly conceded that the marriage was
be given great respect by our courts.
conduced in accordance with law, since he
8. The trial court must order the prosecuting
never raised the issue of lack of marriage
attorney or fiscal and the Solicitor General
license. Petitioner is now bound by this
to appear as counsel for the state.**
admission.
*NOTE HOWEVER, that in the later case of
Marcos v. Marcos (343 SCRA 755; 2000), it
was held that there is no need for the
respondent to be examined by an expert, as
the psychological incapacity may be
established by the totality of the evidence
presented.
** A.M. No. 02-11-10-SC (March 13, 2003)

made the ff. modifications to the Molina
doctrine:

BIGAMOUS MARRIAGE (Art. 41, FC) Exception: Said second marriage is not
bigamous if the first marriage was void due to
2 Kinds of bigamous marriage: the fact that no marriage ceremony was
solemnized at all. Here, the parties merely
VOID VOIDABLE signed a marriage contract on their own. No
bigamous bigamous marriage semblance of marriage, no need for judicial
marriage declaration of nullity.
Contracted during Contracted by spouse
subsistence of present upon the B. EFFECTS OF NULLITY
previous marriage presumption of death (ChiPCuPCDRDIDS) (Arts. 50-54, 43-44)
of first spouse
Good faith of 1. Children – considered illegitimate
remarrying party 2. Property Regime is dissolved – liquidation,
is immaterial; if in partition and distribution of the properties
bad faith, he of the spouses. If either spouse acted in
becomes liable for bad faith, his/her share in the net profits
bigamy will be forfeited:
a. In favor of the common children
General Rule: b. If none, in favor of the guilty
Marriage contracted by any person during the spouse by previous marriage
subsistence of a previous marriage is VOID. c. If none, in favor of the children of
Good faith is immaterial here. the innocent spouse.
3. Custody and support of the common
Exception: children will be decided
If before the celebration of the subsequent 4. Presumptive legitimes – must be delivered
marriage— 5. Creditors – of the spouses and of the
1. The first spouse has been absent for absolute community or conjugal
four consecutive years, or two years partnership must be notified of the
under extraordinary circumstances, proceedings of liquidation.
and 6. Conjugal dwelling – given to the spouse
2. The surviving spouse has a well- with whom majority of the children choose
founded belief that the spouse is dead, to remain.
and 7. Parties can remarry – after compliance
3. There is a judicial declaration of with Art. 52, FC.
presumptive death, without prejudice 8. Donation propter nuptias – remains valid,
to the effect of the reappearance of the (but if the donee contracted marriage in
absent spouse. Note: This is a bad faith, donations will be revoked)
VOIDABLE bigamous marriage. 9. Insurance benefits – innocent spouse may
revoke designation of guilty party as
Exception to the exception: beneficiary, even if such designation is
When both parties in the subsequent marriage irrevocable
acted in bad faith, the marriage is still void 10. Donations - If both parties of subsequent
(Art. 44, FC). marriage acted in bad faith, any donations
and testamentary dispositions made by
People v. Mendoza one party to the other by reason of
95 Phil. 845 (1954) marriage will be revoked
Mendoza contracted three marriages. He 11. Succession Rights – Party in bad faith
contracted the second marriage during the disqualified to inherit from innocent
subsistence of the first marriage. He spouse, whether testate or intestate
contracted the third marriage after the death
of his first wife. He was prosecuted for bigamy Note: Except for #1, the above also effects
on his third marriage. The Supreme Court apply to marriages which are annulled (and to
held that he is not guilty for bigamy for his voidable bigamous marriages.)
third marriage, since his prior subsisting
marriage has already been extinguished by
the death of his first wife. It is the second
V. VOIDABLE MARRIAGES
marriage that is bigamous.
A. GROUNDS (CIF-mspd-FIS) (Art. 45, FC)
Morigo v. People
G.R. No. 145226 (2004) 1. One of the parties is 18 or above but
General Rule: Even if the first marriage is below 21, and there is no parental
judicially declared void only after contracting consent.
the second marriage, the second marriage is 2. Either party was of unsound mind
still bigamous. (insanity).

3. The consent of either party was obtained further proceedings if the defendant fails to
through fraud (different from mistake in answer. A certification by the prosecutor that
identity): he was present during the hearing and even
a. through non-disclosure of a cross-examined the plaintiff does not suffice
previous conviction of a crime to comply with the mandatory requirement.
involving moral turpitude;
b. through concealment of the wife of
the fact that she was pregnant by Ground Who can Prescrip- Ratifica-
another man; (Art. 45) file tion tion
c. through concealment of a sexually- (Art. 47) (Art. 47) (Art. 45)
transmitted disease, even if not Lack of 1. 1. 5
serious or incurable;* parental Underage years
d. through concealment of drug consent party after Free
addiction, habitual alcoholism or attaining cohabita-
homosexuality/lesbianism. (Art.46, 21. tion after
FC) attaining
2. Parent 2. Before
4. The consent of either party was obtained age of
or child
through force, intimidation, or undue 21.
guardian reaches
influence.
21.
5. Either party is physically unable to
consummate the marriage (impotence; Insanity 1. Sane 1. Any
this is different from sterility). spouse time
6. Either party has a serious and incurable with no before
sexually-transmissible disease, even if not knowledge the death
concealed.* of the of insane
other’s party
Free
*STD: Art. 45 v. Art. 46 insanity
cohabita-
2. Legal
guardian tion of
Art. 45 STD Art. 46 STD insane
Ground for The STD is a type of of insane
party
annulment fraud which is a party
after
ground for annulment 3. Insane 2. During
coming
Does not have to Must be concealed party lucid
to reason
be concealed interval
Must be serious Need not be serious or after
and incurable nor incurable regaining
It is the The STD itself is the sanity,
concealment that ground for annulment and
gives rise to the before
annulment Fraud Injured death
Five Free
party years cohabita-
Buccat v Buccat (defrau- after tion after
72 Phil. 19 ded party) discovery having
It held that it is unbelievable that the wife of fraud full
could have concealed the fact that she was 6 knowled-
months pregnant at the time of the marriage. ge of
Annulment not granted. fraud
Force, Injured Five Free
Aquino v Delizo intimida party years cohabita-
109 Phil. 21 tion, after tion after
The Supreme Court granted annulment undue disappea the force
because the wife concealed the fact that she influen- -rance of has
was 4 months pregnant during the time of the ce force or ceased
marriage. It argued that since Delizo was intimida- or
tion disappe-
red
“naturally plump,” Aquino could hardly be
expected to know, by mere looking, whether
or not she was pregnant at the time of the
marriage.
Corpuz v. Ochoterena
AM No. RTJ-04-1861 (2004)
In a legal separation or annulment case, a
prior collusion investigation by the prosecuting
attorney is a condition sine qua non for

Ground Who can Prescripti Ratificati C. EFFECTS OF PENDING

(Art. 45) file on on ACTIONS/DECREE (Art. 49, FC)
(Art. 47) (Art. 47) (Art. 45)
Impoten Healthy Five Deemed 1. The court shall provide for the support
ce party years ratified of the spouses,
after when 2. The custody of the common children,
marriage action giving paramount consideration to their
prescri- moral and material welfare, their
bes choice of parent with whom they wish
STD Healthy Five Deemed to remain.
party years ratified 3. The court shall also provide for
after when visitation rights of other parent.
marriage action
prescri- No child under 7 years shall be separated
bes from the mother unless there is a compelling
reason to do so.
B. MARRIAGE WHEN ONE SPOUSE To prevent collusion between the parties,

IS ABSENT fabrication or suppression of evidence, the
prosecuting attorney or fiscal shall appear on
Requirements for subsequent marriage to behalf of the State. (Art. 48, FC)
be valid when prior spouse is absent:
(Art. 41, FC)
1. The prior spouse had been absent for 4 D. VOID MARRIAGES vs.
consecutive years, or 2 years in cases VOIDABLE MARRIAGES
under Art. 391 CC.
2. The spouse present has a well-founded Void Marriage Voidable
belief that the absent spouse was already Marriage
dead. Nature INEXISTENT VALID until
3. The spouse present must institute a from the annulled by
summary proceeding for the declaration of beginning court
presumptive death of the absentee, Co- CANNOT be CAN be
without prejudice to the effect of validatio covalidated covalidated by
reappearance of the absent spouse. n prescription or
free
Effect of reappearance of absent spouse: cohabitation
Effect on No Community ACP exists
General rule: property Property, only unless another
The subsequent marriage remains valid. Co-ownership system is
instituted
Exception: through
It is automatically terminated by the recording marriage
of the affidavit of reappearance of the absent settlement
spouse. Legiti- General rule: Children are
macy of Children are LEGITIMATE if
Exception to the exception: children ILLEGITIMATE conceived
If there is a judgment annulling the previous (Art. 165) before decree
marriage or declaring it void ab initio. (Art. Exception: of annulment
42, FC) In void
marriages
Republic v. Bermudez-Lorino by reason of
G.R. No. 160258 (2005) psychologica
The RTC rendered a decision declaring the l incapacity
presumptive death of respondent’s absent (Art. 36) or
spouse based on Art. 41, FC. The Republic non-partition
appealed the decision to the CA. Applying of properties
Art. 247 FC, the SC ruled that the CA did not in a previous
have jurisdiction over the appeal because marriage
summary proceedings are immediately final (Art. 53),
and executory, and therefore unappealable. children are
considered
LEGITIMATE
.

Void Marriage Voidable 7. Contracting by respondent of a

Marriage subsequent bigamous marriage, whether
How to May be Can only be in the Philippines of abroad.
impugn attacked attacked 8. Sexual infidelity or perversion.
DIRECTLY or DIRECTLY 9. Attempt on the life of petitioner by
COLLATERALLY (there must be respondent.
, except for annulment a. There is no need for criminal
purpose of decree) conviction.
remarriage 10. Abandonment of petitioner by respondent
(there must be without justifiable cause for more than
JDN) one year.
Effect of May still be Can no longer
death of impugned after be impugned Gandioco v Peñaranda
parties death of after death of 155 SCRA 725 (1989)
parties parties In sexual infidelity as a ground for legal
separation, there is no need for prior
E. JURISDICTION conviction for concubinage, because legal
separation only requires a preponderance of
Tamano v. Ortiz evidence, as opposed to proof beyond
291 SCRA 584 (1998) reasonable doubt required in concubinage.
PD No. 1083 (Code of Muslim Personal Laws
of the Philippines) does not provide for a Lapuz v. Eufemio
situation where the parties were married both 43 SCRA 177
in civil and Muslim rites. Consequently, the The action of the plaintiff in filing for legal
shari'a courts are not vested with original and separation does not survive after her death.
exclusive jurisdiction when it comes to Death of either spouse dissolves the marriage.
marriages celebrated under both civil and An action for legal separation is purely
Muslim laws. Hence, the Regional Trial Courts personal between the spouses.
have jurisdiction over such cases.
Dela Cruz. v. Dela Cruz
22 SCRA 333
Abandonment is not mere physical
VI. LEGAL SEPARATION abandonment but also financial and moral
desertion. There must be an intention never
A. GROUNDS (VAPIDHIBLA) (Art. 55, FC) to return.
1. Repeated physical violence or grossly

abusive conduct directed against B. DEFENSES
petitioner, a common child, or a child of
the petitioner. Grounds for denying legal separation
2. Physical violence or moral pressure to (4CMRPD) (Art. 56, FC)
compel petitioner to change religious or
political affiliation. 1. Condonation by aggrieved party
3. Attempt of respondent to corrupt or 2. Consent by aggrieved party to the
induce petitioner, a common child, or commission of the offense
child of petitioner, to engage in 3. Connivance between parties in the
prostitution or connivance in such commission of the offense
corruption or inducement. 4. Mutual guilt in ground for legal
4. Final judgment sentencing respondent to separation
imprisonment of more than 6 years, even 5. Collusion between parties to obtain
if pardoned (executive pardon, not decree of legal separation
pardon from offended party). 6. Prescription of action for legal
5. Drug addiction or habitual alcoholism of separation (5 years from occurrence of
respondent. the cause of action)
a. When it existed from the time of 7. Death of either party during pendency
celebration, and concealed from of action (Lapuz-Sy v Eufemio, G.R.
petitioner, can be a ground for No. L-30977, 1972)
annulment of marriage. 8. Reconciliation of parties during
b. When it occurred only after the pendency of action (Art. 66 par.1)
marriage, it is only a ground for
legal separation, whether concealed
C. WHEN TO FILE/TRY ACTIONS
or not.
6. Lesbianism or homosexuality of
respondent. Prescription:
a. Same as rules on drug addiction Action prescribes in five years from
occurrence of cause (Art. 57, FC)

Reconciliation period: 6. Innocent spouse may also revoke

Action cannot be tried before six months have designation of guilty spouse as beneficiary
elapsed since the filing of the petition (Art. 58. in an insurance policy, even if such
FC) stipulations are irrevocable (Art. 64. FC).
7. Obligation for mutual support ceases, but
Attempts on reconciliation: the court may order the guilty spouse to
Action cannot be tried unless the court has support the innocent spouse. (Art. 198,
attempted to reconcile the spouses, and FC)
determined that despite such efforts, 8. The wife shall continue to use the surname
reconciliation is highly improbable (Art. 59, of the husband even after the decree for
FC) legal separation. (Art. 372, CC)
Confession:
No decree of legal separation shall be based F. RECONCILIATION
upon a stipulation of facts or a confession of
judgment (Art. 60, par. 1. FC) How done:
Should the spouses reconcile, they should file
Collusion: a corresponding joint manifestation under
The court shall assign the prosecuting oath of such reconciliation. (Art. 65, FC)
attorney or fiscal to make sure that there is
no collusion between the parties, and that Effects of Reconciliation:
evidence is not fabricated or suppressed (Art. 1. Proceedings for legal separation shall
60, par. 2, FC) be terminated at whatever stage. (Art.
66, FC)
D. EFFECTS OF FILING PETITION FOR 2. If there is a final decree of legal
LEGAL SEPARATION (LAC) separation, it shall be set aside. (Art.
66, FC)
1. The spouses are entitled to live separately 3. The separation of property and
(Art. 61, par. 1. FC). forfeiture of share of guilty spouse
2. Administration of Community or Conjugal shall subsist, unless the spouses agree
Property – If there is no written to revive their former property regime
agreement between the parties, the court or to institute another property regime.
shall designate one of them or a third ( Art. 66 cf. Art. 67, FC)
person to administer the ACP or CPG. (Art. 4. Joint custody of children is restored.
61, par. 2, FC) 5. The right to intestate succession by
3. Custody of children – The court shall give guilty spouse from innocent spouse is
custody of children to one of them, if there restored.
is no written agreement between the 6. The right to testamentary succession
spouses. It shall also provide for visitation depends on the will of the innocent
rights of the other spouse. (Art. 62, cf. spouse.
Art. 49. FC)
G. DIVORCE
E. EFFECTS OF DECREE FOR
LEGAL SEPARATION General Rule:
Decrees of absolute divorce obtained by
Filipinos abroad have no validity and are not
1. The spouses can live separately (Art. 63.
recognized in the Phil. dfd
FC)
2. The ACP of CPG shall be dissolved and
Exception
liquidated, and the share of the guilty
(partial recognition of absolute divorce):
spouse shall be forfeited in favor the
- When the divorce is validly obtained by
common children, previous children, or
the alien spouses abroad which
innocent spouse (Art. 63. cf. Art. 42, par.
capacitates him/her to remarry, the
2).
Filipino spouse shall likewise have the
3. Custody of the minor children shall be
capacity to remarry. (Art. 26, par. 2
awarded to the innocent spouse (Art. 63.
FC)
FC)
4. Guilty spouse shall be disqualified from
Twin elements for the application of par.
inheriting from innocent spouse by
2, Art. 26, FC:
intestate succession. The provisions in
1. There is a valid marriage that has been
favor of the guilty party in the will of the
celebrated between a Filipino citizen
innocent spouse shall also be revoked by
and a foreigner; and
operation of law. (Art. 63, FC)
2. A valid divorce is obtained abroad by
5. Donation propter nuptias in favor of the
the alien spouse capacitating him or
guilty spouse may be revoked (Art. 64.
her to remarry.
FC)

2. Her maiden first name and her

Republic v. Orbecido husband's surname or
G.R. No. 154380 (2005) 3. Her husband's full name, but prefixing
Given a valid marriage between 2 Filipino a word indicating that she is his wife,
citizens, where one party is later naturalized such as “Mrs.”
as a foreign citizen and obtains a valid divorce
decree capacitating him or her to remarry, the Yasin v. Shari’a District Court
Filipino spouse remarry under Philippine law. G.R. No. 94986 (1995)
The woman only has an option and not a duty
The RECKONING POINT is not the citizenship to use the surname of her husband, as
of the parties at the time of the celebration of provided for in Art. 370, CC. Moreover, when
the marriage, but their citizenship at the time her husband dies, the woman can revert to
a valid divorce is obtained abroad by the alien her old name without need for judicial
spouse capacitating the latter to remarry. declaration.
2. Widows:
VII. RIGHTS AND OBLIGATIONS
A widow may use the deceased husband’s
BETWEEN HUSBAND & WIFE surname as though he were still living. (Art.
373, CC)
A. OBLIGATION OF SPOUSES
(Arts. 68-71, FC) 3. Mistresses:
1. Live together Legamia v IAC

2. Observe mutual love, respect, and fidelity G.R. No. 63817 (1984)
3. Render mutual help and support The Supreme Court allowed the mistress to
4. Fix the family domicile. use her live-in partner’s name, since everyone
a. In case of disagreement, the court already knew that she was a mistress, so as
shall decide. to avoid confusion.
5. Jointly support the family.
6. Manage the household. 4. Divorcees
B. RIGHTS OF SPOUSES (Arts. 72-73, FC) Tolentino v. CA

G.R. No. 41427 (1988)
A divorced woman may continue using the
1. In case the other spouse neglects his or
surname of her former husband. Philippine
her duties or commit acts which tend to
laws are silent in this issue. Moreover, there
bring danger, dishonor or injury to the is no usurpation as she never represented
family, the aggrieved party may apply the
herself as Mrs. Arturo Tolentino after the
court for relief.
divorce, but simply as Mrs. Consuela David-
2. Either spouse may exercise any legitimate
Tolentino.
profession, without need for consent of the
other.
a. The other spouse may only object
on valid, serious, and moral VIII. PROPERTY RELATIONS
grounds. BETWEEN SPOUSES
b. In case of disagreement, the Court
shall decide whether (1) the
objection is proper, and (2) benefit A. GENERAL PROVISIONS
has accrued to the family before OR
after the objection. Order to be followed: (ARTS. 74, 75, FC):
i. If BEFORE, enforce 1. Marriage settlements before
obligation against the marriage – spouses can agree to
separate property of spouse whatever regime they want, be it ACP,
who has not obtained CPG, or complete separation.
consent. 2. Family Code– If there are no
ii. If AFTER, enforce obligation marriage settlements, or if the regime
against community property agreed upon is void, the Absolute
Community of Property will be followed
C. USE OF SURNAME 3. Local Customs
1. Married Women: (Art. 370, CC)
A married woman may use:

1. Her maiden first name and surname
and add her husband's surname, or

General Rule: (Art. 80, FC) 2. Made in consideration of the marriage

Property relations between Filipino spouses 3. In favor of one or both spouses
are governed by Philippine laws, regardless of
the place of marriage and their residence. Donations excluded:
1. Ordinary wedding gifts given after the
Hence:
celebration of the marriage
The rule that ACP is the default mode of
2. Donations in favor of future spouses made
property relations absent any marriage
before marriage but not in consideration
settlement applies to all Filipinos, regardless
thereof
of the place of the marriage and their
3. Donations made in favor of persons other
residence.
than the spouses even if founded on the
intended marriage
Exceptions: (Art. 80, FC)
1. Where both spouses are aliens
Who may donate:
2. As to the extrinsic validity of contracts
1. spouses to each other
3. Contrary stipulation
2. parents of one or both spouses
3. 3rd persons to either or both spouses
Requirements for Marriage Settlements:
(Art. 77, FC)
Solis v. Barroso
1. Must be in writing (public or private)
53 Phil. 912 (1928)
2. Signed by the parties
Moreover, in donations propter nuptias, the
3. Executed before the celebration of the
marriage is really a consideration but not in
marriage
the sense of giving birth to the obligation.
4. If party needs parental consent,
There can be a valid donation even if the
parent/guardian must be a party to the
marriage never took place. However, the
settlement
absence of marriage is a ground for the
5. If party is under civil interdiction or
revocation of the donation.
other disability (not including insanity),
court appointed guardian must be a
party
Mateo v. Lagua
6. Must be registered in local civil registry
G.R. No. 26270 (1969)
– to affect third persons (If not
Donations propter nuptias are without onerous
registered, will not prejudice third
consideration, marriage being merely the
persons, ACP will apply)
occasion or motive for the donation, not its
cause. Being liberalities, they remain subject
General Rule:
to reduction for inofficiousness upon the
All modifications to the marriage settlement
donor’s death, if they should infringe the
must be made before the marriage is
legitime of a forced heir.
celebrated.
Distinguished from Ordinary Donations:
Exceptions:
1. Legal Separation (Art. 63 (2), FC)
DONATIONS ORDINARY
o The property regime is
PROPTER NUPTIAS DONATIONS
dissolved.
2. Revival of the former property regime Does not require Express
express acceptance acceptance
upon reconciliation if the spouses
necessary
agree (Art. 66 (2))
May be made by Cannot be made
3. A spouse may petition the court for: minors (Art. 78) by minors
a. Receivership May include future Cannot include
b. Judicial separation of property, or property future property
c. The authority to be the sole If present property is No limit to
administrator of the conjugal donated and property donation of
partnership is not absolute present property
 If the other spouse abandons the community, limited provided
other without just cause or fails to to 1/5 legitimes are not
comply with his or her obligations impaired
to the family. (Art. 128) Grounds for Grounds for
4. Judicial Dissolution (Arts. 135 and 136) revocation - In Art. revocation - in
86 donation laws
B. DONATIONS BY REASON OF MARRIAGE
Requisites of donations propter nuptias:

(Art. 82, FC)
1. Made before the celebration of marriage

RULES: Harding v. Commercial Union

38 Phil. 464 (1918)
1. Before Marriage The prohibition on donations can only be
assailed by persons who bear such relation to
General Rule: the parties or the property itself, that their
Future spouses cannot donate to each other rights are being interfered with. Here, the
more than 1/5 of their present property insurance company of the donated car cannot
(excess shall be considered void) (Art. 84, FC) assail the validity of the donation.
Exception: Sumbad v. CA
If they are governed by ACP. G.R. No. 106060 (1999)
The donation made by a man to a woman was
2. During Marriage held valid because no proof was shown that
they were still living in a common-law
General Rule: relationship at the time of the donation.
Spouses cannot donate to each other, directly
or indirectly (donations made by spouses to C. ABSOLUTE COMMUNITY OF PROPERTY
each other during the marriage are void) (Art.
87, FC) 1. IN GENERAL
Exception: When it commences: At the precise

Moderate gifts on the occasion of any family moment of the celebration of the marriage
rejoicing. (Art. 88, FC). However, if the marriage is
celebrated before the Family Code took effect
(1988), the default property regime is the
Grounds for Revocation of Donation Conjugal Partnership of Gains (CPG).
Propter Nuptias (Art. 86, FC)
Waiver of Rights: (Art. 89, FC)
1. If the marriage is not celebrated or
judicially declared void ab initio, except General Rule:
donations made in settlements. NOT ALLOWED
2. When the marriage takes place without
the consent of the parents or guardians, Exceptions:
as required by law. 1. When there is judicial separation of
3. When the marriage is annulled, and the property
donee acted in bad faith. 2. When there is legal separation
4. Upon legal separation, if the donee is the 3. When the marriage is dissolved (by
guilty spouse. death of one of the spouses)
5. If there is a resolutory condition, and it is 4. When the marriage is annulled
not complied with.
6. When donee has committed an act of
ingratitude: (Art. 765, CC) 2. WHAT CONSTITUTES COMMUNITY
a. An offense against person or property PROPERTY
of donor, or his wife or children under
parental authority What it consists: All the property owned by
b. An imputation to the donor of any the spouses at the time of the celebration of
criminal offense, or any act involving the marriage or acquired thereafter. (Art. 91,
moral turpitude, even if proven, unless FC)
the crime is committed against the
donee, his wife or children under his Under the ACP, spouses cannot exclude
authority. specific properties from the regime.
c. Refusing to support the donor, if
he/she is legally required to do so.
What is Excluded (BGM): (Art. 92, FC)
*The action for filing for revocation of 1. Properties acquired by a gratuitous title,
donation prescribes. i.e. donation, inheritance by testate and
intestate succession, including the fruits of
Matabuena v Cervantes such properties
38 SCRA 284 (1971) EXCEPT: When it was expressly
The donation between common-law spouses provided by the donor or testator that the
falls within the provision prohibiting donations property shall form part of the ACP
between spouses during marriage.
2. Properties for personal use
EXCEPT: Jewelry - they form part of
the ACP

3. Properties acquired before the marriage, - Only ff the debtor-spouse has no

for those with legitimate descendants with exclusive property or his or her
a former marriage (to protect rights of property is insufficient.
children by a former marriage). - The payments by the ACP are deemed
advances to be deducted from the
Presumption: share of the guilty spouse upon the
All properties acquired during the marriage liquidation of the absolute community.
form part of the ACP, unless it be proven that
they are excluded. (Art. 93, FC) 10. Expenses of Litigation between Spouses
3. CHARGES UPON THE ACP (Art. 94, FC): 4. ADMINISTRATION, OWNERSHIP AND
(4 debts, 2 taxes, 2 expenses, DISPOSITION OF ACP
support, donation)
Administration of property:
1. Support Belongs to both spouses jointly. If they
- Spouses disagree the husband’s decision prevails.
o Even if not living together However, the wife has five years from the
except when a spouse leaves date of the decision to go to court for
conjugal home without just recourse. Otherwise, it is presumed that she
cause agreed with the husband’s decision. (Art. 96,
o Even during pendency of action FC)
for legal separation or
annulment of marriage Except:
- Common children When the other spouse is incapacitated, or
- Legitimate children of previous unable to participate in the administration
marriage (e.g. when abroad).
2. Debts and Obligations Contracted During Disposition of property:

Marriage Either spouse may, through a will, dispose
- Either by both spouses or one of them, his/her interest in the community property.
with the consent of the other. (Art. 97, FC) However, the will should refer
- In (2) and (3), creditors need not only to his/her own share in the community
prove that the debts benefited the property.
family.
Donation of property:
3. Debts Contracted by one Spouse Without Donation of one spouse without the consent of
Consent of the other the other is not allowed (Art. 98, FC)
- ACP liable only to the extent that the
debt benefited the family. Except:
1. Moderate donations to charity due to
4. Tax, Liens, Repairs on Community family rejoicing or distress;
Property 2. Moderate gifts by each spouse to the
- Includes both major and minor repairs other due to family rejoicing. (note:
What’s moderate depends on the
5. Taxes and Expenses for Mere preservation socio-economic status of the family)
of Separate properties
- Applies only to separate properties by 5. DISSOLUTION OF ACP
either spouse being used by the family,
not those that do not benefit the ACP terminates upon: (Art. 99, FC)
family. 1. Death of either spouse – follow rules in
- Expenses limited to minor repairs. Art. 103
2. Legal Separation – follow rules in Arts. 63
6. Expenses for professional, Vocational, or and 64
Self-Improvement Course of Spouses 3. Annulment or judicial declaration of nullity
– follow rules in Arts. 50 to 52
7. Ante-nuptial Debts that Benefited the 4. Judicial separation of property during
Family marriage – follow rules in Arts. 134 to 138
- If the ante-nuptial debt did not benefit
the family, applicable rule is (9).
Rules on De Facto Separation:
8. Donations by Both Spouses to Common (ART. 100, FC):
Legitimate Children
De facto separation does not affect the ACP.
9. Ante-Nuptial Debts not under (7), Support EXCEPT that:
of Illegitimate Children, Liabilities of Either 1. Spouse who leaves the conjugal home
Spouse Arising from Crime or Quasi-Delict without just cause shall not be entitled

to support. He/She, however, is still balance of separate properties shall be

required to support the other spouse delivered to respective spouses or their
and the family. heirs, and they will also divide into two
2. If consent is necessary for transaction equal shares whatever is left of the
but is withheld or otherwise community assets, without prejudice to
unobtainable, authorization may be the provisions of law on forfeitures and
obtained from the court. delivery of presumptive legitimes.
3. Support for family will be taken from
the ACP. Rules in Case of Termination of Marriage
4. If ACP is insufficient, spouses shall be by Death of One of the Spouses:
solidarily liable. (Art. 103, FC)
5. If it is necessary to administer or
encumber separate property of spouse 1. The community property shall be
who left, spouse present may ask for liquidated in the same proceeding for
judicial authority to do this. the settlement of the estate of the
6. If ACP is not enough and one spouse deceased spouse.
has no separate property, spouse who 2. If no such judicial settlement
has property is liable for support, proceeding is instituted, surviving
according to provisions on support. spouse shall liquidate the community
property either judicially or extra-
Abandonment: (Art. 101, FC) judicially within one year from the
Present spouse may petition the court for: death of the deceased spouse.
(a) receivership;
(b) judicial separation of property; or Procedure for Liquidation of Community
(c) authority to be the sole administrator Properties of Two Marriages:
of the absolute community, subject to (Art. 104, FC)
precautionary conditions that the court
may impose. 1. Determine the capital, fruits, and
income of each community upon such
*Spouse is prima facie considered to have proof as may be considered according
abandoned the other spouse and the family if: to the rules of evidence.
1. he/she has left for a period of three 2. In case of doubt as to which
months, community the existing properties
2. he/she has failed to inform his/her belong, they shall be divided between
whereabouts for a period of three two communities in proportion to the
months. capital and duration of each.
6. LIQUIDATION OF ASSETS Onas v. Javillo

AND LIABILITIES 59 Phil. 733 (1934)
Javillo contracted 2 marriages. SC ruled that
Process of liquidation of ACP: each absolute community should be
(Art. 102, FC) considered owner of the parcels of land
1. Inventory of assets of ACP and of acquired during its existence. Death
spouses, with market values. discontinues ACP.
2. Obligations are paid with community
property, and separate obligations not Vda. De Delizo v. Delizo
charged to ACP paid by respective G.R. No 32820 (1976)
assets of spouses. In case of doubt as to which community the
3. Balance, or net remainder is divided existing properties belong, the same shall be
equally between the spouses, divided between the different communities in
irrespective of how much each brought proportion to the capital and duration of each.
into the community.
4. If obligations exceed the assets of the D. CONJUGAL PARTNERSHIP OF GAINS
ACP, nothing is divided. Creditors can
go after the separate properties of the WHERE IT APPLIES:
spouses, which are solidarily liable for
the deficiency. 1. For marriages before the implementation
5. If personal obligations of a spouse of the Family Code.
exceed his/her separate property, 2. For marriages after the Family Code, if
creditor can go after the share of the agreed to by the parties through a
spouse on the net remainder of the marriage settlement.
ACP, without prejudice to the
provisions of law on forfeitures and HUSBAND AND WIFE PLACE IN COMMON
delivery of presumptive legitimes. FUND:
6. After covering all community
obligations and obligations of spouses,

1. The proceeds, products, fruits, and income B. If winning ticket is bought by conjugal
of their separate properties; funds = prize is conjugal
2. Everything acquired by them within - presumption is ticket bought during
marriage through their own efforts; marriage is bought by conjugal
3. Everything acquired by them by chance funds
EXCLUSIVE PROPERTIES OF THE Property bought on installments paid partly

SPOUSES: from exclusive funds of the spouses and partly
from conjugal funds:
I. Property by direct acquisition, or property
a.If full ownership is vested before the
that is originally exclusive:
marriage – it shall belong to the buyer-
1. Property brought into marriage by each
spouse
spouse as his/her own – Art. 109(1)
b.If full ownership was vested during
2. Property acquired by either spouse
the marriage – it shall belong to the
during the marriage by gratuitous
conjugal partnership
title – Art 109 (2)
Property belonging to one spouse converted
II. Property by substitution:
into another kind totally different in nature
3. Property acquired by right of
from its original form during marriage
redemption, by barter, or by
becomes conjugal in the absence of proof
exchange with property belonging to
that the expenses of conversion were
either spouse – Art. 109 (3)
exclusively for the account of the original
4. Property purchased with exclusive
owner-spouse, subject to reimbursement of
money of either spouse- Art. 109 (4)
the value of the original property from the
conjugal partnership
III. Other Separate Property:
5. Collection of credits belonging to one
Upon dissolution of marriage or partnership,
spouse exclusively
the net gains or benefits from the partnership
6. Sale of separate property of a spouse
shall be divided equally between the spouses,
7. Indemnity paid in cash of expropriation
unless they have agreed on another manner
of separate property or under an
of division in their marriage settlement.
insurance policy covering separate
property.
Money received under the Social
8. Possession does not affect ownership
Security Act is not conjugal, although the
of separate property.
employee-spouse contributes to the SSS with
his salaries, but belongs to the designated
PROPERTIES THAT COMPOSE CPG:
beneficiary under the Social Security Law
1. Acquired by Onerous Title during the
Intellectual property, like copyright or
Marriage at Expense of Common Fund
patent, should, according to Tolentino, citing
(Art. 117 (1));
Planiol and Ripert, be considered separate
2. Acquired through the Labor, Industry,
property of the spouse who produces or
Work, Profession of Either or both
invents or discovers it, this property being of
Spouses (Art. 117 (2));
a special type, almost a part of one's person
3. Fruits from common property;
or taken from his personality and the physical
4. Net fruits of exclusive property of each
or external manifestation of his intellect or
spouse (Art. 117 (3));
genius, that it is not simply a product of one's
5. Share of either spouse in hidden treasure,
work or industry but should be considered as
whether as finder or owner of property
pertaining exclusively to its creator
where treasure is found (Art. 117(4));
6. Acquired through occupation such as
Business property like trade-marks, trade
fishing or hunting (Art. 117 (5));
names, service marks, business goodwill, and
7. Livestock existing at dissolution of
similar kinds of property are, however, merely
partnership in excess of what is brought
accessories to some commercial
by either spouse to the marriage (Art. 117
establishment or product, so that if such
(6));
establishment or product is separate property
8. Acquired by chance, such as winnings from
of one spouse, then the business property is
gambling or betting (Art. 117 (7))
separate property, the same being an
accessory that follows the principal; but all
NOTE:
benefits or earnings derived from these
A. If winning ticket is bought by a spouse
different kinds of property during the
with his or her own money or was
marriage should belong to the conjugal
given gratuitously by a friend = the
property (Tolentino, id., citing the same
prize will be separate property of the
authority).
spouse who owns the ticket

CHARGES UPON CPG (ART. 121) [cf. partnership by allowing it to be given

Charges to ACP]: gratuitously as in cases of donation of
(3 debts, 2 taxes, 2 expenses, support, conjugal partnership property, which is
donation) prohibited.
1. Support of the spouse, their common DISSOLUTION OF CPG (ART. 128):

children, and the legitimate children of
either spouse 1. Prepare an inventory of all properties
2. All debts and obligations contracted during 2. Amounts advanced by the conjugal
the marriage by the designated partnership in payment of personal debts
administrator-spouse for the benefit of the and obligations of either spouse shall be
CPG, or by both spouses or by one of them credited to the conjugal partnership.
with the consent of the other 3. Each spouse shall be reimbursed for
3. Debts and obligations contracted by either the use of his or her exclusive funds in the
spouse without the consent of the other to acquisition of property or for the value of
the extent that the family may have his or her exclusive property, the
benefited ownership of which has been vested by
4. All taxes, liens, charges, and expenses law in the conjugal partnership.
upon conjugal property 4. Debts and obligations of the conjugal
5. All taxes and expenses for mere partnership shall be paid out of the
preservation made during the marriage conjugal assets.
upon the separate property of either 5. Whatever remains of the exclusive
spouse properties of the spouses shall be
6. Expenses to enable either spouse to delivered
commence or complete a professional, 6. Indemnify loss or deterioration of
vocational, or other activity for self- movables belonging to either spouse, even
improvement due to fortuitous event, used for the
7. Ante-nuptial debts of either spouse insofar benefit of the family
as they have redounded to the benefit of 7. The net remainder of the conjugal
the family partnership properties, or the profits,
8. The value of what is donated or promised which shall be divided equally between
by both spouses in favor of their common husband and wife
legitimate children for the exclusive
purpose of commencing or completing a EXCEPTIONS:
professional or vocational course or other a. A different proportion or division was
activity for self-improvement agreed upon in the marriage
9. Expenses of litigation between the spouses settlements
unless the suit is found to groundless b. There has been a voluntary waiver or
forfeiture of such share as provided in
If the conjugal partnership is insufficient to this Code.
cover the foregoing liabilities, the spouses
shall be solidarily liable for the unpaid balance [NOTE: Dissolution of the conjugal property
with their separate properties. must be recorded in the registry of property in
order to affect third persons dealing with
Disposition or encumbrance of conjugal registered property.]
property requires:
A. The consent or approval by both De Ansaldo v. Sheriff of Manila
spouses; OR G.R. No. L-43257 (1937)
B. Judicial authority secured in court The Supreme Court ruled that the spouses are
not co-owners of the conjugal properties
Mere awareness of a transaction is NOT during the marriage and cannot alienate the
consent supposed ½ interest of each in the said
properties. The interest of the spouses in the
Ayala Investment v. Ching conjugal properties is only inchoate or a mere
286 SCRA272 expectancy and does not ripen into title until
The Supreme Court ruled that indirect benefits it appears after the dissolution and liquidation
that might accrue to a husband in signing as a of the partnership that there are net assets
surety or guarantee agreement not in favor of
the family but in favor of his employer
corporation are not benefits that can be ACP/CPG TERMINATES UPON (ART. 99
considered as giving a direct advantage AND 126):
accruing to the family. Hence, the creditors
cannot go against the conjugal partnership 5. Death of either spouse – follow rules in
property of the husband in satisfying the Art. 103
obligation subject of the surety agreement. A 6. Legal Separation – follow rules in Arts.
contrary view would put in peril the conjugal 63 and 64

7. Annulment or judicial declaration of E. SEPARATION OF PROPERTIES

nullity – follow rules in Arts. 50 to 52 DURING MARRIAGE
8. Judicial separation of property during
marriage – follow rules in Arts. 134 to
In the absence of an express declaration in
138
the marriage settlements, the separation of
property between the spouses during the
CPG vs. ACP:
marriage shall not take place except by
judicial order. (Art. 134)
CPG ACP
1. Each Properties Judicial separation of property may either be
Property spouse become part of voluntary or for sufficient cause.
acquired retains community
before his/her property SUFFICIENT CAUSES FOR JUDICIAL
marriage property; SEPARATION OF PROPERTIES (CALASA)
. only fruits (ART. 135):
part of
conjugal 1. Spouse of the petitioner has been
property sentenced to a penalty which carries
with it civil interdiction.
2. Spouse of the petitioner has been
2. Part of Becomes conjugal
judicially declared an absentee.
Property conjugal property.
3. Loss of parental authority of the
acquired property
spouse of petitioner has been decreed
during
by the court.
marriage
4. Spouse of the petitioner has
abandoned the latter or failed to
comply with his or her obligations to
CPG ACP
the family.
3. Upon Separate Net remainder of
5. The spouse granted the power of
dissolu- properties ACP divided
administration in the marriage
tion of are equally between
settlements has abused that power.
marriage returned; spouses or heirs.
6. At the time of the petition, the spouses
net profits
have been separated in fact for at
divided
least one year and reconciliation is
equally
highly improbable.
between
spouses or
Each spouse shall contribute to the family
heirs.
expenses, in proportion to their income. In
4. Basis Capital and Mutual trust and case of insufficiency, the market value of their
properties confidence
separate properties. (Art. 146)
of spouses between spouses;
kept fosters oneness of Liability of spouses to the creditors of the
separate spouses
family shall be SOLIDARY. (Art. 146, par. 2)
and
distinct
EFFECTS OF SEPARATION OF PROPERTY
from BETWEEN SPOUSES:
benefits;
insurmoun
1. ACP or CPG is dissolved and liquidated
table
2. The liability of the spouses to creditors
obstacle to shall be solidary with their separate
presump-
properties
tion of
3. mutual obligation to support each
solidarity continues except when there is legal
5. Exclusive Easier to liquidate separation
Liquida- properties because net 4. rights previously acquired by creditors
tion will have remainder of are not prejudiced
to be community
identified properties are REVIVAL OF PROPERTY REGIME IN THE
and simply divided FF. INSTANCES (ART. 141):
returned, between spouses
and or heirs. 1.When the civil interdiction
sometimes terminates.
, identify- 2.When the absentee spouse
cation is reappears.
difficult. 3.When the court, being satisfied that the
spouse granted the power of

administration in the marriage settlements  not Art. olygamous

will not again abuse that power, 37 marriage
authorizes the resumption of said (incestuo (Art.35(4))
administration. us void 6. incestuous
4.When the spouse who has left the marriage) marriages
conjugal home without a decree of legal  not Art. under
separation resumes common life with 38 (void Art.37
the other; marriage 7. Void
5.When parental authority is judicially by reason marriages
restored to the spouse previously of public by reason of
deprived thereof; policy) public policy
6.When the spouses who have separated  not under
in fact for at least one year, reconcile bigamous Art.38
and resume common life. 4. other void
7.When after voluntary dissolution of the marriages
absolute community of property or due to
conjugal partnership has been judicially absence of
decreed upon the joint petition of the formal
spouses, they agree to the revival of requisite
the former property regime. No voluntary
Salaries Separately
separation of property may thereafter be Owned in
and owned by
granted. equal shares
wages parties
TRANSFER OF ADMINISTRATION TO THE Art.147 Art.148
OTHER SPOUSE WHEN (GACA) (ART. Proper-
142): ties Remains
acquired exclusive Remains
1. When one spouse becomes the through provided exclusive
guardian of the other. exclusive there is proof
2. When one spouse is judicially declared funds
an absentee. Proper-
3. When one spouse is sentenced to a ties Owned in
penalty which carries with it civil acquired Governed by common in
interdiction. by both rules on co- proportion to
4. When one spouse becomes a fugitive through ownership respective
from justice or is in hiding as an work or contribution
accused in a criminal case. industry
 Owned in
If the other spouse is not qualified by reason equal
of incompetence, conflict of interest, or any shares
other just cause, the court shall appoint a since it is
suitable person to be the administrator. presumed
to have
been
No
F. PROPERTY REGIME OF acquired
presumption of
UNIONS WITHOUT MARRIAGE through
joint
joint
acquisition.
Art.147 Art.148 efforts
Proper- When there is
1. man and 1. man and  if one
ties evidence of
woman woman party did
acquired joint
2. living 2. living not
while acquisition but
together together as participate
living none as to the
as husband in
together extent of actual
husband and wife acquisitio
contribution,
and wife 3. NOT n,
there is a
3. with capacitated presumed
presumption of
Applica- capacity to to marry to have
equal sharing
bility marry (Art.35(1) contribute
(Art.5 under 18 d through
without years old) care and
any legal 4. adulterous maintenan
impedimen relationship ce of
t) (e.g. family and
 at least concubinage household
18 years ) Forfeitu- When only If one party is
old 5. bigamous/p re one of the validly married

parties is in to another: 3. Such earnest efforts and the fact of

good faith, - his/her share failure must be alleged
the share of in the co-
the party in owned [NOTE: The case will be dismissed if it is
bad faith shall properties will shown that no such efforts were made.]
be forfeited: accrue to the
1. In favor of ACP/CPG of Exceptions to the general rule (VJLAFF):
their his/her existing a. Civil status of persons,
common valid marriage b. Validity of marriage or a legal
children separation,
2. In case of If the party c. Any ground for legal separation,
default of who acted in d. Future support,
or waiver bad faith is not e. Jurisdiction of courts,
by any or validly married f. Future legitime
all of the to another,
common his/her share
children shall be Hontiveros v. RTC
or their forfeited in the 309 SCRA 340 (1999)
descendan same manner Whenever a stranger is a party in a case
ts, each as that involving family members, the requisite
vacant provided in Art showing of earnest efforts to compromise is
share 147 no longer mandatory, as such inclusion of a
shall stranger takes the case out of the ambit of FC
belong to The same rules 151.
the on forfeiture
respective shall apply if FAMILY HOME - dwelling place of a person
surviving both parties and his family
descendan are in bad faith
ts Guidelines:
3. In the 1. It is deemed constituted from time of
absence actual occupation as a family residence
of such 2. It must be owned by person
descendan constituting it
ts, such 3. It must be permanent
share 4. Rule applies to valid and voidable and
belongs to even to common-law marriages under
the Arts.147 and 148
innocent 5. It continues despite death of one or
party more spouses or unmarried head of
family for 10 years or as long as there
is a minor beneficiary (Art.159)
6. Can only constitute one family home
IX. THE FAMILY
GENERAL RULE:
The family home is exempt from:
FAMILY – basic social institution which public 1. Execution
policy cherishes and protects hence, no suit 2. Forced sale
between members of the family shall prosper 3. Attachment
unless compromise between parties has
failed. Exceptions in the exemption of the family
home from execution (Art. 156):
FAMILY RELATIONS INCLUDE: 1. Nonpayment of taxes.
2. Debts incurred prior to the constitution
1. Between husband and wife of the family home.
2. Between parents and children 3. Debts secured by mortgages on the
3. Among other ascendants and premises before or after such
descendants constitution.
4. Among brothers and sisters, full or half 4. Debts due to laborers, mechanics,
blood. architects, builders, materialmen and
others who have rendered service or
General Rule: furnished material for the construction
For a suit between members of the same of the building.
family to prosper, the following are required:
1. Earnest efforts towards a compromise
have been made
2. Such efforts have failed

Beneficiaries of the family home 4. If the family home is sold for more than
(Art. 154): the value allowed, the proceeds shall be
1. Husband and wife, or an unmarried applied as follows:
person who is the head of the family a. First, the obligation enumerated in
2. Parents (may include parent-in-laws), Article 155 must be paid
ascendants, descendants, brothers and b. Then the judgment in favor of the
sisters (legitimate/illegitimate), who creditor will be paid, plus all the costs
are living in the family home and who of execution
depend on the head of the family for c. The excess, if any, shall be delivered
support
X. PATERNITY AND FILIATION
Requisites to be a beneficiary:
1. The relationship is within those PATERNITY - the relationship or status of a
enumerated person with respect to his or her child
2. They live in the family home (paternity includes maternity).
3. They are dependent for legal support
on the head of the family FILIATION - the status of a person with
respect to his or her parents.
Requirements for the sale, alienation,
donation, assignment, or encumbrance of TYPES OF FILIATION:
the family home: 1. Natural
1. the written consent of the person a. Legitimate (Art. 164)
constituting it, b. Illegitimate (Arts.165, 175, 176)
2. his/her spouse, and c. Legitimated (Arts. 167-172)
3. majority of the beneficiaries of legal 2. By Adoption (R.A. No. 8552 (“Domestic
age Adoption Act”) and R.A. No. 8043 (“Inter-
[NOTE: If there is a conflict, the Court will country Adoption Act”)
decide.]
3 TYPES OF LEGITIMATE CHILDREN:
In case of death (ART. 159): 1. Legitimate proper
- The family home shall continue despite 2. Legitimated
the death of one or both spouses or of 3. Adopted
the unmarried head of the family for a
period of ten years, or as long as there 2 TYPES OF ILLEGITIMATE CHILDREN:
is a minor beneficiary. 1. Children of parents disqualified to marry
- The heirs cannot partition the home each other at conception and marriage.
unless the court finds compelling 2. Children of parents qualified to marry each
reasons therefor. other
Requisites for creditor to avail of the
right under article 160: A. LEGITIMATE CHILDREN
1. He must be a judgment creditor;
2. His claim is not among those excepted GENERAL RULE:
under Article155, and Those who are conceived OR born during a
3. He has reasonable grounds to believe that valid marriage
the family home is worth more than the
maximum amount fixed in Article 157 EXCEPTIONS to the general rule are
those children who are:
Procedure to avail of right under Article 1. Conceived as a result of artificial
160: insemination
1. The creditor must file a motion in the 2. Born of a voidable marriage before decree
court proceeding where he obtained a of annulment
favorable for a writ of execution against 3. Conceived or born before judgment of
the family home. annulment or absolute nullity under Art.
2. There will be a hearing on the motion 36 (psychological incapacity) becomes
where the creditor must prove that the final & executory
actual value of the family home exceeds 4. Conceived or born of a subsequent
the maximum amount fixed by the FC marriage under Art. 53 (failure to record
either at the time of its constitution or as the judgment, partition and distribution of
a result of improvements introduced properties, and delivery of children’s
thereafter its constitution. presumptive legitime)
3. If the creditor proves that the actual 5. Of mothers who may have declared
value exceeds the maximum amount the against their legitimacy or was sentenced
court will order its sale in execution. as an adulteress
6. Legally adopted
7. Legitimated, conceived and born outside of
wedlock of parents without impediment at

the time of conception and who d. Vasectomy [NOTE: SEMPIO-DIY:

subsequently married A double vasectomy, together
with other pieces of evidence, can
For children by artificial insemination to show the impossibility of the
be considered legitimate: alleged father siring his supposed
1. The artificial insemination is made on the child; STA. MARIA: The fact that
wife, not on another woman AND the husband has undergone
2. The artificial insemination on the wife is vasectomy is not enough proof to
done with the sperm of the husband, or of rebut the presumption of
a donor, or both the husband and a donor legitimacy (Cocharan v.
AND Cocharan).]
3. The artificial insemination has been 3. Written authorization or ratification of
authorized or ratified by both spouses on a either parent of children conceived
written instrument executed and signed by through artificial insemination, when
them before the birth of the child, AND the was obtained through mistake,
4. The written instrument is recorded in civil fraud, violence, intimidation, or undue
registry together with the birth certificate influence
of the child
Who can impugn the legitimacy of a child
IMPUGNING LEGITIMACY:
General Rule:
Liyao v. Liyao Only the husband can impugn the legitimacy
378 SCRA 563 (2002) of a child
A child born within a valid marriage is
presumed legitimate even though the mother Exceptions:
may have declared against its legitimacy or The heirs of the husband may impugn the
may have been sentenced as an adulteress. child’s filiation in the following cases:
The child himself cannot choose his own a. If the husband dies before the
filiation. expiration of period for filing the action
b. If the husband dies after filing without
If the husband, presumed to be the father, desisting
does not impugn the legitimacy of the child, If the child was born after the death of the
then the status of the child is fixed, and the husband
latter cannot choose to be the child of his
mother’s alleged paramour. When to impugn the legitimacy of a child:
Grounds to impugn the legitimacy of the 1. Within 1 year – from knowledge of the
child: birth or its recording in the civil register, if
1. Physically impossibility for the husband the impugner resides in the city or
to have sexual intercourse with his wife municipality where the birth took place or
within the first 120 days of the 300 was recorded;
days which immediately preceded the 2. Within 2 years – from knowledge of the
birth of the child because of: birth or its recording in the civil register, if
a. Physical incapacity of the the impugner resides in the Philippines
husband to have sexual other than in the city or municipality
intercourse with his wife where the birth took place or was
b. The fact that the husband and recorded;
wife were living separately in 3. Within 3 years – from knowledge of the
such a way that sexual birth or its recording in the civil register, if
intercourse was not possible, or the impugner resides abroad
c. Serious illness of the husband
which absolutely prevented NOTE: Legitimacy cannot be collaterally
intercourse attacked. It can only be impugned in a direct
2. Biological or other scientific grounds action.
that the child could not have been that 180 days
of the husband, except in the case of 300 days
after
Termination after
children conceived through artificial of 1st Celebration
celebration
termination
of 2nd
insemination marriage of 2nd of 1st
marriage
a. Blood grouping tests – can marriage marriage
determine non-paternity but not
paternity (ex. A-B-O test).
b. Human Leukocyte Antigen Test
(HLA) – can prove identity
between child and father with a Child of Child of
probability exceeding 98%. the 1st the 2nd
c. DNA test marriage marriage

If the birth of the child has been consider the child as his, by continuous and
concealed or was unknown to the husband or clear manifestations of parental affection and
his heirs, the above periods shall be counted: care, which cannot be attributed to pure
1. From the discovery or knowledge of charity.
the birth of the child
2. From the discovery or knowledge of “Continuous” means uninterrupted and
the fact of registration of the birth, consistent, but does not require any particular
whichever is earlier. length of time.
IN CASE OF TWO MARRIAGES OF THE Cabatania v.CA

MOTHER: G.R. No. 124814 (2004)
A certificate of live birth purportedly
 For the child to be considered the child of identifying the putative father is not
the 1st husband, the following requisites competent evidence of paternity when there is
must concur: no showing that the putative father had a
1. The mother must have married again hand in the preparation of said certificate. The
within 300 days from the termination local civil registrar has no authority to record
of her first marriage the paternity of an illegitimate child on the
2. The child was born within the same information of a third person.
300 days after the termination of the
former marriage of its mother While a baptismal certificate may be
3. The child was born before 180 days considered a public document, it can only
after the solemnization of its serve as evidence of the administration of the
mother's 2nd marriage sacrament on the date specified but not the
 For the child to be considered the child of veracity of the entries with respect to the
the 2nd husband, the following requisites child’s paternity. Thus, certificates issued by
must concur: the local civil registrar and baptismal
1. The mother must have married again certificates are per se inadmissible in evidence
within 300 days from the termination as proof of filiation and they cannot be
of the marriage admitted indirectly as circumstantial evidence
2. The child was born within the same to prove the same.
300 days after the termination of its
mother's first marriage Herrera v. Alba
3. The child was born after 180 days G.R No. 148220 (2005)
following the solemnization of its To be effective, the claim of filiation must be
mother's second marriage made by the putative father himself and the
NOTE: The first marriage must be terminated writing must be the writing of the putative
either by death or annulment. father. A notarial agreement to support a child
whose filiation is admitted by the putative
 There is no presumptive rule on the status father was considered acceptable evidence.
of a child born after 300 days following the Letters to the mother vowing to be a good
termination of the marriage. (Art. 169) father to the child and pictures of the putative
[Reason: 300 days is the longest period of father cuddling the child on various occasions,
gestation.] together with the certificate of live birth,
proved filiation. However, a student
B. PROOF OF FILIATION permanent record, a written consent to a
father’s operation, or a marriage contract
1. The record of birth appearing in the civil where the putative father gave consent,
register or a final judgment. cannot be taken as authentic writing.
2. An admission of legitimate filiation in a Standing alone, neither a certificate of
public document or a private handwritten baptism nor family pictures are sufficient to
instrument and signed by the parent establish filiation.
concerned. ACTION TO CLAIM LEGITIMACY
1. The child can bring the action during his
Or, in their Absence: lifetime
1. The open and continuous possession of the 2. If the child dies after reaching majority
status of a legitimate or illegitimate child; without filing an action, his heirs can
or longer file the action after death
2. Any other means allowed by the Rules of 3. If the child dies during minority in the
Court and special laws. state of insanity, his heirs can file the
action for him within 5 years form the
Jison v. CA child’s death
286 SCRA 495 (1998) 4. If the child dies after commencing the
To prove open and continuous possession of action, the action will survive and his heirs
the status of an illegitimate child, there must will substitute for him
be evidence of the manifestation of the
permanent intention of the supposed father to

5. If the child is a minor, incapacitated or [i.e. children of those who are not
insane, his guardian can bring the action disqualified by any impediment to marry
in his behalf each other]
C. ILLEGITIMATE FILIATION CHILDREN OF FOLLOWING CANNOT BE

LEGITIMATED (BECAUSE OF
GENERAL RULE: IMPEDIMENT) (VIBA):
Those who are conceived and born outside a 1. Adulterous relationships
valid marriage are illegitimate. [NOTE: Proof 2. Incestuous relationships
of filiation is the same as that for legitimate 3. Bigamous relationships
children] 4. Void marriages by reasons of public policy
under Art. 38
RIGHTS OF LEGITIMATE AND  RIGHTS: Legitimated children shall
ILLEGITIMATE CHILDREN: enjoy the same rights as legitimate
children (Art. 179)
LEGITIMATE ILLEGITIMATE  RETROACTIVITY: The effects of
To bear the To bear the surname legitimation shall retroact from the time
surnames of the of their mother [may of the child’s birth. (Art. 180)
father and the also use the surname  DEATH OF CHILD: When the child dies
mother of the father if their before the celebration of the marriage,
filiation has been their legitimation shall benefit their
expressly recognized descendants. (Art. 181)
by the father (R.A.  IMPUGNING: Only those who are
9255)] prejudiced by their rights, within five
To receive support To receive support in years from the time of the cause of
from their parents, conformity with the action accrues. (Art. 182)
their ascendants, Family Code
and in proper
cases, their XI. ADOPTION
brothers and
sisters, in LEGITIMATION ADOPTION
conformity with The law merely The law
the provisions of makes legal merely
this Code on what exists by creates by
Support nature fiction a
Entitled to the The legitime of each relation
legitime and other illegitimate child shall which did
successional rights consist of one-half of not in fact
granted to them the legitime of a exist
by the New Civil legitimate child. Persons Only natural Generally
Code affected children applies to
strangers
D. LEGITIMATED CHILDREN Procedure Extrajudicial Always by
acts of parents judicial
Legitimation takes place by the subsequent decree
marriage of the child’s parents. It confers on Who Only by both By one
the child the rights of legitimate children, and applies parents parent
retroacts to the time of the child’s birth. alone
Effect Same status Creates a
REQUISITES FOR LEGITIMATION: and rights as a rel. only
1. The child was conceived and born outside legitimated between
of wedlock; child not only the child
2. The parents, at the time of child’s in relation to and the
conception, were not disqualified by any the legitimizing adopting
impediment to marry each other parents but parent
3. There is a valid marriage subsequent to also to other
the child’s birth. relatives
WHO CAN BE LEGITIMATED:

1. Child who is conceived and born outside of
wedlock; and
2. At the time of conception, the parents
were not disqualified by any impediment
to marry each other.

R.A 8552: Domestic Adoption Act of 1998 c. if spouses are legally separated from
each other
WHO MAY ADOPT:
PRE-ADOPTION SERVICES:
A. Filipino Citizens
1. Of legal age The DSWD shall provide for the following
2. In possession of full civil capacity and legal services:
rights 1. Counseling services for the biological
3. Of good moral character parents, prospective parents, and
4. Has not been convicted of any crime prospective adoptee
involving moral turpitude 2. Exhaust all efforts to locate the biological
5. Emotionally and psychologically capable of parents, if unknown
caring for children
6. At least sixteen (16) years older than WHO MAY BE ADOPTED:
adoptee, except when adopter is biological
parent of the adoptee or is the spouse of 1. Any person below 18 years old who has
the adoptee’s parent been administratively or judicially declared
7. In a position to support and care for available for adoption
his/her children in keeping with the means 2. The legitimate child of one spouse by the
of the family other spouse
3. An illegitimate child by a qualified adopter
B. Aliens to improve the child’s status to that of
1. Possession of the same as the legitimacy
qualifications for Filipinos 4. A person of legal age if, prior to the
2. His/her country has diplomatic relations adoption, said person has been
with the Philippines consistently considered and treated by the
3. Has been living continuously for 3 years adopter(s) as his/her child since minority
(provided that absences not exceeding 60 5. A child whose previous adoption has been
days per 1 year for professional, business, rescinded
or emergency reasons are allowed) in RP 6. A child whose biological or adoptive
prior to filing of decree is entered except parent(s) has died, provided that no
this may be waived under the following: proceedings shall be initiated within 6
(i) A former Filipino Citizen who seeks to months from the time of death of said
adopt a relative within the 4th degree parent(s)
of consanguinity or affinity
(ii) One who seeks to adopt the legitimate CONSENT NECESSARY FOR ADOPTION:
or illegitimate child of his/her Filipino
spouse 1. The prospective adoptee if 10 years or
(iii)One who is married to a Filipino Citizen older
and seeks to adopt jointly with his/her 2. The prospective adoptee’s biological
spouse a relative within the 4th degree parents or legal guardian
of consanguinity or affinity of the 3. The prospective adopters’ legitimate and
Filipino spouse adopted children who are ten years or
4. Has been certified by his/her diplomatic or over and, if any, illegitimate children living
consular office or any appropriate with them
government agency that he/she has the 4. The prospective adopter’s spouse in
legal capacity to adopt in his/her country appropriate cases
5. His/her government allows the adoptee to
enter his/her country as his/her adoptee [NOTE: A decree of adoption shall be effective
6. Has submitted all the necessary clearances as of the date the original petition was filed. It
and such certifications as may be required also applies in case the petitioner dies before
the issuance of the decree of adoption to
C. Guardians protect the interest of the adoptee.]
With respect to theirs ward after the
termination of the guardianship and Tamargo v. CA
clearance of his/her accountabilities G.R. No. 85044 (1992)
Where the petition for adoption was granted
Husband and wife shall adopt jointly after the child had shot and killed a girl, the
except: Supreme Court did not consider that
a. if one spouse seeks to adopt the retroactive effect may be given to the decree
legitimate child of the other of adoption so as to impose a liability upon
b. if one of the spouse seeks to adopt the adopting parents accruing at a time when
his/her illegitimate child provided that adopting parents had no actual or physically
other spouse has signified his/her custody over the adopted child. Retroactive
consent affect may perhaps be given to the granting of
the petition for adoption where such is

essential to permit the accrual of some benefit 4. Succession rights shall revert to its status
or advantage in favor of the adopted child. In prior to adoption, but only as of the date
the instant case, however, to hold that of judgment of judicial rescission. Vested
parental authority had been retroactively rights acquired prior to judicial rescission
lodged in the adopting parents so as to shall be respected.
burden them with liability for a tortious act
that they could not have foreseen and which R.A. 8043: Inter-Country Adoption
they could not have prevented would be unfair Act of 1995
and unconscionable.
INTER-COUNTRY ADOPTION refers to the
EFFECTS OF ADOPTION: socio-legal process of adopting a Filipino child
by a foreigner or a Filipino citizen permanently
1. Parental Authority: residing abroad where the petition is filed, the
All legal ties between biological parents supervised trial custody is undertaken, and
and adoptee are severed, and the same the decree of adoption is issued outside the
shall be vested on the adopter, except if Philippines.
the biological parent is the spouse of the
adopter. WHO MAY BE ADOPTED:
2. Legitimacy: Only a legally-free child may be the subject

The adoptee shall be considered legitimate of inter-country adoption.
son/daughter of the adopter for all intents
and purposes. A legally-free child is one who has been
voluntarily or involuntarily committed to the
3. Succession: DSWD of the Philippines, in accordance with
Adopter and adoptee shall have reciprocal the Child and Youth Welfare Code.
rights of succession without distinction
from legitimate filiation, in legal and No child shall be matched to a foreign
intestate succession. If adoptee and adoptive family unless it is satisfactorily
his/her biological parents had left a will, shown that the child cannot be adopted
the law on testamentary succession shall locally.
govern.
WHO MAY ADOPT:
RESCISSION OF ADOPTION:
Any foreign national or a Filipino citizen
Adoption, being in the best interest of the permanently residing abroad who has the
child, shall not be subject to rescission by the qualifications and none of the disqualifications
adopter(s). under the Act may file an application if
he/she:
Adopted may request for rescission based on
the ff grounds: 1. Is least 27 years of age and at least 16
1. repeated physical and verbal years older than the child to be
maltreatment adopted, at the time of application
2. attempt on life of adoptee unless the adopter is the parent by
3. sexual assault or violence nature of the child to be adopted or the
4. abandonment and failure to comply spouse of such parent
with parental obligations 2. If married, his/her spouse must jointly
file for the adoption
However, the adopter(s) may disinherit the 3. Has the capacity to act and assume all
adopted based on causes ias enumerated in rights and responsibilities of parental
Art. 919 of the NCC. authority under his national laws, and
has undergone the appropriate
EFFECTS OF RESCISSION: counseling from an accredited
counselor in his/her country
1. The parental authority of the adoptee's 4. Has not been convicted of a crime
biological parents, if known, OR the legal involving moral turpitude
custody of the DSWD shall be restored if 5. Is eligible to adopt under his/her
the adoptee is still a minor or national law
incapacitated. 6. Is in a position to provide the proper
2. The reciprocal rights and obligations of the care and support and to give the
adopters and the adoptee to each other necessary moral values and example to
shall be extinguished. all his children, including the child to
3. The court shall order the Civil Registrar to be adopted
cancel the amended certificate of birth of 7. Agrees to uphold the basic rights of the
the adoptee and restore his/her original child as embodied under Philippine
birth certificate. laws, the U.N. Convention on the

Rights of the Child, and to abide by the WHO ARE OBLIGED TO SUPPORT
rules and regulations issued to EACH OTHER:
implement the provisions of this Act 1. The spouses;
8. Comes from a country with whom the 2. Legitimate ascendants and descendants;
Philippines has diplomatic relations and 3. Parents and their legitimate children and
whose government maintains a the legitimate and illegitimate children of
similarly authorized and accredited the latter;
agency and that adoption is allowed 4. Parents and their illegitimate children and
under his/her national laws the legitimate and illegitimate children of
the latter; and
INTER-COUNTRY ADOPTION BOARD: 5. Legitimate brothers and sisters, whether
of full or half-blood.
 Acts as the central authority in matters
relating to inter-country adoption ORDER OF SUPPORT
 Ensures that all possibilities for adoption of (IF 2 OR MORE ARE TO GIVE SUPPORT):
the child under the Family Code have been 1. Spouses
exhausted and that inter-country adoption 2. Descendants, nearest in degree
is in the best interest of the child. 3. Ascendants, nearest in degree
4. Brothers and Sisters
TRIAL CUSTODY:
[NOTE: When two or more are obliged to give
 The trial custody shall be for a period of 6 support, the payment shall be divided
months from the time of placement. between them in proportion to their
 It starts upon actual physical transfer of resources.]
the child to the applicant who, as actual
custodian, shall exercise substitute
parental authority over the person of the XIII. PARENTAL AUTHORITY
child
 The adopting parents shall submit to the PARENTAL AUTHORITY
governmental agency or the authorized (PATRIA POTESTAS):
and accredited agency, which shall in turn The mass of rights and obligations which
transmit a copy to the Board, a progress parents have in relation to the person and
report of the child's adjustment. The property of their children until their
progress report shall be taken into emancipation, and even after this under
consideration in deciding whether or not to certain circumstances (Manresa).
issue the decree of adoption.
PARENTAL AUTHORITY INCLUDES:
1. The caring for and rearing of children for
XII. SUPPORT civic consciousness and efficiency;
2. The development of the moral, mental and
SUPPORT consists of everything physical character and well-being of said
indispensable for sustenance, dwelling, children
clothing, medical attendance, education and
transportation, in keeping with the financial RULES AS TO THE EXERCISE OF
capacity of the family. PARENTAL AUTHORITY:
1. The father and the mother shall jointly
KINDS OF SUPPORT: exercise parental authority over the
1. Legal – that which is required to be given persons of their common children. In
by law case of disagreement, the father's
2. Judicial – that which is required to be decision shall prevail, unless there is a
given by court order whether pendent elite judicial order to the contrary (Art.211)
or in a final judgment 2. If the child is illegitimate, parental
3. Voluntary or Conventional – by authority is with the mother.
agreement
CHARACTERISTICS OF PARENTAL
AUTHORITY:
CHARACTERISTICS OF SUPPORT 1. It is a natural right and duty of the
(PREVIW): parents (Art. 209)
1. Personal 2. It cannot be renounced, transferred or
2. Intransmissible waived, except in cases authorized by
3. Not subject to waiver or compensation law (Art 210)
with regard to future support 3. It is jointly exercised by the father and
4. Exempt from attachment or execution the mother (Art. 211)
5. Reciprocal on the part of those who are by 4. It is purely personal and cannot be
law bound to support each other exercised through agents
6. Variable 5. It is temporary

minor are subsidiarily liable for said

PARENTAL PREFERENCE RULE: acts and omissions of the minor.
The natural parents, who are of good
character and who can reasonably provide for
the child, are ordinarily entitled to custody as Substitute Special Parental Authority
against all persons. Parental
Authority
WHO EXERCISES AUTHORITY IN CASES
OF DEATH, ABSENCE, REMARRIAGE, OR It is It is exercised concurrently
SEPARATION OF PARENTS: exercised in with the parental authority
case of of the parents and rests on
 In case one parent is absent or already death, the theory that while the
dead, the present or surviving parent absence, or child is in the custody of the
 Remarriage shall not affect the in case of person exercising special
parental authority over the children unsuitability parental authority, the
 In case of separation of parents, the of parents. parents temporarily
parent designated by the court. relinquish parental authority
 Innocent spouse gets custody of minor over the child to the latter.
children.
 The court shall take into account all
St. Mary’s Academy v. Carpitanos
relevant considerations, especially the
choice of the child over seven years of 376 SCRA 473 (2002)
age, unless the parent chosen is unfit. The special parental authority and
responsibility applies to all authorized
activities, whether inside or outside the
TENDER YEARS PRESUMPTION:
NO child under 7 years of age shall be premises of the school, entity or institution.
separated from the mother, unless the court
EFFECTS OF PARENTAL AUTHORITY UPON
finds compelling reasons to order otherwise.
Examples of compelling reasons are: THE PROPERTY OF THE CHILD:
o When the mother is insane;  The Father and Mother shall jointly
o with a communicable disease that exercise legal guardianship over the
property of the minor child without court
might endanger the life or health of the
child; appointment
o or is maltreating the child.  In case of disagreement, the father’s
decision shall prevail, unless there is
[NOTE: Prostitution or infidelity to husband
does not make a mother unfit as parent.] judicial order to the contrary
 If the market value of the property or the
SUBSTITUTE PARENTAL AUTHORITY annual income of the child exceeds
P50,000, the parent is required to furnish
EXERCISED BY (IN ORDER):
1. The surviving grandparent a bond of not less than 10% of the value
2. Oldest brother or sister, over 21 years of the child’s property or income
old, unless unfit or unqualified.
GROUNDS FOR SUSPENSION OF
3. Child’s actual custodian, over 21 years
PARENTAL AUTHORITY (CLEBC):
old, unless unfit or unqualified
1. Conviction of parent for crime without civil
SPECIAL PARENTAL AUTHORITY interdiction
EXERCISED BY: 2. Treats child with excessive harassment
1. School, its administrators and and cruelty
teachers, or 3. Gives corrupting orders, counsel or
2. The individual, entity or institution example
engaged in child care. 4. Compels child to beg
5. Subjects or allows acts of lasciviousness
LIABILITY OF THOSE EXERCISING
SPECIAL PARENTAL AUTHORITY OVER PARENTAL AUTHORITY TERMINATES:
THE CHILD: 1. Upon death of parents
1. They are principally and solidarily liable 2. Upon death of child
for damages caused by the acts or 3. Upon emancipation of child
missions of the child while under their 4. If the parents exercising parental authority
supervision, instruction or custody. has subjected the child or allowed him to
HOWEVER, this liability is subject to be subjected to sexual abuse
the defense that the person exercising
parental authority exercised proper
diligence.
2. The parents and judicial guardians of RIGHTS OF PARENTS UPON THEIR
the minor or those exercising CHILDREN:
substitute parental authority over the  To have them in their custody

 To represent them in all matters  cooperate with the family in matters

affecting their interests for his own good
 Demand respect and obedience and
impose discipline on them [ART.4, PD603]
 Administer their property and income  strive to live an upright and virtuous
to support the child and the family life
 To give or withhold consent on  love, obey, respect his parents and
marriage, pre-nuptial, donation propter cooperate with them in strengthening
nuptias, adoption, and employment the family
 To disinherit them for just cause  extend his love to his brothers and
sisters
DUTIES OF PARENTS UPON THEIR  exert his utmost to develop his
CHILDREN: potentials
 Support and upbringing in accordance
to their means
 Educate, instruct, and provide them XIV. FUNERALS
with moral and spiritual guidance, and
love and understanding GENERAL GUIDELINES:
 Defend them against unlawful
aggression 1. Duty and right to make arrangement in
 Answer for damages caused by their funerals in accordance with Art. 199 of FC:
fault or negligence, and for civil liability a. Spouse
for crimes committed by them b. Descendants in nearest degree
 Give their lawful inheritance c. Ascendants in nearest degree
d. Brothers and sisters
RIGHTS OF CHILDREN: 2. The funeral shall be in keeping with the
social position of the deceased
[ART. 356, NCC] 3. The funeral shall be in accordance with the
 parental care expressed wishes of the deceased
 receive at least elementary education a. in the absence of expressed wishes,
 be given moral and civil training by his religious beliefs or affiliation
parents or guardian shall determine
 live in an atmosphere conducive to his b. in case of doubt, the persons in Art.
physical, moral, and intellectual 199 of FC shall decide
development 4. Any person who disrespects the dead or
allows the same shall be liable for
[ART.3, PD603] damages
 to be born well
 right to a wholesome family life
 right to a well-rounded development ***
 right to a balanced diet, adequate
clothing, shelter, proper medical
attention, and all basic physical
requirements of a healthy life
 raised in an atmosphere of morality
and rectitude
 education commensurate to his
abilities
 full opportunities for a safe and
wholesome recreation
 protection against exploitation and
other bad influences
 right to the care, assistance and
protection of the State
 right to an efficient and honest
government
 right to grow up as a free individual
DUTIES OF CHILDREN:
[ART.357, NCC]
 obey and honor his parents or guardian
 respect old relatives and persons
holding substitute parental authority
 exert his utmost for his education and
training

PROPERTY CIVIL LAW
Property
TABLE OF CONTENTS
I. Classification 36
II. Ownership 41
III. Accession 42
IV. Quieting of Title 48
V. Ruinous Buildings and Tress in Danger of Falling 49
VI. Co-Ownership 49
VII. Condominium Law (Act. No. 4726) 55
VIII. Possession 57
IX. Usufruct 63
X. Easements 65
XI. Legal Easements 70
XII. Voluntary Easements 77
XIII. Nuisance 78
XIV. Registry of Property 80
XV. Different Modes of Acquiring Ownership 80
XVI. Prescription 81
XVII. Tradition 82
XVIII. Lease 83
XIX. Donation 89

PROPERTY CIVIL LAW
3. immovables by destination- (4) (5)

PROPERTY (6) (9) and object to remain at a fixed
place on a river, lake, or coast
4. immovables by analogy or by law-
I. CLASSIFICATION (10)
CLASSIFICATION as to mobility Art. 416. Personal Property

Art. 414 (1) Immovable or real property (Movables):
(2) Movable or personal property FLONTS
(1)Those movables susceptible of
Art. 415. Immovables : MADAM’S C appropriation Not included in the
FLAT preceding article;
1. Land, buildings, roads, (2)Real property which by law is
constructions adhered to soil; considered as personal property;
2. Trees, plants, growing fruits-- (3)Forces of nature which are brought
attached to land/form integral under control by science;
part of immovable (4) all things which can be transported
3. Everything attached to from place to place without impairment
immovable in fixed manner-- of the real property to which they
cannot be separated without are fixed.
breaking / deterioration
4. Statues, reliefs, paintings,  Machinery which is movable in
objects for ornamentation in nature only becomes immobilized
buildings / on lands when placed in a plant by the owner
a. by the owner of of a property or plant, NOT when
immovable placed by a tenant, usufructuary etc.
b. manner reveals intention unless acting as an agent of the
to attach owner.
permanently (Davao Sawmill v. Castillo, 1935)
5. Machinery, receptacles,  ….a building is an immovable
instruments, implements property, irrespective of whether or
intended by owner for an not said structure and the land on
industry; works which which it is adhered belong to the
may be carried on in same owner. (Lopez v. Orosa)
building or on a piece of land,  Since only personal properties could
and tend directly to meet the be the subject of a chattel mortgage,
needs of industry or works the execution and registration of the
6. (6) Animal houses, pigeon- chattel mortgage and the foreclosure
houses, beehives, fish ponds, of the house are null and void.
breeding places in case (Associated Insurance & Surety
owner placed / preserves Co. v. Iya 1958 )
them with intention to be  It is undeniable that parties to a
permanently attached to land, contract may treat as personal
AND form permanent part of it property that which by nature would
--animals are included be real property; and for purposes of
7. Fertilizer actually used on a piece taxation, what is naturally personal
of land property may be classed as real
8. Mines, quarries, slag dumps, property. If the properties subject to
while matter their matter forms the chattel mortgage are indeed not
part of the bed, and waters personal properties, the mortgage
running or stagnant would be ineffective as against third
9. Docks and structures which, parties, but this is for the courts to
though floating, are intended by determine and not by the register of
their nature and object to remain deeds. (Standard Oil vs. Jaramillo
at a fixed place on a river, lake, 1923)
or coast;  Re: building under chattel mortgage-
10. Contracts for public works, and - separate treatment by the parties
servitudes and other real of a building from the land on which
rights over immovable it stands does not change the
property. immovable character. An inscription
of a deed of sale of real property in
Classification: the chattel mortgage registry cannot
1. immovables by nature - (1) and (8) be given the legal effect of an
2. immovables by incorporation- (2) (3) inscription in the registry of real
(7)

PROPERTY CIVIL LAW
property. (Leung Yee v. Strong mode and title. alone.

Machinery, 1981) (5) Not
 Where chattel mortgage is (5) Extinguished by extinguished
constituted on machinery the loss or by the loss or
permanently attached to the ground, destruction of destruction of
machinery is personal property and the thing. the thing.
mortgage is not null and void, (6) Gives rise to real (6) Produces
regardless of who owns the land. It actions against only personal
is undeniable that the parties to a 3rd persons actions against
contract may by agreement treat as definite
personal property that which by its debtor.
nature would be real property, as
long as no interest of third parties
may be prejudiced thereby. (Makati Classification of Movables
Leasing and Finance Corp v.
Wearever Textile Mills 1983) (a) Consumables – includes those
movables which cannot be used in a
Differences between Real Rights and manner appropriate to their nature
Personal Rights without their being consumed
(b) Non-consumable- includes all
Kinds of rights considered as property others
(a) Real (jus in re)—power belonging to
a person over a specific thing. It Classification According to
gives direct and immediate juridical Ownership
power over a thing susceptible of
being exercised against a a) Public Dominion 420
determinate person and the whole i. intended for public use
world. ii. intended for public service of state,
(b) Right of obligation or Personal (jus provinces, cities & municipalities
ad rem)—rights belonging to one Characteristics:
person to demand of another as a i. outside the commerce of men
definite passive subject, the ii. cannot be acquired through
fulfillment of a prestation to give, to prescription
do, or not to do. iii. not subject to attachment &
execution
Real rights arises from iv. cannot be burdened by voluntary
(OPLUMEPARP) easement
1. Ownership
2. Possession * Art. 424. Property for public use, in
3. Lease the provinces, cities, and municipalities,
4. Usufruct consist of: (RSS FW P3)
5. Mortgage Roads, Streets, Squares, Fountains,
6. Easement Public Waters, Promenades, Public
7. Pledge Works for public service paid for by the
8. Antichresis local government
9. Redemption All other property possessed by any of
10. Preemption them is patrimonial.
Real Rights Personal Rights b) Private Ownership – 421

(1) One definite (1) There is a i. patrimonial property of state,
active subject definite active provinces, cities, municipalities
and the rest of and passive -exist for attaining economic ends
the world as object. of state
passive (2) Object is an -property of public dominion when
(2) Object is a intangible no longer intended for public
corporeal thing. thing. use/service – declared patrimonial
(3) Real right affects (3) Personal
the thing affects the ii. property belonging to private
directly. thing directly persons – individually or
through the collectively
prestation of
the debtor.
(4) The creation of (4) Creation of
the juridical the juridical
relation is by title is by title

PROPERTY CIVIL LAW
Cases  The sale to private parties of a public

 Churches and other consecrated road which has been validly closed
objects are outside the commerce of by the city government is valid. Basis
man (Barlin vs. Ramirez, 1907) : Art 422 CC (Cebu Oxygen and
 Reclaimed land is public property. In Acetylene v. Bercilles, 1975)
case of gradual erosion by the ebb  The attachment of the municipal
and flow of the tide, private property trucks, police cars, police station and
may become property of the public market stalls is void because the
domain, where it appears that the properties levied upon are exempt
owner abandoned it or permitted it from execution. Property for public
to be destroyed. When they stay in use of the municipality is not within
that condition until reclaimed by the commerce of man so long as it is
filling in done by the government, used by the public. (Vda. De
they continue to be government Tantoco vs. Municipal Council of
property after reclaiming. Immediate Iloilo)
possession by the former owner does  Under the law on Municipal
not confer on him ownership of the Corporations, however, to be
lots, because, as they were considered public property, it is
converted into property of the public enough that property be held and
domain, no private person could devoted for governmental purposes.
acquire title except in the form and (Province of Zamboanga del
manner established by law. Norte v. City of Zamboanga,
(Government of the Philippine 1967)
Islands v. Cabangis)
ACTIONS FOR THE RECOVERY OF IMMOVABLE

PROPERTY
PLENARY ACTION ACTION TO RECOVER
FORCIBLE ENTRY OR TO RECOVER POSSESSION BASED ON
UNLAWFUL POSSESSION OWNERSHIP
DETAINER (ACCION (ACCION
PUBLICIANA) REINVINDICATORIA)
FORCIBLE ENTRY A civil proceeding to An action to seek the
UNLAWFUL ENTRY recover the better recovery of ownership,
right of possession necessarily including the
Possession unlawful except in cases of jus utendi and jus fruendi.
from time of entry. forcible
Prior physical entry/unlawful
possession is detainer.
INDISPENSABLE. Also used to refer to
Decision here is res an ejectment suit
judicata only as to filed after the
possession. expiration of 1 year
PRESCRIPTIVE PERIOD from the unlawful
1 year period starts withholding of
from last demand to possession of the
vacate. realty.
Possession was lawful
at first but later
became illegal, i.e.
defendant withholds
possession after
expiration of his right.
Prior physical
possession is NOT
REQUIRED.

PROPERTY CIVIL LAW
WHEN 1. When
APPLICABLE dispossession is
by any means
other than those
mentioned in
SEC 1 RULE 70
RoC
2. When, although
any of the
special
circumstances is
present, where
the 1 year
prescriptive
period for
bringing an
action for forcible
entry or unlawful
detainer has
expired
ISSUE Physical/material Possession de jure Ownership, recovery of the

possession (possession of realty dominion over the property
de facto) (i.e. NOT civil independent of the as owner.
possession or title and restitution If the issue of possession
possession de jure, of possession. has already been decided,
which arises from the This action is distinct this is the only action that
ownership or is one of and different from can be filed.
the attributes of an action for
ownership), of which a recovery of title or
person 1) has been ownership.
deprived or 2) against A judgment
whom it has been rendered here is
withheld by any of the conclusive only as to
means/circumstances the question of
mentioned in RULE 70 possession, but not
as to the question of
ownership.
WHO MAY 1. A person deprived An owner who is Legal owner or one with
INSTITUTE of the possession of dispossessed by the better right over the
any land or building means other than property.
by force, those mentioned in In an action for
intimidation, threat, RULE 70 RoC, or reconveyance, what is
strategy, or stealth when the possession sought is the transfer of
(forcible entry under of land is due to the property which has
RULE 70) ; tolerance of the been wrongfully/
2. A landlord, vendor, owner. erroneously registered in
vendee, or other It is not necessary another person’s name, to:
person against to wait until the 1) its rightful and legal
whom the expiration of 1 year owner; or 2) to one with
possession of any before the better right
land or building is commencement of
unlawfully withheld action.
after the expiration/ It can also be filed
termination of the after the expiration
right to hold of the 1 year period
possession by virtue if no action for
of any contract, forcible entry or
express or implied unlawful detainer
(unlawful detainer); has been filed during
or that time, otherwise,
3. The legal barred.
representatives/
assigns of any such
landlord, vendor,

PROPERTY CIVIL LAW
vendee or other
person
WHAT HAS 1. Prior possession de For an action to
TO BE facto reconveyance to prosper,
ALLEGED 2. Undue deprivation the property should not
thereof have passed into the hands
When the complaint of an innocent purchaser
fails to aver acts for value.
constitutive of forcible
entry/unlawful detainer
(how he was
dispossessed), the
remedy should be
either accion publiciana
or accion
reinvindicatoria.
In an ejectment suit,
issue of ownership can
be passed upon by the
court only by
determining the issue
of possession de facto.
An action for ejectment
is merely a quieting
process. If plaintiff has
in his favor priority in
time, he has the
security that entitles
him to remain in the
property (even against
the owner himself) until
he is lawfully ejected by
a person having a
better right by an
accion publiciana or
accion reinvindicatoria.
WHERE MTC RTC
FILED Summary In nature— Prescriptive Periods:
these cases involve a 1. 4 years—if based on
disturbance of social fraud from date of
order which must be issuance of
abated as promptly as certificate of title
possible without any over property
undue reliance on 2. 10 years—if based
technical and on implied or
procedural rules constructive trust
3. Imprescriptible—
when plaintiff is in
possession of
property
4. 30 years (without
prejudice to what is
established for the
acquisition of
ownership and other
real rights by
prescription-
ART1141)—if real
actions over
immovables

PROPERTY CIVIL LAW
II. OWNERSHIP owners of such tenements. (Lunod v.

Meneses)
Art. 427. Ownership may be exercised 10. Right to Receive Just Compensation
over things or rights. in case of Expropriation (435)
exception 436: when any property is
Ownership is subject to restrictions condemned or seized by competent
imposed by: authority in the interest of health, safety
1. LAW and or security
2. RIGHTS of others 11. Right to Space and Subsoil
The right of the owner extends to the
Attributes of Ownership (UFADVPA) space and subsoil as far as necessary for
1. Jus possidendi- right to possess his practical interests or to the point
2. Jus Utendi (right to use)—right to where it is possible to assert his
enjoy by receiving the thing that dominion and there is the possibility of
it produces. obtaining some enjoyment or benefit.
Beyond these limits, he would have no
legal interests.
3. Jus abutendi—right to enjoy by 12. Right to Hidden Treasure (if found
consuming the thing by its use on his property)
4. Jus Disponendi—the right to a) hidden and unknown movables
dispose or encumber, transform, consist of money or precious
and even destroy the thing objects
owned. b) owner is unknown
5. Jus Fruendi – right to receive c) If treasure is found by a stranger
fruits by chance –½ belongs to finder;
6. Jus vindicandi—right to exclude the finder must not be trespasser
from the possession of the thing be entitled to a share.
owned by any other person to  Discovery by chance
whom the ownership has not When there is no purpose or intent
transmitted such thing, by the to look for the treasure.
proper action for restitution, with 13. Right to accession
the fruits, accessions, and 14. Right to recovery or possession/
indemnification for damages. ownership
7. jus accessionis- right to the Actions for possession:
accessories 1. movable – replevin (return of a
movable)
Other specific rights: (HARJEES) 2. immovable –
8. Right to Exclude: Doctrine of Self- a) forcible entry
Help (429) b) unlawful detainer
Elements: c) accion publiciana
a) Person exercising rights is owner d) accion reinvindicatoria
or lawful possessor e) Writ of Possession -- the original
b) There is actual or threatened registered owner is entitled to a
unlawful physical invasion of his writ of possession against the
property (not available to parties who appear and answer in
squatters) the land registration proceedings
c) Use force as may be reasonably and against all those who, having
necessary to repel or prevent it been served with process, do not
-Available only when possession appear or answer.
has not yet been lost, if already f) Writ of injunction
lost – resort to judicial process  May be used to prevent or
-May be exercised by 3rd person – restrain acts of trespass or illegal
negotiorum gestio interference by others of his
- Art. 431. cannot make use possession of the property.
thereof in such manner as to injure the
rights of a third person. Requisites in an action to recover
9. Right to Enclose or Fence without (a) Identity of the property
detriment to servitudes constituted (b) Strength of plaintiff’s title/ Better
thereon (430) Title
A person cannot enclose his tenement
and construct a fish pond that will Limitation of Real Right of
obstruct the natural flow of waters from Ownership
the upper tenements to the injury of the (1) For the benefit of the state and for
public interest (Police power,
eminent domain, taxation)

PROPERTY CIVIL LAW
(i) Expropriation for public use III. ACCESSION

(ii) Military requisitions
(iii) Zonification laws
(iv) Public or government monopolies Art. 440. The ownership of property
(v) Law on water and mines gives the right by accession to
(vi) Public health and safety everything which is produced thereby, or
(vii) Public easements which is incorporated or attached
thereto, either naturally or artificially.
(2) Legal servitudes and Voluntary
Servitudes
(3) Limitations imposed by party General Principles of Accession
transmitting property (1) Accessory follows the principal
(i) Either by contract or last will or (2) No unjust enrichment (Art. 443)
donations (3) All works, sowing, and planting
(ii) Stipulation on inalienability are presumed made by owner & at
his expense, unless otherwise proved
(4) True Owner Must Resort to Judicial (Art. 446)
Process (4) Accessory incorporated to
(5) It is unlawful to exercise the right of principal such that it cannot be
ownership in such a manner as to have separated without injury to work
no other effect than to injure a third constructed or destruction to
person without benefit to the owner. plantings or construction of works.
(5) Bad faith involves liability for
(a) Act in State of Necessity damages
 The law permits the injury or (6) Bad faith of one party neutralizes
destruction of things belonging to bad faith of the other (Art. 453).
others provided this is necessary (7) Ownership of fruits belong to the
to avert a greater danger or principal thing; Exceptions: (PULA)
dangers. (i) possession in good faith is
 Different from concept of self- entitled to fruits
help; the purpose is to protect (ii) usufructuary is entitled to fruits
the actor himself or another (iii) lessee is entitled to fruits
person at the expense of the (iv) antichretic creditor is entitled to
owner of the property who has no fruits
part in the state of necessity.
Kinds of Accession
(b) Liability of Proprietors under (1) Accession discreta – the right
Article 2191, for damagegs pertaining to the owner of a thing
caused by exposion of machinery, over everything produced thereby:
excessive smoke, falling of trees, (a) Natural fruits, or spontaneous
emanations from canals products of the soil, and the
(c) Fortified places or Fortresses- young and other products of
must comply with special laws animals (Art. 442)
and regulations (b) Industrial fruits, or those
(d) Easement of Aqueduct- must produced by lands of any kinds
observe proper distances and through cultivation or labor (Art.
prevent damage to neighboring 442)
tenements (c) Civil fruits, or rents of buildings,
(e) Planting of Trees the price of leases of and other
(f) Easements property and the amount of
(g) Lateral and Sub-adjacent perpetual or life annuities or
Support other similar income (Art. 442)
- Cannot commit crime in the  A dividend, whether in cash or

exercise of ownership (People stock, is income or fruit and
vs Segovia, 1958) consequently should go to the
- Can file action for recovery of usufructuary, rather than the
possession even if one has never owner of the shares of stock.
possessed the land; action is Dividend is declared only out of
plenary action for recovery of the profits of a corporation and
possession (De La Paz vs. not out of its capital. (Bachrach
Panis, 1995) vs. Seifert).

PROPERTY CIVIL LAW
 A bonus paid by the mortgage- Right of owner of materials (OM)

debtor to another who had
1. Right to be indemnified or paid of
mortgaged his land to secure the
value of property by owner of
payment of the debtor’s
land
obligation to a bank is not a civil
2. Right to remove materials if he
fruit of the mortgaged property.
can do so w/o injury to work
It is not income delivered from
constructed if owner has not paid
the property but a compensation
3. Right to damages and demolition
granted for the risk assumed by
even if with injury to work if
the owner of the property.
owner of land is in bad faith
(Bachrach vs. Talisay-Silay)
BUILDING, PLANTING, SOWING

(2) Accession Continua – the right
pertaining to the owner of a thing
a) BPS / Land-owner +
over everything that is incorporated
Owner of Materials 447
or attached thereto, either naturally
or artificially.
- Land-owner GF: took
(a) With regard to immovable materials with no
property knowledge that it
(a.1) Accession industrial belonged to a 3rd
(BPS) person
- Land-owner BF: took
(i) Building,
materials knowing fully
(ii) Planting, or
well that it belonged to
(iii) Sowing (Arts. 445-456)
a 3rd person
- Owner of Materials GF:
(a.2) Accession natural (FACA) demanded payment /
no idea of taking
(i) Alluvium
- Owner of Materials BF:
(ii) Avulsion
regardless
(iii) Change in the course of
river
(iv)Formation of islands
(b) With regard to movable property

(ACS)
(b.1) Adjunction or
conjunction
(i) inclusio or engraftment
(ii) soldadura or attachment
(a) ferruminatio – objects
are of the same metal
(b) plumbatura – objects
are diff. metals
(iii) tejido or weaving
(iv)pintura or painting
(v) escritura or writing
(b.2) Commixtion or confusion
(b.3) Specification
Accession Industrial
 Art. 446 establishes 2 disputable
presumptions regarding BPS:
(a) The works etc. were made by the
owner
(b) They were made at the owner’s
expense
Exception: When contrary is proven

PROPERTY CIVIL LAW
Land-owner / BPS (by himself or thru Owner of Materials

another)
GF: pay value of materials and own the GF: right to be paid value of materials
thing built May remove materials if can be separated
without injury (no accession) but accession
prevails (hence, most likely only get paid)
BF: pay value of materials + damages
GF: right to be paid value of materials +
indemnity or remove materials even with
damage + indemnity
GF: pay value of materials regardless of BF: right to be paid value of materials
bf/gf of OM Another view: 449 by analogy, loses right
Another view: 449 by analogy, no to materials, no reimbursement
reimbursement
BF: (both considered good faith) BF: (both considered good faith)
a) BPS / Owner of Materials + Land-owner
- Land-owner GF: no knowledge of illegal BPS

- Land-owner BF: has knowledge of illegal BPS and does not oppose it
453 (2)
- BPS/OM GF: s/he does not know that he built on another’s land
- BPS/OM BF: has knowledge that he had no right to build, plant or sow
Land-owner BPS / Owner of Materials
GF: options GF
1. Appropriate works, sowing or planting
+ pay indemnity
2. Oblige BP to pay price of land (or pay
rent if land value > building and trees)
or Sower to pay rent
Rent – fixed by agreement of parties; if
not, by court 448
GF: options BF: loses what is built, planted or sown,

1. Appropriate without indemnity 449 with no right to indemnity 449
2. Compel removal without indemnity at Still entitled to reimbursement for
BPS’s expense 450 necessary expenses of preservation of the
3. Compel BP to pay price of land (no land 452
conditions) and Sower, the proper rent Whichever option chosen, must pay LO
450 damages 451
Whichever option chosen, entitled to
receive damages 451
BF: 447 by analogy 454 GF: options (447 by analogy – 454)

Pay value of materials + damages 1. Remove works, sowing or planting even
with damage
2. Force payment of indemnity
BF: (both considered GF) BF: (both considered GF) 453 (1)
b) BPS + Land-owner + Owner of Materials 455

PROPERTY CIVIL LAW
BPS OM
Land-owner
GF (GF) GF
GF
LO appropriates and pays indemnity: OM can proceed against LO only after BPS
refuses/cannot pay, OM cannot remove
LO sells land to BPS: OM can only proceed against BPS
GF BF (GF) GF
LO compels demolition: OM cannot claim from LO, BPS solely liable
GF (GF) GF
BF
BPS removes even with damage: OM can only go after BPS

BPS forces LO to pay indemnity: OM can’t demand removal/return but OM can proceed
against BPS and subsidiarily, the LO
BF BF (GF)
GF
Similar to GF-GF-(GF)-GF

GF GF (BF)
GF
LO sells land to BPS: OM can either ask BPS for indemnity + damages or remove
material even with damage
GF BF (BF)
GF
LO compels demolition: OM can compel return of material by removing even with

damage + damages or OM can ask for indemnity + damages
LO appropriates: OM can’t remove because right of removal applies only to BPS in BF,
LO can’t be prejudiced; OM only entitled to the value of materials (indemnity) +
damages from LO
LO sells land to BPS: OM can compel removal (straightforward 447) or ask BPS for
indemnity + damages
BF GF (BF)
GF
BPS removes even with damage: OM can either compel BPS to pay indemnity or to
return materials, in both cases + damages
BPS forces LO payment of indemnity: OM can’t demand removal/return but OM can
proceed against BPS and subsidiarily, the LO
BF BF (BF)
GF
Similar to GF-GF-(BF)-GF
LO sells land to BPS: OM can either ask BPS for indemnity + damages or remove
material even with damage

PROPERTY CIVIL LAW
Cases: his and he is ignorant of any defect or

flaw in his title. And as good faith is
A forced co-ownership occurs when the
presumed, the LO has the burden of
BPS has acted in good faith. Owner of the
proving bad faith on the part of the BPS.
land ihas the right of retention (to pay)
(Pleasantville Dev’t. Corp. v CA, 1996)
because his right is older and because, by
the principle of accession, he is entitled to
After the BPS had refused to restore the
the ownership of the accessory thing.
land to the LO, to the extent that the
(Bernardo vs. Baticlan)
latter even had to resort to the present
Since the option to remove or demolish action to recover his property, the LO
improvement is given to the LO and it is could no longer be regarded as having
limited to paying for the improvement or impliedly assented or conformed to the
selling his land to the BPS, he cannot improvements thereafter made by
refuse to exercise his right of choice and appellant on the premises. (Felices v.
compel the builder to remove or demolish Iriola)
the improvement. He is entitled to such
removal only when after choosing to sell (2) Accession in Natural
his land, the other party fails to pay for
(i) Alluvium 457 – the accretion
the same. (Ignacio vs Hilario)
which lands adjoining the banks or
An order by a court compelling a builder in rivers, lakes, creeks or torrents
good faith to remove is building from land gradually receive from the
belonging to another who chooses neither
Requisites of alluvium: (CANG)
to pay for such building nor sell the land is
null and void for being offensive to Art. (a) The accretion must be gradual
448. (Sarmiento v. Agana)
(b) The cause must be the
While a possessor in good faith may retain current of the water
the property until he is reimbursed for
(c) The land where the
necessary and useful expenses, all the
accretion takes place must be
fruits he receives from the moment his
adjacent to the banks
good faith ceases must be deferred or
paid by him to the LO. He may, however, (d) must be natural
secure the reimbursement of his expenses
*riparian owner – owner of the land
by using the fruits to pay it off (deduct the
fronting such riverbanks
value of the fruits he receives from the
time his good faith ceases from the The alluvium, though automatically owned
reimbursement due him). (Ortiz vs by the riparian owner from the moment
Kayanan) the soil deposit can be seen, is not
automatically registered property, since it
A BPS in good faith does not lose his
is subject to acquisition through
rights under Art. 448 merely because of
prescription by 3rd persons. (Grande vs
the fact that some years after acquiring
CA)
the property in good faith, helearned
about and aptly recognized the right of (ii) Avulsion 459– takes place
the LO to a portion of the land occupied whenever the current of a river,
by the building. The supervening lake, creek or torrent segregates
awareness does not prejudice its right to from an estate on its bank a known
claim the status of a builder in good faith. portion of land and transfers it to
(Tecnogas Phil. Manufacturing Corp. another estate
vs CA)
Distinguished from Alluvium
The BPS in good faith should not pay
Alluvium Avulsion
rentals to the LO spouses. The spouses,
having opted to appropriate the 1. Deposit of soil is 1. Deposit of soil is
improvement on the lot, have to gradual sudden or abrupt
reimburse the BPS of the cost of
2. Deposit of the 2. The owner of the
construction of the building (in accordance
soil belongs to the property from which
with Art 546). The BPS has the right to
owner of the a part was detached
retain the improvements until he is
property where the retains the
reimbursed. An implied tenancy or
same was deposited ownership thereof
possession in fact is created pending the
(2 yrs)
payment of the corresponding indemnity.
(Pecson v CA) 3. The detached
3. The soil cannot
portion can be
Good faith consists in the belief of the be identified
identified
builder that the land he is building on is

PROPERTY CIVIL LAW
Requisites of Avulsion (SIC) On lakes, and on navigable or

floatable rivers (Art. 464) or non-
(a) The segregation and transfer is
navigable and non-floatable rivers
caused by current of water
(Art. 465).
(b) The segregation and transfer must
be sudden or abrupt
(1) Ownership of islands formed through
(c) The portion of land
alluvion
transported must be known and
identifiable (a) If formed:
(a.1) on the seas within Phil.
jurisdiction
Rights of the riparian owner
(a.2) on lakes, and
 Removal within 2 years
 The former owner preserves his (a.3) on navigable or floatable waters,
ownership of the segregated portion the island belongs to the State
provided he removes (not merely
claims) the same within the period of
2 yrs. (b) If formed in non-navigable and
 Art. 460 applies only to uprooted non-floatable rivers:
trees. If a known portion of land with
(b.1) it belongs to the nearest riparian
trees standing thereon is carried away
owner or owner of the margin or
by the current to another land, Art.
bank nearest to it as he is
459 governs.
considered in the best position to
cultivate and develop the island
(iii) Change of river beds
(b.2) it is divided longitudinally in
– that which takes place when a river halves, if it is in the middle of the
bed is abandoned through the river
natural change in the course of the
waters (Art. 461)
(c) Concept of navigable river
 A navigable river is one which
Requisites for the application of Art.
forms in its ordinary condition by
461:
itself or by uniting with other
(a) There must be a change in waters a continuous highway over
the natural course of the waters of with other waters a continuous
the river. highway over which commerce is
or may be carried on.
(b) The change must be abrupt
Test: A river is navigable if it is used or
or sudden.
susceptible of being used, in its ordinary
condition, as a highway of commerce, that
is, for trade and travel in the usual and
Right of owner of land occupied by
ordinary modes.
new river course
Accession Continua-Movable property:
1. Right to old bed ipso facto in
(1) Adjunction or Conjunction – that
proportion to area lost
which takes place whenever movable
2. Owner of adjoining land to old bed
things belonging to different owners
shall have right to acquire the
are united in such a way that they
same by paying its value – value
cannot be separated without injury,
not to exceed the value of area
thereby forming a single object (Art.
occupied by new bed
466)
3. Formation of island in non-
navigable river Ownership of new object formed by
a) owner of margin nearest to adjunction
islands formed – if nearest to it
Owner of Principal  OP
b) owner of both margins – if
Owner of Accessory  OA
island is in the middle (divided
into halves longitudinally)
(a) union in Good Faith OP acquires
accessory, AND pays OA for its
(iv) Formation of islands
value in uncontroverted state.
either on the seas within the
jurisdiction of the Philippines. (b) union in Bad Faith

PROPERTY CIVIL LAW
-if OA incorporated in BF (b) If PT is in Bad Faith,

1. lose the thing and 1. OM shall appropriate work to
2. indemnify OP for himself
damages Without paying maker OR
-if OP acted in BF 2. demand indemnity for value of
1. OA has right to choose material & damages
-payment of value
-separation (even if BUT If transformed thing is more
destroys principal) valuable than material, owner of
2. OA indemnified material cannot appropriate
(c) If OP or OA made the
incorporation with the knowledge
(3) Commixtion or confusion – that which
and without the objection of the
takes place whenever there is a mixture of
other, their respective rights shall
things solid or liquid belonging to different
be determined as though both
owners, the mixture of solids being called
acted in good faith.
commixtion, while that of liquids,
(d) if involves 3 things Art. 466
confusion (Art. 472).
should be applied in an equitable
manner. The principal should be
determined and distinguished from Rights
the others which would be 1. If both owners are in good faith –
considered the accessories. Each owner shall acquire a right
proportional to the part belonging
TEST to determine principal in
to him (vis-a-vis the value of the
adjunction:
things mixed or confused)
In order of application, the principal is 2. If one owner is in bad faith – he
that: shall lose the thing belonging to
(a) To which the other (accessory) has him plus indemnity for damages
seen united as an ornament or for caused to owner of other thing
its use or perfection (Art. 467)- mixed with his thing
INTENT 3. If both in bad faith no cause of
(a) Of greater value, if they are action against each other
unequal values-VALUE
(a) Of greater volume, if they are of an
equal value (Art. 468)-VOLUME IV. QUIETING OF TITLE
(a) That of greater merits taking into
consideration all the pertinent legal
provision applicable as well as the It is a remedy or form of proceeding
comparative, merits, utility and originating in equity jurisprudence, which
volume of their respective things. has for its purpose an adjudication that a
claim of title or an interest in property,
adverse to that of complainant, is invalid,
(3) Specification – that which takes place so that the complainant and those
whenever a person imparts a new claiming under him may be forever free
form to materials belonging to another from any danger of the hostile claim.
person (Art. 474).
Requisites
Ownership of the new object in (1) There is a cloud on title to real
specification property or any interest to real
property (Art. 476)
Person who made Transformation  PT
Owner of Material  OM (2) Plaintiff has legal or equitable title
to or interest in the subject/real
(a) If PT is in Good Faith, he shall property.
1. appropriate thing transformed (3) Instrument, record, claim,
as his own encumbrance or proceeding must be valid
2. indemnify owner of material and binding on its face but in truth and
in fact invalid, ineffective, voidable or
BUT If material is more precious than unenforceable; contract upon which
transformed thing OM may defendant relies has been extinguished or
1. appropriate new thing to himself terminated, or has prescribed
and indemnify labor OR (4) Plaintiff must return benefits
2. demand indemnity for received from the defendant.
materials

PROPERTY CIVIL LAW
Differences between action to quiet title, action to remove a cloud, and action to
prevent a Cloud
QUIET TITLE REMOVE CLOUD PREVENT CLOUD
Purpose is to put to an end Intended to procure the Removal of a possible
to vexatious troublesome cancellation; delivery; release foundation for a future
litigation over the property of an instrument, encumbrance hostile claim.
involved or claim, which constitutes a
claim in plaintiff’s title, and
which may be used to injure or
to vex him in his enjoyment of
his title.
Remedial action: involving a Preventive action: removes cloud Preventive action: to prevent
present adverse claim which may be used for future a future cloud on the title
actions
Plaintiff asserts his own Declares his own title and also
estate and declares avers he source and nature of
generally that the the defendant’s claim, points
defendant claims some out its defects and prays it be
estate on the land, without declared void
defining it and avers that
the claim is without
foundation and calls on the
defendant to set forth the
nature of his claim for
determination
Filed against people who have Filed against defendant who
claims; claims are more asserts claims based on an invalid
general in nature instrument (but not apparent)
Prescription of action—Imprescriptible which constitutes or casts a

if plaintiff is in possession; if not, cloud, doubt, question or shadow
prescribes within period for filing accion upon the owner’s title or interest
publiciana, accion reivindicatoria. in real property. Clearly, the acts
alleged may be considered
Notes: grounds for an action for forcible
An action for reconveyance: entry but definitely not one for
a) Prescribes in 10 years if the quieting of title. (Titong v. CA)
plaintiff is NOT in possession of
the property and if the action for
reconveyance is based on an
V. RUINOUS BUILDINGS AND
implied or constructive trust. The
point of reference is the date of TREES IN DANGER OF FALLING
registration of the deed or the
date of the issuance of the
certificate of title over the Liability for damages:
property. 1. collapse – engineer, architect or
b) Is IMPRESCRIPTIBLE if the contractor
person claiming to be an owner is 2. collapse resulting from total or
in actual possession of the partial damage; no repair made –
property. Here, the right to seek owner; state may compel him to
reconveyance in effect seeks to demolish or make necessary work
quiet title. (Olviga v. CA) to prevent if from falling
3. if no action – done by
 It is not necessary that the government at expense of owner
vendee has an absolute title. An
equitable title is sufficient to
clothe him with personality to VI. CO-OWNERSHIP
bring an action to quiet title.
(Pingol v. CA)
Art. 484. There is co-ownership
whenever the ownership of an undivided
 What plaintiff imagined as clouds
thing or right belongs to different
cast on his title were PR’s alleged
persons.
acts of physical intrusion and not.
an instrument, record, claim,
encumbrance or proceeding

PROPERTY CIVIL LAW
Characteristics of Co-ownership common.

(PUSAM) No term set limit As a rule, an
(1) plurality of owners, but only one set by law agreement to keep
real right of ownership the ownership for
(2) unity of material of the object of more than 10 years
ownership is void.
(3) recognition of ideal shares or aliquot Creditors of Creditors of a co-
(4) absolute control of each co-owner individual partners owner can attach
over his ideal share, not over specific cannot attach and his shares in the
portions of the property sell on execution co-owners and sold
(5) mutual respect among co-owners in the shares of on execution
regard to the use, enjoyment, and partners in the
preservation of the property owned partnership
in common. Can be Death or incapacity
extinguished by of a co-owner does
Differences between co-ownership the death or not affect existence
and joint tenancy incapacity of one of a co-ownership
party
Co-ownership Joint Ownership There is mutual A special authority
Tenancy in Joint tenancy, representation of is needed for such
Common, Tenancy in the parties representation.
Ownership in common, Notion of A partner cannot A co-owner can
Common, Co- “all-for one, one- transfer his rights freely dispose of
dominium for-all” to a 3rd person his share without
Civil law origin Common Law/ without the need to ask the
Anglo-American consent of the consent of the
origin others other co-owners.
Each co-owner Each joint owner, Distribution of Profits of a co-
owner of his ideal the surviving joint profits can be owner depend on
share owners are stipulated upon his proportionate
subrogated in his (profit-sharing) share; profit-
rights by accretion sharing is
Each co-owner Joint owner must invariable (Art.
may dispose of his obtain the consent 485) not subject to
undivided share of all the rest to stipulation
without the other’s dispose of his
consent. share. Sources of co-ownership
In case there is a The defense of one
co-owner who is a joint owner can be (1) Law
minor, minority as used as a defense (a) Cohabitation
a defense against by all joint owners. (i) Between man and woman
prescription is capacitated to marry each
exclusive to him. other. (Art 147, FC)
(ii) Between man and woman not
Differences between partnership capacitated to marry each
and co-ownership other (Art. 148, FC)
Ordinary Co-ownership (b) Absolute community property

Partnership (Art. 90, FC)
With legal/juridical No legal (c) two or more persons purchase
personality distinct personality distinct property and by common consent
from its members from its members legal title is taken in the name of
Created only by created by “LAW one of them for the benefit of all,
agreement or FOCUS” [Law, an implied trust is created in
contract to that Fortuitous Event, favor of the others in proportion
effect Occupancy, to each to interest of each. (Art.
Contract, 1452)
Succession]
Purpose is to Purpose is (d) Succession
obtain profit collective (i) Intestate succession (1078)
enjoyment and to (ii) Testate—if property is given
maintain the unity to two or more heirs by the
and preservation of testator
the things owned in

PROPERTY CIVIL LAW
Redemption done by one of (8) full Ownership of proportion (493)

the co-owners/heirs will benefit
his other co-owner heirs despite
the fact that they did not (1)Right to share in the fruits and
contribute to the redemption benefits in proportion to his
money. interest
(e) Donation  PROVIDED the charges are borne by

 donation to several persons each in the same proportion
jointly, it is understood to be in  A contrary stipulation is VOID.
equal shares  Portions are presumed equal unless
 no rights of accretion unless the contrary is proved.
donor otherwise provides  Accretion added to any portion of
 but if donation is made to land co-owned becomes part of the
husband and wife jointly, there property in co-ownership and should
shall be a right of accretion, be divided according to each co-
unless contrary so provide. owners proportionate share.
(f) Chance – commixtion in good (2)Right to make repairs for

faith (Art. 472, NCC) preservation
(g) Hidden treasure – co-ownership
between finder and owner  Necessary expenses
(h) Easement of a party wall - taxes and expenses for the
(i) Occupation – Harvesting and preservation of the thing which if
fishing not made would endanger the
(Punsalan et al. v. Boon Liat existence of the thing or reduce
et al.) its value or productivity
(j) Condominium law - may be incurred upon the will of
Sec. 6(c) of RA 4726 – unless 1 co-owner, but if practicable, he
otherwise provided, common areas must give reasonable notice to
are held in common by the holders of the other co-owners
the units in equal shares, one for
each unit.  Useful expenses
- increase the income of the thing
(2)Contract owned in common for the benefit
(a) Two or more persons agree to of all the co-owners
create a co-ownership—maximum - a lone co-owner cannot incur
of ten years (494, 2nd par), such expenses without the
extendable by a new agreement. consent of the others and then
(b) Universal Partnership ask reimbursement (resolution of
(i) Of all present properties (Art. majority as per Art. 492)
1778-1779, NCC) - Effect of failure to notify co-
(ii) Of profits (Art. 1780, owners even if it was practicable
NCC) to do so: does not deprive co-
(c) Associations and Societies, owner of right to reimbursement.
whose articles are kept secret He is merely given the burden to
wherein anyone of the members prove the necessity of such
may contact in his own name repairs. He will not be fully
with third persons (no juridical reimbursed if others can prove
personality) that i.e., could have hired a
contractor who would charge less
Rights of each co-owner as to the
thing owned in common: FRom (3)Right to compel the other co-
CUERPO owner to contribute
(1) proportionate Fruits and benefits  For:

(485) 1. expenses for preservation
(2) Repairs for preservation (489-490) 2. taxes
(3) Compel contribution (488)  BUT co-owner has option not to
(4) Use according to purpose intended contribute by renouncing so much of
(486) his undivided interest equal to the
(5) bring an action for Ejectment (487) amount of contribution EXCEPT if
(6) legal Redemption (1620) waiver is prejudicial to co-ownership
(7) demand Partition and terminate co-
ownership (494-496; 498)

PROPERTY CIVIL LAW
(4)Right to use the thing according him upon termination of the co-
to its intended purpose ownership and, as earlier discussed,
that the remaining co-owners have
 may be altered by agreement, the right to redeem, within a
express or implied, provided: specified period, the shares which
- without injury or prejudice to may have been sold to the third
interest of co-ownership; and party (Reyes vs. Judge
- without preventing the use of Concepcion)
other co-owners
 Any act against the collective  Art 1621 presupposes that the land
interest is an act against ownership sought to be redeemed is rural. Both
and the remedies available to owners lands—that sought to be redeemed
in general may by used by the co- and the adjacent lot belonging to the
owner person exercising the right of
redemption—must be rural. If one or
(5)Right of to bring an action in both are urban, the right cannot be
ejectment invoked. (Halili v. CA, 1998)
 no need to implead all the other co-  Art. 1623 requires that the written
owners as co-plaintiffs because the notification should come from the
suit is deemed to be for the benefit vendor or prospective vendor, not
of all: a favorable decision will from any other person. It is the
benefit everyone but an adverse notification from the seller, which
decision will not affect them if they can remove all doubts as to the fact
are not parties in the case or they of the sale, its perfection, and its
did not give their consent to the validity, for in a contract of sale, the
action seller is in the best position to
 BUT action will not prosper if the confirm whether consent to the
action is for the benefit of himself essential obligation of selling the
only and not for the co-ownership property and transferring ownership
 For title to prescribe in favor of the thereof to the vendee has been
co-owner, however, there must be a given. (Francisco v. Boiser)
clear showing that he has repudiated
the claims of the other co-owners  The written notice of sale is
and that they have been mandatory for the tolling of the 30-
categorically advised of the exclusive day redemption period,
claim he is making to the property in notwithstanding actual knowledge of
question. Only then will the period of a co-owner. (Verdad v CA, 1996)
prescription being to run. (Cortes v.
Oliva)  A third person, within the meaning of
Art. 1620 of the Civil Code (on the
(6)Right to exercise legal right of legal redemption of a co-
redemption owner) is anyone who is not a co-
owner. (Pilapil v CA)
 Redemption of the property by a co-
owner does not vest in him sole
ownership over said property but will (7)Right to ask for partition
inure to the benefit of all co-owners.
Redemption is not a mode of  PARTITION: a division between two
termination of relationship. or more persons of real or personal
(Mariano v CA) property which they own as co-
partners, joins tenants or tenants in
 By the very nature of the right of common, effected by the setting
"legal redemption", a co-owner's apart of such interests so that they
right to redeem is invoked only after may enjoy and possess it in
the shares of the other co-owners severalty.
are sold to a third party or stranger
to the co-ownership. The law does  Gen rule: A co-owner can always ask
not prohibit a co-owner from selling, for a partition. There is no
alienating or mortgaging his ideal prescriptive period.
share in the property held in  Exceptions: (PUI SCAN)
common. The law merely provides 1. when partition is generally
that the alienation or mortgage shall Prohibited by law
be limited only to the portion of the 2. when partition would render the
property which may be allotted to thing Unserviceable, or the thing

PROPERTY CIVIL LAW
in common is essentially quota or ideal portion without any

Indivisible physical adjudication.
- no physical partition but thing
maybe sold and co-owners  Co-owner can substitute another
shall divide the proceeds person in the enjoyment of the thing
3. when there is a Stipulation
against it (not beyond 10 years)  Effect of transaction by each co-
4. when Condition of indivision is owner:
imposed by transferor (donor or 1. Limited to his share in the
testator) not exceed 20 years partition
5. Acquisitive prescription has set in 2. Transferee does not acquire any
facor of a stranger to co- specific portion of the whole
ownership or in favor of co- property until partition
owner. 3. Creditors of co-owners may
6. when legal Nature of community intervene in the partition to
prevents partition (e.g. party attack the same if prejudicial
wall) (Art. 499), except that creditors
cannot ask for rescission even if
 Either co-owner may demand the not notified in the absence of
sale of the house and lot at any time fraud (Art. 497)
and the other cannot object to such  Unless the partition is effected, each
demand. Thereafter the proceeds of heir cannot claim ownership over the
the sale shall be divided equally definite portion and cannot dispose
according to their respective of the same. Co-heir can only sell his
interests. (Aguilar v. CA) successional rights. (Carvajal v CA)
 Effects of partition:  Art 493 of the NCC allows the

1. It shall NOT prejudice third alienation of the co-owner of his part
persons who did not intervene in in the co-ownership. The effect of
the partition such alienation or mortgage shall be
2. There should be mutual limited to the portion which may be
accounting of benefits, allotted to him in the division upon
reimbursements, payment of the termination of the co-ownership
damages due to negligence or In short, a co-owner can enter into a
fraud, liability for defects of title contract of lease insofar as to his
and quality of portion assigned to interest. Therefore, he can also
each cancel such lease without the
3. The part allotted to a co-owner at consent from the other co-owner.
partition will be deemed to be (Castro v. Atienza)
possessed by such co-owner from
the time the co-ownership Duties and Limits to Rights of Co-
commenced. owners
4. Heir is exclusive owner of 1. pay for charges (485)
property adjudicated to him. 2. not to make alterations (491)
5. Co-owners reciprocally bound to after partition…
each other for warranty of title 3. mutually account (500)
and quality of part given to each 4. liability for defects in title and
(hidden defect) after partition. quantity (501)
6. Under Art. 1093, obligation of Duty not to make alterations
warranty is proportionate to
respective hereditary shares; Alteration: act by virtue of which a co-
insolvency of one makes the owner
others liable subject to  changes the thing from the state
reimbursement (joint liability) in which the others believe it
should remain or
(8)Right to full ownership of  withdraws it from the use to
proportion which they are desired to be
intended in opposition to the
 All that he can sell or freely dispose common or tacit agreement
is his undivided interest but he Consent of ALL the co-owners is required
cannot sell or alienate a concrete, if it changes the essence or nature of the
specific or definite part of the thing thing (present article refers to this)
owned in common because his right because it is an act of ownership.
over the thing is represented by a Acts of alteration that do not change the
essence or nature of the thing requires

PROPERTY CIVIL LAW
only the agreement of the majority and their decisions are binding upon
because it is merely an act of the minority. Majority may only
administration. proceed to act without notice to the
- but if withholding of consent by minority if the circumstances warrant
any one of the co-owners is urgency.
clearly prejudicial to the common
interest, courts may afford b) An administrator who may or may
adequate relief (491) not be a co-owner delegated by the
co-owners
Acts of Acts of An administrator cannot, without the
Alteration/Acts Administration unanimous consent of all the co-
of Ownership owners, compromise on, donate,
Relates to the use, Also for the better cede, alienate, mortgage, or
substance or form enjoyment of the encumber in any manner the
of the thing property common property.
Have a more Effects are of The majority refers to the majority in

permanent result transitory interest or the financial majority. (50%
character + 1)
Consent of all is Consent of the When are acts seriously prejudicial?

necessary financial majority  So serious and affects the
will be binding interest of the co-owners in the
Contrary to the co- Does not give rise community
ownership to a real right over  Such that will cause injuries
agreement the thing owned in enough to justify the intervention
common. of the court
Examples:
Effects of acts of alteration and (1) When the resolution calls for a
remedies of non-consenting co- substantial change or alteration of
owner : the common property or of the use
(a) Co-owner who made alterations to which it has been dedicated by
may lose whatever he has spent agreement or by its nature
as he will not be reimbursed (2) When the resolution goes beyond
(b) He may be ordered to demolish the limits of mere administration, or
or remove the alteration at his invades the proprietary rights of the
expense co-owners, in violation of Art. 491
(c) He will be liable for damages and (prohibiting against acts of
other losses alteration)
(d) Co-ownership will benefit from (3) When the majority leases, loans,
the alteration if other co-owners or other contracts without security,
decide to contribute to the exposing the thing to serious danger
expenses by reimbursing him to the prejudice of the other co-
(ratification) owners.
(e) If a house is built in a common (4) When the majority refuse to
lot, the co-owners are entitled to dismiss an administrator who is
the proportionate share of the guilty of fraud or negligence in his
rent. management, or does not have the
respectability, aptitude, and solvency
Lease becomes an act of ownership if: required of persons holding such
(1) It is recorded in the Registry position.
of Property (5) When resolution, if carried out,
(2) It is for more than 1 year would cause serious injury to the
thing itself, such as an agreement
Management of Property not to borrow money under
reasonable terms when it is
Who may manage: necessary for urgent repairs for
a) The co-owners themselves preservation, or for the payment of
Court cannot appoint an taxes.
administrator to manage a property
co-owned when the co-owners want Remedies of the minority
to handle the management. In this If the acts of the majority prejudice
management, the “majority” control the minority, the latter may ask for
injunction or at worse, a partition.

PROPERTY CIVIL LAW
(b) plaintiff is indeed a

Extinguishment of Co-Ownership co-owner of the
property
(1) Total destruction of the thing (c) how the property is
(2) Merger of all the interest in one to be divided
person between plaintiff
(3) Acquisitive prescription and defendants.
(a) By a third person  If property cannot be divided
(b) By one co-owner against the without great prejudice, the
other co-owners court may order such
Requisites: property be assigned to one
(i) Unequivocal acts of co-owner. Such co- owner
repudiation of the rights of will pay the others the value
the other co-owners (acts of their interests.
amounting to ouster of other
co-owners)
(ii) Open and adverse possession, VII. CONDOMINIUM LAW (ACT NO.
not mere silent possession for 4726)
the required period of
extraordinary acquisitive Concept of condominium
prescription.  Exclusive interest in units plus
(iii)Presumption is that undivided interest in common areas.
possession of a co-owner is  Partly co-ownership, partly under
not adverse. individual separate ownership
(4) Partition or division  Each unit belongs separately to one
(a) Right of Creditors of individual or more persons
Co-owners Art. 497  The land and the common areas are
 All creditors must be considered of common use by the different
to intervene in the partition of owners and are under co-ownership
the common property. either as contemplated by the Civil
 They must have become creditors Code or through a corporation.
during the co-ownership  Not governed by co-ownership as
 Co-owner debtors have the duty provided for in the Civil Code.
to notify the creditors of the  External surfaces are common areas
partition  Beams and posts are common areas
 Otherwise partition not binding  Easement, unless the master deed
on them says otherwise, is an exclusive
 They can contest such partition if easement.
they formulate a formal  Interest in the common areas will
opposition thereto. depend on interest in the condo
 Important documents in buying a
(b) Partition may be made: condo unit
(ii.) Orally (i) deed of sale
 Valid and enforceable (ii) enabling or master deed
among the parties. (iii)declaration of restrictions
 Statute of frauds does not
operate for partition is not Sec. 9 The owner of a project shall,
a conveyance of property prior to the conveyance of any
but merely a segregation condominium therein, register a
and designation of that declaration of restrictions relating to
part of the property which such project, which restrictions shall
belongs to the co-owners. constitute a lien upon each condominium
in the project and shall insure to and
(ii.) In writing bind all condominium owners in the
(a) Court will just project. Such liens, unless otherwise
confirm such provided, may be enforced by any
written agreement. condominium owner in the project or by
the management body of such project.
(a) Rules of Court does not The Register of Deeds shall enter and
preclude amicable settlement annotate the declaration of restrictions
between parties. upon the certificate of title covering the
land included within the project, if the
(b) Two principal issues in an land is patented or register under the
action for partition: land included within the project, if the

PROPERTY CIVIL LAW
land is patented or registered under the (ii) as the unit may lawfully be
Land Registration or Cadastral Acts. altered or reconstructed from
time to time
 Method of taxation (iii)such easement shall be
automatically terminated in
Sec. 25. Whenever real property has any air space upon
been divided into condominiums, each destruction of the units to
condominium separately owned shall be render it untenable
separately assessed, for purposes of real (c) Unless otherwise provided, the
property taxation and other tax common areas are held in
purposes to the owners thereof and the common by the holders of units,
tax on each such condominium shall in equal shares, one for each unit
constitute a lien solely thereon. (d) a non-exclusive ease ment for
ingress, egress, and support
 Partition of Common Areas through the common areas are
subject to such easements
Sec.7. Except as provided in the
(e) Each condominium unit owner
following section, the common areas
shall have the exclusive right to
shall remain undivided, and there shall
paint, repaint, tile, wax, paper, or
be no judicial partition thereof.
otherwise refinish and decorate
the inner surfaces of the walls,
(b) Who manages the condominium? ceilings, floors, windows, and
(i) condominium corporation doors, bounding his own unit
(preferred by law) – co- (f) Each condominium owner shall
terminous with the existence have the exclusive right to
of the condominium mortgage, pledge, encumber his
(ii) co-ownership condominium and to have the
(iii) association of owners same appraised independently of
the other condominiums but any
Rights and Obligations of obligation incurred by such
Condominium owner condominium owner is personal
What are the incidents of a to him.
condominium grant? (g) Each condominium owner has
(a) The boundary of the unit grant also the absolute right to sell or
(i) the interior surfaces of the dispose of his condominium
perimeter walls, floors, unless the master deed contains
ceilings, windows, and doors a requirement that the property
(ii) those which are not part of be first offered to the
the unit bearing walls, condominium owners within a
columns, floors, roofs, reasonable period of time before
foundations, and other the same is offered to outside
common structural elements parties.
of the building; lobbies,
stairways, hallways, and other Case
areas of common use,
elevator equipment and Ownership of a unit, therefore, is a
shafts, central heating, condition sine qua non to being a
central refrigeration, and shareholder in the condominium
central air-conditioning corporation By necessary implication,
equipment, reservoirs, tanks, the "separate interest" in a
pumps, and other central condominium, which entitles the holder
services and faicilities, pipes, to become automatically a share holder
ducts, flues, chutes, conduits, in the condominium corporation, as
wires and other utility provided in Section 2 of the
installations, wherever Condominium Act, can be no other than
located, except the outlets ownership of a unit. (Sunset View
thereof when located within Condominium v Judge Campos)
the unit.
(b) Exclusive easement for the use of
the air space encompassed by
the boundaries of th unit
(i) as it exists at any particular
time

PROPERTY CIVIL LAW
VIII. POSSESSION their heirs. It is still part of the public

domain until the patents are issued.
Definition and Concept (Director v. CA)
(1) Possession is the holding of a thing
of the enjoyment (exercise) of a
right (523), whether by material Degrees of holding of possession
occupation (de facto possession) or
by the fact that the thing or the right (1) Mere holding or possession without
is subjected to the action of our will. title whatsoever and in violation of
(2) It is a real right independent of and the right of the owner.
apart from ownership.  applies to both movables and
immovables
Essential requisites of possession  both the possessor and the public
(1) Holding or control of a thing or right know that the possession is wrongful
(corpus) consists of either:  there can be no acquisitive
(a) the material or physical prescription of movables under the
possession NCC (Art. 1133)
(b) subject action of our will-
exercise of a right (2) Possession with juridical title but
(c) constructive possession not that of ownership.
 peaceably acquired
 doctrine of constructive possession  this will never ripen into full
applies when the possession is under ownership as long as there is no
title calling for the whole, i.e., repudiation of concept under which
possession of a part is possession of the property is held (if such
the whole. repudiation is made known to the
 Constructive possession owner, then extraordinary
a) tradicion brevi manu (one who prescription of 30 yrs will apply)
possess a thing short of title of  e.g., possession by tenant,
owner – lease ); depositary, agent, bailee, trustee,
b) tradicion constitutum lessee, antichretic creditor
possesorium (owner alienates  even actual owner may be prevented
thing but continues to possess – by law from taking possession
depositary, pledgee, tenant)  a depositary bank is not a possessor
in this degree, since a deposit is
(2) Intention to possess (animus actually a loan to the bank
possidendi)
 it is a state of mind whereby the (3) Possession with just title or title
possessor intends to exercise and sufficient to transfer ownership, but
does exercise a right of possession, not from the true owner
whether or not such right is legal  title— deed of sale or contract of sale
 intention may be inferred from the  possession of a vendee from vendor
fact that the thing in question is who pretends to be the owner, i.e.,
under the power and control of the innocent buyer of stolen goods
possessor  good faith of buyer = just title
 may be rebutted by contrary  if in good faith, extraordinary
evidence prescription of 30 years will apply
 this degree of possession ripens
Cases: interesting full ownership by lapse of
The general rule is that the possession time
and cultivation of a portion of a tract of
land under a claim of ownership of all is (4) Possession with just title from the
a constructive possession of all, IF the true owner
remainder is not in the adverse  Transfer of possession transfers
possession of another. Possession in the ownership! (possession as an
eyes of the law does not mean that a incident of ownership)
man has to have his feet on every
square meter of ground before it can be Cases of possession
said that he is in possession. (Ramos
v. Director of Lands) (1) Possession for oneself, or
possession exercised in one’s own
The rule on constructive possession does name and possession in the name of
not apply when the major portion of the another.
disputed property has been in the  rights of possession may be
adverse possession of homesteaders and exercised through agents

PROPERTY CIVIL LAW
(a) necessary— exercised on behalf better right (e.g.,

of the conceived child, of juridical preemption)
persons, of persons not sui juris, (9) possession in GF and
and of the conjugal partnership possession in BF
(b) voluntary— in cases of agents or
administrators appointed by the (3) Possession in good faith and
owner or possessor possession in bad faith
(2) Possession in the concept of an  possession in good faith ceases from

owner and possession in the concept the moment defects in the title are
of a holder with the ownership made known to the possessor
belonging to another  when an action is filed to recover
possession, good faith ceases from
In the Concept of a Holder the date of the summons to appear
 such possessor acknowledges in at the trial
another a superior right which  GF consists in the possessor’s belief
he believes to be ownership, that the person from whom he
whether his belief be right or receive a thing was the owner of the
wrong same and could convey his title
 e.g. tenant, usufructuary, and  GF is always presumed
borrower  belief that one is the legal owner
must be based on some title or mode
In the Concept of Owner of acquisition, i.e., sale, donation,
 such possessor may be the owner inheritance
himself or one who claims to be  error in the application of the law, in
so the legal solutions that arise form
 only this class of possession can such application, in the appreciation
serve as title for acquiring of the legal consequences of certain
dominion acts, and in the interpretation of
 good faith or bad faith is doubtful provisions or doctrines, may
immaterial except for purposes of properly serve as the basis of GF-
prescription (GF: 10 yrs; BF: 30 mistake upon a doubtful or difficult
yrs) question of law as a basis of good
faith [Art 526 (3)]
Effects of possession in the concept
of an owner: Subjects of possession
(1) possession may by lapse of  All rights and things susceptible of
time ripen into full ownership, appropriation
subject to certain exceptions  Things which cannot be possessed:
(2) presumption of just title and (1) property of public dominion
cannot be obliged to show or (2) res communes
prove it Exception: for (3) easements (discontinuous or
purpose of prescription in Art non-apparent)
1131. (4) things specifically prohibited by
(3) possessor can bring all law
actions an owner can bring to  res nullius (abandoned or ownerless
protect his possession, except property)– may be possessed but
accion reivindicatoria cannot be acquired by prescription
(4) may employ self-help (Art Acquisition of Possession
429)
(5) can ask for the inscription of (1) Ways of acquiring possession
his possession in the registry (a) Material occupation of the thing
of property  occupation is used in the general
(6) has right to the fruits and sense, i.e., a means of acquiring
reimbursement for expenses possession of things, not of rights
(assuming he is a possessor  kind of possession acquired is
in GF) only the fact of possession, not
(7) upon recovering possession the legal right of possession
from unlawful deprivers, can
demand fruits and damages (i) Doctrine of constructive
(8) generally, he can do possession
everything an owner is (ii) Includes constructive
authorized to do until he is delivery (equal to material
ousted by one who has a occupation in cases where

PROPERTY CIVIL LAW
occupation is essential to the (2) By whom possession may be

acquisition of prescription) acquired
traditio brevi manu (a) by same person

 one who possesses a thing Elements of personal acquisition
by title other than  must have the capacity to
ownership continues to acquire possession
possess the same but  must have the intent to
under a new title, that of possess
ownership  possibility to acquire
traditio constitutum possession must be present
possessorium
 owner alienates the thing, (b) by his legal representative
but continues to possess Requisites:
the same but as that of  representative or agent has
depositary, pledge, or the intention to acquire the
tenant thing or exercise the right for
another, and not for himself
(b) subjection to the action of our  person for whom the thing
will has been acquired or right
 different from and exercised, has the intention of
independent of juridical acts possessing such thing or
and legal formalities as it exercising such right
refers more to the right of
possession that to possession (c) by his agent
as a fact (d) by any person without any
(i) traditio simbolica -- power whatsoever but subject to
effected by delivering some ratification, without prejudice to
object or symbol, placing proper case of negotiorum gestio
under the thing under the (e) Qualifiedly, minors and
control of the transferee, such incapacitated persons
as the keys to the warehouse  refers only to possession of
containing the goods things, not of rights, and to
delivered [Art 1498 (2)] acquisition of possession by
(ii) traditio longa manu – material occupation
effected by the transferor
pointing out to the transferee (3) What do not affect possession
the things which are being (a) acts merely tolerated
transacted (b) acts executed clandestinely AND
without knowledge of owner
(c) proper acts and legal formalities (c) acts by violence as long as the
 refers to the acquisition of possessor objects thereto (i.e.,
possession by sufficient title, he files a case)
whether inter vivos or mortis
causa, or lucrative or onerous If owner of a tract of land, to
 e.g., donations, succession, accommodate the public, permits them
contracts, judicial writs of to cross his property, it is not his
possession, writs of execution intention to divest himself of ownership
of judgments, and registration or to establish an easement. Such
of public instruments possession is not affected by acts of
possessory character which are merely
There was a perfect contract of pledge tolerated. (Cuaycong v Benedicto)
and the depositary was placed in the
possession of the goods after the As a squatter, she has no possessory
symbolic transfer by means of delivery rights over the disputed lot. The State’s
to him of the keys to the warehouse solicitude from the destitutes and the
where the goods were kept. (Banco have-nots does not mean that it should
Espanol Filipino v. Peterson) tolerate usurpations pf property, public
or private. (Astudillo v PHHC)
A possessor by mere tolerance is

necessarily bound by an implied promise
to vacate upon demand. (Peran v CFI)

PROPERTY CIVIL LAW
(4) Rules to solve conflict of (ii) accion publiciana (based on

possession superior right of possession, not
of ownership)
In case of conflict of possession, the (iii)accion reivindicatoria
following order of preference must be (recovery
followed: of
(1) present possessor or actual ownership)
possessor (iv) action for replevin – for
(2) if 2 or more possessors, the one recovery of movable property
longer in possession
(3) if dates of possession are the (b) Possessor can employ self-help
same, the one who presents a
title (2) Entitlement to fruits – possessor in
(4) if all the condition are equal, the GF/ BF
thing shall be placed in judicial  Possessor in GF is entitled to the
deposit pending determination of fruits received before the possession
possession or ownership through is legally interrupted.
proper proceedings  Possessor in BF has no right to
receive any fruits. Those already
Preference in case of conflict of gathered and existing will have to be
ownership (double sales) returned; with respect to those lost,
(1) for immovable property consumed, or which could have been
(a) first who registered his right received, he must pay the value.
in GF in the Registry of But the possessor in BF does not
Property have to pay interest on the value of
(b) if no registration, first who fruits he has to pay, because such
possessed in GF amount is unliquidated.
(c) if no possession, one who
presents the oldest title (3) Reimbursement for expenses (See
(2) for movable property: first who Table below
possessed in GF (4) Possession of movable acquired in
GF (in concept of an owner) is
Effects of Possession equivalent to title
 one who has lost a movable or has
(1) In general, every possessor has a been unlawfully deprived thereof
right to may recover it without
be respected in his possession; if reimbursement, except if possessor
disturbed therein, possessor has acquired it at a public sale (559)
right to be protected in or restored to  3 requisites to make possession of
said possession (539) movable equivalent to a title:
(a) action to recover possession (1) that the possession is in GF
(i) summary proceedings – (2) that the owner has voluntarily
forcible entry and unlawful parted with the possession of the
detainer. Plaintiff may ask for thing
writ of preliminary mandatory (3) that the possession is in the
injunction may be asked. concept of an owner
Within 10 days from filing of
complaint in forcible entry Presumptions in favor of the
- the same writ is available in possessor
unlawful detainer actions
upon appeal (Art 1674) (1) Of good faith until the contrary is
proved (Sideco vs. Pascua)
 The acquirer and possessor in (2) Of continutity of initial GF in
good faith of a chattel or movable which possession was commenced or
property is entitled to be possession in GF does not lose its
respected and protected in his character
possession as if he were the true Exception: in the case and from the
owner, until a competent court moment the possessor became aware or
rules otherwise. Such possession is not unaware of improper or wrongful
in good faith is equivalent to title possession.
and every possessor has a right (3) Of enjoyment of possession in
to be respected in his possession the same character in which was
(Arts 539 and 559). (Yu v acquired until the contrary is proved.
Honrado)

PROPERTY CIVIL LAW
(4) Of non-interruption of therefore cannot be recovered anymore

possession in favor of present by any action.
possessor who proves possession at a
previous time until the contrary is Rules for Loss of Movables
proved. (554, 1120-1124) General Rule: possession of personal
property acquired in GF = title therefore
2 Kinds of Interruption the true owner cannot recover it
(1) Natural (Art 1122)—if Exception: if the true owner
interruption is for more than 1 (1) lost the movable or
year. (2) has been unlawfully
(2) Civil (Art 1123)— will start from deprived
the service of summons but the In either of these, he may recover the
proper action must be filed personal property not only from the
 in case of natural interruption, the finder but also from those who may
old possession loses all its juridical have acquired it in GF from such finder
effects and therefore cannot be or thief, without paying for any
tacked to the new possession for indemnity except if possessor acquired it
purposes of prescription in public sale but the possessor in GF is
 in case of civil interruption, if entitled to reimbursement.
possession is recovered, it can be
connected to the time that has Wild animals are possessed only while
elapsed as if it were continuous and they are under one's control;
can be counted in favor of domesticated or tamed animals are
prescription considered domestic or tame if they
(5) Of exclusive possession of retain the habit of returning to the
property allotted to a participant in a premises of the possessor. (Art. 560)
thing possessed in common for the
entire period during which co- (5) Reivindication—the most natural
possession lasted; mode of losing possession, i.e.,
(6) Of continuous possession or non- recovery or reivindication of the
interruption of possession of which thing by the lawful owner
he was wrongfully deprived for all
purposes favorable to him (561)
(7) Other presumptions with respect to
specific property rights
(i) Of extension of possession of real
property to all movables
contained therein so long as it is
not shown that they should be
excluded (Art. 426)
(ii) Non-interruption of possession of
hereditary property (Art. 533,
Art. 1078)
(iii)Of just title in favor of possessor
in concept of owner, subject to
Art. 1141
Loss of Possession
(1) Abandonment
(2) Assignment—WON gratuitously or
onerously
(3) Destruction—must be total/goes
out of commerce
(4) Possession of another—the
possession that is lost here refers
only to possession as a fact (de
facto), not the legal right of
possession (de jure)
NOTE: all the other 3 cases of loss of

possession (abandonment, assignment,
destruction) refer to loss of possession
de jure (real right of possession) and

PROPERTY CIVIL LAW
Effects of Possession in Good Faith or Bad Faith

Good Faith Bad Faith
Fruits Entitled to the fruits while possession Must reimburse fruits received or
received is in GF and before legal interruption fruits which legitimate possessor
(Art 544) could have received (549);
Entitled to expenses for production,

gathering, and preservation
Pending Entitled to a part of the expenses of
Fruits cultivation and a part of the network
harvest, both proportion to the time of
possession (545)
Owner may indemnify or allow

possessor in GF to finish cultivation
and the fruits will be indemnified for
his cultivation (545)
If possessor refuses concession, no

indemnity (545)
Charges Must share with the legitimate Same as with GF
possessor, in proportion to the time of
possession
Necessary Right of reimbursement and retention Reimbursement only
Expenses in the meantime (545)
Useful Owner’s option to reimburse him No right to reimbursement. He also
Expenses either for expenses or for increase in cannot remove improvements even
value (546) he can do so without injury to the
principal thing
Retention prior to reimbursement
(546)
Limited right of removal (but should

not damage principal and owner does
not exercise option of payment of
expenses or increase in value) (547)
Ornamental Limited right of removal as above Limited right of removal (no injury to
Expenses (548) thing and lawful possessor does not
retain by paying for them) (548)
Deterioration No liability unless due to fraud or Liable WoN due to his fault,
or Loss negligence after becoming in BF negligence, fortuitous event
Costs of Bears cost Bears cost
Litigation
Effects of Recovery of Possession

 Improvements caused by nature or
time shall always insure to the
benefit of the person who has
succeeded in recovering
possession. (Art. 551).
 One who recovers possession shall
not be obliged to pay for
improvements which have ceased
to exist at the time he takes
possession of the thing. (Art. 553)
 necessary expenses: lawful
possessor or owner has to pay for
them even if the object for which
they were incurred no longer exist

PROPERTY CIVIL LAW
IX. USUFRUCT  Lease by the owner before the start

of the usufruct is not extinguished by
Definition such usufruct.
USUFRUCT is a real right which gives the  Usufructuary will be liable to the
usufructuary owner for damages caused by the
- a right to enjoy the property of fault or negligence of the transferee
another or lessee.
- with the obligation of preserving  General rule: Lease by the usufruct
its form and substance, unless should terminated at the end of the
the title constituting it or the law usufruct or earlier.
otherwise provides. (Art.562)  Exception: leases of rural lands,
in which case the lease continues
Characteristics for the remainder of the
1. real right of use and enjoyment agricultural year
of property owned by another
2. of a temporary duration Right to improve the thing
3. transmissible  Useful improvements or expenses
4. may be constituted on real or only
personal property, on tangibles  No alteration of form and substance
or intangibles  Usufructuary may remove
improvements only if it is possible
Rights of Usufructuary: without damaging the property.
 The owner cannot compel the
A. As to the thing and its fruits usufructuary to remove the
1. right to possess and enjoy the improvements. BUT If the
thing itself, its fruits and usufructuary does not remove, he
accessions (566-567) has no right to be indemnified.
2. right to lease the thing (572)  Registry of improvements is
3. right to improve the thing necessary to protect the
usufructuary against third persons
Right to possess and enjoy the thing regarding the improvements.
itself, its fruits and accessions  If improvements cannot be removed,
 Fruits belong to the usufructuary such may be used to offset any
except when they diminish the damage caused by the usufructuary
substance of the thing (e.g., to the property.
minerals in quarries), in which case
they will belong to the usufruct only B. As to the usufructuary right itself
when the owner has dedicated the 1. Right to alienate
property to the exploitation of such  EXCEPT in purely personal
products. ones or when the title
 Dividends from shares are fruits. constituting the usufruct
 Rights may be transferred, assigned, prohibits the same.
or otherwise disposed of by the Examples:
usufructuary; - Legal usufruct of
 As to hidden treasure, usufructuary parents (Art. 226 FC)
is a stranger, so no right to it - Usufruct granted the
 Fruits pending at the beginning of usufructuary in
the usufruct belong to the consideration of his
usufructuary, with no obligation to person
refund the expenses of the owner. - Usufruct acquired
 But, if expenses for production were through caucion
incurred by third persons, they must juratoria
be reimbursed.
 Fruits growing at the time of the Sale by the usufructuary
termination of the usufruct belong to  Future crop may be sold; but such
the owner, but the usufructuary sale will be void if not ratified by the
must be reimbursed from the owner. It’s a sale of property not
proceeds of such fruits for his belonging to the usufructuary and
production expenses. those gathered at the termination of
the usufruct belonging to the owner.
Right to lease the thing  If things are consumable or were
 even without consent of owner appraised when delivered, the
 BUT no alienation, mortgage, pledge usufructuary can dispose of them.

PROPERTY CIVIL LAW
Rights of the naked owner demand by the owner, the

1. At the beginning of the usufruct latter may pay for the repairs,
 all obligations of the usufructuary with right of reimbursement
at the beginning of the usufruct from the usufructuary
2. During the usufruct 3. To Notify the Owner of Need to
 retains title to the thing and Undertake Extra-Ordinary Repairs
improve it  Those caused by exceptional
 may alienate the property circumstances, WON they are
3. At the termination or end of the necessary for the preservation
usufruct of the thing
 recover property from the  Those caused by the natural
usufructuary in the same use of the thing, but are not
preserved form and substance necessary for its preservation
with room for ordinary wear and  Naked owner obliged to
tear subject to ordinary repairs undertake them but when
made by the owner,
Obligations of the Usufructuary usufructuary pays legal
 These requirements are conditions interest on the amount while
merely to the entry upon the usufruct lasts
possession and enjoyment of the  Naked owner cannot be
property. compelled to undertake extra-
ordinary repairs
A. At the beginning of the usufruct or  If indispensable and owner
before the exercise of the right of fails to undertake
the usufruct extraordinary repairs- may be
1. To make an inventory EXCEPT made by the usufructuary
when 4. To notify owner of any act
 No one will be injured detrimental to ownership
thereby  OR ELSE, usufructuary will be
 Title constituting usufruct liable for damage and he
excused the making of cannot make extraordinary
inventory repairs
 Title constituting usufruct 5. To shoulder costs of litigation
already makes an inventory regarding the usufruct
2. To give a bond for the faithful 6. To answer for the fault of alienee,
performance of duties as lessee, or agent of the
usufructuary EXCEPT when usufructuary
 No prejudice would result
 Usufruct is reserved by donor Causes of extinguishment of
 Title constituting usufruct Usufruct (Art.603) DERM PLT
excused usufructuary 1. Death of the usufructuary, unless
 Caucion juratoria: a sworn a contrary intention clearly
undertaking wherein the appears;
usufructuary claims that he is 2. Expiration of the period for which
in dire need of the house and it was constituted, or by the
the implements/furniture and fulfillment of any resolutory
asks that he be allowed to condition provided in the title
enjoy the same even without creating the usufruct;
giving the required security 3. Renunciation of the usufructuary;
4. Merger of the usufruct and
B. During the usufruct ownership in the same person;
1. To take care of the things like a 5. Prescription;
good father of the family 6. Total Loss of the thing in
 bad use of the thing will not usufruct;
extinguish the usufruct 7. Termination of the right of the
 Owner becomes entitled to person constituting the usufruct
delivery and administration of
the thing should the Special Cases of Usufruct
abuse cause substantial
injury to the owner 1. over a pension or periodical income
2. To undertake Ordinary Repairs (570)
 for the preservation 2. of property owned in common (582)
 if not repairs made by 3. of head of cattle (591)
usufructuary, even after the 4. over deteriorable property (578)

PROPERTY CIVIL LAW
5. over vineyards and woodlands (575-  It is not essential that the benefit be
576) great. It is sufficient that there is a
6. on mortgaged property (600) determinate use or utility in favor of
7. over entire patrimony (598) a dominant estate.
8. over consumable property (574)  Not necessary that the right acquired
 quasi-usufruct under the servitude be exercised.
 may be on consumables, e.g.,  Servitudes can’t be established on
food, but must be replaced with things which are outside the
equal quantity if not appraised, commerce of man. Such things are
must be considered as on their inalienable. Imposition of an
value encumbrance would constitute an
 may also be on non-consumables alienation.
that gradually deteriorate by use,  Servitudes cannot be created on
e,g,, furniture or car in reality, property of public dominion.
the usufruct is converted into a
simple loan not upon consumable Easement v. Lease
things themselves which are EASEMENT LEASE
delivered to the Real right WON Real right only
usufructuary, but upon the registered, WON when it is
sum representing their value or real or personal registered, or
upon a quantity of things of the when its subject
same kind and quality the matter is real
usufructuary, in effect, becomes property and the
the owner of the things in duration exceeds 1
usufruct, while the grantor year.
becomes a mere creditor entitled Imposed only on May involve either
to the return of the value or of real property real or personal
the things of the same quantity property
and quality Limited right to the Limited right to
use of real both the
property of possession and use
X. EASEMENTS another, without of another’s
right of possession. property.
Art. 613. “Easement or Servitude”:
Easement v. Usufruct
encumbrance imposed upon an
immovable for the benefit of another EASEMENT USUFRUCT
immovable belonging to a different Imposed only on May involve either
owner... real property. real or personal
“Dominant estate”: the immovable in property.
favor of which the easement is Limited to a Includes all the
established particular or uses and fruits of
“Servient estate”: the immovable specific use of the the property.
which is the subject of the easement. servient estate.
Non-possessory Involves right of
Art. 614. “Personal Easements”: right over an possession in an
established for the benefit of a immovable immovable or
community, or of one or more persons movable.
to whom the encumbered estate does Not extinguished As a rule,
not belong. by death of the extinguished by
- real right or encumbrance imposed on dominant owner. the death of the
an immovable for the benefit of another usufructuary.
immovable belonging to a different
owner or for the benefit of a community
or one or more persons to whom the Essential Features of Easements or
encumbered estate does not belong by Real Servitudes (RAIL-IRI-NA-
which the owner is obliged to abstain RIP)
from doing or to permit a certain thing
to be done on his estate. (1) It is a real right. It gives rise to an
action in rem or real action against
 Easements cannot be established on any possessor of the servient estate.
personal property (2) It is a right enjoyed over another
 Burden should not be so great as to property (jus in re aliena). It cannot
amount to a taking of his property exist in one’s own property (nulli res
sua servit). Servient and dominant

PROPERTY CIVIL LAW
estates have to belong to different Classification

persons.
Real/Predial Personal
(3) It is a right constituted over an
immovable by nature not over In favor of In favor of a
movables. another community or
(4) It limits the servient owner’s immovable of 1 or more
right of ownership or the benefit of (Art.613) persons, may
the dominant estate. But servient be public or
tenement remains unimpaired. Being private
an abnormal limitation of ownership, (Art.614)
it cannot be presumed.
i. Public:
(5) It creates a relation between
vested in the
tenements.
As to recepient of benefit
public at
(6) It can exist only between
large or in
neighboring tenements. It can’t be
some class of
created on another servitude.
indeterminate
(7) It cannot consist in requiring the
individuals
owner of the servient estate to do an
act unless the act is accessory to a ii. Private:
praedial servitude (obligation propter vested in a
rem). determinate
(8) It may consist in requiring the individual or
owner of the dominant estate certain
demanding that the owner of the persons
servient estate refrain from doing
Voluntar Legal Mixed
something (servitus in non faciendo),
y
or that the latter permit that Impose Created
something be done over the servient Establish d by law partly
property (servitus in patendo) but ed by will either by will
not in the right to demand that the or for or
owner of the servient estate do agreeme public agree-
something (servitus in faciendo) nt of the use or ment
As to its source
except if such act is an accessory parties or in the and

obligation to a praedial servitude. by a interest partly
(9) It is inherent or inseparable from testator of by law
estate to which they actively or (Art.619) private
passively belong. (Art. 617) persons
(Art.619
 Servitudes cannot exist without )
tenements. They are merely
Continuous Discontinou
accessory. This doesn’t mean they
s
don’t have juridical existence of their Use of which
As to its exercise
own. (Solid Manila vs. Bio Hong) is or may be Used at

 Inherence refers only to that portion incessant, intervals and
of the tenement affected by it. without the depend upon
Portion not affected can be alienated intervention acts of men
without the servitude. of any act of (Art.615)
 Contract of transmission of easement man.
by owner of the dominant estate (Art.615)
may constitute a renunciation or
extinguishments of easement Apparent Non-
As to WON its existence is
apparent
Made known
(10) It is intransmissible, cannot be and are Show no
alienated separately from the continually external
tenement. It can’t be the object of kept in view indication of
mortgage and exists even if not by external their
annotated. signs that existence
(11) It is indivisible. (618) reveal the (Art.615)
(12) It has permanence. use and
* In general,
enjoyment of
indicated
negative
the same
easements
(Art.615)
are non-
apparent.

PROPERTY CIVIL LAW
servient Positive Negative (a) Positive

easements- from
Imposes upon Prohibits the
the day on which
the owner of owner of the
the owner of the
the servient servient
dominant estate,
estate the estate from
or the person who
of
obligation of doing
may have made
allowing something
use of the
duty
something to which he
easement,
be done or of could lawfully
commenced to
doing it do if the
exercise it upon
As to
himself easement did

owner
the servient estate

(Art.616) not exist
(Art.616) (b) Negative
easements- from
the day on which
General Rules Relating to Servitudes the owner of the
dominant estate
(1) No one can have a servitude over
forbade, by an
his own property
instrument
(2) A servitude cannot consist in
acknowledged
doing
before e notary
(3) There cannot be a servitude over
public, the owner
another servitude
of the servient
(4) A servitude must be exercised
estate, from
civiliter, in a way least
executing an act
burdensome to the owner of the
which would be
land.
lawful without the
(5) A servitude must have a
easement.
perpetual cause.
(Art.621)
Modes of Acquiring Easements

* Prescription does
not require good
(1) By Title All easements faith or just title.
General rules for
a juridical act - continious and
acquisitive
which gives rise to apparent (Art.620)
prescription of
the servitude such
- continous and ownership and
as the law (e.g.
non-apparent other real rights do
donation, contracts
easements not apply to it.
and wills)
(Art.622)
* There must
- discontinous however be
easements, adverse possession
whether apparent or exercise of the
or non-apparent easement.
* Discontinuous (3) By deed of If easement has

easement can only recognition been acquired but
be acquired by title (Art.623) no proof of
and not by existence is
(4) By final
prescription. available, and
judgment
easement is one
(Art.623)
that cannot be
(2) By Continuous and (5) By apparent acquired by
Prescription of apparent sign established prescription
10 years easements by the owner of
(Art.620) 2 adjoining
estates.
The existence of an
The time for
apparent sign of
reckoning
easement between
prescription:
two estates,

PROPERTY CIVIL LAW
established or Easement of light and view go together.

maintained by the Acquisition of easements is by title or by
owner of both, prescription. The visible and permanent
shall be sign of an easement is the title that
considered, should characterizes its existence. Existence of
either of them be the apparent sign had the same effect as
alienated, as a title a title of acquisition of the easement of
in order that the the light and view upon death of original
easement may owner. (Amor vs. Florentino)
continue actively
An easement of a right of way cannot be
and passively,
acquired through prescription because
unless, as the time
possession of right of way is intermittent
the ownership of
and discontinuous. Acquisitive
the two estates is
prescription requires that the possession
divided, the
be continuous or uninterrupted (Art.
contrary should be
1118). (Ronquillo v Roco)
provided in the
title of conveyance
of either of them,
Rights and Obligations of Owners of
or the sign
Dominant and Servient Estates
aforesaid should be
removed before
Art. 625. Upon establishment of an
the execution of
easement, all the rights necessary for
the deed. This
its use are considered granted.
provision shall also
apply in case of
(1) Rights of the dominant estate
the division of a
(EWW)
thing owned in
(a) To use the easement (Art.626)
common by two or
and exercise all rights necessary
more persons.
for the use (Art. 627)
(Art. 624.)
(b) To use at his expense all
necessary works for the use and
preservation of the easement.
(Art. 627)
(c) In a right of way, to ask for
Cases change in width of easement
sufficient for needs of dominant
The road is clearly a servitude
estate.
voluntarily constituted in favor of the
community under Art. 531. Having been
 Such right of way may be
devoted by NNSC to the use of the
demanded when there is
public in general, the road is charged
absolutely no access or even
with public interest. And while so
when there is one, it is difficult or
devoted. NNSC may not establish
grossly insufficient. Art. 651
discriminatory exceptions against any
also provides that “the width of
private persons. (North Negros Sugar
the easement of right of way
Co. vs Hidalgo)
shall be that which is sufficient
Since the construction of the church, for the needs of the dominant
there had been a side door in the wall estate, and may accordingly be
through which the worshippers attending changed from time to time.”
mass enter and leave, passing and (Encarnacion v CA)
entering the land in question. As this use
of the land has been continuous, it is
evident that the church has acquired a (2)Obligations of dominant estate
right to such use by prescription, in view (UNAC)
of the time that has elapsed since the (a) To use easement for the benefit
church was built and dedicated to of immovable and in the manner
religious worship, during which period originally established. (Art. 626)
the Municipality has not prohibited the (b) To notify owner of the servient
passage over the land by persons who estate before making repairs in
attend services held by the church. manner inconvenient to servient
(Municipality of Dumangas vs Bishop estate. (Art. 627)
of Jaro) (c) Not to alter easement or render it
burdensome.

PROPERTY CIVIL LAW
(d) If there are several dominant  If cause for cessation of merger is

estates unless he renounces his inherent like nullity or rescission,
interest: to contribute the easement is reestablished. If
expenses of works necessary for extrinsic, there is no revival.
use and preservation servitude.  If the owner of the merged estate
(Art. 628) sells one of the estates later,
easement is not reestablished.
 Owner of dominant estate has the
right to use accessory servitudes or (2)Non- user for 10 years
those necessary for the use of other (a) Computation of period
servitudes regarded as principals (1) Discontinuous easements:
ones. counted from the day they
 Works must be executed in the ceased to be used
manner of least inconvenience to the (2) Continuous easements:
servient who cannot recover counted from the day an act
indemnity for the inevitable damages adverse to the exercise took
that may be suffered by the servient place
owner. (b) Use by a co-owner of the
 If dominant owner violates dominant estate bars prescription
restrictions, he can be compelled to with respect to others (Art.633)
restore the things their original (c) Servitudes not yet exercised
condition and to pay indemnity for cannot be extinguished by non-user
the damages.
 If dominant tenement is alienated,  Non – user must be due to
transferee can be required to restore abstention by dominant owner and
things their original condition but he not to fortuitous event. If dominant
cannot be required to pay indemnity estate is used in common, exercise
because this is a personal liability of of the easement of one of the co –
the former owner. owner inures to the benefit of all
others and preserves the easement
(3) Rights of the servient estate which is indivisible.
(RC)  Erection of works incompatible with
(a) To retain ownership and use of the exercise of the easement or
his property (Art 630) totally obstructing the servitude,
(b) To change the place and manner agreed to by the owner of the
of the use of the easement dominant estate, amounts to tacit
renunciation and extinguishes the
(4)Obligations of the servient estate servitude.
(IC)  Right or power to claim exercise of
(a) Not to impair the use of the the legal servitude do not prescribe.
easement. (Art. 629)
(b) To contribute proportionately to (3) Impossibility of use
expenses to use the easement
[Art 628(2)]  When either or both of the estates
fall into such condition that the
 Owner of servient tenement must easement cannot be used; but it
abstain from rendering the use of the shall revive if the subsequent
easement more inconvenient to the condition of the estates or either of
owner of the dominant estate. them should again permit its use,
 If owner of the servient estate unless when the use becomes
performs act or constructs works possible, sufficient time for
impairing the use of the servitude, prescription has elapsed, in
the owner of the dominant tenement accordance with the provisions of the
may ask for the destruction of such preceding number;
works and restoration with damages.  This mode arises from the condition
Injunction is another remedy. of the tenements and only suspends
 the servitude unlit such time when it
Modes of Extinguishment of can be used again.
Easements (Art.631) (MINERRO)  10 years cap for suspension,
otherwise, extinguished by
(1)Merger – must be absolute, perfect prescription as previously provided.
and definite, not merely temporary. Eg. Flooding of servient tenement
over which a right of way exists.

PROPERTY CIVIL LAW
(4) Expiration of term or fulfillment XI. LEGAL EASEMENTS

of resolutory condition
DEFINITION
 By the expiration of the term or the Art. 634. Imposed or mandated by law
fulfillment of the condition, if the and which have for their object either
easement is temporary or public use or the interest of private
conditional; persons, and thereby become a
continuing property right.
(5) Renunciation of owner of the
dominant estate 2. KINDS (as to their use or object)
(1) Public legal easements – for public or
communal use
 It must be specific, clear, express. (2) Private legal easements – for the
 Fact that owners of the dominant interest of private persons or for private
estate refrained from claiming the use including:
servitude without any positive act to  Waters
imply a real waiver or renunciation  Right of way
does not bring the case within the  Party Wall
provisions of this article.  Light & View
 Occurs only in voluntary easements.  Drainage
 Intermediate Distances
(6) Redemption agreed upon  Against Nuisance
between the owners.  Lateral & Subjacent Support
 By the redemption agreed upon (1)Laws Governing Legal Easements

between the owners of the dominant
Generally, special laws and the CC
and servient estates.
govern easements but note that
-Voluntary
private legal easements may be
-Stipulated conditions, which
governed by agreement of the
extinguish easements.
interested parties whenever the law
does not prohibit it and no injury is
(7) Other causes not mentioned
suffered by a third person.
(a) Annulment or rescission or
cancellation of the title constituting
(a) Those established for the use of
the easement.
water or easements relating
(b) Termination of the right of grantor
waters (Arts. 637 – 648)
to create the easement ( e.g.
(1) Natural drainage of waters
redemption of the property sold a
with stones or earth carried
retro because of the exercise of the
with them
right of conventional redemption (
 waters which form in upper
Art. 1618)
tenements and flow to the lower
(c) Abandonment of the servient
ones by force of nature and not by
estate
those caused by acts of man.
(d) Eminent domain
 Owner of tenements cannot
(e) Special cause of extinction of legal
construct works to increase the
right of way, the opening of an
burden of this servitude.
adequate outlet to the highway
 Owner of the lower tenements
extinguishes the easement, if
cannot make works which impede
servient owner makes a demand
the servitude. But he can construct
for such extinguishment.(Art. 655)
work necessary to prevent damage
(f) Registration of the servient estate
to himself provided it does not
as FREE
impede the servitude and he does
(g) Permanent impossibility to make
not cause damage to other
use of the easement.
tenements
 Rain water from roofs of buildings
and water from houses must be
received on one’s own land.
 It is the duty of the owner of the
building to direct the rainwater to a
public place or to establish an
easement of passage of water
through a neighboring tenement.

PROPERTY CIVIL LAW
Case Compulsory easements for drawing

The dikes are continuous easements water or for watering animals can be
since it does depend upon the act of imposed only for reasons of public use in
man, but is due to gravity. Being such, it favor of a town or village, after payment
is subject to the extinction to the non- of the proper indemnity. (Art. 640)
user (20 years in the Old Code and 10
years in the New Code). (Ongsiaco v. Easements for drawing water and for
Ongsiaco) watering animals carry with them the
obligation of the owners of the servient
(2) Easements on lands along estates to allow passage to persons and
riverbanks animals to the place where such
easements are to be used, and the
 For public use: 3m zone along indemnity shall include this service.
margins for navigation, floatage, (Art. 641)
fishing and salvage.
 If navigable – Towpath easement for Easements of the right of way for the
navigation and floatage passage of livestock known as animal
 If private land – expropriate, since it path, animal trail or any other, and
is for private use. those for watering places, resting places
and animal folds, shall be governed by
(3) Abutment of Land the ordinances and regulations relating
thereto, and, in the absence thereof, by
 Non – owner builder of the dam pay the usages and customs of the place.
owner of land for the abutment of (Art. 657)
the land.
 abutment – part of dam that extends  Without prejudice to rights legally
to the riverbank or dam acquired, the animal path shall not
 if no easement previously exceed the width of 75 meters, and
established, and the dam floods the the animal trail that of 37 meters
land – injured owner or his and 50 centimeters.
representative can remove it as  Whenever it is necessary to establish
private nuisance. a compulsory easement of the right
of way or for a watering place for
(4) Aqueduct animals, the provisions of this
Section and those of Articles 640 and
Any person who may wish to use upon 641 shall be observed. In this case
his own estate any water of which he the width shall not exceed 10
can dispose shall have the right to make meters.
it flow through the intervening estates,
with the obligation to indemnify their (6) Stop lock and sluice gate
owners, as well as the owners of the
lower estates upon which the waters Art. 647. One who for the purpose of
may filter or descend. (Art. 642.) irrigating or improving his estate, has to
construct a stop lock or sluice gate in
Obligation of the dominant estate: the bed of the stream from which the
(1) To prove that he can dispose of the water is to be taken, may demand that
water and that it is sufficient for the use the owners of the banks permit its
for which it is intended; construction, after payment of damages,
(2) To show that the proposed right of including those caused by the new
way is the most convenient and least easement to such owners and to the
onerous to third persons; other irrigators.
(3) To indemnify the owner of the
servient estate (a)Easement of right of way
 The easement of aqueduct for  Requisites before demanding a right

private interest cannot be imposed of way (Articles 649-650)
on buildings, courtyards, annexes, or (a) owner, or anyone with a real
outhouses, or on orchards or gardens right to cultivate, or use
already existing. immovable
 For legal purposes, the easement of (b) not due to acts of the proprietor
aqueduct shall be considered as of the dominant estate
continuous and apparent. (c) surrounded by immovables
belonging to others, without
(5) Drawing waters and adequate outlet to public highway
watering materials i. absolutely no access

PROPERTY CIVIL LAW
ii. difficult or dangerous to use servitude may be demanded with the

(d) right of way claimed is the least payment of the indemnity.
prejudicial to the servient estate  On the other hand, if grantor/
(e) payment of the proper indemnity exchanger/ vendor‘s property
(i) permanent passage – value of becomes isolated, he must pay
the land indemnity.
(ii) without permanent passage –
payment of damages Art. 654. If the right of way is
permanent, the necessary repairs shall
 To justify the imposition of this be made by the owner of the dominant
servitude, there must be a real estate. A proportionate share of the
necessity for it. Mere convenience is taxes shall be reimbursed by said owner
not enough. Even when there is a to the proprietor of the servient estate.
necessity, if it can be satisfied
without imposing the servitude,  Obligations of praedium dominans;
servitude should not be imposed. necessary repairs, proportionate
 Owner can not by his own act isolate share of taxes.
his property from the public highway
and then claim an easement of way Art. 655. If the right of way granted to
through an adjacent estate. a surrounded estate ceases to be
 Access to highway may be necessary because its owner has joined
demanded: it to another abutting on a public road,
(a) when there is absolutely no the owner of the servient estate may
access to a public highway demand that the easement be
(b) when even if there is one, it is extinguished, returning what he may
difficult or dangerous to use have received by way of indemnity. The
or is grossly insufficient interest on the indemnity shall be
 Payment of the value of the land for deemed to be in payment of rent for the
permanent use of easement does not use of the easement.
mean an alienation of the land The same rule shall be applied in
occupied. case a new road is opened giving access
 Criterion of the least prejudice to the to the isolated estate.
servient estate must prevail over the In both cases, the public highway must
criterion of the shortest distance. substantially meet the needs of the
(Quimen v. Quimen) dominant estate in order that the
 Before judicial decision, easement may be extinguished.
establishment of any road would
constitute an invasion of the land  Extinguishment Not Ipso Jure –
with all consequences resulting from (only) owners of the servient estate
such transgression. has to ask for it and return
 It is the needs of the dominant indemnity.
estate which determines the width of  Owner of the dominant estate may
the passage. Servitude may thus be not ask for the return of the
modified after it has already been indemnity unless servient owner asks
established. for the extinguishment.
 Offset interest of the indemnity with
Whenever a piece of land acquired by rentals of the land.
sale, exchange or partition, is
surrounded by other estates of the Art. 656. If it be indispensable for the
vendor, exchanger, or co-owner, he construction, repair, improvement,
shall be obliged to grant a right of way alteration or beautification of a building,
without indemnity. to carry materials through the estate of
another, or to raise therein scaffolding
In case of a simple donation, the donor or other objects necessary for the work,
shall be indemnified by the donee for the the owner of such estate shall be obliged
establishment of the right of way. (Art. to permit the act, after receiving
652) payment of the proper indemnity for the
damage caused him.
 Servitude without indemnity is
considered as a tacit condition of the  This may be demanded by owner and
sale, exchange or partition, but not usufructuary.
implied in a simple donation.  Word indispensable should not be
 When the right of way originally understood as indicating that it
established without indemnity should would be impossible to construct or
disappear or become useless, a legal repair the building. It is enough that

PROPERTY CIVIL LAW
it would be extremely difficult to do

so without the easement. Art. 659. The existence of an easement
of party wall is presumed, unless there
Animal Path is a title, or exterior sign, or proof to the
 Without prejudice to rights legally contrary:
acquired, the animal path shall not (1) In dividing walls of adjoining
exceed the width of 75 meters, and buildings up to the point of common
the animal trail that of 37 meters elevation;
and 50 centimeters. (2) In dividing walls of gardens or yards
 Whenever it is necessary to establish situated in cities, towns, or in rural
a compulsory easement of the right communities;
of way or for a watering place for (3) In fences, walls and live hedges
animals, the provisions of this dividing rural lands.
Section and those of articles 640 and
641 shall be observed. In this case  Co-ownership must be accepted
the width shall not exceed 10 unless the contrary appears from the
meters.(570a) title showing that the entire wall
belongs exclusively to one of the
Cases property owners or unless there is an
exterior sign to destroy such
A voluntary easement of right of way presumption.
could be extinguished only by mutual
agreement or by renunciation of the Art. 660. It is understood that there is
owner of the dominant estate. The an exterior sign, contrary to the
opening of an adequate outlet to a easement of party wall:
highway can extinguish only legal or (1) Whenever in the dividing wall of
compulsory easements, not voluntary buildings there is a window or opening;
easements. (La Vista v. CA) (2) Whenever the dividing wall is, on
one side, straight and plumb on all its
An easement of right of way can be facement, and on the other, it has
established through continued use. similar conditions on the upper part Art.
(Vda. de Baltazar v CA) 657. Easements of the right of way for
the passage of livestock known as
(c) Easement of party wall animal path, animal trail or any other,
and those for watering places, resting
Art. 658. The easement of party wall places and animal folds, shall be
shall be governed by the provisions of governed by the ordinances and
this Title, by the local ordinances and regulations relating thereto, and, in the
customs insofar as they do not conflict absence thereof, by the usages and
with the same, and by the rules of co- customs of the place.
ownership Without prejudice to rights legally
acquired, the animal path shall not
 Party wall is a co-ownership in a exceed in any case the width of 75
special class by itself: meters, and the animal trail that of 37
(1) It is indivisible. meters and 50 centimeters.
(2) The part pertaining to each co- Whenever it is necessary to establish a
owner can be materially compulsory easement of the right of way
designated. or for a watering place for animals, the
(3) Rights of a co-owner of a party provisions of this Section and those of
wall are greater than those of an Articles 640 and 641 shall be observed.
ordinary co-owner and with In this case the width shall not exceed
respect to increasing the height 10 meters. (570a), but the lower part
of the wall. slants or projects outward;
 Wall may be owned in common by (3) Whenever the entire wall is built
the adjoining owners either form its within the boundaries of one of the
construction or by a subsequent act. estates;
Each owner can insert the beams of (4) Whenever the dividing wall bears the
his building in the wall to the extent burden of the binding beams, floors and
of its entire thickness. roof frame of one of the buildings, but
 A party wall is one which is built by not those of the others;
common agreement by getting land (5) Whenever the dividing wall between
from the adjoining tenements in courtyards, gardens and tenements is
equal parts. Each owner may use the constructed in such a way that the
wall but only to the extent of one- coping sheds the water upon only one of
half of its thickness. the estates;

PROPERTY CIVIL LAW
(6) Whenever the dividing wall, being necessary for the preservation of the
built of masonry, has stepping stones, party wall by reason of the greater
which at certain intervals project from height or depth which has been given it.
the surface on one side only, but not on If the party wall cannot bear the
the other; increased height, the owner desiring to
(7) Whenever lands inclosed by fences raise it shall be obliged to reconstruct it
or live hedges adjoin others which are at his own expense and, if for this
not inclosed. purpose it be necessary to make it
In all these cases, the ownership of the thicker, he shall give the space required
walls, fences or hedges shall be deemed from his own land.
to belong exclusively to the owner of the
property or tenement which has in its Art. 665. The other owners who have
favor the presumption on any one of not contributed in giving increased
these signs. (573) height, depth or thickness to the wall
may, nevertheless, acquire the right of
part-ownership therein, by paying
Art. 661. Ditches or drains opened proportionally the value of the work at
between two estates are also presumed the time of the acquisition and of the
as common to both, if there is no title or land used for its increased thickness.
sign showing the contrary.
There is a sign contrary to the part- Art. 666. Every part-owner of a party
ownership whenever the earth or dirt wall may use it in proportion to the right
removed to open the ditch or to clean it he may have in the co-ownership,
is only on one side thereof, in which without interfering with the common and
case the ownership of the ditch shall respective uses by the other co-owners.
belong exclusively to the owner of the
land having this exterior sign in its  Each part-owner can use the party
favor. wall only in proportion to his interest
Art. 662. The cost of repairs and (d) Easement of Light and View
construction of party walls and the
maintenance of fences, live hedges, Art. 667. No part-owner may, without
ditches, and drains owned in common, the consent of the others, open through
shall be borne by all the owners of the the party wall any window or aperture of
lands or tenements having the party wall any kind.
in their favor, in proportion to the right
of each.  Such act would imply the exercise of
Nevertheless, any owner may exempt the right of ownership by the use of
himself from contributing to this charge the entire thickness of the wall. It
by renouncing his part-ownership, would be an invasion of the right of
except when the party wall supports a the other part owners.
building belonging to him.
Art. 668. The period of prescription for
the acquisition of an easement of light
Art. 663. If the owner of a building, and view shall be counted:
supported by a party wall desires to (1) From the time of the opening of the
demolish the building, he may also window, if it is through a party wall; or
renounce his part-ownership of the wall, (2) From the time of the formal
but the cost of all repairs and work prohibition upon the proprietor of the
necessary to prevent any damage which adjoining land or tenement, if the
the demolition may cause to the party window is through a wall on the
wall, on this occasion only, shall be dominant estate.
borne by him.
Art. 669. When the distances in Article
670 are not observed, the owner of a
Art. 664. Every owner may increase the wall which is not party wall, adjoining a
height of the party wall, doing at his own tenement or piece of land belonging to
expense and paying for any damage another, can make in it openings to
which may be caused by the work, even admit light at the height of the ceiling
though such damage be temporary. joints or immediately under the ceiling,
The expenses of maintaining the wall in and of the size of thirty centimeters
the part newly raised or deepened at its square, and, in every case, with an iron
foundation shall also be paid for by him; grating imbedded in the wall and with a
and, in addition, the indemnity for the wire screen.
increased expenses which may be

PROPERTY CIVIL LAW
Nevertheless, the owner of the tenement rise to the easement of light and
or property adjoining the wall in which view by prescription.
the openings are made can close them
should he acquire part-ownership Art. 672. The provisions of Article 670
thereof, if there be no stipulation to the are not applicable to buildings separated
contrary. by a public way or alley, which is not
He can also obstruct them by less than three meters wide, subject to
constructing a building on his land or by special regulations and local ordinances.
raising a wall thereon contiguous to that
having such openings, unless an Art. 673. Whenever by any title a right
easement of light has been acquired. has been acquired to have direct views,
balconies or belvederes overlooking an
 Openings allowed are for the purpose adjoining property, the owner of the
of admitting light. They can be servient estate cannot build thereon at
made only in the walls of buildings less than a distance of three meters to
and not in the walls separating be measured in the manner provided in
gardens or yards because they have Article 671. Any stipulation permitting
no need for such openings distances less than those prescribed in
 The period to require the closing of Article 670 is void. Art. 673. Whenever
the illegal opening begins to run from by any title a right has been acquired to
the moment such opening is made. have direct views, balconies or
But it is only the action to compel the belvederes overlooking an adjoining
closure which prescribes property, the owner of the servient
 Although action to compel the closing estate cannot build thereon at less than
has prescribed, this does not mean a distance of three meters to be
servitude has been acquired by measured in the manner provided in
person who opened them. Servitude Article 671. Any stipulation permitting
is negative and period for acquisitive distances less than those prescribed in
prescription will begin to run only Article 670 is void.
from the time that the owner
asserting the servitude has forbidden  This article refers to a true servitude.
the owner of adjoining tenement Acquisition may be through contact,
from doing something he latter could testament, or prescription. Distance
lawfully do without the servitude. may be increased by stipulation of
the parties. It may also be extended
Art. 670. No windows, apertures, by prescription.
balconies, or other similar projections
which afford a direct view upon or (e)Drainage of Buildings
towards an adjoining land or tenement
can be made, without leaving a distance Art. 674. The owner of a building shall
of two meters between the wall in which be obliged to construct its roof or
they are made and such contiguous covering in such manner that the rain
property. water shall fall on his own land or on a
Neither can side or oblique views upon street or public place, and not on the
or towards such conterminous property land of his neighbor, even though the
be had, unless there be a distance of adjacent land may belong to two or
sixty centimeters. more persons, one of whom is the owner
The nonobservance of these distances of the roof. Even if it should fall on his
does not give rise to prescription. own land, the owner shall be obliged to
collect the water in such a way as not to
 Direct View— that which is obtained cause damage to the adjacent land or
from a wall parallel to the boundary tenement.
line, such that from the opening in
such wall, it is possible to see the  Falling water is res nullius and has
adjoining tenement without the no owner. Every owner of a house
necessity of putting out or turning or building would have aright to
one’s head dispose of it in any manner even to
 Side or oblique view—that which is the prejudice of neighbors had it not
obtained from a wall a an angle with been for the provisions in this Code
the boundary line such that in order  Last sentence is an exception to Art
to see the adjoining tenement, it is 637 which requires lower tenements
necessary to put out or turn one’s to receive water flowing naturally
head to the left or to the right from higher tenements.
 Mere opening of windows in violation
of the present article does not give

PROPERTY CIVIL LAW
Art. 675. The owner of a tenement or a any damage to the neighboring lands or
piece of land, subject to the easement of tenements.
receiving water falling from roofs, may
build in such manner as to receive the Art. 679. No trees shall be planted near
water upon his own roof or give it a tenement or piece of land belonging to
another outlet in accordance with local another except at the distance
ordinances or customs, and in such a authorized by the ordinances or customs
way as not to cause any nuisance or of the place, and, in the absence
damage whatever to the dominant thereof, at a distance of at least two
estate. meters from the dividing line of the
estates if tall trees are planted and at a
 Receive water through distance of at least fifty centimeters if
(1) another roof shrubs or small trees are planted.
(2) another outlet Every landowner shall have the right to
 In accordance with local ordinances demand that trees hereafter planted at a
or customs shorter distance from his land or
 Not a nuisance to the dominant tenement be uprooted.
estate The provisions of this article also apply
to trees which have grown
Art. 676. Whenever the yard or court of spontaneously. (591a)
a house is surrounded by other houses,
and it is not possible to give an outlet
through the house itself to the rain Art. 680. If the branches of any tree
water collected thereon, the should extend over a neighboring estate,
establishment of an easement of tenement, garden or yard, the owner of
drainage can be demanded, giving an the latter shall have the right to demand
outlet to the water at the point of the that they be cut off insofar as they may
contiguous lands or tenements where its spread over his property, and, if it be
egress may be easiest, and establishing the roots of a neighboring tree which
a conduit for the drainage in such should penetrate into the land of
manner as to cause the least damage to another, the latter may cut them off
the servient estate, after payment of the himself within his property.
property indemnity.
 Owner of the neighboring tenement
can cut the roots without necessity of
(f) Intermediate Distances notice to the owner of the trees. But
and Works for Certain as to the branches, it is necessary to
Constructions and Plantings as that they be cut.
Art. 677. No constructions can be built Art. 681. Fruits naturally falling upon
or plantings made near fortified places adjacent land belong to the owner of
or fortresses without compliance with said land.
the conditions required in special laws,
ordinances, and regulations relating (g) Easement against Nuisance
thereto.
Art. 682. Every building or piece of land
Art. 678. No person shall build any is subject to the easement which
aqueduct, well, sewer, furnace, forge, prohibits the proprietor or possessor
chimney, stable, depository of corrosive from committing nuisance through
substances, machinery, or factory which noise, jarring, offensive odor, smoke,
by reason of its nature or products is heat, dust, water, glare and other
dangerous or noxious, without observing causes.
the distances prescribed by the
regulations and customs of the place, Art. 683. Subject to zoning, health,
and without making the necessary police and other laws and regulations,
protective works, subject, in regard to factories and shops may be maintained
the manner thereof, to the conditions provided the least possible annoyance is
prescribed by such regulations. These caused to the neighborhood.
prohibitions cannot be altered or
renounced by stipulation on the part of Nuisance—that class of wrongs which
the adjoining proprietors. arise from unreasonable, unwarranted,
In the absence of regulations, such or unlawful use by a person of his own
precautions shall be taken as may be property and which produces material
considered necessary, in order to avoid annoyance, inconvenience, discomfort,

PROPERTY CIVIL LAW
or harm that the law will presume a

consequent damage. Art. 687. Any proprietor intending to
make any excavation contemplated in
 Whether the effects of the use of the three preceding articles shall notify
one’s property constitutes a nuisance all owners of adjacent lands.
depends upon the circumstances.
Their penetration into another  Notice enables the adjoining owner
tenement in a limited measure is to take the necessary precautions to
permissible. Even if these effects protect their lands and buildings. It
cause material injury, they would must be sufficient to inform the
constitute a nuisance if they result nature and the extent of the
from the utilization of a tenement in proposed excavation.
a manner which is usual or current in Although person making the excavation
the locality. has given notice, he is bound to exercise
reasonable care and skill so as not to
cause damage.
(h) Easement of Lateral and
Subjacent Support
XII. VOLUNTARY EASEMENTS
Art. 684. No proprietor shall make such
excavations upon his land as to deprive Art. 688. Every owner of a tenement or
any adjacent land or building of piece of land may establish thereon the
sufficient lateral or subjacent support. easements
 which he may deem suitable, and
 Owner has a right to excavate on his  in the manner and form which he
own land up to the boundary line of may deem best
the building land. This easement  provided he does not contravene
prevents him from excavating so the laws, public policy or public
close as to deprive the adjoining order
estate of its natural support and
cause it to crumble. Art. 690. Whenever the naked
 There are cases where surface ownership of a tenement or piece of land
belongs to one person and substrata belongs to one person and the beneficial
may belong to or be lawfully used by ownership to another, no perpetual
others. This is where easement of voluntary easement may be established
subjacent support exists. Owners of thereon without the consent of both
rights below the surface may owners.
excavate but this imposes upon them
the duty to refrain from removing Art. 691. In order to impose an
such sufficient support which will easement on an undivided tenement, or
protect the surface from subsiding piece of land, the consent of all the co-
owners shall be required.
Remedies for violation:
(1) Action for damages The consent given by some only, must
(2) Injunction be held in abeyance until the last one of
 Action may be maintained against all the co-owners shall have expressed
anyone who causes the injury his conformity.
whether he is the owner or not.
Contractor is liable jointly with the But the consent given by one of the co-
owner of the land. It is the person owners separately from the others shall
who made the excavation which bind the grantor and his successors not
causes the injury and not the person to prevent the exercise of the right
in possession when the injury occurs, granted.
who is liable for damages.
Art. 693. If the owner of the servient
Art. 685. Any stipulation or estate should have bound himself, upon
testamentary provision allowing the establishment of the easement, to
excavations that cause danger to an bear the cost of the work required for
adjacent land or building shall be void. the use and preservation thereof, he
may free himself from this obligation by
Art. 686. The legal easement of lateral renouncing his property to the owner of
and subjacent support is not only for the dominant estate.
buildings standing at the time the
excavations are made but also for
constructions that may be erected.

PROPERTY CIVIL LAW
Who may establish voluntary (2) Annoys or offends the senses; or

easements: (3) Shocks, defies or disregards decency
 The OWNER possessing capacity to or morality; or
ENCUMBER property may constitute (4) Obstructs or interferes with the free
voluntary servitudes. (Art. 688) passage of any public highway or street,
 The usufructuary, and even the or any body of water; or
possessor in good faith, does not (5) Hinders or impairs the use of
have the right to do so because the property.
creation of a servitude is a Classification of Nuisance
disposition of part of the right of Nature
ownership, and no one but an 1. Nuisance Per Se or at Law
owner may do this. 2. Nuisance Per Accidens or in Fact
 A general capacity to contract is not
sufficient. Scope Of Their Injurious Effects
 If there are various owners, ALL 1. Public
must CONSENT, but consent once 2. Private
given is irrevocable. (Art. 690 and 3. Mixed
691)
 Hence, their consent need not be Nuisance Per Se (Nuisance at Law)
simultaneous.  nuisance at all times and under any
circumstances, REGARDLESS OF
In whose favor they are established: LOCATION OR SURROUNDINGS.
(a)Praedial Servitudes
 For the owner of the dominant Nuisance Per Accidens (Nuisance in
estate Fact)
 For any other person having any  One that becomes a nuisance by
juridical relation with the reason of circumstances and
dominant estate, if the owner surroundings
ratifies it.
(b)Personal Servitudes Public Nuisance
 For anyone capacitated to accept  It causes hurt, inconvenience, or injury
to the public, generally, or to such part
In case of property under usufruct of the public as necessarily comes in
 The usufructuary must not be contact it
prejudiced (Art 689)  public nuisance=common nuisance
 It is a direct encroachment upon public
Rights and Obligations rights or property which results
 These are determined by the— injuriously to the public
(1) Title, and
(2) Possession (in case of Private Nuisance
prescription enlarging or  One which violates only private rights
diminishing the initial voluntary and produces damages to but one or a
easement) (Art. 692) few persons
 Where the owner bound himself
to pay for the maintenance or do Liability of Creator of Nuisance
some service he may abandon his  General Rule: he who creates a
tenement and relieve himself of his nuisance is liable for the resulting
obligation (Art. 693) damages and, ordinarily, his liability
continues as long as the nuisance
 To produce the transmission of continues.
ownership over the tenement  He whose duty is to abate a nuisance
abandoned, the abandonment must should answer for the consequences
be made in the proper juridical form resulting from its continuance
required for the transmission of the  No one is to be held liable for a
ownership of immovable property. nuisance which he cannot himself
physically abate
 All parties to the creation or
XIII. NUISANCE maintenance of a nuisance per se are
responsible for its effect without
Art. 694. A nuisance is any act, limitation of conditions or of time.
omission, establishment, business,
condition of property, or anything else Liability of Transferees
which: (HOSDU)  To render him liable, he must
(1) Injures or endangers the health or knowingly continue the nuisance, and
safety of others; or generally, he is not liable for

PROPERTY CIVIL LAW
continuing it in its original form, unless  In other words, a public nuisance is

he has been notified of its existence not actionable by an individual unless
and requested to remove it, or has and until it becomes as to him, a
actual knowledge that it is a nuisance private nuisance; i.e., until he suffers
and injurious to the rights of others. some special and definite harm.
 Nature of liability is solidary
Art. 704. Any private person may abate
Art. 697. The abatement of a nuisance a public nuisance which is specially
does not preclude the right of any injurious to him by removing, or if
person injured to recover damages for necessary, by destroying the thing which
its past existence. constitutes the same, without
committing a breach of the peace, or
Art. 698. Lapse of time cannot legalize doing unnecessary injury. But it is
any nuisance, whether public or private. necessary:
(1) That demand be first made upon the
No Prescription owner or possessor of the property to
 The creation and maintenance of a abate the nuisance;
public nuisance is punishable criminally (2) That such demand has been
hence, it should prevent the rejected;
acquisition of a right to maintain it. (3) That the abatement be approved by
the district health officer and executed
Art. 699. The remedies against a public with the assistance of the local police;
nuisance are: and
(1) A prosecution under the Penal Code (4) That the value of the destruction
or any local ordinance (only for public does not exceed three thousand pesos.
nuisance): or
(2) A civil action; or Right of Individual to Abate a Public
(3) Abatement, without judicial Nuisance
proceedings. Requisites
1. Must be exercised only in cases
Judgment With Abatement of urgent or extreme necessity
2. Nuisance must be actually
Art. 700. The district health officer shall existing at the time when
take care that one or all of the remedies abatement is undertaken
against a public nuisance are availed of. 3. The summary abatement should
be resorted to within a reasonable
Art. 701. If a civil action is brought by time after knowledge of the
reason of the maintenance of a public nuisance is acquired or should have
nuisance, such action shall be been acquired by the person
commenced by the city or municipal entitled to abate
mayor. 4. Must give a reasonable notice of
his intention; a demand must be
Art. 702. The district health officer shall made
determine whether or not abatement, 5. The means employed must be
without judicial proceedings, is the best reasonable
remedy against a public nuisance. 6. The abatement must be approved
by the district health officer
Art. 703. A private person may file an 7. The property must not be
action on account of a public nuisance, if destroyed unless it is absolutely
it is specially injurious to himself. necessary to do so; the civil code,
however, provides a limitation, that
Special Injury to Individual the value of destruction shall not
 GENERAL RULE: a public nuisance exceed three thousand pesos
gives no right of action to any 8. The right must always be
individual but must be abated by a exercised with the assistance of the
proceeding instituted in the name of local police
the State
 EXCEPTION: an individual who Art. 705. The remedies against a
suffered some special damage by private nuisance are:
reason of a public nuisance, different (1) A civil action; or
from that sustained by the general (2) Abatement, without judicial
public, may maintain a suit in equity proceedings.
for an injunction to abate it, or an
action for damages

PROPERTY CIVIL LAW
Right to Damages title of ownership and of real rights

 A person may maintain an action at which affect it and even where the
law for damages caused by a nuisance capacity of free disposition on the part
 The payment of damages is generally of an individual is modified
a mere reparation for past injuries,
and not an authority to continue the Purposes of the Principle of Publicity
wrong.  To give notice of the true status of the
 each repetition of it gives rise to a new property
cause of action  To record transmissions and
modifications of real rights
Defenses to Action  To prevent fraud
 Public Necessity  To guarantee the effectivity of rights
 Estoppel
Art. 709. The titles of ownership, or of
Art. 706. Any person injured by a other rights over immovable property,
private nuisance may abate it by: which are not duly inscribed or
 removing, or annotated in the Registry of Property
 if necessary, by destroying the shall not prejudice third persons.
thing which constitutes the
nuisance Art. 710. The books in the Registry of
o without committing a Property shall be public for those who
breach of the peace or have a known interest in ascertaining
doing unnecessary injury the status of the immovables or real
o procedure for extrajudicial rights annotated or inscribed therein.
abatement of a public
nuisance by a private Art. 711. For determining what titles
person be followed are subject to inscription or annotation,
as well as the form, effects, and
Who may sue on Private Nuisances cancellation of inscriptions and
 Ownership of the legal title is not annotations, the manner of keeping the
necessary. Even a possessor may sue books in the Registry, and the value of
the entries contained in said books, the
Art. 707. A private person or a public provisions of the Mortgage Law, the
official extrajudicially abating a nuisance Land Registration Act, and other special
shall be liable for damages: laws shall govern.
(1) If he causes unnecessary injury; or

(2) If an alleged nuisance is later
XV. DIFFERENT MODES OF
declared by the courts to be not a real ACQUIRING OWNERSHIP
nuisance.
TITLE - the remote cause of
Remedies of Property Owner
acquisition
 He may bring an action for replevin, or Every juridical right which gives a means
enjoin its sale and damages if it is has
to the acquisition or real rights but
been sold; or action to enjoin private
which in itself is insufficient
parties from proceeding to abate a
supposed nuisance MODE- the proximate cause of
 Ask court to determine WON it is
acquisition
indeed a nuisance
The specific cause which produces
dominion and other real rights as a
result of the co-existence of special
XIV. REGISTRY OF PROPERTY status of things, capacity, and intention
of persons and fulfillment of the
Art. 708. The Registry of Property has requisites of law
for its object the inscription or
annotation of acts and contracts relating Modes of acquiring ownership
to the ownership and other rights over (POSTDI)
immovable property. 1) Occupation
2) Intellectual Creation
Concept 3) Donation
 The Registry of Real Property may be 4) Prescription
defined as a public center where the 5) Succession
true condition of real estate is made 6) Tradition
clear by registering all transferable

PROPERTY CIVIL LAW
XVI. PRESCRIPTION Things not subject to prescription:

1. public domain
It is the mode by which one 2. in transmissible rights
acquires ownership and other real rights 3. movables possessed through a
thru lapse of time; also a means by crime
which one loses ownership, rights & 4. registered land
actions; retroactive from the moment
period began to run Renunciation of prescription:
Kinds:  persons with capacity to alienate
1. Acquisitive may renounce prescription
1. Extinctive already obtained but not the right
to prescribe in the future
Comparison between Acquisitive  may be express or tacit
Prescription and Extinctive Prescription  prescription is deemed to have
Acquisitive Extinctive been tacitly renounced;
Prescription Prescription renunciation results from the acts
Usurpacion Prescription w/c imply abandonment of right
It is the possessor One looks at the acquired
who does the act neglect of the  creditors & persons interested in
owner/ his making prescription effective may
omission avail themselves notwithstanding
Expressly vests the Statute of express or tacit renunciation
property and limitation that
raised a new title merely bars the
Prescription Of Ownership & Other
in the occupant right of action
Real Rights
Important feature Important feature
is the claimant in is the owner out of
possession possession Kinds of Acquisitive prescription
1. ordinary
2. extra-ordinary
Who may acquire by prescription:
a. person who are capable of Requisites for ordinary prescription:
acquiring property by other legal 1. possession in good faith
modes 2. just title
b. STATE 3. within time fixed by law
c. minors – through guardians of  4 years for movables
personally  8 years for immovables
4. in concept of an owner
Against whom prescription run: 5. public, peaceful, uninterrupted
1. minors & incapacitated person
who have guardians Requisites for extra-ordinary
2. absentees who have prescription:
administrators 1. just title is proved
3. persons living abroad who 2. within time fixed by law
have administrators  10 years for movables
4. juridical persons except the  30 years for immovables
state with regards to property 3. in concept of an owner
not patrimonial in character 4. public, peaceful, uninterrupted
5. between husbands & wife
6. between parents & children  GOOD FAITH- Reasonable belief that
(during minority/insanity) person who transferred thing is the
7. between guardian & ward owner & could validly transmit
(during guardianship) ownership
8. between co-heirs/co-owners -Must exist throughout the entire
9. between owner of property & period required for prescription
person in possession of
property in concept of holder  JUST TITLE (TRUE & VALID) –
must be proved & never
Things subject to prescription: all things presumed
within the commerce of men a) Titulo Colorado -
a. private property b) Titulo putativo -
b. patrimonial property of the state  title must be one which would
have been sufficient to

PROPERTY CIVIL LAW
transfer ownership if grantor Prescription of Actions

had been the owner By lapse of time fixed by law
 through one of the modes of  30 years
transferring ownership but -action over immovables from
there is vice/defect in time possession is lost
capacity of grantor to  10 years
transmit ownership -mortgage action
-upon written contract
 IN CONCEPT OF OWNER -upon obligation created by law
 possession not by mere -upon a judgement
tolerance of owner but  8 years
adverse to that of the owner -action to recover movables from
 claim that he owns the time possession is lost
property  6 years
-upon an oral contract
 PUBLIC, PEACEFUL & -upon a quasi-contract
UNINTERRUPTED  5 years
 Must be known to the owner -actions if periods are not fixed
of the thing by law
 Acquired & maintained w/o  4 years
violence -upon injury to rights of plaintiff
 Uninterrupted (no act of -upon a quasi-delict
deprivation by others) in the  1 year
enjoyment of property -for forcible entry & detainer
-for defamation
Interruption
a) Natural Rights not extinguished by
-through any cause, possession ceases prescription:
for more than 1 year 1. demand right of way
-if 1 year of less – as if no interruption 2. abate public /private nuisance
3. declare contract void
b) Civil 4. recover property subject to
-produced by judicial summons; except expressed trust
 void for lack of legal solemnities 5. probate of a will
 plaintiff desist from 6. quiet title
complaint/allow proceedings to
lapse
 possessor is absolved from XVII. TRADITION
complaint Requisites:
i. express or tacit 1. Pre-existence of right in estate of
renunciation grantor
ii. possession in wartime 2. Just cause or title for the
transmission
 RULES IN COMPUTATION OF 3. Intention- of both grantor and
PERIOD: grantee
a. Present possessor may tack his 4. Capacity- to transmit and to
possession to that of his grantor acquire
or predecessor in interest 5. An act giving it in outward form,
b. Present possessor presumed to physically, symbolically, or legally
be in continuous possession I
intervening time unless contrary Legal Maxim:
is proved “Non nudis pactis, sed tranditione,
c. First day excluded, last day dominia rerum transferentur”
included (Not by mere agreement but by delivery,
is ownership transferred)
Tacking Period
 there must be privity between Kinds of Tradition:
previous & present possessor
 possible when there is succession of a. Real Tradition
rights b. Constructive Tradition
 if character of possession different: i. Symbolic Delivery
predecessor in bad faith possessor ii. Delivery by Public Instrument
in good faith – use extraordinary iii. Traditio Longa Manu- “long
prescription hand”; placed in the sight of

PROPERTY CIVIL LAW
vendee so that he can take service or

possession of the property labor
anytime
iv. Traditio Brevi Manu- “short Lease of things
hand”; transferee already in (1) Concept
possession of the property but
not as owner Art. 1643. In the lease of things, one of
v. Traditio Constitum the parties binds himself to give to
Possessorium- owner remains another the enjoyment or use of a thing
in possession but not as owner for a price certain, and for a period
e.g. lease which may be definite or indefinite.
vi. Quasi-Tradition- subject However, no lease for more than ninety-
matter: property right; e.g. right nine years shall be valid.
to collect credit
vii. Tradition by operation of law (2) Consumable things cannot be the
subject matter of lease, Except
(a) consumables only for display
XVIII. LEASE or advertising. eg. Wedding
cakes for display in
General Characteristics of Every Goldilocks, wine in a
Lease showcase of a store
(1) Temporary duration (b) goods are accessory to an
(2) Onerous industrial establishment e.g.,
(3) Price is fixed according to coal in a factory
contract duration
(3) Special characteristics of lease of
Kinds of Lease things;
(1) Lease of things—movables and (a) essential purpose is to
immovables transmit the use and
 no lease for more than 99 years enjoyment of a thing
shall be valid (b) consensual
(c) onerous
(2) Lease of work or contract of (d) price fixed in relation to
labor period of use or enjoyment
 no relation of principal and agent (e) temporary
does not exist between them.
(4) Lease distinguished from sale,
(3) Lease of Services usufrunct, commodatum
 no principle of representation
unlike in agency In case of doubt-INTENTION of the
 The will of both parties is parties should be the guide in determining
necessary for the extinguishment the contract entered into.
of the obligation Lease Sale
(i) Only the use or
Lease of Contract for enjoyment of the
Service a piece of things is
work transferred, and
Manner of The price is In proportion only for a
paying the paid in to the work determinate period
price relation to accomplished Plain redundancy to Price of the thing
the fix or mention the was fixed in the
duration of price of the thing contract
the labor or which is the subject-
service matter thereof
Existence If the lessor If the lessor May be in money, or Price must be in
of a workstation works by in fruits, or in some money or its
relation of under the himself, other useful thing or equivalent
dependenc direction of independently some other
e between the lessee, of the lessee, prestation
lessor and receiving in the manner
lessee instructions he deems
from him most
on the adequate for
manner of the execution Lease Usufruct
rendering of the work

PROPERTY CIVIL LAW
Real right only by Always a real right  CANNOT be perpetual- there

exception: when must always be a period, which
registered and for may be definite or indefinite
more than 1 year  If the period is indefinite, and the
Constitutor/Lessor To constitute thing leased is rural land,
need not be an usufruct, constitutor art.1682 shall apply; if it is urban
owner e.g. must be the owner land art. 1687 governs.
sublessor,  If the thing is neither rural nor
usufruct urban land, the provisions of the
Lessor places and Owner merely allows two articles should be applied by
maintains lessee usufructuary to use analogy.
in the enjoyment and enjoy the
of the thing property (i) rural land
Use is limited to Includes all possible
that written in the uses and manner of Art. 1682. The lease of a piece of rural
contract enjoyment of land, when its duration has not been
property EXCEPT in fixed, is understood to have been for all
distinction of normal the time necessary for the gathering of
or abnormal usufruct the fruits which the whole estate leased
Must be definite, Maybe for an may yield in one year, or which it may
otherwise court indefinite period of yield once, although two or more years
may fix the same time have to elapse for the purpose.
through the
proper action (ii) urban land
BOTH the lessee and the usufructuary
USE and ENJOY the thing. Art. 1687. If the period for the lease
has not been fixed, it is understood to
Lease Commodatum be from year to year, if the rent agreed
Consists in the Consists in the upon is annual; from month to month, if
cessation of the use cessation of a thing it is monthly; from week to week, if the
of a thing to to another but this rent is weekly; and from day to day, if
another but this is is essentially the rent is to be paid daily.
essentially onerous gratuitous
BOTH consist in the cession of the use of Rent Courts can fix a longer term
a thing to another monthly lessee occupied premises for
more than a year
(5) Price In Lease
 Price may be in money, or in weekly lessee has been in possession
fruits, or in some other useful for over six months
things; some other prestation Daily lessee has stayed in the place
 TENANCY CONTRACT- when the for over one month
price consists of a certain
percentage of the fruits obtained Capacity of Lessee
from the thing. But is regarded as Those who are disqualified to buy certain
having the character more of a things cannot lease such things. (ART.
partnership rather than a lease. 1646, 1490,1491)
Amount of Rent Lease of Real Estate

 If the parties are not able to fix Every lease of real estate may be
the price, or the basis for its recorded in the Registry of Property to
determination, the contract is be binding upon 3rd persons.
ABSOLUTELY VOID. If the lessee
has entered upon the possession Purchase of Leased Land
and enjoyment of the thing, he  Where a purchaser of land at the
will be liable for the damages for time of the purchase has FULL
the occupation of the thing. KNOWLEDGE of the fact that the land
has been leased to a third person, he
(6) Period of lease is BOUND to respect said lease,
 When the lease is for such time although it is not recorded upon the
as the lessor or lessee may certificate of title.
please, it is considered as on for
life, ending upon the death of the (7) Assignment of lease
party who would have terminated Art. 1649. The lessee cannot assign the
the contract. lease without the consent of the lessor,

PROPERTY CIVIL LAW
unless there is a stipulation to the preservation of the thing leased in the

contrary. manner stipulated between the lessor
and the lessee.
 However, a mere transfer of
rights of the lessee, and not of (i) for rents
the contract itself, would not
require the lessor’s consent, Art. 1652. The sublessee is subsidiarily
unless there is an express liable to the lessor for lessee’s rent but
stipulation to the contrary. not responsible beyond the amount of
rent due from him at the time of the
(8) Sublease extrajudicial demand by the lessor.
Payments of rent in advance by the
Art. 1650. When in the contract of lease sublessee shall be deemed not to have
of things there is no express prohibition, been made, so far as the lessor's claim
the lessee may sublet the thing leased, is concerned, unless said payments were
in whole or in part, without prejudice to effected in virtue of the custom of the
his responsibility for the performance of place.
the contract toward the lessor.
(ii) for the use and preservation
Assignment of Sublease of the thing leased
lease  Without prejudice to his obligation
There is a transfer Merely another toward the sublessor, the
to a third person of contract of lease, sublessee is bound to the lessor for
the rights and where the original all the acts which refer to the use
obligations arising lessee becomes in and preservation of the thing
from the lease turn a lessor leased in the manner stipulated
contract between the lessor and the lessee.
A sale of the Even when the
lessee’s rights, and lessor consents to (9) Rights and obligations of lessor
when the lessor the sub-lease, the and lessee
gives his consent, original lease
the original lessee contract subsists (a) obligation of lessor
is released and is binding on
the lessee Art. 1654. The lessor is obliged:
Succession by Juxtaposition of 2 (1) To deliver the thing which is the
particular title to leases object of the contract in such a condition
one contract of as to render it fit for the use intended;
lease (2) To make on the same during the
lease all the necessary repairs in order
 Effects to keep it suitable for the use to which it
(1) Remedy when property is has been devoted, unless there is a
subleased despite prohibition: stipulation to the contrary;
recission and damages, or (3) To maintain the lessee in the
damages only. peaceful and adequate enjoyment of the
(2) When in the contract of lease, lease for the entire duration of the
there is no express contract.
prohibition, the lessee may
sublet the thing leased, in (i) Warranty of Lessor
whole or in part, without  IN the cases where the return of
prejudice to his responsibility the price is required, REDUCTION
for the performance of the shall be made in proportion to the
contract toward the lessor. time during which the lessee
enjoyed the thing.
(a) House Rental Law (RA 877)—  Art. 1547, 1555, 1561, 1566,
there is a presumption that there 1567, 1568, 1569
would be no sublease unless the  Liability for the warranty is not
lessor allows it equivalent to liability in damages.
(b) obligation of sublessee to lessor  The lessor is liable for the warranty
of the thing leased against any
hidden defects it may have, even
Art. 1651. Without prejudice to his when UNKNOWN to said lessor.
obligation toward the sublessor, the  But this liability for warranty of the
sublessee is bound to the lessor for all thing leased does not amount to an
acts which refer to the use and obligation to indemnify the tenant
for damages, which is only to be

PROPERTY CIVIL LAW
allowed, when lessor acted with  To maintain the lessee on the

fraud and in bad faith by peaceful and adequate enjoyment
concealing the defect and not of the lessee for the entire
revealing it to the lessee. duration of the contract.
 Failure to do so releases the
(ii) Making of Repairs lessee from the obligation to pay
 It implies the putting of something what is stipulated in the contract
back into the condition in which it from the date he ceased to
was originally and NOT an occupy the premises.
improvement
 It is the duty of the lessee to give (b) obligations of lessee (Art.
NOTICE of the need of repairs to the 1657)
lessor, and he shall be liable for the
damages which by his neglect may (i) Pay Rent
be suffered by the owner.  arises only when the contract has
 Lessor is NOT bound to make repairs been actually carried into effect
caused by the lessee himself. by the delivery of the thing
leased to the lessee for the
Effect of Urgent Repairs purpose stipulated in the
 During the lease it should contract.
become necessary to make some
urgent repairs upon the thing Increase and Decrease of Rent
leased, which cannot be deferred  Increase and decrease in the
until the termination of the lease, price of lease shall be 10% per
the lessee is obliged to tolerate year, net of the assessed
the work. violation of the property
 If the repair lasts for more than
40 days, the rent shall be Failure to Pay for Rent
reduced in proportion to the  Eviction, recover the unpaid rent,
time-including the 40 days- and plus accrued legal interest
the part of the property of which thereon at the rate of 6% per
the lessee has been deprived. year.
 When the work is of such a
nature that the portion which the Place and Time
lessee and his family need for  Payment of rent shall be made at
their dwelling becomes the domicile of the lessee; and
uninhabitable, he may rescind with respect to the time, the
the contract if the main purpose custom of the place shall be
of the lease is to provide a followed.
dwelling for the lessee.
 If after having been notified, the ii. Use the Thing Leased as a
lessor fails to make urgent Diligent Father
repairs, the lessee, to avoid  Standard: diligent father of a
imminent danger, may order the family, in the absence of
repairs at the lessor’s expense. stipulation, to that which may be
inferred from the nature of the
Dangerous Conditions thing leased, according to the
 The lessee may terminate the custom of the place.
lease at once by notifying the  The lessee is responsible for the
lessor, even if at the time the deterioration of the thing leased,
contract was perfected the unless he proves that it took
former knew of the dangerous place without his fault.
condition or waived the right to  The lessee is liable for any
rescind the lease on account of deterioration caused by members
the condition. of his household and by his guest
and visitors.
Alteration
iii. Pay Expenses for the Deed of
Art. 1661. The lessor cannot alter the Lease (Art. 1662-1667)
form of the thing leased in such a way
as to impair the use to which the thing is c. Right of lessee to suspend
devoted under the terms of the lease. payment of rentals
Art. 1658. The lessee may suspend the
(iii) Peaceful Possession payment of the rent in case the lessor
fails to make the necessary repairs or to

PROPERTY CIVIL LAW
maintain the lessee in peaceful and (e) Lessor not obliged to answer
adequate enjoyment of the property for mere act of trespass by a
leased. third person
d. Right to ask for rescission (10) Grounds for ejectment of

lessee by lessor
Liability for Breach of Duties
 If the lessor or lessee should not
comply with the obligation set Termination of Lease
forth in ART 1654 and 1657, the (1) by the expiration of the
aggrieved party may ask for: period;
(1) rescission of the contract; (2) by the total loss of the
(2) indemnification for thing;
damages; (3) by the resolution of the right
(3) only damages, of the
allowing the contract to lessor, such as when the
remain in force lessor is usufruct is
 The lessor cannot be held terminated;
responsible for damages from (4) by the will of the purchaser or
defects unknown to both parties. transferee of the things;
(5) by rescission due to
Alternative Remedies nonperformance of the
 Performance of the contract and obligation of one of the
rescission parties.
 In either case, the aggrieved
party is entitled to such damages Period
but may not upon rescission of  If at the end of the contract the
the contract recover the damages lessee should continue enjoying
that are appropriate only where the thing leased for fifteen days
the performance is demanded. with the acquiescence of the
lessor, and unless a notice to the
Rescission of the Contract contrary by either party has
 Where the plaintiff alleges and previously given, it is understood
submits proof that the defendant that there is an implied new
is in possession of a parcel of lease, not for the period of the
land as lessee, and the latter has original contract but for the time
not paid the proper rents, he may established in art. 1682(rural)
be compelled, by reason of his and 1687(urban)
inability to pay to:  When the parties have made no
(1) return the leased agreement and the tenant
property; remains in possession with the
(2) the lessor has a acquiescence of the lessor for 15
right to rescind the days after the expiration of the
contract; term, the duration of the tenancy
(3) recover the unpaid is governed by article 1682 and
rents 1687.
(4) eject the tenant
from the land Tacit Renewal
 The execution of the deed shall  The fifteen-day period which
be equivalent to delivery but this brings about a tacit renewal of
is a rebuttable presumption. the lease, is not applicable to
 If the thing leased has never successive renewals.
been placed in possession of the
lessee, he has the remedy of
rescission. Judicial Ejectment
 The lessor may judicially eject
Enforcement of Lease the lessee for any of the following
 Where the lessor resumes causes:
possession of his leased property (1) When the period agreed
for its protection after the lessee upon, or that which is fixed
has abandoned the same, the for the duration of leases
lessor has still the right to hold under Art 1682 (rural) and
the lessee responsible until the 1687(urban), has expired;
termination of the lease.

PROPERTY CIVIL LAW
(2) Lack of payment of the price terminate the lease except when
stipulated; the contract provided otherwise
(3) Violation of any of the or purchaser is aware of lease.
conditions agreed upon in the  If the buyer makes use of this
contract; right, the lessee may demand
(4) When the lessee devotes the that he be allowed to gather the
thing leased to any use or fruits of the harvest which
service not stipulated which corresponds to the current
causes the deterioration agricultural year and that the
thereof, or if he does not vendor indemnify him for
observe due diligence in its damages suffered. This right does
use. not extend to the gathering of
 When the lease contract does not fishes, which require 2 years
have a definite period, but is before they are of any
terminable upon 30 days notice, commercial value.
the lease will terminate upon the  The act of the new owner of
expiration of 30 days from the giving notice of an increase of
receipt of notice, whether the rent, when the existing lease is of
termination coincides with the an indefinite time, or when the
rent day or not. original period has expired,
 The landlord has the right to constitutes a notice of
increase the rent after the termination of the original lease.
expiration of the stipulated
period. And if no period is
stipulated, in a lease of urban Right to Repurchase
property, notice by the lessor of  The purchaser in a sale with the
an increase in rent is equivalent right to redemption cannot make
to notice of termination of the use of the power to eject the
original agreement. lessee until the end of the period
of redemption.
(12) Right of purchaser of  But when the vendor remains in
leased land possession as a tenant, and he
fails to pay the agreed rent, he
Art. 1676. The purchaser of a piece of may be evicted by the vendee
land which is under a lease that is not even before the period of
recorded in the Registry of Property may redemption has expired.
terminate the lease, save when there is
a stipulation to the contrary in the (13) Useful improvements in
contract of sale, or when the purchaser good faith made by lessee.
knows of the existence of the lease.
If the buyer makes use of this right, Indemnity For Improvements
the lessee may demand that he be  If the lessee makes, in good
allowed to gather the fruits of the faith, useful improvements the
harvest which corresponds to the current lessor upon the termination of
agricultural year and that the vendor the lease shall pay the lessee
indemnifies him for damages suffered. one-half of the value of the
If the sale is fictitious, for the improvements at that time.
purpose of extinguishing the lease, the
supposed vendee cannot make use of (14) Special provisions for
the right granted in the first paragraph leases of rural lands
of this article. The sale is presumed to  It is urban when the principal
be fictitious if at the time the supposed purpose is dwelling.
vendee demands the termination of the  It is rural when the principal
lease, the sale is not recorded in the purpose is exploitation of the soil.
Registry of Property.
Art. 1677. The purchaser in a sale with

the right of redemption cannot make use
of the power to eject the lessee until the
end of the period for the redemption.
Sale Of Leased Property

 The purchaser which is under a
lease that is not recorded in the
Registry of Property may

PROPERTY CIVIL LAW
XIX. DONATION o Nature of a donation is not made to

depend by the title given by the
Characteristics: donor but by what is expressed.
a) Unilateral – obligation imposed on o To determine whether mortis causa
the donor or inter vivos, nature of act, whether
b) Consensual – perfected at time donor it is disposition or execution, is
knows of acceptance controlling.
Requisites of Donation: Inter vivos

(1) Consent and capacity of parties  In doubt, conveyance should be
(2) Animus donandi (causa) deemed a donation inter vivos to
(3) Delivery of thing donated avoid uncertainty as to the
(4) Form as prescribed by law ownership of the property.
 Where the ownership and
There must be impoverishment in fact possession as well as
of donor’s patrimony and enrichment on administration were turned over
part of donee. to the donee but right to reap
and dispose of the fruits was
Requirements of a donation: deferred until after donor’s
1. subject matter – anything of death, donation is inter vivos
value; present property & not  General rule: Donation inter vivos
future, must not impair legitime is irrevocable EXCEPT:
2. causa – anything to support a 1. During the subsequent birth
consideration: generosity, of the donor’s children
charity, goodwill, past service, 2. Failure of donee to comply
debt which conditions imposed
3. capacity to donate & dispose & 3. Ingratitude of donee; and
accept donation 4. Reduction of the donation by
4. form – depends on value of reason of inofficiousness
donation
Donation mortis causa
Kinds of Donation  A donation mortis causa not in
the form of a will is not valid and
A. As to its taking effect does not transmit any right.
1. Inter Vivos (729, 730, 731)  If the donor reserves the right to
2. Donation mortis causa (728) dispose of all the properties
3. Propter nuptias (Art. 82, 87 purportedly donated, there is no
Family Code) donation inter vivos but mortis
causa.
What rules Intention of the parties prevail

govern
Inter if the intention is to make the donation effective
vivos – during the donor’s lifetime:
Governed by the
take effect ART 729: even if the thing donated is delivered
rules on
during the only at the time of the donor’s death, it is inter
contracts and
lifetime of vivos and the fruits of the thing belongs to the
obligations with
the donor donee unless the donor provides otherwise
regard to
ART 730: even if there is a fixing of an event or
portions not
AS TO WHEN THEY TAKE EFFECT
the imposition of a suspensive condition which

provided in the
may take place beyond the natural expectation
title on
of the life of the donor
donations ART
ART 731: If the resolutory condition is the
732
donor’s survival (i.e. if donor does not die, the
donation already effective shall terminate)
Mortis They partake of
causa – the nature if
take effect testamentary
upon the provisions and
death of are governed by
the donor the rules on
Succession ART
728

PROPERTY CIVIL LAW
B. As to Cause or Consideration WHEN PERFECTED: ACCEPTANCE BY

1. Simple (Art.725) THE DONEE: GENERALLY
2. Remuneratory (Art.726)
3. Onerous (Art.733) ART 734: Donation is perfected at the
(See Table in the appendix) moment the donor knows of the
donee’s acceptance
C. As to its Effectivity or WHO MAY ART 745: Only these
Extinguishment ACCEPT: persons may accept;
1. Pure otherwise, void
2. Conditional (730, 731)—donation 1) donee personally
is not carried out until the day comes 2) authorized person
but it produces effects with a special
power for the
With a term – He who donates with a purpose or with a
term has already disposed of the general sufficient
thing donated and cannot revoke it power
nor can he dispose the thing in favor WHEN TO ART 746: During lifetime
of another unless the donor ACCEPT of donor and donee
postpones execution and reserves
the right to revoke DONATION OF IMMOVABLES:
DONATION AND ACCEPTANCE
Perfection of Donation
presumes a demandable juridical FORM OF Public document
relation. The donor can no longer DONATION
withdraw and he can be compelled to CONTENTS Property donated is
comply. OF specified and the value of
Acceptance is necessary because DONATION the charges which the
nobody is obliged to receive a benefit donee must satisfy
against his will. FORM OF Same deed of donation
When the donation and the acceptance ACCEPTANCE or in a separate public
are in the same instrument, signed document; if separate,
by both donor and donee, donation the donor shall be
is perfected. notified in an authentic
After perfection, donation can only be form and this shall be
revoked by the consent of the donee noted in both
or by judicial decree especially when instruments
the donation is onerous. WHEN TO During lifetime of donor
Mere declaration of an intention without ACCEPT
intent to transfer is not a donation
even if accepted.
DONATION OF MOVABLES; ART 748
Oral In writing
Value of the thing Value of the
donated < or = thing donated
P5,000 > P5,000;
otherwise, void
Requires
simultaneous
delivery of the
thing or the
document which
represents the
thing

PROPERTY CIVIL LAW
DONOR DONEE
ART 735: All persons who may contract ART 738; All those not specially
WHO ARE
and dispose of their property disqualified by law

ALLOWE
ART 736: Donor’s capacity determined

at the time of the making of the
D
donation
ART 736: Guardians and trustees with
respect to the property entrusted to
them
ART 739: Void donations:
1) those made between persons guilty of adultery or concubinage at the time
of the donation (the declaration of nullity may be brought by the spouse of
the donor or donee and only preponderance of evidence is needed)
WHO ARE NOT ALLOWED
2) those found guilty of the same criminal offense inconsideration thereof

ART 739 (3): public officer or his wife,
descendants and ascendants by reason
of his office
ART 740: Those who cannot succeed by
will cannot be donees
ART 743: Donations made to
incapacitated persons are void although
made under the quise of another
contract
ART 741: Minors may become donees
but acceptance must be made through
QUALIFICATI
their parents or legal representative

ART 742: Donations made to unborn
children may be accepted by persons
WITH
ONS
who would legally represent them if

they were already born
Who may receive? 5. Art. 2012 “Any person who is

e. All those who are not specially forbidden from receiving a donation
disqualified by law – e.g. under Art. 739 cannot be named
husband and wife during beneficiary of a life insurance policy
marriage, not propter nuptias by the person who cannot make a
f. Even if incapacitated – e.g. donation to him.”
minors, insane, etc. (acceptance
made through parents or legal Double Donations
guardian); conceived and unborn Apply double sales to double donations
(acceptance made through legal
representatives if they were Who may accept (Art. 745, 747)
born) - donee personally or through
authorized
Capacity required is for disposition person
inter vivos and not mortis causa. Both - representatives of incapacitated
capacity to contract and the capacity to must make notification and
dispose of property must exist in order notation
to have capacity to donate.
Capacity to accept is also governed by If the donor dies before he learns of the
rules on succession acceptance, the donation does not take
effect, even if the acceptance is made
Other persons disqualified to receive during the lifetime of the donor.
donations:
1. priest who heard confession of donor Form of Donations
during his last illness
2. relatives of priest within 4th degree, (a) Personal property (Art. 748)
church, order, community where
priest belongs Document of donation need not be public
3. physician, nurse, etc. who took care instrument. When donation does not
of donor during his last illness exceed P5,000, it may be made orally or
4. individuals, corporations, in writing. If made orally, there must be
associations not permitted simultaneous delivery. If no

PROPERTY CIVIL LAW
simultaneous delivery, donation is void the donee or his heirs accept, the
unless it is made in writing. donation subsists but in reality it is a
new and valid one.
The law does not require that when the
donation is made in writing the While a donation of immovable property
acceptance should also be in writing (if not made in a public instrument is not
value does not exceed P5,000). effective as a transfer of title, it is a
circumstance which may explain the
(b) Real property (Art. 749) adverse and exclusive character of the
possession of the intended donee and
Art. 1357 is not applicable. Donee such possession may ripen into
cannot bring an action to compel the ownership by prescription.
donor to execute a public instrument of
donation. That article is applicable only Rules in Art. 748 and 749 not
to contracts which validly exist and applicable to:
cannot be held applicable to a case i. onerous donations
where the form is required in order to ii. modal donations
make it valid. iii. mortis causa donations
iv. donations propter nuptias
Where the donor executed private
instruments of donation and after his
death his only heir executed a public What may be given:
instrument ratifying the donation, such  All or part of donor’s present
public instrument cannot be considered property provided he reserves
as having retroactively perfected the sufficient means for the support
gift. It might serve as a quitclaim on the of the ff:
part of the heir who is estopped from  himself
asserting any right to the properties.  relatives who by law are entitled
to his support
If the instrument of donation has been  legitimes shall not be impaired
recorded in the registry of property, the  when w/o reservation or if
instrument that shows the acceptance inofficious, may be reduced on
should also be recorded. petition of persons affected
 except: conditional donation &
If acceptance has been made but before donation mortis causa
the donor has been notified, the donor  except: future property (Osorio
dies, the donation is not perfected. If vs. Osorio)
the donor’s heirs ratify the donation and

PROPERTY CIVIL LAW
WHAT MAY BE DONATED All present property of the LIMITATION: he reserves in

ART 750 donor or part thereof full ownership or in usufruct,
sufficient means for his
support and of all relatives
who at the time of
acceptance of the donation
are by law entitled to be
supported
EFFECT OF NON
RESERVATION: reduction of
the donation
WHAT MAY NOT BE ART 751; Donations cannot
DONATED: comprehend future property;
those which the donor cannot
dispose of at the time of the
donation
ART 752: No person may give
or receive by way of donation
more than what he may give
or receive by will
EFFECT OF EXCESS:
inofficious
DONATIONS MADETO ART 753: No accretion (i.e. EXCEPTION: those given to
SEVERAL PERSONS one donee does not get the husband and wife except
JOINTLY share of the other donees when the donor otherwise
who did not accept) provides
WHAT THE DONEE ART 754: to be subrogated to
ACQUIRES WITH THE all the rights and actions that
THING would pertain to the donor in
case of eviction
OBLIGATIONS OF THE ART 754: No obligation to EXCEPT: when donation is
DONOR warrant onerous
EFFECT: if the donor shall be
liable
This also applies in case of
bad faith on his part with
regard to hidden defects
WHAT MAY BE RESERVED ART 755: Right to dispose If donor dies without
BY THE DONOR may be reserved exercising this right, the
portion reserved shall belong
to the donee
USUFRUCT vs. OWNERSHIP ART 757: The ownership of
the property may be donated
to one person and the
usufruct to another
REVERSION ART 758: The donor may LIMITATION: The third
provide that the property will person should be living at the
go back to him or to another time of the donation
person for any case or OTHERWISE: reversion is
circumstances void but obligations subsists
OBLIGATION OF DONEE TO ART 758: If the donation EXCEPT: When contrary
PAY DONOR’S DEBTS imposes this obligation on the intention appears
donee, only those debts
previously contracted shall be
paid by said donee and in no
case shall he be responsible
for debts exceeding the value
of the thing donated
IN FRAUD OF CREDITORS ART 759: If there is no PRESUMPTION that donation
stipulation for the donee to in fraud of creditors: when at
pay debts, he shall only be the time of donation, the
responsible when the donor did not reserve
donation was made in fraud sufficient property to pay his
of creditors debts prior to the donation

PROPERTY CIVIL LAW
 In General considered as limited to the value

(1) Donee may demand actual of the thing donated.
delivery of the thing donated. Creditors may demand the
(2) Donee is subrogated to rights of rescission of the donation. If the
donor in the property credits exceed the value of the
donated. property, the donee cannot be
(3) Donor not obligated to warrant held liable for such excess.
things donated, except in If the donee has alienated the
onerous donations in which case, property to one who acquired it in
donor is liable for eviction good and he is unable to return
up to the extent of the burden. it, he will be held liable in
(4) Donor is liable for eviction or damages but the damages cannot
hidden defects in case of bad exceed the value of the property
faith on his part. itself.
Donations propter nuptias of property

subject to encumbrances are valid. Donations of Future Property (751)
Art. 85 FC-Effect of foreclosure- Future property includes all property

Donations by reason of marriage of that belongs to others at the time the
property subject to encumbrances shall donation is made, although it may or
be valid. In case of foreclosure of the may not later belong to the donor.
encumbrance and the property is sold BUT these can be donated:
for less than the amount of the 1. properties to which the donor
obligation secured, the donee shall not has a RIGHT, although the
be liable for the deficiency. If the delivery of such properties to him
property is sold than the total amount of may be fixed for a future date
said obligation, the donee shall be 2. those properties which pertain
entitled to the excess. to him CONDITIONALLY, and will
become his upon the happening of
Donation to several donees jointly—no a suspensive condition.
right of accretion Except Properties of an existing INHERITANCE
1. donation provides otherwise cannot be considered future property of
2. donation to husband and wife the heirs after the death of the
jointly with right of accretion (jus predecessor, because the rights of the
accrescendi), unless the donor heirs are acquired on the moment of
provides otherwise. death, even if the delivery to them of
the property may be delayed.
Special Provisions
(1) Reservation by donor of power to
dispose (in whole or in part) or to Revocation of Donations
encumber property donated. - applies only to donation inter vivos
(755) - not applicable to onerous donations
(2) Donation of naked ownership to
one donee and usufruct to  With regards to donations made by
another. (756) person without children or
(3) Conventional reversion in favor of descendants at time of donation:
donor or other person. (757) 1. If donor should have legitimate,
(4) Payment of donor’s debt (758) legitimated or illegitimate
(a) If expressly stipulated-donee children
to pay debts contracted 2. If child came out to be alive & not
before the donation, unless dead contrary to belief of donor
specified otherwise, but in no 3. If donor subsequently adopts a
case shall the donee be minor child
responsible for debts
exceeding value of property  Action for revocation based on failure
donated, unless clearly to comply with condition in case of
intended conditional donations
(b) If there is no stipulation-  Action for revocation by reason of
donee answerable only for ingratitude
donor’s debt only in case of 1. Donee commits offense against
donation in fraud of creditors. person, honor, property of donor,
Liability of the donee for the spouse, children under his
debts of the donor should be parental authority

PROPERTY CIVIL LAW
2. Donee imputes to donor any d) donor died w/o having

criminal offense or any cat known the ingratitude
involving moral turpitude even if done
he should prove it unless e) criminal action filed but
act/crime has been committed abated by death
against donee himself, spouse or 3. can only make heirs of donee
children under his parental liable if complaint was already
authority filed when donee died
3. Donee unduly refuses to give
support to donor when legally or
morally bound to give support to
donor Inofficious donations:
1. shall be reduced with regards to
the excess
Exception to rule on 2. action to reduce to be filed by
intransmissibility of action with heirs who have right to legitimate
regards to revocation due to at time of donation
ingratitude: 3. donees/creditors of deceased
1. personal to the donor; general donor cannot ask for reduction of
rule is heir cannot institute if donation
donor did not institute 4. if there are 2 or more donation:
2. heirs can only file in the ff cases: recent ones shall be suppressed
a) donor has instituted 5. if 2 or more donation at same
proceedings but dies time – treated equally &
before bringing civil action reduction is pro rata but donor
for revocation may impose preference which
b) donor already instituted must be expressly stated in
civil action but died, heirs donation
can substitute
c) donee killed donor or his
ingratitude caused the
death of the donor
KINDS OF DONATION
Pure/Simple Remuneratory Conditional Onerous
a) Consideration Liberality or merits of Valuable Valuable consideration
Merits of donee donee or burden/ consideration is given
charge of past imposed but value
services provided they is less than value of
do not constitute thing donated
demandable debt
b) law to apply/ Law on donations Extent of burden Law on obligations
forms imposed>oblicon
Law on donations excess>donation
c) form of Required Required Required
acceptance
Required
d) reservation Applicable Applicable Not Applicable
w/regards to
personal support
& legitime
Applicable
e) warranty
against eviction
& hidden defects
In bad faith only In bad faith only In bad faith only Applies
f) revocation
Applicable Applicable Applicable Applicable
g) effect of considered not written considered not Obligation nullified
impossible/ written
illegal conditions
considered not
written

PROPERTY CIVIL LAW
MODES OF EXTINGUISHMENT
BIRTH OF CHILD NON-FULFILLMENT OF INGRATITUDE
CONDITION
Ipso jure revocation, no needs court action needs court action
need for action., court
decision is merely
declaratory
Extent: portion which may Extent: whole portion but Extent: Whole portion returned
impair legitime of heirs court may rule partial
revocation only
Property must be returned Property in excess Property to be returned
Alienation/mortgages done
prior to recording in
Register of Deeds:
If already sold or cannot Alienations/mortgages Prior ones are void; demand value
be returned – the value imposed are void unless of property when alienated and
must be returned registered with Register of can’t be recovered or redeemed
If mortgaged – donor may Deeds from 3rd persons
redeem the mortgage with
right to recover from
donee
Fruits to be returned at filing Fruits to be returned at filing
of action for revocation of complainant
Prescription of action is 4 Prescription is 4 years from Prescription is 1 year from knowledge
years from birth, etc. non-fulfilment of fact and it was possible for him to
bring action
Action cannot be renounced Action cannot be renounced
in advance
Right of action transmitted to Right of action at instance of Heirs can’t file action
heirs donor but may be transmitted
to heirs
Action extends to donee’s Action does not extend to
heirs donee’s heirs

PROPERTY CIVIL LAW
REVOCATION/ REDUCTION OF DONATION

BASIS TIME OF TRANSMISSIBILITY EFFECT LIABILITY
ACTION (FRUITS)
Birth, Within 4 years Transmitted to Property Fruits returned
appearance, from birth, children and returned/ from the filing of
adoption legitimation descendants upon value (if the complaint
and adoption death of donor sold)/
redeem
mortgage
with right to
recover
Non compliance Within 4 years May be transmitted to Property Fruits received
with condition from non donor’s heirs and returned, after having
compliance may be exercised alienations failed to fulfill
against donee’s heirs and condition
mortgages returned
void subject
to rights of
third person
in good faith
Ingratitude Within 1 year Generally not Property Fruits returned
after transmitted to heirs returned but from the filing of
knowledge of of donor/donee alienations the complaint
the fact and
mortgages
effected
before the
notation of
the
compliant for
revocation in
the registry
of property
subsist
Failure to At any time by Not transmissible Reduced to Donee entitled
reserve sufficient the donor or the extent
means for relatives necessary to
support entitled to provide
support support
Inofficiousness Within 5 years Transmitted to Donation Donee entitled
for being in from death of donor’s heirs takes effect
excess of what donor on the
the donor can lifetime of
give by will donor.
Reduction
only upon his
death with
regard to the
excess
Fraud against Rescission Transmitted to Returned for Fruits returned/
creditors within 4 years creditor’s heirs or the benefit of if impossible
from the successors in interest creditor who indemnify
perfection of brought creditor for
donation/ action damages
knowledge of
the donation

SUCCESSION CIVIL LAW
Succession
TABLE OF CONTENTS
I. Succession in General 99
II. Testamentary Succession 99
III. Legal or Intestate Succession 109
IV. Provisions Common to Testamentary and Intestate Succession 114

DEFINITION OF SUCCESSION (Art. 774, 3. Of sound mind at the time of the

CC) execution of the will (Art. 798, CC)
- It is a mode of acquisition *Supervening capacity or incapacity does
- by virtue of which the property, not affect the will.
rights and obligations
- to the extent of the value of the C. FORMALITIES OF WILLS
inheritance, of a person
- are transmitted through his death KINDS OF WILLS
to another or others 1. Notarial – an ordinary or attested will
- either by his will or by operation of (Articles 804-808, CC)
law 2. Holographic – a handwritten will (Art.
810, CC)
KINDS OF SUCCESSION
1. Testamentary – that which results COMMON REQUIREMENTS TO BOTH
from the designation of an heir, made WILLS (Art. 804, CC)
in a will executed in the form 1. In writing
prescribed by law. (Art. 779, CC) 2. In a language or dialect known to the
2. Legal or Intestate – that which takes testator
place by operation of law in the
absence of a valid will. REQUISITES FOR A VALID NOTARIAL
3. Mixed – that which is effected partly WILL
by will and partly by operation of law. 1. In writing (Art. 804, CC)
(Art. 780, CC) 2. In a language or dialect known to the
testator (Art. 804, CC)
KINDS OF HEIRS 3. Subscribed at the end by the testator
1. Compulsory – those who succeed by himself or by the testator’s name
force of law to some portion of the written by some other person in his
inheritance, in an amount presence, and by his express direction
predetermined by law, of which they (Art. 805, CC)
cannot be deprived by the testator, *Requisite of a signature: satisfied by
except by a valid disinheritance. They a thumbprint Matias vs. Salud. However, a
succeed regardless of a will. cross does not. Garcia vs. Lacuesta
2. Voluntary or Testamentary – those 4. Attested and subscribed by three or
who are instituted by the testator in more credible witnesses in the
his will, to succeed to the portion of presence of the testator and of one
the inheritance of which the testator another (Art. 805, CC)
can freely dispose. They succeed by *Test of Presence: Not whether they
reason of a will. actually saw each other sign, but
3. Legal or Intestate – those who whether they might have seen each
succeed to the estate of the decedent other sign had they chosen to do so
who dies without a valid will, or to the considering their mental and physical
portion of such estate not disposed of condition and position with relation to
by will. They succeed in the absence of each other at the moment of
a valid will. inscription of each signature. Jaboneta
vs. Gustilo, 5 Phil. 541
I. TESTAMENTARY SUCCESSION 5. Each and every page, except the last,
must be signed by the testator or by
the person requested by him to write
A. CONCEPT his name, and by the instrumental
witnesses of the will, on the left
DEFINITION OF WILL (Art. 783, CC) margin. (Art. 805, CC)
- It is an act *Exceptions:
- whereby a person is permitted a. when the will consists of only one
- with the formalities prescribed by page
law b. when the will consists of only two
- to control to a certain degree pages, the first of which contains
- the disposition of his estate all dispositions and is signed at
- to take effect after his death the bottom by the testator and
the witnesses, and the second
B. TESTAMENTARY CAPACITY page contains only the attestation
clause duly signed at the bottom
TESTAMENTARY CAPACITY by the witnesses. Abangan vs.
1. All persons who are not expressly Abangan
prohibited by law (Art. 796, CC)
2. Eighteen (18) years old and above *Note: The inadvertent failure of one
(Art. 797, CC) witness to affix his signature to one

page of a testament, due to the AMENDING A WILL

simultaneous lifting of two pages in the 1. Notarial – only through a codicil
course of signing, is not per se 2. Holographic –
sufficient to justify denial of probate. a. Dispositions may be added below
Icasiano vs. Icasiano, 11 SCRA 422 the signature, provided that said
6. Each and every page of the will must dispositions are also dated and
be numbered correlatively in letters signed, and everything is written by
placed on the upper part of each page. the hand of the testator himself
(Art. 805, CC) example, page one of b. Certain dispositions or additional
five pages matter may be suppressed or
7. It must contain an attestation clause, inserted provided that such is
stating the following (Art. 805, CC) signed by the testator and written
a. The number of pages used upon by the hand of the testator himself
which the will is written. c. Through a codicil which may either
b. The fact that the testator signed be notarial or holographic
the will and every page, or caused
some other person to write his EFFECT OF INSERTION WRITTEN BY
name, under his express direction, ANOTHER PERSON ON THE VALIDITY OF
in the presence of the instrumental A HOLOGRAPHIC WILL WRITTEN BY THE
witnesses. TESTATOR
c. All the instrumental witnesses When Made Effect
witnessed and signed the will and After the execution of Insertion is
all the pages in the presence of the the will, without the considered not
testator and of one another. consent of the testator written. The validity
8. It must be acknowledged before a of the will cannot
notary public by the testator and the be defeated by the
witnesses. (Art. 806, CC) malice or caprice of
* Note: The notary public before whom a third person.
the will was acknowledged cannot be After the execution of Will is valid.
considered as the third instrumental the will, with the Insertion is void.
witness since he cannot acknowledge consent of the testator
before himself his having signed the After the execution of Insertion becomes
will. To allow such would have the the will, validated by part of the will.
effect of having only two attesting the testator by his Entire will becomes
witnesses to the will which would be in signature void because it did
contravention of Articles 805 and 806. not comply with the
Cruz vs. Villasor, 54 SCRA 31 requirement that it
must be wholly
ADDITIONAL REQUISITES FOR A written by the
NOTARIAL WILL IF THE TESTATOR BE testator.
DEAF OR A DEAF-MUTE (Art. 807, CC) Contemporaneous to Will is void because
1. Testator must personally read the will, the execution of the will it is not written
if able to do so. entirely by the
2. Otherwise, testator shall designate two testator.
persons to read the will and
communicate its contents to him in RULES IN CASE OF SUBSEQUENT
some practicable manner. DISPOSITIONS
Subsequent Effect
ADDITIONAL REQUISITES FOR A Disposition
NOTARIAL WILL IF THE TESTATOR BE Signed Valid
BLIND (Art. 808, CC) Not dated
The will shall be read to the testator twice – Last disposition is
1. Once by one of the subscribing signed and dated
witnesses Not signed Void
2. Once by the notary public before whom Dated
the will is acknowledged
Signed Void but it does not
Not dated affect the validity of
REQUISITES FOR A HOLOGRAPHIC WILL
the other dispositions
1. In writing (Art. 804, CC)
or the will itself
2. In a language or dialect known to the
testator (Art. 804, CC)
QUALIFICATIONS OF WITNESSES TO A
3. Entirely written, dated, and signed by
NOTARIAL WILL (Arts. 820 – 821, CC
the hand of the testator himself (Art.
(SABRDC))
810, CC)
1. Of sound mind
2. Of the age of 18 years or more
3. Not blind, deaf or dumb

4. Able to read and write 4. Intrinsic validity of testamentary

5. Domiciled in the Philippines provisions
6. Have not been convicted of falsification
of a document, perjury or false JOINT WILL
testimony - A single testamentary instrument
- which contains the wills of two or
INTERESTED WITNESS (Art. 823, CC) more persons
- A witness who attests to the - jointly executed by them
execution of a will which gives a - either for their reciprocal benefit or
legacy or devise to that witness, or for the benefit of a third person
his spouse, or his parent or his
child. MUTUAL WILLS
*Effect: The devise or legacy, insofar as it - Executed pursuant to an agreement
concerns that witness or his spouse or his between two or more persons
parent or his child, shall be void unless - to dispose of their property in a
there are three other witnesses to such particular manner
will. His competence as a witness shall - each in consideration of the other
subsist. separate wills of two persons which
are reciprocal in their provisions
GOVERNING LAW
As to time Governing Law RECIPROCAL WILLS
Formal Validity Law in force at the time - Testators name each other as
the will is made beneficiaries
Intrinsic Validity Law of decedent’s - under similar testamentary plans
nationality at the time
of his death (Art. 16, Note: A will that is both joint and mutual is
CC) one executed jointly by two or more persons,
the provisions of which are reciprocal and
As to Place which shows on its face that the devises are
Testator Place of Governing Law made in consideration of the other. Such is
Execution of prohibited under Art. 819, CC. Prohibition is
the Will applicable only to joint wills executed by
Filipino Philippines Philippine Law Filipinos.
(Art. 16, CC)
Outside of 1. Law of the D. CODICIL AND INCORPORATION
the country in BY REFERENCE
Philippines which it is
(Art. 815, executed; or
DEFINITION OF A CODICIL (Arts. 825 –
CC) 2. Philippine Law
826, CC)
Alien Philippines 1. Philippine Law; - It is a supplement or addition to a
(Art. 817, or will
CC) 2. Law of the - made after the execution of a will
Country of - and annexed to be taken as a part
which testator of the will
is a citizen or - by which any disposition made in
subject. the original will is explained, added
Outside the 1. Law of the to, or altered
Philippines place where - It is executed as in the case of a
(Art. 816, the will is will.
CC) executed; or
2. Law of the REQUISITES FOR INCORPORATION BY
place where REFERENCE (Art. 827, CC)
the testator 1. The document or paper referred to in
resides; or the will must be in existence at the
3. Law of the time of the execution of the will.
testator’s 2. The will must clearly describe and
country; or identify the same, stating among other
4. Philippine Law things the number of pages thereof.
3. It must be identified by clear and
ASPECTS OF THE WILL GOVERNED BY satisfactory proof as the document or
THE NATIONAL LAW OF THE paper referred to therein. And
DECEDENT (Arts. 16 and 1039, CC) 4. It must be signed by the testator and
1. Order of succession the witnesses on each and every page,
2. Capacity to succeed except in case of voluminous books of
3. Amount of successional rights account or inventories.

E. REVOCATION OF WILLS AND conditional and dependent upon the

efficacy of the new disposition; and
TESTAMENTARY DISPOSITIONS if for any reason, the new will
intended to be made as a
MODES OF REVOKING A WILL (Art. 830, substitute is inoperative, the
CC) revocation fails and the original will
1. By implication of law remain in full force. Molo vs. Molo,
2. By the execution of a will, codicil or 90 Phil. 37
other writing executed as provided in
the case of wills
F. ALLOWANCE AND
3. By burning, tearing, canceling, or
obliterating the will with the intention DISALLOWANCE OF WILLS
of revoking it, by the testator himself,
or by some other person in his PROBATE
presence, and by his express direction - It is a special proceeding by which
the validity of a will may be
*Note: It must be done any time before established.
the death of the testator. The right of - Probate court may pass upon the
revocation cannot be waived or restricted. title thereto, but such
(Art. 828, CC) determination is provisional, not
conclusive, and is subject to the
LAWS WHICH GOVERN REVOCATION final decision in a separate action
(Art. 829, CC) to resolve title. Pastor vs. CA 1983
PLACE OF TESTATOR’S GOVERNING - Probate of a will bars criminal
REVOCATION DOMICILE LAW prosecution of the alleged forger of
In the Philippines or Philippine the probated will. Mercado vs.
Philippines in some Law Santos 1938
other country
Outside the Philippines Philippine MATTERS TO BE PROVED IN A PROBATE
Philippines Law 1. Whether the instrument which is
Foreign 1. Law of offered for probate is the last will and
country the place testament of the decedent
where the 2. Whether the will has been executed in
will was accordance with the formalities
made; or prescribed by law
2. Law of 3. Whether the testator had testamentary
the place capacity at the time of the execution of
in which the will
the
testator GROUNDS FOR DISALLOWANCE OF A
had his WILL (Art. 839, CC) – FIFU SM
domicile 1. If the Formalities required by law have
at the not been complied with.
time of 2. If the testator was Insane, or
revocatio otherwise mentally incapable of
n. making a will, at the time of its
execution.
DOCTRINE OF DEPENDENT RELATIVE 3. If it was executed through Force or
REVOCATION under duress, or the influence of fear,
- A revocation subject to a condition or threats.
does not revoke a will unless and 4. If it was procured by Undue and
until the condition occurs. Thus, improper pressure and influence, on
where a testator “revokes” a will the part of the beneficiary or of some
with the proven intention that he other person.
would execute another will, his 5. If the Signature of the testator was
failure to validly make a latter will procured by fraud.
would permit the allowance of the 6. If the testator acted by Mistake or did
earlier will. not intend that the instrument he
- Where the act of destruction is signed should be his will at the time of
connected with the making of affixing his signature thereto.
another will so as to fairly raise the *This list is exclusive.
inference that the testator meant
the revocation of the old to depend
upon the efficacy of the new
disposition intended to be
substituted, the revocation will be

REVOCATION VS. DISALLOWANCE 1. cause for institution of heirs

REVOCATION DISALLOWANCE must be stated in the will
Voluntary act of the Given by judicial 2. cause must be shown as false
testator decree 3. it must appear form the face of
With or without Must always be for a the will that the testator would
cause legal cause not have made such institution
May be partial or Always total except if he had known the falsity of
total when the ground of the cause. Austria vs. Reyes
fraud or influence for 1970
example affects only
certain portions of the RULES REGARDING A PERSON’S RIGHT
will TO DISPOSE OF HIS ESTATE (Art. 842,
CC)
1. If testator has no compulsory heirs
G. INSTITUTION OF HEIRS
a. He can give his estate to any
person having capacity to succeed.
DEFINITION OF INSTITUTION OF HEIRS b. He must respect restriction
(Art. 840, CC) imposed by special laws.
- It is an act by virtue of which a 2. If testator has compulsory heirs
testator designates in his will a. He can give the disposable portion
- the person/s who are to succeed to strangers.
him in his property and b. Legitimes of compulsory heirs must
transmissible rights and be respected.
obligations.
CONCEPT OF PRETERITION (Art. 854, CC)
REQUISITES FOR A VALID INSTITUTION 1. There must be a total omission of one,
OF HEIR (DACCVP) some or all of the heir/s in the will.
1. Designation in will of person/s to 2. The omission must be that of a
succeed compulsory heir.
2. Will specifically assigns to such person 3. The compulsory heir omitted must be
an inchoate share in the estate of the direct line.
3. The person so named has capacity to 4. The omitted compulsory heir must be
succeed living at the time of the testator’s
4. The will is formally valid death or must at least have been
5. No vice of consent is present conceived before the testator’s death.
6. No preterition results from the effect of
such will EFFECTS OF PRETERITION (Art. 854, CC)
1. The institution of the heir is annulled.
THREE PRINCIPLES IN THE INSTITUTION 2. Devises and legacies shall remain valid
OF HEIRS as long as they are not inofficious.
1. Equality – heirs who are instituted 3. If the omitted compulsory heir should
without designation of shares shall die before the testator, the institution
inherit in equal parts. (Art. 846, CC) shall be effectual, without prejudice to
2. Individuality – heirs collectively the right of representation.
instituted are deemed individually
named unless a contrary intent is
proven. (Art. 847, CC)
3. Simultaneity – when the testator calls
to the succession a person and his
children, they are all deemed to have
been instituted simultaneously and not
successively. (Art. 849, CC)i
INSTITUTION BASED ON A FALSE CAUSE

(Art. 850, CC)
- General Rule: The statement of a
false cause for the institution of an
heir shall be considered as not
written.
- Exception: If it appears from the
will that the testator would not
have made such institution if he
had known the falsity of such
cause. In this case, the institution
shall be annulled.
- Requisites of Annulment under
850:

PRETERITION VS. DISINHERITANCE

PRETERITION DISINHERITANCE
Tacit deprivation of legitime Express deprivation of legitime
Presumed to be involuntary as it is an Always voluntary
omission to mention an heir or though
mentioned, is not instituted as an heir. But it
may also be voluntary.
Presumed by law to be a mere oversight or Legal cause is present
mistake
The omitted compulsory heir gets his Even a compulsory heir may be totally
legitime plus his share in the free portion not excluded. If disinheritance is not lawfully
disposed of by way of legacies and devises. made, the compulsory heir is restored to his
legitime.
EFFECTS OF PREDECEASE, INCAPACITY, REPUDIATION

HEIR PRE IN REPUDIA
DECEASE CAPACITY TION
Voluntary No right transmitted to the No right transmitted to Voluntary heir
heirs of the voluntary heir. the heirs of the who repudiated
voluntary heir. cannot transmit
any right to his
own heirs.
Compulsory Right to the legitime and not Compulsory heir may be Compulsory heir
to the free portion represented but only who repudiated
transmitted to the with respect to his cannot transmit
representatives of the legitime. any right to his
compulsory heir. own heirs.
H. SUBSTITUTION OF HEIRS
KINDS OF INSTITUTIONS
1. Simple or Pure – the rights to the DEFINITION OF SUBSITUTION (Art. 857,
succession are transmitted from the CC)
moment of the death of the decedent.
(Art. 777, CC) - It is the appointment of another
2. Conditional – may be potestative, heir
causal or mixed. (See Arts. 871 – 884) - so that he may enter into the
*Disposicion Captatoria – disposition inheritance in default of the heir
made upon the condition that the heir originally instituted.
shall make some provision in his will in
favor of the testator or of any other CLASSES OF SUBSITITUTION
person. This is void. (Art. 875, CC) 1. Vulgar or Simple – the testator may
3. With a Term – designation of the day designate one or more person/s to
or time when the effects of the substitute the heir/s instituted in case
institution of an heir shall commence such heir/s should: (Art. 859, CC)
or cease. (Art. 885, CC) a. die before him (predecease)
4. Modal – institution where the testator b. should not wish to accept the
states the following: (Art. 882, CC) inheritance (renounce)
a. the object of the institution; or c. should be incapacitated to accept
b. the purpose of the application of the inheritance (incapacitated)
the property left by the testator; or 2. Brief or Compendious (Art. 860, CC)
c. the charge imposed by the creator a. Brief - two or more persons
upon the heir. designated by the testator to
*Doctrine of Constructive substitute for only one heir.
Compliance – When without the fault b. Compendious – One person is
of the heir, the modal institution designated to take the place of two
cannot take effect in the exact manner or more heirs.
stated by the testator, it shall be 3. Reciprocal – If the heirs instituted in
complied with in a manner most unequal shares should be reciprocally
analogous to and in conformity with his substituted, the substitute shall acquire
wishes. (Art. 883, CC) the share of the heir who dies,
renounces, or is incapacitated, unless
it clearly appears that the intention of
the testator was otherwise. If there are
more than one substitute, they shall
have the same share in the

substitution as in the institution. (Art. Surviving spouse- SS

861, CC) Legimate Parents- LP
4. Fideicommissary – if the testator Illegitimate Parents- ILP
institutes an heir with an obligation to
preserve and to deliver to another the COMPULSORY HEIRS
property so inherited. The heir If the testator is a If the testator is an
instituted to such condition is called LEGITIMATE ILLEGITIMATE
the first heir or the fiduciary heir, the CHILD CHILD
one to receive the property is the 1. LC and 1. LC and descendants
fideicommissary or the second heir. descendants
(Art. 863, CC) 2. In default of no. 2. ILC and
1, LP and ascendants descendants
REQUISITES FOR A FIDEICOMMISSARY 3. SS 3. In default of nos. 1-
SUBSTITUTION (Arts. 863 – 865, CC) 2, ILP only
1. A fiduciary or first heir instituted 4. IC and 4. SS
entrusted with the obligation to descendants
preserve and to transmit to a
fideicommissary substitute or second SPECIFIC RULES ON LEGITIMES
heir the whole or part of the 1. Direct Descending Line
inheritance. a. Rule of preference between
2. The substitution must not go beyond lines - Those in the direct
one degree from the heir originally descending line shall exclude those
instituted. in the direct ascending and
3. The fiduciary heir and the collateral lines, and those in the
fideicommissary are living at the time direct ascending line shall, in turn,
of the death of the testator. exclude those in the collateral line.
4. The fideicommissary substitution must b. Rule of proximity – the relative
be expressly made. nearest in degree excludes the
5. The fideicommissary substitution is farther one
imposed on the free portion of the c. Right of representation ad infinitum
estate and never on the legitime. in case of predecease, incapacity or
disinheritance. For decedents who
I. LEGITIMES are legitimate children, only the
legitimate descendants can
DEFINITION OF LEGITIME (Art. 886, CC) represent. For decedents who are
- It is that part of the testator’s illegitimate children, both the
property which he cannot dispose legitimate and illegitimate
of descendants can represent.
- because the law has reserved it for d. If all the legitimate children
his compulsory heirs repudiate their legitime, the next
generation of legitimate
CLASSES OF COMPULSORY HEIRS (Art. descendants succeed in their own
887, CC) right.
1. Primary – those who have precedence 2. Direct Ascending Line
over and exclude other compulsory a. Rule of division by lines
heirs b. Rule of equal division – the
a. Legitimate children and legitimate relatives who are in the same
descendants with respect to their degree shall inherit in equal shares
legitimate parents and ascendants 3. Non-impairment of legitime
2. Secondary – those who succeed only
in the absence of the primary
compulsory heirs
a. Legitimate parents and legitimate
ascendants with respect to their
legitimate children and descendants
b. Illegitimate parents with respect to
their illegitimate children
3. Concurring – those who succeed
together with the primary or the
secondary compulsory heirs
a. Widow or widower (legitimate)
b. Illegitimate children and illegitimate
descendants
Legitmate children- LC
Illegitimate children- ILC

SUMMARY OF LEGITIMES OF COMPULSORY HEIRS

SURVIVING LC & SS ILC LP & ILP
REL. DESCENDANTS ASCENDANT
S
LC alone ½ (divided by
# of children)
1 LC, ½ ¼
SS
LC, SS ½ (divided by Same as the share
# of children) of 1 LC
LC, ILC ½ ½ of the share of 1
LC
1 LC, SS, ½ ¼ ½ of the share of 1
ILC (preferred) LC
2 or more ½ (divided by Same as the share ½ of the share of 1
LC, # of children) of 1 LC LC
SS,
ILC
LP alone ½
LP, ¼ ½
ILC
LP, SS ¼ ½
LP, SS, 1/8 ¼ ½

ILC
ILC alone ½ (divided by # of
children)
ILC, 1/3 1/3 (divided by #
SS of children)
SS alone ½ or 1/3 if
marriage in
articulo mortis
ILP alone ½
ILP, SS ¼ ¼
Adopter 1/3 1/3 1/3

ILC, SS (adopter)
STEPS IN DETERMINING THE LEGITIME portion and restore it to the estate if

OF COMPULSORY HEIRS the donation is inofficious.
1. Determine the gross value of the 7. Distribute the residue of the estate in
estate at the time of the death of the accordance with the will of the
testator. testator.
2. Determine all debts and charges which
are chargeable against the estate. REMEDY OF COMPULSORY HEIR IN CASE
3. Determine the net value of the estate OF IMPAIRMENT OF LEGITIME
by deducting all debts and charges 1. If the impairment is total, then there
from the gross value of the estate. may be preterition if the compulsory
4. Collate or add the value of all heir omitted is either an ascendant or
donations inter vivos to the net value descendant. Art. 854, CC would come
of the estate. in to play, i.e., there will be an
5. Determine the amount of the legitime annulment of the institution of heirs
from the total thus found. and a reduction of devises and
6. Impute the value of all donations inter legacies.
vivos made to compulsory heirs 2. If the impairment is partial, then the
against their legitime and of the value compulsory heir is entitled to
of all donations inter vivos made to completion of legitime under Art. 906,
strangers against the disposable free CC.

3. If the impairment is through donation, 3. It must be made in a valid will.

the remedy is collation. 4. It must be made expressly, stating the
cause in the will itself.
CONCEPT OF RESERVA TRONCAL (Art. 5. The cause must be certain and true,
891, CC) and must be proved by the interested
- The ascendant who inherits from heir if the person disinherited should
his descendant deny it.
- any property which the latter may 6. It must be unconditional.
have acquired by gratuitous tile 7. It must be total.
- from another ascendant, or a
brother or sister, SUMMARY OF CAUSES OF
- is obliged to reserve such property DISINHERITANCE
- as he may have acquired by
operation of law Art. 919- children/ descendants
- for the benefit of relatives within Art. 920- parents/ ascendants
the third degree Art. 921- spouse
- and who belong to the line from Art. 1032- unworthiness
which said property came.
GROUNDS FOR
REQUISITES FOR RESERVA TRONCAL 10
DISINHERITANCE 919 920 921
Chua vs. CFI, 78 SCRA 406 and Gonzales vs. 32
CFI, 104 SCRA 161 Guilty/convicted of
1. that the property was acquired by a attempt against life of *
* * *
descendant (prepositus) from an testator/spouse/
ascendant or from a brother or sister ascendant/descendant
(source) by gratuitous title Accused
2. that the prepositus died without an testator/decedent of
issue crime punishable by *
3. that the property is inherited by * * *
imprisonment of 6
another ascendant (reservista) by years or more, found
operation of law groundless, false
4. that there are relatives within the 3rd Causes
degree (reservatarios) belonging to the testator/decedent to
line from which said property came make will or change *
* * *
one by fraud,
(Source)
violence, intimidation,
A F or undue influence
B
E Unjustified refusal to
* * *
support testator
Convicted of adultery
C or concubinage with *
* *
(Reservatario) D G (Reservista) spouse of
testator/decedent
Maltreatment of
testator by word and *
H deed
(Prepositus) Leading a
dishonorable or *
disgraceful life
J. DISINHERITANCE Conviction of crime
which carries penalty *
DEFINITION OF DISINHERITANCE (Art. of civil interdiction
915, CC) Abandonment of
- It is the act by which the testator children or inducing
- for just cause children to live *
- deprives a compulsory heir of his *
corrupt and immoral
right to the legitime. life or attempted
against virtue
REQUISITES FOR A VALID
Loss of parental
DISINHERITANCE * *
authority
1. Heir disinherited must be designated
Attempt by one
by name or in such a manner as to
parent against life of
leave no room for doubt as to who is
the other UNLESS *
intended to be disinherited.
there is reconciliation
2. It must be for a cause designated by
between parents
law.
Spouses given cause *

for legal separation favor of the estate.

Failure to report legatee/devisee
violent death of onerously
decedent within one * 5. Not belonging to Effective
month, unless the testator at the
authorities have time the will is
already taken action executed but he has
Force, violence, ordered that the thing
intimidation or undue be acquired in order
influence to prevent that it be given to the
another from making * legatee/devisee.
a will or revoking one 6. Not belonging to Void
already made or who the testator at the
supplants or alters time the will is
the latter’s will executed and the
Falsifies or forges a testator erroneously
*
supposed will of the believed that the
decedent thing pertained to
him.
REVOCATION OF DISINHERITANCE 7. Not belonging to Effective
1. Reconciliation the testator at the
2. Subsequent institution of the time the will is
disinherited heir executed but
3. Nullity of the will which contains the afterwards it becomes
disinheritance his by whatever title.
8. Already belonged Ineffective
*Note: The moment the testator uses one of to the
the acts of unworthiness as a cause for legatee/devisee at
disinheritance, he thereby submits it to the the time of the
rules on disinheritance. Thus, reconciliation execution of the will
renders the disinheritance ineffective. even though another
person may have
K. LEGACIES AND DEVISES interest therein
9. Already belonged Ineffective
PERSONS CHARGED WITH LEGACIES AND to the
DEVISES legatee/devisee at
1. Compulsory heir the time of the
2. Voluntary heir execution of the will
3. Legatee or devisee even though it may
4. Estate have been
subsequently
VALIDITY AND EFFECT OF LEGACY OR alienated by him.
DEVISE 10. Testator had Legatee/devisee can
STATUS OF EFFECT ON THE knowledge that the claim nothing by
PROPERTY GIVEN LEGACY/DEVISE thing bequeathed virtue of the
BY LEGACY/DEVISE belonged to a third legacy/devise
1. Belonging to the Effective person and the
testator at the time of legatee/devisee
the execution of the acquired the property
will until his death gratuitously after the
execution of the will.
2. Belonging to the Revoked
testator at the time of 11. Testator had Legatee/devisee can
the execution of the knowledge that the demand
will but alienated in thing bequeathed reimbursement from
favor of a 3rd person belonged to a third the heir or estate.
person and the
3. Belonging to the No revocation. There
legatee/devisee
testator at the time of is a clear intention to
acquired the property
the execution of the comply with the
by onerous title.
will but alienated in legacy/devise.
favor of the legatee
or devisee ORDER OF PAYMENT IN CASE THE
gratuitously ESTATE IS INSUFFICIENT TO COVER ALL
LEGACIES AND DEVISES – ART. 911, CC
4. Belonging to the Legatee/devisee can
VS. ART. 950, CC
testator at the time of demand
the execution of the reimbursement from ART. 911 ART. 950
will but alienated in the heirs or the Order of Preference Order of Preference

(LIPO) (RPSESO) affecting the bequests; sale of the

1. Legitime of 1. Remuneratory thing to pay the debts of the deceased
compulsory legacy/devise during the settlement of his estate.
heirs 2. Preferential *Note: List is not exclusive.
2. Donations Inter legacy/devise
vivos 3. Legacy for Support
3. Preferential 4. Legacy for II. LEGAL OR INTESTATE
legacies or Education
devises 5. Legacy/devise of
SUCCESSION
4. All Other Specific,
legacies or determinate thing CAUSES OF VACANCY IN SUCCESSION
devises pro rata which forms a part 1. Disinheritance – the testator creates
of the estate it himself
6. All Others pro rata 2. Repudiation – the heir does
Application: Application: something
1. When the 1. When there are no 3. Incapacity or Predecease –
reduction is compulsory heirs something happens to the heir
necessary to and the entire
preserve the estate is HOW VACANCIES ARE FILLED
legitime of distributed by the 1. Substitution (Art. 857, CC)
compulsory testator as legacies 2. Representation (Art. 970, CC)
heirs from or devises; or 3. Accretion (Art. 1015, CC)
impairment 2. When there are 4. Intestate Succession
whether there compulsory heirs
are donations but their legitime CAUSES FOR LEGAL OR INTESTATE
inter vivos or has already been SUCCESSION (Art. 960, CC)
not; or provided for by the 1. If a person dies without a will
2. When, although, testator and there 2. If a person dies with a void will
the legitime has are no donations 3. If a person dies with a will which has
been preserved inter vivos. subsequently lost its validity
by the testator *Art. 950 governs 4. When the will does not institute an heir
himself there when the question 5. When the will does not dispose of all
are donations of reduction is the property belonging to the testator.
inter vivos. exclusively among Legal succession shall take place only
*Art. 911 legatees and with respect to the property which the
governs when devisees testator has not disposed.
there is a themselves. 6. If the suspensive condition attached to
conflict between the institution of the heir does not
compulsory happen or is not fulfilled
heirs and the 7. If the heir dies before the testator
devisees and 8. If the heir repudiates the inheritance,
legatees. there being no substitution, and no
right of accretion takes place
*Note: In case of reduction, the inverse order
9. When the heir instituted is incapable of
of payment should be followed.
succeeding, except in cases provided in
the Civil Code
GROUNDS FOR REVOCATION OF
LEGACIES AND DEVISES (Art. 957, CC)
FUNDAMENTAL UNDERLYING
1. Testator transforms the thing
PRINCIPLES IN LEGAL OR INTESTATE
bequeathed in such a manner that it
SUCCESSION
does not retain either the form or the
1. Rule of Preference Between Lines –
denomination it had.
Those in the direct descending line
2. Testator by any title or for any cause
shall exclude those in the direct
alienates the thing bequeathed, or any
ascending and collateral lines, and
part thereof, it being understood that
those in the direct ascending line shall,
in the latter case the legacy or devise
in turn, exclude those in the collateral
shall be without effect only with
line.
respect to the part alienated. Except:
2. Rule of Proximity – the relative nearest
When the thing should again belong to
in degree excludes the farther one.
the testator after alienation by virtue
(Art. 962, CC)
of the exercise of the right of
3. Rule of Equal Division – the relatives
repurchase.
who are in the same degree shall
3. Thing bequeathed is totally lost during
inherit in equal shares. (Articles 987
the lifetime of the testator, or after his
and 1006, CC)
death without the heirs’ fault.
Exceptions:
4. Other causes: nullity of the will; non-
compliance with suspensive conditions

a. Division in the ascending line

(between paternal and maternal *Notes:
grandparents) - In the direct line, representation
b. Division among brothers and takes place ad infinitum in the
sisters, some of whom are of the direct descending line, never in the
full and others of half-blood ascending.
c. Division in cases where the right of - In the collateral line, representation
representation takes place takes place only in favor of the
4. Rule of Barrier between the legitimate children of the brothers or sisters
family and the illegitimate family – the (i.e., nephews and nieces) whether
illegitimate family cannot inherit by of the full or half-blood and only if
intestate succession from the they concur with at least one uncle
legitimate family and vice-versa. (Art. or aunt.
992, CC)
5. Rule of Double Share for full blood RIGHT OF REPRESENTATION IN
collaterals – when full and half-blood TESTAMENTARY SUCCESSION
brothers or sisters, nephews or nieces, 1. When a compulsory heir in the direct
survive, the full blood shall take a descending line had predeceased the
portion in the inheritance double that testator and was survived by his
of the half-blood. (Articles 895 and children or descendants.
983, CC) 2. When a compulsory heir in the direct
descending line is excluded from the
RELATIONSHIP (Articles 963 – 969, CC) inheritance due to incapacity or
1. Number of generations determines unworthiness and he has children or
proximity. descendants.
2. Each generation forms a degree. 3. When a compulsory heir in the direct
3. A series of degrees forms a line. descending line is disinherited and he
4. A line may either be direct or has children or descendants;
collateral. representation covers only the
5. A direct line is that constituted by the legitime.
series of degrees among ascendants 4. A legatee or devisee who died afther
and descendants (ascending and the death of the testator may be
descending). represented by his heirs.
6. A collateral line is that constituted by
the series of degrees among persons RIGHT OF REPRESENTATION IN
who are not ascendants or INTESTATE SUCCESSION
descendants, but who come from a 1. When a legal heir in the direct
common ancestor. descending line had predeceased the
7. Full blood – same father and mother. decedent and was survived by his
8. Half-blood – only one of either parent children or descendants.
is the same. 2. When a legal heir in the direct
9. In adoption, the legal filiation is descending line is excluded from the
personal and exists only between the inheritance due to incapacity or
adopter and the adopted. The adopted unworthiness and he has children or
is deemed a legitimate child of the descendants.
adopter, but still remains as an 3. When brothers or sisters had
intestate heir of his natural parents predeceased the decedent and they
and other blood relatives. had children or descendants.
4. When illegitimate children represent
DEFINITION OF THE RIGHT OF their deceased illegitimate parents in
REPRESENTATION (Art. 970, CC) the estate of their grandparents.
- It is a right created by fiction of law 5. When nephews and nieces inherit
- by virtue of which the together with their uncles and aunts in
representative is raised to the place representation of their deceased
and degree of the person parents who are brothers or sisters of
represented said uncles and aunts.
- and acquires the rights which the
latter would have if he were living
or if he would have inherited.

ORDER OF LEGAL OR INTESTATE SUCCESSION

DECEDENT IS A DECEDENT IS AN DECEDENT IS AN ADOPTED CHILD
LEGITIMATE CHILD ILLEGITIMATE CHILD
1 LC and LC and LC and
Legitimate descendants Legitimate descendants Legitimate descendants
2 LP and ILC and ILC and Illegitimate
Legitimate ascendants Illegitimate descendants descendants
3 ILC and ILP LP or ILP and
Illegitimate descendants Legitimate ascendants,
Adoptive parents
4 SS SS SS
5 Legitimate siblings, Illegitimate siblings, Siblings,
Nephews, Nephews, Nephews,
Nieces Nieces Nieces
6 Legitimate collateral relatives State State
within the 5th degree
7 State
CONCURRENCE IN LEGAL OR INTESTATE SUCCESSION

EXCLUDES EXCLUDED BY CONCURS WITH
Intestate Heir
LC and Ascendants, No one SS and
Legitimate descendants Collaterals and ILC
State
ILC ILP, No one SS
and Descendants Collaterals and LC and
State LP
LP and Collaterals and LC ILC and
Legitimate ascendants State SS
ILP Collaterals and LC and ILC SS
State
SS Collaterals other than No one LC, ILC, LP, ILP
siblings, nephews and Siblings
nieces Nephews
Nieces
Siblings, All other collaterals LC, ILC, LP, ILP SS
Nephews and
Nieces State
Other collaterals within Collateral more remote LC, ILC, LP, ILP and Collaterals in the same
5th degree in degree and SS degree
State
State No one Everyone No one
A MORE DETAILED SUMMARY OF INTESTATE SHARES
1
LEGITIMATE CHILDREN AND LEGITIMATE DESCENDANTS ALONE
SHARE AS FREE TOTAL INTESTATE
Intestate Heir SHARE AS LEGITIME
DISPOSAL SHARE
LC ½ ½ 1
TOTAL ½ ½ 1
2
ONE LEGITIMATE CHILD AND SURVIVING SPOUSE
DISPOSAL SHARE
LC ½ ½
SS ¼ ¼ ½
TOTAL ¾ ¼ 1

3
LEGITIMATE CHILDREN AND SURVIVING SPOUSE
DISPOSAL SHARE
LC Remaining portion of Whole estate divided
estate after paying equally between total
½
legitimes # of children plus the
SS
SS Legitimes to be # of children plus the
divided equally SS (see above)
Same as share of 1 LC
between total # of
children plus the SS
TOTAL Varies on no. of Varies on no. of 1
children children
4
LEGITIMATE CHILDREN AND ILLEGITIMATE CHILDREN
DISPOSAL SHARE
LC ½ Remaining portion of Whole estate divided
estate after paying by the ratio of 2:1 for
legitimes each LC as compared
to the ILC
ILC ½ share of 1 LC Legitimes to be 1 for each ILC
divided by the ratio of provided that legitimes
2 for each LC, 1 for wouldn’t be impaired
each ILC
TOTAL Varies on # of children Varies on # of children 1
5
ONE LEGITIMATE CHILD, ILLEGITIMATE CHILD, AND SURVIVING SPOUSE
SHARE AS LEGITIME SHARE AS FREE TOTAL INTESTATE
Intestate Heir DISPOSAL SHARE
estate after paying by the ratio of 2 for
legitimes to be divided each LC
by the ratio of 2:1 for
each LC and each
ILC, respectively
ILC ½ share of 1 LC or ¼ 1 for each ILC (see 1 for each ILC
above)
SS ¼ Same share as a LC Legitimes wouldn’t be
impaired
TOTAL Varies depending on # Varies depending on # 1
of ILC of ILC
6
LEGITIMATE CHILDREN, ILLEGITIMATE CHILDREN AND SURVIVING SPOUSE
DISPOSAL SHARE
estate, if any after by the ratio of 2:1 for
paying legitimes to be each LC and ILC
divided by the ratio of respectively
2 for each LC
ILC ½ share of each LC 1 for each ILC (see 1 for each ILC (see
above) above)
SS Same share as one Same share as a LC, Same share as a LC,
LC provided legitimes provided legitimes
are not impaired are not impaired
TOTAL Varies depending on Varies depending on 1
no. of ILC no. of ILC

7
LEGITIMATE PARENTS ALONE
DISPOSAL SHARE
LP ½ ½ 1
TOTAL ½ ½ 1
8
LEGITIMATE PARENTS AND ILLEGITIMATE CHILDREN
In SHARE AS FREE TOTAL INTESTATE

SHARE AS LEGITIME
DISPOSAL SHARE
testate Heir
LP ½ ½
ILC ¼ ¼ ½
TOTAL ¾ ¼ 1
9
LEGITIMATE PARENTS AND SURVIVING SPOUSE
DISPOSAL SHARE
LP ½ ½
SS ¼ ¼ ½
TOTAL ¾ ¼ 1
10
LEGITIMATE PARENTS, SURVIVING SPOUSE AND ILLEGITIMATE CHILDREN
DISPOSAL SHARE
LP ½ ½
SS 1/8 1/8 ¼
ILC ¼ ¼
TOTAL 7/8 1/8 1
11
ILLEGITIMATE CHILDREN ALONE
DISPOSAL SHARE
ILC alone ½ ½ 1
TOTAL ½ ½ 1
12
ILLEGITIMATE CHILDREN AND SURVIVING SPOUSE
DISPOSAL SHARE
ILC 1/3 1/6 ½
SS 1/3 1/6 ½
TOTAL 2/3 1/3 1
13
SURVIVING SPOUSE
DISPOSAL SHARE
SS ½ or 1/3 ½ or 1/3 1
TOTAL ½ or 1/3 ½ or 1/3 1
14
ILLEGITIMATE PARENTS ALONE

DISPOSAL SHARE
ILP ½ ½ 1
TOTAL ½ ½ 1

15
ILLEGITIMATE PARENTS AND SURVIVING SPOUSE
DISPOSAL SHARE
ILP ¼ ¼ ½
SS ¼ ¼ ½
TOTAL ½ ½ 1
16
SIBLINGS, NEPHEWS AND NIECES ALONE
(SPECIAL KIND OF COLLATERAL RELATIVES)
DISPOSAL SHARE
Siblings, nephews, ½ ½ 1
nieces
TOTAL ½ ½ 1
17
SURVIVING SPOUSE, SIBLINGS, NEPHEWS AND NIECES
DISPOSAL SHARE
SS ½ ½
Siblings, nephews, ½ ½
nieces
TOTAL ½ ½ 1
ORDER OF CONCURRENCE IN THE CASE OF AN ADOPTED CHILD (Art. 190, FC)

SURVIVORS SHARE
LC, ILC, SS As in the case of ordinary intestate succession
LP or ascendants or ILP Adopter ½
½
LP or ascendants or ILP or Adopter ½
SS
½
LP or ascendants ½
Adopter
ILC or descendants ½
LP or ascendants 1/3
Adopter
SS 1/3
ILC or descendants 1/3
Adopter alone Entire estate
Collateral blood relatives As in the case of ordinary intestate succession
III. PROVISIONS COMMON TO TESTAMENTARY AND INTESTATE

SUCCESSIONS
A. ACCRETION
DEFINITION OF ACCRETION (Art. 1015, CC)
- It is a right by virtue of which
- when two or more persons are called to the same inheritance, devise or legacy
- the part assigned to one who renounces or cannot receive his share or who died
before the testator
- is added or incorporated to that of his co-heirs, co-devisees, or co-legatees.

EFFECT OF PREDECEASE, INCAPACITY, DISINHERITANCE OR REPUDIATION IN

TESTAMENTARY AND INTESTATE SUCCESSION
CAUSE OF VACANCY TESTAMENTARY SUCCESSION INTESTATE

LEGITIME FREE PORTION SUCCESSION
Predecease Representat'n Accretion Representat'n
Intestate Succession Intestate Succession Intestate Succession
Incapacity Representat'n Accretion Representat'n

Intestate Succession Intestate Succession Intestate Succession
Disinheritance Representat'n - -
Intestate Succession
Repudiation Intestate Succession Accretion Accretion
B. CAPACITY TO SUCCEED f. Physician, surgeon, nurse,

health officer or druggist who
REQUISITES FOR CAPACITY TO took care of the testator during
SUCCEED BY WILL OR BY INTESTACY his last illness.
(Art. 1024 – 1025, CC)
1. The heir, legatee or devisee must 2. BASED ON MORALITY OR
be living or in existence at the PUBLIC POLICY (Art. 739, CC)
moment the succession opens; and a. Those made in favor of a
2. He must not be incapacitated or person with whom the testator
disqualified by law to succeed. was guilty of adultery or
concubinage at the time of the
WHO ARE INCAPABLE OF making of the will.
SUCCEEDING b. Those made in consideration of
1. BASED ON UNDUE INFLUENCE a crime of which both the
OR INTEREST (Art. 1027, CC) - testator and the beneficiary
PIGRAP have been found guilty.
a. Priest who heard the last c. Those made in favor of a public
confession of the testator officer or his spouse,
during his last illness, or the descendants and ascendants,
minister of the gospel who by reason of his public office.
extended spiritual aid to him 3. BASED ON ACTS OF
during the same period; UNWORTHINESS (Art. 1032,
b. Individuals, associations and CC) – See table under
corporations not permitted by disinheritance
law to inherit;
c. Guardian with respect to PARDON OF ACTS OF UNWORTHINESS
testamentary dispositions given EXPRESS IMPLIED
by a ward in his favor before Made by the Effected when the
the final accounts of the execution of a testator makes a
guardianship have been document or any will instituting the
approved, even if the testator writing in which the unworthy heir with
should die after the approval decedent condones knowledge of the
thereof; except if the guardian the cause of cause of incapacity
is his ascendant, descendant, incapacity
brother, sister, or spouse; Cannot be revoked Revoked when the
d. Relatives of the priest or testator revokes the
minister of the gospel within will or the
the fourth degree, the church, institution
order, chapter, community,
organization, or institution to
which such priest or minister
may belong;
e. Attesting witness to the
execution of a will, the spouse,
parents, or children, or any one
claiming under such witness,
spouse, parents, or children;

C. ACCEPTANCE AND repudiates the inheritance in

his capacity as a testamentary
REPUDIATION OF INHERITANCE heir, he will be considered to
have also repudiated the
CHARACTERISTICS – VIR (Articles inheritance as a legal heir.
1041 – 1042, 1056, CC) - If he repudiates it as a legal
1. Voluntary and free heir, without his being a
2. Irrevocable except if there is testamentary heir, he may still
vitiation of consent or an unknown accept it in the latter capacity.
will appears
3. Retroactive
D. COLLATION (Articles 1061 –
REQUISITES (Art. 1043, CC) 1077, CC)
1. certainty of death of the decedent
2. certainty of the right to the CONCEPT OF COLLATION
inheritance - To collate is to bring back or to
return to the hereditary mass
ACCEPTANCE VS. REPUDIATION - in fact or by fiction
1. Acceptance involves the - property which came from the
confirmation of transmission of estate of the decedent, during
successional rights, while his lifetime by donation or other
repudiation renders such gratuitous title
transmission ineffective. - but which the law considers as
2. Repudiation is equivalent to an act an advance from the
of disposition and alienation. inheritance.
3. The publicity required for
repudiation is necessary for the - It is the act by virtue of which,
protection of other heirs and also the compulsory heir who
of creditors. concurs with other compulsory
heirs in the inheritance bring
FORMS OF ACCEPTANCE (Articles back to the common hereditary
1049 – 1050, CC) mass
1. Express Acceptance – one made - the property which they may
in a public or private document. have received from the testator
2. Tacit Acceptance – one resulting - so that a division may be
from acts by which the intention to effected according to law and
accept is necessarily implied or the will of the testator.
from acts which one would have no
right to do except in the capacity of OPERATIONS RELATED TO
an heir. Examples would be when COLLATION
the heir sells, donates or assigns 1. Collation – adding to the mass of
his right, when the heir demands the hereditary estate the value of
partition of the inheritance, when the donation or gratuitous
the heir alienates some objects of disposition.
the inheritance, etc. 2. Imputing or Charging – crediting
the donation as an advance on the
FORMS OF REPUDIATION (Art. 1051, legitime (if the donee is a
CC) compulsory heir) or on the free
1. in a public instrument portion (if the donee is a stranger).
acknowledged before a notary 3. Reduction – determining to what
public; or extent the donation will remain
2. in an authentic document – and to what extent it is excessive
equivalent of an indubitable writing or inofficious.
or a writing whose authenticity is 4. Restitution – return or payment
admitted or proved; or of the excess to the mass of
3. by petition presented to the court hereditary estate.
having jurisdiction over the
testamentary or intestate PERSONS OBLIGED TO COLLATE
proceeding 1. General Rule: compulsory heirs
Exceptions:
HEIRS IN TWO CAPACITIES (Art. a. when the testator should
1055, CC) have so expressly provided
- If a person is called to the b. when the compulsory heir
same inheritance as an heir by should have repudiated his
will and by law and he inheritance

2. Grandchildren who survive with E. PARTITION AND

their uncles, aunts, or first cousins
and inherit by right of DISTRIBUITON OF ESTATE
representation (Articles 1078 – 1105, CC)
*Note: Grandchildren may inherit
from their grandparent in their own CONCEPT OF PARTITION (Art. 1079,
right, i.e., as heirs next in degree, CC)
and not by right of representation - It is the separation, division
if their parent repudiates the and assignment
inheritance of the grandparent, as - of a thing held in common
no living person can be among those to whom it may
represented except in cases of belong.
disinheritance and incapacity in - The thing itself or its value may
which case grandchildren are not be divided.
obliged to bring to collation what
their parent has received WHO MAY EFFECT PARTITION
gratuitously from their 1. decedent, during his lifetime by an
grandparent. act inter vivos or by will
2. heirs
WHAT TO COLLATE 3. competent court
1. Any property or right received by 4. third person designated by the
gratuitous title during the decedent
testator’s lifetime.
2. All that they may have received WHO CAN DEMAND PARTITION
from the decedent during his 1. compulsory heir
lifetime. 2. voluntary heir
3. All that their parents would have 3. legatee or devisee
brought to collation if alive. 4. any person who has acquired
interest in the estate
PROPERTIES NOT SUBJECT TO
COLLATION WHEN PARTITION CANNOT BE
1. Absolutely no collation DEMANDED – PAPU
a. Expenses for support, 1. when expressly Prohibited by the
education (only elementary testator for a period not exceeding
and secondary), medical 20 years
attendance, even in 2. when the co-heirs Agreed that the
extraordinary illness, estate shall not be divided for a
apprenticeship, ordinary period not exceeding 10 years,
equipment, or customary renewable for another 10 years
gifts. (Art. 1067, CC) 3. when Prohibited by law
2. Generally not imputable to 4. when to partition the estate would
legitime render it Unserviceable for the use
a. Expenses incurred by for which it is intended
parents in giving their
children professional, PROHIBITION TO PARTITION
vocational or other career 1. The prohibition to partition for a
unless the parents so period not exceeding 20 years can
provide, or unless they be imposed on the legitime.
impair the legitime. 2. If the prohibition to the partition is
b. Wedding gifts by parents for more than 20 years, the excess
and ascendants consisting is void.
of jewelry, clothing, and 3. Even if a prohibition is imposed,
outfit except when they the heirs by mutual agreement can
exceed 1/10 of the sum still make the partition.
disposable by will.
PARTITION INTER VIVOS (Art. 1080,
CC)
- It is one that merely allocates
specific items or pieces of
property on the basis of the
pro-indiviso shares fixed by law
or given under the will to heirs
or successors.

EFFECTS OF INCLUSION OF SAMPLE BAR QUESTIONS

INTRUDER IN PARTITION
1. Between a true heir and several 1. Alfonso, a bachelor without any
mistaken heirs – partition is void. descendant or
2. Between several true heirs and a ascendant, wrote a last will and testament
mistaken heir – transmission to in which he devised, “all the properties of
mistaken heir is void which I may be possessed at the time of
3. Through error or mistake, share of my death” to his favorite brother Manuel.
true heir is allotted to mistaken At the time he wrote the will, he owned
heir – partition shall not be only one parcel of land. But by the time
rescinded unless there is bad faith he died, he owned 20 parcels of land. His
or fraud on the part of the other other brothers and sisters insist that his
persons interested, but the latter will should pass only the parcel of land he
shall be proportionately obliged to owned at the time it was written, and did
pay the true heir of his share. The not cover his properties acquired, which
partition with respect to the should be by intestate succession. Manuel
mistaken heir is void. claims otherwise. Who is correct?
Explain.
A VOID WILL MAY BE A VALID
PARTITION Answer:
1. If the will was in fact a partition Manuel is correct because under Art. 793,
2. If the beneficiaries of the void will NCC, property acquired after the making
were legal heirs of a will shall only pass thereby, as if the
testator had possessed it at the time of
IMPORTANT PERIODS TO REMEMBER making the will, should it expressly appear
1 month or Testator, if publicly known by the will that such was his intention.
less before to be insane, burden of Since Alfonso’s intention to devise all
making a will proof is on the one properties he owned at the time of his
claiming validity of the death expressly appears on the will, then
will all the 20 parcels of land are included in
20 years Maximum period testator the devise.
can prohibit alienation of
dispositions
5 years from To claim property 2. Cristina, the illegitimate daughter of
delivery to escheated to the State Jose and Maria, died intestate, without
the State any descendant or ascendant. Her
1 month To report knowledge of valuable estate is being claimed by Ana,
violent death of decedent the legitimate daughter of Jose, and
lest he be considered Eduardo, the legitimate son of Maria. Is
unworthy either, both, or neither of them entitled to
5 years from Action for declaration of inherit? Explain.
the time incapacity & for recovery
disqualified of the inheritance, devise Answer:
person took or legacy Neither Ana nor Eduardo is entitled to
possession inherit ab intestate from Cristina. Both
30 days from Must signify are legitimate relatives of Cristina’s
issuance of acceptance/repudiation illegitimate parents and therefore they fall
order of otherwise, deemed under the prohibition prescribed un Art.
distribution accepted 992, NCC (Manuel vs. Ferrer, 242 SCA
1 month form Right to repurchase 477; Diaz vs. CA, 182 SCRA 427).
written notice hereditary rights sold to a
of sale stranger by a co-heir
10 years To enforce warranty of 3. (a) Luis was survived by 2 legitimate
title/quality of property children, 2 illegitimate children, his
adjudicated to co-heir parents, and 2 brothers. He left an estate
from the time right of of P1 million. Who are the compulsory
action accrues heirs of Luis, how much is the legitime of
5 years from To enforce warranty of each, and how much is the free portion of
partition solvency of debtor of the his estate, if any?
estate at the time
partition is made (b) Suppose Luis, in the preceding
question, died intestate. Who are his
4 years form Action for rescission of
intestate heirs, and how much is the share
partition partition on account of
of each in his estate?
lesion

Suggested Answer:
(a) The compulsory heirs are the 2
legitimate children and the 2 illegitimate
children. The parents are excluded by the
legitimate children, while the brothers are
not compulsory heirs at all.
Their respective legitimes are:
1. The legitime of the 2 legitimate
children is ½ of the estate (P500,000) to
be divided between them equally, or
P250,000 each.
2. The legitime of each illegitimate
child is ½ the legitime of each legitimate
child or P125,000.
Since the total legitimes of the compulsory
heirs is P750,000, the balance of
P250,000 is the free portion.
(b) The intestate heirs are the 2

legitimate children and the 2 illegitimate
children. In intestacy, the estate of the
decedent is divided among the legitimate
and illegitimate children such that the
share of each illegitimate child is ½ the
share of each legitimate child.
Their shares are:
1. For each legitimate child:
P333,333.33
2. For each illegitimate child:
P166,666.66

OBLIGATIONS & CONTRACTS CIVIL LAW
Obligations and Contracts
TABLE OF CONTENTS
Title 1. Obligations 121
I. General Provisions 121
II. Effect of Obligations 122
III. Different Kinds of Obligations 128
IV. Extinguishment of Obligations 141
Title 2. Contracts 148

I. General Provisions 148
II. Essential Requisites of a Contract 149
III. Form of Contracts 155
IV. Reformation of Instruments 157
V. Interpretation of Contracts 158
VI. Rescissible Contracts 159
VII. Voidable Contracts 161
VIII. Unenforceable Contracts 162
IX. Void or Inexistent Contracts 163
Title 3. Natural Obligations 166
Title 4. Estoppel 166

TITLE I: OBLIGATIONS II. Sources (Art. 1157)

Chapter I: General Provisions
Law
Contracts
I. Concept Quasi-contracts
Delicts
Definition Quasi-delicts
Art. 1156, NCC
An obligation is a juridical necessity to give, to LAW
do or not to do.
General Rule
The legal relation established between one Obligations derived from law are not
party and another, whereby the latter is presumed; only those expressly determined in
bound to the fulfillment of a prestation which this Code or in special laws are demandable,
the former may demand of him. (Manresa) and shall be regulated by the precepts of the
law which establishes them; and as to what
Elements has not been foreseen, by the provisions of
Active subject (obligee/ creditor) this Book. (Article 1158)
- the one in whose favor the obligation is
constituted *Those imposed by the law itself.
- the person who is entitled to demand
Passive subject (obligor / debtor) CONTRACTS

- the one bound to the fulfillment
- the person who has the duty of giving, Definition
doing or not doing A contract is a meeting of minds between two
persons whereby one binds himself, with
Prestation (object) respect to the other, to give something or to
- the conduct which has to be observed by render some service (1305)
the debtor/obligor
- duties of the obligor General Rule
Requisites: The contracting parties may establish
1. it must be Licit such stipulations, clauses, terms and
2. it must be Possible, physically and conditions as they may deem convenient,
judicially provided they are not contrary to Law,
3. it must be Determinate or Morals, Good customs, Public order and
determinable; and Public policy (1306)
4. it must have a Possible equivalent in
money Contracts as force of law between
parties
Vinculum juris – obligations arising from contracts have the
(efficient cause; juridical or legal tie) force of law between the contracting
– that which binds or connects the parties to parties and should be complied with in
the obligation. This can be easily known good faith (1159)
by knowing the sources of obligations. (de
Leon
QUASI-CONTRACTS (LoVe yoU)
Distinction between natural and civil
obligations Definition
It is the juridical relation resulting from lawful,
Civil Natural Obligations voluntary, and unilateral acts by virtue of
Obligations (Art. 1423) which the parties become bound to each other
(Art. 1156) to the end that no one shall be unjustly
Based on Based on equity and enriched or benefited at the expense of
positive law natural law another (2142)
Give a right of Do not grant a right
action to of action to enforce Lawful Distinguishing it from
compel their their performance; crimes
performance but after voluntary Voluntary Differentiating it from
fulfillment by the quasi-delict, which are
obligor, they based on fault and
authorize the negligence
retention of what Unilateral Distinguishing it from
has been delivered contract which is based
or rendered by on agreement
reason thereof

Obligations derived from quasi-contracts shall fault or negligence, if there is no pre-existing

be subject to the provisions of Chapter 1, Title contractual relation between the parties, is
XVII of this Book (1160) called a quasi-delict and is governed by the
Kinds of quasi-contracts provisions of this Chapter.
1. Negotiorum gestio (unauthorized Governing Rules

management) – Obligations derived from quasi-delicts shall
2. Solutio Indebiti (undue payment) be governed by the provisions of Chapter
2, Title XVII of this Book, and by special
1. Negotiorum Gestio laws (1162)
This takes place when a person voluntarily – Title XVIII on damages
takes charge of another’s abandoned – Articles 19-36 on human relations
business or property without the owner’s
authority (Article 2144)
Chapter II: Effect of Obligations
This juridical relation does not arise in
either of these instances:
I. KINDS OF PRESTATION
1. Obligation to Give
a. When the property or business
2. Obligation to Do
is not neglected or abandoned
3. Obligation Not to do
b. If in fact the manager has been
tacitly authorized by the owner
OBLIGATION TO GIVE:
2. Solutio Indebiti
Specific/
This takes place when something is
determinate Generic thing (1246)
received when there is no right to demand
thing
it, and it was unduly delivered thru
mistake (2154) It is identified by It is identified only
its individuality; by its specie. The
hence, it cannot debtor can give
DELICTS (Obligations Ex Delicto) be substituted anything of the same
with another class as long as it is
Governing Rules although the of the same kind.
Pertinent provisions of the RPC and other intended
substitute is of Creditor cannot
penal laws subject to Art 2177 Civil Code
the same kind demand a thing of
Art. 100, RPC and quality. superior quality;
Every person criminally liable for a felony is neither can the
also civilly liable debtor deliver a
thing of inferior
Chapter 2, Preliminary title, on Human quality.
Relations (Civil Code) *Limited Generic thing – when the generic
objects are confined to a particular class, e.g.,
Title 18 of Book IV of the Civil Code - on an obligation to deliver one of my horses
damages (Tolentino)
What civil liability arising from a crime

includes Specific/ Determinate Thing
Restitution
Reparation of damage caused Duties of the obligor:
Indemnity for consequential damages
1. To preserve or take care of the thing due
QUASI-DELICTS (1163)
*Standard of care:
Definition that of a good father of a family
An act or omission with fault or negligence unless the law or stipulation requires
causing damage to another; not a crime nor another standard of care
contract
2. To deliver the thing itself (1244)
Article 2176, New Civil Code
Whoever by act or omission causes damage to 3. To deliver the fruits of the thing (Art.
another, there being fault or negligence, is 1164, par. 1)
obliged to pay for the damage done. Such *When does the right to the fruits begin to
exist?
From the time the duty to deliver arises:
when there is no term/condition

– from the perfection of the fruits, interests damages in case of

contract from the time the breach of
when there is a term/condition obligation to obligation
– from the moment the term or deliver arises.
condition arises
OBLIGATION TO DO:
4. To deliver the accessions and accessories
of the thing (Art. 1166) – To do it (1167)
*Accessories - those joined to or included with – To shoulder the cost if someone else does
the principal for the latter’s better use, it (1167)
perfection or enjoyment – To undo what has been poorly done
(1167)
*Accessions – additions to or improvements – To pay damages (1170-1172, 2201-2202)
upon a thing
If a person obliged to do something fails to do
5. To pay for damages in case of breach it, the same shall be executed at his cost.
(1170)
This same rule shall be observed if he does it
Generic Thing is in contravention of the obligation.
Furthermore, it may be decreed that what has
Duties of the obligor: been poorly done be undone. (1167)
1. To deliver a thing which is of the quality *The creditor may demand that the obligation
intended by the parties taking into be performed by the debtor himself or by a
consideration the purpose of the obligation third person at the expense of the debtor.
and other circumstances (1246) However, in cases where the personal
qualifications of the debtor are taken into
2. To be liable for damages in casa of fraud, account, the only remedy of the creditor is an
negligence, or delay, in the performance action for damages. In the Balane notes,
of his obligation, or contravention of the there is no action for compliance for an
tenor itself (1170) obligation to do because such would be
involuntary servitude which is prohibited by
Personal Right Real Right the constitution.
Before delivery After delivery
Jus ad rem/ jus in jus in re – a right
personam – a enforceable OBLIGATION NOT TO DO:
right enforceable against the world.
only against a – Not to do what should not be done
definite passive – To shoulder the cost to undo what should
subject, the not have been done (1168)
debtor – To pay damages (1170, 2201-2202)
Right pertaining to Right pertaining to
the person to a person over a *If undoing is not possible, either physically
demand from specific thing, or legally, or because of rights acquired by
another, as a without a passive third persons who acted in good faith, or for
definite passive subject individually some other reason, his remedy is an action
subject, the determined against for damages caused by the debtor’s violation
fulfillment of a whom such right of his obligation. (Manresa)
prestation to give, may be personally
to do or not to do enforced II. BREACH OF OBLIGATION
Rights of a Creditor Voluntary - the debtor, in the performance of

the obligation is guilty of fraud, negligence,
Specific Generic delay or contravention of the tenor of the
To compel To ask for obligation
specific performance of the
performance obligation Involuntary – debtor is unable to comply
To recover To ask that the with his obligation because of a fortuitous
damages in case obligation be event
of breach of the complied with at
obligation, the expense of the A. MODES OF BREACH (1170)
exclusive or in debtor
addition to 1. Fraud
specific 2. Negligence
performance 3. Delay
Entitlement to To recover 4. Contravention the tenor thereof

FRAUD NEGLIGENCE (fault or culpa)
It is the deliberate or intentional evasion of It is the absence of due diligence.

the normal fulfillment of an obligation.
(Manresa) It is any voluntary act or omission, there
being no malice, which prevents the normal
It implies some kind of malice or dishonesty fulfillment of an obligation. (1173, 1174)
and it cannot cover cases of mistake and
errors in judgment made in good faith. It is Distinction between fraud and negligence
synonymous to bad faith. (O’leary v.
Macondray & Co., Inc., G.R. No. 21383, Fraud Negligence
March 25, 1924) There is There is no deliberate
deliberate intention to cause
*Responsibility arising from fraud is intention to damage.
demandable in all obligations (fraud in the cause
performance) damage.
Liability Liability may be
*Waiver of action for future fraud is void for cannot be mitigated.
being contrary to law and public policy (Art. mitigated.
1171) because the advance renunciation of Waiver for Waiver for future
the creditor would practically leave the future fraud is negligence may be
obligation without effect. void. allowed in certain
cases:
*Past fraud can be renounced. The fraud a) gross – can never
referred to is fraud in Article 1170, which is be excused in
the malice or bad faith in the performance of advance; against
the obligation. public policy
b) simple – may be
Kinds of Fraud excused in certain
cases
Fraud in the Fraud in the Execution
Performance Diligence Required
(Art. 1170) Causal Incidental
Fraud Fraud (dolo 1. That agreed upon by the parties
(dolo incidente) 2. In the absence of stipulation, that required
causante) (Art. 1344) by law in the particular case
(Art. 1338) 3. If both the contract and law are silent,
Present Present Present diligence of a good father of a family
during the during the during the
performance perfection perfection *Deligence of a Good Father of a Family:
of a pre- of a of a That reasonable diligence which an
existing contract contract ordinary prudent person would have had
obligation under the same circumstances.
Purpose is Purpose is Purpose is
to evade the to secure to secure Test of Negligence
normal the the consent
fulfillment consent of of the other Did the defendant in doing the alleged
of the another to party but negligent act use the reasonable care and
obligation enter into the fraud caution which an ordinary and prudent person
the was not the would have used in the same situation? If
contract principal not, then he is guilty of negligence.
inducement (Mandarin Villa, Inc. v. CA, 257 SCRA
in making 538, 1996)
the contract
Results in Results in Does not The rule for measuring degree of care and
the breach vitiation of result in the vigilance is dependent upon the circumstances
of an consent; vitiation of in which a person finds himself situated.
obligation voidable consent (Cusi v. Phil. National Railways, 90 SCRA
contract 357, 1979)
Gives rise to Gives rise Gives rise
a right in to a right to a right of Kinds of Culpa
favor of the of an an innocent
creditor to innocent party to 1. Culpa Aquiliana (quasi-delict) – wrong or
recover party to claim for negligence committed independent of
damages annul the damages contract and without criminal intent
contract

2. Culpa Contractual – wrong or negligence 2. Mora Accipiendi

in the performance of an obligation
There is a delay on the part of the creditor to
3. Culpa Criminal – wrong or negligence in accept the performance of the obligation
the commission of a crime
Requisites:
DELAY (mora) 1. Offer of performance by the debtor who
has the required capacity.
It is the non-fulfillment of an obligation with 2. Offer must be to comply with the
respect to time. prestation as it should be performed.
3. Creditor refuses the performance without
1st GENERAL RULE: Delay occurs from the just cause.
time of creditor’s judicial or extrajudicial
demand Effects when these elements are present:
1. The responsibility of debtor is reduced to
Exception: Demand is not necessary to fraud and gross negligence.
incur in delay when: 2. The debtor is exempted from risk of loss
 obligation or law expressly declares of thing or the creditor bears risk of loss.
 time is a controlling motive 3. The expenses incurred by the debtor for
 demand would be useless the preservation of the thing after the
mora shall be chargeable to the creditor.
2nd GENERAL RULE: In reciprocal obligations, 4. If the obligation bears interest, the debtor
delay happens from the moment one party does not have to pay from time of delay.
fulfills his undertaking. (1169) If neither party 5. The creditor is liable for damages.
performs his undertaking, neither incurs delay 6. The debtor may relieve himself of
obligation by consigning the thing.
Kinds of delay
3. Compensatio Morae
1. Mora solvendi
2. Mora accipiendi It is the delay of the parties or the obligors in
3. Compensatio morae – the delay of the reciprocal obligations. The effect is that it is as
obligors in reciprocal obligations if there is no default.
1. Mora Solvendi Rules on Mora, Delay or Default
There is a delay on the part of the debtor to Unilateral Reciprocal

fulfill his obligation (to give or to do) Obligations Obligations
General Rule:
a) Mora Solvendi Ex re – default in real “No demand – no One party incurs in
obligations delay.” The mere delay from the
b) Mora Solvendi Ex persona – default in expiration of the moment the other
personal obligations period fixed by the party fulfills his
parties is not obligation, while
Requisites: enough in order he himself does
– The obligation must be liquidated, due and that the debtor not comply or is
demandable. may incur in delay. not ready to
– The debtor is guilty of non-performance. comply in a proper
– There was demand made judicially or manner with what
extra-judicially. is incumbent upon
him. The general
Effects when these elements are present: rule is that
The creditor may ask for damages/ the debtor fulfillment by both
is liable for damages parties should be
The debtor is liable even if the loss is due to simultaneous.
fortuitous events. Exception:
The debtor shall bear the risk of loss. when the When different
obligation or law dates for the
Instance when there is no default or mora expressly performance of
solvendi: declares obligation is fixed
a) In negative obligations, because one can when time is of the by the parties.
never be late in not doing or not giving essence in the
something contract
b) In natural obligations, because the when the demand
performance is optional or voluntary on would be useless
the part of the debtor. when the debtor
acknowledged

that he is in not possible. He made the first monthly

default installment but refused to make further
It is not enough The demand is still payments until and unless GSIS completed
that there is a necessary only the housing unit. GSIS cancelled the award
specific date of when the and required Agcaoili to vacate the premises.
performance, the respective
words “without obligations are to Held: GSIS had no right to rescind sale. In
the need of be performed on reciprocal obligations, neither party incurs in
demand” should separate dates. delay if the other does not comply or is not
appear in the face ready to comply in a proper manner with what
of the instrument. If neither party is incumbent upon him. (1169, par. 6)
complies with the
prestation, the
default on one CONTRAVENTION TO THE TENOR OF THE
compensates the OBLIGATION
default of another.
This is the violation of the terms and
*Delay in payment of money is indemnified conditions stipulated in the obligation. And
through interest unless a gratuitous mutuum such contravention must not be due to a
or simple loan. If no stipulated interest, fortuitous event or force majeure.
default interest is (6%) six percent. (2209)
In general, every debtor who fails in the
*If obligation consists in payment of a sum of performance of his obligation is bound to
money, and debtor incurs in delay, the indemnify for the losses and damages caused
indemnity for damages, there being no thereby.
stipulation to the contrary, shall be the
payment of the interest agreed upon, and in The phrase “in any manner contravenes the
the absence of stipulation, the legal interest, tenor” means any illicit act, which impairs the
which is six percent per annum. (2209) strict and faithful fulfillment of the obligation,
or every kind of defective performance.
*When there is delay, the injured party may
ask for damages. But this benefit arising from It is therefore immaterial whether or not the
Mora, default or delay may cease upon: actor is in bad faith or negligent, what is
- Renunciation of the creditor required is that it is his fault or the act done
- Prescription of action contravenes their agreement.
- Extension of time for the fulfillment of
the obligation B. FORTUITOUS EVENTS
Bragaza v. CA DEFINITION
A contract was entered into for delivery of
materials on Dec. 22, 1990 in time for the Events which could not be foreseen, or which
aggrieved party’s wife who expressly wished though foreseen are inevitable. (Article 1174)
that she be buried before Christmas day, and
where, despite knowing this timetable and Act of God
having been paid for the materials, the
supplier failed to make the delivery despite An act of God is defined as an accident, due
pleas and earnest follow-ups by the widower. directly and exclusively to natural causes
Supreme Court ruled that time was of the without human intervention, which by no
essence of such contract and the supplier amount of foresight, pains or care, reasonably
should be liable for the delay and breach. to have been expected, could have been
prevented. (Nakpil v. CA)
N.B. Example of incurring delay without
judicial or extrajudicial demand. (#2)Time is Act of Man
of the essence. Contract was entered into in
view of burial before Christmas. In contrast, force majeure is a superior or
irresistible force, which is essentially an act of
Agcaoili v. GSIS man, such as wars, strikes, riots, acts of
The parties entered into a contract of sale of a robbers, pirates, and brigands.
government housing unit on the condition that
Agcaoili should occupy the same within three *In our law, acts of man and acts of God are
days from the receipt of notice. Failure to identical in so far as they exempt an obligor
immediately occupy contractually allowed from liability because the events happened
GSIS to terminate the contract. Agcaoli upon independent of the will of the obligor.
receipt of notice, immediately went to the (Republic v. Stevedoring Corp., 21 SCRA
place and found a house in a state of 279, 1967 and UST v. Descals, 38 Phil.
incompleteness that civilized occupation was 287, 1918)

Kinds of Fortuitous Events failure to act, the whole occurrence is then

humanized and removed from the rules
1. Ordinary – those which are common and applicable to the acts of God. (NAPOCOR v.
which the contracting parties could easily CA, 211 SCRA 162, 1992)
foresee.
Herbosa v. CA
2. Extraordinary – those which are 374 SCRA 578 (2002)
uncommon and which the contracting PVE, a subsidiary of SD, Inc., was not able to
parties could not have reasonably cover the wedding celebration of EH and RH
foreseen. (see 1680) allegedly due to the gross negligence of the
crew and the lack of supervision from PVE’s
General Rule general manager. Held: PVE or SD, Inc.
cannot take refuge under Article 1280 of the
Except in cases expressly specified by law, or New Civil Code. The defense that they
when it is otherwise declared by stipulation, or exercised due care in the selection and
when the nature of the obligations requires supervision of their employees can only be
assumption of risk, no person shall be availed of when the liability arises from culpa
responsible for those events which, could not aquiliana and not from culpa contractual.
be foreseen, or which though foreseeable, are
inevitable. C. REMEDIES OF CREDITORS
*When a debtor is unable to fulfill his GENERAL RULE

obligation because of fortuitous events or
force majeure, his obligation to comply is Rights acquired by virtue of an obligation are
extinguished subject to the following transmissible in character.
exceptions:
Exception
– cases expressly specified by law (i.e.,
552(2), 1165, 1268, 1942, 2147, a) when they are not transmissible by their
2148, 2159) very nature (Personal obligation)
– declared by stipulation b) when there is Stipulation of the parties
– nature of the obligation requires the that they are not transmissible
assumption of risk (1174) c) when they are not transmissible by
– when the obligor is in default or has operation of Law
promised to deliver the same thing to
two or more persons who do not have Rights of Creditor against Debtor (E-PAA,
the same interests. (1165(3)) electronic paa/foot or e-foot)
Requisites for exemption 1. Exact fulfillment – to demand fulfillment of

the obligation or specific performance –
1. cause of event or debtor’s failure either specific, substitute or equivalent
independent of human will performance
2. impossible to foresee or avoid 2. Pursue the leviable – to attach the
3. impossible for debtor to fulfill his properties of the debtor, except those
obligation in a normal manner exempt by law, from execution.
4. debtor free from participation in the 3. Accion subrogatoria
aggravation of the injury to the creditor 4. Accion Pauliana
(Nakpil v. CA and Lasam v. Smith)
Accion Subrogatoria
*It must be the ONLY and SOLE cause, not
merely a proximate cause. Definition
Effect of Concurrent Fault Novation via change of creditor (1291, par.

3);
One who negligently creates a dangerous
situation cannot escape liability for the natural This involves the right of the creditor to
and probable consequences thereof although exercise all of the rights and bring all of the
an act of God intervened to precipitate the actions which the debtor may have against
loss. There must be no fraud, negligence, third persons.
delay or violation or contravention in any
manner of the tenor of the obligation. (Nakpil Requisites
v. CA)
1. Creditor must have the right of return
When the effect is found to be in part the against debtor
result of the participation of man, whether 2. The debt is due and demandable
due to his active intervention or neglect or

3. There is a failure of the debtor to collect Juridical quality and efficaciousness

his own debt from 3rd persons either a. Civil obligations
through malice or negligence b. Natural obligations
4. The debtor's assets are insufficient c. Mixed – according to natural and civil
5. The right of account is not purely personal law
Accion Pauliana By the parties or subject

a. Unilateral or Bilateral
Definition b. Individual or Collective
c. Joint or Solidary
Rescission, which involves the right of the
creditor to attack or impugn by means of a By the object of the obligation or prestation
rescissory action any act of the debtor which a. Specific or Generic
is in fraud and to the prejudice of his rights as b. Positive or Negative
creditor. c. Real or Personal
d. Possible or Impossible
Requisites e. Divisible or Indivisible
f. Principal or Accessory
1. There is a credit in favor of plaintiff g. Simple or Compound
2. The debtor has performed an act If compound:
subsequent to the contract, giving Conjunctive (demandable at the same
advantage to other persons time)
3. The creditor has no other legal remedy Distributive (alternative or facultative)
4. The debtor's acts are fraudulent
5. The creditor is prejudiced by the debtor's By their juridical perfection or fulfillment
act which are in favor of 3rd parties and a. Pure or Conditional
rescission will benefit the creditor b. With a Period
I. PURE AND CONDITIONAL OBLIGATIONS

Chapter III: Different Kinds
PURE OBLIGATION
of Obligations
The effectivity or extinguishment is not
subject to any condition and no specific date
PRIMARY CLASSIFICATION is mentioned for its fulfillment and is,
(PaPA, Just Don’t Preach) therefore, immediately demandable. (1179,
par. 1)
1. Pure and conditional obligations (1179-
1192) CONDITIONAL OBLIGATION
2. Obligations with a Period (1193-1198)
3. Alternative obligations (1199-1206) The consequences are subject in one way or
4. Joint and solidary obligations (1207-1222) another to the fulfillment of a condition.
5. Divisible and indivisible obligations (1223-
1225) Condition
6. Obligations with a Penal clause (1226-
1230) It is a future and uncertain event, upon the
happening of which, the effectivity or
SECONDARY CLASSIFICATION extinguishment of an obligation (or rights)
(U R D PoLiCe) subject to it depends.
1. Unilateral and bilateral Term
2. Real and personal
3. Determinate and indeterminate A day certain is understood to be that which
4. Positive and negative must necessarily come, although it may not
5. Legal and conventional be known when.
6. Civil and natural
*Difference between conditional and those
Classification according to Sanchez with a term: There is uncertainty or certainty
Roman: of day or time.
1. Juridical quality and efficaciousness If the uncertainty consists in whether the day
2. By parties or subject will come or not, the obligation is conditional,
3. By the object of the obligation or and it shall be regulated by the rules of the
prestation preceding section. (1193)
4. By their juridical perfection and
extinguishment

Pay v. Viuda de Palanca happening of the uncertain event which

The debtor issued a promissory note to the constitutes the condition.
creditor to pay a sum of money payable upon
receipt of a particular sum of money from the RESOLUTORY CONDITION
estate of a certain deceased person upon (Condition subsequent)
demand. The case for collection on the note
was filed 15 years after its execution. The It causes the extinguishment or loss of rights
Supreme Court ruled that, since the already acquired upon the fulfillment of the
prescriptive period for filing the action was 10 condition, that is, the happening of the event
years and considering that the promissory which constitutes the condition. In other
note’s payment constituted a pure obligation words, the fulfillment of which will extinguish
and therefore demandable at once, the action an obligation (or right) already existing.
to collect could no longer prosper. It was
deemed pure since satisfaction of credit could Suspensive Resolutory
be realized either through the debtor sued When it is fulfilled, The obligation is
receiving the cash payment from the estate of the obligation extinguished.
the deceased or “upon demand”. arises.
When it takes
place, The tie of law is
Classification of Conditions the tie of law consolidated
(juridical or legal
1. As to effect tie) does not
a. Suspensive appear
b. Resolutory Until it takes place, Its effects flow,
the existence of but over it, hovers
2. As to form the obligation is a the possibility of
a. Express – the condition is clearly mere hope termination
stated Effect: The loss
b. Implied – the condition is merely The acquisition of (termination) of
inferred rights rights already
acquired
3. As to possibility (Manresa)
a. Possible
b. Impossible Potestative, Casual and Mixed (1182)
4. As to cause or origin POTESTATIVE CONDITION

a. Potestative (facultative condition)
b. Casual
c. Mixed It is a condition which is suspensive in nature
and which depends upon the sole will of one
5. As to mode of the contracting parties.
a. Positive – the condition consists in the
performance of an act (1184) Suspensive Resolutory
b. Negative – the condition consists in the condition condition
omission of an act Depends upon the
will of the debtor
6. As to numbers The condition and The condition and
a. Conjunctive – there are several obligation are void obligation are still
conditions and all must be fulfilled because the valid because the
b. Disjunctive – there are several validity and debtor is interested
conditions and only one or some of compliance are in the fulfillment of
them must be fulfilled left to the will of a condition which
the debtor and it causes the
7. As to divisibility cannot, therefore, extinguishment or
a. Divisible – the condition is susceptible be legally loss of rights
of partial performance demanded as it already acquired
b. Indivisible – the condition is not will cause the by the creditor.
susceptible of partial performance debtor not to
fulfill the
Suspensive and Resolutory (1179) condition to
escape liability.
SUSPENSIVE CONDITION
(Condition precedent or condition antecedent) Except when the
obligation is a pre-
It suspends the acquisition of rights until the existing one;
conditions are fulfilled; that is, until the hence, only the

condition is void. 5. in case of conditions not to do an

Depends upon the impossible thing
will of the creditor
The condition and Effect
obligation are
valid because the It renders the conditional obligation void since
creditor is the obligor knows that his obligation cannot
interested in the be fulfilled; thus, showing that he has no
fulfillment of the intention to comply with his obligation.
obligation as it
will benefit him. Effects of Impossible and Illegal Conditions
If the condition is:

CASUAL CONDITION 1. To do an impossible or illegal thing, the
condition and the obligation are void.
The condition depends upon chance or the will 2. Negative (not to do an illegal thing), the
of a third person. condition and the obligation are valid.
3. Negative (not to do the impossible thing),
MIXED CONDITION disregard the condition, however, the
obligation remains.
The condition depends partly on the will of a
party and partly on chance or the will of a 3rd Positive and Negative Conditions
person.
POSITIVE CONDITION
The obligation is valid if the suspensive (suspensive)
condition depends partly upon chance and
partly upon the will of a third person. (Naga The obligation is extinguished:
Telephone, Co., Inc. v. CA, 230 SCRA 351,
1994) a) as soon as the time expires without the
event taking place
b) as soon as it has become indubitable that
Possible and Impossible Conditions the event will not take place although the
(1183) time specified has not yet expired (1184)
*Applies to suspensive conditions. NEGATIVE CONDITION

(suspensive)
POSSIBLE CONDITIONS
The obligation becomes effective:
The condition is capable of fulfillment, legally
and physically. a) from the moment the time indicated has
elapsed without the event taking place; or
IMPOSSIBLE CONDITIONS b) from the moment it has become evident
that the event cannot occur, although the
The condition is not capable of fulfillment, time indicated has not yet elapsed (1185)
legally or physically.
Constructive Fulfillment (1186)
Two Kinds
For Suspensive Conditions
1. Physically impossible conditions – those, in
the nature of things, cannot exist or Requisites
cannot be undone.
2. Legally impossible conditions – those 1. The condition is suspensive;
which are contrary to law, morals, good 2. The obligor actually prevents the
customs, public order and public policy. fulfillment of the condition; and
3. He acts voluntarily.
General Rule
For Resolutory Condition
They shall annul the obligation which depends
upon them This also applies to a resolutory condition
when the debtor is bound to return what he
Exceptions has received upon fulfillment of the condition.
1. pre-existing obligation Effects of Suspensive Conditions

2. divisible obligations
3. simple or remuneratory donations 1. Before the condition is fulfilled, the
4. testamentary dispositions demandability and acquisition or effectivity

of the rights arising from the obligation is 1. Physical loss (the thing perishes)
suspended. 2. Legal loss (the thing goes out of
2. After the condition has been fulfilled, the commerce)
obligation arises or becomes effective. 3. Civil loss (the thing disappears and the
3. The effects of a conditional obligation to existence is unknown or unrecoverable as
give, once the condition has been fulfilled a matter of fact or of law)
shall retroact to the day the obligation was
constituted. Rules
*The law allows retroactivity because the 1. When the thing is lost without the debtor’s
condition is not an essential requisite of an fault, the obligation is extinguished.
obligation. 2. When the thing is lost with the debtor’s
fault, the debtor pays for damages.
1. When the obligation imposes reciprocal
prestations upon the parties, the fruits and DETERIORATION
interests shall be deemed to have been
mutually compensated (this assumes a Rules
simultaneous performance of prestations).
1. When the thing deteriorates without the
*The fruits are mutually compensated for debtor’s fault, the creditor will suffer the
convenience. deterioration of impairment.
2. When the thing deteriorates with the
2. In a unilateral obligation, the debtor shall debtor’s fault, the creditor may choose
appropriate the fruits and interests between:
received unless the intention constituting a. Rescission (cancellation) of the
such was different. obligation with indemnity for damages,
3. In obligations to do or not to do, the court or
shall determine the retroactive effect of b. Fulfillment of the obligation also with
the condition that has been complied with. damages
Rights Pending Fulfillment of a Suspensive IMPROVEMENT

Condition
Rules
Of the creditor Of the debtor
He may take or He is entitled to 1. When the thing is improved by nature or
bring appropriate recover what he by time, the improvement shall inure to
actions for the has paid by the benefit of the creditor.
preservation of his mistake prior to 2. When the thing is improved at the expense
right, as the debtor the happening og of the debtor, the debtor shall have no
may render the suspensive other right than that granted to a
nugatory the condition. usufructuary.
obligation upon the
happening of the
condition. Effect of the Fulfillment of Resolutory
Conditions (1190)
Loss, Deterioration or Improvement 1. Extinguishment of the obligation

Pending the Happening of the Condition 2. Mutual restitution (the parties restore to
(1189) each other what they have received
including the fruits and interest)
Requisites for 1189 to apply 3. Art. 1189 applies to whoever has the duty
to return in case of loss, deterioration or
6. The obligation is a real obligation; improvement of the thing
7. The object is a specific or determinate 4. If the obligation is to do or not to do, the
thing; courts determine the retroactivity of the
8. The condition is subject to a suspensive fulfillment of the condition as stated in
condition; 1187
9. The condition is fulfilled; and
10. There is loss, deterioration, or Kinds of Obligation according to the
improvement of the thing during the Person Obliged
pendency of the the condition.
UNILATERAL OBLIGATION
LOSS
It is when only one party is obliged to comply
Kinds of loss with a prestation.

BILATERAL OBLIGATION b. When, even if there has been delivery, the

contract states that either party can
It is when both parties are mutually bound to rescind the same or take possession of the
each other making them both the debtors and property upon non-fulfillment of the
creditors of each other. obligation by the other party.
It may be: By one party: (1191)

– reciprocal, or
– non-reciprocal 1. Implied in reciprocal obligations, when the
other does not comply
Reciprocal Obligations 2. Power to rescind plus damages
3. Compel fulfillment and then rescind if such
Those which arise from the same cause and in becomes impossible
which each party is debtor and creditor of the 4. The Court decrees rescission unless just
other. cause for authorizing a period
5. Must be without prejudice to third persons
Implied Condition who have acquired the thing, in
accordance with articles 1385 and 1388
There must be compliance by the other with and the Mortgage Law.
the duties incumbent upon him as party to the
debt. By both parties: (1192)
In reciprocal obligations, a party cannot In case both parties have committed a breach
demand unless he complies or is ready to of the obligation, the liability of the first
comply with obligations (inferred from 1169). infractor shall be equitably tempered by the
courts. If it cannot be determined which of
*This is subject to same rules on interim the parties first violated the contract, the
obligations and interim remedies. same shall be deemed extinguished, and each
shall bear his own damages.
Non-Reciprocal Obligations
1. Rule against the first infractor, as
Those which do not impose simultaneous and tempered by courts
correlative performance on both parties. The 2. If first infractor cannot be determined,
performance of one party does not depend obligation extinguished
upon the simultaneous performance of
another. *Rescission should be done judicially unless
stipulated in the contract. Rescission will only
Remedies in Reciprocal Obligations be granted if breach of the obligation is
substantial and not mere occasional
RESCISSION IN ARTICLE 1191 malfunction of the machine without even an
allegation of loss of income. (Philippine
The power to rescind means the right to Amusement Enterprises, Inc. v.
cancel or to resolve the contract in case of Natividad)
non-fulfillment of the obligation on the part of
one of the parties. *Injured party has the power to rescind
but only through the courts in proper
It is the breach of faith committed by the proceedings. (Ocejo v. International Banking
person who is supposed to comply with Corp.)
obligation. It is not the rescission in 1380
which involves damage or lesion, or injury to UP v. de los Angeles
the economic interest of a person. The parties stipulated rescission of logging
agreements without the need for any judicial
Characteristics pronouncement.
1. It only exists in reciprocal obligations. N.B. Judicial pronouncement of rescission was

2. It can be demanded only if the plaintiff is unnecessary as it was clearly expressed in
ready, willing and able to comply with his their contract. No law prohibits parties from
own obligation and the other is not. entering agreements wherein violation of the
(Seva v. Berwia, 48 Phil. 581) terms of contract would cause cancellation
even without court intervention. Rescission on
General Rule account of infractions by the other party by
one of the parties must be made known to
Judicial approval is necessary for rescission, that other party who in turn can seek for
except: judicial remedy should he feel that rescission
a. When the object is not yet delivered is unjustified.

Obligations Rendered Void By Certain future unknown to parties

Conditions
As to influence on
Annulling conditions: the obligation
– Merely fixes It causes an
a. Potestative – only if suspensive condition the time for the obligation to arise
is solely upon the will of the debtor (1182) efficaciousness or be terminated.
b. Impossible Conditions (1183) of the
c. those contrary to law, good customs, obligation.
morals, public order or public policy – If suspensive,
(1183) it cannot
d. Not to do an impossible thing – not agreed prevent the
upon (1183, par. 2) birth of the
obligation in
Lao Lim v. CA due time.
The stipulation that the lessee has the right to – If resolutory, it
renew contract of lease as long as he needs does not annul,
the premises and he can pay for the same is even in fiction,
invalid. It would leave the lessee, Dy, the sole the fact of its
power to determine whether the lease should existence.
continue or not. The lease contract is deemed As to effect, when
extinguished at the end of a year, subject to left to the debtor’s Depends upon the
renewal by means of a new agreement but will sole will of the
since the lessor did not want to renew, there – Depends upon debtor, thus,
is no more lease. the will of the invalidates the
debtor obligation
Romero v. CA empowers the
This case shows that one cannot rescind a court to fix its
contract on account of one’s own failure to duration
fulfill an obligation. As to retroactivity
of effects
Ducusin v. CA – Unless The happening of
Only that which is dependent on the sole will stipulated, the the condition has
of the debtor is invalid. No one is supposed to arrival of a retroactive effect.
have sole power. In this case, since the period has no
condition is dependent on the will of third retroactive
persons, the condition was held to be valid. effect.
II. OBLIGATIONS WITH A TERM Classifications of Term/ Period
Those whose consequences are subjected in 1. According to effect

one way or another to the expiration of a a. suspensive period (ex die) – obligation
period or term. (Manresa, Lirag Textiles, becomes demandable only upon the
Inc. v. CA, 63 SCRA 374, 1975) arrival of a certain day
b. resolutory period (in diem) – obligation
PERIOD or TERM is valid up to a day certain and
terminated upon the arrival of period.
It is a future and certain event upon the
arrival of which the obligation (or right) 2. According to source
subject to it either arises or is terminated. a. legal period – provided for by law
b. conventional/ voluntary period –
*The demandability is suspended by the term, agreed to by the parties
not the acquisition of the right or the c. judicial period – fixed by the court
effectivity of the obligation.
3. According to definiteness
*Fortuitous events do interrupt the running of a. definite period – fixed or the coming of
the period. which is known
b. indefinite period – not fixed or the
Distinguishing a period from a condition coming of which is not known (usually,
the law empowers the courts to fix the
Period/ Term Condition period)
As to fulfillment
Certain event Uncertain event
As to time May also refer to a

Refers only to the past event

Requisites of Period/ Term VESSELS. THE SUPREME COURT, IN DECIDING

WHO WAS TO BEAR THE LOSS AS A RESULT OF THE
It must refer to the future. TYPHOON IN A CONTRACT FOR DELIVERY OF LOGS,
It must be certain. RULED THAT THE QUOTED PROVISION PROVIDES
It must be possible. FOR A PERIOD.
THE DESIGNATED TIME WAS
CALCULATED TO AVOID TYPHOONS. ON MAY 5,
Effect of payment before the arrival of 1951 THE APPELLANT FAILED TO SEND A VESSEL
the period TO PICK UP THE LOGS, WHICH WERE
CONSEQUENTLY SWEPT AWAY BY A TYPHOON.
The debtor may recover what he has paid SINCE THE SAID DATE WAS WITHIN THE PERIOD
including the fruits and interest if he is PRESCRIBED, NONE OF THE PARTIES COULD INCUR
unaware of the period or believed that the DELAY NOR DEMAND PERFORMANCE. THE LOSS
obligation has become due and demandable SHOULD BE SHOULDERED BY THE APPELLEE OR THE
(1195). If he paid voluntarily knowing that the LOGGER.
obligation is not yet due, he cannot recover
what he has paid. FIXING OF A PERIOD
General Rule The Court May Fix a Period When:
The period attached to the obligation is for the 1. There is no express stipulation, but a
benefit of both parties. period is intended by the parties as can be
inferred from the nature and
Exception circumstances of the obligation.
2. If the duration of the period depends upon
When it appears from the tenor of the the will of the debtor.
obligation or other circumstances that the 3. If the debtor promises to pay when his
period has been established in favor of one or means permit him to do so. (1197)
the other subject to an express stipulation of
the parties, the period may be benefit the The Court May NOT Fix a Period When:
debtor or the creditor alone.
1. When no term has been specified by the
Period for the benefit of the debtor alone: parties because no term was ever
intended, in which case it is considered a
The debtor cannot be compelled to pay pure obligation.
prematurely, however, he may renounce the 2. When the obligation is payable on
benefit of the period by performing his demand.
obligation in advance. (Manresa) 3. When specified period is provided by law.
Period for the benefit of the creditor alone: Araneta, Inc. v. Philippine Sugar Estates
Development Co., Ltd.
The creditor may demand fulfillment even The parties in the case intended to defer
before the arrival of the term but the debtor performance of obligations until after the
cannot compel him to accept before the squatters were duly evicted. Although it was
expiration of the period (i.e., “on demand”). indefinite, such was the intention of the
parties and courts could not just assign a
Interim obligations period out of thin air. The requisite and
guideline for setting a period is when there is
In case of loss, deterioration or improvement no period specified but such was intended,
of the thing before the arrival of the day courts should just fix a period, which the
certain, the rules in article 1189 shall be parties could have intended.
observed.
i. Exercise due diligence; otherwise, Reasons for Fixing a Period
responsibility for loss, deterioration
(1189) 1. There can be no possibility of any breach
ii. Improvement inures to creditor, if at of contract or failure to perform the
expense of debtor only usufructuary obligation unless the period is fixed by the
right (1189) courts.
iii. Recover payment or delivery before 2. When the court has not yet fixed the
due and demandable period, it is premature to collect.
ABESAMIS V. WOODCRAFT WORKS, INC. A Debtor Loses the Right to Make Use of
THE CONTRACT PROVIDED THAT THE APPELLANT a Period (when the creditor can demand even
SHALL MAKE SHIPMENT BEFORE THE END OF JULY, when the obligation is not yet due) (1198)
BUT WILL NOT COMMENCE EARLIER THAN APRIL
WITH THE OPTION TO MAKE PARTIAL SHIPMENT
DEPENDING ON THE AVAILABILITY OF LOGS AND

1. When after contracting the obligation, the ALTERNATIVE OBLIGATION

debtor suffers from insolvency, unless he
gives guaranties or securities for the debt It is one wherein various prestations are due
2. When the debtor does not furnish but the performance of one of them is
promised guaranties or securities he sufficiently determined by the choice which,
promised as a general rule, belongs to the debtor.
3. When by his own act, the debtor has (Manresa)
impaired established guaranties or FACULTATIVE OBLIGATION
securities and when through a fortuitous
event they disappear, unless he gives new It one where only one prestation has been
ones equally satisfactory when the debtor agreed upon but the obligor may render
violates any undertaking in consideration another in substitution.
of which the creditor agreed to the period
4. When the debtor attempts to abscond. Distinguising Alternative and Facultative
Obligations
*IN ALL THE CASES ABOVE, DESPITE THE FACT
THAT THE PERIOD HAS NOT YET LAPSED, THE Alternative Facultative
OBLIGATION SHALL BECOME IMMEDIATELY Number of
PAYABLE OR DEMANDABLE. prestations Only one
Several prestation is due
*THE WORD “INSOLVENT” DOES NOT REQUIRE A prestations are although the
JUDICIAL DECREE OF INSOLVENCY. IT SHOULD BE due but debtor is allowed
UNDERSTOOD IN ITS ORDINARY MEANING WHICH compliance with to substitute
MAY EMBRACE DIFFERENT DEGREES OF FINANCIAL one is sufficient another
EMBARRASSMENT. THE INSOLVENCY MUST HAVE Right of choice
OCCURRED AFTER THE OBLIGATION WAS May be given to The right to make
CONSTITUTED. the creditor or to the substitution is
a third person given only to the
Gaite v. Fonacier debtor
Payment of obligation was secured by two Loss through a
surety bonds: one from a mining company fortuitous event
and its stockholders and the other from a The loss of one or The loss of the
bonding company. The obligor was obliged to more of the thing due
pay the indebtedness from the time it alternatives does extinguishes the
received the proceeds of the sale of iron ore, not extinguish obligation.
the Supreme Court ruled that the obligor in the obligation
this case lost its right to the period. Failure to Loss through
renew an expired surety with the bonding fault of debtor
company constituted an impairment of the a) Does not a) The debtor is
securities or guaranties. Thus, Fonacier lost render the debtor liable
his right to the period, i.e. time to sell the iron liable
ore, unless he immediately gives new ones b) Where the b) The loss of the
equally satisfactory. choice belongs to substitute before
the creditor, the the substitution
III. ALTERNATIVE OBLIGATIONS loss of one does not render
alternative gives the debtor liable
Kinds of Obligation according to Object rise to liability
Nullity of
1. Simple obligation – one where there is prestation a) The nullity of
only one prestation a) The nullity of the prestation
2. Compound obligation – one where there one prestation agreed upon
are two or more prestations does not invalidates the
a. Conjunctive obligation – one where invalidate the obligation
there are several prestations and all of others b) the debtor is not
them are due bound to choose
b. Distributive obligation – one where one b) the debtor or the substitute
of two or more of the prestations is creditor should
due choose from
among the
*A distributive obligation may be remainder
– alternative (1199), or
– facultative (1206)

Right of Choice Rules in Facultative Obligations
General Rule Before After Substitution

Substitution
The right of choice belongs to the debtor. Loss of the Principal
Fortuitous Event The debtor is not
Except: The obligation is liable whatever may
extinguished be the cause
When expressly granted to the creditor, or Fault of Debtor
When expressly granted to a third person The debtor is
liable for
*A right of choice becomes a simple obligation damages
when a person who has a right of choice has Loss of the Substitute
communicated his choice and that one choice The debtor is not Fortuitous Event
is the only practicable one (i.e., the others liable whether The obligation is
may have become illegal or impossible). the loss is due to extinguished
(1202) the fault of the Fault of Debtor
debtor or to a The debtor is liable
Limitations on the Debtor’s Right of Choice fortuitous event. for damages
1. The debtor cannot choose those IV. JOINT AND SOLIDARY OBLIGATIONS
prestations which are impossible, unlawful
or which could not have been the object of
JOINT OBLIGATIONS
the obligation. (1200)
Obligacion Mancomunada
2. The debtor has no more right of choice
when among the prestations whereby he is
It is an obligation where the whole liability is
alternatively bound, only one is
to be paid or fulfilled proportionately by the
practicable.
different debtors; and/or is to be demanded
3. The debtor cannot choose the part of one
proportionately by the different creditors.
prestation and part of another.
SOLIDARY OBLIGATION
The Right of Choice belongs to the Debtor
Obligacion Solidaria
As a general rule, in alternative obligations,
It is an obligation where each one of the
the right of choice belongs to the debtor.
debtors is bound to render, and/ or each one
However, the debtor may expressly give the
of the creditors has a right to demand
right of choice to the creditor.
compliance with the prestation. (1207)
Rules in Alternative Obligations
*In a joint obligation, each debtor shall
be liable only for his part of the debt
Debtor’s Creditor’s
presumed to be equal with the other debtors.
choice choice
The above provision is consistent with the rule
Due to a Fortuitous Event
that a joint obligation is presumed in case of
All Extinguish Extinguish
plurality of debtors or creditors for solidary
Some Deliver any of Deliver any of obligation exists only when the law so
the remaining the remaining provides, when expressly stipulated by the
One Deliver Deliver parties or when called for by the nature of the
Debtor’s Fault obligation. (Jurado) (see 1208)
All Value of the Value of any of
last thing lost the things and General Rule
and damages damages
Some Deliver any of Value of the By default, collective obligations are presumed
the remaining, thing lost, to be joint if there is concurrence of two or
no damages damages or more debtors and/ or creditors.
any of the
remaining Solidarity exists only
One Deliver, no
damages 1. When Stipulated by the parties using such
Loss of Last Thing words like “jointly and severally,” “in
Extinguish Value of any of solidum,” “I promise to pay” in a note
the things lost signed by two or more debtors, or similar
due to the words. (conventional solidarity)
creditor’s fault
and damages 2. When solidary liability is provided by Law,
hence, civil liability arising from crimes,

negotiorum gestio, commodatum or quasi- between the parties is joint, that is, liable only
delict shall be solidary. (legal solidarity) to a proportionate share. (1209)
3. When the Nature of the obligation requires *In a joint indivisible obligation, the
solidarity. liabilities of the debtors or the rights of the
creditors are joint, but they are indivisible as
4. When a charge or condition is imposed to compliance. (1224) The concurrence of all
upon heirs or legatees, and the Testament the creditors is necessary for demanding
expressly makes the charge or condition compliance due to the indivisibility of the
“in solidum”. obligation. The same is inversely true as
regards the debtors. The concurrence of all
5. When a solidary responsibility is imputed the creditors is also necessary for acts which
by a Final judgment upon several are prejudicial. But an act beneficial to all like
defendants. interruption of prescription may be performed
by one of the creditors.
Some Features of Joint Liability
Indivisible obligations are not necessarily
1. Insolvency of one debtor does not make solidary (1210)
the others liable.
2. Vitiated consent on the part of one debtor Indivisibility Solidarity
does not affect the others.
3. Demand made to one of the debtors is not Refers to the Refers to the legal
a demand to all because the debt of one is prestation or juridical tie
distinct from the others. binding the parties
Only the debtor All of the debtors
*In a given contract, wherein a party who is guilty of are liable for the
signs as a surety but the agreement states breach of breach of
joint and several liabilities, there is a solidary obligation is obligation
obligation. (Jaucian v. Querol) liable for committed by any
damages, thereby one of the debtrs.
Kinds of Solidarity (PAMela Anderson) terminating the
agency.
1. Passive Solidarity Can exist even if Can only exist
2. Active Solidarity there is only one when there is at
3. Mixed Solidarity – solidarity among debtor or one least two debtors
creditors and debtors creditor or creditors
The others are The others are
Passive Active not liable in case proportionately
Solidarity Solidarity of insolvency of liable in case of
Solidarity Solidarity of one debtor insolvency of one
of debtors creditors debtor
Any one of Any one of
the debtors can the creditors may Characteristics
be made liable for demand fulfillment
the fulfillment of of the entire 1. Demand must be made to all the joint
the entire obligation. debtors.
obligation, with 2. The creditor must proceed against all the
the consequent joint debtors, because the compliance of
right to demand the obligation is possible only if all of the
from the others joint debtors would act together.
their 3. If one of the debtors is insolvent, the
corresponding other(s) shall not be liable for his share.
shares in the 4. If one of the debtors cannot comply, the
liability. obligation is converted into monetary
It is in the Its essential consideration. One who is ready and
nature of a feature is that of willing to comply will pay his proportionate
mutual guaranty. mutual share, and the other not willing shall pay
representation. his share plus damages when his financial
condition improves.
5. If there is more than one creditor, delivery
Joint Indivisibility must be made to all, unless one is
authorized to receive for the others.
A joint indivisible obligation is one in
which the object or prestation is indivisible,
not susceptible of division; while the tie

RULES observed. In such case the contract is called

1. GIVES RISE TO INDEMNITY FOR DAMAGES: a suretyship. (2047)
NON-COMPLIANCE WITH UNDERTAKING
(1224) Distinguishing Suretyship from
2. DEBTORS READY TO FULFILL SHALL NOT BE Solidarity
LIABLE (1224)
1. A surety does not have an actual loan of
*AS ALREADY STATED, IN A JOINT INDIVISIBLE his own, solidary debtor is also liable for
OBLIGATION, A SUIT FOR SPECIFIC PERFORMANCE his own debt in addition to that of others.
MUST BE DIRECTED AGAINST ALL THE DEBTORS 2. After paying the debt, a surety has right to
AND IF ANY ONE OF THEM IS NOT WILLING TO collect from principal debtor, while a
FULFILL, THE ACTION SHALL BE CONVERTED INTO solidary debtor has right to collect from
ONE FOR DAMAGES WHERE THE DEBTORS SHALL BE solidary co-debtor.
LIABLE FOR THEIR RESPECTIVE SHARES WHILE THE 3. Most importantly, an extension of time
UNWILLING DEBTOR SHALL PAY HIS SHARE PLUS would benefit the surety and such would
DAMAGES FOR HE ALONE SHALL BE LIABLE FOR not benefit solidary co-debtors who did not
DAMAGES, THE OTHER DEBTORS BEING WILLING know or consent to an extension of time.
TO DELIVER. (Villa v. Garcia Bosque) (Jurado)
3. Prejudiced only by collective acts of ALL

creditors / enforced against ALL debtors Rights of solidary creditor/s
(1209)
1. Do only what is useful to others, nothing
*Article 1209 contemplates an prejudicial to co-creditors. (1212)
obligation which is joint as to the parties but 2. There is no assignment without the
indivisible as to compliance. The concurrence consent of others (1213)
of all the creditors is necessary for demanding
compliance due to the indivisibility of the *The consent of the other co-solidary
obligation. The same is inversely true as creditors is necessary because they may not
regards the debtors. The concurrence of all trust the new creditor who would thereby be
the creditors is also necessary for acts which entitled to collect the entire debt. (Jurado)
are prejudicial. But an act beneficial to all like
interruption of prescription may be performed 3. Anyone has right to receive the payment;
by one of the creditor. but the first one to demand receives the
payment. (1214)
Inchausti & Co. v. Yulo
Six brothers and sisters admitted solidary *Payment made by the debtor to any
liability. Gregorio Yulo was sued for one of the solidary creditors extinguishes the
payment of entire indebtedness. obligation. If one of the solidary creditors
However, solidary debtors Francisco, demands payment of the debt, he has the
Manuel and Carmen entered into a right to do so and payment must be made to
compromise agreement with plaintiff. him. (Jurado)
Gregorio was ordered to pay the part of
the reduced indebtedness, only insofar as
such is demandable. Greg Yulo was Quiombing v. CA
solidarily liable, he benefited from the Only one of the solidary creditors filed
remission, but not the extension of the a suit for collection against the solidary
period for payment, thus there was debtors. The debtors moved for the dismissal
partial demandability. of the suit on the ground that the other
solidary creditors should have been included
in the case. The Supreme Court rejected the
Debtor/ Passive Solidarity Distinguished dismissal of the suit invoking Art. 1212 and
From Suretyship stated that recovery of the contract price was
surely a useful act and can be done even by
By guaranty a person, called the guarantor, one solidary creditor. Furthermore, the
binds himself to the creditor to fulfill the question as to who should sue was a personal
obligation of the principal debtor in case the issue among the solidary creditors.
latter should fail to do so. A solidary guaranty
is suretyship. N.B. As to who sues for recovery of
the obligation should not matter to the
Suretyship debtors as they are wholly obligated to either
one of the solidary creditors.
If a person binds himself solidarily with the
principal debtor, the provisions of Section 4,
Chapter 3, Title I of this Book shall be 4. Action against and payment by solidary
debtor.

a. Proceed against anyone, some, or all of Imperial Insurance, Inc. v. David

them simultaneously (1216) Husband and wife bound themselves
b. Demand against one: not obstacle for solidarily in favor of obligee for a sum of
demand against another, unless paid money and when the husband died, the
(1216) obligee demanded payment from the wife who
resisted payment, claiming that the obligee’s
claim is barred by it’s failure to file a claim in
Effect of Loss or Impossibility the intestate proceeding of the deceased
husband. The Supreme Court ruled that the
1. Without any fault of any of the debtors: obligee can properly claim from the wife as
Extinguishment (1221) the nature of the obligation is solidary.
2. With fault of any of the debtors: all are N.B. If obligation were solidary, the
responsible but co-debtors have a right entire obligation is demandable from anyone
against negligent debtor of the solidary obligors.
3. Due to a fortuitous event, but with delay:
all are responsible with right of action
against the negligent debtor Right of action against solidary co-debtors
Rules of Payment in Solidary Obligations The payor of the obligation may claim
from each co-debtor his share of the debt with
1. The creditor may proceed against any one interest, unless paid before debt is due or
of the solidary debtors or some or all of demandable (with no interest). (1217)
them as long as the debt has not been
fully collected. (1316) V. DIVISIBLE & INDIVISIBLE
2. Payment made by one of the solidary OBLIGATIONS
debtors extinguishes the obligation.
(1217) The indivisibility of an obligation does not
3. If two or more debtors offer to pay, the necessarily give rise to solidarity. Nor does
creditor may choose which offer to accept. solidarity of itself imply indivisibility. (1210)
(1217)
4. The paying debtor may ask for DIVISIBLE OBLIGATIONS
reimbursement with interest from his co-
debtors. (1217) Those obligations whose objects are capable
5. The share of the insolvent debtor shall be of partial performance in their delivery or
borne by all his co-debtors, pro-rata. performance.
(1217)
6. There shall be no reimbursement if the INDIVISIBLE OBLIGATIONS
solidary debtor paid AFTER the obligation
has prescribed or has become illegal. Those obligations whose objects are not
(1218) capable of partial fulfillment in delivery or
performance.
Rights of Solidary Debtor
1. Set-up all defenses Test for Distinction

2. Right of action against solidary co-debtors
The determining factor is the purpose of the
Set-up Defenses (1222) obligation or the intention of the parties and
NOT the possibility or impossibility of partial
a. Defenses derived from the nature of prestation. (1225)
the obligation available to all debtors
as a defense to compliance with the Presumptions
entire obligation;
b. Defenses personal to the debtor like 1. INDIVISIBLE: DEFINITE THINGS, NOT PARTIAL
minority, insanity, civil interdiction, PERFORMANCE
etc. not available to the other debtors 2. DIVISIBLE: PARTIAL PERFORMANCE; BY DAYS
so as to free the latter from their OF WORK, METRICAL UNITS, OR ANALOGOUS
liability for their own shares in the THINGS
obligation; 3. PHYSICALLY DIVISIBLE: SUBJECT TO LAW OR
c. Defenses that pertain to his co- WHAT IS INTENDED BY THE PARTIES
debtor(s), like the existence of a period 4. NOT TO DO: DETERMINED BY CHARACTER OF
or condition available only as regards PRESTATION
the share of such co-debtor(s) for
solidarity may exist even if the debtors
are bound under different periods or
conditions.

KINDS OF INDIVISIBILITY OF AN OBLIGATION Purposes of Penalty
a. LEGAL INDIVISIBILITY - BY LAW, AS WHEN 1. Funcion coercitiva or de garantia - to

TAXES ARE TO BE PAID IN FULL BECAUSE THE ensure performance of the obligation
LAW DOES NOT PERMIT PAYING THE SAME BY 2. Funcion liquidatoria - to substitute a
INSTALLMENTS penalty for the indemnity of damages and
b. CONVENTIONAL INDIVISIBILITY - BY the payment of interest in case of non-
STIPULATION OF THE PARTIES OR INTENTION compliance.
BY THEM TO TREAT THE THINGS AS 3. Funcion estrictamente penal - to punish
INDIVISIBLE EVEN IF THEY ARE ACTUALLY the debtor for the non-fulfillment of his
DIVISIBLE obligation.
c. NATURAL INDIVISIBILITY - BY THE NATURE
OF THE OBLIGATION Penalty as a Substitute for Damages
Quantum Meruit Principle
General Rule
Divisible Obligation
The penalty fixed by the parties is a
If only partially performed, the obligor compensation or substitute for damages in
can enforce his right in proportion to the case of breach.
services performed.
Exceptions
Indivisible Obligation 1. When there is a stipulation to the contrary
2. When the debtor is sued for refusal to pay
If obligor fails to perform the work the agreed penalty
completely, he cannot recover on this 3. When the debtor is guilty of fraud
principle because in indivisible obligations,
partial performance is equivalent to non- Distinguishing a Penal Clause from a
performance. Condition
This principle allows recovery of the Penal Clause Condition

reasonable value of the work done regardless There is No obligation
of any agreement as to the value. It entitles obligation through through an
the party to “as much as he reasonably an accessory accessory
deserves” as distinguished from quantum May become Is never
valebant or “to as much as what is reasonably demandable in demandable
worth”. The sellement of claim under this default of an
principle requires application of judgment and unperformed
discretion and cannot be adjusted by simple obligation and
arithmetical process. (F.F. Manocop v. CA, sometimes jointly
GR 122196, Jan. 15, 1997) with it
(Manresa)
VI. OBLIGATIONS WITH A PENAL CLAUSE
Kinds of Penal Clause
In an obligation with a penal clause, the
penalty shall substitute the indemnity for  As to origin
damages and the payment of interest in case Legal penal clause – provided by law
of non-compliance, if there is no stipulation to Conventional penal clause – provided for
the contrary. A penal clause is an accessory by stipulation of the parties
undertaking to assume greater liability in case
of breach.  As to its purpose
Compensatory penal clause – the penalty
Principal and Accessory Obligations takes the place of damages
Punitive penal clause – the penalty is
PRINCIPAL OBLIGATION imposed merely as a punishment for
breach
That which can stand by itself and does not
depend upon other obligations for its validity  As to its dependability or effect
and existence. Subsidiary or alternative penal clause –
only the penalty can be enforced
ACCESSORY OBLIGATION Joint or cumulative penal clause – both the
principal obligation and the penal
That which contains an accessory undertaking clause can be enforced (Manresa)
to pay a previously stipulated indemnity in
case of breach of the principal prestation
intended primarily to induce its fulfillment.

Effect of Nullity of the Penal Clause With respect to parties
If only the penal clause is void, the principal This must be made by the proper party to the
obligation remains valid and demandable. proper party
(1230)
(1) Payor
Nullity of the Principal Obligation
(a) Payor - the one performing, he can be
If the principal is void, the penal clause is also the debtor himself or his heirs or
void because the penal clause cannot stand assigns or his agent, or anyone
along without the principal obligation to which interested in the fulfillment of the
it is subordinated. obligation; can be anyone as long as it
is with the creditor's consent
However, if the nullity of the principal
obligation is due to the debtor’s fault who (b) 3RD person pays/performs - only the
acted in bad faith, and by reason of which the creditor's consent;
creditor suffered damages on equitable
grounds, the penalty may be enforced. If performance is done also with
debtor's consent - he takes the place
Chapter IV: Extinguishment of of the debtor. There is subrogation
except if the 3rd person intended it to
Obligations be a donation
Classification of the Modes of (c) 3rd person pays/performs with consent

Extinguishment of Obligations of creditor but not with debtor's
consent, the repayment is only to the
1. Novation extent that the payment has been
2. Compensation beneficial to debtor
3. Merger or confusion
4. Remission or condonation (2) Payee
5. Payment or performance
6. Loss of the thing due (a) payee - creditor or obligee or successor
7. Prescription in interest of transferee, or agent
8. Rescission
9. Fulfillment of the Resolutory condition (b) 3rd person - if any of the ff. concur:
10. Annulment
i. it must have redounded to the
I. PAYMENT OR PERFORMANCE obligee's benefit and only to the
extent of such benefit
The delivery of money, the delivery of the
thing (other than money), the doing of an act, ii. it falls under art 1241, par 1,2,3 -
or not doing of an act. the benefit is total so, performance
is total
Elements
(c) anyone in possession of the credit - but
The elements of payment are analyzed into: will apply only if debt has not been
1. persons- who may pay to whom payment previously garnished
may be made
2. thing or object in which the payment must Payment made to an Incapacitated Person
consist
3. the cause thereof It is valid when:
4. the mode or form thereof 1. The incapacitated person kept the thing
5. the place and time in which it must be delivered, or
made
6. the imputation of expenses occasioned by 2. Insofar as the payment has been beneficial
it to him
7. the special parts which may modify the
same and the effects they generally Payment to a 3rd party not authorized, valid if
produce proved & only to the extent of benefit
Requisites for Valid Payment Presumed if:

1. After payment, 3rd person acquires the
With respect to prestation itself: creditor’s rights
(1) identity 2. Creditor ratifies payment to 3rd person
(2) integrity or completeness 3. By creditor’s conduct, debtor has been led
(3) indivisibility to make the payment (estoppel)

Payment made in good faith to a person in Mercantile documents, payable to order:

possession of credit shall release debtor only when cashed or impaired by
creditor.
Requisites: The delivery of promissory notes payable to
1. Payment by debtor must be made in good order, or bills of exchange or other mercantile
faith documents shall produce the effect of
2. Creditor must be in possession of the payment only when they have been cashed,
credit & not merely the evidence of or when through the fault of the creditor they
indebtedness have been impaired. (1249)
With respect to time and place of *Impairment contemplates an issuance by a

payment third party, otherwise, creditor can just ask
from creditor again but without interest as
Where payment should be made there was no delay. (Jurado, Balane)
1. In the place designated in the obligation During encashment: action in abeyance.

In the meantime, the action derived from the
2. If there is no express stipulation and the original obligation shall be held in the
undertaking is to deliver a specific thing – abeyance. (1170)
at the place where the thing might be at
the moment the obligation was constituted
Extraordinary inflation/ deflation
3. In other cases – in the place of the
domicile of the debtor Stipulation (1250)
Time of payment Currency value at time of agreement.

This is the time stipulated by the parties. In case an extraordinary inflation or deflation
of the currency stipulated should supervene,
Effect of payment the value of the currency at the time of the
The obligation is extinguished. establishment of the obligation shall be the
basis of payment, unless there is an
Except in an order to retain the debt. agreement to the contrary. (1250)
Expenses:
Substantial Performance Unless it is otherwise stipulated, the
extrajudicial expenses required by the
1. Attempt in Good Faith to perform without payment shall be for the account of the
willful or intentional departure debtor. With regard to judicial costs, the
2. Deviation is slight Rules of Court shall govern. (1247)
3. Omission/Defect is technical or
unimportant
4. Must not be so material that intention of Special Rules/Forms Of Payment –
parties is not attained
Application of Payments – the designation
Effect of Substantial performance in good faith of the debt which payment shall be made, out
of 2 or more debts owing the same creditor:
1. Obligor may recover as though there has
been strict and complete fulfillment, less 1. May be made according to the stipulation
damages suffered by the obligee of the parties or application of party given
2. Right to rescind cannot be used for slight benefit of period;
breach 2. For the application to be valid, it must be
debtor’s choice or w/ consent of debtor
Currency Requisites for the Application of payment

1. Various debts of the same kind
Stipulated (1249) 2. Same debtor
3. Same creditor
Philippine legal tender 4. All debts must be due
The payment of debts in money shall be made
in the currency stipulated, and if it is not Exception: there may be application of
possible to deliver such currency, then in the payment even if all debts are not yet due
currency which is legal tender in the if:
Philippines. (1249) a) parties so stipulate
b) when application of payment is made
by the party for whose benefit the term
has been constituted

5. Payment is not enough to extinguish all Cession/Assignment in Favor of creditors

debts The process by which debtor transfer all the
properties not subject to execution in favor of
How the application is made: creditors is that the latter may sell them and
1. Debtor makes the designation thus, apply the proceeds to their credits;
2. If not, creditor makes it by so stating extinguish up to amount of net proceeds (
in the receipt that he issues, unless unless w/ contrary stipulation )
there is cause for invalidating the
contract Kinds
3. If neither the debtor nor creditor has
made the application or if the 1. Legal – governed by the insolvency law
application is not valid, then 2. Voluntary – agreement of creditors
application, is made by operation of
law Requisites for voluntary assignment
Who makes the application: a) More than 1 debt

General Rule: Debtor b) More than 1 creditor
Exception: Creditor – c) Complete or partial insolvency of debtor
d) Abandonment of all debtor’s property not
a) Debtor without protest accepts receipt exempt from execution
in which creditor specified expressly e) Acceptance or consent on the part of the
and unmistakably the obligation to creditors
which such payment was to be applied
Effects
*The debtor in this case renounced the
right of choice a) Creditors do not become the owner; they
are merely assignees with authority to sell
b) When monthly statements were made
by the bank specifying the application b) Debtor is released up to the amount of the
and the debtor signed said statements net proceeds of the sale, unless there is a
approving the status of her account as stipulation to the contrary
thus sent to her monthly by the bank
c) Creditors will collect credits in the order of
In case no application has been made preference agreed upon, or in default of
agreement, in the order ordinarily
1. Apply payment to the most onerous established by law
2. If debts are of the same nature and
burden, application shall be made to all Consignation
proportionately
Tender -the act of offering the creditor what
Dacion en Pago is due him together with a demand that the
creditor accept the same (When creditor
The mode of extinguishing an obligation refuses w/o just cause to accept payment, he
whereby the debtor alienates in favor of the becomes in mora accepiendi & debtor is
creditor property for the satisfaction of released from responsibility if he consigns the
monetary debt; extinguish up to amount of thing or sum due)
property unless w/ contrary stipulation;
Consignation – the act of depositing the
A special form of payment because 1 element thing due with the court or judicial authorities
of payment is missing: IDENTITY. whenever the creditor cannot accept or
refuses to accept payment; generally requires
*Governed by the law on sales prior tender of payment
Conditions for a valid dacion: Requisites of valid consignation:
1) If creditor consents, for a sale 1. Existence of valid debt

presupposes the consent of both 2. Consignation was made because of some
parties legal cause - previous valid tender was
unjustly refused or under circumstances
2) If dacion will not prejudice the other making previous tender exempt.
creditors 3. Prior Notice of Consignation had been
given to the person interested in
3) If debtor is not judicially declared performance of obligation (1st notice)
insolvent 4. Actual deposit/Consignation with proper
judicial authorities

5. Subsequent notice of Consignation (2nd In obligations to deliver a generic thing

notice)
General Rule: Not extinguished
Effects: Extinguishment of obligation Exceptions:
a) if the generic thing is delimited
(1) Debtor may ask judge to order b) if the generic thing has already been
cancellation of obligation segregated
(2) Running of interest is suspended c) monetary obligation
(3) Before creditor accepts or before judge
declares consignation has been properly In obligations to do
made, obligation remains (debtor bears
risk of loss at the meantime, after General Rule: Debtor is released when
acceptance by creditor or after judge prestation becomes legally or physically
declares that consignation has been impossible without fault on part of debtor
properly made – risk of loss is shifted to
creditor)
EFFECT OF PARTIAL LOSS
Consignation w/o prior tender
Judicial determination of extent is necessary.
This is allowed when:
a) when loss is significant – may be enough
a. creditor absent or unknown/ does not to extinguish obligation
appear at the place of payment b) when loss insignificant – not enough to
b. incapacitated to receive payment at the extinguish obligation
time it is due
c. refuses to issue receipt w/o just cause
d. 2 or more creditor claiming the same right WHEN THING IS LOST IN THE
to collect POSSESSION OF THE DEBTOR
e. title of obligation has been lost
Presumption: Loss due to debtor’s fault
(disputable)
II. LOSS OF THE THING DUE Exception: natural calamity, earthquake,
flood, storm
This is partial or total which includes the
impossibility of performance. REBUS SIC STANTIBUS
CONCEPT A doctrine which holds that an agreement is

valid only if the same conditions prevailing at
Meaning of loss of the thing time of contracting continue to exist at the
time of performance.
1) When the object perishes (physically)
2) When it goes out of commerce Effect of Difficulty Beyond Parties’
3) When it disappears in such a way that its Contemplation
existence is unknown or it cannot be
recovered Rule: The obligor may be released in whole or
in part.
When is there impossibility of Requisites:
performance (a) The event or change could not have been
foreseen at the time of the execution of
1) Physical impossibility the contract
2) Legal impossibility : (b) The performance is extremely difficult, but
not impossible (because if it is impossible,
it is extinguished by impossibility)
EFFECT OF TOTAL LOSS (c) The event was not due to the act of any of
the parties
In obligations to deliver a specific thing (d) The contract is for a future prestation
General Rule: Extinguished

Exceptions: III. CONDONATION/REMISSION
a) Debtor is at fault OF THE DEBT
b) Debtor is made liable for fortuitous event
because of a provision of law, contractual An act of pure liability by virtue of which the
stipulation or the nature of the obligation obligee, without receiving any price or
requires assumption of risk on part of equivalent, renounces the enforcement of the
debtor obligation, as a result of which it is

extinguished in its entirety or in part or aspect IV. CONFUSION OR MERGER OF RIGHTS

of the same to which the remission refers.
It is the merger of the characteristics of the
*It is the gratuitous abandonment of the creditor and the debtor in one and the same
creditor of his rights. person by virtue of which the obligation is
extinguished.
Requisites
Requisites
a. There must be an agreement
b. There must be a subject matter (object of a. It must take place between the principal
the remission, otherwise there would be debtor & the principal creditor only
nothing to condone) b. The merger must be clear & definite
c. Cause of consideration must be liberality c. The obligation involved must be the same
Essentially gratuitous, an act of liberality & identical – one obligation only
d. Parties must be capacitated and must d. Revocable, if for any reason the confusion
consent; requires acceptance by obligor- ceases, the obligation is revived
implied in mortis causa & express inter
vivos
e. Formalities of a donation are required in V. COMPENSATION
the case of an express remission
f. Revocable – subject to rule on inofficious Extinguishment in the concurrent amount of
donation (excessive, legitime is impaired) the obligation of those persons who are
& ingratitude & condition not followed reciprocally debtors and creditors of each
g. Obligation remitted must have been other.
demandable at the time of remission
h. Waivers or remission are not to be Requisites
presumed generally
1. Both parties must be mutually creditors
Forms Extent Kinds and debtors - in their own right and as
Express – total Principal – accessory principals
formalities also condoned 2. Both debts must consist in sum of money
of donation or if consumable, of the same kind or
Implied – partial accessory – principal quality
conduct is still outstanding 3. Both debts are due
sufficient 4. Both debts are liquidated & demandable
accessory obligation 5. Neither debt must be retained in a
of pledge – controversy commenced by 3rd person &
condoned; communicated w/ debtor (neither debt is
presumption only, garnished)
rebuttable
Kinds
Implied Condonation
1. Legal – by operation of law; as long as 5
1. voluntary delivery – presumption; when requisites concur- even if unknown to
evidence of indebtedness is w/ debtor – parties & if payable in diff places;
presumed that it is a voluntary delivery by indemnity for expense of exchanges; even
creditor; rebuttable if not equal debts – only up to concurring
amount
2. effect of delivery of evidence of 2. Conventional – agreement of parties is
indebtedness: conclusion that debt is enough, forget other requirement as long
condoned as both consented
3. Facultative – one party has choice of
Voluntary Delivery of Private Document claiming/opposing – one who has benefit
of period may choose to compensate
1. if in the hands of joint debtor – only his - not all requisites are present
share is condoned - depositum; commodatum; criminal
2. if in the hands of solidary debtor - whole offense; claim for future support; taxes
debt is condoned 4. Judicial – set off; upon order of the court;
Tacit: Voluntary destruction of instrument by needs pleading & proof; all requirements
creditor; made to prescribe w/o demanding must concur except liquidation
5. Total – when 2 debts are of the same
amount
6. Partial – when 2 debts are not of the same
amount

Effect of assignment of credit to 3rd b. Implied – When the old and new
person; can there still be compensation obligation are incompatible with each
other on every point
1. if made after compensation took place –
no effect; compensation already perfected Forms of Substitution by Debtors
2. if made before compensation took place –
depends 1. Expromision
a) with consent of debtor – debtor is 2. Delegacion
estopped unless he reserves his right &
gave notice to assignee
b) with knowledge but w/o consent of EXPROMISION
debtor – compensation may be set up
as to debts maturing prior to It is effected with the consent of the creditor
assignment at the instance of the new debtor even
c) w/o knowledge – compensation may without the consent or even against the will of
be set-up on all debts prior to his the old debtor.
knowledge
Requisites
VI. NOVATION 1. Initiative for substitution must emanate

from the new debtor
The substitution or change of an obligation by 2. Consent of the creditor to the substitution
another, resulting in its extinguishment or
modification, either by changing its object or Kinds
principal conditions, or by substituting another
in place of the debtor, or by subrogating a 3rd 1. Substitution with the knowledge and
person in the rights of the creditor. consent of the old debtor
2. Substitution without the knowledge or
It is the total or partial extinction of an against the will of the old debtor (Jurado)
obligation through the creation of a new one
which substitutes it. Effect of Payment by the New Debtor
Requisites 1. Substitution with the knowledge and

consent of the old debtor
1. The existence of a previous valid
obligation The new debtor is entitled to
2. The intention or agreement and capacity reimbursement of the entire amount paid
of the parties to extinguish or modify the and subrogation.
obligation
3. The extinguishment or modification of the 2. Substitution without the knowledge or
obligation against the will of the old debtor
4. The creation of a valid new obligation (Tiu
Siuco v. Habana, 45 Phil. 707, 1924) The new debtor is entitled to
reimbursement in so far as beneficial to
Purpose of Novation the old debtor with no right if subrogation
1. The original obligation is extinguished Effect of Insolvency of the New Debtor

2. A new obligation is created
There are two prevailing views:
Kinds of Novation
1. The new debtor’s insolvency or non-
1. As to essence fulfillment of the obligation shall not revive
a. Objective/ Real – This refers to the the original debtor’s liability to the creditor
change in either the cause, object or whether the substitution is effected with or
principal without the knowledge or against the will
of the original debtor. (Tolentino)
b. Subjective/ Personal – This refers to
the substitution of the person of the 2. If the substitution was effected with the
debtor or to the subrogation of the 3rd knowledge and consent of the original
person in the rights of the creditor debtor, the new debtor’s insolvency or
c. Mixed non-fulfillment of the obligation shall
2. As to its form/ constitution revive the original debtor’s liability to the
a. Express – When it is declared in creditor.
unequivocal terms that the old
obligation is extinguished by a new one
which substitutes the same

DELEGACION General Rule
It is effected with the consent of the creditor Legal subrogation cannot be presumed.
at the instance of the old debtor, with the
concurrence of the new debtor. Exception
Requisites 1. The creditor pays another creditor who is

preferred, without the debtors knowledge
1. Initiative for substitution must emanate 2. A third person is not interested in the
from the old debtor obligation pays with the express or tacit
2. Consent of the new debtor approval of the debtor
3. Acceptance by the creditor 3. Even without the debtor’s knowledge, a
person interested in the fulfillment of the
Effect of Payment by the New Debtor obligation pays without prejudice to the
effects of confusion as to the latter’s share
The new debtor is entitled to reimbursement
of the entire amount paid and subrogation.
Magdalena Estates, Inc. v.
Effect of Insolvency of the New Debtor Spouses Rodriguez
The mere fact that the creditor accepts
The creditor can sue the old debtor when the payments from a third person who agreed to
insolvency was prior to the delegation and assume the obligation, when there is no
publicly known or when the old debtor knew agreement that the first debtor shall be
of such insolvency at the time he delegated released from the responsibility does not
the obligation. constitute obligation.
Effects of Novation to Accessory

Kabankalan Sugar Co., Inc v.
When the principal obligation is extinguished Josefa Pacheco
in consequence of a novation, accessory When an easement of right of way is one of
obligation must subsist only insofar as they the principal conditions of a contract, and the
may benefit 3rd persons who did not give duration of said easement is specified, the
consent. reduction of said period in a subsequent
contract, wherein the same obligation is one
Effects of Condition in Novation of the principal conditions, constitutes a
novation and to that extent extinguishes the
1. If the original obligation was subject to former contract.
condition, the new obligation shall be
under the same condition, unless it is
otherwise stipulated. Aquintey v. Spouses Tibong
2. If the new obligation and the old obligation (511 SCRA 414, G.R. No. 166704, 2006)
are subject to different conditions: The transfer of rights takes place upon
a. If the conditions are compatible, both perfection of the contract, and ownership of
must be fulfilled otherwise there is the right, including all appurtenant accessory
nothing to novate. rights, is acquired by the assignee who steps
b. If the conditions are incompatible, the into the shoes of the original creditor as
latter should be fulfilled. subrogee of the latter from that amount, the
ownership of the right is acquired by the
Kinds of Subrogation assignee. The law does not require any
formal notice to bind the debtor to the
1. Conventional assignee, all that the law requires is
2. Legal knowledge of the assignment. Even if the
debtor had not been notified, but came to
CONVENTIONAL know of the assignment by whatever means,
the debtor is bound by it. If the document of
That which takes place by agreement of the assignment is public, it is evidence even
parties. This kind of subrogation requires the against a third person of the facts which gave
intervention and consent of 3 persons: the rise to its execution and of the date of the
original creditor, the new creditor and the latter. The transfer of the credit must
debtor. therefore be held valid and effective from the
moment it is made to appear in such
LEGAL instrument, and third persons must recognize
it as such, in view of the authenticity of the
That which takes place without the agreement document, which precludes all suspicion of
but by operation of law because of certain fraud with respect to the date of the transfer
acts. or assignment of the credit.

TITLE II: CONTRACTS 2. Stipulation Pour Autrui – a stipulation in

favor of a third person
Chapter I: General Provisions
Requisites
Definition a. The stipulation must only be a part of
the contract; it must not be the whole
A contract is a meeting of the minds between of the contract.
two persons whereby one binds himself, with b. The contracting parties clearly and
respect to the other, to give something or to deliberately conferred the favor to the
render some service. (1305) third person.
c. The 3rd person must have
A contract is a juridical convention manifested communicated his acceptance to the
in legal form, by virtue of which, one or more obligor before its revocation by the
persons bind themselves in favor of another original parties.
or others, or reciprocally, to the fulfillment of d. Neither of the contracting parties bears
a prestation to give, to do, or not to do. the legal representation or
authorization of a 3rd party.
e. The favorable stipulation should not be
Principal Characteristics (AMOR = love) conditioned or compensated by any
kind of obligation.
1. Autonomy
2. Mutuality 3. When a third person induces another to
3. Obligatory Force and Consensuality violate his contract. (1314)
4. Relativity
Requisites
AUTONOMY  Existence of a valid contract
This is the freedom or liberty to stipulate.  Knowledge of the contract by a 3rd
person
General Rule  Interference by the 3rd person without
legal justification or excuse
The parties are free to stipulate anything they
may deem convenient. 4. Accion Directa - the right of a creditor to
sue on a contract entered into by his
Except debtor. (1313)
As long as the stipulation are not contrary to: 5. Third persons who come into possession of
1. Law the object of the contact creating real
2. Morals rights (1312)
3. Good Customs
4. Public Order 6. Accion Pauliana (see Obligations > Breach
5. Public Policy (1306) of Obligation > Remedies of Creditors)
MUTUALITY
Performance or validity of the contract binds Kinds of Contracts
both parts and it cannot be left to the will of
one of them. (1308) 1. According to perfection
Consensual – a contract that is perfected
OBLIGATORY FORCE & CONSENSUALITY by agreement of the parties
Contracts are perfected by mere consent and Real – a contract that is perfected by
from that moment, the parties are bound, not delivery
only to the fulfillment of what has been Formal/ Solemn – a contract perfected by
expressly stipulated but also to all the conformity to essential formalities,
consequences which, according to their e.g., donation
nature, may be in keeping with good faith,
usage and law. 2. According to degree of importance
a. Principal – a contract that can stand
RELATIVITY alone
General Rule b. Accessory – a contract that is
Contracts take effect only between parties, dependent upon another contract for
their assigns and their heirs. its existence and validity
c. Preparatory – means through which
Exceptions other (future) contracts may be made;
1. Obligations arising from contract which are not an end in itself, e.g. Agency
not transmissible by their nature,
stipulation, or provision of law.

3. According to subject matter Chapter II: Essential Requisites

a. Involving things, such as sale or barter
b. Involving rights or credits, such as Essential Requisites of a Contract
usufruct or assignment of credits (Always COCa-Cola)
c. Involving services such as agency,
carriage, etc. 1. Consent of the contracting parties;
2. Object certain which is the subject matter
4. According to name of the contract;
a. Nominate – a contract that has its own 3. Cause of the obligation which is
individuality and id regulated by a established. (1318)
special provision of law, i.e., pledge,
mortgage, etc.
b. Innominate – a contract that lacks
I. CONSENT
individuality and is not regulated by a
special provision of law
Consent is manifested by the meeting of the
- Do ut des – I give that you may give
offer and the acceptance upon the thing and
- Do ut facias – I give that you may do
the cause which are to constitute the contract.
- Facio ut des – I do that you may give
The offer must be certain and the acceptance
- Facio ut facias – I do that you may
absolute. A qualified acceptance constitutes a
do
counter-offer. (1319)
*facio/ facias – do
*do - give
Requisites
5. According to cause
1. Plurality of subject
a. Onerous – a contract with an exchange
2. Capacity
of valuable considerations
3. Intelligence and free will
b. Gratuitous – a contract with no
4. Manifestation of intent of parties
consideration received in exchange for
5. Cognition by the other party
what has been given
6. Conformity of manifestation and cognition
c. Remuneratory – a contract in which
something (a prestation) is given for a
*We follow the theory of cognition and not
benefit or service performed without
the theory of manifestation. Under our civil
any legal obligation to do so
law, the offer and acceptance concur only
when the offeror comes to know, and not
6. According to nature of obligation
when the offeree merely manifests his
produced or number of parties
acceptance
obligated
a. Unilateral – a contract with only one
Auto Contract
party with an obligation, e.g.
Commodatum and Mutuum
A contract made by a person acting in
b. Bilateral – a contract in which both
another’s name in one capacity and his own
parties are required to render
name or that of another in another capacity.
reciprocal prestations
Collective Contract
7. According to risk
a. Commutative – a contract where
A contract where the law authorizes that the
equivalent values are given by both
will of the majority binds a minority to an
parties, i.e., sale, barter and lease
agreement, notwithstanding the opposition of
b. Aleatory – a contract where fulfillment
the latter.
is dependent upon chance, such as
insurance
Contract of Adhesion
Stages of a Contract (PPC)
A contract in which one party has already
prepared a form of a contract, containing
1. Preparation or conception – bargaining
stipulations desired by him and he simply asks
point, negotiation
the other party to agree to them if he wants
2. Perfection or birth – the meeting of
to enter into the contract.
minds regarding the subject matter and
the cause of the contract.
Offer and Acceptance
3. Consummation or death – parties have
performed their respective obligations and
OFFER
the contract is put to an end
A proposal made by one party to another to
enter into a contract.

Elements of Valid Offer Advertisements as Offers
1. Definite Business advertisements of things for sale are

2. Complete not definite offers, but mere invitations to
3. Intentional make an offer, unless it appears otherwise.
(1325)
Mode of acceptance as stipulation
Advertisements for bidders are simply
The person making the offer may fix the time, invitations to make proposals, and the
place, and manner of acceptance, all of which advertiser is not bound to accept the highest
must be complied with. (1321) or lowest bidder, unless the contrary appears.
(1326)
Agent as offerer
An offer made through an agent is accepted ACCEPTANCE

from the time acceptance is communicated to The manifestation by the offeree of his assent
him. (1322) to the terms of the offer.
Withdrawal of Offer (1324) Elements of Valid Acceptance
General Rule: An offer or proposal may be 1. Unequivocal

withdrawn as long as the offeror has no 2. Unconditional
knowledge that the offeree has already
accepted the offer. *If qualified, constitutes a counter-offer.
Exception: When the option is founded upon Forms of Acceptance (1320)

a consideration, as something paid or
promised, the offer cannot be withdrawn. 1. Express Acceptance - may be oral or
written.
When does the offer become ineffective? 2. Implied Acceptance - may be inferred
from the act or conduct of the offeree.
1. Death, civil interdiction, insanity or
insolvency of either party before Period for Acceptance
acceptance is conveyed
2. Express or implied revocation of the offer 1. stated fixed period in the offer
by the offeree 2. no stated fixed period
3. Qualified or conditional acceptance of the a) offer is made to a person present –
offer acceptance must be made immediately
4. Subject matter becomes illegal or b) offer is made to a person absent –
impossible before acceptance is acceptance may be made within such
communicated time that, under normal circumstances,
an answer can be received from him
Rule on Complex Offers
*Acceptance may be revoked before the
1. When offers are interrelated - the offeror finds out about it.
contracted can only be perfected if all the
offers are accepted. *Amplified Acceptance - under certain
circumstances, a mere amplification on the
2. When offers are not interrelated – the offer must be understood as an acceptance of
single acceptance of each offer results in a the original offer, plus a new offer which is
perfected contract unless the offeror has contained in the amplification.
made it clear that one is dependent upon
the other and acceptance of both is Withdrawal of Acceptance
necessary
1. First View (Manresa): It is to be observed
*An Offer inter praesentes must be accepted that although the offeror is not bound until
immediately. If the parties intended that he learns of the acceptance, the same
there should be an express acceptance, the thing can not be said of the offeree who,
contract will be perfected only upon from the moment he accepts, loses the
knowledge by the offeror of the express power to retract such acceptance since the
acceptance by the offeree of the offer. An right to withdraw between the time of the
acceptance which is not made in the manner acceptance and its communication is a
prescribed by the offeror is not effective, but right which is expressly limited by law to
it takes the form of a counter-offer which the the offeror.
offeror may accept or reject. (Malbarosa vs.
CA, G.R. No. 12576, 2003)

*To justify the inequality between the *A unilateral promise to buy or sell, if not
contracting parties, Manresa said that supported by a distinct consideration, may be
since the offeree is the first to know about withdrawn but may not be done whimsically
the concurrence of will if the parties, as a or arbitrarily; the right of the grantee here is
consequence, the obligation, as far as he damages and not specific performance. (Ang
is concerned, must also commence earlier. Yu v. CA, 1994)
2. Second View (Tolentino): Acceptance may *An option clause in order to be valid and
be revoked before it comes to the enforceable must indicate the definite price at
knowledge of the offeror because in such a which the person granting the option is willing
case, there is still no meeting of minds, to sell, contract can be enforced and not only
since the revocation has cancelled or damages. (Equatorial v. Mayfair, 24 SCRA
nullified the acceptance which thereby 483)
ceased to have any legal effect.
*The right of first refusal may be enforced by
Acceptance by Letter or Telegram (1319) specific performance. (Paranaque Kings v.
CA, 1997)
When is it binding?
Acceptance is binding only from the time the Persons Who Cannot Give Valid Consent
offerer had knowledge of it. to a Contract
Where is it binding? 1. Unemancipated Minors

2. Insane or demented persons
he contract is presumed to have been entered 3. Deaf-mutes or illiterates who do not know
into in the place where the offer was made. how to write
4. Intoxicated persons and hypnotized
Theories on Acceptance of an Offer by persons
Telegram 5. A person under Mistake since a mistake
1. Manifestation Theory – a contract is may deprive one of intelligence. (1331)
perfected from the moment the 6. A person induced by Fraud (dolo
acceptance is declared or made causante) (1338)
2. Expedition Theory – contract is perfected
from the moment the acceptance is *Dolus bonus (usual exaggerations in
declared or made even if not made known trade) are not in themselves fraudulent
to the offeror
3. Cognition Theory – perfected from the Article 1330
moment the acceptance comes to the A contract where consent is given through
knowledge of the offeror; adopted in mistake, violence, intimidation, undue
Philippines influence, or fraud is voidable.
4. Reception Theory – the contract is
perfected from the moment the offeror Rule on Contracts Entered into By Minors
receives the letter
General Rule
*Revocation of Acceptance: The acceptance These contracts are considered voidable.
by the offeree may be revoked before
reaching the knowledge of the offeror. If it is Exceptions
revoked, the contract is not perfected if the 1. Minor is Estopped for having
notice of revocation reaches the offeror before misrepresented his age and misled the
the letter of acceptance is received. other party (when age is close to age of
majority as in the Mercado v. Espiritu &
*In unilateral promises, when offer is made to Sia Suan v. Alcantara cases)
the public, specific acceptance is not required 2. They were contracts for Necessities such
to bind the obligor. as food, but here the persons who are
bound to give them support should pay
OPTION therefor Upon reaching age of majority –
they ratify the same
It is a preparatory contract in which one party 3. They were entered unto by a Guardian
grants to the other, for a fixed period to and the court having jurisdiction had
decide whether or not to enter into a principal approved the same right of first refusal
contract. may be enforced by specific performance
4. Voluntary fulfillment of a natural
*An option may be withdrawn anytime before obligation provided that the minor is
acceptance is communicated but not when between 18-21 years of age.
supported by a consideration other than 5. Contracts of Life, health or accident
purchase price: option money insurance taken on the life of the minor.

Rule on Contracts Entered into by Insane or Distinguishing Incapacity from Disqualification

Demented Persons or Those Who Were
Intoxicated or Hypnotized Incapacity Disqualification
Restrains the Restrains the very
Contracts entered into during a lucid interval exercise of the right itself
are valid. Contracts agreed to in a state of right to contract
drunkenness or during a hypnotic spell are May still enter Absolutely
voidable. (1328) into contract disqualified
through parent,
The incapacity declared in article 1327 is guardian or legal
subject to the modifications determined by representative
law, and is understood to be without prejudice Based upon Based upon public
to special disqualifications established in the subjective policy and morality
laws. (1329) circumstance of
certain person
Rule on Contracts Entered into under Mistake Contracts Contracts entered
entered into are into are void
In order that mistake may invalidate consent, merely voidable
it should refer to the substance of the thing
which is the object of the contract, or to those Causes which Vitiate Freedom to Consent
conditions which have principally moved one
or both parties to enter into the contract. 1. Violence
(1331) 2. Intimidation
3. Mistake
As to identity or qualifications: Mistake as 4. Fraud
to the identity or qualifications of one of 5. Undue Influence
the parties will vitiate consent only when
such identity or qualifications have been VIOLENCE
the principal cause of the contract. There is violence when in order to wrest
consent, serious or irresistible force is
Correction only if: A simple mistake of employed.
account shall give rise to its correction.
(1331) Requisites
- Error must be excusable, not caused a. Irresistible physical force
by negligence b. Such force is the determining cause for
- Error must be a mistake of fact, not of giving consent
law
INTIMIDATION
Exceptions on Mistake: There is intimidation when one of the
1. Illiterate party (1332) contracting parties is compelled by a
2. Knowledge of doubt, contingency, risk reasonable and well-grounded fear of an
affecting the object of the contract (1333) imminent and grave evil upon his person or
3. Mutual error (1334) property, or upon the person or property of
his spouse, descendants or ascendants, to
give his consent. (1335)
Disqualified to Enter into Contracts
Requisites
Contracts consented into by the following are a. One of the parties is compelled to give his
void: consent by a reasonable and well-
1. those under civil interdiction grounded fear of an evil
2. hospitalized lepers b. The evil must be imminent and grave.
3. prodigals c. The evil must be unjust.
4. deaf and dumb who are unable to read d. The evil must be the determining cause for
and write the party upon whom it is employed in
5. those who by reason of age, disease, entering into the contract.
weak mind and other similar causes,
cannot without outside aid, take care of Reluctant Consent
themselves and manage their property, A contract is valid even though one of the
becoming an easy prey for deceit and parties entered into it against his wishes and
exploitation desires or even against his better judgment.
Contracts are also valid even though they are
entered into by one of the parties without
hope of advantage or profit. (Martinez v.
Hongkong and Shanhai Bank, 15 Phil
252)

MISTAKE
It is not only a wrong conception of the thing *Caveat Emptor – dealer’s talk, buyer
but also the lack of knowledge with respect to beware
it. (Manresa)
ii. Opinions: A mere expression of an
General Rule opinion does not signify fraud, unless
Mistake does not vitiate consent. made by an expert and the other party
has relied on the former's special
Exception: knowledge. (1341)
Mutual error as to the effect of an agreement
when the real purpose of the parties is iii. Misrepresentation by a third person
frustrated. does not vitiate consent, unless such
misrepresentation has created
Requisites: substantial mistake and the same is
a. Mistake must be with respect to the mutual. (1342)
legal effect of an agreement
b. It must be mutual iv. Misrepresentation made in good faith is
c. The real purpose of the parties must not fraudulent but may constitute
have been frustrated error. (1343)
FRAUD
There is fraud when, through insidious words General Rule on Fraud
or machinations of one of the contracting
parties, the other is induced to enter into a In order that fraud may make a contract
contract which, without them, he would not voidable, it should be serious and should not
have agreed to. (1338) (Dolo Causante) have been employed by both contracting
parties. (1344)
Failure to disclose facts
1. There must be a deliberate intent to
When there is a duty to reveal them, as when deceive or to induce
the parties are bound by confidential 2. The other party relied on this untrue
relations, constitutes fraud. (1339) statement.
3. Incidental fraud only obliges the person
Kinds of Fraud employing it to pay damages. (1344)
Fraud in the perfection of the contract Fraud by Third Persons
1. Dolo Causante (1338) – renders the General Rule: Fraud by a 3rd person does not
contract voidable vitiate consent and merely gives tise to action
2. Dolo Incidente (1344) – holds the guilty for damages.
party liable for damages
Except when:
(see Obligations > Effect of Obligations > 1. There is collusion by one of the parties
Breach of Obligation > Fraud) o fthe contract with the 3rd person.
2. There is misrepresentation that has
Fraud in the performance of an obligation created a substantial mistake and the
(1170) same is mutual.
Requisites of Fraud UNDUE INFLUENCE

a. Insidious words or machinations are There is undue influence when a person takes
employed improper advantage of his power over the will
b. It must be serious of another, depriving the latter of a
c. It induced another party to enter into a reasonable freedom of choice. (Coso v.
contract Fernandez Deza, 42 Phil. 595)
d. It is not employed by both parties nor by
3rd parties Simulated Contracts
Exceptional Cases SIMULATION
These are not fraud unless Dolo Causante Simulation is the declaration of a fictitious
or substantial/ principal condition: intent manifested deliberately and by
agreement by the parties in order to produce,
i. Usual exaggerations in trade, when the for the purpose of deceiving others, the
other party had an opportunity to know appearance of a transaction which does not
the facts, are not in themselves exist or which is different from the true
fraudulent. (1340) agreement.

Kinds of Simulated Contracts III. CAUSA
a. Absolute – There is no intention on the It is the “why” of the contract, the essential
part of the contracting parties to be bound reason which impels the parties to enter into
by the contract at all. The contract is the contract.
merely fictitious making it void from
beginning Requisites
b. Relative – There is an intention by the 1. It must Exist at the time of the celebration
parties to be bound but they conceal their of the contract.
true agreement 2. It must be Real (true).
3. It must be Licit or lawful.
*Relative simulated contracts are binding
when: Distiguishing Cause from Motive
i. It does not prejudice 3rd persons
ii. It is not contrary to law, morals, good Cause Motive
customs, public order or public policy. Direct and most Indirect and remote
proximate reason
reason of a
II. OBJECT contract
Objective and Psychological or
The thing, right or service which is the subject juridical reason purely personal
matter of the obligation arising from the reason
contract. Cause is always Motive differs for
same for each each contracting
Requisites (PLDT-Ctc) contracting party party
The legality or The legality or
a) The prestation must be within the illegality of illegality of motive
Commerce of man, either existing or in cause affects the does not affect the
potency existence or existence or validity
b) It must be Licit or not contrary to law, validity of the of the contract.
morals, good customs, public order, or contract
public policy.
c) It must be Possible or real. Causes according to type of contract
d) It must be Determinate as to its kind or
determinable without the need to enter a. In onerous contracts: the cause is
into a new contract. (1349) understood to be, for both parties, the
e) It must be Transmissible. prestation or promise of a thing or service
by the other.
Those which Cannot be the Object of a
Contract (Fruits In Cream – IOI) b. In remuneratory contracts: the cause is
the service or benefit remunerated
1. Future inheritance (1347)
2. Impossible things or services cannot be c. Of Pure beneficence: liberality of donor or
the object of contracts. (1348) benefactor (1350)
3. Contrary to law morals, good customs,
public order, and public policy. d. In accessory contracts: the cause is
4. Indeterminable as to their kind. identical with the cause of the principal
5. Outside the commerce of men contract, that is the loan from which it
6. Intransmissible rights derives lide and existence.
Future Things Effects of Cause
May be interpreted in two ways (Manresa): When Cause Renders Contract Void:
1. Conditional Contract – the thing must 1. Absence of cause/ unlawful cause (1352)
come into existence otherwise the contract 2. False unless to prove another cause
is void. (1353)
2. Aleatory Contract – One of the parties
bears the risk of loss that the thing might  Want of Cause – There is a total lack or
not come into existence. absence of consideration.
 Illegal Cause – The cause is contrary to
law, morals, good custom, public
order, or public policy.
 False Cause – The cause is stated but
that cause is not true.

When Cause Renders Contract Voidable: EXCEPTION
Unless specified by law, lesion or inadequacy 1. Law requires contract to be in some form
will not invalidate a contract as long as there for validity - donation and acceptance of
has been no fraud, mistake or undue real property
influence. (1355) 2. Law requires contract to be in some form
to be enforceable - Statute of Frauds;
Cause Effect contract is valid but right to enforce
Absence of VOID - produce no legal cannot be exercised; need ratification to
causa effect be enforceable
VOID - produce no legal 3. Law requires contract to be in some form
Illegality of effect for convenience - contract is valid and
causa enforceable, needed only to bind 3rd
Falsity of causa VOIDABLE – party must parties
prove that cause is
untruthful; presumption Ex: public documents needed for the ff:
of validity but rebuttable a. Contracts w/c object is creation,
transmission or reformation of real
Causa not PRESUMED TO EXIST -
rights over immovables
stated in burden of proof is on the
b. Cession, repudiation, renunciation
contract person assailing its
of hereditary rights/CPG
existence
c. Power to administer property for
Inadequacy of DOES NOT INVALIDATE
another
causa CONTRACT PER SE
d. Cession of action of rights
Exceptions:
proceeding from an act appearing
1. when there is fraud,
in a public inst.
mistake or undue
e. All other docs where amount
influence, or
involved is in excess of 500 ( must
2. when the parties
be written even private docs )
intended a donation or
some other contract
When is Form Important
Chapter III: Form of Contracts 1. When form is required for Validity

2. When form is required for Enforceability
Form is a manner in which a contract is 3. When form is required for Convenience
executed or manifested
FOR VALIDITY (formal/solemn contracts)
Forms of Contracts
1. Donation of real property must be in a
a. Informal – may be entered into whatever public instrument, otherwise, void.
form as long as there is consent, object & 2. Donation of personal property exceeding
cause P5,000 must be in writing, otherwise void.
3. Contribution of a partner of immovable
b. Formal – required by law to be in certain property in a partnership, must be in
specified form such as: donation of real writing, otherwise void.
property, stipulation to pay interest, 4. Authority of agent to sell land must be in
transfer of large cattle, sale of land thru writing, otherwise sale is void.
agent, contract of antichresis, contract of
partnership, registration of chattel
mortgage, donation of personal prop in Dievas v. Acuna
excess of 5,000 Articles 1357 and 1358 do not require a
particular form to validate or enforce a
c. Real – creation of real rights over contract, only to ensure its efficacy, so that
immovable property – must be written after its existence have been admitted, the
party bound may be compelled to execute
necessary document.
General Rule
SPIRITUALITY PRINCIPLE Solis v. Barroso

Even where the contract has not been reduced
Contracts are valid and enforceable in to the required form, it is still valid and
whatever form, even if orally entered into, as binding as far as contracting parties are
long as all essential requisites are present. concerned. Consequently both presuppose the
(1356) existence of a valid and enforceable contract.

FOR ENFORCEABILITY other power which has for its object an act
(Statute of Frauds) appearing or which should appear in a
(1403, par. 2, in relation to 1405) public document, or should prejudice a
third person;
Those that do not comply with the Statute of 4. Cession of actions from public documents
Frauds as set forth in this number. - The cession of actions or rights
proceeding from an act appearing in a
In the following cases an agreement hereafter public document.
made shall be unenforceable by action,
unless the same, or some note or Private Document
memorandum, thereof, be in writing, and
subscribed by the party charged, or by his 1. All other contracts where the amount
agent; evidence, therefore, of the agreement involved exceeds five hundred pesos must
cannot be received without the writing, or a appear in writing, even a private one. But
secondary evidence of its contents: sales of goods, chattels or things in action
are governed by articles, 1403, No. 2 and
1. An agreement that by its terms is not to 1405. (1358)
be performed within a year from the 2. Donations exceeding five thousand pesos
making thereof; (Art. 748)
2. A special promise to answer for the debt, 3. Giving authority to an agent for the Sale
default, or miscarriage of another; of land. (Art. 1874)
3. An agreement made in consideration of 4. Agreements on payment of interests on
marriage, other than a mutual promise to contracts of loan (art. 1956)
marry; 5. Antichresis (Art. 2134)
4. An agreement for the sale of goods,
chattels or things in action, at a price not Electronic Commerce Act (RA 8792)
less than five hundred pesos, unless the
buyer accept and receive part of such 1. Amends Art. 1403 by including computers
goods and chattels, or the evidences, or and their networks as means against
some of them, of such things in action or frauds and proof of contracts
pay at the time some part of the purchase
money; but when a sale is made by 2. Expressly provides for the application of
auction and entry is made by the the same principles as normal contracts
auctioneer in his sales book, at the time of but adds more presumptions wherein such
the sale, of the amount and kind of should be known by both parties.
property sold, terms of sale, price, names
of the purchasers and person on whose Presumptions from rules of court and
account the sale is made, it is a sufficient doctrines as applied to e-mail, internet,
memorandum; and networks
5. An agreement of the leasing for a longer
period than one year, or for the sale of  Receipt of letter – presumed to come to
real property or of an interest therein; knowledge regardless of actual reading
6. A representation as to the credit of a third  Regular functions have been carried out
person. regularly
FOR CONVENIENCE *However, special presumptions for

computers were made into law by the e-
Public Document commerce act.
The following must appear in a public In IBM v. Sec. of Labor, the Supreme Court
document: (1358) ruled that Local Area Network or LAN is not
1. Real rights over immovable property, sales sufficient notice for firing an employee since
of real property - Acts and contracts which there was still no law providing for such
have for their object the creation, presumptions. Remember that presumptions
transmission, modification or facilitate transactions and rules of evidence by
extinguishment of real rights over being pragmatic about it. Otherwise, proving
immovable property; sales of real property the propositions as found in the presumptions
or of an interest therein a governed by would be impossible and uncertain. E.g. no
articles 1403, No. 2, and 1405; one can really prove that person A read his e-
2. Hereditary rights and conjugal property of mail, thus it is more practical to presume that
gains -The cession, repudiation or he had done so given proof of his receiving
renunciation of hereditary rights or of such e-mail.
those of the conjugal partnership of gains
3. Power to administer property, other
powers to act, prejudice 3rd persons - The
power to administer property, or any

Provisions of the E-commerce Act Chapter IV: Reformation of

1. Present laws apply; electronic documents Contracts
are valid like ordinary ones.
2. In using ATM of network banks, (Arts.1359-1369)
transaction is final at actual debiting;
presumption of authority upon the holder Reformation is that remedy in equity by
of the ATM card. means of which a written instrument is made
3. Electronic devices are valid or construed so as to express or conform to
4. Message from originator presumed to be the real intention of the parties when some
made by the owner thereof regardless of error or mistake has been committed.
who actually typed it. There must be
express statement that he (owner) would Requisites for Reformation
be held liable for that ID. Receiver has
right to assume his actual authorship. 1. Meeting of minds.
5. On agreements of acknowledgement of 2. True intention not expressed within the
receipt, such as actual reply of the instrument by reason of mistake, fraud,
receiver, or notice by the server. If no inequitable conduct, or accident.
reply or acknowledgement, presumption 3. There is clear and convincing proof of
that it was not sent. mistake, accident, fraud, simulation or
6. As to time, presumption is at the time inequitable conduct.
such was received by the designated
information system or server, or that of Causes for Reformation (MUMO – ghost)
the receiver. This also requires a system
of acknowledgement of receipt. 1. Mutual: instrument includes something
7. Web sites – require proof or w/c should not be there or omit what
acknowledgement of visiting the site. This should be there
is usually done by pre-program procedure a. Mutual
like requirement of registration before b. Mistake of fact
being given access. c. clear and convincing proof
8. On security of signature – electronic d. causes failure of instrument to express
imprints, identification systems, and codes true intention
Tip: Always have a hard copy back-up 2. Unilateral

Acts Required for the Perfection of a. one party was mistaken
Certain Contracts b. other either acted fraudulently or
inequitably or knew but concealed
REGISTRATION c. party in good faith may ask for
reformation
Chattel Mortgages (art. 2140)
b. Sales or Transfers of Large Cattle 3. Mistake by 3rd persons – due to
(Cattle Registration act) ignorance, lack of skill, negligence , bad
faith of drafter, clerk, typist
DELIVERY OF THE THING
(for Real contracts) 4. Others specified by law – to avoid
frustration of true intent
Pledge - In addition to the requisites
prescribed in article 2085, it is necessary, Special Cases
in order to constitute the contract of
pledge, that the thing pledged be placed in 1. Mutual mistake - When a mutual mistake
the possession of the creditor, or of a third of the parties causes the failure of the
person by common agreement. (2093) instrument to disclose their real
agreement, said instrument may be
Deposit- A deposit is constituted from the reformed.
moment a person receives a thing
belonging to another, with the obligation 2. Mistaken party, not fraudulent - If one
of safely keeping it and of returning the party was mistaken and the other acted
same. If the safekeeping of the thing fraudulently or inequitably in such a way
delivered is not the principal purpose of that the instrument does not show their
the contract, there is no deposit but some true intention, the former may ask for the
other contract. (1962) reformation of the instrument.
3. Mistaken party, other knew of mistake and

non-conformity of instrument – When one
party was mistaken and the other knew or
believed that the instrument did not state

their real agreement, but concealed that EVIDENT INTENTION PREVAILS OVER
fact from the former, the instrument may LETTER
be reformed.
If the words appear to be contrary to the
4. Ignorance, lack of skill, negligence, or bad evident intention of the parties, the latter
faith of drafter, clerk, typist of instrument shall prevail over the former.
- When through the ignorance, lack of
skill, negligence or bad faith on the part of CONTEMPORANEOUS AND SUBSEQUENT
the person drafting the instrument or of ACTS CONSIDERED
the clerk or typist, the instrument does
not express the true intention of the In order to judge the intention of the
parties, the courts may order that the contracting parties, their contemporaneous
instrument be reformed. and subsequent acts shall be principally
considered.
5. Agreement on pledge or mortgage but
with instrument on sale – If two parties GENERAL TERMS IN ACCORDANCE TO
agree upon the mortgage or pledge of real INTENTION
or personal property, but the instrument
states that the property is sold absolutely However general the terms of a contract may
or with a right of repurchase, reformation be, they shall not be understood to
of the instrument is proper. comprehend things that are distinct and cases
that are different from those upon which the
Prescriptive period: 10 years from the date parties intended to agree.
of the execution of the instrument.
INTERPRET TO EFFECTUATE
When No Reformation Is Allowed (SWV-
E, Sisters With Voices-E) If some stipulation of any contract should
(Arts. 1366-1367) admit of several meanings, it shall be
understood as bearing that import which is
1. Simple donations inter vivos wherein no most adequate to render it effectual.
condition is imposed;
2. Wills; READ AS A WHOLE
3. When the real agreement is Void.
4. Estoppel – When one of the parties has The various stipulations of a contract shall be
brought an action to enforce the interpreted together, attributing to the
instrument, he cannot subsequently ask doubtful ones that sense which may result
for its reformation. from all of them taken jointly. (1374)
Standing: IN KEEPING WITH NATURE AND OBJECT

OF CONTRACT
Reformation may be ordered at the instance
of: Words which may have different significations
shall be understood in that which is most in
 either party or his successors in interest, if keeping with the nature and object of the
the mistake was mutual; otherwise, contract.
 upon petition of the injured party, or his
heirs and assigns. (1368) CUSTOMS FACILITATE INTERPRETATION
The usage or custom of the place shall be

Chapter V: Interpretation of borne in mind in the interpretation of the
ambiguities of a contract, and shall fill the
Contracts omission of stipulations which are ordinarily
established.
(Arts. 1370-1379) OBSCURE WORDS FOR NON-OBSCURERS
LITERAL MEANING OF CLEAR TERMS The interpretation of obscure words or

stipulations in a contract shall not favor the
If the terms of a contract are clear and leave party who caused the obscurity.
no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations DOUBTS
shall control.
1. Doubts with regard to incidental
circumstances:

When it is absolutely impossible to settle the contract may who is prejudiced by

doubts by the rules established in the demand the contract may
preceding articles, and the doubts refer to fulfillment or demand the
incidental circumstances of a gratuitous seek the rescission of the
contract, the least transmission of rights rescission of the contract.
and interests shall prevail. If the contract contract
is onerous, the doubt shall be settled in Court may fix a Court cannot grant
favor of the greatest reciprocity of period or grant extension of time for
interests. extension of fulfillment of the
time for the obligation
2. Doubts with regard to principal object: fulfillment of the
obligation
If the doubts are cast upon the principal Its purpose is to Its purpose is to
object of the contract in such a way that it cancel the seek reparation for
cannot be known what may have been the contract the damage or injury
intention or will of the parties, the contract caused, thus
shall be null and void. allowing partial
rescission of the
*Principles of interpretation under ROC also contract
observed (Rule 140 B (4))
Requisites of Rescission
1. Contract is essentially valid.

*DEFECTIVE CONTRACTS 2. There is lesion or pecuniary prejudice.
3. Plaintiff has no other means to obtain
Kinds of Defective Contracts (VURV, The reparation.
VURV Pipe or, a VURV – an action word) 4. Plaintiff must be able to return whatever
he may be obliged to return due to
1. Rescissible Contracts rescission.
2. Voidable Contracts  The things must not have been passed
3. Unenforceable Contracts to 3rd parties who did not act in bad
4. Void or Inexistent Contracts faith.
 It must be made within the prescribed
period.
Chapter VI: Rescissible Contracts
Grounds for Rescission (1381)
The following contracts are rescissible:

Rescission is a process to render inefficacious
(FLAG)
a contract validly entered into, and normally
binding, by reason of external conditions,
1. Those entered into by Guardians where
causing an economic prejudice to a party or
the ward suffers lesion of more than ¼ of
his creditor.
the value of the things which are the
objects thereof
*According to the SC, it is a relief to protect
2. Those agreed upon in representation of
one of the parties or a third person from all
Absentees, of the latter suffers lesion by
injury and damages which the contract may
more than ¼ of the value of things which
cause, to protect some preferential right.
are the subject thereof
3. Those undertaken in Fraud of creditors
Rescission in Rescission Proper in
when the latter cannot in any manner
1191 1381
claim what are due them
It is a principal It is a subsidiary
4. Those which refer to things under
action remedy
Litigation if they have been entered into
retaliatory in
by the defendant without the knowledge
character
and approval of the litigants of the court
Only ground is There are 5 grounds
5. All other contracts especially declared by
non- to rescind. Non-
law to be subject to rescission and
performance of performance by the
payments made in the state of insolvency.
one’s obligation other is not
or what is important
a. Payment made by insolvent
incumbent upon
b. Partition with lesion to heirs by at least
him
¼ (1098)
Applies only to It applies to both
c. Deterioration because suspensive
reciprocal unilateral and
condition debtor’s fault
obligation reciprocal
d. When the conditions have been
obligations
imposed with the intention of
Only a party to Even a third person

suspending the efficacy of an obligation Mutual Restitution

to give, the following rules shall be
observed in case of the improvement, Things w/c are the objects of the contract and
loss or deterioration of the thing during their fruits
the pendency of the condition (1198) Price with interest
e. If it deteriorates through the fault of
the debtor, the creditor may choose When Mutual Restitution is not Applicable
between the rescission of the
obligation and its fulfillment, with a. When the creditor did not receive anything
indemnity for damages in either case from the contract.
f. Unpaid seller may rescind (1534) b. When the thing is already in possession of
g. Sale of object which is inferior by more the party in good faith; subject to
than 10% (1539) indemnity only; if there are 2 or more
h. Sale of land for lack of measurement alienations, it is the liability of the 1st
(1542) infractor
i. Sale because of loss of important part
through eviction (1556) When Contracts can be Rescinded on the
j. Sale of animals w/ redhibitory defects Ground of Lesion
warranty vs. Hidden faults & defects
(1567) 1. The contract must have been entered into
k. Lease (1659) by a guardian in behalf of his ward or by a
legal representative in behalf of an
Obligation to Return in Rescission absentee.
2. The ward or absentee must have suffered
Rescission creates the obligation to return the lesion of more than ¼ of the value of the
things which were the object of the contract, property which is the object of the
together with their fruits, and the price with contract.
its interest; consequently, it can be carried 3. The contract must have been entered into
out only when he who demands rescission can without judicial approval. (court approval)
return whatever he may be obliged to restore. 4. There must be no other legal means of
(1385) obtaining separation for the lesion.
(subsidiary character of rescission)
Extent Necessary 5. The person bringing the action must be
able to return whatever he may be obliged
Rescission shall be only to the extent to restore. (mutual restitution)
necessary to cover the damages caused. 6. The object of the contract must not be
(1384) legally in the possession of a third person
who did not act in bad faith.
When is Rescission NOT Allowed
1. When there are other means (1383) When Contracts can be Rescinded on the
2. When he who demands rescission has no Ground of Fraud (Accion Pauliana)
ability to restore. (1385)
3. In possession of a 3rd person in good faith 1. There must be credit existing prior to the
(1385) celebration of the contract.
4. Rescission referred to in Nos. 1 and 2 of 2. There must be fraud or, at least, the
article 1381 shall not take place with intent to commit fraud to the prejudice of
respect to contracts approved by the the creditor seeking rescission.
courts. (1386) 3. The creditor cannot, in any legal manner,
collect his credit.
Who Can Bring Action for Rescission 4. The object of the contract must bot be
legally in possession of a 3rd person who
the injured party; did not act in bad faith.
his heirs;
the creditor, if the transaction is fraudulent. Presumptions of Fraud
Effect of Rescission By Gratuituous Title
1. As to the parties – Mutual restitution All contracts by virtue of which the debtor
together with the fruits and interest. alienates property by gratuitous title are
2. As to 3rd persons presumed to have been entered into in fraud
a. If he acted in bad faith or he was not of creditors, when the donor did not reserve
legally in possession, he is obliged to sufficient property to pay all debts contracted
return. before the donation.
b. If he legally possess the object in good
faith, he is not obliged to return.

By Onerous Title c. In case of alienation in fraud of creditor,

things under litigation and payment of the
Alienations by onerous title are also presumed state of insolvency, within 4 yeas from the
fraudulent when made by persons against time of discovery of fraud.
whom some judgment has been issued.
The decision or attachment need not refer to Exception
the property alienated, and need not have
been obtained by the party seeking the In certain contracts of sale which are specially
rescission. declared by law to be rescissible, the period is
6 months or even 40 days, counted from the
*In addition to these presumptions, the day of deliver. (1542, 1571, 1577)
design to defraud creditors may be proved in
any other manner recognized by the law
of evidence. (1387)
Chapter VII: Voidable Contracts
Badges of Fraud
Voidable Contracts are those which possess all
1. Consideration of the conveyance is the essential requisites of a valid contract but
inadequate or fictitious either on of the grounds under 1390 is
2. Transfer was made by a debtor after a suit present.
has been begun and while it is pending
against him These contracts are binding, unless they are
3. Sale upon credit by an insolvent debtor annulled by a proper action in court. They are
4. Evidence of indebtedness or complete susceptible of ratification.
insolvency
5. Transfer of all his property by a debtor Characteristics
when he is financially embarrassed or
insolvent 1. Effective until set aside
6. Transfer made between father and son 2. May be assailed or attacked only in an
where there is present any of the above action for that purpose
circumstances 3. Can be confirmed ( NOTE: confirmation is
7. Failure of the vendee to take exclusive the proper term for curing the defect of a
possession of the property voidable contract)
4. Can be assailed only by the party whose
Reliefs consent was defective or his heirs or
assigns
1. Grant rescission – only to extent
necessary; no other means; ability to Grounds
restore; no acquirer in good faith; nos. 1
and 2 are not court approved 1. One of the parties is incapable of giving
2. Order return – ability to restore; object of consent to a contract
contract or its price, together with fruits, 2. The consent is vitiated by mistake,
plus interests violence, intimidation, undue influence or
3. Damages: Who are liable? fraud (Art 1390)
a. Art. 1189 – rules on
improvement, loss, or deterioration Contracts are voidable when entered into by:
b. Acquirer in bad faith (1388) a. Minors ( below 18 )
*If there are two or more alienations, b. Insane persons unless they acted in lucid
the first acquirer shall be liable first, interval
and so on successively. (1388) c. Deaf mutes who cannot read or write
c. One who alienates to acquirer in d. Persons who are specially disqualified, i.e.,
good faith (1385, par. 3) due to civil interdiction
e. Intoxicated persons
f. Hypnotized persons
Prescriptive Period
The Person who has the Right to Annul a
General Rule Voidable Contract
Within four (4) years from the date it was General Rule
entered into:
a. If the person is under guardianship, within The party prejudiced has the right to annul a
4 years from the time the guardianship voidable contract.
ceases
b. In case of absentees, within 4 years from Exception
the time domicile is known

If a 3rd person is prejudiced in his rights with *The incapacitated person is not obliged to
respect to one of the contracting parties, and make restitution except insofar as he has
can show detriment which would positively been benefited by the thing or price received
result to him from the contract in which he by him. (1399)
has no intervention. (Teves v. People’s
Homesite and Housing Corp., 23 SCRA *It is presumed in the absence of proof that
1141) no such benefit has accrued to the
incapacitated person. (Manresa)
Causes of Extinction of an Action to Annul Effect of a Failure to make a Restitution
1. Prescription When the thing is lost:

2. Ratification
3. Loss of the thing due to default of the 1. Due to the fault of the defendant, he shall
plaintiff and loss of the thing during the be obliged to pay the value of the thing at
plaintiff’s incapacity or after he had the same time of the loss including the
acquired incapacity interest from the same date.
2. Due to the fault of the plaintiff, there is no
PRESCRIPTION restitution, annulment cannot be made
3. Due to a fortuitous event, the person
The action must be commenced within 4 years obliged to return shall pay the value of the
from: thing at the time of loss, but without
a. the time the incapacity ends interest thereon
b. the time the violence, intimidation or 4. Due to the fault of an incapacitated
undue influence ends person, no restitution can be made.
c. the time the mistake or fraud is
discovered
Chapter VIII: Unenforceable
*The discovery of fraud must be reckoned to
have taken place from the time the document Contracts
was registered in the office of the registrar of
deeds. Registration constitutes constructive They are contracts which cannot be enforced
notice to the whole world. (Carantes v. CA, in court or sued upon by reason of defects
76 SCRA 514) provided by law until and unless they are
ratified according to law.
RATIFICATION
It is considered valid but one cannot compel
Requisites its execution unless ratified due to the
extrinsic defect of the contract. It produces
a. The contract should be tainted with a vice legal effects only after ratified.
which is susceptible of being cured
b. The confirmation should be effected by the Kinds
person who is entitled to do so under the
law 1. Unauthorized or No sufficient authority –
c. The cause of the nullity or defect should entered into in the name of another when:
have already disappeared a. No authority conferred
d. It should be effected with the knowledge b. In excess of authority conferred (ultra
of the vice or defect of the contract. vires)
2. Curable by Ratification - Both parties
incapable of giving consent -2 minor or 2
Restitution between Parties insane persons
3. Curable by Acknowledgment - Failure to
Obligation of Mutual Restitution comply with Statute of Frauds
a. Agreement to be performed within a
1. Obligation to do or not to do – there will year after making contract
be apportionment of damages based onteh b. Special promise to answer for debt,
value of such prestation with default or miscarriage of another
corresponding interests. (Jurado) c. Agreement made in consideration of
2. Obligation to give – Restoe to each other promise to marry
the things which have been the subject d. Agreement for sale of goods, chattels
matter of the contract with fruits and the or things in action at price not less
price with interest, except in cases than 500; exception: auction when
provided by law. recorded sale in sales book
e. Agreement for lease of property for
*Articles 1398-1402 are not applicable to more than one year and sale of real
consummated contracts property regardless of price
f. Representation as to credit of another

Grounds for Unenforceable Contracts agent, otherwise, the said contract shall be
(1403) unenforceable.
1. Those contracts which are entered into in Curing Unenforceable Contracts

the name of another by one without or
acting in excess of authority. 1. Failure of defendant to object in time, to
2. Those which do not comply with the the presentation of parole evidence in
Statute of Frauds court, the defect of unenforceability is
3. Those contracts in which both parties are cured
incapable of giving consent.
2. Acceptance of benefits under the contract.
WITHOUT OR IN EXCESS OF AUTHORITY If there is performance in either part and
there is acceptance of performance, it
Those entered into in the name of another takes it out of unenforceable contracts;
person by one who has been given no also estoppel sets in by accepting
authority or legal representation, or who has performance, the defect is waived
acted beyond his powers.
STATUTE OF FRAUDS Chapter IX: Void & Inexistent

Those that do not comply with the Statute of Contracts
Frauds as set forth in this number. In the
following cases an agreement hereafter made These are contracts which have absolutely no
shall be unenforceable by action, unless the force and effect and are inexistent from the
same, or some note or memorandum, thereof, beginning. The maxim is “no contract at all”.
be in writing, and subscribed by the party
charged, or by his agent; evidence, therefore, VOID CONTRACTS
of the agreement cannot be received without
the writing, or a secondary evidence of its Those where all the requisites of a contract
contents: are present but the cause, object or purpose
- An agreement that by its terms is not to is contrary to law, morals, good customs,
be performed within a year from the public order or public policy; or the contract
making thereof (executory contracts) itself is prohibited or declared void by law.
- A special promise to answer for the debt,
default, or miscarriage of another; INEXISTENT CONTRACTS
- Propter nuptias - An agreement made in
consideration of marriage, other than a Those where one or some or all of the
mutual promise to marry; requisites essential for the validity of a
- Sale of at least Php 500, unless partial contract are absolutely lacking.
compliance / Auction entry in sales book
sufficient - An agreement for the sale of Grounds (Art.1409)
goods, chattels or things in action, at a
price not less than five hundred pesos, Void Contracts
unless the buyer accept and receive part
of such goods and chattels, or the 1. The cause, object or purpose is contrary to
evidences, or some of them, of such law, morals, good customs, public order or
things in action or pay at the time some public policy; (1347 par. 3, 1352)
part of the purchase money; but when a 2. The object is outside the commerce of
sale is made by auction and entry is made men; (1347, par. 1)
by the auctioneer in his sales book, at the 3. It contemplates an impossible service;
time of the sale, of the amount and kind of (1348)
property sold, terms of sale, price, names 4. The intention of the parties relative to the
of the purchasers and person on whose principal object of the contract cannot be
account the sale is made, it is a sufficient ascertained; (1378)
memorandum; 5. Those expressly prohibited or declared
- An agreement of the leasing for a longer void by law. (1347, par. 3)
period than one year, or for the sale of
real property or of an interest therein; Inexistent Contracts
- A representation as to the credit of a third
person. 6. It is absolutely simulated or fictitious;
(1346)
*The contact or agreement under the Statute 7. The cause or object did not exist at the
of Frauds require that the same be evidenced time of the transaction; (1318)
by some note, memorandum or writing,
subscribed by the party charged or by his

Characteristics will be confiscated

in favor of the
1. It produces no effect whatsoever either governement
against or in favor of anyone
2. There is no action for annulment
necessary as such is ipso jure. A judicial
declaration to that effect is merely a
declaration
3. It cannot be confirmed, ratified or cured.
4. If performed, restoration is in order,
except if pari delicto will apply
5. The right to set up the defense of nullity
cannot be waived Exception
6. Imprescriptible
7. Anyone may invoke the nullity of the 1. If the purpose has not yet been
contract whenever its juridical effects are accomplished and if the damage has not
asserted against him been cause to any 3rd person
2. Payment of usurious interest (1413)
Illegal Contracts 3. Payment of money or delivery of property
for an illegal purpose, where the party
Kinds of Illegal Contracts who paid or delivered repudiates the
In Pari Delicto Doctrine contract before the purpose has been
accomplished, or before any damage has
*Only applicable to void contracts and not to been caused to a 3rd person (1415)
inexistent contracts. 4. Payment of money or delivery of property
made by an incapacitated person (1416)
General Rule 5. Agreement or contract which is not illegal
in itself and the prohibition is designed for
When the defect of a void contract consists in the protection of the plaintiff (1416)
the illegality of the cause or object of the 6. Payment of any amount in excess of the
contract and both of the parties are at fault or maximum price of any article or
in pari delicto, the law refuses them every commodity fixed by law or regulation by
remedy and leaves tehm where they are. competent authority (1417)
7. Contract whereby a laborer undertakes to
Contract constitute Contract does not work longer than the maximum number of
criminal offense constitute criminal hours fixed by law. (1418)
offense but is 8. Contract whereby a laborer accepts a
illegal or unlawful wage lower than the minimum wage fixed
per se by law. (1419)
9. One who lost in gambling because of
The parties are in
fraudulent schemes practiced on him is
pari delicto
allowed to recover losses even if the
 No action for  No action for
gambling is prohibited. (315, RPC)
specific specific
performance performance
Requisites of illegal contracts
restitution on either restitution on
1. Contract is for an illegal purpose
side. either side.
2. Contract must be repudiated by any of the
 Both shall be  No confiscation
parties before purpose is accomplished or
prosecuted
damage is caused to 3rd parties
 Thing/price to be
3. The court believes that public interest will
confiscated in favor
be served by allowing recovery
of government
(discretionary upon the court ) – based on
Only One Party is
remorse; illegality is accomplished when
guilty
parties entered into contract; before it
takes effect – party w/c is remorseful
specific specific
prevents it
performance performance
 Innocent party is  Innocent party is
Where Laws Are Issued To Protect Certain
entitled to entitled to
Sectors
restitution restitution
 Guilty party is not  Guilty party is not
1. Consumer protection
entitled to entitled to
2. Labor
restitution restitution
3. Usury law
 Guilty party will be
prosecuted
Consumer protection – if price of
 Instrument of crime
commodity is determined by statute, any

person paying an amount in excess of the

maximum price allowed may recover such
excess Philippine Banking Corp. v. Lui She
A virtual sale through a very long-term lease
Labor – if the law sets the minimum wage for of 50 years was deemed void for its
laborers, any laborer who agreed to receive contravention to the prohibition on foreign
less may still be entitled to recover the ownership. However, since the prohibition was
deficiency; if law set max working hours and only for protection and security of Filipino
laborer who undertakes to work longer may ownership of land, applying article 1416, pari-
demand additional compensation delicto does not apply.
Interest paid in excess of the interest allowed

by the usury law may be recovered by
debtor with interest from date of payment
Effects of Illegal Contracts
 If one party is incapacitated, courts may

allow recovery of money, property
delivered by incapacitated person in the
interest of justice; pari delicto cannot
apply because an incapacitated person
does not know what he is entering into;
unable to understand the consequences of
his own action
 If agreement is not illegal per se but
merely prohibited and prohibition is
designated for the protection of the
plaintiff – may recover what he has paid
or delivered by virtue of public policy
Mutual Restitution in Void Contracts
General Rule
The parties should return to each other what

they have given by virtue of the void contract
in case
Where nullity arose from defect in essential

elements
return object of contract and fruits
return price plus interest
Exception
No recovery can be had in cases where nullity

of contract arose from illegality of contract
where parties are in pari delicto; except:
a. incapacitated – not obliged to return
what he gave but may recover what he
has given
b. other party is less guilty or not guilty
Angeles v. CA
A sale of homestead within five year
prohibitive period is void but in pari delicto
does not apply because of public policy.
However, recovery does not extend to
products or fruits of the land, and the
improvements made by the other party. The
unjust enrichment principle must apply as to
the recovery of the price paid.

TITLE III: NATURAL OBLIGATIONS TITLE IV: ESTOPPEL
Article 1423. Obligations are civil or natural. It is the admission or representation

Civil obligations give a right of action to conclusive upon person making such; cannot
compel their performance. Natural obligations, be denied or disproved.
not being based on positive law but on equity
and natural law, do not grant a right of action General Rule
to enforce their performance, but after
voluntary Effective only between parties thereto or
successors in interest. (1439)
They are real obligations to which the law
denies an action, but which the debtor may Types of Estoppel
perform voluntarily.
1. By Conduct (in pais) – intentional and
They are patrimonial, and presupposes a culpable negligence
prestation.
Elements
The binding tie of these obligations is in the a. acts inducing another to believe certain
conscience of man, for under the law, they do facts to exist
not have the necessary efficacy to give rise to b. with intent or culpable negligence
an action. c. the other party rightfully relies and
acts on such belief
Features d. other party would be prejudiced if the
guilty party is allowed to deny facts
1. no positive law giving right of action first represented by him
2. no right of action to enforce performance
3. voluntary fulfillment of obligation by Types:
obligor a. by silence
4. authorize retention of what has been b. by acceptance of benefits
fulfilled; c. by acts – representations or
5. no right to recover, or demand return of admissions
what has been fulfilled
2. By Deed - cannot question admission in
fulfillment by the obligor, they authorize document or deeds
the retention of what has been delivered
or rendered by reason thereof. Some 3. By Record – cannot question executive
natural obligations are set forth in the and legislative records
following articles.
4. By Judgment – no denial of adjudicated
The following are natural obligations facts by competent court
1. Prescribed action of obligee. (1424) 5. By Laches

2. Prescribed action of 3rd person payor who
pays without knowledge and consent of Failure or neglect, for an unreasonable
debtor against the latter. (1425) and unexplainable length of time, to do
3. Annulled contract of minor without that which, by exercising due diligence,
consent of parents. (1426, 1427) could or should have been done earlier; it
a. returns whole thing or price he has is negligence or omission to assert a right
received (Relate to Art. 1241, “only within a reasonable time, warranting a
insofar benefited”) presumption that the party entitled to
b. fulfills obligation, and good faith assert it either has abandoned it or
consummation and spending of what declined to assert it.
has been delivered (Relate to Art.
1327, unemancipated minors cannot Distinguishing Laches from Prescription
give consent to contracts) Laches Prescription
4. Voluntary performance after failed action Concerned with Concerned with
to enforce contract (Art. 1428) the effect of delay the fact of delay
5. Succession Question of Question or
a. Heirs paying decedent’s debt beyond inequity of matter of time
what he has received (1429) permitting the
b. The will is voided by lack of formalities, claim to be
intestate heir pays a legacy (1430) enforced
Not statutory Statutory
Applies in equity Applies at law
Not based on a Based on a fixed
fixed time time

Elements
1. Conduct on the part of the defendant,
or of one under whom he claims,
giving rise to the situation of which
complaint is made and for which the
complaint seeks a remedy.
2. Delay in asserting the complainant’s
rights, the complainant having
knowledge or notice, of the defendant’s
conduct and having been afforded the
opportunity to institute a suit
3. Lack of knowledge or notice on the
part of the defendant that the
complainant would assert the right on
which he bases his suit
4. Injury to the defendant in the event
relief is accorded to the complainant
The following are estopped
Ownership transfers to the buyer (in Sales)
1. Seller or grantor who is not owner at time

of sale but he later acquires ownership of
such (1434)
2. Seller represents owner in a sale; cannot
contest title of ownership of buyer (1435)
Lessee or bailee cannot claim ownership of

thing leased or received against lessor or
bailor (1436)
Misleader in 3rd party contracts on immovable

property
Requisites
1. fraudulent representation or wrongful
concealment of facts known to the party
estopped;
2. intent by party precluded that the other
should act upon the facts as
misrepresented;
3. party misled must have been unaware of
the true facts; and
4. party defrauded must have acted in
accordance with the misrepresentation.
Owner allowing another to feign ownership,

cannot claim ownership as defense against
pledge. (In pledge) (1438)
***

SALES CIVIL LAW
Sales
TABLE OF CONTENTS
I. Contract of Sale 169
II. Elements of a Valid Sale 172
III. Transfer of Ownership 175
IV. Risk of Loss 176
V. Document of Title 176
VI. Obligations of Seller and Buyer 178
VII. Remedies of Seller and Buyer 182
VIII. Double Sale 189
IX. Extinguishment of Sale 190
X. Assignment 192
XI. Special Laws 193

SALES CIVIL LAW
SALES (Title VI, Book 4, Arts 1458- normally the full payment of the
purchase price.
1637, Civil Code) o Breach of the condition prevents
the obligation to convey title from
I. CONTRACT OF SALE 1 acquiring obligatory force. (Ang Yu
Asuncion v. CA, 1994)
A contract of sale only constitutes a TITLE or
right to the transfer of ownership, but is NOT  In some cases, the SC makes finer
the MODE of transferring ownership. (Aznar v. distinctions between a conditional sale and
Yapdiangco, 1965) a contract to sell in that:
o In a contract to sell- the fulfillment
A. ESSENTIAL REQUISITES: (Art. 1318) of the suspensive condition, which
is the full payment of the purchase
1. Consent- meeting of offer and
price, will not automatically
acceptance on the thing and the price
transfer ownership to the buyer
2. Object- determinate thing
although the property may have
3. Cause
been previously delivered to him;
- for the seller: payment of price
o In a conditional sale- the fulfillment
- for the buyer: transfer of
of the suspensive condition renders
ownership and delivery of thing
the sale absolute and affects the
seller’s title thereto such that if
B. STAGES:
there was previous delivery of the
1. Negotiation - from the time the property, the seller’s ownership or
prospective contracting parties indicate title to the property is
interest in the contract to the time the automatically transferred to the
contract is perfected buyer (see Ursal v. CA, 2005)
2. Perfection – upon the concurrence of

E. FORM (Art. 1483)
the essential elements of the sale,
which is the meeting of the minds of
GEN. RULE: NO form required – may be
the parties as to the object of the
o Written
contract and upon the price
o Oral
o Partly written, partly oral
3. Consummation - begins when the
o Inferred from the conduct of the
parties perform their respective
parties
undertakings under the contract of
Why: because sale is consensual (Art. 1475)
sale, culminating in the extinguishment
thereof (Ang Yu Asuncion v. CA, 1994)
EXCEPTIONS:
1. Under Statute of Frauds (contract or
C. CHARACTERISTICS:
some memorandum thereof must be
1. Nominate written and subscribed; otherwise,
2. Consensual- perfected by mere contract unenforceable UNLESS ratified
consent by failure to object to oral evidence OR
3. Real obligation (‘to give’) a acceptance of benefits under the
determinate thing is created contract) (Art1403(2)):
4. Bilateral- with reciprocal obligations a. Sale not to be performed within
5. Onerous- with exchange of equivalent 1 year
values b. Sale of personal property at a
6. Principal price of P500 up.
7. Commutative- fulfillment c. Sale of real property or an
predetermined in advance interest therein
D. KINDS: (Art. 1458(2)) The Statute of Frauds applies only to

1. ABSOLUTE sale executory contracts, NOT to contracts either
2. CONDITIONAL sale (“Contract to sell”) partially or totally performed. (Iñigo v. Estate
o Ownership of the thing sold is of Maloto, 1967)
retained until the fulfillment of a
positive suspensive condition, 2. Transmission of real rights over
immovable property (must appear in
public document to bind third parties)
1
Art. 1458. By the contract of sale, one of the (Art.1358(1))
parties obligates himself to transfer the ownership 3. When certain form required by other
of and to deliver a determinate thing, and the other law
to pay therefore a price certain in money or its a. Transfer of large cattle must
equivalent. be registered with the municipal
A contract of sale may be absolute or treasurer to be valid (Sec. 529,
conditional.

SALES CIVIL LAW
Revised Administrative Code of  Money advanced but eventually

1917) utilized as rental payments is NOT
b. In sale of land through agent, a separate consideration for an
the authority of the agent must option to buy in a lease contract;
be written; otherwise, sale is hence, the option is not binding.
void (Art.1874) 2. The consideration may be in money OR
in kind (things or undertakings)
3. If the consideration is not monetary,
F. REMEDIES: a. these must be things or
1. Specific Performance + damages (Arts. undertakings of value, in view
1191 and 1165(1)) of the onerous nature of the
2. Rescission + damages (Art. 1191) contract of option;
3. Damages (Art. 1170) b. said consideration must be
clearly specified as such in the
option contract or clause.
G. VIS-A-VIS: - example: an undertaking on the part
of the optionee (lessee) to sell the
1. Bilateral promise improvements made on the
to buy and sell (Art. 1479(1)2) property if the option to buy is not
exercised
o LIKE sale: there must be a
- determinate thing to be sold
- price certain to be paid o Arts. 13244 and 1479(2), as
interpreted by the Supreme Court5:
o UNLIKE sale: the promise to buy is the
consideration for the promise to sell and - IF the option is supported by
vice versa (de la Cavada v. Diaz, 1918) consideration distinct from the
price: it is both a binding contract
o Manresa: has the same effect as a of option and an offer of a contract
contract of sale since parties can of sale.
reciprocally demand fulfillment - IF the option is NOT supported by
2. Option to buy or to sell consideration distinct from the
(accepted unilateral promise price: it is NOT binding as a
to buy or to sell) (1479(2)3) contract of option, but is a mere
offer of a contract of sale.
o Example: “if the financial condition of the - IF the offer is accepted (i.e., option
mortgagees will permit, they may is exercised) BEFORE withdrawal, a
purchase said land absolutely on any date contract of sale is perfected, hence
within the 2 year term of this mortgage at the remedy of specific performance
the agreed price of P3,900.” (Soriano v. lies. (Soriano v. Bautista, 1962;
Bautista, 1962) Sanchez v. Rigos, 1972)
- IF the offer is withdrawn BEFORE
o LIKE sale: there must be a acceptance, specific performance
- determinate thing to be sold does not lie because no contract of
- price certain to be paid sale was perfected.(Ang Yu
Asuncion v. CA, 1994)
o UNLIKE sale: it is unilateral- it gives a
right to buy or to sell, but imposes no
obligation on the part of the option-holder, Remedies in Case of Breach
aside from the consideration for the offer Option with Withdrawal Damages for
distinct of offer breach of
o It must be supported by a consideration consideration BEFORE option
distinct from the price. acceptance contract
AFTER Specific
o RULES re SEPARATE CONSIDERATION: acceptance performance
(Bible Baptist Church v. CA, 2004) of offer of sales
contract
1. An option contract must be supported Option w/o Withdrawal Damages
by a separate consideration.
4
When the offerer has allowed the offeree a certain
2
A promise to buy and sell a determinate thing for period to accept, the offer may be withdrawn at
a price certain is reciprocally demandable. any time before acceptance by communicating such
withdrawal, except when the option is founded
3
An accepted unilateral promise to buy or to sell a upon a consideration, as something paid or
determinate thing for a price certain is binding promised.
5
upon the promissor if the promise is supported by a Sanchez v. Rigos (1972); Ang Yu Asuncion v. CA
consideration distinct from the price. (1994) ; Limson v. CA (2001).

SALES CIVIL LAW
Distinct of offer ONLY IF subject of an action for specific performance

consideration BEFORE there is an (Tanay Recreation Center and Development
acceptance abuse of Corp. v. Fausto, 2005)8
right under H. DISTINGUISHED FROM OTHER
Art. 19, CC ACTS/CONTRACTS
(no
damages for 1. Contract for a piece of work (Art.1467)
breach of
option CONTRACT FOR A
contract) SALE
PIECE OF WORK
AFTER Specific Goods manufactured Goods
acceptance Performance or procured in the manufactured
of offer of sales ordinary course of specially for the
contract business (WON on customer upon his
hand) special order
For the general Not for the
3. Right of first refusal market general market
Essence is the object Essence is skill
o Example: “That should the LESSOR Tests under jurisprudence:
decide to sell the leased premises, the 1. Habituality test: WON the job
LESSEE shall have the priority right to requires the use of extraordinary
purchase the same.” (Tanay Recreation or additional equipment, or
Center and Development Corp. v. involves services not generally
Fausto, 2005) performed (Celestino v. CIR, 1956)
2. WON the thing is one which would
o LIKE sale: there must be a determinate have never existed but for the
thing to be sold order of the party desiring to
acquire it, or one which would
o UNLIKE sale: have existed and have been the
- price and other terms yet to be subject of sale to some other
agreed upon (Ang Yu Asuncion v. person even f the order had not
CA, 1994) been given (CIR v. Eng.&Supply,
- it is unilateral 1975)
o UNLIKE option:
- The grantee has no right to buy or 2. Agency to Sell (Art.1467)
sell, only a right to the first offer O Look at essential clauses- cause and
should the grantor decide to sell subject matter
(Polytechnic University of the
Philippines v. CA, 2001)6 SALE AGENCY TO SELL
- Separate consideration NOT
Buyer pays price Agent does not
required7
(WON he sells the pay price, but
- rescission and specific performance
thing to a 3rd person) only delivers to
available in case of breach
the principal the
price he obtains
Prevailing doctrine: A sale made in violation
from the sale to a
of a right of first refusal is valid but rescissible
third person
under Art 1381(3),CC, and may be the
Buyer becomes the Agent does not
owner become the
6
The basis of the right of first refusal must be the owner
current offer to sell of the seller or offer to buy of Buyer can make profit Agent cannot
any prospective buyer. Only after the optionee fails if he resells make secret
to exercise its right of first priority under the same profit in selling
terms and within the period contemplated, could
the owner validly offer to sell the property to a
third person, again under the same terms as
3. Barter
offered to the optionee. (Parañaque Kings SALE BARTER
Enterprises, Inc. v. CA, 1997) Price in money or Consideration is
its equivalent another thing
7
When contained in a lease contract, the right of If the consideration is partly in money
first refusal is an integral and indivisible part of the and partly in another thing:
contract of lease and is inseparable from the whole 1. look at manifest intention of the
contract. The consideration for the lease includes
the consideration for the right of first refusal and is
8
built into the reciprocal obligations of the parties. Equatorial, reverting to the doctrine in Guzman,
(Equatorial Realty Development, Inc. v. Mayfair reversed Ang Yu Asuncion where it was held that
Theater Inc., 1996) the remedy in case of a sale violative of a right of
first refusal is limited to damages.

SALES CIVIL LAW
parties to characterize the avenues and parks, according to the Arellano

transaction; development plan of the Municipality” (Melliza
2. if no manifest intention: v. City of Iloilo, 1968)
o barter: if value of thing > amt of
money or its equivalent A thing is LICIT if it is NOT: (Art. 1409)
o sale: if value of thing < amt of 1. Contrary to law, morals, good customs,
money or its equivalent public order, or public policy;
- e.g. dangerous drugs; land acquired
4. Dation (Art. 1245) by homestead or free patent- within 5
years from issuance of patent or grant,
SALE DATION except if sale in favor of the Gov.t or any
No pre-existing debt w/ pre-existing of its units, braches or institutions (CA
debt 141)
Creates obligation Extinguishes 2. Outside the commerce of men;
obligation (mode e.g. property of public dominion such
of payment) as a river (Martinez v. CA, 1974)
5. Lease of things A thing is

o ACTUAL when it is existing,
SALE LEASE OF THING o POSSIBLE when it is has a potential
Ownership Ownership not existence.
transferred transferred - sale of “future goods” (goods to be
manufactured, raised, or acquired
6. Donation by the seller after the perfection of
sale): VALID
SALE DONATION - sale of a mere hope or expectancy:
onerous gratuitous subject to the CONDITION that the
thing will come into existence
Other contracts governed by the law of - sale of a vain hope or expectancy:
sales: VOID
1. Dation (Art.1245)
- a mode of payment where property  Future inheritance cannot be the object
is alienated to the creditor in of sale (Art.1347(2)) but heir may sell
satisfaction of a debt in money his hereditary rights (Art.1088)
2. Barter (Art. 1641)
- a contract where one of the parties  Rules in case of loss at perfection
binds himself to give one thing in (Baviera: loss occurred before the
consideration of the other’s promise contract was entered into without the
to give another thing (Art.1638) knowledge of both parties) (Arts.
- governed by title on sales in 1493-1495):
matters not specifically provided for
in title on barter Total loss contract without any
3. Innominate contracts most analogous effect (no object)
to sale (Art. 1307) Partial loss OR Buyer may:
material 1. Withdraw from
deterioration in contract OR
whole or in part 2. Demand remaining
II. ELEMENTS OF A VALID SALE part and pay
proportional price
The following may be objects of sale:

A. THING sold must be:
1. Undivided interest in a thing (Art.1463)
2. Things under litigation; BUT if without
1. Determinate (Art.1458)
the knowledge and approval of the
2. Licit (1459)
litigants or of the court, sale rescissible
3. Actual or Possible (Arts. 1461 & 1462)
(Art.1381(4))
3. Things subject to a resolutory condition
(Art. 1465)
A thingis DETERMINATE when it is:
- e.g. things acquired under a legal or
1. Particularly designated;
conventional right of redemption
2. Physically segregated; or
3. Capable of being made determinate
without the necessity of a new or B. PRICE must be:
further agreement between the 1. Certain (Art. 1458)
parties. (Art. 1460) 2. In money or its equivalent (Art. 1458)
Example: specific mention of some lots plus 3. Real (Art 1471)
the phrase “lots needed for the city hall site, 4. True (Art. 1353)

SALES CIVIL LAW
GROSS INADEQUACY of price does not affect

Price is CERTAIN when it is: a contract of sale, except that:
1. Fixed by agreement of the parties (Art. 1. It may indicate a defect in the consent
1473) such as fraud, mistake, or undue
2. Certain with reference to another thing influence (Arts.1470 & 1355)
certain (Art. 1469) 2. It may indicate that the parties
- e.g. 10% below invoice price intended a donation or some other act
3. The price which the thing sold would or contract (Art1470)
have on a definite day, or a particular e.g. when the price of a sale with right
exchange or market, or a certain to repurchase is unusually inadequate,
amount above or below such price it is presumed to be an equitable
(Art. 1472) mortgage (Art1602(1))
4. To be fixed by a third person (Art. 3. Sale is rescissible if:
1469) a. the sale is entered into by a
- If 3rd person unable or unwilling to guardian or by a representative
fix price: sale inefficacious UNLESS of an absentee;
the parties subsequently agree b. the ward or absentee
upon the price represented suffers lesion by
- If 3rd person acts in BF or by more than ¼ of the value of the
mistake: courts may fix price thing sold; AND
- If 3rd person prevented from fixing c. the sale is not approved by the
price by fault of the buyer or seller: court (Arts.1381(1)(2) & 1386)
party not in fault may avail of 4. In an ordinary sale, for reason of
remedies against the other equity, a transaction may be
invalidated on the ground of
o If price CANNOT be determined: inadequacy of price, or when such
- sale INEFFICACIOUS inadequacy shocks one’s conscience as
- BUT if the thing or part thereof has to justify the courts to interfere; BUT
been delivered to and appropriated such does not follow when the law
by the buyer, he must pay a gives the owner the right to redeem as
reasonable price therefor when a sale is made at public auction,
(Art.1474) upon the theory that the lesser the
price, the easier it is for the owner to
Price must be in effect redemption. (Hulst v. PR
o MONEY or Builders, Inc. , 2007)
o its EQUIVALENT
- e.g. letter of credit (Baviera) C. CONSENT perfects a contract of sale.
o Consent: meeting of offer and

Price must be REAL, not simulated. acceptance on the
o Price is real when there is an intention 1. thing sold
(on the part of the buyer) to pay and 2. price
an expectation on the part of the - Manner of payment goes into the
seller) to receive it. price such that a disagreement on the
o If price is simulated: manner of payment is tantamount to a
- sale is vOID failure to agree on the price (Toyota Shaw
- BUT the act may be shown to have v. CA, 1995)
been really a donation or some
other act or contract (Art.1471) The buyer and the seller must have CAPACITY
to enter into a contract of sale.
Price must be TRUE, not false.
o The price is false when the real Absolute Incapacity: (MIDDD-HI-C)
consideration is not the same as that 1. Minors
stated in the contract (Mapalo v. 2. Insane
Mapalo, 1966) Except: during lucid interval (Art.1328)
o If false price stated 3. Demented persons
- sale void unless proved to be 4. Deaf-mutes who do not know how to write
founded on another true and lawful (Art. 1327)
price (Art. 1353) 5. Persons suffering civil interdiction (Art.34,
- SC says the contract is not void but RPC)
is a relatively simulated contract; 6. Drunk person
hence, the parties are bound by 7. Hypnotized person (Art.1328)
their real agreement. (Balite v. Lim, 8. Those judicially declared “Incompetent”
2004) a) prodigals
b) hospitalized lepers

SALES CIVIL LAW
c) persons not being of unsound mind, but o BUT sale to guardians, agents,
by reason of age, disease, weak mind, and executors/administrators can be “ratified”
other similar causes, cannot, without by the execution of a new contract,
outside aid, take care of themselves and making the sale valid from the time the
manage their property, becoming thereby new contract is executed, unlike sale to
an easy prey for deceit and exploitation public or judicial officers and employees
(Sec.2, Rule 92,ROC) and lawyers which cannot be so “ratified”
because it is contrary to public policy
o Status of sale: (Rubias v. Batiller, 1973)
- Where 1 party incapacitated:
VOIDABLE (Art.1390(1)) The OFFER must be CERTAIN (Art. 1319) as
- Where both parties incapacitates: to the object and the price (Villanueva v. PNB,
UNENFORCEABLE (Art.1403(3)) 2006).
o BUT when necessaries (those o Offer a.k.a. imperfect promise or
indispensable for sustenance, clothing, policitacion (Litonjua v. L&R Corp.,
dwelling, medical attendance, education, 2000)
transportation) are sold and delivered to o The ff. are not definite offers but mere
incapacitated person, he must pay a invitations to make an offer, unless the
reasonable price therefor. (Art.1489) contrary appears:
1. Business advertisements of things
Relative Incapacity to buy (HW-PAGE-JLO) for sale (Art.1325)
1. Husband/Wife 2. Advertisements for bidders
- What: property of spouse (Art.1326)
- Except: when property regime is
separation of property (marriage The ACCEPTANCE must be ABSOLUTE. (Art.
settlement or judicial order) 1319)
- Prohibition applies to common-law o Qualified acceptance= counter-offer
spouses (Matabuena v. Cervantes,
1971) Consent must not be VITIATED, otherwise
2. Guardian sale is VOIDABLE. (Arts. 1330 &1390(2))
- What: property of ward o Vices of consent:
3. Agent 1. Fraud
- What: property of principal 2. Mistake
- Except: principal consents 3. Violence
4. Executor/Administrator 4. Intimidation
- What: property of estate 5. Undue influence
administered
- Does NOT apply to sale of Payment of EARNEST MONEY is considered as
hereditary right bec. it is not proof of the perfection of sale. (Art. 1482)
administered by the o BUT mere payment of earnest money
executor/administrator (Naval v is not sufficient proof of a perfected
Enriquez, 1904) sale when some essential element
5. Public officers and employees (e.g. agreement on terms of payment)
- What: property of State, GOCC, is admittedly lacking (Velasco v. CA,
institution administered 1973)
- Applies to judges and gov’t. experts
who, in any manner, take part in
the sale EARNEST MONEY v. OPTION MONEY
6. Judicial officers and employees (justices, (Limson v. CA, 2001)
judges, prosecuting attorneys, court given as a distinct
part of purchase
clerks, other officers and employees consideration for an option
price
connected with the administration of contract
justice) given only when
applies to a sale not yet
- What: property or rights in there is already
perfected
litigation or levied upon an a sale
execution before the court within when given, the would-be-
when given, the
their territorial jurisdiction buyer is not required to
buyer is bound
7. Lawyers buy, but may even forfeit it
to pay the
- What: property and rights object depending on the terms of
balance
of any litigation handled by them the option
(Art. 1491)
8. Others specially disqualified by law
- e.g. aliens, wrt private land in the
Philippines (Art.12, sec.7,
Constitution)
o Status of sale: VOID (Art. 1409(7))

SALES CIVIL LAW
III. TRANSFER OF OWNERSHIP

o BUYER in GOOD FAITH is one who buys
property from another
A perfected contract of sale per se does NOT
- without notice that some other
transfer ownership over the thing sold.
person has a right to or interest in
For ownership to transfer, there must be:
it, AND
1. Right to transfer ownership at the
- who pays a full and fair price
time of delivery (Art.1459)
therefor at the time of the purchase
a. owner (Art. 428)
or before receiving such notice.
b. authorized by owner
2. Delivery (Art. 1496)
o When the seller voluntarily delivers the
3. Intention to transfer ownership
thing sold to the buyer but is swindled,
(Norkis Distributors Inc. v. CA,
- the seller is not “unlawfully
1991)
deprived” of the thing under Art.
4. If delivery is symbolic, control of
559; the buyer who practiced fraud
the seller over the thing sold that
acquires a voidable title which, if
its material delivery could have
not avoided at the time of sale,
been made. (Vda. de Sarmiento v.
confers a good title on a
Lesaca, 1960)
subsequent buyer in good faith and
for value
- a good title means an indefeasible
A. RIGHT TO TRANSFER OWNERSHIP title even as against the original
owner. (Tagatac v. Jimenez, 1957;
1. When the seller has NO TITLE Edca v. Santos, 1990)
Gen. Rule: One cannot give what one does

not have (Nemo dat quod non habet) B. DELIVERY
o Art. 559: When the owner has lost or
has been unlawfully deprived of a o Ownership over the thing sold is
movable, he may recover it even from transferred by DELIVERY or tradition
a buyer in good faith (Aznar v. (Aznar v. Yapdiangco, 1965)
Yapdiangco, 1965) o Sale without delivery gives the buyer
- limitation: if buyer in good faith no rights over the property except
acquired it in a public sale, the those of a creditor (Kuenzle & Streiff v.
owner must reimburse the price Macke & Chandler, 1909)
paid therefor o Delivery may be actual or constructive
Exceptions: 1. Actual delivery

a. Estoppel: when the owner is by his o placing the thing sold in the control
conduct precluded from denying the and possession of the buyer (Art.1497)
seller’s authority to sell (Art. 1505)
b. Sale under court order (Art. 1505) 2. Constructive Delivery
o But in execution sale, the buyer merely (Arts. 1498-1501)
steps into the shoes of the judgment
debtor (Rule 39, sec. 33, ROC) Kind How Made Applies to
c. When goods are purchased in a 1. Symbolic o By real or
- merchant’ store, execution personal
- fair, or of public property;
- market (Art. 1505) instrumen incorporeal
d. Registered land bought in good faith t property
- Gen rule: buyer need not go evidencin
beyond the Torrens title g sale
- Exception: when he has actual except: if
knowledge of facts and contrary
circumstances that would impel a appears or
reasonably cautious man to make can be
further inquiry clearly
inferred
 No factors’ acts or recording laws (referred o delivery personal
to in Art1505(1)) in the Philippines of keys property
(Baviera) where
stored/ke
pt
2. When the seller has a voidable title 2. Traditio By mere personal
which has not been avoided at the time of the longa manu agreement property
sale, a buyer in good faith acquires a good of the buyer
title to the goods. (Art.1506)

SALES CIVIL LAW
Kind How Made Applies to reasonable time, if no time has been

and seller if fixed. (Art.1502 (2))
possession - cf. Sale on return where
cannot be o ownership passes to the buyer upon
transferred delivery
at the time o BUT he may revest ownership in the
of the sale seller by returning the goods within
3. Traditio By mere personal the time fixed or a reasonable time,
brevi manu agreement property if no time has been fixed. (Art. 1502
of the buyer (1))
and seller if
the buyer D. CONTROL
already had o The efficacy of symbolic delivery can
possession be prevented if the seller does not
for any possess control over the thing sold, in
other reason which case this legal fiction must yield
4. Traditio Seller real or to reality.
constitutum remains in personal o The key word is control, NOT
possessorium possession property possession. The presence of lessees or
of the illegal occupants who do not have
property in claims of ownership does not prevent
a different symbolic delivery (Power Commercial
capacity e.g. and Industrial Corp. v. CA, 1997; Sabio
as lessee v. The International Corporate Bank,
5. Quasi- Placing of incorporeal Inc., 2001)
tradition the titles of property
ownership
in the
possession IV. RISK OF LOSS
of the buyer
or allowing Transfer of ownership is relevant in
the buyer to determining who bears the risk of loss.
use his
rights A. GEN RULE: owner bears the risk of loss
6. Tradition When a non- real or (res perit domino:the thing is lost to the
by operation owner who personal owner)
of law sells a thing property
(Art.1434) later B. EXCEPTIONS: (Art.1504)
acquires 1. Stipulation to the contrary
title thereto 2. Security title: goods delivered and
7. Delivery to delivery to a goods ownership retained by the seller merely
a carrier9 carrier for to secure payment- buyer bears the
transmission risk from the time of delivery
to the buyer 3. Delay in actual delivery through the
fault of the seller or buyer- party in
C. INTENTION TO TRANSFER OWNERSHIP fault bears the risk
Ownership is not transferred despite delivery

in the following cases:
1. Ownership is reserved, as V. DOCUMENT OF TITLE
o In conditional sale
o When under the bill of lading, the Document of title is a document
goods are deliverable to the seller or o used as proof of possession or control
his agent, or to the order of the seller of the goods sold, or
or his agent (Art.1503(2)) o authorizing or purporting to authorize
2. Sale on approval (trial or satisfaction), the possessor of the document to
where ownership transfers only when the transfer or receive goods represented
buyer by such document (Art.1636(1))
o signifies his approval or acceptance to
the buyer or does any other act Examples:
adopting the transaction; OR - bill of lading
o retains the goods without giving notice - quedan
of rejection within the time fixed or a - warehouse receipt
It may be negotiable (bearer or order) or non-

9
Discussed in detail under obligation of the seller negotiable.
to deliver.

SALES CIVIL LAW
o Words like “not negotiable” or “non- Rights under Rights under transfer
negotiable” do not affect negotiability negotiation
1. title to the 1. title to the
When document of title is negotiable: goods of the goods as
o It may be negotiated one who against the
- if bearer, by delivery negotiated and transferor,
- if order, by indorsement of the original subject to any
 indorsement of a non-negotiable consignee agreement with
document gives the transferee no (Art.1513(1)) the latter
additional right (Art.1511) 2. direct obligation 2. right to notify
o Goods in the possession of the bailee of the bailee the bailee
cannot be attached or levied under an issuing the issuing the
execution unless the document document to document of the
- be first surrendered or hold possession transfer thereof,
- its negotiation enjoined of the goods for and thereby to
o Bailee cannot be compelled to deliver him according acquire the
up the actual possession of the goods to the terms of direct obligation
until the document is the document as of such bailee to
- surrendered to him or fully as if such hold possession
- impounded by the court (Art.1519) bailee had of the goods for
- contracted him accdg to
IMPLIED WARRANTIES of indorser or directly with the terms of the
transferor (unless a contrary intention him document
appears): (Art.1513(2))
1. Genuineness of document o prior to the
2. Legal right to negotiate or transfer 3. freedom from notification of
3. No knowledge of fact which would the defenses of: the bailee, the
impair the validity or worth of the - breach of title and right of
document duty the transferee
4. Right to transfer the title to the goods - loss may be
and merchantability or fitness for a - theft defeated by
particular purpose, whenever such - accident - levy of
warranties would have been implied - mistake attachment of
had the contract been transfer the - conversion, execution
goods without a document (Art.1516) if the buyer of upon the
o The indorser does NOT warrant the the document goods by the
fulfillment by the bailee issuing the paid value transferor’s
document or previous indorsers of their therefor in good creditor, or
respective obligations (Art.1517) faith and - a notification
without notice to such bailee
(Art.1518) by the
transferor or a
subsequent
buyer of a
subsequent
sale of the
goods by the
transferor
(Art. 1519)
3. If the document
is negotiable,
right to compel
the transferee
to indorse it,
unless a
contrary
intention
appears
o negotiation
takes effect
from actual
indorsement
(Art. 1515)

SALES CIVIL LAW
VI. RECIPROCAL OBLIGATIONS a. he becomes insolvent UNLESS

he gives a guaranty or security
OF THE SELLER AND THE BUYER for the debt;
b. he does not does not furnish
A. OBLIGATIONS OF THE SELLER: (WPD) the seller the guaranties or
securities he promised;
1. Preserve (take care of) the thing sold until c. he impairs the guaranties or
delivery (Art. 1480 in rel. to Art.1163) securities or they disappear
2. Deliver fortuitously UNLESS he
o Thing sold (Art. 1495) immediately gives new ones
o Fruits (Arts. 1164 &1537) equally satisfactory;
o Accessions and accessories (Arts.1166 d. he violates any undertaking, in
&1537) consideration of which the seller
 If the thing is improved by nature: agreed to the period;
improvement inures to the benefit of the e. he attempts to abscond.
buyer (Art.1536 in rel. to Art.1198)
 If the thing is improved at the seller’s
expense: seller only entitled to the right of o Rules wrt delivery of goods (tangibles)
a usufructuary- not entitled to indemnity 1. Whether it is for the buyer to take
but may remove the improvement if it can possession of the goods or for the
be done without damage tot the thing seller to send them depends on the
sold. (Art. 1538 in rel. to Arts. 1198 & contract between the parties.
579) 2. place of delivery: seller’s place of
3. Warrant the thing sold (Art.1495) business or residence if no place of
business
exceptions:
a. contract (express or implied) or
1. Preservation
usage of trade to the contrary
b. sale of specific goods which
o Standard of care: diligence of a good
parties knew to be in some
father of a family
other place at the time of sale-
- UNLESS another standard of care
that place is the place of
required is required by law or
delivery
stipulation
3. Where the seller is bound to send the
goods but no time for sending is fixed,
o Liability for fortuitous event:
he must send them w/in a reasonable
1. By Law
time.
a. Guilty of delay
 What constitutes a reasonable time
b. Promised to deliver the same
is determined by the circumstances
thing to 2 or more persons who
of the particular transaction, such
do not have the same interest
as:
2. By Stipulation
- the character of the goods,
3. Nature of obligation requires
- the purpose for which they are
assumption of risk
intended,
- the ability of the seller to produce
the goods if they are manufactured,
2. Delivery
- the facilities available for
transportation and the distance the
o Recall: kinds of delivery
goods must be carried, and
- the usual course of business in the
o Unless otherwise agreed, when symbolic
particular trade (Smith Bell & Co.,
delivery has been made, the seller is not
Ltd. V. Matti, 1922)
obliged to remove tenants to place the
4. Where the goods at the time of sale
buyer in actual possession of the property
are possessed by a 3rd person, no
as he has already complied with his
delivery unless and until such 3rd
obligation to transfer ownership of and
person acknowledges to the buyer that
deliver the thing sold. (Power Commercial
he holds the goods on the buyer’s
and Industrial Corp. v. CA, 1997; Sabio v.
behalf.
The International Corporate Bank, Inc.,
5. Demand or tender of delivery must be
2001)
made at a reasonable hour, otherwise
it may be treated as ineffectual.
o The seller is NOT bound to deliver if:
6. Expenses of and incidental to putting
1. the buyer has not paid him the price or
the goods in a deliverable state (state
no period for payment has been fixed
that the buyer would be bound to take
in the contract (Art.1524);
delivery) must be borne by the seller,
2. the buyer loses the right to make use
UNLESS otherwise agreed. (Art.1521)
of the term, as when:

SALES CIVIL LAW
7. Where the seller is authorized or with the contract OR may waive

required to send the goods, delivery to performance of the condition.
a carrier for transmission to the buyer - Example of condition on
is deemed delivery to the buyer performance of obligation:
Exceptions: obligation of the buyer to pay the
a. contrary stipulation balance of the purchase price made
b. contrary intent subject to the condition that the
- A specification in the contract seller first deliver the reconstituted
relative to the payment of title of the house and lot (Laforteza
freight may indicate the v. Machuca, 2000)
intention of the parties as to the o If seller has promised that the condition
place of delivery (i.e., the should happen or be performed, the buyer
owner pays for the freight); may treat the nonperformance of the
however the terms “F.O.B.,” condition as a breach of warranty.
“c.i.f.,” and “F.a.S.” merely (Art.1545)
make rules of presumption
which yield to proof of contrary Express Warranty (APIR)
intention. There is an EXPRESS warranty when:
- the best indication of the 1. The seller makes an affirmation of fact
intention of the parties as to the or any promise relating to the thing
place of delivery is the manner sold;
and place of payment of the 2. The natural tendency of such
price. affirmation or promise is to induce the
buyer to buy; AND
F.O.B. c.i.f F.a.s 3. The buyer buys the thing relying
(free on (cost, (free thereon.
board) insurance, alongside)  Affirmation of the value of the thing or
freight) statement of the seller’s opinion only is
Seller bears Price Seller bears NOT a warranty unless:
the expenses quoted the expenses o The seller made it as an expert; AND
of includes of o It was relied upon by the buyer.
transportation the costs of transportation (Art.1546)
up to the the goods, until he  Cf. Dealer’s talk (usual exaggerations of
f.o.b. point insurance, delivers the trade)
and freight goods o Ordinarily, what does not appear on
charges on alongside a the face of the written instrument
the goods vessel at a should be regarded as dealer's or
up to the named port trader's talk; conversely, what is
place of specifically represented as true in said
destination document cannot be considered as
mere dealer's talk. (Moles v. IAC,
c. under bill of lading, goods 1989)
deliverable to the seller or his o The refusal of the seller to warrant his
agent or to the order of the seller estimate should have admonished the
of his agent (seller reserves purchaser that that estimate was put
ownership in the goods) forth as a mere opinion; and we will
- cf. under bill of lading, goods not now hold the seller to a liability
deliverable to the order of the equal to that which would have been
buyer or his agent, but the seller or created by a warranty, if one had been
his agent retains possession of the given. A man who relies upon an
BoL- only right of possession affirmation made by a person whose
reserved (Art.1523 in rel. to Art. interest might so readily prompt him
1503) to exaggerate the value of his property
does so at his peril, and must take the
o The expenses for the execution and consequences of his own imprudence.
registration of the sale shall be borne by (Songco v. Sellner, 1917)
the seller, unless there is a contrary  Examples of express warranty:
stipulation. (Art.1487) o certification that the machine sold
was in “A-1 condition” (Moles v. IAC,
3. Warranty 1989)
o may be express or implied o express intimation that all taxes and
o cf. condition on performance of obligation: duties had already been paid
- if condition not performed, party (Harrison Motors Corporation v.
whose obligation is subject to the Navarro, 2000)
condition may refuse to proceed  An express warranty can be made by and
also be binding on the seller even in the

SALES CIVIL LAW
sale of a secondhand article. (Moles v. he would not have bought it or

IAC, 1989) would have paid a lower price;
 Cf. fraud: in fraud, there must be an b. The defect is not patent or visible;
intention to deceive or mislead the other c. The buyer is not an expert who, by
party to his prejudice (Philippine reason of his trade or profession,
Manufacturing Co. v. Go Jucco, 1926) should have known the defect
d. The seller is aware of the hidden
Implied Warranty fault or defect, OR even he is not
aware thereof if there is no
IMPLIED warranties (unless a contrary stipulation to the contrary
intention appears)10: (Art.1547) (Arts.1561 &1566)
1. Implied Warranty of Title o Implied warranty as to Merchantable
2. Implied Warranty against Encumbrance Quality and Fitness of Goods
3. Implied warranty against Hidden Defects a. Merchantable Quality:
1) Where the goods are brought by
Implied Warranty of Title description from a seller who
o Seller’s right to sell at the time the deals in goods of that
ownership is to pass and the buyer’s description (Art.1562(2))
peaceful and legal possession of the 2) In a sale by sample, if the seller
thing from that time is a dealer in goods of that kind
o Does NOT apply to a sheriff, and the defect is not apparent
auctioneer, mortgagee, pledge, or on reasonable examination of
other person professing to sell by the sample (Art.1566)
virtue of authority in fact or law. b. Fitness for a particular purpose:
o Requisites for breach of warranty Where the buyer expressly or
against eviction: impliedly makes known to the
a. Buyer is deprived of the whole or a seller the particular purpose for
part of the thing sold; which the goods are acquired AND
b. Eviction is by final judgment it appears that the buyer relies on
c. Final judgment based on the seller’s skill or judgment
 A right prior to the sale OR (Art.1562(1))
 An act imputable to the vendor o Implied warranty against Redhibitory
d. Seller is summoned and made co- Defect in the Sale of Animals
defendant in the suit for eviction at  Redhibitory defect- a hidden defect
the instance of the buyer. (Arts. of animals of such nature that
1548, 1558, Power Commercial expert knowledge is not sufficient
and Industrial Corp. v. CA, 1997) to discover it, even in case a
professional inspection has been
Implied Warranty against Encumbrance made
o Requisites for breach:  No warranty in case of:
a. thing sold is an immovable a. animals sold at fairs or
b. burden or servitude encumbering public auctions
the thing sold is b. livestock sold as
 non-apparent condemned
 not mentioned in the agreement  The following sales are void:
 of such nature that it must be a. sale of animals suffering
presumed that the buyer would from contagious diseases
not have bought it had he been b. sale of animals unfit for the
aware thereof purpose for which they are
 not recorded in the Registry of acquired as stated in the
Property UNLESS there is an contract
express warranty that the thing  Veterinarian liable if he fails to
is free from all burdens and discover or disclose the hidden
encumbrances (Art.1560) defect through ignorance or bad
faith
Implied warranty against Hidden Defects  Seller liable if animal dies within 3
o Requisites for breach: days after its purchase due to a
a. The defect renders the thing sold disease that existed at the time of
unfit for the use for which it was sale.
intended OR diminishes its fitness
for such use to such an extent that OTHER warranties
had the buyer been aware thereof,
1. Warranty in sale of CONSUMER GOODS
10
These also apply in a contract of lease and a o Consumer goods- goods primarily for
contract for a piece of work if the contractor agrees personal, family, household or agricultural
to produce the work from material furnished by purposes, which shall include but not
him. (Arts. 1653 & 1714)

SALES CIVIL LAW
limited to food, drugs, cosmetics, and to the seller that he has rejected them.
devices (Sec.4(q), RA 749311) (Art.1585)
o Kinds of express warranty: o Rights of the buyer (UNLESS otherwise
1. “Full warranty”- if the written warranty agreed):
meets the minimum standards 1. Not bound to accept delivery of goods
2. “Limited warranty- if the written by installments (Art. 1583)
warranty does not meet the minimum 2. Reasonable opportunity to examine the
standards (Sec.6(c), RA7394) goods upon delivery to ascertain WON
o Minimum standard for warranties that the they are in conformity with the
warrantor shall: contract before accepting the same
1. remedy such consumer product within  BUT when the seller delivers the goods
a reasonable time and without charge to a carrier upon the terms that the
in case of a defect, malfunction or same shall not be delivered to the
failure to conform to such written buyer until he has paid the price, the
warranty; buyer has no right to examine the
2. permit the consumer to elect whether goods before payment unless there is
to ask for a refund or replacement an agreement or usage of trade
without charge of such product or part, permitting such examination.
as the case may be, where after (Art.1584)
reasonable number of attempts to 3. Acceptance of the goods shall not
remedy the defect or malfunction, the discharge the seller from liability for
product continues to have the defect or breach of any promise or warranty
to malfunction  BUT the buyer must give the seller
 BUT the warrantor will not be required notice of the breach of promise or
to perform the above duties if he can warranty within a reasonable time after
show that the defect, malfunction or the buyer knows or ought to know of
failure to conform to a written such breach, otherwise the seller shall
warranty was caused by damage due not be liable therefor. (Art.1586)
to unreasonable use thereof. o The buyer must notify the seller
(Sec.68(d), RA 7394) of the breach of warranty at any
time BEFORE the latter has filed
2. Warranty in sale of SUBDIVISION LOT or the suit for the collection of the
CONDOMINIUM UNIT unpaid price since the purpose
o The owner or developer shall be of the rule requiring notice is to
answerable and liable for the facilities, prevent the buyer from
improvements, infrastructures or other interposing belated claims for
forms of development represented or damages as an offset to a suit
promised in brochures, advertisements begun by the seller for the
and other sales propaganda disseminated purchase price (de Guzman v.
by the owner or developer or his agents Triangle Ace Corp., 2001)
and the same shall form part of the sales 4. Reject delivery of a wrong quantity of
warranties enforceable against said owner goods or of goods of a different
or developer, jointly and severally. description not included in the contract
(Sec.19, PD 95712) which are mixed with the goods sold.
(Art.1522)
B. OBLIGATIONS OF THE BUYER 5. If he refuses to accept the goods,
having the right to do so, he is not
bound to return them to the seller; it
1. Accept delivery of the thing sold
being sufficient that he notifies the
2. Pay the price of the thing sold (Art.1582)
seller of his refusal to accept.
 If he voluntarily constitutes himself a
depositary of the goods, he shall be
1. Acceptance liable as such. (Art.1587)
o Modes of accepting goods: (AIR) o Effect of refusal to accept goods without
1. Buyer intimates to the seller that he has just cause: title to the goods passes to the
accepted the goods. buyer from the moment they are placed at
2. Goods delivered to the buyer and he does his disposal, except if ownership has been
any act in relation to them which is reserved by the seller (Art.1588)
inconsistent with the ownership of the
seller. 2. Payment
3. After the lapse of a reasonable time, the o 3 cases where the buyer is liable for
buyer retains the goods without intimating interest for the period between delivery
and payment: (STD)
1. It is stipulated;
11
Consumer Act of the Philippines 2. Thing sold produces fruits or income;
12
The Subdivision and Condominium Buyers’
Protective Decree.

SALES CIVIL LAW
3. Buyer is in default (interest accrues B. PARTICULAR REMEDIES OF THE BUYER

from the time of judicial or
extrajudicial demand for the payment 1. Breach of Obligation to Preserve
of the price)
o Rights of the buyer: Loss (Arts.1538 & 1189)
1. Suspend payment
 When: No breach
a) he is disturbed in the possession or Without fault of
(obligation
ownership of the thing acquired or seller
extinguished)
has reasonable grounds to fear Through fault of
such disturbance, seller OR through
b) by a vindicatory action or a fortuitous event if Damages
foreclosure of mortgage seller liable even for
 Until when: until the seller has caused fortuitous events
the disturbance or danger to cease
 Exceptions: o A thing is lost when it:
b) When the seller gives security for 1. perishes;
the return of the price in a proper 2. goes out of commerce; or
case 3. disappears in such a way that its
c) When it has been stipulated that, existence is unknown or it cannot
notwithstanding any such be recovered
contingency, the buyer shall be
bound to pay
 A mere act of trespass shall not
authorize the suspension of the Deterioration (Arts.1538 & 1189)
payment. (Art.1590)
2. In the sale of immovable property, to Without fault of No breach
pay even after the expiration of the seller (impairment
period agreed upon, borne by buyer)
 as long as no demand for rescission of Through the fault of 1. Rescission +
the contract has been made upon him seller damages OR
either judicially or by a notarial act, 2. SP + damages
 even though it may have been
stipulated that rescission shall of right
take place upon failure to pay the price 2. Breach of Obligation to Deliver
at the time agreed upon. (Art.1592)
Delivery of wrong quantity
VII. REMEDIES IN CASE OF Goods (Art.1522)

BREACH13 Less 1. Reject OR
2. Accept and pay
- at contract rate: if he
accepts knowing that the
A. GENERAL REMEDIES (Art.1191)
seller is not going to perform
1. Specific performance in full; or
2. Rescission - fair value: if he used the
3. Damages goods delivered before
knowing that the seller is not
going to perform in full
o The general rule is that rescission of a More 1. Reject the excess or the
contract will not be permitted for a slight whole
or casual breach, but only for such if indivisible OR
substantial and fundamental breach as 2. Accept the whole and pay at
would defeat the very object of the parties contract rate
in making the agreement (Song Fo & Co.
v. Hawaiian-Philippine Co., 1925)
o In the sale of an undivided share of a
o In reciprocal obligations, neither party
specific mass of fungible goods, if the
incurs in delay if the other does not
mass contains less than the number,
comply or is not ready to comply in a
weight, or measure bought, the buyer
proper manner with what is incumbent
becomes the owner of the whole mass and
upon him. (Art.1169 last par.)
the seller is bound to make good the
o Prescriptive periods:
deficiency from goods of the same kind
- 10 years if based on written contract
and quality, UNLESS a contrary intent
- 6 years if based on oral contract
appears. (Art.1464)
13
Includes both extrajudicial and judicial remedies.

SALES CIVIL LAW
Real estate (Arts.1539-1543) Real estate (Arts.1539-1543)

per unit of less (in 1. prescriptive
measure area or proportional pd: 6 mos.
quality) reduction of from delivery
price OR
2. rescission, 3. Breach of Warranty
if
- lack in area Express Warranty
or inferior o Prescriptive period:
quality at 1. Period specified in the express
least 1/10 of warranty; OR
area stated or 2. If no period specified, 4 years,
price; OR following the general rule on rescission
- the buyer of contract (Engineering & Machinery
would not Corp. v. CA, 1996)
have bought o Remedies in case of sale of goods:
had he known 1. Accept goods + demand diminution or
of smaller extinction of price
area or 2. Accept goods + action for damages
inferior 3. Refuse to accept goods + action for
quality damages
4. Rescind (refuse to accept OR return or
prescriptive offer to return) + recover price paid
pd: 6 mos.  Rescission NOT available IF buyer:
from delivery - knew of the breach of warranty
more 1. Reject the when he accepted the goods
excess OR without protest;
2. Accept the - fails to notify seller of the election
whole and to rescind w/in a reasonable time;
pay at - fails to return or to offer to return
contract rate. the goods to the seller in
substantially as good condition as
they were in when delivered, unless
the deterioration is due to the
breach of warranty
 Measure of damages in case of breach
Lump sum/ Everything No remedy of warranty of quality (in the absence
sale of 2 or w/in o Where of special circumstances showing
more boundaries, both the proximate damage of a greater amt):
immovables even if less area and difference between the value of goods
for a single or more the at the time of delivery and the value
price than stated boundaries they would have had if they had
area of the answered to the warranty.
immovable  Effects of rescission:
are 1. Buyer no longer liable for price and
declared, entitled to return of any part
the area thereof paid, concurrently with or
covered immediately after an offer to
within the return the goods.
boundaries 2. If seller refuses to accept offer to
of the return goods, buyer deemed bailee
immovable for the seller and has right of lien
prevails to secure payment of any part of
over the price paid.
stated
area. Implied Warranty Against Eviction
(Rudolf (Arts.1555&1556)
Lietz, Inc.
v. CA, Total Enforce liability for eviction
2005) eviction (demand VICED from seller)
NOT 1. o Value of thing sold at the
everything proportional time of eviction
w/in reduction in o Income or fruits, IF he has
boundaries price OR been ordered to deliver
2. rescission them to the party who
won the eviction suit

SALES CIVIL LAW
o Costs of proportionate
- eviction suit and reduction of the price
- in a proper case, suit (accion quanti
against seller for the minoris)+damages
warranty Thing Due to o If seller aware of
o Expenses of the contract, lost hidden defect- may demand:
IF the buyer has paid fault - return of price
them - refund of
o Damages and interests, expenses of
and ornamental expenses, contract
IF the sale was made in - damages
BF o If seller not aware of
Partial 1. Enforce liability for defect- may demand
eviction eviction (VICED) OR price and expenses
2. Rescind, IF he would not but not damages
have bought the thing sold Due to Demand:
without the part lost (but fortuitous o Price paid minus
he must return the thing event or value of thing when
without other to fault of it was lost
encumbrances than those buyer o Damages IF the
which it had when he seller acted in BF
acquired it) o Prescriptive period: 6 mos. from delivery
o RULES: (Arts.1549-1554) Implied Warranty Against Redhibitory Defect

1. Buyer need not appeal from the decision to of Animals
hold seller liable for eviction. 1. Withdraw from contract (accion
2. When adverse possession commenced redhibitoria) + damages; OR
before sale but prescriptive pd. completed 2. Demand a proportionate reduction of the
after transfer- seller not liable price (accion quanti minoris)+damages
3. If property sold for nonpayment of taxes o If sale rescinded, buyer must return
due and not made known to the buyer animal in the condition in which it was sold
before sale- seller liable and delivered (liable for injury due to his
4. Judgment debtor also responsible for negligence and not arising from the
eviction in judicial sales, unless it is redhibitory fault or defect)
otherwise decreed in the judgment o Prescriptive period: 40 days from delivery
5. If there is waiver of warranty: Warranty in Sale of Consumer Goods (Sec. 68

a. if seller acted in BF- seller liable (e)(f), RA 7394)
for eviction (waiver void)
b. if buyer made waiver without Express 1. Demand repair w/in 30
knowledge of the risks of warranty days (extendible for
eviction- seller liable only for the causes beyond the control
value of the thing sold at the of the warrantor; OR
time of eviction 2. Demand refund of price
c. if buyer made waiver with minus amount directly
knowledge of the risks of attributable to the use of
eviction and assumed its the consumer prior to the
consequences- seller not liabl discovery of the non-
conformity
Implied Warranty Against Encumbrances Implied 1. Retain the goods and
(Art.1560) warranty recover damages; OR
1. Rescission- w/in 1 yr. from execution 2. Reject the goods, cancel
of deed of sale; OR contract and recover from
2. Damages- w/in 1 yr from execution of the seller so much of the
deed of sale or from discovery of purchase price as has
burden or servitude been paid, including
damages.
Implied Warranty Against Hidden Defects o Duration of warranty if implied warranty
(Arts.1567-1571) accompanies express warranty:
- If the implied warranty on
Thing not lost 1. Withdraw from merchantability accompanies an
contract (accion express warranty, both will be of
redhibitoria) + equal duration.
damages; OR - Any other implied warranty shall
2. Demand a endure not less than sixty (60)

SALES CIVIL LAW
days nor more than one (1) year any time while they are in transit
following the sale of new consumer as if he never parted with the
products. possession
3. Resale
C. PARTICULAR REMEDIES OF THE 4. Rescission –rescind transfer of title
SELLER and resume ownership in the goods
Right of LIEN
NON-ACCEPTANCE OF GOODS
o Available when:
1. Goods sold w/o any stipulation as to
1. Action for damages for nonacceptance,
credit;
where the buyer wrongfully neglects or
2. Goods sold on credit, but the term of
refuses to accept and pay for the goods
credit has expired; or
(Art.1596)
3. Buyer becomes insolvent14
 Measure of damages:
o Lost when:
- estimated loss directly and
1. Seller delivers goods to carrier or other
naturally resulting in the ordinary
bailee for transmission to the buyer
course of events from the buyer’s
w/o reserving ownership or right to
breach
possession;
- where there is an available market
2. Buyer or his agent lawfully obtains
for the goods (in the absence of
possession of the goods
special circumstances): difference
3. Seller waives it
between the contract price and the
o NOT lost by reason only that the buyer
market price at the time the goods
has obtained judgment for the price of the
ought to have been accepted or if
goods
no time fixed, at the time of refusal
o In case of part delivery: may exercise
to accept
right of lien as to remainder UNLESS part
- labor performed and expenses
delivery made with intent to waive the lien
made by the seller before receiving
o NOT affected by any sale or other
notice of the buyer’s repudiation or
disposition of goods which the buyer may
countermand
have made UNLESS the seller has
- profit the seller would have made if
consented thereto
sale had been fully performed
 BUT if negotiable doc of title has
2. Rescission by giving notice of election to
been issued, right of a holder in
rescind to the buyer (Arts.1597&1593)
due course NOT defeated, whether
the negotiation be prior or
NONPAYMENT
subsequent to the notification of
the carrier or other bailee of the
In sale of movables:
seller’s claim to a lien.
1. Self-help remedies of unpaid seller
of goods
Right of STOPPAGE IN TRANSITU
2. Action for the price of goods
o Available when the buyer of the goods is
3. Alternative remedies under the
or becomes insolvent
Recto Law (Arts. 1484 & 1485)
o Goods are in transit:
1. From the time they are delivered to a
Self-help remedies of an unpaid seller of
carrier or other bailee for transmission
goods (Arts.1525-1535)
to the buyer until buyer or his agent
o “unpaid seller” when:
takes delivery;
1. the whole of the price has not
2. If buyer rejects the goods and the
been paid or tendered
carrier or bailee continues in
2. a bill of exchange or other
possession, even if the seller has
negotiable instrument received as
refused to receive them back
conditional payment has been
o Goods no longer in transit if:
dishonored
1. Buyer or his agent obtains delivery of
 seller includes:
the goods before their arrival at the
- seller’s agent to whom the BOE has
appointed destination;
been endorsed
2. After the arrival of the goods at the
- a consignor or agent who has
appointed destination, carrier or bailee
himself paid, or is directly
acknowledges to the buyer or his
responsible for the price
- any other person who is in the
position of a seller 14
Insolvency under Title on Sales refers to
o Self-help remedies: insolvency in fact- when a person has ceased to
1. Lien- right to retain the goods pay his debts in the ordinary course of business or
while he is in possession of them cannot pay his debts as they become due, WON
insolvency proceedings have been commenced
2. Stoppage in transitu- right to
(Art.1636(2))
resume possession of the goods at

SALES CIVIL LAW
agent that he holds the goods on his 2. The seller may recover damages from
behalf and continues in possession of the original buyer for any loss
them as bailee for the buyer or his occasioned by the breach of the
agent (immaterial if buyer indicates contract of sale.
further destination for the goods; 3. The buyer in the resale acquires a good
3. The carrier or baileewrongfully refuses title as against the original buyer.
to deliver the goods to the buyer or his
agent Right to RESCIND
o Exercised by: o Available to unpaid seller who:
1. Obtaining actual possession of the 1. has a right of lien; OR
goods; OR 2. has stopped the goods in transitu
2. Notifying carrier or bailee of his claim o Available when:
 If carrier or bailee has issued a 1. Seller expressly reserved the right to
negotiable document of title, it rescind in case the buyer defaults; or
must first be surrendered for 2. Buyer defaults in payment for an
cancellation before the goods are unreasonable time.
redelivered to the seller o Rescission made by manifesting an
o In case of part delivery: may exercise intention to rescind by:
right of stoppage in transitu as to 1. notice to the buyer; OR
remainder UNLESS circumstances of part 2. some other overt act which
delivery show an agreement with the need not be communicated to
buyer to give up possession of the whole the buyer
of the goods. o BUT giving or failure to give notice of
o NOT affected by any sale or other intention to rescind is relevant in
disposition of goods which the buyer may determining WON the buyer had been in
have made UNLESS the seller has default for an unreasonable time before
consented thereto the rescission.
 BUT if negotiable doc of title has been
issued, right of a holder in due course Action for the price of goods
NOT defeated, whether the negotiation o Available when:
be prior or subsequent to the 1. Ownership has passed to buyer and
notification of the carrier or other buyer wrongfully neglects or refuses to
bailee of the seller’s claim to a right of pay;
stoppage in transitu 2. Price payable on a certain day
irrespective of delivery and buyer
Right of RESALE wrongfully neglects or refuses to pay;
o Available to unpaid seller who: or
1. has a right of lien; OR 3. Buyer notifies seller of his repudiation
2. has stopped the goods in transitu of the contract after the seller has
o Available when: completed the manufacture of the
1. Goods are of a perishable nature; goods or had procured the goods to be
2. Seller expressly reserves the right of delivered, and the goods cannot
resale in case the buyer defaults; or readily be resold for a reasonable
3. Buyer defaults in payment for an price. (Art.1595)
unreasonable time
o For the resale to be valid, the seller need Under the Recto Law (Arts.1484 & 1485)
NOT notify the original buyer of: o Applies in cases of:
1. the intention to resell 1. sale of movables in installment
2. the time and place of the resale 2. lease of personal property
o BUT giving or failure to give notice of - with option to buy
intention to resell is relevant in - when the lessor has deprived the
determining WON the buyer had been in lessee of the possession or
default for an unreasonable time before enjoyment of the thing
the resale was made.  When the seller assigns his credit to
o The seller must exercise reasonable care another person, the assignee is
and judgment in making a resale likewise bound by the same law.
o The resale may be by public or private (Borbon II v. Servicewide Specialists,
sale. Inc., 1996)
o The seller CANNOT buy the goods, directly  Stipulation that the installments or
or indirectly. rents paid shall not be returned to the
o Effects of resale: buyer or lessee VALID insofar as the
1. The seller is NOT liable anymore to the same may not be unconscionable (Art.
original buyer: 1486)
- upon the contract of sale; OR
- for any profit made by the resale

SALES CIVIL LAW
Sale of movables in installment 2. Cancellation of sale, IF the

 The Recto law does NOT apply to a buyer fails to pay 2 or more
straight term sale in which the balance, installments
after payment of the initial sum, should be 3. Foreclosure of chattel
paid in full at the time specified, because mortgage on the thing sold, if
the law attempts to protect improvident one has been constituted, IF
buyers from the great temptation of the buyer fails to pay 2 or
buying beyond their means. In a straight more installments.
term sale, the partial payments are not so
small as to place buyers off their guard o Nature of the remedies: ALTERNATIVE,
and delude them to a miscalculation of NOT CUMULATIVE- the exercise of one
their ability to pay. (Levy Hermanos, Inc. bars the exercise of the others (Cruz v.
v. Gervacio, 1939) Filipinas Investment & Finance Corp.,
1968)16
Lease of personal property with option to buy
 The condition that the lessor has deprived SPECIFIC PERFORMANCE
the lessee of possession or enjoyment of
the thing for the purpose of applying Art. o When the seller-mortgagee first seeks to
1485 is fulfilled when the lessor files a enforce additional mortgages, guarantees
complaint for replevin to recover or other security arrangements, he loses
possession of the movable property. By his lien on the chattel mortgage of the
virtue of the writ of seizure, the lessee is personal property he sold, although he
deprived of the use of the property. (Elisco may still levy on it. (Borbon II v.
Tool Manufacturing Corp., v. CA, 1999) Servicewide Specialists, Inc., 1996)
 The Recto law does not apply to a financial o When there is a chattel mortgage on the
leasing agreement which, by definition thing sold but the seller elects to sue on a
under RA 855615, does not give the lessee promissory note to exact fulfillment of the
an option to buy. (Sing, Jr. v. FEB Leasing obligation to pay, the seller is not limited
and Finance Corp., 2007) to the proceeds, on execution, of the
 BUT when a contract purporting to be a mortgaged property, as there is no
financial leasing agreement is in reality a foreclosure of chattel mortgage nor a
contract of lease with option to buy, the foreclosure sale of the thing sold in such a
Recto law applies. When the lessor, in its case. Hence, other properties of the buyer
demand letter, gives the defaulting lessee may be levied upon in case of deficiency.
the option of either returning the movable (Tajanlangit v. Southern Motors, Inc.,
property or keeping it by paying the 1957)
outstanding balance, the lessee is in effect
given an option to buy, even if the “lease CANCELLATION OF SALE
agreement” does not contain a “purchase
option” clause.(PCI Leasing and Finance, o Available when the buyer fails to pay 2 or
Inc. v. Giraffe-X Creative Imaging, Inc., more installments
2007) o When the seller cancels the sale by
 The Recto law does not apply to a repossessing the property sold, it is barred
creditor-mortgagee in a loan secured by a from exacting payment of the balance of
chattel mortgage on the property the price thereof. (Nonato v. IAC, 1985)
purchased with the proceeds of the loan,
absent proof that: FORECLOSURE OF CHATTEL MORTGAGE
- the agreement was in fact a
consumer loan agreement (i.e., the o Available when the buyer fails to pay 2 or
mortgagee in fact bought the more installments
property from the original seller o Foreclosure may be judicial or
and in turn, sold it to the extrajudicial- that is, by ordinary action or
mortgagor) (Superlines by foreclosure under power of sale
Transportation Company, Inc. v. contained in the mortgage. (Magna
Lavides, 2003); or Financial Services Group, Inc. v. Colarina,
- the seller assigned to the creditor 2005)
the right to collect the balance of o Effect of foreclosure: seller shall have “no
the purchase price from the buyer. further action” to recover any “unpaid
(Rosario v. PCI Leasing and balance” of the price; any contrary
Finance, Inc., 2005) agreement VOID.
 Purpose of the law is to remedy the
o Alternative remedies under the Recto law: abuses committed in foreclosure of
1. Specific performance
16
QUOTABLE QUOTE: SC always says, “It cannot
15
Financing Company Act of 1998 have its cake and eat it too.”

SALES CIVIL LAW
chattel mortgages. It prevents

mortgagees from seizing the Rescission for anticipatory breach
mortgaged property, buying it at o Available when the seller has reasonable
foreclosure sale for a low price and grounds to fear the loss of immovable
then bringing the suit against the property sold and its price
mortgagor for a deficiency judgment.
The almost invariable result of this Rescission
procedure was that the mortgagor o Available even after the seller has chosen
found himself minus the property and specific performance IF the latter becomes
still owing practically the full amount impossible
of his original indebtedness. (Bachrach o Instead of decreeing rescission, the court
Motor Co., Inc. v. Millan, 1935) may authorize the fixing of a period for a
 It is the fact of foreclosure and actual just cause.
sale of the mortgaged chattel that o In case of an absolute sale, the seller
would bar the seller from recovering must make a demand for rescission either
any unpaid balance; hence, after filing - judicially OR
an action for replevin but before the - by a notarial act (Art. 1592)
foreclosure sale, the seller may accept  A judicial or notarial act is necessary
payments voluntarily tendered by the before a valid rescission can take
buyer who admits a subsisting place, whether or not automatic
indebtedness. (Northern Motors, Inc. rescission has been stipulated. (Iringan
v. Sapinoso, 1970) v. CA, 2001)
 The further “action” referred to may be  Effect of lack of demand: buyer can
judicial or extrajudicial; hence, it still pay
includes extrajudicial foreclosure of a  Effect of demand: the court may not
real estate mortgage given as grant the buyer a new term
additional security. (Cruz v. Filipinas  The ff. have been considered by the SC
Investment & Finance Corp., 1968) as constituting a judicial demand for
 After foreclosure of the chattel rescission:
mortgage, the seller cannot proceed 1. Cross-claim (Luzon Brokerage Co.,
against additional security put up by Inc. v. Maritime Building Co., Inc.,
the buyer himself (Ridad v. Filipinas 1972);
Investment and Finance Corp., 1983) 2. Action for Judicial Confirmation of
or even by a third person, because the Rescission and Damages (Iringan
buyer would still be the one ultimately v. CA, 2001)
burdened- the guarantor can recover 3. Defense in the seller’s Answer to
from him what it had paid. (Cruz v. the buyer’s Action for Specific
Filipinas Investment & Finance Corp., Performance (Ramel v. Aquino,
1968) 2006)
 Where the buyer-mortgagor o In installment sale of realty, RA 6552
unjustifiably refused to surrender the imposes additional requirements for a
chattel subject of the mortgage upon valid rescission
failure of 2 or more installments, or if  RA 6552 does not apply to:
he concealed the chattel to place it 1. industrial lots
beyond the reach of the seller- 2. commercial buildings
mortgagee, that thereby constrained 3. sale to tenants under RA 384418
the latter to seek court relief, the  Requirements for a valid rescission if
expenses incurred for the prosecution buyer has paid at least 2 years of
of the case, such as attorney’s fees, installments: (Sec.3)
could rightly be awarded (Borbon II v. 1. Grace period- 1 mo/1 yr of
Servicewide Specialists, Inc., 1996) installment payments made; BUT
buyer may avail of it only once in
In sale of immovables every 5 yrs.
1. Rescission for anticipatory breach 2. Refund of cash surrender value
(Art.1591) (CSV): 50% of total amt paid +
2. Specific Performance + damages under 5% for every yr after the first 5
Art.1191 years of installments, BUT not >
3. Rescission + damages under Art.1191 90% of total amt paid
 Subject to the provisions of: 3. Notice of cancellation or demand
- Art.1592 in case of an absolute sale for rescission by notarial act,
(Odyssey Park, Inc. v. CA, 1997); effective 30 days from the buyer’s
OR receipt thereof and upon full
- RA 655217 in case of a sale in payment of the CSV
installment
17 18
Realty Installment Buyer Act Agricultural Land Reform Code

SALES CIVIL LAW
 Requirements for a valid rescission if bought the real property, there was still no
buyer has paid less than 2 yrs of sale to a second vendee.(Consolidated
installments: (Sec.4) Rural Bank (Cagayan Valley), Inc. v. CA,
1. Grace period of at least 60 days 2005)
2. Notice of cancellation or demand o Art. 1544 does NOT apply to the sale of
for rescission by notarial act, unregistered land at an execution sale
effective 30 days from the buyer’s because a buyer of unregistered land at a
receipt thereof execution sale only steps into the shoes of
 Down payments, deposits or options on the judgment debtor, and merely acquires
the contract shall be included in the the latter's interest in the property sold as
computation of the total number of of the time the property was levied upon.
installment payments made. (Sec.3) (Carumba v. CA, 1970)
 The seller can go to court to demand
judicial rescission in lieu of a notarial B. RULES OF PRIORITY UNDER ART.1544
act of rescission. (Olympia Housing,
Inc. v. Panasiatic Travel Corp, 2003) IN CASE OF MOVABLES:
- Possession in good faith
 The requirement of a notarial act of
rescission is dispensed with when the IN CASE OF IMMOVABLES:
seller files an action for annulment of 1. Registration in good faith
contract, which is a kindred concept of 2. If no prescription, possession in good
rescission (Layug v. IAC, 1988); but faith
NOT when he files 3. If no registration or possession, oldest
- an action for reconveyance (Ramos title acquired in good faith.
v. Heruela, 2005; Olympia Housing,
Inc. v. Panasiatic Travel Corp., o Good faith- lack of knowledge of any
2003); OR defect in the title over the property sold
- an action for unlawful detainer (Vda de Melencion v. CA, 2007)
(Pagtalunan v. Vda. De Manzano,
2007) o Knowledge gained by the first buyer of the
 Automatic cancellation clause is void second sale cannot defeat the first buyer’s
under Section 7 of R.A. 6552 (Fabrigas rights except where the second buyer
v. San Francisco Del Monte, Inc., registers in good faith the second sale
2005) ahead of the first, as provided by the Civil
Code. Such knowledge of the first buyer
VIII. DOUBLE SALE does not bar her from availing of her
(Art.1544) rights under the law, among them, to
register first her purchase as against the
A. REQUISITES: (Cheng v. Genato, 1998) second buyer. But in converso, knowledge
1. 2 or more valid sales; gained by the second buyer of the first
2. same subject matter; sale defeats his rights even if he is first to
3. 2 or more buyers with conflicting register the second sale, since such
interests at odds over the rightful knowledge taints his prior registration with
ownership of the thing sold; bad faith. (Uraca v. CA, 1997)
4. same seller
O No double sale when one of the two o Registration- any entry made in the books
contracts is a mere contract to sell. (San of the registry, including both registration
Lorenzo Development Corp. v. CA, 2005; in its ordinary and strict sense and
Coronel v. CA, 1996) cancellation, annotation, and even
O No double sale where there is only one marginal notes. (Cheng v. Genato, 1998)
valid sale, the other sale being forged.
(Fudot v. Cattleya Land, Inc., 2007) o If the land is registered under the Land
O No double sale when the two different Registration Act (and therefore has a
contracts of sale are made by two Torrens Title), and it is sold and the sale
different persons, one of them not being is registered not under the Land
the owner of the property sold.(Salera v. Registration Act but under Act 3344, as
Rodaje, 2007) amended, such sale is not considered
O When not all requisites for the application registered under Art. 1544 of the Civil
of Art. 1544 are present, the principle of Code; neither does such registration
prior tempore, potior jure (“he who is first operate as constructive notice to the
in time is preferred in right”) should apply. second buyer.(Vda de Melencion v. CA,
The only essential requisite of this rule is 2007)
priority in time; in other words, the only
one who can invoke this is the first o Possession includes not only
vendee. Undisputedly, he is a purchaser material(actual) possession, but also
in good faith because at the time he symbolic possession, which is acquired by

SALES CIVIL LAW
the execution of a public instrument o Enforceable against:

(Sanchez v. Ramos, 1919) 1. Buyer (or his agent/heirs/assigns)
 If the land is registered, the right to
o Older title- any document showing redeem must be annotated in the title
acquisition of the land in good faith, like a in order to prejudice a subsequent
receipt for the price. (Baviera) buyer from the buyer a retro.
 A buyer of a part of an undivided
immovable who acquires the whole
thereof may compel the seller to
IX. EXTINGUISHMENT OF SALE redeem the whole property.
 If the buyer leaves several heirs,
A. CAUSES: (Arts.1600 &1231) action to redeem may be brought
(P-PLAN-CCC-RRR) against each heir only for his own
1. Payment/performance share, WON the thing has been
2. Presription partitioned, UNLESS in the partition,
3. Loss of thing due one heir was awarded with the thing
4. Annulment sold, in which case he may be sued for
5. Novation redemption of the whole thing
6. Condonation/remission o Redemption exercised by:
7. Confusion/merger 1. Returning the ff. to the buyer: (PEN)
8. Compensation a. Price of the sale;
9. Rescission b. Expenses of the contract and other
10. Resolutory condition fulfilled legitimate payments made by reason
11. Redemption of the sale;
a. Legal c. Necessary and useful expenses
b. Conventional made on the thing sold
2. Complying with any other stipulation
agreed upon, if any.
B. CONVENTIONAL REDEMPTION  The general rule in redemption is that
it is not sufficient that a person
(Arts.1601-1618)
offering to redeem manifests his desire
o Available when the seller reserves the
to do so. The statement of intention
right to repurchase the thing sold in the
must be accompanied by an actual and
same instrument of sale as one of the
simultaneous tender of payment for
stipulations of the contract (Villarica v CA,
the full amount of the repurchase
1968)
price. (BPI Family Savings Bank, Inc.
 An agreement to repurchase becomes
v. Veloso, 2004)
a promise to sell when made after the
 Tender of payment is enough (i.e.,
sale, because when the sale is made
consignation is not necessary), if made
without such an agreement, the
on time, as a basis for action against
purchaser acquires the thing sold
the buyer to compel him to resell. But
absolutely, and if he afterwards grants
that tender does not in itself relieve
the vendor the right to repurchase, it
the buyer from his obligation to pay
is a new contract entered into by the
the price when redemption is allowed
purchaser, as absolute owner already
by the court. (Paez v. Magno, 1949)
of the object. (Ramos v. Icasiano,
o Effects of redemption:
1927)
1. The seller shall receive the thing free
o Period for redemption:
from all charges or mortgages
- pd. stipulated, but NOT > 10 yrs; OR
constituted by the buyer BUT he shall
- 4 yrs from date of contract, if no pd.
respect leases executed by the buyer
stipulated
in good faith and in accordance with
o Available to:
local custom.
1. Seller (or his agent/heirs/assigns)
2. If there are growing fruits at the time
2. Creditors of seller, AFTER they have
of sale and at the time of redemption:
exhausted the seller’s property
no reimbursement or prorating if the
 If co-owners, jointly and in the same
buyer did not pay indemnity at the
contract, sell an undivided immovable,
time of sale
each may redeem only his respective
3. If there were no growing fruits at the
share
time of sale, but some exist at the
 If a sole owner sells an immovable and
time of redemption: fruits prorated
leaves several heirs, each heir may
(buyer entitled to part corresponding
redeem only his share.
to time he possessed the land in the
 In these 2 cases, the buyer a retro
last year, counted from the
may demand all the sellers a retro or
anniversary of the date of sale)
heirs to buy redeem the whole thing
o Effect of non-redemption: Ownership
and he cannot be compelled to agree
consolidated in the buyer BUT the
to a partial redemption.

SALES CIVIL LAW
consolidation shall not be recorded in the - the right to be subrogated,

Registry of property w/o a judicial order, - upon the same terms and
after the vendor has been duly heard. conditions,
 If the court declares the contract as an - in the place of one who acquires a
equitable mortgage, the right of action thing by onerous title (such as sale
to foreclose the mortgage or to collect or dation)
the indebtedness arises from the
judgment, even if it is not alternatively o Instances of legal redemption and periods
prayed for. (Heirs of Arches v. Diaz, for their exercise
1973)
To whom granted Period
CONTRACT OF SALE (with right to repurchase Co-owner 30 days from notice
or absolute) vis-à-vis EQUITABLE MORTGAGE (Art.1620, CC) - in writing
o An equitable mortgage is defined as one Adjoining owner of - by the seller
which, although lacking in some formality, rural land - of the actual
or form or words, or other requisites (Art.1621,CC) execution and
demanded by a statute, nevertheless Adjoining owner of delivery of the deed
reveals the intention of the parties to urban land of sale
charge real property as security for a (Art.1622,CC) *Actual knowledge
debt, and contains nothing impossible or of the sale
contrary to law. (Molina v. CA, 2003) immaterial
o Contract of sale (whether with right of (Doromal v CA,
purchase or purported as absolute) is 1975)
presumed to be an equitable mortgage in
ANY of the ff. cases: (5P-R)
1. Price unusually inadequate; Debtor in case a 30 days from the
2. Possession retained by the seller as credit or date the assignee
lessee or otherwise; incorporeal right in demands payment
3. Period of redemption extended (or litigation is sold from debtor
granted anew) upon or after the (Art.1634)
expiration of the right to repurchase;
Applicant or his 5 yrs. from date of
4. Part of the purchase price retained by
widow or legal conveyance
the seller;
heirs in case of
5. Payment of taxes on the thing sold
sale of homestead
borne by the seller;
(Sec.119, Public
6. Any other case where it may be fairly
Land Act)
inferred that the real intention of the
Taxpayer in case of 1 year from date of
parties is for the transaction to secure
tax sale (Sec. 215, forfeiture
a debt or other obligation.
NIRC)
o For the presumption of an equitable
mortgage to arise under Art. 1602, two
(2) requisites must concur: (a) that the
Judgment debtor, 1 year from the
parties entered into a contract
successor–in- date of registration
denominated as a contract of sale, and (b)
interest, or creditor of the certificate of
that their intention was to secure an
with subsequent sale
existing debt by way of a mortgage.
lien, in case of
(Molina v. CA, 2003)
execution sale
o In case of doubt, a contract purporting to
(Rule 39, Sec.27,
be a sale with right to repurchase shall be
ROC)
construed as an equitable mortgage.
Debtor-mortgagor, 1 year from the
o Remedy of apparent vendor if equitable
successors-in- date of the sale
mortgage is the real intention:
interest,
REFORMATION
judicial/judgment
 If decreed to be an equitable
creditor, any
mortgage- any money, fruits or other
person having a
benefit to be received by the buyer as
lien on the
rent or otherwise considered as
property, in case of
interest.
extrajudicial
 If decreed as a true sale with right to
foreclosure of
purchase- seller may redeem w/in 30
mortgage (Act No.
days from finality of judgment, even if
3135. Sec. 6. )
the period for redemption has expired.
debtor-mortgagor 90 days from
in case of judicial finality of judgment
C. LEGAL REDEMPTION (Arts. 1619-1623) foreclosure of real
estate mortgage IF
o Legal redemption the mortgagee is a

SALES CIVIL LAW
To whom granted Period o NOT available when the assignment in

bank or a banking favor of:
institution. (The 1. co-heir/co-owner of right assigned
General Banking 2. creditor in payment of his credit
Law of 2000) 3. possessor of a tenement or piece of
land which is subject to the right
Agricultural lessee 2 years from the assigned
w/o knowledge of registration of the o How exercised: reimburse the assignee for
sale of landholding sale the:
(Agrarian Land - Price paid
Reform Code, - Judicial expenses incurred
Sec.12) - Interest on the price from date of
payment
o How exercised: by either a formal offer to
redeem or the filing of an action in court
together with the consignation of the X. ASSIGNMENT
redemption price within the reglementary
period. (Lee Chuy Realty Corp., v. CA, o Assignment: a sale of credits and other
1995) incorporeal rights
Redemption by co-owner o Requirement to bind third persons:

o Available when the shares of any or all of - if involving credit, right, or action:
the other co-owners are sold to a 3rd must appear in public instrument;
person (anyone not a co-owner) - if involving right over real property:
o If price grossly excessive, the must be recorded in Registry of
redemptioner shall pay only a reasonable property
one.
o If 2 or more co-owners want to redeem: o Debtor who pays his creditor before
they may do so in proportion to their having knowledge of the assignment is
respective shares released from the obligation.
o The right of redemption of co-owners
excludes that of adjoining owners. o Assignment of credit includes all accessory
rights, such as:
Redemption by adjoining owner of rural land - Guaranty;
o Available when the area of rural land is 1 - Mortgages;
hectare or less, unless the grantee does - Pledge
not own any rural land. - Preference
o NOT available when the adjoining lands
are separated by brooks, drains, ravines, o Warranties in assignment of credit:
roads, and other permanent servitudes for 1. Seller warrants existence and legality
the benefit of other estates of the credit at the time of the sale,
o Priority if 2 or more adjoining owners want UNLESS it should have been sold as
to redeem: doubtful;
1. owner of smaller adjoining land;or 2. Seller does NOT warrant solvency of
2. if with same area, owner who first the debtor, UNLESS:
requested redemption - expressly stipulated or
- the insolvency was prior to the sale
Redemption by adjoining owner of urban land AND of common knowledge
o Granted in addition to right of pre-emption  If seller warrants debtor’s solvency but
o Available when the urban land: duration of liability not stipulated:
1. is so small and so situated that a major duration is 1 year from
portion of it cannot be used for any - time of assignment, if the period
practical purpose w/in a reasonable for payment had already expired,
time; or
2. was bought merely for speculation; - maturity, if period has not yet
and expired
3. was resold.
o Priority if 2 or more adjoining owners want o Liability of assignor of credit in case of
to redeem: owner whose intended use of breach of warranty:
the land appears to be best justified - if in GF: price received + expenses of
contract
- if in BF: price received + all expenses
Redemption of credit or incorporeal right + damages
o Available when it is sold while in litigation o Other warranties:
(from the time the complaint is answered)

SALES CIVIL LAW
1. If inheritance sold w/o enumerating PURPOSE OF THE LAW: to regulate the sale of
the things composing it, seller only subdivision lots and condominiums and
warrants his character as an heir impose penalties on fraudulent practices and
2. If certain rights, rents, or products sold manipulations committed in connection
for lump sum, seller warrants only the therewith (Whereas clause)
legitimacy of the whole in general and
not each part composing it, EXCEPT in SCOPE OF APPLICATION: “Sale” of subdivision
case of eviction from the whole or the lot (inc. the building or other improvements)
part of greater value or condominium unit, which includes:
- a contract to sell,
- a contract of purchase and sale,
XI. SOME SPECIAL LAWS - an exchange,
- an attempt to sell,
- an option of sale or purchase,
A. RA 6552
- a solicitation of a sale, or
- an offer to sell, directly or by an agent, or by
TITLE: Realty Installment Buyer Act
a circular, letter, advertisement or otherwise.
PURPOSE OF THE LAW: to protect buyers of
REGULATION BY THE NATIONAL HOUSING
real estate on installment payments against
AUTHORITY
onerous and oppressive conditions (Sec.2)
1. Approval of plan for subdivision or
condominium project and registration of
SCOPE OF APPLICATION: (Sec.3)
approved plan. (Sec.4)
o Applies to: sale or financing of real estate
2. License to sell (subdivision lots or
on installment payments, including
condominium units) and performance
residential condominium apartments
bond, except in the ff. cases:
o Does NOT apply to:
a. Sale of a subdivision lot resulting from
1. industrial lots;
the partition of land among co-owners
2. commercial buildings; and
and co-heirs.
3. sales to tenants under the Agrarian
b. Sale or transfer of a subdivision lot by
Land Reform Code
the original buyer thereof and any
subsequent sale of the same lot.
RIGHTS/BENEFITS GRANTED TO BUYERS
c. Sale of a subdivision lot or a
1. Additional requirements for rescission in
condominium unit by or for the
case of default in payment:19
account of a mortgagee
a. grace period
- in the ordinary course of business
b. notice of cancellation or
- when necessary to liquidate a bona
demand for rescission by
fide debt. (Secs.4-7)
notarial act
4. Power to suspend license to sell (Sec.8)
c. payment of CSV, if at least 2
5. Power to revoke registration certificate
yrs of installments paid
and license to sell after notice and hearing
(Secs.3&4)
(Sec.9)
2. During the grace period and before actual
6. Registers of subdivision lots and
cancellation of the contract:
condominium units where all NHA orders
a. right to assign by a notarial act
affecting the condition or status thereof
his rights to another person, or
shall be entered (Sec.10)
b. right to reinstate the contract
7. Registration of dealers, brokers, and
by updating the account.
salesmen (Sec.11)
(Sec.5)
8. Revocation of registration of dealers,
3. Right to pay in advance
brokers, and salesmen after notice and
- any installment or the full unpaid
hearing (sec12)
balance of the purchase price
9. Prior written approval for any mortgage on
- any time
the unit or lot to be made by the owner or
- without interest
developer (sec.18)
and to have such full payment of the
10. Permission for alteration of approved
purchase price annotated in the certificate
subdivision plan (Sec.22)
of title covering the property. (Sec.6)
11. Visitorial powers (Sec34)
o Any contrary stipulation NULL & VOID.
12. Take-over development at the expenses of
(Sec.7)
the owner or developer, jointly and
severally, in cases where the owner or
B. PD 957 developer has refused or failed to develop
or complete the development of the
TITLE: The Subdivision and Condominium project as provided for in this Decree.
Buyers’ Protective Decree o NHA may, after such take-over,
demand, collect and receive from the
buyers the installment payments due
19
Discussed in detail under rescission.

SALES CIVIL LAW
on the lots, which shall be utilized for o In the event a mortgage over the lot or
the development of the subdivision. unit is outstanding at the time of the
(Sec.35) issuance of the title to the buyer, the
owner or developer shall redeem the
RIGHTS/BENEFITS GRANTED TO BUYERS mortgage or the corresponding portion
thereof within six months from such
1. If the owner or developer mortgaged the issuance. (Sec.25)
lot or unit to secure a loan: 7. Payment of real estate tax and
- buyer must be notified before the assessment on a lot or unit by the owner
release of the loan or developer without recourse to the buyer
- buyer may, at his option, pay his for as long as the title has not passed the
installment for the lot or unit directly buyer
to the mortgagee who shall apply the o BUT if the buyer has actually taken
payments to the corresponding possession of and occupied the lot or
mortgage indebtedness secured by the unit, he shall be liable to the owner or
particular lot or unit being paid for, developer for such tax and assessment
with a view to enabling said buyer to effective the year following such taking
obtain title over the lot or unit of possession and occupancy. (Sec.26)
promptly after full payment thereto 8. Freedom from any collection of charges by
(Sec.18) the owner or developer for an alleged
2. Warranties enforceable community benefit.
- against the owner or developer, jointly o Fees to finance services for common
and severally, comfort, security and sanitation may
- for the facilities, improvements, be collected only by a properly
infrastructures or other forms of organized homeowners association and
development represented or promised only with the consent of a majority of
in brochures, advertisements and the lot or unit buyers actually residing
other sales propaganda disseminated in the subdivision or condominium
by the owner or developer or his project. (Sec.27)
agents (Sec.19) 9. Right of way to public road must be
o The owner or developer must complete secured by the owner or developer of a
the construction within 1 year from the subdivision without access to any existing
date of the issuance of the license for public road or street (Sec.29)
the subdivision or condominium 10. Organization of Homeowners Association
project or such other period of time as to be initiated by the owner or developer
may be fixed by the NHA (Sec.20) for the purpose of promoting and
3. Consent by the homeowners association or protecting the mutual interest of the
majority of the lot buyers required for any buyers and assisting in their community
alteration of the approved subdivision plan development. (Sec.30)
(Sec.22)
4. Non-forfeiture of installment payments o Any waiver of compliance with any
when the buyer, provision of PD957 VOID (Sec.33)
- after due notice to the owner or
developer, o Sanctions in case of violation:
- desists from further payment 1. Administrative fine: up to P10K
- due to the failure of the owner or 2. Criminal liability: fine up to P20K
developer to develop the subdivision or and/or imprisonment up to 10 yrs.
condominium project according to the
approved plans and within the time
limit for complying with the same. C. ACT NO. 3952
o Such buyer may, at his option, be
reimbursed the total amount paid TITLE: The Bulk Sales Law
including amortization interests but
excluding delinquency interests, with PURPOSE OF THE LAW: To protect persons
interest thereon at the legal rate. who extended credit to merchants, relying on
(Sec.23) the fact that their stock of merchandise was
5. Rights under RA 6552 if the buyer defaults not to be sold in bulk, but kept up and
in payment for reasons other than the replenished from time to time. Credit was
failure of the owner or developer to extended, presupposing continuance in the
develop the project (Sec.24) business of merchandising (Baviera, citing US
6. Issuance of title upon full payment of the case)
lot or unit
o No fee, except those required for the SCOPE OF APPLICATION
registration of the deed of sale in the o Applies to: a “sale and transfer in bulk”,
Registry of Deeds, shall be collected which includes any sale, transfer,
for the issuance of such title. mortgage or assignment of:

SALES CIVIL LAW
1. a stock of goods, wares, merchandise, Notice to creditors

provisions or materials NOT in the o Contents: price, terms, and conditions of
ordinary course of trade and the the sale, transfer, mortgage or assignment
regular prosecution of the business of o When made: at least 10 days before
the seller, transferor, mortgagor, or transferring possession
assignor o How made: personally or by registered
2. all, or substantially all, of the business mail
or trade theretofore conducted by the
seller, transferor, mortgagor, or Consideration
assignor - must not be nominal
3. all, or substantially all, of the fixtures
and equipment used in and about the EFFECT OF NON-COMPLIANCE:
business of the seller, transferor,
mortgagor, or assignor o Criminal liability: 6 mos.-5yrs
o Does not apply : imprisonment, or fine of P5K or less, or
1. If the vendor, transferor, mortgagor or both.
assignor, produces and delivers a o In addition, if the purchase or mortgage
written waiver of the provisions of the money is not applied pro-rata to the bona
Act from his creditors as shown by fide claims of listed creditors, the sale,
verified statements (Sec.2) transfer or mortgage shall be
2. To executors, administrators, FRAUDULENT and VOID.
receivers, assignees in insolvency, or
public officers, acting under judicial
process. (Sec.8)
Q 2007 BAR
REQUIREMENTS: (SPIN-C) Seeking to streamline its operations and to
1. Sworn statement of list of creditors bail out its losing ventures, the stockholders
2. Pro-rata application of the purchase or of X Corporation unanimously adopted a
mortgage money to the payment of listed proposal to sell substantially all of the
creditors machineries and equipment used in and about
3. Inventory of the goods, wares, its manufacturing business and to sink the
merchandise, provisions or materials proceeds of the sale for the expansion of its
4. Notice to listed creditors cargo transport services.
5. Consideration for the sale, transfer, (a) Would the transaction be covered by the
mortgage or assignment provisions of the Bulk Sales Law?
(b) How would X Corporation effect a valid
sale?
Sworn statement of list of creditors
o Contents:
1. names and addresses of all creditors of
seller or mortgagor
2. amount of indebtedness due or owing,
or to become due or owing to each
o When delivered: before receiving any part
of the purchase price, or any promissory
note, memorandum, or other evidence of
indebtedness therefor
o To who delivered:
- to such buyer, mortgagee, or agent; or
- if the buyer, mortgagee, or agent be a
corporation: to the president, vice-
president, treasurer, secretary or
manager of said corporation; or
- if such vendee or mortgagee be a
partnership firm: to a member thereof
Inventory
o Contents:
1. quantity
2. cost price of each article, so far as
possible
o When made: at least 10 days before sale
or mortgage

AGENCY CIVIL LAW
Agency
TABLE OF CONTENTS
Section 1. Nature, Form, and Kinds of Agency 197
Section 2. Obligations of the Agent 202
Section 3. Liabilities of the Agent 204
Section 4. Obligations of the Principal 205
Section 5. Extinguishment of Agency 206

AGENCY CIVIL LAW
NATURE, FORM, AND KINDS OF agent, there must be an intention to accept

the appointment and act on it, and in the
AGENCY absence of such intent, there is generally no
agency. [Victorias Milling v CA, 2000]
Definition and concept
Exception: One who clothes another with
Contract of agency: where a person binds apparent authority as his agent, and holds
himself, him out to the public as such, can’t be
1. to render some service, or permitted to deny the authority of such
2. to do something in representation person to act as his agent, to the prejudice of
or on behalf of another, with the innocent third parties dealing with such
latter’s consent or authority. (Art. person in good faith. [Macke v Camps, 1907]
1868, CC)
2. Nominate: Has its own name.
AGENCY is a relationship which implies a 3. Preparatory: Entered into as a means to an
power in an agent to contract with a 3rd end.
person on behalf of a principal. [Humble 4. Principal: Can stand by itself without need
Oil & Refining v Beu Tex. Cir. App.] of another contract:
5. If gratuitous, unilateral: Creates obligations
AGENCY is personal, representative, and for only one of the parties. If for
derivative in nature. The authority to act compensation, bilateral: Gives rise to
emanates from the powers granted to him reciprocal rights and obligations. (CNPPU/B)
by his principal. His act is the act of the
principal if done within the scope of the Essential elements
authority. [Rallos v Felix Go Chan & Sons
Realty, 1978] 1. Consent, express or implied
2. Object of the contract, which is the
Nature, basis and purposes execution of a juridical act in relation to
third persons;
Since agency is a contract, there must 3. Agent acts as a representative; and
consent, object, and cause. 4. Agent acts within the scope of his
authority. (Rallos v Felix Go Chan & Sons
The purpose of agency is to extend the Realty, 1978)
principal’s personality.
General rule: What a man may do in person, The agent may also be called an attorney,
he may do thru another. proxy, delegate or representative. (Angeles
Exceptions: There are acts which the agent v. PNR, 2006)
may not do for the principal:
1. Personal acts, and Relationship between the parties is fiduciary:
2. Criminal acts. With respect to the property that is subject
matter of the agency, the agent is estopped
Knowledge of the agent is imputed to the from asserting an interest adverse to the
principal. interest of the principal. The agent cannot
Exceptions: 1. Agent’s interests are adverse bind the principal where the agent has an
to those of the principal; adverse interest.
2. Agent’s duty is not to disclose Exception:
information; and 1. If agent acts with the knowledge
3. 3rd person claiming the benefit and consent of both, in which case
of the rule colludes with agent to either party may repudiate the
defraud principal. transaction.
2. If agent is mere intermediary
The theory of imputed knowledge ascribes the with no independent initiative.
knowledge of the agent, to the principal, not
the other way around. The knowledge of the The agent must not use or divulge confidential
principal can’t be imputed to its agent information. After agency terminates, the
(Sunace Internat’l Mgt. Services v. NLRC, agent is no longer under a duty to abstain
2006). from competition and may use general
information (not acquired in violation of his
Characteristics duty as agent).
1. Consensual: Perfected by mere consent. While acting as an agent of his employer, an

employee owes the duty of fidelity and
General Rule: On the part of the principal, loyalty. Being a fiduciary, he can’t solicit his
there must be an actual intention to appoint employer’s customers or co-employees for
or an intention naturally inferable from his himself or for a business competitor of his
words or actions; and on the part of the employer. (Molina v. Pacific Plans, 2006)

AGENCY CIVIL LAW
Acts under the Acts according to his

The rules on service of process make service
principal’s control own method.
on "agent", whether general or special,
and instruction.
sufficient even if agent has limited authority.
An employee of a corporation may not be Principal is liable for Employer not liable
deemed an agent under the above rule unless torts committed by for torts committed
his/her duties are so integrated to the the agent within the by the independent
business that his/her absence or presence scope of his contractor.
won’t toll the business’ operations (Aboitiz authority.
Internat’l Forwarders, Inc. v. CA, 2006).
Determination of existence of agency 3. Lease
1. Designation by parties is not agency lease of service

controlling.
2. Fact of existence: if relations that Based on Based on
constitute agency exist, there is representation. employment.
agency regardless of WON parties
understood the exact nature of the Agent exercises Lessor ordinarily
relation. discretionary performs only
3. No presumption of existence: agency powers. ministerial
must exist as a fact. functions.
Exceptions:
a) When agency arises ipso jure 3 parties: Principal, 2 parties: Lessor
b) To prevent unjust enrichment agent and the 3rd and lessee.
4. Intention of the parties to create person with whom
relationship. As between principal and the agent contracts.
3rd person, agency may exist without
the direct assent of the agent. Relates to Relates more to
commercial or matters of mere
Against the principal, the agent has business manual or
the obligation to determine transactions. mechanical
existence and scope of agency… execution.
Against the agent, the third person
has the obligation to determine
existence and scope of agency…The
person dealing with the agent must agency lease of property
also act with ordinary prudence and
reasonable diligence. If he knows Agent is controlled Lessee is not
or has good reason to believe that by the principal. controlled by the
the agent is exceeding his lessor.
authority, he cannot claim
protection. [Harry Keeler Electric v Agency may involve Lease of property
Rodriguez, 1922] things other than involves property..
property.
Agency vs. similar contracts
Agent can bind the Lessee cannot bind
principal. the lessor.
1. Partnership
a. An agent acts only for his principal; a
partner acts for his partners, the 4. Contract of sale
partnership, and for himself.
b. Parity of standing test: A partnership
agency to sell sale
generally presupposes a parity of standing
between the partners-- equal proprietary Agent receives the Buyer receives the
interest in the capital or property and goods as the goods as owner.
exercises equal rights in the conduct of the principal’s goods.
business.
Agent delivers the Buyer pays the price.
2. Independent contractor proceeds of the sale.
Agent independent Agent can return the Buyer, as a general

contractor object in case he is rule, cannot return
unable to sell the the object sold.
Represents his Employed by the same to a 3rd
principal. employer. person.

AGENCY CIVIL LAW
power of attorney to the

Agent in dealing with Buyer can deal with
agent, who receives it
the thing received is the thing as he
without any objection
bound to act pleases, being the
(Art. 1871, CC); and
according to the owner.
b. The persons are absent:
instructions of his
acceptance isn’t implied
principal.
from the agent’s silence,
except
5. Guardianship 1. When the principal
transmits his power of
atty. to the agent, who
agency guardianship
receives it without any
Agent represents a A guardian objection;
capacitated person. represents an 2. When the principal
incapacitated entrusts to him by
person. letter/telegram a power
of atty. with respect to
Agent is appointed Guardian is the business in which
by the principal and appointed by the he’s habitually engaged
can be removed by court and stands in as an agent, and he
the latter. loco parentis. didn’t reply (Art. 1872,
CC).
Agent is subject to Guardian is not
the directions of the subject to the By special notification: The person appointed
principal. directions of the as agent is considered such with respect to
ward but must act the person to whom it was given. (Art. 1873,
for the benefit of the CC)
latter By public advertisement: The agent is
considered such with regard to any person.
Agent can make the Guardian has no (Art. 1873, CC)
principal personally power to impose
liable. personal liability on 2. As to formalities
the ward.
Gen. Rule: No formal requirements
governing the appointment of an agent.
In agency, the agent acts not on his own Except: When the law requires a specific
behalf but on behalf of his principal. In form, i.e. if the sale of a piece of land or any
assignment, there is total transfer or interest therein is through an agent, the
relinquishment of right by the assignor to the agent’s authority shall be in writing, or the
assignee. (Apex Mining Co. v. Southeast Asia sale is void. (Art. 1874, CC)
Mindanao Gold Mining, Corp., 2006) Note: If the owner himself sells
realty/interest therein, if not made in
Kinds writing, the contract of sale is unenforceable
but subject to ratification (Art. 1403, par.
1. As to manner of creation 2(e), CC).
a. Express: where the agent has been
actually authorized by the 3. As to cause or consideration
principal,
i. Orally, or a. Gratuitous
ii. In writing. (Art. 1869, CC) b. Onerous: there is
b. Implied: where the agency created is compensation. Agency is
deduced from the presumed to be for
i. Acts or conduct of the compensation (Art. 1875, CC)
principal;
ii. Silence or lack of action of the 4. As to extent of business covered
principal;
iii. Principal’s failure to repudiate a. General: comprises all the
the agency; (Art. business of the principal; or
1869, CC) b. Special: comprises one or more
iv. Agent’s acts which carry out specific transactions. (Art.
the agency; or 1876, CC)
v. Agent’s silence or inaction.
(Art. 1870, CC) 2 situations Universal agent: authorized to do all acts that
of implied acceptance from the principal may personally do, and which he
silence – can lawfully delegate to another the power of
a. The persons are present:
if the principal delivers his

AGENCY CIVIL LAW
doing. (Mechem, Sec. 58) iii. the agency authorizes a

general and unlimited
general special management. (Art. 1877,
agent agent CC)
All acts Specific acts b. Couched in specific terms:
Scope of connected in pursuance authorizing only the
authority with the of particular performance of a specific act/s.
business or instructions (Art. 1878, CC)
employment or with
in which he is restrictions Power of attorney: a written authorization to
engaged. necessarily an agent to perform specified acts in behalf of
implied from his principal which acts, when performed,
the act to be shall have binding effect on the principal (2
done. Am. Jur. 30).
Involves No continuity Purpose: Not to define the agent’s
Nature of continuity of of service. authority, but to evidence such
service service. authority to 3rd parties
authorized Interpretation: Strictly construed
Exception: When strict construction will
Extent to May bind his Cannot bind
destroy the very purpose of the power.
which agent principal by his principal
may bind the an act within in a manner
Special power of attorney: an authority
principal the scope of beyond or
granted by the principal to the agent where
his authority outside the
the act for which it is drawn is expressly
although it specific acts
mentioned. (Strong v. Repide) A special
may be which he is
power can be included in a gen. power of
contrary to authorized to
attorney, either by giving authority for all acts
the latter’s perform.
of a particular character or by specifying
special
therein the act/transaction for which a special
instructions.
power is needed. (Tolentino)
Termination Apparent Duty imposed
of authority authority upon the 3rd When special powers are necessary: for acts
does not party to of strict dominion/ownership –
terminate by inquire a. To make payments;
the mere makes b. To effect novations;
revocation of termination c. To compromise, submit questions for
his authority of the arbitration, renounce the right to
without relationship appeal from judgment, waive
notice to the as between objections to venue of actions, or
3rd party. the principal abandon a prescription already
and agent acquired;
effective as d. To effect remission/condonation;
to such 3rd e. To enter into any contract by which the
party, unless ownership of an immovable is
the agency transmitted/acquired;
has been f. To make gifts;
entrusted for g. To loan or borrow money;
the purpose h. To lese any realty to another for more
of contracting than a year;
with such 3rd i. To bind the principal to render some
party. service without compensation;
Construction Merely Strictly j. To bind the principal in a contract of
of principal’s advisory in construed as partnership;
instructions nature. they limit the k. To obligate the principal as a
agent’s guarantor or surety;
authority. l. To create or convey real rights over
immovables;
5. As to authority conferred m. To accept or repudiate an inheritance;
n. To ratify or recognize obligations
a. Couched in general terms: contracted before the agency; and
comprise only acts of o. Any other act of strict dominion. (Art.
administration, even if – 1878, CC)
i. the principal states that he
withholds no power, 6. As to nature and effects
ii. that the agent may execute
such acts as he may a. Ostensible or Representative
consider appropriate, or

AGENCY CIVIL LAW
b. Simple or commission: agent acts in hospital; a representation may be general and

his own name but for the principal’s implied. The second factor focuses on the
account. (Art. 1883, CC) patient’s reliance-whether the plaintiff relied
c. Agency by estoppel: there is no upon the conduct of the hospital or its agent,
agency, and the alleged agent seemed consistent with ordinary care and prudence.
to have apparent or ostensible, but not (Nogales v. Capitol Medical Center, 2006)
real, authority to represent another.
Apparent authority/doctrine of ostensible
agency/agency by estoppel, imposes liability
apparent authority by
because of the actions of a principal/
authority estoppel
employer in misleading the public into
Though not actually Where the principal, believing that the relationship or the authority
granted, principal by his negligence, exists. The question is whether the principal
knowingly permits permits his agent to has by his voluntary act placed the agent in
or holds out the exercise powers not such a situation that a person of ordinary
agent as possessing granted to him, prudence, conversant with business usages
the necessary even though the and the nature of the particular business, is
powers to act in a principal may have justified in presuming that such agent has
certain way. no notice or authority to perform the particular act in
knowledge of the question. In cases where it can be shown that
conduct of the a hospital, by its actions, has held out a
agent. particular physician as its agent and/or
employee and that a patient has accepted
treatment from that physician in the
Implied Agency Agency by reasonable belief that it is being rendered in
Estoppel behalf of the hospital, then the hospital will be
liable for the physician’s negligence.
1. There is actual 1. There is no actual
(Professional Services Inc v. Agana, 2007)
agency; thus agency; thus
with rights & without rights &
d. Agency by Ratification
duties as an duties as an agent.
agent.
Conditions for ratification:
2. Principal alone 2. If caused by the 1. The principal must have
is liable. principal, he is capacity and power to ratify.
responsible. If 2. He must have had knowledge of
caused by the agent, material facts.
he is responsible. 3. He must ratify the acts in its
Provided, 3rd person entirety.
in good faith. 4. The act must be capable of
ratification.
5. The act must be done in behalf
One professing to act as agent for another is
of the principal.
estopped to deny his agency both as against
his asserted principal and third persons
Ratification need not be expressed to the
interested in the transaction which he
agent or 3rd party. Before ratification, the 3rd
engaged in. (Angeles v. PNR, 2006)
party may revoke the unauthorized contract.
In general, a hospital isn’t liable for the
Effects of ratification:
negligence of an independent contractor-
1. With respect to the agent: It
physician. The exception is if the physician is
relieves the agent from liability. He
the hospital’s “ostensible” agent.
may also recover compensation.
Under the doctrine of apparent authority a
2. With respect to the principal: He
hospital can be held vicariously liable for the
assumes responsibility for the
negligent acts of a physician, WON the
unauthorized act, as fully as if the
physician is an independent contractor, unless
agent had acted under original
the patient knows, or should’ve known that
authority; but he is not liable for acts
the physician is an independent contractor.
outside the authority approved by his
This doctrine involves 2 factors to determine
ratification.
liability. The first factor focuses on the
3. With respect to 3rd persons: They
hospital’s manifestations, whether the hospital
are bound by ratification. They cannot
acted in a manner which would lead a
question agent’s authority.
reasonable person to conclude that the
individual who was alleged to be negligent
was an employee or agent of the hospital. The Ratification Estoppel
hospital need not make express
representations to the patient that the Rests on intention. Rests on prejudice.
treating physician is an employee of the

AGENCY CIVIL LAW
Obligation of person who declines an agency:

Affects the entire Affects only
under equity he is still bound to observe bono
transaction from the relevant parts of
paterfamilias in the custody and preservation
beginning. the transaction.
of the property forwarded to him by the
The substance of The substance of owner. However, the owner must act as soon
ratification is estoppel is the as practicable either by appointing an agent or
confirmation of principal’s by taking charge of the property. (Art. 1885,
unauthorized acts or inducement to CC)
conduct after it has another to act to
been done. his prejudice. When agency shouldn’t be carried out: if its
execution would manifestly result in
loss/damage to the principal (Art. 1888, CC).
7. Kinds of principal b) To act within the scope of

authority
a. Disclosed
b. Partially disclosed third is unaware of The agent must act within the scope of his
the principal’s identity. authority (Art. 1881, CC): authority is the
c. Undisclosed power to act within the scope of his
assignment on his principal’s behalf with
General rule: If the principal is binding effect on the latter. But the agent isn’t
undisclosed, the agent is directly liable to deemed to have exceeded the limits of his
the person with whom he had contracted authority should he perform the agency in a
as if the transaction were his own. (Art. manner more advantageous to the principal
1883, CC) (Art. 1882, CC) since he’s authorized to do
Rationale: There is no representation. such acts as may be conducive to the
Exception: When the contract involves accomplishment of the agency’s purpose (Art.
things belonging to the principal, in 1881, CC).
order to protect 3rd persons against
possible collusion between the agent c) To advance the necessary funds
and the principal. (Art. 1883, CC)
Obligation to advance funds: when the
The agents who made a contract in their contract stipulates that the agent shall
own names may sue the third person. advance the necessary funds. (Art. 1886,
(Behn Mayer & Co. v. Banco Español-Fil.) CC)
Basis: principal’s obligation to
The undisclosed principal can’t sue the reimburse the agent
third person on a contract concluded by Exception: insolvent principal (Art.
the agent in his own name (Smith Bell & 1886, CC)
Co. v. Sotto Matti). His recourse is against
the agent. d) To act in accordance with
instructions
OBLIGATIONS OF THE AGENT When departure from instructions is justified:

a. In sudden emergencies
a) To carry out the agency he b. If there are ambiguous instructions
accepted c. Insubstantial departures
Acceptance of agency: person is free to Absence of instructions: agent shall exercise

refuse the agency, but once he accepts he’s the diligence of a good father of a family as
bound to carry it out (Art. 1884, CC) in required by the nature of the
accordance with its terms in good faith and business/transaction (Art. 1888, CC)
following the principal’s instructions.
Authority Instructions
Obligation to answer for damages: the agent The sum total of the Only a private rule
is liable for damages suffered by the principal powers committed or of guidance to the
due to his non-performance (Art. 1884, CC). permitted to the agent
agent
Obligation to finish business upon principal’s Relates to the Refers to the
death: if delay will entail any danger to the subject manner or mode of
subject of the agency/principal, the agent (biz/transaction) agent’s action with
must finish the transaction/business already with which the agent respect to matters
begun on the principal’s death (Art. 1884, is empowered to within the permitted
CC). This is an exception to the gen. rule that deal or act. scope of action.
death extinguishes agency.

AGENCY CIVIL LAW
Limits of authority Binding only on the

operate vs those principal and agent Effects of Substitution:
who have/are a. Substitution prohibited – all the
charged with substitute’s acts are void (Art. 1892,
knowledge of them. CC)
b. Substitution authorized – agent is
e) To be loyal released from responsibility unless
substitute is notoriously incompetent
Obligation not to prefer own interest: agent is or insolvent (Art. 1892, CC).
liable for damages if, there being a conflict of - if the substitute is the one designated
interests, he prefers his own (Art. 1889, by the principal, agent is absolutely
CC). exempted
Exception: c. Substitution not authorized, not
a. The principal waives the benefit of the rule, prohibited – valid if beneficial to the
provided he does so with full knowledge of the principal
facts. - if caused damage to principal, agent
b. The interests of the agent are superior. is responsible for substitute’s acts
(Art. 1892, CC) and principal with
f) To borrow money right of action against substitute (Art.
1893).
a. Agent empowered to borrow money:
agent may himself be the lender at Relation among the principal, agent and sub-
current rate of interest (Art. 1890, CC), agent:
for there is no danger of damage to a. If sub-agent is appointed by the agent on
principal. the agent’s sole account, the sub-agent is a
b. Agent authorized to lend money: needs stranger to the original principal.
the principal’s consent (Art. 1890, CC) b. If sub-agent is appointed by the agent with
for he may be a bad debtor. the principal’s authority, the relation of
principal-agent generally exists between the
g) To render accounts and original principal and the sub-agent.
deliver things received by virtue
of the agency Effect of death of the original agent:
a. If the authority of the sub-agent proceeds
Obligation to render accounts: agent’s duty to from the principal- not terminated.
account for and deliver to the principal all b. If the sub-agent is a substitute for, acts
money and property received by virtue of the under the authority of, and is accountable to,
agency (Art. 1891, CC). If he fails to do so the agent, the sub-agent’s authority is
or uses the money/property for his own use, terminated even if the power of substitution is
the agent is liable for estafa (Art. 315, RPC). given in the original power.
Stipulation exempting the agent from this
duty is void (Art. 1891, CC). Applying the law to the SPA executed by
Rubio in favor of his daughter Llamas, it is
Inapplicability: clear that she isn’t prohibited from appointing
a. The agent or broker acted only as a a substitute. By authorizing Lim to sell the
middleman (Domingo v. Domingo) subject properties, Llamas merely acted
b. The agent or broker informed the principal within the limits of the authority given by her
of the gift or bonus or profit he received from father, but she will have to be "responsible for
the vendee, and the principal did not object. the acts of the sub-agent," among which is
c. A right of lien exists in favor of the agent. precisely the sale of the subject properties in
d. Solutio indebiti favor of respondent. (Escueta v. Lim, 2007)
h) To be responsible for i) To pay interest

substitutes
2 cases under Art. 1896, CC:
Sub-agent: Person to whom the agent a. Sums belonging to the principal applied to
delegates, as his agent, the performance of an agent’s own use: agent liable for interest as
act for the principal which the agent has been compensation/indemnity from the day on
empowered to perform through his which he did so, without prejudice to criminal
representative. (Restatement of the Law liability (Art. 315, RPC)
on Agency, Sec. 5) b. Agent owes sums even after the end of the
agency: agent liable for interest from the date
Power to appoint sub-agent/substitute: unless the agency is extinguished.
prohibited by the principal, the agent may
appoint one (Art. 1892, CC). The principal Agent is bound to deliver the money hence,
has a right of action against both the agent demand unnecessary. (Art. 1891, CC)
and substitute (Art. 1893, CC).

AGENCY CIVIL LAW
j) To answer for his

commission agent Broker
fraud/negligence
Engaged in the Has no custody or
Liability: that the agency is or isn’t gratuitous
purchase and sale, possession of the
will be considered by the court in fixing the
for a principal, of thing he disposes;
liability of the agent (Art. 1909, CC)
personal property merely acts as an
which has to be intermediary
k) Factor/Commission agents
placed in his between the sellers
possession and and the buyer.
Factor/commission agent: one whose business
disposal.
is to receive & sell goods for a commission,
and is entrusted by the principal with its
Has a relation with Maintains no
possession (Mechem on Agency)
the principal (buyers relation with the
thing which he
or sellers) and the
Obligations of a commission agent: purchases or sells.
property which is
a. Responsibility for goods received as
the object of the
described in the consignment – to avoid
transaction.
liability, make a written statement of the
damage and deterioration of the goods [Pacific Commercial v Yatco, 1939]
upon receiving them (Art. 1903, CC)
b. If handling goods of same kind and
mark with different owners – distinguish LIABILITIES OF THE AGENT
them by countermarks and designate the
goods owned by each principal (Art.
When liable, not liable
1904, CC)
c. Sale on credit – only if with principal’s
Gen. rule: an agent who acts as such isn’t
express or implied consent (Art. 1905,
personally liable to the party with whom he
CC). If without authority, principal with
contracts (Art. 1897, CC)
2 alternatives:
1. require payment in cash – any
Exceptions:
interest/benefit from the sale shall
1. The agent acts in his own name (Art.
go to the agent
1883, CC): he is directly bound in favor of
2. ratify the sale
the person with whom he contracted.
- if authorized, shall be deemed to have
Exception: if the contract involves
been made on a cash basis if agent fails
things owned by the principal. (Art.
to inform the principal of such sale and
1883, CC)
of the names of the buyers (Art. 1906,
2. The agent expressly binds himself
CC)
(Art. 1897, CC): he obligates himself
d. If agent receives a guarantee
personally and by his own act.
commission – agent bears the risk of
3. The agent exceeds his authority
collection (Art. 1907, CC). The
without giving the other party sufficient
guarantee commission is paid to the
notice of his powers (Art. 1897, CC): the
agent in addition to the ordinary
contract is unenforceable against the
commission agreed upon.
principal; for depriving the third party of
e. To collect the principal’s credits when
any remedy against the principal, the
they are due & demandable – agent is
agent is liable. (NPC v. Nat’l Merchandising
liable for damages if he fails to do so,
Corp.)
unless he can show that the credit is
4. The agent exceeded the scope of his
uncollectible despite the exercise of due
authority and undertook to secure
diligence (Art. 1908, CC). This
principal’s ratification (Art. 1898, CC).
exception doesn’t apply if there’s a
guarantee commission.
That the agent has also bound himself to pay
the debt doesn’t relieve the principal, for
ordinary agent commission agent whose benefit the debt was incurred, from
liability. The agent’s individual liability
Acts for and in Acts in his own constitutes a further security in the creditor’s
behalf of the name or in that his favor and doesn’t affect/preclude the
principal. principal. principal’s liability. [Tuason v Orozco, 1906]
Need not have Must be in Art. 1897 presents 2 instances when an agent
possession of the possession of the becomes personally liable to a third person:
goods of the goods of the when he expressly binds himself to the
principal. principal. obligation, and when he exceeds his authority.
In the last instance, the agent can be held
liable if he does not give the third party
sufficient notice of his powers. In case of

AGENCY CIVIL LAW
excess of authority, the law doesn’t say that a of attorney as written, even if the agent in
third person can recover from both the fact exceeded the limits of authority based on
principal and the agent. (Eurotech Industrial an understanding between him and the
Technologies Inc. v. Cuizon, 2007) principal (Art. 1900, CC).
Though the entrustee is a corporation, the law Presentation of power of attorney or

specifically makes the officers/employees instructions: may be required by 3rd persons
responsible for the offense, without prejudice (Art. 1902, CC). As a rule, a 3rd person deals
to the civil liabilities of such corporation with an agent at his peril. But he can’t be
and/or board of directors. Such bound by private/secret orders and
officers/employees are vested with the instructions of the principal (Art. 1902, CC).
authority and responsibility to devise means
necessary to ensure compliance with the law Liability of 2 or more agents
and, if they fail to do so, are held criminally
accountable. The principle applies to those Gen. rule: joint liability
corporate agents who themselves commit the Except: if solidarity is expressly stipulated,
crime and to those, who, by virtue of their solidary liability (Art. 1894, CC) for:
managerial positions or other similar relation 1. non-fulfillment of the agency; or
to the corporation, could be deemed 2. fault/negligence of fellow agents.
responsible for its commission, if by virtue of Exception to exception: when some agents
their relationship to the corporation, they had acted beyond the scope of their authority,
the power to prevent the act. (Ching v. Sec. innocent agents aren’t liable. (Art. 1895,
of Justice, 2006) CC)
Where agency exists, the third party's liability

on a contract is to the principal and not to the
OBLIGATIONS OF THE PRINCIPAL
agent. However, where an agent is
constituted as an assignee, the agent may, in
1. To comply with the obligations
his own behalf, sue on a contract made for his
contracted by the agent
principal. (Angeles v. PNR, 2006)
Principal is bound: he must comply with all
Effect where 3rd person aware of limits of
the obligations arising from the agent’s
power: if agent exceeded the scope of his
authorized acts. If the agent acted beyond his
authority and the principal didn’t ratify the
authority, the principal is bound if he ratifies
contract, the contract is unenforceable against
the contract (Art. 1910, CC).
the principal, and void between the agent and
the third person. (Art. 1898, CC)
Principal is estopped: though the agent
1. Agent promised to secure the
exceeded his authority, the principal is liable if
principal’s ratification and failed –
he allowed the former to act as if he had full
agent is liable. (Art. 1898, CC)
powers (Art. 1911, CC).
2. Contract ratified – principal is liable.
If 2 persons contract simultaneously with
Effect of agent’s ignorance: if the agent acted
agent & principal for the same thing:
in accordance with the principal’s orders, the
a. Contract of prior date prevails.
latter can’t use the agent’s ignorance as to
b. If applicable, follow the rule on double
circumstances where he himself was/ought to
sales in Art. 1544, CC. (Art. 1916,
have been aware. (Art. 1899, CC) The
CC)
principal is liable.
Liability to 3rd persons, if agent & principal
When 3rd person can’t use as a defense the
contracted separately:
agent’s lack of authority:
a. Agent in good faith – principal is liable
1. The principal has ratified the contract;
for damages.
or
b. Agent in bad faith – agent is liable.
2. Principal signified his willingness to
(Art. 1917, CC)
ratify. (Art. 1901, CC)
2. To advance the necessary
Ratification: if the agent exceeds his
sums and reimburse the agent
authority, the principal isn’t bound unless he
ratifies it. (Art. 1910, CC) Without
Obligation to advance funds: the principal
ratification, the agent is liable.
must advance to the agent, upon his request,
the sums necessary for the execution of the
When agent acts within scope of authority
agency. (Art. 1912, CC)
Within the scope of authority: for third Obligation to reimburse: if the agent
persons, an act is within the scope of advanced the sums necessary, these must be
authority if it’s within the terms of the power reimbursed by the principal with interest from

AGENCY CIVIL LAW
the day the advance was made, even if the It would be in the height of injustice to permit
business wasn’t successful (Art. 1912, CC). the principal to terminate the contract to the
broker’s prejudice when he had already
Exceptions to the obligation of advancement/ reaped the benefits of the broker’s efforts.
reimbursement: (Lim v. Saban)
a. If the agent acted in contravention
of the principal's instructions, unless In case of double agency:
principal derives benefits. a. If both principals have knowledge of
b. When the expenses were due to the the double employment, the agent can
fault of the agent. recover from both of the principals.
c. When the agent incurred them b. If both principals have no knowledge of
knowing that an unfavorable result the double employment, the agent
would ensure, if the principal was can’t recover from either.
unaware thereof. c. If the 2nd employer has knowledge of
d. When it was stipulated that the the 1st employment, both he and the
expenses would be borne by the agent, agent are guilty, and an executory
or that the latter would be allowed only contract entered into in fraud of the
a certain sum. (Art. 1918, CC) 1st employer is unenforceable.
Agent’s right to retain object of agency in Brokers: One who negotiates contracts
pledge: if the principal fails to reimburse the relative to property in behalf of others and for
agent (Art. 1914, CC). But agent isn’t a fee.
entitled to the excess in case the thing was
sold to satisfy his claim, and the proceeds are Since a brokerage relationship is essentially a
more than his claim (Arts. 2115, 2121, CC). contract of agency, principles of contract law
Also he must possess the thing lawfully in his apply. Since the principals of the broker are
capacity as agent (2 C.J. 457). generally undisclosed, the broker is personally
liable. Hence, petitioner had to advance the
When principals solidarily liable for the payments for respondent’s trades. Brokers
agency’s consequences: have a right to be reimbursed for sums
a. There are 2/more principals; advanced by them. (Abacus Securities Corp.
b. They all concurred in the v. Ampil, 2006)
appointment of the same agent;
and If a broker isn’t efficient in procuring cause in
c. The agent is appointed for a bringing about the sale, he isn’t entitled to
common compensation. (Prats v. CA)
transaction/undertaking. (Art.
1915, CC)
EXTINGUISHMENT OF AGENCY
3. To indemnify the agent for
damages
Quick glance: Ways to extinguish agency
Obligation to indemnify agent: for damages
which the execution of the agency has caused Mode Way of
the agent, so long as the agent isn’t at fault extinguishing
(Art. 1913, CC). This is based on fairness. 1. By the parties’ a. Principal’s
subsequent acts revocation
Note: Arts. 1914-1915 are applicable here.
4. To pay the agent’s b. Agent’s withdrawal

compensation
2. By operation of law a. By the
Presumed for compensation: the principal principal’s/agent’s
must pay the compensation – - death
a. agreed upon, or
b. the reasonable value of the services. - civil interdiction
- insanity, or
When agent is entitled to compensation: only
after he has completed/substantially - insolvency
completed his obligation.
Agent can’t be deprived of agreed commission b. By the

by the principal by dealing directly with the firm’s/corporation’s
buyer. The principal’s act is unfair as would dissolution
amount to bad faith. (Infante v. Cunanan) 3. By agreement a. Accomplishment of
object/purpose

AGENCY CIVIL LAW
faith, breach of confidence, or betrayal

of trust. [Coleongco v Claparols, 1964]
b. Expiration of
period
Irrevocability of the contract cannot
4. Other modes a. Other modes of affect 3rd persons and is obligatory only
extinguishment of on the principal who executed the
obligations agency. [New Manila Lumber v Republic,
1960]
b. Changes in law Principal’s liability for damages despite

revocation of agency:
1. Agency with a fixed period: principal
c. Changes in liable due to wrongful discharge of
conditions agent before end of the period.
2. No period fixed: principal liable if
the agent can prove the former acted
d. War in bad faith.
Effect of revocation wrt 3rd persons:

Modes of extinguishment (Art. 1919, CC) (Arts. 1921-1922, CC)
1. By the subsequent acts of the parties Agency to contract Agency to contract

either by mutual consent or unilaterally. with specific with general
persons public
a. By the principal’s revocation.
Won’t prejudice Won’t prejudice
Revocation: termination by the 3rd persons until those in good faith
subsequent acts of the principal. May be notice is given & w/o knowledge.
express or implied. If the agent’s them.
authority is in writing, the principal may Notice must be Notice may be
compel him to return this document personal. personal.
(Art. 1920, CC).
Gen. rule: principal may revoke the The principal has a duty to give actual
agency at will (Art. 1920,CC). notice of the revocation of the agency to
Except (BIW): 1. the revocation is done third parties. [La Compania General de
in bad faith (Danon v. Brimo); Tobacos v Diaba, 1911]
2. the agency is coupled with an
interest, such as when – As to the agent: Express notice is always
a. a bilateral contract depends necessary. Revocation without notice to
on it; the agent will not render invalid an act
b. it’s the means of fulfilling an done in pursuance of the authority.
obligation already contracted;
c. a partner is appointed As to 3rd persons: Express notice is
manager of a partnership and necessary. Insofar as 3rd parties acting
is removed unjustifiably. (Art. in good faith and without knowledge of
1927, CC) revocation, acts of the agent are deemed
3. the principal waived his right valid.
to revoke (New Manila Lumber As to former customers: Actual
Co. v. Rep.) notice must be given to them
because they always assume the
Agency coupled with an interest can’t be continuance of the agency
terminated by the sole will of the relationship.
principal since third persons are As to other persons: Notice by
involved, though it’s revocable after the publication is enough.
interest ceases. The interest of the agent
must be in the subject matter of the Revocation by appointment of a new
power conferred, and not merely in the agent: effective when notice is given to
exercise of the power as it entitles him the former agent (Art. 1923, CC). The
to compensation. (Del Rosario v. Abad) 2 agencies must be incompatible. This is
an implied revocation.
An agency coupled with interest may be
revoked when the agent acts to defraud Revocation by direct management by
the principal. The irrevocability of the principal: when the principal deals
power of attorney may not be used to directly with 3rd persons (Art. 1924,
shield the perpetration of acts in bad CC). This is an implied revocation.

AGENCY CIVIL LAW
Revocation if with 2/more principals: one 2. wrt acts done by the agent who didn’t
of the principals may revoke the power know of the principal’s death (Art.
of attorney without the others’ consent 1931, CC)
(Art. 1925, CC). 3. wrt business already begun when the
principal died, if delay would cause
Partial revocation of gen. power: a gen. danger (Art. 1884, CC).
power is revoked by a special one wrt
the special matter involved in the latter An act done by the agent after the
(Art. 1926, CC). principal’s death is valid and effective
only if the agent and the 3rd person knew
b. By the agent’s withdrawal. of the death. The knowledge of the 2
must concur; otherwise the agent’s act
The agent may withdraw at will, subject void and unenforceable. (Rallos v. Go
to the contractual obligations to the Chan & Sons)
principal (fixed period of agency,
purposes not accomplished). Agent’s death: his heirs are obligated to
notify the principal and to adopt such
Right to withdraw: based on the measures as the circumstances may
prohibition against involuntary servitude demand for the principal’s interest (Art.
(Art. III, Sec. 18, 1987 1932, CC). But they cannot continue
Constitution). the agency.
1. without just cause: agent with duty Exceptions:
to give due notice to the principal a. agency by operation of law
and to indemnify the latter, should b. agency coupled with an interest in the
he suffer damages due to the subject matter of the agency
withdrawal (Art. 1928, CC)
2. with just cause: if due to
impossibility of continuing with the b. By the dissolution of the
agency without grave detriment to firm/corporation.
himself (Art. 1928, CC), or due to
a fortuitous event (Art. 1174, 3. By agreement.
CC), the agent can’t be held liable.
a. By the accomplishment of the
Obligation to continue to act: agent must agency’s object/purpose.
continue to act until the principal has
had reasonable opportunity to take the b. By the expiration of the period of
necessary steps to remedy the situation the agency.
caused by the withdrawal (1929, CC).
Implied renunciation: Other Modes

1. agent conducts himself in a way
incompatible with his duties. The modes enumerated in Art. 1919 are
2. agent abandons the object of agency those peculiar to agency. The list isn’t
and acts for himself in committing a exclusive.
fraud upon the principal.
3. files a complaint against the principal Other modes:
and adopts an antagonistic attitude 1. Modes of extinguishment of obligations
towards him (Valera v. Velasco). (Art. 1291, CC)
2. Changes in law affecting the subject
2. By operation of law. matter/transaction involved in the
agency (2 Am. Jur. 75)
a. By the principal’s/agent’s death, 3. Changes in conditions not anticipated
civil interdiction, insanity or by the parties (2 Am. Jur. 61)
insolvency. Except: a. the original circumstances
are restored within a reasonable period
As there’s an integration of the of time
principal’s personality into the agent’s, b. agent has reasonable doubts
it’s impossible for agency to continue as to whether the principal
once the death of either is established. would want him to act, his
(Rallos v. Felix Go Chan & Sons) authority won’t be terminated if
Except: 1. the agency is constituted in he acts reasonably
the common interest of the principal and c. the principal and agent are in
agent, or in the interest of a 3rd person close daily contact, and the
who accepted the stipulation in his favor agent knows that the principal
(Art. 1930, CC). is aware of the change and

AGENCY CIVIL LAW
doesn’t give him new

instructions
4. Outbreak of war
Presumption of continuance of agency: once

shown to have existed, agency is presumed to
continue, without anything showing
termination.

PARTNERSHIP CIVIL LAW
Partnership
TABLE OF CONTENTS
Section 1. Nature; Creation of a Partnership 211
Section 2. Classification of Partnerships and Partners 212
Section 3. Obligations of Partners 214
Section 4. Obligations of Partnerships 217
Section 5. Rights of Partners 218
Section 6. Rights of Partnerships 220
Section 7. Dissolution and Winding Up 220
Section 8. Settlement of Accounts Between Partners 223
Section 9. Limited Partnership 223
Section 10. Limited Partner 225

NATURE; CREATION OF A 2. Co-ownership and sharing of gross returns

don’t establish a partnership, by itself
PARTNERSHIP 3. Prima facie evidence of partnership: receipt
of a share of the business profits
Essential Features Except if received in payment as:
a. A debt by installment
Contract of Partnership: b. Wages or rent
a. 2/more persons bind themselves c. An annuity
b. to contribute money, property, or d. Interest on a loan
industry to a common fund, e. Consideration in a sale
c. with the intent of dividing the profits
among themselves. (Art. 1767, CC) For tax purposes, a co-ownership of inherited
properties is automatically converted to an
Essential features: unregistered partnership when these are used
1. There must be a valid contract as a common fund with intent to produce
2. The parties must have legal capacity profits for the heirs in proportion to their
3. A mutual contribution of money, property, shares in the inheritance as determined in a
or industry to a common fund project of partition. (Oña v. CIR)
4. Has a lawful object (Art. 1770, CC)
5. The primary purpose is to obtain profits Whether a partnership exists is a factual
and divide the same among the parties matter. Where circumstances taken singly
may be inadequate to prove the intent to form
Characteristics: a partnership, the collective effect of these
1. Fiduciary circumstances may be such as to support a
2. Nominate finding of the existence of the parties’ intent.
3. Consensual (Heirs of Tan Eng Kee v CA)
4. Bilateral/multilateral
5. Principal Distinctions
6. Onerous
7. Preparatory Partnership Corporation
8. With legal personality (Art. 1768, CC)
Created by mere Created by
9. Profit oriented
agreement of the operation of law
parties;
The partners can’t be held liable for the
partnership’s obligations unless it is shown May be organized Requires at least 5
that the legal fiction of a different juridical by only two incorporators;
personality is being used for fraudulent, persons
unfair, or illegal purposes (Aguila v CA).
Juridical Personality
personality commences from
Principle of delectus personae: no one can be
commences from SEC’s issuance of
a partner without the consent of all the
the moment of the certificate of
partners.
execution of the incorporation
contract of
Form of Contract partnership
General Rule: No special form is required May exercise any Can exercise such
(Art. 1771, CC) power authorized powers expressly
Exceptions: by the partners as granted by law or
1. Where immovable property or real rights long as it is not incident to its
are contributed (Art. 1771, CC) – written in contrary to law, existence
a public instrument with a signed inventory of etc.
the contributions. (Art. 1773, CC) If no agreement as Power to do
2. Where the capital is at least P3,000, in to mgt. - every business is vested
money or property – need a public partner is an agent in the board of
instrument, which must be recorded in the of the partnership directors/ trustees
SEC. (Art. 1772, CC) But a partnership has a
A partner as such Suit against the
juridical personality even if requirement is not
may sue a co- board/director who
complied with.
partner who mismanages must
mismanages be brought in the
Rules to determine the existence of a
corp.’s name
partnership (Art. 1769, CC)
1. General Rule: Persons who are not partners

to each other are not partners as to third
persons.
exception: partnership by estoppel.

Has no right of Has right of shares and

succession succession any
stipulation to
The partners are The stockholders the contrary
liable personally are liable to the is void.
and subsidiarily for extent of the
partnership debts shares subscribed A corp. can’t enter into a partnership contract.
by them This is based on public policy, since in a
Based on delectus Not based on partnership the corporation would be bound
personam delectus personam by the acts of persons who aren’t duly
appointed and authorized agents and officers,
May be established May not be formed which would be inconsistent with the policy
for any period of for a period that the corporation shall manage its own
time stipulated exceeding 50 affairs, separately and exclusively. (SEC
years OPINION to Antonio Librea dated Feb.
May be dissolved May be dissolved 29, 1980)
at anytime by the only with the
will of any or all consent of the The main distinction is that the partnership
partners state contemplates a general business with some
degree of continuity, while the joint adventure
Governed by the Governed by the
is formed for the execution of a single
Civil Code Corporation Code
transaction, and is of a temporary nature.
Under Phil. law, a joint adventure is a form of
partnership. Although a corporation cannot
Partnershi Co- enter into a partnership contract, it may
p ownership
engage in a joint venture (Heirs of Tan Eng
Creation Always Gen., created Kee v CA).
created by a by law, may
contract exist even
without a
contract
CLASSIFICATION OF
Juridical Has a Has no PARTNERSHIPS AND PARTNERS
Personality separate, juridical
distinct personality Kinds of Partnerships
juridical
personality
1. As to nature
Purpose Realization Common a. Commercial/trading
of profits enjoyment of b. Professional
a thing or 2. As to duration
right
a. With a fixed term - (Art. 1830[1a],
Duration No limitation Property can’t CC) unless continued by some/all the
upon the be undivided partners (Art. 1785, CC)
duration is for more than
b. At will (Art. 1785, CC)
set by law 10 years
3. As to legality of existence
Transfer of Need A co-owner a. De jure – has complied with all the
Interests unanimous can dispose necessary requisites for lawful
consent of of his share
establishment (Arts. 1772, 1773,
partners to without the
CC)
make consent of
assignee of the others b. De facto – failed to comply with the
interest a requisites
partner 4. As to representation to others
Power to A partner A co-owner
a. Ordinary/real – really exists between &
act with may bind can’t among the partners themselves and as
Third the represent the to third persons
Persons partnership co-ownership b. Ostensible/by estoppel – deemed one
Dissolution Death or Death or
only in relation to transacting third
incapacity of incapacity of persons (Art. 1825, CC)
a partner a co-owner 5. As to publicity
dissolves the doesn’t a. Open – known to the public
partnership dissolve the b. Secret
co-ownership 6. As to its object
Representa There is There is no a. Universal (Art. 1777, CC)
-tion mutual mutual i. As to all present property (Art. 1778,
agency agency CC)
Profits Must be Must always ii. As to profits (Art. 1780, CC)
stipulated depend upon b. Particular (Art. 1783, CC)
upon proportionate 7. As to partners’ liability

a. General – liable pro rata (Art. 1816, unless expressly permitted (Art.
CC) or solidarily (Arts. 1822-1824, 1789, CC)
CC) 8. As to liability
b. Limited (Art. 1843, CC) a. General/Real – liability extend to
separate property (Art. 1776, CC)
Types, Universal Partnership: b. Limited/Special – only to extent of
contribution (Art. 1843, CC)
All present All profits c. Capitalist-Industrial
property 9. As to management
All present property Property owned by a. Managing – manages the firm’s affairs
actually owned by the partners when b. Silent – doesn’t participate in
partners are the partnership was management
contributed  formed continue to c. Liquidating – winds up the affairs after
become common pertain to them  dissolution
property of the only the usufruct 10. Other special classifications
partnership & the becomes common a. Subpartner – related only to the
partners. property regular partner (Art. 1804, CC)
Only profits from the All profits acquired b. Retiring – withdraws/retires from the
property contributed through partners’ partnership
become common industry/work
property; other become common Industrialist Capitalist
profits may, by property. Partner Partner
stipulation, be
Contribution Contributes Contributes
considered as his industry money or
common property. property
Prohibition Cannot Can’t engage
Who are prohibited from entering into
to engage in engage in any in the same or
universal partnerships: those prohibited from other business for similar
giving donations (Art. 1782, CC), such as: business himself enterprise
a. legally married, common law spouses (Art.
Profits Receives a Shares in
87, FC)
just and profits
b. parties guilty of adultery/concubinage equitable according to
c. criminals convicted for the same offense in share agreement
consideration of the same thereon; if
d. a person & a public officer (or his wife, none, pro rata
descendants, ascendants) by reason of his to his
office (Art. 739, CC) contribution
Losses Exempted as 1. stipulation
Kinds of Partners to losses as as to losses
between
1. As to membership partners but 2. if none, the
a. Real – a contributing member it is liable to agreement as
b. By estoppel/Quasi-partner – not really a 3rd persons to profits
without
partner but represents himself as one
prejudice to 3. if none, pro
2. As to continuation of business affairs after reimburseme
dissolution rata to
nt from the contribution
a. Continuing capitalist
b. Discontinuing partners
3. As to value of contribution
a. Majority
b. Nominal Partnership and Partner by Estoppel
4. As to nature of membership
a. Original Partner by estoppel: the representation of
b. Incoming being a partner is done by 1 person only
5. As to state of survivorship Partnership by estoppel: the representation
a. Surviving – continues to be a partner involves several persons pretending to be a
after dissolution due to death of a firm
partner
b. Deceased Requisites of “Partner By Estoppel”:
6. As to effect of expulsion 1. The person –
a. Expelled (Art. 1840[6], CC) a. represents himself as a partner of an
b. Expelling existing partnership when he isn’t, or
7. As to nature of contribution b. consents to another representing him to
a. Capitalist – contribute money or anyone as a partner in an existing
property partnership, or
b. Industrial – contribute industry/labor.
He can’t engage in business for himself

c. consents to another representing him to facto and the general provisions of the Civil
anyone as a partner with 1/more persons not Code applicable to all partnerships apply to it.
actual partners.
2. Third person relied on the Corporation by estoppel: all persons are liable
misrepresentation, unaware of the deception. as general partners (Sec. 21, Corp. Code). A
3. On the faith of the misrepresentation, the de facto partnership is created.
3rd person gave credit to the actual/apparent
partnership.
4. The alleged partner can’t disallow liability OBLIGATIONS OF PARTNERS
by claiming he isn’t actually a partner. He is
bound as a “partner” though he actually isn’t.
(Art. 1825, CC) A. Contribute
Partnership by estoppel: composed of the 1. Obligation with respect to contribution

alleged partner and the partnership itself. It of property
arises when all the members of the existing
partnership consented to the representation Partner is a debtor: for whatever he had
(Art. 1825, CC). The person becomes an promised to contribute thereto (Art. 1786,
agent of the existing firm and his CC)
act/obligation binds the firm.
Partner is a warrantor wrt contributions of
No real partnership is created by estoppel. It’s specific & determinate things: he’s bound to
only insofar as 3rd persons are involved and warrant vs. eviction (Art. 1786, CC)
for the purpose of protecting them that the
Liability for undelivered fruits: if the property
principal of estoppel is recognized.
is fruit-producing, and the fruits weren’t
When Situation Who are
delivered at the execution of the contract or
liability liable any specified time, the partner will be liable
is: for the value of these fruits (Art. 1786, CC).
Pro rata no all those person No demand is necessary.
existing represented who
partner as partners represente Remedy for breach of warranty: partnership
ship consented to d/was may recover indemnity from contributing
the represente partner. If the partnership wouldn’t have been
representatio d as a
constituted had it not been for the
n or partner
and all
contribution, the other partners may dissolve
existing not all of the those who the firm (11 Planiol & Ripert, 276)
partner partners consented
ship consented Other duties of contributing partners:
Separat no only some of person a. to preserve the property with the diligence
e existing those who of a good father of a family (Art. 1163, CC)
partner represented represente b. to indemnify the partnership for damages
ship as partners d/was caused to it by delay in contribution of
consented to represente
property (Art. 1170, CC)
the d as a
representatio partner
n and all
2. Appraisal of goods or property
Existin or those who contributed
g none of the consented
partner partners Rule when contribution is in goods: the
ship consented amount must be determined by proper
appraisal at the time of contribution.
He who contracts with a partnership as such is a.Comply if mode of appraisal is agreed
estopped in a suit by the partnership against upon
him growing out of such contract to claim that b. no agreement– by experts chosen by
the partnership was not properly organized partners (Art. 1787, CC)
(Behn, Meyer & Co. v. Rozamin).
Subsequent changes in value: will be for the
Applicability of general provisions of firm’s account (Art. 1787, CC)
partnership:
1. If the law recognizes a defectively 3. Obligation with respect to contribution
organized partnership as de facto as far as of money, and money converted to
3rd persons are concerned, it should have personal use
such attribute of partnership as domicile.
(MacDonald v. National City Bank) Sanctions:
2. Although it has no legal standing or a.partner becomes the firm’s debtor for
juridical personality, it is a partnership de interest and damages from the time of

his failure to contribute or from time of though the receipt he issued covered only his
conversion (Art. 1788, CC) share (Art. 1793, CC).
b. payment of 12% interest as interest on
forbearance of money (Martinez v. Cf. 1792: in 1793 there’s only 1 debt where
Ong Pang Co) the partnership is the creditor.
When money or property have been received B. Pay damages

by a partner for a specific purpose and he
later misappropriated it, such partner is guilty Liability for damages due to partner’s fault:
of estafa. (Liwanag v CA) the damages can’t be compensated with the
profits & benefits he may have earned for the
4. Bring to partnership capital credit partnership by his industry (Art. 1794, CC).
received Compensation is inapplicable as its requisites
are absent.
Equal contribution by general partners:
capitalist partners shall contribute equal Mitigation of liability: if through his
shares to the capital of the partnership (Art. extraordinary efforts in other activities
1790, CC). unusual profits have been realized (Art.
1794, CC)
5. Obligation of capitalist partner to
contribute additional capital C. Bear risk of loss
To contribute additional capital in case of Risk of loss of things contributed (Art. 1795,
imminent loss, requisites: CC): owner bears the loss
a. There is an imminent loss of the business
b. The majority of the capitalist partners are Specific & determinate Risk is borne by
of the opinion that an additional contribution things, not fungible partner
to the common fund would save the business where only usufruct is
c. Capitalist partner refuses deliberately to contributed
contribute an additional share Specific & determinate Risk is borne by
d. There is no agreement to the contrary things, with ownership partnership
transferred to
If refused to contribute: the partner must sell partnership
his interest in the partnership to the other Fungible things Risk is borne by
partners (Art. 1791, CC) (consumable) partnership
Things contributed to Risk is borne by
Industrial partner is exempt from sanction.
be sold partnership
6. Obligation of collecting managing Things brought and Risk is borne by

appraised in the partnership
partner
inventory
Requisites:
a. 2 separate credits, both demandable, D. Mutual Agency
b. one credit is owed to the partnership,
c. the other to the collecting partner who’s a Appointed managing partner’s (MP) power:
managing partner. execute all acts of administration despite his
partners’ opposition unless he acts in bad faith
Managing partner should: (Art. 1800, CC). He has the powers of a
a. If issued receipt for own account only  general agent and all incidental powers
apply the sum to the 2 credits in proportion to essential for the carrying on of the firm’s
their amounts purposes.
b. Issued receipt for partnership’s account 
apply whole sum to partnership’s credit (Art. If MP appointed in the articles of partnership:
1792, CC) power is irrevocable
Except: 1. with just, lawful cause
7. Obligation of partner who receives 2. upon the vote of the partners
share of partnership credit representing the controlling interest
(Art. 1800, CC)
Receipt of share in partnership credit: if a
debtor made a partial payment of his debt to If power granted after constitution of
the partnership, where a partner received his partnership: revocable any time, for any
share of the credit and the others haven’t, cause (Art. 1800, CC)
and the debtor later becomes insolvent, the
partner who received his share shall bring to In case of conflict: if –
the partnership capital what he received 1. 2/more partners are appointed MPs,
2. there’s no specification of their
respective duties,

3. there’s no stipulation that 1 of them Liability of a partner acting without authority:

shall not act without the others’ personal liability
unanimous consent,
Then – each MP may separately execute all E. Render full information
acts of administration.
If any MPs oppose the others’ acts – the issue Duty to give info: on demand, to give true &
shall be decided by the majority of the MPs. full info relating to partnership affairs (Art.
In case of tie – the issue shall be decided by 1806, CC). He’s also under the duty of
the partners owning the controlling interest voluntary disclosure of material facts within
(Art. 1801, CC). his knowledge relating to/affecting partnership
affairs (Art. 1821, CC).
Joint management: if there’s a stipulation that
none of the MPs shall act without the others’ F. Account for benefits
consent. Unanimity is required, even if an MP
is absent/incapacitated unless there’s A partner can’t, to the other’s detriment,
imminent danger of grave or irreparable injury apply exclusively to his own benefit the
(Art. 1802, CC) results of the knowledge and info gained in
the character of partner (Pang Lim v. Lo
If without agreement on manner of mgt: Seng).
1. all partners are considered agents
2. Important changes in the firm’s realty Partner shall hold as trustee for partnership
require unanimity (Art. 1803, CC) any profits:
1. derived without the others’ consent from
Judicial intervention to get total consent: if any transaction connected to the –
the important alteration is necessary & a. formation,
unanimous consent can’t be obtained (Art. b. conduct, or
1803, CC) c. liquidation of the partnership.
2. derived from the use of the partnership’s
Kinds of acts of a partner (Art.1818, CC) funds or property (Art. 1807, CC).
Those apparently for These acts bind the
the carrying of the partnership, unless the G. Liable for Partnership contracts
partnership’s partner had in fact no
business in the authority and the 3rd Liability of partnership & partners for
usual way person dealing with partnership contracts: pro rata, with all their
him knew of such fact property (Art. 1816, CC). The private
Those not These acts only bind property of the partners can’t be seized for
apparently for the partnership if the satisfaction of partnership debts until all the
carrying on the partner was in fact partnership assets have been exhausted.
partnership’s authorized by the co-
business in the partners
usual way The exemption of an industrial partner from
Those in Not binding on the paying losses relates exclusively to the
contravention of a partnership if the 3rd settlement of the partnership affairs among
restriction on person knew of the the partners themselves, and not with the
authority restriction partners’ liabilities to 3rd persons (La
Compania Maritima v Munoz).
Presumption: that each individual partner is
the firm’s agent & that he has authority to While the liability of the partners are joint in
bind the firm in carrying on the partnership transactions entered into by the partnership, a
transactions. This presumption permits 3rd 3rd person who transacted with the
persons to hold the firm liable on transactions partnership can hold partners solidarily liable
entered into by any of its members acting for the whole obligation if the 3rd person’s
apparently on its behalf & within the scope of case falls under Arts. 1822-1823 (Muñasque
his authority (Litton v. Hill). A 3rd person has v. CA).
the right to presume that a gen. partner
dealing with partnership property has the Partner acting in his own name: he is solely
requisite authority from his co-partner liable
(Goquiolay v. Sycip).
Gen. rule: stipulation against pro rata liability
Re: 7 acts of dominion in Art.1818, CC: can is void
be done on the partnership’s behalf if all the Except: such stipulation is valid by & among
partners jointly act. the partners (Art. 1817, CC)
Except: 1. all the co-partners have
authorized a partner to execute the act Art. 1817 vs. 1799: it is permissible to
2. all the co-partners have abandoned the stipulate among partners that a capitalist
business partner will be exempted from liability in
excess of the original capital contributed; but

won’t be exempted insofar as his capital is only be partially satisfied, which is contrary to
concerned (Paras). the law’s purpose (Liwanag v. Workmen’s
Compensation Comm.)
The dismissal of the complaint to favor 1 of
the general partners doesn’t increase the
remaining partners’ liability. (Island Sales v. OBLIGATIONS OF PARTNERSHIPS
United Pioneers).
A. Bear risk of loss
Liability of a newly-admitted partner:
1. obligations contracted before his admission:
liable only up to his share in the partnership Partnership bears the risk: when what is
property unless there’s a contrary contributed is a fungible thing, thing which
stipulation (Art. 1826, CC). can’t be kept without deteriorating, if the
2. obligations contracted after admission: thing was contributed to be sold, and
liable as an ordinary original partner. contributions are appraised in the inventory
(Art. 1795, CC)
Liability of outgoing partner:
1. when he gives notice of his retirement or B. Reimburse
withdrawal, he’s freed from liability on
contracts entered into thereafter but still 3 obligations of the partnership:
liable on existing incomplete contracts 1. refund disbursements with legal interest
2. he’s liable for goods sold & delivered 2. answer for obligations contracted in good
after his retirement/withdrawal if the sale faith in the partnership’s interest
was pursuant to a contract made before such 3. answer for risks (Art. 1796, CC)
retirement/withdrawal
Partner = agent. Being a mere agent, he isn’t
H. Solidarily liable with partnership personally liable as long as he’s not at fault
(Art. 1912, CC) and acted within the scope
Solidary liability of partnership & partners: for of his authority. But unlike an ordinary agent,
everything chargeable to the partnership the paying partner doesn’t have the right of
under Arts. 1822-1823 (Art. 1824, CC). retention if he isn’t paid.
This is an exception to Art. 1816 as it
involves torts. C. Operate under firm name
Vicarious liability, requisites: Required: every partnership shall operate

1. the partner committed a wrongful under a firm name (Art. 1815, CC) to
act/omission; distinguish the partnership from other entities
2. he acted in the ordinary course of the & from the individual partners.
partnership business or with the authority of
the co-partners even if the act wasn’t Non-members whose names were used: don’t
connected with the partnership business; have the rights of a partner but are liable to
3. loss/injury is caused to a 3rd person by the 3rd persons without notice as partners (Art.
wrongful act/omission; 1815, CC). They become partners by
4. 3rd person isn’t a partner (Art. 1822, CC); estoppel (PNB v. Lo).
5. there’s no pre-existing contract between the
partnership & 3rd person; if there is, but was Use of deceased partner’s name in law firm:
grossly & deliberately violated, this itself permissible as long as it’s indicated in the
constitutes quasi-delict (Air France v. firm’s communications that the partner is
Carrascoso). deceased (Rule 3.02, CPR)
Extent of liability: firm is liable to the same Other rules:

extent as the partner (Art. 1822, CC) & all 1. a person continuing the partnership after
partners are solidarily liable with the firm a dissolution uses the firm name/name of
(Art. 1824, CC). deceased partner as part of the name:
deceased partner’s individual property isn’t
Misapplication of money/property resulting in liable for debts contracted (Art. 1840, CC)
losses: if loss is suffered by the 3rd person 2. the limited partner’s surname shall not
who delivered the money/property, the appear in the firm name unless
partnership is solidarily liable with the a. it’s also the surname of a general
misappropriating partner (Art. 1823, CC) & partner
all partners are solidarily liable with the firm b. before the limited partner became such,
(Art. 1824, CC). the business had been carried on under a
name in which his surname appeared (Art.
The liability of partners under the Workmen’s 1846, CC)
Compensation Act also solidary. If their
responsibility was merely joint and one
became insolvent, the amount awarded would

D. Bound by partner’s admission as may be according to

just and capital
equitable contribution
Requisites to be admissible against the under the 3.Purely
partnership: circumstanc industrial
1. it must be connected with partnership es partner not
affairs liable for
2. it’s within the scope of the partner’s losses
authority (Art. 1820, CC)
3. it’s made during the firm’s existence For capitalist-industrial partner: wrt his capital
contribution, he shall, in addition, receive a
Exception: when a partner makes admissions share in the profits in proportion to the
for himself only without purporting to act for amount of his capital contribution.
the partnership
Industrial partner not liable for losses
Admission by a former partner not admissible
in evidence against the partnership. (Congco Designation of shares: by agreement, may be
vs. Trillana) entrusted to a 3rd person. Designation made
by the 3rd person is binding on partners,
E. Bound by notice to partner unless it is manifestly inequitable or
unreasonable (Art. 1798, CC).
Notice to the firm:
1. Notice to a partner while already a partner When the designation of a 3rd person can no
2. Knowledge is acquired by a partner who’s longer be impugned:
acting in a particular matter, WON a partner 1. the partner has begun to execute the
at the time as long as he still remembers the decision
partnership matter 2. he hasn’t questioned it within 3 months
3. The partner who acquired it has reason to from knowledge of it (Art.1798, CC)
believe that it be the subject of the business,
and could’ve communicated it to the acting Prohibited stipulation: the exclusion of a
partner (Art. 1821, CC) partner from the profits or from sharing in the
losses (Art. 1799, CC).
F. Liable for wrongful act of partner
B. Associate another person
Extent of liability for wrongful acts, omissions
of a partner: firm is liable to the same extent Subpartnership: partnership of a partner with
as the partner (Art. 1822, CC). another person wrt the former’s share. The
subpartner isn’t a part of the partnership.
Misapplication of money/property resulting in
losses: if loss is suffered by the 3rd person Requisite so subpartner is part of the main
who delivered the money/property, the partnership: consent of all (Art. 1804, CC).
partnership is solidarily liable with the
misappropriating partner (Art. 1823, CC). C. Access partnership books
Partnership books: open to inspection of all

RIGHTS OF PARTNERS the partners at a reasonable hour (Art. 1805,
CC).
A. Share in losses and profits
Where kept:
Rules for distribution of profits and losses, 1. place agreed upon
(Art. 1797, CC) 2. if without agreement, at principal place of
business (Art. 1805, CC)
OF OF LOSSES
PROFITS Reasonable hours on business days
With According to According to
throughout the year, not merely during some
agreement agreement agreement arbitrary period of a few days chosen by the
managing partners (Pardo v. Lumber Co.)
Without 1. Share of 1. If sharing
agreement capitalist of profits is
D. Obtain formal account
partner is in stipulated -
proportion apply to
to his capital sharing of Gen. rule: a partner isn’t entitled to a formal
contribution losses account, save in dissolution
2. Share of 2.If no profit Basis: his right of access to the books
purely sharing Except:
industrial stipulated - 1. if he’s wrongfully excluded from the
partner is losses shall business/possession of the property by his co-
not fixed - be borne partners

2. if the right exists by agreement

3. as provided in Art. 1807 The partner isn’t a creditor of the partnership
4. whenever other circumstances render it for the amount of the shares (Leyte-Samar
just & reasonable (Art. 1809, CC) Sales v. Cea).
The right of a partner to demand an Conveyance of partner’s entire interest:

accounting exists as long as the partnership doesn’t, of itself, dissolve the partnership
exists. The prescription period begins to run (Art. 1813, CC)
only upon the dissolution when the final
accounting is done (Fue Leung v. IAC). Rights of the What assignees
transferee or cannot do
E. Property rights assignee
To receive in Interfere in the
Property rights (Art. 1810, CC): accordance with his management;
1. in the specific partnership property contract the profits
2. in the partnership, and accruing to the
3. to participate in the management assigning partner
To avail of the usual Require any
Partnership capital vs. partnership property remedies provided information or
by law in the event account
Capital Property of fraud in the
With a constant value Value varies, in management
accordance with To receive the Inspect any of the
market value assignor’s interest in partnership books.
Includes only the Includes the case of dissolution
actual capital contribution & all
contributed & property later acquired
promised to the on the partnership’s Enforcement of a judgment vs. a debtor-
partnership account partner’s interest (Art. 1814, CC): the
judgment creditor may –
Partners are co-owners of specific partnership 1. apply for an order charging the partner’s
property: the incidents are – interest with payment of the unsatisfied
1. a partner has an equal right with his co- amount of the final judgment with interest
partners to possess specific property for 2. have a receiver appointed
partnership purposes  if excluded from this,
can seek a formal accounting (Art. 1809, Redemption: a partner or more may redeem
CC) or judicial dissolution (Art. 1831, CC) the interest with –
2. a partner’s right in specific property can’t 1. their separate property
be assigned except when all partners assign 2. with partnership property, with the consent
their rights in that property of all partners whose interests aren’t
3. a partner’s right in specific property isn’t charged/sold (Art. 1814, CC)
subject to attachment/execution except on a
claim against the partnership F. Convey real property
4. a partner’s right in specific property isn’t
subject to support payment (Art.1811, CC) Effects of Conveyance (Art. 1819, CC):
Property used by the partnership: a partner Title in Conveyance passes title

may partnership name but partnership can
1. contribute only the use of property - Any partner may recover unless: 1)The
2. allow partnership to use his separate convey under partner who sold it was
property partnership name carrying on in the usual
3. hold the title to partnership property in his way the business of the
own name without having it belong to him partnership hence
binding the
partnership; or 2)
Property acquired by a partner with Buyer had no
partnership funds: partnership property knowledge of the lack
Except: of authority of the
1. contrary intention appears seller
2. property was acquired after dissolution but Title in Conveyance does not
before winding up partnership name pass title but only
- Conveyance in equitable interest.
Partner’s interest in the partnership: his share partner's name Provided that: The
in the profits & surplus (Art. 1812, CC). This partner who sold it was
may be assigned, attached, & subject to carrying on in the usual
payment of support as there was already a way the business of the
liquidation of the partnership affairs. The partnership hence
binding the partnership
assignee is only entitled to the profits
assigned.

3. Termination: point in time after all

partnership affairs have been wound up.
Title in name of Conveyance passes title (Idos v. CA)
1/ more partners, but partnership can
Conveyance in recover unless: 1)The Effect of dissolution: partnership continues
name if partner who sold it was until winding up is completed (Art. 1829,
partner/partners carrying on in the usual CC).
in whose name way the business of the
title stands partnership hence Effect of dissolution on the partners:
binding the
1. they can’t evade prior obligations
partnership; or 2)
Buyer had no 2. generally they’re spared from new
knowledge of the lack obligations to which they didn’t consent,
of authority of the unless these are essential for the winding up
seller (Testate Estate of Mota v. Serra)
Title in name of Conveyance will only
1/more/all pass equitable interest. Causes of Dissolution
partners or 3rd Provided that: The
person in trust for partner who sold it was 1.Extrajudicial causes (Art. 1830, CC)
partnership, carrying on in the usual
Conveyance way the business of the a. Causes w/o violation of partnership
executed in partnership hence agreement
partnership name binding the partnership i. End of the definite term or agreed
of in name of
undertaking
partners
ii. By a partner’s express will, in good faith.
If in bad faith, he’ll be liable for damages
Cf agency: this is different from the provisions on
but he can’t be compelled to remain in the
agency, which provide that a special power to sell
excludes the power to mortgage (Art. 1879, CC). firm (Rojas v. Maglana)
iii. Express will of all partners who haven’t
assigned their interests or suffered them to
RIGHTS OF PARTNERSHIPS be charged for their separate debts
iv. Expulsion of a partner in good faith
b. Causes in violation of partnership
A. Acquire immovables
agreement
c. Business becoming unlawful
Immovables/an interest therein may be d. Loss of specific thing
acquired in the partnership name, and title so i. Promised specified thing lost before
acquired can only be conveyed in the delivery – dissolved
partnership name (Art. 1774, CC). ii. Promised specific thing lost after delivery
& transfer of ownership – not dissolved
Cf Art. 1819: if the immovable is in the firm’s iii. Transfer of usufruct – dissolved
name, it must be alienated in the name of the e. Death of any partner
firm; if it’s in the partner/s’ name, it must be f. Insolvency
alienated in the name of said partner/s. If the g. Civil interdiction
immovable is in the firm’s name but conveyed h. Court decree in relation to Art. 1831
by a partner or some of them in his/their
names, only the equitable interest is passed The articles didn’t provide that the heirs would
to the buyer in good faith. be limited partners; they expressly stipulated
that in case of death, the co-partnership
B. Preference of creditors would be continued with the heirs. It couldn’t
be continued if it were to be converted from a
Preference: partnership creditors preferred to general partnership to a limited one since the
creditors of individual partners (Art. 1827, difference between the 2 is fundamental and
CC). as this would leave the heirs without a share
in the management (Goquiolay v. Sycip).
Remedy of private creditors of partners: seek
the attachment/public sale of the shares The death of a partner causes dissolution. A
new partnership (with the same name) was
DISSOLUTION AND WINDING UP formed with the remaining living partners. It
may be that the succeeding partnerships
merely continued the business started by the
Definitions:
original one. This element of continuity
1. Dissolution: the change in the partners’
doesn’t detract from the fact that the
relation caused by any partner ceasing to be
partnerships of the same name formed after
associated in the carrying on of the business
the partner’s demise are entities altogether
(Art. 1828, CC).
different and with personalities distinct from
2. Winding up: process of settling business
the original partnership. (Estate of Grimm v.
affairs after its dissolution.
Estate of Parsons, 2006)

incurred by any partner acting for the

The death of 2 partners didn’t disqualify the partnership as if there is no dissolution
partnership from being an awardee of a Except: i. The dissolution being by act, the
foreshore lease, as it was survived by 7 representing partner knew of such.
partners who continued the operations of the ii. The dissolution being by
partnership. The death of a partner won’t death/insolvency, the representing
disqualify the partnership from awards and partner knew/had notice of such.
rights it had gained before the partner’s c. With respect to third persons (Art. 1834,
death. (Lu Do and Lu Ym Corp. v. Aznar CC) if:
Brothers Realty Co., 2006) i. The business/transaction is necessary for
the winding up
No profits gained after dissolution by death ii. There’s a need to complete unfinished
will be due to the heirs, who are entitled only business already begun
to the profits already obtained at the time of iii. New transactions entered into by a
death. After death, the partnership was partner with a 3rd person in good faith.
merely a “partnership in liquidation”
(Bearneza v. Dequilla). Stipulation expressly declared not binding
after dissolution (Art. 1834, CC):
The partners can’t enter into an agreement a. When dissolved because it’s unlawful to
where the automatic dissolution caused by law carry on the business, unless the act’s
will be limited/restricted (Lichauco v. appropriate for winding up
Lichauco). b. Insolvency of a partner
c. The partner is w/o authority to wind up
2.Judicial causes (Art. 1831, CC) partnership affairs, except in transactions with
one who –
a. On application by/for a partner when: i. Had extended credit before dissolution and
i. A partner is insane/of unsound mind had no knowledge/notice of the want of
ii. A partner is incapable of performing his authority
part in the contract ii. Hadn’t extended credit before dissolution,
iii. A partner is guilty of prejudicial acts and had no knowledge/notice of want of
iv. A partner breaches the partnership authority due to lack of advertisement of
agreement such
v. The business can only be carried on at a
loss If after dissolution a person pretends to be a
vi. Other equitable circumstances partner though he isn’t, he’ll be liable as a
b. On application by the buyer of partner’s “partner by estoppel” under Art. 1825
interest under Art. 1813 or 1814: (Art.1834, CC)
i. After the end of the specified term/agreed
undertaking 2. As to partner's existing liability
ii. Any time if it’s a partnership at will when
the partner’s interest had already been Gen. rule: dissolution doesn’t by itself
assigned/charged discharge the partner’s existing liability
Except: if there’s an agreement to that effect
3.Membership changes (Art. 1840, CC) between the partner, the creditor & the
(ARADE) person/partnership continuing the business
a. Admission of new member (Art. 1835, CC)
b. Partner’s retirement
c. Assignment of rights in partnership Death of a partner: his individual property
property shall be liable for all partnership obligations
d. Death of a partner incurred while he was still a partner, subject
e. Expulsion of a partner to prior payment of his separate debts.
Consequences of dissolution 3. Liability of person/partnership

continuing the business (Art. 1840,CC)
1. As to partner's authority to act for the
partnership When applicable: a partnership is dissolved
due to change in membership but the
Gen. rule: terminates the partners’ authority remaining partners continue the business
to bind the partnership (Art. 1832, CC) without liquidation.
Exceptions: Effect: unpaid old creditors of the dissolved

a. to wind up partnership affairs and complete partnership automatically become creditors of
unfinished transactions (Art. 1832, CC) the new partnership.
b. With respect to the partners (Art. 1833,
CC): if dissolved by act, death, or insolvency
of a partner, a partner remains liable to his
co-partners for his share of any liability

New partner’s liability: satisfied out of a. secure by bond or pay the value of the
partnership property only, unless with a guilty partner’s partnership interest (less the
contrary stipulation value of damages he caused), and
b. to indemnify him against all partnership’s
Not only the retiring partners but also the new liabilities, present & future.
partnership itself which continued the
business of the dissolved one, are liable for 4. Rights where dissolution not in
the debts of the prior partnership. A contravention of agreement
withdrawing partner remains liable to a 3rd
party creditor of the old partnership Rights of each partner against his co-
(Singsong vs. Isabela Sawmill). partners:
a. to have the partnership property applied to
Rights of partners upon dissolution discharge partnership liabilities
b. the surplus assets, if any, distributed in
1. Right to wind up (Art. 1836, CC) cash to the respective partners, after
deducting what may be due to the firm from
Kinds of winding up: judicial & extrajudicial them as partners (Art. 1837, CC)
Who can initiate: (PALA) 5. Rights of innocent party

a. the partner expressly authorized
b. if there’s no agreement, all the partners If dissolution in contravention of agreement:
c. the legal representative of the last surviving a. Apply partnership property to discharge its
partner who’s not insolvent for cause liabilities
d. assignee b. Have the surplus, if any, for payment in
cash of the net amount owed to partners
Powers of a liquidating partner: limited to c. Claim for damages against guilty partner
what’s necessary to wind up the affairs - d. To continue the business in the same name
a. may enter into new contracts necessary for e. To possess partnership property if the
winding up. business is continued (Art. 1837, CC)
b. may borrow money or sell property to pay
its debts (40 Am. Jur. 325). 6. Rights of guilty party (Art. 1837, CC)
c. may incur obligations necessary to
Business isn’t Business is
complete existing contracts or to preserve
continued continued
partnership assets (40 Am. Jur. [1960] Guilty partner with all Guilty partner shall -
Supp. 36). the ff. rights of innocent i. have the value (in
d. may engage the services of counsel to partners - cash or secured by a
prosecute/defend the firm’s cases. i. apply partnership bond) of his interest
property to discharge the in the partnership
The action for accounting & liquidation of partnership liabilities less damages
partnership against the deceased industrial & ii. receive in cash his ii. be released from
managing partner can’t be continued against share of surplus less all the firm’s existing
damages he caused liabilities
the heirs. When a partner dies, the duty of
liquidating its affairs devolves on the surviving
7. Rights of expelled partner
partners, not on the deceased’s legal
representatives (Lota v. Tolentino). Expelled with just Expelled without
cause just case
2. Right to damages for wrongful Receive in cash only Have all the rights of
dissolution the net amount due an innocent partner
him from the plus damages for his
When arises: if he’s an innocent partner partnership, if he’s unlawful exclusion
(haven’t caused a wrongful dissolution), he discharged from all
liabilities (Art. 1837, CC)
has the right to claim damages against the
partner who caused the wrongful dissolution,
8. Rights of parties entitled to annul
based on breach of the agreement (Art.
1837, CC).
When entitled to rescind: if with fraud or
misrepresentation
3. Right to continue business on wrongful
dissolution (Art. 1837, CC)
Rights:
a. Of lien/retention of the surplus of the
To continue: all innocent partners may
partnership property after satisfaction of the
continue the partnership business in the same
partnership liabilities to 3rd persons for any
name either by themselves or jointly with
sum paid or for any capital/advances
others during the agreed term of the
contributed
partnership subject to certain conditions –
b. To subrogate partnership creditors after his
payment of liabilities to them.

c. To be indemnified by the supposed guilty When assets are insufficient to satisfy

partner against all debts & liabilities of the liabilities: the partners are required to
partnership (Art. 1838, CC). contribute, based on contributed capital.
If refuses to contribute – a petition in court
9. Right of retiring/ deceased partner may be filed for its enforcement.
If partner is dead – contribution may be
When applicable: a partner retires/dies & the enforced against his private property through
business is continued without any settlement the administrator
of accounts
Except: no liquidation is necessary when Doctrine of Marshalling of Assets: If there are
there’s an agreement as to what the retiree claims over both partnership assets &
shall receive & he in fact received that amount partners’ individual properties, both in custody
(Bonnevie v. Hernandez). of the court for distribution:
1. Partnership creditors are preferred with
If no agreement, liquidation: regard to partnership property
a. The retiree/legal rep. of the deceased may 2. Individual creditors are preferred wrt
have the value of the interest at the date of individual properties of partners.
dissolution. 3. Anything left from either goes to the
b. He shall receive as an ordinary creditor an other.
amount equal to the value of his interest in
the partnership with interest or, in lieu of Order in case of insolvency of a partner or his
interest, the profits attributable to the use of estate (in case of death):
his right in the property of the dissolved 1.Separate creditors
partnership (Art. 1841, CC). 2.Partnership creditors
3.Partners who gave contributions
10. Right to account (Art. 1842, CC)
Liquidation needed. The business profits can’t
Right to demand accounting of partner’s be determined by taking into account the
interest: reckoned from the date of result of 1 transaction instead of all the
dissolution, unless with a contrary agreement. transactions had, thus the need for a general
liquidation before a partner may claim a
Duty to make an account: the winding specific sum as his share of the profits (Sison
up/surviving partners or those continuing the v. McQuaid).
business.
No return of shares without dissolution &
Right to demand an accounting exists as long liquidation, for the firm’s outside creditors
as the partnership exists. Prescription begins have preference over the firm’s assets and the
to run only upon the dissolution of the firm’s property can’t be diminished to their
partnership, after final accounting (Fue prejudice (Magdusa v. Albaran).
Leung v IAC).
Art. 1842 Art. 1809 LIMITED PARTNERSHIP

Accounting upon Accounting before
dissolution dissolution
Limited partnership:
a. formed by 2/more persons,
SETTLEMENT OF ACCOUNTS b. in accordance with the requirements of
law,
BETWEEN PARTNERS (Art. 1839,
c. composed of 1/more general partners
CC) & 1/more limited partners (Art. 1843, CC).
The rules for distribution won’t apply if there’s Limited partners: not bound by the
a contrary agreement between the partners. partnership’s obligations (Art. 1843, CC).
Rule of preference in the payment of A limited partnership that hasn’t complied

partnership liabilities: with the law of its creation is but a general
1.those owed to creditors other than partnership in which all members are liable
partners (Jo Chung Cang v. Pacific Commercial).
2.those owed to partners other than
capital and profits Characteristics:
3.those owed to partners in respect of 1. Complied with the statutory requirement
capital of form (Art. 1844 CC)
4.those owed to partners in respect of 2. The business is controlled by 1/more gen.
profits partners who are personally liable to
creditors (Arts. 1848, 1850 CC)

3. 1/more limited partners contribute to the insolvency

capital & share in the profits but don’t Assignability Not Assignable
manage the business of interest assignable
4. The limited partners aren’t personally in
liable for obligations beyond their partnership
contribution (Arts. 1845, 1848, 1856
CC) Gen. Limited
5. Obligations/debts are paid out of Partnership Partnership
partnership assets and the gen. partners’ Creation In any form Executed in a
separate assets unless cert. of limited
immovables partnership
6. Limited partners may get back their capital
are contributed containing the
contributions subject to conditions required data,
prescribed by law (Arts. 1844, 1857 CC) duly signed &
sworn to by all
Advantages of limited partnerships: partners & filed
1. For gen. partners: secure capital from in the SEC
others while retaining control & Composition Only gen. 1/more gen.
supervision of the business partners partners and
2. For limited partners: share in the profits 1/more limited
without the risk of personal liability partners
Firm name Must contain Name must
the word include the
General Limited “Company” word “Limited”
Partner Partner (SEC Memo (SEC Memo
extent of Personally Only to the Circ. #14-00) Circ. #14-00)
liability liable for extent of his unless it’s a
partnership capital professional
obligations contributions partnership
right to If manner No
Who may be limited partners:
participate of mgt. not participation in
management
1. A partnership – no
in agreed
managemen upon, all 2. A gen. partnership may be changed
t gen into a limited one, & a partner in the former
partners gen. partnership may be a limited partner in
have an the limited partnership formed.
equal right
in business When the cert. of partnership may be
mgt amended:
contribution Cash, Cash or 1. Change in partnership name or in the
property or property only, amount/character of contribution of any
industry not industry limited partner
proper party Proper Not proper 2. Substitution of a limited partner
to party to party to 3. Additional limited partner is admitted
proceedings proceeding proceedings 4. A gen. partner is admitted
by or s by/against 5. Gen. partner retires, dies, becomes
against the by/against partnership insolvent or insane, or under civil
partnership partnership unless:
interdiction & the business is continued
1. he is also a 6. A change in the character of business
gen. partner
7. A false/erroneous statement in the cert.
2. where the
8. A change in the time as stated in the cert.
object of the
for the dissolution of the partnership or
proceedings is
to enforce a return of a contribution
limited 9. To fix the time for dissolution or return of
partner's right a contribution
against or 10. The members want to change a
liability to the statement in the cert. to make it more
partnership accurate (Art. 1864, CC)
Name in Name may Name must
firm name appear in appear in firm Requirements to amend:
firm name name 1. Must be in writing, under oath, & set forth
prohibition Prohibited No prohibition clearly the change desired
to engage in 2. Signed & sworn to by all the members,
other including the new members & assigning
business members
effect of Dissolves Different 3. The cert., as amended, must be filed in
retirement the effect; rights the SEC (Art. 1865, CC)
death partnership transferred to
insanity or legal rep. When the certificate shall be cancelled:

1. When the partnership is dissolved Here he divests himself of the privilege of

2. When all limited partners cease to be such limited liability & will be exposed to all the
(Art. 1864, CC) liabilities of a gen. partner.
Requirements to cancel: b. Surname in firm name (Art.1846, CC)

1. Must be in writing
2. Signed by all the members Gen. rule: the surname of a limited partner
3. Filed with the SEC; if cancellation is court- shall not appear in the partnership name
ordered, a certified copy of the order shall If used in firm name: he is liable as a gen.
also be filed (Art.1865, CC) partner to creditors who didn’t know that he
isn’t a gen. partner.
LIMITED PARTNER c. False statement (Art. 1847, CC)
Who’s liable: any party to the certificate who

Contribution knew the falsity of a statement therein, which
is relied upon by an innocent person and who
Restriction: only cash or property, not suffered loss because of the falsity
services (Art. 1845, CC).
d. Control of business (Art. 1848, CC)
Liabilities of a limited partner
Effect: he becomes liable as a gen. partner
Gen. rule: not liable as a gen. partner. His without acquiring the rights of one. Control
liability is limited to the extent of his here contemplates active participation in the
contribution to the partnership. business.
1. To the partnership (Art. 1858, CC) e. Fraud on creditors (Art. 1854, CC)
Limited partner is responsible for: Prohibited transactions of limited partners:

a. Difference between his actual contribution & 1. Receiving/holding as collateral security any
that stated in the certificate as having been partnership property
made 2. Receiving any payment, conveyance, or
b. Unpaid contributions which he agreed to release from liability if it will prejudice the
make at specified future time & on the rights of 3rd persons
conditions stated in the certificate
If performed prohibited acts: presumption of
Liability as trustee for the partnership: fraud on the creditors. But the law doesn’t
a. Specific property which he committed but absolutely prohibit the taking as collateral
didn’t contribute, or which he contributed security of the property, as the prohibitions are
but was wrongfully returned to him modify by the requirement of sufficient assets
b. Money/property wrongfully paid or conveyed to discharge the partnership obligations.
to him
f. Non-compliance with requisites for
Waiver of liability: if all the partners consent formation (Art. 1844 par.2, CC)
but waiver can’t include the right of a creditor
who extended credit or whose claim arose Effect of lack of substantial compliance:
after the filing & before a partnership becomes a general partnership wrt
cancellation/amendment of the certificate is 3rd persons, and the members are liable as
made. general partners.
Return of contribution: if a limited partner 3. Liabilities to separate creditors

rightfully received back his contribution to
capital, he remains liable to the partnership Right of creditors: to petition the court to
for any sum necessary to discharge the charge the interest of the indebted limited
liabilities of the partnership to creditors who partner with the payment of the unsatisfied
extended credit/whose claims arose before amount of the claim. A receiver may be
such return. appointed to preserve the interest.
2. Liabilities to partnership creditors & Redemption: with the separate property of

other partners any gen. partner. (Art. 1862, CC)
a. Contributes services (Art. 1845, CC) Rights of Limited Partners
Effect: he will be considered an industrial & Common rights of limited & gen. partners:
general partner. If the certificate states that 1. Demand that partnership books be kept at
he’s a limited partner, he will be a general the principal place of business
partner & limited partner at the same time.

2. Inspect & copy any of the books, content Dissolution, upon petition of limited partner:
3. Demand true & full info of all things 1. When his demand for return of contribution
affecting the partnership wasn’t acted upon/denied
4. Demand a formal account 2. His contribution wasn’t returned/paid
5. Resort to the court for the dissolution and
winding up of the business In case of several limited partners: members
6. Receive a share of the profits & surplus may agree to give priority to 1/more limited
7. Demand the return of his contribution partners, and this must be stated in the
provided assets are more than the liabilities certificate of partnership. The preference
(Art. 1851, CC) covers –
1. return of contributions,
Restrictions on gen. partners: gen. partners 2. compensation, and
can’t, without the written consent or written 3. other matters where some benefit is
ratification of all limited partners, do the ff: granted (Art. 1855, CC).
1. Any act in contravention of the certificate
2. Any act which would make it impossible to Share of profits (Art. 1856, CC)
carry on the partnership business
3. Confess judgment Partner’s share: when the assets exceed
4. Possess partnership property, or assign liabilities (except those to limited & general
their rights in specific partnership property for partners), a limited partner may recover a
other than a partnership purpose share in the profits/compensation by way of
5. Admit a person as a gen. partner income stipulated in the certificate.
6. Admit a person as a limited partner, unless
the right is granted in the certificate Assign interests (Art. 1859, CC)
7. Continue the business with partnership
property on the death, retirement, insanity, Substituted limited partner: a person admitted
civil interdiction or insolvency of a gen. to all the rights of a limited partner who has
partner, unless the power is granted in the died or assigned his interest in a partnership
certificate (Art. 1850, CC)
Rule: limited partner’s interest is assignable.
Loan & other business transactions The assignee may become a substituted
limited partner if –
Allowed to loan money, transact business: the 1. all the members consent, or
relationship between the limited partner & 2. the assignor is empowered in the
partnership isn’t based on trust & confidence. articles of partnership, and he gave the
There is no conflict of interests. assignee the right to be a substituted limited
partner.
Sharing pro rata: he’s entitled to a pro rata It is still required that the certificate be
share of the partnership assets together with amended (Art. 1865, CC) and registered
the creditors. (Art. 1854, CC) with the SEC.
Return of contribution (Art.1857,CC) Rights of substituted limited partner:

1. To require any info/account of the
Conditions for return: transactions
1. All liabilities to non-partner creditors had 2. To inspect partnership books
been paid, or there are sufficient assets to
satisfy them Liability of substituted limited partner:
2. All members consent, unless the limited 1. all restrictions & liabilities of the assignor
partner desiring the return has lawfully 2. responsible for the liabilities of the
demanded the return of his contribution. assignor except those he was ignorant of
3. The certificate had been cancelled or when he became a limited partner and
amended as to reflect the couldn’t be ascertained in the certificate
withdrawal/reduction of contribution.
Effect on assignor: that the assignee has
When return may be demanded: become a substituted limited partner doesn’t
1. On the dissolution of the partnership relieve the assignor of all liabilities to the
2. On the arrival of the date specified in the partnership (Arts. 1847, 1858 CC).
certificate
3. On the lapse of 6 months from notice in If assignee didn’t become a substituted
writing to all other members if no time is limited partner:
specified 1. remains a mere assignee
2. with right to receive the share of the
Gen. rule: return of contribution is in cash profits/compensation by way of income, or
Except: if there’s a statement to that effect in the return of his contribution to which the
the certificate or all partners consent assignor would’ve been entitled to

Effect of death (Art. 1861, CC) dissolution isn’t effected until there has been
compliance with this requirement.
Rights of executors/administrators:
1. All the rights of a limited partner for the Settling accounts after dissolution
purpose of settling the estate
2. If the deceased had assigned his interest in Order of priority in the payment of liabilities
the partnership, the executor or (Art. 1863, CC):
administrator may constitute the assignee a 1. Those owed to creditors, in the order of
substituted limited partner if the deceased was priority provided by law (Arts. 2236-
empowered to do so 2251, CC), except those to limited
partners on account of their contribution &
Estate’s liability: for all the deceased’s to general partners
obligations & liabilities to the partnership as a 2. Those to limited partners in respect to their
limited partner share of the profits and other compensation
by way of income in their contributions
Person erroneously believing he’s a limited 3. Those to limited partners in respect of their
partner (Art. 1852, CC) capital contributions
4. Those to general partners other than for
Effect: he doesn’t, by reason of his exercise of capital and profits
the rights of a limited partner, become a gen. 5. Those to general partners in respect to
partner. Neither is he bound by the profits
obligations of the person/partnership. He’s 6. Those to general partners in respect to
exempt from general liability. capital
Conditions for exemption: Winding up: general partners have the duty &
1. on ascertaining the mistake, he promptly power to wind up the partnership’s affairs
renounces his interest in the profits of the
business If there’s no agreement, the limited partners
2. his surname doesn’t appear in the shall share in the partnership assets and
partnership name profits in proportion to the respective amounts
3. he doesn’t participate in the management of their claims (Art. 1863, CC).
of the business
Dissolution
When a limited partnership may be dissolved:

1. The misconduct of a general partner
2. Fraud on the limited partner by the
general partner
3. The retirement, death, insolvency,
insanity, or civil interdiction of a general
partner
Except: if the business is continued by the
remaining general partners –
i. under a right stated in the cert.
ii. when all members consented to the
continuation (Art. 1860, CC)
4. When all the limited partners ceased to be
such (Art. 1864, CC)
5. End of the term for which it was to exist
(Art. 1844, CC)
6. By mutual consent of the partners before
the end of the firm’s original term
7. When the limited partner demanded the
return of his contribution but was
unjustifiably denied (Art. 1857, CC)
8. The causes in Arts. 1830 & 1831.
If dissolved by expiration of the fixed term:

the notice of dissolution need not be given
since the papers filed in the SEC are notice to
the world.
If dissolved by express will of the partners:

the certificate should be cancelled, and a

CREDIT TRANSACTIONS CIVIL LAW
Credit Transactions
TABLE OF CONTENTS
Section 1. Credit Transactions 229
Section 2. Loan 229
Section 3. Deposit 233
Section 4. Guaranty 240
Section 5. Legal and Judicial Bonds 246
Section 6. Pledge, Mortgage, Antichresis 248
Section 7. Concurrence and Preference of Credit 255
Section 7. Special Laws 256
Section 9. Warehouse Receipts Law 256
Section 10. Insolvency Law 261
Section 11. Sample Questions 268

CREDIT TRANSACTIONS LOAN

include all transactions involving the purchase or
loan of goods, services or money in the present with LOAN is a contract by which one of the parties
a promise to pay or deliver in the future (contract of delivers to another, either something not consumable
security) so that the latter may use the same for a certain time
and return it, in which case the contract is called
commodaturm; or money or other consumable thing,
2 TYPES OF CREDIT TRANSACTIONS: upon the condition that the same amount of the
1. SECURED TRANSACTIONS – THOSE same kind and quality shall be paid, in which case
SUPPORTED BY A COLLATERAL OR AN
the contract is simply called a loan or mutuum.(Art
ENCUMBRANCE OF PROPERTY
1933)
2. UNSECURED TRANSACTIONS – THOSE
SUPPORTED ONLY BY A PROMISE TO PAY CHARACTERISTICS OF A LOAN:
OR THE PERSONAL COMMITMENT OF 1. real contract – delivery is essential
ANOTHER SUCH AS A GUARANTOR OR for perfection of the loan (BUT a
SURETY promise to lend, being consensual, is
binding upon the parties)
SECURITY is something given, deposited or 2. unilateral contract - only the
serving as a means to ensure the fulfillment borrower has the obligation
or enforcement of an obligation or of
protecting some interest in the property Cause or consideration in a contract of
loan:
2 TYPES OF SECURITY: 1. as to the borrower – the acquisition of
1. personal – when an individual the thing
becomes a surety or a guarantor 2. as to the lender – the right to demand
2. real or property – when an its return or its equivalent
emcumbrance is made on property
BAILMENT is the delivery of property of one 2 KINDS OF LOAN:

person to another in trust for a specific
purpose, with a contract, express or implied, Commodatum Mutuum or
that the trust shall be faithfully executed and simple
the property returned or duly accounted for loan
when a special purpose is accomplished or nature bailor delivers bailor
kept until the bailor reclaims it. to the bailee a (creditor)
non- delivers to
consumable the bailee
PARTIES IN BAILMENT thing so that (debtor)
1. bailor – the giver, the party who the latter may money or
delivers possession/custody of the use it for a other
thing bailed certain time consumable
2. bailee – the recipient, the party who and return the thing upon
receives the possession/custody of the identical thing the
thing delivered condition
that the
KINDS OF CONTRACTUAL BAILMENT W/ latter will
REFERENCE TO COMPENSATION pay the
1. for the sole benefit of the bailor same
(gratuitous) e.g. gratuitous deposit, amount of
mandatum (do some act w/ respect to the same
a thing) kind and
2. for the sole benefit of the bailee quality
(gratuitous) e.g. commodatum, Subject Non- Money or
gratuitous simple loan or mutuum matter consumable other
3. for the benefit of both parties e.g. thing (Art consumable
deposit for compensation, involuntary 1936) thing
deposit, pledge and bailments for hire:
a. hire of things – temporary use Except: when
b. hire of service – for work or labor purpose of
c. hire of carriage of goods – for contract is not
carriage consumption,
d. hire of custody – for storage but merely for
exhibition the
subject matter
may be a
consumable

thing. In this A thing is consumable when it is used in a

case, the use manner appropriate to its purpose or nature.
is exhibition of (Art 418)
the thing, so
the COMMODATUM
consumable
thing is not 2 KINDS OF COMMODATUM:
being used in a 1. ordinary commodatum - use by the
manner bailee of the thing is for a certain
appropriate to period of time
its purpose, 2. precarium – one whereby the bailor
but for another may demand the thing loaned at will;
purpose. exists in cases where:
Transfer of None, Ownership i. neither the duration of the
ownership ownership is is contract nor the use to
retained by transferred which the thing loaned
bailor (Art to the should be devoted has
1933) debtor been stipulated
consideration None, May be ii. if the use of the thing is
essentially gratuitous merely tolerated by the
gratuitous (Art or onerous, owner. (Art 1947)
1933) i.e. w/
stipulation General rule: In a commodatum, the right to
Note that if to pay use is limited to the thing loaned, and not
there is any interest to its fruits.
compensation, Except: There is stipulation to the
the contract contrary. (Art 1940) In cases where
that arises is a there is such a stipulation, enjoyment
lease contract of the fruits must be incidental to the
(Art. 1643) use of the thing itself. Otherwise, if the
need to Bailee must debtor use of the fruits is the main cause, the
return and return the needs only contract ma be one of usufruct. (Art
what same thing to pay the 562)
loaned (Art same
1933) amount of What is the effect of an accepted promise
the same to deliver by way of commodatum or
kind and mutuum?
quality  It is binding upon the parties, but the
Nature of May involve Only contract of loan shall not be perfected
property real or personal until delivery of the contract. (Art
involved personal property 1934)
property (Art
1937) Who may be bailor in commodatum?
Purpose of Loan for use Loan for  Anyone. The bailor in commodatum
loan (Art 1935) consumption need not be the owner of the thing
loaned. (Art 1938)
If the bailee is  But the bailee himself may not lend
not entitled to nor lease the thing loaned to him to a
the use of the third person (Art 1939(2))
thing, the
contract may General rule: Commodatum is purely
be a deposit. personal in character. (Art 1939)
(Art 1962) 1. death of either party extinguishes the
WON return YES, in case of NO, creditor contract
may be urgent need may not 2. bailee can neither lend nor lease the
demanded (Art 1946) demand its thing lent to him to a third person
before end of return Except: Members of the bailee’s household
term before the may make use of the thing loaned
lapse of the Except: Bailee’s household may NOT
term agreed use it when:
upon 1. there is stipulation to the
who suffers Bailor, since he Debtor contrary, or
the loss is the owner suffers the 2. the nature of the thing forbids
(Art 1942, Art loss such use.
1174)

What are the OBLIGATIONS OF THE 3. The bailor is aware thereof

BAILEE in commodatum? 4. He does not advise the bailee of the
1. obligation to pay for the ordinary same, and
expenses for the use and preservation 5. The bailee suffers damages by reason
of the thing loaned (Art 1941) of said flaw or defect
2. obligation to take good care of the
thing with the diligence of a good What are the OBLIGATIONS OF THE
father of a family (Art 1163) BAILOR in a commodatum?
3. liability for loss, even if loss through 1. obligation to respect the duration of
fortuitous event, in certain the loan: The bailor cannot demand
circumstances (Art 1942) the return of the thing loaned till after
4. liability for deterioration of thing the expiration of the period stipulated,
loaned, except under certain or after the accomplishment of the use
circumstances (Art 1943) for which the commodatum has been
5. obligation to return the thing upon constituted.
expiration of term or upon demand in Except: Bailor may demand return
case of urgent need or temporary use before end of
6. solidary obligation where there are 2 or term when:
more bailees to whom a thing was 1. he should have urgent need of
loaned in the same contract (Art 1945) the thing (Art 1946)
2. bailee commits an act of
General rule: Bailee is not liable for loss or ingratitude specified in Art 765
damage due to a fortuitous event (Art 1174), (Art 1948)
since the bailor retains ownership of the thing
Except: Bailee is liable even for loss The law uses “its return” or “temporary
due to a fortuitous event when: (Art use” because the return demanded
1942) may be temporary or permanent.
1. he devotes the thing to any
purpose different from that for In case of temporary use by the
which it was loaned bailor, the rights and duties of the
2. he keeps it longer than the period parties are temporarily suspended
stipulated, or after the while the thing is in the possession of
accomplishment of the use for the bailor. (Art 1946, par 2)
which the commodatum has been
constituted Any of the following constitutes acts of
3. the thing loaned has been delivered ingratitude:
with appraisal of its value, unless 1. bailee commits offenses against
there is stipulation exempting the the person, the honor, or the
bailee from responsibility in case of property of the bailor, or of his wife
a fortuitous event or children under his parental
4. he lends or leases the thing to a authority
third person who is a not a member 2. bailee imputes to the bailor any
of his household criminal offense, or any act
5. being able to save either the thing involving moral turpitude, even
borrowed or his own thing, he though he should prove it, unless
chose to save the latter. the crime or the act has been
committed against the bailee
General rule: Bailee is liable for deterioration himself, his wife, or children under
of thing loaned. his authority, and
Except: The deterioration of the thing 3. if the bailee unduly refuses the
is due only to the use thereof and bailor support when the bailee is
without his fault, then bailee is not legally or morally bound to give
liable. (Art 1943) support to the bailor
General rule: Bailee has no right of retention Article 765 is applicable, because like a
of the thing loaned, on the ground that the donation, a commodatum is essentially
bailor owes him something. gratuitous. (Art 1933, par 2)
Except: Bailee has a right of retention
for damages for known hidden flaws
mentioned in Art 1951. (Art 1944) 2. obligation to refund extraordinary
expenses (Art 1949):
What are the requisites for the application a. extraordinary expenses for the
of Art 1951? preservation of the thing are
1. There is a flaw or defect in the thing borne by the bailor.
loaned
2. The flaw or defect is hidden

Requisites for liability of bailor to

arise: Loan (both barter
1. extraordinary expense for kinds)
preservation Subject Money or any Non-fungible
2. bailee gives bailor notice before matter other fungible things
incurring the expenses, except things
when the expense is so urgent that obligation Obligation to Obligation to
a reply to notice cannot be awaited return or to give an
without danger to the thing pay equivalent of
that received
b. extraordinary expenses on the consideration Loan may be Barter is
occasion of actual use by bailee, gratuitous always
even if without fault are borne (commodatum) onerous
equally by the bailor and the
bailee, unless there is contrary
stipulation The object of simple loan may be either
money or consumable or fungible things.
c. ordinary expenses for use and
preservation are also borne by 1. loan of money
bailor (Art 1950, in rel Art 2. loan of fungible thing
1941)
Kinds of interest:
Bailor has no right of abandonment: He 1. Simple interest – which is paid for the
cannot exempt himself from payment of principal at a certain rate fixed or
expenses to bailee by abandoning the thing to stipulated by the parties
the latter. (Art 1952) 2. Compound Interest – that which is
imposed interest due and unpaid. The
MUTUUM OR SIMPLE LOAN accrued interest is added to the principal
sum and the whole is treated as a new
A mutuum or simple loan is a contract by principal upon which the interest for the
which a person (creditor) delivers to another next period is calculated
(debtor) money or other consumable thing 3. Legal Interest – that which the law
with the understanding that the same amount directs to be charged in the absence of
of the same kind and quality shall be paid. any agreement as to the rate between
(Art 1953) the parties.
4. Lawful Interest – that which the laws
Elements of a mutuum: allow or do not prohibit
1. delivery of a money or other 5. Unlawful or Usurious Interest – paid or
consumable thing stipulated to be paid beyond the
2. obligation on the part of debtor to pay maximum fixed by law
(not exactly to return)
General Rule: If the exact rate of interest is
When is a contract deemed a barter? (Art not mentioned, the legal rate shall be imposed
1954)
1. transfer of ownership of non-fungible Except:
thing to another
2. obligation on the part of the latter to a. the debtor is liable to pay legal
give things of the same kind, quantity, interest (12%) as indemnity even in
and quality the absence of stipulation for the
payment of interest
What is a fungible thing? b. interest due shall earn legal interest
 Fungibles are those which are dealt from the time it is judicially
with by number, weight, or measure, demanded although the obligation
such as grain, oil, sugar, etc. may be silent upon this point
 Whether a thing is consumable or not
depends on the nature and whether it General Rule: Accrued interest shall not earn
is fungible or not depends on the interest
intention of the parties.
 e.g. Wine is consumable by nature, but Except:
it may be non-fungible if the intention
is merely for display or exhibition. a. when judicially demanded as
provided in art 2122.
b. when there is an express stipulation
made by the parties that the interest
due and unpaid shall be added to the

principal obligation and the resulting CHARACTERISTICS OF A DEPOSIT

total amount shall earn interest
1. Real – like commodatum & mutuum;
bec it’s perfected by the delivery of the
Payment of unstipulated interest subj matter. Where there is no
delivery, there is merely an agreement
1. where unstipulated interest is paid by to deposit w/c, however, is binding &
mistake the debtor may recover as this enforceable upon the parties. Hence, a
would be a case of solution indebiti or contract of future deposit is consensual
undue payment (see 1934 CC).
2. where the unstipulated interest is paid 2. Unilateral– if it’s gratuitous; bec only
voluntarily because the debtor feels the depositary has an oblig.
morally obliged to do so there can be no 3. Bilateral – if it’s for a compensation;
recovery as in the case of natural bec it gives rise to obligs on both the
obligations depositary & the depositor.
4. Voluntary as a general rule. It
USURY becomes necessary in the 3 cases in
1996 & 1998 CC and in cases of
1. Usury is contracting for or receiving deposit of goods made by
something in excess of the amount travelers/passengers w/ common
allowed by law for the loan or carriers, which may also be regarded
forbearance of money, goods or as necessary.
chattels 5. Gratuitous as a general rule
2. Forbearance signifies the contractual Exceptions:
obligation of the creditor to forbear or
refrain during a period to require the 1. where there is contrary
debtor payment of an existing debt stipulation
then due and payable. 2. where depositary engaged in
3. Where there is no loan or forbearance the business of storing goods
there is no usury 3. where property saved from
4. The usury law has not been repealed, destruction w/o knowledge of
it is just suspended; there may still be the owner
unconscionable interest if the court
finds it so PRINCIPAL PURPOSE
5. Interest is the compensation allowed
by law or fixed by the parties for the Safekeeping of the thing delivered. (This is
loan or forbearance of money, goods or why if it’s only an accessory or secondary
chattels oblig of the recipient, deposit is not
6. a floating interest rate is not invalid constituted but some other contract).
per se but there must be a reference
point 1. Deposit v. Mutuum
7. Requirements for a valid escalation Safekeeping Consumption
clause Purpose or mere of the Subj
custody Matter
a. increase is provided by law/ Depositor can Lender must
resolution by the monetary demand the wait until the
board return of the expiration of
Demandability
b. there is a corresponding de- subject the period
escalation clause matter at will granted to
c. the effectivity of the clause is the debtor
on or after the effect of increase May be both Only money
ordered on the maximum movable & & other
interest Object
immovable fungible thing
property
DEPOSIT
2. Deposit v. Commodatum
DEPOSIT is constituted from the moment a Safekeepin Transfer of
Purpose
person receives a thing belonging to another, g the Use
with the obligation of safely keeping it and of May be Essentially
Remuneratio
returning the same. If the safekeeping of the gratuitous & always
n
thing delivered is not the principal purpose of gratuitous
the contract, there is no deposit but some In Both
other contract. (Art. 1962) extrajudicia movable &
Object
l deposit, immovable
only property

movable may be litigation

things may the object In whose Person who Depositor or
be the behalf has a right 3rd person
object held designated
CREATION OF A DEPOSIT SUBJECT MATTER OF DEPOSIT
1. By virtue of a court order; or 1. Only movable/personal property may

2. By law be the object of extrajudicial deposit,
3. Not by the will of the parties whether voluntary or necessary. The
4. It is essential that the depositary is not provisions do not embrace
the owner of the property deposited incorporeal or intangible property,
(Art. 1962) like rights & actions.
2. Judicial deposit may cover movable
EXTINGUISHMENT OF DEPOSIT as well as immovable property, its
purpose being to protect the rights of
1. A deposit is extinguished:
the parties to a suit.
a. upon the loss or deterioration of
the thing deposited;
PARTIES TO A DEPOSIT
b. upon the death of the
depositary, ONLY in gratuitous
1. Ordinarily, there are only 2 persons
deposits;
involved. Sometimes, however, the
c. other provisions in the Civil
depositary may be a 3rd person.
Code (novation, merger, etc.)
2. The main difference btw a voluntary
deposit & a necessary deposit is that in
KINDS OF DEPOSIT
voluntary deposit, the depositor has
1. judicial - when an attachment or complete freedom in choosing the
seizure of property in litigation is depositary, whereas in the latter, there
ordered is lack of free choice in the depositor.
2. extrajudicial (Art. 1967) 3. As a general rule, the depositor must be
a. voluntary- delivery is made by the owner of the thing deposited.
the will of the depositor or by However, it may belong to another
two or more persons each of person than the depositor. For example,
whom believes himself entitled when two or more persons claiming to
to the thing deposited; be entitled to a thing may deposit the
b. necessary- made in compliance same with a third person. In such case,
with a legal obligation, or on the third person assumes the obligation
the occasion of any calamity, or to deliver to the one to whom it belongs.
by travelers in hotels and inns The depositary may bring an action of
or by travelers with common interpleader to compel the depositors to
carriers settle their conflicting claims. Here one
of the depositors is not the owner.
Judicial Extrajudici
al EFFECTS OF INCAPACITY
Will of the Will of the
creation court contracting
parties Depositary is
Depositary is
Security or Custody and capacitated; incapacitated;
ensure the safekeeping Depositor is Depositor is
right of a incapacitated capacitated
party to
purpose property or
Depositary is Depositary does not
to recover in
subject to ALL the incur the obligations
case of
obligations of a of a depositary
favorable
depositary
judgment
Depositary must Depositary, however
Subject Generally
return the is liable to:
matter immovables
property either to:
Always Maybe
a) return the thing
onerous compensate
a) the legal deposited while still
cause d but
representative of in his possession;
generally
the incapacitated,
gratuitious
OR AND
Upon order Upon
Return
of the court/ demand of
of thing b) the depositor b) pay the depositor
end of depositor
himself if he the amount by which

should acquire he may have Rationale

capacity benefited himself A deposit is founded on trust and
with the thing or its confidence and it can be supposed that
price subject to the the depositor, in choosing the
right of any 3rd depositary, has taken into
person who acquires consideration the latter’s qualification.
the thing in good
faith Exception
The depositary is authorized by
OBLIGATIONS OF THE DEPOSITARY express stipulation.
1. Two primary obligations (Art. b) General rule:

1972) Depositary is liable for loss of the thing
deposited when:
a) safekeeping of the object, using as
a degree of care the same diligence i. He transfers the deposit with a
that the depositary would exercise third person without authority
over his property20 although there is no negligence
on his part and the third
Exception: person;
The depositary cannot excuse ii. He deposits the thing with a
himself from liability in the event of third person who is manifestly
loss by claiming that he exercised careless or unfit although
the same amount of care toward authorized, even in the absence
the thing deposited as he would of negligence; or
towards his own if such care is less iii. The thing is lost through the
than that required by the negligence of his employees
circumstances. whether the latter are
manifestly careless or not.
Rationale:
Exception:
i. Essential requisite of judicial There is an exemption from liability
relation which involves the when The thing is lost without the
depositor’s confidence in his negligence of the third person with
good faith and trust worthiness; whom he was allowed to deposit the
ii. The presumption that the thing if such third person is not
depositor took into account the “manifestly careless or unfit.”
diligence which the depositary is
accustomed with respect to his 3. Obligation not to change the way
own property. of deposit (Art. 1974)
b) Return of the thing when required – General rule:

even though a specified term or Depositary may not change the way of
time for such may have been the deposit
stipulated in the contract.
Exception:
2. Obligation not to transfer deposit If there are circumstances indicating
(Art. 1973) that the depositor would consent to the
change. This is a situation wherein the
a) General rule depositary would reasonably presume
the depositary is not allowed to deposit that the depositor would agree to the
the thing with a third person. change if he knows of the facts of the
situation.
20
THE ROMAN CATHOLIC BISHOP OF JARO v. DE LA PEÑA:
“Although the CC states that "a person obliged to give something Requisites:
is also bound to preserve it with the diligence pertaining to a good a) The depositary must notify the
father of a family" (art. 1094), it also provides, following the
principle of the Roman law, major casus est, cui humana infirmitas depositor of such change and
resistere non potest, that "no one shall be liable for events which b) Must wait for the reply of the
could not be foreseen, or which having been foreseen were depositor to such change.
inevitable, with the exception of the cases expressly mentioned in
the law or those in which the obligation so declares."” (Thus, in
this case, the defendant cannot be held liable for the loss of the Exception: If the delay of the
money he deposited in his personal trust fund because such was reply would cause danger.
not illegal and the Court cannot say “that in choosing between two
means equally legal, he is culpably negligent in selecting one
whereas he would not have been if he had selected the other”).

4. Obligation to collect on the choses b) Such use is necessary for its

in action deposited (Art. 1975) preservation but limited for the
purpose only.
a) If the thing deposited should earn
interest, the depositary is under the b) Unauthorized use will result in
obligation to: liability for damages. In addition,
unauthorized use will have the
i. Collect the capital and interest following effects:
as they become due;
ii. Take such steps as may be i. If the thing deposited is
necessary to preserve its value nonconsumable:
and the right corresponding to
it. General rule: The contract loses
the character of a deposit and
b) A contract for the rent of safety acquires that of a commodatum
deposit boxes is not an ordinary despite the fact that the parties
contract of lease of things, but a may have denominated it as a
special kind of deposit; hence, it is not deposit.
to be strictly governed by the
provisions on deposit. The prevailing Exception: Safekeeping is still
rule in the US is that the relation the principal purpose of the
between a bank renting out safety contract.
deposit boxes and its customer with
respect to the contents of the box is ii. Thing deposited is money or
that of bailor and bailee.21 other consumable thing:
5. Obligation not to commingle things General rule: Converts the

if stipulated (Art. 1976) contract into a simple loan or
mutuum.
General rule:
The depositary is permitted to Exception: Safekeeping is still
commingle grain or other articles of the principal purpose of the
the same kind and quality. contract, but it becomes an
irregular deposit. Bank deposits
Effects: are in the nature of irregular
a) The various depositors of the deposits but they are really
mingled goods shall own the loans governed by the law on
entire mass in common. loans.
b) Each depositor shall be entitled
to such portion of the entire as 7. Liability for loss through fortuitous
the amount deposited by him events (Art. 1979)
bears the whole.
General rule:
Exception: If the thing deposited is lost without a
When there is a stipulation to the fortuitous event, the depositary is
contrary. presumed at fault. If it was lost
through a fortuitous event, the
6. Obligation not to make use of the depositary is not liable without his
thing deposited (Art. 1977) fault.
a) General rule: Exceptions:

Deposit is for safekeeping of the a) If it is so stipulated;
subject matter and not for its use22. b) If he uses the thing without the
depositor’s permission
Exceptions: c) If he delays in its return;
a) Expressly authorized by the d) If he allows others to use it, even
depositor; though he himself may have been
authorized to use the same.
21 8. Relation between bank and

CA AGRO-INDUSTRIAL DEV. CORP. v CA: “ the contractual
relation between a commercial bank and another party in a
depositor (Art. 1980)
contract of rent of a safety deposit box is one of deposit”
22
JAVELLANA v. LIM ET AL.: “a depositary CANNOT make use Fixed, savings, and current deposits of
of the thing deposited w/o the express permission of the depositor. money in banks and similar institutions
Article 1768 CC also states that when the depositary has
permission to make use of the thing deposited, the contract
shall be governed by the provisions
LOSES the character of a deposit & becomes a LOAN or concerning simple loan.
BAILMENT.”

within the period of one month (30

a) Contract of loan – deposits days)
in banks are really loans
because the bank can use the 14.Obligation of the depositary when
same for its ordinary there are two or more depositors.
transactions (Art. 1985)
b) Relation of creditor and a) In cases of a divisible thing and

debtor – the relation between a joint depositors – each one of the
depositor and a bank is that of depositors can demand only his
a creditor and a debtor. share proportionate thereto.
b) In cases of an Indivisible thing and
9. Obligation when the thing solidary depositors – rules on active
deposited is closed and sealed solidarity
(Art. 1981)
i) General Rule: Each one of the
General rule: depositors may do whatever
The depositary has the obligation to: may be useful to the others.
a) return the thing deposited when (Art. 1212)
delivered closed and sealed in the
same condition; Exception: Anything which may
b) pay for damages should the seal or be prejudicial to the other
lock be broken through his fault, depositors.
which is presumed unless proven
otherwise; ii) General Rule: The depositary
c) Keep the secret of the deposit may return the thing to any one
when the seal or lock is broken, of the solidary depositors
with or without his fault.
Exception: When a demand,
Exception: judicial or extrajudicial, for its
The depositary is justified in opening a return has been made by one of
closed and sealed subject matter them in which case delivery
a) When the depositary is presumed should be made to him.
authorized to do so (the
presumption applies if the key has c) In cases where there is a
been delivered to him) stipulation of return to one of the
b) When the instructions of the depositors – if by stipulation, the
depositor as regards the deposit thing should be returned to one of
cannot be executed without the depositors, the depositary is
opening the box or receptacle. bound to return it only to the
(Necessity) person designated although he has
not made any demand for its
10.Obligation to return products, return.
accessories and accessions (Art.
1983) 15.Obligation to return to the person
to whom return must be made.
11.Obligation to pay interest on sums (Art. 1986)
converted for personal use (Art. a) The depositary is obliged to return
1983) the thing deposited, when required,
to:
12.The depositary who receives the  The depositor;
thing in deposit cannot require  To his heirs or successors;
that the depositor prove his or
ownership over the thing (Art.  To the person who may
1984) have been designated in the
contract.
13.Where a third person appears to be b) If the depositor was incapacitated
the owner. (Art. 1984) at the time of making the deposit,
the property must be returned to:
The depositary may be relieved from  His guardian or
liability when: administrator;
a) He advised the true owner of the  To the person who made the
thing of the deposit. deposit;
b) If the owner, is spite of such  To the depositor himself
information, does not claim it should he acquire capacity.

c) Even if the depositor had capacity 19.Depositary’s liability in case of loss

at the time of making the deposit by force majeure or government
but he subsequently loses his order. (Art. 1990)
capacity during the deposit, the
thing must be returned to his legal The depositary is not liable in cases of
representative. loss by force majeur or by government
order. However, he has the duty to
16.Obligation to return at the place of deliver to the depositor money or
return (Art. 1987) another thing he receives in place of
the thing.
General rule:
At the place agreed upon by the 20.Liability in case of alienation of the
parties, transportation expenses shall depositary’s heir. (Art. 1991)
be borne by the depositor.
When alienation is done in GOOD
Exception: FAITH:
(In the absence of stipulation) At the a) Return the value of the thing
place where the thing deposited might deposited
be even if it should not be the same b) Assign the right to collect from the
place where the original deposit was buyer.
made.  The heir does not need to pay
the actual price of the thing
17.Obligation to return upon the time deposited.
of return. (Art. 1988)
When alienation is done in BAD FAITH:
General rule: a) Liable for damages;
The thing deposited must be returned b) Pay the actual price of the thing
to the depositor upon demand, even deposited.
though a specified period or time for
such return may have been fixed. 21.Depositary may retain the thing in
pledge until the full payment of
Exceptions: what may be due him by reason of
a) When the thing is judicially the deposit. (Art. 1994)
attached while in the depositary’s
possession The thing retained serves as security
b) When notified of the opposition of a for the payment of what may be due to
third person to the return or the the depositary by reason of the
removal of the thing deposited deposit. (see Art. 1965, 1992, 1993).
Note: The debt must be prior to the
18.Right of the depositary to return deposit.
the thing deposited. (Art. 1989)
(NOTE: in this case, it is the depositary OBLIGATIONS OF THE DEPOSITOR
who is returning the deposit WITH OR
WITHOUT THE DEMAND of the 1. Obligation to pay expenses of
depositor) preservation. (Art. 1992)
General rule: 2. Obligation to pay losses incurred

The depositary may return the thing due to character of thing
deposited notwithstanding that a deposited. (Art. 1993)
period has been fixed for the deposit if:
a) The deposit is gratuitous; General rule:
b) The reason is justifiable. The depositary must be reimbursed for
loss suffered by him because of the
If the depositor refuses to receive character of the thing deposited.
the thing, the depositary may
deposit the thing at the disposal of Exceptions:
the judicial authority. a) Depositor was not aware of the
danger;
Exception: b) Depositor was not expected to
When the deposit is for a valuable know the dangerous character of
consideration, the depositary has no the thing;
right to return the thing before the c) Depositor notified the depositary of
expiration of the time designated even such dangerous character;
if he should suffer inconvenience as a d) Depositary was aware of the
consequence. danger without advice from the
depositor.

Extent of liability:
3. Effect of death of depositor or a) Liability in hotel rooms which come
depositary. (Art. 1995) under the term “baggage” or
articles such as clothing as are
a) Deposit gratuitous – death of ordinarily used by travelers
either of the depositor or b) Include those lost or damages in
depositary extinguishes the hotel annexes such as vehicles in
deposit (personal in nature). By the hotel’s garage.
the word “extinguished,” the law
really means that the depositary In the following cases, the hotel-
is not obliged to continue with keeper is liable REGARDLESS of the
the contract of deposit. amount of care exercised:
b) Deposit for compensation – not a) The loss or injury to personal

extinguished by the death of property is caused by his servants
either party. or employees as well as by
strangers (Art. 2000).
NECESSARY DEPOSITS b) The loss is caused by the act of a
thief or robber done without the
A deposit is necessary when: use of arms and irresistible force.
(Art. 2001)
1. It is made in compliance with a legal
obligation, in which case it is governed In the following cases, the hotel-
by the law establishing it, and in case keeper is not liable:
of deficiency, the rules on voluntary
deposit e.g. Arts. 538, 586 and 2104 a) The loss or injury is cause by
force majeure, like flood, fire,
2. It takes place on the occasion of any theft or robbery by a stranger
calamity, such as fire, storm, flood, (not the hotel-keeper’s servant
pillage, shipwreck, or other similar or employee) with the use of
events. There must be a causal relation firearms or irresistible force.
between the calamity and the
constitution of the deposit. In this case Exception: Unless the hotel-
the deposit is governed by the rules on keeper is guilty of fault or
voluntary deposit and Art. 2168 negligence in failing to provide
against the loss or injury from
3. Made by passengers with common his cause.
carriers., as to those baggage the
passengers or their agents carry b) The loss is due to the acts of
the guests, his family,
4. Made by travelers in hotels or inns. servants, visitors.
(Art. 1998)
c) The loss arises from the
The hotel-keeper cannot free himself character of the things brought
from responsibility by posting notices into the hotel.
to the effect that he is not liable for the
articles brought by the guest. (Art. Hotel-keeper’s right to retain
2003) Any stipulation between the
hotel-keeper and the guest whereby The hotel-keeper has a right to retain
the responsibility of the former (as set the things brought into the hotel by the
forth in Art. 1998-2001) is suppressed guest, as a security for credits on
or diminished shall be VOID. account of:
a) lodging;
Before keepers of hotels or inns may b) supplies usually furnished to
be held responsible as depositaries hotel guests.
with regard to the effects of their Rationale
guests, the following must concur: It is given to hotel-keepers to
compensate them for the
Elements: liabilities imposed upon them by
a) They have been previously law. The right of retention
informed about the effects brought recognized in this article is in
by the guests; and the nature of a pledge created
b) The latter have taken the by operation of law.
precautions prescribed regarding
their safekeeping. JUDICIAL DEPOSIT

When judicial deposit takes place: Judicial GUARANTY

deposit takes place when an attachment or
seizure of property in litigation is ordered by a
GUARANTY is a contract whereby a person,
court. (Art. 2005)
called the guarantor, binds himself to the
creditor to fulfill the obligation of the principal
Nature: Auxiliary to a case pending in court.
debtor in case the latter should fail to do so.
(Art. 2047)
Purpose: To maintain the status quo during
the pendency of the litigation or to insure the
right of the parties to the property in case of a CHARACTERISTICS
favorable judgment.
1. Accessory – dependent for its
Depositary of sequestered property: person existence upon the principal obligation
appointed by the court. (Art. 2007) guaranteed by it;
2. Subsidiary and conditional – takes
Obligations: effect only when the principal debtor
a) To take care of the property with the fails in his obligation subject to
diligence of a good father of the family. limitation
(Art. 2008) 3. Unilateral –
b) He may not be relieved of his a. It gives rise only to a duty on
responsibility until the litigation is the part of the guarantor in
ended or the court so orders. (Art. relation to the creditor and not
2007) vice versa
b. It may be entered into even
Applicable law: The law on judicial deposit is without the intervention of the
remedial or procedural in nature. Hence, the principal debtor.
Rules of Court are applicable. (Art. 2009) 4. Guarantor must be a person distinct
from the debtor – a person cannot be
the personal guarantor of himself
Basis of Judicial Extra-
Compariso Deposit judicial
n Deposit CLASSIFICATION OF GUARANTY
Cause or By will of By will of the
1. Guaranty in the broad sense:
origin the courts parties.
a. Personal – guaranty is the
Hence, there
credit given by the person who
is a contract
guarantees the fulfillment of the
Purpose Security; Custody;
principal obligation; or
Secure the Safekeeping
b. Real – guaranty is property,
right of a of the thing
movable, or immovable
party to
i. Real mortgage (2124) or
recover in
antichresis (2132) –
case of
guaranty is immovable
favorable
ii. Chattel mortgage (2140)
judgment.
or pledge (2093) –
Subject Either Only guaranty is movable
Matter movable or movable 2. As to its origin:
immovable property a. Conventional – constituted by
property agreement of the parties
but (2051[1])
generally, b. Legal – imposed by virtue of a
immovable provision of law
Remunerati Always Generally c. Judicial – required by a court to
on remunerate gratuitous, guarantee the eventual right of
d (onerous) but may be one of the parties in a case.
compensate 3. As to consideration:
d a. Gratuitous – guarantor does not
In whose In behalf of In behalf of receive any price or
behalf it is the person the remuneration for acting as such
held who, by the depositor or (2048)
judgment, third person b. Onerous – one where the
has a right designated guarantor receives valuable
consideration for his guaranty
4. As to person guaranteed:
a. Single – constituted solely to
guarantee or secure
performance by the debtor of
the principal obligation;

b. Double or sub-guaranty – 1. Guaranty is unilateral – exists for the

constituted to secure the benefit of the creditor and not for the
fulfillment by the guarantor of a benefit of the principal debtor
prior guaranty 2. Creditor has every right to take all
5. As to its scope and extent: possible measures to secure payment
a. Definite – where the guaranty is of his credit – guaranty can be
limited to the principal constituted even against the will of the
obligation only, or to a specific principal debtor
portion thereof;
b. Indefinite or simple – where the
However, as regards payment made by a
guaranty included all the
third person:
accessory obligations of the
principal, e.g. costs, including 1. Payment without the knowledge or
judicial costs. against the will of the debtor:
a. Guarantor can recover only
insofar as the payment has
RULES GOVERNING GUARANTY
been beneficial to the debtor
1. A guaranty is generally gratuitous b. Guarantor cannot compel the
(2048) creditor to subrogate him in his
rights
General Rule: Guaranty is gratuitous
2. Payment with knowledge or consent of
Exception: When there is a stipulation the debtor: Subrogated to all the rights
to the contrary which the creditor had against the
debtor
2. On the cause of a guaranty contract
a. Presence of cause which supports
5. The guaranty must be founded on a
principal obligation: Cause of the
valid principal obligation (2052[1])
contract is the same cause which
supports the obligation as to the Guaranty is an accessory contract: It is an
principal debtor23. The indispensable condition for its existence that
consideration which supports the there must be a principal obligation. Hence, if
obligation as to the principal the principal obligation is void, it is also void.
debtor is a sufficient consideration
to support the obligation of a
guarantor or surety. 6. A guaranty may secure the
b. Absence of direct consideration or performance of a voidable,
benefit to guarantor: Guaranty or unenforceable, and natural obligation
surety agreement is regarded valid (2052[2])
despite the absence of any direct
A guaranty may secure the performance of a:
consideration received by the
guarantor or surety, such 1. Voidable contract – such contract is
consideration need not pass binding, unless it is annulled by a
directly to the guarantor or surety; proper court action
a consideration moving to the 2. Unenforceable contract – because such
principal will suffice. contract is not void
3. Natural obligation – the creditor may
proceed against the guarantor
3. A married woman who is a guarantor
although he has not right of action
binds only her separate property,
against the principal debtor for the
generally
reason that the latter’s obligation is not
Exceptions: civilly enforceable. When the debtor
himself offers a guaranty for his
1. With her husband’s consent, bind the
natural obligation, he impliedly
community or conjugal partnership
recognizes his liability, thereby
property
transforming the obligation from a
2. Without husband’s consent, in cases
natural into a civil one.
provided by law, such as when the
guaranty has redounded to the benefit
of the family. 7. A guaranty may secure a future debt
(2053)
4. A guaranty need not be undertaken
Continuing Guaranty or Suretyship24:
with the knowledge of the debtor (2050)
24
DIÑO v. CA: “Under the Civil Code, a guaranty may be given to
23
SEVERINO v SEVERINO: “A guarantor or surety is bound by secure even future debts, the amount of which may not known at
the same consideration that makes the contract effective between the time the guaranty is executed. This is the basis for contracts
the principal parties thereto.” denominated as continuing guaranty or suretyship.

1. Future debts, even if the amount is not

yet known, may be guaranteed but
8. A guaranty may secure the
there can be no claim against the
performance of a conditional obligation
guarantor until the amount of the debt
is ascertained or fixed and 1. Principal obligation subject to a
demandable. suspensive condition – the guarantor is
liable only after the fulfillment of the
Rationale: A contract of guaranty is condition.
subsidiary. 2. Principal obligation subject to a
resolutory condition – the happening of
a. To secure the payment of a loan
the condition extinguishes both the
at maturity – surety binds
principal obligation and the guaranty
himself to guarantee the
punctual payment of a loan at
maturity and all other 9. A guarantor’s liability cannot exceed
obligations of indebtedness the principal obligation (2054)
which may become due or
owing to the principal by the
General Rule:
borrower.
Guaranty is a subsidiary and accessory
contract – guarantor cannot bind himself for
b. To secure payment if any debt more than the principal debtor and even if he
to be subsequently incurred – a does, his liability shall be reduced to the limits
guaranty shall be construed as of that of the debtor. But the guarantor may
continuing when by the terms bind himself for less than that of the principal.
therof it is evident that the
object is to give a standing Exceptions:
credit to the principal debtor to
1. Interest, judicial costs, and attorney’s
be used from time to time
fees as part of damages may be
either indefinitely or until a
recovered – creditors suing on a
certain period, especially if the
suretyship bond may recover from the
right to recall the guaranty is
surety as part of their damages,
expressly reserved.
interest at the legal rate, judicial costs,
and attorney’s fees when appropriate,
c. To secure existing unliquidated
even without stipulation and even if
debts – refer to debts existing
the surety would thereby become liable
at the time of the constitution
to pay more than the total amount
of the guaranty but the amount
stipulated in the bond.
thereof is unknown and not to
dents not yet incurred and
Interest runs from:
existing at that time. The surety
agreement itself is valid and a. Filing of the complaint (upon
binding even before the judicial demand); or
principal obligation intended to b. The time demand was made
be secured thereby is born, any upon the surety until the
more than there would be in principal obligation is fully paid
saying that obligations which (upon extra-judicial demand)
are subject to a condition
precedent are valid and binding Rationale
before the occurrence of the Surety is made to pay, not by reason
condition precedent of the contract, but by reason of his
failure to pay when demanded and for
having compelled the creditor to resort
A continuing guaranty is one which is not limited to a
single transaction, but which contemplates a future course of to the courts to obtain payment.
dealing, covering a series of transactions, generally for an
indefinite time or until revoked. It is prospective in its operation 2. Penalty may be provided – a surety
and is generally intended to provide security with respect to future
transactions within certain limits, and contemplates a succession may be held liable for the penalty
of liabilities, for which, as they accrue, the guarantor becomes provided for in a bond for violation of
liable. the condition therein.
A continuing guaranty is one which covers all
transactions, including those arising in the future, which are within
Principal’s liability may exceed
the description or contemplation of the contract, of guaranty, until guarantor’s obligations
the expiration or termination thereof. A guaranty shall be
construed as continuing when by the terms thereof it is evident The amount specified in a surety bond
that the object is to give a standing credit to the principal debtor to as the surety’s obligation does not limit
be used from time to time either indefinitely or until a certain
period, especially if the right to recall the guaranty is expressly
the extent of the damages that may be
reserved. recovered from the principal, the
Where the contract of guaranty states that the same is latter’s liability being governed by the
to secure advances to be made "from time to time" the guaranty
will be construed to be a continuing one.”

obligations he assumed under his undertaking

contract.
Secondarily liable Primarily liable –
10. The existence of a guaranty is not – he contracts to undertakes directly
presumed (2055) pay if, by the use for the payment
Guaranty requires the expression of consent of due diligence, without reference to
the dent cannot be the solvency of the
on the part of the guarantor to be bound. It
paid principal, and is so
cannot be presumed because of the existence
responsible at once
of a contract or principal obligation.
the latter makes
Rationale: default, without any
1. There be assurance that the guarantor demand by the
had the true intention to bind himself; creditor upon the
2. To make certain that on making it, the principal
guarantor proceeded with whatsoever or any
consciousness of what he was doing. notice of default
Only binds himself Undertakes to pay if
11. A contract of guaranty is covered by to pay if the the principal does
the Statute of Frauds principal cannot or not pay, without
unable to pay regard to his ability
Guaranty must not only be expressed but to do so
must so be reduced into writing. Hence, it
shall be unenforceable by action, unless the Insurer of the Insurer of the debt
same or some note or memorandum thereof solvency of the
be in writing, and subscribed by the party debtor
charged, or by his agent; evidence, therefore, Does not contract Pay the creditor
of the agreement cannot be received without that the principal without qualification
the writing, or a secondary evidence of its will pay, but if the principal
contents. However, It need not appear in a simply that he is debtor does not
public document. able to do so pay. Hence, the
responsibility or
obligation assumed
GUARANTY DISTINGUISHED FROM by the surety is
WARRANTY greater or more
GUARANTY WARRANTY onerous than that
of a guarantor
Contract by which a An undertaking
person is bound to that the title,
another for the quality, or 13. On the guarantor (2056-2057)
fulfillment of a quantity of the
promise or subject matter of 1. He possesses integrity;
engagement of a a contract is 2. He has capacity to bind himself;
third party what it has been 3. He has sufficient property to answer
represented to for the obligation which he guarantees.
be, and relates
to some Exception: The creditor waives the
agreement made requirements
ordinarily by the
party who makes The qualifications above need only be present
the warranty at the time of the perfection of the contract.
The subsequent loss of integrity or property or
supervening incapacity of the guarantor would
GUARANTY DISTINGUISHED FROM not operate to exonerate the guarantor of the
SURETYSHIP eventual liability he has contracted, and the
contract of guaranty continues. The creditor
GUARANTY SURETYSHIP can merely demand another guarantor with
Liability depends Assumes liability as the proper qualifications except that the
upon an a regular party to creditor may waive such remedy if he chooses
independent the undertaking and hold the guarantor to his bargain.
agreement to pay
the obligation if
the primary debtor
fails to do so Selection of Guarantor:
Engagement is a Charged as an 1. Specified person stipulated as

collateral original promisor guarantor: Substitution of guarantor
may not be demanded

Reason: The selection of the guarantor principal debtor would not result
is: in the satisfaction of the
a. Term of the agreement; obligation – if such judicial
b. As a party, the creditor is, action including execution would
therefore, bound thereby. not satisfy the obligation, the
2. Guarantor selected by the principal guarantor can no longer require
debtor: Debtor answers for the the creditor to resort to all such
integrity, capacity, and solvency of the remedies against the debtor as
guarantor. the same would be but a
3. Guarantor personally designated by the useless formality. It is not
creditor: Responsibility of the selection necessary that the debtor be
should fall upon the creditor because judicially declared insolvent.
he considered the guarantor to have
the qualifications for the purpose. 2. If he does not comply with Art. 2060:
In order that the guarantor may make
EFFECTS OF GUARANTY BETWEEN THE use of the benefit of excussion, he
GUARANTOR AND THE CREDITOR must:
1. The guarantor has the right to benefit a. Set it up against the creditor
from excussion/ exhaustion25 upon the latter’s demand for
payment from him;
Exceptions to the benefit of excussion (2059) b. Point out to the creditor:
i. Available property of the
1. As provided in Art. 2059: debtor – the guarantor
should facilitate the
a. If the guarantor has expressly realization of the
renounced it ;waiver is valid but excussion since he is the
it must be made in express most interested in its
terms. benefit.
b. If he has bound himself ii. Within the Philippine
solidarily with the debtor, the territory – excussion of
liability assumed is that of a property located abroad
surety. The guarantor becomes would be a lengthy and
primarily liable as a solidary co- extremely difficult
debtor. In effect, he renounces proceeding and would
in the contract itself the benefit not conform with the
of exhaustion26. purpose of the guaranty
c. In case of insolvency of the to provide the creditor
debtor – guarantor guarantees with the means of
the solvency of the debtor. If obtaining the fulfillment
the debtor becomes insolvent, of the obligation.
the liability of the guarantor as iii. Sufficient to cover the
the debtor cannot fulfill his amount of the debt.
obligation
d. When he (debtor) has 3. If he is a judicial bondsman and sub-
absconded, or cannot be sued surety (2084)
within the Philippines – the
creditor is not required to go 4. Where a pledge or mortgage has been
after a debtor who is hiding or given by him as a special security.
cannot be sued in our courts,
and to incur the delays and 5. If he fails to interpose it as a defense
expenses incident thereto. The before judgment is rendered against
exception is when the debtor him.
has left a manager or
representative; 2. The creditor has the right to secure a
e. If it may be presumed that an judgment against the guarantor prior to
execution on the property of the the excussion
General rule:
25
SOUTHERN MOTORS, INC. v BARBOSA: “The right of An ordinary personal guarantor (NOT a
guarantors…to demand exhaustion of the property of the principal
debtor, exists only when a pledge or a mortgage has not been
pledgor or mortgagor), may demand
given as special security for the payment of the principal exhaustion of all the property of the debtor
obligation.” before he can be compelled to pay.
26
LUZON STEEL CORP. v SIA: “The surety in the present case
bound itself "jointly and severally" (in solidum) with the defendant;
and excussion (previous exhaustion of the property of the debtor)
Exception:
shall not take place "if he (the guarantor) has bound himself
solidarily with the debtor".”

The creditor may, prior thereto, secure a 1. A compromise between creditor and
judgment against the guarantor, who shall be principal debtor benefits the guarantor
entitled, however, to a deferment of the but does not prejudice him.
execution of said judgment against him, until 2. A compromise between guarantor and
after the properties of the principal debtor the creditor benefits but does not
shall have been exhausted, to satisfy the prejudice the principal debtor.
latter’s obligation.
8. Co-guarantors are entitled to the
3. The creditor has the duty to make prior benefit of division (2065)
demand for payment from the guarantor
(2060) The benefit of division applies only when there
are several guarantors and one debtor for a
1. The demand is to be made only after single debt. Except when solidarity has been
judgment on the debt stipulated among the co-guarantors, a co-
2. Joining the guarantor in the suit guarantor is liable only to the extent of his
against the principal debtor is not the share in the obligation as divided among all
demand intended by law. Actual the co-guarantors.
demand has to be made.
EFFECTS OF GUARANTY BETWEEN THE
4. The guarantor has the duty to set up DEBTOR AND THE GUARANTOR
the benefit of excussion (2060)
As soon as he is required to pay, guarantor 1. The guarantor has the right to be

must also point out to the creditor available subrogated to the rights of the creditor
property (not in litigation or encumbered) of
the debtor within the Philippines. A guarantor who pays the debt is entitled to
every remedy which the creditor has against
5. The creditor has the duty to resort to the principal debtor, to enforce every security
all legal remedies (2061) and all means of payments; to stand in the
place of the creditor not only through the
a) After the guarantor has fulfilled the medium of the contract, but even by means of
conditions required for making use of the securities entered into w/out the
the benefit of exhaustion, it becomes knowledge of the surety; having the right to
the duty of the creditor to: have those securities transferred to him
b) Exhaust all the property of the debtor though there was no stipulation for it, and to
pointed out by the guarantor; avail himself of all securities against the
c) If he fails to do so, he shall suffer the debtor
loss but only to the extent of the value
of the said property, for the insolvency The need to enforce the provisions on
of the debtor. indemnity in Article 2066 forms the basis for
the subrogation clause of Article 2067. The
6. The creditor has the duty to notify the assumption, however, is that the guarantor
guarantor in the action against the who is subrogated to the rights of the
debtor creditor, has the right to be reimbursed for his
answering for the obligation of the debtor.
Under this article, notice to the guarantor is Absent this right of reimbursement,
mandatory in the action against the principal subrogation will not be proper.
debtor. The guarantor, however, is not duty
bound to appear in the case, and his non- 2. The guarantor has the duty to notify
appearance shall not constitute default, w/ its the debtor before paying the creditor.
consequential effect.
Should payment be made without notifying
Rationale: the debtor, and supposing the debtor has
The purpose of notification is to give the already made a prior payment, the debtor
guarantor the opportunity to allege and would be justified in putting up the defense
substantiate whatever defenses he may have that the obligation has already been
against the principal obligation, and chances extinguished by the time the guarantor made
to set up such defenses as are afforded him the payment. In this case, the guarantor will
by law if he so desires lose the right of reimbursement and
consequently the right of subrogation as well.
3. The guarantor cannot make payment

7. A compromise shall not prejudice the before the obligation has become due.
person not party to it. General rule:
Since a contract of guaranty is only
subsidiary, the guarantor cannot be liable for

the obligation before the period on which the obligation. For purposes of
debtor’s liability will accrue. Any payment proportionate reimbursement, the
made by the guarantor before the obligation is other guarantors may interpose such
due cannot be indemnified by the debtor. defenses against the paying guarantor
as are available to the debtor against
Exception: the creditor, except those that are
Prior consent or subsequent ratification by the personal to the debtor.
debtor
EXTINGUISHMENT OF GUARANTY
4. The guarantor may proceed against
the debtor even before payment has been 1. Once the obligation of the debtor is
made extinguished in any manner provided in the
Civil Code, the obligation of the guarantor is
General rule: also extinguished. However, there may be
Guarantor has no cause of action against the instances when, after the extinguishment of
debtor until after the former has paid the the guarantor’s obligation (as in the case of a
obligation. release from the guaranty), the obligation of
the debtor still subsists.
Exceptions:
2. Although the guarantor generally has to
1. When he is sued for the payment; make payment in money, any other thing of
2. In case of insolvency of the principal value, if accepted by the creditor, is valid
debtor; payment and therefore releases the
3. When the debtor has bound himself to guarantor.
relieve him from the guaranty within a
specified period, and this period has 3. If one guarantor is released, the release
expired; would benefit the co-guarantors to the extent
4. When the debt has become of the proportionate share of the guarantor
demandable, by reason of the released.
expiration of the period for payment;
5. After the lapse of 10 years, when the 4. A guarantor is also released if the creditor,
principal obligation has no fixed period without the guarantor’s consent, extends the
for its maturity, unless it be of such time within which the debtor may perform his
nature that it cannot be extinguished obligation. This is to protect the interest of the
except within a period longer than 10 guarantor should the debtor be insolvent
years; during the period of extension and deprive the
6. If there are reasonable grounds to fear guarantor of his right to reimbursement.
that the principal debtor intends to
abscond; 5. If through the fault of the creditor the
7. If the principal debtor is in imminent guarantors are precluded from being
danger of becoming insolvent. subrogated to the former’s rights, the latter
are released from the obligation.
Rationale
To enable the guarantor to take measures for
the protection of his interest in view of the LEGAL AND JUDICIAL BONDS
probability that he would be called upon to
pay the debt. As such, he may, in the
alternative, obtain release from the guaranty; Bond – an undertaking that is sufficiently
or demand security that shall protect him secured, and not cash or currency.
from any proceedings by the creditor; and Bondsman – a surety offered in virtue of a
against the insolvency of the debtor. provision of law or a judicial order.
EEFECTS OF GUARANTY AS BETWEEN CO- Qualifications of personal bondsman:
GUARANTORS 1. He possesses integrity;
2. He has capacity to bind himself;
Requisites for the applicability of Art. 2073: 3. He has sufficient property to
answer for the obligation which he
1. Payment has already been made by guarantees.
one guarantor;
2. The payment was made because
a. Of the insolvency of the debtor, PLEDGE OR MORTGAGE IN LIEU OF BOND
or Guaranty or suretyship is a personal security.
b. By judicial demand
3. The paying guarantor seeks to be Pledge or mortgage is a property or real
indemnified only to the extent of his security.
proportionate share in the total

If the person required to give a legal or NOTE: Surety is not entitled to

judicial bond should not be able to do so, a exhaustion
pledge or mortgage sufficient to cover the
4. Undertaking is to creditor, not to
obligation shall be admitted in lieu thereof.
debtor: The surety makes no covenant
BONDSMAN NOT ENTITLED TO or agreement with the principal that it
EXCUSSION will fulfill the obligation guaranteed for
the benefit of the principal. The
A judicial bondsman and the sub-surety are
surety’s undertaking is that the
not entitled to the benefit of excussion.
principal shall fulfill his obligation and
Reason: They are not mere guarantors, but that the surety shall be relieved of
sureties whose liability is primary and liability when the obligation secured is
solidary. performed.
Exception: Unless otherwise expressly
Effect of negligence of creditor: Mere
provided.
negligence on the part of the creditor in
collecting from the debtor will not relieve the NOTE: Surety is not entitled to notice
surety from liability. of principal’s default
5. Prior demand by the creditor upon
principal not required
SURETYSHIP is a relation which exists where Surety is not exonerated by
one person (principal) has undertaken an neglect of creditor to sue principal
obligation and another person (surety) is also
under a direct and primary obligation or other
duty to the obligee, who is entitled to but one STRICTISSIMI JURIS RULE APPLICABLE
performance, and as between the two who are ONLY TO ACCOMMODATION SURETY
bound, the second, rather than the first
should perform. Reason: An accommodation surety acts
without motive of pecuniary gain and hence,
If a person binds himself solidarily with the should be protected against unjust pecuniary
principal debtor, the contract is called impoverishment by imposing on the principal,
suretyship and the guarantor is called a duties akin to those of a fiduciary.
surety.
This rule will apply only after it has been
definitely ascertained that the contract is one
NATURE OF SURETY’S UNDERTAKING of suretyship or guaranty.
1. Liability is contractual and
accessory but direct:
2. Liability is limited by terms of STRICTISSIMI JURIS RULE NOT
contract APPLICABLE TO COMPENSATED
3. Liability arises only if principal SURETIES
debtor is held liable Reasons:
a. In the absence of collusion, the
surety is bound by a judgment 1. Compensated corporate sureties are
against the principal event business association organized for the
though he was not a party to purpose of assuming classified risks in
the proceedings; large numbers, for profit and on an
b. The creditor may sue, impersonal basis.
separately or together, the 2. They are secured from all possible loss
principal debtor and the surety; by adequate counter-bonds or
c. A demand or notice of default is indemnity agreements.
not required to fix the surety’s 3. Such corporations are in fact insurers
liability and in determining their rights and
Exception: Where required by liabilities, the rules peculiar to
the provisions of the contract of suretyship do not apply.
suretyship
d. A surety bond is void where
there is not principal debtor
because such an undertaking
presupposes that the obligation
is to be enforceable against
someone else besides the
surety, and the latter can
always claim that it was never
his intention to be the sole
person obligated thereby.

PLEDGE, MORTGAGE, 2) Creditor cannot appropriate to himself the

thing nor can he dispose of the same as
ANTICHRESIS owner.
pledge mortgage
ESSENTIAL REQUISITES COMMON TO Constituted on Constituted on
PLEDGE AND MORTGAGE movables. immovables.
Property is Delivery not
1) Constituted to secure the fulfillment of a delivered to the necessary.
principal obligation27. pledgee, or by
2) Pledgor or mortgagor must be the common consent to
absolute owner of the thing pledged or a 3rd person.
mortgaged. Not valid against 3rd Not valid against 3rd
3) The persons constituting the pledge or persons unless a persons if not
mortgage have the free disposal of their description of the registered.
property, and in the absence thereof, that thing pledged and
they be legally authorized for the purpose. the date of the
4) Cannot exist without a valid obligation. pledge appear in a
5) Debtor retains the ownership of the thing public instrument.
given as a security.
6) When the principal obligation becomes
due, the thing pledged or mortgaged may PROHIBITION AGAINST PACTUM
be alienated for the payment to the COMMISSORIUM
creditor.
1. Stipulation is null and void: Stipulation
where thing or mortgaged shall
IMPORTANT POINTS automatically become the property of
the creditor in the event of
1) Future property cannot be pledged or
nonpayment of the debt within the
mortgaged.
term fixed.
2) Pledge or mortgage executed by one who 2. Requisites of pactum commissorium28:
is not the owner of the property pledged a) Pledge or mortgage.
or mortgaged is without legal existence b) A stipulation for an automatic
and registration cannot validate it. appropriation by the creditor of the
property in the event of
3) Mortgage of a conjugal property by one of
nonpayment.
the spouses is valid only as to ½ of the
3. Effect on security contract: Nullity of
entire property.
the stipulation does not affect validity
4) In case of property covered by Torrens and efficacy of the principal contract.
title, a mortgagee has the right to rely
upon what appears in the certificate of title
and does not have to inquire further. IMPORTANT POINTS
5) Pledgor or mortgagor has free disposal of
1) Debtor-owner bears the risk of loss of the
property.
property.
6) Thing pledged or mortgaged may be 2) Pledge or mortgage is indivisible.
alienated. Exceptions:
a) Where each of several things
7) Creditor not required to sue to enforce his
guarantees a determinate portion of
credit.
the credit.
8) Pledgor or mortgagor may be a third b) Where only a portion of loan was
person. released.
c) Where there was failure of
consideration.
RIGHT OF CREDITOR WHERE DEBTOR FAILS
3) Rule that real property, consisting of
TO COMPLY WITH HIS OBLIGATION
several lots should be sold separately,
applies to sales in execution, and not to
1) Creditor is merely entitled to move for the
foreclosure of mortgages.
sale of the thing pledged or mortgaged
4) The mere embodiment of a real estate
with the formalities required by law in
mortgage and a chattel mortgage in one
order to collect.
28
UY TONG v CA: The 2 elements for pactum commissorium to
exist: (1) that there should be a pledge or mortgage wherein a
27
property is pledged or mortgaged by way of security for the
MANILA SURETY V VELAYO: The accessory character is of payment of the principal obligation; and (2) that there should be a
the essence of pledge and mortgage. As stated in Art 2085 CC, an stipulation for an automatic appropriation by the creditor of the
essential requisite of these contracts is that they be constituted to thing pledged or mortgaged in the event of non-payment of the
secure the fulfillment of a principal obligation principal obligation within the stipulated period.

document does not have the effect of CHARACTERISTICS

fusing both securities into an indivisible
1) Real – Perfected by delivery.
whole29.
5) Pledge or mortgage may secure all kinds 2) Accessory – Has no independent existence
of obligation, be they pure or subject to of its own.
suspensive or resolutory conditions.
3) Unilateral – Creates obligation solely on
6) A promise to constitute pledge or
the part of the creditor to return the thing
mortgage creates no real right, only a
subject upon the fulfillment of the principal
personal right binding upon the parties,
obligation.
only right of action to compel the
fulfillment of the promise but there is no 4) Subsidiary – Obligation incurred does not
pledge or mortgage yet. arise until the fulfillment of the principal
7) Under the RPC, estafa is committed by a obligation.
person who, pretending to be the owner
of any real property, shall convey, sell,
encumber or mortgage the same knowing CAUSE OR CONSIDERATION
that the real property is encumbered and
1) Principal obligation – In so far as the
shall dispose of the same as
pledgor is concerned.
unencumbered. It is essential that fraud or
deceit be practiced upon the vendee at the 2) Compensation stipulated for the pledge or
time of the sale. mere liberality of the pledgor – If pledgor
is not the debtor.
PLEDGE is a contract by virtue of which the
debtor delivers to the creditor or to a third PROVISIONS APPLICABLE ONLY TO
person a movable or document evidencing PLEDGE
incorporeal rights for the purpose of securing
the fulfillment of a principal obligation with the 1) Transfer of possession to the creditor or to
understanding that when the obligation is third person by common agreement is
fulfilled, the thing delivered shall be returned essential in pledge.
with all its fruits and accessions. (Art.2085 in - Actual delivery is important.
rel to 2093) - Constructive or symbolic
delivery of the key to the
warehouse is sufficient to show
KINDS
that the depositary appointed
1) Voluntary or conventional – Created by by common consent of the
agreement of parties. parties was legally placed in
possession.
2) Legal – Created by operation of law.
2) All movables within the commerce of man
may be pledged as long as they are
susceptible of possession.
3) Incorporeal rights may be pledged. The
instruments representing the pledged
rights shall be delivered to the creditor; if
they be negotiable instruments, they must
29
CENTRAL BANK vs. CA: The consideration of the accessory
contract of real estate mortgage is the same as that of the be indorsed.
principal contract. For the debtor, the consideration of his
obligation to pay is the existence of a debt. Thus, in the accessory 4) Pledge shall take effect against 3rd persons
contract of real estate mortgage, the consideration of the debtor in only if the following appear in a public
furnishing the mortgage is the existence of a valid, voidable, or instrument:
unenforceable debt (Art. 2086, in relation to Art. 2052, of the Civil
Code). a) Description of the thing pledged.
It is not necessary that any consideration should pass at b) Date of the pledge.
the time of the execution of the contract of real mortgage. It may 5) The thing pledged may be alienated by the
either be a prior or subsequent matter. But when the consideration
is subsequent to the mortgage, the mortgage can take effect only pledgor or owner only with the consent of
when the debt secured by it is created as a binding contract to the pledgee. Ownership of the thing
pay. And, when there is partial failure of consideration, the pledged is transmitted to the vendee or
mortgage becomes unenforceable to the extent of such failure.
Where the indebtedness actually owing to the holder of
transferee as soon as the pledgee
the mortgage is less than the sum named in the mortgage, the consents to the alienation, but the latter
mortgage cannot be enforced for more than the actual sum due. shall continue to have possession.
The rule of indivisibility of the mortgage as outlined by
Article 2089 above-quoted presupposes several heirs of the
6) Pledge gives the creditor the right to retain
debtor or creditor which does not obtain in this case. Hence, the the thing in his possession or in that of a
rule of indivisibility of a mortgage cannot apply; third person to whom it has been
BELO vs. PNB: From Art. 2089 is excepted the case in w/c, there
delivered, until the debt is paid.
being several things given in mortgage or pledge, each one of 7) Special Laws apply to pawnshops and
them guarantees only a determinate portion of the credit. The establishments engaged in making loans
debtor, in this case, shall have a right to the extinguishment of the secured by pledges. Provisions of the Civil
pledge or mortgage as the portion of the debt for w/c each thing is
specially answerable is satisfied. From the wordings of the law, Code shall apply subsidiarily to them.
indivisibility arises only when there is a debt, that is, there is a
debtor-creditor relationship.

RIGHTS AND DUTIES OF CREDITOR IN A 3) Is allowed to substitute the thing which is

PLEDGE in danger of destruction or impairment
without any fault on the part of the
1) Shall take care of the thing pledged with pledgee, with another thing of the same
the diligence of a good father of a family. kind and quality.
2) Has right to reimbursement of the 4) May require that the thing be deposited
expenses made for preserving the thing. with a 3rd person, if through the
Shall be liable for loss or deterioration of negligence or willful act of the pledgee the
the thing by reason of fraud, negligence, thing is in danger of being lost or
delay or violation of the terms of the impaired.
contract, but not for fortuitous events.
3) May bring actions pertaining to the owner EXTINGUISHMENT OF A PLEDGE
of the thing in order to recover it from, or
defend it against, a 3rd person. 1) Ways to extinguish a pledge:
4) Cannot use the thing without the authority a) Payment of the debt.
of the owner. If he uses the thing without b) Sale of the thing pledged at public
authority, or if he misuses the thing when auction.
he was authorized to use it, the owner c) Thing pledged is returned by the
may ask that it be judicially or pledgee to the pledgor or owner.
extrajudicially deposited. d) Written statement by the pledgee that
5) May use the thing if necessary for its he renounces or abandons the pledge.
preservation. For this purpose, neither the
6) May either claim another thing in pledge acceptance by the pledgor or owner
or demand immediate payment of the nor the return of the thing pledged is
principal obligation if he is deceived on the necessary, and the pledgee becomes a
substance or quality of the thing. depositary.
2) Presumptions32:
RIGHTS AND DUTIES OF THE PLEDGEE a) If, subsequent to the perfection of the
pledge, the thing is found in the
1) Cannot deposit the thing pledged with a possession of the pledgor or owner,
3rd person, unless there is a contrary there is prima facie presumption that
stipulation30. the thing has been returned by the
2) Is responsible for the acts of his agents or pledgee.
employees with respect to the thing b) If the thing is in the possession of a
pledged. 3rd person who received it from the
3) Has no right to use the thing or to pledgor or owner after the constitution
appropriate its fruits without authority of the pledge, there is prima facie
from the owner31. presumption that the thing has been
4) May cause the public sale of the thing returned by the pledgee.
pledged if, without fault on his part, there
is danger of destruction, impairment or REQUIREMENTS IN SALE OF THE THING
dimunition in value of the thing. The PLEDGED BY A CREDITOR, IF CREDIT IS
proceeds of the auction shall be a security NOT PAID ON TIME
for the principal obligation.
1) Debt is due and unpaid.
PLEDGOR 2) Sale must be at a public auction.
3) Notice to the pledgor and owner, stating
the amount due.
1) Takes responsibility for the flaws of the
4) Sale must be made with the intervention
thing pledged.
of a notary public.
2) Cannot ask for the return of the thing
against the will of the creditor, unless and
EFFECT OF THE SALE OF THE THING
until he has paid the debt and its interest,
PLEDGED
with expenses in proper cases.
1) Extinguishes the principal obligation,

whether the price of the sale is more or
30
YULIONGSIU vs. PNB: There is authority supporting the less than the amount due.
proposition that the pledgee can temporarily entrust me physical
possession of the chattels pledged to the pledgor without
invalidating the pledge. In such a case, the pledgor is regarded as
holding the pledged property merely as trustee for the pledgee.
The type of delivery will depend upon the nature and the peculiar
circumstances of each case.
31
PNB vs. ATENDIDO: according to law, a pledgee cannot 32
MANILA BANKING v TEODORO: In case of doubt as to whether a
become the owner of, nor appropriate to himself, the thing given in transaction is a pledge or a dation in payment, the presumption is in
pledge. If by the contract of pledge the pledgor continues to be the favor of pledge, the latter being the lesser transmission of rights and
owner of the thing pledged during the pendency of the obligation, interests (as earlier established in Lopez v. Court of Appeals)
it stands to reason that in case of loss of the property, the loss
should be borne by the pledgor.

2) if the price is more than amount due, the shows the intention of the parties to make
debtor is not entitled to the excess unless the property as a security for a debt.
the contrary is provided. - Provisions governing equitable
3) If the price of the sale is less, neither is mortgage: Arts. 1365, 1450, 1454,
the creditor entitled to recover the 1602, 1603, 1604 and 1607.
deficiency. A contrary stipulation is void.
ESSENTIAL REQUISITES
LEGAL PLEDGES
1) Constituted to secure the fulfillment of a
1) Necessary expenses shall be refunded to principal obligation34.
every possessor, but only a possessor in 2) Mortgagor must be the absolute owner of
good faith may retain the thing until he the thing mortgaged.
has been reimbursed. 3) The persons constituting the mortgage
- Useful expenses shall be refunded only have free disposal of the property; in the
to the possessor in good faith with the absence thereof, they should be legally
same right of retention, the person authorized for the purpose.
who has defeated him in the 4) Cannot exist without a valid obligation.
possession having the option of 5) When the principal obligation becomes
refunding the amount of the expenses due, the thing in which the mortgage
or of paying the increase in value consists may be alienated for payment to
which the thing may have acquired the creditor.
and by reason thereof (Art. 546) 6) Must appear in a public document duly
2) He who has executed work upon a recorded in the Registry of Property, to be
movable has a right to retain it by way of validly constituted.
pledge until he is paid. (Art. 1731) - In a legal mortgage, the persons in
3) The agent may retain the things which are whose favor the law establishes a
the objects of agency until the principal mortgage have the right to demand
effects the reimbursement and pays the the execution and recording of a
indemnity. (Art. 1914) document formalizing the mortgage.
4) The laborer’s wages shall be a lien on the
goods manufactured or the work done. EFFECTS
(Art. 1707)
1) Creates real rights, a lien inseparable from
MORTGAGE is a contract whereby the debtor
the property mortgaged, enforceable
secures to the creditor the fulfillment of a
against the whole world.
principal obligation, specially subjecting to
2) Creates merely an encumbrance.
such security immovable property or real
rights over immovable property in case the
principal obligation is not complied with at the
LAWS GOVERNING MORTGAGE
time stipulated33.
1) New Civil Code.

OBJECTS OF REAL MORTGAGE
2) PD 1952.
3) Revised Administrative Code.
1) Immovables. 4) RA 4882, regarding aliens becoming
2) Alienable real rights in accordance with the mortgagees.
laws, imposed upon immovables.
- Future property cannot be object of
mortgage. IMPORTANT POINTS
KINDS
1) As a general rule, the mortgagor retains
possession of the property. He may deliver
1) Voluntary said property to the mortgagee without
2) Legal altering the nature of the contract of
3) Equitable – One which, although lacking mortgage.
the proper formalities of a mortgage, 2) It is not an essential requisite that the
principal of the credit bears interest, or
33
DAYRIT v CA: Well-entrenched in law is the rule that a
mortgage directly and immediately subjects the property upon
which it is imposed, the same being indivisible even though the
34
debt may be divided, and such indivisibility likewise being MOJICA v CA: Mortgages given to secure future
unaffected by the fact that 'the debtors are not solidarity liable. advancements are valid and legal contracts; that the amounts
"When several things are pledged or mortgaged, each thing for a named as consideration in said contract do not limit the amount for
determinate portion of the debt, the pledges or mortgage, are which the mortgage may stand as security if from the 4 corners of
considered separate from each other. But when the several things the instrument the intent to secure future and other indebtedness
are given to secure the same debt in its entirety, all of them are can be gathered. A mortgage given to secure advancements is a
liable for the debt, and the creditor does not have to divide his continuing security and is not discharged by repayment of the
action by distributing the debt among the various things pledged or amount named in the mortgage, until the full amount of the
mortgaged. Even when only a part of the debt remains unpaid, all advancements are paid (as established earlier in Lim Julian v.
the things are still liable for such balance." (Tolentino) Lutero).

that the interest as compensation for the motion, shall order the property to
use of the principal and the enjoyment of be sold to the highest bidder at a
its fruits be in the form of a certain public auction.
percentage thereof. Upon confirmation of the sale by the
court, also upon motion, it shall
INCIDENTS OF REGISTRATION OF operate to divest the rights of all
MORTGAGE parties to the action and to vest
their rights to the purchaser
1) Mortgagee is entitled to registration of subject to such rights of
mortgage as a matter of right. redemption as may be allowed by
2) Proceedings for registration do not law.
determine validity of the mortgage or its Before the confirmation, the court
effect35. retains control of the proceedings
3) Registration is without prejudice to better The proceeds of the sale shall be
rights of third parties. applied to the payment of the:
4) Mortgage deed, once duly registered, - Costs of the sale;
forms part of the records for the - Amount due the mortgagee;
registration of the mortgaged property. - Claims of junior encumbrancers
5) Mortgage by a surviving spouse of his/her or persons holding subsequent
undivided share in the conjugal property mortgages in the order of their
can be registered. priority; and
- Balance, if any shall be paid to
the mortgagor.
EFFECT OF INVALIDITY OF MORTGAGE Sheriff’s certificate is executed,
ON THE PRINCIPAL OBLIGATION acknowledged and recorded to
complete the foreclosure.
1) Principal obligation remains valid. - NATURE OF JUDICIAL

2) Mortgage deed remains evidence of a FORECLOSURE PROCEEDINGS:
personal obligation. a) Quasi in rem action.
b) Foreclosure is only the result or
FORECLOSURE OF MORTGAGE incident of the failure to pay debt.
c) Survives death of mortgagor.
It is the remedy available to the mortgagee by
which he subjects the mortgaged property to 2) Extrajudicial.
the satisfaction of the obligation secured by - Act No. 3135, as amended:
the mortgage. a) Express authority to sell is given to
the mortgagee.
KINDS OF FORECLOSURE b) Authority is not extinguished by
death of mortgagor or mortgagee.
1) Judicial. c) Public sale should be made after
- Rule 68, ROC: proper notice.
May be availed of by bringing an action d) Surplus proceeds of foreclosure
in the proper court which has sale belong to the mortgagor.
jurisdiction over the area wherein e) Debtor has the right to redeem the
the real property involved or a property sold within 1 year from
portion thereof is situated. and after the date of sale.
If the court finds the complaint to be f) Remedy of party aggrieved by
well-founded, it shall order the foreclosure is a petition to set aside
mortgagor to pay the amount due sale and cancellation of writ of
with interest and other charges possession.
within a period of not less than 90 - Nature of power of foreclosure by
days nor more than 120 days from extrajudicial sale:
the entry of judgment a) Conferred for mortgagee’s
If the mortgagor fails to pay at the protection.
time directed, the court, upon b) An ancillary stipulation.
c) A prerogative of the mortgagee.
35 - Both should be distinguished from
SAMANILLA v CAJUCOM: A mortgage, whether registered or
not, is binding between the parties, registration being necessary execution sale governed by Rule 39, ROC.
only to make the same valid against third persons (Art. 2125, CC). - Foreclosure retroacts to the date of
Registration only operates as a notice of the mortgage to others, registration of mortgage.
but neither adds to its validity nor convert an invalid mortgage into
a valid one between the parties. In Gurbax Singh Pabla vs. Reyes,
- A stipulation of upset price, or the
SC ruled that "if the purpose of registration is merely to give minimum price at which the property shall
notice, the questions regarding the effect or invalidity of be sold to become operative in the event
instruments are expected to be decided after, not before,
registration. It must follow as a necessary consequence that
of a foreclosure sale at public auction, is
registration must first be allowed and validity or effect litigated null and void.
afterwards".

RIGHT OF MORTGAGEE TO RECOVER within a certain period after it was sold

DEFICIENCY for the satisfaction of the debt.
ANTICHRESIS is a contract whereby the
1) Mortgagee is entitled to recover deficiency. creditor acquires the right to receive the fruits
2) If the deficiency is embodied in a of an immovable of the debtor, with the
judgment, it is referred to as deficiency obligation to apply then to the payment of the
judgment. interest, if owing, and thereafter to the
3) Action for recovery of deficiency may be principal of the credit (Art 2132)
filed even during redemption period.
4) Action to recover prescribes after 10 years
from the time the right of action accrues. CHARACTERISTICS
1. Accessory contract – it secures the
EFFECT OF INADEQUACY OF PRICE IN performance of a principal obligation
FORECLOSURE SALE 2. formal contract – it must be in a
specified form to be valid (Art. 2134)
1) Where there is right to redeem, SPECIAL REQUISITES:
inadequacy of price is immaterial because 1. it can cover only the fruits of an
the judgment debtor may redeem the immovable property
property. 2. delivery of the immovable is necessary
- Exception: Where the price is so for the creditor to receive the fruits
inadequate as to shock the conscience and not that the contract shall be
of the court, taking into consideration binding
the peculiar circumstances. 3. amount of principal and interest must
2) Property may be sold for less than its fair be specified in writing
market value, upon the theory that the 4. express agreement that debtor will
lesser the price the easier it is for the give possession of the property to
owner to redeem. creditor and that the latter will apply
3) The value of the mortgaged property has the fruits to the interest, if any, then to
no bearing on the bid price at the public the principal of his credit
auction, provided that the public auction 5. NOTE: The obligation to pay interest is
was regularly and honestly conducted. not of the essence of the contract of
antichresis; there being nothing in the
WAIVER OF SECURITY BY CREDITOR Code to show that antichresis is only
applicable to securing the payment of
1) Mortgagee may waive right to foreclose his interest-bearing loans. On the
mortgage and maintain a personal action contrary, antichresis is susceptible of
for recovery of the indebtedness. guaranteeing all kinds of obligations,
2) Mortgagee cannot have both remedies. pure or conditional
Antichresis Pledge
REDEMPTION Refers to real Refers to personal
property property
1) It is a transaction by which the mortgagor Perfected by mere Perfected by
reacquires the property which may have consent delivery of the thing
passed under the mortgage or divests the pledged
property of the lien which the mortgage Consensual contract Real contract
may have created36.
2) Kinds:
Antichresis Real Mortgage
a) Equity of redemption: Right of the Property is Debtor usually
mortgagor to redeem the mortgaged delivered to creditor retains possession
property after his default in the of the property
performance of the conditions of the Creditor acquires Creditor does not
mortgage but before the sale of the only the right to have any right to
mortgaged property or confirmation of receive the fruits of receive the fruits,
sale the property, hence, but the mortgage
b) Right of redemption: Right of the it does not produce creates a real right
mortgagor to redeem the property a real right over the property
The creditor, unless The creditor has no
there is stipulation such obligation
to the contrary, is
36
MEDIDA v CA: The rule up to now is that the right of a obliged to pay the
purchaser at a foreclosure sale is merely inchoate until after the taxes and charges
period of redemption has expired without the right being upon the estate
exercised. The title to land sold under mortgage foreclosure
remains, in the mortgagor or his grantee until the expiration of the It is expressly There is no such
redemption period and conveyance by the master's deed.

stipulated that the obligation on part of Delivery of the Delivery of the

creditor given mortgagee personal property personal property is
possession of the is NOT necessary. necessary.
property shall apply Registration is Registration is NOT
all the fruits thereof necessary for necessary for
to the payment of validity. validity.
interest, if owing, Procedure: Sec. 14 Procedure: Art.
and thereafter to of Act 1508, as 2112, CC.
the principal amended.
Subject matter of If the property is If the property is
both is real property foreclosed, the sold, the debtor is
excess over the not entitled to the
OBLIGATIONS OF ANTICHRETIC amount due goes to the excess
CREDITOR to the debtor. UNLESS it is
1. to pay taxes and charges on the otherwise agreed
estate, including necessary or in case of legal
expenses pledge.
Creditor may avoid said obligation Creditor is entitled Creditor is not
by: to deficiency from entitled to recover
a. compelling debtor to reacquire the debtor EXCEPT deficiency
enjoyment of the property if it is a security for notwithstanding
b. by stipulation to the contrary the purchase of any stipulation to
2. to apply all the fruits, after personal property the contrary.
receiving them, to the payment of in installments.
interest, if owing, and thereafter to
the principal
3. to render an account of the fruits
to the debtor LAWS GOVERNING CHATTEL MORTGAGE
4. to bear the expenses necessary for
its preservation and repair 1) Chattel Mortgage Law37 (Act.1508, as
amended).
REMEDIES OF CREDITOR IN CASE OF 2) Civil Code.
NON-PAYMENT OF DEBT 3) Revised Administrative Code.
1. action for specific performance 4) Revised Penal Code.
2. petition for the sale of the real 5) Ship Mortgage Decree of 1978 (PD 1521)
property as in a foreclosure of governs mortgage of vessels of domestic
mortgages under Rule 68 of the Rules ownership.
of Court
AFFIDAVIT OF GOOD FAITH
 the parties, however, may agree on
an extrajudicial foreclosure in the An oath in a contract of chattel mortgage
same manner as they are allowed wherein the parties "severally swear that the
in contracts of mortgage and mortgage is made for the purpose of securing
pledge (Tavera v. El Hogar Filipino, the obligation specified in the conditions
Inc. 68 Phil 712) thereof and for no other purposes and that
 a stipulation authorizing the the same is a just and valid obligation and
antichretic creditor to appropriate one not entered into for the purpose of fraud.
the property upon the non-payment
of the debt within the agreed EFFECT OF REGISTRATION
period is void (Art. 2088)
1) Creates real rights.
2) Adds nothing to mortgage.
CHATTEL MORTGAGE is a contract by virtue
of which a personal property is recorded in the
Chattel Mortgage Register as security for the
performance of an obligation. 37
ACME SHOE vs. CA: A chattel mortgage must comply
- IF THE MOVABLE, INSTEAD OF BEING substantially with the form prescribed by the Chattel Mortgage
RECORDED, IS DELIVERED TO THE CREDITOR, Law itself. One of the requisites, under Sec 5 thereof, is an
affidavit of Good Faith. While it is not doubted that if such an
IT IS PLEDGE AND NOT CHATTEL MORTGAGE. affidavit is not appended to the agreement, the chattel mortgage
would still be valid between the parties (not against third persons
acting in GF), the fact, however, that the statute has provided that
the parties to the contract must execute an oath that "x x x
chattel mortgage pledge mortgage is made for the purpose of securing the obligation
Involves movable Involves movable specified in the conditions thereof, and for no other purpose, and
property. property. that the same is a just and valid obligation, and one not entered
into for the purpose of fraud." makes it obvious that the debt
referred to in the law is a current, not an obligation that is yet
merely contemplated.

- Registration of assignment of mortgage is in installments: No deficiency judgment

not required. can be asked and any contrary agreement
shall be void.
RIGHT OF REDEMPTION 3. Where mortgaged property subsequently
attached and sold: Mortgagee is entitled to
1. When the condition of a chattel mortgage deficiency judgment in an action for
is broken, the following may exercise specific performance.
redemption:
a. Mortgagor. APPLICATION OF PROCEEDS OF SALE
b. Person holding a subsequent
mortgage. 1. Costs and expenses of keeping and sale.
c. Subsequent attaching creditor. 2. Payment of the obligation.
2. An attaching creditor who so redeems 3. Claims of persons holding subsequent
shall be subrogated to the rights of the mortgages in their order.
mortgagee and entitled to foreclose the 4. Balance, if any, shall be paid to the
mortgage in the same manner as a mortgagor, or person holding rights under
mortgagee. him.
3. Redemption is made by paying or
delivering o the mortgagee the amount
due on such mortgage and the costs and CONCURRENCE AND PREFERENCE
expenses incurred by such breach of OF CREDITS
condition before the sale.
FORECLOSURE OF CHATTEL MORTGAGE

CONCURRENCE OF CREDIT implies
possession by two or more creditors of equal
1. Public sale.
right or privileges over the same property or
2. Private sale – There is nothing illegal,
all of the property of a debtor.
immoral or against public order in an
agreement for the private sale of the
personal properties covered by chattel PREFERENCE OF CREDIT is the right held by
mortgage. a creditor to be preferred in the payment of
his claim above other out of the debtor’s
PERIOD TO FORECLOSE assets.
1. After 30 days from the time of the

condition is broken. GENERAL PROVISIONS
2. The 30-day period is the minimum period
after violation of the mortgage condition 1) The debtor is liable with all his property,
for the creditor to cause the sale at public present and future, for the fulfillment of
auction with at least 10 days notice to the his obligations, subjects to exemptions
mortgagor and posting of public notice of provided by law.
time, place, and purpose of such sale, and - Exempt property:
is a period of grace for the mortgagor, to a. Present property:
discharge the obligation. 1. Family home. (Arts. 152, 153
3. After the sale at public auction, the right of and 155, CC)
redemption is no longer available to the 2. Right to receive support, as well
mortgagor. as money or property obtained
by such support, shall not be
CIVIL ACTION TO RECOVER CREDIT levied upon on attachment or
execution. (Art. 205, CC)
1. Independent action not required. 3. Sec. 13, Rule 39, ROC.
2. Mortgage lien is deemed abandoned by 4. Sec 118, Public Land Act. (CA
obtaining a personal judgment. 141, as amended)
b. Future property: A debtor who
RIGHT OF MORTGAGEE TO RECOVER obtains a discharge from his debts
DEFICIENCY on account of insolvency, is not
liable for the unsatisfied claims of
his creditors with said property.
1. Where mortgage foreclosed: Creditor may
(Sec. 68 and 69, Insolvency Law,
maintain action for deficiency although The
Act 1956)
Chattel Mortgage Law is silent on this
c. Property in custodia legis and of
point, because a chattel mortgage is given
public dominion.
only as a security and not as payment of
2) Insolvency shall be governed by the
the debt.
Insolvency Law. (Act 1956, as amended)
2. Where mortgage constituted as security
for purchase of personal property payable

3) Exemption of conjugal property or shall be satisfied according to the following

absolute community or property, provided rules:
that: - Order established by Art 2244
- Partnership or community subsists. - Common credits referred to in Art 2245
- Obligations of the insolvent spouse shall be paid pro rata regardless of
have not redounded to the benefit of dates.
the family.
4) If there is co-ownership, and one of the
co-owners is the insolvent debtor, his SPECIAL LAWS
undivided share or interest in the property
shall be possessed by the assignee in WAREHOUSE RECEIPTS LAW
insolvency proceedings because it is part
of his assets.
5) Property held by the insolvent debtor as a
trustee of an express or implied trust, SCOPE
shall be excluded from the insolvency
proceedings All warehouses, whether public or private,
bonded or not.
CLASSIFICATION OF CREDITS
APPLICATION
1) Special preferred credits. (Art. 2241 and
2242, CC)
The special law applies to warehouse receipts
a) Considered as mortgages or pledges of
issued by a warehouseman as defined in Sec.
real or personal property or liens
58(a); while the Civil Code, to other cases
within the purview of legal provisions
where receipts are not issued by a
governing insolvency.
warehouseman.
b) Taxes due to the State shall first be
satisfied.
WHO MAY ISSUE WAREHOUSE RECEIPTS
2) Ordinary preferred credits (Art. 2244) –
Preferred in the order given by law.
3) Common credits (Art. 2245) – Credits of  Only a warehouseman; but a duly
any other kind or class, or by any other authorized officer or agent of a
right or title not comprised in Arts. 2241- warehouseman may do so.
2244 shall enjoy no preference.  Warehouseman: Person lawfully
engaged in the business of storing
ORDER OF PREFERENCE OF CREDIT goods for profit.
 Receipts not issued by a warehouseman,
1) Credits which enjoy preference with although in the form of warehouse
respect to specific movables exclude all receipts, are not warehouse receipts
others to the extent of the value of the
personal property to which the preference FORM AND CONTENT
refers.
2) If there are 2 or more credits with respect Need not be in particular form, but certain
to the same specific movable property, essential terms must be present:
they shall be satisfied pro rata, after the 1. Location of warehouse: Because the
payment of duties, taxes and fees due the warehouseman may have other
State or any subdivision thereof warehouses.
3) Those credits which enjoy preference in 2. Date of issue and receipt: Indicates prima
relation to specific real property or real facie the date when the contract of deposit
rights exclude all others to the extent of has been perfected and when the
the value of the immovable or real right to computation of storage charges shall
which the preference refers. begin.
4) If there are 2 or more credits with respect 3. Consecutive number of receipt: To identify
to the same specific real property or real each receipt with the goods for which it
rights, they shall be satisfied pro rata, was issued.
after the payment of the taxes and 4. Person to whom goods are deliverable:
assessment of the taxes and assessments Determines the persons who shall prima
upon the immovable property or real right. facie be entitled lawfully to the possession
5) The excess, if any, after the payment of of the goods deposited.
the credits which enjoy preference with 5. Rate of storage charges: Consideration for
respect to specific property, real or the contract from the point of view of the
personal, shall be added to the free warehouseman.
property which the debtor may have, for 6. Description of goods or packages: For
the payment of other credits. identification purposes.
6) Those credits which do not enjoy any 7. Signature of warehouseman: Best
preference with respect to specific evidence of the fact that the
property, and those which enjoy warehouseman has received the goods
preference, as to the amount not paid,

and has bound himself to assume all - Applies only to non-negotiable warehouse
obligations connected therewith. receipts:
8. Warehouseman’s ownership of or interest - A non-negotiable receipt must contain
in the goods: To prevent abuses in the the word “non-negotiable”.
past when warehouseman issued receipt - Effect: Failure to do so will make a
on their goods. holder who (1) purchased for value AND
9. Statement of advances made and liabilities (2) supposing it to be negotiable, may at
incurred (if present): To preserve the lien his option treat it as negotiable.
of the warehouseman over the goods he CONSTRUCTION OF WAREHOUSE RECEIPTS:
stores or the proceeds thereof in his hands
- Effect of omission of any of the essential Liberal construction of the law in favor of bona
terms: fide holders. This has no application to
a. validity and negotiability of receipt is actions against any party other than a
not affected. warehouseman.
b. warehouseman will be liable for
damages. OBLIGATION AND RIGHTS OF A
c. the contract will be converted to an WAREHOUSEMAN UPON THEIR RECEIPTS
ordinary deposit.
- Any other terms or conditions may be Principal obligations of a warehouseman
inserted, except:
1. To take care of the goods, and be liable for
a. Those contrary to this Act (e.g.
failure to exercise care; but he is not liable
exemption from liability for misdelivery
for loss or injury which could not have
in Sec. 10, not giving statutory notice
been avoided, unless there is a stipulation
in case of sale of goods in Sec. 33 and
to the contrary.
34).
2. To deliver the goods to the holder of the
b. Exemption from liability and
receipt or the depositor upon demand,
negligence.
accompanied with:
c. Those contrary to law, morals, good
a. An offer to satisfy the warehouseman’s
customs, public order or public policy.
lien: Because a warehouseman may
refuse delivery until his lien is satisfied
DEFINITIONS
b. An offer to surrender the receipt: For
1) Negotiable receipt: Receipt in which it is the protection of the warehouseman
stated that the goods received will be and to avoid criminal liability; this is
delivered to the bearer or to the order of subject to waiver.
any person named in such receipt. c. A offer to sign when the goods are
- A provision in a negotiable receipt that it delivered, an acknowledgment that
is non-negotiable is void. they have been delivered.
2) Non-negotiable receipt: Receipt in which it - But warehouseman may still refuse
is stated that the goods received will be delivery on the grounds of some lawful
delivered to the depositor or to any other excuse:
specified person. a. Sec. 10
- A negotiable warehouse receipt is not a 1. he has been requested by the
negotiable instrument in the same sense person lawfully entitled to the
as in the NIL. goods not to make delivery;
2. he has information that the
DUPLICATE RECEIPTS delivery about to be made was
to one not lawfully entitled to
- Applies only to negotiable warehouse the goods;
receipts: b. Sec. 16: He has acquired title to
- Whenever more than one negotiable the goods which was derived from
receipt is issued for the same goods, 1. transfer made by the
the word ‘DUPLICATE” shall be placed depositor at the time of the
on the face of the receipt except the deposit for storage or
one first issued. subsequent thereto
- Effect: The warehouseman shall be 2. the warehouseman’s lien
liable for damages for failing to do this c. Sec. 18: If there are several
to any one who purchased the claimants to the goods
subsequent receipt (1) for value, and d. Sec. 21: If the goods were lost and
(2) supposing it to be an original, he had no fault
even though the purchase be after e. Sec. 36: He has already lawfully
delivery of the goods by the sold the goods
warehouseman to the holder of the
original receipt. Persons to whom the goods must be delivered
FAILURE TO MAKE RECEIPT NON-NEGOTIABLE 1. Persons lawfully entitled to the possession

of the goods or its agent

2. Persons entitled to deliver under: b. When only some of the goods

a. a non-negotiable receipt; or were delivered: Failure to
b. with written authority cancel or to state plainly in the
3. person in possession of a negotiable receipt that some goods were
receipt (which was lawfully negotiated) delivered will make him liable to
- A warehouseman does not have a cause of any one who purchased for
action against a person to whom he value in good faith such receipt
misdelivered the thing, unless the depositor (5) Issuing receipt for non-existing
sues him. goods or misdescribed goods (Sec. 20)
- General rule: A warehouseman is under
Acts for which a warehouseman is liable obligation to deliver the identical
property stored with him and if he
(1) Failure to stamp “duplicate” on fails to do so he is liable.
copies of a negotiable receipt (Sec. 6 and - Exception: If the description consists
15) merely of marks or labels upon the
- When more than one negotiable receipts goods or upon the packages containing
are issued for the same goods, the word them, etc., the warehouseman is not
“duplicate” must be plainly placed by the liable even if the goods are not of the
warehouseman upon the face of every kind as indicated in the marks or labels
such receipt except the 1st. In such (6) In case of lost or destroyed receipts
case, the warehouseman warrants: (Sec. 14)
a. that the duplicate is an accurate - Remember that a warehouseman must
copy of the original receipt deliver to the one who has the receipt but
b. such original receipt is uncancelled if such was lost, a competent court may
at the date of the issue of the order the delivery of the goods only:
duplicate a. upon proof of the loss or
- The duplicate imposes no other destruction of the receipt; and
liability upon the warehouseman. b. upon giving of a bond with
sufficient securities
(2) Failure to place “non-negotiable” on - The warehouseman is still liable to a
a non-negotiable receipt (Sec. 7) holder of the receipt for value without
notice since the warehouseman can
(3) Misdelivery of the goods (Sec. 10) secure himself in the bond given.
a. To one not lawfully entitled to (7) Failure to take care of the goods (Sec.
possession 12)
- Liable for conversion (unauthorized (8) Failure to give notice in case of sales
assumption and exercise of the of goods to satisfy his lien (Sec. 33) or
right of ownership over goods because the goods are perishable and
belonging to another through hazardous (Sec. 34)
alteration or the exclusion of the
owner’s right)
b. To a person entitled to delivery under a EFFECTS OF ALTERED RECEIPTS
non-negotiable receipt or written
authorization OR person in possession a. Alteration immaterial: whether fraudulent
of a negotiable receipt or not, authorized or not, the
- Still liable for conversion if: warehouseman is liable on the altered
1. prior to delivery, he had been receipt according to its original tenor;
requested NOT to make such b. Alteration material: but it was authorized,
delivery the warehouseman is liable according to
2. he had received notice of the the terms of the receipts as altered;
adverse claim or title of a 3rd c. Material alteration innocently made:
person though unauthorized, the warehouseman
is liable on the altered receipt according to
(4) Failure to effect cancellation of a its original term;
negotiable receipt upon delivery of the d. Material alteration fraudulently made:
goods (Sec. 11) warehouseman is liable according to the
- This is applicable ONLY to negotiable original tenor to a:
receipts but NOT to a situation where 1. purchaser of the receipt for value
there was a valid sale in accordance without notice; and
with Sec. 36 2. to the alterer and subsequent
a. When the goods are delivered purchasers with notice ( BUT his
already: Failure to cancel will liability is limited only to delivery as he
make him liable to any one who is excused from any other liability)
purchased for value in good - Even a fraudulent alteration cannot divest
faith such receipt the title of the owner of stored goods and the
warehouseman is liable to return them to the

owner. But a bona fide holder acquires no - General rule: A warehouseman may not
right to the goods under a negotiable receipt mingle goods belonging to different
which has been stolen or lost or which the depositors.
indorsement has been forged. - Exception: In case of fungible goods of the
same kind and grade provided:
a. he is authorized by agreement
WITH REGARD TO OWNERSHIP b. he is authorized by custom
- Effects:
a. Ownership is not a defense for refusal to a. each depositor shall own the entire
deliver mass in common and entitled to his
- The warehouseman cannot refuse to portion
deliver the goods on the ground that he b. warehouseman is severally liable to
has acquired title or right to the each depositor for the care and
possession of it unless such is derived: redelivery of their portion as if the
1. directly or indirectly from a transfer goods had been kept separate
made by the depositor at the time
of the deposit for storage or ATTACHMENT OR LEVY ON NEGOTIABLE
subsequent thereto; RECEIPTS
2. from the warehouseman’s lien
b. Adverse title of a 3rd person is not a  A warehouseman has the obligation to
defense for refusal to deliver by a hold the goods for the owner or for the
warehouseman to his bailor on demand, person to whom the negotiable receipt has
except: been duly negotiated. Therefore, the
1. To persons to whom the goods goods cannot be attached or levied upon
must be livered (Sec. 9) under an execution, unless:
2. To the person who wins in the a. the document be first surrendered; or
interpleader case (Sec. 17) b. the negotiation is enjoined, or
3. To the person he finds to be c. the document is impounded by the
entitled to the possession after court
investigation (Sec. 18)  The warehouseman cannot be compelled
4. To the buyer in case there was a to deliver the goods until:
valid sale of the goods (Sec. 36) a. the receipt is surrendered to him;
b. it is impounded by the court
DUTY OF WAREHOUSEMAN WHEN THERE ARE - This provision does not apply if the person
SEVERAL CLAIMANTS depositing is not the owner of the goods or
one who has not the right to convey title to
- The warehouseman may either: the goods binding upon the owner.
a. Investigate and determine within a
reasonable time the validity of the
claims, and deliver to the person whom REMEDY OF CREDITOR WHOSE DEBTOR
he finds is entitled to the possession of OWNS A NEGOTIABLE RECEIPT
the goods
- Effect: He is not excused from Attachment of the negotiable receipt, not on
liability in case he makes a mistake the goods.
b. He may bring a complaint in - The goods themselves cannot readily be
interpleader attached or levied upon by ordinary legal
- Effect: process
a) he will be relieved from liability in
delivering the goods to the person EXTENT OF WAREHOUSEMAN’S LIEN
whom the court finds to have
better right; a. lawful charges for
b) he is liable for refusal to deliver to 1. storage, and
the rightful claimant when it is 2. preservation of the goods
required to have an interpleader; b. lawful claims for
c. He may not do (a) and (b) 1. money advanced
- Effect: He will be liable after a lapse 2. labor
of a reasonable time, of conversion as 3. interest
of the date of the original demand for 4. weighing
the goods. 5. insurance
- This does NOT apply to cases where the 6. cooperating
warehouseman himself makes a claim to the 7. transportation
goods. c. other charges and expenses in relation to
such goods
COMMINGLING OF DEPOSITED GOODS d. reasonable charges and expenses for
notice and advertisements of sale

e. sale of the goods where defaults has been property and recovery of any deficiency in
made in satisfying the lien case it exists after the sale of the
property;
EXTENT OF THE LIEN WHEN A NEGOTIABLE 4. By causing the extrajudicial sale of the
RECEIPT HAS BEEN ISSUED property and applying the proceeds to the
value of the lien
a. charges for storage and preservation of
the goods Process:
b. other charges expressly enumerated A. Written notice to the person on whose
(from b, c, d and e above) although the account the goods are held or to persons
amount is NOT stated who claim an interest in the goods
- For claims not specified, the warehouseman containing:
shares pro rata with the other creditors of the a. itemized statement of warehouseman’s
depositor the balance of the proceeds of the lien showing the sum due and when it
sale for the satisfaction of the claims. became due
b. brief description of the goods
GOODS SUBJECT TO LIEN c. a demand that a claim be paid on or
before a day mentioned, not less than
10 days from:
a. goods of the depositor who is liable to the
1. delivery of notice if personally
warehouseman as debtor wherever such
delivered
goods are deposited;
2. time when notice should reach
b. goods of other persons stored by the
its destination if sent by mail
depositor who is liable to the
d. statement that if the claim is not paid,
warehouseman as debtor with authority to
the goods will be advertised for sale
make a valid pledge
and then sold at a specified time and
- A warehouseman has NO lien on goods
place
belonging to another and stored by a stranger
B. After the time for payment of the claim if
in fraud of the true owner’s right.
the notice has elapsed, the sale will be
- The lien may be lost through:
advertised stating:
a. voluntarily surrendering possession of
a. a description of the goods to be sold
goods - constitutes a waiver or
b. the name of the owner or person on
abandonment
whose account the goods were held
- A warehouseman may NOT claim
c. time and place of the sale
a lien on other goods of the same
C. Publication:
depositor for unpaid charges on the
a. if there is a newspaper published in
goods surrendered if the goods
the place of sale: once a week for 2
were delivered to him under
consecutive weeks and the sale not
different receipts.
held less than 15 days from the time of
b. wrongfully refusing to deliver the
the 1st publication
goods to a person who holds the
b. if there is no newspaper: posted at
receipt or the depositor upon DEMAND
least 10 days before the sale in not
accompanied with:
less than 6 conspicuous places in the
1. an offer to satisfy the
place of sale
warehouseman’s lien (because
D. Sale itself in:
a warehouseman may refuse
a. place where the lien was acquired
delivery until his lien is
b. if such place is manifestly unsuitable
satisfied)
for the purpose, at the nearest
2. an offer to surrender the receipt
suitable place
a. for the protection of the
E. From the proceeds of the sale:
warehouseman and to avoid
a. the warehouseman shall satisfy his
criminal liability
lien
b. this is subject to waiver
b. including the reasonable charges of
3. an offer to sign when the goods
notice, advertisement and sale
are delivered, an
c. the balance shall be held by the
acknowledgment that they have
warehouseman and delivered on demand
been delivered
to the person to whom he should deliver it
F. Any time before the goods are sold, any
REMEDIES FOR A WAREHOUSEMAN
person may pay the warehouseman for his
lien and the other expenses. The
1. Even if without lien, all remedies allowed by warehouseman shall deliver the goods to
law to a creditor against his debtor for that person if he is entitled under this Act,
collection of charges; to the possession of the goods on payment
2. By refusing to deliver the goods until his of the charges. Otherwise, the
lien is satisfied; warehouseman shall retain ownership of the
3. All remedies allowed by law for the goods.
enforcement of a lien against personal

the debtor from imprisonment, and either

PERISHABLE AND HAZARDOUS GOODS may operate on the petition of the debtor or
that of his creditors.
- Warehouseman will give notice to owner or
person in whose name the goods are
stored: INSOLVENCY PRIMARILY GOVERNED BY THE
a. to satisfy his lien CC
b. to remove the goods Insolvency shall be governed by special laws
c. failure to do a &b will give the insofar as they are not inconsistent with
warehouseman authority to sell the the CC. Insolvency is thus primarily governed
goods without advertising by the CC and subsidiarily by the Insolvency
d. if sale is not possible, he may dispose Law.
of the goods in any lawful manner
without liability The Insolvency Law is intended to cover the
- Proceeds of the sale shall be disposed of in entire subject of insolvency and bankruptcy
accordance with the process in the sale of and must be treated as a complete body of
the goods. law upon the subject.
EFFECTS OF SALE PURPOSES OF INSOLVENCY LAW:
a. warehouseman is NOT liable for non- 1. To effect an equitable distribution of

delivery even if the receipt was given for the bankrupt’s property among his
the goods when they were deposited be creditors; and
negotiated 2. To benefit the debtor in discharging
b. when the sale was made without the him from his liabilities and enabling
publication required and before the time him to start afresh with the property
specified by law, such sale is void and the set apart to him as exempt.
purchaser of the goods acquires no title in 3. The regulatory and unifying influence
them of the law on credit transactions and
business usage throughout the
NEGOTIATION AND TRANSFER OF RECEIPTS country.
- Negotiable receipts negotiable by delivery:

1. if the goods are deliverable to the bearer; WHAT MAY BE PERMITTED OF A DEBTOR BY
or THE INSOLVENCY LAW
2. when indorsed in blank; or
3. person to whose order the goods are 1. Petition the court to suspend
delivered or by a subsequent indorsee payments;
indorsed it to bearer 2. To be discharged from his debts and
liabilities by voluntary or involuntary
insolvency proceedings.
INSOLVENCY LAW
SUSPENSION OF PAYMENTS
INSOLVENCY – state of a person whose – postponement, by court order, of the
liabilities are more than his assets. It is the payment of debts of one who, while
inability of a person to pay his debys as they possessing sufficient property to cover his
become due in the ordinary course of debts, foresees the impossibility of meeting
business. them when they respectively fall due.
Balance Sheet Test – relative condition of a PURPOSE:

man’s assets and liabilities that the former if
all made immediately available, would not be To suspend or delay the payment of
sufficient to discharge the latter. debts the amount of which is not affected
although a postponement is declared.
Equity Test – a person may be insolvent
although he may be able to pay his debts at BASIS:
some future time on a settlement and winding
up of his affairs. Probability of the debtor’s inability to
meet his obligations when they
INSOLVENCY vs. BANKRUPTCY respectively fall due, despite the fact that
The only distinction between insolvency he has sufficient assets to cover all his
and bankruptcy is a matter of liabilities.
terminology and the source of the laws
relating thereto. REQUISITES OF PETITION FOR SUSPENSION
Either a bankruptcy or insolvency statute may OF PAYMENTS:
operate to discharge a debt as well as release

1. Petition is filed by a debtor; EFFECT OF COURT ORDER DECLARING

2. Possessing sufficient property to cover DEBTOR INSOLVENT
all his debts; 1. All the assets of the debtor
3. Foreseeing the impossibility of meeting not exempt from execution are
them when they respectively fall due; taken possession of by the sheriff
and until the appointment of a receiver
4. Petitioning that he be declared in the or assignee.
state of suspension of payments 2. The payment to the debtor of
any debts due to him and the delivery
RULE ON DOUBLE MAJORITY IN THE MEETING to the debtor or to any person for him
OF CREDITORS of any property belonging to him and
the transfer of any property by him are
Majority shall be: forbidden.
1. Two thirds (2/3) of the creditors voting 3. All civil proceedings pending
upon the same proposition, which against the insolvent debtor shall be
2. Represents at least three fifths (3/5) of stayed.
the total liabilities of the debtor. 4. Mortgages or pledges,
attachments or executions on property
KINDS OF INSOLVENCY of the debtor duly recorded and not
dissolved are not affected by the
order.
VOLUNTARY INSOLVENCY – an insolvent
debtor owing debts exceeding the amount of
INVOLUNTARY INSOLVENCY – an
P1,000.00 may apply to be discharged from
adjudication of insolvency may be made on
his debts and liabilities by petition to the RTC
the petition of three or more creditors,
of the province or city in which he has resided
residents of the Philippines, whose credits or
for six months next preceding the filing of the
demands accrued in the Philippines, and the
petition.
amount of which credits or demands are in
the aggregate of not less than P1,000.00
DISTINCTIONS BETWEEN SUSPENSION OF
DISTINCTIONS BETWEEN VOLUNTARY
PAYMENTS AND INSOLVENCY
INSOLVENCY AND INVOLUNTARY
INSOLVENCY
suspension insolvency
of payments voluntary involuntary
Suspend or Discharge the insolvency insolvency
Purpose delay the debtor from One creditor Three or more
payment of the payment of Number of is sufficient creditors are
debts debts creditors required
Sufficie Debtor has Debtor does
Who may Filed by the Filed by three
ncy of sufficient not have
petition insolvent or more
property property to sufficient
debtor creditors who
pay his debts property to
possess the
pay all his
qualifications
debts
required by
Effect Amount of The creditors
law
on indebtedness receive less
Acts of Debtor Debtor must
amount is not affected than their
insolvency must not be have
of debt credits, and in
guilty of committed
case where
any of the one or more
there are
acts of of such acts of
preferences,
insolvency insolvency
some creditors
(Sec. 20)
may not
receive any Amount of The amount Amount must
amount at all debt of not be less
indebtednes than
Number Number of In case of
s must P1,000.00
of creditors is involuntary
exceed (aggregate)
creditor immaterial insolvency,
P1,000.00
s three or more
required creditors are Posting of Bond is not Petition must
required bond required be
accompanied
by a bond
Ex parte An order of An order of
adjudication adjudication adjudication
may be granted only

granted ex after a hearing control of the property is vested in

parte the court.
Residency Petition is Length of 3. All actions to recover all the estate,
duration to filed in the residence is debts, and effects of the insolvent shall
vest RTC of the immaterial be brought by the assignee and not by
jurisdiction province or the creditors.
in courts city where 4. The assignment shall:
the debtor a. Dissolve any attachment
has resided levied within one month next
for six preceding the commencement
months of insolvency proceedings;
Requirement Court issues The debtor is b. Vacate and set aside judgment
of hearing the order of not entered in any action
adjudication adjudicated commenced within 30 days
declaring insolvent until immediately prior to the
the after hearing commencement of insolvency
petitioner of the case proceedings;
insolvent c. Vacate and set aside execution
upon the issued thereon;
filing of the d. Vacate and set aside any
voluntary judgment entered by default or
petition consent of the debtor within 30
days prior to the
ASSIGNEE – person elected by the creditors commencement of insolvency
or appointed by he court to whom an proceedings
insolvent debtor makes an assignment of all
his property for the benefit of his creditors. BOND OF THE ASSIGNEE
CREDITORS NOT ENTITLED TO VOTE IN THE After his election, the assignee is
ELECTION OF ASSIGNEE required to give a bond for the faithful
1. Those who did not file their claims at performance of his duties.
least two days prior to the time
appointed for such election Purpose:
2. Those whose claims are barred by the
statute of limitations 1. To establish his official character
3. Secured creditors unless they 2. To establish his right to sue in that
surrender their security or lien to the capacity
sheriff or receiver or unless they shall The bond is solely for the benefit of the
first have the value of such security creditors of the insolvent, and that third
fixed persons have no remedy against the sureties
4. Holders of claims for unliquidated if the assignee, purporting to be as such,
damages arising out of pure tort. wrongfully takes property from such third
persons and converts it to his own use.
EFFECTS OF ASSIGNMENT38
1. Assignee takes the property in the
PROPERTIES OF INSOLVENT THAT PASS TO
plight and conditions that the insolvent
THE ASSIGNEE
held it.
2. Upon appointment, the legal title to
all the property of the insolvent is 1. All real and personal property,
vested in the assignee, and the estate, and effects of the debtor,
including all deeds, books, and papers
in relation thereto;
2. Properties fraudulently conveyed;
38
SERVICEWIDE v. CA: Assignment of Credit/Consent: As 3. Right of action for damages to real
provided in Article 2096 in relation to Article 2141 of the Civil property
Code, a thing pledged may be alienated by the pledgor or owner
with the consent of the pledgee. This provision is in accordance
4. The undivided share or interest of
with Act No. 1508 which provides that a mortgagor of personal the insolvent debtor in property held
property shall not sell or pledge such property, or any part thereof, under co-ownership
mortgaged by him without the consent of the mortgagee in writing
on the back of the mortgage and on the margin of the record
thereof in the office where such mortgage is recorded. PROPERTIES OF INSOLVENT THAT DO NOT
A mortgage credit may be alienated or assigned to a PASS TO THE ASSIGNEE
third person. Since the assignee of the credit steps into the shoes
of the creditor-mortgagee to whom the chattel is mortgaged, it
follows that the assignee’s consent is necessary in order to bind 1. Property exempt from execution;
him of the alienation of the mortgaged thing by the debtor- 2. Property held in trust;
mortgagor This is tantamount to a novation. 3. Property of the conjugal partnership
or absolute community except

insofar as the debtor’s obligations When Sec. 37 does not apply: Not
redounded to the benefit of the family. applicable where what has been disposed of is
4. Property to which a mortgage or the creditor’s own credit and not the
pledge exists unless the creditor insolvent’s property.
surrenders his security or lien.
5. After-acquired property except fruits
and income of property owned by the DIVIDENDS IN INSOLVENCY
debtor
6. Non-leviable assets like life Dividends in insolvency – parcel if the fund
insurance policy which do not have any arising from the assets of the estate, rightfully
cash surrender value allotted to a creditor entitled to share in the
7. Right of action for tort which is fund, whether in the same proportion with
purely personal in nature. other creditors or in a different proportion. It
is paid by the assignee only upon order of the
court.
POWERS OF THE ASSIGNEE
1. To sue and recover all the estate,
debts, and claims belonging to or due CLASSIFICATION AND PREFERENCE OF
to the debtor; CREDITORS
2. To take into his possession all the
PREFERENCE – an exception to the general
estate of the debtor except property
rule. By it, one person is given a superior
exempt from execution;
right or claim over another. Hence, the law on
3. In case of non-resident or
preferences is strictly construed. (The general
absconding or concealed debtor, to
rule is that the purpose of insolvency
demand and receive of every
proceeding is the equitable distribution of the
sheriff all the property and money in
insolvent’s assets among the debtor’s
his possession belonging to the debtor.
creditors.)
4. To sell, upon order of the court, any
estate of the debtor which has come
into his possession;
RULES ON ORDER OF DISTRIBUTION
5. To redeem all mortgages and
pledges and to satisfy any 1. The priorities fixed by law govern
judgment which may be an 2. The claims which are given priority
encumbrance on any property sold by must be paid in full in the order of
him. their priority, before the general
6. To settle all accounts between the creditors receive anything.
debtor and his debtors subject to 3. Creditors claiming preference must
the approval of the court; sufficiently establish their credits and
7. To compound, under the order of the their right to preference to entitle them
court, with any person indebted to to such preference.
such debtor;
8. To recover any property
ORDER OF DISTRIBUTION
fraudulently conveyed by the
debtor. 1. Equitable claims under Sec. 48;
2. Preferred claims with respect to
CREDITOR’S LIABILITY FOR FRAUDULENTLY specific movable property and specific
ASSIGNING HIS CREDIT immovable property under Art. 2241
A creditor’s transfer or assignment of his and 2242 of the CC.
credit to another without the knowledge and 3. Preferred claims as to unencumbered
at the back of other creditors of the insolvent property of the debtor which shall be
may be a shrews surprise move that enables paid in the order named in Art. 2244 of
the transferor creditor to collect almost if not the CC.
the entire amount of the said creditor. 4. Common or ordinary credits which
shall be paid pro rata regardless of
REMEDY OF THE ASSIGNEE: SECTION 37 OF dates under Art. 2245 of the CC.
THE INSOLVENCY LAW:
With reference to specific movable and
The creditor coming within this purview is immovable property of the debtor, the taxes
liable to an action by the assignee for double due the State shall first be satisfied.
the value of the property so embezzled or
disposed of, to be received for the benefit of The preferred claims enumerated in Art. 2241
the insolvent’s estate. and 2242 are considered as mortgages and
Section 37 constitutes a sort of penal pledges of real or personal property or
clause which shall be strictly construed. liens within the purview of the Insolvency
Law.

EQUITABLE CLAIMS UNDER THE INSOLVENCY COMPOSITION

LAW
An agreement, made upon a sufficient
consideration, between an insolvent or
embarrassed debtor and his creditors,
Section 48 of the Insolvency Law: Any
whereby the latter for the sake of immediate
property found among the property of the
or sooner payment, agree to accept a
insolvent, the ownership of which has not
dividend less than the whole amount of their
been conveyed to him by legal and irrevocable
claims, to be distributed pro rata, in discharge
title, shall not be considered to be property of
and satisfaction of the whole debt.
the insolvent and shall be placed at the
disposal of its lawful owners, on order of the
court on petition of the assignee or any
composition accord
creditor whose right to the estate of the
insolvent has been established. Designates an An agreement between
arrangement a debtor and a single
1. Paraphernal property belonging to the
between a debtor creditor for a discharge
wife of the insolvent;
and the whole of the obligation by a
2. Property held by the insolvent on
body of his part payment or on
deposit, administration, lease, or
creditors (or at different terms.
usufruct;
least a
3. Merchandise held by the debtor on
considerable
commission;
portion of them)
4. Negotiable instruments for collection or
for the liquidation
remittance;
of their claims by
5. Money held by the debtor for
the dividend
remittance;
offered.
6. Amounts due the insolvent for sales or
merchandise on commission;
7. Merchandise bought by the insolvent
on credit where no delivery is made or REQUIREMENTS FOR A VALID OFFER OF
where the right of ownership or COMPOSITION
possession has been retained by the 1. The offer of the terms of composition
seller; must be made after the filing in court
8. Goods or chattels wrongfully taken by of the schedule of property and
the insolvent or the amount of the submission of his list of creditors;
value thereof. 2. The offer must be accepted in writing
by a majority of the creditors
ALTERNATIVE RIGHTS OF SECURED representing a majority of the claims
CREDITOR which have been allowed;
3. It must be made after depositing in
such place designated by the court, the
1. To maintain his right under his consideration to be paid and the costs
security or lien and ignore the of the proceedings; and
insolvency proceedings – it is the 4. The terms of the composition must be
duty of the assignee to surrender to approved or confirmed by the court.
him the property encumbered;
2. To waive his right under the WHEN COURT MAY CONFIRM A COMPOSITION
security or lien – thereby, share in
the distribution of the assets of the 1. If it is in the best interest of the
debtor; creditors;
3. To have the value of the 2. The debtor has not been guilty of any
encumbered property appraised of the acts, or of a failure to perform
and then share in the distribution any of the duties which would create a
of the assets of the debtor with bar to his discharge; and
respect to the balance of his credit. 3. The offer and its acceptance are in
good faith and have not been made or
procured in a manner forbidden by the
Waiver – release or surrender of the claim to Act.
the receiver, sheriff, or assignee.
The following do not constitute waiver: EFFECTS OF CONFIRMATION OF
1. Mere recommendation that the COMPOSITION
assignee be appointed; 1. The consideration shall be distributed
2. Voting of a secured claim. as the judge shall direct;
2. The insolvency proceedings shall be
dismissed;

3. The title to the insolvent’s property 4. Debt of any person liable for the same
shall revest in him; and debt, for or with the insolvent debtor,
4. The insolvent shall be released from either as a partner, joint contractor,
his debts. indorser, surety or otherwise;
5. The substitution, in a certain sense, 5. Debts of a corporation (Reason:
composition for the insolvency Corporation is not granted a discharge)
proceedings. 6. Claim for support (Reason: It will
6. A lawful composition and its make the law a means of avoiding the
performance by the insolvent has the enforcement of the obligation)
same effect of a written discharge, 7. Discharged debt but revived by a
although no written discharge is subsequent new promise to pay
granted. (Reason: Discharge does not end the
7. For all legal and practical purposes, the moral obligation to pay)
insolvency ended on the date of the 8. Debts which have not been duly
confirmation of composition and the schedules in time for proof and
firm was restored to its status quo. It allowance.
reacquired its personality. Its Exception: The creditors had notice or
properties ceased to be in custodia actual knowledge of the insolvency
legis. proceedings
WHEN CONFIRMATION MAY BE SET ASIDE
9. Claims for:
1. Any time within six months after the a. Unliquidated damages;
composition has been confirmed; b. Secured creditors;
2. Fraud was practiced in procuring such c. Not in existence or not mature
composition; at the time of the discharge;
3. Knowledge thereof has come to the d. Contingent at the time of the
petitioner after the confirmation of discharged.
such composition.
LEGAL EFFECTS OF DISCHARGE
DISCHARGE Discharge takes effect from the
commencement of the proceedings in
The formal and judicial release of an insolvent
insolvency.
debtor from his debts with the exception of
those expressly reserved by law. 1. Releases the debtor from all claims,
debts, liabilities and demand set forth
in the schedule or which were or might
WHEN AN INSOLVENT DEBTOR MAY APPLY have been proved against his estate in
FOR A DISCHARGE insolvency.
2. Operates as a discharge of the
General rule: A debtor may apply to the RTC
insolvent and future acquisitions but
for a discharge at three months to one year
permits mortgages and other lien
after the adjudication of insolvency.
3. It is a special defense which may be
Exception: The property of the insolvent has pleaded and be a complete bar to all
not been converted into money without his suits brought on any such debts,
fault, thereby delaying the distribution of claims, liabilities or demands.
dividends among the creditors in which case 4. It does not operate to release any
the court may extend the period. person liable for the same debts, for or
with the debtor, either as partner, joint
contractor, indorser, surety, or
DEBTS RELEASED BY A DISCHARGE otherwise.
5. The certificate of discharge is prima
1. All claims, debts, and liabilities, and
facie evidence of the fact of release,
demands set forth in the schedule; and
and the regularity of such discharge.
2. All claims, debts, liabilities and
demands which were or might have
been proved against the estate in Remedy of guarantor or surety when
insolvency debtor declared judicially insolvent: File a
contingent claim in the insolvency proceeding,
if his rights as such guarantor or surety are
DEBTS NOT RELEASED BY DISCHARGE
not to be barred by the subsequent discharge
1. Taxes or assessments due the of the insolvent debtor from all his liabilities.
Government;
2. Any debt created by the fraud or
embezzlement of the debtor; WHEN DISCHARGE MAY BE REVOKED
3. Any debt created by the defalcation of
Discharge may be revoked by the court which
the debtor as a public officer or while
granted it upon petition of any creditor:
acting in a fiduciary capacity;

1. Whose debt was proved or provable insolvency, or to prevent the

against the estate in insolvency, on same from being distributed
the ground that the discharge was ratably among his creditors, or
fraudulently obtained; and provided, to defeat the object of or any
2. The petition is filed within one year way hinder the operation or
after the date of the discharge. evade the provisions of the
Insolvency Law.
*Date of registration of sale of real property
FRAUDULENT PREFERENCES AND TRANSFERS
should determine whether the sale was
TRANSFER – includes the sale and every prohibited by the Insolvency Law or not.
other and different modes of disposing of or
parting with property, or the possession of
property, absolutely or conditionally, as a WHEN PRESUMPTION OF FRAUD EXISTS
payment, pledge, mortgage, gift, or security.
1. If such payment, pledge, mortgage,
WHEN PREFERENTIAL TRANSFER EXISTS conveyance, sale, assignment or
transfer is not made in the usual and
1. There must be a parting of the
ordinary course of business of the
insolvent’s property;
debtor; or
2. For the benefit of the creditor;
2. If such seizure is made under a
3. Consequent diminution of the
judgment which the debtor has
insolvent’s estate;
confessed or offered to allow, that fact
4. With the result that such creditor
shall be prima facie evidence of fraud.
receives a greater proportion of his
claim than other creditors of the same
class. EQUAL EXCHANGE NOT A PREFERENCE
An exchange of securities within the thirty-day
General rule: A debtor is not prohibited from period is not a fraudulent preference under
paying one creditor in preference to another the law, even when both parties know that the
debtor is insolvent, if:
Exception: In cases mentioned in the
Insolvency Law 1. The security given up is a valid one at
the time the exchange;
2. Of equal value with the one received in
Deposit of money to one’s credit on a exchange.
bank does not create any preference. Reason: Exchange takes nothing away from
the other creditor
Reason: The estate of the depositor is not
diminished for there is an obligation on the Equal value: Not necessary that their value
part of the bank to pay the amount of the should be mathematically equal, but it is
deposit as soon as the depositor may see fit sufficient if they are substantially equal.
to draw a check against it.
WHEN FRAUDULENT TRANSFER EXISTS

WHEN FRAUDULENT PREFERENCE EXISTS
1. Any payment, pledge, mortgage,
Fraudulent preference – when the debtor conveyance, sale, assignment, or
procures any part of his property to be transfer of property of whatever
attached, sequestered, or seized on execution character;
or makes any payment, pledge, mortgage, 2. Made by the insolvent;
assignment, transfer, sale or conveyance of 3. Within one month before the filing of
any part of his property, whether directly or the petition in insolvency against him
indirectly, absolutely or conditionally, to any Exception: Transfer for a valuable pecuniary
one under the following circumstances: consideration in good faith
1. The debtor is insolvent or in Effect of fraudulent transfer: Such transfer
contemplation of insolvency; is VOID
2. The transaction in question is made
within 30 days before the filing of a
petition by or against the debtor; RIGHT OF ASSIGNEE TO RECOVER PROPERTY
3. It is made with a view to giving OR ITS VALUE
preference to any creditor or person
The creditors of the insolvent are not
having a claim against him; and
authorized to institute an independent action.
4. The person receiving a benefit thereby
In all actions or proceedings to set aside or
has reasonable cause to believe:
nullify fraudulent preferences or transactions
a. That the debtor is insolvent;
as VOID, the assignee appears for, and
b. That the transfer is made with a
represents the general creditors.
view to prevent his property
from coming to his assignee in

EFFECT OF DEATH OF INSOLVENT DEBTOR 5. Setting apart homestead or other

property claimed as exempt from
1. Death after the order of
execution.
adjudication – the proceedings shall
6. A discharge to the debtor.
be continued and concluded in like
manner and with like validity and
effects as if he had lived.
2. Death before the order of SAMPLE QUESTIONS
adjudication – the proceedings shall
be discontinued. a. What are the preferred claims that shall be
Remedy: File claims in the proper satisfied first from the assets of an insolvent
testate or intestate proceedings corporation?
How shall the remaining non-preferred
WHEN RECEIVER MAY BE APPOINTED creditors share in the estate of the insolvent
Anytime before the election of an assignee, corporation above?
when it appears by the verified petition of a
creditor: Multiple choice: Choose the right answer.
1. That the assets of the insolvent or a
1. The parties to a bailment are the:
considerable portion thereof have been
a. bailor;
pledged, mortgaged, transferred,
b. bailee;
assigned, conveyed, or seized on legal
c. comodatario;
process in violation of Sec. 70;
d. all the above;
2. That it is necessary to commence an
e. letters a and b
action to recover the same;
2. A deposit made in compliance with a legal
obligation is:
The receiver shall deliver all the property, a. an extrajudicial deposit;
assets, or effects remaining in his hands to b. a voluntary deposit;
the assignee who shall be substituted for him c. a necessary deposit;
in all pending actions or proceedings. d. a deposit with a warehouseman;
e. letters a and b
3. A contract of antichresis is always:
WHEN PETITION MAY BE DISMISSED a. a written contract;
b. a contract, with a stipulation that the
At anytime before the appointment of an
debt will be paid through receipt of the
assignee:
fruits of an immovable;
1. Voluntary petition – upon the c. Involves the payment of interests, if
application of the debtor, if no creditor owing;
files written objections; d. All of the above;
2. Involuntary petition – e. Letters a and b
a. Upon the application of the 4. An, assignee in a proceeding under the
petitioning creditors; or Insolvency Law does not have the duty of:
b. By written consent of all a. suing to recover the properties of the
creditors filed in court, in which state of the insolvent debtor;
case, the proceedings may be b. selling property of the insolvent
dismissed at any time. debtor;
After the appointment of an assignee, c. ensuring that a debtor corporation
dismissal is not allowed without the consent of operate the business efficiently and
all parties interested in or affected thereby. effectively while the proceedings are
pending;
d. collecting and discharging debts owed
WHEN APPEAL MAY BE TAKEN TO THE to the insolvent debtor.
SUPREME COURT 5. In order to obtain approval of the proposed
settlement of the debtor in an insolvency
From an order granting or refusing:
proceeding.
1. An adjudication in insolvency and in a. the court must initiate the proposal
the latter case, from the order fixing b. 2/3 of the number of creditors should
the amount of costs, expenses, agree to the settlement;
damages, and attorney’s fees allowed c. 3/5 of the number of creditors should
the debtor; agree to the settlement;
2. A creditor’s claim when the amount in d. 1/3 of the total debts must be
dispute exceeds P300.00 represented by the approving
3. A claim for property not belonging to creditors;
the insolvent, presented under Sec. 48 e. Letters a and b
(equitable claims)
4. Settling an account of an assignee; Before he left for Riyadh to work as a
mechanic, Pedro left his Adventure van with

Tito, with the understanding that the latter Bank, a foreign bank, to purchase outboard
could use it for one year for his personal or motors. Likewise, Ricardo executed a Surety
family use while Pedro works in Riyadh. He Agreement in favor of AC Bank. The outboard
did not tell Tito that the brakes of the van motors arrived and were delivered to Ricardo,
were faulty. Tito had the van tuned up and but he was not able to pay the purchase price
the brakes repaired. He spent a total amount thereof.
of P15,000.00. After using the vehicle for two
weeks, Tito discovered that it consumed too a) Can AC Bank take possession of the
much fuel. To make up for the expenses, he outboard motors? Why?
leased it to Annabelle. Two months later, b) Can AC Bank also foreclose the
Pedro returned to the Philippines and asked mortgage over the fishpond? Explain.
Tito to return the van. Unfortunately, while
being driven by Tito, the van was accidentally
damaged by a cargo truck without his fault.
a) Who shall bear the P15,000.00 spent
for the repair of the van? Explain.
b) Who shall bear the costs for the van’s
fuel, oil and other materials while it
was with Tito? Explain.
c) Does Pedro have the right to retrieve
the van even before the lapse of one
year? Explain.
d) Who shall bear the expenses for the
accidental damage caused by the cargo
truck, granting that the truck driver
and truck owner are insolvent? Explain.
A real estate mortgage may be foreclosed

judicially or extrajudicially. In what instance
may a mortgagee extrajudicially foreclose a
real estate mortgage?
Aaron, a well-known architect, is suffering

from financial reverses. He has four creditors
with a total claim of P26 Million. Despite his
intention to pay these obligations, his current
assets are insufficient to cover all of them. His
creditors are about to sue him. Consequently,
he was constrained to file a petition for
insolvency.
a) Since Aaron was merely forced by

circumstances to petition the court to
declare him insolvent, can the judge
properly treat the petition as one for
involuntary insolvency? Explain.
b) If Aaron is declared an insolvent by the
court, what would be the effect, if any,
of such declaration on his creditors?
Explain.
c) Assuming that Aaron has guarantors
for his debts, are the guarantors
released from their obligations once
Aaron is discharged from his debts?
Explain.
d) What remedies are available to the
guarantors in case they are made to
pay the creditors? Explain.
Ricardo mortgaged his fishpond to AC Bank to

secure a P1 Million loan. In a separate
transaction, he opened a letter of credit with
the same bank for $500,000.00 in favor of HS

TORTS & DAMAGES CIVIL LAW
Torts and Damages

TABLE OF CONTENTS
Title 1. Torts 271
I. In General 271
II. Negligence Torts 272
III. Intentional Torts 280
IV. Other Torts 281
V. Strict Liability Tort 282
VI. Torts with Independent Civil Action 285
VII. Civil Liability Arising from Crime 287
Title 2. Damages 288

I. Definition and Concept 288
II. Kinds of Damages 288

D. How is a quasi delict different from a

TORTS crime?
Quasi-delict
Crime
public interest private concern
I. IN GENERAL
RPC punishes and CC repairs the
corrects the act damage by
A. What is a TORT? indemnification
punishes only includes all acts in
Essentially, "tort" consists in the violation of a when there is a which "any kind of
right given or the omission of a duty imposed penal law fault or negligence
by law. Tort is a breach of a legal duty. covering the act intervenes."
(Naguiat vs. NLRC) subsidiary liability solidary liability of
of employer employer
A tort is civil wrong, other than breach of ER’s defense is ER’s defense is that
contract, for which a court of law will afford a that employee’s accused observed due
remedy in the form of an action for damages. resources must diligence of a good
first be exhausted father of a family
Elements: (Barredo vs. Garcia)
1) A legal duty Acquittal from an accusation of criminal

2) Breach negligence, whether on reasonable doubt or
3) Causation not, shall not be a bar for a subsequent civil
4) Damage action, not for civil liability arising from the
criminal act, but for damages due to a quasi-
delict. (Elcano vs. Hill, 1977)
B. What is a QUASI-DELICT?
Whoever by act or omission causes damage to E. What is the relation of quasi-delict to

another, there being fault or negligence, is breach of contract and delict?
obliged to pay for the damage done. Such
fault or negligence, if there is no pre-existing CONTRAC QUASI DELICT
contractual relation between the parties, is T DELICT
called a quasi-delict and is governed by the Vinculu Contract Negligent Act/omis
provisions of the Civil Code Chapter on quasi- m Juris act/ sion
delicts. (Art. 2176) omission committ
(culpa, ed by
Elements: imprudence) means
of dolo
1) Act or omission (delibera
2) Damage or injury is caused to another te,
3) Fault or negligence is present maliciou
4) There are no pre-existing contractual s, in bad
relations between the parties faith)
5) Causal connection between damage Proof Preponder Preponderan Proof
done and act/omission Neede ance of ce of beyond
d evidence evidence reasona
C. What is the relation of quasi- ble
delict to tort? doubt
Defens Exercise of Exercise of
e extraordin diligence of
Quasi-delict, known in Spanish legal treatises
availab ary good father
as culpa aquiliana, is a civil law concept while
le diligence of a family
torts is an Anglo-American or common law
(in in the
concept. Torts, in common law, embrace both
contract of selection
delicts and quasi-delicts. Quasi-delict is
carriage), and
seemingly a refinement of the torts concept in
Force supervision
that it refers particularly to wrongful,
Majeure of
negligent, injurious acts outside the ambit of
employees
penal laws.
Pre- There is No pre- No pre-
Our concept of culpa aquilania embraces both existin pre- existing existing
negligent and intentional acts. (Barredo vs. g existing contract contract
Garcia) contra contract

ct 3. And most commonly, good father of

Burden Contractu Victim. Prosecut the family or bonus paterfamilias
of proo al party. Prove the ion.
f Prove the ff.: Accused A standard of extraordinary diligence is
ff.: is imposed by law in certain situations, such as
presume in the case of a common carrier.
1. damage
1. existen 2. negligen d
ce of a ce innocent E. What is the “emergency rule?”
contra 3. causal until the
ct connecti contrary Under the "emergency rule," an individual
2. on is who suddenly finds himself in a situation of
breach between proved. danger and is required to act without much
negligen time to consider the best means that may be
ce and adopted to avoid the impending danger, is not
damage guilty of negligence if he fails to undertake
done what subsequently and upon reflection may
appear to be a better solution, unless the
emergency was brought by his own
F. What are some classifications of tort? negligence. (Valenzuela vs. CA)
1. Negligence tort
2. Intentional tort
3. Strict liability tort F. Who has the burden of proving
4. Other Torts (Human relations torts) negligence?
Generally, it is the plaintiff or injured party. In

cases where the law creates a presumption of
II. NEGLIGENCE TORT negligence, such as for common carriers or for
persons vicariously liable, the burden is then
A. What are the elements of negligence placed on the defendant.
tort (Art. 2176)?
1. Legal duty
2. Breach G. When is negligence presumed?
3. Causation
4. Damage In motor vehicle mishaps:
B. What is NEGLIGENCE? a) A driver was negligent, if he had been

found guilty of
1. reckless driving OR
Negligence is lack of due care required by a
2. violating traffic regulations at
particular situation, conduct which falls below
least twice within the next
the standard required by law. (US vs. Barias,
preceding two months. (Art.
1912)
2184)
b) Driver has been negligent if at the time
An accident pertains to an unforeseen event in
of the mishap, he was violating any
which no fault or negligence attaches to the
traffic regulation. (Art. 2185)
defendant. (Jarco Marketing vs. CA, 1999)
Other cases:
There is prima facie presumption of
C. What is the relation of negligence to the
negligence on the part of the DEFENDANT if
elements of negligence tort? the death or injury results from his possession
of dangerous weapons or substances, such as
Negligence is the breach (element no. 2) of firearms and poison, EXCEPT when the
the legal duty (element no. 1) to observe a possession or use thereof is indispensable in
certain standard of conduct in a particular his occupation or business. (Art. 2188)
situation.
Elsewhere, the Civil Code provides for other
D. What are the tests of negligence? instances where negligence is presumed.
Example: Art. 1756 regarding common
Since negligence is the lack of due care carriers.
required by the circumstances, the test is
whether due care was observed.
1. Ordinarily prudent man;

2. Reasonable man;

H. What is RES IPSA LOQUITUR? I. What is CAUSATION?
The doctrine of res ipsa loquitur (the thing Causation is the bringing about of a result,
speaks for itself) states that the happening of and a necessary element in establishing legal
an injury permits an inference of negligence liability.
where plaintiff produces substantial evidence
that injury was caused by an agency or J. What is PROXIMATE CAUSE?
instrumentality under exclusive control and
management of defendant, and that the Proximate legal cause is that acting first and
occurrence was such that in the ordinary
producing the injury, either immediately or by
course of things would not happen if
reasonable care had been used. (Layugan vs. setting other events in motion, all constituting a
IAC) natural and continuous chain of events, each
having a close causal connection with its
To be applicable, res ipsa loquitur requires: immediate predecessor, the final event in the
chain immediately effecting the injury as a
1) Evidence of the specific acts of
negligence is absent and not readily natural and probable result of the cause which
available; first acted, under such circumstances that the
2) The accident is of a kind which does person responsible for the first event should, as
not necessarily occur unless someone an ordinarily prudent and intelligent person,
is negligent;
3) The instrumentality which caused the
have reasonable ground to expect at the
injury was under the exclusive control moment of his act or default that an injury to
of the person in charge; and some person might probably result. (Vda. De
4) The injury suffered must not have been Bataclan vs. Medina, 1957)
due to any voluntary action or
contribution of the injured person. A prior and remote cause cannot be made the
basis of an action if such remote cause did
In this jurisdiction, res ipsa loquitur is not a nothing more than furnish the condition and
rule of substantive law but a mere evidentiary give rise to the occasion by which the injury
rule. Mere invocation and application of the was made possible, if there intervened
doctrine does not dispense with the between such prior or remote cause and the
requirement of proof of negligence. injury, a distinct, successive, unrelated and
efficient cause of the injury, even though such
injury would not have happened for such
Prof. Services Inc. vs. Agana condition or occasion. If no danger existed in
the condition except because of the
independent cause, such condition was not
For purposes of apportioning
the proximate cause and if an independent
responsibility in medical negligence cases, an negligent act which results in injury because
employer-employee relationship in effect exists of the prior defective condition, such
between hospitals and their attending and subsequent act or condition is the proximate
visiting physicians. The control test is cause. (Manila Electric Co. vs. Remoquillo,
1956)
determinative.
Recent years have seen the doctrine of
corporate negligence as the judicial answer to K. What is the relation of proximate cause
the problem of allocating hospital’s liability for to the elements of negligence tort?
the negligent acts of health practitioners,
absent facts to support the application of The most basic element of any tort action is the
respondeat superior or apparent authority. Its causal connection between the act or omission
formulation proceeds from the judiciary’s of the tortfeasor and the plaintiff’s injury such
acknowledgment that in these modern times, that without it, no action will prosper.
the duty of providing quality medical service is
no longer the sole prerogative and
responsibility of the physician. L. When is proximate cause presumed?
RULE: Injured party must show that the

violation of the enactment is the proximate
cause of his injury or that it substantially
contributed to it.

EXCEPTION: However, the character and negligence rendering him liable for damages
purpose of a particular statute may be such to private respondent for the destruction of
that the courts will deem a reasonable the car which was serviced by the petitioner
connection between the injury and the due to the fire. (Cipriano vs. CA, 1996)
violation sufficient to award damages based
on negligence. In this case, proximate cause
is presumed and the injured party need not O. What Civil Code provisions on
establish proximate cause in the traditional obligations are applicable in quasi-delict?
sense.
The provisions of Articles 1172 to 1174 are
If the very injury which a particular statute also applicable to a quasi-delict. (Art. 2178)
intends to prevent happens, the violation of
the statute is presumed to be, the proximate
Art. 1172. Responsibility arising from
cause of the injury. The violation of ordinance
negligence in the performance of every kind of
intended to promote safety is in itself
obligation is also demandable, but such
negligence. (Teague vs. Fernandez)
liability may be regulated by the courts,
according to the circumstances.
M. Is the presumption that the violation of
the statute is the proximate cause Art. 1173. The fault or negligence of the
disputable? obligor consists in the omission of that
It depends. diligence which is required by the nature of
the obligation and corresponds with the
circumstances of the persons, of the time and
DISPUTABLE in the ff. cases: of the place. When negligence shows bad
faith, the provisions of Articles 1171 and
violation creates a prima facie case of 2201, paragraph 2, shall apply.
negligence
violation constitutes evidence of If the law or contract does not state the
negligence diligence which is to be observed in the
performance, that which is expected of a good
The defense that the violation was either father of a family shall be required.
justifiable or excusable under the
circumstances of the case is available. The Art. 1174. Except in cases expressly specified
legal grounds or excuse for violation of a by the law, or when it is otherwise declared by
statute: stipulation, or when the nature of the
obligation requires the assumption of risk, no
1. Anything that would make complying person shall be responsible for those events
with the statute IMPOSSIBLE; which could not be foreseen, or which, though
2. Anything over which the defendant has foreseen, were inevitable.
NO CONTROL and places him in a
position contrary to that required by Art. 1171. Responsibility arising from fraud is
the statute; demandable in all obligations. Any waiver of
3. An EMERGENCY not of the defendant’s an action for future fraud is void.
making causing him to violate the
statute; and
4. Conduct that is precisely excused or Art. 2201, par.2
EXEMPTED by the statute.
In case of fraud, bad faith, malice or wanton
CONCLUSIVE: It is not available in cases attitude, the obligor shall be responsible for all
where the statute provides for negligence per damages which may be reasonably attributed
se. to the non-performance of the obligation.
N. What is NEGLIGENCE PER SE? P. What are some of the defenses to

prevent or mitigate negligence tort
Negligence per se is the legal doctrine liability?
whereby certain acts are considered
intrinsically negligent. It is the law that 1. “I was not negligent. I exercised due
determines which acts constitute negligence diligence.” (Art. 2176)
per se. (Anonuevo vs. CA, 2004) 2. “Even if I was negligent, it was not the
proximate cause of the damage.” (Art.
Illustration: The law requires registration of 2176)
service and repair enterprises for motor 3. “There was no damage.” (Art. 2176)
vehicles. There is thus a statutory duty 4. “I was not negligent. What happened
imposed on petitioner and it is for his failure was a fortuitous event.”
to comply with this duty that he was guilty of

RULE: No person shall be seen responsible for What is the maxim of “DAMNUM ABSQUE
those events which, could not foreseen, or INJURIA”?
which, though foreseen, were inevitable.
If damage results from a person's exercising
EXCEPTIONS (LAS): his legal rights, it is damnum absque injuria.
Since conjunction of damage and wrong is
1. Cases expressly specified by law absent, damage sustained is not actionable.
2. Nature of obligation requires assuming
the risk
3. Cases declared by stipulation (Art.
1174) Damage v. Injury
Q. What is a FORTUITOUS EVENT? INJURY is the illegal invasion of a legal

right;
A fortuitous event presents the following
essential characteristics: DAMAGE is the loss, hurt, or harm which
results from the injury; and
1. The cause of the unforeseen and
unexpected occurrence, or the failure DAMAGES are the recompense or
of the debtor to comply with his compensation awarded for the damage
obligation, must be independent of the suffered.
human will;
2. It must be impossible to foresee the Thus, there can be damage without injury
event or if it can be foreseen, it must in those instances in which the loss or
be impossible to avoid; harm was not the result of a violation of a
3. The occurrence must be such as to legal duty. These situations are often
render it impossible for the debtor to called damnum absque injuria. In order
fulfill his obligation in a normal manner that a plaintiff may maintain an action for
and the injuries of which he complains, he must
4. The obligor (debtor) must be free from establish that such injuries resulted from a
any participation in the aggravation of breach of duty which the defendant owed
the injury resulting to the creditor. to the plaintiff. There must be damnum et
injuria. (Custodio vs. CA)
(Juntillla vs. Fontanar, 1985)
DEFENSES
“I was negligent and I am the proximate
“The plaintiff voluntarily assumed the risk. Volenti non fit injuria.” cause of the damage but the plaintiff
was guilty of contributory
What is the maxim of “VOLENTI NON FIT INJURIA”?
negligence.”
RULE: The maxim “volenti non fit injuria” What is the effect of plaintiff’s negligence
states that when a person voluntarily assents on his right to recover?
to a known danger, he must abide by the
consequences. IF it is the immediate and proximate CAUSE of
his injury, he CANNOT recover damages.
Illustration: The owner of an animal is
answerable only for damages caused to a IF only CONTRIBUTORY, the immediate and
stranger, and that for damage caused to the proximate cause of the injury being the
caretaker of the animal. A caretaker of defendant's lack of due care, the plaintiff may
animals voluntarily assumes the risks of his recover damages, but the courts shall
occupation. The owner would be liable only if MITIGATE the damages to be awarded. (Art.
he had been negligent or at fault under article 2179)
1902 of the Civil Code. (Afialde vs. Hisolde)
EXCEPTION: If an emergency is found to “I was negligent and I am the proximate

exist or if the life or property if another is in cause of the damage, but I already
peril or when he seeks to rescue his paid.”
endangered property. (Ilocos Norte Electric
Company vs. CA, 1989) Responsibility for fault or negligence under
the preceding article is entirely separate and
distinct from the civil liability arising from
negligence under the Penal Code. BUT THE
“I was just exercising my rights. PLAINTIFF CANNOT RECOVER DAMAGES
Damnum absque injuria.”

TWICE FOR THE SAME ACT OR OMISSION OF Prescription

THE DEFENDANT. (Art. 2177)
- 4 years for Quasi-Delict (Art. 1146)
Article 2177 of the Civil Code forbids ACTUAL - 1 year for defamation (Art. 1147)
double recovery of damages for the same
negligent act or omission. Hence, an award of
damages in a civil case does not preclude an PERSONS LIABLE
award of damages in the subsequent criminal
case. (Padua vs. Robles)
“I was negligent but the defendant had A. Who is liable for the obligation
the last clear chance.” imposed by Article 2176?
What is the doctrine of “LAST CLEAR The obligation imposed by Article 2176 is
CHANCE”? demandable from:
The doctrine of “last clear chance” (also 1. one's own acts or omissions,
“supervening negligence” or “discovered 2. acts or omissions of persons for whom
peril”) states that where both parties are one is responsible. (Art. 2180)
negligent, but the negligent act of one is
appreciably later in time than that of the A tortfeasor (liable directly or vicariously)
other, or when it is impossible to determine may be a natural or a juridical person.
whose fault or negligence should be attributed
to the incident, the one who had the last clear B. What is VICARIOUS LIABILITY?
opportunity to avoid the impending harm and
failed to do so is chargeable with the Vicarious liability is the imposition of liability
consequences thereof. An antecedent on one person for the actionable conduct of
negligence of a person doesn’t preclude the another, based solely on a relationship
recovery of damages for the supervening between the two persons. The liability is
negligence of, or bar a defense against liability primary and solidary. (Black’s Law
sought by another, if the latter, who had the Dictionary)
last fair chance, could have avoided the
impending harm by the exercise of due Extra-contractual liability of this kind has been
diligence. (PBCom vs. CA, 1997) limited to cases wherein “moral culpability”
can be directly imputed to the person
Illustration: A calesa being driven on the charged.
road side of the road and a car converged on
BASES:
a bridge. A collision was averted when the car
swerved suddenly but the calesa still fell of
the bridge. Although the plaintiff was guilty of a. Doctrine of Imputed Negligence
negligence in being in the wrong side of the
bridge, the defendant was nevertheless civilly This doctrine places upon one person the
liable for the legal damages resulting from the responsibility for another’s negligence.
collision, as he had a fair opportunity to avoid
the accident after he realized the situation b. Respondeat superior
created by the negligence of the plaintiff and
failed to avail himself of that opportunity; It means nothing more than “look to the man
while the plaintiff could by no means then higher up,” (usually the employer or person
place himself in a position of greater safety. under whose control the tortfeasor was under)
(Picart vs. Smith, 1918) which is a manifestation of vicarious liability.
Last clear chance is inapplicable in culpa c. Bonus paterfamilias.

contractual. (Consolidated Bank vs. CA,
2003) The relationship of pater familias is the basis
of civil law liability, particularly for an
Waiver employer. It is a defense for all instances of
vicarious liability based on Art. 2180.
What is the test of validity of a waiver? C. Who are liable vicariously?
a. The FATHER and, in case of his death

A waiver, to be valid and effective, must be or incapacity, the MOTHER, are
couched in CLEAR and UNEQUIVOCAL TERMS responsible for the damages caused by
which leave no doubt as to the INTENTION of the minor children who live in their
a person to give up a right or benefit which company.
legally pertains to him. (Gatchalian vs. b. GUARDIANS are liable for damages
Delim, 1991) caused by the minors or incapacitated

persons who are under their authority REQUISITES for liability to attach:
and live in their company.
c. The OWNERS and MANAGERS of an Parents (mnemonic: 21 + Authority &
establishment or enterprise are Company):
likewise responsible for damages
caused by their employees in the 1. The child is below 21 years old
service of the branches in which the 2. The child is under the parental
latter are employed or on the occasion authority of the parents
of their functions. 3. The child is living in the company of
d. EMPLOYERS shall be liable for the the parents
damages caused by their employees
and household helpers acting within Guardians (mnemonic: Authority &
the scope of their assigned tasks, even Company)
though the former are not engaged in 1. The ward if minor is below 21 years
any business or industry. old. If Incapacitated, the guardian is
liable for the acts of the ward
C. Who are liable vicariously? (continued) regardless of the latter’s age.
The child is under the parental
e. The STATE is responsible in like authority of the parents
manner when it acts through a special 2. The tortfeasor is under his authority
agent; but not when the damage has 3. The tortfeasor is living in his company
been caused by the official to whom
the task done properly pertains, in Is a minor or insane tortfeasor with NO
which case what is provided in Article parent or guardian liable?
2176 shall be applicable.
f. Lastly, TEACHERS or HEADS of Yes. He shall be answerable with his own
establishments of arts and trades shall property in an action against him where a
be liable for damages caused by their guardian ad litem shall be appointed. (Art.
pupils and students or apprentices, so 2182)
long as they remain in their custody.
(Art. 2180) Owners and managers of establishments
or enterprises
Rule on Construction: Because it imposes Who are For Requisites

strict liability, Art. 2180 should be interpreted liable whose for liability to
strictly and cannot be extended to persons not acts attach
enumerated therein. Owners and Their The damage
managers of an employees was caused in
D. Instances where there is vicarious establishment the service of
or enterprise the branches
liability.
in which the
employees are
Parents and Guardians employed
-OR-
Article 2180 (a) has been REPEALED by Art. The damage
221 of the Family Code. Now, parent(s) was caused on
exercising parental authority is liable for the the occasion of
torts of their children. their functions
Art. 221 (Family Code) PARENTS and The term “owners and managers of an
OTHER PERSONS EXERCISING PARENTAL establishment or enterprise” is used in the
AUTHORITY shall be civilly liable for the sense of an “EMPLOYER;” hence, managers
injuries and damages caused by the acts or cannot be liable since they themselves are
omissions of their unemancipated children employees of the enterprise.
living in their company AND under their
parental authority subject to the appropriate Art 2180, par 4 may be unnecessary as Art
defenses provided by law. 2180, par 5 already covers the cases under
par 4.
Despite the lowering of the age of majority
from 21 to 18, parents are still liable for the Employers
torts committed by their children below 21
years of age. (Art 236, par 3 FC, as The liability of an employer is based primarily
amended by RA 6809). on the presumption that he failed to exercise
due diligence in the selection and supervision
of his employees.

REQUISITES OF LIABILITY: of the car and met an accident, the employer

1) existence of the employer-employee was also made liable under Art. 2180 of the
relationship Civil Code for the injury caused by the
2) THE EMPLOYER WAS CHOSEN BY THE negligent operation of the car by the
EMPLOYEE; executive on the ground that the car which
3) THE WORK BEING PERFORMED WAS IN caused the injury was assigned to the
ACCORDANCE WITH A VALID ORDER; AND executive by the employer for the prestige of
4) THE ILLICIT ACTS OF THE EMPLOYEE WAS the company. The insurance company was
ON THE OCCASION OR BY REASON OF THE held liable even though the employee was not
FUNCTIONS ENTRUSTED TO HIM. performing within the scope of his assigned
tasks when the accident happened
The employer can interpose the defense of (Valenzuela vs. CA, 253 SCRA 303 [1996]).
due diligence in selection and supervision of State
his employees.
General Rule: The State cannot be sued.
BAR QUESTION (Sec 3, Art XVI, Consti)
Exceptions:
After working overtime up to midnight, Alberto,
an executive of an insurance company drove a
company vehicle to a favorite videoke bar a. There is express legislative consent
where he had some drinks and sang some songs b. The State filed the case
with friends to “unwind.” At 2:00 a.m., he
Instances where the state gives its
drove home, but in doing so, he bumped a consent to be sued:
tricycle, resulting in the death of its driver. May
the insurance company be held liable for the a. Art. 2180 (6) is an example of an
negligent act of Alberto? Why? express legislative consent. Here, the
State assumes a limited liability for the
acts of its special agents.
Suggested Answer: b. Art. 2189 provides for state liability for
The insurance company is not liable because damages caused by defective condition
when the accident occurred, Alberto was not of public works.
acting within the assigned tasks of his c. Local Government Code provides for
employment. the liability of local government units
for the for the wrongful exercise of its
It is true that under Art. 2180 (par. 5) of the proprietary (as opposed to its
Civil Code, employers are liable for damages governmental) functions. The latter is
caused by their employees who were acting the same as that of a private
within the scope of their assigned tasks. corporation or individual. (Mendoza vs.
However, the mere fact that Alberto was using De Leon)
a service vehicle of the employer at the time
of the injurious accident does not necessarily Who is a special agent?
mean that he was operating the vehicle within
the scope of his employment. In Castilex A special agent is
Industrial Corp. vs. Vasquez, Jr. (321 SCRA
393 [1999]), the Supreme Court held that a. A public official required to do a
notwithstanding the fact that the employee particular task that is foreign to said
did some overtime work for the company, the official’s usual government functions,
former was, nevertheless, engaged in his own or
affairs or carrying out a personal purpose B. A PRIVATE INDIVIDUAL WHO IS
when he went to a restaurant at 2:00 a.m. COMMISSIONED FOR A SPECIAL GOVERNMENT
after coming out from work. The time of the TASK.
accident (also 2:00 a.m.) was outside normal
working hours. The agent must be empowered by a definite
order or commission to perform some act.
Alternative Answer: This act must be the one that gives rise to the
The insurance company is liable if Alberto was injury claimed. (Merritt vs. Government)
negligent in the operation of the car and the
car was assigned to him for the benefit of the If the State’s agent is not a public official and
insurance company, and even though he was is commissioned to perform non-
not within the scope of his assigned tasks governmental functions, then the State
when the accident happened. In one case assumes the role of an ordinary employer and
decided by the Supreme Court, where an can be held liable for the agent’s tort.
executive of a pharmaceutical company was
given the use of a company car, and after Does state immunity mean that injured
office hours, the executive made personal use persons are deprived of remedy?

1) The tortfeasor is a minor (below 18

No. A regular official is liable under Art 2176 only)
for the damage he causes. But as a rule, even 2) Under their supervision, instruction or
if injury is caused in the course of the custody
performance of a governmental duty, no
recovery can be had from the government’s RA 6809 does not provide that persons
officers so long as they performed their duty exercising subsidiary parental authority are
honestly and in good faith or that they did not liable for the torts of those who are between
act wantonly or maliciously. 18 and 21, unlike in the case of parents and
guardians.
Cases which do not fall under the provision on
Teachers and heads of establishments of substitute parental authority will be governed
by Art 2180 of the Civil Code.
arts and trades
What are the requisites for liability to
attach under Article 2180?
Art. 2180 must be read together with the
provisions of the Family Code, thus: REQUISITES:
1) The defendant must be the teacher or

Art. 218. The school, its administrators and
the head of a school of arts and
teachers, or the individual, entity or institution
trades;
engaged in child care shall have special
2) THE DAMAGE TO THE PLAINTIFF MUST BE
parental authority and responsibility over the
CAUSED BY THE ACT OR OMISSION OF A
minor child while under their supervision,
STUDENT WHO, AT THE TIME OF ITS
instruction or custody.
COMMISSION, WAS UNDER THE CUSTODY OF
Authority and responsibility shall apply to all
THE DEFENDANT; AND
authorized activities whether inside or outside
3) Proof of the amount of damage.
the premises of the school, entity or
institution.
“Custody” means the protective and
supervisory custody the school and its head
Art. 219. Those given the authority and
and teachers exercise over the students for as
responsibility under the preceding Article shall
long as they are at attendance in the school,
be principally and solidarily liable for damages
including break times (lunch or recess).
caused by the acts or omissions of the
unemancipated minor. The parents, judicial
guardians or the persons exercising substitute
parental authority over said minor shall be E. Do tortfeasors vicariously liable under
subsidiarily liable. Art. 2180 have a defense?
The respective liabilities of those referred to in Yes. Responsibility ceased when they prove
the preceding paragraph shall not apply if it is that they observed all the diligence of a good
proved that they exercised the proper father of a family to prevent damage. (Art.
diligence required under the particular 2180)
circumstances.
All other cases not covered by this and the F. What is the liability of joint tortfeasors?
preceding articles shall be governed by the
provisions of the Civil Code on quasi-delicts. The responsibility of two or more persons who
are liable for quasi-delict is SOLIDARY. (Art.
Who are liable? 2194)
Persons exercising substitute parental

authority (SATI) G. May they recover what they paid and
from whom?
1) School
2) Administrators Yes. Whoever pays for the damage caused by
3) Teachers his dependents or employees may recover
4) Individual/entity/institution engaged in from the latter what he has paid or delivered
child care in satisfaction of the claim. (Art. 2181)
Substitute parental authority is intermittent
What are the requisites for liability to

attach under the Family Code?
REQUISITES:

Who are For whose Requisite for
liable Acts Liability to A right, though by itself legal because
Attach recognized or granted by law as such, may
Teacher- in- pupils and pupils and nevertheless become the source of some
charge students students illegality. When a right is exercised in a
(the one remain in manner which does not conform with the
designated teacher’s norms enshrined in Article 19 (i.e. to act with
to exercise custody justice; to give everyone his due; and to
supervision regardless of observe honesty and good faith) and results in
over the age damage to another, a legal wrong is thereby
students) committed for which the wrongdoer must be
Head of Apprentices custody held responsible. An action for damages under
establishme regardless of either Article 20 or Article 21 would be proper.
nt of arts the age (Cebu Country Club, Inc., et al. vs. Ricardo F.
and trades Elizagaque)
School a. if the must be
REQUISITES to find the existence of an
(generally tortfeasor below 18
abuse of right under Article 19:
not held is a
liable) student of
1) There is a legal right or duty;
the school
2) Which is exercised in BAD FAITH;
(Art 218
3) FOR THE SOLE INTENT OF PREJUDICING OR
FC)
INJURING ANOTHER.
b. if the
tortfeasor
Good faith is presumed and the burden of
is a
proving bad faith is on the party alleging it.
teacher/
employee
of the
B. Acts contra bonus mores
school, it is
liable as
employer Any person who wilfully causes loss or injury
under 2180 to another in a manner that is contrary to
(5) of CC morals, good customs or public policy shall
(St. Francis compensate the latter for the damage. (Art.
vs. CA) 21)
c. if the
tortfeasor REQUISITES:
is a
stranger, it 1) A person has a legal right
is liable for 2) Such right is violated by another in a
breach of manner contrary to morals, good
contract. customs or public policy;
(PSBA vs. 3) Act is done with intent to injure;
CA) 4) There is a loss or injury suffered as a
result of said violation. (Ruiz vs.
Secretary of Defense; Albenson vs. CA)
There is an act which is legal but which may

III. INTENTIONAL TORTS
be contrary to morals, good custom, public
order, or public policy. (Albeson vs. CA)
What are intentional torts?
Illustrations:
A. Abuse of Rights
a. Breach of promise to marry,
Every person must, in the exercise of his seduction and sexual assault
rights and in the performance of his duties,
act with justice, give everyone his due, and Mere breach of promise to marry is not an
observe honesty and good faith. (Art. 19) actionable wrong. But to formally set a
wedding and go through all the above-
Every person who, contrary to law, wilfully or described preparation and publicity, only to
negligently causes damage to another, shall walk out of it when the matrimony is about to
indemnify the latter for the same. (Art. 20) be solemnized, is quite different. This is
palpably and unjustifiably contrary to good
Art 19 contains a mere declaration of customs for which defendant must be held
principles. The declaration is implemented by answerable in damages in accordance with
Art. 20. (Globe Mackay vs. CA) Article 21. (Wassmer vs. Velez)

b. Disconnection of Utilities If the dismissal was done anti-socially or

oppressively, as the complaint alleges, then
A prior written notice to the customer is the respondents violated Art. 1701 of the CC
required before disconnection of the service. and Art 21 of the CC.
Failure to give such prior notice amounts to a
tort. (Meralco vs. CA) Abuse of Rights vs. Acts Contra Bonus Mores
c. Malicious Prosecution Article 19 Article 21

(as
implemented
RULE: One cannot be held liable in damages
by Art. 20)
for maliciously instituting a prosecution where
Act is Contrary to law Contrary to
he acted with probable cause. Reason: It
morals, good
would be a very great discouragement to
customs, public
public justice if prosecutors, who had a
policy
tolerable ground of suspicion, were liable to
Manner Willfully or Willfully
be sued at law when their indictments
negligently
miscarried. (Que vs. IAC)
Result Damage Injury or loss
EXCEPTION: An action for damages brought Sanction Indemnify Compensate
by one against whom a criminal prosecution,
civil suit, or other legal proceeding has been
instituted maliciously and without probable
cause, after the termination of such
IV. OTHER TORTS (OTHER HUMAN
prosecution, suit or other proceeding in favor RELATIONS TORTS)
of the defendant herein. The gist of the action
is the putting of legal process in force, A. Unjust Enrichment
regularly, for the mere purpose of vexation or
injury.
Art. 22. (CC) Every person who through an
act of performance by another, or any other
Requisites for Malicious Prosecution:
means, acquires or comes into possession of
something at the expense of the latter without
(1) Fact of the prosecution
just or legal ground, shall return the same to
(2) Defendant was himself the
him.
prosecutor
(3) Action was terminated with an
Art. 23.(CC) Even when an act or event
acquittal
causing damage to another's property was not
(4) Prosecutor acted without probable
due to the fault or negligence of the
cause
defendant, the latter shall be liable for
(5) Prosecutor was impelled by legal
indemnity if through the act or event he was
malice, that is by improper or sinister
benefited.
motive (Drilon vs. CA)
Art. 2154.(CC) If something is received
As to the elements of malicious prosecution,
when there is no right to demand it, and it
the presence of probable cause signifies the
was unduly delivered through mistake, the
absence of malice. (Albenson vs. CA)
obligation to return it arises.
Note: It seems that the second and third
elements are REDUNDANT. REQUISITES:
d. Public Humiliation
1) defendant is enriched
Carpio vs. Valmonte 2) plaintiff suffered damage or loss
3) there is no just or legal ground for
defendant's enrichment
Wedding coordinator accused by bride’s aunt
4) enrichment is at the expense of
for stealing jewelry, in the presence of other
plaintiff
people in hotel room. True, petitioner had the
right to ascertain the identity of the
malefactor, but to malign respondent without
B. Ostentatious Display of Wealth
an iota of proof is impermissible.
e. Unjustified Dismissal Thoughtless extravagance in expenses for

pleasure or display during a period of acute
Quisaba vs. Sta. Ines public want or emergency may be stopped by
order of the courts at the instance of any
government or private charitable institution.
(Art. 25)

The acts and omissions of the firm fall under

Article 26. Persons who know the residence of
C. Dereliction of Duty Doctor Aramil, were confused by the
distorted, lingering impression that he was
Any person suffering material or moral loss renting his residence from Arcadio or that
because a public servant or employee refuses Arcadio had leased it from him. Either way,
or neglects, without just cause, to perform his his private life was mistakenly and
official duty may file an action for damages unnecessarily exposed. (St. Louis Realty
and other relief against he latter, without Corporation vs. CA, 1984)
prejudice to any disciplinary administrative
action that may be taken. (Art. 27)
E. Unfair Competition
REQUISITES (Amaro vs. Samanguit):
Art. 28 (CC). Unfair competition in
(1) Defendant is a public officer charged agricultural, commercial or industrial
with a performance of a duty in favor enterprises or in labor through the use of
of the plaintiff force, intimidation, deceit, machination or any
other unjust, oppressive or highhanded
(2) He refused or neglected without just method shall give rise to a right of action by
cause to perform the duty the person who thereby suffers damage.
(3) Plaintiff sustained material or moral
loss as a consequence of such non- For a defendant to be liable, the plaintiff must
performance show that the former’s conduct was PURELY
MALICIOUS and served no legitimate purpose,
(4) The amount of such damages, if or that any trade or competitive motive was
material absent.
Note (Sangco): REFUSAL implies a Unfair competition includes, but is not

deliberate act which may be due to erroneous limited to:
belief in good faith or plain ignorance; while
NEGLECT which is the failure to do a thing, 1. PHYSICAL INTERFERENCES, VIOLENCE AND
may be intentional or unintentional. THREATS (BOTH AGAINST COMPETITORS
Furthermore, the duty to act must be AND THEIR CUSTOMERS);
MINISTERIAL, and must be owed only to the 2. Competition with malice;
person who sustains the loss by the failure to 3. Passing off; a tortuous interference
fulfill it. with another’s patronage that may, but
need not involve, trade mark
For discretionary “duties,” there should be infringement, for example, selling
proof of malice or arbitrariness in the action. homemade ice cream as Magnolia ice
cream.
D. Respect for Dignity, Personality, Privacy
and Peace of Mind of Another A civil action based on Art. 28 may be
pursued entirely independent from a criminal
Art. 26. Every person shall respect the action.
dignity, personality, privacy and peace of
mind of his neighbors and other persons. The
following and similar acts, though they may V. STRICT LIABILITY TORT
not constitute a criminal offense, shall
produce a cause of action for damages,
prevention and other relief: What is a STRICT LIABILITY TORT?
(5) Prying into the privacy of another's

residence: Tort liability that does not depend on actual
(2) Meddling with or disturbing the private negligence or intent to harm but that is based
life or family relations of another; on the breach of an absolute duty to make
something safe; most often applies to ultra-
(3) Intriguing to cause another to be alienated hazardous activities and products-liability
from his friends;(4) Vexing or humiliating cases; also known as absolute liability, liability
another on account of his religious beliefs, without fault.
lowly station in life, place of birth, physical
defect, or other personal condition. What are the types of strict liability tort?
Acts listed are not exclusive. 1. Damages caused by an animal

2. Motor vehicle mishaps
Illustration of a “similar act”: Wrongful 3. Product Liability
advertisement of house in the Sunday times.

4. Defective condition of public works slope caused the van to gain speed and that,
5. Collapse of a building as he stepped on the brakes to check the
6. Things thrown or falling from a building acceleration, the brakes locked, causing the
van to go even faster and eventually to hit the
A. Damages caused by an animal car in front of it. Orlando and Diego contend
that the sudden malfunction of the van’s
Who is liable for damages caused by an brake system is a fortuitous event and that,
animal? therefore, they are exempt from any liability.
The POSSESSOR of an animal or WHOEVER (a) Is this contention tenable? Explain.

MAY MAKE USE of the same is responsible for (b) Explain the concept of vicarious
the damage which it may cause. liability in quasi-delicts.
(c) Does the presence of the owner
NOT available as a defense: Although animal inside the vehicle causing damage
may escape or be lost. to a third party affect his liability
for his driver’s negligence? Explain.
Available defenses: Damage should come
from force majeure or from the fault of the
person who has suffered damage. (Art. Suggested Answer:
2183)
(a) No. Mechanical defects of a motor vehicle
What must be determined is possession do not constitute fortuitous event, since
regardless of the ownership. It holds the the presence of such defects would have
possessor liable even if the animal should been readily detected by diligence
"escape or be lost" and so be removed from maintenance check. The failure to
his control. And it does not matter either that maintain the vehicle in safe running
the animal was tame as the law does not condition constitutes negligence.
speak only of vicious animals. (Vestil vs. (b) The doctrine of vicarious liability is that
IAC) which renders a person liable for the
negligence of others for whose acts or
omission the law makes him responsible
B. Motor Vehicle Mishaps on the theory that they are under his
control and supervision.
Who is liable in motor vehicle mishaps? (c) In motor vehicle mishaps, the owner is
made solidarily liable with his driver if he
If owner was in the motor vehicle: DRIVER (the owner) was in the vehicle and could
and OWNER, he is solidarily liable with his have, by the use of due diligence,
driver IF he could have, by the use of the due prevented the mishap (Caedo vs. Yu Khe
diligence, prevented the misfortune. Thai, 26 SCRA 410 [1968]). However, this
question has no factual basis in the
If the owner was NOT in the motor vehicle: problem given, in view of the express
Article 2180 is applicable. (i.e. person who given fact that “Orlando was not in the car
caused the injury and the employer) (Art. at the time of the incident.”
2184.)
The law requires every owner of a motor C. Product Liability

vehicle to file with the proper government
office a bond executed by a government- Who is liable for death or injuries caused
controlled corporation or office, to answer for by any noxious or harmful substances
damages to third persons. The amount of the used?
bond and other terms shall be fixed by the
competent public official. (Art. 2186) MANUFACTURERS and PROCESSORS of
foodstuffs, drinks, toilet articles and similar
BAR QUESTION goods shall be liable ALTHOUGH no
contractual relation exists between them and
A van owned by Orlando and driven by Diego, the consumers. (Art. 2187)
while negotiating a downhill slope of a city
road, suddenly gained speed, obviously
beyond the authorized limit in the area, and D. Defective condition of public works
bumped a car in front of it, causing severe
damage to the car and serious injuries to its Who are liable for damages caused by
passengers. Orlando was not in the car at the defective condition of public works?
time of the incident. The car owner and the
injured passengers sued Orlando and Diego LGUs (provinces, cities and municipalities)
for damages cause by Diego’s negligence. In shall be liable for damages for the death of, or
their defense, Diego claims that the downhill injuries suffered by, any person by reason of

the defective condition of roads, streets, Person For What Defenses

bridges, public buildings, and other public Strictly or
works UNDER THEIR CONTROL OR Liable Exception
SUPERVISION. (Art. 2189) s
If not in
Requisite for liability is supervision NOT vehicle
ownership. 2180
Manufacturers death and Absence on
and injuries caused contractual
Processors of by any noxious relation
E. Collapse of a building
foodstuffs, or harmful NOT a
drinks, toilet substances used defense
When are proprietors liable for damages? articles and
similar goods
PROPRIETORS shall be responsible for (FDTAS)
damages caused: Defendant in death or injury possession
possession of results from or use
a) By the total or partial collapse of a dangerous such possession thereof is
building or structure if it should be due weapons/ indispensab
to the lack of necessary repairs. (Art. substances le in his
2190) such as occupation
b) By the explosion of machinery which firearms and or business
has not been taken care of with due poison
diligence, and
Provinces, the death or Public
c) By the inflammation of explosive
Cities and injuries suffered works must
substances which have not been kept
Municipalities by any person be under
in a safe and adequate place;
by reason of the their
d) By excessive smoke, which may be
defective supervision
harmful to persons or property;
condition of s
e) By the falling of trees situated at or
roads, streets,
near highways or lanes, if not caused
bridges, public
by force majeure;
buildings, and
f) By emanations from tubes, canals,
other public
sewers or deposits of infectious matter,
works
constructed without precautions
Proprietor of  total or Responsibili
suitable to the place. (Art. 2191)
building/ partial ty for
structure collapse of collapse
F. Things thrown or falling from a building building or should be
structure if due to the
The HEAD OF A FAMILY that lives in a building due to lack of lack of
or a part thereof. (Art 2193) necessary rep necessary
airs repairs
QUICKGLANCE  explosion of
Person For What Defenses machinery
Strictly or which has not
Liable Exception been taken
s cared of with
Possessor of For the damage Force due diligence,
an animal or it may cause majeure and the
whoever Fault of the inflammation
makes use of person who of explosive
them even if suffered substances
the animal is damage which have
lost or not been kept
escaped in a safe and
Owner of Motor vehicle Solidary adequate
Motor Vehicle mishaps liability place
only if the  by excessive
owner was smoke, which
in the may be
vehicle and harmful to
if he could persons or
have property
prevented  by falling of
it thru due trees situated
diligence at or near

Person For What Defenses 3. Freedom to write for the press or to

Strictly or maintain a periodical publication
Liable Exception 4. Freedom from arbitrary or illegal detention
s 5. Freedom of suffrage
highways or 6. The right against deprivation of property
lanes, if not without due process of law
caused by 7. The right to just compensation when
force majeure property is taken for public use
 by 8. The right to equal protection of the laws
emanations 9. The right to be secure in one’s person,
from tubes, house, papers and effects against
canals, unreasonable searches and seizures
sewers or 10. The liberty of abode and of changing the
deposits of same
infectious 11. The right to privacy of communication and
matter, correspondence
constructed 12. The right to become a member of
without associations and societies for purposes not
precautions contrary to law
suitable to the 13. The right to take part in a peaceable
place assembly and petition the government for
redress of grievances
14. The right to be free from involuntary
servitude in any form
15. The right of the accused against excessive
bail
16. The right of the accused to be heard by
himself and counsel, to be informed of the
Engineer, if damage of
nature and the cause of the accusation
Architect or building or
against him, to have a speedy and public trial,
Contractor structure is
to meet the witnesses face to face, to have
caused by
compulsory process to secure the attendance
defect in
of witnesses on is behalf;
construction
17. Freedom form being compelled to be
which happens
witness against one’s self, or from being
within 15 years
forced to confess his guilt, or from being
from
induced by a promise of immunity or reward
construction;
to make such confession, except when the
action must be
person confessing becomes a State witness.
brought within
18. Freedom of access to the courts
10 years from
collapse
Head of the liable for
In any of the cases referred to in this article,
Family that damages
whether or not the defendant’s act or
lives in a caused by
omission constitutes a criminal offense, the
building or things thrown
aggrieved party has a right to commence an
any part or falling from
entirely separate and distinct civil action for
thereof the same
damages, and for other relief.
Such civil action shall proceed independently

VI. TORTS WITH INDEPENDENT of any criminal prosecution (if the latter be
CIVIL ACTION instituted) and may be proved by a
preponderance of evidence. The indemnity
shall include moral damages. Exemplary
A. Violation of Civil and Political Rights
damages may also be adjudicated.
32 CC. Any public officer or employee, or any The responsibility herein set forth is not
private individual, who directly or indirectly demandable from a judge unless his act or
obstructs, defeats, violates or in any manner omission constitutes a violation of the Penal
impedes or impairs any of the following rights code or any other penal statute.
and liberties of another person shall be liable
to the latter for damages: REQUISITE: FACT OF VIOLATION
1. Freedom of religion To be liable under Article 32 of the New Civil

2. Freedom of speech Code, it is enough that there was a violation
of the constitutional rights of the plaintiffs and

it is not requires that defendants should have (2) defamatory,

acted with malice or with bad faith.” Allowing (3)concerning the plaintiff.
good faith as an excuse would defeat the main
purpose of the provision which is the effective 2. Fraud
protection of individual rights and its objective
is to put an end to official abuse by the pleas Under article 33 of the Civil Code, a civil
of good faith. (Lim vs. Ponce De Leon) action for damages, entirely separate and
distinct from the criminal action may be
B. Defamation, Fraud, Physical injuries brought by the injured party in cases of
defamation, fraud and physical injuries, Estafa
Art. 33 CC. In cases of DEFAMATION, falls under fraud.” (Prudential Bank vs. IAC)
FRAUD, and PHYSICAL INJURIES, a civil
action for damages, entirely separate and 3. Physical Injuries
distinct from the criminal action, may be The term “physical injuries” is used in a
brought by the injured party. Such civil generic sense. It is not the crime of physical
action shall proceed independently of the injuries defined in the RPC. It includes not
only physical injuries, but consummated,
criminal prosecution, and shall require only frustrated and attempted homicide. The ruling
a preponderance of evidence. in Corpus vs. Paje, which states that reckless
imprudence or criminal negligence is not
Article 33 speaks only of defamation, fraud included in Art. 33 is not authoritative.
and physical injuries. The case of reckless (Madeja vs. Hon. Caro)
imprudence resulting in physical injuries and
homicide is not one of the three crimes C. Neglect of Duty
mentioned in article 33 and therefore, no civil
action shall proceed independently of the 34 CC. When a member of the city or
criminal prosecution. The essence of the crime municipal police force refuses or fails to
of criminal negligence, is the execution of the render aid or protection to any person in case
imprudent or negligent act that, if of danger to life or property, such peace
intentionally done would be punishable as a officer shall be primarily liable for damages
felony, and hence the law penalizes the and the city or municipality shall be
negligent or careless act and no the result subsidiarily responsible therefore. The civil
thereof. (Marcia, et. al vs. CA) action herein recognized shall be independent
of any criminal proceedings, and a
The civil action for damages which it allows to preponderance of evidence shall suffice to
be instituted is ex-delicto. This is manifest in support such action.
the provision which uses the expressions
“criminal action” and “criminal prosecution”. D. Action for damages where no
This conclusion is supported by the comment independent civil action is provided
of the Code Commission. (Madeja vs. Hon.
Caro)
35 CC. When a person claiming to be injured
1. Defamation by a criminal offense, charges another with
the same, for which no independent civil
Defamation, which includes libel and slander, action is granted in this code or any special
law, but the justice of the peace finds no
means the offense of injuring a person’s reasonable ground to believe that a crime has
character, fame or reputation through false and been committed, or the prosecuting attorney
malicious statements. It is that which tends to refuses or fails to institute criminal
injure reputation or to diminish the esteem, proceedings, the complainant may bring a
civil action for damages against the alleged
respect, good will or confidence in the plaintiff
offender. Such civil action may be supported
or to excite derogatory feelings or opinions by a preponderance of evidence. Upon the
about the plaintiff. defendant’s motion, the court may require the
plaintiff to file a bond to indemnify the
defendant in case the complaint should be
Words which are merely insulting or offensive found to be malicious.
are not actionable. There must be a presence
of allegations as to special damages suffered If during the pendency of the civil action, a
by the plaintiff. (MVRS Publications vs. Islamis information should be presented by the
Da’wah Council of the Philippines, Inc., et al.) prosecuting attorney, the civil action shall be
suspended until the termination of the
REQUISITES for recovery; Prove that the criminal proceedings.
defendant
(1) Published a statement that was,

Notes: Because of the last sentence, the civil the private complainant in the criminal case.
action provided under this article cannot (Casupanan vs. Laroya)
strictly be considered as an independent civil
action. The criminal action for violation of Batas
Pambansa Blg. 22 shall be deemed to include
It should be emphasized that the same the corresponding civil action and that no
negligent act causing damages may produce a reservation to file such civil action separately
civil liability arising from a crime under Art. shall be allowed. But a separate proceeding
100 of the Revised Penal Code or create an for the recovery of civil liability in cases of
action for quasi-delict or culpa extra- violations of B.P. No. 22 is allowed when the
contractual under Arts. 2176-2194 of the New civil case is filed ahead of the criminal case.
Civil Code. (Garcia vs. Florido) (Sps. Benito Lo Bun Tiong etc. vs. Vicente
Balboa)
If Liability being predicated on quasi-delict the
civil case may proceed as a separate and BAR QUESTION
independent civil action, as specifically
provided for in Article 2177 of the Civil Code. As a result of a collision between a taxicab
(Cinco vs. Canonoy) owned by A and another taxicab owned by B,
X, a passenger of the first taxicab, was
seriously injured. X later filed a criminal
VII. CIVIL LIABILITY ARISING action against both drivers.
(a)
FROM CRIME (a) Is it necessary for X to reserve his right to
Responsibility for fault or negligence is
institute a civil action for damages against both
entirely separate and distinct from the civil taxicab owners before he can file a civil action
liability arising from negligence under the for damages against them? Why?
RPC. But double recovery is not allowed. (Art.
(b) May both taxicab owners raise the defense
2177)
of due diligence in the selection and
supervision of their drivers to be absolved
RPC Art. 100 provides that every person who
from liability for damages to X? Reason.
is criminally liable for a felony is also civilly
liable. This general rule however presupposes
Suggested Answer:
that the felony had resulted in damage or
(a) It depends. If the separate civil action is
injury to another’s person or property. To
to recover damages arising from the
create an obligation or give rise to civil
criminal act, reservation is necessary. If
liability, an act or omission, whether
the civil action against the taxicab owners
intentional or negligent, must have caused
is based on culpa contractual or on quasi-
damage or injury to another, otherwise only
delict, there is no need for reservation.
criminal liability will attach.
(b) It depends. If the civil action is based on
quasi-delict, the taxicab owners may raise
Though the general rule provides that one
the defense of diligence of a good father of
who is not criminally liable cannot be civilly
a family in the selection and supervision of
liable, RPC Arts. 101-103 provide exceptions
the driver; if the action against them is
as they provide for vicarious liability for
based on culpa contractual or civil liability
certain types of offenders and subsidiary
arising from a crime, they cannot raise the
liability in case of default of the offender.
defense.
The civil liability established by RPC Arts.
Alternative Answer:
100-103 include:
No such reservation is necessary. Under
Section 1 Rule 111 of the 2000 Rules on
a. Restitution;
Criminal Procedure, what is “deemed
b. Reparation of the damage caused;
instituted” with the criminal action is only the
and
action to recover civil liability arising from the
c. Indemnification for consequential
crime or ex delicto. All the other civil actions
damages.
under Articles 32, 33, 34, 2176 of the New
Civil Code are no longer “deemed instituted,”
Deemed instituted in every criminal
and may be filed separately and prosecuted
prosecution is the civil liability arising from the
independently even without any reservation in
crime or delict per se (civil liability ex delicto),
the criminal action (Section 3, Rule 111, 2000
but not those liabilities from quasi-delicts,
Rules on Criminal Procedure). The failure to
contracts or quasi-contracts. (Neplum vs.
make a reservation the criminal action is not a
Orbeso)
waiver of the right to file a separate and
independent civil action based on these
An accused in a pending criminal case can
articles of the New Civil Code (Casupanan vs.
validly file, simultaneously and independently,
Laroya, G.R. No. 145391, August 26, 2002)
a separate civil action for quasi-delict against

No proof of pecuniary loss is necessary for:

moral, nominal, temperate, liquidated or
DAMAGES exemplary damages.
The assessment of such damages is

I. DEFINITION AND CONCEPT discretionary upon the court, except liquidated
ones. (Art. 2216)
Art. 2195. The provisions of this Title shall be
respectively applicable to all obligations Kinds of Actual Damages
mentioned in Article 1157.
CC
What are damages? Art.
2200 A. Damnum emergente- value of
Damages may be defined as the pecuniary the loss suffered
compensation, recompense, or satisfaction for B. Lucro cessante- profits which the
an injury sustained, or as otherwise obligee failed to obtain
expressed, the pecuniary consequences which 2205 A. Loss of earning capacity due to
the law imposes for the breach of some duty injury (temporary or permanent)
or the violation of some right (People vs. B. Damage to Business Standing or
Ballesteros). The obligation to repair the Commercial Credit
damages exists whether done intentionally or 2206 A. Fixed indemnity for death = Php
negligently and whether or not punishable by 50,000 (as of 2005)
law (Ocena vs. Icamina). B. Loss of Earning Capacity of the
Deceased
Elements for recovery of damages: 2209 Interest
2208 Attorney’s Fees & Expenses of
1. Right of action Litigation
2. For a wrong inflicted by the defendant
3. Damage resulting to the plaintiff
General Principles for Recovery
II. KINDS OF DAMAGES (1) The amount of damages must be fair and
just and commensurate to the loss.
Kinds of Damages (MENTAL) - In case of contracts, only those
(1) ACTUAL/COMPENSATORY- for loss actually injuries which could have been
suffered reasonably foreseen by the parties
(2) MORAL- mental anguish, etc. by the parties at the time the
(3) NOMINAL- for rights recognized and contract was entered into are
violated recoverable.
(4) TEMPERATE/MODERATE- for damages
proved but the amount was not proven (2) The damages must be proximate damages
(5) LIQUIDATED- stipulated damages in the and not remote or speculative.
contract
(6) EXEMPLARY/CORRECTIVE- to serve as an (3) The damages must be proven by
example for the common good (Art. competent evidence (admissible or
2197) probative)
- It is necessary to prove with a
reasonable degree of certainty,
premised upon competent proof
A. Actual or Compensatory
and on the best evidence
obtainable by the injured party, the
When is a person entitled to actual or
actual amount of loss. (Integrated
compensatory damages?(Art. 2199)
Packaging Corp. vs. CA; Fuentes
A)
vs. CA)
 When there is a pecuniary loss
suffered by him
(4) Complaint and prayer must specify
 When he has alleged and prayed
amount of damages and pay filing fees
for such relief (Manchester Dev’t
before it may be accepted and admitted
Corp vs. CA)
for filing. (Circ. No. 7, Mar. 24, 1988;
 When he has duly proved it
Manchester Dev’t. Corp. vs. CA, 1987).
B)
 When provided by law
(5) The requirement of certainty does not
 Or by stipulation
prevent the drawing of reasonable
inferences from the fact and circumstance
in evidence.

those which were "the natural and probable

(6) Events which occur after the wrong consequences" or "the direct and immediate
complained of may serve to render the consequences" of the act or omission (Algarra
damage sufficiently certain. vs. Sandejas).
(7) The damages must be susceptible of Extent of recovery in breach of contract:

ascertainment in some manner other than
by mere speculation, conjecture or The damages recoverable upon breach of
surmise and by reference to some fairly contract are, primarily, the ordinary, natural
definite standard, such as market value, and in a sense the necessary damage
established experience or direct inference resulting from the breach. Other damages,
from known circumstances. known as special damages, are recoverable
where it appears that the particular conditions
Where, however, it is reasonably certain that which made such damages a probable
injury consisting of failure to realize otherwise consequence of the breach were known to the
reasonably expected profits had been delinquent party at the time the contract was
incurred, uncertainty as to the precise amount made. This proposition must be understood
of such unrealized profits will not prevent with the qualification that, if the damages are
recovery or the award of damages. (Talisay- in the legal sense remote or speculative,
Silay vs. Associacion) knowledge of the special conditions which
render such damages possible will not make
them recoverable. Special damages of this
What is the extent of recovery? character cannot be recovered unless made
the subject of special stipulation. The
Recovery of all proximately traceable to the damages ordinarily recoverable against a
primary negligence, including subsequent vendor for failure to deliver land which he has
aggravations, the probability of which the law contracted to deliver is the value of the use
regards as a consequence and natural result and occupation of the land for the tune during
likely to flow form the original injury. which it is wrongfully withheld (Daywalt vs.
However, note that if the subsequent Recoletos et al.).
aggravations are due to his own negligence
then the tortfeasor shall not be liable for such What must be proved to allow recovery?
since Art. 2203 imposes a duty on the injured
party to avoid loss or minimize resulting Proof
damages. Fact of Reasonable certainty – only that the
Injury fact and cause of injury must be
Art. Contra Liability Note: taken out of the area of speculation.
220 cts and extends to Liability Usual burden of proof required in a
1 quasi those: extends to negligence case, prove the
contrac 1. natural and all damages substantive right, its breach and the
ts probable which may amount of damages flowing from
consequences be the breach.
of the breach reasonably Cause Proximate cause – the cause,
2. those that attributed to which, in a natural and continuous
have been the non- sequence, unbroken by any efficient
foreseen performance intervening cause, produces the
3. those that of the injury, and without which the injury
could have obligation in would not have occurred. (“without
been case of which test of cause in fact”)
reasonably fraud, bad Amount Need not be proved with the same
foreseen faith, malice degree of certainty. Fair and
or wanton reasonable estimate of the amount
Provided: attitude of damage.
obligor in good (FBM-WA).
faith When pecuniary loss need not be proved
Art. Crimes Liability Note:
220 and extends to all WON 1) Liquidated damages previously agreed
2 quasi- damages damage is upon
delicts which are the foreseen is 2) If damages other than actual are
natural and irrelevant sought (Art. 2216)
probable 3) Loss is presumed (ex: loss of a child or
consequence spouse)
4) Forfeiture of bonds in favor of the
Actual damages for a negligent act or government for the purpose of
omission are confined to those which "were promoting public interest or policy (ex:
foreseen or might have been foreseen," or bond for temporary stay of alien)

Damages for Personal Injury & Death When can attorney’s fees, other than
(Art. 2206) judicial costs, be recovered? (SELMUBS-
CREWD) (Art. 2208).
Recoverable damages for death caused by a
crime or quasi-delict: (1) If there is a stipulation to that effect
(a) At least three thousand pesos, even (2) When exemplary damages are
though there may have been awarded;
mitigating circumstances. (3) When the defendant's act or omission
- As of 2008, it is P75,000 (People has compelled the plaintiff to litigate
vs. Robert Brodett y Pajaro, Jan. with third persons or to incur expenses
18, 2008) to protect his interest;
(4) In criminal cases of malicious
(b) Loss of the earning capacity of the prosecution against the plaintiff;
deceased, (5) In case of a clearly unfounded civil
- paid to his heirs action or proceeding against the
- unless the deceased on account of plaintiff;
permanent physical disability not (6) Where the defendant acted in gross and
caused by the defendant, had no evident bad faith in refusing to satisfy
earning capacity at the time of the plaintiff's plainly valid, just and
death; demandable claim;
(7) In actions for legal support;
(c) Support according to the provisions of (8) In actions for the recovery of wages of
Article 291 household helpers, laborers and skilled
- the recipient who is not a testate or workers;
intestate heir may demand support (9) In actions for indemnity under
from the person causing the death, workmen's compensation and
for a period not exceeding five employer's liability laws;
years (10) In a separate civil action to recover civil
liability arising from a crime;
(d) Moral damages (11) When at least double judicial costs are
- demanded by the spouse, awarded;
legitimate and illegitimate (12) In any other case where the court
descendants and ascendants of the deems it just and equitable that
deceased attorney's fees and expenses of
litigation should be recovered.
Factors:
1. Earning Capacity In all cases, the attorney's fees and

2. Obligation to Support expenses of litigation must be reasonable.
3. Moral Damages to heirs
2 Concepts of Attorney’s Fees
Compensation should be allowed for loss of
earning capacity resulting from the death of a (1) Retainer’s agreement between the lawyer
minor who has not yet commenced and the client (in writing).
employment or training for a specific (2) Award as an indemnity to the client.
profession if sufficient evidence is presented (BELONGS to the client hence the litigant
to establish the amount thereof. is the judgment creditor who may enforce
the judgment by execution) (Quirante vs.
The argument for allowing compensation for IAC)
loss of earning capacity of a minor is even
stronger if he or she was a student, whether
already training for a specific profession or INTEREST
still engaged in general studies. Formula
established in decided cases for computing net When shall interest accrue as indemnity
earning capacity: for damages?
Net earning capacity (X) = life expectancy *
[gross annual income – reasonable, necessary - the obligation consists in the payment
living expenses] of a sum of money
Life expectancy= 2/3 (80- age of deceased) (MMTC - debtor incurs in delay
v. CA) - there being no stipulation to the
contrary
ATTORNEY’S FEES
If there is no stipulated interest the legal
Attorney’s Fees is the exception NOT the interest of 6%. (Art. 2209)
general rule.

Interest From BASE RATE ACCRUAL

due c. When an at the rate If claim or
Art. Breach of Discretion Interest obligation, of 6% per damages are
2210 contract of the imposed NOT annum. LIQUIDATED,
court on constituting a from default,
damages loan or i.e., from
awarded forbearance judicial or
Art. Crimes Discretion Interest of money, is extrajudicial
2211 and of the is breached, an demand. (Art.
quasi- court awarded interest on 1169, Civil
delicts as part of the AMOUNT Code)
damages OF DAMAGES
awarded may If
When shall interest earn legal interest? be imposed UNLIQUIDATED,
at the from the time
- from judicial demand discretion of the demand can
- even if the obligation is silent upon this the court. be established
point. (Art. 2212) with reasonable
The actual certainty.
When is interest not recovered? base for the Hence, the
- When claims/ damages are computation interest shall
unliquidated of legal begin to run
- EXCEPT when the demand can be interest shall only FROM THE
established with reasonably certainty. be on the DATE THE
(Art. 2213) amount JUDGMENT OF
finally THE COURT IS
Legal Interests adjudged. MADE (at which
time the
The rules of thumb in the determination of quantification of
legal interests are as follows: damages may
be deemed to
1. When an obligation, regardless of its have been
source (i.e., law, contracts, quasi- reasonably
contracts, delicts or quasi-delicts) is ascertained).
breached, the contravenor can be held c. When the the rate of from such
liable for damages. JUDGMENT legal FINALITY UNTIL
2. With regard particularly to an AWARD of the court interest, ITS
OF INTEREST in the concept of actual awarding a whether SATISFACTION,
and compensatory damages, the RATE sum of the case this interim
of interest, as well as the ACCRUAL money falls under period being
thereof, is imposed, as follows: becomes a,b, or c, deemed to be by
final and above, then an
BASE RATE ACCRUAL executory, shall be equivalent to a
a. When the a) That to be computed 12% per forbearance of
obligation is which may from default, annum credit.
breached, have been i.e., from
and it stipulated JUDICIAL or (Eastern Shipping Lines vs. CA, 1994)
consists in in writing. EXTRAJUDICIAL
the PAYMENT b) In the demand under
OF A SUM OF absence of and subject to Start of Delay
MONEY, i.e., stipulation, the provisions of
a loan or the rate of Article 1169 of (1) Extrajudicial: demand letter
forbearance interest the Civil Code. (2) Judicial: Filing of complaint
of money, shall be (3) Award
the interest 12% per
due should annum Crismina Garments vs. CA
be (legal
interest) “Forbearance” in the context of the usury law
is a contractual obligation of lender or creditor
b. legal from the time it to refrain during a given time period from
Furthermore, interest is JUDICIALLY requiring payment of a loan then due and
the demanded. payable. Here, the contract is for a “piece of
INTEREST work,” hence not a forbearance.
DUE shall
itself earn When are damages mitigated?

1. In quasi-delicts contributory - Though incapable of pecuniary

negligence (Art. 2214) computation
2. Doctrine of avoidable consequences - If such is the proximate result of
a) This refers to the duty to defendant’s act or omission. (Art.
minimize damages once a cause 2217)
of action has accrued.
Standard: good father of a What are the requisites for awarding
family (Art. 2203) moral damages?
3. In contracts, quasi-contracts and
quasi-delict (C-BELL): (1) there must be an injury, whether
a) plaintiff has contravened the physical, mental or psychological,
terms of contract clearly sustained by the claimant;
b) plaintiff derived some benefit as (2) there must be a culpable act or
result of contract omission factually established;
c) in case where exemplary (3) the wrongful act or omission of the
damages are to be awarded, defendant must be the proximate
that the defendant acted upon cause of the injury sustained by the
the advise of counsel claimant; and
d) that the loss would have (4) the award of damages is predicated on
resulted in any event any of the cases stated in ART. 2219
e) that since the filing of the NCC. (Villanueva vs. Salvador)
action, the defendant has done
his best to lessen the plaintiff's
loss or injury (Art. 2215) General Principles of Recovery (as
4. In crimes→ mitigating circumstances outlined in Expertravel & Tours vs. CA #1 to
(Art. 2204) 7)
Note: aggravating circumstances in case of 1. Moral damages must somehow be

crimes can increase the damages adjudicated proportional to the suffering inflicted.
(Art. 2204) 2. In culpa contractual or breach of contract,
moral damages may be recovered when
The inordinate amount of damages calls for the defendant acted in bad faith or was
the moderating hand of the court, that justice guilty of gross negligence (amounting to
may be tempered with reason instead of being bad faith) or in wanton disregard of his
tainted when it appears to be a result of contractual obligation and, exceptionally,
ruthless vindictiveness. when the act of breach of contract itself is
constitutive of tort resulting in physical
injuries.
B. Moral 3. By special rule in Article 1764, in relation
to Article 2206, moral damages may also
What is the nature of moral damages? be awarded in case the death of a
passenger results from a breach of
Moral damages are emphatically not intended carriage.
to enrich a complainant at the expense of the 4. In culpa aquiliana, or quasi-delict,
defendant. Its award is aimed at the (a) when an act or omission causes
restoration, within the limits of the possible, physical injuries, or
of the spiritual status quo ante, and it must be (b) where the defendant is guilty of
proportional to the suffering inflicted. intentional tort, moral damages may
(Visayan Sawmill vs. CA) aptly be recovered. This rule also
applies to contracts when breached by
When are moral damages awarded? tort.
5. In culpa criminal, moral damages could be
- If injury consists of any of the ff: lawfully due when the accused is found
(PBMF-MWSSS) guilty of physical injuries, lascivious acts,
adultery or concubinage, illegal or
a. Physical suffering arbitrary detention, illegal arrest, illegal
b. Besmirched reputation search, or defamation.
c. Mental anguish 6. Malicious prosecution can also give rise to
d. Fright a claim for moral damages. The term
e. Moral shock "analogous cases," referred to in Article
f. Wounded feelings 2219, following the ejusdem generis rule,
g. Social humiliation must be held similar to those expressly
h. Serious anxiety enumerated by the law.
i. Similar injury 7. Although the institution of a clearly
unfounded civil suit can at times be a legal
justification for an award of attorney's

fees, such filing, however, has almost (7) Libel, slander or any other form of
invariably been held not to be a ground for defamation;
an award of moral damages. (8) Malicious prosecution;
8. The burden rests on the person claiming (9) Acts mentioned in Article 309;
moral damages to show convincing (disrespect for the dead)
evidence for good faith is presumed. In a (10) Acts and actions referred to in Articles
case involving simple negligence, moral 21, 26, 27, 28, 29, 30, 32, 34, and 35.
damages cannot be recovered. (Villanueva
vs. Salvador) Who else can recover moral damages?
9. Failure to use the precise legal terms or
"sacramental phrases" of "mental anguish,
- Parents of the female seduced,
fright, serious anxiety, wounded feelings
abducted, raped, or abused, referred
or moral shock" does not justify the denial
to in No. 3
of the claim for damages. It is sufficient
- The spouse, descendants, ascendants,
that these exact terms have been pleaded
and brothers and sisters (SDABS) may
in the complaint and evidence has been
bring the action mentioned in No. 9 in
adduced (Miranda-Ribaya vs. Bautista)
the order named.
10. Even if the allegations regarding the
amount of damages in the complaint are
What are the other legal grounds for
not specifically denied in the answer, such
awarding moral damages?
damages are not deemed admitted.
- Willful injury to property if such
(Raagas, et al. vs. Traya et al.)
damages are justly due.
11. An appeal in a criminal case opens the
- Breaches of contract where the
whole case for review and this 'includes
defendant acted fraudulently or in bad
the review of the penalty, indemnity and
faith. (Art. 2220)
damages. Even if the offended party had
not appealed from said award, and the
Labor Cases
only party who sought a review of the
Moral damages are recoverable only where
decision of said court was the accused, the
the dismissal of the employee:
court can increase damages awarded
(Sumalpong vs. CA)
(1) Was attended by bad faith or fraud
Cases where recovery of moral damages are allowed (2) Constituted an act oppressive to labor
(3) Was done in a manner contrary to
morals, good customs, or public policy.
(1) A criminal offense of physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other BAR QUESTION
lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest; Ortillo contracts Fabricato, Inc. to supply and
(6) Illegal search; install tile materials in a building he is donating
(7) Libel, slander, defamation; to his province. Ortillo pays 50% of the contract
(8) Malicious prosecution; price as per agreement. It is also agreed that
(9) Article 309;
the balance would be payable periodically after
(10) Articles 21, 26, 27, 28, 29, 30, 32,
34, and 35. (Art. 2219) every 10% performance until completed. After
(11) wilful injury to property (Art. 2220) performing about 93% of the contract, for
(12) breach of contract (Art. 2220) which it has been paid an additional 40% as per
(13) death of passenger from breach a agreement, Fabricato, Inc. did not complete the
breach of carriage (Art. 1764 in
relation to Art. 2206 and (Expertravel
project due to its sudden cessation of
& Tours vs. CA) operations. Instead, Fabricato, Inc. demands
payment of the last 10% of the contract despite
Art. 2219. Moral damages may be its non-completion of the project. Ortillo
recovered in the following and analogous refuses to pay, invoking the stipulation that
cases: (not an exclusive list; 2PI-SALAMI-
309-Others)
payment of the last amount of 10% shall be
upon completion. Fabricato, Inc. brings suit for
(1) A criminal offense resulting in physical the entire 10% plus damages. Ortillo counters
injuries; with claims for (a) moral damages for Fabricato,
(2) Quasi-delicts causing physical injuries; Inc.’s unfounded suit which has damaged his
(3) Seduction, abduction, rape, or other
lascivious acts;
reputation as a philanthropist and respected
(4) Adultery or concubinage; businessman in his community, and (b)
(5) Illegal or arbitrary detention or arrest; attorney’s fees.
(6) Illegal search;

P50K as moral damages must be increased to

P75K in line with prevailing jurisprudence. In
(a) Does Ortillo have a legal basis for his claim addition, the presence of the qualifying
for moral damages? circumstances of minority and relationship
(b) How about his claim for attorney’s fees, entitles the offended party to exemplary
having hired a lawyer to defend him? damages in the amount of P25K.
Suggested Answer: People vs. Teodorico Cleopas and Pirame

(a) There is no legal basis to Ortillo’s claim for (2000)
moral damages. It does not fall under the The award of P50,000 from each accused as
coverage of Article 2219 of the New Civil moral and exemplary damages, however, is
Code. unsupported. The widow of the victim did not
testify on any mental anguish or emotional
Ortillo is entitled to attorney’s fees because distress, which she suffered as a result of her
Fabricato’s complaint is a case of malicious husband's death.
prosecution or a clearly unfounded civil action
(Art. 2208 [4] and [11], NCC). Arcona vs. CA
As borne out by human nature and
Illustrations: experience, a violent death invariably and
necessarily brings about emotional pain and
Moral damages in malicious prosecution anguish on the part of the victim’s family.
Such violent death or brutal killing not only
Mijares vs. CA steals from the family of the deceased his
Moral damages cannot be recovered from a precious life, deprives them forever of his
person who has filed a complaint against love, affection and support, but often leaves
another in good faith, or without malice or them with the gnawing feeling that an
bad faith. If damage results from the filing of injustice has been done to them. For this
the complaint, it is damnum absque injuria. reason, moral damages must be awarded
even in the absence of any allegation and
Castillo vs. Castillo proof of the heirs’ emotional suffering.
While it must be admitted that this case is
peculiar in that it is one filed by a daughter
against her own mother, that alone does not Labor Cases
justify any counterclaim, specifically for the
exemplary damages and moral damages Triple Eight Integrated Services, Inc. vs. NLRC
sought to be collected since the complaint as Moral damages are recoverable where the
has been said has been found to have some dismissal of the employee was attended by
merit. The adverse result of an action does bad faith or fraud or constituted an act
not per se make the act wrongful and subject oppressive to labor, or was done in a manner
the actor to the payment of moral damages. contrary to morals, good customs, or public
The law could not have meant to impose a policy. Likewise, exemplary damages may be
penalty on the right to litigate; such right is so awarded if the dismissal was effected in a
precious that moral damages may not be wanton, oppressive or malevolent manner.
charged on those who may exercise it
erroneously." Factors for the Amount of Moral Damages
Moral damages in rape (1) Political, social, financial status, of the

person offended as well as the
People vs. Calongui business and financial standing of the
Anent the award of damages, civil indemnity offender.
ex delicto is mandatory upon finding of the (2) Degree of anguish
fact of rape while moral damages is awarded (3) Sentimental value where applicable
upon such finding without need of further
proof because it is assumed that a rape victim Illustrations:
has actually suffered moral injuries entitling
the victim to such award. No factual and legal Kierulf et al. vs. CA
bases, no award of exemplary damages The social and financial standing of a claimant
should be allowed. of moral damages may be considered in
awarding moral damages only if he or she was
Moral damages in murder subjected to contemptuous conduct despite
the offender's knowledge of his or her social
People vs. Barcena and financial standing.
TC correctly awarded P75K as civil indemnity
which is awarded if the crime is qualified by
circumstances which warrant the imposition of
the death penalty. However, the award of

Factors in Determining Amount no emotions, no senses, It cannot, therefore,

experience physical suffering and mental
PNB vs. CA anguish, which call be experienced only by
Petitioner has not presented adequate one having a nervous system. The statement
evidence to show that private respondent is in People vs. Manero and Mambulao Lumber
indeed a big time gambler. Petitioner has Co. vs. PNB that a corporation may recover
besmirched private respondent's reputation moral damages if it "has a good reputation
and has considerably caused him undue that is debased, resulting in social
humiliation. The records further show that humiliation" is an obiter dictum.
plaintiff is a prominent businessman, licensed
and engaged in the real estate business. He is NAPOCOR vs. Philipp Brothers
at the same time a consultant of Dizon- While it is true that besmirched reputation is
Esguerra Real Estate Company. Defendant included in moral damages, it cannot cause
treated him as a valued and VIP client. mental anguish to a corporation, unlike in the
Because of the bank's refusal to encash the case of a natural person, for a corporation has
entire one million face amount of his no reputation in the sense that an individual
manager's checks, he was so embarrassed for has, and besides, it is inherently impossible
he was not able to purchase a house and lot for a corporation to suffer mental anguish.
in Baguio City.
Lopez, et al. vs. Pan American World Airways BAR QUESTION

International carriers like defendant know the
prestige of such an office. For the Senate is
Rosa was leasing an apartment in the city.
not only the Upper Chamber of the Philippine
Congress, but the nation's treaty-ratifying Because of the Rent Control Law, her landlord
body. And he was former Vice-President of the could not increase the rental as much as he
Philippines. An award of P100,000,000 is wanted to, nor terminate her lease as long as
appropriate. Mrs. Maria J. Lopez, as wife of she was paying her rent. In order to force her
Senator Lopez, shared his prestige and
to leave the premises, the landlord stopped
therefore his humiliation. Mr. and Mrs. Alfredo
Montelibano, Jr. were traveling as immediate making repairs on the apartment, and cause the
members of the family of Senator Lopez. As water and electricity services to be
such they likewise shared his prestige and disconnected. The difficulty of living without
humiliation. electricity and running water resulted in Rosa’s
Producers Bank vs. CA
suffering a nervous breakdown. She sued the
In the case of Leopoldo Araneta v. Bank of landlord for actual and moral damages. Will the
America, we held that: "The financial credit of action prosper? Explain.
a businessman is a prized and valuable asset,
it being a significant part of the foundation of
Answer:
his business. Any adverse reflection thereon
Yes, based on quasi-delict under the human
constitutes some financial loss to him.” The
relations provisions of the New Civil Code
damage to private respondents' reputation
(Articles 19, 20 and 21) because the act
and social standing entitles them to moral
committed by the lessor is contrary to morals.
damages.
Moral damages are recoverable under Article
2219 (10) in relation to Article 21. Although
Who may recover moral damages?
the action is based on quasi-delict and not on
contract, actual damages may be recovered if
Strebel vs. Figueras, et al.
the lessee is able to prove the losses and
As a general rule, the right of recovery for
expenses she suffered.
mental suffering resulting from bodily injuries
is restricted to the person who has suffered
Alternative Answers:
the bodily hurt, and there can be no recovery
(a) Yes, based on breach of contract. The
for distress caused by sympathy for another's
lessor has the obligation to undertake
suffering, or for fright due to a wrong against
repairs to make the apartment habitable
a third person. A husband or wife cannot
and to maintain the lessee in the peaceful
recover for mental suffering caused by his
and adequate enjoyment of the lease for
sympathy for the other's suffering.
the entire duration of the contract (Article
1654, NCC). Since there was willful
Exception: Art. 2219
breach of contract by the lessor, the
lessee is entitled to moral damages under
ABS-CBN vs. CA
Article 2220, NCC. She is also entitled to
The award of moral damages cannot be
actual damages, e.g. loss of income,
granted in favor of a corporation because,
medical expenses, etc., which she can
being an artificial person and having existence
prove at trial.
only in legal contemplation, it has no feelings,

(b) Yes, based on contract and/or on tort. Nominal damages are incompatible with:
The lessor willfully breached his actual, temperate and exemplary damages.
obligations under Article 1654, NCC,
hence, he is liable for breach of Armovit vs. CA
Nominal damages cannot co-exist with actual
contract. For such breach, the lessee may or compensatory damages.
recover moral damages under Art. 2220 of the
NCC, and actual damages that she may have Francisco v. Ferrer
suffered on account thereof. And since the No moral or exemplary damages was
conduct of the lessor was contrary to morals, awarded. Nevertheless, when confronted with
he may also be held liable for quasi-delict. their failure to deliver on the wedding day the
The lessee may recover moral damages under wedding cake ordered and paid for, petitioners
Article 2219 (10) in relation to Article 21, and gave the lame excuse that delivery was
all actual damages which she may have probably delayed because of the traffic, when
suffered by reason of such conduct under in truth, no cake could be delivered because
Articles 9, 20 and 21. the order slip got lost. For such prevarication,
petitioners must be held liable for nominal
Yes, the action should prosper for both actual damages for insensitivity, inadvertence or
and moral damages. In fact, even exemplary inattention to their customer's anxiety and
damages and attorney’s fees can be claimed need of the hour.
by Rosa, on the authority of Magbanua vs.
IAC (137 SCRA 328), considering that, as
given, the lessor’s willful and illegal act of D. Temperate
disconnecting the water and electric services
resulted in Rosa’s suffering a nervous What is the nature of temperate or
breakdown. Art. 20 NCC and Art. 21 NCC moderate damages?
authorize the award of damages for such
willful and illegal conduct. Temperate or moderate damages, which are
more than nominal but less than
C. Nominal compensatory damages.
Art. 2221. Nominal damages are It may be recovered when some pecuniary
adjudicated in order that a right of the loss has been suffered but its amount can not
plaintiff, which has been violated or invaded be provided with certainty. (Art. 2224)
by the defendant, may be vindicated or
recognized, and not for the purpose of Temperate damages must be reasonable
indemnifying the plaintiff for any loss suffered under the circumstances. (Art. 2225)
by him.
Requisites:
Art. 2222. The court may award nominal
damages: (1) There is actual damage.
(2) The pecuniary amount of the damage
- in every obligation in Article 1157, or cannot be proved.
- where any property right has been (3) Amount must be reasonable.
invaded.
 In cases where the resulting injury might
Art. 2223. What is precluded by the be continuing and possible future
adjudication of nominal damages? complications directly arising from the
- further contest upon the right involved injury, while certain to occur are difficult
- all accessory questions to predict, temperate damages can and
- between the parties or their respective should be awarded on top of actual or
heirs and assigns. compensatory damages; in such cases
there is no incompatibility between actual
Requisites: and temperate damages.
 Temperate damages are incompatible with
(1) A legal right has been violated. nominal damages hence, cannot be
(2) There is no loss or damage suffered or granted concurrently (Citytrust Bank vs.
such cannot be proven or was not IAC)
proved.
(3) The award is to vindicate the right Pleno vs. CA
violated. Temperate damages are included within the
context of compensatory damages (RCPI vs.
General Rule: One does not ask for nominal CA). ". . . There are cases where from the
damages and it is in lieu of the actual, moral, nature of the case, definite proof of pecuniary
temperate, or liquidated damages. loss cannot be offered, although the court is
convinced that there has been such loss. For

instance, injury to one's commercial credit or Exemplary damages cannot be recovered as a

to the goodwill of a business firm is often hard matter of right; discretion of the court. (Art.
to show certainty in terms of money. 2233)
NOTE: In this case actual and temperate Requisites to recover exemplary damages
damages were awarded. It is postulated that and liquidated damages agreed upon in
the actual damages is for the car while the addition to exemplary (Art.2234):
temperate damages is for the lost actual
income not sufficiently proved. The plaintiff must show that he is entitled to
moral, temperate or compensatory damages
E. Liquidated
If arising When exemplary
What are liquidated damages? from damages are
Those agreed upon by the parties to a granted
contract, to be paid in case of breach thereof. Art. Crimes the crime was
(Art. 2226) 2230 committed with an
aggravating
What are the grounds for equitable circumstance/s
reduction of liquidated damages? Art. Quasi-delicts defendant acted
- iniquitous or 2231 with gross
- unconscionable. (Art. 2227) negligence
Art. Contracts and defendant acted in a
In what instance is the stipulation not 2232 Quasi- wanton, fraudulent,
controlling? contracts reckless,
oppressive, or
When the breach of the contract is not the malevolent manner
one contemplated by the parties in agreeing (WFROMM)
upon the liquidated damages. In this case, the
law shall determine
EXEMPLARY OR the measure of damages. A stipulation whereby exemplary damages are
(Art. 2228) renounced in advance shall be null and void.
CORRECTIVE DAMAGES (Art. 2235)
Notes
(1) These damages are agreed upon in a Notes
contract in case of breach thereof.
(2) There is no need to prove the amount, (1) Amount need not be proven.
only the fact of the breach. (2) Cannot be recovered as a matter or right;
(3) The amount can be reduced if: may be waived.
a. unconscionable as determined by An employer may be subsidiarily liable to pay
the court (Art. 2227) moral, actual, temperate or liquidated
b. partial or irregular performance damages arising from an employee’s criminal
offense, but NOT as to exemplary damages
General Rule: The penalty shall substitute because aggravating circumstances are
the indemnity for damages and the payment personal to the accused.
of the interests in case or breach.
PNB vs. CA
Exceptions However, the award of P1,000,000 exemplary
damages is also far too excessive and should
(1) When there is stipulation to the likewise be reduced to an equitable level.
contrary. Exemplary damages are imposed not to enrich
(2) When the obligor is sued for refusal to one party or impoverish another but to serve
pay the agreed penalty. as a deterrent against or as a negative
(3) When the obligor is guilty of fraud. incentive to curb socially deleterious actions.
F. Exemplary or Corrective
Art. 2229. Nature of exemplary or

corrective damages
- Imposed by way of example
- or correction for the public good
- in addition to the moral, temperate,
liquidated or compensatory damages.

LAND TITLES AND DEEDS CIVIL LAW
Land Titles and Deeds
TABLE OF CONTENTS
I. Introduction 299
II. Torrens Certificate of Title 299
III. Original Registration 300
IV. Cadastral Registration Proceedings 305
V. Subsequent Registration 305
VI. Dealings with Unregistered Lands 309
VII. Patents 309
VIII. Remedies of Aggrieved Party 311
IX. Replacement and Reconstitution 312

I. INTRODUCTION
To establish and certify to the
ownership of an absolute and
A. CONCEPTS AND DEFINITIONS indefeasible title to realty, and to
simplify its transfer Grey Alba vs. CA.
1. THE TORRENS SYSTEM
A system for registration of land D. JURISDICTION
under which, upon landowner’s
application, the court may, after
 RTCs of province or city where the
appropriate proceedings, direct the
land or a portion or it lies- land
issuance of a certificate of title.
registration proceedings and over all
(Black’s Law Dictionary)
petitions filed after original registration
of titles (Sec. 2, PD 1529)
2. LAND TITLE
 MTCs- cadastral and land registration
Evidence of the right of the owner or
cases covering:
the extent of his interest, and by which
o lots without controversy or
means he can maintain control, and as
opposition
a rule assert right to exclusive
o contested lots where the value
possession and enjoyment of property.
does not exceed P100,000.00
(sec. 34, BP 129)
3. DEED
A written instrument executed in
accordance with law, wherein a person
grants or conveys to another certain II. TORRENS CERTIFICATE OF TITLE
land, tenements, or hereditaments.
A. KINDS
4. FEE SIMPLE
Absolute title; absolute estate in 1. OCT
perpetuity. Land is conferred upon a The first title issued in the name of a
man and his heirs absolutely and registered owner by the Register of
without any limitation imposed upon Deeds covering a parcel of land
the state. which had been registered under the
Torrens System, by virtue of judicial
5. REGISTRATION or administrative proceedings.
The State provides a public record of
the title itself upon which a 2. TCT
prospective purchaser or someone The certificate shall show the number
else interested may rely. of the next previous certificate
covering the same land and also the
6. RECORDING fact that it was originally registered,
Provides for the recording of giving the record number, the
conveyance and other instrument number of the original certificate of
without guaranteeing the title, leaving title, and the volume and page of the
to the prospective purchasers or other registration book in which the latter
persons interested to examine the is found. (Sec. 43, PD 1529)
instruments in the records and
formulate their own conclusions as to 3. PATENTS
their effect on the title. Whenever public land is by the
Government alienated, granted or
B. NATURE conveyed to any person, the same
shall be brought forthwith under the
Land registration is a proceeding in rem operation of this Decree. It shall be
(Sec. 2, PD 1529). A proceeding in rem, the duty of the official issuing the
dealing with a tangible res, may be instrument of alienation, grant,
instituted and carried to judgment, without patent or conveyance in behalf of the
personal service Roxas vs. Enriquez. Government to cause such
instrument to be filed with the
C. PURPOSE OF REGISTRATION Register of Deeds of the province or
city where the land lies, and to be
The real purpose of that system is to there registered like other deeds and
quiet title to land; to put a stop forever conveyance.
to any questions of the legality of the The deed, grant, patent or
title, except claims which were noted at instrument of conveyance from the
the time of the registration, in the Government to the grantee shall not
certificate, or which may arise take effect as a conveyance or bind
subsequent thereto Legarda vs. Saleeby. the land but shall operate only as a

contract between the Government B. EFFECT OF REGISTRATION

and the grantee and as evidence of
authority to the Register of Deeds to Registration does not vest or give title
make registration. to the land, but merely confirms and
thereafter protects the title already
It is the act of registration that shall possessed by the owner, making it
be the operative act to affect and imprescriptible by occupation of third
convey the land. After due parties. it does not give the owner any
registration and issuance of the better title than he has.
certificate of title, such land shall be
deemed to be registered land (sec. Registration is not a mode of acquiring
103, PD 1529) ownership. A certificate of title cannot
be used to protect a usurper from the
true owner or as a shield for the
B. ENFORCEABILITY OF TORRENS TITLE
commission of fraud (Vagalidad vs.
The title, once registered, is notice to Vagalidad, GR No. 161136.
the world. All persons must take notice.
No one can plead ignorance of the
C. ORIGINAL REGISTRATION PROCEEDINGS
registration Egao vs. CA.
Steps in Original Registration

Proceedings
III. ORIGINAL REGISTRATION 1) Determine if the land is registrable
2) Determine if you are qualified to apply
A. LAWS GOVERNING LAND REGISTRATION 3) Survey the land
4) File the application (survey attached)
1. PD No. 1529 for land registration with the
Property Registration Decree covers appropriate court
both ordinary and cadastral registration 5) Court sets initial hearing
proceedings. It supersedes the Land 6) Publication of the initial hearing
Registration Act and the Cadastral Act. 7) File an opposition to the application
8) Hearing
2. CA141 9) Judgment
Public Land Act governs the 10)Issuance of decree
procedure for the judicial
confirmation of imperfect or 1. WHAT ARE THE REGISTRABLE
incomplete titles. LANDS?
o It applies to lands of the public
domain which have been PRIVATE LANDS
declared open to disposition or
If in the public domain, the land
concession and officially
must be classified as alienable and
delimited and classified
disposable. It must be classified as
o Under section 103 of PD 1529
such AT THE TIME OF FILING THE
whenever public land is
APPLICATION FOR REGISTRATION.
alienated, granted, conveyed to
(Republic vs. CA and Naguit, GR
any person by the government,
No. 144057)
the same shall be brought
forthwith under the operation of With the exception of agricultural
the Decree lands, all other natural resources
shall not be alienated. (sec. 2 and
3. RA No. 8371 3 Art. XII of the Constitution)
The Indigenous Peoples Rights Act
(Oct. 29, 1997) recognize the rights
NON- REGISTRABLE LANDS
of ownership and possession of
indigenous cultural communities to 1.) Forest or timberland, public
their ancestral domains and lands on forest, forest reserves lands,
the basis of native title, and defines mineral lands (Sec. 2 and 3
the extent of these lands and Art. XII of the Constitution)
domains. It expressly converts 2.) Those intended for public use,
ancestral lands into public
such as roads, rivers, torrents,
agricultural lands, and individuals
ports and bridges constructed
members of the cultural by the State, banks, shores,
communicates shall have the option roadsteads, and others of
to secure title to their ancestral lands
similar character
under the CA 141 or PD 1529.
3.) Those which belong to the
State, without being for public
use, and are intended for some

public service or for the 25. (Sec. 3 Article XII of the

development of the national 1987 Constitution)
wealth. (Art. 420, CC)
Private lands may be owned for as long
as the corporation is at least 60%
2. WHO MAY APPLY? (OCEN-PAAL)
Filipino. (sec. 7 Article XII of the
1) Those who by themselves or 1987 Constitution)
through their predecessors-in-
interest have been in open,
continuous, exclusive and notorious 3. SURVEY
(OCEN) possession and occupation
of alienable and disposable lands of The survey may be done by a public
the public domain under a bona fide or private surveyor. When done by a
claim of ownership since June 12, private surveyor it has to be approved
1945, or earlier. by the Land Management Bureau. PD
239 withdrew the authority of the
2) Those who have acquired
Land Registration Authority to
ownership of private lands by
approve original survey plans.
prescription under the provision of
existing laws.
4. APPLICATION
3) Those who have acquired
The application for land registration
ownership of private lands or
shall be:
abandoned river beds by right of
accession or accretion under the  in writing and
existing laws.
 signed and sworn to by the
4) Those who have acquired applicant or the person duly
ownership of land in any other authorized in his behalf
manner provided for by law.
If there is more than one applicant,
If co-owned, file the application the application shall be signed and
jointly. sworn to by and in behalf of each.
If sold under pacto de retro, the It shall contain:
vendor a retro may file an application
 description of the land
for the original registration of the
land BUT should the period for  citizenship and civil status of the
redemption expire during the applicant
registration proceedings and
o if married, the name of the
ownership consolidated in the vendee
wife or husband
a retro, the latter shall be substituted
for the applicant. o if the marriage has been legally
dissolved, when and how
A trustee may apply for original
registration, unless prohibited by the  full names and addresses of all
instrument creating the trust. (Sec. occupants and those of the
14, PD 1529) adjoining owners, if known
 Persons must be natural-born  if not known, it shall state the
Filipino citizens (sec. 2 Art. XII of extent of the search made to find
the Constitution) them. (Sec. 15, PD 1529)
Exceptions:  If the application describes the
land as bounded by a public or
(a) Aliens by way of hereditary
private way or road, it shall state
succession
WON the applicant claims any
(b) Natural born citizens who portion of the land within the
have lost their citizenship- limits of the way or road, and
limited to 5,000 sqm for whether the applicant desires to
urban land and 3 hectares have the line of way or road
for rural land (RA No. 7042 determined (Sec. 20, PD 1529)
as amended by RA No.
 If the applicant is a non-resident
8179)
of the Philippines, he shall file an
 As for private corporations, they instrument appointing a resident
may not hold such alienable lands agent in the Phils. and shall agree
of the public domain except by that service of nay legal process
lease of 1,000 hectares for 25 (Sec. 16, PD 1529)
years renewable for not more than
It must be accompanied by the
original tracing cloth plan, white or

blue copes thereof, the original and  Secretary of Agrarian

copies of the technical description Reform, the Solicitor
and geodetic engineer’s certification. General, the Director of
Lands, the Director of Mines
and/or the Director of
A person claiming ownership of real Fisheries and Aquatic
property must clearly identify the Resources, (as appropriate)
land claimed by him. Intestate Estate if the land borders on a
of Don Mariano San Pedro vs. CA. river, navigable stream or
shore, or on an arm of the
5. INITIAL HEARING sea where a river or harbor
line has been established, or
The court shall issue an order setting on a lake, or if it otherwise
the date and hour of the initial appears from the application
hearing within five days from filing of or the proceedings that a
the application. The initial hearing tenant-farmer or the
shall be 45-90 days from the date of national government may
the order. (Sec. 23, PD 1529) have a claim adverse to that
of the applicant
6. PUBLICATION
(c) By Posting
The public shall be notified of the
initial hearing by means of (1) CLR shall cause the sheriff or
publication; (2) mailing; and (3) his deputy to post the notice at
posting. The court may also cause least 14 days before the
notice to be served and in such hearing:
manner as it may deem proper.  in a conspicuous place on
each parcel of land included
(a) By Publication in the application and
 in a conspicuous place on
the bulletin board of the
The Commissioner of Land
municipal building of the
Registration shall cause it to be
municipality or city in which
published:
the land or portion thereof is
 once in the Official Gazette
situated (Sec. 23, PD
(sufficient to confer
1529)
jurisdiction) and
 once in a newspaper of
7. OPPOSITION
general circulation in the
Philippines
Any person claiming an interest may
appear and file an opposition:
The notice is addressed to:
 on or before the date of initial
 all persons appearing to
hearing, or
have an interest in the land
 within such further time as may
 the adjoining owners so far
be allowed by the court.
as known
 "to all whom it may
The opposition shall state:
concern"
 all the objections and
 the interest claimed by the party
(b) By Mailing
 the remedy desired.
Within 7 days from publication in It shall be signed and sworn to by

the OG, the Commissioner of him or by some other duly authorized
Land Registration shall mail a person. (Sec. 25, PD 1529)
copy of the notice to: If no person appears and answers
 every person named in the within the time allowed, the court
notice whose address is shall, upon motion order a default to
known. be recorded. By the description in the
 the Secretary of Public notice "To all Whom It May Concern",
Highways, to the Provincial all the world are made parties
Governor, and to the Mayor defendant and shall be concluded by
of the municipality or city, in the default order.
which the land lies, if the
applicant requests to have Where an appearance has been
the line of a public way or entered and an answer filed, a
road determined default order shall be entered against

persons who did not appear and sent, together with the owner's
answer. (Sec. 26, PD 1529) duplicate certificate, to the Register
of Deeds where the property is
Absence of opposition does not
situated for entry in his registration
justify outright registration Director
book. (sec. 39, PD No. 1529).
of Lands vs. Agustin.
The Register of Deeds shall forthwith
8. HEARING send notice by mail to the registered
owner that his owner's duplicate is
Proof of Ownership
ready for delivery to him upon
(a) Tax declaration and receipts- payment of legal fees. (sec. 40, PD
not conclusive but have strong 1529)
probative value when
accompanied by proof of actual - Appeal reckoned from the
possession Municipality of Solgen’s receipt of the decision.
Santiago vs. CA - Becomes final 15 days from
receipt
(b) Payment of taxes- payment in
one lump sum to cover all past
Court retains jurisdiction over the
taxes is “irregular” and affects
case until after the expiration of 1
the validity of the applicant’s
year from the issuance of the decree
claim of ownership Republic vs.
of registration Gomez vs. CA.
Tayag
(c) Spanish titles- no longer D. ATTRIBUTES OF AND LIMITATION
admissible ON CERTIFICATE OF TITLE AND
REGISTERED LAND (FIIC)
9. JUDGMENT
Judgment becomes final upon 1. Free from Liens and
expiration of 30 days from receipt of Encumbrances except (NCTHA)
notice of judgment (Sec. 30, PD
1529).  Those noted in the certificate
 Liens, claims or rights existing
Other incidents:
under the laws and Constitution
 WRIT OF POSSESSION which are not required to appear
of record in the Registry of
The writ may be issued not only
Deeds
against the person defeated in
 Unpaid real estate taxes levied
the registration case but also
and assessed within 2 yrs
against any one adversely
preceding the acquisition of any
occupying the land during the
right over the land
proceedings Vencilao vs. Vano.
 Any public highway or private
The writ does not lie against a way established or recognized by
person who entered the land after law, or any government
the issuance of the decree and irrigation canal or lateral thereof,
who was not a party in the case. if the certificate of title does not
He can only be proceeded against state that the boundaries of such
in a separate action for ejectment have been determined.
or reinvindicatory action Bernas  Any disposition of the property
vs. Nuevo. or limitation on the use thereof
by virtue of, or pursuant to,
 WRIT OF DEMOLITION
Presidential Decree No. 27 or
This writ is a complement of the any other laws on agrarian
writ of possession Gawaran vs. IAC. reform. (Sec. 44, PD 1529)
10. Issuance of Decree 2. Indefeasible

Within 15 days from entry of The decree of registration shall not
judgment, the court shall issue an be reopened or revised by reason
order directing the Land Registration of absence, minority, or other
Authority to issue a decree of disability of any person adversely
registration and certificate of Title. affected thereby.
The decree of registration shall be Ground for reopening and
signed by the Commissioner, entered reviewing the decree of
and filed in the Land Registration registration: Actual fraud.
Commission. The original of the
original certificate of title shall be

It must be reopened not later than This applies only to alienable and
1 yr from and after the date of the disposable (A&D) agricultural lands of
entry of such decree. the public domain. Under Sec. 6 of CA
141, the classification of public lands
No petition shall be entertained
into A&D, forest lands, or mineral lands
where an innocent purchaser for
is the prerogative of the Executive
value may be prejudiced. This
Department.
includes an innocent lessee,
mortgagee, or other encumbrancer The rule on confirmation of imperfect
for value. title does not apply unless and until the
land classified as, say, forest land, is
Upon the expiration of said period
released in an official proclamation to
of one year, the decree of
that effect so that if may form part of
registration and the certificate of
the disposable agricultural lands of the
title issued shall become
public domain. (Bracewell vs. CA,
incontrovertible. The only remedy
GR. NO 107247)
left is an action for damages. (Sec.
32, PD 1529)
1) PERIOD OF FILING
The rule on the incontrovertible
nature of a certificate of title RA No. 9176 extended the period
applies when what is involved is the to file an application for judicial
validity of the OCT, not when it confirmation of imperfect or
concerns that of the TCT Arguelles incomplete title to December 31,
vs. Timbancaya). 2020. It further limited the area
applied for to 12 hectares.
3. Imprescriptible
2) REQUISITES
No title to registered land shall be
 Filipino citizen
acquired by prescription or adverse
 He must have, by himself, or
possession. (Sec. 47, PD 1529)
thru his predecessors-in-
interest, possessed and
Prescription is unavailing not only
occupied an alienable and
against the registered owner but
disposable agricultural portion
also against his hereditary
of the public domain
successors because the latter
 Such possession and occupation
merely step into the shoes of the
must have been OCEN and in
decedent by operation of law and
the concept of owner since June
are merely the continuation of the
12, 1945
personality of their predecessor-in-
 Application filed with proper court
interest Barcelona vs. Barcelona.
3) PRIVATE CORPORATIONS
4. Not Subject to Collateral Attack
Where at the time the corporation
A certificate of title shall not be
acquired the land, its predecessor-
subject to collateral attack. It
in-interest had been in possession
cannot be altered, modified, or
and occupation thereof in the
canceled except in a direct
manner and for the period
proceeding in accordance with law.
prescribed by law as to entitle him
(Sec. 48, PD 1529)
to registration in his name, then
the proscription against
E. JUDICIAL CONFIRMATION OF
corporation acquiring alienable
IMPERFECT OR INCOMPLETE TITLES lands of the public domain does
General Rule: No title or right to, or not apply for the land was no
equity in, any lands of the public longer public land but private
domain may be acquired by property Dir. Of Lands vs. IAC and
prescription or by adverse possession Acme Plywood and Veneer Co., G.R.
or occupancy except as expressly 73002. Since the land is private,
provided by law. (Sec. 57, CA 141) the corporation can institute
The Public Land Act recognizes the confirmation proceedings.
concept of ownership under the civil
law. This ownership is based on * Requirements of the proceedings
adverse possession and the right of are governed by PD 1529.
acquisition is governed by the Chapter
on judicial confirmation of imperfect or
incomplete titles.

IV. CADASTRAL REGISTRATION An owner of registered land may

convey, mortgage, lease, charge or
PROCEEDINGS otherwise deal with the same in
Unlike other kinds of registration, this is accordance with existing laws.
compulsory as it is initiated by the The deed, mortgage, lease, or other
government. voluntary instrument, except a will shall
ONLY operate as:
Steps in Cadastral Registration
Proceedings (sec. 35-36, PD 1529):
1.) A contract between the parties and
1. Determination of the President that 2.) Evidence of authority to the
public interest requires title to Register of Deeds to make
unregistered lands be settled registration.
2. Director of lands shall make a
cadastral survey The act of registration shall be the
3. Director of Lands gives notice to operative act to convey or affect the
interested persons land insofar as third persons are
4. Publication of notice concerned, and in all cases under this
5. A copy of the notice shall also be Decree, the registration shall be made
sent to the mayor and the in the office of the Register of Deeds
sanggunian for the province or city where the land
6. Geodetic engineers/ Bureau of Land lies. (Sec. 51, PD 1529)
employees shall notify (re: survey)
by posting at the municipal building Every conveyance, mortgage, lease,
7. Interested persons should lien, attachment, order, judgment,
communicate with the geodetic instrument or entry affecting registered
engineer if he requests for any land shall, if registered, filed or
information about the land entered in the office of the Register of
8. Actual survey/ plotting of the land Deeds be constructive notice to all
9. Director of Lands represented by persons from the time of registering.
Solgen shall institute original (sec. 52, PD 1529)
registration proceedings
10. Publication, mailing posting C. VOLUNTARY VS. INVOLUNTARY
11. Hearing DEALINGS
12. Decision
13. Issuance of the decree and certificate VOLUNTARY INVOLUNTARY
of title DEALINGS DEALINGS
Ex. Sale, Attachment,
NOTE In voluntary registration proceedings, mortage, lease, injunction,
there is no res judicata when the applicant patent, powers of mandamus, levy
fails to prove his title. In cadastral
attorney, trusts on execution,
registration, if the applicant cannot prove
that he is entitled to the land, the land notice of lis
becomes public land. There is res judicata. pendens
Presentation of Entry in the day
the owner’s book is sufficient
V. SUBSEQUENT REGISTRATION
duplicate notice to all
certificate of title persons
A. TWO TYPES OF DEALINGS is required to
notify; mere entry
1. VOLUNTARY DEALINGS insufficient
Deeds, instruments, documents An innocent Entry thereof in
which are the results of free and purchaser for the day book of
voluntary acts of parties thereto. value of the ROD is
registered land sufficient notice
2. INVOLUNTARY DEALINGS becomes the to all persons
Writ, order, or process issued by the registered owner even if the
court of record affecting registered the moment he owner’s duplicate
land, also other instruments which presents and files certificate of title
are not willful acts of the registered a duly notarized is not presented
owner, executed without his and valid deed of to the ROD.
knowledge or consent. sale and the same (Lenin vs. Bass,
is entered in the 1952)
B. NECESSITY/EFFECTS OF day book and at
REGISTRATION the same time he
surrenders or
presents the

owner’s duplicate show that it is qualified to acquire

certificate of title private lands. (Sec. 55, PD 1529)
covering the land 2. Present owner’s duplicate. The
sold and pays the issuance of a new transfer
registration fees. certificate without presentation of
It is necessary to Entry in the day such is un warranted and confers
register the deed book is sufficient no right on the purchaser PNB vs.
or instrument in notice to all Fernandez, 1935
the entry book persons of an 3. Show that you have paid taxes.
and a adverse claim RA 456 prohibits registration of
memorandum without the same documents affecting real property
thereof shall also being annotated which is delinquent in the payment
be made in the at the back of the of real estate taxes. If evidence of
owner’s duplicate certificate of title such pament is not presented with
certificate and its (Dir. Of Lands 15 days form the date of entry of
original (Villasor vs. Reyes, said document in the primary
vs. Camon, 1976) entry book of the register of deeds
1951) the entry shall be deemed
cancelled.
General Rule: A person dealing with 4. Pay fees and DST (government is
registered property need not go exempt)
beyond, but only has to rely on, the 5. Register of Deeds shall enter the
title. He is charged with notice only of instruments filed with him relating
such burdens and claims which are to registered land. He shall note in
annotated on the title, for registration is such book the date, hour and
the operative act that binds the minute of reception of all
property Campillo vs. PNVB. instruments, in the order in which
they were received. They shall be
When should a purchaser investigate? regarded as registered from the
 Banks are required to exercise time so noted, and the
more care and prudence in dealing memorandum of each instrument,
with registered lands for their when made on the certificate of
business is one affected with title to which it refers, shall bear
public interest. The general rule the same date. (sec. 56, PD
does not apply. 1529)
 when party concerned has actual 6. All deeds and voluntary
knowledge of facts and instruments shall be presented
circumstances that would impel a with their respective copies and
reasonably cautious man to make shall be attested and sealed by the
inquiry Leung Yee vs. Strong Register of Deeds, endorsed with
Machinery the file number, and copies may
 When purchaser is in bad faith; be delivered to the person
e.g. he had full knowledge of a presenting them. (sec. 56, PD
previous sale Jamoc vs. CA, 1991 1529)
 When a person buys land from one 7. TCT shall be issued.
whose rights over the land is
evidenced only by a deed of sale E. REGISTRATION OF DEEDS OF SALE
and an annotation in the certificate (CONVEYANCES) AND TRANSFERS
of title but no TCT Quiniano vs. CA
1. ENTIRE PROPERTY IS SUBJECT
D. REGISTRATION OF VOLUNTARY
SECTION 57
INSTRUMENTS
a. An owner shall execute and
Steps in registration in general: register a deed of conveyance
1. File with the Register of Deeds the in a form sufficient in law.
voluntary instrument for b. The Register of Deeds shall
registration (Sec. 54, PD 1529). thereafter make out in the
It shall contain full name, registration book a new
nationality, residence and postal certificate of title to the grantee
address of the grantee or other and shall prepare and deliver to
person acquiring or claiming an him an owner's duplicate
interest under such instrument. It certificate.
shall also contain the grantee’s civil c. The Register of Deeds shall note
status. If the grantee is a upon the original and duplicate
corporation or association, it must certificate the date of transfer,
the volume and page of the

registration book in which the the certificate of title and also upon the
new certificate is registered and owner's duplicate certificate a
a reference by number to the memorandum thereof and shall sign.
last preceding certificate. (Sec. 61, PD 1529)
d. The original and the owner's
duplicate of the grantor's G. POWERS OF ATTORNEY; TRUSTS
certificate shall be stamped
"canceled". Powers of attorney to deal with
e. The deed of conveyance shall registered land shall be registered with
be filed and indorsed with the the Register of Deeds of the province
number and the place of or city where the land lies. Revocation
registration of the certificate of of power shall be registered in like
title of the land conveyed. manner (Sec. 64, PD 1529).
2. PORTION OF PROPERTY IS SUBJECT To transfer registered land in trust or

to create or declare a trust or other
SECTION 58 equitable interests in such land without
a. Have the plan showing all the transfer, the particulars of the trust
portions or lots into which it has shall not be entered on the certificate;
been subdivided and the but only a memorandum thereof shall
corresponding technical be entered by the words "in trust", or
descriptions verified and "upon condition", or other apt words,
approved. Otherwise, such deed and by a reference by number to the
may only be annotated by way instrument. A similar memorandum
of memorandum to serve as a shall be made upon the original
notice to third persons of the instrument (Sec. 65, PD 1529).
fact that certain unsegregated No instrument which transfers,
portion of the land described mortgages or in any way deals with
therein has been conveyed registered land in trust shall be
b. The original of the plan and a registered, unless the enabling power
certified copy of the technical thereto is expressly conferred in the
descriptions shall be filed with trust instrument, or unless a final
the Register of Deeds for judgment or order of a court of
annotation in the corresponding competent jurisdiction has construed
certificate of title the instrument in favor of the power, in
c. Officer shall issue a new which case a certified copy of such
certificate of title and cancel the judgment or order may be registered
grantor's certificate partially (Sec. 66, PD 1529).
with respect only to said portion
conveyed, OR certificate may be Whoever claims an interest in
canceled totally and a new one registered land by reason of any
issued describing therein the implied or constructive trust shall file
remaining portion for registration with the Register of
Deeds a sworn statement. Such claim
3. SUBSISTING ENCUMBRANCES/ shall not affect the title of a purchaser
ANNOTATIONS for value and in good faith before its
registration (Sec. 68, PD 1529).
Encumbrances or annotations that
appear in the registration book shall H. INVOLUNTARY DEALINGS
be carried over in the new certificate
or certificates; except so far as they 1. ATTACHMENT
may be simultaneously released or An attachment, or a copy of any
discharged. (Sec. 59, PD 1529) writ, order or process issued by a
court of record, intended to create
F. MORTGAGES AND LEASES or preserve any lien, status, right,
Mortgage and leases shall be or attachment upon registered land,
registered in the manner provided in shall be filed and registered in the
Section 54 of this Decree. Such deed of Registry of Deeds for the province or
mortgage or lease shall take effect city in which the land lies.
upon the title only from time of It shall contain a reference to the
registration. (Sec. 60, PD 1529) number of the certificate of title to
Upon presentation for registration of be affected and its registered owner.
the deed of mortgage or lease with the If not claimed on all the land,
owner's duplicate, the Register of include a description sufficiently
Deeds shall enter upon the original of accurate for identification of the land
affected.

A restraining order, injunction or necessarily affected by judgment. It

mandamus issued by the court shall is proper in the ff cases:
be entered and registered on the - action to recover possession of
certificate of title affected, free of real estate
charge. (sec. 69, PD 1529) - action to quiet title
- action to remove clouds upon
The duplicate certificate must be
the title
presented for registration. If not,
- action for partition or
the Register of Deeds shall, within
- other proceedings of any kind in
36 hours, send notice by mail to the
court directly affecting the title
registered owner, stating that such
to land or the use or occupation
paper has been registered, and
thereof or the buildings thereon
requesting him to send or produce
his duplicate certificate so that a A memorandum or notice must be
memorandum of the attachment or filed and registered so that
other lien may be made thereon. judgment shall have an effect on the
land and 3rd persons. It should
If the owner neglects or refuses to
contain:
comply within a reasonable time,
- institution of such action or
the Register of Deeds shall report
proceeding
the matter to the court so that it
- in which court it is pending
may order the owner to produce his
- date of the institution
certificate. (sec. 70, PD 1529)
- number of the certificate of title
In case of conflict between a vendee - description of the land affected and
and an attaching creditor, if the - the registered owner (sec. 76,
attaching creditor registered first then PD 1529)
he acquires a valid title over the
property. But where a party has It is not proper in:
knowledge of a prior existing interest, - preliminary attachments
which is unregistered at the time he - proceedings for probate of wills
acquired a right to the same land, his - levies on execution
knowledge of that prior unregistered - proceedings for administration
interest has the effect of registration of estates
as to him Ruiz vs. CA, 2001. - proceedings the object of which
is a money judgment
2. EXECUTION AND TAX
DELINQUENCY SALES * In case of subsequent sales or
transfers, the Register of Deeds is
Whenever registered land is:
duty bound to carry over the notice
- sold on execution
of lis pendens on all titles to issued.
- taken or sold for taxes or for
any assessment or
Before final judgment, the court
- to enforce a lien of any
may order the cancellation:
character, or for any costs and
- After showing that notice is only
charges incident to such liens
for purpose of molesting an
Any execution, any officer's return, adverse party
or any deed, demand, certificate, or - When it is shown that it is not
affidavit, or other instrument made necessary to protect the right of
in the course of the proceedings, the party who caused the
shall be filed with the Register of registration thereof
Deeds and registered in the - When the consequences of the
registration book, and a trial are unnecessarily delaying
memorandum made upon the the determination of the case to
proper certificate of title in each the prejudice of the other party
case as lien or encumbrance. (Sec. - When party who caused
74, PD 1529) registration filed a verified
petition
- Deemed cancelled when
3. NOTICE OF LIS PENDENS
certificate issued by clerk of
This does not create a lien. court stating manner of disposal
of proceeding is registered at
Notice of lis pendens may involve
any time after final judgment in
actions that deal not only with title or
favor of the defendant, or other
possession of a property but also
disposition of the action such as
with the use or occupation of
to terminate finally all rights of
property. The litigation must directly
the plaintiff (Sec. 77, PD
involve a specific property which is
1529)

appeal the matter to the Commissioner of

4. ADVERSE CLAIM Land Registration. Any recording made
under this section shall be without
WHEN IS A CLAIM ADVERSE?
prejudice to a third party with a better
When a person claims any part or right.
interest in registered land adverse to
Tax sale, attachment and levy, notice of
the registered owner, arising
lis pendens, adverse claim with respect to
subsequent to the date of the original
unregistered lands shall likewise be
registration. (Sec. 70, PD 1529)
admissible to record.
The adverse claim shall be effective Fees shall be same amount of fees
for a period of 30 days from the date prescribed for similar services for the
of registration. After that the registration of deeds or instruments
annotation of adverse claim may be concerning registered lands.
cancelled upon filing of a verified
petition therefor by the party in VII. Patents
interest. After cancellation, no second
adverse claim based on the same
ground shall be registered by the The classification of public lands is a
same claimant (Sec. 70, PD 1529). function of the executive branch of
government Republic vs. Imperial, 2000.
Requisites: Lands of the public domain which are
1. The adverse claimant must alienable or open to disposition may be
state the ff in writing: further classified as:
- his alleged right or interest - agricultural
- how and under whom such - residential, commercial, industrial,
alleged right or interest is or for similar productive purposes
acquired - educational, charitable or other
- the description of the land similar purposes
in which the right or - reservations for townsites and for
interest is claimed and public and quasi- public uses
- the number of the
certificate of title MODES OF DISPOSITION
2. The statement must be signed and
sworn to before a notary public or Public lands suitable for agricultural
other officer authorized to purposes can be disposed of only as
administer oath and follows:
3. The claimant should state his - homestead settlement
residence or the place to which all - sale
notices may be served upon him. - lease
- confirmation of imperfect or
Non-compliance with the above incomplete titles
requisites renders the adverse o judicial legalization
claim non registrable and o administrative legalization (free
ineffective. patent)
VI. DEALINGS WITH Kinds Applicant Requirements

UNREGISTERED LANDS Homest The Public - Max of 12
ead Land Act hectares of
No deed, conveyance, mortgage, lease, Patent provides agricultura
or other voluntary instrument affecting that any l land
land not registered under the Torrens Filipino - Applicant
system shall be valid, except as between citizen over must have
the parties thereto, unless such the age of cultivated
instrument shall have been recorded 18 or head and
under PD 1529. (Sec. 113, PD 1529) of the family improved
The recording of the deed and other may enter a at least
instruments relating to unregistered lands homestead 1/5 of the
shall be effected by any of annotation on land
the space provided therefor in the continuous
Registration Book, after the same shall ly since
have been entered in the Primary Entry the
Book. approval of
the
In case the Register of Deeds refuses to application
record, said official shall advise the party resided for
in interest in writing and the latter may

at least 1 residen reisides lands and

yr in the tial - have other lands
municipalit purpos established may be
y in which es in good faith sold on
the land is his residence condition
located or on a parcel that the
in an of public purchaser
adjacent to land which is shall make
the same not needed improveme
- Payment for public nts of a
of fee service (RA permanent
required 730) character
Sales Any Filipino - Sold thru for the
Patent of lawful age sealed purpose
or the head bidding for which
of a family - Purchase the land is
may price may purchased
Public purchase be paid in w/in 18
Agricult any tract of full upon moms.
ural public the making From the
Lands agricultural of the date of the
land not to award or award.
exceed 12 in not
hectares. more that - exception
10 to CA 141
installment - area does
s from the not exceed
date of the 1,000 sqm
award - it shall be
- Purchaser an
shall have essential
not less condition
than 1/5 of of this sale
the land that the
cultivated occupants
w/in 5 yrs has
from the constructe
date of the d his
award house on
Lands - Before any the land
for patent is and
residen issued he occupants
tial, must show has
comme actual constructe
rcial or occupancy, d his
industri cultivation house on
al and the land
purpos improveme and
es nt of at actually
least 1/5 resided
of the land therein
until the Free To any -does not own
date of patent natural born more than 12
final Filipino hectares of
payment. citizen land
(filing ended - continuously
- Lands Dec. 31, occupied and
reclaimed 2000) cultivated,
-Filipino by the either by
citizen of govt and himself or his
legal age foreshore predecessors-
- not the shall be in-interest,
owner of a disposed tracts of
home lot in by lease agricultural
Lands the mun only public lands
for where he - Marshy subject to

disposition for for 1. petitioner must have

at least 30 Review an estate or interest in
years prior to the land
March 2. he must show actual
28,1990 fraud
- paid real 3. petition must be filed
property taxes within one year form
on the the issuance of the
property while decree by LRA
the same has 4. property has not yet
not been passed to an innocent
occupied by purchaser for value.
any person Walstrom vs. Mapa, GR No.
Special Issued upon 38387
patent the
promulgation Grounds:
of a special - extrinsic fraud,
law or act of - void decision for want
Congress or of due process
by the Sec of - lack of jurisdiction
DENR as
authorized by Under the Torrens system of
an EO registration, the Torrens still
becomes indefeasible and
e.g. issued by incontrovertible one year
the Pres. In form the issuance of the final
1988 to the decree and is generally
Public Estates conclusive evidence of the
Authority ownership (Calalang vs.
under PD Register of Deeds). This
1085 over 3 applies as well to title
reclaimed acquired through homestead
islands in the or free patents Iglesia ni
name of PEA Cristo vs. CFI, GR No. L-
35273
Action - before issuance of
VIII. REMEDIES OF AGGRIEVED for decree, or within/after
PARTY Reconv 1 year from entry
eyance - if based on implied
trust, 10 years;
Motion - 15 days from notice of
- if based on expressed
for judgment
trust and void
New Grounds:
contract,
Trial - Fraud, accident,
imprescriptible
mistake, excusable
- if based on fraud, 4
negligence
years from the
- Newly discovered
discovery
evidence
- Awarded excessive
It does not reopen
damages, or
proceedings but a mere
insufficiency of
transfer of the land from
evidenc, or that the
registered owner to the
decision is against law
rightful owner Esconde vs.
Appeal - 15 days from notice
Barlongay. It is available in
- appealable to the CA
case of fraud thereby
or to the SC in the
creating a constructive trust
same manner as in
between parties Huang vs.
ordinary actions
CA. It is not available if the
Relief - 60 days after petitioner property has already been
from learns of judgment, but not transferred to an innocent
Judgm more than 6 months after purchaser for value.
ent judgment was entered
Damag It can be availed of when
Grounds: Fraud, accident,
es reconveyance is no longer
mistake, excusable
possible as when the land has
negligence
been transferred to an
Petition Requisites: innocent purchaser for value

Ching vs. CA. Indefeasibility of title,

Action Requisites: prescription, laches, and
for - A person sustains loss estoppel do not bar reversion
Compe or damage or is suits.
nsation deprived by any Crimin Perjury, Forgery, Others
from estate or interest in al involving fraud
the land Action
Assura - On account of bringing
nce of land under the IX. REPLACEMENT AND
Fund39 Torrens system
- Through (FEMOM) RECONSTITUTION
fraud, error, mistake,
omission, or A. REPLACEMENT
misdescription in the In case of loss or theft of an owner's
certificate of entry in duplicate certificate of title, due notice
the registration book under oath shall be sent by the owner
- Without negligence on or by someone in his behalf to the
his part Register of Deeds of the province or
- And is barred from city where the land lies as soon as the
bringing an action for loss or theft is discovered. If a
recovery of the land. duplicate certificate is lost or
- The action has not destroyed, or cannot be produced by
prescribed. It must be a person applying for the entry of a
instituted within 6 new certificate to him or for the
years from the time registration of any instrument, a
the right to bring such sworn statement of the fact of such
action first occurred-- loss or destruction may be filed by the
> date of issue of the registered owner or other person in
certificate of title interest and registered.
Against whom filed: against
the Register of Deeds and the Upon the petition of the registered
National Treasurer if FEMOM owner or other person in interest, the
is caused by court personnel, court may, after notice and due
Register of Deeds, his deputy hearing, direct the issuance of a new
or other employees of the duplicate certificate, which shall
Registry contain a memorandum of the fact
If other those above that it is issued in place of the lost
mentioned: the Register of duplicate certificate, but shall in all
Deeds, the National respects be entitled to like faith and
Treasurer and other person credit as the original duplicate, and
or persons, as co-defendants. shall thereafter be regarded as such
Annulm Grounds: extrinsic fraud and for all purposes of this decree.
ent of lack of jurisdiction.
Judgm B. RECONSITUTION
ent Ordinary remedies of appeal, Original copies of certificates of title
motion for new trial etc lost or destroyed in the offices of
should no longer be available. Register of Deeds as well as liens and
If based on extrinsic fraud, encumbrances affecting the lands
file 4 within years from covered by such titles shall be
discovery. reconstituted judicially in accordance
If based on lack of with the procedure prescribed in
jurisdiction, before it is Republic Act No. 26 insofar as not
barred by laches or estoppel inconsistent with this Decree. The
Galicia vs. Marquez 2007. procedure relative to administrative
Reversi Instituted by the reconstitution of lost or destroyed
on government, thru Solgen in certificate prescribed in said Act is
all cases where lands of hereby abrogated.
public domain are held in
violation of the Constitution Notice of all hearings of the petition
or were fraudulently for judicial reconstitution shall be
conveyed. given to the Register of Deeds of the
place where the land is situated and
to the Commissioner of Land
39 Registration. No order or judgment
Upon registration, there shall be paid to the Register of
Deeds ¼ of 1% of the assessed value of the real estate ordering the reconstitution of a
on the basis of the last assessment for taxation purposes, certificate of title shall become final
as contribution to the Assurance Fund.

until the lapse of thirty days from

receipt by the Register of Deeds and
by the Commissioner of Land
Registration of a notice of such order
or judgment without any appeal
having been filed by any of such
officials.

PRIVATE INTERNATIONAL LAW CIVIL LAW
Private International Law
TABLE OF CONTENTS
Section 1. Conflict of Laws 315
Section 2. Jurisdiction 315
Section 3. Choice of Law 317
Section 4. Recognition and Enforcement of Judgment 324

CONFLICT OF LAWS 3 PHASES INVOLVED IN THE JUDUCIAL

RESOLUTION OF A CONFLICTS CASE
PRIVATE INTERNATIONAL LAW : that part (Hasegawa v. Kitamura, 2007)
of municipal law which governs cases
involving a foreign element 1. Jurisdiction
- Where can or should litigation be
o The principles of conflict of laws initiated?
incorporated in municipal laws of many
states are based on comity of nations. 2. Choice of law
- Which law will the court apply?
o COMITY: is the recognition which one
nation allows within its territory to the 3. Recognition and enforcement of
legislative, executive, or judicial acts of judgments
another nation having due regard both - Where can the resulting judgment
to international duty and convenience, be enforced?
and to the rights of its own citizens or
of other persons who are under the JURISDICTION
protection of its laws (Hilton v.
Guyot, 1895)
JURISDICTION40 : the power of a court to
o FOREIGN ELEMENT may refer to TRY a case, RENDER judgment, and EXECUTE
parties, property, events, or it in accordance with law
transactions.
PRIVATE INTERNATIONAL LAW ASPECTS OF JURISDICTION:

vs. 1. Jurisdiction over the parties
PUBLIC INTERNATIONAL LAW 2. Jurisdiction over the property (res)
3. Jurisdiction over the subject-matter
Basis PRIL PIL
Primarily
Individuals or states and JURISDICTION OVER THE PARTIES
Parties
corporations international o Over the plaintiff: acquired by the filing of
organizations suit
-
treaty o Over the defendant: acquired by entry of
-
custom appearance or service of legal process
-
generally
- National
recognized
conflict
principles JURISDICTION OVER THE PROPERTY
rules
of law o Acquired by:
Sources - judicial - seizure of the property by legal
-
decisions process or
International
- teachings - institution of legal proceedings
conflict
of the most wherein the court’s power over the
rules
highly property is recognized and made
qualified effective
publicists
- diplomatic JURISDICTION OVER THE SUBJECT-MATTER
protest o conferred by LAW (e.g., BP 129)
- negotiation, - resort to o CANNOT be conferred by consent of the
conciliation, forum parties
arbitration court or o SUBJECT MATTER: refers to the nature of
Remedies - adjudicatio administrat the cause of action and of the relief sought
n before ive (Idonah Perkins v. Roxas, 1941)
internation tribunals
al tribunal
- use of force BASIS OF THE EXERCISE OF JURISDICTION
- war
PRIL v. Municipal law: presence of foreign TRADITIONAL BASIS: State’s PHYSICAL
element POWER over persons and
property within its
SOURCES territory
1. Codes and statutes
2. Treaties and international conventions
40
3. Treatises, commentaries, and studies This more properly refers to judicial jurisdiction, as
of learned societies opposed to legislative jurisdiction or the ability of the sate
to promulgate laws and enforce them on all persons and
4. Judicial decisions
property within its territory.

This explains the distinctions made o Mullane v. Central Hanover Bank &
between actions in personam41 and actions in Trust Co. (1950): The standard for
rem or quasi in rem42, dating back to the case adequate notice is WON it is
of Pennoyer v. Neff(1878). reasonably certain to inform those
affected or, where conditions do not
o In actions in personam, wherein the reasonably permit such notice, WON
defendant is a non-resident who does not the form chosen is not substantially
voluntarily submit himself to the authority less likely to bring home notice than
of the court, personal service of summons other of the feasible and customary
within the state is essential to the substitutes.
acquisition of jurisdiction over her person.
- This method of service is possible if o Shaffer v. Heitner (1977): The
such defendant is physically present in minimum contacts and fundamental
the country. If he is not found therein, fairness test should be satisfied
the court cannot acquire jurisdiction regardless of whether the proceedings
over his person and therefore cannot are in rem, quasi in rem, or in
validly try and decide the case against personam, and the minimum contacts
him. must exist among the forum,
- An exception was laid down in defendant, and the cause of action.
Gemperle v. Schenker wherein a non-
resident was served with summons o Long-arm statutes: statutes that
through his wife, who was a resident allow the forum state to exercise
of the Philippines and who was his jurisdiction over a non-resident
representative and attorney-in-fact in defendant, provided that the
a prior civil case filed by him; prospective defendant has sufficient
moreover, the second case was a mere minimum contacts with the forum
offshoot of the first case. state.
 2 types:
o On the other hand, in a proceeding in rem - first type enumerates factual
or quasi in rem, jurisdiction over the situations likely to satisfy the
person of the defendant is not a minimum-contacts test;
prerequisite to confer jurisdiction on the - second type is much broader
court provided that the court acquires and provides jurisdiction over
jurisdiction over the res. Nonetheless an individual or corporation
summons must be served upon the as long as that jurisdiction is
defendant not for the purpose of vesting not inconsistent with
the court with jurisdiction but merely for constitutional restrictions
satisfying the due process requirements.
(Asiavest Limited v. CA, 1998) 3 WAYS OF DEALING WITH
A CONFLICTS CASE:
In the US: The conceptual basis for the 1. Dismiss the case because of
exercise of jurisdiction has a. lack of jurisdiction or
shifted from territorial power to b. forum non conveniens
considerations of MINIMUM 2. Assume jurisdiction over the case and
CONTACTS and FUNDAMENTAL apply the internal law of the forum
FAIRNESS. 3. Assume jurisdiction over the case and take
into account or apply the law of some
other State or States
o International Shoe Co. v. (Hasegawa v. Kitamura, 2007)
Washington (1945): Due process only
requires that the defendant who is not
present within the territory of the Doctrine of FORUM NON CONVENIENS
forum have minimum contacts with it
such that the maintenance of the suit o literal meaning: the forum is inconvenient
does not offend traditional notions of o emerged in private international law to
fair play and substantial justice. deter the practice of global forum
shopping- that is, to prevent non-resident
litigants from choosing the forum or place
wherein to bring their suit for malicious
reasons, such as to secure procedural
41
Actions in personam are directed against specific advantages, to annoy and harass
persons and seek personal judgments. the defendant, to avoid overcrowded
42 dockets, or to select a more friendly
Actions in rem or quasi in rem are directed against the
thing or property or status of a person and seek venue.
judgments with respect thereto as against the whole
world.

o Under this doctrine, a court, in conflicts of 2. Local Law Theory

law cases, may refuse impositions on its o The power of the state to regulate
jurisdiction where it is not the most within its territory has no limitation
“convenient” or available forum and the except such as may be imposed by its
parties are not precluded from seeking own positive law.
remedies elsewhere. o In conflicts problems, the court does
not enforce a foreign right but a right
o Whether a suit should be entertained or created by its own law by treating the
dismissed on the basis of said doctrine case as a purely domestic case without
depends largely upon the facts of the a foreign element.
particular case and is addressed to the
sound discretion of the trial court. MODERN APPROACHES:
o Philippine Court may assume jurisdiction 1. Place of the most significant

over the case if it chooses to do so, relationship
provided the local judicial machinery is o FACTUAL CONTACTS evaluated
adequate in that the following requisites depending on their RELATIVE
are met: IMPORTANCE & RELEVANCE to the
1. The Philippine Court is one to which issue at hand
the parties may conveniently resort to;
2. The Philippine Court is in a position to 2. Interest analysis
make an intelligent decision as to the o Looks at the POLICY behind the laws of
law and the facts; and the involved states and the INTEREST
3. The Philippine Court has or is likely to each state has in applying its own law
have power to enforce its decision. o Factual contacts alone not
determinative of the outcome of the
o The doctrine of forum non conveniens case unless they reflected a state
should NOT be used as a ground for a policy which would be advanced by the
motion to dismiss because Sec. 1, Rule 16 application of the substantive state law
of the Rules of Court does not include said
doctrine as a ground. 3. Comparative impairment
o The propriety of dismissing a case based o Subordination of the state objective
on this principle of forum non conveniens which would be least impaired
requires a factual determination, hence it
is more properly considered a matter of 4. Functional analysis
defense. (Bank of America NT&SA v. o Looks at the policies and considers
CA, 2003) their relative weight (“policy-weighing’)
o Considers whether the law of a state
reflects an “emerging” or “regressing”
CHOICE OF LAW policy
5. Choice-influencing considerations
APPROACHES TO CHOICE OF LAW (BOPIS)
a. Predictability of results;
1. Traditional approach: simplicity, b. Maintenance of interstate and
convenience, uniformity international order;
2. Modern approach: reaching appropriate c. Simplification of the judicial task;
results in particular cases d. Application of the better rule of law;
e. Advancement of the forum’s
governmental interests
TRADITIONAL APPROACH THEORIES:
ESCAPE DEVICES: used to avoid the
1. Vested Rights Theory inherent rigidity and unjust decisions that may
o An act done in a foreign jurisdiction result from the application of traditionally-
gives rise to the existence of a right if oriented rules
the laws of that state provide so. This 1. Characterization
right vests in the plaintiff and he 2. Renvoi
carries it with him to be enforced in
any forum he chooses to bring suit
o The applicable law is the law of the CHARACTERIZATION: assigning a disputed
place of occurrence of the LAST ACT question to an area of substantive law
necessary to complete the cause of 1. Subject-matter characterization:
action. classifying a FACTUAL SITUATION into
a LEGAL CATEGORY
2. Substance-procedure
characterization

- if issue substantive: may apply o Forum court would apply the law the
foreign law foreign court would have applied
- if issue procedural: apply forum
law Renvoi does NOT apply to a false conflict.
Statue of Frauds FOREIGN LAW

- substantive if it forbids the creation
of the obligation (“void”) PLEADING AND PROOF
- procedural if it forbids the
enforcement of the obligation (“no Gen. Rule: Foreign law must be pleaded and
action shall be brought”) proved as a fact
o The party whose cause of action or
Statue of Limitations defense depended on the foreign law
- traditionally considered procedural has the burden of proving the foreign
- substantive if they provide for a law.
SHORTER PERIOD for certain types Exception: Court may take judicial notice of
of claims that fall within a wider foreign laws which are already within its
classification covered by a general ACTUAL KNOWLEDGE such as when:
statute of limitations - they are well and generally known OR
 Specificity test: substantive - they have been actually ruled upon in
when the limitation was other cases before it and none of the
directed to the newly created parties concerned claim otherwise
liability so SPECIFICALLY as to (PCIB v. Escolin, 1974)
warrant saying that it qualified
the right Foreign law proved by:
- Borrowing statute: a statute which
bars the filing of a suit in the forum 1. an OFFICIAL PUBLICATION of the law; OR
if it is already barred by the SOL in 2. a COPY of the law ATTESTED by the officer
the place where the cause of action having the legal custody of the record, or
arose by his deputy.
- If such record is not kept in the
Dépecage (“to dissect”) Philippines, it must be accompanied
o Nuanced single-aspect method with a certificate that such officer has
o Cutting up the case issue by issue and the custody
applying the pertinent laws to the
different aspects 3 Alternatives in case of failure to plead and
prove foreign law
RENVOI (“send back”)
o A procedure whereby the conflicts rule of 1. DISMISS the case for failure to establish a
the forum refers the jural matter to a cause of action
foreign state and in turn, the conflicts rule 2. Apply FORUM LAW
of such foreign state refers the matter 3. PROCESSUAL PRESUMPTION
back to the law of
- the forum (REMISSION); OR Factors in deciding whether to apply domestic
- a 3rd state (TRANSMISSION) law or decide against the party who has the
burden of proving the contents of foreign law:
4 ways of dealing with renvoi: 1. degree of PUBLIC INTEREST involved
1. REJECT renvoi and apply internal law of 2. ACCESSIBILITY of the foreign law
the foreign state (that applied to a purely materials to the parties
domestic case) 3. probability that the plaintiff is merely
2. ACCEPT renvoi and apply the “whole” law FORUM-SHOPPING
of the foreign state (including its conflict 4. SIMILARITIES between the forum law
rules) and foreign law
o Effect: forum law applied
EXCEPTIONS TO THE APPLICATION
3. DESISTANCE or mutual disclaimer of OF FOREIGN LAW
jurisdiction
o Upon reference to another state’s law, 1. Local law expressly so provides
the court sees that such law is limited 2. Failure to plead and prove the foreign
to its own national and has no law or judgment
provision for application to a non- 3. Exceptions to the rule of comity:
national (4P-FAG-UV)
o Same effect as acceptance: forum law a. The foreign law is contrary to an
applied IMPORTANT PUBLIC POLICY of the
forum
4. DOUBLE RENVOI (“foreign court theory”)

b. The foreign law is PROCEDURAL in NATIONALITY

nature o Each state has the prerogative and
c. The foreign law is PENAL in nature authority to determine by its own
d. Issues related to PROPERTY municipal law who are its nationals or
e. The issue involved in the citizens.
enforcement of foreign claim is
FISCAL or ADMINISTRATIVE Statelessness
f. The foreign law is contrary to o De jure statelessness: person has been
GOOD MORALS (contra bonus stripped of his nationality by his former
mores) gov’t. without having an opportunity to
g. The application of foreign law will acquire another
work UNDENIABLE INJUSTICE to o De facto statelessness: person possessed
citizens of the forum of a nationality but his country does not
h. The application of foreign law give him protection outside its own
might endanger the VITAL territory (refugee)
INTERESTS of the state
DOMICILE
PERSONAL LAW
o One’s personal law follows him GENERAL RULES ON DOMICILE
wherever he is and governs those 1. No person shall be without domicile
transactions which affect him most o One’s domicile of origin prevails until
closely. he acquires anew domicile
o Determined either by one’s nationality 2. A person cannot have 2 simultaneous
or domicile domiciles for a given purpose or a given
o Most civil law countries such as the time under the law of a particular state
Philippines follow the national law 3. Domicile establishes a connection between
theory a person and a particular territory
4. Burden of proving a change of domicile is
Nationality Domicile on the one alleging it
Merits Merits
- logical since - genuine link 3 KINDS OF DOMICILE
lawmakers - suitable for 1. Domicile of ORIGIN
considered the countries with 2. Domicile of CHOICE
qualities of its a federal 3. CONSTRUCTIVE domicile
citizens in system
making the Domicile of Origin
laws Demerits o Person’s domicile at birth
- easily - not easily o Legitimate child: father’s domicile
verifiable from determinable o Illegitimate child: mother’s domicile
documents - concept not
clear-cut Domicile of Choice
Demerits - if domicile of o Voluntary domicile
- does not origin given o To acquire: actual residence + animo
provide much weight, manendi (intent to make it one’s
solution with connection home)
respect to attenuated
 stateless Domicile of Origin Domicile of
persons Choice
 those with - NOT lost by - deemed
multiple mere extinguished
nationalitie abandonment by removal of
s and remains intent even
 states with until replaced prior to the
diverse by a domicile acquisition of
legal of choice a new
systems - Presumed to domicile
- person’s ties to be revived
his nation may once the
be so domicile of
attenuated if choice is given
he has lived in up and before
another a new one is
country most acquired
of his life (reverter or
revival
doctrine)

Constructive Domicile o Doctrine of Immutability of Matrimonial

o Domicile assigned to persons legally Property Regime: The change of the
incapable of choosing their own nationality on the part of the husband
domicile: or wife or both does not affect the
- minors original property regime except when
- mentally disabled the law of the original nationality itself
- married women changes the marital regime, hence, the
property regime has to change
accordingly.
SPECIAL PROBLEMS IN DOMICILE 2. Divorce and separation

1. People kept under physical or legal o Hague Convention: national law of
compulsion (e.g. military personnel) spouses and lex fori
o Modern view: if person under o Grounds for divorce: lex fori
compulsion intends to remain even o Divorce decrees affecting Filipinos:
after the compulsion has been Art.26(2), FC44
removed, he acquires domicile of o Foreign divorce between foreigners
choice - Hague Convention: a foreign
2. Married women seeking to acquire a divorce decree will be recognized in
separate domicile from their husbands all contracting states if, at the date
o Modern view: altogether dispenses of the institution of the
with any presumption that the wife’s proceedings,
domicile is the same as her husband’s a. either spouse had his habitual
residence there;
b. both spouses were nationals of
CHOICE OF LAW PROBLEMS that state; or
c. if only the petitioner was a
PERSONAL STATUS national, he should have his
habitual residence there
o Includes condition and capacity
o Embraces 3. Annulment and declaration of nullity
- beginning and end of human o Traditional approach: lex loci
personality celebrationis
- juridical capacity o Policy-centered approach: law of the
- capacity to act state of marital domicile
- family relations
- succession 4. Parental relations
o Applicable law: personal law o legitimacy: personal law of the parents
- if Filipino: national law (Art.15,CC) o parental authority: personal law of the
- if alien: law of nationality or father
domicile, depending on what the
alien’s country follows 5. Adoption
o Process of adoption:
FAMILY RELATIONS - personal law of the child (best
interests); or
1. Marriage - personal law of the adopter, if the
a. extrinsic validity: lex loci celebrationis child’s domicile is merely
(Art.26, FC; Hague Convention) constructive
b. intrinsic validity: personal law o effects of adoption: personal law of the
- refers to capacity adopting parents
c. effects of marriage: personal law - adoption does not effect changes in
d. property relations of spouses the political rights of the adopted child
- Hague Convention:
- law designated before marriage
- in default, law of state of first contracts affecting property not situated in
habitual residence the Philippines and executed in the country
- Art 80, FC43: generally follows lex where the property is located; and
situs (3) With respect to the extrinsic validity of
contracts entered into in the Philippines not
affecting property situated in a foreign
43
Art. 80. In the absence of a contrary stipulation in a country whose laws require different
marriage settlement, the property relations of the formalities for their extrinsic validity.
spouses shall be governed by Philippine laws, regardless
44
of the place of celebration of the marriage and their Art.26(2).Where a marriage between a Filipino citizen
residence. and a foreigner is validly celebrated and a divorce is
This rule shall not apply: thereafter validly obtained abroad by the alien spouse
(1) Where both spouses are aliens; capacitating him or her to remarry, the Filipino spouse
(2) With respect to the extrinsic validity of shall have capacity to remarry under Philippine law.

PROPERTY c. Lex loci INTENTIONIS
1. Immovables: lex situs LEX LOCI CONTRACTUS

2. Movables: o law of the place of making
a. lex domicilii (mobilia sequuntur o merits:
personam); - relative ease in establishing
b. lex situs; - certainty and stability
c. lex loci actus (law of the place o demerit: unjust results when place of
where the transaction was making entirely incidental
completed); or
d. proper law of the forum (law of LEX LOCI SOLUTIONIS
the state which has the most O law of the place of performance
real connection with the O governs:
transfer) - time, place, and manner of
performance
In the Philippines: - sufficiency of performance
- excuses for non-performance
o Gen. rule: lex situs wrt both personal and O merit: always connected to the
real property (Art. 16,CC) contract in a significant way
- capacity to acquire or transfer property O demerits not helpful when the contract
- extrinsic validity of conveyance is performed in 2 or more states with
- intrinsic validity of conveyance UNLESS conflicting laws
lex intentionis is clearly established
- effects of conveyance LEX LOCI INTENTIONIS
o law intended by the parties
o Exceptions to lex situs rule: o may be express or implied
1. where the transaction does not affect o express
transfer of title to or ownership of land - choice of law provision in the
o applicable law: lex intentionis or contract
lex voluntatis - must be recognized unless there
2. in contracts where real property is are cogent reasons for not doing so
offered by way of security for the o implied
performance of an obligation such as a - based on contemporaneous and
loan subsequent acts of the parties
o applicable law: lex situs as to the - often upheld with reference to the
mortgage, lex intentionis as to the rule of validity of contracts which
loan contract presumes that the parties
3. testate or intestate succession and contemplate to enter into a valid
capacity to succeed contract
o applicable law: national law of the
decedent (Art. 16(2), CC) 3. Capacity to contract: personal law
4. under policy-centered approach:
a. when the situs of the movable
property at the time of the Choice of Forum Clause
transfer was insignificant or O A case arising from a contract will be
accidental litigated in the forum chosen by the
b. where the issue involves parties if the choice of forum clause
considerations other than the specifically identifies it as the ONLY
validity and effect of the VENUE.
transfer itself o When there is no fraud or
overreaching, and there is no showing
o Situs of shares of stock is NOT the same that the choice-of-forum clause would
as situs of the income derived from the be unreasonable and unjust, the clause
sale of shares (CIR v. Anglo California must be given effect.
National Bank, 1960)
Contracts with Arbitration Clause
o An arbitration clause, stipulating that
CONTRACTS the arbitral award of an arbitral panel
in a foreign country is FINAL AND
1. Extrinsic validity: lex loci celebrationis BINDING, is not contrary to public
(Sec. 9, Restatement 2nd; Art.17,CC) policy. It does not oust our courts of
- principle of LOCUS REGIT ACTUM: jurisdiction as the international arbitral
place governs the act award, the award of which is not
2. Intrinsic validity: 3 possible law: absolute and without exceptions, is still
a. Lex loci CONTRACTUS judicially reviewable under certain
b. Lex loci SOLUTIONIS conditions provided for by the

UNCITRAL Model Law on ICA as applied

and incorporated in RA 9285. ( Korea Applicable law in the absence of effective
Technologies Co., Ltd. v. Lerma, 2008) choice
o It is regarded as the “wave of
the future” in international civil o 2nd Restatement: law of the place of the
and commercial disputes. MOST SIGNIFICANT RELATIONSHIP with
Brushing aside a contractual the contract as a whole or with a specific
agreement calling for arbitration issue arising therefrom
between the parties would be a
step backward. Consistent with o Factors to consider:
the policy of encouraging 1. Place of contracting
alternative dispute resolution 2. Place of negotiating
methods, courts should liberally 3. Place of performance
construe arbitration clauses. 4. Situs of the subject-matter of the
(Ibid.) contract
5. Parties’ domicile, residence,
Adhesion Contracts nationality, place of incorporation,
place of business
o Adhesion contracts are not entirely 6. Place under whose local law the
prohibited. The one who agrees to the contract will be most effective
contract is in reality, free to reject it
entirely; if he adheres, he gives his
consent. SUCCESSION
o Void if there is UNDUE ADVANTAGE on
the part of the dominant party 1. Extrinsic validity of wills
o Ambiguity construed strictly against (Arts.17, 815-817, CC)
the drafter
Place of Applicable
Testator
Special Contracts Execution Law
Philippines Philippine law
1. Sale or barter of goods: lex situs 1. Lex loci
2. Simple loan granted by financial celebrationi
institutions: law of the permanent place of Filipino Foreign
s
business country
2. Philippine
3. Loan granted by a private individual or law
where subject matter of loan is personal: 1. law of
law of the place where the loan was nationality
obtained Philippines
2. Philippine
4. Pledge, Chattel Mortgage, Antichresis: lex law
situs 1. Law of
5. Carriage of goods by sea: nationality;
- law of the place of destination Alien 2. Law of
(Art.1753, CC) domicile;
- Code of Commerce Foreign
3. Lex loci
- COGSA country
celebrationi
6. International Air Transportation: Warsaw s;
Convention 4. Philippine
law
Limitations to the parties’ choice of law
o Filipinos prohibited from making joint
1. Cannot be a law which has NO connection wills, either here or abroad (Arts.818-
at all with the transaction or the parties 819,CC)
2. Law as changed will govern EXCEPT if the o Code silent as to validity of a joint will
change is so revolutionary that it was executed by an alien in the Philippines.
never contemplated by the parties It is suggested that it should not be
3. Choice of law should not be interpreted to probated if it would affect heirs in the
oust the jurisdiction which the court has Philippines. (Coquia and Pangalangan)
already acquired over the parties and the
subject-matter. 2. Intrinsic validity of wills: national law
4. Cannot contract away provisions of law of decedent (Arts.16(2) and 1039,CC)
especially peremptory provisions heavily
impressed with public interest 3. Interpretation of wills: national law of
5. Cognovit clause (confession-of-judgment decedent
clause) valid only if the parties were of
equal bargaining power and the defendant 4. Revocation of wills (Art. 829, CC)
agreed to it voluntarily

Place of Applicable MODERN APPROACH

Testator
revocation law
Philippine o In determining the state which has the
Philippine law
domiciliary most significant relationship, the
Philippines following factors are to be taken into
Non-
Philippine law account:
domiciliary
1. Philippine a. place of tortuous conduct
law b. place of injury
2. lex loci c. victim’s and tortfeasor’s domicile,
actus (law residence, nationality, place of
Philippine of the place incorporation and place of business
domiciliary of d. place where the relationship between
revocation) the parties is centered
(Coquia &
Foreign
Pangalanga
country FOREIGN TORT CLAIMS
n)
1. lex loci
celebrationi o Tort liability is transitory. An action for tort
s may be brought wherever the tortfeasor is
Non- subject to suit.
2. lex domicilii
domiciliary
at the time
of the Conditions for enforcement of foreign tort
revocation. claims:
1. The foreign tort is based on a civil action
and not on a crime.
5. Probate 2. The enforcement of the tort would not
o Law of the forum governs procedural infringe the public policy of the forum; and
matter 3. The judicial machinery of the forum is
o Compliance with extrinsic requirements adequate for its proper enforcement.
governed by Arts.17,815-817, CC)
ATCA (Alien Tort Claims Act)
6. Administration of estates o Grants US district courts original
o Territorial: governed by the law of the jurisdiction over any civil action by an
place where the administration takes alien for a tort committed in violation
place, and that is the law of the of the law of nations or a treaty of the
country from which the administrator US.
derives his authority.
In the Philippines, no specific statutory law
7. Testamentary trusts governing the enforcement of claims arising
o Extrinsic validity: rules governing wills from foreign torts.
apply
o Intrinsic validity: lex situs since a trust
involves property CRIMES
o Applicable law: lex loci delicti commissi

TORTS o 2 principles:
1. nullum crimen sine lege
TRADITIONAL APPROACH 2. territoriality principle
1. lex loci delicti commissi applies in o Exceptions to the territoriality principle in
matters concerning conduct and safety the Philippine:
2. lex domicilii of parties applies in 1. crimes committed by state officials,
matters concerning loss distribution or diplomatic representatives and officials
financial protection of recognized international
organizations.
Lex loci delicti commissi where tortuous - based on the theory of state
conduct and injury take place in different immunity from suits
states: - limited to official acts
1. common law: place of injury 2. crimes committed on board a foreign
- last act (vested rights theory) vessel even if within the territorial
2. civil law: place of tortuous conduct waters of the coastal state, as long as
- principle is that the legality or the effect of such crime does not affect
illegality of a person’s act should the peace and order of the coastal
be determined by the law of the state.
state where he is at the time he 3. Crimes which, although committed by
does such act Philippine nationals abroad are

punishable under Philippine law, to stockholders, members or officers of the

wit: corporation to each other.
- crimes committed while on
Philippine ship or airship Service of summons upon foreign corporations
- forging or counterfeiting doing business in the Philippines may be
Philippine coins or currency made:
- introducing counterfeit coins or a. on its resident agent
currency into the Philippines b. in the absence thereof, on the
- Public officers or employees government official designated by law
committing offenses in the or any of its officers or agents within
exercise of their functions the Philippines
- Crimes against national security c. on any officer or agent of said
and the law of nations (Art. 2, corporation in the Philippines
RPC) d. by serving summons through
diplomatic channels.
CORPORATIONS AND OTHER JURIDICAL RIGHT OF A FOREIGN CORPORATION TO

ENTITIES BRING SUIT
CORPORATION OR PARTNERSHIP General Rule: license to do business in the

Philippines required
PERSONAL LAW
Exceptions:
General Rule: Law of the place of 1. isolated transactions
incorporation 2. action to protect trademark, trade
name, goodwill, patent or for unfair
Exceptions to incorporation test: competition
a. Constitutional and statutory 3. agreements fully transacted outside
restrictions (Art. XII, 1987 the Philippines
Constitution) 4. petition filed is merely corollary
b. Control Test during war – Courts defense in a suit against the
may pierce the veil of corporate corporation
identity and look into the nationality of
the stockholders to determine the EFFECT OF FAILURE TO SECURE A LICENSE
citizenship of the corporation. TO TRANSACT BUISNESS
o The foreign corporation has no right to
Personal law of the corporation governs the sue in the Philippines but it can still be
following issues: sued.
a. existence and the legal character of the o Although the contracts entered into
corporation may be valid as between the parties, it
b. capacity and powers of the corporation may not be enforced in the Philippine
c. internal organization of the corporate courts.
enterprise
d. alteration of the charter and the
dissolution of the corporation RECOGNITION AND ENFORCEMENT
OF FOREIGN JUDGMENTS
DOMICILE OR RESIDENCE OF FOREIGN
CORPORATIONS FOREIGN JUDGMENT: a decision rendered
o that fixed by the law creating them; or outside the forum and encompasses
o if not so fixed, the place where their judgments, decrees and orders of courts of
legal representation is or where they foreign countries.
exercise their principal functions. (Art.
51, CC) RECOGNITION OF FOREIGN JUDGMENT
- Passive act of giving the same effect that
A foreign corporation granted license to it has in the State where it was rendered
operate in the Philippines acquires domicile with respect to the parties, the subject
here. matter of the action and the issues
involved without the necessity of filing an
All foreign corporations lawfully doing action in the forum giving effect to the
business here in the Philippines shall be bound judgment.
by all laws and rules and regulations - Examples of foreign judgments which can
applicable to domestic corporations except only be recognized: declaratory
provisions for the creation, formation, judgments, judgments which give no
organization or dissolution of corporations or affirmative relief, judgments which
liabilities, responsibilities or duties of determine the parties’ interests in a thing
or status.

recognition and enforcement of

Philippine judgments
ENFORCEMENT OF A FOREIGN JUDGMENT 5. Judgment is for a FIXED SUM of money
- A foreign judgment is enforced when, in 6. Foreign judgment not contrary to
addition to being recognized, a party is PUBLIC POLICY or GOOD MORALS of
given affirmative relief to which the country where it is sought to be
judgment entitles him and it necessarily enforced
requires the filing of an action. 7. Judgment not obtained by EXTRINSIC
- This necessarily implies recognition. FRAUD, COLLUSION, MISTAKE of fact
or law
BASES OF RECOGNITION AND PROCEDURES FOR ENFORCEMENT

ENFORCEMENT 1. SUMMARY PROCEEDING
1. COMITY- requires reciprocity between o Followed in most civil law countries
the concerned jurisdictions o Validation proceeding: authenticated
2. DOCTRINE OF OBLIGATION copy of foreign judgment validated by
- foreign judgment of a court of clerk of court
competent jurisdiction imposes a 2. JUDGMENT REGISTRATION
duty on the losing litigant o Authenticated copy filed in the
- based on the vested rights theory registrar’s office with the proofs
required
POLICY OF PRECLUSION UNDERLYING 3. PETITION
RECOGNITION AND ENFORCEMENT o Followed in common law countries and
o The policy of preclusion seeks to in the Philippines
protect party expectations resulting o The rules are silent as to what
from previous litigation, to safeguard initiatory procedure must be
against the harassment of defendants, undertaken in order to enforce a
to insure that the task of courts not be foreign judgment in the Philippines.
increased by never-ending litigation of But there is no question that the filing
the same disputes, and – in a larger of a civil complaint is an appropriate
sense – to promote what Lord Coke in measure for such purpose (Mijares v.
the Ferrer’s Case of 1599 stated to be Ranada, 2005)
the goal of all law: “rest and
quietness.”(Mijares v. Ranada, 2005)
RELATED CONCEPTS EFFECT OF FOREIGN JUDGMENT IN THE

1. Res judicata: once there is a final PHILIPPINES (Section 48, Rule 39, Rules of
judgment, resolution on the issues Court)
litigated is binding on the parties and
their privies o In an action in rem: the foreign judgment
2. Merger: Plaintiff’s cause of action is is deemed conclusive upon the title to
merged in the judgment so that he the thing,
may not relitigate that exact claim o In an action in personam, the foreign
3. Bar: successful defendant can judgment is presumptive, and not
interpose as a defense the judgment conclusive, of a right as between the
in his favor to avert a 2nd action by the parties and their successors in interest by
plaintiff on the same claim a subsequent title.
4. Direct estoppel: relitigation of all o However, in both cases, the foreign
matters decided are precluded judgment is susceptible to impeachment in
5. Indirect estoppel: all essential our local courts on the grounds of:
issues of fact actually litigated cannot - want of jurisdiction
be relitigated - want of notice to the party
- collusion
REQUISITES FOR RECOGNITION OR - fraud
ENFORCEMENT - clear mistake of law or fact
1. Foreign court had JURISDICTION over o It has been recognized that “public policy”
the parties and the case as a defense to the recognition of
2. Judgment VALID under the laws of the judgments serves as an umbrella for a
country that rendered it variety of concerns in international
3. Judgment FINAL and EXECUTORY to practice which may lead to a denial of
constitute res judicata in another recognition. (Mijares v. Ranada, 2005)
action
4. RECIPROCITY: state where foreign
judgment was obtained allows

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UNIVERSITY OF THE PHILIPPINES

Bar Operations Head │ Arianne Reyes

Academics Head │ Henry Aguda

Subject Committee │ Dianne Ducepec * Michelle Dy *

Information Management Chino Baybay [Head] * Simoun

Persons and Family Relations

100% UP LAW UP BAROPS 2008 Page 2 of 325

I. CIVIL PERSONALITY Effect of Death:

Kinds of persons: 1. The State and its political subdivisions;

100% UP LAW UP BAROPS 2008 Page 3 of 325

B. CAPACITY TO ACT AND Effect on Marriage:

1. Minority Effect on Contracts:

100% UP LAW UP BAROPS 2008 Page 4 of 325

5. Civil Interdiction Rule:

Effect on Property Relations: 9. Married Women

100% UP LAW UP BAROPS 2008 Page 5 of 325

4. If the administration of all the property  Domicile of parents of a person at

II. CITIZENSHIP AND DOMICILE - As used in the Naturalization Law,

100% UP LAW UP BAROPS 2008 Page 6 of 325

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3. Marriages by Muslims and cultural 2. Marriage in a remote place in accordance

There is no particular form or religious rite IV. VOID MARRIAGES

100% UP LAW UP BAROPS 2008 Page 8 of 325

i. Judgment of annulment or Terre v. Terre

c. Under Art. 37 Domingo v. CA

Declaration of nullity of marriage Carating-Siayngco v. Siayngco

100% UP LAW UP BAROPS 2008 Page 9 of 325

blood. Mere showing of irreconcilable 1. The appearance of the Solicitor General

** A.M. No. 02-11-10-SC (March 13, 2003)

100% UP LAW UP BAROPS 2008 Page 10 of 325

100% UP LAW UP BAROPS 2008 Page 11 of 325

100% UP LAW UP BAROPS 2008 Page 12 of 325

Ground Who can Prescripti Ratificati C. EFFECTS OF PENDING

B. MARRIAGE WHEN ONE SPOUSE To prevent collusion between the parties,

100% UP LAW UP BAROPS 2008 Page 13 of 325

Void Marriage Voidable 7. Contracting by respondent of a

1. Repeated physical violence or grossly

100% UP LAW UP BAROPS 2008 Page 14 of 325

Reconciliation period: 6. Innocent spouse may also revoke

100% UP LAW UP BAROPS 2008 Page 15 of 325

2. Her maiden first name and her

1. Live together Legamia v IAC

B. RIGHTS OF SPOUSES (Arts. 72-73, FC) Tolentino v. CA

1. Married Women: (Art. 370, CC)

A married woman may use:

100% UP LAW UP BAROPS 2008 Page 16 of 325

General Rule: (Art. 80, FC) 2. Made in consideration of the marriage

Requisites of donations propter nuptias:

100% UP LAW UP BAROPS 2008 Page 17 of 325

RULES: Harding v. Commercial Union

Exception: When it commences: At the precise

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3. Properties acquired before the marriage, - Only ff the debtor-spouse has no

2. Debts and Obligations Contracted During Disposition of property:

100% UP LAW UP BAROPS 2008 Page 19 of 325

to support. He/She, however, is still balance of separate properties shall be

6. LIQUIDATION OF ASSETS Onas v. Javillo

100% UP LAW UP BAROPS 2008 Page 20 of 325

EXCLUSIVE PROPERTIES OF THE Property bought on installments paid partly

100% UP LAW UP BAROPS 2008 Page 21 of 325

CHARGES UPON CPG (ART. 121) [cf. partnership by allowing it to be given

1. Support of the spouse, their common DISSOLUTION OF CPG (ART. 128):

100% UP LAW UP BAROPS 2008 Page 22 of 325

7. Annulment or judicial declaration of E. SEPARATION OF PROPERTIES