UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW

Bar Operations 2008

CIVIL LAW

Bar Operations Head Academics Head Subject Committee

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Arianne Reyes
Henry Aguda Ryan Balisacan 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 Chino Baybay [Head] * Simoun Salinas [Deputy] * Rania Joya [Design & Lay-out] * Ludee Pulido [Documentations] * Linus Madamba * Des Mayoralgo * Jillian De Dumo * Mike Ocampo * Abel Maglanque * Edan Marri R. Cañete

Information Management Committee │

PERSONS & FAMILY RELATIONS

CIVIL LAW

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

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PERSONS & FAMILY RELATIONS I. CIVIL PERSONALITY
A. CONCEPT AND CLASSES OF PERSONS Person - any being, natural (Art. 40, CC) or juridical (Art. 42, CC), susceptible to legal rights and obligations, and can be a subject of legal relations. Kinds of Capacity: (Art. 37, CC) Juridical Capacity Fitness to be the subject of legal relations. Inherent in every natural person Lost only through death Inherent and ineffaceable attribute of man; attaches to him by the mere fact of his being a man. Kinds of persons: 1. Natural persons General Rule: Birth determines personality (Art 40). Death extinguishes civil personality (Art 42). Exception: A conceived child is considered born for all purposes that are FAVORABLE to it, provided it be born later (Art 40, 2nd clause) with the following circumstances: a. It is alive at the time it is completely delivered from the mother's womb. b. But if the fetus had an intra-uterine life of less than seven months, it should survive for at least 24 hours after its complete delivery. (Art. 41, CC) Test of life: complete respiration. Burden of proof: The presumption is that it was alive and the burden of proof is on the party who alleges the contrary. Geluz v. CA G.R. No. 16439 (1961) 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. Capacity to Act Power to do acts with legal effect Acquired and may be lost Subject to certain restrictions Conditional and variable, it is acquired and may be lost. Joaquin v. Navarro

CIVIL LAW
Effect of Death: The effect of death upon the rights and obligations of the deceased is determined by law, by contract and by will (Art 42, par. 2). Doubt as to the order of death: If they are called to succeed each other, whoever alleges the death of one prior to the other, shall prove the same. In the absence of proof, it is presumed that they died at the same time, and there will be no transmission of rights from one to the other. (Art. 43, CC)

93 Phil 257 (1953) The rule on Art. 43 was not applied in determining whether the mother or the son died first. There were eyewitnesses who can give evidence as to who died first. It is only applied when it is impossible to determine who died first that the presumption applies. 2. Juridical persons Kinds of juridical persons: (Art. 44, CC) 1. The State and its political subdivisions; 2. Other corporations, institutions and entities for public interest or purpose, created by law; 3. Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality. Governing laws: Juridical Person State Political subdivision Public corporation Private corporation Governing law Constitution Charter Charter Corporation Code, Articles of Incorporation and ByLaws Stipulations of the parties and suppletorily by the general provisions on partnership

Partnerships

Juridical persons may acquire and possess property of all kinds, incur obligations, and bring civil or criminal actions (Art. 46, CC).

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PERSONS & FAMILY RELATIONS
B. CAPACITY TO ACT AND RESTRICTIONS THEREON Presumption of Capacity: Standard Oil Co. v. Arenas 19 Phil 363 (1911) To prove insanity, it has to be proven that: (1) The monomania of wealth was habitual and that it contributed to mental perturbation; (2) that the act was caused by the monomania itself; (3) that the monomania existed at the moment he signed the surety. Capacity to act is presumed unless previously declared incapable by the court. Restrictions/limitations on capacity to act: (Art. 38, 39, CC,) 1. 2. 3. 4. 5. 6. 7. 8. 9. Minority Insanity or imbecility State of being deaf-mute Prodigality Civil interdiction Family relations Alienage Absence Married women (Art. 2259, CC)

CIVIL LAW
Effect on Marriage: - Marriage contracted by any minor is VOID. Effect on Crimes: - 9 years and below= EXEMPT from criminal liability. (Art. 12, RPC) - Over 9 years and under 15 = EXEMPT, (Art. 12, RPC) - Unless he acted with discernment = Penalty is lowered by at least 2 degrees. (Art. 68, RPC) - 15 years and below 18 = MITIGATING circumstance. (Art. 13, RPC) 2. Insanity Effect on Contracts: - Insane persons cannot give consent to a contract. (Art. 1327, CC) - Contracts entered into during a lucid interval are valid. (Art. 1328, CC) - The incapacitated person is not obliged to make any restitution except insofar as he has been benefited. (Art. 1399, CC) Effect on Crimes: - Insane persons are EXEMPT from criminal liability unless they acted during a lucid interval. (Art. 12, RPC) Effect on Marriage: - A marriage is VOIDABLE if either party was of unsound mind at the time of the marriage. - Except: When the insane person, after coming to reason, freely cohabited with the other. Dumaguin v. Reynolds 10 Phil. 381 (1952) The presumption of mental incapacity in a person under guardianship for mental derangement may be rebutted by evidence. That person may enter a valid contract provided it is proven— 1. That he was not insane at the time he entered into the contract, and 2. That his mental defect did not affect his capacity to appreciate the meaning and significance of the transaction. 3. State of being deaf-mute Deaf-mutes cannot give consent to a contract. (Art. 1327, CC) If the testator is a deaf-mute, he must personally read the will. If unable to read, he must designate 2 persons to read it and communicate to him the contents thereof. (Art. 807, CC) Deaf-mutes can’t be witnesses to a will. (Art. 820, CC)
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1. Minority RA 6809 – Majority commences at the age of 18 years. Effect on Contracts: - Minors cannot give consent to a contract. (Art. 1327, CC). - The parent’s consent is binding on the minor. (Shields v. Gross, 58 NY 2d 338) - If one of the parties to a contract is a minor, the contract is voidable. (Art. 1390, CC) - If both parties are minors, the contract is unenforceable. (Art. 1403, CC) - Persons who are capable cannot allege the incapacity of the other party. (Art. 1379, CC) - The minor is not obliged to make restitution except insofar as he has been benefited. (Art. 1399, CC) - If there is active representation by the minors that they are of legal age, the contract is valid. (Mercado v. Espiritu, 37 Phil. 215) - If there is only passive representation, the contract is not valid. The fraud must be actual and not constructive. Mere silence does not constitute fraud. However, the minors must make restitution to the extent they profited from the money received. (Braganza v. de Villa Abrille, 105 Phil. 456)

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PERSONS & FAMILY RELATIONS
8. Absence 4. Prodigality Martinez v. Martinez 1 Phil. 182 To make a person legally unfit to run his own affairs, his acts of prodigality must show: 1. A morbid mind, and 2. A tendency to spend or waste the estate so as to expose the family to want or deprive the forced heirs of their inheritance. 5. Civil Interdiction Civil interdiction deprives the offender during the time of his sentence of the following rights— (PA-G-MA-MD) 1. Parental authority, 2. Guardianship as to the person or property of any ward, 3. Marital authority, 4. Management his property 5. Disposition of his property (Art. 34, RPC) 6. Family Relations Effect on Crimes: - No criminal liability if one acts in defense of spouse, ascendants, descendants, brothers or sisters, relatives by affinity and consanguinity within the 4th civil degree provided the requisites in Art. 11 and 12 of RPC are followed. - Mitigating circumstance: If one acts in immediate vindication of a grave offense committed against his spouse, ascendants, or relatives by affinity within the same degrees. (Art. 13, RPC) Effect on Marriage: - Incestuous and void – Marriages between ascendants and descendants; between brothers and sisters, whether full or half blood. (Art. 37, FC) Effect on Prescription: - Prescription does not run between husband and wife. (Art. 1109, CC) Effect on Property Relations: - Husband and wife cannot sell property to each other except: - When separation of property was agreed in the marriage settlements; - When there has been a judicial separation of property. (Art. 1490, CC) 7. Alienage

CIVIL LAW

General Rule: Absence of 7 years + unknown whether the absentee still leaves = presumed dead for all purposes. Except: For the purpose of opening his succession, in which case, the absentee is presumed dead after 10 years. If disappeared after the age of 75 years, 5 years will be sufficient. (Art. 390, CC) Rule: The following are presumed dead for ALL purposes, including the division of estate among the heirs: (VA-A-D) 1. A person on board a vessel during a sea voyage, or an aeroplane which is missing, who has not been heard of for 4 years since the loss of the vessel or aeroplane; 2. A person in the armed forces who has taken part in war, and has been missing for 4 years; 3. A person who has been in danger of death under other circumstances and existence has not been known for 4 years. (Art. 391, CC) Administration and enjoyment of conjugal partnership where one spouse is absent: The other spouse may assume sole powers of administration. These powers to NOT include disposition or encumbrance without court authority or written consent of the other spouse. Effect of want of authority/consent: VOID disposition or encumbrance. BUT, the transaction is construed as a CONTINUING OFFER on the part of the consenting spouse and the 3rd person. It may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (Art. 124, FC)

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9. Married Women General Rule: A married woman may not sue or be sued alone without joining her husband. Except: (Rule 3, Sec. 4, ROC) 1. When they are judicially separated. 2. If they have in fact been separated for at least 1 year; 3. When there is a separation of property agreed upon in the marriage settlements;
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4. If the administration of all the property in the marriage has been transferred to her; 5. When the litigation is between husband and wife; 6. If the suit concerns her paraphernal property; 7. When the action is upon the civil liability arising from a criminal offense; 8. If the litigation is incidental to the profession, occupation or business in which she is engaged; 9. In any of the civil action referred to in Art. 25-35 CC. 10. In an action upon a quasi-delict. Note: In cases #7-9, the husband must be joined as party defendant if Art. 163, par. 3 applies. 

CIVIL LAW
Domicile of parents of a person at the time he was born. 2. Domicile of Choice  Domicile chosen by a person, changing his domicile of origin.  A 3rd requisite is necessary – intention not to return to one’s domicile as his permanent place. 3. Domicile by Operation of Law (i.e., Article 69, domicile of minor) Construction of “residence”: Although “residence” and “domicile” are used interchangeably, they are NOT synonymous in connection with citizenship, jurisdiction, limitations, school privileges, probate and succession. (Uytengsu v. Republic, 1954) As used in the Naturalization Law, residence means actual and substantial residence, not domicile. (Uytengsu v. Republic, 1954) HOWEVER, in election law, residence is synonymous with domicile. (Romualdez-Marcos v. Comelec, 1995)

II. CITIZENSHIP AND DOMICILE
A. FILIPINO CITIZENS 1. Those who are citizens of the Philippines at the time of the adoption of the 1987 Constitution; 2. Those whose fathers or mothers are citizens of the Philippines; 3. Those born before January 17, 1973, of Filipino mothers, who elect Philippine citizenship upon reaching the age of majority; and 4. Those who are naturalized in accordance with law. (Art IV, §1, 1987 Consti.) B. DOMICILE For Natural Persons: The place of their habitual residence (Art. 50, CC). For Juridical Persons: The place where their legal representation is established, or where they exercise their primary functions, unless there is a law or other provision that fixes the domicile (Art. 51, CC). Domicile vs. Residence: While domicile is permanent (there is intent to remain), residence is temporary and may be changed anytime (there is no necessary intent to remain). Requisites of Domicile: 1. Physical Presence 2. Intent to remain permanently Kinds of Domicile: 1. Domicile of Origin
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III. MARRIAGE
A. DEFINITION MARRIAGE AND NATURE OF

Definition of Marriage: 1. A special contract 2. of permanent union 3. between a man and a woman 4. entered into in accordance with law 5. for the establishment of conjugal and family life. 6. It is the foundation of the family and 7. an inviolable social institution 8. whose nature, consequences, and incidents are governed by law and not subject to stipulation, 9. except that marriage settlements may fix the property relations during the marriage within the limits provided by this Code. (Art. 1, FC) Breach of promise to marry: Tanjanco v. CA 18 SCRA 994 Breach of promise to marry is not an actionable wrong. The fact that the woman agreed to have sexual intercourse for a year does not constitute seduction but mutual passion. Wassmer v. Velez 12 SCRA 648
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3. (Art. 2. 4. 28. b. FC) 6. 2. 2) C. While the plane is in flight. Mayors (LGC) b. 10. (Art. 7. CIVIL LAW contracting parties having good faith that he had authority to do so (Art 35. Where one or both of the parties are in articulo mortis. all presumptions favor the solidarity of the family. par. FC). (2) the couple’s public cohabitation. Authority of the solemnizing officer. It was a mere ruse for him to escape criminal liability. 27. he shall compensate the latter for damages (costs of the wedding preparations). FC) B. Consent freely given in the presence of the solemnizing officer. a. (Art. FORMAL REQUISITES OF MARRIAGE (SO-ML-MC) 1. Must be authorized by his church or religious sect. imam. par. Art 31. Thus. 4. par. Hallahan 501 S. FC) a. Any incumbent member of the judiciary within the court’s jurisdiction (Art. 4 FC). the following would constitute competent evidence: (1) the testimony of witnesses to matrimony. FC) 2. It is the abuse of right which can be a cause for moral or material damages. 21 of the Civil Code which provides that when a person willfully causes loss or injury contrary to good custom. Marriage is defined by law as one entered into by a man and a woman. Ship captain or airplane chief in the following cases. d. Presumption of marriage: In case of doubt. or vice consul (Art. ESSENTIAL REQUISITES OF MARRIAGE 1. 2. etc. Must act within the limits of the written authority granted by the Church. To prove the fact of marriage. consul. (Art. b. Any military commander of a unit to which a chaplain is assigned. Legal Capacity of contracting parties who must be Male and Female. Authority of solemnizing officer Who are authorized to solemnize marriages? (JPSMCM) 1. At stopovers or ports of call (Art 7. 2) 3. The issuance of the marriage license and the duties of the local civil registrar shall also be performed by said consular official. whether members of the armed forces or civilians (Art 32. CA 289 SCRA 188 (1998) Absence of a marriage certificate is not proof of absence of marriage. 5. FC) Absence Void* Void* Defect Voidable Irregularity No effect on validity but party responsible will be liable.W. 7. FC) Jones v. FC) Essential Formal *Except when it is solemnized by an unauthorized person with either or both 100% UP LAW UP BAROPS 2008 Page 7 of 325 . in the absence of the latter (Art 7. Can solemnize marriages between Filipino citizens abroad. par. 7. A valid marriage license. 3. Marriage in remote and inaccessible places (Art. People v Santiago 51 Phil 68 When a person only married another to avoid prosecution because he raped her the same morning. Marriage in articulo mortis (Art. FC). Marriage License Marriages exempt from marriage license requirement: (ARMC) 1. or d. Must be registered with the civil registrar general. every intendment of law or facts leans towards the validity of marriage. 5 FC) a. a. 2. rabbi. While the ship is at sea or c. Effects of absence of and defect in the requisites of marriage: (Art. 1). and (3) birth and baptismal certificates of children born during the union. Any priest. Consul-general. par. par. the marriage is void for absence of consent on the part of the rapist. Marriage ceremony (Art 3. c. 221. Velez is still liable under Art.PERSONS & FAMILY RELATIONS While mere breach is not an actionable wrong. or minister of any church or religious sect a. Trinidad v. the indissolubility of the marriage bonds. Can only solemnize marriages in articulo mortis between persons within the zone of military operation. At least one of the parties must be a member of the church or religious sect to which the solemnizing officer belongs. 2d 588 A license to enter into a same-sex marriage is a nullity since the parties are incapable of entering into a marriage as the term is defined.

(Art. a. Marriage is void when Art. (Art. 33. 41) 5. 3. FC) e) If aged 18-25. 6. a. The subsequent marriage is void under Art. and the remaining spouse has a well-founded belief that the absent spouse is dead. Where both of the parties request the solemnizing officer in writing. FC) Ninal v Badayog GR 133778 (2000) There must be no legal impediment during the entire five or more years that the parties are living as husband and wife. 37 7. 3. a. 6. Which shall be signed by the contracting parties and their witnesses and attested by the solemnizing officer. Marriage in articulo mortis. That they take each other as husband and wife 4. Marriage in a remote place in accordance with Art. Marriage by parties with who have cohabited for at least 5 years. 12. VOID MARRIAGES A. Marriage between persons below 18 years old – Art. present parental consent. FC) g) If foreigner. 35 (5) 4. FC) Note: In a marriage in articulo mortis. FC) 4. 29. D. 53: a. Things to do at the local civil registrar: a) File an application of marriage license at the proper local civil registrar. or two years under extraordinary circumstances. 34. FC) c) If aged 18-21 years. par. Psychological incapacity – Art. (Art. Exceptions: 1. FC) Exceptions: (AgeBI53PIPP) 1. (PD 965) f) Pay the required fees. 35 1. 35(1) 2. 11. Chambers of the judge or in open court. 36 6. 35 (6) 5. and is judicially declared presumptively dead. Office of the Consul-general. Incestuous marriages – Art. 14. except when one or both parties believe that the solemnizing officer had authority to do so.PERSONS & FAMILY RELATIONS 3. consul. except when first spouse has been absent for four years. 38 IV. MARRIAGES CELEBRATED ABROAD General Rule: Marriages solemnized outside the RP in accordance with the law of the foreign country shall be valid in the Philippines (lex loci celebrationis). 52 is not complied with: the following must be recorded in the appropriate civil registry: General Rule: 1. (Art. when one or both parties are unable to sign the marriage certificate. The contracting parties appear personally before the solemnizing officer 2. present certificate of legal capacity issued by diplomat or consular officials. as the case may be. 35(4) 3. Marriages by Muslims and cultural minorities. (Art. 6. There is a mistake in identity of the other contracting party. present certificate of marriage counseling from your priest. or vice-consul. (Art. FC) may be CIVIL LAW 2. FC) c. in which case the marriage may be solemnized at a house or place designated by then in a sworn statement. (Art 19. Mistake in identity – Art. (Art. 2) Places where marriage celebrated (CCO): (Art. Bigamous or polygamous marriage – Art. Marriage Ceremony There is no particular form or religious rite required by law. FC) b) Present birth or baptismal certificate. (Art. It is bigamous or polygamous. which shall be attested by the solemnizing officer. 3. They declare in the presence of at least two witnesses of legal age. Under Art. 5. Marriages void under Article 53 – Art. Solemnized by anyone not authorized to do so. except in marriage under exceptional circumstances 4. 100% UP LAW UP BAROPS 2008 Page 8 of 325 . it shall be sufficient for one of the witnesses to write the name of said party. There is no marriage license. FC) Minimum requirements by law: 1. (Art. Marriage void for reasons of public policy – Art. FC) d) If aged 21-25. The declaration shall be contained in the marriage certificate. Contracted by anyone below 18 years old. present parental advice. (Art 6. 15. Church. or temple 3. 8. chapel. (Art. even with consent of parents 2. 26. (Art. 21. GROUNDS a. 2.

Between parties where one. 36 7. ii. is equivalent to psychological incapacity. distribution and separation of property between spouses. The Family Code retroacts to the extent that it does not impair rights. legitimate or illegitimate. c. 158896 (2004) Sexual infidelity. custody and support of children. CA G. legitimate or illegitimate. 16. 12. regardless of the date of the first marriage.R. Between parents-in-law and children-inlaw. They must file an action for declaration of nullity under Art. 40 before they remarry. partition. and (c) incurability. 112109 (1995) Psychological incapacity under Art. Psychological incapacity of any contracting party. 15. liquidation. Partition and distribution of the properties of the spouses iii. CA 226 SCRA 572 (1993) A marriage void for lack of marriage license still needs a judicial declaration of such fact even for a purpose OTHER than remarriage (e. Brillantes 243 SCRA 32 Art. 18. FC is not meant to comprehend all possible cases of psychoses. No. Delivery of presumptive legitimes of the children. does not constitute psychological incapacity. killed that other person's spouse. Between the surviving spouse of the adopted child and the adopter. at the time of the celebration of the marriage. Art.PERSONS & FAMILY RELATIONS i. Between ascendants and descendants of any degree. 40 not mean that JDN can only be invoked for purposes of remarriage. constant. 9. and prolonged refusal to comply with the essential marital obligations. 14. Atienza v. the nullity of a previous marriage may be invoked solely on the basis of a final judicial declaration of nullity (JDN) of the previous marriage. Psychological incapacity must be characterized by (a) gravity. Between brothers and sisters. 38 (For Reasons of Public Policy) 10. or his or her own spouse. The following CAN marry each other: 1. Santos v. legitimate or illegitimate. FC) Chi Ming Tsoi v. 11. with the intention to marry the other. Between adopting parent and adopted child. 13. 36. Between collateral blood relatives. Judgment of annulment or of absolute nullity of marriage. PSYCHOLOGICAL INCAPACITY (Art. 40. Under Art. to no less than a mental (not physical) incapacity that causes a party to be truly incognitive of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the marriage. d. Declaration of nullity of marriage The action imprescriptible. It should refer. The prolonged refusal of a spouse to have sex with his spouse. (Art. Domingo v. Guardian and ward 4. It must be shown that respondent’s unfaithfulness is a manifestation of a disordered personality which makes him completely unable to 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 2008 Page 9 of 325 100% UP LAW UP BAROPS . Between the surviving spouse of the adopting parent and the adopted child. Procreation is one of the essential marital obligations under the Family Code. Adopted child and illegitimate child of the adopted e. 41 and both parties are in bad faith. 36.g. 17. Between an adopted child and a legitimate child of the adopter. (Art. Siayngco G. FC) For purposes of remarriage. Carating-Siayngco v. 44 Subsequent marriage contracted under Art. Under Art. Between step-parents and step-children. FC) CIVIL LAW Terre v. rather. Terre 211 SCRA 6 Parties are not allowed to assume that their marriage is void even if such is the fact. per se. Between adopted children of the same adopter. to comply with the essential marital obligations.R. 40 is applicable to remarriages entered into after the effectivity of the Family Code. 37 (Incestuous Relationships) 8. 39. CA 266 SCRA 234 (1997) Psychological incapacity involves the senseless. whether full or half-blood. b. Under Art. Brother-in-law and sister-in-law 2. Stepbrother and stepsister 3. up to the fourth civil degree. even though capable. (b) juridical antecedence. Under Art. and delivery of the latter’s presumptive legitime).

medically or clinically identified. The incapacity must be proven to be existing at “the time of the celebration” of the marriage. The trial court must order the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the state. c. Guidelines for the interpretation of Art. No.** CIVIL LAW 1. 221. 02-11-10-SC (March 13. The award of moral damages should be predicated. No. sufficiently proven by the experts. and 225 of the same Code in regard to parents and their children. No. There is only one cause of action for both petitions—the nullity of the marriage. We cannot be lenient in the application of the rules merely because the spouse alleged to be psychologically incapacitated happens to be a foreign national. that in the later case of Marcos v.R. Moreover.PERSONS & FAMILY RELATIONS blood. the possibility of awarding moral damages on the same set of facts was negated. Molina 268 SCRA 198 (1997). 127358 (2005) By declaring the petitioner as psychologically incapacitated (hence beyond the control of the party because of an innate inability). No. The burden of proof to show the nullity of the marriage belongs to the plaintiff. Mere showing of irreconcilable differences and conflicting personalities does not constitute psychological incapacity. 3. Republic v. 8. The root cause of the psychological incapacity must be: a. Buenaventura v. Marcos (343 SCRA 755. The medical and clinical rules to determine psychological incapacity were formulated on the basis of studies of human behavior in general. clearly explained in the decision. 6.* d. an individual who contracts a second or subsequent marriage during the subsistence of a valid marriage is criminally liable for bigamy. 2000).R. Republic v. The essential marital obligations must be those embraced by Articles 68 up to 71 of the Family Code as regards the husband and wife as well as Articles 220. 2.R. Such illness must be grave enough to bring about the disability of the party to assume the essential obligations of marriage. petitioner impliedly conceded that the marriage was conduced in accordance with law.R. Petitioner is now bound by this admission. 2003) made the ff. 149498 (2004) In proving psychological incapacity. 5. The appearance of the Solicitor General is no longer necessary. as long as the physical manifestations of psychological incapacity at the time of celebration of marriage are alleged. Interpretations given by the National Appellate Matrimonial tribunal of the Catholic Church in the Philippines. not on the mere act of entering into the marriage. 36: 1. Tenebro v. as the psychological incapacity may be established by the totality of the evidence presented. 2. Alcantara G. 141528 Res judicata applies to a petition for nullity of marriage due to lack of marriage license. Such incapacity must also be shown to be medically or clinically permanent or incurable. No. alleged in the complaint. notwithstanding the subsequent declaration that the second marriage is void ab initio on the ground of psychological incapacity. CA G. in the first case. it was held that there is no need for the respondent to be examined by an expert. should be given great respect by our courts. *NOTE HOWEVER. there should be no distinction between an alien spouse and a Filipino spouse. Quintero-Hamano G. b. 7.M. 4. modifications to the Molina doctrine: 100% UP LAW UP BAROPS 2008 Page 10 of 325 . 150758 (2004) The subsequent judicial declaration of nullity of marriage on the ground of psychological incapacity does not retroact to the date of the celebration of the marriage insofar as the Philippine penal laws are concerned. where a prior petition for nullity of marriage based on psychological incapacity had been denied. but on specific evidence that it was done deliberately and with malice by a party who had knowledge of his or her disability and yet willfully concealed the same Mallion v. As such. CA G. Expert opinion need not be alleged. ** A. since he never raised the issue of lack of marriage license.

or two years under extraordinary circumstances. He contracted the third marriage after the death of his first wife. In favor of the common children b. Donations . No semblance of marriage. Donation propter nuptias – remains valid. 43-44) 1. Parties can remarry – after compliance with Art. He contracted the second marriage during the subsistence of the first marriage. the second marriage is still bigamous. Children – considered illegitimate 2. the marriage is still void (Art. donations will be revoked) 9. in favor of the children of the innocent spouse. partition and distribution of the properties of the spouses. 44. Exception to the exception: When both parties in the subsequent marriage acted in bad faith. without prejudice to the effect of the reappearance of the absent spouse. If none. B. Presumptive legitimes – must be delivered 5. and there is no parental consent. Property Regime is dissolved – liquidation. 2. even if such designation is irrevocable 10. He was prosecuted for bigamy on his third marriage. Custody and support of the common children will be decided 4. 845 (1954) Mendoza contracted three marriages.PERSONS & FAMILY RELATIONS BIGAMOUS MARRIAGE (Art. Creditors – of the spouses and of the absolute community or conjugal partnership must be notified of the proceedings of liquidation. 52. Exception: If before the celebration of the subsequent marriage— 1. the above also effects apply to marriages which are annulled (and to voidable bigamous marriages. Mendoza 95 Phil. Succession Rights – Party in bad faith disqualified to inherit from innocent spouse. No. (but if the donee contracted marriage in bad faith. since his prior subsisting marriage has already been extinguished by the death of his first wife. in favor of the guilty spouse by previous marriage c. VOIDABLE MARRIAGES A. 3. 7. and 2. 6. GROUNDS (CIF-mspd-FIS) (Art. his/her share in the net profits will be forfeited: a. Insurance benefits – innocent spouse may revoke designation of guilty party as beneficiary. 100% UP LAW UP BAROPS 2008 Page 11 of 325 . People G. If either spouse acted in bad faith. If none. whether testate or intestate Note: Except for #1. FC). People v. he becomes liable for bigamy General Rule: Marriage contracted by any person during the subsistence of a previous marriage is VOID.If both parties of subsequent marriage acted in bad faith. The Supreme Court held that he is not guilty for bigamy for his third marriage. 145226 (2004) General Rule: Even if the first marriage is judicially declared void only after contracting the second marriage. There is a judicial declaration of presumptive death. VOIDABLE bigamous marriage Contracted by spouse present upon the presumption of death of first spouse CIVIL LAW Exception: Said second marriage is not bigamous if the first marriage was void due to the fact that no marriage ceremony was solemnized at all. FC.R. Either party was of unsound mind (insanity). 8. any donations and testamentary dispositions made by one party to the other by reason of marriage will be revoked 11. 41. It is the second marriage that is bigamous. The surviving spouse has a wellfounded belief that the spouse is dead. if in bad faith.) V. 45. no need for judicial declaration of nullity. Conjugal dwelling – given to the spouse with whom majority of the children choose to remain. EFFECTS OF NULLITY (ChiPCuPCDRDIDS) (Arts. 50-54. One of the parties is 18 or above but below 21. Here. The first spouse has been absent for four consecutive years. and 3. Good faith is immaterial here. FC) 1. Note: This is a VOIDABLE bigamous marriage. the parties merely signed a marriage contract on their own. FC) 2 Kinds of bigamous marriage: VOID bigamous marriage Contracted during subsistence of previous marriage Good faith of remarrying party is immaterial. Morigo v.

PERSONS & FAMILY RELATIONS 3. 47) 1. this is different from sterility). Aquino v Delizo 109 Phil. 6. 2. Either party has a serious and incurable sexually-transmissible disease. 45) Lack of parental consent Who can file (Art. through concealment of drug addiction. Art. by mere looking. Either party is physically unable to consummate the marriage (impotence. The consent of either party was obtained through force. 19 It held that it is unbelievable that the wife could have concealed the fact that she was 6 months pregnant at the time of the marriage. RTJ-04-1861 (2004) In a legal separation or annulment case. intimida tion.* d. 2. Insane party for Does not have to be concealed Must be serious and incurable It is the concealment that gives rise to the annulment Buccat v Buccat 72 Phil. The consent of either party was obtained through fraud (different from mistake in identity): a. 1. b. through concealment of the wife of the fact that she was pregnant by another man. 45 STD Ground annulment Art. Corpuz v. 5. During lucid interval or after regaining sanity. c. Parent or guardian Insanity 1. 47) 1.* *STD: Art. and before death Five years after discovery of fraud Free cohabitation of insane party after coming to reason Force. Any time before the death of insane party Ratification (Art. Before child reaches 21. intimidation. 46 STD The STD is a type of fraud which is a ground for annulment Must be concealed Need not be serious nor incurable The STD itself is the ground for annulment Fraud Injured party (defrauded party) CIVIL LAW further proceedings if the defendant fails to answer.” Aquino could hardly be expected to know. (Art. A certification by the prosecutor that he was present during the hearing and even cross-examined the plaintiff does not suffice to comply with the mandatory requirement. Sane spouse with no knowledge of the other’s insanity 2. Legal guardian of insane party 3. habitual alcoholism or homosexuality/lesbianism. even if not concealed. 45) Free cohabitation after attaining age of 21. a prior collusion investigation by the prosecuting attorney is a condition sine qua non for 100% UP LAW UP 2. 46 Art. It argued that since Delizo was “naturally plump. 5 years after attaining 21.46. FC) 4. or undue influence. Underage party Prescription (Art. Ochoterena AM No. 21 The Supreme Court granted annulment because the wife concealed the fact that she was 4 months pregnant during the time of the marriage. Ground (Art. undue influence Injured party Five years after disappea -rance of force or intimidation Free cohabitation after having full knowledge of fraud Free cohabitation after the force has ceased or disappered BAROPS 2008 Page 12 of 325 . even if not serious or incurable. Annulment not granted. whether or not she was pregnant at the time of the marriage. through concealment of a sexuallytransmitted disease. through non-disclosure of a previous conviction of a crime involving moral turpitude. 45 v.

247 FC. 45) Impoten ce Who can file (Art. (Art. without prejudice to the effect of reappearance of the absent spouse. 42. FC) Republic v. 47) Healthy party Prescripti on (Art. fabrication or suppression of evidence. To prevent collusion between the parties. their choice of parent with whom they wish to remain. The prior spouse had been absent for 4 consecutive years. 41. 2. 45) Deemed ratified when action prescribes Deemed ratified when action prescribes C. only Co-ownership Legitimacy of children General rule: Children are ILLEGITIMATE (Art. (Art. Bermudez-Lorino G. Applying Art. 47) Five years after marriage Five years after marriage Ratificati on (Art. The Republic appealed the decision to the CA. giving paramount consideration to their moral and material welfare. The custody of the common children. or 2 years in cases under Art. FC) CIVIL LAW STD Healthy party 1. the SC ruled that the CA did not have jurisdiction over the appeal because summary proceedings are immediately final and executory. The spouse present has a well-founded belief that the absent spouse was already dead. FC) 1. No. EFFECTS OF PENDING ACTIONS/DECREE (Art. the prosecuting attorney or fiscal shall appear on behalf of the State. Effect of reappearance of absent spouse: General rule: The subsequent marriage remains valid. 391 CC. The court shall also provide for visitation rights of other parent. 100% UP LAW UP BAROPS 2008 Page 13 of 325 . VOIDABLE MARRIAGES Void Marriage Nature Covalidatio n Effect on property INEXISTENT from the beginning CANNOT be covalidated Voidable Marriage VALID until annulled by court CAN be covalidated by prescription or free cohabitation ACP exists unless another system is instituted through marriage settlement Children are LEGITIMATE if conceived before decree of annulment B.PERSONS & FAMILY RELATIONS Ground (Art. MARRIAGE WHEN ONE SPOUSE IS ABSENT Requirements for subsequent marriage to be valid when prior spouse is absent: (Art. FC) D. VOID MARRIAGES vs. 3. The court shall provide for the support of the spouses. 36) or non-partition of properties in a previous marriage (Art. 53). The spouse present must institute a summary proceeding for the declaration of presumptive death of the absentee. and therefore unappealable. children are considered LEGITIMATE . 41. Exception to the exception: If there is a judgment annulling the previous marriage or declaring it void ab initio. No Community Property.R. 48. 160258 (2005) The RTC rendered a decision declaring the presumptive death of respondent’s absent spouse based on Art. 49. No child under 7 years shall be separated from the mother unless there is a compelling reason to do so. 3. 2. 165) Exception: In void marriages by reason of psychologica l incapacity (Art. FC. Exception: It is automatically terminated by the recording of the affidavit of reappearance of the absent spouse.

WHEN TO FILE/TRY ACTIONS Prescription: Action prescribes in five years occurrence of cause (Art. Dela Cruz 22 SCRA 333 Abandonment is not mere physical abandonment but also financial and moral desertion. Attempt on the life of petitioner by respondent. Lapuz v. Ortiz 291 SCRA 584 (1998) PD No. Repeated physical violence or grossly abusive conduct directed against petitioner. except for purpose of remarriage (there must be JDN) May still be impugned after death of parties Voidable Marriage Can only be attacked DIRECTLY (there must be annulment decree) 7. the shari'a courts are not vested with original and exclusive jurisdiction when it comes to marriages celebrated under both civil and Muslim laws. LEGAL SEPARATION A. 57. whether concealed or not. No. 1. Death of either party during pendency of action (Lapuz-Sy v Eufemio. there is no need for prior conviction for concubinage. 56. 9. Gandioco v Peñaranda 155 SCRA 725 (1989) In sexual infidelity as a ground for legal separation. 1083 (Code of Muslim Personal Laws of the Philippines) does not provide for a situation where the parties were married both in civil and Muslim rites. 8. DEFENSES Grounds for denying (4CMRPD) (Art. FC) 1. Physical violence or moral pressure to compel petitioner to change religious or political affiliation. and concealed from petitioner. Consent by aggrieved party to the commission of the offense 3. Drug addiction or habitual alcoholism of respondent. as opposed to proof beyond reasonable doubt required in concubinage. not pardon from offended party). 10. Attempt of respondent to corrupt or induce petitioner. Hence. a common child. or a child of the petitioner. a. Collusion between parties to obtain decree of legal separation 6. 66 par. the Regional Trial Courts have jurisdiction over such cases. Abandonment of petitioner by respondent without justifiable cause for more than one year. FC) 2008 6. whether in the Philippines of abroad. There must be an intention never to return.PERSONS & FAMILY RELATIONS Void Marriage How to impugn May be attacked DIRECTLY or COLLATERALLY . Dela Cruz. to engage in prostitution or connivance in such corruption or inducement. v. or child of petitioner. GROUNDS (VAPIDHIBLA) (Art. 4. 1972) 8. B. When it existed from the time of celebration.R. CIVIL LAW Contracting by respondent of a subsequent bigamous marriage. b. Lesbianism or homosexuality of respondent. even if pardoned (executive pardon. Sexual infidelity or perversion. Same as rules on drug addiction 2. There is no need for criminal conviction. Eufemio 43 SCRA 177 The action of the plaintiff in filing for legal separation does not survive after her death. from 100% UP LAW UP BAROPS Page 14 of 325 . G. Death of either spouse dissolves the marriage. L-30977. 5. Reconciliation of parties during pendency of action (Art. 3. can be a ground for annulment of marriage. Connivance between parties in the commission of the offense 4. VI. it is only a ground for legal separation. Prescription of action for legal separation (5 years from occurrence of the cause of action) 7.1) C. Consequently. Final judgment sentencing respondent to imprisonment of more than 6 years. FC) legal separation Effect of death of parties Can no longer be impugned after death of parties E. When it occurred only after the marriage. a. a common child. An action for legal separation is purely personal between the spouses. Mutual guilt in ground for legal separation 5. JURISDICTION Tamano v. 55. because legal separation only requires a preponderance of evidence. Condonation by aggrieved party 2. a.

2). 61. and the share of the guilty spouse shall be forfeited in favor the common children. FC) Collusion: The court shall assign the prosecuting attorney or fiscal to make sure that there is no collusion between the parties. (Art. Guilty spouse shall be disqualified from inheriting from innocent spouse by intestate succession. CC) F. 2. 58. Obligation for mutual support ceases. It shall also provide for visitation rights of the other spouse. FC) 5. par.PERSONS & FAMILY RELATIONS Reconciliation period: Action cannot be tried before six months have elapsed since the filing of the petition (Art. G. FC). FC) Confession: No decree of legal separation shall be based upon a stipulation of facts or a confession of judgment (Art. 60. and determined that despite such efforts. 42. even if such stipulations are irrevocable (Art. 198. FC) 2. par. (Art. The spouses are entitled to live separately (Art. 2. EFFECTS OF FILING PETITION FOR LEGAL SEPARATION (LAC) 1. reconciliation is highly improbable (Art. par. 7. 67. If there is a final decree of legal separation. 2. Innocent spouse may also revoke designation of guilty spouse as beneficiary in an insurance policy. 26. 372. EFFECTS OF DECREE FOR LEGAL SEPARATION 1. 2. (Art. par. FC) Attempts on reconciliation: Action cannot be tried unless the court has attempted to reconcile the spouses. Proceedings for legal separation shall be terminated at whatever stage. Joint custody of children is restored. FC) 2. 63. FC) 3. FC) Effects of Reconciliation: 1. par. 5. FC) 100% UP LAW UP CIVIL LAW 6. 49. Administration of Community or Conjugal Property – If there is no written agreement between the parties. cf. FC: 1. 6. they should file a corresponding joint manifestation under oath of such reconciliation. FC) 4. and that evidence is not fabricated or suppressed (Art. 61. 63. RECONCILIATION How done: Should the spouses reconcile. 2 FC) Twin elements for the application of par. 63. 26. 1. DIVORCE General Rule: Decrees of absolute divorce obtained by Filipinos abroad have no validity and are not recognized in the Phil. Art. FC) E. or innocent spouse (Art. 64. Custody of children – The court shall give custody of children to one of them. previous children. 66. The right to intestate succession by guilty spouse from innocent spouse is restored. ( Art. The ACP of CPG shall be dissolved and liquidated. 65. cf. FC) 3. (Art. Custody of the minor children shall be awarded to the innocent spouse (Art. (Art. The separation of property and forfeiture of share of guilty spouse shall subsist. (Art. 66. The provisions in favor of the guilty party in the will of the innocent spouse shall also be revoked by operation of law. if there is no written agreement between the spouses. A valid divorce is obtained abroad by the alien spouse capacitating him or her to remarry. FC). but the court may order the guilty spouse to support the innocent spouse. Art. Art. BAROPS 2008 Page 15 of 325 . (Art. 1. par. unless the spouses agree to revive their former property regime or to institute another property regime. 66 cf. 59. The wife shall continue to use the surname of the husband even after the decree for legal separation. The spouses can live separately (Art. FC) D. 3. the Filipino spouse shall likewise have the capacity to remarry. 62. The right to testamentary succession depends on the will of the innocent spouse. (Art. Donation propter nuptias in favor of the guilty spouse may be revoked (Art.When the divorce is validly obtained by the alien spouses abroad which capacitates him/her to remarry. (Art. 64. Art. the court shall designate one of them or a third person to administer the ACP or CPG. and 2. it shall be set aside. FC) 4. 60. 63. There is a valid marriage that has been celebrated between a Filipino citizen and a foreigner. FC) 8. dfd Exception (partial recognition of absolute divorce): .

the aggrieved party may apply the court for relief. b. 6. The RECKONING POINT is not the citizenship of the parties at the time of the celebration of the marriage. where one party is later naturalized as a foreign citizen and obtains a valid divorce decree capacitating him or her to remarry. but their citizenship at the time a valid divorce is obtained abroad by the alien spouse capacitating the latter to remarry. the Filipino spouse remarry under Philippine law. Her maiden first name and surname and add her husband's surname. PROPERTY RELATIONS BETWEEN SPOUSES A. CC. No.” Yasin v. CC) 3. No. CA G. Widows: VII. Married Women: (Art. serious. such as “Mrs. 370. 68-71. and fidelity Render mutual help and support Fix the family domicile. enforce obligation against community property C. or 100% UP LAW UP A widow may use the deceased husband’s surname as though he were still living. In case of disagreement. or complete separation. the Court shall decide whether (1) the objection is proper. and moral grounds. RIGHTS OF SPOUSES (Arts. 373. and (2) benefit has accrued to the family before OR after the objection. 2. FC) 1.R. CIVIL LAW 2. 4. enforce obligation against the separate property of spouse who has not obtained consent. a. 3. 63817 (1984) The Supreme Court allowed the mistress to use her live-in partner’s name. Her maiden first name and her husband's surname or 3. Mistresses: Legamia v IAC G. Consuela DavidTolentino. 2.R. 41427 (1988) A divorced woman may continue using the surname of her former husband. when her husband dies. since everyone already knew that she was a mistress. the court shall decide. 5. Live together Observe mutual love. If BEFORE. Philippine laws are silent in this issue. as provided for in Art. 4. Jointly support the family. VIII. without need for consent of the other. Moreover. If AFTER. No.R. CC) A married woman may use: 1. In case of disagreement. FC) 1. Shari’a District Court G. FC): 1. 2. the Absolute Community of Property will be followed 3. Her husband's full name. (Art. or if the regime agreed upon is void. In case the other spouse neglects his or her duties or commit acts which tend to bring danger. so as to avoid confusion.PERSONS & FAMILY RELATIONS Republic v. Either spouse may exercise any legitimate profession. Arturo Tolentino after the divorce. RIGHTS AND OBLIGATIONS BETWEEN HUSBAND & WIFE A. 370. Local Customs BAROPS 2008 Page 16 of 325 . respect. Manage the household. OBLIGATION OF SPOUSES (Arts.R. ii. the woman can revert to her old name without need for judicial declaration. USE OF SURNAME 1. be it ACP. 2. Marriage settlements before marriage – spouses can agree to whatever regime they want. 75. 154380 (2005) Given a valid marriage between 2 Filipino citizens. Family Code– If there are no marriage settlements. The other spouse may only object on valid. but prefixing a word indicating that she is his wife. 94986 (1995) The woman only has an option and not a duty to use the surname of her husband. 72-73. Moreover. Divorcees Tolentino v. CPG. GENERAL PROVISIONS Order to be followed: (ARTS. No. 74. B. Orbecido G. there is no usurpation as she never represented herself as Mrs. but simply as Mrs. i. a. dishonor or injury to the family.

marriage being merely the occasion or motive for the donation. There can be a valid donation even if the marriage never took place. Must be in writing (public or private) 2. Contrary stipulation Requirements for Marriage Settlements: (Art. Donations in favor of future spouses made before marriage but not in consideration thereof 3. If party needs parental consent. Barroso 53 Phil. Judicial Dissolution (Arts. Donations made in favor of persons other than the spouses even if founded on the intended marriage Who may donate: 1. 63 (2). Where both spouses are aliens 2. Mateo v. FC) Property relations between Filipino spouses are governed by Philippine laws. FC) o The property regime is dissolved. 3rd persons to either or both spouses Solis v. Made before the celebration of marriage 100% UP LAW UP BAROPS 2008 CIVIL LAW 2. the marriage is really a consideration but not in the sense of giving birth to the obligation. Exceptions: (Art. Ordinary wedding gifts given after the celebration of the marriage 2. 128) 4. Legal Separation (Art. 66 (2)) 3. they remain subject to reduction for inofficiousness upon the donor’s death. Hence: The rule that ACP is the default mode of property relations absent any marriage settlement applies to all Filipinos. 26270 (1969) Donations propter nuptias are without onerous consideration.PERSONS & FAMILY RELATIONS General Rule: (Art. A spouse may petition the court for: a. 80. ACP will apply) General Rule: All modifications to the marriage settlement must be made before the marriage is celebrated. regardless of the place of marriage and their residence. Distinguished from Ordinary Donations: DONATIONS PROPTER NUPTIAS Does not require express acceptance May be made by minors (Art. The authority to be the sole administrator of the conjugal partnership  If the other spouse abandons the other without just cause or fails to comply with his or her obligations to the family. parents of one or both spouses 3. 82. No. 77. FC) 1. Revival of the former property regime upon reconciliation if the spouses agree (Art. Made in consideration of the marriage 3. DONATIONS BY REASON OF MARRIAGE Requisites of donations propter nuptias: (Art. Lagua G. Executed before the celebration of the marriage 4. in donations propter nuptias. or c. court appointed guardian must be a party 6. Must be registered in local civil registry – to affect third persons (If not registered. Exceptions: 1. Being liberalities. FC) 1. the absence of marriage is a ground for the revocation of the donation.in donation laws Page 17 of 325 . 78) May include future property If present property is donated and property is not absolute community.In Art. parent/guardian must be a party to the settlement 5. regardless of the place of the marriage and their residence. if they should infringe the legitime of a forced heir. 2. 86 ORDINARY DONATIONS Express acceptance necessary Cannot be made by minors Cannot include future property No limit to donation of present property provided legitimes are not impaired Grounds for revocation . 80. limited to 1/5 Grounds for revocation . Signed by the parties 3. If party is under civil interdiction or other disability (not including insanity). However. FC) 1. In favor of one or both spouses Donations excluded: 1. 912 (1928) Moreover. spouses to each other 2. not its cause. will not prejudice third persons.R. 135 and 136) B. (Art. Receivership b. Judicial separation of property. As to the extrinsic validity of contracts 3.

ABSOLUTE COMMUNITY OF PROPERTY 1. 86. An imputation to the donor of any criminal offense. as required by law. donation. i. Here. or any act involving moral turpitude. 464 (1918) The prohibition on donations can only be assailed by persons who bear such relation to the parties or the property itself.they form part of the ACP Matabuena v Cervantes 38 SCRA 284 (1971) The donation between common-law spouses falls within the provision prohibiting donations between spouses during marriage. When there is legal separation 3. FC) Exception: Moderate gifts on the occasion of any family rejoicing. the default property regime is the Conjugal Partnership of Gains (CPG). During Marriage General Rule: Spouses cannot donate to each other. if the marriage is celebrated before the Family Code took effect (1988).PERSONS & FAMILY RELATIONS RULES: 1. even if proven. FC) Under the ACP. When the marriage is dissolved (by death of one of the spouses) 4. FC) Donation CIVIL LAW Harding v. 2. 2. if the donee is the guilty spouse. 87. for revocation of exclude specific properties from the regime. and the donee acted in bad faith. When there is judicial separation of property 2. *The action for filing donation prescribes. FC) Exception: If they are governed by ACP. If there is a resolutory condition. However. 84. Properties for personal use EXCEPT: Jewelry . An offense against person or property of donor. including the fruits of such properties EXCEPT: When it was expressly provided by the donor or testator that the property shall form part of the ACP 2. When the marriage takes place without the consent of the parents or guardians. 5. 106060 (1999) The donation made by a man to a woman was held valid because no proof was shown that they were still living in a common-law relationship at the time of the donation. 92. 6. When the marriage is annulled 2. If the marriage is not celebrated or judicially declared void ab initio. 100% UP LAW UP BAROPS 2008 Page 18 of 325 . c. FC) 1. IN GENERAL When it commences: At the precise moment of the celebration of the marriage (Art. Grounds for Revocation of Propter Nuptias (Art. unless the crime is committed against the donee. 89. except donations made in settlements. Properties acquired by a gratuitous title. (Art. Refusing to support the donor. Sumbad v. CA G. 91. 88. or his wife or children under parental authority b. CC) a. inheritance by testate and intestate succession. his wife or children under his authority. Before Marriage General Rule: Future spouses cannot donate to each other more than 1/5 of their present property (excess shall be considered void) (Art. Upon legal separation. that their rights are being interfered with. No.R. Waiver of Rights: (Art. 765. spouses cannot 1. and it is not complied with. directly or indirectly (donations made by spouses to each other during the marriage are void) (Art. 4. 3. When the marriage is annulled. When donee has committed an act of ingratitude: (Art. the insurance company of the donated car cannot assail the validity of the donation. C. if he/she is legally required to do so. What is Excluded (BGM): (Art. FC) General Rule: NOT ALLOWED Exceptions: 1. FC).e. Commercial Union 38 Phil. WHAT CONSTITUTES COMMUNITY PROPERTY What it consists: All the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter.

FC) However. 98. with the consent of the other. FC) Except: When the other spouse is incapacitated. Death of either spouse – follow rules in Art. 4. Expenses of Litigation between Spouses 4.In (2) and (3). FC) Except: 1.ACP liable only to the extent that the debt benefited the family. 93. (Art. 6. or unable to participate in the administration (e. through a will. or Self-Improvement Course of Spouses 7.Common children . 97. Ante-Nuptial Debts not under (7). (Art. EXCEPT that: 1. unless it be proven that they are excluded.If the ante-nuptial debt did not benefit the family.PERSONS & FAMILY RELATIONS 3. for those with legitimate descendants with a former marriage (to protect rights of children by a former marriage). 134 to 138 Rules on De Facto Separation: (ART. Debts Contracted by one Spouse Without Consent of the other . not those that do not benefit the family. Taxes and Expenses for Mere preservation of Separate properties . 63 and 64 3. ADMINISTRATION. Donation of property: Donation of one spouse without the consent of the other is not allowed (Art.Expenses limited to minor repairs. Annulment or judicial declaration of nullity – follow rules in Arts. donation) 1. Repairs on Community Property . the wife has five years from the date of the decision to go to court for recourse. . FC) 1. 2 taxes. creditors need not prove that the debts benefited the family. Tax. 50 to 52 4. (note: What’s moderate depends on the socio-economic status of the family) 5. Moderate donations to charity due to family rejoicing or distress. Judicial separation of property during marriage – follow rules in Arts.Legitimate children of previous marriage 2. Liabilities of Either Spouse Arising from Crime or Quasi-Delict 100% UP LAW UP CIVIL LAW Only ff the debtor-spouse has no exclusive property or his or her property is insufficient. If they disagree the husband’s decision prevails. 2. the will should refer only to his/her own share in the community property.Applies only to separate properties by either spouse being used by the family. OWNERSHIP AND DISPOSITION OF ACP Administration of property: Belongs to both spouses jointly. Legal Separation – follow rules in Arts. Donations by Both Spouses to Common Legitimate Children 9. Moderate gifts by each spouse to the other due to family rejoicing. Liens. 8. 3.g. 99. 94. Otherwise. FC): De facto separation does not affect the ACP. Vocational. Presumption: All properties acquired during the marriage form part of the ACP. applicable rule is (9). 96.Either by both spouses or one of them. 100. Support . Ante-nuptial Debts that Benefited the Family . Support of Illegitimate Children. support. Spouse who leaves the conjugal home without just cause shall not be entitled 2008 Page 19 of 325 BAROPS . CHARGES UPON THE ACP (Art. Properties acquired before the marriage. The payments by the ACP are deemed advances to be deducted from the share of the guilty spouse upon the liquidation of the absolute community. dispose his/her interest in the community property. FC) 3.Spouses o Even if not living together except when a spouse leaves conjugal home without just cause o Even during pendency of action for legal separation or annulment of marriage . when abroad). 2 expenses. (Art. it is presumed that she agreed with the husband’s decision. .Includes both major and minor repairs 5. 103 2. FC): (4 debts. DISSOLUTION OF ACP ACP terminates upon: (Art. - 10. Debts and Obligations Contracted During Marriage . Disposition of property: Either spouse may. However. Expenses for professional.

Delizo G. SC ruled that each absolute community should be considered owner of the parcels of land acquired during its existence. he/she has left for a period of three months. 100% UP LAW UP BAROPS 2008 Page 20 of 325 . 4. without prejudice to the provisions of law on forfeitures and delivery of presumptive legitimes. Support for family will be taken from the ACP. After covering all community obligations and obligations of spouses. however. spouse present may ask for judicial authority to do this. creditor can go after the share of the spouse on the net remainder of the ACP. The community property shall be liquidated in the same proceeding for the settlement of the estate of the deceased spouse. For marriages before the implementation of the Family Code. FC) Present spouse may petition the court for: (a) receivership. FC) 1. 2. 6. Procedure for Liquidation of Community Properties of Two Marriages: (Art. If ACP is not enough and one spouse has no separate property. according to provisions on support. If personal obligations of a spouse exceed his/her separate property.PERSONS & FAMILY RELATIONS to support. or net remainder is divided equally between the spouses. FC) 1. 104. and they will also divide into two equal shares whatever is left of the community assets. 3. Obligations are paid with community property. 2. 2. or (c) authority to be the sole administrator of the absolute community. D. with market values. Onas v. 2. and separate obligations not charged to ACP paid by respective assets of spouses. he/she has failed to inform his/her whereabouts for a period of three months. Determine the capital. 6. Creditors can go after the separate properties of the spouses. CONJUGAL PARTNERSHIP OF GAINS WHERE IT APPLIES: 1. If no such judicial settlement proceeding is instituted. Javillo 59 Phil. they shall be divided between two communities in proportion to the capital and duration of each. and income of each community upon such proof as may be considered according to the rules of evidence. spouse who has property is liable for support. 6. 5. LIQUIDATION OF ASSETS AND LIABILITIES Process of liquidation of ACP: (Art. For marriages after the Family Code. Vda. authorization may be obtained from the court. nothing is divided. Abandonment: (Art. subject to precautionary conditions that the court may impose. If ACP is insufficient. the same shall be divided between the different communities in proportion to the capital and duration of each. 102. is still required to support the other spouse and the family. De Delizo v. without prejudice to the provisions of law on forfeitures and delivery of presumptive legitimes. CIVIL LAW balance of separate properties shall be delivered to respective spouses or their heirs. (b) judicial separation of property. If consent is necessary for transaction but is withheld or otherwise unobtainable. if agreed to by the parties through a marriage settlement. FC) 1. If obligations exceed the assets of the ACP. Balance. irrespective of how much each brought into the community. surviving spouse shall liquidate the community property either judicially or extrajudicially within one year from the death of the deceased spouse. Death discontinues ACP. 733 (1934) Javillo contracted 2 marriages. Inventory of assets of ACP and of spouses.R. If it is necessary to administer or encumber separate property of spouse who left. fruits. which are solidarily liable for the deficiency. He/She. 4. 103. 3. 101. HUSBAND AND WIFE PLACE IN COMMON FUND: 2. 5. No 32820 (1976) In case of doubt as to which community the existing properties belong. spouses shall be solidarily liable. 2. Rules in Case of Termination of Marriage by Death of One of the Spouses: (Art. In case of doubt as to which community the existing properties belong. *Spouse is prima facie considered to have abandoned the other spouse and the family if: 1.

Acquired by Onerous Title during the Marriage at Expense of Common Fund (Art. by barter. or by exchange with property belonging to either spouse – Art. however. Acquired by chance. The proceeds. should. so that if such establishment or product is separate property of one spouse. but all benefits or earnings derived from these different kinds of property during the marriage should belong to the conjugal property (Tolentino. Profession of Either or both Spouses (Art. 117 (7)) NOTE: A. trade names. 5. Possession does not affect ownership of separate property. 109 (4) III. id. and similar kinds of property are. Acquired through occupation such as fishing or hunting (Art. Everything acquired by them by chance PROPERTIES OF THE CIVIL LAW B. Property by substitution: 3.If full ownership was vested during the marriage – it shall belong to the conjugal partnership Property belonging to one spouse converted into another kind totally different in nature from its original form during marriage becomes conjugal in the absence of proof that the expenses of conversion were exclusively for the account of the original owner-spouse. or property that is originally exclusive: 1. whether as finder or owner of property where treasure is found (Art. then the business property is separate property. 117 (2)). Industry. business goodwill.. citing the same authority). the same being an accessory that follows the principal. merely accessories to some commercial establishment or product. 3. Other Separate Property: 5. Indemnity paid in cash of expropriation of separate property or under an insurance policy covering separate property. like copyright or patent. and income of their separate properties. 109 (3) 4. PROPERTIES THAT COMPOSE CPG: 1. 2. subject to reimbursement of the value of the original property from the conjugal partnership Upon dissolution of marriage or partnership. Collection of credits belonging to one spouse exclusively 6. Work. but belongs to the designated beneficiary under the Social Security Law Intellectual property. Everything acquired by them within marriage through their own efforts. 7. Money received under the Social Security Act is not conjugal. If winning ticket is bought by a spouse with his or her own money or was given gratuitously by a friend = the prize will be separate property of the spouse who owns the ticket 100% UP LAW UP BAROPS 2008 Page 21 of 325 . according to Tolentino. 117 (3)).presumption is ticket bought during marriage is bought by conjugal funds Property bought on installments paid partly from exclusive funds of the spouses and partly from conjugal funds: a. Property brought into marriage by each spouse as his/her own – Art. this property being of a special type.If full ownership is vested before the marriage – it shall belong to the buyerspouse b. Livestock existing at dissolution of partnership in excess of what is brought by either spouse to the marriage (Art. Acquired through the Labor. Property purchased with exclusive money of either spouse. Net fruits of exclusive property of each spouse (Art. such as winnings from gambling or betting (Art. be considered separate property of the spouse who produces or invents or discovers it. 117 (6)). service marks. Share of either spouse in hidden treasure. Sale of separate property of a spouse 7. 3. products. 6.PERSONS & FAMILY RELATIONS 1. 117 (5)). Fruits from common property. almost a part of one's person or taken from his personality and the physical or external manifestation of his intellect or genius. citing Planiol and Ripert. 8. 4. 8. 2. Property by direct acquisition. Property acquired by either spouse during the marriage by gratuitous title – Art 109 (2) II.Art. 109(1) 2. 117(4)). that it is not simply a product of one's work or industry but should be considered as pertaining exclusively to its creator Business property like trade-marks. unless they have agreed on another manner of division in their marriage settlement. fruits. 117 (1)). although the employee-spouse contributes to the SSS with his salaries. Property acquired by right of redemption. If winning ticket is bought by conjugal funds = prize is conjugal . the net gains or benefits from the partnership shall be divided equally between the spouses. EXCLUSIVE SPOUSES: I.

The value of what is donated or promised by both spouses in favor of their common legitimate children for the exclusive purpose of commencing or completing a professional or vocational course or other activity for self-improvement 9. Charges to ACP]: (3 debts. OR B. Debts and obligations of the conjugal partnership shall be paid out of the conjugal assets. 2 taxes. 99 AND 126): 5. which is prohibited. Amounts advanced by the conjugal partnership in payment of personal debts and obligations of either spouse shall be credited to the conjugal partnership. used for the benefit of the family 7. Death of either spouse – follow rules in Art. support. Support of the spouse. All taxes. 63 and 64 2008 Page 22 of 325 BAROPS . L-43257 (1937) The Supreme Court ruled that the spouses are not co-owners of the conjugal properties during the marriage and cannot alienate the supposed ½ interest of each in the said properties. A different proportion or division was agreed upon in the marriage settlements b. Sheriff of Manila G. DISSOLUTION OF CPG (ART. or by both spouses or by one of them with the consent of the other 3. Each spouse shall be reimbursed for the use of his or her exclusive funds in the acquisition of property or for the value of his or her exclusive property. Ching 286 SCRA272 The Supreme Court ruled that indirect benefits that might accrue to a husband in signing as a surety or guarantee agreement not in favor of the family but in favor of his employer corporation are not benefits that can be considered as giving a direct advantage accruing to the family. Prepare an inventory of all properties 2. 121) [cf. vocational. All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the CPG. Hence. A contrary view would put in peril the conjugal 100% UP LAW UP CIVIL LAW partnership by allowing it to be given gratuitously as in cases of donation of conjugal partnership property. the ownership of which has been vested by law in the conjugal partnership. 103 6. Ante-nuptial debts of either spouse insofar as they have redounded to the benefit of the family 8. 2 expenses. The interest of the spouses in the conjugal properties is only inchoate or a mere expectancy and does not ripen into title until it appears after the dissolution and liquidation of the partnership that there are net assets ACP/CPG TERMINATES UPON (ART. liens. Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have benefited 4.R. [NOTE: Dissolution of the conjugal property must be recorded in the registry of property in order to affect third persons dealing with registered property.] De Ansaldo v. 4. There has been a voluntary waiver or forfeiture of such share as provided in this Code. the spouses shall be solidarily liable for the unpaid balance with their separate properties. Disposition or encumbrance of conjugal property requires: A. The net remainder of the conjugal partnership properties. or other activity for selfimprovement 7. No. charges. Expenses to enable either spouse to commence or complete a professional. Judicial authority secured in court Mere awareness of a transaction is NOT consent Ayala Investment v. Whatever remains of the exclusive properties of the spouses shall be delivered 6. even due to fortuitous event. which shall be divided equally between husband and wife EXCEPTIONS: a. 128): 1. and expenses upon conjugal property 5. 3. donation) 1. 5. The consent or approval by both spouses. their common children. or the profits. and the legitimate children of either spouse 2.PERSONS & FAMILY RELATIONS CHARGES UPON CPG (ART. the creditors cannot go against the conjugal partnership property of the husband in satisfying the obligation subject of the surety agreement. Legal Separation – follow rules in Arts. All taxes and expenses for mere preservation made during the marriage upon the separate property of either spouse 6. Expenses of litigation between the spouses unless the suit is found to groundless If the conjugal partnership is insufficient to cover the foregoing liabilities. Indemnify loss or deterioration of movables belonging to either spouse.

Judicial separation of property during marriage – follow rules in Arts. 141): 1. INSTANCES (ART. fosters oneness of spouses Easier to liquidate because net remainder of community properties are simply divided between spouses or heirs. SEPARATION OF PROPERTIES DURING MARRIAGE CIVIL LAW In the absence of an express declaration in the marriage settlements. Spouse of the petitioner has abandoned the latter or failed to comply with his or her obligations to the family. 100% UP LAW UP BAROPS . 3. (Art. Spouse of the petitioner has been sentenced to a penalty which carries with it civil interdiction. Loss of parental authority of the spouse of petitioner has been decreed by the court. The spouse granted the power of administration in the marriage settlements has abused that power. 2) EFFECTS OF SEPARATION OF PROPERTY BETWEEN SPOUSES: 1. Basis 5. 2. At the time of the petition. 3. 3. 146. ACP or CPG is dissolved and liquidated 2. rights previously acquired by creditors are not prejudiced REVIVAL OF PROPERTY REGIME IN THE FF. 134 to 138 CPG vs. 5.When the civil interdiction terminates. 6. SUFFICIENT CAUSES FOR JUDICIAL SEPARATION OF PROPERTIES (CALASA) (ART. ACP Net remainder of ACP divided equally between spouses or heirs. Property acquired before marriage . being satisfied that the spouse granted the power of 2008 Page 23 of 325 1. Mutual trust and confidence between spouses. insurmoun table obstacle to presumption of solidarity Exclusive properties will have to be identified and returned. the separation of property between the spouses during the marriage shall not take place except by judicial order. Liquidation CPG Separate properties are returned. and sometimes . the spouses have been separated in fact for at least one year and reconciliation is highly improbable. (Art. 134) Judicial separation of property may either be voluntary or for sufficient cause.PERSONS & FAMILY RELATIONS 7. 135): 1. 2. ACP: CPG Each spouse retains his/her property.When the absentee spouse reappears. of 2. Spouse of the petitioner has been judicially declared an absentee. par. Property acquired during marriage Becomes conjugal property. 146) Liability of spouses to the creditors of the family shall be SOLIDARY. identifycation is difficult. the market value of their separate properties. net profits divided equally between spouses or heirs. 4.When the court. Capital and properties of spouses kept separate and distinct from benefits. mutual obligation to support each continues except when there is legal separation 4. only fruits part of conjugal property Part of conjugal property ACP Properties become part community property E. 50 to 52 8. Annulment or judicial declaration of nullity – follow rules in Arts. Each spouse shall contribute to the family expenses. (Art. in proportion to their income. Upon dissolution of marriage 4. In case of insufficiency. The liability of the spouses to creditors shall be solidary with their separate properties 3.

adulterous relationship (e.When the spouse who has left the conjugal home without a decree of legal separation resumes common life with the other. 142): 1. concubinage ) 5.38 4.When parental authority is judicially restored to the spouse previously deprived thereof.148 1. 2. 6. incestuous marriage) marriages  not Art. conflict of interest. If the other spouse is not qualified by reason of incompetence. olygamous 37 marriage (incestuo (Art. 4.PERSONS & FAMILY RELATIONS administration in the marriage settlements will not again abuse that power. When one spouse is sentenced to a penalty which carries with it civil interdiction. there is a presumption of equal sharing Forfeiture 2008 If one party is validly married Page 24 of 325 100% UP LAW . PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE Art. When one spouse becomes the guardian of the other. living together as husband and wife 3.147 1.147 Remains exclusive provided there is proof Separately owned parties Art. living together as husband and wife 3.When the spouses who have separated in fact for at least one year.5 without any legal impedimen t)  at least 18 years old Art. with capacity to marry (Art. 3. When one spouse becomes a fugitive from justice or is in hiding as an accused in a criminal case. authorizes the resumption of said administration. NOT capacitated to marry (Art. under 38 (void Art. the court shall appoint a suitable person to be the administrator. TRANSFER OF ADMINISTRATION TO THE OTHER SPOUSE WHEN (GACA) (ART. When one spouse is judicially declared an absentee.g. or any other just cause.35(1) under 18 years old) 4. 4. bigamous/p UP BAROPS CIVIL LAW not Art.37 marriage 7. man and woman 2.When after voluntary dissolution of the absolute community of property or conjugal partnership has been judicially decreed upon the joint petition of the spouses. presumed to have contribute d through care and maintenan ce of family and household When only one of the Owned in common in proportion to respective contribution Properties acquired while living together Applicability No presumption of joint acquisition. Void by reason marriages of public by reason of policy) public policy  not under bigamous Art. they agree to the revival of the former property regime. 7. reconcile and resume common life. When there is evidence of joint acquisition but none as to the extent of actual contribution. 5. man and woman 2. F.35(4)) us void 6. No voluntary separation of property may thereafter be granted.148 Remains exclusive by  Governed by rules on coownership  Owned in equal shares since it is presumed to have been acquired through joint efforts  if one party did not participate in acquisitio n. other void marriages due to absence of formal requisite Salaries and wages Properties acquired through exclusive funds Properties acquired by both through work or industry Owned in equal shares Art.

mechanics. FAMILY HOME . architects. IX. Future legitime Hontiveros v.159) 6. the share of the party in bad faith shall be forfeited: 1. Between husband and wife 2. the requisite showing of earnest efforts to compromise is no longer mandatory. such share belongs to the innocent party to another: . his/her share shall be forfeited in the same manner as that provided in Art 147 The same rules on forfeiture shall apply if both parties are in bad faith CIVIL LAW 3. Can only constitute one family home GENERAL RULE: The family home is exempt from: 1. each vacant share shall belong to the respective surviving descendan ts 3.] Exceptions to the general rule (VJLAFF): a.dwelling place of a person and his family Guidelines: 1. Such efforts have failed 100% UP LAW UP BAROPS 2008 Page 25 of 325 . Attachment Exceptions in the exemption of the family home from execution (Art. Among brothers and sisters. e. b. c. 2. FAMILY RELATIONS INCLUDE: 1. Rule applies to valid and voidable and even to common-law marriages under Arts. Execution 2. Any ground for legal separation. It is deemed constituted from time of actual occupation as a family residence 2. RTC 309 SCRA 340 (1999) Whenever a stranger is a party in a case involving family members.147 and 148 5. 3. the following are required: 1. 4. Future support. full or half blood. d. In favor of their common children 2. Such earnest efforts and the fact of failure must be alleged [NOTE: The case will be dismissed if it is shown that no such efforts were made. Among other ascendants and descendants 4. as such inclusion of a stranger takes the case out of the ambit of FC 151. materialmen and others who have rendered service or furnished material for the construction of the building. It must be permanent 4. Civil status of persons. It continues despite death of one or more spouses or unmarried head of family for 10 years or as long as there is a minor beneficiary (Art. Between parents and children 3. Jurisdiction of courts. Debts incurred prior to the constitution of the family home. Debts secured by mortgages on the premises before or after such constitution.his/her share in the coowned properties will accrue to the ACP/CPG of his/her existing valid marriage If the party who acted in bad faith is not validly married to another. builders. f. 156): 1. Forced sale 3. General Rule: For a suit between members of the same family to prosper. THE FAMILY FAMILY – basic social institution which public policy cherishes and protects hence. Earnest efforts towards a compromise have been made 2.PERSONS & FAMILY RELATIONS parties is in good faith. Nonpayment of taxes. It must be owned by person constituting it 3. Validity of marriage or a legal separation. In case of default of or waiver by any or all of the common children or their descendan ts. In the absence of such descendan ts. Debts due to laborers. no suit between members of the family shall prosper unless compromise between parties has failed.

The family home shall continue despite the death of one or both spouses or of the unmarried head of the family for a period of ten years. They are dependent for legal support on the head of the family Requirements for the sale. descendants. By Adoption (R. Children of parents disqualified to marry each other at conception and marriage. PATERNITY AND FILIATION PATERNITY . who are living in the family home and who depend on the head of the family for support Requisites to be a beneficiary: 1. Legally adopted 7.165. Children of parents qualified to marry each other A. Legitimate proper 2. Legitimated (Arts. the Court will decide. Illegitimate (Arts. The creditor must file a motion in the court proceeding where he obtained a favorable for a writ of execution against the family home. 8043 (“Intercountry Adoption Act”) 3 TYPES OF LEGITIMATE CHILDREN: 1. 176) c. Conceived or born before judgment of annulment or absolute nullity under Art. ascendants. Legitimate (Art. shall be delivered X. majority of the beneficiaries of legal age [NOTE: If there is a conflict. Legitimated. and delivery of children’s presumptive legitime) 5. His claim is not among those excepted under Article155. First. Natural a. 8552 (“Domestic Adoption Act”) and R. The excess. Born of a voidable marriage before decree of annulment 3.A. He must be a judgment creditor. There will be a hearing on the motion where the creditor must prove that the actual value of the family home exceeds the maximum amount fixed by the FC either at the time of its constitution or as a result of improvements introduced thereafter its constitution. the proceeds shall be applied as follows: a. 3. Adopted 2 TYPES OF ILLEGITIMATE CHILDREN: 1. or an unmarried person who is the head of the family 2. No. if any. Legitimated 3. TYPES OF FILIATION: 1. 2. conceived and born outside of wedlock of parents without impediment at 2008 Page 26 of 325 100% UP LAW UP BAROPS . 159): . CIVIL LAW 4.the relationship or status of a person with respect to his or her child (paternity includes maternity). LEGITIMATE CHILDREN GENERAL RULE: Those who are conceived OR born during a valid marriage EXCEPTIONS to the general rule are those children who are: 1. 2. . alienation. 53 (failure to record the judgment. and 3. 167-172) 2. Conceived or born of a subsequent marriage under Art. Parents (may include parent-in-laws). 164) b.The heirs cannot partition the home unless the court finds compelling reasons therefor. assignment. his/her spouse. and 3. Of mothers who may have declared against their legitimacy or was sentenced as an adulteress 6. the obligation enumerated in Article 155 must be paid b. brothers and sisters (legitimate/illegitimate).PERSONS & FAMILY RELATIONS Beneficiaries of the family home (Art.A. If the family home is sold for more than the value allowed. FILIATION . 2. donation.] In case of death (ART. Then the judgment in favor of the creditor will be paid. plus all the costs of execution c. The relationship is within those enumerated 2. 36 (psychological incapacity) becomes final & executory 4. Husband and wife. He has reasonable grounds to believe that the family home is worth more than the maximum amount fixed in Article 157 Procedure to avail of right under Article 160: 1. They live in the family home 3. No.the status of a person with respect to his or her parents. If the creditor proves that the actual value exceeds the maximum amount the court will order its sale in execution. 175. partition and distribution of properties. or as long as there is a minor beneficiary. Requisites for creditor to avail of the right under article 160: 1. or encumbrance of the family home: 1. 154): 1. 2. the written consent of the person constituting it. Conceived as a result of artificial insemination 2.

Written authorization or ratification of either parent of children conceived through artificial insemination. STA. The artificial insemination is made on the wife. Physically impossibility for the husband to have sexual intercourse with his wife within the first 120 days of the 300 days which immediately preceded the birth of the child because of: a. Within 3 years – from knowledge of the birth or its recording in the civil register. Grounds to impugn the legitimacy of the child: 1. if the impugner resides in the Philippines other than in the city or municipality where the birth took place or was recorded. Liyao 378 SCRA 563 (2002) A child born within a valid marriage is presumed legitimate even though the mother may have declared against its legitimacy or may have been sentenced as an adulteress. Vasectomy [NOTE: SEMPIO-DIY: A double vasectomy. not on another woman AND 2.PERSONS & FAMILY RELATIONS the time of conception subsequently married and who CIVIL LAW d. if the impugner resides abroad NOTE: Legitimacy cannot be collaterally attacked. MARIA: The fact that the husband has undergone vasectomy is not enough proof to rebut the presumption of legitimacy (Cocharan v. b. It can only be impugned in a direct action. The fact that the husband and wife were living separately in such a way that sexual intercourse was not possible. Termination of 1st Celebration marriage of 2nd marriage 180 days after celebration of 2nd marriage 300 days after termination of 1st marriage Child of the 1st marriage Child of the 2nd marriage BAROPS 2008 Page 27 of 325 . 2. and the latter cannot choose to be the child of his mother’s alleged paramour. violence. If the husband dies before the expiration of period for filing the action b. If the husband dies after filing without desisting If the child was born after the death of the husband When to impugn the legitimacy of a child: 1. presumed to be the father. or both the husband and a donor AND 3. intimidation. c. when the was obtained through mistake. A-B-O test). Blood grouping tests – can determine non-paternity but not paternity (ex. The child himself cannot choose his own filiation. or c. except in the case of children conceived through artificial insemination a. Serious illness of the husband which absolutely prevented intercourse 2. The artificial insemination on the wife is done with the sperm of the husband. Within 2 years – from knowledge of the birth or its recording in the civil register. or of a donor. Physical incapacity of the husband to have sexual intercourse with his wife b. then the status of the child is fixed. fraud. does not impugn the legitimacy of the child. or undue influence Who can impugn the legitimacy of a child For children by artificial insemination to be considered legitimate: 1. AND 4.] 3. Cocharan). can show the impossibility of the alleged father siring his supposed child. 3. Human Leukocyte Antigen Test (HLA) – can prove identity between child and father with a probability exceeding 98%. Within 1 year – from knowledge of the birth or its recording in the civil register. DNA test 100% UP LAW UP General Rule: Only the husband can impugn the legitimacy of a child Exceptions: The heirs of the husband may impugn the child’s filiation in the following cases: a. If the husband. The artificial insemination has been authorized or ratified by both spouses on a written instrument executed and signed by them before the birth of the child. Biological or other scientific grounds that the child could not have been that of the husband. together with other pieces of evidence. if the impugner resides in the city or municipality where the birth took place or was recorded. The written instrument is recorded in civil registry together with the birth certificate of the child IMPUGNING LEGITIMACY: Liyao v.

CA G. in their Absence: 1. but does not require any particular length of time. If the child dies after reaching majority without filing an action. the above periods shall be counted: 1. 148220 (2005) To be effective. Thus. 169) [Reason: 300 days is the longest period of gestation. 124814 (2004) A certificate of live birth purportedly identifying the putative father is not competent evidence of paternity when there is no showing that the putative father had a hand in the preparation of said certificate. certificates issued by the local civil registrar and baptismal certificates are per se inadmissible in evidence as proof of filiation and they cannot be admitted indirectly as circumstantial evidence to prove the same. Standing alone. From the discovery or knowledge of the fact of registration of the birth.  There is no presumptive rule on the status of a child born after 300 days following the termination of the marriage. 2. “Continuous” means uninterrupted and consistent. IN CASE OF TWO MARRIAGES OF THE MOTHER:  For the child to be considered the child of the 1st husband. From the discovery or knowledge of the birth of the child 2. the action will survive and his heirs will substitute for him BAROPS 2008 Page 28 of 325 . Or. The child was born after 180 days following the solemnization of its mother's second marriage NOTE: The first marriage must be terminated either by death or annulment. The child was born within the same 300 days after the termination of the former marriage of its mother 3.] B. it can only serve as evidence of the administration of the sacrament on the date specified but not the veracity of the entries with respect to the child’s paternity. proved filiation. No. or 2. PROOF OF FILIATION 1. there must be evidence of the manifestation of the permanent intention of the supposed father to 100% UP LAW UP CIVIL LAW consider the child as his. The record of birth appearing in the civil register or a final judgment. by continuous and clear manifestations of parental affection and care. the following requisites must concur: 1. cannot be taken as authentic writing. the following requisites must concur: 1. CA 286 SCRA 495 (1998) To prove open and continuous possession of the status of an illegitimate child. However. his heirs can longer file the action after death 3. If the child dies after commencing the action. Alba G. The open and continuous possession of the status of a legitimate or illegitimate child. The child was born within the same 300 days after the termination of its mother's first marriage 3.R.R No. The local civil registrar has no authority to record the paternity of an illegitimate child on the information of a third person. the claim of filiation must be made by the putative father himself and the writing must be the writing of the putative father. Any other means allowed by the Rules of Court and special laws. Jison v.PERSONS & FAMILY RELATIONS If the birth of the child has been concealed or was unknown to the husband or his heirs. A notarial agreement to support a child whose filiation is admitted by the putative father was considered acceptable evidence. Herrera v. (Art. While a baptismal certificate may be considered a public document. together with the certificate of live birth. or a marriage contract where the putative father gave consent. An admission of legitimate filiation in a public document or a private handwritten instrument and signed by the parent concerned. which cannot be attributed to pure charity. The mother must have married again within 300 days from the termination of the marriage 2. a written consent to a father’s operation. his heirs can file the action for him within 5 years form the child’s death 4. a student permanent record. The child can bring the action during his lifetime 2. whichever is earlier. Cabatania v. The mother must have married again within 300 days from the termination of her first marriage 2. neither a certificate of baptism nor family pictures are sufficient to establish filiation. If the child dies during minority in the state of insanity. Letters to the mother vowing to be a good father to the child and pictures of the putative father cuddling the child on various occasions. The child was born before 180 days after the solemnization of its mother's 2nd marriage  For the child to be considered the child of the 2nd husband. ACTION TO CLAIM LEGITIMACY 1.

The child was conceived and born outside of wedlock. At the time of conception. incapacitated or insane. There is a valid marriage subsequent to the child’s birth. the parents were not disqualified by any impediment to marry each other. in conformity with the provisions of this Code on Support Entitled to the legitime and other successional rights granted to them by the New Civil Code XI. It confers on the child the rights of legitimate children. [NOTE: Proof of filiation is the same as that for legitimate children] RIGHTS OF LEGITIMATE AND ILLEGITIMATE CHILDREN: LEGITIMATE To bear the surnames of the father and the mother ILLEGITIMATE To bear the surname of their mother [may also use the surname of the father if their filiation has been expressly recognized by the father (R. his guardian can bring the action in his behalf C. (Art. and 2. LEGITIMATED CHILDREN Legitimation takes place by the subsequent marriage of the child’s parents. The parents. their ascendants. (Art. their legitimation shall benefit their descendants. and retroacts to the time of the child’s birth. 180)  DEATH OF CHILD: When the child dies before the celebration of the marriage. Adulterous relationships 2. Same status and rights as a legitimated child not only in relation to the legitimizing parents but also to other relatives 100% UP LAW UP BAROPS 2008 Page 29 of 325 . 9255)] To receive support in conformity with the Family Code CIVIL LAW [i. (Art. Bigamous relationships 4. only between the child and the adopting parent The legitime of each illegitimate child shall consist of one-half of the legitime of a legitimate child. within five years from the time of the cause of action accrues. their brothers and sisters. at the time of child’s conception. 181)  IMPUGNING: Only those who are prejudiced by their rights. children of those who are not disqualified by any impediment to marry each other] CHILDREN OF FOLLOWING CANNOT BE LEGITIMATED (BECAUSE OF IMPEDIMENT) (VIBA): 1. Void marriages by reasons of public policy under Art.e. Incestuous relationships 3. 182) To receive support from their parents. 179)  RETROACTIVITY: The effects of legitimation shall retroact from the time of the child’s birth. ILLEGITIMATE FILIATION GENERAL RULE: Those who are conceived and born outside a valid marriage are illegitimate. 38  RIGHTS: Legitimated children shall enjoy the same rights as legitimate children (Art. Child who is conceived and born outside of wedlock. and in proper cases. WHO CAN BE LEGITIMATED: 1. Persons affected Procedure Who applies Effect Only natural children Extrajudicial acts of parents Only by parents both D.A. ADOPTION LEGITIMATION The law merely makes legal what exists by nature ADOPTION The law merely creates by fiction a relation which did not in fact exist Generally applies to strangers Always by judicial decree By one parent alone Creates a rel. were not disqualified by any impediment to marry each other 3.PERSONS & FAMILY RELATIONS 5. REQUISITES FOR LEGITIMATION: 1. If the child is a minor. 2.

said person has been consistently considered and treated by the adopter(s) as his/her child since minority 5. A child whose biological or adoptive parent(s) has died. CA G. business. Guardians With respect to theirs ward after the termination of the guardianship and clearance of his/her accountabilities Husband and wife shall adopt jointly except: a. Has not been convicted of any crime involving moral turpitude 5. 85044 (1992) Where the petition for adoption was granted after the child had shot and killed a girl. except when adopter is biological parent of the adoptee or is the spouse of the adoptee’s parent 7. if one of the spouse seeks to adopt his/her illegitimate child provided that other spouse has signified his/her consent CIVIL LAW c. Filipino Citizens 1. Has submitted all the necessary clearances and such certifications as may be required C. Exhaust all efforts to locate the biological parents. At least sixteen (16) years older than adoptee. Aliens 1. No.] Tamargo v. and prospective adoptee 2. Emotionally and psychologically capable of caring for children 6. In possession of full civil capacity and legal rights 3. The prospective adopters’ legitimate and adopted children who are ten years or over and. Has been living continuously for 3 years (provided that absences not exceeding 60 days per 1 year for professional. It also applies in case the petitioner dies before the issuance of the decree of adoption to protect the interest of the adoptee. The legitimate child of one spouse by the other spouse 3. Of legal age 2. Retroactive affect may perhaps be given to the granting of the petition for adoption where such is 2008 Page 30 of 325 100% UP LAW UP BAROPS . The prospective adoptee’s biological parents or legal guardian 3. In a position to support and care for his/her children in keeping with the means of the family B. if unknown WHO MAY BE ADOPTED: 1. illegitimate children living with them 4. Has been certified by his/her diplomatic or consular office or any appropriate government agency that he/she has the legal capacity to adopt in his/her country 5. prior to the adoption. A person of legal age if. His/her country has diplomatic relations with the Philippines 3. A child whose previous adoption has been rescinded 6. if one spouse seeks to adopt the legitimate child of the other b.A 8552: Domestic Adoption Act of 1998 WHO MAY ADOPT: A. The prospective adoptee if 10 years or older 2.PERSONS & FAMILY RELATIONS R. Of good moral character 4. Possession of the same as the qualifications for Filipinos 2. An illegitimate child by a qualified adopter to improve the child’s status to that of legitimacy 4. or emergency reasons are allowed) in RP prior to filing of decree is entered except this may be waived under the following: (i) A former Filipino Citizen who seeks to adopt a relative within the 4th degree of consanguinity or affinity (ii) One who seeks to adopt the legitimate or illegitimate child of his/her Filipino spouse (iii)One who is married to a Filipino Citizen and seeks to adopt jointly with his/her spouse a relative within the 4th degree of consanguinity or affinity of the Filipino spouse 4. the Supreme Court did not consider that retroactive effect may be given to the decree of adoption so as to impose a liability upon the adopting parents accruing at a time when adopting parents had no actual or physically custody over the adopted child. Counseling services for the biological parents. provided that no proceedings shall be initiated within 6 months from the time of death of said parent(s) CONSENT NECESSARY FOR ADOPTION: 1. Any person below 18 years old who has been administratively or judicially declared available for adoption 2.R. if spouses are legally separated from each other PRE-ADOPTION SERVICES: The DSWD shall provide for the following services: 1. if any. His/her government allows the adoptee to enter his/her country as his/her adoptee 6. prospective parents. The prospective adopter’s spouse in appropriate cases [NOTE: A decree of adoption shall be effective as of the date the original petition was filed.

WHO MAY BE ADOPTED: Only a legally-free child may be the subject of inter-country adoption. Parental Authority: All legal ties between biological parents and adoptee are severed. RESCISSION OF ADOPTION: Adoption. No child shall be matched to a foreign adoptive family unless it is satisfactorily shown that the child cannot be adopted locally. Adopted may request for rescission based on the ff grounds: 1. Convention on the 2008 Page 31 of 325 . the adopter(s) may disinherit the adopted based on causes ias enumerated in Art. in accordance with the Child and Youth Welfare Code. 8043: Inter-Country Adoption Act of 1995 INTER-COUNTRY ADOPTION refers to the socio-legal process of adopting a Filipino child by a foreigner or a Filipino citizen permanently residing abroad where the petition is filed. Succession: Adopter and adoptee shall have reciprocal rights of succession without distinction from legitimate filiation. 2. Agrees to uphold the basic rights of the child as embodied under Philippine laws. R. and has undergone the appropriate counseling from an accredited counselor in his/her country 4. in legal and intestate succession. to hold that parental authority had been retroactively lodged in the adopting parents so as to burden them with liability for a tortious act that they could not have foreseen and which they could not have prevented would be unfair and unconscionable. and the decree of adoption is issued outside the Philippines. Vested rights acquired prior to judicial rescission shall be respected. 100% UP LAW UP BAROPS CIVIL LAW 4. but only as of the date of judgment of judicial rescission. EFFECTS OF RESCISSION: 1. however.A. Has the capacity to act and assume all rights and responsibilities of parental authority under his national laws.N. The parental authority of the adoptee's biological parents. abandonment and failure to comply with parental obligations However. A legally-free child is one who has been voluntarily or involuntarily committed to the DSWD of the Philippines. Legitimacy: The adoptee shall be considered legitimate son/daughter of the adopter for all intents and purposes. OR the legal custody of the DSWD shall be restored if the adoptee is still a minor or incapacitated. sexual assault or violence 4. his/her spouse must jointly file for the adoption 3. the law on testamentary succession shall govern. and the same shall be vested on the adopter. EFFECTS OF ADOPTION: 1. 2. attempt on life of adoptee 3. The reciprocal rights and obligations of the adopters and the adoptee to each other shall be extinguished. being in the best interest of the child. In the instant case. Is eligible to adopt under his/her national law 6. shall not be subject to rescission by the adopter(s). If married. 919 of the NCC. the supervised trial custody is undertaken. Has not been convicted of a crime involving moral turpitude 5. Is in a position to provide the proper care and support and to give the necessary moral values and example to all his children. WHO MAY ADOPT: Any foreign national or a Filipino citizen permanently residing abroad who has the qualifications and none of the disqualifications under the Act may file an application if he/she: 1. 3. at the time of application unless the adopter is the parent by nature of the child to be adopted or the spouse of such parent 2. If adoptee and his/her biological parents had left a will. except if the biological parent is the spouse of the adopter. Is least 27 years of age and at least 16 years older than the child to be adopted.PERSONS & FAMILY RELATIONS essential to permit the accrual of some benefit or advantage in favor of the adopted child. 3. if known. the U. repeated physical and verbal maltreatment 2. The court shall order the Civil Registrar to cancel the amended certificate of birth of the adoptee and restore his/her original birth certificate. including the child to be adopted 7. Succession rights shall revert to its status prior to adoption.

Intransmissible 3. It is temporary 2008 Page 32 of 325  XII. Legal – that which is required to be given by law 2. a progress report of the child's adjustment. It cannot be renounced. Parents and their legitimate children and the legitimate and illegitimate children of the latter. Parents and their illegitimate children and the legitimate and illegitimate children of the latter. Personal 2. CIVIL LAW WHO ARE OBLIGED TO SUPPORT EACH OTHER: 1. Comes from a country with whom the Philippines has diplomatic relations and whose government maintains a similarly authorized and accredited agency and that adoption is allowed under his/her national laws INTER-COUNTRY ADOPTION BOARD:   Acts as the central authority in matters relating to inter-country adoption Ensures that all possibilities for adoption of the child under the Family Code have been exhausted and that inter-country adoption is in the best interest of the child. SUPPORT SUPPORT consists of everything indispensable for sustenance. CHARACTERISTICS OF PARENTAL AUTHORITY: 1. Exempt from attachment or execution 5. as actual custodian. mental and physical character and well-being of said children RULES AS TO THE EXERCISE OF PARENTAL AUTHORITY: 1. dwelling. Legitimate brothers and sisters. and to abide by the rules and regulations issued to implement the provisions of this Act 8. 2. The father and the mother shall jointly exercise parental authority over the persons of their common children. the father's decision shall prevail. and even after this under certain circumstances (Manresa). 211) 4.211) 2. The progress report shall be taken into consideration in deciding whether or not to issue the decree of adoption.PERSONS & FAMILY RELATIONS Rights of the Child. 209) 2. Brothers and Sisters [NOTE: When two or more are obliged to give support.] TRIAL CUSTODY:   The trial custody shall be for a period of 6 months from the time of placement. If the child is illegitimate. whether of full or half-blood. Legitimate ascendants and descendants. It is purely personal and cannot be exercised through agents 5. 2. clothing. It is jointly exercised by the father and the mother (Art. and 5. It is a natural right and duty of the parents (Art. which shall in turn transmit a copy to the Board. PARENTAL AUTHORITY PARENTAL AUTHORITY (PATRIA POTESTAS): The mass of rights and obligations which parents have in relation to the person and property of their children until their emancipation. PARENTAL AUTHORITY INCLUDES: 1. It starts upon actual physical transfer of the child to the applicant who. The development of the moral. Variable 100% UP LAW UP BAROPS . The spouses. parental authority is with the mother. 3. nearest in degree 4. Reciprocal on the part of those who are by law bound to support each other 6. medical attendance. unless there is a judicial order to the contrary (Art. Spouses 2. Descendants. KINDS OF SUPPORT: 1. except in cases authorized by law (Art 210) 3. Voluntary or Conventional – by agreement CHARACTERISTICS OF SUPPORT (PREVIW): 1. Not subject to waiver or compensation with regard to future support 4. The caring for and rearing of children for civic consciousness and efficiency. Judicial – that which is required to be given by court order whether pendent elite or in a final judgment 3. nearest in degree 3. Ascendants. the payment shall be divided between them in proportion to their resources. education and transportation. transferred or waived. XIII. ORDER OF SUPPORT (IF 2 OR MORE ARE TO GIVE SUPPORT): 1. In case of disagreement. in keeping with the financial capacity of the family. shall exercise substitute parental authority over the person of the child The adopting parents shall submit to the governmental agency or the authorized and accredited agency. 4.

School. unless there is judicial order to the contrary  If the market value of the property or the annual income of the child exceeds P50. The court shall take into account all relevant considerations. Gives corrupting orders. LIABILITY OF THOSE EXERCISING SPECIAL PARENTAL AUTHORITY OVER THE CHILD: 1.PERSONS & FAMILY RELATIONS PARENTAL PREFERENCE RULE: The natural parents. [NOTE: Prostitution or infidelity to husband does not make a mother unfit as parent. or 2. They are principally and solidarily liable for damages caused by the acts or missions of the child while under their supervision. unless the parent chosen is unfit. Special Parental Authority It is exercised concurrently with the parental authority of the parents and rests on the theory that while the child is in the custody of the person exercising special parental authority.000. REMARRIAGE. CIVIL LAW minor are subsidiarily liable for said acts and omissions of the minor. Treats child with excessive harassment and cruelty 3. WHO EXERCISES AUTHORITY IN CASES OF DEATH. 3. 2. The individual. the parent designated by the court. who are of good character and who can reasonably provide for the child. especially the choice of the child over seven years of age. o with a communicable disease that might endanger the life or health of the child. this liability is subject to the defense that the person exercising parental authority exercised proper diligence. Carpitanos 376 SCRA 473 (2002) The special parental authority and responsibility applies to all authorized activities. Examples of compelling reasons are: o When the mother is insane. Child’s actual custodian. Subjects or allows acts of lasciviousness PARENTAL AUTHORITY TERMINATES: 1. whether inside or outside the premises of the school. entity or institution. over 21 years old. absence. unless unfit or unqualified SPECIAL PARENTAL AUTHORITY EXERCISED BY: 1. TENDER YEARS PRESUMPTION: NO child under 7 years of age shall be separated from the mother. Upon death of child 3. the present or surviving parent Remarriage shall not affect the parental authority over the children In case of separation of parents. over 21 years old. Compels child to beg 5. counsel or example 4. The surviving grandparent 2. If the parents exercising parental authority has subjected the child or allowed him to be subjected to sexual abuse RIGHTS OF PARENTS UPON CHILDREN:  To have them in their custody 2008 THEIR BAROPS Page 33 of 325 . the father’s decision shall prevail. OR SEPARATION OF PARENTS:      In case one parent is absent or already dead. Oldest brother or sister. Innocent spouse gets custody of minor children. unless the court finds compelling reasons to order otherwise. its administrators and teachers. Upon emancipation of child 4. HOWEVER. instruction or custody. are ordinarily entitled to custody as against all persons. the parents temporarily relinquish parental authority over the child to the latter. entity or institution engaged in child care. Conviction of parent for crime without civil interdiction 2. or in case of unsuitability of parents. Mary’s Academy v. EFFECTS OF PARENTAL AUTHORITY UPON THE PROPERTY OF THE CHILD:  The Father and Mother shall jointly exercise legal guardianship over the property of the minor child without court appointment  In case of disagreement. o or is maltreating the child.] SUBSTITUTE PARENTAL AUTHORITY EXERCISED BY (IN ORDER): 1. unless unfit or unqualified. ABSENCE. the parent is required to furnish a bond of not less than 10% of the value of the child’s property or income GROUNDS FOR SUSPENSION OF PARENTAL AUTHORITY (CLEBC): 1. Substitute Parental Authority It is exercised in case of death. Upon death of parents 2. The parents and judicial guardians of the minor or those exercising substitute parental authority over the 100% UP LAW UP St.

and provide them with moral and spiritual guidance. 199 of FC: a. 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. and love and understanding  Defend them against unlawful aggression  Answer for damages caused by their fault or negligence. PD603]  strive to live an upright and virtuous life  love. Brothers and sisters 2.3. 356. donation propter nuptias. the persons in Art. The funeral shall be in keeping with the social position of the deceased 3. The funeral shall be in accordance with the expressed wishes of the deceased a. adoption. Duty and right to make arrangement in funerals in accordance with Art. NCC]  parental care  receive at least elementary education  be given moral and civil training by parents or guardian  live in an atmosphere conducive to his physical.357. Any person who disrespects the dead or allows the same shall be liable for damages *** BAROPS 2008 Page 34 of 325 . respect his parents and cooperate with them in strengthening the family  extend his love to his brothers and sisters  exert his utmost to develop his potentials XIV. obey. shelter.PERSONS & FAMILY RELATIONS      To represent them in all matters affecting their interests Demand respect and obedience and impose discipline on them Administer their property and income to support the child and the family To give or withhold consent on marriage. PD603]  to be born well  right to a wholesome family life  right to a well-rounded development  right to a balanced diet. FUNERALS GENERAL GUIDELINES: 1. instruct. Ascendants in nearest degree d. proper medical attention. Spouse b. and for civil liability for crimes committed by them  Give their lawful inheritance RIGHTS OF CHILDREN: [ART. pre-nuptial. and employment To disinherit them for just cause  CIVIL LAW cooperate with the family in matters for his own good DUTIES OF PARENTS UPON THEIR CHILDREN:  Support and upbringing in accordance to their means  Educate. in the absence of expressed wishes. and intellectual development [ART. his religious beliefs or affiliation shall determine b.4. 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 100% UP LAW UP [ART. 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. Descendants in nearest degree c. adequate clothing. 199 of FC shall decide 4. in case of doubt. moral.

VI. IX. XI.PROPERTY CIVIL LAW Property TABLE OF CONTENTS I. XII. VII. XV. XVII. X. IV. XIX. No. V. XVIII. III. II. XIV. XVI. XIII. VIII. 4726) Possession Usufruct Easements Legal Easements Voluntary Easements Nuisance Registry of Property Different Modes of Acquiring Ownership Prescription Tradition Lease Donation 36 41 42 48 49 49 55 57 63 65 70 77 78 80 80 81 82 83 89 100% UP LAW UP BAROPS 2008 Page 35 of 325 . Classification Ownership Accession Quieting of Title Ruinous Buildings and Tress in Danger of Falling Co-Ownership Condominium Law (Act.

lake. usufructuary etc. Trees. works which may be carried on in building or on a piece of land. (Associated Insurance & Surety Co. 1935) ….PROPERTY CIVIL LAW 3. breeding places in case owner placed / preserves them with intention to be permanently attached to land. immovables by incorporation. 414 (1) Immovable or real property (2) Movable or personal property Art. and tend directly to meet the needs of industry or works 6. Statues. fish ponds. Orosa) Since only personal properties could be the subject of a chattel mortgage. (Davao Sawmill v.(2) (3) (7)     100% UP LAW UP BAROPS 2008 Page 36 of 325 . Castillo. and waters running or stagnant 9. beehives. Mines. or coast. what is naturally personal property may be classed as real property. Everything attached to immovable in fixed manner-cannot be separated without breaking / deterioration 4. (6) Animal houses. Contracts for public works. by the owner of immovable b. or coast 4. (2)Real property which by law is considered as personal property. pigeonhouses. the mortgage would be ineffective as against third parties. are intended by their nature and object to remain at a fixed place on a river. Classification: 1. quarries.(4) (5) (6) (9) and object to remain at a fixed place on a river. 10. receptacles.a building is an immovable property. An inscription of a deed of sale of real property in the chattel mortgage registry cannot be given the legal effect of an inscription in the registry of real PROPERTY I. and for purposes of taxation. objects for ornamentation in buildings / on lands a. 416. constructions adhered to soil. Jaramillo 1923) Re: building under chattel mortgage. lake.  Machinery which is movable in nature only becomes immobilized when placed in a plant by the owner of a property or plant. immovables by nature . If the properties subject to the chattel mortgage are indeed not personal properties. immovables by analogy or by law(10) Art. (Lopez v. while matter their matter forms part of the bed. Docks and structures which. and servitudes and other real rights over immovable property.separate treatment by the parties of a building from the land on which it stands does not change the immovable character. slag dumps. AND form permanent part of it --animals are included 7. Machinery. Immovables : MADAM’S C FLAT 1. 2. (Standard Oil vs. though floating. (4) all things which can be transported from place to place without impairment of the real property to which they are fixed. but this is for the courts to determine and not by the register of deeds. reliefs. implements intended by owner for an industry. irrespective of whether or not said structure and the land on which it is adhered belong to the same owner. growing fruits-attached to land/form integral part of immovable 3. Personal Property (Movables): FLONTS (1)Those movables susceptible of appropriation Not included in the preceding article. plants. NOT when placed by a tenant. Land. unless acting as an agent of the owner. CLASSIFICATION CLASSIFICATION as to mobility Art. instruments. manner reveals intention to attach permanently 5.(1) and (8) 2. v. Fertilizer actually used on a piece of land 8. roads. the execution and registration of the chattel mortgage and the foreclosure of the house are null and void. 415. immovables by destination. (3)Forces of nature which are brought under control by science. buildings. paintings. Iya 1958 ) It is undeniable that parties to a contract may treat as personal property that which by nature would be real property.

(2) Object is an intangible thing. Real rights arises (OPLUMEPARP) 1. cities & municipalities Characteristics: i. (Makati Leasing and Finance Corp v. Easement 7. Possession 3. cities. regardless of who owns the land. (5) Not extinguished by the loss or destruction of the thing. Property for public use. It is undeniable that the parties to a contract may by agreement treat as personal property that which by its nature would be real property. Pledge 8. Public Waters. patrimonial property of state. Fountains. as long as no interest of third parties may be prejudiced thereby. cannot be burdened by voluntary easement * Art. Usufruct 5.PROPERTY property.  Classification of Movables (a) Consumables – includes those movables which cannot be used in a manner appropriate to their nature without their being consumed (b) Non-consumable. consist of: (RSS FW P3) Roads. from a) Public Dominion 420 i. to do. (Leung Yee v. It gives direct and immediate juridical power over a thing susceptible of being exercised against a determinate person and the whole world. (6) Gives rise to real actions against 3rd persons CIVIL LAW alone. Preemption Real Rights (1) One definite active subject and the rest of the world as passive (2) Object is a corporeal thing. (5) Extinguished by the loss or destruction of the thing. provinces. Squares. Ownership 2. 1981) Where chattel mortgage is constituted on machinery permanently attached to the ground. in the provinces. 424. not subject to attachment & execution iv. (6) Produces only personal actions against definite debtor. (3) Real right affects the thing directly. (3) Personal affects the thing directly through the prestation of the debtor. machinery is personal property and mortgage is not null and void. Public Works for public service paid for by the local government All other property possessed by any of them is patrimonial. intended for public service of state. Redemption 10. (b) Right of obligation or Personal (jus ad rem)—rights belonging to one person to demand of another as a definite passive subject. Mortgage 6. Strong Machinery. the fulfillment of a prestation to give. Antichresis 9. b) Private Ownership – 421 i. cannot be acquired through prescription iii. property belonging to private persons – individually or collectively (4) The creation of the juridical relation is by Personal Rights (1) There is a definite active and passive object. Lease 4. outside the commerce of men ii. Wearever Textile Mills 1983) mode and title. (4) Creation of the juridical title is by title 100% UP LAW UP BAROPS 2008 Page 37 of 325 . cities. Promenades. and municipalities. intended for public use ii. Streets. municipalities -exist for attaining economic ends of state -property of public dominion when no longer intended for public use/service – declared patrimonial ii. or not to do. provinces.includes all others Classification Ownership According to Differences between Real Rights and Personal Rights Kinds of rights considered as property (a) Real (jus in re)—power belonging to a person over a specific thing.

where it appears that the owner abandoned it or permitted it to be destroyed. Bercilles. they continue to be government property after reclaiming. De Tantoco vs. 1907)  Reclaimed land is public property. as they were converted into property of the public domain. Possession was lawful at first but later became illegal. (Vda. ACTION TO RECOVER POSSESSION BASED ON OWNERSHIP (ACCION REINVINDICATORIA) An action to seek the recovery of ownership. Prior physical possession is INDISPENSABLE. Property for public use of the municipality is not within the commerce of man so long as it is used by the public. 100% UP LAW UP BAROPS 2008 Page 38 of 325 . to be considered public property. because. Ramirez. When they stay in that condition until reclaimed by filling in done by the government. Municipal Council of Iloilo) Under the law on Municipal Corporations. 1967)   ACTIONS FOR THE RECOVERY OF IMMOVABLE PROPERTY FORCIBLE ENTRY OR UNLAWFUL DETAINER FORCIBLE ENTRY UNLAWFUL ENTRY Possession unlawful from time of entry. Also used to refer to an ejectment suit filed after the expiration of 1 year from the unlawful withholding of possession of the realty. Prior physical possession is NOT REQUIRED. police station and market stalls is void because the properties levied upon are exempt from execution. necessarily including the jus utendi and jus fruendi. Immediate possession by the former owner does not confer on him ownership of the lots. In case of gradual erosion by the ebb and flow of the tide.e. (Government of the Philippine Islands v. 1975) The attachment of the municipal trucks. (Province of Zamboanga del Norte v. PLENARY ACTION TO RECOVER POSSESSION (ACCION PUBLICIANA) A civil proceeding to recover the better right of possession except in cases of forcible entry/unlawful detainer. Cabangis)  CIVIL LAW The sale to private parties of a public road which has been validly closed by the city government is valid. it is enough that property be held and devoted for governmental purposes. private property may become property of the public domain. Decision here is res judicata only as to possession. PRESCRIPTIVE PERIOD 1 year period starts from last demand to vacate. police cars.PROPERTY Cases  Churches and other consecrated objects are outside the commerce of man (Barlin vs. i. however. Basis : Art 422 CC (Cebu Oxygen and Acetylene v. defendant withholds possession after expiration of his right. no private person could acquire title except in the form and manner established by law. City of Zamboanga.

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 Physical/material possession (possession de facto) (i. threat. vendee. When. An owner who is dispossessed by means other than those mentioned in RULE 70 RoC. Ownership. A person deprived of the possession of any land or building by force. When dispossession is by any means other than those mentioned in SEC 1 RULE 70 RoC 2.PROPERTY WHEN APPLICABLE 1. express or implied (unlawful detainer). or 2) to one with the better right 100% UP LAW BAROPS 2008 Page 39 of 325 . A landlord. NOT civil possession or possession de jure. to: 1) its rightful and legal owner. This action is distinct and different from an action for recovery of title or ownership. The legal representatives/ assigns of any such landlord. vendor. recovery of the dominion over the property as owner. what is sought is the transfer of the property which has been wrongfully/ erroneously registered in another person’s name. or 3. vendor. Legal owner or one with the better right over the property. or when the possession of land is due to tolerance of the owner. but not as to the question of ownership. otherwise. A judgment rendered here is conclusive only as to the question of possession. barred. It can also be filed after the expiration of the 1 year period if no action for forcible entry or unlawful detainer has been filed during that time. or other person against whom the possession of any land or building is unlawfully withheld after the expiration/ termination of the right to hold possession by virtue of any contract. or stealth (forcible entry under RULE 70) . In an action for reconveyance.e. this is the only action that can be filed. UP CIVIL LAW ISSUE WHO MAY INSTITUTE Possession de jure of realty independent of the title and restitution of possession. intimidation. It is not necessary to wait until the expiration of 1 year before commencement of action. strategy. which arises from the ownership or is one of the attributes of ownership). of which a person 1) has been deprived or 2) against whom it has been withheld by any of the means/circumstances mentioned in RULE 70 1. If the issue of possession has already been decided. 2.

Prior possession de facto 2. WHERE FILED RTC Prescriptive Periods: 1. 30 years (without prejudice to what is established for the acquisition of ownership and other real rights by prescriptionART1141)—if real actions over immovables 100% UP LAW UP BAROPS 2008 Page 40 of 325 . If plaintiff has in his favor priority in time. In an ejectment suit. 4 years—if based on fraud from date of issuance of certificate of title over property 2. the remedy should be either accion publiciana or accion reinvindicatoria. An action for ejectment is merely a quieting process. 10 years—if based on implied or constructive trust 3. MTC Summary In nature— these cases involve a disturbance of social order which must be abated as promptly as possible without any undue reliance on technical and procedural rules CIVIL LAW WHAT HAS TO BE ALLEGED For an action to reconveyance to prosper. 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. the property should not have passed into the hands of an innocent purchaser for value.PROPERTY vendee or other person 1. issue of ownership can be passed upon by the court only by determining the issue of possession de facto. Undue deprivation thereof When the complaint fails to aver acts constitutive of forcible entry/unlawful detainer (how he was dispossessed). Imprescriptible— when plaintiff is in possession of property 4.

transform. Right to Exclude: Doctrine of SelfHelp (429) Elements: a) Person exercising rights is owner or lawful possessor b) There is actual or threatened unlawful physical invasion of his property (not available to squatters) c) Use force as may be reasonably necessary to repel or prevent it -Available only when possession has not yet been lost. (Lunod v. safety or security 11. Right to recovery or possession/ ownership Actions for possession: 1.the original registered owner is entitled to a writ of possession against the parties who appear and answer in the land registration proceedings and against all those who. the finder must not be trespasser be entitled to a share. OWNERSHIP Art. jus accessionis. taxation) Attributes of Ownership (UFADVPA) 1.  Discovery by chance When there is no purpose or intent to look for the treasure. 13. immovable – a) forcible entry b) unlawful detainer c) accion publiciana d) accion reinvindicatoria e) Writ of Possession -. f) Writ of injunction  May be used to prevent or restrain acts of trespass or illegal interference by others of his possession of the property. Right to Receive Just Compensation in case of Expropriation (435) exception 436: when any property is condemned or seized by competent authority in the interest of health. cannot make use thereof in such manner as to injure the rights of a third person. Jus Utendi (right to use)—right to enjoy by receiving the thing that it produces. Requisites in an action to recover (a) Identity of the property (b) Strength of plaintiff’s title/ Better Title Limitation of Real Right of Ownership (1) For the benefit of the state and for public interest (Police power. having been served with process. Ownership may be exercised over things or rights. 12. Right to Hidden Treasure (if found on his property) a) hidden and unknown movables consist of money or precious objects b) owner is unknown c) If treasure is found by a stranger by chance –½ belongs to finder. Meneses) 10. Jus Fruendi – right to receive fruits 6. Jus vindicandi—right to exclude from the possession of the thing owned by any other person to whom the ownership has not transmitted such thing. he would have no legal interests. and even destroy the thing owned. 3.right to the accessories Other specific rights: (HARJEES) 8.Art. 431. and indemnification for damages. RIGHTS of others to restrictions CIVIL LAW owners of such tenements. accessions.right to possess 2. movable – replevin (return of a movable) 2. with the fruits.PROPERTY II. Ownership is subject imposed by: 1. eminent domain. 7. Jus abutendi—right to enjoy by consuming the thing by its use 4. Jus possidendi. 5. Right to Enclose or Fence without detriment to servitudes constituted thereon (430) A person cannot enclose his tenement and construct a fish pond that will obstruct the natural flow of waters from the upper tenements to the injury of the 100% UP LAW UP BAROPS 2008 Page 41 of 325 . do not appear or answer. 427. Beyond these limits. Jus Disponendi—the right to dispose or encumber. by the proper action for restitution. if already lost – resort to judicial process -May be exercised by 3rd person – negotiorum gestio . Right to accession 14. LAW and 2. Right to Space and Subsoil The right of the owner extends to the space and subsoil as far as necessary for his practical interests or to the point where it is possible to assert his dominion and there is the possibility of obtaining some enjoyment or benefit. 9.

action is plenary action for recovery of possession (De La Paz vs. or those produced by lands of any kinds through cultivation or labor (Art. ACCESSION Art. either naturally or artificially. Panis. the price of leases of and other property and the amount of perpetual or life annuities or other similar income (Art. 440. 446) (4) Accessory incorporated to principal such that it cannot be separated without injury to work constructed or destruction to plantings or construction of works. 1958) Can file action for recovery of possession even if one has never possessed the land. and the young and other products of animals (Art. is income or fruit and consequently should go to the usufructuary. The ownership of property gives the right by accession to everything which is produced thereby. 442)  A dividend. 443) (3) All works. General Principles of Accession (1) Accessory follows the principal (2) No unjust enrichment (Art. 453). or spontaneous products of the soil. 442) (b) Industrial fruits. or rents of buildings. (Bachrach vs.  Different from concept of selfhelp. whether in cash or stock. Exceptions: (PULA) (i) possession in good faith is entitled to fruits (ii) usufructuary is entitled to fruits (iii) lessee is entitled to fruits (iv) antichretic creditor is entitled to fruits Kinds of Accession (1) Accession discreta – the right pertaining to the owner of a thing over everything produced thereby: (a) Natural fruits. excessive smoke. 1995) 100% UP LAW UP BAROPS 2008 Page 42 of 325 . Seifert). (a) Act in State of Necessity  The law permits the injury or destruction of things belonging to others provided this is necessary to avert a greater danger or dangers. (5) Bad faith involves liability for damages (6) Bad faith of one party neutralizes bad faith of the other (Art. falling of trees. emanations from canals (c) Fortified places or Fortressesmust comply with special laws and regulations (d) Easement of Aqueduct. (b) Liability of Proprietors under Article 2191. sowing.PROPERTY (i) Expropriation for public use (ii) Military requisitions (iii) Zonification laws (iv) Public or government monopolies (v) Law on water and mines (vi) Public health and safety (vii) Public easements (2) Legal servitudes and Voluntary Servitudes (3) Limitations imposed by party transmitting property (i) Either by contract or last will or donations (ii) Stipulation on inalienability (4) True Owner Must Resort to Judicial Process (5) It is unlawful to exercise the right of ownership in such a manner as to have no other effect than to injure a third person without benefit to the owner. Dividend is declared only out of the profits of a corporation and not out of its capital. for damagegs caused by exposion of machinery. the purpose is to protect the actor himself or another person at the expense of the owner of the property who has no part in the state of necessity. CIVIL LAW III. (7) Ownership of fruits belong to the principal thing. unless otherwise proved (Art. rather than the owner of the shares of stock.must observe proper distances and prevent damage to neighboring tenements (e) Planting of Trees (f) Easements (g) Lateral and Sub-adjacent Support Cannot commit crime in the exercise of ownership (People vs Segovia. and planting are presumed made by owner & at his expense. 442) (c) Civil fruits. or which is incorporated or attached thereto.

445-456) (a. metals (iii) tejido or weaving (iv)pintura or painting (v) escritura or writing (b. Right to damages and demolition even if with injury to work if owner of land is in bad faith BUILDING.3) Specification Accession Industrial  Art.2) Accession natural (FACA) (i) Alluvium (ii) Avulsion (iii) Change in the course of river (iv)Formation of islands (b) With regard to movable property (ACS) (b. (Bachrach vs. were made by the owner (b) They were made at the owner’s expense Exception: When contrary is proven - - - 100% UP LAW UP BAROPS 2008 Page 43 of 325 . or (iii) Sowing (Arts. Right to be indemnified or paid of value of property by owner of land 2. Talisay-Silay) Right of owner of materials (OM) CIVIL LAW 1. 446 establishes 2 disputable presumptions regarding BPS: (a) The works etc. PLANTING. (ii) Planting.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. either naturally or artificially. (a) With regard to property (a.2) Commixtion or confusion (b. It is not income delivered from the property but a compensation granted for the risk assumed by the owner of the property.1) Accession (BPS) immovable industrial (i) Building. SOWING a) BPS / Land-owner + Owner of Materials 447 Land-owner GF: took materials with no knowledge that it belonged to a 3rd person Land-owner BF: took materials knowing fully well that it belonged to a 3rd person Owner of Materials GF: demanded payment / no idea of taking Owner of Materials BF: regardless (2) Accession Continua – the right pertaining to the owner of a thing over everything that is incorporated or attached thereto.PROPERTY  A bonus paid by the mortgagedebtor to another who had mortgaged his land to secure the payment of the debtor’s obligation to a bank is not a civil fruit of the mortgaged property. Right to remove materials if he can do so w/o injury to work constructed if owner has not paid 3.

Force payment of indemnity BF: (both considered GF) 453 (1) BF: (both considered GF) b) BPS + Land-owner + Owner of Materials 455 100% UP LAW UP BAROPS 2008 Page 44 of 325 . sowing or planting + pay indemnity 2. entitled to receive damages 451 BF: 447 by analogy 454 Pay value of materials + damages BF: loses what is built. most likely only get paid) GF: right to be paid value of materials + indemnity or remove materials even with damage + indemnity BF: right to be paid value of materials Another view: 449 by analogy. must pay LO damages 451 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. sowing or planting even with damage 2. if not. the proper rent 450 Whichever option chosen. Appropriate works. with no right to indemnity 449 Still entitled to reimbursement for necessary expenses of preservation of the land 452 Whichever option chosen.PROPERTY CIVIL LAW Land-owner / BPS (by himself or thru another) GF: pay value of materials and own the thing built BF: pay value of materials + damages Owner of Materials GF: right to be paid value of materials May remove materials if can be separated without injury (no accession) but accession prevails (hence. no reimbursement BF: (both considered good faith) a) BPS / Owner of Materials + Land-owner Land-owner GF: options 1. 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. Compel removal without indemnity at BPS’s expense 450 3. by court 448 GF: options 1. Appropriate without indemnity 449 2. plant or sow BPS / Owner of Materials GF GF: options (447 by analogy – 454) 1. no reimbursement BF: (both considered good faith) GF: pay value of materials regardless of bf/gf of OM Another view: 449 by analogy. planted or sown. Compel BP to pay price of land (no conditions) and Sower. Remove works. loses right to 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. 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. BPS solely liable 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 (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. 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. OM cannot remove LO sells land to BPS: OM can either ask BPS for indemnity + damages or remove material even with damage 100% UP LAW UP BAROPS 2008 Page 45 of 325 . the LO BF BF (BF) GF Similar to GF-GF-(BF)-GF LO appropriates and pays indemnity: OM can proceed against LO only after BPS refuses/cannot pay.PROPERTY BPS GF (GF) OM GF CIVIL LAW Land-owner 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 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. the LO BF BF (GF) GF Similar to 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 GF (BF) GF LO appropriates and pays indemnity: OM can proceed against LO only after BPS refuses/cannot pay.

(Sarmiento v. 448 merely because of the fact that some years after acquiring the property in good faith. Baticlan) Since the option to remove or demolish improvement is given to the LO and it is limited to paying for the improvement or selling his land to the BPS. (Pleasantville Dev’t. The owner of the property from which a part was detached retains the ownership thereof (2 yrs) 3. Deposit of soil is sudden or abrupt 2. (Tecnogas Phil. The soil cannot be identified 100% UP LAW UP BAROPS 2008 Page 46 of 325 . creeks or torrents gradually receive from the Requisites of alluvium: (CANG) (a) The accretion must be gradual (b) (c) The cause must current of the water be the The land where the accretion takes place must be adjacent to the banks must be natural (d) *riparian owner – owner of the land fronting such riverbanks The alluvium. he cannot refuse to exercise his right of choice and compel the builder to remove or demolish the improvement. vs CA) The BPS in good faith should not pay rentals to the LO spouses. Deposit of the soil belongs to the owner of the property where the same was deposited 3. (Grande vs CA) (ii) Avulsion 459– takes place whenever the current of a river. by the principle of accession. helearned about and aptly recognized the right of the LO to a portion of the land occupied by the building. is not automatically registered property. secure the reimbursement of his expenses by using the fruits to pay it off (deduct the value of the fruits he receives from the time his good faith ceases from the reimbursement due him).PROPERTY Cases: A forced co-ownership occurs when the BPS has acted in good faith. Corp. Deposit of soil is gradual 2. 448. however. the LO could no longer be regarded as having impliedly assented or conformed to the improvements thereafter made by appellant on the premises. 1996) After the BPS had refused to restore the land to the LO. lakes. (Felices v. An implied tenancy or possession in fact is created pending the payment of the corresponding indemnity. all the fruits he receives from the moment his good faith ceases must be deferred or paid by him to the LO. The detached portion can be identified Distinguished from Alluvium Alluvium 1. lake. And as good faith is presumed. though automatically owned by the riparian owner from the moment the soil deposit can be seen. Iriola) (2) Accession in Natural (i) Alluvium 457 – the accretion which lands adjoining the banks or rivers. Owner of the land ihas the right of retention (to pay) because his right is older and because. He may. the other party fails to pay for the same. The supervening awareness does not prejudice its right to claim the status of a builder in good faith. the LO has the burden of proving bad faith on the part of the BPS. creek or torrent segregates from an estate on its bank a known portion of land and transfers it to another estate Avulsion 1. since it is subject to acquisition through prescription by 3rd persons. Agana) While a possessor in good faith may retain the property until he is reimbursed for necessary and useful expenses. he is entitled to the ownership of the accessory thing. Manufacturing Corp. (Bernardo vs. The BPS has the right to retain the improvements until he is reimbursed. He is entitled to such removal only when after choosing to sell his land. having opted to appropriate the improvement on the lot. (Ignacio vs Hilario) An order by a court compelling a builder in good faith to remove is building from land belonging to another who chooses neither to pay for such building nor sell the land is null and void for being offensive to Art. have to reimburse the BPS of the cost of construction of the building (in accordance with Art 546). The spouses. (Ortiz vs Kayanan) A BPS in good faith does not lose his rights under Art. v CA. to the extent that the latter even had to resort to the present action to recover his property. (Pecson v CA) Good faith consists in the belief of the builder that the land he is building on is CIVIL LAW his and he is ignorant of any defect or flaw in his title.

100% UP LAW UP BAROPS 2008 Page 47 of 325 . (1) Ownership of islands formed through alluvion (a) If formed: (a. that is.1) on the jurisdiction seas within Phil. Formation of island in nonnavigable river a) owner of margin nearest to islands formed – if nearest to it b) owner of both margins – if island is in the middle (divided into halves longitudinally) (iv) Formation of islands either on the seas within the jurisdiction of the Philippines. if it is in the middle of the river (c) Concept of navigable river A navigable river is one which forms in its ordinary condition by itself or by uniting with other waters a continuous highway over with other waters a continuous highway over which commerce is or may be carried on. 466) Ownership of new object formed by adjunction Owner of Principal  OP Owner of Accessory  OA (a) union in Good Faith OP acquires accessory.2) on lakes. 464) or nonnavigable and non-floatable rivers (Art. (b) union in Bad Faith   – that which takes place when a river bed is abandoned through the natural change in the course of the waters (Art. and (a. 465). Owner of adjoining land to old bed shall have right to acquire the same by paying its value – value not to exceed the value of area occupied by new bed 3. and on navigable or floatable rivers (Art. the island belongs to the State (b) If formed in non-navigable and non-floatable rivers: (b. Rights of the riparian owner   Removal within 2 years The former owner preserves his ownership of the segregated portion provided he removes (not merely claims) the same within the period of 2 yrs. Art. as a highway of commerce.2) it is divided longitudinally in halves. thereby forming a single object (Art. 461: (a) There must be a change in the natural course of the waters of the river. Accession Continua-Movable property: (1) Adjunction or Conjunction – that which takes place whenever movable things belonging to different owners are united in such a way that they cannot be separated without injury. Test: A river is navigable if it is used or susceptible of being used.PROPERTY Requisites of Avulsion (SIC) (a) The segregation and transfer is caused by current of water (b) The segregation and transfer must be sudden or abrupt (c) The portion of land transported must be known and identifiable CIVIL LAW On lakes. for trade and travel in the usual and ordinary modes. If a known portion of land with trees standing thereon is carried away by the current to another land. Right to old bed ipso facto in proportion to area lost 2. AND pays OA for its value in uncontroverted state. Art. (iii) Change of river beds (a. 461) Requisites for the application of Art.1) it belongs to the nearest riparian owner or owner of the margin or bank nearest to it as he is considered in the best position to cultivate and develop the island (b. in its ordinary condition.3) on navigable or floatable waters. The change must be abrupt (b) or sudden. 460 applies only to uprooted trees. Right of owner of land occupied by new river course 1. 459 governs.

the mixture of solids being called commixtion. The principal should be determined and distinguished from the others which would be considered the accessories. (3) Specification – that which takes place whenever a person imparts a new form to materials belonging to another person (Art. contract upon which defendant relies has been extinguished or terminated. 467)INTENT (a) Of greater value.PROPERTY -if OA incorporated in BF 1. TEST to determine adjunction: principal in CIVIL LAW (b) If PT is in Bad Faith. adverse to that of complainant. If both owners are in good faith – Each owner shall acquire a right proportional to the part belonging to him (vis-a-vis the value of the things mixed or confused) 2. Person who made Transformation  PT Owner of Material  OM (a) If PT is in Good Faith. OM shall appropriate work to himself Without paying maker OR 2. voidable or unenforceable. If one owner is in bad faith – he shall lose the thing belonging to him plus indemnity for damages caused to owner of other thing mixed with his thing 3. their respective rights shall be determined as though both acted in good faith. lose the thing and 2. 1. ineffective. 476) (2) Plaintiff has legal or equitable title to or interest in the subject/real property. encumbrance or proceeding must be valid and binding on its face but in truth and in fact invalid. merits. If both in bad faith no cause of action against each other In order of application. OA has right to choose -payment of value -separation (even if destroys principal) 2. Rights 1. is invalid. Ownership of specification the new object in IV. demand indemnity for value of material & damages BUT If transformed thing is more valuable than material. owner of material cannot appropriate (3) Commixtion or confusion – that which takes place whenever there is a mixture of things solid or liquid belonging to different owners. while that of liquids. Requisites (1) There is a cloud on title to real property or any interest to real property (Art. claim. QUIETING OF TITLE It is a remedy or form of proceeding originating in equity jurisprudence. appropriate new thing to himself and indemnify labor OR 2. utility and volume of their respective things. OA indemnified (c) If OP or OA made the incorporation with the knowledge and without the objection of the other. so that the complainant and those claiming under him may be forever free from any danger of the hostile claim. the principal is that: (a) To which the other (accessory) has seen united as an ornament or for its use or perfection (Art. which has for its purpose an adjudication that a claim of title or an interest in property. appropriate thing transformed as his own 2. or has prescribed (4) Plaintiff must return benefits received from the defendant. record. 474). if they are unequal values-VALUE (a) Of greater volume. 468)-VOLUME (a) That of greater merits taking into consideration all the pertinent legal provision applicable as well as the comparative. demand indemnity for materials 100% UP LAW UP BAROPS 2008 Page 48 of 325 . (3) Instrument. 472). indemnify owner of material BUT If material is more precious than transformed thing OM may 1. if they are of an equal value (Art. confusion (Art. 466 should be applied in an equitable manner. (d) if involves 3 things Art. indemnify OP for damages -if OP acted in BF 1. he shall 1.

The point of reference is the date of registration of the deed or the date of the issuance of the certificate of title over the property. (Titong v. claims are more general in nature Declares his own title and also avers he source and nature of the defendant’s claim. an instrument. collapse resulting from total or partial damage. RUINOUS BUILDINGS AND TREES IN DANGER OF FALLING Liability for damages: 1. There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. 484. prescribes within period for filing accion publiciana. the right to seek reconveyance in effect seeks to quiet title. encumbrance hostile claim. (Pingol v. An equitable title is sufficient to clothe him with personality to bring an action to quiet title. which constitutes a claim in plaintiff’s title. question or shadow upon the owner’s title or interest in real property. CO-OWNERSHIP Art. CA) V. (Olviga v. state may compel him to demolish or make necessary work to prevent if from falling 3. architect or contractor 2. CA) What plaintiff imagined as clouds cast on his title were PR’s alleged acts of physical intrusion and not. CA)  It is not necessary that the vendee has an absolute title. and which may be used to injure or to vex him in his enjoyment of his title. record. encumbrance or proceeding which constitutes or casts a cloud. collapse – engineer. accion reivindicatoria.  100% UP LAW UP BAROPS 2008 Page 49 of 325 . 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. if no action – done by government at expense of owner VI. release foundation for a future litigation over the property of an instrument. Remedial action: involving a present adverse claim Preventive action: removes cloud which may be used for future actions Preventive action: to prevent a future cloud on the title Plaintiff asserts his own estate and declares generally that the defendant claims some estate on the land. claim. doubt. delivery.PROPERTY CIVIL LAW Differences between action to quiet title. involved or claim. Notes: An action for reconveyance: a) Prescribes in 10 years if the plaintiff is NOT in possession of the property and if the action for reconveyance is based on an implied or constructive trust. Here. no repair made – owner. points out its defects and prays it be declared void Filed against defendant who asserts claims based on an invalid instrument (but not apparent) Prescription of action—Imprescriptible if plaintiff is in possession. the acts alleged may be considered grounds for an action for forcible entry but definitely not one for quieting of title. b) Is IMPRESCRIPTIBLE if the person claiming to be an owner is in actual possession of the property. if not. Clearly. without 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 claims. action to remove a cloud.

Contract. and preservation of the property owned in common. Ownership in Common. A co-owner can freely dispose of his share without need to ask the consent of the other co-owners. Succession] Purpose is collective enjoyment and to maintain the unity and preservation of the things owned in 100% UP LAW UP BAROPS 2008 Page 50 of 325 . enjoyment. 90. the surviving joint owners are subrogated in his rights by accretion Joint owner must obtain the consent of all the rest to dispose of his share. an implied trust is created in favor of the others in proportion to each to interest of each. Differences between co-ownership and joint tenancy Co-ownership Tenancy in Common. CIVIL LAW common. (Art. Creditors of a coowner can attach his shares in the co-owners and sold on execution Death or incapacity of a co-owner does not affect existence of a co-ownership A special authority is needed for such representation. not over specific portions of the property (5) mutual respect among co-owners in regard to the use. Occupancy.PROPERTY Characteristics of Co-ownership (PUSAM) (1) plurality of owners. FC) (ii) Between man and woman not capacitated to marry each other (Art. The defense of one joint owner can be used as a defense by all joint owners. Codominium Civil law origin Each co-owner owner of his ideal share Each co-owner may dispose of his undivided share without the other’s consent. profitsharing is invariable (Art. an agreement to keep the ownership for more than 10 years is void. 148. but only one real right of ownership (2) unity of material of the object of ownership (3) recognition of ideal shares or aliquot (4) absolute control of each co-owner over his ideal share. Profits of a coowner depend on his proportionate share. As a rule. Notion of “all-for one. (Art 147. Fortuitous Event. onefor-all” Common Law/ Anglo-American origin Each joint owner. 1452) (d) Succession (i) Intestate succession (1078) (ii) Testate—if property is given to two or more heirs by the testator Differences between and co-ownership Ordinary Partnership With legal/juridical personality distinct from its members Created only by agreement or contract to that effect Purpose is obtain profit to partnership Co-ownership No legal personality distinct from its members created by “LAW FOCUS” [Law. Joint Ownership Joint tenancy. FC) (b) Absolute community property (Art. 485) not subject to stipulation No term set limit set by law Creditors of individual partners cannot attach and sell on execution the shares of partners in the partnership Can be extinguished by the death or incapacity of one party There is mutual representation of the parties A partner cannot transfer his rights to a 3rd person without the consent of the others Distribution of profits can be stipulated upon (profit-sharing) Sources of co-ownership (1) Law (a) Cohabitation (i) Between man and woman capacitated to marry each other. Tenancy in common. minority as a defense against prescription is exclusive to him. In case there is a co-owner who is a minor. FC) (c) two or more persons purchase property and by common consent legal title is taken in the name of one of them for the benefit of all.

v. NCC) (ii) Of profits (Art. taxes BUT co-owner has option not to contribute by renouncing so much of his undivided interest equal to the amount of contribution EXCEPT if waiver is prejudicial to co-ownership  100% UP LAW UP BAROPS 2008 Page 51 of 325 .increase the income of the thing owned in common for the benefit of all the co-owners .PROPERTY Redemption done by one of the co-owners/heirs will benefit his other co-owner heirs despite the fact that they did not contribute to the redemption money. 1780. 6(c) of RA 4726 – unless otherwise provided. whose articles are kept secret wherein anyone of the members may contact in his own name with third persons (no juridical personality) Rights of each co-owner as to the thing owned in common: FRom CUERPO (1) proportionate Fruits and benefits (485) (2) Repairs for preservation (489-490) (3) Compel contribution (488) (4) Use according to purpose intended (486) (5) bring an action for Ejectment (487) (6) legal Redemption (1620) (7) demand Partition and terminate coownership (494-496. (e) Donation  donation to several persons jointly. he must give reasonable notice to the other co-owners Useful expenses . (f) Chance – commixtion in good faith (Art. unless contrary so provide. He will not be fully reimbursed if others can prove that i. 492) . (2)Contract (a) Two or more persons agree to create a co-ownership—maximum of ten years (494. Accretion added to any portion of land co-owned becomes part of the property in co-ownership and should be divided according to each coowners proportionate share. 2nd par). 472. 1778-1779. common areas are held in common by the holders of the units in equal shares. (b) Universal Partnership (i) Of all present properties (Art.. Portions are presumed equal unless contrary is proved. one for each unit. there shall be a right of accretion.Effect of failure to notify coowners even if it was practicable to do so: does not deprive coowner of right to reimbursement. Boon Liat et al.a lone co-owner cannot incur such expenses without the consent of the others and then ask reimbursement (resolution of majority as per Art.e. 498) (8) full Ownership of proportion (493) CIVIL LAW (1)Right to share in the fruits and benefits in proportion to his interest     PROVIDED the charges are borne by each in the same proportion A contrary stipulation is VOID.) (j) Condominium law Sec. expenses for preservation 2. He is merely given the burden to prove the necessity of such repairs. repairs for (2)Right to make preservation  Necessary expenses . extendable by a new agreement.may be incurred upon the will of 1 co-owner. but if practicable. NCC) (c) Associations and Societies. could have hired a contractor who would charge less  (3)Right to compel the other coowner to contribute  For: 1. it is understood to be in equal shares  no rights of accretion unless the donor otherwise provides  but if donation is made to husband and wife jointly. NCC) (g) Hidden treasure – co-ownership between finder and owner (h) Easement of a party wall (i) Occupation – Harvesting and fishing (Punsalan et al.taxes and expenses for the preservation of the thing which if not made would endanger the existence of the thing or reduce its value or productivity .

1623 requires that the written notification should come from the vendor or prospective vendor.PROPERTY (4)Right to use the thing according to its intended purpose  may be altered by agreement. 1620 of the Civil Code (on the right of legal redemption of a coowner) is anyone who is not a coowner.without preventing the use of other co-owners Any act against the collective interest is an act against ownership and the remedies available to owners in general may by used by the coowner CIVIL LAW him upon termination of the coownership and. Exceptions: (PUI SCAN) 1. Oliva) exercise legal      (6)Right to redemption  Redemption of the property by a coowner does not vest in him sole ownership over said property but will inure to the benefit of all co-owners. CA.without injury or prejudice to interest of co-ownership. its perfection. Redemption is not a mode of termination of relationship. The law merely provides that the alienation or mortgage shall be limited only to the portion of the property which may be allotted to (7)Right to ask for partition  PARTITION: a division between two or more persons of real or personal property which they own as copartners. (Cortes v. 1998) Art. Both lands—that sought to be redeemed and the adjacent lot belonging to the person exercising the right of redemption—must be rural. The law does not prohibit a co-owner from selling. (Halili v. the right cannot be invoked. which can remove all doubts as to the fact of the sale. however. as earlier discussed. when partition would render the thing Unserviceable. It is the notification from the seller. (Verdad v CA. Gen rule: A co-owner can always ask for a partition. (Pilapil v CA)  (5)Right of to bring an action in ejectment  no need to implead all the other coowners as co-plaintiffs because the suit is deemed to be for the benefit of all: a favorable decision will benefit everyone but an adverse decision will not affect them if they are not parties in the case or they did not give their consent to the action BUT action will not prosper if the action is for the benefit of himself only and not for the co-ownership For title to prescribe in favor of the co-owner. There is no prescriptive period. provided: . effected by the setting apart of such interests so that they may enjoy and possess it in severalty. alienating or mortgaging his ideal share in the property held in common. that the remaining co-owners have the right to redeem. (Francisco v. for in a contract of sale. a co-owner's right to redeem is invoked only after the shares of the other co-owners are sold to a third party or stranger to the co-ownership. Judge Concepcion)  Art 1621 presupposes that the land sought to be redeemed is rural. when partition is generally Prohibited by law 2. Boiser) The written notice of sale is mandatory for the tolling of the 30day redemption period. 1996) A third person. and . there must be a clear showing that he has repudiated the claims of the other co-owners and that they have been categorically advised of the exclusive claim he is making to the property in question. express or implied. the seller is in the best position to confirm whether consent to the essential obligation of selling the property and transferring ownership thereof to the vendee has been given. Only then will the period of prescription being to run. or the thing    100% UP LAW UP BAROPS 2008 Page 52 of 325 . joins tenants or tenants in common. the shares which may have been sold to the third party (Reyes vs. notwithstanding actual knowledge of a co-owner. If one or both are urban. (Mariano v CA) By the very nature of the right of "legal redemption". within a specified period. and its validity. within the meaning of Art. not from any other person.

no physical partition but thing maybe sold and co-owners shall divide the proceeds when there is a Stipulation against it (not beyond 10 years) when Condition of indivision is imposed by transferor (donor or testator) not exceed 20 years Acquisitive prescription has set in facor of a stranger to coownership or in favor of coowner. Co-owners reciprocally bound to each other for warranty of title and quality of part given to each (hidden defect) after partition. Limited to his share in the partition 2. reimbursements. mutually account (500) 4.  6. (Castro v. 499). Heir is exclusive owner of property adjudicated to him. 5.g. a co-owner can enter into a contract of lease insofar as to his interest. specific or definite part of the thing owned in common because his right over the thing is represented by a 100% UP LAW UP BAROPS 2008 Page 53 of 325 . The part allotted to a co-owner at partition will be deemed to be possessed by such co-owner from the time the co-ownership commenced. The effect of such alienation or mortgage shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership In short. 1093. insolvency of one makes the others liable subject to reimbursement (joint liability) full ownership of    Duties and Limits to Rights of Coowners 1. obligation of warranty is proportionate to respective hereditary shares. Atienza) 3.  Either co-owner may demand the sale of the house and lot at any time and the other cannot object to such demand. pay for charges (485) 2. when legal Nature of community prevents partition (e. Thereafter the proceeds of the sale shall be divided equally according to their respective interests. liability for defects in title and quantity (501) Duty not to make alterations Alteration: act by virtue of which a coowner  changes the thing from the state in which the others believe it should remain or  withdraws it from the use to which they are desired to be intended in opposition to the common or tacit agreement Consent of ALL the co-owners is required if it changes the essence or nature of the thing (present article refers to this) because it is an act of ownership. 4. Under Art. 497) Unless the partition is effected. he can also cancel such lease without the consent from the other co-owner. party wall) CIVIL LAW quota or ideal portion without any physical adjudication. 4. Transferee does not acquire any specific portion of the whole property until partition 3. liability for defects of title and quality of portion assigned to each 3. Therefore. not to make alterations (491) after partition… 3. each heir cannot claim ownership over the definite portion and cannot dispose of the same. payment of damages due to negligence or fraud. (Carvajal v CA) Art 493 of the NCC allows the alienation of the co-owner of his part in the co-ownership. CA) Effects of partition: 1. It shall NOT prejudice third persons who did not intervene in the partition 2. Co-heir can only sell his successional rights. 6. There should be mutual accounting of benefits. Creditors of co-owners may intervene in the partition to attack the same if prejudicial (Art. (Aguilar v. except that creditors cannot ask for rescission even if not notified in the absence of fraud (Art. Acts of alteration that do not change the essence or nature of the thing requires (8)Right to proportion  All that he can sell or freely dispose is his undivided interest but he cannot sell or alienate a concrete. 5.PROPERTY in common is essentially Indivisible .  Co-owner can substitute another person in the enjoyment of the thing Effect of transaction by each coowner: 1.

PROPERTY
only the agreement of the majority because it is merely an act of administration. - but if withholding of consent by any one of the co-owners is clearly prejudicial to the common interest, courts may afford adequate relief (491) Acts of Alteration/Acts of Ownership Relates to the use, substance or form of the thing Have a more permanent result Consent of all is necessary Contrary to the coownership agreement Acts of Administration Also for the better enjoyment of the property Effects are transitory character of

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and their decisions are binding upon the minority. Majority may only proceed to act without notice to the minority if the circumstances warrant urgency. b) An administrator who may or may not be a co-owner delegated by the co-owners An administrator cannot, without the unanimous consent of all the coowners, compromise on, donate, cede, alienate, mortgage, or encumber in any manner the common property. The majority refers to the majority in interest or the financial majority. (50% + 1) When are acts seriously prejudicial?  So serious and affects the interest of the co-owners in the community  Such that will cause injuries enough to justify the intervention of the court Examples: (1) When the resolution calls for a substantial change or alteration of the common property or of the use to which it has been dedicated by agreement or by its nature (2) When the resolution goes beyond the limits of mere administration, or invades the proprietary rights of the co-owners, in violation of Art. 491 (prohibiting against acts of alteration) (3) When the majority leases, loans, or other contracts without security, exposing the thing to serious danger to the prejudice of the other coowners. (4) When the majority refuse to dismiss an administrator who is guilty of fraud or negligence in his management, or does not have the respectability, aptitude, and solvency required of persons holding such position. (5) When resolution, if carried out, would cause serious injury to the thing itself, such as an agreement not to borrow money under reasonable terms when it is necessary for urgent repairs for preservation, or for the payment of taxes. Remedies of the minority If the acts of the majority prejudice the minority, the latter may ask for injunction or at worse, a partition.

Consent of the financial majority will be binding Does not give rise to a real right over the thing owned in common.

Effects of acts of alteration and remedies of non-consenting coowner : (a) Co-owner who made alterations may lose whatever he has spent as he will not be reimbursed (b) He may be ordered to demolish or remove the alteration at his expense (c) He will be liable for damages and other losses (d) Co-ownership will benefit from the alteration if other co-owners decide to contribute to the expenses by reimbursing him (ratification) (e) If a house is built in a common lot, the co-owners are entitled to the proportionate share of the rent. Lease becomes an act of ownership if: (1) It is recorded in the Registry of Property (2) It is for more than 1 year Management of Property Who may manage: a) The co-owners themselves Court cannot appoint an administrator to manage a property co-owned when the co-owners want to handle the management. In this management, the “majority” control

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(b) plaintiff is indeed a co-owner of the property (c) how the property is to be divided between plaintiff and defendants. If property cannot be divided without great prejudice, the court may order such property be assigned to one co-owner. Such co- owner will pay the others the value of their interests.

Extinguishment of Co-Ownership (1) Total destruction of the thing (2) Merger of all the interest in one person (3) Acquisitive prescription (a) By a third person (b) By one co-owner against the other co-owners Requisites: (i) Unequivocal acts of repudiation of the rights of the other co-owners (acts amounting to ouster of other co-owners) (ii) Open and adverse possession, not mere silent possession for the required period of extraordinary acquisitive prescription. (iii)Presumption is that possession of a co-owner is not adverse. (4) Partition or division (a) Right of Creditors of individual Co-owners Art. 497  All creditors must be considered to intervene in the partition of the common property.  They must have become creditors during the co-ownership  Co-owner debtors have the duty to notify the creditors of the partition  Otherwise partition not binding on them  They can contest such partition if they formulate a formal opposition thereto. (b) Partition may be made: (ii.) Orally  Valid and enforceable among the parties.  Statute of frauds does not operate for partition is not a conveyance of property but merely a segregation and designation of that part of the property which belongs to the co-owners. (ii.) In writing (a) Court will just confirm such written agreement.

VII. CONDOMINIUM LAW (ACT NO. 4726) Concept of condominium  Exclusive interest in units plus undivided interest in common areas.  Partly co-ownership, partly under individual separate ownership  Each unit belongs separately to one or more persons  The land and the common areas are of common use by the different owners and are under co-ownership either as contemplated by the Civil Code or through a corporation.  Not governed by co-ownership as provided for in the Civil Code.  External surfaces are common areas  Beams and posts are common areas  Easement, unless the master deed says otherwise, is an exclusive easement.  Interest in the common areas will depend on interest in the condo  Important documents in buying a condo unit (i) deed of sale (ii) enabling or master deed (iii)declaration of restrictions Sec. 9 The owner of a project shall, prior to the conveyance of any condominium therein, register a declaration of restrictions relating to such project, which restrictions shall constitute a lien upon each condominium in the project and shall insure to and bind all condominium owners in the project. Such liens, unless otherwise provided, may be enforced by any condominium owner in the project or by the management body of such project. The Register of Deeds shall enter and annotate the declaration of restrictions upon the certificate of title covering the land included within the project, if the land is patented or register under the land included within the project, if the

(a) Rules of Court does not preclude amicable settlement between parties. (b) Two principal issues in an action for partition:

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land is patented or registered under the Land Registration or Cadastral Acts.  Method of taxation

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(ii) as the unit may lawfully be altered or reconstructed from time to time (iii)such easement shall be automatically terminated in any air space upon destruction of the units to render it untenable (c) Unless otherwise provided, the common areas are held in common by the holders of units, in equal shares, one for each unit (d) a non-exclusive ease ment for ingress, egress, and support through the common areas are subject to such easements (e) Each condominium unit owner shall have the exclusive right to paint, repaint, tile, wax, paper, or otherwise refinish and decorate the inner surfaces of the walls, ceilings, floors, windows, and doors, bounding his own unit (f) Each condominium owner shall have the exclusive right to mortgage, pledge, encumber his condominium and to have the same appraised independently of the other condominiums but any obligation incurred by such condominium owner is personal to him. (g) Each condominium owner has also the absolute right to sell or dispose of his condominium unless the master deed contains a requirement that the property be first offered to the condominium owners within a reasonable period of time before the same is offered to outside parties. Case Ownership of a unit, therefore, is a condition sine qua non to being a shareholder in the condominium corporation By necessary implication, the "separate interest" in a condominium, which entitles the holder to become automatically a share holder in the condominium corporation, as provided in Section 2 of the Condominium Act, can be no other than ownership of a unit. (Sunset View Condominium v Judge Campos)

Sec. 25. Whenever real property has been divided into condominiums, each condominium separately owned shall be separately assessed, for purposes of real property taxation and other tax purposes to the owners thereof and the tax on each such condominium shall constitute a lien solely thereon.  Partition of Common Areas Sec.7. Except as provided in the following section, the common areas shall remain undivided, and there shall be no judicial partition thereof. (b) Who manages the condominium? (i) condominium corporation (preferred by law) – coterminous with the existence of the condominium (ii) co-ownership (iii) association of owners Rights and Obligations of Condominium owner What are the incidents of a condominium grant? (a) The boundary of the unit grant (i) the interior surfaces of the perimeter walls, floors, ceilings, windows, and doors (ii) those which are not part of the unit bearing walls, columns, floors, roofs, foundations, and other common structural elements of the building; lobbies, stairways, hallways, and other areas of common use, elevator equipment and shafts, central heating, central refrigeration, and central air-conditioning equipment, reservoirs, tanks, pumps, and other central services and faicilities, pipes, ducts, flues, chutes, conduits, wires and other utility installations, wherever located, except the outlets thereof when located within 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

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VIII. POSSESSION Definition and Concept (1) Possession is the holding of a thing of the enjoyment (exercise) of a right (523), whether by material occupation (de facto possession) or by the fact that the thing or the right is subjected to the action of our will. (2) It is a real right independent of and apart from ownership. Essential requisites of possession (1) Holding or control of a thing or right (corpus) consists of either: (a) the material or physical possession (b) subject action of our willexercise of a right (c) constructive possession  doctrine of constructive possession applies when the possession is under title calling for the whole, i.e., possession of a part is possession of the whole. Constructive possession a) tradicion brevi manu (one who possess a thing short of title of owner – lease ); b) tradicion constitutum possesorium (owner alienates thing but continues to possess – depositary, pledgee, tenant)

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their heirs. It is still part of the public domain until the patents are issued. (Director v. CA) Degrees of holding of possession (1) Mere holding or possession without title whatsoever and in violation of the right of the owner.  applies to both movables and immovables  both the possessor and the public know that the possession is wrongful  there can be no acquisitive prescription of movables under the NCC (Art. 1133) (2) Possession with juridical title but not that of ownership.  peaceably acquired  this will never ripen into full ownership as long as there is no repudiation of concept under which the property is held (if such repudiation is made known to the owner, then extraordinary prescription of 30 yrs will apply)  e.g., possession by tenant, depositary, agent, bailee, trustee, lessee, antichretic creditor  even actual owner may be prevented by law from taking possession  a depositary bank is not a possessor in this degree, since a deposit is actually a loan to the bank (3)      Possession with just title or title sufficient to transfer ownership, but not from the true owner title— deed of sale or contract of sale possession of a vendee from vendor who pretends to be the owner, i.e., innocent buyer of stolen goods good faith of buyer = just title if in good faith, extraordinary prescription of 30 years will apply this degree of possession ripens interesting full ownership by lapse of time

(2) Intention to possess (animus possidendi)  it is a state of mind whereby the possessor intends to exercise and does exercise a right of possession, whether or not such right is legal  intention may be inferred from the fact that the thing in question is under the power and control of the possessor  may be rebutted by contrary evidence Cases: The general rule is that the possession and cultivation of a portion of a tract of land under a claim of ownership of all is a constructive possession of all, IF the remainder is not in the adverse possession of another. Possession in the eyes of the law does not mean that a man has to have his feet on every square meter of ground before it can be said that he is in possession. (Ramos v. Director of Lands) The rule on constructive possession does not apply when the major portion of the disputed property has been in the adverse possession of homesteaders and

(4) Possession with just title from the true owner  Transfer of possession transfers ownership! (possession as an incident of ownership) Cases of possession (1) Possession for oneself, or possession exercised in one’s own name and possession in the name of another. rights of possession may be exercised through agents

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(a) necessary— exercised on behalf of the conceived child, of juridical persons, of persons not sui juris, and of the conjugal partnership (b) voluntary— in cases of agents or administrators appointed by the owner or possessor (2) Possession in the concept of an owner and possession in the concept of a holder with the ownership belonging to another better right preemption) (9) possession in possession in BF (3)   Possession in good possession in bad faith

CIVIL LAW
(e.g., GF faith and and

In the Concept of a Holder  such possessor acknowledges in another a superior right which he believes to be ownership, whether his belief be right or wrong  e.g. tenant, usufructuary, and borrower In the Concept of Owner  such possessor may be the owner himself or one who claims to be so  only this class of possession can serve as title for acquiring dominion  good faith or bad faith is immaterial except for purposes of prescription (GF: 10 yrs; BF: 30 yrs) Effects of possession in the concept of an owner: (1) possession may by lapse of time ripen into full ownership, subject to certain exceptions (2) presumption of just title and cannot be obliged to show or prove it Exception: for purpose of prescription in Art 1131. (3) possessor can bring all actions an owner can bring to protect his possession, except accion reivindicatoria (4) may employ self-help (Art 429) (5) can ask for the inscription of his possession in the registry of property (6) has right to the fruits and reimbursement for expenses (assuming he is a possessor in GF) (7) upon recovering possession from unlawful deprivers, can demand fruits and damages (8) generally, he can do everything an owner is authorized to do until he is ousted by one who has a

 

possession in good faith ceases from the moment defects in the title are made known to the possessor when an action is filed to recover possession, good faith ceases from the date of the summons to appear at the trial GF consists in the possessor’s belief that the person from whom he receive a thing was the owner of the same and could convey his title GF is always presumed belief that one is the legal owner must be based on some title or mode of acquisition, i.e., sale, donation, inheritance error in the application of the law, in the legal solutions that arise form such application, in the appreciation of the legal consequences of certain acts, and in the interpretation of doubtful provisions or doctrines, may properly serve as the basis of GFmistake upon a doubtful or difficult question of law as a basis of good faith [Art 526 (3)]

Subjects of possession  All rights and things susceptible of appropriation  Things which cannot be possessed: (1) property of public dominion (2) res communes (3) easements (discontinuous or non-apparent) (4) things specifically prohibited by law  res nullius (abandoned or ownerless property)– may be possessed but cannot be acquired by prescription Acquisition of Possession (1) Ways of acquiring possession (a) Material occupation of the thing  occupation is used in the general sense, i.e., a means of acquiring possession of things, not of rights  kind of possession acquired is only the fact of possession, not the legal right of possession (i) Doctrine of constructive possession (ii) Includes constructive delivery (equal to material occupation in cases where

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occupation is essential to the acquisition of prescription) traditio brevi manu  one who possesses a thing by title other than ownership continues to possess the same but under a new title, that of ownership traditio constitutum possessorium  owner alienates the thing, but continues to possess the same but as that of depositary, pledge, or tenant (b) subjection to the action of our will  different from and independent of juridical acts and legal formalities as it refers more to the right of possession that to possession as a fact (i) traditio simbolica -effected by delivering some object or symbol, placing under the thing under the control of the transferee, such as the keys to the warehouse containing the goods delivered [Art 1498 (2)] (ii) traditio longa manu – effected by the transferor pointing out to the transferee the things which are being transacted (c) proper acts and legal formalities  refers to the acquisition of possession by sufficient title, whether inter vivos or mortis causa, or lucrative or onerous  e.g., donations, succession, contracts, judicial writs of possession, writs of execution of judgments, and registration of public instruments There was a perfect contract of pledge and the depositary was placed in the possession of the goods after the symbolic transfer by means of delivery to him of the keys to the warehouse where the goods were kept. (Banco Espanol Filipino v. Peterson) (2) By whom possession acquired

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may be

(a) by same person Elements of personal acquisition  must have the capacity to acquire possession  must have the intent to possess  possibility to acquire possession must be present (b) by his legal representative Requisites:  representative or agent has the intention to acquire the thing or exercise the right for another, and not for himself  person for whom the thing has been acquired or right exercised, has the intention of possessing such thing or exercising such right (c) by his agent (d) by any person without any power whatsoever but subject to ratification, without prejudice to proper case of negotiorum gestio (e) Qualifiedly, minors and incapacitated persons  refers only to possession of things, not of rights, and to acquisition of possession by material occupation (3) What do not affect possession (a) acts merely tolerated (b) acts executed clandestinely AND without knowledge of owner (c) acts by violence as long as the possessor objects thereto (i.e., he files a case) If owner of a tract of land, to accommodate the public, permits them to cross his property, it is not his intention to divest himself of ownership or to establish an easement. Such possession is not affected by acts of possessory character which are merely tolerated. (Cuaycong v Benedicto) As a squatter, she has no possessory rights over the disputed lot. The State’s solicitude from the destitutes and the have-nots does not mean that it should 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)

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PROPERTY (4) Rules possession to solve conflict of CIVIL LAW (ii) accion publiciana (based on superior right of possession. every possessor has a right to be respected in his possession. the following order of preference must be followed: (1) present possessor or actual possessor (2) if 2 or more possessors. (3) Of enjoyment of possession in the same character in which was acquired until the contrary is proved. 100% UP LAW UP BAROPS 2008 Page 60 of 325 . Within 10 days from filing of complaint in forcible entry . consumed. Plaintiff may ask for writ of preliminary mandatory injunction may be asked. if disturbed therein. or which could have been received. (Yu v Honrado) (1) Of good faith until the contrary is proved (Sideco vs. possessor has right to be protected in or restored to said possession (539) (a) action to recover possession (i) summary proceedings – forcible entry and unlawful detainer.  Possessor in BF has no right to receive any fruits. not of ownership) (iii)accion reivindicatoria (recovery of ownership) (iv) action for replevin – for recovery of movable property (b) Possessor can employ self-help (2) Entitlement to fruits – possessor in GF/ BF  Possessor in GF is entitled to the fruits received before the possession is legally interrupted. (3) Reimbursement for expenses (See Table below (4) Possession of movable acquired in GF (in concept of an owner) is equivalent to title  one who has lost a movable or has been unlawfully deprived thereof may recover it without reimbursement. Those already gathered and existing will have to be returned. he must pay the value. except if possessor acquired it at a public sale (559)  3 requisites to make possession of movable equivalent to a title: (1) that the possession is in GF (2) that the owner has voluntarily parted with the possession of the thing (3) that the possession is in the concept of an owner Presumptions possessor in favor of the In case of conflict of possession. because such amount is unliquidated. the one who presents a title (4) if all the condition are equal. one who presents the oldest title (2) for movable property: first who possessed in GF Effects of Possession (1) In general.the same writ is available in unlawful detainer actions upon appeal (Art 1674)  The acquirer and possessor in good faith of a chattel or movable property is entitled to be respected and protected in his possession as if he were the true owner. with respect to those lost. first who possessed in GF (c) if no possession. the one longer in possession (3) if dates of possession are the same. the thing shall be placed in judicial deposit pending determination of possession or ownership through proper proceedings Preference in case of conflict of ownership (double sales) (1) for immovable property (a) first who registered his right in GF in the Registry of Property (b) if no registration. Pascua) (2) Of continutity of initial GF in which possession was commenced or possession in GF does not lose its character Exception: in the case and from the moment the possessor became aware or is not unaware of improper or wrongful possession. But the possessor in BF does not have to pay interest on the value of fruits he has to pay. Such possession in good faith is equivalent to title and every possessor has a right to be respected in his possession (Arts 539 and 559). until a competent court rules otherwise.

(Art. (2) Civil (Art 1123)— will start from the service of summons but the proper action must be filed  in case of natural interruption. subject to Art. domesticated or tamed animals are considered domestic or tame if they retain the habit of returning to the premises of the possessor. Wild animals are possessed only while they are under one's control. without paying for any indemnity except if possessor acquired it in public sale but the possessor in GF is entitled to reimbursement.PROPERTY (4) Of non-interruption of possession in favor of present possessor who proves possession at a previous time until the contrary is proved. he may recover the personal property not only from the finder but also from those who may have acquired it in GF from such finder or thief. if possession is recovered. 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.e. destruction) refer to loss of possession de jure (real right of possession) and CIVIL LAW therefore cannot be recovered anymore by any action. i. 426) (ii) Non-interruption of possession of hereditary property (Art. (554. 533. 1120-1124) 2 Kinds of Interruption (1) Natural (Art 1122)—if interruption is for more than 1 year. it can be connected to the time that has elapsed as if it were continuous and can be counted in favor of prescription (5) Of exclusive possession of property allotted to a participant in a thing possessed in common for the entire period during which copossession lasted.. recovery or reivindication of the thing by the lawful owner 100% UP LAW UP BAROPS 2008 Page 61 of 325 . 560) (5) Reivindication—the most natural mode of losing possession. 1078) (iii)Of just title in favor of possessor in concept of owner. Rules for Loss of Movables General Rule: possession of personal property acquired in GF = title therefore the true owner cannot recover it Exception: if the true owner (1) lost the movable or (2) has been unlawfully deprived In either of these. the old possession loses all its juridical effects and therefore cannot be tacked to the new possession for purposes of prescription  in case of civil interruption. (6) Of continuous possession or noninterruption of possession of which 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.

(Art. He also cannot remove improvements even he can do so without injury to the principal thing Ornamental Expenses Deterioration or Loss Costs of Litigation Limited right of removal (but should not damage principal and owner does not exercise option of payment of expenses or increase in value) (547) Limited right of removal as above (548) No liability unless due to fraud or negligence after becoming in BF Bears cost Limited right of removal (no injury to thing and lawful possessor does not retain by paying for them) (548) Liable WoN due to his fault. and preservation Fruits received Pending Fruits Entitled to a part of the expenses of cultivation and a part of the network harvest. fortuitous event Bears cost 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. 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. in proportion to the time of possession Right of reimbursement and retention in the meantime (545) Owner’s option to reimburse him either for expenses or for increase in value (546) Retention (546) prior to reimbursement Charges Necessary Expenses Useful Expenses Same as with GF Reimbursement only No right to reimbursement. 553)  necessary expenses: lawful possessor or owner has to pay for them even if the object for which they were incurred no longer exist 100% UP LAW UP BAROPS 2008 Page 62 of 325 . (Art.PROPERTY CIVIL LAW Effects of Possession in Good Faith or Bad Faith Good Faith Bad Faith Entitled to the fruits while possession Must reimburse fruits received or is in GF and before legal interruption fruits which legitimate possessor (Art 544) could have received (549). gathering. negligence. 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. Entitled to expenses for production. no indemnity (545) Must share with the legitimate possessor.

 Dividends from shares are fruits. the usufructuary can dispose of them. right to lease the thing (572) 3.  Fruits growing at the time of the termination of the usufruct belong to the owner.  If things are consumable or were appraised when delivered. they must be reimbursed. on tangibles or intangibles Rights of Usufructuary: A.Legal usufruct of parents (Art.Usufruct granted the usufructuary in consideration of his person .  As to hidden treasure. (Art.  But. in which case they will belong to the usufruct only when the owner has dedicated the property to the exploitation of such products. unless the title constituting it or the law otherwise provides. of a temporary duration 3.  If improvements cannot be removed. Right to alienate  EXCEPT in purely personal ones or when the title constituting the usufruct prohibits the same. It’s a sale of property not belonging to the usufructuary and those gathered at the termination of the usufruct belonging to the owner. pledge  CIVIL LAW Lease by the owner before the start of the usufruct is not extinguished by such usufruct. 100% UP LAW UP BAROPS 2008 Page 63 of 325 . As to the usufructuary right itself 1. so no right to it  Fruits pending at the beginning of the usufruct belong to the usufructuary. usufructuary is a stranger. right to possess and enjoy the thing itself..562) Characteristics 1. Examples: . right to improve the thing Right to possess and enjoy the thing itself. transmissible 4. such may be used to offset any damage caused by the usufructuary to the property. but the usufructuary must be reimbursed from the proceeds of such fruits for his production expenses. Usufructuary will be liable to the owner for damages caused by the fault or negligence of the transferee or lessee.a right to enjoy the property of another . USUFRUCT Definition USUFRUCT is a real right which gives the usufructuary . but such sale will be void if not ratified by the owner. may be constituted on real or personal property. minerals in quarries). its fruits and accessions  Fruits belong to the usufructuary except when they diminish the substance of the thing (e. if expenses for production were incurred by third persons. Right to lease the thing  even without consent of owner  BUT no alienation. As to the thing and its fruits 1. its fruits and accessions (566-567) 2. BUT If the usufructuary does not remove. assigned. mortgage.  The owner cannot compel the usufructuary to remove the improvements. or otherwise disposed of by the usufructuary.  Exception: leases of rural lands.with the obligation of preserving its form and substance. in which case the lease continues for the remainder of the agricultural year   Right to improve the thing  Useful improvements or expenses only  No alteration of form and substance  Usufructuary may remove improvements only if it is possible without damaging the property.g. General rule: Lease by the usufruct should terminated at the end of the usufruct or earlier. 226 FC) .PROPERTY IX. real right of use and enjoyment of property owned by another 2. he has no right to be indemnified.  Registry of improvements is necessary to protect the usufructuary against third persons regarding the improvements. with no obligation to refund the expenses of the owner.Usufruct acquired through caucion juratoria Sale by the usufructuary  Future crop may be sold.  Rights may be transferred. B.

may be made by the usufructuary To notify owner of any act detrimental to ownership  OR ELSE. To make an inventory EXCEPT when  No one will be injured thereby  Title constituting usufruct excused the making of inventory  Title constituting usufruct already makes an inventory 2. or agent of the usufructuary 3. unless a contrary intention clearly appears. During the usufruct  retains title to the thing and improve it  may alienate the property 3. 5. over deteriorable property (578) 100% UP LAW UP BAROPS 2008 Page 64 of 325 . with right of reimbursement from the usufructuary To Notify the Owner of Need to Undertake Extra-Ordinary Repairs  Those caused by exceptional circumstances. To undertake Ordinary Repairs  for the preservation  if not repairs made by usufructuary. Merger of the usufruct and ownership in the same person.603) DERM PLT 1. At the termination or end of the usufruct  recover property from the usufructuary in the same preserved form and substance with room for ordinary wear and tear subject to ordinary repairs Obligations of the Usufructuary  These requirements are conditions merely to the entry upon the possession and enjoyment of the property. Expiration of the period for which it was constituted. Renunciation of the usufructuary. 5. 7. 4. To take care of the things like a good father of the family  bad use of the thing will not extinguish the usufruct  Owner becomes entitled to delivery and administration of the thing should the abuse cause substantial injury to the owner 2. Prescription. At the beginning of the usufruct or before the exercise of the right of the usufruct 1. but are not necessary for its preservation  Naked owner obliged to undertake them but when made by the owner. lessee. Death of the usufructuary. of property owned in common (582) 3. Causes of extinguishment of Usufruct (Art. Total Loss of the thing in usufruct. WON they are necessary for the preservation of the thing  Those caused by the natural use of the thing. 2. To give a bond for the faithful performance of duties as usufructuary EXCEPT when  No prejudice would result  Usufruct is reserved by donor  Title constituting usufruct excused usufructuary  Caucion juratoria: a sworn undertaking wherein the usufructuary claims that he is in dire need of the house and the implements/furniture and asks that he be allowed to enjoy the same even without giving the required security B. over a pension or periodical income (570) 2. Termination of the right of the person constituting the usufruct Special Cases of Usufruct 1. 6. usufructuary pays legal interest on the amount while usufruct lasts  Naked owner cannot be compelled to undertake extraordinary repairs  If indispensable and owner fails to undertake extraordinary repairs. At the beginning of the usufruct  all obligations of the usufructuary at the beginning of the usufruct 2. During the usufruct 1. or by the fulfillment of any resolutory condition provided in the title creating the usufruct. A. 3. of head of cattle (591) 4. even after the CIVIL LAW demand by the owner. 6. the latter may pay for the repairs. usufructuary will be liable for damage and he cannot make extraordinary repairs To shoulder costs of litigation regarding the usufruct To answer for the fault of alienee.PROPERTY Rights of the naked owner 1. 4.

Such things are inalienable. Servitudes cannot be created on property of public dominion. servient estate. e. Imposition of an encumbrance would constitute an alienation.   Easements cannot be established on personal property Burden should not be so great as to amount to a taking of his property Limited right to the use of real property of another. (2) It is a right enjoyed over another property (jus in re aliena). Not necessary that the right acquired under the servitude be exercised. Lease EASEMENT Real right WON registered.g. “Personal Easements”: established for the benefit of a community. over consumable property (574)  quasi-usufruct  may be on consumables. must be considered as on their value  may also be on non-consumables that gradually deteriorate by use. but upon the sum representing their value or upon a quantity of things of the same kind and quality the usufructuary. Easement v. May involve either real or personal property Limited right to both the possession and use of another’s property. on mortgaged property (600) 7. real or personal property. WON real or personal Imposed only real property on X. Not extinguished As a rule.. Limited to a Includes all the particular or uses and fruits of specific use of the the property. in effect. becomes the owner of the things in usufruct.g. furniture or car in reality. food. e. “Dominant estate”: the immovable in favor of which the easement is established “Servient estate”: the immovable which is the subject of the easement. or of one or more persons to whom the encumbered estate does not belong. while the grantor becomes a mere creditor entitled to the return of the value or of the things of the same quantity and quality  CIVIL LAW It is not essential that the benefit be great. Non-possessory Involves right of right over an possession in an immovable immovable or movable. the usufruct is converted into a simple loan not upon consumable things themselves which are delivered to the usufructuary.PROPERTY 5.. “Easement or Servitude”: encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner. EASEMENTS Art. Art. It cannot exist in one’s own property (nulli res sua servit). It is sufficient that there is a determinate use or utility in favor of a dominant estate. but must be replaced with equal quantity if not appraised. over entire patrimony (598) 8... or when its subject matter is real property and the duration exceeds 1 year. 614. over vineyards and woodlands (575576) 6. Usufruct EASEMENT USUFRUCT Imposed only on May involve either real property. without right of possession.real right or encumbrance imposed on an immovable for the benefit of another immovable belonging to a different owner or for the benefit of a community or one or more persons to whom the encumbered estate does not belong by which the owner is obliged to abstain from doing or to permit a certain thing to be done on his estate. by death of the extinguished by dominant owner. the death of the usufructuary.    Easement v. Servitudes can’t be established on things which are outside the commerce of man. . 613. Essential Features of Easements or Real Servitudes (RAIL-IRI-NARIP) (1) It is a real right. LEASE Real right only when it is registered. It gives rise to an action in rem or real action against any possessor of the servient estate. Servient and dominant 100% UP LAW UP BAROPS 2008 Page 65 of 325 .

615) Apparent Made known and are continually kept in view by external signs that reveal the use and enjoyment of the same (Art. Private: vested in a determinate individual or certain persons (5) (6) (7) (8) As to recepient of benefit Voluntar y Establish ed by will or agreeme nt of the parties or by a testator (Art. (Art. It is inherent or inseparable from estate to which they actively or passively belong.619 ) Mixed Created partly by will or agreement and partly by law (9)  As to its source Continuous As to its exercise   Use of which is or may be incessant.615) Discontinou s Used at intervals and depend upon acts of men (Art. It limits the servient owner’s right of ownership or the benefit of the dominant estate.619) Legal Impose d by law either for public use or in the interest of private persons (Art. (618) (12) It has permanence. They are merely accessory.615) no of * In general. (Art. It may consist in requiring the owner of the dominant estate demanding that the owner of the servient estate refrain from doing something (servitus in non faciendo). Bio Hong) Inherence refers only to that portion of the tenement affected by it. But servient tenement remains unimpaired. without the intervention of any act of man. This doesn’t mean they don’t have juridical existence of their own. it cannot be presumed.615) (10) It is intransmissible. It is a right constituted over an immovable by nature not over movables. Contract of transmission of easement by owner of the dominant estate may constitute a renunciation or extinguishments of easement Classification Real/Predial In favor of another immovable (Art. 617) Servitudes cannot exist without tenements.613) CIVIL LAW (3) (4) Personal In favor of a community or of 1 or more persons. may be public or private (Art. It can exist only between neighboring tenements. (11) It is indivisible. Being an abnormal limitation of ownership. (Solid Manila vs.PROPERTY estates have to belong to different persons.614) i. Portion not affected can be alienated without the servitude. negative easements are nonapparent. Public: vested in the public at large or in some class of indeterminate individuals ii. It can’t be created on another servitude. It creates a relation between tenements. As to WON its existence is indicated Nonapparent Show external indication their existence (Art. or that the latter permit that something be done over the servient property (servitus in patendo) but not in the right to demand that the owner of the servient estate do something (servitus in faciendo) except if such act is an accessory obligation to a praedial servitude. 100% UP LAW UP BAROPS 2008 Page 66 of 325 . cannot be alienated separately from the tenement. It can’t be the object of mortgage and exists even if not annotated. It cannot consist in requiring the owner of the servient estate to do an act unless the act is accessory to a praedial servitude (obligation propter rem).

(3) By deed of recognition (Art.PROPERTY servient CIVIL LAW Negative Prohibits the owner of the servient estate from doing something which he could lawfully do if the easement did not exist (Art. or the person who may have made use of the easement. contracts and wills) All easements . (Art.623) final If easement been acquired no proof existence available. Modes of Acquiring Easements (1) By Title a juridical act which gives rise to the servitude such as the law (e. (5) A servitude must have a perpetual cause. whether apparent or non-apparent * Discontinuous easement can only be acquired by title and not by prescription. by an instrument acknowledged before e notary public. (2) Prescription 10 years By of Continuous apparent easements (Art.616) (a) Positive easementsfrom the day on which the owner of the dominant estate. the owner of the servient estate.623) (4) By judgment (Art. in a way least burdensome to the owner of the land.620) The time reckoning prescription: and (5) By apparent sign established by the owner of 2 adjoining estates.continous non-apparent easements (Art. for 100% UP LAW UP BAROPS 2008 Page 67 of 325 .620) . donation. General rules for acquisitive prescription of ownership and other real rights do not apply to it.g.616) General Rules Relating to Servitudes (1) No one can have a servitude over his own property (2) A servitude cannot consist in doing (3) There cannot be a servitude over another servitude (4) A servitude must be exercised civiliter.622) and As to owner duty of discontinous easements.621) * Prescription does not require good faith or just title. from executing an act which would be lawful without the easement. The existence of an apparent sign of easement between two estates. * There must however be adverse possession or exercise of the easement. easement is that cannot acquired prescription has but of is and one be by Positive Imposes upon the owner of the servient estate the obligation of allowing something to be done or of doing it himself (Art. commenced to exercise it upon the servient estate (b) Negative easementsfrom the day on which the owner of the dominant estate forbade.continious and apparent (Art.

as the time the ownership of the two estates is divided. it is difficult or grossly insufficient. (1) Rights of the dominant estate (EWW) (a) To use the easement (Art. all the rights necessary for its use are considered granted. (Art. or the sign aforesaid should be removed before the execution of the deed.626) and exercise all rights necessary for the use (Art. the contrary should be provided in the title of conveyance of either of them.” (Encarnacion v CA) Cases The road is clearly a servitude voluntarily constituted in favor of the community under Art. And while so devoted. 624. in view of the time that has elapsed since the church was built and dedicated to religious worship. and may accordingly be changed from time to time. (Municipality of Dumangas vs Bishop of Jaro) (2)Obligations of dominant estate (UNAC) (a) To use easement for the benefit of immovable and in the manner originally established. (Amor vs. 627) (c) Not to alter easement or render it burdensome. vs Hidalgo) Since the construction of the church. As this use of the land has been continuous. 627) (b) To use at his expense all necessary works for the use and preservation of the easement. (Art. during which period the Municipality has not prohibited the passage over the land by persons who attend services held by the church. to ask for change in width of easement sufficient for needs of dominant estate. Art. 627) (c) In a right of way. This provision shall also apply in case of the division of a thing owned in common by two or more persons. 626) (b) To notify owner of the servient estate before making repairs in manner inconvenient to servient estate. passing and entering the land in question. 100% UP LAW UP BAROPS 2008 Page 68 of 325 . (Ronquillo v Roco) Rights and Obligations of Owners of Dominant and Servient Estates Art. Florentino) An easement of a right of way cannot be acquired through prescription because possession of right of way is intermittent and discontinuous. should either of them be alienated. Having been devoted by NNSC to the use of the public in general. the road is charged with public interest.  Such right of way may be demanded when there is absolutely no access or even when there is one. there had been a side door in the wall through which the worshippers attending mass enter and leave.) CIVIL LAW Easement of light and view go together. (North Negros Sugar Co. Acquisitive prescription requires that the possession be continuous or uninterrupted (Art. The visible and permanent sign of an easement is the title that characterizes its existence. as a title in order that the easement may continue actively and passively. (Art. it is evident that the church has acquired a right to such use by prescription.PROPERTY established or maintained by the owner of both. shall be considered. Acquisition of easements is by title or by prescription. 1118). Upon establishment of an easement. unless. 625. NNSC may not establish discriminatory exceptions against any private persons. (Art. 531. 651 also provides that “the width of the easement of right of way shall be that which is sufficient for the needs of the dominant estate. Existence of the apparent sign had the same effect as a title of acquisition of the easement of the light and view upon death of original owner.

If the owner of the merged estate sells one of the estates later. Erection of works incompatible with the exercise of the easement or totally obstructing the servitude.    (2)Non.   (3)     Modes of Extinguishment of Easements (Art. If dominant estate is used in common. If extrinsic. transferee can be required to restore things their original condition but he cannot be required to pay indemnity because this is a personal liability of the former owner. the owner of the dominant tenement may ask for the destruction of such works and restoration with damages. not merely temporary. but it shall revive if the subsequent condition of the estates or either of them should again permit its use. If dominant owner violates restrictions. there is no revival.  When either or both of the estates fall into such condition that the easement cannot be used. Impossibility of use  (3) Rights of the servient estate (RC) (a) To retain ownership and use of his property (Art 630) (b) To change the place and manner of the use of the easement (4)Obligations of the servient estate (IC) (a) Not to impair the use of the easement. If dominant tenement is alienated. (Art. This mode arises from the condition of the tenements and only suspends the servitude unlit such time when it can be used again. otherwise. 10 years cap for suspension.PROPERTY (d) If there are several dominant estates unless he renounces his interest: to contribute the expenses of works necessary for use and preservation servitude.633) (c) Servitudes not yet exercised cannot be extinguished by non-user  Non – user must be due to abstention by dominant owner and not to fortuitous event. agreed to by the owner of the dominant estate. If owner of the servient estate performs act or constructs works impairing the use of the servitude. easement is not reestablished. 629) (b) To contribute proportionately to expenses to use the easement [Art 628(2)]  Owner of servient tenement must abstain from rendering the use of the easement more inconvenient to the owner of the dominant estate. Right or power to claim exercise of the legal servitude do not prescribe. Works must be executed in the manner of least inconvenience to the servient who cannot recover indemnity for the inevitable damages that may be suffered by the servient owner.631) (MINERRO) (1)Merger – must be absolute.user for 10 years (a) Computation of period (1) Discontinuous easements: counted from the day they ceased to be used (2) Continuous easements: counted from the day an act adverse to the exercise took place (b) Use by a co-owner of the dominant estate bars prescription with respect to others (Art. unless when the use becomes possible. easement is reestablished. extinguished by prescription as previously provided. amounts to tacit renunciation and extinguishes the servitude. 100% UP LAW UP BAROPS 2008 Page 69 of 325 . Eg. Flooding of servient tenement over which a right of way exists. perfect and definite. sufficient time for prescription has elapsed. he can be compelled to restore the things their original condition and to pay indemnity for the damages. 628)  Owner of dominant estate has the right to use accessory servitudes or those necessary for the use of other servitudes regarded as principals ones. (Art.  CIVIL LAW If cause for cessation of merger is inherent like nullity or rescission. exercise of the easement of one of the co – owner inures to the benefit of all others and preserves the easement which is indivisible. Injunction is another remedy. in accordance with the provisions of the preceding number.

(7) Other causes not mentioned (a) Annulment or rescission or cancellation of the title constituting the easement. Redemption agreed between the owners. Renunciation dominant estate of owner of the XI. clear.g. 637 – 648) (1) Natural drainage of waters with stones or earth carried with them waters which form in upper tenements and flow to the lower ones by force of nature and not by those caused by acts of man. But he can construct work necessary to prevent damage to himself provided it does not impede the servitude and he does not cause damage to other tenements Rain water from roofs of buildings and water from houses must be received on one’s own land. special laws and the CC govern easements but note that private legal easements may be governed by agreement of the interested parties whenever the law does not prohibit it and no injury is suffered by a third person. 655) (f) Registration of the servient estate as FREE (g) Permanent impossibility to make use of the easement.      100% UP LAW UP BAROPS 2008 Page 70 of 325 . KINDS (as to their use or object) (1) Public legal easements – for public or communal use (2) Private legal easements – for the interest of private persons or for private use including:  Waters  Right of way  Party Wall  Light & View  Drainage  Intermediate Distances  Against Nuisance  Lateral & Subjacent Support (1)Laws Governing Legal Easements Generally. if the easement is temporary or conditional. 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. Imposed or mandated by law and which have for their object either public use or the interest of private persons. Owner of the lower tenements cannot make works which impede the servitude. upon  By the redemption agreed upon between the owners of the dominant and servient estates. the opening of an adequate outlet to the highway extinguishes the easement. (b) Termination of the right of grantor to create the easement ( e. LEGAL EASEMENTS CIVIL LAW  DEFINITION Art.(Art. Occurs only in voluntary easements. if servient owner makes a demand for such extinguishment. 634. (5)    (6) It must be specific. express. (a) Those established for the use of water or easements relating waters (Arts. which extinguish easements. Owner of tenements cannot construct works to increase the burden of this servitude. Fact that owners of the dominant estate refrained from claiming the servitude without any positive act to imply a real waiver or renunciation does not bring the case within the provisions of this article. 2. 1618) (c) Abandonment of the servient estate (d) Eminent domain (e) Special cause of extinction of legal right of way. and thereby become a continuing property right.PROPERTY (4) Expiration of term or fulfillment of resolutory condition By the expiration of the term or the fulfillment of the condition. -Voluntary -Stipulated conditions. redemption of the property sold a retro because of the exercise of the right of conventional redemption ( Art.

floatage. without adequate outlet to public highway i. If navigable – Towpath easement for navigation and floatage If private land – expropriate. (4) Aqueduct  Any person who may wish to use upon his own estate any water of which he can dispose shall have the right to make it flow through the intervening estates. the animal path shall not exceed the width of 75 meters. the provisions of this Section and those of Articles 640 and 641 shall be observed. 642. (Art. Ongsiaco) (2) Easements on lands along riverbanks    For public use: 3m zone along margins for navigation. fishing and salvage. or outhouses. Whenever it is necessary to establish a compulsory easement of the right of way or for a watering place for animals. (Art. or anyone with a real right to cultivate. but is due to gravity.PROPERTY Case The dikes are continuous easements since it does depend upon the act of man. may demand that the owners of the banks permit its construction. (Ongsiaco v. and the animal trail that of 37 meters and 50 centimeters. absolutely no access  100% UP LAW UP BAROPS 2008 Page 71 of 325 . in the absence thereof. has to construct a stop lock or sluice gate in the bed of the stream from which the water is to be taken. annexes. (3)    Abutment of Land CIVIL LAW Compulsory easements for drawing water or for watering animals can be imposed only for reasons of public use in favor of a town or village. by the usages and customs of the place. Being such. 657)  Without prejudice to rights legally acquired. with the obligation to indemnify their owners. 641) Easements of the right of way for the passage of livestock known as animal path. 640) Easements for drawing water and for watering animals carry with them the obligation of the owners of the servient estates to allow passage to persons and animals to the place where such easements are to be used. For legal purposes. and. (6) Stop lock and sluice gate Non – owner builder of the dam pay owner of land for the abutment of the land. One who for the purpose of irrigating or improving his estate. animal trail or any other. and the dam floods the land – injured owner or his representative can remove it as private nuisance. resting places and animal folds.) Obligation of the dominant estate: (1) To prove that he can dispose of the water and that it is sufficient for the use for which it is intended. since it is for private use. including those caused by the new easement to such owners and to the other irrigators. it is subject to the extinction to the nonuser (20 years in the Old Code and 10 years in the New Code). (2) To show that the proposed right of way is the most convenient and least onerous to third persons. (Art. (5) Drawing waters watering materials and Art. and those for watering places. In this case the width shall not exceed 10 meters. after payment of the proper indemnity. courtyards. or on orchards or gardens already existing. after payment of damages. abutment – part of dam that extends to the riverbank or dam if no easement previously established. (a)Easement of right of way  Requisites before demanding a right of way (Articles 649-650) (a) owner. as well as the owners of the lower estates upon which the waters may filter or descend. (3) To indemnify the owner of the servient estate  The easement of aqueduct for private interest cannot be imposed on buildings. and the indemnity shall include this service. 647. (Art. the easement of aqueduct shall be considered as continuous and apparent. shall be governed by the ordinances and regulations relating thereto. or use immovable (b) not due to acts of the proprietor of the dominant estate (c) surrounded by immovables belonging to others.

652)  Servitude without indemnity is considered as a tacit condition of the sale. If it be indispensable for the construction. In case of a simple donation. (Quimen v. Even when there is a necessity. servitude should not be imposed. 655. after receiving payment of the proper indemnity for the damage caused him. it is difficult or dangerous to use or is grossly insufficient Payment of the value of the land for permanent use of easement does not mean an alienation of the land occupied. or to raise therein scaffolding or other objects necessary for the work. Access to highway may be demanded: (a) when there is absolutely no access to a public highway (b) when even if there is one. If the right of way granted to a surrounded estate ceases to be necessary because its owner has joined it to another abutting on a public road. the public highway must substantially meet the needs of the dominant estate in order that the easement may be extinguished. necessary repairs. The interest on the indemnity shall be deemed to be in payment of rent for the use of the easement. If the right of way is permanent. Owner of the dominant estate may not ask for the return of the indemnity unless servient owner asks for the extinguishment.  Art. In both cases.PROPERTY ii. Offset interest of the indemnity with rentals of the land.    Whenever a piece of land acquired by sale. Mere convenience is not enough. The same rule shall be applied in case a new road is opened giving access to the isolated estate. Owner can not by his own act isolate his property from the public highway and then claim an easement of way through an adjacent estate. alteration or beautification of a building. to carry materials through the estate of another. Word indispensable should not be understood as indicating that it would be impossible to construct or repair the building. exchange or partition. he shall be obliged to grant a right of way without indemnity. the owner of the servient estate may demand that the easement be extinguished. Quimen) Before judicial decision. CIVIL LAW servitude may be demanded with the payment of the indemnity. if it can be satisfied without imposing the servitude. Servitude may thus be modified after it has already been established. returning what he may have received by way of indemnity. Criterion of the least prejudice to the servient estate must prevail over the criterion of the shortest distance. difficult or dangerous to use (d) right of way claimed is the least prejudicial to the servient estate (e) payment of the proper indemnity (i) permanent passage – value of the land (ii) without permanent passage – payment of damages  To justify the imposition of this servitude. is surrounded by other estates of the vendor. he must pay indemnity. It is the needs of the dominant estate which determines the width of the passage.   This may be demanded by owner and usufructuary. but not implied in a simple donation. establishment of any road would constitute an invasion of the land with all consequences resulting from such transgression. if grantor/ exchanger/ vendor‘s property becomes isolated. improvement. It is enough that  100% UP LAW UP BAROPS 2008 Page 72 of 325 . exchanger. the donor shall be indemnified by the donee for the establishment of the right of way. 656. (Art. repair. there must be a real necessity for it. proportionate share of taxes. the necessary repairs shall be made by the owner of the dominant estate. the owner of such estate shall be obliged to permit the act. 654.      Art. exchange or partition. a legal Art. A proportionate share of the taxes shall be reimbursed by said owner to the proprietor of the servient estate. or co-owner. On the other hand.  Extinguishment Not Ipso Jure – (only) owners of the servient estate has to ask for it and return indemnity. When the right of way originally established without indemnity should disappear or become useless.  Obligations of praedium dominans.

(3) Whenever the entire wall is built within the boundaries of one of the estates. The opening of an adequate outlet to a highway can extinguish only legal or compulsory easements. (La Vista v. (2) The part pertaining to each coowner can be materially designated. or exterior sign. and by the rules of coownership  Party wall is a co-ownership in a special class by itself: (1) It is indivisible. (4) Whenever the dividing wall bears the burden of the binding beams. Each owner may use the wall but only to the extent of onehalf of its thickness. gardens and tenements is constructed in such a way that the coping sheds the water upon only one of the estates. towns.  Co-ownership must be accepted unless the contrary appears from the title showing that the entire wall belongs exclusively to one of the property owners or unless there is an exterior sign to destroy such presumption. and on the other. animal trail or any other. The existence of an easement of party wall is presumed. 659. unless there is a title.   Art.PROPERTY it would be extremely difficult to do so without the easement. (Vda. A party wall is one which is built by common agreement by getting land from the adjoining tenements in equal parts. not voluntary easements. It is understood that there is an exterior sign. Wall may be owned in common by the adjoining owners either form its construction or by a subsequent act. (5) Whenever the dividing wall between courtyards. The easement of party wall shall be governed by the provisions of this Title. 657. but the lower part slants or projects outward. CA) An easement of right of way can be established through continued use. floors and roof frame of one of the buildings. but not those of the others. it has similar conditions on the upper part Art. on one side. straight and plumb on all its facement. the animal path shall not exceed the width of 75 meters. Easements of the right of way for the passage of livestock known as animal path. de Baltazar v CA) (c) Easement of party wall CIVIL LAW Art. shall be governed by the ordinances and regulations relating thereto. In this case the width shall not exceed 10 meters. and the animal trail that of 37 meters and 50 centimeters. the provisions of this Section and those of articles 640 and 641 shall be observed. (2) Whenever the dividing wall is. Whenever it is necessary to establish a compulsory easement of the right of way or for a watering place for animals. and the animal trail that of 37 meters and 50 centimeters. by the local ordinances and customs insofar as they do not conflict with the same. (3) In fences. resting places and animal folds. by the usages and customs of the place. In this case the width shall not exceed 10 meters. (570a). in the absence thereof. the provisions of this Section and those of Articles 640 and 641 shall be observed. and those for watering places. the animal path shall not exceed in any case the width of 75 meters. Without prejudice to rights legally acquired. contrary to the easement of party wall: (1) Whenever in the dividing wall of buildings there is a window or opening. and. 100% UP LAW UP BAROPS 2008 Page 73 of 325 .  Whenever it is necessary to establish a compulsory easement of the right of way or for a watering place for animals. (2) In dividing walls of gardens or yards situated in cities. or in rural communities. Animal Path  Without prejudice to rights legally acquired. walls and live hedges dividing rural lands. 658. Art. (3) Rights of a co-owner of a party wall are greater than those of an ordinary co-owner and with respect to increasing the height of the wall. 660. or proof to the contrary: (1) In dividing walls of adjoining buildings up to the point of common elevation.(570a) Cases A voluntary easement of right of way could be extinguished only by mutual agreement or by renunciation of the owner of the dominant estate. Each owner can insert the beams of his building in the wall to the extent of its entire thickness.

acquire the right of part-ownership therein. 100% UP LAW UP BAROPS 2008 Page 74 of 325 . supported by a party wall desires to demolish the building. 666. Nevertheless. There is a sign contrary to the partownership whenever the earth or dirt removed to open the ditch or to clean it is only on one side thereof. Every owner may increase the height of the party wall. shall be borne by him. being built of masonry. open through the party wall any window or aperture of any kind. of of It of Art. 662. in proportion to the right of each. the ownership of the walls. in which case the ownership of the ditch shall belong exclusively to the owner of the land having this exterior sign in its favor. Art. except when the party wall supports a building belonging to him. Art. shall be borne by all the owners of the lands or tenements having the party wall in their favor.PROPERTY (6) Whenever the dividing wall. 667. and. and drains owned in common. 661. but not on the other. The other owners who have not contributed in giving increased height. In all these cases. 668.  Each part-owner can use the party wall only in proportion to his interest (d) Easement of Light and View Art. he may also renounce his part-ownership of the wall. Art. The period of prescription for the acquisition of an easement of light and view shall be counted: (1) From the time of the opening of the window. live hedges. Art. has stepping stones. in addition. would be an invasion of the right the other part owners. but the cost of all repairs and work necessary to prevent any damage which the demolition may cause to the party wall. the indemnity for the increased expenses which may be CIVIL LAW necessary for the preservation of the party wall by reason of the greater height or depth which has been given it. 665. with an iron grating imbedded in the wall and with a wire screen. ditches. Every part-owner of a party wall may use it in proportion to the right he may have in the co-ownership. fences or hedges shall be deemed to belong exclusively to the owner of the property or tenement which has in its favor the presumption on any one of these signs. on this occasion only. or (2) From the time of the formal prohibition upon the proprietor of the adjoining land or tenement. If the owner of a building. When the distances in Article 670 are not observed. he shall give the space required from his own land. (7) Whenever lands inclosed by fences or live hedges adjoin others which are not inclosed. If the party wall cannot bear the increased height. the owner of a wall which is not party wall. can make in it openings to admit light at the height of the ceiling joints or immediately under the ceiling. Art. depth or thickness to the wall may. 669. in every case. nevertheless. (573) Art. 664. and of the size of thirty centimeters square. even though such damage be temporary. the owner desiring to raise it shall be obliged to reconstruct it at his own expense and. 663. Ditches or drains opened between two estates are also presumed as common to both. adjoining a tenement or piece of land belonging to another. No part-owner may. if the window is through a wall on the dominant estate. any owner may exempt himself from contributing to this charge by renouncing his part-ownership. and. without interfering with the common and respective uses by the other co-owners. which at certain intervals project from the surface on one side only. if it is through a party wall. The cost of repairs and construction of party walls and the maintenance of fences. The expenses of maintaining the wall in the part newly raised or deepened at its foundation shall also be paid for by him. without the consent of the others. doing at his own expense and paying for any damage which may be caused by the work. by paying proportionally the value of the work at the time of the acquisition and of the land used for its increased thickness. if for this purpose it be necessary to make it thicker.  Such act would imply the exercise the right of ownership by the use the entire thickness of the wall. Art. if there is no title or sign showing the contrary.

Whenever by any title a right has been acquired to have direct views. They can be made only in the walls of buildings and not in the walls separating gardens or yards because they have no need for such openings The period to require the closing of the illegal opening begins to run from the moment such opening is made. Any stipulation permitting distances less than those prescribed in Article 670 is void. unless there be a distance of sixty centimeters. Even if it should fall on his own land. Any stipulation permitting distances less than those prescribed in Article 670 is void. it is possible to see the adjoining tenement without the necessity of putting out or turning one’s head Side or oblique view—that which is obtained from a wall a an angle with the boundary line such that in order to see the adjoining tenement. (e)Drainage of Buildings Art. balconies. Distance may be increased by stipulation of the parties. the owner shall be obliged to collect the water in such a way as not to cause damage to the adjacent land or tenement. it is necessary to put out or turn one’s head to the left or to the right Mere opening of windows in violation of the present article does not give    100% UP LAW UP BAROPS 2008 Page 75 of 325 . and not on the land of his neighbor. the owner of the servient estate cannot build thereon at less than a distance of three meters to be measured in the manner provided in Article 671. CIVIL LAW rise to the easement of light and view by prescription. or other similar projections which afford a direct view upon or towards an adjoining land or tenement can be made. Art. Every owner of a house or building would have aright to dispose of it in any manner even to the prejudice of neighbors had it not been for the provisions in this Code Last sentence is an exception to Art 637 which requires lower tenements to receive water flowing naturally from higher tenements.  This article refers to a true servitude. if there be no stipulation to the contrary. which is not less than three meters wide. Acquisition may be through contact. Art. such that from the opening in such wall. The nonobservance of these distances does not give rise to prescription. balconies or belvederes overlooking an adjoining property.   Art. But it is only the action to compel the closure which prescribes Although action to compel the closing has prescribed. apertures. without leaving a distance of two meters between the wall in which they are made and such contiguous property. or prescription.  Falling water is res nullius and has no owner. Neither can side or oblique views upon or towards such conterminous property be had. this does not mean servitude has been acquired by person who opened them. balconies or belvederes overlooking an adjoining property. the owner of the tenement or property adjoining the wall in which the openings are made can close them should he acquire part-ownership thereof. 673. 673. one of whom is the owner of the roof.PROPERTY Nevertheless. the owner of the servient estate cannot build thereon at less than a distance of three meters to be measured in the manner provided in Article 671. 670. 672.  Openings allowed are for the purpose of admitting light. Art. unless an easement of light has been acquired. Servitude is negative and period for acquisitive prescription will begin to run only from the time that the owner asserting the servitude has forbidden the owner of adjoining tenement from doing something he latter could lawfully do without the servitude. even though the adjacent land may belong to two or more persons.  Direct View— that which is obtained from a wall parallel to the boundary line. 674. It may also be extended by prescription. testament. subject to special regulations and local ordinances. The owner of a building shall be obliged to construct its roof or covering in such manner that the rain water shall fall on his own land or on a street or public place. No windows. The provisions of Article 670 are not applicable to buildings separated by a public way or alley. Whenever by any title a right has been acquired to have direct views. He can also obstruct them by constructing a building on his land or by raising a wall thereon contiguous to that having such openings.

furnace. Nuisance—that class of wrongs which arise from unreasonable. (f) Intermediate Distances and Works for Certain Constructions and Plantings Art. or factory which by reason of its nature or products is dangerous or noxious. 682. without observing the distances prescribed by the regulations and customs of the place. in the absence thereof. 678. The owner of a tenement or a piece of land. No trees shall be planted near a tenement or piece of land belonging to another except at the distance authorized by the ordinances or customs of the place. 681. Every landowner shall have the right to demand that trees hereafter planted at a shorter distance from his land or tenement be uprooted. and. These prohibitions cannot be altered or renounced by stipulation on the part of the adjoining proprietors. 677. discomfort. in regard to the manner thereof. in order to avoid Art. glare and other causes. 675. The provisions of this article also apply to trees which have grown spontaneously. chimney. and it is not possible to give an outlet through the house itself to the rain water collected thereon. ordinances. well. it is necessary to as that they be cut. jarring. 679. if it be the roots of a neighboring tree which should penetrate into the land of another. 680. Art. But as to the branches. and. 683. smoke. Every building or piece of land is subject to the easement which prohibits the proprietor or possessor from committing nuisance through noise. machinery. Art. depository of corrosive substances. No person shall build any aqueduct. police and other laws and regulations. and without making the necessary protective works. inconvenience. may build in such manner as to receive the water upon his own roof or give it another outlet in accordance with local ordinances or customs. or unlawful use by a person of his own property and which produces material annoyance. subject. tenement. sewer. heat. Art. water. Whenever the yard or court of a house is surrounded by other houses. and in such a way as not to cause any nuisance or damage whatever to the dominant estate. (g) Easement against Nuisance Art. the owner of the latter shall have the right to demand that they be cut off insofar as they may spread over his property. 676. such precautions shall be taken as may be considered necessary. after payment of the property indemnity. Art. and regulations relating thereto. Subject to zoning. dust. 100% UP LAW UP BAROPS 2008 Page 76 of 325 . If the branches of any tree should extend over a neighboring estate. giving an outlet to the water at the point of the contiguous lands or tenements where its egress may be easiest. health. Fruits naturally falling upon adjacent land belong to the owner of said land. the establishment of an easement of drainage can be demanded. In the absence of regulations. subject to the easement of receiving water falling from roofs.    Receive water through (1) another roof (2) another outlet In accordance with local ordinances or customs Not a nuisance to the dominant estate CIVIL LAW any damage to the neighboring lands or tenements. unwarranted. factories and shops may be maintained provided the least possible annoyance is caused to the neighborhood. forge. the latter may cut them off himself within his property. and establishing a conduit for the drainage in such manner as to cause the least damage to the servient estate. offensive odor.  Owner of the neighboring tenement can cut the roots without necessity of notice to the owner of the trees.PROPERTY Art. (591a) Art. to the conditions prescribed by such regulations. at a distance of at least two meters from the dividing line of the estates if tall trees are planted and at a distance of at least fifty centimeters if shrubs or small trees are planted. stable. No constructions can be built or plantings made near fortified places or fortresses without compliance with the conditions required in special laws. garden or yard.

Although person making the excavation has given notice.  Notice enables the adjoining owner to take the necessary precautions to protect their lands and buildings.  Whether the effects of the use of one’s property constitutes a nuisance depends upon the circumstances. Art. public policy or public order Art. Every owner of a tenement or piece of land may establish thereon the easements  which he may deem suitable. he may free himself from this obligation by renouncing his property to the owner of the dominant estate. VOLUNTARY EASEMENTS Art.  Owner has a right to excavate on his own land up to the boundary line of the building land. Art. In order to impose an easement on an undivided tenement. Contractor is liable jointly with the owner of the land. No proprietor shall make such excavations upon his land as to deprive any adjacent land or building of sufficient lateral or subjacent support. It must be sufficient to inform the nature and the extent of the proposed excavation. There are cases where surface belongs to one person and substrata may belong to or be lawfully used by others. (h) Easement of Lateral Subjacent Support and XII. Art. Owners of rights below the surface may excavate but this imposes upon them the duty to refrain from removing such sufficient support which will protect the surface from subsiding CIVIL LAW Art. Art. If the owner of the servient estate should have bound himself. The legal easement of lateral and subjacent support is not only for buildings standing at the time the excavations are made but also for constructions that may be erected. 687. Any stipulation or testamentary provision allowing excavations that cause danger to an adjacent land or building shall be void.PROPERTY or harm that the law will presume a consequent damage.  Remedies for violation: (1) Action for damages (2) Injunction  Action may be maintained against anyone who causes the injury whether he is the owner or not. It is the person who made the excavation which causes the injury and not the person in possession when the injury occurs. 686. or piece of land. must be held in abeyance until the last one of all the co-owners shall have expressed his conformity. 693. 685. 691. The consent given by some only. the consent of all the coowners shall be required. Whenever the naked ownership of a tenement or piece of land belongs to one person and the beneficial ownership to another. 688. he is bound to exercise reasonable care and skill so as not to cause damage. Their penetration into another tenement in a limited measure is permissible. 690. upon the establishment of the easement. 100% UP LAW UP BAROPS 2008 Page 77 of 325 . no perpetual voluntary easement may be established thereon without the consent of both owners. Even if these effects cause material injury. This easement prevents him from excavating so close as to deprive the adjoining estate of its natural support and cause it to crumble. and  in the manner and form which he may deem best  provided he does not contravene the laws. Art. to bear the cost of the work required for the use and preservation thereof. But the consent given by one of the coowners separately from the others shall bind the grantor and his successors not to prevent the exercise of the right granted. they would constitute a nuisance if they result from the utilization of a tenement in a manner which is usual or current in the locality. Any proprietor intending to make any excavation contemplated in the three preceding articles shall notify all owners of adjacent lands. This is where easement of subjacent support exists. who is liable for damages. 684.

Nuisance Per Accidens or in Fact Scope Of Their Injurious Effects 1.  He whose duty is to abate a nuisance should answer for the consequences resulting from its continuance  No one is to be held liable for a nuisance which he cannot himself physically abate  All parties to the creation or maintenance of a nuisance per se are responsible for its effect without limitation of conditions or of time. or (4) Obstructs or interferes with the free passage of any public highway or street. Mixed Nuisance Per Se (Nuisance at Law)  nuisance at all times and under any circumstances. defies or disregards decency or morality.  If there are various owners. 692)  Where the owner bound himself to pay for the maintenance or do some service he may abandon his tenement and relieve himself of his obligation (Art. or any body of water. if the owner ratifies it. he must knowingly continue the nuisance. Liability of Transferees  To render him liable. or anything else which: (HOSDU) (1) Injures or endangers the health or safety of others. CIVIL LAW (2) Annoys or offends the senses. REGARDLESS OF LOCATION OR SURROUNDINGS. Public 2. 690 and 691)  Hence. but consent once given is irrevocable. establishment. the abandonment must be made in the proper juridical form required for the transmission of the ownership of immovable property. he is not liable for XIII. 693)  To produce the transmission of ownership over the tenement abandoned. Private 3. and even the possessor in good faith. his liability continues as long as the nuisance continues. 694. A nuisance is any act. or injury to the public. (Art. NUISANCE Art. Classification of Nuisance Nature 1. and (2) Possession (in case of prescription enlarging or diminishing the initial voluntary easement) (Art. or 100% UP LAW UP BAROPS 2008 Page 78 of 325 . or to such part of the public as necessarily comes in contact it  public nuisance=common nuisance  It is a direct encroachment upon public rights or property which results injuriously to the public Private Nuisance  One which violates only private rights and produces damages to but one or a few persons Liability of Creator of Nuisance  General Rule: he who creates a nuisance is liable for the resulting damages and.PROPERTY Who may establish voluntary easements:  The OWNER possessing capacity to ENCUMBER property may constitute voluntary servitudes. does not have the right to do so because the creation of a servitude is a disposition of part of the right of ownership. or (5) Hinders or impairs the use of property. Nuisance Per Accidens (Nuisance in Fact)  One that becomes a nuisance by reason of circumstances and surroundings Public Nuisance  It causes hurt. Nuisance Per Se or at Law 2. (b)Personal Servitudes  For anyone capacitated to accept In case of property under usufruct  The usufructuary must not be prejudiced (Art 689) Rights and Obligations  These are determined by the— (1) Title. ALL must CONSENT. ordinarily. inconvenience. generally. omission.  A general capacity to contract is not sufficient. (Art. In whose favor they are established: (a)Praedial Servitudes  For the owner of the dominant estate  For any other person having any juridical relation with the dominant estate. and generally. and no one but an owner may do this. their consent need not be simultaneous. 688)  The usufructuary. condition of property. or (3) Shocks. business.

Art.. Art. Judgment With Abatement Art. The district health officer shall take care that one or all of the remedies against a public nuisance are availed of. But it is necessary: (1) That demand be first made upon the owner or possessor of the property to abate the nuisance. or has actual knowledge that it is a nuisance and injurious to the rights of others. No Prescription  The creation and maintenance of a public nuisance is punishable criminally hence.PROPERTY continuing it in its original form. or doing unnecessary injury. The means employed must be reasonable 6. 698. The abatement must be approved by the district health officer 7. The remedies against a private nuisance are: (1) A civil action. the civil code. 700. The property must not be destroyed unless it is absolutely necessary to do so. or an action for damages CIVIL LAW  In other words. If a civil action is brought by reason of the maintenance of a public nuisance. The right must always be exercised with the assistance of the local police Art. without judicial proceedings. without committing a breach of the peace. Special Injury to Individual  GENERAL RULE: a public nuisance gives no right of action to any individual but must be abated by a proceeding instituted in the name of the State  EXCEPTION: an individual who suffered some special damage by reason of a public nuisance. or if necessary. 705. Must be exercised only in cases of urgent or extreme necessity 2. Art. however. 701. provides a limitation. 704. 702. or (2) Abatement. Must give a reasonable notice of his intention. Art. a public nuisance is not actionable by an individual unless and until it becomes as to him. The district health officer shall determine whether or not abatement. 703. a demand must be made 5. by destroying the thing which constitutes the same. and (4) That the value of the destruction does not exceed three thousand pesos. 100% UP LAW UP BAROPS 2008 Page 79 of 325 . may maintain a suit in equity for an injunction to abate it. such action shall be commenced by the city or municipal mayor. different from that sustained by the general public. (2) That such demand has been rejected. A private person may file an action on account of a public nuisance. unless he has been notified of its existence and requested to remove it. The abatement of a nuisance does not preclude the right of any person injured to recover damages for its past existence. Any private person may abate a public nuisance which is specially injurious to him by removing. Right of Individual to Abate a Public Nuisance Requisites 1. Nuisance must be actually existing at the time when abatement is undertaken 3. 699. 697.  Nature of liability is solidary Art. without judicial proceedings. The remedies against a public nuisance are: (1) A prosecution under the Penal Code or any local ordinance (only for public nuisance): or (2) A civil action. or (3) Abatement. i. without judicial proceedings. it should prevent the acquisition of a right to maintain it. a private nuisance. if it is specially injurious to himself. whether public or private. that the value of destruction shall not exceed three thousand pesos 8. Art.e. is the best remedy against a public nuisance. Art. (3) That the abatement be approved by the district health officer and executed with the assistance of the local police. until he suffers some special and definite harm. Lapse of time cannot legalize any nuisance. The summary abatement should be resorted to within a reasonable time after knowledge of the nuisance is acquired or should have been acquired by the person entitled to abate 4.

the remote cause of acquisition Every juridical right which gives a means to the acquisition or real rights but which in itself is insufficient MODE. Art. REGISTRY OF PROPERTY Art. The books in the Registry of Property shall be public for those who have a known interest in ascertaining the status of the immovables or real rights annotated or inscribed therein. capacity. which are not duly inscribed or annotated in the Registry of Property shall not prejudice third persons. or of other rights over immovable property. Any person injured by a private nuisance may abate it by:  removing. 708. and not an authority to continue the wrong. the provisions of the Mortgage Law. The titles of ownership. and cancellation of inscriptions and annotations. effects. Even a possessor may sue Art. Concept  The Registry of Real Property may be defined as a public center where the true condition of real estate is made clear by registering all transferable 100% UP LAW UP BAROPS 2008 Page 80 of 325 . DIFFERENT MODES ACQUIRING OWNERSHIP OF TITLE . A private person or a public official extrajudicially abating a nuisance shall be liable for damages: (1) If he causes unnecessary injury. 709. and intention of persons and fulfillment of the requisites of law Modes of acquiring (POSTDI) 1) Occupation 2) Intellectual Creation 3) Donation 4) Prescription 5) Succession 6) Tradition ownership XIV. or  if necessary. the Land Registration Act. 710. 706.PROPERTY Right to Damages  A person may maintain an action at law for damages caused by a nuisance  The payment of damages is generally a mere reparation for past injuries. For determining what titles are subject to inscription or annotation.the proximate cause of acquisition The specific cause which produces dominion and other real rights as a result of the co-existence of special status of things. or enjoin its sale and damages if it is has been sold. by destroying the thing which constitutes the nuisance o without committing a breach of the peace or doing unnecessary injury o procedure for extrajudicial abatement of a public nuisance by a private person be followed Who may sue on Private Nuisances  Ownership of the legal title is not necessary. Remedies of Property Owner  He may bring an action for replevin. or action to enjoin private parties from proceeding to abate a supposed nuisance  Ask court to determine WON it is indeed a nuisance CIVIL LAW title of ownership and of real rights which affect it and even where the capacity of free disposition on the part of an individual is modified Purposes of the Principle of Publicity  To give notice of the true status of the property  To record transmissions and modifications of real rights  To prevent fraud  To guarantee the effectivity of rights Art. the manner of keeping the books in the Registry. and the value of the entries contained in said books. or (2) If an alleged nuisance is later declared by the courts to be not a real nuisance. and other special laws shall govern. as well as the form. The Registry of Property has for its object the inscription or annotation of acts and contracts relating to the ownership and other rights over immovable property. 707. 711. XV.  each repetition of it gives rise to a new cause of action Defenses to Action  Public Necessity  Estoppel Art. Art.

registered land Renunciation of prescription:  persons with capacity to alienate may renounce prescription already obtained but not the right to prescribe in the future  may be express or tacit  prescription is deemed to have been tacitly renounced. public domain 2. between parents & children (during minority/insanity) 7. just title 3. rights & actions. within time fixed by law  4 years for movables  8 years for immovables 4. between husbands & wife 6. private property b. in transmissible rights 3. possession in good faith 2. peaceful. uninterrupted  GOOD FAITH. public. extra-ordinary Requisites for ordinary prescription: 1. retroactive from the moment period began to run Kinds: 1. peaceful. uninterrupted Requisites for extra-ordinary prescription: 1. between guardian & ward (during guardianship) 8. between owner of property & person in possession of property in concept of holder Things subject to prescription: all things within the commerce of men a. juridical persons except the state with regards to property not patrimonial in character 5. in concept of an owner 5. movables possessed through a crime 4. STATE c. in concept of an owner 4. within time fixed by law  10 years for movables  30 years for immovables 3. between co-heirs/co-owners 9. patrimonial property of the state CIVIL LAW Things not subject to prescription: 1. just title is proved 2. also a means by which one loses ownership. Extinctive Comparison between Acquisitive Prescription and Extinctive Prescription Acquisitive Extinctive Prescription Prescription Usurpacion Prescription It is the possessor One looks at the who does the act neglect of the owner/ his omission Expressly vests the Statute of property and limitation that raised a new title merely bars the in the occupant right of action Important feature Important feature is the claimant in is the owner out of possession possession Who may acquire by prescription: a. minors & incapacitated person who have guardians 2. persons living abroad who have administrators 4. ordinary 2. public. PRESCRIPTION It is the mode by which one acquires ownership and other real rights thru lapse of time. person who are capable of acquiring property by other legal modes b.Reasonable belief that person who transferred thing is the owner & could validly transmit ownership -Must exist throughout the entire period required for prescription  JUST TITLE (TRUE & VALID) – must be proved & never presumed a) Titulo Colorado b) Titulo putativo  title must be one which would have been sufficient to 100% UP LAW UP BAROPS 2008 Page 81 of 325 . minors – through guardians of personally Against whom prescription run: 1.PROPERTY XVI. absentees who have administrators 3. Acquisitive 1. renunciation results from the acts w/c imply abandonment of right acquired  creditors & persons interested in making prescription effective may avail themselves notwithstanding express or tacit renunciation Prescription Real Rights Of Ownership & Other Kinds of Acquisitive prescription 1.

Symbolic Delivery ii. possession ceases for more than 1 year -if 1 year of less – as if no interruption b) Civil -produced by judicial summons. Constructive Tradition i. An act giving it in outward form. Intention. quiet title XVII. demand right of way 2. Delivery by Public Instrument iii. physically. Present possessor presumed to be in continuous possession I intervening time unless contrary is proved c. Traditio Longa Manu.to transmit and to acquire 5. PEACEFUL & UNINTERRUPTED  Must be known to the owner of the thing  Acquired & maintained w/o violence  Uninterrupted (no act of deprivation by others) in the enjoyment of property  Interruption a) Natural -through any cause. placed in the sight of 100% UP LAW UP BAROPS 2008 Page 82 of 325 .of both grantor and grantee 4. Pre-existence of right in estate of grantor 2. Just cause or title for the transmission 3. possession in wartime  RULES IN COMPUTATION OF PERIOD: a. Capacity. or legally Legal Maxim: “Non nudis pactis.“long hand”. Present possessor may tack his possession to that of his grantor or predecessor in interest b. symbolically. recover property subject to expressed trust 5. TRADITION Requisites: 1. First day excluded. is ownership transferred) Kinds of Tradition: a. declare contract void 4. express or tacit renunciation ii. dominia rerum transferentur” (Not by mere agreement but by delivery. abate public /private nuisance 3.PROPERTY transfer ownership if grantor had been the owner through one of the modes of transferring ownership but there is vice/defect in capacity of grantor to transmit ownership Prescription of Actions CIVIL LAW   IN CONCEPT OF OWNER  possession not by mere tolerance of owner but adverse to that of the owner  claim that he owns the property PUBLIC. last day included Tacking Period  there must be privity between previous & present possessor  possible when there is succession of rights  if character of possession different: predecessor in bad faith possessor in good faith – use extraordinary prescription By lapse of time fixed by law  30 years -action over immovables from time possession is lost  10 years -mortgage action -upon written contract -upon obligation created by law -upon a judgement  8 years -action to recover movables from time possession is lost  6 years -upon an oral contract -upon a quasi-contract  5 years -actions if periods are not fixed by law  4 years -upon injury to rights of plaintiff -upon a quasi-delict  1 year -for forcible entry & detainer -for defamation Rights not extinguished by prescription: 1. Real Tradition b. probate of a will 6. except  void for lack of legal solemnities  plaintiff desist from complaint/allow proceedings to lapse  possessor is absolved from complaint i. sed tranditione.

owner remains in possession but not as owner e. transferee already in possession of the property but not as owner v. Except (a) consumables only for display or advertising.“short hand”. However. commodatum In case of doubt-INTENTION of the parties should be the guide in determining the contract entered into. in the manner he deems most adequate for the execution of the work UP BAROPS Lease Usufruct 100% UP LAW 2008 Page 83 of 325 .g. one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain.. lease vi. receiving instructions from him on the manner of rendering Contract for a piece of work In proportion to the work accomplished service labor Lease of things (1) Concept or CIVIL LAW Art. 1643. e.g. or in some money or its other useful thing or equivalent some other prestation Existence of a relation of dependenc e between lessor and lessee If the lessor works by himself. coal in a factory (3) Special characteristics of lease of things. no lease for more than ninetynine years shall be valid. usufrunct. (2) Consumable things cannot be the subject matter of lease. In the lease of things. eg. Traditio Brevi Manu. Tradition by operation of law XVIII. wine in a showcase of a store (b) goods are accessory to an industrial establishment e. (a) essential purpose is to transmit the use and enjoyment of a thing (b) consensual (c) onerous (d) price fixed in relation to period of use or enjoyment (e) temporary (4) Lease distinguished from sale. Quasi-Traditionsubject matter: property right. LEASE General Characteristics of Every Lease (1) Temporary duration (2) Onerous (3) Price is fixed according to contract duration Kinds of Lease (1) Lease of things—movables and immovables  no lease for more than 99 years shall be valid (2) Lease of work or contract of labor  no relation of principal and agent does not exist between them. right to collect credit vii. and for a period which may be definite or indefinite. independently of the lessee. (3) Lease of Services  no principle of representation unlike in agency  The will of both parties is necessary for the extinguishment of the obligation (i) Lease of Service Manner of paying the price The price is paid in relation to the duration of the labor or service If the lessor workstation under the direction of the lessee.g. or Price must be in in fruits. and only for a determinate period Plain redundancy to Price of the thing fix or mention the was fixed in the price of the thing contract which is the subjectmatter thereof May be in money. Traditio Constitum Possessorium. Lease Sale Only the use or enjoyment of the things is transferred.PROPERTY vendee so that he can take possession of the property anytime iv. Wedding cakes for display in Goldilocks.

and from day to day. or in some other useful things.1682 shall apply. otherwise court may fix the same through the proper action BOTH the lessee and the usufructuary USE and ENJOY the thing. Rent monthly weekly Daily Courts can fix a longer term lessee occupied premises for more than a year lessee has been in possession for over six months lessee has stayed in the place for over one month  Must be definite. if it is monthly. sublessor.there must always be a period. from month to month. although it is not recorded upon the certificate of title. 1682. If the period for the lease has not been fixed. some other prestation  TENANCY CONTRACT. The lease of a piece of rural land. and the thing leased is rural land. 100% UP LAW UP BAROPS 2008 Page 84 of 325 . If the lessee has entered upon the possession and enjoyment of the thing. if it is urban land art. Capacity of Lessee Those who are disqualified to buy certain things cannot lease such things. constitutor must be the owner Owner merely allows usufructuary to use and enjoy the property Includes all possible uses and manner of enjoyment of property EXCEPT in distinction of normal or abnormal usufruct Maybe for an indefinite period of time CIVIL LAW CANNOT be perpetual. (i) rural land Art. 1687 governs. 1646. is understood to have been for all the time necessary for the gathering of the fruits which the whole estate leased may yield in one year. If the thing is neither rural nor urban land. if the rent is weekly. Amount of Rent  If the parties are not able to fix the price. (ii) urban land Art. when its duration has not been fixed. art. (6) Period of lease  When the lease is for such time as the lessor or lessee may please.1491) Lease of Real Estate Every lease of real estate may be recorded in the Registry of Property to be binding upon 3rd persons. or which it may yield once. from week to week. 1649. or in fruits. he is BOUND to respect said lease. ending upon the death of the party who would have terminated the contract. (7) Assignment of lease Art. which may be definite or indefinite If the period is indefinite. But is regarded as having the character more of a partnership rather than a lease.g. (ART. The lessee cannot assign the lease without the consent of the lessor. usufruct Lessor places and maintains lessee in the enjoyment of the thing Use is limited to that written in the contract Always a real right   To constitute usufruct. although two or more years have to elapse for the purpose.when the price consists of a certain percentage of the fruits obtained from the thing. the provisions of the two articles should be applied by analogy. 1490. the contract is ABSOLUTELY VOID. Lease Commodatum Consists in the Consists in the cessation of the use cessation of a thing of a thing to to another but this another but this is is essentially essentially onerous gratuitous BOTH consist in the cession of the use of a thing to another (5) Price In Lease  Price may be in money. or the basis for its determination. he will be liable for the damages for the occupation of the thing. it is considered as on for life.PROPERTY Real right only by exception: when registered and for more than 1 year Constitutor/Lessor need not be an owner e. if the rent agreed upon is annual. if the rent is to be paid daily. Purchase of Leased Land  Where a purchaser of land at the time of the purchase has FULL KNOWLEDGE of the fact that the land has been leased to a third person. it is understood to be from year to year. 1687.

the lessee may sublet the thing leased. (2) To make on the same during the lease all the necessary repairs in order to keep it suitable for the use to which it has been devoted. (i) for rents (8) Sublease Art. there is no express prohibition. which is only to be  Effects (1) Remedy when property is subleased despite prohibition: recission and damages. the sublessee is bound to the lessor for all the acts which refer to the use and preservation of the thing leased in the manner stipulated between the lessor and the lessee. The lessor is obliged: (1) To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended. 1566. (9) Rights and obligations of lessor and lessee (a) obligation of lessor Art.  However. (i) Warranty of Lessor  IN the cases where the return of the price is required. REDUCTION shall be made in proportion to the time during which the lessee enjoyed the thing. so far as the lessor's claim is concerned. Without prejudice to his obligation toward the sublessor. 1555. 1652. 1547. (2) When in the contract of lease. the original lessee is released Succession by particular title to one contract of lease  Sublease Merely another contract of lease. unless there is a stipulation to the contrary. 1651. Payments of rent in advance by the sublessee shall be deemed not to have been made.  Art. and when the lessor gives his consent. (3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract. the lessee may sublet the thing leased. 1654.PROPERTY unless there is a stipulation to the contrary. The sublessee is subsidiarily liable to the lessor for lessee’s rent but not responsible beyond the amount of rent due from him at the time of the extrajudicial demand by the lessor. 1650.  But this liability for warranty of the thing leased does not amount to an obligation to indemnify the tenant for damages. would not require the lessor’s consent. (ii) for the use and preservation of the thing leased Without prejudice to his obligation toward the sublessor. 1568. When in the contract of lease of things there is no express prohibition. where the original lessee becomes in turn a lessor Even when the lessor consents to the sub-lease.  The lessor is liable for the warranty of the thing leased against any hidden defects it may have. the sublessee is bound to the lessor for all acts which refer to the use and 100% UP LAW UP BAROPS 2008 Page 85 of 325 . the original lease contract subsists and is binding on the lessee Juxtaposition of 2 leases Art. in whole or in part. 1567. 1569  Liability for the warranty is not equivalent to liability in damages. CIVIL LAW preservation of the thing leased in the manner stipulated between the lessor and the lessee. without prejudice to his responsibility for the performance of the contract toward the lessor. and not of the contract itself. unless there is an express stipulation to the contrary. Assignment of lease There is a transfer to a third person of the rights and obligations arising from the lease contract A sale of the lessee’s rights. 1561. without prejudice to his responsibility for the performance of the contract toward the lessor. even when UNKNOWN to said lessor. a mere transfer of rights of the lessee. in whole or in part. or damages only. (a) House Rental Law (RA 877)— there is a presumption that there would be no sublease unless the lessor allows it (b) obligation of sublessee to lessor Art. unless said payments were effected in virtue of the custom of the place.

 If the repair lasts for more than 40 days. the lessor fails to make urgent repairs.PROPERTY allowed. in the absence of stipulation. Use the Thing Leased as a Diligent Father  Standard: diligent father of a family. Dangerous Conditions  The lessee may terminate the lease at once by notifying the lessor. plus accrued legal interest thereon at the rate of 6% per year. he may rescind the contract if the main purpose of the lease is to provide a dwelling for the lessee. 1658.  Lessor is NOT bound to make repairs caused by the lessee himself. ii. and with respect to the time. Pay Expenses for the Deed of Lease (Art. to that which may be inferred from the nature of the thing leased.  The lessee is liable for any deterioration caused by members of his household and by his guest and visitors. when lessor acted with fraud and in bad faith by concealing the defect and not revealing it to the lessee. to avoid imminent danger. the custom of the place shall be followed.  If after having been notified.and the part of the property of which the lessee has been deprived. the lessee. net of the assessed violation of the property Failure to Pay for Rent  Eviction. even if at the time the contract was perfected the former knew of the dangerous condition or waived the right to rescind the lease on account of the condition. may order the repairs at the lessor’s expense. The lessor cannot alter the form of the thing leased in such a way as to impair the use to which the thing is devoted under the terms of the lease. and he shall be liable for the damages which by his neglect may be suffered by the owner. Alteration Art. The lessee may suspend the payment of the rent in case the lessor fails to make the necessary repairs or to  100% UP LAW UP BAROPS 2008 Page 86 of 325 . according to the custom of the place. (ii) Making of Repairs  It implies the putting of something back into the condition in which it was originally and NOT an improvement  It is the duty of the lessee to give NOTICE of the need of repairs to the lessor. which cannot be deferred until the termination of the lease.  The lessee is responsible for the deterioration of the thing leased.  When the work is of such a nature that the portion which the lessee and his family need for their dwelling becomes uninhabitable. Increase and Decrease of Rent  Increase and decrease in the price of lease shall be 10% per year. 1661. 1657) (i) Pay Rent  arises only when the contract has been actually carried into effect by the delivery of the thing leased to the lessee for the purpose stipulated in the contract. the lessee is obliged to tolerate the work. iii. (iii) Peaceful Possession  CIVIL LAW To maintain the lessee on the peaceful and adequate enjoyment of the lessee for the entire duration of the contract. Effect of Urgent Repairs  During the lease it should become necessary to make some urgent repairs upon the thing leased. Right of lessee to suspend payment of rentals Art. recover the unpaid rent. unless he proves that it took place without his fault. Failure to do so releases the lessee from the obligation to pay what is stipulated in the contract from the date he ceased to occupy the premises. the rent shall be reduced in proportion to the time-including the 40 days. (b) obligations of lessee (Art. Place and Time  Payment of rent shall be made at the domicile of the lessee. 1662-1667) c.

(5) by rescission due to nonperformance of the obligation of one of the parties. he has the remedy of rescission. the aggrieved party may ask for: (1) rescission of the contract. d. the aggrieved party is entitled to such damages but may not upon rescission of the contract recover the damages that are appropriate only where the performance is demanded. CIVIL LAW (e) Lessor not obliged to answer for mere act of trespass by a third person (10) Grounds for ejectment of lessee by lessor Termination of Lease (1) by the expiration of the period. Right to ask for rescission Liability for Breach of Duties  If the lessor or lessee should not comply with the obligation set forth in ART 1654 and 1657. (2) by the total loss of the thing. Period  If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquiescence of the lessor. allowing the contract to remain in force  The lessor cannot be held responsible for damages from defects unknown to both parties. by reason of his inability to pay to: (1) return the leased property. has expired. (4) by the will of the purchaser or transferee of the things. Tacit Renewal  The fifteen-day period which brings about a tacit renewal of the lease. Alternative Remedies  Performance of the contract and rescission  In either case. (3) recover the unpaid rents (4) eject the tenant from the land  The execution of the deed shall be equivalent to delivery but this is a rebuttable presumption. 1682(rural) and 1687(urban)  When the parties have made no agreement and the tenant remains in possession with the acquiescence of the lessor for 15 days after the expiration of the term. Rescission of the Contract  Where the plaintiff alleges and submits proof that the defendant is in possession of a parcel of land as lessee. the duration of the tenancy is governed by article 1682 and 1687. (2) the lessor has a right to rescind the contract. he may be compelled.PROPERTY maintain the lessee in peaceful and adequate enjoyment of the property leased. (2) indemnification for damages. such as when the lessor is usufruct is terminated. the lessor has still the right to hold the lessee responsible until the termination of the lease. not for the period of the original contract but for the time established in art. and the latter has not paid the proper rents. (3) by the resolution of the right of the lessor. is not applicable to successive renewals. and unless a notice to the contrary by either party has previously given. it is understood that there is an implied new lease. or that which is fixed for the duration of leases under Art 1682 (rural) and 1687(urban). 100% UP LAW UP BAROPS 2008 Page 87 of 325 . Enforcement of Lease  Where the lessor resumes possession of his leased property for its protection after the lessee has abandoned the same. (3) only damages.  If the thing leased has never been placed in possession of the lessee. Judicial Ejectment  The lessor may judicially eject the lessee for any of the following causes: (1) When the period agreed upon.

whether the termination coincides with the rent day or not. The purchaser of a piece of land which is under a lease that is not recorded in the Registry of Property may terminate the lease.  It is rural when the principal purpose is exploitation of the soil. which require 2 years before they are of any commercial value. but is terminable upon 30 days notice. or when the original period has expired. the lessee may demand that he be allowed to gather the fruits of the harvest which corresponds to the current agricultural year and that the vendor indemnifies him for damages suffered. Art. The sale is presumed to be fictitious if at the time the supposed vendee demands the termination of the lease. This right does not extend to the gathering of fishes. 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. of purchaser of CIVIL LAW terminate the lease except when the contract provided otherwise or purchaser is aware of lease. notice by the lessor of an increase in rent is equivalent to notice of termination of the original agreement. The landlord has the right to increase the rent after the expiration of the stipulated period. (13) Useful improvements good faith made by lessee. When the lease contract does not have a definite period. the lessee may demand that he be allowed to gather the fruits of the harvest which corresponds to the current agricultural year and that the vendor indemnify him for damages suffered. The act of the new owner of giving notice of an increase of rent. useful improvements the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. save when there is a stipulation to the contrary in the contract of sale. 1676.PROPERTY (2) Lack of payment of the price stipulated. If the sale is fictitious. the sale is not recorded in the Registry of Property. for the purpose of extinguishing the lease. If the buyer makes use of this right. or if he does not observe due diligence in its use. in good faith. 1677. and he fails to pay the agreed rent. And if no period is stipulated. when the existing lease is of an indefinite time. or when the purchaser knows of the existence of the lease.     (12) Right leased land Art. If the buyer makes use of this right. in Indemnity For Improvements  If the lessee makes.  But when the vendor remains in possession as a tenant. (4) When the lessee devotes the thing leased to any use or service not stipulated which causes the deterioration thereof. he may be evicted by the vendee even before the period of redemption has expired. (14) Special provisions for leases of rural lands  It is urban when the principal purpose is dwelling. 100% UP LAW UP BAROPS 2008 Page 88 of 325 . the lease will terminate upon the expiration of 30 days from the receipt of notice. (3) Violation of any of the conditions agreed upon in the contract. in a lease of urban property. the supposed vendee cannot make use of the right granted in the first paragraph of this article. constitutes a notice of termination of the original lease. Sale Of Leased Property  The purchaser which is under a lease that is not recorded in the Registry of Property may Right to Repurchase  The purchaser in a sale with the right to redemption cannot make use of the power to eject the lessee until the end of the period of redemption.

present property & not future. subject matter – anything of value. and 4. past service. must not impair legitime 2. debt 3. 730.  Where the ownership and possession as well as administration were turned over to the donee but right to reap and dispose of the fruits was deferred until after donor’s death.e. Requirements of a donation: 1. there is no donation inter vivos but mortis causa. goodwill. capacity to donate & dispose & accept donation 4. o Inter vivos  In doubt. Ingratitude of donee. 87 Family Code) What govern Inter vivos – take effect during the lifetime of the donor AS TO WHEN THEY TAKE EFFECT CIVIL LAW o Nature of a donation is not made to depend by the title given by the donor but by what is expressed. if donor does not die. causa – anything to support a consideration: generosity. During the subsequent birth of the donor’s children 2.  If the donor reserves the right to dispose of all the properties purportedly donated. 731) Donation mortis causa (728) Propter nuptias (Art. 2. form – depends on value of donation Kinds of Donation A. As 1. is controlling. 82. rules Intention of the parties prevail if the intention is to make the donation effective during the donor’s lifetime: ART 729: even if the thing donated is delivered only at the time of the donor’s death. 3. it is inter vivos and the fruits of the thing belongs to the donee unless the donor provides otherwise ART 730: even if there is a fixing of an event or the imposition of a suspensive condition which may take place beyond the natural expectation of the life of the donor ART 731: If the resolutory condition is the donor’s survival (i.PROPERTY XIX. Failure of donee to comply which conditions imposed 3. Reduction of the donation by reason of inofficiousness Donation mortis causa  A donation mortis causa not in the form of a will is not valid and does not transmit any right. charity. nature of act. To determine whether mortis causa or inter vivos. whether it is disposition or execution. donation is inter vivos  General rule: Donation inter vivos is irrevocable EXCEPT: 1. DONATION Characteristics: a) Unilateral – obligation imposed on the donor b) Consensual – perfected at time donor knows of acceptance Requisites of Donation: (1) Consent and capacity of parties (2) Animus donandi (causa) (3) Delivery of thing donated (4) Form as prescribed by law There must be impoverishment in fact of donor’s patrimony and enrichment on part of donee. conveyance should be deemed a donation inter vivos to avoid uncertainty as to the ownership of the property. the donation already effective shall terminate) Governed by the rules on contracts and obligations with regard to portions not provided in the title on donations ART 732 They partake of the nature if testamentary provisions and are governed by the rules on Succession ART 728 Mortis causa – take effect upon the death of the donor 100% UP LAW UP BAROPS 2008 Page 89 of 325 . to its taking effect Inter Vivos (729.

Conditional (730.733) (See Table in the appendix) C. DONATION OF MOVABLES. void 1) donee personally 2) authorized person with a special power for the purpose or with a general sufficient power WHEN TO ART 746: During lifetime ACCEPT of donor and donee DONATION OF IMMOVABLES: DONATION AND ACCEPTANCE FORM OF DONATION CONTENTS OF DONATION FORM OF ACCEPTANCE Public document Property donated is specified and the value of the charges which the donee must satisfy Same deed of donation or in a separate public document. signed by both donor and donee. When the donation and the acceptance are in the same instrument. otherwise. Onerous (Art.PROPERTY B. void CIVIL LAW WHEN PERFECTED: ACCEPTANCE THE DONEE: GENERALLY BY ART 734: Donation is perfected at the moment the donor knows of the donee’s acceptance WHO MAY ART 745: Only these ACCEPT: persons may accept. Remuneratory (Art. the donor shall be notified in an authentic form and this shall be noted in both instruments During lifetime of donor WHEN ACCEPT TO 100% UP LAW UP BAROPS 2008 Page 90 of 325 . if separate. Mere declaration of an intention without intent to transfer is not a donation even if accepted.726) 3. The donor can no longer withdraw and he can be compelled to comply. Simple (Art. After perfection. Pure 2. donation is perfected. ART 748 Oral Value of the thing donated < or = P5. donation can only be revoked by the consent of the donee or by judicial decree especially when the donation is onerous. Acceptance is necessary because nobody is obliged to receive a benefit against his will.725) 2. otherwise. As to Cause or Consideration 1. As to its Effectivity or Extinguishment 1.000 Requires simultaneous delivery of the thing or the document which represents the thing In writing Value of the thing donated > P5.000. 731)—donation is not carried out until the day comes but it produces effects With a term – He who donates with a term has already disposed of the thing donated and cannot revoke it nor can he dispose the thing in favor of another unless the donor postpones execution and reserves the right to revoke Perfection of Donation presumes a demandable juridical relation.

Even if incapacitated – e. etc. even if the acceptance is made during the lifetime of the donor.” Who may receive? e.g. 747) . 748) Document of donation need not be public instrument. relatives of priest within 4th degree. If made orally. nurse. there must be simultaneous delivery. priest who heard confession of donor during his last illness 2.g. All those not specially and dispose of their property disqualified by law ART 736: Donor’s capacity determined at the time of the making of the 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) 2) those found guilty of the same criminal offense inconsideration thereof ART 739 (3): public officer or his wife. Form of Donations (a) Personal property (Art. who took care of donor during his last illness 4. not propter nuptias f.representatives of incapacitated must make notification and notation If the donor dies before he learns of the acceptance. conceived and unborn (acceptance made through legal representatives if they were born) Capacity required is for disposition inter vivos and not mortis causa. etc. 2012 “Any person who is forbidden from receiving a donation under Art. Capacity to accept is also governed by rules on succession Other persons disqualified to receive donations: 1. physician. 745. minors. it may be made orally or in writing. Both capacity to contract and the capacity to dispose of property must exist in order to have capacity to donate. (acceptance made through parents or legal guardian). When donation does not exceed P5. insane.donee personally or through authorized person .PROPERTY CIVIL LAW DONOR DONEE ART 735: All persons who may contract ART 738. individuals. order.000. the donation does not take effect. associations not permitted WITH QUALIFICATI ONS WHO ARE NOT ALLOWED WHO ARE ALLOWE D Double Donations Apply double sales to double donations Who may accept (Art. All those who are not specially disqualified by law – e. church. 739 cannot be named beneficiary of a life insurance policy by the person who cannot make a donation to him. community where priest belongs 3. Art. 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 their parents or legal representative ART 742: Donations made to unborn children may be accepted by persons who would legally represent them if they were already born 5. husband and wife during marriage. If no 100% UP LAW UP BAROPS 2008 Page 91 of 325 . corporations.

(b) Real property (Art. such public instrument cannot be considered as having retroactively perfected the gift. it is a circumstance which may explain the adverse and exclusive character of the possession of the intended donee and such possession may ripen into ownership by prescription. If acceptance has been made but before the donor has been notified. the donation is not perfected.000). While a donation of immovable property not made in a public instrument is not effective as a transfer of title. donation is void unless it is made in writing. modal donations iii. The law does not require that when the donation is made in writing the acceptance should also be in writing (if value does not exceed P5. Where the donor executed private instruments of donation and after his death his only heir executed a public instrument ratifying the donation. Rules in Art. mortis causa donations iv. the instrument that shows the acceptance should also be recorded.PROPERTY simultaneous delivery. It might serve as a quitclaim on the part of the heir who is estopped from asserting any right to the properties. 749) Art. the donation subsists but in reality it is a new and valid one. If the instrument of donation has been recorded in the registry of property. Osorio) 100% UP LAW UP BAROPS 2008 Page 92 of 325 . If the donor’s heirs ratify the donation and CIVIL LAW the donee or his heirs accept. 748 and 749 applicable to: i. onerous donations ii. donations propter nuptias not What may be given:  All or part of donor’s present property provided he reserves sufficient means for the support of the ff:  himself  relatives who by law are entitled to his support  legitimes shall not be impaired  when w/o reservation or if inofficious. 1357 is not applicable. That article is applicable only to contracts which validly exist and cannot be held applicable to a case where the form is required in order to make it valid. may be reduced on petition of persons affected  except: conditional donation & donation mortis causa  except: future property (Osorio vs. the donor dies. Donee cannot bring an action to compel the donor to execute a public instrument of donation.

he shall only be responsible when the donation was made in fraud of creditors EXCEPT: when donation is onerous EFFECT: if the donor shall be liable This also applies in case of bad faith on his part with regard to hidden defects If donor dies without exercising this right. 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 DONATED: NOT BE DONATIONS SEVERAL JOINTLY MADETO PERSONS WHAT THE DONEE ACQUIRES WITH THE THING OBLIGATIONS DONOR OF THE ART 751. the donor did not reserve sufficient property to pay his debts prior to the donation 100% UP LAW UP BAROPS 2008 Page 93 of 325 . 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 ART 759: If there is no stipulation for the donee to pay debts. one donee does not get the share of the other donees who did not accept) ART 754: to be subrogated to all the rights and actions that would pertain to the donor in case of eviction ART 754: No obligation to warrant EXCEPTION: those given to husband and wife except when the donor otherwise provides WHAT MAY BE RESERVED BY THE DONOR USUFRUCT vs. Donations cannot comprehend future property. OWNERSHIP ART 755: Right to dispose may be reserved ART 757: The ownership of the property may be donated to one person and the usufruct to another ART 758: The donor may provide that the property will go back to him or to another person for any case or circumstances ART 758: If the donation imposes this obligation on the donee. the portion reserved shall belong to the donee REVERSION OBLIGATION OF DONEE TO PAY DONOR’S DEBTS LIMITATION: The third person should be living at the time of the donation OTHERWISE: reversion is void but obligations subsists EXCEPT: When contrary intention appears IN FRAUD OF CREDITORS PRESUMPTION that donation in fraud of creditors: when at the time of donation.e.PROPERTY WHAT MAY BE DONATED ART 750 All present property of the donor or part thereof CIVIL LAW LIMITATION: he reserves in full ownership or in usufruct. 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 ART 753: No accretion (i.

If the donee has alienated the property to one who acquired it in good and he is unable to return it. unless the donor provides otherwise. If the credits exceed the value of the property. (755) (2) Donation of naked ownership to one donee and usufruct to another. because the rights of the heirs are acquired on the moment of death. unless clearly intended (b) If there is no stipulationdonee answerable only for donor’s debt only in case of donation in fraud of creditors. 85 FC-Effect of foreclosureDonations by reason of marriage of property subject to encumbrances shall be valid. the donee shall not be liable for the deficiency. Liability of the donee for the debts of the donor should be CIVIL LAW considered as limited to the value of the thing donated. unless specified otherwise. honor. and will become his upon the happening of a suspensive condition. but in no case shall the donee be responsible for debts exceeding value of property donated. (756) (3) Conventional reversion in favor of donor or other person. Properties of an existing INHERITANCE cannot be considered future property of the heirs after the death of the predecessor. If donor subsequently adopts a minor child Action for revocation based on failure to comply with condition in case of conditional donations Action for revocation by reason of ingratitude 1. even if the delivery to them of the property may be delayed. Donation to several donees jointly—no right of accretion Except 1.PROPERTY  In General (1) Donee may demand actual delivery of the thing donated. Revocation of Donations . BUT these can be donated: 1. In case of foreclosure of the encumbrance and the property is sold for less than the amount of the obligation secured. If donor should have legitimate. Donations propter nuptias of property subject to encumbrances are valid. legitimated or illegitimate children 2. (3) Donor not obligated to warrant things donated. If the property is sold than the total amount of said obligation. the donee cannot be held liable for such excess. he will be held liable in damages but the damages cannot exceed the value of the property itself. donor is liable for eviction up to the extent of the burden. donation to husband and wife jointly with right of accretion (jus accrescendi).not applicable to onerous donations  With regards to donations made by person without children or descendants at time of donation: 1. children under his parental authority   100% UP LAW UP BAROPS 2008 Page 94 of 325 . Special Provisions (1) Reservation by donor of power to dispose (in whole or in part) or to encumber property donated. donation provides otherwise 2. although the delivery of such properties to him may be fixed for a future date 2. (757) (4) Payment of donor’s debt (758) (a) If expressly stipulated-donee to pay debts contracted before the donation. Donee commits offense against person. except in onerous donations in which case. spouse. the donee shall be entitled to the excess. property of donor. although it may or may not later belong to the donor. properties to which the donor has a RIGHT. (4) Donor is liable for eviction or hidden defects in case of bad faith on his part. Art. If child came out to be alive & not dead contrary to belief of donor 3. those properties which pertain to him CONDITIONALLY.applies only to donation inter vivos . Creditors may demand the rescission of the donation. Donations of Future Property (751) Future property includes all property that belongs to others at the time the donation is made. (2) Donee is subrogated to rights of donor in the property donated.

general rule is heir cannot institute if donor did not institute 2. action to reduce to be filed by heirs who have right to legitimate at time of donation 3. Donee unduly refuses to give support to donor when legally or morally bound to give support to donor Exception to rule on intransmissibility of action with regards to revocation due to ingratitude: 1. if 2 or more donation at same time – treated equally & reduction is pro rata but donor may impose preference which must be expressly stated in donation KINDS OF DONATION Pure/Simple a) Consideration Merits of donee Remuneratory Liberality or merits of donee or burden/ charge of past services provided they do not constitute demandable debt Law on donations Required Applicable Conditional Valuable consideration is imposed but value is less than value of thing donated Extent of burden Required Applicable Onerous Valuable consideration given b) law to apply/ forms Law on donations c) form of acceptance Required d) reservation w/regards to personal support & legitime Applicable e) warranty against eviction & hidden defects In bad faith only f) revocation Applicable g) effect of impossible/ illegal conditions considered not written Law on obligations imposed>oblicon excess>donation Required Not Applicable In bad faith only Applicable considered not written In bad faith only Applicable considered not written Applies Applicable Obligation nullified 100% UP LAW UP BAROPS 2008 Page 95 of 325 . spouse or children under his parental authority 3. shall be reduced with regards to the excess 2. personal to the donor. heirs can substitute c) donee killed donor or his ingratitude caused the death of the donor d) CIVIL LAW donor died w/o having known the ingratitude done e) criminal action filed but abated by death 3. Donee imputes to donor any criminal offense or any cat involving moral turpitude even if he should prove it unless act/crime has been committed against donee himself.PROPERTY 2. heirs can only file in the ff cases: a) donor has instituted proceedings but dies before bringing civil action for revocation b) donor already instituted civil action but died. can only make heirs of donee liable if complaint was already filed when donee died Inofficious donations: 1. donees/creditors of deceased donor cannot ask for reduction of donation 4. if there are 2 or more donation: recent ones shall be suppressed 5.

no need for action. Action cannot be renounced Right of action transmitted to heirs Action heirs extends to donee’s NON-FULFILLMENT OF CONDITION needs court action INGRATITUDE needs court action Extent: whole portion but court may rule partial revocation only Property in excess Extent: Whole portion returned Property to be returned Alienations/mortgages imposed are void unless registered with Register of Deeds Prior ones are void. court decision is merely declaratory Extent: portion which may impair legitime of heirs Property must be returned Alienation/mortgages done prior to recording in Register of Deeds: If already sold or cannot be returned – the value must be returned If mortgaged – donor may redeem the mortgage with right to recover from donee Fruits to be returned at filing of action for revocation Prescription of action is 4 years from birth..PROPERTY CIVIL LAW MODES OF EXTINGUISHMENT BIRTH OF CHILD Ipso jure revocation. etc. demand value of property when alienated and can’t be recovered or redeemed from 3rd persons Fruits to be returned at filing of complainant Prescription is 4 years from non-fulfilment Action cannot be renounced in advance Right of action at instance of donor but may be transmitted to heirs Action does not extend to donee’s heirs Prescription is 1 year from knowledge of fact and it was possible for him to bring action Heirs can’t file action 100% UP LAW UP BAROPS 2008 Page 96 of 325 .

Reduction only upon his death with regard to the excess Returned for the benefit of creditor who brought action LIABILITY (FRUITS) Fruits returned from the filing of the complaint Non compliance with condition Within 4 years from non compliance May be transmitted to donor’s heirs and may be exercised against donee’s heirs Fruits received after having failed to fulfill condition returned Ingratitude Within 1 year after knowledge of the fact Generally not transmitted to heirs of donor/donee Fruits returned from the filing of the complaint Failure to reserve sufficient means for support Inofficiousness for being in excess of what the donor can give by will At any time by the donor or relatives entitled to support Within 5 years from death of donor Not transmissible Donee entitled Transmitted donor’s heirs to Donee entitled Fraud against creditors Rescission within 4 years from the perfection of donation/ knowledge of the donation Transmitted to creditor’s heirs or successors in interest Fruits returned/ if impossible indemnify creditor for damages 100% UP LAW UP BAROPS 2008 Page 97 of 325 .PROPERTY CIVIL LAW REVOCATION/ REDUCTION OF DONATION BASIS Birth. appearance. legitimation and adoption TRANSMISSIBILITY Transmitted children descendants death of donor to and upon EFFECT Property returned/ value (if sold)/ redeem mortgage with right to recover Property returned. alienations and mortgages void subject to rights of third person in good faith Property returned but alienations and mortgages effected before the notation of the compliant for revocation in the registry of property subsist Reduced to the extent necessary to provide support Donation takes effect on the lifetime of donor. adoption TIME OF ACTION Within 4 years from birth.

IV. Succession in General Testamentary Succession Legal or Intestate Succession Provisions Common to Testamentary and Intestate Succession 99 99 109 114 100% UP LAW UP BAROPS 2008 Page 98 of 325 . III.SUCCESSION CIVIL LAW Succession TABLE OF CONTENTS I. II.

Lacuesta 4. CC) 3. Mixed – that which is effected partly by will and partly by operation of law. C. Notarial – an ordinary or attested will (Articles 804-808. 780. 798. Legal or Intestate – that which takes place by operation of law in the absence of a valid will. Holographic – a handwritten will (Art. 810. (Art. Jaboneta vs. and by his express direction (Art. They succeed regardless of a will. Compulsory – those who succeed by force of law to some portion of the inheritance. and the second page contains only the attestation clause duly signed at the bottom by the witnesses. made in a will executed in the form prescribed by law. In a language or dialect known to the testator (Art. 783. CC) *Test of Presence: Not whether they actually saw each other sign. a cross does not. CC) 1. CC) 2. 2. CC) *Requisite of a signature: satisfied by a thumbprint Matias vs. 804. However. In writing (Art. CC) *Supervening capacity or incapacity does not affect the will. when the will consists of only two pages. of a person are transmitted through his death to another or others either by his will or by operation of law KINDS OF SUCCESSION 1. or to the portion of such estate not disposed of by will. 541 5. 796. in an amount predetermined by law. 805. on the left margin. 805. 5 Phil. but whether they might have seen each other sign had they chosen to do so considering their mental and physical condition and position with relation to each other at the moment of inscription of each signature. CONCEPT DEFINITION OF WILL (Art. They succeed in the absence of a valid will. when the will consists of only one page b. CIVIL LAW 3. 804. 774. except by a valid disinheritance. Gustilo. Attested and subscribed by three or more credible witnesses in the presence of the testator and of one another (Art. the first of which contains all dispositions and is signed at the bottom by the testator and the witnesses. 3. CC) It is a mode of acquisition by virtue of which the property. except the last. CC) 2. Abangan vs. 779. TESTAMENTARY SUCCESSION A. Of sound mind at the time of the execution of the will (Art. Testamentary – that which results from the designation of an heir. Eighteen (18) years old and above (Art. They succeed by reason of a will. Voluntary or Testamentary – those who are instituted by the testator in his will. Salud.SUCCESSION DEFINITION OF SUCCESSION (Art. CC) KINDS OF HEIRS 1. 804. CC) 2. (Art. of which they cannot be deprived by the testator. 3. All persons who are not expressly prohibited by law (Art. Subscribed at the end by the testator himself or by the testator’s name written by some other person in his presence. CC) *Exceptions: a. 805. Each and every page. must be signed by the testator or by the person requested by him to write his name. rights and obligations to the extent of the value of the inheritance. In a language or dialect known to the testator REQUISITES FOR A VALID NOTARIAL WILL 1. Garcia vs. to succeed to the portion of the inheritance of which the testator can freely dispose. TESTAMENTARY CAPACITY TESTAMENTARY CAPACITY 1. CC) 2. and by the instrumental witnesses of the will. Abangan *Note: The inadvertent failure of one witness to affix his signature to one 2008 Page 99 of 325 I. CC) It is an act whereby a person is permitted with the formalities prescribed by law to control to a certain degree the disposition of his estate to take effect after his death B. CC) COMMON REQUIREMENTS TO BOTH WILLS (Art. (Art. Legal or Intestate – those who succeed to the estate of the decedent who dies without a valid will. FORMALITIES OF WILLS KINDS OF WILLS 1. 797. In writing 2. CC) 100% UP LAW UP BAROPS .

804. CC) example. consent of the testator After the execution of Insertion becomes the will. due to the simultaneous lifting of two pages in the course of signing. Each and every page of the will must be numbered correlatively in letters placed on the upper part of each page. Cruz vs. Dispositions may be added below the signature. 11 SCRA 422 6.SUCCESSION page of a testament. In a language or dialect known to the testator (Art. under his express direction. CC) CIVIL LAW AMENDING A WILL 1. All the instrumental witnesses witnessed and signed the will and all the pages in the presence of the testator and of one another. and signed by the hand of the testator himself (Art. validated by part of the will. Through a codicil which may either be notarial or holographic EFFECT OF INSERTION WRITTEN BY ANOTHER PERSON ON THE VALIDITY OF A HOLOGRAPHIC WILL WRITTEN BY THE TESTATOR When Made Effect After the execution of Insertion is the will. and everything is written by the hand of the testator himself b. CC (SABRDC)) 1. In writing (Art. Icasiano. Testator must personally read the will. 805. dated. Of the age of 18 years or more 3. CC) 2. ADDITIONAL REQUISITES FOR A NOTARIAL WILL IF THE TESTATOR BE BLIND (Art. (Art. Contemporaneous to Will is void because the execution of the will it is not written entirely by the testator. Once by one of the subscribing witnesses 2. with the Insertion is void. RULES IN CASE OF SUBSEQUENT DISPOSITIONS Subsequent Effect Disposition Signed Valid Not dated Last disposition is signed and dated Not signed Void Dated Signed Void but it does not Not dated affect the validity of the other dispositions or the will itself QUALIFICATIONS OF WITNESSES TO A NOTARIAL WILL (Arts. 54 SCRA 31 ADDITIONAL REQUISITES FOR A NOTARIAL WILL IF THE TESTATOR BE DEAF OR A DEAF-MUTE (Art. The validity of the will cannot be defeated by the malice or caprice of a third person. is not per se sufficient to justify denial of probate. (Art. the will. 8. 808. Certain dispositions or additional matter may be suppressed or inserted provided that such is signed by the testator and written by the hand of the testator himself c. 806. provided that said dispositions are also dated and signed. CC) The will shall be read to the testator twice – 1. Not blind. The fact that the testator signed the will and every page. 810. testator shall designate two persons to read the will and communicate its contents to him in some practicable manner. 807. without the considered not consent of the testator written. The number of pages used upon which the will is written. To allow such would have the effect of having only two attesting witnesses to the will which would be in contravention of Articles 805 and 806. Villasor. Holographic – a. or caused some other person to write his name. It must be acknowledged before a notary public by the testator and the witnesses. Otherwise. the testator by his Entire will becomes signature void because it did not comply with the requirement that it must be wholly written by the testator. Of sound mind 2. in the presence of the instrumental witnesses. Once by the notary public before whom the will is acknowledged REQUISITES FOR A HOLOGRAPHIC WILL 1. b. 2. c. if able to do so. It must contain an attestation clause. Icasiano vs. CC) a. 805. 820 – 821. deaf or dumb 2008 Page 100 of 325 100% UP LAW UP BAROPS . stating the following (Art. CC) * Note: The notary public before whom the will was acknowledged cannot be considered as the third instrumental witness since he cannot acknowledge before himself his having signed the will. CC) 1. After the execution of Will is valid. page one of five pages 7. 804. Notarial – only through a codicil 2. CC) 3. Entirely written.

827. added to. insofar as it concerns that witness or his spouse or his parent or his child. the will is CC) executed. Able to read and write 5. 825 – 826. Order of succession 2. CC) A witness who attests to the execution of a will which gives a legacy or devise to that witness. Have not been convicted of falsification of a document. It must be signed by the testator and the witnesses on each and every page. The document or paper referred to in the will must be in existence at the time of the execution of the will. (Art. Law of the place where the testator resides. except in case of voluminous books of account or inventories. His competence as a witness shall subsist. Intrinsic validity provisions of CIVIL LAW testamentary JOINT WILL A single testamentary instrument which contains the wills of two or more persons jointly executed by them either for their reciprocal benefit or for the benefit of a third person MUTUAL WILLS Executed pursuant to an agreement between two or more persons to dispose of their property in a particular manner each in consideration of the other separate wills of two persons which are reciprocal in their provisions RECIPROCAL WILLS Testators name each other as beneficiaries under similar testamentary plans - - Testator Filipino Note: A will that is both joint and mutual is one executed jointly by two or more persons. Philippine Law. Such is prohibited under Art. Prohibition is applicable only to joint wills executed by Filipinos. 817. And 4. perjury or false testimony INTERESTED WITNESS (Art. Philippine Law Philippines 1. Philippine Law 4. Amount of successional rights 100% UP LAW UP BAROPS . 816. or his parent or his child. Outside the 1. 3. or altered It is executed as in the case of a will. or 4. 16.SUCCESSION 4. shall be void unless there are three other witnesses to such will. CC) 1. 2. Domiciled in the Philippines 6. Law of the testator’s country. CODICIL AND INCORPORATION BY REFERENCE DEFINITION OF A CODICIL (Arts. It must be identified by clear and satisfactory proof as the document or paper referred to therein. or his spouse. *Effect: The devise or legacy. Capacity to succeed 3. or CC) 2. Law of the Country of which testator is a citizen or subject. or 3. CC) Outside of 1. or 2. Law of the Philippines place where (Art. Law of the the country in Philippines which it is (Art. stating among other things the number of pages thereof. 819. 815. 16. CC) 1. The will must clearly describe and identify the same. CC) As to Place Place of Governing Law Execution of the Will Philippines Philippine Law (Art. GOVERNING LAW As to time Governing Law Formal Validity Law in force at the time the will is made Intrinsic Validity Law of decedent’s nationality at the time of his death (Art. the provisions of which are reciprocal and which shows on its face that the devises are made in consideration of the other. D. CC. 16 and 1039. executed. 823. REQUISITES FOR INCORPORATION BY REFERENCE (Art. CC) It is a supplement or addition to a will made after the execution of a will and annexed to be taken as a part of the will by which any disposition made in the original will is explained. or CC) 2. 2008 Page 101 of 325 Alien ASPECTS OF THE WILL GOVERNED BY THE NATIONAL LAW OF THE DECEDENT (Arts.

not conclusive. the revocation fails and the original will remain in full force. 828. and is subject to the final decision in a separate action to resolve title. By implication of law 2. If the Formalities required by law have not been complied with. on the part of the beneficiary or of some other person. at the time of its execution. 829. tearing. Whether the testator had testamentary capacity at the time of the execution of the will GROUNDS FOR DISALLOWANCE OF A WILL (Art. 6. or obliterating the will with the intention of revoking it. If the testator acted by Mistake or did not intend that the instrument he signed should be his will at the time of affixing his signature thereto. CC) PLACE OF TESTATOR’S GOVERNING REVOCATION DOMICILE LAW In the Philippines or Philippine Philippines in some Law other country Outside the Philippines Philippine Philippines Law Foreign 1. Probate court may pass upon the title thereto. Mercado vs. Law of country the place where the will was made. CC) – FIFU SM 1. the revocation will be 100% UP LAW UP BAROPS CIVIL LAW conditional and dependent upon the efficacy of the new disposition.SUCCESSION E. If it was procured by Undue and improper pressure and influence. DOCTRINE OF DEPENDENT RELATIVE REVOCATION A revocation subject to a condition does not revoke a will unless and until the condition occurs. 830. the new will intended to be made as a substitute is inoperative. 4. Molo vs. or 2. or otherwise mentally incapable of making a will. By burning. (Art. and if for any reason. where a testator “revokes” a will with the proven intention that he would execute another will. *This list is exclusive. Pastor vs. Where the act of destruction is connected with the making of another will so as to fairly raise the inference that the testator meant the revocation of the old to depend upon the efficacy of the new disposition intended to be substituted. Law of the place in which the testator had his domicile at the time of revocatio n. and by his express direction *Note: It must be done any time before the death of the testator. Molo. 3. Whether the will has been executed in accordance with the formalities prescribed by law 3. by the testator himself. REVOCATION OF WILLS AND TESTAMENTARY DISPOSITIONS MODES OF REVOKING A WILL (Art. 839. codicil or other writing executed as provided in the case of wills 3. If the Signature of the testator was procured by fraud. 2. or the influence of fear. Whether the instrument which is offered for probate is the last will and testament of the decedent 2. but such determination is provisional. The right of revocation cannot be waived or restricted. ALLOWANCE DISALLOWANCE OF WILLS - AND - PROBATE It is a special proceeding by which the validity of a will may be established. 2008 Page 102 of 325 . If the testator was Insane. 5. or threats. CC) LAWS WHICH GOVERN REVOCATION (Art. If it was executed through Force or under duress. 90 Phil. canceling. Santos 1938 MATTERS TO BE PROVED IN A PROBATE 1. Thus. CC) 1. CA 1983 Probate of a will bars criminal prosecution of the alleged forger of the probated will. By the execution of a will. 37 F. or by some other person in his presence. his failure to validly make a latter will would permit the allowance of the earlier will.

Requisites of Annulment under 850: 100% UP LAW UP BAROPS 2008 Page 103 of 325 . No preterition results from the effect of such will THREE PRINCIPLES IN THE INSTITUTION OF HEIRS 1. He can give his estate to any person having capacity to succeed. If testator has compulsory heirs a. The person so named has capacity to succeed 4. 846. The institution of the heir is annulled. There must be a total omission of one. 842. CC) 1. 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. If testator has no compulsory heirs a. without prejudice to the right of representation. 3. Individuality – heirs collectively instituted are deemed individually named unless a contrary intent is proven. The will is formally valid 5. He can give the disposable portion to strangers. Designation in will of person/s to succeed 2. Equality – heirs who are instituted without designation of shares shall inherit in equal parts.SUCCESSION REVOCATION VS. CC) 3. CC) General Rule: The statement of a false cause for the institution of an heir shall be considered as not written. G. b. b. 854. INSTITUTION OF HEIRS DEFINITION OF INSTITUTION OF HEIRS (Art. No vice of consent is present 6. CC) 1. (Art. 2. the institution shall be effectual. 2. Will specifically assigns to such person an inchoate share in the estate 3. 847. 849. 3. The omitted compulsory heir must be living at the time of the testator’s death or must at least have been conceived before the testator’s death. CONCEPT OF PRETERITION (Art. Austria vs. 850. cause must be shown as false 3. 840. it must appear form the face of the will that the testator would not have made such institution if he had known the falsity of the cause. The omission must be that of a compulsory heir. cause for institution of heirs must be stated in the will 2. CC) It is an act by virtue of which a testator designates in his will the person/s who are to succeed him in his property and transmissible rights and obligations. The compulsory heir omitted must be of the direct line. CC) 2. CC)i INSTITUTION BASED ON A FALSE CAUSE (Art. they are all deemed to have been instituted simultaneously and not successively. Devises and legacies shall remain valid as long as they are not inofficious. If the omitted compulsory heir should die before the testator. the institution shall be annulled. CC) 1. REQUISITES FOR A VALID INSTITUTION OF HEIR (DACCVP) 1. Simultaneity – when the testator calls to the succession a person and his children. Reyes 1970 RULES REGARDING A PERSON’S RIGHT TO DISPOSE OF HIS ESTATE (Art. 2. Legitimes of compulsory heirs must be respected. He must respect restriction imposed by special laws. In this case. EFFECTS OF PRETERITION (Art. (Art. some or all of the heir/s in the will. DISALLOWANCE REVOCATION DISALLOWANCE Voluntary act of the Given by judicial testator decree With or without Must always be for a cause legal cause May be partial or Always total except total when the ground of fraud or influence for example affects only certain portions of the will CIVIL LAW 1. (Art. 854. 4.

CC) a. 885. This is void. the object of the institution. the charge imposed by the creator upon the heir. CC) Modal – institution where the testator states the following: (Art. INCAPACITY. any right to his compulsory heir. *Doctrine of Constructive Compliance – When without the fault of the heir. the substitute shall acquire the share of the heir who dies. die before him (predecease) b. REPUDIATION PRE IN REPUDIA DECEASE CAPACITY TION No right transmitted to the No right transmitted to Voluntary heir heirs of the voluntary heir. cannot transmit any right to his own heirs. it shall be complied with in a manner most analogous to and in conformity with his wishes. CC) H. 3. CC) Conditional – may be potestative. Brief . should not wish to accept the inheritance (renounce) c. the compulsory heir is restored to his legitime. CC) a. (Art. 4. 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. CC) With a Term – designation of the day or time when the effects of the institution of an heir shall commence or cease. If disinheritance is not lawfully disposed of by way of legacies and devises. or is incapacitated. they shall have the same share in the 2008 Page 104 of 325 100% UP LAW UP BAROPS . made. 875. (Art. or c. 860. 882. 859. own heirs. 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. EFFECTS OF PREDECEASE. (See Arts. HEIR Voluntary Compulsory 1.SUCCESSION CIVIL LAW PRETERITION VS. 883. CC) It is the appointment of another heir so that he may enter into the inheritance in default of the heir originally instituted. But it may also be voluntary. KINDS OF INSTITUTIONS Simple or Pure – the rights to the succession are transmitted from the moment of the death of the decedent. is not instituted as an heir. or b. 857. the heirs of the who repudiated voluntary heir. SUBSTITUTION OF HEIRS DEFINITION OF SUBSITUTION (Art. 3. If there are more than one substitute. the modal institution cannot take effect in the exact manner stated by the testator. CC) a. (Art. Compendious – One person is designated to take the place of two or more heirs. renounces. b. causal or mixed.two or more persons designated by the testator to substitute for only one heir. 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. should be incapacitated to accept the inheritance (incapacitated) 2. 871 – 884) *Disposicion Captatoria – disposition made upon the condition that the heir shall make some provision in his will in favor of the testator or of any other person. Vulgar or Simple – the testator may designate one or more person/s to substitute the heir/s instituted in case such heir/s should: (Art. Brief or Compendious (Art. the purpose of the application of the property left by the testator. 777. CLASSES OF SUBSITITUTION 1. 2. (Art. unless it clearly appears that the intention of the testator was otherwise. Reciprocal – If the heirs instituted in unequal shares should be reciprocally substituted.

SS Legimate Parents. 2. Secondary – those who succeed only in the absence of the primary compulsory heirs a. 2. Concurring – those who succeed together with the primary or the secondary compulsory heirs a. 2. CC) 1. SS 3. Primary – those who have precedence over and exclude other compulsory heirs a.ILP CIVIL LAW COMPULSORY HEIRS If the testator is a If the testator is an LEGITIMATE ILLEGITIMATE CHILD CHILD 1. Widow or widower (legitimate) b. The fideicommissary substitution is imposed on the free portion of the estate and never on the legitime. the next generation of legitimate descendants succeed in their own right. IC and 4. (Art. If all the legitimate children repudiate their legitime. and those in the direct ascending line shall. only the legitimate descendants can represent. Rule of proximity – the relative nearest in degree excludes the farther one c. The heir instituted to such condition is called the first heir or the fiduciary heir. ILP only 4. incapacity or disinheritance. b.LP Illegitimate Parents. SS descendants SPECIFIC RULES ON LEGITIMES 1. 3. Rule of preference between lines . In default of no. The fiduciary heir and the fideicommissary are living at the time of the death of the testator. In default of nos. Fideicommissary – if the testator institutes an heir with an obligation to preserve and to deliver to another the property so inherited. both the legitimate and illegitimate descendants can represent.Those in the direct descending line shall exclude those in the direct ascending and collateral lines. Non-impairment of legitime I. 4. 5. 861. Direct Descending Line a. in turn. Illegitimate parents with respect to their illegitimate children 3.SUCCESSION substitution as in the institution. The substitution must not go beyond one degree from the heir originally instituted. 863 – 865. 12.LC Illegitimate children. A fiduciary or first heir instituted entrusted with the obligation to preserve and to transmit to a fideicommissary substitute or second heir the whole or part of the inheritance. d. For decedents who are legitimate children. Surviving spouse. CC) REQUISITES FOR A FIDEICOMMISSARY SUBSTITUTION (Arts. Rule of equal division – the relatives who are in the same degree shall inherit in equal shares 3. LC and 1. exclude those in the collateral line. ILC and 1. Legitimate children and legitimate descendants with respect to their legitimate parents and ascendants 2. CC) It is that part of the testator’s property which he cannot dispose of because the law has reserved it for his compulsory heirs CLASSES OF COMPULSORY HEIRS (Art. CC) 1. LC and descendants descendants 2. 886. (Art. The fideicommissary substitution must be expressly made. LEGITIMES DEFINITION OF LEGITIME (Art. CC) 4. For decedents who are illegitimate children. Direct Ascending Line a. LP and ascendants descendants 3. Legitimate parents and legitimate ascendants with respect to their legitimate children and descendants b. 887.ILC 100% UP LAW UP BAROPS 2008 Page 105 of 325 . the one to receive the property is the fideicommissary or the second heir. 863. Rule of division by lines b. Illegitimate children and illegitimate descendants Legitmate children. Right of representation ad infinitum in case of predecease.

there will be an annulment of the institution of heirs and a reduction of devises and legacies. CC. 6. ILC LP alone LP. SS LC. SS. Impute the value of all donations inter vivos made to compulsory heirs against their legitime and of the value of all donations inter vivos made to strangers against the disposable free portion and restore it to the estate if the donation is inofficious. then there may be preterition if the compulsory heir omitted is either an ascendant or descendant. Collate or add the value of all donations inter vivos to the net value of the estate. ILC LP. 100% UP LAW UP BAROPS 2008 Page 106 of 325 . SS LP. 2. SS. ILC ILC alone ILC.e. Determine the gross value of the estate at the time of the death of the testator.SUCCESSION CIVIL LAW SUMMARY OF LEGITIMES OF COMPULSORY HEIRS LC & SS ILC LP & DESCENDANTS ASCENDANT S SURVIVING REL. 5. 4. CC would come in to play. If the impairment is partial. 854. If the impairment is total. 2. 906. then the compulsory heir is entitled to completion of legitime under Art. SS LC. Distribute the residue of the estate in accordance with the will of the testator. ILC 2 or more LC. 7. REMEDY OF COMPULSORY HEIR IN CASE OF IMPAIRMENT OF LEGITIME 1. i. SS. Determine the net value of the estate by deducting all debts and charges from the gross value of the estate. Determine all debts and charges which are chargeable against the estate. LC alone 1 LC.. 3. ILC 1 LC. SS SS alone ILP ½ (divided by # of children) ½ ½ (divided by # of children) ½ ½ ½ (divided by # of children) ¼ (preferred) Same as the share of 1 LC ¼ Same as the share of 1 LC ½ of the share of 1 LC ½ of the share of 1 LC ½ of the share of 1 LC ½ ¼ ¼ 1/8 ¼ ½ (divided by # of children) 1/3 ½ or 1/3 if marriage in articulo mortis ½ ¼ 1/3 1/3 1/3 (adopter) ¼ 1/3 (divided by # of children) ½ ½ ½ ILP alone ILP. Determine the amount of the legitime from the total thus found. SS Adopter ILC. Art. SS STEPS IN DETERMINING THE LEGITIME OF COMPULSORY HEIRS 1.

CC) The ascendant who inherits from his descendant any property which the latter may have acquired by gratuitous tile from another ascendant. is obliged to reserve such property as he may have acquired by operation of law for the benefit of relatives within the third degree and who belong to the line from which said property came. CC) It is the act by which the testator for just cause deprives a compulsory heir of his right to the legitime. that the prepositus died without an issue 3. 2. 100% UP LAW UP Guilty/convicted of attempt against life of testator/spouse/ ascendant/descendant Accused testator/decedent of crime punishable by imprisonment of 6 years or more. CFI. 78 SCRA 406 and Gonzales vs.children/ descendants 920. 6. that there are relatives within the 3rd degree (reservatarios) belonging to the line from which said property came (Source) CIVIL LAW 3. or undue influence Unjustified refusal to support testator Convicted of adultery or concubinage with spouse of testator/decedent Maltreatment of testator by word and deed Leading a dishonorable or disgraceful life Conviction of crime which carries penalty of civil interdiction Abandonment of children or inducing children to live corrupt and immoral life or attempted against virtue Loss of parental authority Attempt by one parent against life of the other UNLESS there is reconciliation between parents Spouses given cause 2008 * * * * * * * * * * * * * * * * * * * * * * * * Page 107 of 325 BAROPS . intimidation. Heir disinherited must be designated by name or in such a manner as to leave no room for doubt as to who is intended to be disinherited. It must be made expressly.spouse 1032. found groundless.unworthiness GROUNDS FOR DISINHERITANCE 919 * 920 * 921 10 32 * A B E F (Reservatario) C D G (Reservista) H (Prepositus) J. CFI. false Causes testator/decedent to make will or change one by fraud. 104 SCRA 161 1. SUMMARY OF CAUSES OF DISINHERITANCE Art.SUCCESSION 3. that the property was acquired by a descendant (prepositus) from an ascendant or from a brother or sister (source) by gratuitous title 2. It must be made in a valid will. It must be unconditional. violence. 915. that the property is inherited by another ascendant (reservista) by operation of law 4. Art. stating the cause in the will itself. or a brother or sister. It must be for a cause designated by law. the remedy is collation. 5. CONCEPT OF RESERVA TRONCAL (Art. 7. If the impairment is through donation. 919. 891. 4. REQUISITES FOR RESERVA TRONCAL Chua vs. DISINHERITANCE DEFINITION OF DISINHERITANCE (Art. Art. The cause must be certain and true. REQUISITES FOR A VALID DISINHERITANCE 1. and must be proved by the interested heir if the person disinherited should deny it. Art. It must be total.parents/ ascendants 921.

Thus. Legatee or devisee 4. Not belonging to the testator at the time the will is executed but he has ordered that the thing be acquired in order that it be given to the legatee/devisee. Not belonging to the testator at the time the will is executed and the testator erroneously believed that the thing pertained to him. 8. reconciliation renders the disinheritance ineffective. Belonging to the No revocation. CC VS. 911. Belonging to the Effective testator at the time of the execution of the will until his death 2. Compulsory heir 2. 950 Order of Preference Order of Preference 2008 Page 108 of 325 BAROPS . unless authorities have already taken action Force. Testator had knowledge that the thing bequeathed belonged to a third person and the legatee/devisee acquired the property gratuitously after the execution of the will. CIVIL LAW * Effective * Void * REVOCATION OF DISINHERITANCE 1. 911 ART. he thereby submits it to the rules on disinheritance. violence. 11. 950.SUCCESSION for legal separation Failure to report violent death of decedent within one month. Estate VALIDITY AND EFFECT OF LEGACY OR DEVISE STATUS OF EFFECT ON THE PROPERTY GIVEN LEGACY/DEVISE BY LEGACY/DEVISE 1. Belonging to the Legatee/devisee can testator at the time of demand the execution of the reimbursement from will but alienated in the heirs or the 100% UP LAW UP Ineffective Legatee/devisee claim nothing virtue of legacy/devise can by the Legatee/devisee can demand reimbursement from the heir or estate. Already belonged to the legatee/devisee at the time of the execution of the will even though it may have been subsequently alienated by him. CC ART. Voluntary heir 3. Nullity of the will which contains the disinheritance *Note: The moment the testator uses one of the acts of unworthiness as a cause for disinheritance. 10. 7. Already belonged to the legatee/devisee at the time of the execution of the will even though another person may have interest therein 9. LEGACIES AND DEVISES PERSONS CHARGED WITH LEGACIES AND DEVISES 1. Not belonging to the testator at the time the will is executed but afterwards it becomes his by whatever title. favor of the legatee or devisee gratuitously 4. Belonging to the Revoked testator at the time of the execution of the will but alienated in favor of a 3rd person 3. Reconciliation 2. There testator at the time of is a clear intention to the execution of the comply with the will but alienated in legacy/devise. intimidation or undue influence to prevent another from making a will or revoking one already made or who supplants or alters the latter’s will Falsifies or forges a supposed will of the decedent favor of the legatee/devisee onerously 5. Testator had knowledge that the thing bequeathed belonged to a third person and the legatee/devisee acquired the property by onerous title. estate. ART. ORDER OF PAYMENT IN CASE THE ESTATE IS INSUFFICIENT TO COVER ALL LEGACIES AND DEVISES – ART. Subsequent institution of the disinherited heir 3. 6. Effective Ineffective K.

When there are no compulsory heirs and the entire estate is distributed by the testator as legacies or devises. Rule of Preference Between Lines – Those in the direct descending line shall exclude those in the direct ascending and collateral lines. CC) Intestate Succession GROUNDS FOR REVOCATION OF LEGACIES AND DEVISES (Art. If a person dies without a will 2. (Art. sale of the thing to pay the debts of the deceased during the settlement of his estate. 962. or after his death without the heirs’ fault. 960. Incapacity or Predecease – something happens to the heir 1. If a person dies with a will which has subsequently lost its validity 4. (LIPO) Legitime of compulsory heirs Donations Inter vivos Preferential legacies or devises All Other legacies or devises pro rata (RPSESO) 1. Thing bequeathed is totally lost during the lifetime of the testator. II. the inverse order of payment should be followed. 2. Legacy for Education 5. Legal succession shall take place only with respect to the property which the testator has not disposed. CIVIL LAW affecting the bequests. When. the legitime has been preserved by the testator himself there are donations inter vivos. All Others pro rata Application: 1. and those in the direct ascending line shall. there being no substitution. When the will does not institute an heir 5. 1015. 3. Repudiation – the heir does something 3. except in cases provided in the Civil Code FUNDAMENTAL UNDERLYING PRINCIPLES IN LEGAL OR INTESTATE SUCCESSION 1. If a person dies with a void will 3. 3. 2. or 2. Rule of Proximity – the relative nearest in degree excludes the farther one. *Art. If the heir dies before the testator 8. 857. When the heir instituted is incapable of succeeding. 3. When the will does not dispose of all the property belonging to the testator. Legacy for Support 4. Rule of Equal Division – the relatives who are in the same degree shall inherit in equal shares. Except: When the thing should again belong to the testator after alienation by virtue of the exercise of the right of repurchase. *Note: List is not exclusive. CC) 1. and no right of accretion takes place 9. 970. it being understood that in the latter case the legacy or devise shall be without effect only with respect to the part alienated. If the heir repudiates the inheritance. (Articles 987 and 1006. 4. although. When the reduction is necessary to preserve the legitime of compulsory heirs from impairment whether there are donations inter vivos or not. 950 governs when the question of reduction is exclusively among legatees and devisees themselves. LEGAL SUCCESSION OR INTESTATE Application: 1. Testator by any title or for any cause alienates the thing bequeathed. Other causes: nullity of the will. When there are compulsory heirs but their legitime has already been provided for by the testator and there are no donations inter vivos. If the suspensive condition attached to the institution of the heir does not happen or is not fulfilled 7. or 2. *Art. 2. 911 governs when there is a conflict between compulsory heirs and the devisees and legatees. Legacy/devise of Specific. CAUSES OF VACANCY IN SUCCESSION 1. in turn. HOW VACANCIES ARE FILLED Substitution (Art. 2. 6. noncompliance with suspensive conditions 100% UP LAW UP BAROPS CAUSES FOR LEGAL OR INTESTATE SUCCESSION (Art. *Note: In case of reduction. Preferential legacy/devise 3. 4. 4. CC) 1. CC) Exceptions: 2008 Page 109 of 325 .SUCCESSION 1. CC) Representation (Art. or any part thereof. determinate thing which forms a part of the estate 6. CC) Accretion (Art. Remuneratory legacy/devise 2. exclude those in the collateral line. Disinheritance – the testator creates it himself 2. 957. Testator transforms the thing bequeathed in such a manner that it does not retain either the form or the denomination it had. CC) 3.

Division among brothers and sisters. 8. 2. (Articles 895 and 983. but who come from a common ancestor. When illegitimate children represent their deceased illegitimate parents in the estate of their grandparents. 6. 7. but still remains as an intestate heir of his natural parents and other blood relatives. 970. 4. RIGHT OF REPRESENTATION IN INTESTATE SUCCESSION 1. Half-blood – only one of either parent is the same. CC) 1. 100% UP LAW UP BAROPS 2008 Page 110 of 325 . A legatee or devisee who died afther the death of the testator may be represented by his heirs. RIGHT OF REPRESENTATION IN TESTAMENTARY SUCCESSION 1. 5. DEFINITION OF THE RIGHT OF REPRESENTATION (Art. some of whom are of the full and others of half-blood c. (Art. CC) It is a right created by fiction of law by virtue of which the representative is raised to the place and degree of the person represented and acquires the rights which the latter would have if he were living or if he would have inherited.e. When brothers or sisters had predeceased the decedent and they had children or descendants. In the collateral line.. CC) RELATIONSHIP (Articles 963 – 969. 3. *Notes: - CIVIL LAW - In the direct line. 5. In adoption. survive. representation takes place ad infinitum in the direct descending line. Full blood – same father and mother. Rule of Barrier between the legitimate family and the illegitimate family – the illegitimate family cannot inherit by intestate succession from the legitimate family and vice-versa. 4. representation covers only the legitime. When a legal heir in the direct descending line had predeceased the decedent and was survived by his children or descendants. Division in the ascending line (between paternal and maternal grandparents) b. When a compulsory heir in the direct descending line is disinherited and he has children or descendants. A series of degrees forms a line. 9. The adopted is deemed a legitimate child of the adopter. A line may either be direct or collateral. nephews and nieces) whether of the full or half-blood and only if they concur with at least one uncle or aunt. When a compulsory heir in the direct descending line is excluded from the inheritance due to incapacity or unworthiness and he has children or descendants. When a legal heir in the direct descending line is excluded from the inheritance due to incapacity or unworthiness and he has children or descendants. Division in cases where the right of representation takes place 4. 2. the full blood shall take a portion in the inheritance double that of the half-blood. When nephews and nieces inherit together with their uncles and aunts in representation of their deceased parents who are brothers or sisters of said uncles and aunts. A direct line is that constituted by the series of degrees among ascendants and descendants (ascending and descending). 3. nephews or nieces. 4. A collateral line is that constituted by the series of degrees among persons who are not ascendants or descendants.SUCCESSION a. 3. 2. 992. never in the ascending. Each generation forms a degree. When a compulsory heir in the direct descending line had predeceased the testator and was survived by his children or descendants. CC) 5. Rule of Double Share for full blood collaterals – when full and half-blood brothers or sisters. representation takes place only in favor of the children of the brothers or sisters (i. the legal filiation is personal and exists only between the adopter and the adopted. Number of generations determines proximity.

Nephews Nieces Other collaterals within 5th degree State LC.SUCCESSION ORDER OF LEGAL OR INTESTATE SUCCESSION DECEDENT IS A LEGITIMATE CHILD LC and Legitimate descendants LP and Legitimate ascendants ILC and Illegitimate descendants SS Legitimate siblings. Collaterals and State Collaterals and State Collaterals and State Collaterals other than siblings. Collaterals and State ILP. ILP LC. LP. Nieces State CONCURRENCE IN LEGAL OR INTESTATE SUCCESSION Intestate Heir LC and Legitimate descendants ILC and Descendants LP and Legitimate ascendants ILP SS EXCLUDES Ascendants. LP. Nephews. Nieces Legitimate collateral relatives within the 5th degree State DECEDENT IS AN ILLEGITIMATE CHILD LC and Legitimate descendants ILC and Illegitimate descendants ILP CIVIL LAW DECEDENT IS AN ADOPTED CHILD LC and Legitimate descendants ILC and Illegitimate descendants LP or ILP and Legitimate ascendants. LP. Nephews. Adoptive parents SS Siblings. Nieces State 1 2 3 4 5 6 7 SS Illegitimate siblings. ILP Siblings Nephews Nieces SS Collaterals in the same degree No one CONCURS WITH Siblings. nephews and nieces All other collaterals and State Collateral more remote in degree and State No one EXCLUDED BY No one No one LC LC and ILC No one SS and ILC SS LC and LP ILC and SS SS LC. ILC. ILC. ILP and SS Everyone A MORE DETAILED SUMMARY OF INTESTATE SHARES 1 LEGITIMATE CHILDREN AND LEGITIMATE DESCENDANTS ALONE SHARE AS FREE TOTAL INTESTATE SHARE AS LEGITIME Intestate Heir DISPOSAL SHARE LC ½ ½ 1 TOTAL ½ ½ 1 2 ONE LEGITIMATE CHILD AND SURVIVING SPOUSE Intestate Heir LC SS TOTAL SHARE AS LEGITIME ½ ¼ ¾ SHARE AS FREE DISPOSAL ¼ ¼ TOTAL INTESTATE SHARE ½ ½ 1 100% UP LAW UP BAROPS 2008 Page 111 of 325 . Nephews. ILC.

1 for wouldn’t be impaired each ILC TOTAL Varies on # of children Varies on # of children 1 5 ONE LEGITIMATE CHILD.SUCCESSION CIVIL LAW 3 LEGITIMATE CHILDREN AND SURVIVING SPOUSE SHARE AS FREE TOTAL INTESTATE SHARE AS LEGITIME Intestate Heir 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 1 children children 4 LEGITIMATE CHILDREN AND ILLEGITIMATE CHILDREN SHARE AS FREE TOTAL INTESTATE SHARE AS LEGITIME Intestate Heir 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. of Varies on no. Same share as a LC. of ILC no. of ILC 100% UP LAW UP BAROPS 2008 Page 112 of 325 . LC provided legitimes provided legitimes are not impaired are not impaired TOTAL Varies depending on Varies depending on 1 no. ILLEGITIMATE CHILD. AND SURVIVING SPOUSE SHARE AS LEGITIME SHARE AS FREE TOTAL INTESTATE Intestate Heir DISPOSAL SHARE LC ½ Remaining portion of estate after paying legitimes to be divided by the ratio of 2:1 for each LC and each ILC. ILLEGITIMATE CHILDREN AND SURVIVING SPOUSE SHARE AS FREE TOTAL INTESTATE SHARE AS LEGITIME Intestate Heir DISPOSAL SHARE LC ½ Remaining portion of Whole estate divided estate. respectively 1 for each ILC (see above) Same share as a LC Varies depending on # of ILC Whole estate divided by the ratio of 2 for each LC ILC SS TOTAL ½ share of 1 LC or ¼ ¼ Varies depending on # of ILC 1 for each ILC Legitimes wouldn’t be impaired 1 6 LEGITIMATE CHILDREN. 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.

SUCCESSION 7 LEGITIMATE PARENTS ALONE SHARE AS FREE SHARE AS LEGITIME DISPOSAL ½ ½ ½ ½ CIVIL LAW Intestate Heir LP TOTAL TOTAL INTESTATE SHARE 1 1 8 LEGITIMATE PARENTS AND ILLEGITIMATE CHILDREN In testate Heir LP ILC TOTAL ½ ¼ ¾ SHARE AS LEGITIME SHARE AS FREE DISPOSAL TOTAL INTESTATE SHARE ½ ½ 1 ¼ ¼ 9 LEGITIMATE PARENTS AND SURVIVING SPOUSE SHARE AS FREE SHARE AS LEGITIME Intestate Heir DISPOSAL LP ½ SS ¼ ¼ TOTAL ¾ ¼ TOTAL INTESTATE SHARE ½ ½ 1 10 LEGITIMATE PARENTS. SURVIVING SPOUSE AND ILLEGITIMATE CHILDREN SHARE AS FREE TOTAL INTESTATE SHARE AS LEGITIME Intestate Heir DISPOSAL SHARE LP ½ ½ SS 1/8 1/8 ¼ ILC ¼ ¼ TOTAL 7/8 1/8 1 11 ILLEGITIMATE CHILDREN ALONE SHARE AS FREE SHARE AS LEGITIME DISPOSAL ½ ½ ½ ½ Intestate Heir ILC alone TOTAL TOTAL INTESTATE SHARE 1 1 12 ILLEGITIMATE CHILDREN AND SURVIVING SPOUSE SHARE AS FREE TOTAL INTESTATE SHARE AS LEGITIME Intestate Heir DISPOSAL SHARE ILC 1/3 1/6 ½ SS 1/3 1/6 ½ TOTAL 2/3 1/3 1 13 SURVIVING SPOUSE SHARE AS FREE SHARE AS LEGITIME DISPOSAL ½ or 1/3 ½ or 1/3 ½ or 1/3 ½ or 1/3 14 ILLEGITIMATE PARENTS ALONE Intestate Heir ILP TOTAL 100% UP LAW Intestate Heir SS TOTAL TOTAL INTESTATE SHARE 1 1 SHARE AS LEGITIME ½ ½ UP BAROPS SHARE AS FREE DISPOSAL ½ ½ 2008 TOTAL INTESTATE SHARE 1 1 Page 113 of 325 .

or co-legatees. nephews. SIBLINGS. nephews. NEPHEWS AND NIECES ALONE (SPECIAL KIND OF COLLATERAL RELATIVES) SHARE AS FREE SHARE AS LEGITIME DISPOSAL ½ ½ ½ ½ Intestate Heir Siblings. ILC. ACCRETION - COMMON TO TESTAMENTARY AND INTESTATE DEFINITION OF ACCRETION (Art. PROVISIONS SUCCESSIONS A. 190. co-devisees. 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. 1015. ½ ½ nieces TOTAL ½ ½ 1 ORDER OF CONCURRENCE IN THE CASE OF AN ADOPTED CHILD (Art. CC) It is a right by virtue of which when two or more persons are called to the same inheritance. NEPHEWS AND NIECES SHARE AS FREE TOTAL INTESTATE SHARE AS LEGITIME Intestate Heir DISPOSAL SHARE SS ½ ½ Siblings. nieces TOTAL TOTAL INTESTATE SHARE 1 1 17 SURVIVING SPOUSE. 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. 100% UP LAW UP BAROPS 2008 Page 114 of 325 . FC) SURVIVORS SHARE LC.SUCCESSION CIVIL LAW 15 ILLEGITIMATE PARENTS AND SURVIVING SPOUSE SHARE AS FREE TOTAL INTESTATE SHARE AS LEGITIME Intestate Heir DISPOSAL SHARE ILP ¼ ¼ ½ SS ¼ ¼ ½ TOTAL ½ ½ 1 16 SIBLINGS.

BASED ON ACTS OF UNWORTHINESS (Art. brother.SUCCESSION CIVIL LAW EFFECT OF PREDECEASE. nurse. CC) a. CC) PIGRAP a. The heir. c. community. Guardian with respect to testamentary dispositions given by a ward in his favor before the final accounts of the guardianship have been approved. c. chapter. associations and corporations not permitted by law to inherit. BASED ON UNDUE INFLUENCE OR INTEREST (Art. Individuals. descendant. Those made in consideration of a crime of which both the testator and the beneficiary have been found guilty. except if the guardian is his ascendant. He must not be incapacitated or disqualified by law to succeed. even if the testator should die after the approval thereof. Physician. spouse. Those made in favor of a public officer or his spouse. d. parents. or children. the church. Relatives of the priest or minister of the gospel within the fourth degree. 3. 1024 – 1025. INCAPACITY. or any one claiming under such witness. or institution to which such priest or minister may belong. by reason of his public office. organization. CC) 1. or spouse. 739. B. WHO ARE INCAPABLE OF SUCCEEDING 1. legatee or devisee must be living or in existence at the moment the succession opens. descendants and ascendants. b. 1027. Priest who heard the last confession of the testator during his last illness. and 2. b. or the minister of the gospel who extended spiritual aid to him during the same period. CAPACITY TO SUCCEED REQUISITES FOR CAPACITY TO SUCCEED BY WILL OR BY INTESTACY (Art. CC) – See table under disinheritance PARDON OF ACTS OF UNWORTHINESS EXPRESS IMPLIED Made by the Effected when the execution of a testator makes a document or any will instituting the writing in which the unworthy heir with decedent condones knowledge of the the cause of cause of incapacity incapacity Cannot be revoked Revoked when the testator revokes the will or the institution 2008 Page 115 of 325 . health officer or druggist who took care of the testator during his last illness. 100% UP LAW UP BAROPS 2. Attesting witness to the execution of a will. e. sister. BASED ON MORALITY OR PUBLIC POLICY (Art. order. parents. surgeon. Those made in favor of a person with whom the testator was guilty of adultery or concubinage at the time of the making of the will. the spouse. DISINHERITANCE OR REPUDIATION IN TESTAMENTARY AND INTESTATE SUCCESSION CAUSE OF VACANCY Predecease TESTAMENTARY SUCCESSION LEGITIME FREE PORTION Representat'n Accretion Intestate Succession Intestate Succession Representat'n Intestate Succession Representat'n Intestate Succession Intestate Succession Accretion Accretion Intestate Succession INTESTATE SUCCESSION Representat'n Intestate Succession Representat'n Intestate Succession - Incapacity Disinheritance Repudiation Accretion f. 1032. or children.

It is the act by virtue of which. etc. COLLATION (Articles 1061 – 1077. or 3. Voluntary and free 2. CC) If a person is called to the same inheritance as an heir by will and by law and he - CIVIL LAW repudiates the inheritance in his capacity as a testamentary heir. when the testator should have so expressly provided b. 3. without his being a testamentary heir. in an authentic document – equivalent of an indubitable writing or a writing whose authenticity is admitted or proved. certainty of the right to the inheritance ACCEPTANCE VS. Restitution – return or payment of the excess to the mass of hereditary estate. FORMS OF ACCEPTANCE (Articles 1049 – 1050. by petition presented to the court having jurisdiction over the testamentary or intestate proceeding HEIRS IN TWO CAPACITIES (Art.SUCCESSION C. The publicity required for repudiation is necessary for the protection of other heirs and also of creditors. during his lifetime by donation or other gratuitous title but which the law considers as an advance from the inheritance. certainty of death of the decedent 2. If he repudiates it as a legal heir. D. CC) 1. he will be considered to have also repudiated the inheritance as a legal heir. CC) 1. or 2. donates or assigns his right. Express Acceptance – one made in a public or private document. when the heir demands partition of the inheritance. Tacit Acceptance – one resulting from acts by which the intention to accept is necessarily implied or from acts which one would have no right to do except in the capacity of an heir. ACCEPTANCE AND REPUDIATION OF INHERITANCE CHARACTERISTICS – VIR (Articles 1041 – 1042. 1051. Reduction – determining to what extent the donation will remain and to what extent it is excessive or inofficious. REPUDIATION 1. Imputing or Charging – crediting the donation as an advance on the legitime (if the donee is a compulsory heir) or on the free portion (if the donee is a stranger). Repudiation is equivalent to an act of disposition and alienation. when the heir alienates some objects of the inheritance. Acceptance involves the confirmation of transmission of successional rights. CC) 1. Examples would be when the heir sells. he may still accept it in the latter capacity. CC) CONCEPT OF COLLATION To collate is to bring back or to return to the hereditary mass in fact or by fiction property which came from the estate of the decedent. 1055. the compulsory heir who concurs with other compulsory heirs in the inheritance bring back to the common hereditary mass the property which they may have received from the testator so that a division may be effected according to law and the will of the testator. 2. 2. Irrevocable except if there is vitiation of consent or an unknown will appears 3. 4. PERSONS OBLIGED TO COLLATE 1. while repudiation renders such transmission ineffective. 1056. FORMS OF REPUDIATION (Art. Retroactive REQUISITES (Art. in a public instrument acknowledged before a notary public. General Rule: compulsory heirs Exceptions: a. OPERATIONS RELATED TO COLLATION Collation – adding to the mass of the hereditary estate the value of the donation or gratuitous disposition. 3. 2. - - - 1. when the compulsory heir should have repudiated his inheritance 100% UP LAW UP BAROPS 2008 Page 116 of 325 . CC) 1. 1043.

WHAT TO COLLATE 1. 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. 3. heirs 3. or customary gifts. medical attendance. CC) 2. compulsory heir 2. and not by right of representation if their parent repudiates the inheritance of the grandparent. voluntary heir 3. when expressly Prohibited by the testator for a period not exceeding 20 years 2. (Art. All that their parents would have brought to collation if alive. apprenticeship. 1079. PARTITION AND DISTRIBUITON OF ESTATE (Articles 1078 – 1105. Any property or right received by gratuitous title during the testator’s lifetime. The prohibition to partition for a period not exceeding 20 years can be imposed on the legitime. even in extraordinary illness. PARTITION INTER VIVOS (Art. CC) It is the separation. when the co-heirs Agreed that the estate shall not be divided for a period not exceeding 10 years. Grandchildren who survive with their uncles. b. or first cousins and inherit by right of representation *Note: Grandchildren may inherit from their grandparent in their own right. third person designated by the decedent WHO CAN DEMAND PARTITION 1. decedent. 3. competent court 4. Expenses for support.SUCCESSION 2. the heirs by mutual agreement can still make the partition. 2. Generally not imputable to legitime a. 2. as heirs next in degree. clothing. vocational or other career unless the parents so provide. 1067. ordinary equipment. or unless they impair the legitime. when Prohibited by law 4. Expenses incurred by parents in giving their children professional. i. Wedding gifts by parents and ascendants consisting of jewelry. If the prohibition to the partition is for more than 20 years. aunts. The thing itself or its value may be divided. legatee or devisee 4.. PROPERTIES NOT SUBJECT TO COLLATION 1. WHO MAY EFFECT PARTITION 1. division and assignment of a thing held in common among those to whom it may belong. renewable for another 10 years 3. the excess is void. 100% UP LAW UP BAROPS 2008 Page 117 of 325 . any person who has acquired interest in the estate WHEN PARTITION CANNOT BE DEMANDED – PAPU 1. education (only elementary and secondary). during his lifetime by an act inter vivos or by will 2. 1080. Even if a prohibition is imposed. when to partition the estate would render it Unserviceable for the use for which it is intended PROHIBITION TO PARTITION 1. CIVIL LAW E. as no living person can be represented except in cases of disinheritance and incapacity in which case grandchildren are not obliged to bring to collation what their parent has received gratuitously from their grandparent. All that they may have received from the decedent during his lifetime.e. Absolutely no collation a. CC) CONCEPT OF PARTITION (Art. and outfit except when they exceed 1/10 of the sum disposable by will.

SUCCESSION
EFFECTS OF INCLUSION OF INTRUDER IN PARTITION 1. Between a true heir and several mistaken heirs – partition is void. 2. Between several true heirs and a mistaken heir – transmission to mistaken heir is void 3. Through error or mistake, share of true heir is allotted to mistaken heir – partition shall not be rescinded unless there is bad faith or fraud on the part of the other persons interested, but the latter shall be proportionately obliged to pay the true heir of his share. The partition with respect to the mistaken heir is void. A VOID WILL MAY BE A VALID PARTITION 1. If the will was in fact a partition 2. If the beneficiaries of the void will were legal heirs IMPORTANT PERIODS TO REMEMBER 1 month or Testator, if publicly known less before to be insane, burden of making a will proof is on the one claiming validity of the will 20 years Maximum period testator can prohibit alienation of dispositions 5 years from To claim property delivery to escheated to the State the State 1 month To report knowledge of violent death of decedent lest he be considered unworthy 5 years from Action for declaration of the time incapacity & for recovery disqualified of the inheritance, devise person took or legacy possession 30 days from Must signify issuance of acceptance/repudiation order of otherwise, deemed distribution accepted 1 month form Right to repurchase written notice hereditary rights sold to a of sale stranger by a co-heir 10 years To enforce warranty of title/quality of property adjudicated to co-heir from the time right of action accrues 5 years from To enforce warranty of partition solvency of debtor of the estate at the time partition is made 4 years form Action for rescission of partition partition on account of lesion

CIVIL LAW
SAMPLE BAR QUESTIONS 1. Alfonso, a bachelor without any descendant or ascendant, wrote a last will and testament in which he devised, “all the properties of which I may be possessed at the time of my death” to his favorite brother Manuel. At the time he wrote the will, he owned only one parcel of land. But by the time he died, he owned 20 parcels of land. His other brothers and sisters insist that his will should pass only the parcel of land he owned at the time it was written, and did not cover his properties acquired, which should be by intestate succession. Manuel claims otherwise. Who is correct? Explain. Answer: Manuel is correct because under Art. 793, NCC, property acquired after the making of a will shall only pass thereby, as if the testator had possessed it at the time of making the will, should it expressly appear by the will that such was his intention. Since Alfonso’s intention to devise all properties he owned at the time of his death expressly appears on the will, then all the 20 parcels of land are included in the devise. 2. Cristina, the illegitimate daughter of Jose and Maria, died intestate, without any descendant or ascendant. Her valuable estate is being claimed by Ana, the legitimate daughter of Jose, and Eduardo, the legitimate son of Maria. Is either, both, or neither of them entitled to inherit? Explain. Answer: Neither Ana nor Eduardo is entitled to inherit ab intestate from Cristina. Both are legitimate relatives of Cristina’s illegitimate parents and therefore they fall under the prohibition prescribed un Art. 992, NCC (Manuel vs. Ferrer, 242 SCA 477; Diaz vs. CA, 182 SCRA 427). 3. (a) Luis was survived by 2 legitimate children, 2 illegitimate children, his parents, and 2 brothers. He left an estate of P1 million. Who are the compulsory heirs of Luis, how much is the legitime of each, and how much is the free portion of his estate, if any? (b) Suppose Luis, in the preceding question, died intestate. Who are his intestate heirs, and how much is the share of each in his estate?

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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

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Obligations and Contracts
TABLE OF CONTENTS
Title 1. Obligations I. General Provisions II. Effect of Obligations III. Different Kinds of Obligations IV. Extinguishment of Obligations Title 2. Contracts I. General Provisions II. Essential Requisites of a Contract III. Form of Contracts IV. Reformation of Instruments V. Interpretation of Contracts VI. Rescissible Contracts VII. Voidable Contracts VIII. Unenforceable Contracts IX. Void or Inexistent Contracts Title 3. Natural Obligations Title 4. Estoppel 121 121 122 128 141 148 148 149 155 157 158 159 161 162 163 166 166

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OBLIGATIONS & CONTRACTS TITLE I: OBLIGATIONS Chapter I: General Provisions
I. Concept Definition Art. 1156, NCC An obligation is a juridical necessity to give, to do or not to do. The legal relation established between one party and another, whereby the latter is bound to the fulfillment of a prestation which the former may demand of him. (Manresa) Elements Active subject (obligee/ creditor) - the one in whose favor the obligation is constituted - the person who is entitled to demand Passive subject (obligor / debtor) - the one bound to the fulfillment - the person who has the duty of giving, doing or not doing Prestation (object) - the conduct which has to be observed by the debtor/obligor - duties of the obligor Requisites: 1. it must be Licit 2. it must be Possible, physically and judicially 3. it must be Determinate or determinable; and 4. it must have a Possible equivalent in money Vinculum juris (efficient cause; juridical or legal tie) – that which binds or connects the parties to the obligation. This can be easily known by knowing the sources of obligations. (de Leon Distinction between natural and civil obligations Civil Obligations (Art. 1156) Based on positive law Give a right of action to compel their performance Natural Obligations (Art. 1423) Based on equity and natural law Do not grant a right of action to enforce their performance; but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof
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II. Sources (Art. 1157) Law Contracts Quasi-contracts Delicts Quasi-delicts LAW General Rule Obligations derived from law are not presumed; only those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of this Book. (Article 1158) *Those imposed by the law itself. CONTRACTS Definition A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service (1305) General Rule The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to Law, Morals, Good customs, Public order and Public policy (1306) Contracts as force of law between parties – obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith (1159) QUASI-CONTRACTS (LoVe yoU) Definition It is the juridical relation resulting from lawful, voluntary, and unilateral acts by virtue of which the parties become bound to each other to the end that no one shall be unjustly enriched or benefited at the expense of another (2142) Lawful Voluntary Distinguishing it from crimes Differentiating it from quasi-delict, which are based on fault and negligence Distinguishing it from contract which is based on agreement

Unilateral

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Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 1, Title XVII of this Book (1160) Kinds of quasi-contracts 1. Negotiorum gestio (unauthorized management) 2. Solutio Indebiti (undue payment) 1. Negotiorum Gestio This takes place when a person voluntarily takes charge of another’s abandoned business or property without the owner’s authority (Article 2144) This juridical relation does not arise in either of these instances: a. When the property or business is not neglected or abandoned b. If in fact the manager has been tacitly authorized by the owner 2. Solutio Indebiti This takes place when something is received when there is no right to demand it, and it was unduly delivered thru mistake (2154) DELICTS (Obligations Ex Delicto) Governing Rules Pertinent provisions of the RPC and other penal laws subject to Art 2177 Civil Code Art. 100, RPC Every person criminally liable for a felony is also civilly liable Chapter 2, Preliminary Relations (Civil Code) title, on Human

CIVIL LAW
fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. Governing Rules – Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title XVII of this Book, and by special laws (1162) – Title XVIII on damages – Articles 19-36 on human relations

Chapter II: Effect of Obligations
I. KINDS OF PRESTATION 1. Obligation to Give 2. Obligation to Do 3. Obligation Not to do OBLIGATION TO GIVE: Specific/ determinate thing It is identified by its individuality; hence, it cannot be substituted with another although the intended substitute is of the same kind and quality. Generic thing (1246) It is identified only by its specie. The debtor can give anything of the same class as long as it is of the same kind.

Title 18 of Book IV of the Civil Code - on damages What civil liability arising from a crime includes Restitution Reparation of damage caused Indemnity for consequential damages QUASI-DELICTS Definition An act or omission with fault or negligence causing damage to another; not a crime nor contract Article 2176, New Civil Code Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such

Creditor cannot demand a thing of superior quality; neither can the debtor deliver a thing of inferior quality. *Limited Generic thing – when the generic objects are confined to a particular class, e.g., an obligation to deliver one of my horses (Tolentino) Specific/ Determinate Thing Duties of the obligor: 1. To preserve or take care of the thing due (1163) *Standard of care: that of a good father of a family unless the law or stipulation requires another standard of care 2. To deliver the thing itself (1244) 3. To deliver the fruits of the thing (Art. 1164, par. 1) *When does the right to the fruits begin to exist? From the time the duty to deliver arises: when there is no term/condition

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– from the perfection of the contract when there is a term/condition – from the moment the term or condition arises 4. To deliver the accessions and accessories of the thing (Art. 1166) *Accessories - those joined to or included with the principal for the latter’s better use, perfection or enjoyment *Accessions – additions to or improvements upon a thing 5. To pay for damages in case of breach (1170) Generic Thing Duties of the obligor: 1. To deliver a thing which is of the quality intended by the parties taking into consideration the purpose of the obligation and other circumstances (1246) 2. To be liable for damages in casa of fraud, negligence, or delay, in the performance of his obligation, or contravention of the tenor itself (1170) Personal Right Before delivery Jus ad rem/ jus in personam – a right enforceable only against a definite passive subject, the debtor Right pertaining to the person to demand from another, as a definite passive subject, the fulfillment of a prestation to give, to do or not to do Rights of a Creditor Specific To compel specific performance To recover damages in case of breach of the obligation, exclusive or in addition to specific performance Entitlement to
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fruits, interests from the time the obligation to deliver arises. OBLIGATION TO DO: – – – – To do it (1167) To shoulder the cost if someone else does it (1167) To undo what has been poorly done (1167) To pay damages (1170-1172, 2201-2202) damages in case of breach of obligation

If a person obliged to do something fails to do it, the same shall be executed at his cost. This same rule shall be observed if he does it is in contravention of the obligation. Furthermore, it may be decreed that what has been poorly done be undone. (1167) *The creditor may demand that the obligation be performed by the debtor himself or by a third person at the expense of the debtor. However, in cases where the personal qualifications of the debtor are taken into account, the only remedy of the creditor is an action for damages. In the Balane notes, there is no action for compliance for an obligation to do because such would be involuntary servitude which is prohibited by the constitution. OBLIGATION NOT TO DO: – – – Not to do what should not be done To shoulder the cost to undo what should not have been done (1168) To pay damages (1170, 2201-2202)

Real Right After delivery jus in re – a right enforceable against the world.

Right pertaining to a person over a specific thing, without a passive subject individually determined against whom such right may be personally enforced

*If undoing is not possible, either physically or legally, or because of rights acquired by third persons who acted in good faith, or for some other reason, his remedy is an action for damages caused by the debtor’s violation of his obligation. (Manresa) II. BREACH OF OBLIGATION Voluntary - the debtor, in the performance of the obligation is guilty of fraud, negligence, delay or contravention of the tenor of the obligation Involuntary – debtor is unable to comply with his obligation because of a fortuitous event A. MODES OF BREACH (1170) 1. Fraud 2. Negligence 3. Delay 4. Contravention the tenor thereof

Generic To ask for performance of the obligation To ask that the obligation be complied with at the expense of the debtor

To recover
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Test of Negligence Did the defendant in doing the alleged negligent act use the reasonable care and caution which an ordinary and prudent person would have used in the same situation? If not. 1344) Present during the perfection of a contract Purpose is to secure the consent of the other party but the fraud was not the principal inducement in making the contract Does not result in the vitiation of consent Gives rise to a right of an innocent party to claim for damages Diligence Required NEGLIGENCE (fault or culpa) CIVIL LAW It is the absence of due diligence. 257 SCRA 538. G. (Manresa) It implies some kind of malice or dishonesty and it cannot cover cases of mistake and errors in judgment made in good faith. which is the malice or bad faith in the performance of the obligation. (1173. against public policy b) simple – may be excused in certain cases Present during the performance of a preexisting obligation Purpose is to evade the normal fulfillment of the obligation 1. 1174) Distinction between fraud and negligence Fraud There is deliberate intention to cause damage.R. If both the contract and law are silent. (Mandarin Villa. Negligence There is no deliberate intention to cause damage. 1996) The rule for measuring degree of care and vigilance is dependent upon the circumstances in which a person finds himself situated. that required by law in the particular case 3. That agreed upon by the parties 2. Culpa Aquiliana (quasi-delict) – wrong or negligence committed independent of contract and without criminal intent Results in the breach of an obligation Gives rise to a right in favor of the creditor to recover damages Results in vitiation of consent. 1979) Kinds of Culpa 1. It is any voluntary act or omission.. Waiver for future fraud is void. It is synonymous to bad faith. Kinds of Fraud Fraud in the Performance (Art.. No. 1924) *Responsibility arising from fraud is demandable in all obligations (fraud in the performance) *Waiver of action for future fraud is void for being contrary to law and public policy (Art. Macondray & Co. Liability may be mitigated. diligence of a good father of a family *Deligence of a Good Father of a Family: That reasonable diligence which an ordinary prudent person would have had under the same circumstances. National Railways. (Cusi v. Inc. 1338) Present during the perfection of a contract Purpose is to secure the consent of another to enter into the contract Incidental Fraud (dolo incidente) (Art. 1171) because the advance renunciation of the creditor would practically leave the obligation without effect. Liability cannot be mitigated. Waiver for future negligence may be allowed in certain cases: a) gross – can never be excused in advance. Inc. v. 1170) Fraud in the Execution Causal Fraud (dolo causante) (Art. Phil. which prevents the normal fulfillment of an obligation. CA. then he is guilty of negligence. (O’leary v. 21383. voidable contract Gives rise to a right of an innocent party to annul the contract 100% UP LAW UP BAROPS 2008 Page 124 of 325 . March 25. there being no malice. The fraud referred to is fraud in Article 1170. *Past fraud can be renounced. 90 SCRA 357.OBLIGATIONS & CONTRACTS FRAUD It is the deliberate or intentional evasion of the normal fulfillment of an obligation. In the absence of stipulation.

It is the delay of the parties or the obligors in reciprocal obligations. because one can never be late in not doing or not giving something b) In natural obligations. The debtor is exempted from risk of loss of thing or the creditor bears risk of loss. while he himself does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Exception: when the obligation or law expressly declares when time is of the essence in the contract when the demand would be useless when the debtor acknowledged 2008 100% UP LAW UP BAROPS Page 125 of 325 . The debtor may relieve himself of obligation by consigning the thing. 5. delay happens from the moment one party fulfills his undertaking. Mora Accipiendi CIVIL LAW There is a delay on the part of the creditor to accept the performance of the obligation Requisites: 1.OBLIGATIONS & CONTRACTS 2. Culpa Criminal – wrong or negligence in the commission of a crime DELAY (mora) It is the non-fulfillment of an obligation with respect to time. neither incurs delay Kinds of delay 3. The debtor shall bear the risk of loss. 2. – The debtor is guilty of non-performance. Compensatio Morae 1. The general rule is that fulfillment by both parties should be simultaneous. Culpa Contractual – wrong or negligence in the performance of an obligation 3. 1st GENERAL RULE: Delay occurs from the time of creditor’s judicial or extrajudicial demand Exception: Demand is not necessary to incur in delay when:  obligation or law expressly declares  time is a controlling motive  demand would be useless 2nd GENERAL RULE: In reciprocal obligations. If the obligation bears interest. Delay or Default Unilateral Obligations General Rule: “No demand – no delay. 2. 2. Effects when these elements are present: The creditor may ask for damages/ the debtor is liable for damages The debtor is liable even if the loss is due to fortuitous events.” The mere expiration of the period fixed by the parties is not enough in order that the debtor may incur in delay. 3. 6. Offer of performance by the debtor who has the required capacity. Effects when these elements are present: 1. – There was demand made judicially or extra-judicially. Rules on Mora. 3. When different dates for the performance of obligation is fixed by the parties. due and demandable. Instance when there is no default or mora solvendi: a) In negative obligations. Compensatio morae – the delay of the obligors in reciprocal obligations 1. Mora accipiendi 3. Creditor refuses the performance without just cause. The effect is that it is as if there is no default. The creditor is liable for damages. the debtor does not have to pay from time of delay. 4. because the performance is optional or voluntary on the part of the debtor. The expenses incurred by the debtor for the preservation of the thing after the mora shall be chargeable to the creditor. Mora Solvendi There is a delay on the part of the debtor to fulfill his obligation (to give or to do) a) Mora Solvendi Ex re – default in real obligations b) Mora Solvendi Ex persona – default in personal obligations Requisites: – The obligation must be liquidated. The responsibility of debtor is reduced to fraud and gross negligence. Reciprocal Obligations One party incurs in delay from the moment the other party fulfills his obligation. Offer must be to comply with the prestation as it should be performed. Mora solvendi 2. (1169) If neither party performs his undertaking.

22. or which though foreseen are inevitable. N. GSIS cancelled the award and required Agcaoili to vacate the premises. It is therefore immaterial whether or not the actor is in bad faith or negligent. the default on one compensates the default of another. In general. Agcaoili v. force majeure is a superior or irresistible force. due directly and exclusively to natural causes without human intervention. 1990 in time for the aggrieved party’s wife who expressly wished that she be buried before Christmas day. neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him.. acts of robbers. The phrase “in any manner contravenes the tenor” means any illicit act. every debtor who fails in the performance of his obligation is bound to indemnify for the losses and damages caused thereby. the legal interest. which is essentially an act of man. FORTUITOUS EVENTS DEFINITION Events which could not be foreseen. and debtor incurs in delay. 38 Phil. Example of incurring delay without judicial or extrajudicial demand. pirates. In reciprocal obligations.B. what is required is that it is his fault or the act done contravenes their agreement. (#2)Time is of the essence. and in the absence of stipulation.Renunciation of the creditor . acts of man and acts of God are identical in so far as they exempt an obligor from liability because the events happened independent of the will of the obligor. Failure to immediately occupy contractually allowed GSIS to terminate the contract. He made the first monthly installment but refused to make further payments until and unless GSIS completed the housing unit. or every kind of defective performance. *In our law. strikes. *Delay in payment of money is indemnified through interest unless a gratuitous mutuum or simple loan. the indemnity for damages. (2209) *When there is delay. the injured party may ask for damages. immediately went to the place and found a house in a state of incompleteness that civilized occupation was 100% UP LAW UP BAROPS . And such contravention must not be due to a fortuitous event or force majeure. which is six percent per annum. CA) Act of Man In contrast. there being no stipulation to the contrary. and where. the words “without the need of demand” should appear in the face of the instrument. (Republic v. 21 SCRA 279. such as wars. Descals. despite knowing this timetable and having been paid for the materials. the supplier failed to make the delivery despite pleas and earnest follow-ups by the widower. 287. shall be the payment of the interest agreed upon. 6) CONTRAVENTION TO THE TENOR OF THE OBLIGATION This is the violation of the terms and conditions stipulated in the obligation.OBLIGATIONS & CONTRACTS that he is in default It is not enough that there is a specific date of performance. which by no amount of foresight. (Article 1174) Act of God An act of God is defined as an accident. reasonably to have been expected. and brigands. 1918) 2008 Page 126 of 325 The demand is still necessary only when the respective obligations are to be performed on separate dates. If neither party complies with the prestation. Stevedoring Corp. pains or care. Contract was entered into in view of burial before Christmas. (2209) *If obligation consists in payment of a sum of money.Prescription of action . could have been prevented. B. which impairs the strict and faithful fulfillment of the obligation. default or delay may cease upon: . (1169.Extension of time for the fulfillment of the obligation Bragaza v. CA A contract was entered into for delivery of materials on Dec. CIVIL LAW not possible. default interest is (6%) six percent. Supreme Court ruled that time was of the essence of such contract and the supplier should be liable for the delay and breach. par. Agcaoli upon receipt of notice. GSIS The parties entered into a contract of sale of a government housing unit on the condition that Agcaoili should occupy the same within three days from the receipt of notice. Held: GSIS had no right to rescind sale. But this benefit arising from Mora. riots. 1967 and UST v. If no stipulated interest. (Nakpil v.

3. 2. Inc. (1165(3)) CIVIL LAW failure to act. debtor free from participation in the aggravation of the injury to the creditor (Nakpil v. negligence. Requisites 1.. electronic paa/foot or e-foot) 1. The debt is due and demandable BAROPS 2008 Page 127 of 325 . whether due to his active intervention or neglect or 100% UP LAW UP Definition Novation via change of creditor (1291. Smith) *It must be the ONLY and SOLE cause. Extraordinary – those which are uncommon and which the contracting parties could not have reasonably foreseen. CA) When the effect is found to be in part the result of the participation of man. are inevitable. except those exempt by law. 2147. or when it is otherwise declared by stipulation. delay or violation or contravention in any manner of the tenor of the obligation. Inc. REMEDIES OF CREDITORS GENERAL RULE Rights acquired by virtue of an obligation are transmissible in character. CA 374 SCRA 578 (2002) PVE. not merely a proximate cause. impossible for debtor to fulfill his obligation in a normal manner 4.OBLIGATIONS & CONTRACTS Kinds of Fortuitous Events 1. Pursue the leviable – to attach the properties of the debtor. Accion subrogatoria 4. or when the nature of the obligations requires assumption of risk. 2148. Exact fulfillment – to demand fulfillment of the obligation or specific performance – either specific. CA. (see 1680) General Rule Except in cases expressly specified by law. the whole occurrence is then humanized and removed from the rules applicable to the acts of God. Exception a) when they are not transmissible by their very nature (Personal obligation) b) when there is Stipulation of the parties that they are not transmissible c) when they are not transmissible by operation of Law Rights of Creditor against Debtor (E-PAA. from execution. C. Accion Pauliana Accion Subrogatoria Requisites for exemption 1. or which though foreseeable. (NAPOCOR v. par. Ordinary – those which are common and which the contracting parties could easily foresee. There must be no fraud. no person shall be responsible for those events which. was not able to cover the wedding celebration of EH and RH allegedly due to the gross negligence of the crew and the lack of supervision from PVE’s general manager. Creditor must have the right of return against debtor 2. 552(2). 2159) declared by stipulation nature of the obligation requires the assumption of risk (1174) when the obligor is in default or has promised to deliver the same thing to two or more persons who do not have the same interests. his obligation to comply is extinguished subject to the following exceptions: – – – – cases expressly specified by law (i. 1165. a subsidiary of SD. This involves the right of the creditor to exercise all of the rights and bring all of the actions which the debtor may have against third persons. 1268. cannot take refuge under Article 1280 of the New Civil Code. 1942. Effect of Concurrent Fault One who negligently creates a dangerous situation cannot escape liability for the natural and probable consequences thereof although an act of God intervened to precipitate the loss.e. The defense that they exercised due care in the selection and supervision of their employees can only be availed of when the liability arises from culpa aquiliana and not from culpa contractual. *When a debtor is unable to fulfill his obligation because of fortuitous events or force majeure. CA and Lasam v. impossible to foresee or avoid 3. Held: PVE or SD. (Nakpil v.. could not be foreseen. 1992) Herbosa v. cause of event or debtor’s failure independent of human will 2. 211 SCRA 162. substitute or equivalent performance 2. 3).

The creditor is prejudiced by the debtor's act which are in favor of 3rd parties and rescission will benefit the creditor CIVIL LAW Juridical quality and efficaciousness a. The creditor has no other legal remedy 4. parties or subject Unilateral or Bilateral Individual or Collective Joint or Solidary object of the obligation or prestation Specific or Generic Positive or Negative Real or Personal Possible or Impossible Divisible or Indivisible Principal or Accessory Simple or Compound If compound: Conjunctive (demandable at the same time) Distributive (alternative or facultative) By their juridical perfection or fulfillment a. With a Period I. Requisites 1. The right of account is not purely personal Accion Pauliana Definition Rescission. although it may not be known when. giving advantage to other persons 3. *Difference between conditional and those with a term: There is uncertainty or certainty of day or time. (1193) Chapter III: Different Kinds of Obligations PRIMARY CLASSIFICATION (PaPA. d. The debtor's acts are fraudulent 5.OBLIGATIONS & CONTRACTS 3. Obligations with a Period (1193-1198) 3. Natural obligations c. The debtor's assets are insufficient 5. the obligation is conditional. g. c. There is a failure of the debtor to collect his own debt from 3rd persons either through malice or negligence 4. PURE AND CONDITIONAL OBLIGATIONS PURE OBLIGATION The effectivity or extinguishment is not subject to any condition and no specific date is mentioned for its fulfillment and is. 3. 5. Divisible and indivisible obligations (12231225) 6. par. 2. Obligations with a Penal clause (12261230) SECONDARY CLASSIFICATION (U R D PoLiCe) 1. Mixed – according to natural and civil law By the a. Civil obligations b. immediately demandable. By the object of the obligation or prestation 4. The debtor has performed an act subsequent to the contract. There is a credit in favor of plaintiff 2. (1179. If the uncertainty consists in whether the day will come or not. Joint and solidary obligations (1207-1222) 5. which involves the right of the creditor to attack or impugn by means of a rescissory action any act of the debtor which is in fraud and to the prejudice of his rights as creditor. 4. 1) CONDITIONAL OBLIGATION The consequences are subject in one way or another to the fulfillment of a condition. therefore. Juridical quality and efficaciousness 2. b. c. e. Condition It is a future and uncertain event. upon the happening of which. f. Alternative obligations (1199-1206) 4. Pure and conditional obligations (11791192) 2. and it shall be regulated by the rules of the preceding section. Pure or Conditional b. Unilateral and bilateral Real and personal Determinate and indeterminate Positive and negative Legal and conventional Civil and natural Classification according to Sanchez Roman: 1. By the a. By their juridical perfection and extinguishment 100% UP LAW UP BAROPS 2008 Page 128 of 325 . the effectivity or extinguishment of an obligation (or rights) subject to it depends. Just Don’t Preach) 1. 6. Term A day certain is understood to be that which must necessarily come. b. By parties or subject 3.

The tie of law is consolidated Its effects flow. the fulfillment of which will extinguish an obligation (or right) already existing. As to possibility a. As to form a. the existence of the obligation is a mere hope Effect: The acquisition of rights (Manresa) Potestative. Positive – the condition consists in the performance of an act (1184) b. the tie of law (juridical or legal tie) does not appear Until it takes place. Casual and Mixed (1182) POTESTATIVE CONDITION (facultative condition) It is a condition which is suspensive in nature and which depends upon the sole will of one of the contracting parties. As to effect a. Indivisible – the condition is not susceptible of partial performance Suspensive and Resolutory (1179) SUSPENSIVE CONDITION (Condition precedent or condition antecedent) It suspends the acquisition of rights until the conditions are fulfilled. Suspensive condition Depends upon the will of the debtor The condition and obligation are void because the validity and compliance are left to the will of the debtor and it cannot. Disjunctive – there are several conditions and only one or some of them must be fulfilled 7. As a. hence. until the 100% UP LAW UP Resolutory condition The condition and obligation are still valid because the debtor is interested in the fulfillment of a condition which causes the extinguishment or loss of rights already acquired by the creditor. Except when the obligation is a preexisting one. The Supreme Court ruled that. The case for collection on the note was filed 15 years after its execution. Viuda de Palanca The debtor issued a promissory note to the creditor to pay a sum of money payable upon receipt of a particular sum of money from the estate of a certain deceased person upon demand. Classification of Conditions 1. therefore.OBLIGATIONS & CONTRACTS Pay v. Impossible 4. Express – the condition is clearly stated b. since the prescriptive period for filing the action was 10 years and considering that the promissory note’s payment constituted a pure obligation and therefore demandable at once. Divisible – the condition is susceptible of partial performance b. BAROPS . the action to collect could no longer prosper. Implied – the condition is merely inferred 3. When it takes place. Suspensive When it is fulfilled. Negative – the condition consists in the omission of an act 6. As to mode a. the obligation arises. only the 2008 Page 129 of 325 Resolutory The obligation is extinguished. b. As to divisibility a. hovers the possibility of termination The loss (termination) of rights already acquired 5. RESOLUTORY CONDITION (Condition subsequent) CIVIL LAW event which It causes the extinguishment or loss of rights already acquired upon the fulfillment of the condition. Suspensive b. Conjunctive – there are several conditions and all must be fulfilled b. that is. As to numbers a. but over it. c. In other words. the happening of the event which constitutes the condition. It was deemed pure since satisfaction of credit could be realized either through the debtor sued receiving the cash payment from the estate of the deceased or “upon demand”. to cause or origin Potestative Casual Mixed happening of the uncertain constitutes the condition. be legally demanded as it will cause the debtor not to fulfill the condition to escape liability. Resolutory 2. Possible b. that is.

good customs. Effects of Suspensive Conditions 1. (Naga Telephone. the condition and the obligation are void. or b) from the moment it has become evident that the event cannot occur. For Resolutory Condition This also applies to a resolutory condition when the debtor is bound to return what he has received upon fulfillment of the condition. 2. thus. however. 3. in the nature of things. 3. 230 SCRA 351. 4. pre-existing obligation divisible obligations simple or remuneratory donations testamentary dispositions UP CIVIL LAW 5. To do an impossible or illegal thing. legally or physically. Before the condition is fulfilled. in case of conditions impossible thing Effect It renders the conditional obligation void since the obligor knows that his obligation cannot be fulfilled. 2. 2. the obligation remains. The obligation is valid if the suspensive condition depends partly upon chance and partly upon the will of a third person. Negative (not to do an illegal thing). cannot exist or cannot be undone. Negative (not to do the impossible thing). 1994) Possible and Impossible Conditions (1183) *Applies to suspensive conditions. MIXED CONDITION The condition depends partly on the will of a party and partly on chance or the will of a 3rd person. Depends upon the will of the creditor The condition and obligation are valid because the creditor is interested in the fulfillment of the obligation as it will benefit him. The obligor actually prevents fulfillment of the condition. Co. Effects of Impossible and Illegal Conditions If the condition is: 1. public order and public policy. morals. although the time indicated has not yet elapsed (1185) Constructive Fulfillment (1186) For Suspensive Conditions Requisites 1. the condition and the obligation are valid. He acts voluntarily. The condition is suspensive. Legally impossible conditions – those which are contrary to law. Physically impossible conditions – those. Positive and Negative Conditions POSITIVE CONDITION (suspensive) The obligation is extinguished: a) as soon as the time expires without the event taking place b) as soon as it has become indubitable that the event will not take place although the time specified has not yet expired (1184) NEGATIVE CONDITION (suspensive) The obligation becomes effective: a) from the moment the time indicated has elapsed without the event taking place. the demandability and acquisition or effectivity BAROPS 2008 Page 130 of 325 not to do an the 100% UP LAW . legally and physically. Inc.OBLIGATIONS & CONTRACTS condition is void. POSSIBLE CONDITIONS The condition is capable of fulfillment. and 3. v. Two Kinds 1. disregard the condition.. CA. CASUAL CONDITION The condition depends upon chance or the will of a third person. IMPOSSIBLE CONDITIONS The condition is not capable of fulfillment. showing that he has no intention to comply with his obligation. General Rule They shall annul the obligation which depends upon them Exceptions 1. 2.

the creditor may choose between: a. Art. The object is a specific or determinate thing. The obligation is a real obligation. 2. Civil loss (the thing disappears and the existence is unknown or unrecoverable as a matter of fact or of law) Rules 1. Of the debtor He is entitled to recover what he has paid by mistake prior to the happening og the suspensive condition. Fulfillment of the obligation also with damages IMPROVEMENT Rules 1. When the thing is lost with the debtor’s fault. Rights Pending Fulfillment of a Suspensive Condition Of the creditor He may take or bring appropriate actions for the preservation of his right. When the thing is improved at the expense of the debtor. the fruits and interests shall be deemed to have been mutually compensated (this assumes a simultaneous performance of prestations). or improvement of the thing during the pendency of the the condition. 2. the debtor shall appropriate the fruits and interests received unless the intention constituting such was different.OBLIGATIONS & CONTRACTS of the rights arising from the obligation is suspended. *The fruits are mutually compensated for convenience. 100% UP LAW UP BAROPS 2008 Page 131 of 325 . 2. LOSS Kinds of loss UNILATERAL OBLIGATION It is when only one party is obliged to comply with a prestation. 8. 1189 applies to whoever has the duty to return in case of loss. or b. the debtor pays for damages. When the thing deteriorates with the debtor’s fault. as the debtor may render nugatory the obligation upon the happening of the condition. The effects of a conditional obligation to give. After the condition has been fulfilled. the obligation is extinguished. the debtor shall have no other right than that granted to a usufructuary. Rescission (cancellation) of the obligation with indemnity for damages. In a unilateral obligation. *The law allows retroactivity because the condition is not an essential requisite of an obligation. When the thing is lost without the debtor’s fault. the court shall determine the retroactive effect of the condition that has been complied with. Deterioration or Improvement Pending the Happening of the Condition (1189) Requisites for 1189 to apply 6. and 10. deterioration or improvement of the thing 4. DETERIORATION Rules 1. In obligations to do or not to do. The condition is subject to a suspensive condition. the creditor will suffer the deterioration of impairment. the obligation arises or becomes effective. The condition is fulfilled. deterioration. 7. once the condition has been fulfilled shall retroact to the day the obligation was constituted. 9. CIVIL LAW 1. 3. 2. 1. There is loss. When the obligation imposes reciprocal prestations upon the parties. the improvement shall inure to the benefit of the creditor. Effect of the Fulfillment of Resolutory Conditions (1190) 1. 2. Legal loss (the thing goes out of commerce) 3. Physical loss (the thing perishes) 2. If the obligation is to do or not to do. 3. Mutual restitution (the parties restore to each other what they have received including the fruits and interest) 3. When the thing is improved by nature or by time. When the thing deteriorates without the debtor’s fault. Extinguishment of the obligation 2. the courts determine the retroactivity of the fulfillment of the condition as stated in 1187 Kinds of Obligation Person Obliged according to the Loss.

v. Rescission on account of infractions by the other party by one of the parties must be made known to that other party who in turn can seek for judicial remedy should he feel that rescission is unjustified. Remedies in Reciprocal Obligations RESCISSION IN ARTICLE 1191 The power to rescind means the right to cancel or to resolve the contract in case of non-fulfillment of the obligation on the part of one of the parties. and each shall bear his own damages. The performance of one party does not depend upon the simultaneous performance of another. Compel fulfillment and then rescind if such becomes impossible 4. By both parties: (1192) In case both parties have committed a breach of the obligation. International Banking Corp. Non-Reciprocal Obligations Those which do not impose simultaneous and correlative performance on both parties. or injury to the economic interest of a person. except: a. It is not the rescission in 1380 which involves damage or lesion. when the other does not comply 2. Inc.OBLIGATIONS & CONTRACTS BILATERAL OBLIGATION It is when both parties are mutually bound to each other making them both the debtors and creditors of each other.B. It only exists in reciprocal obligations. (Philippine Amusement Enterprises. The Court decrees rescission unless just cause for authorizing a period 5. N. It is the breach of faith committed by the person who is supposed to comply with obligation. If first infractor cannot be determined. 100% UP LAW UP BAROPS 2008 Page 132 of 325 . or – non-reciprocal Reciprocal Obligations Those which arise from the same cause and in which each party is debtor and creditor of the other. the same shall be deemed extinguished. the liability of the first infractor shall be equitably tempered by the courts. 2. in accordance with articles 1385 and 1388 and the Mortgage Law. When the object is not yet delivered CIVIL LAW b. It can be demanded only if the plaintiff is ready. Berwia. When. (Seva v. In reciprocal obligations. 581) General Rule Judicial approval is necessary for rescission. Implied Condition There must be compliance by the other with the duties incumbent upon him as party to the debt. By one party: (1191) 1. willing and able to comply with his own obligation and the other is not. as tempered by courts 2.) UP v. (Ocejo v. a party cannot demand unless he complies or is ready to comply with obligations (inferred from 1169). Implied in reciprocal obligations. It may be: – reciprocal. even if there has been delivery. Characteristics 1. Power to rescind plus damages 3. 1. de los Angeles The parties stipulated rescission of logging agreements without the need for any judicial pronouncement. obligation extinguished *Rescission should be done judicially unless stipulated in the contract. the contract states that either party can rescind the same or take possession of the property upon non-fulfillment of the obligation by the other party. Natividad) *Injured party has the power to rescind but only through the courts in proper proceedings. No law prohibits parties from entering agreements wherein violation of the terms of contract would cause cancellation even without court intervention. 48 Phil. If it cannot be determined which of the parties first violated the contract. Rule against the first infractor. *This is subject to same rules on interim obligations and interim remedies. Must be without prejudice to third persons who have acquired the thing. Rescission will only be granted if breach of the obligation is substantial and not mere occasional malfunction of the machine without even an allegation of loss of income. Judicial pronouncement of rescission was unnecessary as it was clearly expressed in their contract.

thus. Depends upon the sole will of the debtor. CA. subject to renewal by means of a new agreement but since the lessor did not want to renew. *The demandability is suspended by the term. there is no more lease. the sole power to determine whether the lease should continue or not. According to effect a. Classifications of Term/ Period 1. invalidates the obligation The happening of the condition has retroactive effect. it does not annul. suspensive period (ex die) – obligation becomes demandable only upon the arrival of a certain day b. 2. it cannot prevent the birth of the obligation in due time. unknown to parties It causes an obligation to arise or be terminated. public order or public policy (1183) d. good customs. Potestative – only if suspensive condition is solely upon the will of the debtor (1182) b. when left to the debtor’s will – Depends upon the will of the debtor empowers the court to fix its duration As to retroactivity of effects – Unless stipulated. those contrary to law. 1975) PERIOD or TERM It is a future and certain event upon the arrival of which the obligation (or right) subject to it either arises or is terminated. According to source a. the fact of its existence. 2) Lao Lim v. CA Only that which is dependent on the sole will of the debtor is invalid. Inc. OBLIGATIONS WITH A TERM Those whose consequences are subjected in one way or another to the expiration of a period or term. According to definiteness a. judicial period – fixed by the court – Condition Uncertain event May also refer to a past event UP 3. since the condition is dependent on the will of third persons. Distinguishing a period from a condition Period/ Term As to fulfillment Certain event As to time Refers only to the 100% UP LAW CIVIL LAW future As to influence on the obligation – Merely fixes the time for the efficaciousness of the obligation.OBLIGATIONS & CONTRACTS Obligations Rendered Void By Certain Conditions Annulling conditions: a. CA The stipulation that the lessee has the right to renew contract of lease as long as he needs the premises and he can pay for the same is invalid. morals. par. legal period – provided for by law b. II. the law empowers the courts to fix the period) BAROPS 2008 Page 133 of 325 . The lease contract is deemed extinguished at the end of a year. Not to do an impossible thing – not agreed upon (1183. No one is supposed to have sole power. conventional/ voluntary period agreed to by the parties c. CA This case shows that one cannot rescind a contract on account of one’s own failure to fulfill an obligation. – If resolutory. indefinite period – not fixed or the coming of which is not known (usually. – If suspensive. 63 SCRA 374. the condition was held to be valid. In this case. Dy. even in fiction. As to effect. Romero v. It would leave the lessee. resolutory period (in diem) – obligation is valid up to a day certain and terminated upon the arrival of period. v. the arrival of a period has no retroactive effect. Lirag Textiles. (Manresa. Impossible Conditions (1183) c. *Fortuitous events do interrupt the running of the period. not the acquisition of the right or the effectivity of the obligation. definite period – fixed or the coming of which is known b. Ducusin v.

IN DECIDING WHO WAS TO BEAR THE LOSS AS A RESULT OF THE TYPHOON IN A CONTRACT FOR DELIVERY OF LOGS...OBLIGATIONS & CONTRACTS Requisites of Period/ Term It must refer to the future. (Manresa) Period for the benefit of the creditor alone: The creditor may demand fulfillment even before the arrival of the term but the debtor cannot compel him to accept before the expiration of the period (i. Interim obligations In case of loss. THE CONTRACT PROVIDED THAT THE APPELLANT SHALL MAKE SHIPMENT BEFORE THE END OF JULY. deterioration (1189) ii. otherwise. 2. Exception When it appears from the tenor of the obligation or other circumstances that the period has been established in favor of one or the other subject to an express stipulation of the parties. When specified period is provided by law.e. courts should just fix a period. ON MAY 5. “on demand”). SINCE THE SAID DATE WAS WITHIN THE PERIOD PRESCRIBED. It must be possible. which the parties could have intended. If the duration of the period depends upon the will of the debtor. the rules in article 1189 shall be observed. The requisite and guideline for setting a period is when there is no period specified but such was intended. NONE OF THE PARTIES COULD INCUR DELAY NOR DEMAND PERFORMANCE. 2. but a period is intended by the parties as can be inferred from the nature and circumstances of the obligation. Although it was indefinite. There can be no possibility of any breach of contract or failure to perform the obligation unless the period is fixed by the courts. (1197) The Court May NOT Fix a Period When: 1. THE LOSS FOR A SHOULD BE SHOULDERED BY THE APPELLEE OR THE LOGGER. It must be certain. Ltd. Improvement inures to creditor. it is premature to collect. v. Period for the benefit of the debtor alone: The debtor cannot be compelled to pay prematurely. he cannot recover what he has paid. When the court has not yet fixed the period. Philippine Sugar Estates Development Co. RULED THAT THE QUOTED PROVISION PROVIDES THE DESIGNATED TIME WAS CALCULATED TO AVOID TYPHOONS. INC. Reasons for Fixing a Period 1. Inc. 1951 THE APPELLANT FAILED TO SEND A VESSEL TO PICK UP THE LOGS. in which case it is considered a pure obligation. FIXING OF A PERIOD The Court May Fix a Period When: 1. the period may be benefit the debtor or the creditor alone. When no term has been specified by the parties because no term was ever intended. If the debtor promises to pay when his means permit him to do so. CIVIL LAW THE SUPREME COURT. Effect of payment before the arrival of the period The debtor may recover what he has paid including the fruits and interest if he is unaware of the period or believed that the obligation has become due and demandable (1195). such was the intention of the parties and courts could not just assign a period out of thin air. The parties in the case intended to defer performance of obligations until after the squatters were duly evicted. Araneta. General Rule The period attached to the obligation is for the benefit of both parties. deterioration or improvement of the thing before the arrival of the day certain. if at expense of debtor only usufructuary right (1189) iii. 3. i. PERIOD. WHICH WERE CONSEQUENTLY SWEPT AWAY BY A TYPHOON. BUT WILL NOT COMMENCE EARLIER THAN APRIL WITH THE OPTION TO MAKE PARTIAL SHIPMENT DEPENDING ON THE AVAILABILITY OF LOGS AND VESSELS. There is no express stipulation. WOODCRAFT WORKS. A Debtor Loses the Right to Make Use of a Period (when the creditor can demand even when the obligation is not yet due) (1198) 100% UP LAW UP BAROPS 2008 Page 134 of 325 . 2. he may renounce the benefit of the period by performing his obligation in advance. If he paid voluntarily knowing that the obligation is not yet due. When the obligation is payable on demand. Recover payment or delivery before due and demandable ABESAMIS V. responsibility for loss. Exercise due diligence. 3. however.

the loss of one alternative gives rise to liability Nullity of prestation a) The nullity of one prestation does not invalidate the others b) the debtor or creditor should choose from among the remainder Facultative Only one prestation is due although the debtor is allowed to substitute another The right to make the substitution is given only to the debtor The loss of the thing due extinguishes the obligation. Fonacier lost his right to the period.e. unless he gives guaranties or securities for the debt 2. Distributive obligation – one where one of two or more of the prestations is due *A distributive obligation may be – alternative (1199). DESPITE THE FACT THAT THE PERIOD HAS NOT YET LAPSED. CIVIL LAW ALTERNATIVE OBLIGATION It is one wherein various prestations are due but the performance of one of them is sufficiently determined by the choice which. belongs to the debtor. or – facultative (1206) a) The debtor is liable b) The loss of the substitute before the substitution does not render the debtor liable a) The nullity of the prestation agreed upon invalidates the obligation b) the debtor is not bound to choose the substitute 100% UP LAW UP BAROPS 2008 Page 135 of 325 . the debtor has impaired established guaranties or securities and when through a fortuitous event they disappear. Conjunctive obligation – one where there are several prestations and all of them are due b. IT SHOULD BE UNDERSTOOD IN ITS ORDINARY MEANING WHICH MAY EMBRACE DIFFERENT DEGREES OF FINANCIAL EMBARRASSMENT. time to sell the iron ore. unless he immediately gives new ones equally satisfactory. as a general rule.OBLIGATIONS & CONTRACTS 1. III. When the debtor attempts to abscond. Simple obligation – one where there is only one prestation 2. When by his own act. OCCURRED CONSTITUTED. Compound obligation – one where there are two or more prestations a. the debtor suffers from insolvency. *THE WORD “INSOLVENT” DOES NOT REQUIRE A JUDICIAL DECREE OF INSOLVENCY. Failure to renew an expired surety with the bonding company constituted an impairment of the securities or guaranties. When after contracting the obligation. the Supreme Court ruled that the obligor in this case lost its right to the period. (Manresa) FACULTATIVE OBLIGATION It one where only one prestation has been agreed upon but the obligor may render another in substitution. Thus. Distinguising Alternative and Facultative Obligations Alternative Number of prestations Several prestations are due but compliance with one is sufficient Right of choice May be given to the creditor or to a third person Loss through a fortuitous event The loss of one or more of the alternatives does not extinguish the obligation Loss through fault of debtor a) Does not render the debtor liable b) Where the choice belongs to the creditor. i. Fonacier Payment of obligation was secured by two surety bonds: one from a mining company and its stockholders and the other from a bonding company. When the debtor does not furnish promised guaranties or securities he promised 3. *IN ALL THE CASES ABOVE. unless he gives new ones equally satisfactory when the debtor violates any undertaking in consideration of which the creditor agreed to the period 4. The obligor was obliged to pay the indebtedness from the time it received the proceeds of the sale of iron ore. THE INSOLVENCY MUST HAVE THE OBLIGATION WAS AFTER Gaite v. ALTERNATIVE OBLIGATIONS Kinds of Obligation according to Object 1. THE OBLIGATION SHALL BECOME IMMEDIATELY PAYABLE OR DEMANDABLE.

unlawful or which could not have been the object of the obligation. When solidary liability is provided by Law. or When expressly granted to a third person *A right of choice becomes a simple obligation when a person who has a right of choice has communicated his choice and that one choice is the only practicable one (i. (Jurado) (see 1208) General Rule By default. CIVIL LAW Rules in Facultative Obligations Before After Substitution Substitution Loss of the Principal Fortuitous Event The debtor is not The obligation is liable whatever may extinguished be the cause Fault of Debtor The debtor is liable for damages Loss of the Substitute The debtor is not Fortuitous Event liable whether The obligation is the loss is due to extinguished the fault of the Fault of Debtor debtor or to a The debtor is liable fortuitous event.” “I promise to pay” in a note signed by two or more debtors. each debtor shall be liable only for his part of the debt presumed to be equal with the other debtors.” “in solidum. 2. Solidarity exists only 1. Except: When expressly granted to the creditor. the debtor may expressly give the right of choice to the creditor.. (conventional solidarity) 2. collective obligations are presumed to be joint if there is concurrence of two or more debtors and/ or creditors. or similar words. When Stipulated by the parties using such words like “jointly and severally. when expressly stipulated by the parties or when called for by the nature of the obligation.e. the others may have become illegal or impossible). hence. the right of choice belongs to the debtor. (1207) *In a joint obligation. However. no damages Loss of Last Thing Extinguish Value of any of the things lost due to the creditor’s fault and damages 100% UP LAW UP BAROPS 2008 Page 136 of 325 . Rules in Alternative Obligations Debtor’s Creditor’s choice choice Due to a Fortuitous Event All Extinguish Extinguish Some Deliver any of Deliver any of the remaining the remaining One Deliver Deliver Debtor’s Fault All Value of the Value of any of last thing lost the things and and damages damages Some Deliver any of Value of the the remaining. and/or is to be demanded proportionately by the different creditors. The debtor cannot choose the part of one prestation and part of another. and/ or each one of the creditors has a right to demand compliance with the prestation. no damages damages or any of the remaining One Deliver. 3. The debtor cannot choose those prestations which are impossible. for damages IV. (1202) Limitations on the Debtor’s Right of Choice 1. in alternative obligations. SOLIDARY OBLIGATION Obligacion Solidaria It is an obligation where each one of the debtors is bound to render. thing lost. The Right of Choice belongs to the Debtor As a general rule. only one is practicable. civil liability arising from crimes. The above provision is consistent with the rule that a joint obligation is presumed in case of plurality of debtors or creditors for solidary obligation exists only when the law so provides.OBLIGATIONS & CONTRACTS Right of Choice General Rule The right of choice belongs to the debtor. JOINT AND SOLIDARY OBLIGATIONS JOINT OBLIGATIONS Obligacion Mancomunada It is an obligation where the whole liability is to be paid or fulfilled proportionately by the different debtors. (1200) The debtor has no more right of choice when among the prestations whereby he is alternatively bound.

(legal solidarity) 3. because the compliance of the obligation is possible only if all of the joint debtors would act together. Demand made to one of the debtors is not a demand to all because the debt of one is distinct from the others. Insolvency of one debtor does not make the others liable. and the other not willing shall pay his share plus damages when his financial condition improves. and the Testament expressly makes the charge or condition “in solidum”. the obligation is converted into monetary consideration. When a solidary responsibility is imputed by a Final judgment upon several defendants. while the tie 1. Can only exist when there is at least two debtors or creditors The others are proportionately liable in case of insolvency of one debtor solidarity among Active Solidarity Solidarity of creditors Any one of the creditors may demand fulfillment of the entire obligation. Only the debtor who is guilty of breach of obligation is liable for damages. 5. When a charge or condition is imposed upon heirs or legatees. One who is ready and willing to comply will pay his proportionate share. but they are indivisible as to compliance. not susceptible of division. the other(s) shall not be liable for his share. 4. The concurrence of all the creditors is also necessary for acts which are prejudicial. liable only to a proportionate share.OBLIGATIONS & CONTRACTS negotiorum gestio. 2. Mixed Solidarity – creditors and debtors Passive Solidarity Solidarity of debtors Any one of the debtors can be made liable for the fulfillment of the entire obligation. (1209) *In a joint indivisible obligation. When the Nature of the obligation requires solidarity. Joint Indivisibility A joint indivisible obligation is one in which the object or prestation is indivisible. wherein a party signs as a surety but the agreement states joint and several liabilities. (1224) The concurrence of all the creditors is necessary for demanding compliance due to the indivisibility of the obligation. Can exist even if there is only one debtor or one creditor The others are not liable in case of insolvency of one debtor Characteristics Its essential feature is that of mutual representation. If one of the debtors is insolvent. 100% UP LAW UP BAROPS 2008 Page 137 of 325 . Some Features of Joint Liability 1. If one of the debtors cannot comply. The creditor must proceed against all the joint debtors. thereby terminating the agency. The same is inversely true as regards the debtors. 4. with the consequent right to demand from the others their corresponding shares in the liability. delivery must be made to all. unless one is authorized to receive for the others. 3. 5. (Jaucian v. that is. If there is more than one creditor. Querol) Kinds of Solidarity (PAMela Anderson) 1. But an act beneficial to all like interruption of prescription may be performed by one of the creditors. are not necessarily Solidarity Refers to the legal or juridical tie binding the parties All of the debtors are liable for the breach of obligation committed by any one of the debtrs. there is a solidary obligation. Passive Solidarity 2. the liabilities of the debtors or the rights of the creditors are joint. 2. Indivisible obligations solidary (1210) Indivisibility Refers to prestation the CIVIL LAW between the parties is joint. Demand must be made to all the joint debtors. Vitiated consent on the part of one debtor does not affect the others. commodatum or quasidelict shall be solidary. *In a given contract. Active Solidarity 3. 3. It is in the nature of a mutual guaranty.

(1212) 2. As to who sues for recovery of the obligation should not matter to the debtors as they are wholly obligated to either one of the solidary creditors. called the guarantor. Gregorio Yulo was sued for payment of entire indebtedness. But an act beneficial to all like interruption of prescription may be performed by one of the creditor. A solidary guaranty is suretyship. 4. However. thus there was partial demandability. THE OTHER DEBTORS BEING WILLING TO DELIVER. IN A JOINT INDIVISIBLE OBLIGATION.OBLIGATIONS & CONTRACTS RULES 1. v. only insofar as such is demandable. A SUIT FOR SPECIFIC PERFORMANCE MUST BE DIRECTED AGAINST ALL THE DEBTORS AND IF ANY ONE OF THEM IS NOT WILLING TO FULFILL. (Villa v. while a solidary debtor has right to collect from solidary co-debtor. The Supreme Court rejected the dismissal of the suit invoking Art. he has the right to do so and payment must be made to him. 3. After paying the debt. the provisions of Section 4. Furthermore. Manuel and Carmen entered into a compromise agreement with plaintiff. Inchausti & Co. an extension of time would benefit the surety and such would not benefit solidary co-debtors who did not know or consent to an extension of time. Gregorio was ordered to pay the part of the reduced indebtedness. 1212 and stated that recovery of the contract price was surely a useful act and can be done even by one solidary creditor. THE ACTION SHALL BE CONVERTED INTO ONE FOR DAMAGES WHERE THE DEBTORS SHALL BE LIABLE FOR THEIR RESPECTIVE SHARES WHILE THE UNWILLING DEBTOR SHALL PAY HIS SHARE PLUS DAMAGES FOR HE ALONE SHALL BE LIABLE FOR DAMAGES. solidary debtors Francisco. Action against and payment by solidary debtor. 2008 Page 138 of 325 3. (Jurado) 3. The same is inversely true as regards the debtors. Yulo Six brothers and sisters admitted solidary liability.B. nothing prejudicial to co-creditors. but the first one to demand receives the payment. Debtor/ Passive Solidarity Distinguished From Suretyship By guaranty a person. CA Only one of the solidary creditors filed a suit for collection against the solidary debtors. The concurrence of all the creditors is necessary for demanding compliance due to the indivisibility of the obligation. Prejudiced only by collective acts of ALL creditors / enforced against ALL debtors (1209) *Article 1209 contemplates an obligation which is joint as to the parties but indivisible as to compliance. N. Most importantly. Do only what is useful to others. Anyone has right to receive the payment. Suretyship If a person binds himself solidarily with the principal debtor. solidary debtor is also liable for his own debt in addition to that of others. but not the extension of the period for payment. Chapter 3. In such case the contract is called a suretyship. (1214) *Payment made by the debtor to any one of the solidary creditors extinguishes the obligation. a surety has right to collect from principal debtor. (Jurado) Quiombing v. DEBTORS READY TO FULFILL SHALL NOT BE LIABLE (1224) *AS ALREADY STATED. (2047) Distinguishing Solidarity Suretyship from 1. Garcia Bosque) (Jurado) Rights of solidary creditor/s 1. Greg Yulo was solidarily liable. 2. A surety does not have an actual loan of his own. GIVES RISE TO INDEMNITY FOR DAMAGES: NON-COMPLIANCE WITH UNDERTAKING (1224) 2. The concurrence of all the creditors is also necessary for acts which are prejudicial. the question as to who should sue was a personal issue among the solidary creditors. If one of the solidary creditors demands payment of the debt. Title I of this Book shall be 100% UP LAW UP BAROPS . CIVIL LAW observed. There is no assignment without the consent of others (1213) *The consent of the other co-solidary creditors is necessary because they may not trust the new creditor who would thereby be entitled to collect the entire debt. he benefited from the remission. binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. The debtors moved for the dismissal of the suit on the ground that the other solidary creditors should have been included in the case.

B. Test for Distinction The determining factor is the purpose of the obligation or the intention of the parties and NOT the possibility or impossibility of partial prestation. b. The Supreme Court ruled that the obligee can properly claim from the wife as the nature of the obligation is solidary. Right of action against solidary co-debtors The payor of the obligation may claim from each co-debtor his share of the debt with interest. PHYSICALLY DIVISIBLE: SUBJECT TO LAW OR WHAT IS INTENDED BY THE PARTIES 4. OR ANALOGOUS THINGS 3. some. or all of them simultaneously (1216) b. (1225) Presumptions 1. civil interdiction. like the existence of a period or condition available only as regards the share of such co-debtor(s) for solidarity may exist even if the debtors are bound under different periods or conditions. NOT PARTIAL PERFORMANCE 2. The creditor may proceed against any one of the solidary debtors or some or all of them as long as the debt has not been fully collected. insanity. (1217) 4. Without any fault of any of the debtors: Extinguishment (1221) 2. METRICAL UNITS. (1217) V. (1217) 6. If two or more debtors offer to pay. unless paid (1216) Effect of Loss or Impossibility 1. Nor does solidarity of itself imply indivisibility. not available to the other debtors so as to free the latter from their liability for their own shares in the obligation. Defenses that pertain to his codebtor(s). claiming that the obligee’s claim is barred by it’s failure to file a claim in the intestate proceeding of the deceased husband. BY DAYS OF WORK. but with delay: all are responsible with right of action against the negligent debtor Rules of Payment in Solidary Obligations 1. (1218) Rights of Solidary Debtor 1. Defenses personal to the debtor like minority. (1217) 3. Right of action against solidary co-debtors Set-up Defenses (1222) a. pro-rata. David Husband and wife bound themselves solidarily in favor of obligee for a sum of money and when the husband died. the obligee demanded payment from the wife who resisted payment. There shall be no reimbursement if the solidary debtor paid AFTER the obligation has prescribed or has become illegal. (1210) DIVISIBLE OBLIGATIONS Those obligations whose objects are capable of partial performance in their delivery or performance. Demand against one: not obstacle for demand against another. the entire obligation is demandable from anyone of the solidary obligors. The share of the insolvent debtor shall be borne by all his co-debtors. INDIVISIBLE OBLIGATIONS Those obligations whose objects are not capable of partial fulfillment in delivery or performance. c. If obligation were solidary. Proceed against anyone. With fault of any of the debtors: all are responsible but co-debtors have a right against negligent debtor 3. Payment made by one of the solidary debtors extinguishes the obligation. The paying debtor may ask for reimbursement with interest from his codebtors. the creditor may choose which offer to accept. etc. Defenses derived from the nature of the obligation available to all debtors as a defense to compliance with the entire obligation. Inc. (1316) 2. unless paid before debt is due or demandable (with no interest). CIVIL LAW Imperial Insurance. Due to a fortuitous event. Set-up all defenses 2. (1217) 5. NOT TO DO: DETERMINED BY CHARACTER OF PRESTATION 100% UP LAW UP BAROPS 2008 Page 139 of 325 .OBLIGATIONS & CONTRACTS a. N. v. DIVISIBLE: PARTIAL PERFORMANCE. DIVISIBLE OBLIGATIONS & INDIVISIBLE The indivisibility of an obligation does not necessarily give rise to solidarity. INDIVISIBLE: DEFINITE THINGS.

 The penalty fixed by the parties is a compensation or substitute for damages in case of breach.BY LAW. partial performance is equivalent to nonperformance. 15. A penal clause is an accessory undertaking to assume greater liability in case of breach. Funcion liquidatoria . 1997) VI. It entitles the party to “as much as he reasonably deserves” as distinguished from quantum valebant or “to as much as what is reasonably worth”. the obligor can enforce his right in proportion to the services performed. Penalty as a Substitute for Damages General Rule b. Funcion estrictamente penal .OBLIGATIONS & CONTRACTS KINDS OF INDIVISIBILITY OF AN OBLIGATION a. GR 122196.F. AS WHEN TAXES ARE TO BE PAID IN FULL BECAUSE THE LAW DOES NOT PERMIT PAYING THE SAME BY INSTALLMENTS CIVIL LAW Purposes of Penalty 1. CA. LEGAL INDIVISIBILITY . When there is a stipulation to the contrary 2. Manocop v.to ensure performance of the obligation 2. Principal and Accessory Obligations PRINCIPAL OBLIGATION That which can stand by itself and does not depend upon other obligations for its validity and existence. (F. if there is no stipulation to the contrary. Indivisible Obligation If obligor fails to perform the work completely. 3.to substitute a penalty for the indemnity of damages and the payment of interest in case of noncompliance.BY THE NATURE OF THE OBLIGATION Quantum Meruit Principle Divisible Obligation If only partially performed. ACCESSORY OBLIGATION That which contains an accessory undertaking to pay a previously stipulated indemnity in case of breach of the principal prestation intended primarily to induce its fulfillment. Funcion coercitiva or de garantia . When the debtor is sued for refusal to pay the agreed penalty 3. CONVENTIONAL BY THEM TO INDIVISIBILITY TREAT THE - BY AS STIPULATION OF THE PARTIES OR INTENTION THINGS INDIVISIBLE EVEN IF THEY ARE ACTUALLY DIVISIBLE c. Jan. he cannot recover on this principle because in indivisible obligations. OBLIGATIONS WITH A PENAL CLAUSE In an obligation with a penal clause. Exceptions 1. This principle allows recovery of the reasonable value of the work done regardless of any agreement as to the value. When the debtor is guilty of fraud Distinguishing a Penal Clause from a Condition Penal Clause There is obligation through an accessory May become demandable in default of an unperformed obligation and sometimes jointly with it (Manresa) Kinds of Penal Clause  As to origin Legal penal clause – provided by law Conventional penal clause – provided for by stipulation of the parties As to its purpose Compensatory penal clause – the penalty takes the place of damages Punitive penal clause – the penalty is imposed merely as a punishment for breach As to its dependability or effect Subsidiary or alternative penal clause – only the penalty can be enforced Joint or cumulative penal clause – both the principal obligation and the penal clause can be enforced (Manresa) Condition No obligation through an accessory Is never demandable  100% UP LAW UP BAROPS 2008 Page 140 of 325 . the penalty shall substitute the indemnity for damages and the payment of interest in case of non-compliance.to punish the debtor for the non-fulfillment of his obligation. NATURAL INDIVISIBILITY . The sellement of claim under this principle requires application of judgment and discretion and cannot be adjusted by simple arithmetical process.

can be anyone as long as it is with the creditor's consent (b) 3RD person pays/performs . the principal obligation remains valid and demandable.the one performing. Remission or condonation 5. After payment. Compensation 3. persons. debtor has been led to make the payment (estoppel) BAROPS 2008 Page 141 of 325 . or not doing of an act. Fulfillment of the Resolutory condition 10. concur: i.if any of the ff.he takes the place of the debtor.who may pay to whom payment may be made 2. the mode or form thereof 5. the cause thereof 4. or anyone interested in the fulfillment of the obligation. thing or object in which the payment must consist 3. Novation 2. If performance is done also with debtor's consent . Merger or confusion 4. the penal clause is also void because the penal clause cannot stand along without the principal obligation to which it is subordinated. valid if proved & only to the extent of benefit Presumed if: 1. By creditor’s conduct. he can be the debtor himself or his heirs or assigns or his agent. it must have redounded to the obligee's benefit and only to the extent of such benefit Chapter IV: Extinguishment of Obligations Classification of the Modes of Extinguishment of Obligations 1. it falls under art 1241. Elements The elements of payment are analyzed into: 1.creditor or obligee or successor in interest of transferee. Rescission 9.3 the benefit is total so. the special parts which may modify the same and the effects they generally produce Requisites for Valid Payment With respect to prestation itself: (1) identity (2) integrity or completeness (3) indivisibility 100% UP LAW UP ii. (1230) Nullity of the Principal Obligation If the principal is void. Insofar as the payment has been beneficial to him Payment to a 3rd party not authorized. the doing of an act. if the nullity of the principal obligation is due to the debtor’s fault who acted in bad faith. 3rd person acquires the creditor’s rights 2. Creditor ratifies payment to 3rd person 3. There is subrogation except if the 3rd person intended it to be a donation (c) 3rd person pays/performs with consent of creditor but not with debtor's consent. PAYMENT OR PERFORMANCE The delivery of money.but will apply only if debt has not been previously garnished Payment made to an Incapacitated Person It is valid when: 1. or agent (b) 3rd person .OBLIGATIONS & CONTRACTS Effect of Nullity of the Penal Clause If only the penal clause is void. Prescription 8. The incapacitated person kept the thing delivered. Loss of the thing due 7. With respect to parties CIVIL LAW This must be made by the proper party to the proper party (1) Payor (a) Payor .2. the repayment is only to the extent that the payment has been beneficial to debtor (2) Payee (a) payee . Payment or performance 6. the place and time in which it must be made 6. par 1. the imputation of expenses occasioned by it 7. Annulment I. performance is total (c) anyone in possession of the credit . and by reason of which the creditor suffered damages on equitable grounds. However. or 2.only the creditor's consent. the penalty may be enforced. the delivery of the thing (other than money).

(1249) CIVIL LAW Mercantile documents. then in the currency which is legal tender in the Philippines. Rules of Court shall govern. With regard to judicial costs. creditor can just ask from creditor again but without interest as there was no delay. For the application to be valid. Various debts of the same kind 2. Deviation is slight 3. it must be debtor’s choice or w/ consent of debtor Requisites for the Application of payment 1. the value of the currency at the time of the establishment of the obligation shall be the basis of payment. otherwise. or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed. (1249) *Impairment contemplates an issuance by a third party. out of 2 or more debts owing the same creditor: 1. less damages suffered by the obligee 2. (1247) Special Rules/Forms Of Payment – Application of Payments – the designation of the debt which payment shall be made. Must not be so material that intention of parties is not attained Effect of Substantial performance in good faith 1. In case an extraordinary inflation or deflation of the currency stipulated should supervene. All debts must be due Exception: there may be application of payment even if all debts are not yet due if: a) parties so stipulate b) when application of payment is made by the party for whose benefit the term has been constituted 2008 Page 142 of 325 the the the the 100% UP LAW UP BAROPS . 2. If there is no express stipulation and the undertaking is to deliver a specific thing – at the place where the thing might be at the moment the obligation was constituted 3. In other cases – in the place of the domicile of the debtor Time of payment This is the time stipulated by the parties. payable to order: only when cashed or impaired by creditor. (1170) Extraordinary inflation/ deflation Stipulation (1250) Currency value at time of agreement. Obligor may recover as though there has been strict and complete fulfillment. (Jurado. the action derived from the original obligation shall be held in the abeyance.OBLIGATIONS & CONTRACTS Payment made in good faith to a person in possession of credit shall release debtor Requisites: 1. Same debtor 3. In the place designated in the obligation 2. May be made according to the stipulation of the parties or application of party given benefit of period. Balane) During encashment: action in abeyance. unless there is an agreement to the contrary. Right to rescind cannot be used for slight breach Currency Stipulated (1249) Philippine legal tender The payment of debts in money shall be made in the currency stipulated. Payment by debtor must be made in good faith 2. and if it is not possible to deliver such currency. Creditor must be in possession of the credit & not merely the evidence of indebtedness With respect to time and place of payment Where payment should be made 1. In the meantime. Substantial Performance 1. Same creditor 4. extrajudicial expenses required by payment shall be for the account of debtor. Effect of payment The obligation is extinguished. (1250) Expenses: Unless it is otherwise stipulated. or when through the fault of the creditor they have been impaired. Omission/Defect is technical or unimportant 4. Attempt in Good Faith to perform without willful or intentional departure 2. Except in an order to retain the debt. The delivery of promissory notes payable to order.

they are merely assignees with authority to sell b) Debtor is released up to the amount of the net proceeds of the sale. Voluntary – agreement of creditors Requisites for voluntary assignment a) b) c) d) More than 1 debt More than 1 creditor Complete or partial insolvency of debtor Abandonment of all debtor’s property not exempt from execution e) Acceptance or consent on the part of the creditors Effects a) Creditors do not become the owner. Existence of valid debt 2. Actual deposit/Consignation with proper judicial authorities 2) If dacion will not prejudice the other creditors 3) If debtor is not judicially declared insolvent 100% UP LAW UP BAROPS 2008 Page 143 of 325 . Consignation was made because of some legal cause . creditor makes it by so stating in the receipt that he issues. unless there is cause for invalidating the contract 3. If not. Prior Notice of Consignation had been given to the person interested in performance of obligation (1st notice) 4. Payment is not enough to extinguish all debts How the application is made: 1. is made by operation of law Who makes the application: General Rule: Debtor Exception: Creditor – a) Debtor without protest accepts receipt in which creditor specified expressly and unmistakably the obligation to which such payment was to be applied *The debtor in this case renounced the right of choice b) When monthly statements were made by the bank specifying the application and the debtor signed said statements approving the status of her account as thus sent to her monthly by the bank In case no application has been made 1. unless there is a stipulation to the contrary c) Creditors will collect credits in the order of preference agreed upon. or in default of agreement. he becomes in mora accepiendi & debtor is released from responsibility if he consigns the thing or sum due) Consignation – the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment.OBLIGATIONS & CONTRACTS 5. generally requires prior tender of payment Requisites of valid consignation: 1. application shall be made to all proportionately Dacion en Pago The mode of extinguishing an obligation whereby the debtor alienates in favor of the creditor property for the satisfaction of monetary debt. then application. Apply payment to the most onerous 2. for a presupposes the consent of parties sale both CIVIL LAW Cession/Assignment in Favor of creditors The process by which debtor transfer all the properties not subject to execution in favor of creditors is that the latter may sell them and thus. extinguish up to amount of net proceeds ( unless w/ contrary stipulation ) Kinds 1. in the order ordinarily established by law Consignation Tender -the act of offering the creditor what is due him together with a demand that the creditor accept the same (When creditor refuses w/o just cause to accept payment. A special form of payment because 1 element of payment is missing: IDENTITY. apply the proceeds to their credits. 3. Debtor makes the designation 2.previous valid tender was unjustly refused or under circumstances making previous tender exempt. *Governed by the law on sales Conditions for a valid dacion: 1) If creditor consents. If neither the debtor nor creditor has made the application or if the application is not valid. Legal – governed by the insolvency law 2. extinguish up to amount of property unless w/ contrary stipulation. If debts are of the same nature and burden.

renounces the enforcement of the obligation. earthquake. LOSS OF THE THING DUE This is partial or total which includes the impossibility of performance. This is allowed when: a. Effect of Difficulty Beyond Parties’ Contemplation Rule: The obligor may be released in whole or in part. incapacitated to receive payment at the time it is due c. Subsequent notice) notice of Consignation (2nd CIVIL LAW In obligations to deliver a generic thing General Rule: Not extinguished Exceptions: a) if the generic thing is delimited b) if the generic thing has already been segregated c) monetary obligation In obligations to do General Rule: Debtor is released when prestation becomes legally or physically impossible without fault on part of debtor EFFECT OF PARTIAL LOSS Effects: Extinguishment of obligation (1) Debtor may ask judge to order cancellation of obligation (2) Running of interest is suspended (3) Before creditor accepts or before judge declares consignation has been properly made. Requisites: (a) The event or change could not have been foreseen at the time of the execution of the contract (b) The performance is extremely difficult.OBLIGATIONS & CONTRACTS 5. CONDONATION/REMISSION OF THE DEBT An act of pure liability by virtue of which the obligee. title of obligation has been lost II. flood. but not impossible (because if it is impossible. refuses to issue receipt w/o just cause d. CONCEPT Meaning of loss of the thing 1) When the object perishes (physically) 2) When it goes out of commerce 3) When it disappears in such a way that its existence is unknown or it cannot be recovered When is there impossibility of performance 1) Physical impossibility 2) Legal impossibility : EFFECT OF TOTAL LOSS In obligations to deliver a specific thing General Rule: Extinguished Exceptions: a) Debtor is at fault b) Debtor is made liable for fortuitous event because of a provision of law. contractual stipulation or the nature of the obligation requires assumption of risk on part of debtor a) when loss is significant – may be enough to extinguish obligation b) when loss insignificant – not enough to extinguish obligation WHEN THING IS LOST IN THE POSSESSION OF THE DEBTOR Presumption: Loss due to debtor’s fault (disputable) Exception: natural calamity. 2 or more creditor claiming the same right to collect e. after acceptance by creditor or after judge declares that consignation has been properly made – risk of loss is shifted to creditor) Consignation w/o prior tender Judicial determination of extent is necessary. it is extinguished by impossibility) (c) The event was not due to the act of any of the parties (d) The contract is for a future prestation III. creditor absent or unknown/ does not appear at the place of payment b. obligation remains (debtor bears risk of loss at the meantime. without receiving any price or equivalent. storm REBUS SIC STANTIBUS A doctrine which holds that an agreement is valid only if the same conditions prevailing at time of contracting continue to exist at the time of performance. as a result of which it is 100% UP LAW UP BAROPS 2008 Page 144 of 325 .

Both debts are liquidated & demandable 5. forget other requirement as long as both consented 3. upon order of the court. voluntary delivery – presumption. requires acceptance by obligorimplied in mortis causa & express inter vivos e. indemnity for expense of exchanges. There must be an agreement b. Both parties must be mutually creditors and debtors . Legal – by operation of law.whole debt is condoned Tacit: Voluntary destruction of instrument by creditor. presumption only.not all requisites are present . commodatum. Requisites a. Judicial – set off. COMPENSATION Extinguishment in the concurrent amount of the obligation of those persons who are reciprocally debtors and creditors of each other. needs pleading & proof. Requisites 1. Formalities of a donation are required in the case of an express remission f. *It is the gratuitous abandonment of the creditor of his rights. rebuttable Implied Condonation 1. taxes 4. even if not equal debts – only up to concurring amount 2. rebuttable 2. Requisites a. if in the hands of joint debtor – only his share is condoned 2. Partial – when 2 debts are not of the same amount partial Voluntary Delivery of Private Document 1. There must be a subject matter (object of the remission.in their own right and as principals 2. Neither debt must be retained in a controversy commenced by 3rd person & communicated w/ debtor (neither debt is garnished) Kinds 1. Parties must be capacitated and must consent. criminal offense. otherwise there would be nothing to condone) c. of the same kind or quality 3. the obligation is revived V. Both debts are due 4. The merger must be clear & definite c. as long as 5 requisites concur. Obligation remitted must have been demandable at the time of remission h. Cause of consideration must be liberality Essentially gratuitous. an act of liberality d. CONFUSION OR MERGER OF RIGHTS It is the merger of the characteristics of the creditor and the debtor in one and the same person by virtue of which the obligation is extinguished. claim for future support. Revocable – subject to rule on inofficious donation (excessive. effect of delivery of indebtedness: conclusion condoned evidence of that debt is CIVIL LAW IV. Conventional – agreement of parties is enough.even if unknown to parties & if payable in diff places.depositum. Facultative – one party has choice of claiming/opposing – one who has benefit of period may choose to compensate . Revocable. if in the hands of solidary debtor . when evidence of indebtedness is w/ debtor – presumed that it is a voluntary delivery by creditor. if for any reason the confusion ceases. made to prescribe w/o demanding 100% UP LAW UP BAROPS 2008 Page 145 of 325 . The obligation involved must be the same & identical – one obligation only d.OBLIGATIONS & CONTRACTS extinguished in its entirety or in part or aspect of the same to which the remission refers. all requirements must concur except liquidation 5. Both debts must consist in sum of money or if consumable. It must take place between the principal debtor & the principal creditor only b. legitime is impaired) & ingratitude & condition not followed g. Waivers or remission are not to be presumed generally Forms Express – formalities of donation Implied – conduct is sufficient Extent total Kinds Principal – accessory also condoned accessory – principal still outstanding accessory obligation of pledge – condoned. Total – when 2 debts are of the same amount 6.

Delegacion EXPROMISION It is effected with the consent of the creditor at the instance of the new debtor even without the consent or even against the will of the old debtor. the new debtor’s insolvency or non-fulfillment of the obligation shall revive the original debtor’s liability to the creditor. Subjective/ Personal – This refers to the substitution of the person of the debtor or to the subrogation of the 3rd person in the rights of the creditor c. The extinguishment or modification of the obligation 4. If the substitution was effected with the knowledge and consent of the original debtor. As to essence a. As to its form/ constitution a. Implied – When the old and new obligation are incompatible with each other on every point Forms of Substitution by Debtors 1. NOVATION The substitution or change of an obligation by another. Initiative for substitution must emanate from the new debtor 2. or by substituting another in place of the debtor.OBLIGATIONS & CONTRACTS Effect of assignment of credit to 3rd person. The new debtor’s insolvency or nonfulfillment of the obligation shall not revive the original debtor’s liability to the creditor whether the substitution is effected with or without the knowledge or against the will of the original debtor. or by subrogating a 3rd person in the rights of the creditor. 45 Phil. Requisites 1. (Tolentino) 2. Habana. Consent of the creditor to the substitution Kinds 1. Substitution with the knowledge consent of the old debtor and The new debtor is entitled to reimbursement of the entire amount paid and subrogation. The existence of a previous valid obligation 2. 707. compensation already perfected 2. can there still be compensation 1. Requisites 1. The intention or agreement and capacity of the parties to extinguish or modify the obligation 3. Substitution with the knowledge and consent of the old debtor 2. Express – When it is declared in unequivocal terms that the old obligation is extinguished by a new one which substitutes the same 100% UP LAW UP CIVIL LAW b. BAROPS 2008 Page 146 of 325 . It is the total or partial extinction of an obligation through the creation of a new one which substitutes it. 2. The original obligation is extinguished 2. object or principal b. Substitution without the knowledge or against the will of the old debtor The new debtor is entitled to reimbursement in so far as beneficial to the old debtor with no right if subrogation Effect of Insolvency of the New Debtor There are two prevailing views: 1. A new obligation is created Kinds of Novation 1. either by changing its object or principal conditions. Substitution without the knowledge or against the will of the old debtor (Jurado) Effect of Payment by the New Debtor 1. resulting in its extinguishment or modification. Objective/ Real – This refers to the change in either the cause. Mixed 2. Expromision 2. 1924) Purpose of Novation 1. if made after compensation took place – no effect. if made before compensation took place – depends a) with consent of debtor – debtor is estopped unless he reserves his right & gave notice to assignee b) with knowledge but w/o consent of debtor – compensation may be set up as to debts maturing prior to assignment c) w/o knowledge – compensation may be set-up on all debts prior to his knowledge VI. The creation of a valid new obligation (Tiu Siuco v.

both must be fulfilled otherwise there is nothing to novate. 2008 Page 147 of 325 the the the the BAROPS . Consent of the new debtor 3. The law does not require any formal notice to bind the debtor to the assignee. If the new obligation and the old obligation are subject to different conditions: a. the latter should be fulfilled. it is evidence even against a third person of the facts which gave rise to its execution and of the date of the latter. wherein the same obligation is one of the principal conditions. with the concurrence of the new debtor. 100% UP LAW UP CIVIL LAW General Rule Legal subrogation cannot be presumed. the new obligation shall be under the same condition. 166704. the ownership of the right is acquired by the assignee. Requisites 1. and third persons must recognize it as such. LEGAL That which takes place without the agreement but by operation of law because of certain acts. in view of the authenticity of the document. If the conditions are compatible.R. is acquired by the assignee who steps into the shoes of the original creditor as subrogee of the latter from that amount. but came to know of the assignment by whatever means. Spouses Rodriguez The mere fact that the creditor accepts payments from a third person who agreed to assume the obligation. Kabankalan Sugar Co.. 2006) The transfer of rights takes place upon perfection of the contract. Josefa Pacheco When an easement of right of way is one of the principal conditions of a contract. accessory obligation must subsist only insofar as they may benefit 3rd persons who did not give consent. Kinds of Subrogation 1. including all appurtenant accessory rights. The transfer of the credit must therefore be held valid and effective from the moment it is made to appear in such instrument. No. Conventional 2. Effects of Novation to Accessory When the principal obligation is extinguished in consequence of a novation. Effect of Insolvency of the New Debtor The creditor can sue the old debtor when the insolvency was prior to the delegation and publicly known or when the old debtor knew of such insolvency at the time he delegated the obligation. b. and ownership of the right. Spouses Tibong (511 SCRA 414. the reduction of said period in a subsequent contract. when there is no agreement that the first debtor shall be released from the responsibility does not constitute obligation. This kind of subrogation requires intervention and consent of 3 persons: original creditor. G. If the original obligation was subject to condition. Aquintey v. A third person is not interested in the obligation pays with the express or tacit approval of the debtor 3. constitutes a novation and to that extent extinguishes the former contract. If the conditions are incompatible. all that the law requires is knowledge of the assignment. Inc v. Even without the debtor’s knowledge.OBLIGATIONS & CONTRACTS DELEGACION It is effected with the consent of the creditor at the instance of the old debtor. Even if the debtor had not been notified. Inc. the new creditor and debtor. without the debtors knowledge 2. v. Legal CONVENTIONAL That which takes place by agreement of parties. Initiative for substitution must emanate from the old debtor 2. 2. Effects of Condition in Novation 1. unless it is otherwise stipulated. a person interested in the fulfillment of the obligation pays without prejudice to the effects of confusion as to the latter’s share Magdalena Estates. and the duration of said easement is specified. the debtor is bound by it. Exception 1. which precludes all suspicion of fraud with respect to the date of the transfer or assignment of the credit. Acceptance by the creditor Effect of Payment by the New Debtor The new debtor is entitled to reimbursement of the entire amount paid and subrogation. The creditor pays another creditor who is preferred. If the document of assignment is public.

Exceptions 1. donation 2. to give something or to render some service. 2. their assigns and their heirs.OBLIGATIONS & CONTRACTS TITLE II: CONTRACTS Chapter I: General Provisions Definition A contract is a meeting of the minds between two persons whereby one binds himself. long as the stipulation are not contrary to: Law Morals Good Customs Public Order Public Policy (1306) MUTUALITY Performance or validity of the contract binds both parts and it cannot be left to the will of one of them. Stipulation Pour Autrui – a stipulation in favor of a third person Requisites a. b. Third persons who come into possession of the object of the contact creating real rights (1312) 6. Preparatory – means through which other (future) contracts may be made. with respect to the other. The favorable stipulation should not be conditioned or compensated by any kind of obligation. (1314) Requisites  Existence of a valid contract  Knowledge of the contract by a 3rd person  Interference by the 3rd person without legal justification or excuse 4. Accion Directa . to do. Neither of the contracting parties bears the legal representation or authorization of a 3rd party. according to their nature.g. 4. stipulation. 5. 3. 3. According to degree of importance a.g. may be in keeping with good faith. Obligations arising from contract which are not transmissible by their nature. the parties are bound. to the fulfillment of a prestation to give. not an end in itself. by virtue of which. When a third person induces another to violate his contract. it must not be the whole of the contract. usage and law. 4.the right of a creditor to sue on a contract entered into by his debtor. one or more persons bind themselves in favor of another or others. The 3rd person must have communicated his acceptance to the obligor before its revocation by the original parties. or not to do. (1305) A contract is a juridical convention manifested in legal form. Accion Pauliana (see Obligations > Breach of Obligation > Remedies of Creditors) Kinds of Contracts 1. Accessory – a contract that is dependent upon another contract for its existence and validity c. d. The stipulation must only be a part of the contract.. e. or reciprocally. According to perfection Consensual – a contract that is perfected by agreement of the parties Real – a contract that is perfected by delivery Formal/ Solemn – a contract perfected by conformity to essential formalities. (1313) 5. General Rule The parties are free to stipulate anything they may deem convenient. Agency AUTONOMY This is the freedom or liberty to stipulate. not only to the fulfillment of what has been expressly stipulated but also to all the consequences which. e. (1308) OBLIGATORY FORCE & CONSENSUALITY Contracts are perfected by mere consent and from that moment. The contracting parties clearly and deliberately conferred the favor to the third person. RELATIVITY General Rule Contracts take effect only between parties. Principal – a contract that can stand alone b. e. 100% UP LAW UP BAROPS 2008 Page 148 of 325 . or provision of law. Except As 1. 2. Principal Characteristics (AMOR = love) 1. 3. c. Autonomy Mutuality Obligatory Force and Consensuality Relativity CIVIL LAW 2.

100% UP LAW UP BAROPS 2008 Page 149 of 325 . CONSENT Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. (1318) I. i. Onerous – a contract with an exchange of valuable considerations b. Object certain which is the subject matter of the contract. Collective Contract A contract where the law authorizes that the will of the majority binds a minority to an agreement.e. According to name a.. 3.Do ut facias – I give that you may do .Facio ut des – I do that you may give . b.OBLIGATIONS & CONTRACTS 3. 3. Plurality of subject Capacity Intelligence and free will Manifestation of intent of parties Cognition by the other party Conformity of manifestation and cognition *We follow the theory of cognition and not the theory of manifestation. 6. Involving rights or credits. notwithstanding the opposition of the latter. 2. The offer must be certain and the acceptance absolute. 5. e. Contract of Adhesion A contract in which one party has already prepared a form of a contract. 4. Consent of the contracting parties. sale. Involving services such as agency. such as sale or barter b. Bilateral – a contract in which both parties are required to render reciprocal prestations 7. Cause of the obligation which is established.Facio ut facias – I do that you may do *facio/ facias – do *do .Do ut des – I give that you may give . etc. Under our civil law. and not when the offeree merely manifests his acceptance Auto Contract A contract made by a person acting in another’s name in one capacity and his own name or that of another in another capacity. 4. Remuneratory – a contract in which something (a prestation) is given for a benefit or service performed without any legal obligation to do so 6.e. Commutative – a contract where equivalent values are given by both parties. the offer and acceptance concur only when the offeror comes to know. According to cause a. negotiation 2. Offer and Acceptance OFFER A proposal made by one party to another to enter into a contract.g. such as usufruct or assignment of credits c. According to risk a. i. Consummation or death – parties have performed their respective obligations and the contract is put to an end CIVIL LAW Chapter II: Essential Requisites Essential Requisites of a Contract (Always COCa-Cola) 1. such as insurance Stages of a Contract (PPC) 1.give 5. Preparation or conception – bargaining point. carriage. barter and lease b. Nominate – a contract that has its own individuality and id regulated by a special provision of law.. Involving things. Commodatum and Mutuum b. 2. mortgage. Gratuitous – a contract with no consideration received in exchange for what has been given c. containing stipulations desired by him and he simply asks the other party to agree to them if he wants to enter into the contract. Innominate – a contract that lacks individuality and is not regulated by a special provision of law . According to nature of obligation produced or number of parties obligated a. According to subject matter a. pledge. A qualified acceptance constitutes a counter-offer. Unilateral – a contract with only one party with an obligation. Aleatory – a contract where fulfillment is dependent upon chance. 3. (1319) Requisites 1. Perfection or birth – the meeting of minds regarding the subject matter and the cause of the contract. etc.

as something paid or promised. plus a new offer which is contained in the amplification. Express Acceptance . Elements of Valid Acceptance 1. Express or implied revocation of the offer by the offeree 3. Implied Acceptance . 2003) 100% UP LAW UP CIVIL LAW Advertisements as Offers Business advertisements of things for sale are not definite offers. When does the offer become ineffective? 1. BAROPS 2008 Page 150 of 325 . an answer can be received from him *Acceptance may be revoked offeror finds out about it. If the parties intended that there should be an express acceptance. insanity or insolvency of either party before acceptance is conveyed 2. First View (Manresa): It is to be observed that although the offeror is not bound until he learns of the acceptance. Withdrawal of Acceptance 1. (1326) ACCEPTANCE The manifestation by the offeree of his assent to the terms of the offer. An acceptance which is not made in the manner prescribed by the offeror is not effective. under normal circumstances. Exception: When the option is founded upon a consideration. and manner of acceptance. Complete 3. no stated fixed period a) offer is made to a person present – acceptance must be made immediately b) offer is made to a person absent – acceptance may be made within such time that.R. Subject matter becomes illegal or impossible before acceptance is communicated Rule on Complex Offers 1.may be inferred from the act or conduct of the offeree. place. constitutes a counter-offer. Unequivocal 2. stated fixed period in the offer 2. all of which must be complied with. unless the contrary appears.under certain circumstances. No. G. 2. 2.may be oral or written. CA. Period for Acceptance 1. the offer cannot be withdrawn. Unconditional *If qualified. but mere invitations to make an offer. When offers are not interrelated – the single acceptance of each offer results in a perfected contract unless the offeror has made it clear that one is dependent upon the other and acceptance of both is necessary *An Offer inter praesentes must be accepted immediately. Definite 2. Qualified or conditional acceptance of the offer 4. Forms of Acceptance (1320) 1. and the advertiser is not bound to accept the highest or lowest bidder. (1322) Withdrawal of Offer (1324) General Rule: An offer or proposal may be withdrawn as long as the offeror has no knowledge that the offeree has already accepted the offer. When offers are interrelated . a mere amplification on the offer must be understood as an acceptance of the original offer. before the *Amplified Acceptance . unless it appears otherwise. from the moment he accepts. (1321) Agent as offerer An offer made through an agent is accepted from the time acceptance is communicated to him.the contracted can only be perfected if all the offers are accepted. Intentional Mode of acceptance as stipulation The person making the offer may fix the time. Death. (1325) Advertisements for bidders are simply invitations to make proposals. loses the power to retract such acceptance since the right to withdraw between the time of the acceptance and its communication is a right which is expressly limited by law to the offeror. civil interdiction. the contract will be perfected only upon knowledge by the offeror of the express acceptance by the offeree of the offer. (Malbarosa vs. 12576.OBLIGATIONS & CONTRACTS Elements of Valid Offer 1. but it takes the form of a counter-offer which the offeror may accept or reject. the same thing can not be said of the offeree who.

(1331) 6. (Paranaque Kings v. (Equatorial v. intimidation. OPTION It is a preparatory contract in which one party grants to the other. Acceptance by Letter or Telegram (1319) When is it binding? Acceptance is binding only from the time the offerer had knowledge of it. Second View (Tolentino): Acceptance may be revoked before it comes to the knowledge of the offeror because in such a case. undue influence. They were entered unto by a Guardian and the court having jurisdiction had approved the same right of first refusal may be enforced by specific performance 4. but here the persons who are bound to give them support should pay therefor Upon reaching age of majority – they ratify the same 3. Voluntary fulfillment of a natural obligation provided that the minor is between 18-21 years of age. Exceptions 1. A person under Mistake since a mistake may deprive one of intelligence. Cognition Theory – perfected from the moment the acceptance comes to the knowledge of the offeror. Contracts of Life. must also commence earlier. If it is revoked. Theories on Acceptance of an Offer by Telegram 1. for a fixed period to decide whether or not to enter into a principal contract. Espiritu & Sia Suan v. Alcantara cases) 2. 2. the contract is not perfected if the notice of revocation reaches the offeror before the letter of acceptance is received. Expedition Theory – contract is perfected from the moment the acceptance is declared or made even if not made known to the offeror 3. Rule on Contracts Entered into By Minors General Rule These contracts are considered voidable. Minor is Estopped for having misrepresented his age and misled the other party (when age is close to age of majority as in the Mercado v. A person induced by Fraud (dolo causante) (1338) *Dolus bonus (usual exaggerations in trade) are not in themselves fraudulent Article 1330 A contract where consent is given through mistake. the right of the grantee here is damages and not specific performance. Manresa said that since the offeree is the first to know about the concurrence of will if the parties. as far as he is concerned. 100% UP LAW UP BAROPS 2008 Page 151 of 325 . CA. 5. 1997) Persons Who Cannot Give Valid Consent to a Contract 1. since the revocation has cancelled or nullified the acceptance which thereby ceased to have any legal effect. *An option may be withdrawn anytime before acceptance is communicated but not when supported by a consideration other than purchase price: option money CIVIL LAW *A unilateral promise to buy or sell. Manifestation Theory – a contract is perfected from the moment the acceptance is declared or made 2. when offer is made to the public. (Ang Yu v. Reception Theory – the contract is perfected from the moment the offeror receives the letter *Revocation of Acceptance: The acceptance by the offeree may be revoked before reaching the knowledge of the offeror. there is still no meeting of minds. or fraud is voidable. violence.OBLIGATIONS & CONTRACTS *To justify the inequality between the contracting parties. They were contracts for Necessities such as food. Unemancipated Minors 2. Intoxicated persons and hypnotized persons 5. as a consequence. specific acceptance is not required to bind the obligor. Mayfair. Insane or demented persons 3. 1994) *An option clause in order to be valid and enforceable must indicate the definite price at which the person granting the option is willing to sell. 24 SCRA 483) *The right of first refusal may be enforced by specific performance. health or accident insurance taken on the life of the minor. may be withdrawn but may not be done whimsically or arbitrarily. Where is it binding? he contract is presumed to have been entered into in the place where the offer was made. Deaf-mutes or illiterates who do not know how to write 4. the obligation. adopted in Philippines 4. CA. if not supported by a distinct consideration. contract can be enforced and not only damages. *In unilateral promises.

Hongkong and Shanhai Bank. d. those who by reason of age. not caused by negligence . Irresistible physical force b. serious or irresistible force is employed. deaf and dumb who are unable to read and write 5. c.Error must be a mistake of fact. Contracts agreed to in a state of drunkenness or during a hypnotic spell are voidable. Violence Intimidation Mistake Fraud Undue Influence VIOLENCE There is violence when in order to wrest consent. 2. The evil must be the determining cause for the party upon whom it is employed in entering into the contract. or upon the person or property of his spouse. The evil must be imminent and grave. One of the parties is compelled to give his consent by a reasonable and wellgrounded fear of an evil b.OBLIGATIONS & CONTRACTS Rule on Contracts Entered into by Insane or Demented Persons or Those Who Were Intoxicated or Hypnotized Contracts entered into during a lucid interval are valid. not of law Exceptions on Mistake: 1. The evil must be unjust. take care of themselves and manage their property. Contracts are also valid even though they are entered into by one of the parties without hope of advantage or profit. to give his consent. 3. those under civil interdiction 2. (1331) As to identity or qualifications: Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such identity or qualifications have been the principal cause of the contract. disease. it should refer to the substance of the thing which is the object of the contract. Illiterate party (1332) 2. becoming an easy prey for deceit and exploitation CIVIL LAW Distinguishing Incapacity from Disqualification Incapacity Restrains the exercise of the right to contract May still enter into contract through parent. descendants or ascendants. prodigals 4. or to those conditions which have principally moved one or both parties to enter into the contract. 5. Mutual error (1334) Disqualified to Enter into Contracts Contracts consented into by the following are void: 1. (1328) The incapacity declared in article 1327 is subject to the modifications determined by law. contingency. Reluctant Consent A contract is valid even though one of the parties entered into it against his wishes and desires or even against his better judgment. cannot without outside aid. Correction only if: A simple mistake of account shall give rise to its correction. hospitalized lepers 3. risk affecting the object of the contract (1333) 3. (1331) . Such force is the determining cause for giving consent INTIMIDATION There is intimidation when one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property. 4. (1335) Requisites a. (Martinez v. guardian or legal representative Based upon subjective circumstance of certain person Contracts entered into are merely voidable Disqualification Restrains the very right itself Absolutely disqualified Based upon public policy and morality Contracts entered into are void Causes which Vitiate Freedom to Consent 1. weak mind and other similar causes. (1329) Rule on Contracts Entered into under Mistake In order that mistake may invalidate consent. 15 Phil 252) 100% UP LAW UP BAROPS 2008 Page 152 of 325 .Error must be excusable. and is understood to be without prejudice to special disqualifications established in the laws. Requisites a. Knowledge of doubt.

unless made by an expert and the other party has relied on the former's special knowledge. Exception: Mutual error as to the effect of an agreement when the real purpose of the parties is frustrated. without them. Insidious words or machinations are employed b. unless such misrepresentation has created substantial mistake and the same is mutual. 2008 Page 153 of 325 100% UP LAW BAROPS . Misrepresentation made in good faith is not fraudulent but may constitute error. for the purpose of deceiving others. Fernandez Deza. It must be serious c. are not in themselves fraudulent. 595) Simulated Contracts SIMULATION Simulation is the declaration of a fictitious intent manifested deliberately and by agreement by the parties in order to produce. It induced another party to enter into a contract d. Usual exaggerations in trade. constitutes fraud. when the other party had an opportunity to know the facts. It is not employed by both parties nor by 3rd parties Exceptional Cases These are not fraud unless Dolo Causante or substantial/ principal condition: i. Dolo Incidente (1344) – holds the guilty party liable for damages (see Obligations > Effect of Obligations > Breach of Obligation > Fraud) Fraud in the performance of an obligation (1170) Requisites of Fraud a. It must be mutual c. (Manresa) General Rule Mistake does not vitiate consent. (1344) 1. There is collusion by one of the parties o fthe contract with the 3rd person.OBLIGATIONS & CONTRACTS MISTAKE It is not only a wrong conception of the thing but also the lack of knowledge with respect to it. There must be a deliberate intent to deceive or to induce 2. it should be serious and should not have been employed by both contracting parties. the other is induced to enter into a contract which. Requisites: a. the appearance of a transaction which does not exist or which is different from the true agreement. (1344) Fraud by Third Persons General Rule: Fraud by a 3rd person does not vitiate consent and merely gives tise to action for damages. The real purpose of the parties must have been frustrated FRAUD There is fraud when. Dolo Causante (1338) – renders the contract voidable 2. 42 Phil. There is misrepresentation that has created a substantial mistake and the same is mutual. (1339) Kinds of Fraud Fraud in the perfection of the contract 1. buyer beware ii. he would not have agreed to. through insidious words or machinations of one of the contracting parties. Misrepresentation by a third person does not vitiate consent. (1338) (Dolo Causante) Failure to disclose facts When there is a duty to reveal them. The other party relied on this untrue statement. (1342) iv. 3. (Coso v. Except when: 1. Mistake must be with respect to the legal effect of an agreement b. (1340) UP CIVIL LAW *Caveat Emptor – dealer’s talk. Incidental fraud only obliges the person employing it to pay damages. UNDUE INFLUENCE There is undue influence when a person takes improper advantage of his power over the will of another. (1341) iii. depriving the latter of a reasonable freedom of choice. as when the parties are bound by confidential relations. 2. (1343) General Rule on Fraud In order that fraud may make a contract voidable. Opinions: A mere expression of an opinion does not signify fraud.

Illegal Cause – The cause is contrary to law. the essential reason which impels the parties to enter into the contract. In onerous contracts: the cause is understood to be. Aleatory Contract – One of the parties bears the risk of loss that the thing might not come into existence. public order or public policy. b. Those which Cannot be the Object of a Contract (Fruits In Cream – IOI) 1. II. that is the loan from which it derives lide and existence. Future inheritance (1347) 2. good customs. right or service which is the subject matter of the obligation arising from the contract. either existing or in potency b) It must be Licit or not contrary to law. 5. 2.OBLIGATIONS & CONTRACTS Kinds of Simulated Contracts a. (1348) 3. In remuneratory contracts: the cause is the service or benefit remunerated c. Distiguishing Cause from Motive Cause Direct and most proximate reason of a contract Objective and juridical reason Cause is always same for each contracting party The legality or illegality of cause affects the existence or validity of the contract Motive Indirect and remote reason Psychological or purely personal reason Motive differs for each contracting party The legality or illegality of motive does not affect the existence or validity of the contract. False unless to prove another cause (1353)    Want of Cause – There is a total lack or absence of consideration. Conditional Contract – the thing must come into existence otherwise the contract is void. 100% UP LAW UP BAROPS 2008 Page 154 of 325 . False Cause – The cause is stated but that cause is not true. good custom. Effects of Cause When Cause Renders Contract Void: 1. for both parties. Requisites 1. or public policy. 3. the prestation or promise of a thing or service by the other. c) It must be Possible or real. morals. CAUSA CIVIL LAW It is the “why” of the contract. public order. or public policy. OBJECT The thing. public order. (1349) e) It must be Transmissible. good customs. Contrary to law morals. 4. 2. Outside the commerce of men 6. It must Exist at the time of the celebration of the contract. good customs. It is not contrary to law. In accessory contracts: the cause is identical with the cause of the principal contract. III. It must be Licit or lawful. Absolute – There is no intention on the part of the contracting parties to be bound by the contract at all. The contract is merely fictitious making it void from beginning b. morals. It does not prejudice 3rd persons ii. Requisites (PLDT-Ctc) a) The prestation must be within the Commerce of man. public order. d) It must be Determinate as to its kind or determinable without the need to enter into a new contract. Of Pure beneficence: liberality of donor or benefactor (1350) d. morals. and public policy. It must be Real (true). Impossible things or services cannot be the object of contracts. Intransmissible rights Future Things May be interpreted in two ways (Manresa): 1. Indeterminable as to their kind. Relative – There is an intention by the parties to be bound but they conceal their true agreement *Relative simulated contracts are binding when: i. Causes according to type of contract a. Absence of cause/ unlawful cause (1352) 2.

donation of personal prop in excess of 5. needed only to bind 3rd parties Ex: public documents needed for the ff: a. Authority of agent to sell land must be in writing. Contribution of a partner of immovable property in a partnership. Solis v.Statute of Frauds. mistake or undue influence. 100% UP LAW UP BAROPS 2008 Page 155 of 325 . (1355) Cause Absence of causa Illegality of causa Falsity of causa Effect VOID . Contracts w/c object is creation. Law requires contract to be in some form for convenience . or 2. Power to administer property for another d. When form is required for Validity 2. contract of partnership. Real – creation of real rights over immovable property – must be written General Rule SPIRITUALITY PRINCIPLE Contracts are valid and enforceable in whatever form. it is still valid and binding as far as contracting parties are concerned. stipulation to pay interest. 2. presumption of validity but rebuttable PRESUMED TO EXIST burden of proof is on the person assailing its existence DOES NOT INVALIDATE CONTRACT PER SE Exceptions: 1.000 c.produce no legal effect VOID . when the parties intended a donation or some other contract EXCEPTION CIVIL LAW 1. lesion or inadequacy will not invalidate a contract as long as there has been no fraud. When form is required for Enforceability 3. Dievas v. the party bound may be compelled to execute necessary document. 3. (1356) 1. Informal – may be entered into whatever form as long as there is consent. transfer of large cattle. object & cause b.produce no legal effect VOIDABLE – party must prove that cause is untruthful. Barroso Even where the contract has not been reduced to the required form. Acuna Articles 1357 and 1358 do not require a particular form to validate or enforce a contract. Cession.donation and acceptance of real property 2. only to ensure its efficacy. void. renunciation of hereditary rights/CPG c. Consequently both presuppose the existence of a valid and enforceable contract. e. Donation of personal property exceeding P5. as long as all essential requisites are present. contract is valid but right to enforce cannot be exercised. registration of chattel mortgage. transmission or reformation of real rights over immovables b. sale of land thru agent. Law requires contract to be in some form to be enforceable . otherwise sale is void. Cession of action of rights proceeding from an act appearing in a public inst. Donation of real property must be in a public instrument. otherwise void. must be in writing. when there is fraud. contract of antichresis. When form is required for Convenience FOR VALIDITY (formal/solemn contracts) 1. otherwise void. so that after its existence have been admitted.OBLIGATIONS & CONTRACTS When Cause Renders Contract Voidable: Unless specified by law. mistake or undue influence. even if orally entered into. All other docs where amount involved is in excess of 500 ( must be written even private docs ) When is Form Important Causa not stated in contract Inadequacy of causa Chapter III: Form of Contracts Form is a manner in which a contract is executed or manifested Forms of Contracts a. otherwise. repudiation.000 must be in writing. need ratification to be enforceable 3. Formal – required by law to be in certain specified form such as: donation of real property. Law requires contract to be in some form for validity .contract is valid and enforceable. 4.

Cession of actions from public documents . Amends Art. 4. An agreement that by its terms is not to 1405. All other contracts where the amount agent. knowledge regardless of actual reading 6. modification or extinguishment of real rights over immovable property. regularly FOR CONVENIENCE Public Document The following must appear in a public document: (1358) 1. 1403. sales of real property . but when a sale is made by 2. Remember that presumptions facilitate transactions and rules of evidence by being pragmatic about it. Otherwise. (Art.OBLIGATIONS & CONTRACTS FOR ENFORCEABILITY (Statute of Frauds) (1403. and subscribed by the party charged. other than a mutual promise to contracts of loan (art. no one can really prove that person A read his email. thereof.g.Acts and contracts which have for their object the creation. Sec. at the time of but adds more presumptions wherein such the sale. or some note or Private Document memorandum. of the agreement involved exceeds five hundred pesos must cannot be received without the writing. BAROPS 2008 Page 156 of 325 . An agreement for the sale of goods. be in writing. 2134) 4. it is a sufficient doctrines as applied to e-mail. 748) 2. CIVIL LAW other power which has for its object an act appearing or which should appear in a public document. Giving authority to an agent for the Sale default. and networks 5. special presumptions for computers were made into law by the ecommerce act.The power to administer property. repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains 3. Real rights over immovable property. or by his 1. 3. or miscarriage of another. An agreement of the leasing for a longer period than one year. unless the buyer accept and receive part of such 1. or the evidences. memorandum. of Labor. price. (Art. prejudice 3rd persons . at a price not Electronic Commerce Act (RA 8792) less than five hundred pesos. No. In IBM v. thus it is more practical to presume that he had done so given proof of his receiving such e-mail. sales of real property or of an interest therein a governed by articles 1403. or and their networks as means against some of them. 5. A representation as to the credit of a third  Regular functions have been carried out person. But secondary evidence of its contents: sales of goods. (1358) be performed within a year from the 2. or a appear in writing. Agreements on payment of interests on marriage. internet. in relation to 1405) Those that do not comply with the Statute of Frauds as set forth in this number. 2. Power to administer property. terms of sale. 1403 by including computers goods and chattels. 1956) marry. Hereditary rights and conjugal property of gains -The cession. names of the purchasers and person on whose Presumptions from rules of court and account the sale is made. or for the sale of  Receipt of letter – presumed to come to real property or of an interest therein. or should prejudice a third person. the Supreme Court ruled that Local Area Network or LAN is not sufficient notice for firing an employee since there was still no law providing for such presumptions. evidence. even a private one. therefore. Donations exceeding five thousand pesos making thereof. An agreement made in consideration of 4. unless the same. 2.The cession of actions or rights proceeding from an act appearing in a public document. other powers to act. chattels or things in action are governed by articles. property sold. and 1405. proving the propositions as found in the presumptions would be impossible and uncertain. Expressly provides for the application of auction and entry is made by the the same principles as normal contracts auctioneer in his sales book. chattels or things in action. 1874) 3. par. E. A special promise to answer for the debt. transmission. of the amount and kind of should be known by both parties. 2 and 1. No. 2. Antichresis (Art. of such things in action or frauds and proof of contracts pay at the time some part of the purchase money. In the following cases an agreement hereafter made shall be unenforceable by action. or any 100% UP LAW UP *However. of land.

simulation or inequitable conduct. Message from originator presumed to be made by the owner thereof regardless of who actually typed it. fraud. or notice by the server. Present laws apply.If one party was mistaken and the other acted fraudulently or inequitably in such a way that the instrument does not show their true intention. negligence . Unilateral a.In addition to the requisites prescribed in article 2085. typist 4. lack of skill. 2. presumption that it was not sent. Mistaken party. If the safekeeping of the thing delivered is not the principal purpose of the contract. presumption of authority upon the holder of the ATM card. In using ATM of network banks.A deposit is constituted from the moment a person receives a thing belonging to another. or that of the receiver. electronic documents are valid like ordinary ones. 2. Requisites for Reformation 1.When a mutual mistake of the parties causes the failure of the instrument to disclose their real agreement. 3. This is usually done by pre-program procedure like requirement of registration before being given access. Mistake by 3rd persons – due to ignorance. 6. Others specified by law frustration of true intent Special Cases 1. other either acted fraudulently or inequitably or knew but concealed c. There must be express statement that he (owner) would be held liable for that ID. Receiver has right to assume his actual authorship. There is clear and convincing proof of mistake. said instrument may be reformed. inequitable conduct. Mutual mistake . 3. Mistaken party. 2140) b. (1962) CIVIL LAW Chapter IV: Reformation of Contracts (Arts. Mistake of fact c. one party was mistaken b.1359-1369) Reformation is that remedy in equity by means of which a written instrument is made or construed so as to express or conform to the real intention of the parties when some error or mistake has been committed. Mutual b. On agreements of acknowledgement of receipt. (2093) Deposit. not fraudulent . party in good faith may ask for reformation 3. that the thing pledged be placed in the possession of the creditor. in order to constitute the contract of pledge. and codes Tip: Always have a hard copy back-up Acts Required for the Perfection of Certain Contracts REGISTRATION Chattel Mortgages (art. presumption is at the time such was received by the designated information system or server. bad faith of drafter. fraud. This also requires a system of acknowledgement of receipt. Electronic devices are valid 4. 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 – to avoid 100% UP LAW UP BAROPS 2008 Page 157 of 325 . clear and convincing proof d. it is necessary. there is no deposit but some other contract. clerk. such as actual reply of the receiver. the former may ask for the reformation of the instrument. transaction is final at actual debiting.OBLIGATIONS & CONTRACTS Provisions of the E-commerce Act 1. with the obligation of safely keeping it and of returning the same. accident. 8. On security of signature – electronic imprints. True intention not expressed within the instrument by reason of mistake. Mutual: instrument includes something w/c should not be there or omit what should be there a. If no reply or acknowledgement. identification systems. or of a third person by common agreement. causes failure of instrument to express true intention 2. 2. Web sites – require proof or acknowledgement of visiting the site. 3. Meeting of minds. or accident. 7. As to time. 5. Causes for Reformation (MUMO – ghost) 1. Sales or Transfers of Large Cattle (Cattle Registration act) DELIVERY OF THE THING (for Real contracts) Pledge .

Sisters With Voices-E) (Arts. CUSTOMS FACILITATE INTERPRETATION The usage or custom of the place shall be borne in mind in the interpretation of the ambiguities of a contract. or his heirs and assigns. it shall be understood as bearing that import which is most adequate to render it effectual. GENERAL TERMS IN ACCORDANCE TO INTENTION However general the terms of a contract may be. Agreement on pledge or mortgage but with instrument on sale – If two parties agree upon the mortgage or pledge of real or personal property. upon petition of the injured party. Ignorance. the instrument may be reformed. INTERPRET TO EFFECTUATE If some stipulation of any contract should admit of several meanings. their contemporaneous and subsequent acts shall be principally considered. otherwise. and shall fill the omission of stipulations which are ordinarily established. or bad faith of drafter. (1374) IN KEEPING WITH NATURE AND OBJECT OF CONTRACT Words which may have different significations shall be understood in that which is most in keeping with the nature and object of the contract. 5. OBSCURE WORDS FOR NON-OBSCURERS The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. When the real agreement is Void. When No Reformation Is Allowed (SWVE. 1366-1367) 1. Wills. attributing to the doubtful ones that sense which may result from all of them taken jointly. Doubts with circumstances: regard to incidental Chapter V: Interpretation of Contracts (Arts. lack of skill. he cannot subsequently ask for its reformation. 100% UP LAW UP BAROPS 2008 Page 158 of 325 . clerk. 1370-1379) LITERAL MEANING OF CLEAR TERMS If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties. Standing: Reformation may be ordered at the instance of:   either party or his successors in interest. the literal meaning of its stipulations shall control. Prescriptive period: 10 years from the date of the execution of the instrument. lack of skill. 2. typist of instrument . Estoppel – When one of the parties has brought an action to enforce the instrument. negligence. reformation of the instrument is proper. (1368) CIVIL LAW EVIDENT INTENTION PREVAILS OVER LETTER If the words appear to be contrary to the evident intention of the parties. but concealed that fact from the former. but the instrument states that the property is sold absolutely or with a right of repurchase. 4.OBLIGATIONS & CONTRACTS their real agreement. DOUBTS 1. negligence or bad faith on the part of the person drafting the instrument or of the clerk or typist. READ AS A WHOLE The various stipulations of a contract shall be interpreted together. CONTEMPORANEOUS AND SUBSEQUENT ACTS CONSIDERED In order to judge the intention of the contracting parties. the instrument does not express the true intention of the parties. 4. the latter shall prevail over the former.When through the ignorance. they shall not be understood to comprehend things that are distinct and cases that are different from those upon which the parties intended to agree. the courts may order that the instrument be reformed. Simple donations inter vivos wherein no condition is imposed. 3. if the mistake was mutual.

*Principles of interpretation under ROC also observed (Rule 140 B (4)) the contract may demand fulfillment or seek the rescission of the contract Court may fix a period or grant extension of time for the fulfillment of the obligation Its purpose is to cancel the contract CIVIL LAW who is prejudiced by the contract may demand the rescission of the contract. The VURV Pipe or. Partition with lesion to heirs by at least ¼ (1098) c. Those undertaken in Fraud of creditors when the latter cannot in any manner claim what are due them 4. the doubt shall be settled in favor of the greatest reciprocity of interests. Those agreed upon in representation of Absentees. *According to the SC. Rescission in 1191 It is a principal action retaliatory in character Only ground is nonperformance of one’s obligation or what is incumbent upon him Applies only to reciprocal obligation Only a party to 100% UP LAW Rescission Proper in 1381 It is a subsidiary remedy There are 5 grounds to rescind. the contract shall be null and void.OBLIGATIONS & CONTRACTS When it is absolutely impossible to settle doubts by the rules established in the preceding articles. Those which refer to things under Litigation if they have been entered into by the defendant without the knowledge and approval of the litigants of the court 5. to protect some preferential right. and the doubts refer to incidental circumstances of a gratuitous contract. When the conditions have been imposed with the intention of 2008 Page 159 of 325 BAROPS . Rescissible Contracts Voidable Contracts Unenforceable Contracts Void or Inexistent Contracts 1. Court cannot grant extension of time for fulfillment of the obligation Its purpose is to seek reparation for the damage or injury caused. and normally binding. Nonperformance by the other is not important It applies to both unilateral and reciprocal obligations Even a third person UP 1. Contract is essentially valid. Plaintiff must be able to return whatever he may be obliged to return due to rescission. it is a relief to protect one of the parties or a third person from all injury and damages which the contract may cause. 3. Plaintiff has no other means to obtain reparation. 4. 2. thus allowing partial rescission of the contract Requisites of Rescission *DEFECTIVE CONTRACTS Kinds of Defective Contracts (VURV. a. of the latter suffers lesion by more than ¼ of the value of things which are the subject thereof 3. If the contract is onerous. by reason of external conditions. Grounds for Rescission (1381) The following (FLAG) contracts are rescissible: Chapter VI: Rescissible Contracts Rescission is a process to render inefficacious a contract validly entered into. 2. 4. causing an economic prejudice to a party or his creditor. There is lesion or pecuniary prejudice. Those entered into by Guardians where the ward suffers lesion of more than ¼ of the value of the things which are the objects thereof 2.  The things must not have been passed to 3rd parties who did not act in bad faith. 2. All other contracts especially declared by law to be subject to rescission and payments made in the state of insolvency. the least transmission of rights and interests shall prevail. Deterioration because suspensive condition debtor’s fault d. Doubts with regard to principal object: If the doubts are cast upon the principal object of the contract in such a way that it cannot be known what may have been the intention or will of the parties.  It must be made within the prescribed period. a VURV – an action word) 1. 3. Payment made by insolvent b.

consequently. the following rules shall be observed in case of the improvement. b. When he who demands rescission has no ability to restore. he is not obliged to return. When the thing is already in possession of the party in good faith. subject to indemnity only. he is obliged to return. (court approval) 4. together with their fruits. it can be carried out only when he who demands rescission can return whatever he may be obliged to restore. (1385) Extent Necessary Rescission shall be only to the extent necessary to cover the damages caused. The object of the contract must bot be legally in possession of a 3rd person who did not act in bad faith. 100% UP LAW UP BAROPS 2008 Page 160 of 325 . loss or deterioration of the thing during the pendency of the condition (1198) If it deteriorates through the fault of the debtor. If he acted in bad faith or he was not legally in possession. The creditor cannot. b. The person bringing the action must be able to return whatever he may be obliged to restore. The ward or absentee must have suffered lesion of more than ¼ of the value of the property which is the object of the contract. When the creditor did not receive anything from the contract. When Contracts can be Rescinded on the Ground of Fraud (Accion Pauliana) 1. Rescission referred to in Nos. if the transaction is fraudulent. h. in any legal manner. k. the intent to commit fraud to the prejudice of the creditor seeking rescission. Obligation to Return in Rescission Rescission creates the obligation to return the things which were the object of the contract. collect his credit. j. f. i. There must be no other legal means of obtaining separation for the lesion. As to 3rd persons a. 2. 3. There must be fraud or. (mutual restitution) 6. Hidden faults & defects (1567) Lease (1659) Mutual Restitution CIVIL LAW Things w/c are the objects of the contract and their fruits Price with interest When Mutual Restitution is not Applicable a. (1384) When is Rescission NOT Allowed 1. and the price with its interest. When there are other means (1383) 2. e. 2. The contract must have been entered into by a guardian in behalf of his ward or by a legal representative in behalf of an absentee. 4. at least. it is the liability of the 1st infractor When Contracts can be Rescinded on the Ground of Lesion 1. (1386) Who Can Bring Action for Rescission the injured party. with indemnity for damages in either case Unpaid seller may rescind (1534) Sale of object which is inferior by more than 10% (1539) Sale of land for lack of measurement (1542) Sale because of loss of important part through eviction (1556) Sale of animals w/ redhibitory defects warranty vs. if there are 2 or more alienations.OBLIGATIONS & CONTRACTS suspending the efficacy of an obligation to give. his heirs. 1 and 2 of article 1381 shall not take place with respect to contracts approved by the courts. In possession of a 3rd person in good faith (1385) 4. (subsidiary character of rescission) 5. Presumptions of Fraud By Gratuituous Title All contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have been entered into in fraud of creditors. g. Effect of Rescission 1. (1385) 3. The object of the contract must not be legally in the possession of a third person who did not act in bad faith. As to the parties – Mutual restitution together with the fruits and interest. when the donor did not reserve sufficient property to pay all debts contracted before the donation. 2. the creditor may choose between the rescission of the obligation and its fulfillment. There must be credit existing prior to the celebration of the contract. the creditor. 3. If he legally possess the object in good faith. The contract must have been entered into without judicial approval.

Can be confirmed ( NOTE: confirmation is the proper term for curing the defect of a voidable contract) 4. May be assailed or attacked only in an action for that purpose 3. or deterioration b. 1189 – rules on improvement. within 4 years from the time domicile is known CIVIL LAW c. Minors ( below 18 ) b. Sale upon credit by an insolvent debtor 4. Can be assailed only by the party whose consent was defective or his heirs or assigns Grounds 1. and so on successively. within 4 yeas from the time of discovery of fraud. In case of alienation in fraud of creditor. plus interests 3. Effective until set aside 2. undue influence or fraud (Art 1390) Contracts are voidable when entered into by: a. Transfer was made by a debtor after a suit has been begun and while it is pending against him 3. ability to restore. Exception In certain contracts of sale which are specially declared by law to be rescissible. Transfer made between father and son where there is present any of the above circumstances 7. One of the parties is incapable of giving consent to a contract 2. things under litigation and payment of the state of insolvency. Intoxicated persons f. loss. the first acquirer shall be liable first. The consent is vitiated by mistake. Exception 100% UP LAW UP BAROPS 2008 Page 161 of 325 . Characteristics 1. One who alienates to acquirer in good faith (1385. *In addition to these presumptions. (1542.OBLIGATIONS & CONTRACTS By Onerous Title Alienations by onerous title are also presumed fraudulent when made by persons against whom some judgment has been issued. the period is 6 months or even 40 days. Deaf mutes who cannot read or write d.. counted from the day of deliver. Order return – ability to restore. i. The decision or attachment need not refer to the property alienated.e. and need not have been obtained by the party seeking the rescission. par. (1387) Badges of Fraud 1. together with fruits. Grant rescission – only to extent necessary. unless they are annulled by a proper action in court. Persons who are specially disqualified. object of contract or its price. In case of absentees. 1577) Chapter VII: Voidable Contracts Voidable Contracts are those which possess all the essential requisites of a valid contract but either on of the grounds under 1390 is present. Evidence of indebtedness or complete insolvency 5. within 4 years from the time the guardianship ceases b. 1 and 2 are not court approved 2. Damages: Who are liable? a. Acquirer in bad faith (1388) *If there are two or more alienations. 3) Prescriptive Period General Rule Within four (4) years from the date it was entered into: a. Art. Insane persons unless they acted in lucid interval c. the design to defraud creditors may be proved in any other manner recognized by the law of evidence. (1388) c. no acquirer in good faith. Consideration of the conveyance is inadequate or fictitious 2. nos. 1571. no other means. violence. Transfer of all his property by a debtor when he is financially embarrassed or insolvent 6. due to civil interdiction e. If the person is under guardianship. Failure of the vendee to take exclusive possession of the property Reliefs 1. These contracts are binding. intimidation. They are susceptible of ratification. Hypnotized persons The Person who has the Right to Annul a Voidable Contract General Rule The party prejudiced has the right to annul a voidable contract.

. the time the incapacity ends b. Obligation to give – Restoe to each other the things which have been the subject matter of the contract with fruits and the price with interest. he shall be obliged to pay the value of the thing at the same time of the loss including the interest from the same date. Special promise to answer for debt. (Jurado) 2. Agreement made in consideration of promise to marry d. chattels or things in action at price not less than 500. (Manresa) Effect of a Failure to make a Restitution When the thing is lost: 1. but without interest thereon 4. 23 SCRA 1141) Causes of Extinction of an Action to Annul 1. In excess of authority conferred (ultra vires) 2. Restitution between Parties Obligation of Mutual Restitution 1.Failure to comply with Statute of Frauds a. Agreement to be performed within a year after making contract b. (1399) *It is presumed in the absence of proof that no such benefit has accrued to the incapacitated person. It should be effected with the knowledge of the vice or defect of the contract. Due to the fault of the defendant. Ratification 3. People’s Homesite and Housing Corp. default or miscarriage of another c. the time the violence. Due to the fault of an incapacitated person. The confirmation should be effected by the person who is entitled to do so under the law c. Due to a fortuitous event. It is considered valid but one cannot compel its execution unless ratified due to the extrinsic defect of the contract. annulment cannot be made 3. CA. Prescription 2.Both parties incapable of giving consent -2 minor or 2 insane persons 3. 2. Obligation to do or not to do – there will be apportionment of damages based onteh value of such prestation with corresponding interests. It produces legal effects only after ratified. the time the mistake or fraud is discovered *The discovery of fraud must be reckoned to have taken place from the time the document was registered in the office of the registrar of deeds. Registration constitutes constructive notice to the whole world. there is no restitution. the person obliged to return shall pay the value of the thing at the time of loss. intimidation or undue influence ends c. Chapter VIII: Unenforceable Contracts They are contracts which cannot be enforced in court or sued upon by reason of defects provided by law until and unless they are ratified according to law. Curable by Ratification . Agreement for sale of goods. The cause of the nullity or defect should have already disappeared d. (Teves v. No authority conferred b. exception: auction when recorded sale in sales book e. Due to the fault of the plaintiff. Loss of the thing due to default of the plaintiff and loss of the thing during the plaintiff’s incapacity or after he had acquired incapacity PRESCRIPTION The action must be commenced within 4 years from: a. 76 SCRA 514) RATIFICATION Requisites a. Curable by Acknowledgment . Agreement for lease of property for more than one year and sale of real property regardless of price f. (Carantes v. except in cases provided by law. Unauthorized or No sufficient authority – entered into in the name of another when: a. Representation as to credit of another 2008 Page 162 of 325 100% UP LAW UP BAROPS .OBLIGATIONS & CONTRACTS If a 3rd person is prejudiced in his rights with respect to one of the contracting parties. and can show detriment which would positively result to him from the contract in which he has no intervention. The contract should be tainted with a vice which is susceptible of being cured b. Kinds 1. *Articles 1398-1402 are not applicable to consummated contracts CIVIL LAW *The incapacitated person is not obliged to make restitution except insofar as he has been benefited by the thing or price received by him. no restitution can be made.

WITHOUT OR IN EXCESS OF AUTHORITY Those entered into in the name of another person by one who has been given no authority or legal representation. (1347 par.A representation as to the credit of a third person. 2.An agreement made in consideration of marriage. price. chattels or things in action. thereof. (1347.Sale of at least Php 500. The intention of the parties relative to the principal object of the contract cannot be ascertained. (1378) 5. or the contract itself is prohibited or declared void by law. The object is outside the commerce of men. The cause. of the agreement cannot be received without the writing. INEXISTENT CONTRACTS Those where one or some or all of the requisites essential for the validity of a contract are absolutely lacking. It contemplates an impossible service. morals. other than a mutual promise to marry. object or purpose is contrary to law. Those expressly prohibited or declared void by law.OBLIGATIONS & CONTRACTS Grounds for Unenforceable Contracts (1403) 1. VOID CONTRACTS Those where all the requisites of a contract are present but the cause. or the evidences. to the presentation of parole evidence in court. or a secondary evidence of its contents: . also estoppel sets in by accepting performance. or miscarriage of another. or by his agent.An agreement that by its terms is not to be performed within a year from the making thereof (executory contracts) . at the time of the sale. the defect of unenforceability is cured 2. par. or for the sale of real property or of an interest therein. The maxim is “no contract at all”.Propter nuptias . Grounds (Art. terms of sale. The cause or object did not exist at the time of the transaction. or who has acted beyond his powers. unless the buyer accept and receive part of such goods and chattels. good customs.An agreement for the sale of goods. Those which do not comply with the Statute of Frauds 3. evidence. *The contact or agreement under the Statute of Frauds require that the same be evidenced by some note. it is a sufficient memorandum. It is absolutely simulated or fictitious. the said contract shall be unenforceable. . Those contracts in which both parties are incapable of giving consent. or some of them. morals. 1) 3. object or purpose is contrary to law. public order or public policy. or some note or memorandum. it takes it out of unenforceable contracts. subscribed by the party charged or by his CIVIL LAW agent.1409) Void Contracts 1. memorandum or writing. unless partial compliance / Auction entry in sales book sufficient . 3) Inexistent Contracts 6. 3. names of the purchasers and person on whose account the sale is made. good customs. Curing Unenforceable Contracts 1. . be in writing. therefore. and subscribed by the party charged. STATUTE OF FRAUDS Those that do not comply with the Statute of Frauds as set forth in this number. Failure of defendant to object in time. otherwise. . of the amount and kind of property sold. Acceptance of benefits under the contract. the defect is waived Chapter IX: Void & Inexistent Contracts These are contracts which have absolutely no force and effect and are inexistent from the beginning. In the following cases an agreement hereafter made shall be unenforceable by action. (1347. but when a sale is made by auction and entry is made by the auctioneer in his sales book. . default. (1318) 100% UP LAW UP BAROPS 2008 Page 163 of 325 . par.An agreement of the leasing for a longer period than one year.A special promise to answer for the debt. 1352) 2. (1348) 4. If there is performance in either part and there is acceptance of performance. of such things in action or pay at the time some part of the purchase money. at a price not less than five hundred pesos. (1346) 7. public order or public policy. unless the same. Those contracts which are entered into in the name of another by one without or acting in excess of authority.

(1419) 9. If performed. Usury law Consumer protection – if price of commodity is determined by statute. Contract constitute criminal offense Contract does not constitute criminal offense but is illegal or unlawful per se  No action for specific performance  No action for restitution on either side. Imprescriptible 7. (1418) 8. Payment of usurious interest (1413) 3. It produces no effect whatsoever either against or in favor of anyone 2. or before any damage has been caused to a 3rd person (1415) 4. A judicial declaration to that effect is merely a declaration 3. the law refuses them every remedy and leaves tehm where they are. One who lost in gambling because of fraudulent schemes practiced on him is allowed to recover losses even if the gambling is prohibited. Contract is for an illegal purpose 2. If the purpose has not yet been accomplished and if the damage has not been cause to any 3rd person 2.  No confiscation will be confiscated in favor of the governement CIVIL LAW Exception 1. Agreement or contract which is not illegal in itself and the prohibition is designed for the protection of the plaintiff (1416) 6.OBLIGATIONS & CONTRACTS Characteristics 1. where the party who paid or delivered repudiates the contract before the purpose has been accomplished. restoration is in order. 4. Contract must be repudiated by any of the parties before purpose is accomplished or damage is caused to 3rd parties 3. before it takes effect – party w/c is remorseful prevents it Where Laws Are Issued To Protect Certain Sectors 1. The right to set up the defense of nullity cannot be waived 6. Contract whereby a laborer accepts a wage lower than the minimum wage fixed by law.  Both shall be prosecuted  Thing/price to be confiscated in favor of government Only One Party is guilty  No action for specific performance  Innocent party is entitled to restitution  Guilty party is not entitled to restitution  Guilty party will be prosecuted  Instrument of crime 100% UP LAW  No action for specific performance  Innocent party is entitled to restitution  Guilty party is not entitled to restitution UP BAROPS 2008 Page 164 of 325 . There is no action for annulment necessary as such is ipso jure. any The parties are in pari delicto  No action for specific performance  No action for restitution on either side. ratified or cured. Payment of money or delivery of property made by an incapacitated person (1416) 5. General Rule When the defect of a void contract consists in the illegality of the cause or object of the contract and both of the parties are at fault or in pari delicto. Payment of money or delivery of property for an illegal purpose. (315. Payment of any amount in excess of the maximum price of any article or commodity fixed by law or regulation by competent authority (1417) 7. It cannot be confirmed. The court believes that public interest will be served by allowing recovery (discretionary upon the court ) – based on remorse. Labor 3. Anyone may invoke the nullity of the contract whenever its juridical effects are asserted against him Illegal Contracts Kinds of Illegal Contracts In Pari Delicto Doctrine *Only applicable to void contracts and not to inexistent contracts. RPC) Requisites of illegal contracts 1. Contract whereby a laborer undertakes to work longer than the maximum number of hours fixed by law. illegality is accomplished when parties entered into contract. except if pari delicto will apply 5. Consumer protection 2.

paridelicto does not apply. pari delicto cannot apply because an incapacitated person does not know what he is entering into. property delivered by incapacitated person in the interest of justice.OBLIGATIONS & CONTRACTS person paying an amount in excess of the maximum price allowed may recover such excess Labor – if the law sets the minimum wage for laborers. except: a. any laborer who agreed to receive less may still be entitled to recover the deficiency.  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. if law set max working hours and laborer who undertakes to work longer may demand additional compensation 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. The unjust enrichment principle must apply as to the recovery of the price paid. However. and the improvements made by the other party. incapacitated – not obliged to return what he gave but may recover what he has given b. since the prohibition was only for protection and security of Filipino ownership of land. 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 CIVIL LAW Philippine Banking Corp. 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. applying article 1416. recovery does not extend to products or fruits of the land. courts may allow recovery of money. v. 100% UP LAW UP BAROPS 2008 Page 165 of 325 . However. Lui She A virtual sale through a very long-term lease of 50 years was deemed void for its contravention to the prohibition on foreign ownership.

OBLIGATIONS & CONTRACTS TITLE III: NATURAL OBLIGATIONS Article 1423. fulfills obligation. the other party rightfully relies and acts on such belief d. (1425) 3. (1439) Types of Estoppel 1. for an unreasonable and unexplainable length of time. for under the law. could or should have been done earlier. they do not have the necessary efficacy to give rise to an action. by acts – representations admissions or 2. warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. returns whole thing or price he has received (Relate to Art. Some natural obligations are set forth in the following articles. by acceptance of benefits c. they authorize the retention of what has been delivered or rendered by reason thereof. other party would be prejudiced if the guilty party is allowed to deny facts first represented by him Types: a. Heirs paying decedent’s debt beyond what he has received (1429) b. 1427) a. By Record – cannot question executive and legislative records 4. The following are natural obligations 1. but after voluntary They are real obligations to which the law denies an action. it is negligence or omission to assert a right within a reasonable time. unemancipated minors cannot give consent to contracts) 4. Prescribed action of obligee. no right to recover. By Judgment – no denial of adjudicated facts by competent court 5. Succession a. 1327. but which the debtor may perform voluntarily. The will is voided by lack of formalities. by silence b. Obligations are civil or natural. no positive law giving right of action 2. not being based on positive law but on equity and natural law. and presupposes a prestation. with intent or culpable negligence c. Voluntary performance after failed action to enforce contract (Art. By Deed . They are patrimonial.cannot question admission in document or deeds 3. General Rule Effective only between parties thereto or successors in interest. By Conduct (in pais) – intentional and culpable negligence Elements a. acts inducing another to believe certain facts to exist b. Annulled contract of minor without consent of parents. and good faith consummation and spending of what has been delivered (Relate to Art. or demand return of what has been fulfilled fulfillment by the obligor. by exercising due diligence. (1426. The binding tie of these obligations is in the conscience of man. Civil obligations give a right of action to compel their performance. Features 1. voluntary fulfillment of obligation by obligor 4. (1424) 2. Natural obligations. authorize retention of what has been fulfilled. cannot be denied or disproved. “only insofar benefited”) b. Prescribed action of 3rd person payor who pays without knowledge and consent of debtor against the latter. By Laches Failure or neglect. 1241. 1428) 5. no right of action to enforce performance 3. intestate heir pays a legacy (1430) CIVIL LAW TITLE IV: ESTOPPEL It is the admission or representation conclusive upon person making such. Distinguishing Laches from Prescription Laches Prescription Concerned with Concerned with the effect of delay the fact of delay Question of Question or inequity of matter of time permitting the claim to be enforced Not statutory Statutory Applies in equity Applies at law Not based on a Based on a fixed fixed time time 2008 Page 166 of 325 100% UP LAW UP BAROPS . do not grant a right of action to enforce their performance. to do that which. 5.

intent by party precluded that the other should act upon the facts as misrepresented.OBLIGATIONS & CONTRACTS Elements 1. 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. 3. 2. Seller or grantor who is not owner at time of sale but he later acquires ownership of such (1434) 2. 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. and 4. (In pledge) (1438) CIVIL LAW *** 100% UP LAW UP BAROPS 2008 Page 167 of 325 . Seller represents owner in a sale. party defrauded must have acted in accordance with the misrepresentation. Conduct on the part of the defendant. Delay in asserting the complainant’s rights. the complainant having knowledge or notice. party misled must have been unaware of the true facts. of the defendant’s conduct and having been afforded the opportunity to institute a suit 3. 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. 2. fraudulent representation or wrongful concealment of facts known to the party estopped. giving rise to the situation of which complaint is made and for which the complaint seeks a remedy. cannot claim ownership as defense against pledge. or of one under whom he claims. Owner allowing another to feign ownership.

V. VI. IX. IV. II. VII. Contract of Sale Elements of a Valid Sale Transfer of Ownership Risk of Loss Document of Title Obligations of Seller and Buyer Remedies of Seller and Buyer Double Sale Extinguishment of Sale Assignment Special Laws 169 172 175 176 176 178 182 189 190 192 193 100% UP LAW UP BAROPS 2008 Page 168 of 325 . XI. X.SALES CIVIL LAW Sales TABLE OF CONTENTS I. III. VIII.

Consentmeeting of offer and acceptance on the thing and the price 2. Yapdiangco. and the other to pay therefore a price certain in money or its equivalent.the fulfillment of the suspensive condition renders the sale absolute and affects the seller’s title thereto such that if there was previous delivery of the property. RULE: NO form required – may be o Written o Oral o Partly written. (Aznar v. the SC makes finer distinctions between a conditional sale and a contract to sell in that: o In a contract to sell. Bilateral.perfected by mere consent 3. 100% UP LAW UP BAROPS . Object. NOT to contracts either partially or totally performed. FORM (Art. will not automatically transfer ownership to the buyer although the property may have been previously delivered to him. Arts 14581637. 2005) E. A contract of sale may be absolute or conditional. CA.1358(1)) 3.for the buyer: transfer of ownership and delivery of thing B. Sale not to be performed within 1 year b. Real obligation (‘to give’) a determinate thing is created 4. 1483) GEN. CONTRACT OF SALE 1 CIVIL LAW normally the full payment of the purchase price. Under Statute of Frauds (contract or some memorandum thereof must be written and subscribed.fulfillment predetermined in advance D. but is NOT the MODE of transferring ownership. Cause . the seller’s ownership or title to the property is automatically transferred to the buyer (see Ursal v.with exchange of equivalent values 6. contract unenforceable UNLESS ratified by failure to object to oral evidence OR acceptance of benefits under the contract) (Art1403(2)): a. 1458. STAGES: 1. Book 4. otherwise. Estate of Maloto. When certain form required by other law a. Sale of personal property at a price of P500 up. Breach of the condition prevents the obligation to convey title from acquiring obligatory force. Perfection – upon the concurrence of the essential elements of the sale.determinate thing 3. 1994) C. 1965) A. CA. CA. 2008 Page 169 of 325 1 Art. 529. Sale of real property or an interest therein The Statute of Frauds applies only to executory contracts. Commutative. ABSOLUTE sale 2. partly oral o Inferred from the conduct of the parties Why: because sale is consensual (Art. Transfer of large cattle must be registered with the municipal treasurer to be valid (Sec. Onerous. Nominate 2. 1475) EXCEPTIONS: 1.begins when the parties perform their respective undertakings under the contract of sale. Negotiation . KINDS: (Art. 1994) o A contract of sale only constitutes a TITLE or right to the transfer of ownership.for the seller: payment of price . Principal 7. (Iñigo v. which is the meeting of the minds of the parties as to the object of the contract and upon the price 3.from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected 2. Consummation .SALES SALES (Title VI. one of the parties obligates himself to transfer the ownership of and to deliver a determinate thing. which is the full payment of the purchase price.the fulfillment of the suspensive condition. 1318) 1. 1967) 2. 1458(2)) 1. ESSENTIAL REQUISITES: (Art. CONDITIONAL sale (“Contract to sell”) o Ownership of the thing sold is retained until the fulfillment of a positive suspensive condition. c. Consensual. Transmission of real rights over immovable property (must appear in public document to bind third parties) (Art. (Ang Yu Asuncion v.  In some cases. CHARACTERISTICS: 1. o In a conditional sale.with reciprocal obligations 5. culminating in the extinguishment thereof (Ang Yu Asuncion v. Civil Code) I. By the contract of sale.

CA. 2008 Page 170 of 325 BAROPS . a. Specific Performance + damages (Arts.900. 1191) 3. hence. Damages (Art.(Ang Yu Asuncion v. the authority of the agent must be written. 1479(1)2) o LIKE sale: there must be a . Rescission + damages (Art. aside from the consideration for the offer It must be supported by a consideration distinct from the price.e. The consideration may be in money OR in kind (things or undertakings) 3. specific performance does not lie because no contract of sale was perfected..determinate thing to be sold .it gives a right to buy or to sell. (Soriano v. a contract of sale is perfected. except when the option is founded upon a consideration. sale is void (Art. An option contract must be supported by a separate consideration. IF the offer is accepted (i. Limson v. 2. 1170) G. otherwise. Option to buy or to sell (accepted unilateral promise to buy or to sell) (1479(2)3) o o Example: “if the financial condition of the mortgagees will permit. 1918)  CIVIL LAW Money advanced but eventually utilized as rental payments is NOT a separate consideration for an option to buy in a lease contract.determinate thing to be sold .1874) F. but is a mere offer of a contract of sale.example: an undertaking on the part of the optionee (lessee) to sell the improvements made on the property if the option to buy is not exercised Arts. 3 An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. Bilateral promise to buy and sell (Art. 5 Sanchez v. Ang Yu Asuncion v. 2 - - - o o o o Remedies in Case of Breach Option with Withdrawal Damages for distinct of offer breach of consideration BEFORE option acceptance contract AFTER Specific acceptance performance of offer of sales contract Option w/o Withdrawal Damages 4 A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. the option is not binding. In sale of land through agent. RULES re SEPARATE CONSIDERATION: (Bible Baptist Church v. as something paid or promised. Diaz. REMEDIES: 1. the offer may be withdrawn at any time before acceptance by communicating such withdrawal. CA (2001). 1191 and 1165(1)) 2. these must be things or undertakings of value. Sanchez v. Rigos (1972). hence the remedy of specific performance lies. 100% UP LAW UP When the offerer has allowed the offeree a certain period to accept. 1972) IF the offer is withdrawn BEFORE acceptance. b.” (Soriano v.price certain to be paid UNLIKE sale: the promise to buy is the consideration for the promise to sell and vice versa (de la Cavada v. said consideration must be clearly specified as such in the option contract or clause.SALES Revised Administrative Code of 1917) b. IF the option is NOT supported by consideration distinct from the price: it is NOT binding as a contract of option. but imposes no obligation on the part of the option-holder. 2004) 1. .price certain to be paid UNLIKE sale: it is unilateral. 1962. 13244 and 1479(2). they may purchase said land absolutely on any date within the 2 year term of this mortgage at the agreed price of P3. 1962) LIKE sale: there must be a . If the consideration is not monetary. option is exercised) BEFORE withdrawal. CA. CA (1994) . as interpreted by the Supreme Court5: IF the option is supported by consideration distinct from the price: it is both a binding contract of option and an offer of a contract of sale. Bautista. Bautista. 1994) o o Manresa: has the same effect as a contract of sale since parties can reciprocally demand fulfillment 2. VIS-A-VIS: 1. in view of the onerous nature of the contract of option. Rigos.

reversed Ang Yu Asuncion where it was held that the remedy in case of a sale violative of a right of first refusal is limited to damages. Only after the optionee fails to exercise its right of first priority under the same terms and within the period contemplated. Habituality test: WON the job requires the use of extraordinary or additional equipment.it is unilateral UNLIKE option: . CA. the right of first refusal is an integral and indivisible part of the contract of lease and is inseparable from the whole contract. 2005)8 H.rescission and specific performance available in case of breach o o o cause and Prevailing doctrine: A sale made in violation of a right of first refusal is valid but rescissible under Art 1381(3). again under the same terms as offered to the optionee. CIR. v. Right of first refusal o Example: “That should the LESSOR decide to sell the leased premises.1467) CONTRACT FOR A PIECE OF WORK Goods manufactured Goods or procured in the manufactured ordinary course of specially for the business (WON on customer upon his hand) special order For the general Not for the market general market Essence is the object Essence is skill Tests under jurisprudence: 1.The grantee has no right to buy or sell. 1994) . Fausto. the LESSEE shall have the priority right to purchase the same. Agency to Sell (Art. Fausto. DISTINGUISHED FROM OTHER ACTS/CONTRACTS 1. WON the thing is one which would have never existed but for the order of the party desiring to acquire it. reverting to the doctrine in Guzman. CC (no damages for breach of option contract) Specific Performance of sales contract CIVIL LAW subject of an action for specific performance (Tanay Recreation Center and Development Corp. Eng.1467) O Look at essential clausessubject matter SALE Buyer pays price (WON he sells the thing to a 3rd person) AFTER acceptance of offer 3. v. 2005) LIKE sale: there must be a determinate thing to be sold UNLIKE sale: . (Equatorial Realty Development.&Supply. or involves services not generally performed (Celestino v.” (Tanay Recreation Center and Development Corp. Contract for a piece of work (Art.. look at manifest intention of the 8 Equatorial. or one which would have existed and have been the subject of sale to some other person even f the order had not been given (CIR v. CA. 2008 Page 171 of 325 100% UP LAW UP BAROPS . 2001)6 . CA. v.SALES Distinct consideration of offer BEFORE acceptance ONLY IF there is an abuse of right under Art. 1956) 2. 1997) 6 Buyer becomes the owner Buyer can make profit if he resells AGENCY TO SELL Agent does not pay price. Mayfair Theater Inc.Separate consideration NOT required7 . Inc. 19.price and other terms yet to be agreed upon (Ang Yu Asuncion v. Barter SALE BARTER Price in money or Consideration is its equivalent another thing If the consideration is partly in money and partly in another thing: 1. (Parañaque Kings Enterprises. could the owner validly offer to sell the property to a third person. only a right to the first offer should the grantor decide to sell (Polytechnic University of the Philippines v. and may be the The basis of the right of first refusal must be the current offer to sell of the seller or offer to buy of any prospective buyer. Inc. but only delivers to the principal the price he obtains from the sale to a third person Agent does not become the owner Agent cannot make secret profit in selling When contained in a lease contract. 1975) SALE 2. The consideration for the lease includes the consideration for the right of first refusal and is built into the reciprocal obligations of the parties. v. 1996) 7 3.CC.

sale of a mere hope or expectancy: subject to the CONDITION that the thing will come into existence . 2.governed by title on sales in matters not specifically provided for in title on barter 3.SALES parties to characterize the transaction. 1641) . raised. 2. 1460) Example: specific mention of some lots plus the phrase “lots needed for the city hall site.e.1381(4)) 3.a contract where one of the parties binds himself to give one thing in consideration of the other’s promise to give another thing (Art. e. 1458) 2. Certain (Art.1463) 2.e. True (Art. according to the Arellano development plan of the Municipality” (Melliza v. morals. 1409) 1. 1461 & 1462) A thing 1. Innominate contracts most analogous to sale (Art. Outside the commerce of men. public order.t or any of its units. Barter (Art. Contrary to law. 1465) .a mode of payment where property is alienated to the creditor in satisfaction of a debt in money 2. Things subject to a resolutory condition (Art. or public policy. dangerous drugs.within 5 years from issuance of patent or grant. o POSSIBLE when it is has a potential existence. Physically segregated. In money or its equivalent (Art. Dation (Art. 3. (Art. land acquired by homestead or free patent. ELEMENTS OF A VALID SALE A.1638) . except if sale in favor of the Gov. or acquired by the seller after the perfection of sale): VALID . Lease of things SALE Ownership transferred 6.1347(2)) but heir may sell his hereditary rights (Art. Real (Art 1471) 4. Withdraw from contract OR 2. .1245) . Licit (1459) 3.1088) Rules in case of loss at perfection (Baviera: loss occurred before the contract was entered into without the knowledge of both parties) (Arts. THING sold must be: 1.sale of a vain hope or expectancy: VOID  Future inheritance cannot be the object of sale (Art. Things under litigation. sale rescissible (Art. Donation SALE onerous DONATION gratuitous LEASE OF THING Ownership not transferred Other contracts governed by the law of sales: 1. or Capable of being made determinate without the necessity of a new or further agreement between the parties. 1968) A thing is LICIT if it is NOT: (Art. Demand remaining part and pay proportional price 5.sale of “future goods” (goods to be manufactured. . Determinate (Art. BUT if without the knowledge and approval of the litigants or of the court. 1353) 2008 Page 172 of 325 BAROPS . 1245) SALE No pre-existing debt Creates obligation DATION w/ pre-existing debt Extinguishes obligation (mode of payment) CIVIL LAW avenues and parks. if no manifest intention: o barter: if value of thing > amt of money or its equivalent o sale: if value of thing < amt of money or its equivalent 4. 1307)  Total loss Partial loss OR material deterioration in whole or in part II.g. Dation (Art. 1493-1495): contract without any effect (no object) Buyer may: 1. City of Iloilo. is DETERMINATE when it is: Particularly designated. Actual or Possible (Arts. 1458) 3. braches or institutions (CA 141) 2. things acquired under a legal or conventional right of redemption B. good customs.g. 100% UP LAW UP The following may be objects of sale: 1.1458) 2.g. property of public dominion such as a river (Martinez v. PRICE must be: 1. CA. 1974) A thing is o ACTUAL when it is existing. Undivided interest in a thing (Art.

or undue influence (Arts. 1353) . not false. letter of credit (Baviera) Price must be REAL.BUT if the thing or part thereof has been delivered to and appropriated by the buyer.1471) Price must be TRUE. or a certain amount above or below such price (Art.SC says the contract is not void but is a relatively simulated contract.g.sale INEFFICACIOUS . or a particular exchange or market. mistake. Insane Except: during lucid interval (Art. Hypnotized person (Art.g.34. CA.Manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price (Toyota Shaw v. Absolute Incapacity: (MIDDD-HI-C) 1. the ward or absentee represented suffers lesion by more than ¼ of the value of the thing sold.If 3rd person unable or unwilling to fix price: sale inefficacious UNLESS the parties subsequently agree upon the price .If 3rd person prevented from fixing price by fault of the buyer or seller: party not in fault may avail of remedies against the other o If price CANNOT be determined: . Drunk person 7. 1473) 2. b. Sale is rescissible if: a. 1995) o The buyer and the seller must have CAPACITY to enter into a contract of sale. upon the theory that the lesser the price. To be fixed by a third person (Art. he must pay a reasonable price therefor (Art. except that: 1. BUT such does not follow when the law gives the owner the right to redeem as when a sale is made at public auction. Fixed by agreement of the parties (Art. a transaction may be invalidated on the ground of inadequacy of price. Lim.e. or when such inadequacy shocks one’s conscience as to justify the courts to interfere. it is presumed to be an equitable mortgage (Art1602(1)) 3. o If price is simulated: .1328) 8. RPC) 6.sale void unless proved to be founded on another true and lawful price (Art. not simulated. 2004) 100% UP LAW UP BAROPS 2008 Page 173 of 325 . 1472) 4. In an ordinary sale. It may indicate that the parties intended a donation or some other act or contract (Art1470) e. Mapalo.1470 & 1355) 2. 10% below invoice price 3.1381(1)(2) & 1386) 4. price . CONSENT perfects a contract of sale. 1966) o If false price stated .BUT the act may be shown to have been really a donation or some other act or contract (Art.SALES Price is CERTAIN when it is: 1. . 1469) . 2007) C. the parties are bound by their real agreement.1328) 3. Minors 2. when the price of a sale with right to repurchase is unusually inadequate. Those judicially declared “Incompetent” a) prodigals b) hospitalized lepers Price must be in o MONEY or o its EQUIVALENT .If 3rd person acts in BF or by mistake: courts may fix price .g. Demented persons 4.sale is vOID . The price which the thing sold would have on a definite day. It may indicate a defect in the consent such as fraud.e. AND c. PR Builders. Persons suffering civil interdiction (Art. 1469) . Certain with reference to another thing certain (Art. 1327) 5. Consent: meeting of offer and acceptance on the 1. o The price is false when the real consideration is not the same as that stated in the contract (Mapalo v. (Hulst v. (Balite v. for reason of equity.1474) CIVIL LAW GROSS INADEQUACY of price does not affect a contract of sale. the sale is entered into by a guardian or by a representative of an absentee. Deaf-mutes who do not know how to write (Art. thing sold 2. the sale is not approved by the court (Arts. o Price is real when there is an intention (on the part of the buyer) to pay and an expectation on the part of the seller) to receive it. the easier it is for the owner to effect redemption. Inc. hence.

judges. prosecuting attorneys.SALES c) persons not being of unsound mind. without outside aid. 1973) EARNEST MONEY v.Does NOT apply to sale of hereditary right bec. clothing.What: property of ward 3. PNB.1489) o CIVIL LAW BUT sale to guardians. 2000) o The ff. unlike sale to public or judicial officers and employees and lawyers which cannot be so “ratified” because it is contrary to public policy (Rubias v. Rule 92.What: property of estate administered . experts who. medical attendance. other officers and employees connected with the administration of justice) .g. disease. but by reason of age.What: property or rights in litigation or levied upon an execution before the court within their territorial jurisdiction 7. Constitution) o Status of sale: VOID (Art. agents. he must pay a reasonable price therefor. Undue influence Payment of EARNEST MONEY is considered as proof of the perfection of sale.What: property of principal . 1330 &1390(2)) o Vices of consent: 1. 2006).What: property of spouse . but may even forfeit it to pay the depending on the terms of balance the option BAROPS 2008 Page 174 of 325 .Except: principal consents 4.1326) The ACCEPTANCE must be ABSOLUTE. 1319) as to the object and the price (Villanueva v. executors/administrators can be “ratified” by the execution of a new contract. Batiller. in any manner. 1482) o BUT mere payment of earnest money is not sufficient proof of a perfected sale when some essential element (e.1325) 2. take care of themselves and manage their property.k. Intimidation 5.g. Judicial officers and employees (justices. Executor/Administrator .What: property of State.a. Fraud 2. agreement on terms of payment) is admittedly lacking (Velasco v. 1491) 8. 1973) o Relative Incapacity to buy (HW-PAGE-JLO) 1. the buyer is not required to buyer is bound buy. GOCC. (Art.12.ROC) o Status of sale: . 1904) 5. transportation) are sold and delivered to incapacitated person. court clerks. CA. OPTION MONEY (Limson v. are not definite offers but mere invitations to make an offer. 2001) given as a distinct part of purchase consideration for an option price contract given only when applies to a sale not yet there is already perfected a sale when given.Applies to judges and gov’t. Mistake 3. imperfect promise or policitacion (Litonjua v.1390(1)) . Advertisements for bidders (Art. Husband/Wife .What: property and rights object of any litigation handled by them (Art. Public officers and employees . o Offer a.Prohibition applies to common-law spouses (Matabuena v. Agent . wrt private land in the Philippines (Art.1403(3)) BUT when necessaries (those indispensable for sustenance. cannot. Business advertisements of things for sale (Art. education.2. unless the contrary appears: 1. Lawyers . take part in the sale 6. dwelling. Others specially disqualified by law . L&R Corp. weak mind. making the sale valid from the time the new contract is executed.Where 1 party incapacitated: VOIDABLE (Art. (Arts. (Art..e. and other similar causes. (Art. Violence 4. otherwise sale is VOIDABLE. institution administered . aliens. the would-bewhen given. becoming thereby an easy prey for deceit and exploitation (Sec. it is not administered by the executor/administrator (Naval v Enriquez. Cervantes.Except: when property regime is separation of property (marriage settlement or judicial order) . 1319) o Qualified acceptance= counter-offer Consent must not be VITIATED. sec.7. Guardian . CA. 1971) 2.Where both parties incapacitates: UNENFORCEABLE (Art. 1409(7)) 100% UP LAW UP The OFFER must be CERTAIN (Art.

the buyer merely steps into the shoes of the judgment debtor (Rule 39. there must be: 1. . 559. de Sarmiento v. Right to transfer ownership at the time of delivery (Art. sec.a good title means an indefeasible title even as against the original owner.merchant’ store.market (Art. 33. 1965) Sale without delivery gives the buyer no rights over the property except those of a creditor (Kuenzle & Streiff v. Constructive Delivery (Arts. v. If delivery is symbolic. Lesaca. a buyer in good faith acquires a good title to the goods. or . 1909) Delivery may be actual or constructive o o 1. 1505) d. Yapdiangco. AND . When goods are purchased in a . authorized by owner 2. 1498-1501) Kind 1. the owner must reimburse the price paid therefor Exceptions: a.Gen rule: buyer need not go beyond the Torrens title Exception: when he has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make further inquiry  No factors’ acts or recording laws (referred to in Art1505(1)) in the Philippines (Baviera) B. CA. Yapdiangco. When the seller has a voidable title which has not been avoided at the time of the sale. he may recover it even from a buyer in good faith (Aznar v. 1496) 3.who pays a full and fair price therefor at the time of the purchase or before receiving such notice.1506) 100% UP LAW UP 2. 1960) CIVIL LAW BUYER in GOOD FAITH is one who buys property from another . incorporeal property personal property 2. Sale under court order (Art.fair. Jimenez.1459) a. When the seller voluntarily delivers the thing sold to the buyer but is swindled. the buyer who practiced fraud acquires a voidable title which. 1965) . . 559: When the owner has lost or has been unlawfully deprived of a movable.the seller is not “unlawfully deprived” of the thing under Art. (Vda. TRANSFER OF OWNERSHIP A perfected contract of sale per se does NOT transfer ownership over the thing sold.limitation: if buyer in good faith acquired it in a public sale. Actual delivery o placing the thing sold in the control and possession of the buyer (Art. control of the seller over the thing sold that its material delivery could have been made. Traditio longa manu personal property BAROPS 2008 Page 175 of 325 . Estoppel: when the owner is by his conduct precluded from denying the seller’s authority to sell (Art. 1957. confers a good title on a subsequent buyer in good faith and for value .without notice that some other person has a right to or interest in it. owner (Art. Edca v. Intention to transfer ownership (Norkis Distributors Inc. DELIVERY o Ownership over the thing sold is transferred by DELIVERY or tradition (Aznar v. (Art.SALES III. 1505) o But in execution sale. Delivery (Art. ROC) c. if not avoided at the time of sale. When the seller has NO TITLE Gen. Santos. Symbolic How Made o By execution of public instrumen t evidencin g sale except: if contrary appears or can be clearly inferred o delivery of keys where stored/ke pt By mere agreement of the buyer Applies to real or personal property. (Tagatac v.1497) 2. For ownership to transfer. Macke & Chandler. Registered land bought in good faith . Rule: One cannot give what one does not have (Nemo dat quod non habet) o Art. 1990) o o A. 1505) b. 428) b. 1991) 4. RIGHT TO TRANSFER OWNERSHIP 1.

The International Corporate Bank. GEN RULE: owner bears the risk of loss (res perit domino:the thing is lost to the owner) B.1502 (2)) cf.bill of lading .1503(2)) 2. OR o retains the goods without giving notice of rejection within the time fixed or a 9 V.warehouse receipt It may be negotiable (bearer or order) or nonnegotiable.1434) 7.SALES Kind How Made and seller if possession cannot be transferred at the time of the sale By mere agreement of the buyer and seller if the buyer already had possession for any other reason Seller remains in possession of the property in a different capacity e.buyer bears the risk from the time of delivery 3. Quasitradition incorporeal property D. real or personal property A. The presence of lessees or illegal occupants who do not have claims of ownership does not prevent symbolic delivery (Power Commercial and Industrial Corp. INTENTION TO TRANSFER OWNERSHIP Ownership is not transferred despite delivery in the following cases: 1. CA. Inc. if no time has been fixed. RISK OF LOSS Transfer of ownership is relevant in determining who bears the risk of loss. 1502 (1)) 3. as o In conditional sale o When under the bill of lading. EXCEPTIONS: (Art. Ownership is reserved. v. NOT possession. as lessee Placing of the titles of ownership in the possession of the buyer or allowing the buyer to use his rights When a nonowner who sells a thing later acquires title thereto delivery to a carrier for transmission to the buyer Applies to - CIVIL LAW reasonable time. or to the order of the seller or his agent (Art. the goods are deliverable to the seller or his agent. in which case this legal fiction must yield to reality. Sabio v. Delay in actual delivery through the fault of the seller or buyer. Traditio brevi manu personal property 4. 2001) IV. CONTROL o The efficacy of symbolic delivery can be prevented if the seller does not possess control over the thing sold.. Sale on approval (trial or satisfaction).1504) 1.party in fault bears the risk 6.quedan . 1997. o The key word is control. Delivery to a carrier9 goods C. 100% UP LAW UP BAROPS . or o authorizing or purporting to authorize the possessor of the document to transfer or receive goods represented by such document (Art. Tradition by operation of law (Art. 2008 Page 176 of 325 Discussed in detail under obligation of the seller to deliver. if no time has been fixed. Security title: goods delivered and ownership retained by the seller merely to secure payment. DOCUMENT OF TITLE Document of title is a document o used as proof of possession or control of the goods sold.g. Stipulation to the contrary 2. (Art. Traditio constitutum possessorium real or personal property 5. Sale on return where o ownership passes to the buyer upon delivery o BUT he may revest ownership in the seller by returning the goods within the time fixed or a reasonable time. where ownership transfers only when the buyer o signifies his approval or acceptance to the buyer or does any other act adopting the transaction. (Art.1636(1)) Examples: .

a notification to such bailee by the transferor or a subsequent buyer of a subsequent sale of the goods by the transferor (Art.surrendered to him or . if the buyer of the document paid value therefor in good faith and without notice (Art.impounded by the court (Art.be first surrendered or . 1519) 3. Right to transfer the title to the goods and merchantability or fitness for a particular purpose.1513(2)) freedom from the defenses of: . When document of title is negotiable: o It may be negotiated . and thereby to acquire the direct obligation of such bailee to hold possession of the goods for him accdg to the terms of the document prior to the notification of the bailee. 1515) o 3.1518) CIVIL LAW Rights under transfer 1.if order.conversion. right to notify the bailee issuing the document of the transfer thereof. by delivery .its negotiation enjoined o Bailee cannot be compelled to deliver up the actual possession of the goods until the document is .levy of attachment of execution upon the goods by the transferor’s creditor.loss . the title and right of the transferee may be defeated by . Rights under negotiation title to the goods of the one who negotiated and of the original consignee (Art. No knowledge of fact which would impair the validity or worth of the document 4.theft . right to compel the transferee to indorse it. 100% UP LAW UP BAROPS 2008 Page 177 of 325 .mistake .1519) IMPLIED WARRANTIES of indorser or transferor (unless a contrary intention appears): 1. subject to any agreement with the latter 2.1511) o Goods in the possession of the bailee cannot be attached or levied under an execution unless the document .SALES o Words like “not negotiable” or “nonnegotiable” do not affect negotiability 1.1517) 2. Genuineness of document 2. If the document is negotiable. title to the goods as against the transferor.if bearer. unless a contrary intention appears o negotiation takes effect from actual indorsement (Art. Legal right to negotiate or transfer 3.1513(1)) direct obligation of the bailee issuing the document to hold possession of the goods for him according to the terms of the document as fully as if such bailee had contracted directly with him (Art.1516) o The indorser does NOT warrant the fulfillment by the bailee issuing the document or previous indorsers of their respective obligations (Art. whenever such warranties would have been implied had the contract been transfer the goods without a document (Art. by indorsement  indorsement of a non-negotiable document gives the transferee no additional right (Art. or .breach of duty .accident .

1521) 2008 Page 178 of 325 1. he does not does not furnish the seller the guaranties or securities he promised. Delivery o o Recall: kinds of delivery Unless otherwise agreed. to Art. d. (Power Commercial and Industrial Corp. UNLESS otherwise agreed. . .the facilities available for transportation and the distance the goods must be carried. such as: . Ltd. 2001) The seller is NOT bound to deliver if: 1. he must send them w/in a reasonable time. he violates any undertaking. the buyer loses the right to make use of the term.SALES VI. Where the goods at the time of sale are possessed by a 3rd person. 6.the purpose for which they are intended. sale of specific goods which parties knew to be in some other place at the time of salethat place is the place of delivery 3. in consideration of which the seller agreed to the period. 1495) o Fruits (Arts. 5.1198) o Rules wrt delivery of goods (tangibles) 1. OBLIGATIONS OF THE SELLER: (WPD) 1. e. 1997.1163) 2.UNLESS another standard of care required is required by law or stipulation Liability for fortuitous event: 1. CA. Demand or tender of delivery must be made at a reasonable hour. he becomes insolvent UNLESS he gives a guaranty or security for the debt. 1480 in rel. the buyer has not paid him the price or no period for payment has been fixed in the contract (Art. c. The International Corporate Bank. Whether it is for the buyer to take possession of the goods or for the seller to send them depends on the contract between the parties. Deliver o Thing sold (Art. when symbolic delivery has been made. Preserve (take care of) the thing sold until delivery (Art. otherwise it may be treated as ineffectual. (Art. RECIPROCAL OBLIGATIONS OF THE SELLER AND THE BUYER A. he attempts to abscond.the character of the goods. 1538 in rel.the usual course of business in the particular trade (Smith Bell & Co. b. Nature of obligation requires assumption of risk o 2.1495) CIVIL LAW a. 2. Preservation o Standard of care: diligence of a good father of a family . Matti. 1164 &1537) o Accessions and accessories (Arts.. he impairs the guaranties or securities or they disappear fortuitously UNLESS he immediately gives new ones equally satisfactory. place of delivery: seller’s place of business or residence if no place of business exceptions: a.  What constitutes a reasonable time is determined by the circumstances of the particular transaction.1524). Promised to deliver the same thing to 2 or more persons who do not have the same interest 2. 2.not entitled to indemnity but may remove the improvement if it can be done without damage tot the thing sold. v. to Arts.1166 &1537)  If the thing is improved by nature: improvement inures to the benefit of the buyer  If the thing is improved at the seller’s expense: seller only entitled to the right of a usufructuary. By Stipulation 3. as when: UP BAROPS o 100% UP LAW . V. (Art. the seller is not obliged to remove tenants to place the buyer in actual possession of the property as he has already complied with his obligation to transfer ownership of and deliver the thing sold. Sabio v. to Art.the ability of the seller to produce the goods if they are manufactured. By Law a. contract (express or implied) or usage of trade to the contrary b. 1922) 4. Where the seller is bound to send the goods but no time for sending is fixed.1536 in rel. Inc.. Expenses of and incidental to putting the goods in a deliverable state (state that the buyer would be bound to take delivery) must be borne by the seller. . no delivery unless and until such 3rd person acknowledges to the buyer that he holds the goods on the buyer’s behalf. (Art. and . 1198 & 579) 3. Warrant the thing sold (Art. Guilty of delay b.

1545) o c. Where the seller is authorized or required to send the goods. 1989) o express intimation that all taxes and duties had already been paid (Harrison Motors Corporation v.a. conversely.” and “F. condition on performance of obligation: . 1503) o The expenses for the execution and registration of the sale shall be borne by the seller. Machuca. Dealer’s talk (usual exaggerations of trade) o Ordinarily. under bill of lading. unless there is a contrary stipulation. and freight charges on the goods up to the place of destination F.Example of condition on performance of obligation: obligation of the buyer to pay the balance of the purchase price made subject to the condition that the seller first deliver the reconstituted title of the house and lot (Laforteza v.S. however the terms “F. goods deliverable to the seller or his agent or to the order of the seller of his agent (seller reserves ownership in the goods) .1487) 3.only right of possession reserved (Art. contrary intent . 1989) o The refusal of the seller to warrant his estimate should have admonished the purchaser that that estimate was put forth as a mere opinion. 2000)  An express warranty can be made by and also be binding on the seller even in the 2008 Page 179 of 325 100% UP LAW UP BAROPS .o. (Moles v.s (free alongside) Seller bears the expenses of transportation until he delivers the goods alongside a vessel at a named port CIVIL LAW with the contract OR may waive performance of the condition.” “c. the owner pays for the freight).f (cost.O. AND o It was relied upon by the buyer.” merely make rules of presumption which yield to proof of contrary intention. The natural tendency of such affirmation or promise is to induce the buyer to buy.1546)  Cf.i.. party whose obligation is subject to the condition may refuse to proceed Express Warranty (APIR) There is an EXPRESS warranty when: 1. 1917)  Examples of express warranty: o certification that the machine sold was in “A-1 condition” (Moles v. delivery to a carrier for transmission to the buyer is deemed delivery to the buyer Exceptions: a.the best indication of the intention of the parties as to the place of delivery is the manner and place of payment of the price. (free on board) Seller bears the expenses of transportation up to the f. insurance.. contrary stipulation b. insurance. under bill of lading. (Art. goods deliverable to the order of the buyer or his agent. (Art. what is specifically represented as true in said document cannot be considered as mere dealer's talk.b. and we will not now hold the seller to a liability equal to that which would have been created by a warranty. The buyer buys the thing relying thereon. 2000) If seller has promised that the condition should happen or be performed. F.O. and must take the consequences of his own imprudence. . . A man who relies upon an affirmation made by a person whose interest might so readily prompt him to exaggerate the value of his property does so at his peril. Sellner. but the seller or his agent retains possession of the BoL.  Affirmation of the value of the thing or statement of the seller’s opinion only is NOT a warranty unless: o The seller made it as an expert.e.a. The seller makes an affirmation of fact or any promise relating to the thing sold. (Songco v.B.SALES 7. what does not appear on the face of the written instrument should be regarded as dealer's or trader's talk.A specification in the contract relative to the payment of freight may indicate the intention of the parties as to the place of delivery (i. AND 3. IAC. Navarro. if one had been given.f.. 2.i. freight) Price quoted includes the costs of the goods. the buyer may treat the nonperformance of the condition as a breach of warranty.if condition not performed. (Art.1523 in rel. IAC.B. point c. to Art. Warranty o may be express or implied o cf.cf.

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sale of a secondhand article. (Moles v. IAC, 1989) Cf. fraud: in fraud, there must be an intention to deceive or mislead the other party to his prejudice (Philippine Manufacturing Co. v. Go Jucco, 1926)

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he would not have bought it or would have paid a lower price; b. The defect is not patent or visible; c. The buyer is not an expert who, by reason of his trade or profession, should have known the defect d. The seller is aware of the hidden fault or defect, OR even he is not aware thereof if there is no stipulation to the contrary (Arts.1561 &1566) Implied warranty as to Merchantable Quality and Fitness of Goods a. Merchantable Quality: 1) Where the goods are brought by description from a seller who deals in goods of that description (Art.1562(2)) 2) In a sale by sample, if the seller is a dealer in goods of that kind and the defect is not apparent on reasonable examination of the sample (Art.1566) b. Fitness for a particular purpose: Where the buyer expressly or impliedly makes known to the seller the particular purpose for which the goods are acquired AND it appears that the buyer relies on the seller’s skill or judgment (Art.1562(1)) Implied warranty against Redhibitory Defect in the Sale of Animals  Redhibitory defect- a hidden defect of animals of such nature that expert knowledge is not sufficient to discover it, even in case a professional inspection has been made  No warranty in case of: a. animals sold at fairs or public auctions b. livestock sold as condemned  The following sales are void: a. sale of animals suffering from contagious diseases b. sale of animals unfit for the purpose for which they are acquired as stated in the contract  Veterinarian liable if he fails to discover or disclose the hidden defect through ignorance or bad faith  Seller liable if animal dies within 3 days after its purchase due to a disease that existed at the time of sale.

Implied Warranty IMPLIED warranties (unless a contrary intention appears)10: (Art.1547) 1. Implied Warranty of Title 2. Implied Warranty against Encumbrance 3. Implied warranty against Hidden Defects Implied Warranty of Title o Seller’s right to sell at the time the ownership is to pass and the buyer’s peaceful and legal possession of the thing from that time o Does NOT apply to a sheriff, auctioneer, mortgagee, pledge, or other person professing to sell by virtue of authority in fact or law. o Requisites for breach of warranty against eviction: a. Buyer is deprived of the whole or a part of the thing sold; b. Eviction is by final judgment c. Final judgment based on  A right prior to the sale OR  An act imputable to the vendor d. Seller is summoned and made codefendant in the suit for eviction at the instance of the buyer. (Arts. 1548, 1558, Power Commercial and Industrial Corp. v. CA, 1997) Implied Warranty against Encumbrance o Requisites for breach: a. thing sold is an immovable b. burden or servitude encumbering the thing sold is  non-apparent  not mentioned in the agreement  of such nature that it must be presumed that the buyer would not have bought it had he been aware thereof  not recorded in the Registry of Property UNLESS there is an express warranty that the thing is free from all burdens and encumbrances (Art.1560) Implied warranty against Hidden Defects o Requisites for breach: a. The defect renders the thing sold unfit for the use for which it was intended OR diminishes its fitness for such use to such an extent that had the buyer been aware thereof,
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OTHER warranties 1. Warranty in sale of CONSUMER GOODS o Consumer goods- goods primarily for personal, family, household or agricultural purposes, which shall include but not
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These also apply in a contract of lease and a contract for a piece of work if the contractor agrees to produce the work from material furnished by him. (Arts. 1653 & 1714) 100% UP LAW UP

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limited to food, drugs, cosmetics, and devices (Sec.4(q), RA 749311) Kinds of express warranty: 1. “Full warranty”- if the written warranty meets the minimum standards 2. “Limited warranty- if the written warranty does not meet the minimum standards (Sec.6(c), RA7394) Minimum standard for warranties that the warrantor shall: 1. remedy such consumer product within a reasonable time and without charge in case of a defect, malfunction or failure to conform to such written warranty; 2. permit the consumer to elect whether to ask for a refund or replacement without charge of such product or part, as the case may be, where after reasonable number of attempts to remedy the defect or malfunction, the product continues to have the defect or to malfunction  BUT the warrantor will not be required to perform the above duties if he can show that the defect, malfunction or failure to conform to a written warranty was caused by damage due to unreasonable use thereof. (Sec.68(d), RA 7394)

CIVIL LAW
to the seller that he has rejected them. (Art.1585) Rights of the buyer (UNLESS otherwise agreed): 1. Not bound to accept delivery of goods by installments (Art. 1583) 2. Reasonable opportunity to examine the goods upon delivery to ascertain WON they are in conformity with the contract before accepting the same  BUT when the seller delivers the goods to a carrier upon the terms that the same shall not be delivered to the buyer until he has paid the price, the buyer has no right to examine the goods before payment unless there is an agreement or usage of trade permitting such examination. (Art.1584) 3. Acceptance of the goods shall not discharge the seller from liability for breach of any promise or warranty  BUT the buyer must give the seller notice of the breach of promise or warranty within a reasonable time after the buyer knows or ought to know of such breach, otherwise the seller shall not be liable therefor. (Art.1586) o The buyer must notify the seller of the breach of warranty at any time BEFORE the latter has filed the suit for the collection of the unpaid price since the purpose of the rule requiring notice is to prevent the buyer from interposing belated claims for damages as an offset to a suit begun by the seller for the purchase price (de Guzman v. Triangle Ace Corp., 2001) 4. Reject delivery of a wrong quantity of goods or of goods of a different description not included in the contract which are mixed with the goods sold. (Art.1522) 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 being sufficient that he notifies the seller of his refusal to accept.  If he voluntarily constitutes himself a depositary of the goods, he shall be liable as such. (Art.1587) Effect of refusal to accept goods without just cause: title to the goods passes to the buyer from the moment they are placed at his disposal, except if ownership has been reserved by the seller (Art.1588)

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2. Warranty in sale of SUBDIVISION LOT or CONDOMINIUM UNIT o The owner or developer shall be answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures, advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally. (Sec.19, PD 95712) B. OBLIGATIONS OF THE BUYER 1. Accept delivery of the thing sold 2. Pay the price of the thing sold (Art.1582)

1. Acceptance o Modes of accepting goods: (AIR) 1. Buyer intimates to the seller that he has accepted the goods. 2. Goods delivered to the buyer and he does any act in relation to them which is inconsistent with the ownership of the seller. 3. After the lapse of a reasonable time, the buyer retains the goods without intimating

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2. Payment o 3 cases where the buyer is liable for interest for the period between delivery and payment: (STD) 1. It is stipulated; 2. Thing sold produces fruits or income;

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3. Buyer is in default (interest accrues from the time of judicial or extrajudicial demand for the payment of the price) Rights of the buyer: 1. Suspend payment  When: a) he is disturbed in the possession or ownership of the thing acquired or has reasonable grounds to fear such disturbance, b) by a vindicatory action or a foreclosure of mortgage  Until when: until the seller has caused the disturbance or danger to cease  Exceptions: b) When the seller gives security for the return of the price in a proper case c) When it has been stipulated that, notwithstanding any such contingency, the buyer shall be bound to pay  A mere act of trespass shall not authorize the suspension of the payment. (Art.1590) 2. In the sale of immovable property, to pay even after the expiration of the period agreed upon,  as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act,  even though it may have been stipulated that rescission shall of right take place upon failure to pay the price at the time agreed upon. (Art.1592)

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B. PARTICULAR REMEDIES OF THE BUYER 1. Breach of Obligation to Preserve Loss (Arts.1538 & 1189) Without fault of seller Through fault of seller OR through fortuitous event if seller liable even for fortuitous events o No breach (obligation extinguished) Damages

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A thing is lost when it: 1. perishes; 2. goes out of commerce; or 3. disappears in such a way that its existence is unknown or it cannot be recovered

Deterioration (Arts.1538 & 1189) Without fault of seller Through the fault of seller No breach (impairment borne by buyer) 1. Rescission + damages OR 2. SP + damages

2. Breach of Obligation to Deliver Delivery of wrong quantity

VII. REMEDIES IN CASE OF BREACH13
A. GENERAL REMEDIES (Art.1191) 1. Specific performance 2. Rescission 3. Damages The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but only for such substantial and fundamental breach as would defeat the very object of the parties in making the agreement (Song Fo & Co. v. Hawaiian-Philippine Co., 1925) In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. (Art.1169 last par.) Prescriptive periods: - 10 years if based on written contract - 6 years if based on oral contract
Includes both extrajudicial and judicial remedies. UP

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Goods (Art.1522) Less 1. Reject OR 2. Accept and pay - at contract rate: if he accepts knowing that the seller is not going to perform in full; or - fair value: if he used the goods delivered before knowing that the seller is not going to perform in full More 1. Reject the excess or the whole if indivisible OR 2. Accept the whole and pay at contract rate o In the sale of an undivided share of a specific mass of fungible goods, if the mass contains less than the number, weight, or measure bought, the buyer becomes the owner of the whole mass and the seller is bound to make good the deficiency from goods of the same kind and quality, UNLESS a contrary intent appears. (Art.1464)

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Real estate (Arts.1539-1543) per unit of less (in 1. measure area or proportional quality) reduction of price OR 2. rescission, if - lack in area or inferior quality at least 1/10 of area stated or price; OR - the buyer would not have bought had he known of smaller area or inferior quality prescriptive pd: 6 mos. from delivery 1. Reject the excess OR 2. Accept the whole and pay at contract rate.

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Real estate (Arts.1539-1543) prescriptive pd: 6 mos. from delivery 3. Breach of Warranty Express Warranty o Prescriptive period: 1. Period specified in the express warranty; OR 2. If no period specified, 4 years, following the general rule on rescission of contract (Engineering & Machinery Corp. v. CA, 1996) o Remedies in case of sale of goods: 1. Accept goods + demand diminution or extinction of price 2. Accept goods + action for damages 3. Refuse to accept goods + action for damages 4. Rescind (refuse to accept OR return or offer to return) + recover price paid  Rescission NOT available IF buyer: - knew of the breach of warranty when he accepted the goods without protest; - fails to notify seller of the election to rescind w/in a reasonable time; - fails to return or to offer to return 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 of warranty of quality (in the absence of special circumstances showing proximate damage of a greater amt): difference between the value of goods at the time of delivery and the value they would have had if they had answered to the warranty.  Effects of rescission: 1. Buyer no longer liable for price and entitled to return of any part thereof paid, concurrently with or immediately after an offer to return the goods. 2. If seller refuses to accept offer to return goods, buyer deemed bailee for the seller and has right of lien to secure payment of any part of price paid. Implied Warranty Against Eviction (Arts.1555&1556) Total eviction Enforce liability for eviction (demand VICED from seller) o Value of thing sold at the time of eviction o Income or fruits, IF he has been ordered to deliver them to the party who won the eviction suit
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Lump sum/ sale of 2 or more immovables for a single price

Everything No remedy w/in o Where boundaries, both the even if less area and or more the than stated boundaries area of the immovable are declared, the area covered within the boundaries of the immovable prevails over the stated area. (Rudolf Lietz, Inc. v. CA, 2005) NOT 1. everything proportional w/in reduction in boundaries price OR 2. rescission

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o Costs of - eviction suit and - in a proper case, suit against seller for the warranty Expenses of the contract, IF the buyer has paid them Damages and interests, and ornamental expenses, IF the sale was made in BF Enforce liability for eviction (VICED) OR Rescind, IF he would not have bought the thing sold without the part lost (but he must return the thing without other encumbrances than those which it had when he acquired it)

CIVIL LAW
proportionate reduction of the price (accion quanti minoris)+damages Thing Due to o If seller aware of lost hidden defect- may demand: fault - return of price - refund of expenses of contract - damages o If seller not aware of defect- may demand price and expenses but not damages Due to Demand: fortuitous o Price paid minus event or value of thing when to fault of it was lost buyer o Damages IF the seller acted in BF o Prescriptive period: 6 mos. from delivery Implied Warranty Against Redhibitory Defect of Animals 1. Withdraw from contract (accion redhibitoria) + damages; OR 2. Demand a proportionate reduction of the price (accion quanti minoris)+damages o If sale rescinded, buyer must return animal in the condition in which it was sold and delivered (liable for injury due to his negligence and not arising from the redhibitory fault or defect) o Prescriptive period: 40 days from delivery Warranty in Sale of Consumer Goods (Sec. 68 (e)(f), RA 7394) Express warranty 1. Demand repair w/in 30 days (extendible for causes beyond the control of the warrantor; OR 2. Demand refund of price minus amount directly attributable to the use of the consumer prior to the discovery of the nonconformity Implied 1. Retain the goods and warranty recover damages; OR 2. Reject the goods, cancel contract and recover from the seller so much of the purchase price as has been paid, including damages. o Duration of warranty if implied warranty accompanies express warranty: - If the implied warranty on merchantability accompanies an express warranty, both will be of equal duration. - Any other implied warranty shall endure not less than sixty (60)
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o RULES: (Arts.1549-1554) 1. Buyer need not appeal from the decision to hold seller liable for eviction. 2. When adverse possession commenced before sale but prescriptive pd. completed after transfer- seller not liable 3. If property sold for nonpayment of taxes due and not made known to the buyer before sale- seller liable 4. Judgment debtor also responsible for eviction in judicial sales, unless it is otherwise decreed in the judgment 5. If there is waiver of warranty: a. if seller acted in BF- seller liable for eviction (waiver void) b. if buyer made waiver without knowledge of the risks of eviction- seller liable only for the value of the thing sold at the time of eviction c. if buyer made waiver with knowledge of the risks of eviction and assumed its consequences- seller not liabl Implied Warranty Against Encumbrances (Art.1560) 1. Rescission- w/in 1 yr. from execution of deed of sale; OR 2. Damages- w/in 1 yr from execution of deed of sale or from discovery of burden or servitude Implied Warranty Against Hidden Defects (Arts.1567-1571) Thing not lost 1. Withdraw from contract (accion redhibitoria) + damages; OR 2. Demand a
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days nor more than one (1) year following the sale of new consumer products. C. PARTICULAR REMEDIES OF THE SELLER NON-ACCEPTANCE OF GOODS 1. Action for damages for nonacceptance, where the buyer wrongfully neglects or refuses to accept and pay for the goods (Art.1596)  Measure of damages: - estimated loss directly and naturally resulting in the ordinary course of events from the buyer’s breach - where there is an available market for the goods (in the absence of special circumstances): difference between the contract price and the market price at the time the goods ought to have been accepted or if no time fixed, at the time of refusal to accept - labor performed and expenses made by the seller before receiving notice of the buyer’s repudiation or countermand - profit the seller would have made if sale had been fully performed 2. Rescission by giving notice of election to rescind to the buyer (Arts.1597&1593) NONPAYMENT In sale of movables: 1. Self-help remedies of unpaid seller of goods 2. Action for the price of goods 3. Alternative remedies under the Recto Law (Arts. 1484 & 1485) Self-help remedies of an unpaid seller of goods (Arts.1525-1535) o “unpaid seller” when: 1. the whole of the price has not been paid or tendered 2. a bill of exchange or other negotiable instrument received as conditional payment has been dishonored  seller includes: - seller’s agent to whom the BOE has been endorsed - a consignor or agent who has himself paid, or is directly responsible for the price - any other person who is in the position of a seller o Self-help remedies: 1. Lien- right to retain the goods while he is in possession of them 2. Stoppage in transitu- right to resume possession of the goods at
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any time while they are in transit as if he never parted with the possession 3. Resale 4. Rescission –rescind transfer of title and resume ownership in the goods Right of LIEN o Available when: 1. Goods sold w/o any stipulation as to credit; 2. Goods sold on credit, but the term of credit has expired; or 3. Buyer becomes insolvent14 o Lost when: 1. Seller delivers goods to carrier or other bailee for transmission to the buyer w/o reserving ownership or right to possession; 2. Buyer or his agent lawfully obtains possession of the goods 3. Seller waives it o NOT lost by reason only that the buyer has obtained judgment for the price of the goods o In case of part delivery: may exercise right of lien as to remainder UNLESS part delivery made with intent to waive the lien o NOT affected by any sale or other disposition of goods which the buyer may have made UNLESS the seller has consented thereto  BUT if negotiable doc of title has been issued, right of a holder in due course NOT defeated, whether the negotiation be prior or subsequent to the notification of the carrier or other bailee of the seller’s claim to a lien. Right of STOPPAGE IN TRANSITU o Available when the buyer of the goods is or becomes insolvent o Goods are in transit: 1. From the time they are delivered to a carrier or other bailee for transmission to the buyer until buyer or his agent takes delivery; 2. If buyer rejects the goods and the carrier or bailee continues in possession, even if the seller has refused to receive them back o Goods no longer in transit if: 1. Buyer or his agent obtains delivery of the goods before their arrival at the appointed destination; 2. After the arrival of the goods at the appointed destination, carrier or bailee acknowledges to the buyer or his
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Insolvency under Title on Sales refers to insolvency in fact- when a person has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due, WON insolvency proceedings have been commenced (Art.1636(2)) 2008 Page 185 of 325

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OR 2. Action for the price of goods o Available when: 1. 3. Buyer notifies seller of his repudiation of the contract after the seller has completed the manufacture of the goods or had procured the goods to be delivered. Right to RESCIND o Available to unpaid seller who: 1. 1486) o o o Right of RESALE o Available to unpaid seller who: 1. the assignee is likewise bound by the same law. Ownership has passed to buyer and buyer wrongfully neglects or refuses to pay. NOT affected by any sale or other disposition of goods which the buyer may have made UNLESS the seller has consented thereto  BUT if negotiable doc of title has been issued.1484 & 1485) o Applies in cases of: 1. OR 2. Goods are of a perishable nature.with option to buy . has a right of lien. Buyer defaults in payment for an unreasonable time o For the resale to be valid. The carrier or baileewrongfully refuses to deliver the goods to the buyer or his agent Exercised by: 1. the seller need NOT notify the original buyer of: 1.. o The seller must exercise reasonable care and judgment in making a resale o The resale may be by public or private sale. has stopped the goods in transitu o Available when: 1. o Rescission made by manifesting an intention to rescind by: 1.1595) Under the Recto Law (Arts. has a right of lien. 1996)  Stipulation that the installments or rents paid shall not be returned to the buyer or lessee VALID insofar as the same may not be unconscionable (Art. Seller expressly reserves the right of resale in case the buyer defaults. has stopped the goods in transitu o Available when: 1. notice to the buyer. right of a holder in due course NOT defeated. Seller expressly reserved the right to rescind in case the buyer defaults. and the goods cannot readily be resold for a reasonable price. 2. o The seller CANNOT buy the goods.for any profit made by the resale 100% UP LAW UP BAROPS 2008 Page 186 of 325 . lease of personal property . or 3. 3.upon the contract of sale. the time and place of the resale o BUT giving or failure to give notice of intention to resell is relevant in determining WON the buyer had been in default for an unreasonable time before the resale was made. or 2. Inc. directly or indirectly. or 3. (Borbon II v. OR . it must first be surrendered for cancellation before the goods are redelivered to the seller In case of part delivery: may exercise right of stoppage in transitu as to remainder UNLESS circumstances of part delivery show an agreement with the buyer to give up possession of the whole of the goods. OR 2. some other overt act which need not be communicated to the buyer o BUT giving or failure to give notice of intention to rescind is relevant in determining WON the buyer had been in default for an unreasonable time before the rescission. 2. OR 2.when the lessor has deprived the lessee of the possession or enjoyment of the thing  When the seller assigns his credit to another person. The seller is NOT liable anymore to the original buyer: . The buyer in the resale acquires a good title as against the original buyer. The seller may recover damages from the original buyer for any loss occasioned by the breach of the contract of sale. the intention to resell 2. Obtaining actual possession of the goods. Notifying carrier or bailee of his claim  If carrier or bailee has issued a negotiable document of title. o Effects of resale: 1. Servicewide Specialists. Buyer defaults in payment for an unreasonable time. sale of movables in installment 2. (Art.SALES agent that he holds the goods on his behalf and continues in possession of them as bailee for the buyer or his agent (immaterial if buyer indicates further destination for the goods. Price payable on a certain day irrespective of delivery and buyer wrongfully neglects or refuses to pay. whether the negotiation be prior or subsequent to the notification of the carrier or other bailee of the seller’s claim to a right of stoppage in transitu CIVIL LAW 2.

. When the lessor. CA. (Tajanlangit v. v. Inc. 2005) o Alternative remedies under the Recto law: 1. other properties of the buyer may be levied upon in case of deficiency. gives the defaulting lessee the option of either returning the movable property or keeping it by paying the outstanding balance. Filipinas Investment & Finance Corp. (Magna Financial Services Group.  Purpose of the law is to remedy the abuses committed in foreclosure of o Financing Company Act of 1998 UP QUOTABLE QUOTE: SC always says... guarantees or other security arrangements. the Recto law applies. in its demand letter. FEB Leasing and Finance Corp. Gervacio. 1968)16 SPECIFIC PERFORMANCE o When the seller-mortgagee first seeks to enforce additional mortgages. 1957) o CANCELLATION OF SALE o o Available when the buyer fails to pay 2 or more installments When the seller cancels the sale by repossessing the property sold.the seller assigned to the creditor the right to collect the balance of the purchase price from the buyer. PCI Leasing and Finance. 2003).that is. 1939) Lease of personal property with option to buy  The condition that the lessor has deprived the lessee of possession or enjoyment of the thing for the purpose of applying Art.” BAROPS 2008 Page 187 of 325 100% UP LAW . the lessee is deprived of the use of the property. v. Servicewide Specialists. sold it to the mortgagor) (Superlines Transportation Company. Jr. Lavides. it is barred from exacting payment of the balance of the price thereof. although he may still levy on it. v. NOT CUMULATIVE.SALES Sale of movables in installment  The Recto law does NOT apply to a straight term sale in which the balance. Inc. Inc.the exercise of one bars the exercise of the others (Cruz v. Hence. o Nature of the remedies: ALTERNATIVE. “It cannot have its cake and eat it too. or . Inc.. Giraffe-X Creative Imaging. Inc. Foreclosure of chattel mortgage on the thing sold. v. 2007)  BUT when a contract purporting to be a financial leasing agreement is in reality a contract of lease with option to buy. Inc.the agreement was in fact a consumer loan agreement (i. Cancellation of sale. Southern Motors. (Elisco Tool Manufacturing Corp. should be paid in full at the time specified. By virtue of the writ of seizure. the seller is not limited to the proceeds. as there is no foreclosure of chattel mortgage nor a foreclosure sale of the thing sold in such a case. the partial payments are not so small as to place buyers off their guard and delude them to a miscalculation of their ability to pay.. by ordinary action or by foreclosure under power of sale contained in the mortgage. 1996) When there is a chattel mortgage on the thing sold but the seller elects to sue on a promissory note to exact fulfillment of the obligation to pay. (Nonato v. (Sing.e. 1999)  The Recto law does not apply to a financial leasing agreement which. on execution. (Rosario v. 2005) Effect of foreclosure: seller shall have “no further action” to recover any “unpaid balance” of the price. Inc. Specific performance 16 15 CIVIL LAW 2. if one has been constituted. In a straight term sale. of the mortgaged property. even if the “lease agreement” does not contain a “purchase option” clause. Colarina. v. 2007)  The Recto law does not apply to a creditor-mortgagee in a loan secured by a chattel mortgage on the property purchased with the proceeds of the loan. (Levy Hermanos. 1485 is fulfilled when the lessor files a complaint for replevin to recover possession of the movable property. absent proof that: . the lessee is in effect given an option to buy. 1985) FORECLOSURE OF CHATTEL MORTGAGE o o Available when the buyer fails to pay 2 or more installments Foreclosure may be judicial or extrajudicial. does not give the lessee an option to buy. because the law attempts to protect improvident buyers from the great temptation of buying beyond their means. the mortgagee in fact bought the property from the original seller and in turn. v. IF the buyer fails to pay 2 or more installments. after payment of the initial sum. Inc... (Borbon II v..(PCI Leasing and Finance. by definition under RA 855615. he loses his lien on the chattel mortgage of the personal property he sold. IF the buyer fails to pay 2 or more installments 3. IAC. any contrary agreement VOID.

1592 in case of an absolute sale (Odyssey Park. Inc. The almost invariable result of this procedure was that the mortgagor found himself minus the property and still owing practically the full amount of his original indebtedness. 2. (Bachrach Motor Co. whether or not automatic rescission has been stipulated. (Cruz v. Millan. Rescission + damages under Art. o In case of an absolute sale. 2006) o In installment sale of realty. Inc. that thereby constrained the latter to seek court relief. BUT not > 90% of total amt paid 3. sale to tenants under RA 384418  Requirements for a valid rescission if buyer has paid at least 2 years of installments: (Sec. 1972).. such as attorney’s fees.the guarantor can recover from him what it had paid. 1968) Where the buyer-mortgagor unjustifiably refused to surrender the chattel subject of the mortgage upon failure of 2 or more installments. buying it at foreclosure sale for a low price and then bringing the suit against the mortgagor for a deficiency judgment. RA 6552 imposes additional requirements for a valid rescission  RA 6552 does not apply to: 1. because the buyer would still be the one ultimately burdened. it includes extrajudicial foreclosure of a real estate mortgage given as additional security. OR . 2. the expenses incurred for the prosecution of the case. CA.by a notarial act (Art. Grace period. 2001) 3.3) 1. 1592)  A judicial or notarial act is necessary before a valid rescission can take place. Defense in the seller’s Answer to the buyer’s Action for Specific Performance (Ramel v. (Cruz v. or if he concealed the chattel to place it beyond the reach of the sellermortgagee.1191  Subject to the provisions of: . commercial buildings 3. Action for Judicial Confirmation of Rescission and Damages (Iringan v. could rightly be awarded (Borbon II v. Servicewide Specialists. the court may authorize the fixing of a period for a just cause. Specific Performance + damages under Art. 1970) The further “action” referred to may be judicial or extrajudicial...judicially OR . v. 2001)  Effect of lack of demand: buyer can still pay  Effect of demand: the court may not grant the buyer a new term  The ff. (Iringan v. CA. 1983) or even by a third person. Inc. Filipinas Investment & Finance Corp. effective 30 days from the buyer’s receipt thereof and upon full payment of the CSV     In sale of immovables 1. have been considered by the SC as constituting a judicial demand for rescission: 1. the seller may accept payments voluntarily tendered by the buyer who admits a subsisting indebtedness. the seller cannot proceed against additional security put up by the buyer himself (Ridad v.. v.1591) 2. after filing an action for replevin but before the foreclosure sale.RA 655217 in case of a sale in installment 17 Realty Installment Buyer Act UP 18 Agricultural Land Reform Code 2008 Page 188 of 325 100% UP LAW BAROPS ..Art. Aquino. It prevents mortgagees from seizing the mortgaged property.SALES chattel mortgages. 1968) After foreclosure of the chattel mortgage.. Maritime Building Co. Filipinas Investment and Finance Corp. Filipinas Investment & Finance Corp. hence. v. (Northern Motors. 1996) CIVIL LAW Rescission for anticipatory breach o Available when the seller has reasonable grounds to fear the loss of immovable property sold and its price Rescission o Available even after the seller has chosen specific performance IF the latter becomes impossible o Instead of decreeing rescission. Notice of cancellation or demand for rescission by notarial act.. 1935) It is the fact of foreclosure and actual sale of the mortgaged chattel that would bar the seller from recovering any unpaid balance. Inc. Rescission for anticipatory breach (Art. Refund of cash surrender value (CSV): 50% of total amt paid + 5% for every yr after the first 5 years of installments. hence.. the seller must make a demand for rescission either . Inc.1 mo/1 yr of installment payments made. industrial lots 2. v. Inc. 1997).1191 3. CA. BUT buyer may avail of it only once in every 5 yrs. Cross-claim (Luzon Brokerage Co. Sapinoso.

2 or more valid sales. 4.. (Cheng v.(Vda de Melencion v. in other words. v. If no registration or possession. 1970) o   B. the only one who can invoke this is the first vendee. Undisputedly. 6552 (Fabrigas v. 2003). 2005) Art. But in converso. IAC. 2007) Knowledge gained by the first buyer of the second sale cannot defeat the first buyer’s rights except where the second buyer registers in good faith the second sale ahead of the first. 1998) 1. (Uraca v. De Manzano. 1544 does NOT apply to the sale of unregistered land at an execution sale because a buyer of unregistered land at a execution sale only steps into the shoes of the judgment debtor.(Salera v. since such knowledge taints his prior registration with bad faith. one of them not being the owner of the property sold. Genato. Inc.1544) A. 1544 are present. as provided by the Civil Code.(Consolidated Rural Bank (Cagayan Valley). 2005. Vda.3) The seller can go to court to demand judicial rescission in lieu of a notarial act of rescission. and it is sold and the sale is registered not under the Land Registration Act but under Act 3344. DOUBLE SALE (Art. Olympia Housing. (Fudot v.. effective 30 days from the buyer’s receipt thereof Down payments. to register first her purchase as against the second buyer. which is acquired by 2008 Page 189 of 325   o VIII. Inc. including both registration in its ordinary and strict sense and cancellation. 2. oldest title acquired in good faith. which is a kindred concept of rescission (Layug v. annotation.1544 IN CASE OF MOVABLES: . Registration in good faith 2. (Carumba v. Inc.SALES  Requirements for a valid rescission if buyer has paid less than 2 yrs of installments: (Sec. Notice of cancellation or demand for rescission by notarial act. (Sec. as amended. o Good faith. The only essential requisite of this rule is priority in time. among them. 2007) O No double sale when the two different contracts of sale are made by two different persons. v. Rodaje. possession in good faith 3. CA. 3. Such knowledge of the first buyer does not bar her from availing of her rights under the law. (Olympia Housing. Coronel v.A. San Francisco Del Monte. 1996) O No double sale where there is only one valid sale. 2003) The requirement of a notarial act of rescission is dispensed with when the seller files an action for annulment of contract. Cattleya Land. 2007) Automatic cancellation clause is void under Section 7 of R.4) 1. there was still no sale to a second vendee. but NOT when he files . such sale is not considered registered under Art. 1997) Registration. CA. Heruela. Inc. 1988).any entry made in the books of the registry. 2007) Possession includes not only material(actual) possession. Inc. CA. Panasiatic Travel Corp. 1544 of the Civil Code. potior jure (“he who is first in time is preferred in right”) should apply. Panasiatic Travel Corp. Grace period of at least 60 days 2. CA. v. and merely acquires the latter's interest in the property sold as of the time the property was levied upon. he is a purchaser in good faith because at the time he 100% UP LAW UP o o o BAROPS . RULES OF PRIORITY UNDER ART. 2005) CIVIL LAW bought the real property.Possession in good faith IN CASE OF IMMOVABLES: 1. CA. CA.an action for reconveyance (Ramos v. 1998) If the land is registered under the Land Registration Act (and therefore has a Torrens Title). 2005. 2007) O When not all requisites for the application of Art.an action for unlawful detainer (Pagtalunan v. Genato. same subject matter. OR . 2 or more buyers with conflicting interests at odds over the rightful ownership of the thing sold. knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale. neither does such registration operate as constructive notice to the second buyer. deposits or options on the contract shall be included in the computation of the total number of installment payments made. CA. v. REQUISITES: (Cheng v. the principle of prior tempore.lack of knowledge of any defect in the title over the property sold (Vda de Melencion v. (San Lorenzo Development Corp.. the other sale being forged. If no prescription. same seller O No double sale when one of the two contracts is a mere contract to sell. and even marginal notes. but also symbolic possession.

as absolute owner already of the object. Magno. Creditors of seller. Presription 3. CAUSES: (Arts.1601-1618) o Available when the seller reserves the right to repurchase the thing sold in the same instrument of sale as one of the stipulations of the contract (Villarica v CA. if any. 2. Payment/performance 2. action to redeem may be brought against each heir only for his own share. Seller (or his agent/heirs/assigns) 2. 2004)  Tender of payment is enough (i. like a receipt for the price. CONVENTIONAL REDEMPTION (Arts. Icasiano. 1949) Effects of redemption: 1. but NOT > 10 yrs. it is a new contract entered into by the purchaser. and if he afterwards grants the vendor the right to repurchase. in which case he may be sued for redemption of the whole thing Redemption exercised by: 1.  The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. (Baviera) o CIVIL LAW Enforceable against: 1. Loss of thing due 4. c. counted from the anniversary of the date of sale) Effect of non-redemption: Ownership consolidated in the buyer BUT the 2008 Page 190 of 325 IX. 1968)  An agreement to repurchase becomes a promise to sell when made after the sale. UNLESS in the partition. one heir was awarded with the thing sold. But that tender does not in itself relieve the buyer from his obligation to pay the price when redemption is allowed by the court. Confusion/merger 8. Compensation 9. Legal b. The seller shall receive the thing free from all charges or mortgages constituted by the buyer BUT he shall respect leases executed by the buyer in good faith and in accordance with local custom. Annulment 5.pd. WON the thing has been partitioned. Inc.SALES the execution of a public instrument (Sanchez v. Returning the ff.. Conventional B. Condonation/remission 7. each heir may redeem only his share. Expenses of the contract and other legitimate payments made by reason of the sale. 1927) o Period for redemption: . b. Veloso. Rescission 10. EXTINGUISHMENT OF SALE A. (BPI Family Savings Bank.e. The statement of intention must be accompanied by an actual and simultaneous tender of payment for the full amount of the repurchase price. Ramos.any document showing acquisition of the land in good faith. to the buyer: (PEN) a.  A buyer of a part of an undivided immovable who acquires the whole thereof may compel the seller to redeem the whole property. as a basis for action against the buyer to compel him to resell. consignation is not necessary). AFTER they have exhausted the seller’s property  If co-owners. 1919) o Older title. Buyer (or his agent/heirs/assigns)  If the land is registered. Redemption a. (Paez v. but some exist at the time of redemption: fruits prorated (buyer entitled to part corresponding to time he possessed the land in the last year. If there are growing fruits at the time of sale and at the time of redemption: no reimbursement or prorating if the buyer did not pay indemnity at the time of sale 3. the purchaser acquires the thing sold absolutely. Novation 6. 100% UP LAW UP o o o BAROPS . sell an undivided immovable.1600 &1231) (P-PLAN-CCC-RRR) 1. each may redeem only his respective share  If a sole owner sells an immovable and leaves several heirs. Price of the sale.4 yrs from date of contract. the buyer a retro may demand all the sellers a retro or heirs to buy redeem the whole thing and he cannot be compelled to agree to a partial redemption. the right to redeem must be annotated in the title in order to prejudice a subsequent buyer from the buyer a retro. v. OR .  If the buyer leaves several heirs.  In these 2 cases. Resolutory condition fulfilled 11. if made on time. stipulated. Complying with any other stipulation agreed upon. (Ramos v. jointly and in the same contract. Necessary and useful expenses made on the thing sold 2. stipulated o Available to: 1. if no pd. If there were no growing fruits at the time of sale. because when the sale is made without such an agreement.

and (b) that their intention was to secure an existing debt by way of a mortgage. Sec. even if it is not alternatively prayed for. 215. 3. NIRC) Judgment debtor.  If the court declares the contract as an equitable mortgage. 1975) 30 days from the date the assignee demands payment from debtor 5 yrs. ) debtor-mortgagor in case of judicial foreclosure of real estate mortgage IF the mortgagee is a 2008 1 year from date of forfeiture 1 year from the date of registration of the certificate of sale 1 year from the date of the sale 90 days from finality of judgment 100% UP LAW BAROPS Page 191 of 325 . after the vendor has been duly heard.  If decreed as a true sale with right to purchase. in case of extrajudicial foreclosure of mortgage (Act No. Period of redemption extended (or granted anew) upon or after the expiration of the right to repurchase.in writing . C. Price unusually inadequate. 6. CC) Adjoining owner of rural land (Art. 2003) o Contract of sale (whether with right of purchase or purported as absolute) is presumed to be an equitable mortgage in ANY of the ff. successors-ininterest. Part of the purchase price retained by the seller. nevertheless reveals the intention of the parties to charge real property as security for a debt. (Heirs of Arches v. fruits or other benefit to be received by the buyer as rent or otherwise considered as interest. or form or words.1620. Any other case where it may be fairly inferred that the real intention of the parties is for the transaction to secure a debt or other obligation. 3135.SALES consolidation shall not be recorded in the Registry of property w/o a judicial order. 2003) o In case of doubt. cases: (5P-R) 1. Diaz.1634) Applicant or his widow or legal heirs in case of sale of homestead (Sec. (Molina v. 6.CC) Debtor in case a credit or incorporeal right in litigation is sold (Art. Public Land Act) Taxpayer in case of tax sale (Sec. CA. upon the same terms and conditions. in the place of one who acquires a thing by onerous title (such as sale or dation) o Instances of legal redemption and periods for their exercise Period 30 days from notice .any money. o Remedy of apparent vendor if equitable mortgage is the real intention: REFORMATION  If decreed to be an equitable mortgage. 1619-1623) o Legal redemption UP CIVIL LAW the right to be subrogated. or creditor with subsequent lien. a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage. even if the period for redemption has expired.1622. and contains nothing impossible or contrary to law.119. CA. 5. 2. o For the presumption of an equitable mortgage to arise under Art. two (2) requisites must concur: (a) that the parties entered into a contract denominated as a contract of sale.seller may redeem w/in 30 days from finality of judgment. Payment of taxes on the thing sold borne by the seller. ROC) Debtor-mortgagor. 1973) CONTRACT OF SALE (with right to repurchase or absolute) vis-à-vis EQUITABLE MORTGAGE o An equitable mortgage is defined as one which. judicial/judgment creditor. in case of execution sale (Rule 39.by the seller . Sec. although lacking in some formality. (Molina v. LEGAL REDEMPTION (Arts. or other requisites demanded by a statute. from date of conveyance To whom granted Co-owner (Art. 4. the right of action to foreclose the mortgage or to collect the indebtedness arises from the judgment. successor–ininterest.of the actual execution and delivery of the deed of sale *Actual knowledge of the sale immaterial (Doromal v CA. any person having a lien on the property.CC) Adjoining owner of urban land (Art.1621. 1602.27. Possession retained by the seller as lessee or otherwise.

SALES
To whom granted bank or a banking institution. (The General Banking Law of 2000) Agricultural lessee w/o knowledge of sale of landholding (Agrarian Land Reform Code, Sec.12) o Period o

CIVIL LAW
NOT available when the assignment in favor of: 1. co-heir/co-owner of right assigned 2. creditor in payment of his credit 3. possessor of a tenement or piece of land which is subject to the right assigned How exercised: reimburse the assignee for the: - Price paid - Judicial expenses incurred - Interest on the price from date of payment

2 years from the registration of the sale

o

How exercised: by either a formal offer to redeem or the filing of an action in court together with the consignation of the redemption price within the reglementary period. (Lee Chuy Realty Corp., v. CA, 1995)

X. ASSIGNMENT
o Assignment: a sale of credits and other incorporeal rights Requirement to bind third persons: - if involving credit, right, or action: must appear in public instrument; - if involving right over real property: must be recorded in Registry of property Debtor who pays his creditor before having knowledge of the assignment is released from the obligation. Assignment of credit includes all accessory rights, such as: - Guaranty; - Mortgages; - Pledge - Preference Warranties in assignment of credit: 1. Seller warrants existence and legality of the credit at the time of the sale, UNLESS it should have been sold as doubtful; 2. Seller does NOT warrant solvency of the debtor, UNLESS: - expressly stipulated or - the insolvency was prior to the sale AND of common knowledge  If seller warrants debtor’s solvency but duration of liability not stipulated: duration is 1 year from - time of assignment, if the period for payment had already expired, or - maturity, if period has not yet expired Liability of assignor of credit in case of breach of warranty: - if in GF: price received + expenses of contract - if in BF: price received + all expenses + damages Other warranties:

Redemption by co-owner o Available when the shares of any or all of the other co-owners are sold to a 3rd person (anyone not a co-owner) o If price grossly excessive, the redemptioner shall pay only a reasonable one. o If 2 or more co-owners want to redeem: they may do so in proportion to their respective shares o The right of redemption of co-owners excludes that of adjoining owners. Redemption by adjoining owner of rural land o Available when the area of rural land is 1 hectare or less, unless the grantee does not own any rural land. o NOT available when the adjoining lands are separated by brooks, drains, ravines, roads, and other permanent servitudes for the benefit of other estates o Priority if 2 or more adjoining owners want to redeem: 1. owner of smaller adjoining land;or 2. if with same area, owner who first requested redemption Redemption by adjoining owner of urban land o Granted in addition to right of pre-emption o Available when the urban land: 1. is so small and so situated that a major portion of it cannot be used for any practical purpose w/in a reasonable time; 2. was bought merely for speculation; and 3. was resold. o Priority if 2 or more adjoining owners want to redeem: owner whose intended use of the land appears to be best justified Redemption of credit or incorporeal right o Available when it is sold while in litigation (from the time the complaint is answered)

o

o

o

o

o

o

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SALES
1. If inheritance sold w/o enumerating the things composing it, seller only warrants his character as an heir 2. If certain rights, rents, or products sold for lump sum, seller warrants only the legitimacy of the whole in general and not each part composing it, EXCEPT in case of eviction from the whole or the part of greater value

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

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

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C. ACT NO. 3952 TITLE: The Bulk Sales Law PURPOSE OF THE LAW: To protect persons who extended credit to merchants, relying on the fact that their stock of merchandise was not to be sold in bulk, but kept up and replenished from time to time. Credit was extended, presupposing continuance in the business of merchandising (Baviera, citing US case) SCOPE OF APPLICATION o Applies to: a “sale and transfer in bulk”, which includes any sale, transfer, mortgage or assignment of:
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SALES
1. a stock of goods, wares, merchandise, provisions or materials NOT in the ordinary course of trade and the regular prosecution of the business of the seller, transferor, mortgagor, or assignor 2. all, or substantially all, of the business or trade theretofore conducted by the seller, transferor, mortgagor, or assignor 3. all, or substantially all, of the fixtures and equipment used in and about the business of the seller, transferor, mortgagor, or assignor Does not apply : 1. If the vendor, transferor, mortgagor or assignor, produces and delivers a written waiver of the provisions of the Act from his creditors as shown by verified statements (Sec.2) 2. To executors, administrators, receivers, assignees in insolvency, or public officers, acting under judicial process. (Sec.8)

CIVIL LAW
Notice to creditors o Contents: price, terms, and conditions of the sale, transfer, mortgage or assignment o When made: at least 10 days before transferring possession o How made: personally or by registered mail Consideration - must not be nominal EFFECT OF NON-COMPLIANCE: o Criminal liability: 6 mos.-5yrs imprisonment, or fine of P5K or less, or both. In addition, if the purchase or mortgage money is not applied pro-rata to the bona fide claims of listed creditors, the sale, transfer or mortgage shall be FRAUDULENT and VOID.

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REQUIREMENTS: (SPIN-C) 1. Sworn statement of list of creditors 2. Pro-rata application of the purchase or mortgage money to the payment of listed creditors 3. Inventory of the goods, wares, merchandise, provisions or materials 4. Notice to listed creditors 5. Consideration for the sale, transfer, mortgage or assignment 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, vicepresident, 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

Q 2007 BAR Seeking to streamline its operations and to bail out its losing ventures, the stockholders of X Corporation unanimously adopted a proposal to sell substantially all of the machineries and equipment used in and about its manufacturing business and to sink the proceeds of the sale for the expansion of its cargo transport services. (a) Would the transaction be covered by the provisions of the Bulk Sales Law? (b) How would X Corporation effect a valid sale?

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AGENCY

CIVIL LAW

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

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AGENCY NATURE, FORM, AND KINDS OF AGENCY
Definition and concept Contract of agency: where a person binds himself, 1. to render some service, or 2. to do something in representation or on behalf of another, with the latter’s consent or authority. (Art. 1868, CC) AGENCY is a relationship which implies a power in an agent to contract with a 3rd person on behalf of a principal. [Humble Oil & Refining v Beu Tex. Cir. App.] AGENCY is personal, representative, and derivative in nature. The authority to act emanates from the powers granted to him by his principal. His act is the act of the principal if done within the scope of the authority. [Rallos v Felix Go Chan & Sons Realty, 1978] Nature, basis and purposes Since agency is a contract, consent, object, and cause. there must

CIVIL LAW
agent, there must be an intention to accept the appointment and act on it, and in the absence of such intent, there is generally no agency. [Victorias Milling v CA, 2000] Exception: One who clothes another with apparent authority as his agent, and holds him out to the public as such, can’t be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith. [Macke v Camps, 1907] 2. Nominate: Has its own name. 3. Preparatory: Entered into as a means to an end. 4. Principal: Can stand by itself without need of another contract: 5. If gratuitous, unilateral: Creates obligations for only one of the parties. If for compensation, bilateral: Gives rise to reciprocal rights and obligations. (CNPPU/B) Essential elements 1. Consent, express or implied 2. Object of the contract, which is the execution of a juridical act in relation to third persons; 3. Agent acts as a representative; and 4. Agent acts within the scope of his authority. (Rallos v Felix Go Chan & Sons Realty, 1978) The agent may also be called an attorney, proxy, delegate or representative. (Angeles v. PNR, 2006) Relationship between the parties is fiduciary: With respect to the property that is subject matter of the agency, the agent is estopped from asserting an interest adverse to the interest of the principal. The agent cannot bind the principal where the agent has an adverse interest. Exception: 1. If agent acts with the knowledge and consent of both, in which case either party may repudiate the transaction. 2. If agent is mere intermediary with no independent initiative. The agent must not use or divulge confidential information. After agency terminates, the agent is no longer under a duty to abstain from competition and may use general information (not acquired in violation of his duty as agent). While acting as an agent of his employer, an employee owes the duty of fidelity and loyalty. Being a fiduciary, he can’t solicit his employer’s customers or co-employees for himself or for a business competitor of his employer. (Molina v. Pacific Plans, 2006)
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The purpose of agency is to extend the principal’s personality. General rule: What a man may do in person, he may do thru another. Exceptions: There are acts which the agent may not do for the principal: 1. Personal acts, and 2. Criminal acts. Knowledge of the agent is imputed to the principal. Exceptions: 1. Agent’s interests are adverse to those of the principal; 2. Agent’s duty is not to disclose information; and 3. 3rd person claiming the benefit of the rule colludes with agent to defraud principal. The theory of imputed knowledge ascribes the knowledge of the agent, to the principal, not the other way around. The knowledge of the principal can’t be imputed to its agent (Sunace Internat’l Mgt. Services v. NLRC, 2006). Characteristics 1. Consensual: Perfected by mere consent. General Rule: On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions; and on the part of the
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An employee of a corporation may not be deemed an agent under the above rule unless his/her duties are so integrated to the business that his/her absence or presence won’t toll the business’ operations (Aboitiz Internat’l Forwarders. Designation by parties is not controlling. unable to sell the same to a 3rd person. Determination of existence of agency 1. Independent contractor Agent Represents his principal. there is agency regardless of WON parties understood the exact nature of the relation. Lessor ordinarily performs only ministerial functions. the agent has the obligation to determine existence and scope of agency… Against the agent. 3. proceeds of the sale. agency may exist without the direct assent of the agent. and for himself. agency Agent is controlled by the principal. An agent acts only for his principal. Relates more to matters of mere manual or mechanical execution. cannot return the object sold. the partnership. whether general or special. As between principal and 3rd person. sale Buyer receives the goods as owner. Acts under the principal’s control and instruction.. CIVIL LAW Acts according to his own method. as a general object in case he is rule.equal proprietary interest in the capital or property and exercises equal rights in the conduct of the business. a partner acts for his partners. Contract of sale agency to sell Agent receives the goods as the principal’s goods. 100% UP LAW UP BAROPS 2008 Page 198 of 325 . Agent exercises discretionary powers. Agency may involve Lease of property involves property. lease of service Based on employment.AGENCY The rules on service of process make service on "agent". Lessee cannot bind the lessor. 2. Agent can return the Buyer. Against the principal. Principal is liable for torts committed by the agent within the scope of his authority. Partnership a. independent contractor Employed by the employer. Agent delivers the Buyer pays the price. he cannot claim protection. No presumption of existence: agency must exist as a fact. 1922] Agency vs. b. agent and the 3rd person with whom the agent contracts. 2 parties: Lessor and lessee. similar contracts 1. Relates to commercial or business transactions. Agent can bind the principal. 3 parties: Principal. 2. Fact of existence: if relations that constitute agency exist. Intention of the parties to create relationship. 2006). Employer not liable for torts committed by the independent contractor. CA. the third person has the obligation to determine existence and scope of agency…The person dealing with the agent must also act with ordinary prudence and reasonable diligence. things other than property. 4. If he knows or has good reason to believe that the agent is exceeding his authority. Parity of standing test: A partnership generally presupposes a parity of standing between the partners-. lease of property Lessee is not controlled by the lessor. Inc. Lease agency Based on representation. v. sufficient even if agent has limited authority. 3. [Harry Keeler Electric v Rodriguez. Exceptions: a) When agency arises ipso jure b) To prevent unjust enrichment 4.

Acts or conduct of the principal. Guardianship agency guardianship Buyer can deal with the thing as he pleases. 2006) Kinds 1. i. par. (Art. Agent’s acts which carry out the agency. who receives it without any objection (Art. As to extent of business covered a. CC) 2 situations of implied acceptance from silence – a. CC). 1873. personal liability on the ward. to the agent. The persons are present: if the principal delivers his 100% UP LAW UP BAROPS 2008 Page 199 of 325 . When the principal transmits his power of atty. represents an incapacitated person. if not made in writing. or v.e. CC) By public advertisement: The agent is considered such with regard to any person. Agency is presumed to be for compensation (Art. 1876. In writing. Agent’s silence or inaction. Agent is subject to Guardian is not the directions of the subject to the principal. 1869. Express: where the agent has been actually authorized by the principal. 1872. (Art. In agency. Except: When the law requires a specific form. Silence or lack of action of the principal. As to manner of creation a. iii. Orally. the agent’s authority shall be in writing. and b. Onerous: there is compensation. who receives it without any objection. When the principal entrusts to him by letter/telegram a power of atty. ii. 1869. (Art. Implied: where the agency created is deduced from the i. (Art. 1403. (Apex Mining Co. 1870. CIVIL LAW power of attorney to the agent. CC). (Art. CC) Note: If the owner himself sells realty/interest therein. By special notification: The person appointed as agent is considered such with respect to the person to whom it was given. if the sale of a piece of land or any interest therein is through an agent. and he didn’t reply (Art. CC) Universal agent: authorized to do all acts that the principal may personally do. 1875. Southeast Asia Mindanao Gold Mining. 1874. directions of the ward but must act for the benefit of the latter Agent can make the Guardian has no principal personally power to impose liable. (Art. Corp. General: comprises all the business of the principal. CC) 4. v. Agent is appointed by the principal and can be removed by the latter. 1871.. there is total transfer or relinquishment of right by the assignor to the assignee. except 1. or b. Guardian is appointed by the court and stands in loco parentis. Rule: No formal requirements governing the appointment of an agent. the agent acts not on his own behalf but on behalf of his principal. 2(e). being the owner. In assignment. or ii. Gratuitous b. 1873. CC) b. CC) iv. As to formalities Gen. 3. (Art. the contract of sale is unenforceable but subject to ratification (Art. or the sale is void. 5. with respect to the business in which he’s habitually engaged as an agent. As to cause or consideration a. 2. The persons are absent: acceptance isn’t implied from the agent’s silence.AGENCY Agent in dealing with the thing received is bound to act according to the instructions of his principal. Special: comprises one or more specific transactions. and which he can lawfully delegate to another the power of Agent represents a A guardian capacitated person. i. CC). CC) 2. Principal’s failure to repudiate the agency.

d. renounce the right to appeal from judgment. CC) 6. 1877. To bind the principal to render some service without compensation. and o. (Strong v. e. Couched in general terms: comprise only acts of administration. As to authority conferred a. To loan or borrow money. 30). i. To obligate the principal as a guarantor or surety. ii. To enter into any contract by which the ownership of an immovable is transmitted/acquired. Ostensible or Representative 2008 Page 200 of 325 Scope of authority Nature of service authorized Extent to which agent may bind the principal Termination of authority Construction Merely of principal’s advisory in instructions nature. power of attorney. To ratify or recognize obligations contracted before the agency. As to nature and effects a. submit questions for arbitration. (Tolentino) When special powers are necessary: for acts of strict dominion/ownership – a. To effect novations. 1878. k. To accept or repudiate an inheritance. To bind the principal in a contract of partnership. iii. or 100% UP LAW UP BAROPS . Duty imposed upon the 3rd party to inquire makes termination of the relationship as between the principal and agent effective as to such 3rd party. the principal states that he withholds no power. m. To lese any realty to another for more than a year. either by giving authority for all acts of a particular character or by specifying therein the act/transaction for which a special power is needed. 58) general special agent agent All acts Specific acts connected in pursuance with the of particular business or instructions employment or with in which he is restrictions engaged. Any other act of strict dominion. May bind his principal by an act within the scope of his authority although it may be contrary to the latter’s special instructions. b. Apparent authority does not terminate by the mere revocation of his authority without notice to the 3rd party. To compromise. c. or abandon a prescription already acquired. (Art. Repide) A special power can be included in a gen. even if – i. Cannot bind his principal in a manner beyond or outside the specific acts which he is authorized to perform. Strictly construed as they limit the agent’s authority. necessarily implied from the act to be done. CIVIL LAW the agency authorizes a general and unlimited management. 5. Couched in specific terms: authorizing only the performance of a specific act/s. To make gifts. shall have binding effect on the principal (2 Am. Involves No continuity continuity of of service. 1878. (Art. (Mechem. waive objections to venue of actions. To effect remission/condonation. n. f.AGENCY doing. service. Jur. but to evidence such authority to 3rd parties Interpretation: Strictly construed Exception: When strict construction will destroy the very purpose of the power. CC) b. (Art. when performed. j. Special power of attorney: an authority granted by the principal to the agent where the act for which it is drawn is expressly mentioned. that the agent may execute such acts as he may consider appropriate. h. CC) Power of attorney: a written authorization to an agent to perform specified acts in behalf of his principal which acts. Purpose: Not to define the agent’s authority. unless the agency has been entrusted for the purpose of contracting with such 3rd party. To create or convey real rights over immovables. To make payments. g. l. Sec.

2006) Apparent authority/doctrine of ostensible agency/agency by estoppel. If caused by the principal. Agana. CC) c. Ratification Rests on intention. 2006) In general. With respect to the agent: It relieves the agent from liability. Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a physician. then the hospital will be liable for the physician’s negligence. authority by estoppel Where the principal. 5. 2007) d. Simple or commission: agent acts in his own name but for the principal’s account. 3. The second factor focuses on the patient’s reliance-whether the plaintiff relied upon the conduct of the hospital or its agent. consistent with ordinary care and prudence. The first factor focuses on the hospital’s manifestations. There is actual agency. by his negligence. This doctrine involves 2 factors to determine liability. 2. The question is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence. He must have had knowledge of material facts. whether the hospital acted in a manner which would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital. authority to represent another. (Nogales v. Agency by Estoppel 1. conversant with business usages and the nature of the particular business. Agency by estoppel: there is no agency. With respect to the principal: He assumes responsibility for the unauthorized act. 2. CIVIL LAW hospital. Principal alone is liable. The hospital need not make express representations to the patient that the treating physician is an employee of the 100% UP LAW UP BAROPS 2008 Page 201 of 325 . thus without rights & duties as an agent. has held out a particular physician as its agent and/or employee and that a patient has accepted treatment from that physician in the reasonable belief that it is being rendered in behalf of the hospital. PNR. (Art. The exception is if the physician is the hospital’s “ostensible” agent. With respect to 3rd persons: They are bound by ratification. 3rd person in good faith. 4. The act must be capable of ratification. but not real. but he is not liable for acts outside the authority approved by his ratification. thus with rights & duties as an agent. Ratification need not be expressed to the agent or 3rd party.AGENCY b. WON the physician is an independent contractor. unless the patient knows. The act must be done in behalf of the principal. Estoppel Rests on prejudice. and the alleged agent seemed to have apparent or ostensible. He may also recover compensation. a representation may be general and implied. or should’ve known that the physician is an independent contractor. In cases where it can be shown that a hospital. by its actions. is justified in presuming that such agent has authority to perform the particular act in question. permits his agent to exercise powers not granted to him. Capitol Medical Center. 2. 1883. Implied Agency 1. he is responsible. (Angeles v. He must ratify the acts in its entirety. Effects of ratification: 1. the 3rd party may revoke the unauthorized contract. as fully as if the agent had acted under original authority. The principal must have capacity and power to ratify. Before ratification. principal knowingly permits or holds out the agent as possessing the necessary powers to act in a certain way. he is responsible. a hospital isn’t liable for the negligence of an independent contractorphysician. Agency by Ratification Conditions for ratification: 1. If caused by the agent. One professing to act as agent for another is estopped to deny his agency both as against his asserted principal and third persons interested in the transaction which he engaged in. even though the principal may have no notice or knowledge of the conduct of the agent. 3. Provided. They cannot question agent’s authority. apparent authority Though not actually granted. (Professional Services Inc v. imposes liability because of the actions of a principal/ employer in misleading the public into believing that the relationship or the authority exists. 2. There is no actual agency.

If there are ambiguous instructions c. CC). CIVIL LAW Obligation of person who declines an agency: under equity he is still bound to observe bono paterfamilias in the custody and preservation of the property forwarded to him by the owner. CC) Basis: principal’s obligation to reimburse the agent Exception: insolvent principal (Art. 1885. 1886. CC) d) To act in instructions accordance with OBLIGATIONS OF THE AGENT a) To carry out the agency he accepted Acceptance of agency: person is free to refuse the agency. b) To act within authority the scope of 7. c. CC) Rationale: There is no representation. 1888. 1888. the transaction. However. 1881. 1882. CC).AGENCY Affects the entire Affects only transaction from the relevant parts of beginning. Partially disclosed third is unaware of the principal’s identity. c) To advance the necessary funds Obligation to advance funds: when the contract stipulates that the agent shall advance the necessary funds. Undisclosed General rule: If the principal is undisclosed. v. in order to protect 3rd persons against possible collusion between the agent and the principal. (Art. Insubstantial departures Absence of instructions: agent shall exercise the diligence of a good father of a family as required by the nature of the business/transaction (Art. the agent must finish the transaction/business already begun on the principal’s death (Art. the owner must act as soon as practicable either by appointing an agent or by taking charge of the property. 1883. 100% UP LAW UP BAROPS 2008 Page 202 of 325 . (Art. CC) When agency shouldn’t be carried out: if its execution would manifestly result in loss/damage to the principal (Art. rule that death extinguishes agency. CC): authority is the power to act within the scope of his assignment on his principal’s behalf with binding effect on the latter. but once he accepts he’s bound to carry it out (Art. the agent is directly liable to the person with whom he had contracted as if the transaction were his own. Banco Español-Fil. scope of action. 1884. (Behn Mayer & Co. The substance of estoppel is the principal’s inducement to another to act to his prejudice. CC) The agents who made a contract in their own names may sue the third person. Obligation to answer for damages: the agent is liable for damages suffered by the principal due to his non-performance (Art. (Art. CC). Obligation to finish business upon principal’s death: if delay will entail any danger to the subject of the agency/principal. CC). The agent must act within the scope of his authority (Art. Exception: When the contract involves things belonging to the principal. When departure from instructions is justified: a. CC) since he’s authorized to do such acts as may be conducive to the accomplishment of the agency’s purpose (Art. Disclosed b. Sotto Matti). In sudden emergencies b. CC) Authority Instructions The sum total of the Only a private rule powers committed or of guidance to the permitted to the agent agent Relates to the Refers to the subject manner or mode of (biz/transaction) agent’s action with with which the agent respect to matters is empowered to within the permitted deal or act. 1884. Kinds of principal a. But the agent isn’t deemed to have exceeded the limits of his authority should he perform the agency in a manner more advantageous to the principal (Art. 1884. His recourse is against the agent. The substance of ratification is confirmation of unauthorized acts or conduct after it has been done.) The undisclosed principal can’t sue the third person on a contract concluded by the agent in his own name (Smith Bell & Co. CC) in accordance with its terms in good faith and following the principal’s instructions. 1883. 1881. This is an exception to the gen. 1886. (Art. v.

315. c. it is clear that she isn’t prohibited from appointing a substitute.AGENCY Limits of authority Binding only on the operate vs those principal and agent who have/are charged with knowledge of them. agent is responsible for substitute’s acts (Art. CC) b. Lim. 1892. 5) Power to appoint sub-agent/substitute: unless prohibited by the principal. If the authority of the sub-agent proceeds from the principal. The principal waives the benefit of the rule. The interests of the agent are superior. RPC) b. CC). If sub-agent is appointed by the agent on the agent’s sole account. (Art. the relation of principal-agent generally exists between the original principal and the sub-agent.not terminated. 1890. 315. and the principal did not object. 1891. d." among which is precisely the sale of the subject properties in favor of respondent. (Restatement of the Law on Agency. A right of lien exists in favor of the agent. Applying the law to the SPA executed by Rubio in favor of his daughter Llamas. 100% UP LAW UP BAROPS 2008 Page 203 of 325 . Exception: a. 1892. Sums belonging to the principal applied to agent’s own use: agent liable for interest as compensation/indemnity from the day on which he did so. but she will have to be "responsible for the acts of the sub-agent. 1889. for there is no danger of damage to principal. demand unnecessary. as his agent. CC). 1892. Substitution authorized – agent is released from responsibility unless substitute is notoriously incompetent or insolvent (Art. the agent is liable for estafa (Art. Solutio indebiti h) To be responsible substitutes for CIVIL LAW Effects of Substitution: a. 1891. the performance of an act for the principal which the agent has been empowered to perform through his representative. CC). e) To be loyal Obligation not to prefer own interest: agent is liable for damages if. Effect of death of the original agent: a. 2007) i) To pay interest 2 cases under Art. 1892. Sec. If he fails to do so or uses the money/property for his own use. b.if caused damage to principal. agent is absolutely exempted c. acts under the authority of. Relation among the principal. CC). b. provided he does so with full knowledge of the facts. Substitution not authorized. Stipulation exempting the agent from this duty is void (Art. Agent owes sums even after the end of the agency: agent liable for interest from the date the agency is extinguished. without prejudice to criminal liability (Art. not prohibited – valid if beneficial to the principal . 1893. CC). g) To render accounts and deliver things received by virtue of the agency Obligation to render accounts: agent’s duty to account for and deliver to the principal all money and property received by virtue of the agency (Art. The agent or broker acted only as a middleman (Domingo v. there being a conflict of interests. he prefers his own (Art. The principal has a right of action against both the agent and substitute (Art. CC). b. The agent or broker informed the principal of the gift or bonus or profit he received from the vendee. Llamas merely acted within the limits of the authority given by her father. CC) for he may be a bad debtor. and is accountable to. If the sub-agent is a substitute for. Inapplicability: a. the sub-agent is a stranger to the original principal.if the substitute is the one designated by the principal. the agent. the sub-agent’s authority is terminated even if the power of substitution is given in the original power. (Escueta v. 1893). By authorizing Lim to sell the subject properties. the agent may appoint one (Art. Agent authorized to lend money: needs the principal’s consent (Art. Substitution prohibited – all the substitute’s acts are void (Art. RPC). If sub-agent is appointed by the agent with the principal’s authority. 1891. Agent is bound to deliver the money hence. CC) Sub-agent: Person to whom the agent delegates. 1896. CC: a. CC). 1890. Domingo) b. CC) and principal with right of action against substitute (Art. b. agent and subagent: a. f) To borrow money a. . Agent empowered to borrow money: agent may himself be the lender at current rate of interest (Art.

and when he exceeds his authority. 1904. 1897 presents 2 instances when an agent becomes personally liable to a third person: when he expressly binds himself to the obligation. CC) d. If without authority. and is entrusted by the principal with its possession (Mechem on Agency) Obligations of a commission agent: a. not liable Gen. merely acts as an intermediary between the sellers and the buyer. make a written statement of the damage and deterioration of the goods upon receiving them (Art. 1883. Sale on credit – only if with principal’s express or implied consent (Art. 1897. CC) k) Factor/Commission agents Factor/commission agent: one whose business is to receive & sell goods for a commission. 1883. Liability: that the agency is or isn’t gratuitous will be considered by the court in fixing the liability of the agent (Art. shall be deemed to have been made on a cash basis if agent fails to inform the principal of such sale and of the names of the buyers (Art. CC) c.if authorized. e. (NPC v. The agent exceeds his authority without giving the other party sufficient notice of his powers (Art. Exception: if the contract involves things owned by the principal. [Tuason v Orozco. CC): he is directly bound in favor of the person with whom he contracted. ratify the sale . 1897. CC) b. CC) 2. CC). Has a relation with Maintains no the principal (buyers relation with the thing which he or sellers) and the purchases or sells. unless he can show that the credit is uncollectible despite the exercise of due diligence (Art. Need not have possession of the goods of the principal. 3. principal with 2 alternatives: 1. The agent exceeded the scope of his authority and undertook to secure principal’s ratification (Art. 1908. CC): the contract is unenforceable against the principal. The agent’s individual liability constitutes a further security in the creditor’s favor and doesn’t affect/preclude the principal’s liability. for whose benefit the debt was incurred. CC). from liability. 1909. In case of 100% UP LAW UP BAROPS 2008 Page 204 of 325 . 1898. for a principal. Nat’l Merchandising Corp. for depriving the third party of any remedy against the principal. commission agent Acts in his own name or in that his principal. 1907. To collect the principal’s credits when they are due & demandable – agent is liable for damages if he fails to do so.) 4. 1905. the agent can be held liable if he does not give the third party sufficient notice of his powers. Responsibility for goods received as described in the consignment – to avoid liability. Must be in possession of the goods of the principal. That the agent has also bound himself to pay the debt doesn’t relieve the principal.AGENCY j) To answer fraud/negligence for his commission agent Engaged in the purchase and sale. the agent is liable. (Art. rule: an agent who acts as such isn’t personally liable to the party with whom he contracts (Art. This exception doesn’t apply if there’s a guarantee commission. 1903. CC) Exceptions: 1. 1939] LIABILITIES OF THE AGENT When liable. ordinary agent Acts for and in behalf of the principal. 1906. CC). If agent receives a guarantee commission – agent bears the risk of collection (Art. The agent expressly binds himself (Art. property which is the object of the transaction. CC). In the last instance. The guarantee commission is paid to the agent in addition to the ordinary commission agreed upon. 1906] Art. If handling goods of same kind and mark with different owners – distinguish them by countermarks and designate the goods owned by each principal (Art. The agent acts in his own name (Art. CIVIL LAW Broker Has no custody or possession of the thing he disposes. [Pacific Commercial v Yatco. CC): he obligates himself personally and by his own act. require payment in cash – any interest/benefit from the sale shall go to the agent 2. 1897. of personal property which has to be placed in his possession and disposal.

are held criminally accountable. by virtue of their managerial positions or other similar relation to the corporation. 1894. To advance the necessary sums and reimburse the agent Obligation to advance funds: the principal must advance to the agent. if they fail to do so. 1901. an act is within the scope of authority if it’s within the terms of the power 100% UP LAW UP CIVIL LAW of attorney as written. fault/negligence of fellow agents. (Art. 1910. 1912. b. (Art. the sums necessary for the execution of the agency. 1898. Liability of 2 or more agents Gen. When agent acts within scope of authority Within the scope of authority: for third persons. b. Exception to exception: when some agents acted beyond the scope of their authority. 1910. rule: joint liability Except: if solidarity is expressly stipulated. the law specifically makes the officers/employees responsible for the offense. v. in his own behalf. (Art. follow the rule on double sales in Art. CC. the agent is liable. the principal isn’t bound unless he ratifies it. CC). But he can’t be bound by private/secret orders and instructions of the principal (Art. CC) Liability to 3rd persons. CC). 1895. upon his request. CC) OBLIGATIONS OF THE PRINCIPAL 1. As a rule. (Art. the contract is unenforceable against the principal. or 2. CC) The principal is liable. (Art. CC) 2. Principal is estopped: though the agent exceeded his authority. Agent promised to secure the principal’s ratification and failed – agent is liable. the latter can’t use the agent’s ignorance as to circumstances where he himself was/ought to have been aware. a 3rd person deals with an agent at his peril. If applicable. the law doesn’t say that a third person can recover from both the principal and the agent. CC). the third party's liability on a contract is to the principal and not to the agent. CC) 2. the principal is bound if he ratifies the contract (Art. Agent in good faith – principal is liable for damages. Presentation of power of attorney or instructions: may be required by 3rd persons (Art. 2006) Effect where 3rd person aware of limits of power: if agent exceeded the scope of his authority and the principal didn’t ratify the contract. 2007) Though the entrustee is a corporation. or 2. However. To comply with the obligations contracted by the agent Principal is bound: he must comply with all the obligations arising from the agent’s authorized acts. could be deemed responsible for its commission. the principal is liable if he allowed the former to act as if he had full powers (Art. CC). 1899. if by virtue of their relationship to the corporation. 1916. Sec. Contract ratified – principal is liable. who. CC) Ratification: if the agent exceeds his authority. if agent & principal contracted separately: a. solidary liability (Art. PNR. CC) for: 1. Agent in bad faith – agent is liable. innocent agents aren’t liable. and void between the agent and the third person. When 3rd person can’t use as a defense the agent’s lack of authority: 1. the agent may. (Ching v.AGENCY excess of authority. If 2 agent a. (Art. The principle applies to those corporate agents who themselves commit the crime and to those. If the agent acted beyond his authority. where an agent is constituted as an assignee. 1911. (Art. sue on a contract made for his principal. CC) 1. non-fulfillment of the agency. 1902. they had the power to prevent the act. 1900. (Angeles v. 1544. of Justice. 1902. 1917. Cuizon. CC) Without ratification. (Eurotech Industrial Technologies Inc. Effect of agent’s ignorance: if the agent acted in accordance with the principal’s orders. The principal has ratified the contract. Principal signified his willingness to ratify. (Art. Such officers/employees are vested with the authority and responsibility to devise means necessary to ensure compliance with the law and. (Art. CC). even if the agent in fact exceeded the limits of authority based on an understanding between him and the principal (Art. 2006) Where agency exists. without prejudice to the civil liabilities of such corporation and/or board of directors. persons contract simultaneously with & principal for the same thing: Contract of prior date prevails. these must be reimbursed by the principal with interest from 2008 Page 205 of 325 BAROPS . CC) Obligation to reimburse: if the agent advanced the sums necessary. 1898.

2121. 1914-1915 are applicable here. But agent isn’t entitled to the excess in case the thing was sold to satisfy his claim. and an executory contract entered into in fraud of the 1st employer is unenforceable. if the principal was unaware thereof. both he and the agent are guilty. 1912.J. v. even if the business wasn’t successful (Art.insolvency b. b. Hence. 1918. When the agent incurred them knowing that an unfavorable result would ensure. Note: Arts. (Art.civil interdiction . agreed upon. the agent can recover from both of the principals. If the 2nd employer has knowledge of the 1st employment. or b. and the proceeds are more than his claim (Arts. CC). c. the reasonable value of the services. Saban) In case of double agency: a. CC) 3. By the principal’s/agent’s . CC). CA) EXTINGUISHMENT OF AGENCY Quick glance: Ways to extinguish agency Mode 1. Accomplishment of object/purpose Page 206 of 325 Obligation to indemnify agent: for damages which the execution of the agency has caused the agent. By the parties’ subsequent acts Way of extinguishing a. When it was stipulated that the expenses would be borne by the agent.death . c. Agent’s withdrawal 2. CC) Agent’s right to retain object of agency in pledge: if the principal fails to reimburse the agent (Art. the broker is personally liable. 4. 1914. (Prats v. If both principals have knowledge of the double employment. and c. When agent is entitled to compensation: only after he has completed/substantially completed his obligation. Exceptions to the obligation of advancement/ reimbursement: a. principles of contract law apply. This is based on fairness. By the firm’s/corporation’s dissolution 3. b. (Art. the agent can’t recover from either. Cunanan) 100% UP LAW UP BAROPS 2008 . When the expenses were due to the fault of the agent. 1915. he isn’t entitled to compensation. If the agent acted in contravention of the principal's instructions. Since the principals of the broker are generally undisclosed. By agreement a.AGENCY the day the advance was made. 2006) If a broker isn’t efficient in procuring cause in bringing about the sale. Also he must possess the thing lawfully in his capacity as agent (2 C. Agent can’t be deprived of agreed commission by the principal by dealing directly with the buyer. There are 2/more principals. CC). Brokers have a right to be reimbursed for sums advanced by them. so long as the agent isn’t at fault (Art.insanity. To indemnify damages the agent for CIVIL LAW It would be in the height of injustice to permit the principal to terminate the contract to the broker’s prejudice when he had already reaped the benefits of the broker’s efforts. (Abacus Securities Corp. When principals solidarily liable for the agency’s consequences: a. b. Principal’s revocation b. The agent is appointed for a common transaction/undertaking. 1913. petitioner had to advance the payments for respondent’s trades. Brokers: One who negotiates contracts relative to property in behalf of others and for a fee. or that the latter would be allowed only a certain sum. They all concurred in the appointment of the same agent. CC). To pay compensation the agent’s Presumed for compensation: the principal must pay the compensation – a. 457). d. Ampil. 2115. If both principals have no knowledge of the double employment. (Infante v. (Lim v. By operation of law a. Since a brokerage relationship is essentially a contract of agency. unless principal derives benefits. The principal’s act is unfair as would amount to bad faith. or .

Gen. [Coleongco v Claparols. As to other persons: Notice by publication is enough. Revocation: termination by the subsequent acts of the principal. Effect of revocation wrt 3rd persons: (Arts. As to former customers: Actual notice must be given to them because they always assume the continuance of the agency relationship. CC). acts of the agent are deemed valid. such as when – a. Agency to contract with general public Won’t prejudice those in good faith & w/o knowledge. By the subsequent acts of the parties either by mutual consent or unilaterally. the agency is coupled with an interest. a. This is an implied revocation. The irrevocability of the power of attorney may not be used to shield the perpetration of acts in bad The principal has a duty to give actual notice of the revocation of the agency to third parties. Except (BIW): 1. No period fixed: principal liable if the agent can prove the former acted in bad faith. 1920. May be express or implied. Revocation without notice to the agent will not render invalid an act done in pursuance of the authority. a partner is appointed manager of a partnership and is removed unjustifiably. 1960] Principal’s liability for damages despite revocation of agency: 1. 1911] As to the agent: Express notice is always necessary. If the agent’s authority is in writing. or betrayal of trust. and not merely in the exercise of the power as it entitles him to compensation. Revocation by direct management by principal: when the principal deals directly with 3rd persons (Art. By the principal’s revocation. Notice must be personal. b. As to 3rd persons: Express notice is necessary.) Agency coupled with an interest can’t be terminated by the sole will of the principal since third persons are involved. Expiration period 4. Other modes extinguishment obligations b. the principal waived his right to revoke (New Manila Lumber Co. it’s the means of fulfilling an obligation already contracted. breach of confidence. Abad) An agency coupled with interest may be revoked when the agent acts to defraud the principal. v. 2. a bilateral contract depends on it. This is an implied revocation. Insofar as 3rd parties acting in good faith and without knowledge of revocation. CC). though it’s revocable after the interest ceases. b. c. The 2 agencies must be incompatible. Notice may be personal. rule: principal may revoke the agency at will (Art. Rep. (Art. Changes conditions d. (Del Rosario v. CC). 1927. CC) Agency to contract with specific persons Won’t prejudice 3rd persons until notice is given them. Other modes a.CC). Agency with a fixed period: principal liable due to wrongful discharge of agent before end of the period. [New Manila Lumber v Republic. [La Compania General de Tobacos v Diaba. the principal may compel him to return this document (Art. CC) 1. 100% UP LAW UP BAROPS 2008 Page 207 of 325 . 1964] Irrevocability of the contract cannot affect 3rd persons and is obligatory only on the principal who executed the agency. Revocation by appointment of a new agent: effective when notice is given to the former agent (Art. Changes in law c. War of of of in Modes of extinguishment (Art.AGENCY CIVIL LAW faith. the revocation is done in bad faith (Danon v. 2. 1924. Brimo). The interest of the agent must be in the subject matter of the power conferred. 1919. CC) 3. 1921-1922. 1920. 1923.

CC). Other modes: 1. with just cause: if due to impossibility of continuing with the agency without grave detriment to himself (Art. The knowledge of the 2 must concur. The agent may withdraw at will. power is revoked by a special one wrt the special matter involved in the latter (Art. But they cannot continue the agency. 1928. By the agent’s withdrawal. CC). 1931. wrt business already begun when the principal died. Sec. CC) 3. files a complaint against the principal and adopts an antagonistic attitude towards him (Valera v. CC). of the of the b. Exceptions: a. the original circumstances are restored within a reasonable period of time b. By the expiration of the period of the agency. without just cause: agent with duty to give due notice to the principal and to indemnify the latter. civil interdiction. CC) 2. CC). Implied renunciation: 1. 1932. As there’s an integration of the principal’s personality into the agent’s. wrt acts done by the agent who didn’t know of the principal’s death (Art. Right to withdraw: based on the prohibition against involuntary servitude (Art. 1174. 1930. or in the interest of a 3rd person who accepted the stipulation in his favor (Art. agent has reasonable doubts as to whether the principal would want him to act. CC). The list isn’t exclusive. or due to a fortuitous event (Art. CC) 2. (Rallos v. By the principal’s/agent’s death. Go Chan & Sons) Agent’s death: his heirs are obligated to notify the principal and to adopt such measures as the circumstances may demand for the principal’s interest (Art. the agency is constituted in the common interest of the principal and agent. By the dissolution firm/corporation. Obligation to continue to act: agent must continue to act until the principal has had reasonable opportunity to take the necessary steps to remedy the situation caused by the withdrawal (1929. 2. agent conducts himself in a way incompatible with his duties. it’s impossible for agency to continue once the death of either is established. III. 1919 are those peculiar to agency. otherwise the agent’s act void and unenforceable. Velasco). Changes in law affecting the subject matter/transaction involved in the agency (2 Am. Other Modes The modes enumerated in Art. agency by operation of law b. By agreement. 1926. CC). 1291. CC). 61) Except: a. Felix Go Chan & Sons) Except: 1. Modes of extinguishment of obligations (Art. Changes in conditions not anticipated by the parties (2 Am. insanity or insolvency. Jur. 1. CIVIL LAW 2. if delay would cause danger (Art. power: a gen. and the agent knows that the principal is aware of the change and 100% UP LAW UP BAROPS 2008 Page 208 of 325 . agent abandons the object of agency and acts for himself in committing a fraud upon the principal. Partial revocation of gen. 3. By operation of law. the principal and agent are in close daily contact. Jur. 18. a. 1925. By the accomplishment agency’s object/purpose. 3. agency coupled with an interest in the subject matter of the agency b. 1884. 75) 3. purposes not accomplished). b. the agent can’t be held liable. 2. 1987 Constitution). should he suffer damages due to the withdrawal (Art. subject to the contractual obligations to the principal (fixed period of agency. 1928. CC).AGENCY Revocation if with 2/more principals: one of the principals may revoke the power of attorney without the others’ consent (Art. (Rallos v. his authority won’t be terminated if he acts reasonably c. a. An act done by the agent after the principal’s death is valid and effective only if the agent and the 3rd person knew of the death.

AGENCY doesn’t give instructions 4. agency is presumed to continue. Outbreak of war him new CIVIL LAW Presumption of continuance of agency: once shown to have existed. 100% UP LAW UP BAROPS 2008 Page 209 of 325 . without anything showing termination.

Nature. 7. 8. Creation of a Partnership Classification of Partnerships and Partners Obligations of Partners Obligations of Partnerships Rights of Partners Rights of Partnerships Dissolution and Winding Up Settlement of Accounts Between Partners Limited Partnership Limited Partner 211 212 214 217 218 220 220 223 223 225 100% UP LAW UP BAROPS 2008 Page 210 of 325 . 10. 6. 3.PARTNERSHIP CIVIL LAW Partnership TABLE OF CONTENTS Section Section Section Section Section Section Section Section Section Section 1. 9. 5. 4. 2.

Principle of delectus personae: no one can be a partner without the consent of all the partners. CC) Exceptions: 1. Where circumstances taken singly may be inadequate to prove the intent to form a partnership. Personality commences from SEC’s issuance of the certificate of incorporation Can exercise such powers expressly granted by law or incident to its existence Power to do business is vested in the board of directors/ trustees Suit against the board/director who mismanages must be brought in the corp. A mutual contribution of money. Consensual 4. CC) Essential features: 1. or industry to a common fund 4.PARTNERSHIP NATURE. (Art. 1769. 1773. An annuity d. or illegal purposes (Aguila v CA).every partner is an agent of the partnership A partner as such may sue a copartner who mismanages Corporation Created by operation of law Requires at least 5 incorporators. Principal 6. CC) 9. General Rule: Persons who are not partners to each other are not partners as to third persons. CC) – written in a public instrument with a signed inventory of the contributions. Fiduciary 2. CC) 5. Preparatory 8. Wages or rent c. Interest on a loan e.000. Nominate 3. which must be recorded in the SEC. with the intent of dividing the profits among themselves.’s name Page 211 of 325 . 2/more persons bind themselves b. 1772. May be organized by only two persons Juridical personality commences from the moment of execution of the contract of partnership May exercise any power authorized by the partners as long as it is not contrary to law. Where the capital is at least P3. Bilateral/multilateral 5. etc. (Heirs of Tan Eng Kee v CA) Distinctions Partnership Created by mere agreement of the parties. the collective effect of these circumstances may be such as to support a finding of the existence of the parties’ intent. Prima facie evidence of partnership: receipt of a share of the business profits Except if received in payment as: a. 1771. CC) But a partnership has a juridical personality even if requirement is not complied with. CIR) Whether a partnership exists is a factual matter. unfair. Where immovable property or real rights are contributed (Art. 1770. a co-ownership of inherited properties is automatically converted to an unregistered partnership when these are used as a common fund with intent to produce profits for the heirs in proportion to their shares in the inheritance as determined in a project of partition. 100% UP LAW UP BAROPS 2008 CIVIL LAW 2. The primary purpose is to obtain profits and divide the same among the parties Characteristics: 1. property. There must be a valid contract 2. 1767. Has a lawful object (Art. (Oña v. by itself 3. Profit oriented The partners can’t be held liable for the partnership’s obligations unless it is shown that the legal fiction of a different juridical personality is being used for fraudulent. Consideration in a sale For tax purposes. A debt by installment b. CC) 2. Co-ownership and sharing of gross returns don’t establish a partnership. . in money or property – need a public instrument. (Art. With legal personality (Art. exception: partnership by estoppel. or industry to a common fund. Rules to determine the existence of a partnership (Art. Onerous 7. 1768. If no agreement as to mgt. Form of Contract General Rule: No special form is required (Art. (Art. The parties must have legal capacity 3. CC) 1. 1771. c. property. CREATION OF A PARTNERSHIP Essential Features Contract of Partnership: a. to contribute money.

it may engage in a joint venture (Heirs of Tan Eng Kee v CA). 1780. As to all present property (Art. CC) As to publicity a. Commercial/trading b. which would be inconsistent with the policy that the corporation shall manage its own affairs. can’t enter into a partnership contract. 1777. BAROPS 100% UP LAW . CC) As to legality of existence a. 1772. 2. 1773. a joint adventure is a form of partnership.PARTNERSHIP Has no right succession of Has right succession of CIVIL LAW shares and any stipulation to the contrary is void.(Art. Open – known to the public b. and is of a temporary nature.. 29. Ordinary/real – really exists between & among the partners themselves and as to third persons b. Partnershi p Creation Always created by a contract Coownership Gen. distinct juridical personality Realization of profits CLASSIFICATION OF PARTNERSHIPS AND PARTNERS Kinds of Partnerships 1. CC) b. 6. A co-owner can’t represent the co-ownership Death or incapacity of a co-owner doesn’t dissolve the co-ownership There is mutual agency no Power to act with Third Persons Dissolution 5. As to nature a. 1830[1a]. law. CC) i. may exist even without a contract Has no juridical personality Juridical Personality Has a separate. CC) ii. CC) b. CC) As to partners’ liability 2008 Page 212 of 325 Purpose Common enjoyment of a thing or right Property can’t be undivided for more than 10 years A co-owner can dispose of his share without the consent of the others Duration No limitation upon the duration is set by law Need unanimous consent of partners to make assignee of interest a partner A partner may bind the partnership Death or incapacity of a partner dissolves the partnership There mutual agency is Transfer of Interests 3. (SEC OPINION to Antonio Librea dated Feb. Particular (Art. 1825. At will (Art. separately and exclusively. With a fixed term . Under Phil. 1783. Ostensible/by estoppel – deemed one only in relation to transacting third persons (Art. As to profits (Art. Professional As to duration a. Representa -tion Profits Must be stipulated upon Must always depend upon proportionate UP 7. Secret As to its object a. 1785. 1778. This is based on public policy. Universal (Art. The partners are liable personally and subsidiarily for partnership debts Based on delectus personam May be established for any period of time stipulated May be dissolved at anytime by the will of any or all partners Governed by the Civil Code The stockholders are liable to the extent of the shares subscribed by them Not based on delectus personam May not be formed for a period exceeding 50 years May be dissolved only with the consent of the state Governed by the Corporation Code A corp. 1980) The main distinction is that the partnership contemplates a general business with some degree of continuity. De jure – has complied with all the necessary requisites for lawful establishment (Arts. CC) unless continued by some/all the partners (Art. created by law. CC) b. Although a corporation cannot enter into a partnership contract. since in a partnership the corporation would be bound by the acts of persons who aren’t duly appointed and authorized agents and officers. De facto – failed to comply with the requisites As to representation to others a. 4. 1785. while the joint adventure is formed for the execution of a single transaction.

1789. Universal Partnership: All present property All present property actually owned by partners are contributed  become common property of the partnership & the partners. 1822-1824. descendants. As to value of contribution a. pro rata to his contribution 1. As to effect of expulsion a. As to continuation of business affairs after dissolution a. or BAROPS 2008 Page 213 of 325 . As to state of survivorship a. Liquidating – winds up the affairs after dissolution 10. if none. CC) b. represents himself as a partner of an existing partnership when he isn’t. Real – a contributing member b. Continuing b. 1782. CC) Types. Deceased 6. FC) b. other profits may. Limited/Special – only to extent of contribution (Art. stipulation as to losses 2. if none. As to membership a. Only profits from the property contributed become common property. 1776. All profits Property owned by the partners when the partnership was formed continue to pertain to them  only the usufruct becomes common property All profits acquired through partners’ industry/work become common property. 1804. legally married. CC) 8. Other special classifications a. 1843. a person & a public officer (or his wife. CC) b. Surviving – continues to be a partner after dissolution due to death of a partner b. be considered as common property. pro rata to contribution Who are prohibited from entering into universal partnerships: those prohibited from giving donations (Art. Capitalist-Industrial 9. Subpartner – related only to the regular partner (Art. 1840[6]. consents to another representing him to anyone as a partner in an existing partnership. Capitalist – contribute money or property b. CC) b. the agreement as to profits 3. As to management a. 87. He can’t engage in business for himself 100% UP LAW UP Prohibition to engage in other business Profits Losses Exempted as to losses as between partners but it is liable to 3rd persons without prejudice to reimburseme nt from the capitalist partners Partnership and Partner by Estoppel Partner by estoppel: the representation of being a partner is done by 1 person only Partnership by estoppel: the representation involves several persons pretending to be a firm Requisites of “Partner By Estoppel”: 1. As to nature of membership a. Managing – manages the firm’s affairs b. Nominal 4. Incoming 5. CIVIL LAW unless expressly permitted (Art. 1843. common law spouses (Art. As to liability a. parties guilty of adultery/concubinage c. As to nature of contribution a. Limited (Art. Discontinuing 3. if none. CC) c. General – liable pro rata (Art. by stipulation. General/Real – liability extend to separate property (Art.PARTNERSHIP a. Expelling 7. Industrial – contribute industry/labor. CC) b. CC). Original b. CC) Kinds of Partners 1. CC) or solidarily (Arts. such as: a. Expelled (Art. or b. The person – a. 1816. Majority b. Silent – doesn’t participate in management c. Retiring – withdraws/retires from the partnership Industrialist Partner Contribution Contributes his industry Cannot engage in any business for himself Receives a just and equitable share Capitalist Partner Contributes money or property Can’t engage in the same or similar enterprise Shares in profits according to agreement thereon. By estoppel/Quasi-partner – not really a partner but represents himself as one 2. ascendants) by reason of his office (Art. 739. criminals convicted for the same offense in consideration of the same d.

Code). no agreement– by experts chosen by partners (Art. and the fruits weren’t delivered at the execution of the contract or any specified time. Rozamin). it should have such attribute of partnership as domicile. He is bound as a “partner” though he actually isn’t. 3. CC). 1825. it is a partnership de Rule when contribution is in goods: the amount must be determined by proper appraisal at the time of contribution. to indemnify the partnership for damages caused to it by delay in contribution of property (Art. 276) Other duties of contributing partners: a. the partner will be liable for the value of these fruits (Art.partner becomes the firm’s debtor for interest and damages from the time of 100% UP LAW UP BAROPS 2008 Page 214 of 325 . If the partnership wouldn’t have been constituted had it not been for the contribution. 2. the other partners may dissolve the firm (11 Planiol & Ripert. consents to another representing him to anyone as a partner with 1/more persons not actual partners. CC) Subsequent changes in value: will be for the firm’s account (Art. 1786. (MacDonald v. 1787. Corporation by estoppel: all persons are liable as general partners (Sec. No demand is necessary. No real partnership is created by estoppel. 1163. CC).Comply if mode of appraisal is agreed upon b. A de facto partnership is created. National City Bank) 2. On the faith of the misrepresentation. Obligation with respect to contribution of money. 1170. Obligation with respect to contribution of property Partner is a debtor: for whatever he had promised to contribute thereto (Art. The person becomes an agent of the existing firm and his act/obligation binds the firm. Appraisal contributed of goods or property Separat e existing partner ship no existing partner ship Existin g partner ship He who contracts with a partnership as such is estopped in a suit by the partnership against him growing out of such contract to claim that the partnership was not properly organized (Behn. 1786. If the law recognizes a defectively organized partnership as de facto as far as 3rd persons are concerned. (Art. It’s only insofar as 3rd persons are involved and for the purpose of protecting them that the principal of estoppel is recognized.PARTNERSHIP c. 1825. CC) Partner is a warrantor wrt contributions of specific & determinate things: he’s bound to warrant vs. CC) Partnership by estoppel: composed of the alleged partner and the partnership itself. When liability is: Pro rata Situation no existing partner ship all those represented as partners consented to the representatio n or not all of the partners consented only some of those represented as partners consented to the representatio n or none of the partners consented Who are liable person who represente d/was represente d as a partner and all those who consented person who represente d/was represente d as a partner and all those who consented CIVIL LAW facto and the general provisions of the Civil Code applicable to all partnerships apply to it. 21. 4. Third person relied on the misrepresentation. Remedy for breach of warranty: partnership may recover indemnity from contributing partner. CC) Liability for undelivered fruits: if the property is fruit-producing. to preserve the property with the diligence of a good father of a family (Art. v. 1786. OBLIGATIONS OF PARTNERS A. Meyer & Co. unaware of the deception. Although it has no legal standing or juridical personality. It arises when all the members of the existing partnership consented to the representation (Art. Contribute 1. Applicability of general provisions of partnership: 1. CC) b. 1787. a. The alleged partner can’t disallow liability by claiming he isn’t actually a partner. eviction (Art. CC) 3. the 3rd person gave credit to the actual/apparent partnership. CC) 2. and money converted to personal use Sanctions: a. Corp.

Compensation is inapplicable as its requisites are absent. 1794. upon the vote of the partners representing the controlling interest (Art. CC). and the debtor later becomes insolvent. Managing partner should: a. CC). There is no agreement to the contrary If refused to contribute: the partner must sell his interest in the partnership to the other partners (Art. 2008 Page 215 of 325 100% UP LAW UP BAROPS . 1795. Obligation of partner who receives share of partnership credit Receipt of share in partnership credit: if a debtor made a partial payment of his debt to the partnership. CC). not fungible where only usufruct is contributed Specific & determinate things. CC) b. 1791. CC) C. CC) Industrial partner is exempt from sanction. b. 1800. payment of 12% interest as interest on forbearance of money (Martinez v. where a partner received his share of the credit and the others haven’t. 6. CC) 7. Bring to partnership capital credit received Equal contribution by general partners: capitalist partners shall contribute equal shares to the capital of the partnership (Art. Ong Pang Co) When money or property have been received by a partner for a specific purpose and he later misappropriated it. 1793. Obligation of capitalist contribute additional capital partner to CIVIL LAW though the receipt he issued covered only his share (Art. He has the powers of a general agent and all incidental powers essential for the carrying on of the firm’s purposes. 1790. for any cause (Art. c. Obligation partner of collecting managing Risk is borne by partnership Risk is borne by partnership Risk is borne by partnership Risk is borne by partnership Things contributed to be sold Things brought appraised in inventory and the Requisites: a. both demandable. Issued receipt for partnership’s account  apply whole sum to partnership’s credit (Art. such partner is guilty of estafa. 1792. If issued receipt for own account only  apply the sum to the 2 credits in proportion to their amounts b. Pay damages Liability for damages due to partner’s fault: the damages can’t be compensated with the profits & benefits he may have earned for the partnership by his industry (Art. CC). If MP appointed in the articles of partnership: power is irrevocable Except: 1. the partner who received his share shall bring to the partnership capital what he received D. Cf. requisites: a. one credit is owed to the partnership. 2. 5. the other to the collecting partner who’s a managing partner. with ownership transferred to partnership Fungible (consumable) things Risk is borne by partner To contribute additional capital in case of imminent loss. Mitigation of liability: if through his extraordinary efforts in other activities unusual profits have been realized (Art. The majority of the capitalist partners are of the opinion that an additional contribution to the common fund would save the business c. CC) In case of conflict: if – 1. 1792: in 1793 there’s only 1 debt where the partnership is the creditor. 2 separate credits. 1800. 1800. 1794. Bear risk of loss Risk of loss of things contributed (Art. there’s no specification of their respective duties. There is an imminent loss of the business b. 1788. CC): owner bears the loss Specific & determinate things. 2/more partners are appointed MPs. CC) If power granted after constitution of partnership: revocable any time. (Liwanag v CA) 4. Capitalist partner refuses deliberately to contribute an additional share d. B. Mutual Agency Appointed managing partner’s (MP) power: execute all acts of administration despite his partners’ opposition unless he acts in bad faith (Art.PARTNERSHIP his failure to contribute or from time of conversion (Art. lawful cause 2. with just.

all the co-partners have authorized a partner to execute the act 2. CC) Art. F. to the other’s detriment. If any MPs oppose the others’ acts – the issue shall be decided by the majority of the MPs. 1802. Important changes in the firm’s realty require unanimity (Art. liquidation of the partnership. CC). derived from the use of the partnership’s funds or property (Art. 1807. Liable for Partnership contracts Liability of partnership & partners for partnership contracts: pro rata. CC). unless the partner had in fact no authority and the 3rd person dealing with him knew of such fact These acts only bind the partnership if the partner was in fact authorized by the copartners Not binding on the partnership if the 3rd person knew of the restriction CIVIL LAW Liability of a partner acting without authority: personal liability E.1818. Render full information Duty to give info: on demand. Partner shall hold as trustee for partnership any profits: 1. Re: 7 acts of dominion in Art. 1816. formation. The private property of the partners can’t be seized for satisfaction of partnership debts until all the partnership assets have been exhausted. all the co-partners have abandoned the business 100% UP LAW UP BAROPS . but 2008 Page 216 of 325 Presumption: that each individual partner is the firm’s agent & that he has authority to bind the firm in carrying on the partnership transactions. In case of tie – the issue shall be decided by the partners owning the controlling interest (Art. 1821. 2. G. with all their property (Art. rule: stipulation against pro rata liability is void Except: such stipulation is valid by & among the partners (Art. CA). Sycip). 1817. even if an MP is absent/incapacitated unless there’s imminent danger of grave or irreparable injury (Art. 1822-1823 (Muñasque v. CC). While the liability of the partners are joint in transactions entered into by the partnership. A 3rd person has the right to presume that a gen. derived without the others’ consent from any transaction connected to the – a. 1803. Then – each MP may separately execute all acts of administration. CC: can be done on the partnership’s behalf if all the partners jointly act. there’s no stipulation that 1 of them shall not act without the others’ unanimous consent. Lo Seng). all partners are considered agents 2. 1817 vs. The exemption of an industrial partner from paying losses relates exclusively to the settlement of the partnership affairs among the partners themselves. 1806. CC) If without agreement on manner of mgt: 1. partner dealing with partnership property has the requisite authority from his co-partner (Goquiolay v. b. 1799: it is permissible to stipulate among partners that a capitalist partner will be exempted from liability in excess of the original capital contributed. Joint management: if there’s a stipulation that none of the MPs shall act without the others’ consent. to give true & full info relating to partnership affairs (Art. 1801. CC) Those apparently for the carrying of the partnership’s business in the usual way Those not apparently for carrying on the partnership’s business in the usual way Those in contravention of a restriction on authority These acts bind the partnership. Except: 1. a 3rd person who transacted with the partnership can hold partners solidarily liable for the whole obligation if the 3rd person’s case falls under Arts. or c. Account for benefits A partner can’t. apply exclusively to his own benefit the results of the knowledge and info gained in the character of partner (Pang Lim v.PARTNERSHIP 3. This presumption permits 3rd persons to hold the firm liable on transactions entered into by any of its members acting apparently on its behalf & within the scope of his authority (Litton v. CC). CC) Judicial intervention to get total consent: if the important alteration is necessary & unanimous consent can’t be obtained (Art. Partner acting in his own name: he is solely liable Gen. Hill). conduct. and not with the partners’ liabilities to 3rd persons (La Compania Maritima v Munoz). CC). 1803. He’s also under the duty of voluntary disclosure of material facts within his knowledge relating to/affecting partnership affairs (Art.1818. CC) Kinds of acts of a partner (Art. Unanimity is required.

Non-members whose names were used: don’t have the rights of a partner but are liable to 3rd persons without notice as partners (Art. 3. 1826. he acted in the ordinary course of the partnership business or with the authority of the co-partners even if the act wasn’t connected with the partnership business. CC). CC). Lo). The dismissal of the complaint to favor 1 of the general partners doesn’t increase the remaining partners’ liability. 1822. if the thing was contributed to be sold. the partnership is solidarily liable with the misappropriating partner (Art. CC). which is contrary to the law’s purpose (Liwanag v. Liability of outgoing partner: 1. he’s freed from liability on contracts entered into thereafter but still liable on existing incomplete contracts 2. if there is. Carrascoso). thing which can’t be kept without deteriorating. Vicarious liability. 1822-1823 (Art. CC) BAROPS 2008 Page 217 of 325 . 1840. 2. before the limited partner became such. 5. CC) to distinguish the partnership from other entities & from the individual partners. refund disbursements with legal interest 2. 1816 as it involves torts. the business had been carried on under a name in which his surname appeared (Art. 1822. CC) 2. Being a mere agent. The liability of partners under the Workmen’s Compensation Act also solidary. They become partners by estoppel (PNB v. loss/injury is caused to a 3rd person by the wrongful act/omission. Liability of a newly-admitted partner: 1. CC). the partner committed a wrongful act/omission. but was grossly & deliberately violated. there’s no pre-existing contract between the partnership & 3rd person. this itself constitutes quasi-delict (Air France v. CPR) Other rules: 1. Solidarily liable with partnership Solidary liability of partnership & partners: for everything chargeable to the partnership under Arts. a person continuing the partnership after a dissolution uses the firm name/name of deceased partner as part of the name: deceased partner’s individual property isn’t liable for debts contracted (Art.02. CC) & all partners are solidarily liable with the firm (Art. it’s also the surname of a general partner b. the limited partner’s surname shall not appear in the firm name unless a. 4. when he gives notice of his retirement or withdrawal. (Island Sales v. the paying partner doesn’t have the right of retention if he isn’t paid. 3rd person isn’t a partner (Art. answer for obligations contracted in good faith in the partnership’s interest 3. CC) & all partners are solidarily liable with the firm (Art. Use of deceased partner’s name in law firm: permissible as long as it’s indicated in the firm’s communications that the partner is deceased (Rule 3. 2. 1912. But unlike an ordinary agent. 1796.PARTNERSHIP won’t be exempted insofar as his capital is concerned (Paras). CC) Partner = agent. United Pioneers). 1824. 1815. 1795. Operate under firm name Required: every partnership shall operate under a firm name (Art. 1824. Reimburse 3 obligations of the partnership: 1. answer for risks (Art. This is an exception to Art. CC) B. 1846. requisites: 1. If their responsibility was merely joint and one became insolvent. obligations contracted after admission: liable as an ordinary original partner. 1823. the amount awarded would 100% UP LAW UP CIVIL LAW only be partially satisfied. Extent of liability: firm is liable to the same extent as the partner (Art. 1815. Misapplication of money/property resulting in losses: if loss is suffered by the 3rd person who delivered the money/property. Bear risk of loss Partnership bears the risk: when what is contributed is a fungible thing. obligations contracted before his admission: liable only up to his share in the partnership property unless there’s a contrary stipulation (Art. CC). and contributions are appraised in the inventory (Art. CC). C. Workmen’s Compensation Comm.) OBLIGATIONS OF PARTNERSHIPS A. 1824. CC) and acted within the scope of his authority. he’s liable for goods sold & delivered after his retirement/withdrawal if the sale was pursuant to a contract made before such retirement/withdrawal H. he isn’t personally liable as long as he’s not at fault (Art.

Bound by notice to partner Notice to the firm: 1. When the designation of a 3rd person can no longer be impugned: 1. Associate another person Subpartnership: partnership of a partner with another person wrt the former’s share. Liable for wrongful act of partner Extent of liability for wrongful acts. C.) D. it’s within the scope of the partner’s authority (Art. 1805. not merely during some arbitrary period of a few days chosen by the managing partners (Pardo v. at principal place of business (Art. CC) 3. 1822.PARTNERSHIP D. Industrial partner not liable for losses Designation of shares: by agreement.1798. he hasn’t questioned it within 3 months from knowledge of it (Art. may be entrusted to a 3rd person. The subpartner isn’t a part of the partnership. Share in losses and profits Rules for distribution of profits and losses. Bound by partner’s admission Requisites to be admissible against the partnership: 1. Lumber Co. CC). and could’ve communicated it to the acting partner (Art. receive a share in the profits in proportion to the amount of his capital contribution. the partnership is solidarily liable with the misappropriating partner (Art. 1821. CC). 1804. place agreed upon 2. B. Share of purely industrial partner is not fixed OF LOSSES According to agreement 1. The partner who acquired it has reason to believe that it be the subject of the business. 1805. CC). if he’s wrongfully excluded from the business/possession of the property by his copartners RIGHTS OF PARTNERS A.Purely industrial partner not liable for losses For capitalist-industrial partner: wrt his capital contribution. CC). unless it is manifestly inequitable or unreasonable (Art. WON a partner at the time as long as he still remembers the partnership matter 3. If sharing of profits is stipulated apply to sharing of losses 2. CC) F. in addition. Access partnership books Partnership books: open to inspection of all the partners at a reasonable hour (Art. CC) OF PROFITS With agreement Without agreement According to agreement 1. CC). (Art. Notice to a partner while already a partner 2. Where kept: 1. Trillana) E. as may be just and equitable under the circumstanc es CIVIL LAW according to capital contribution 3. it’s made during the firm’s existence Exception: when a partner makes admissions for himself only without purporting to act for the partnership Admission by a former partner not admissible in evidence against the partnership. 1797. Share of capitalist partner is in proportion to his capital contribution 2. CC). (Congco vs. CC) Reasonable hours on business days throughout the year. it must be connected with partnership affairs 2. rule: a partner isn’t entitled to a formal account. Knowledge is acquired by a partner who’s acting in a particular matter. he shall. CC) Prohibited stipulation: the exclusion of a partner from the profits or from sharing in the losses (Art. 1820.If no profit sharing stipulated losses shall be borne UP 100% UP LAW BAROPS 2008 Page 218 of 325 . save in dissolution Basis: his right of access to the books Except: 1. Obtain formal account Gen. if without agreement. Requisite so subpartner is part of the main partnership: consent of all (Art. Designation made by the 3rd person is binding on partners. Misapplication of money/property resulting in losses: if loss is suffered by the 3rd person who delivered the money/property. the partner has begun to execute the decision 2. 1798. 1823. 1799. omissions of a partner: firm is liable to the same extent as the partner (Art.

hold the title to partnership property in his own name without having it belong to him Property acquired by a partner with partnership funds: partnership property Except: 1. or 2) Buyer had no knowledge of the lack of authority of the seller Conveyance does not pass title but only equitable interest. Convey real property Effects of Conveyance (Art. 1809. Property rights Property rights (Art.PARTNERSHIP 2. 1831. of itself. contrary intention appears 2. whenever other circumstances render it just & reasonable (Art. Provided that: The partner who sold it was carrying on in the usual way the business of the partnership hence binding the partnership Title in partnership name . 1810. in the partnership. 1812. CC) or judicial dissolution (Art. The assignee is only entitled to the profits assigned.Any partner may convey under partnership name Conveyance passes title but partnership can recover unless: 1)The partner who sold it was carrying on in the usual way the business of the partnership hence binding the partnership. property was acquired after dissolution but before winding up Partner’s interest in the partnership: his share in the profits & surplus (Art. a partner’s right in specific property isn’t subject to support payment (Art. 1819. contribute only the use of property 2. with the consent of all partners whose interests aren’t charged/sold (Art. partnership property Capital With a constant value Includes only the actual capital contributed & promised to the partnership Property Value varies. IAC). can seek a formal accounting (Art. a debtorpartner’s interest (Art. if the right exists by agreement 3. Cea). a partner’s right in specific property isn’t subject to attachment/execution except on a claim against the partnership 4. 1809. CC) 2. to participate in the management Partnership capital vs. as provided in Art. CC) Rights of the transferee or assignee To receive in accordance with his contract the profits accruing to the assigning partner To avail of the usual remedies provided by law in the event of fraud in the management To receive the assignor’s interest in case of dissolution What assignees cannot do Interfere in management. CC) F. E. with partnership property. their separate property 2. a partner’s right in specific property can’t be assigned except when all partners assign their rights in that property 3. 1814. 100% UP LAW UP Enforcement of a judgment vs. The prescription period begins to run only upon the dissolution when the final accounting is done (Fue Leung v. attached. & subject to payment of support as there was already a liquidation of the partnership affairs. CC): the judgment creditor may – 1. CC) Property used by the partnership: a partner may 1. apply for an order charging the partner’s interest with payment of the unsatisfied amount of the final judgment with interest 2. have a receiver appointed Redemption: a partner or more may redeem the interest with – 1. CC). CC) The right of a partner to demand an accounting exists as long as the partnership exists. dissolve the partnership (Art. CC): 1.1811. the Require information account any or Inspect any of the partnership books. This may be assigned. Partners are co-owners of specific partnership property: the incidents are – 1. in accordance with market value Includes the contribution & all property later acquired on the partnership’s account CIVIL LAW The partner isn’t a creditor of the partnership for the amount of the shares (Leyte-Samar Sales v. and 3.Conveyance in partner's name BAROPS 2008 Page 219 of 325 . in the specific partnership property 2. 1813. 1807 4. allow partnership to use his separate property 3. Conveyance of partner’s entire interest: doesn’t. CC): Title in partnership name . a partner has an equal right with his copartners to possess specific property for partnership purposes  if excluded from this. 1814.

if it’s in the partner/s’ name. they can’t evade prior obligations 2. Death of any partner f. 1879. Promised specific thing lost after delivery & transfer of ownership – not dissolved iii. Insolvency g. Expulsion of a partner in good faith b. 1819: if the immovable is in the firm’s name. generally they’re spared from new obligations to which they didn’t consent. CC). 1829. Serra) Causes of Dissolution 1. Promised specified thing lost before delivery – dissolved ii. 1828. CC). Causes w/o violation of partnership agreement i. Acquire immovables Immovables/an interest therein may be acquired in the partnership name.Extrajudicial causes (Art. 2. 1827. Preference of creditors Preference: partnership creditors preferred to creditors of individual partners (Art. 2006) 2008 Page 220 of 325 Title in name of 1/ more partners. or 2) Buyer had no knowledge of the lack of authority of the seller Conveyance will only pass equitable interest. (Idos v. If the immovable is in the firm’s name but conveyed by a partner or some of them in his/their names. Winding up: process of settling business affairs after its dissolution. Express will of all partners who haven’t assigned their interests or suffered them to be charged for their separate debts iv. Court decree in relation to Art. unless these are essential for the winding up (Testate Estate of Mota v. Conveyance in name if partner/partners in whose name title stands Conveyance passes title but partnership can recover unless: 1)The partner who sold it was carrying on in the usual way the business of the partnership hence binding the partnership. Sycip). Effect of dissolution on the partners: 1. it must be alienated in the name of said partner/s. the co-partnership would be continued with the heirs. Provided that: The partner who sold it was carrying on in the usual way the business of the partnership hence binding the partnership Title in name of 1/more/all partners or 3rd person in trust for partnership. A new partnership (with the same name) was formed with the remaining living partners. Termination: point in time after all partnership affairs have been wound up. it must be alienated in the name of the firm. Maglana) iii. CC) a. Business becoming unlawful d. Causes in violation of partnership agreement c. CC). Transfer of usufruct – dissolved e. It couldn’t be continued if it were to be converted from a general partnership to a limited one since the difference between the 2 is fundamental and as this would leave the heirs without a share in the management (Goquiolay v. 1774. Loss of specific thing i. 100% UP LAW UP BAROPS . If in bad faith. End of the definite term or agreed undertaking ii. which provide that a special power to sell excludes the power to mortgage (Art. 1830. only the equitable interest is passed to the buyer in good faith. Remedy of private creditors of partners: seek the attachment/public sale of the shares DISSOLUTION AND WINDING UP Definitions: 1. The death of a partner causes dissolution.PARTNERSHIP CIVIL LAW 3. By a partner’s express will. 1831 The articles didn’t provide that the heirs would be limited partners. RIGHTS OF PARTNERSHIPS A. in good faith. he’ll be liable for damages but he can’t be compelled to remain in the firm (Rojas v. CC). and title so acquired can only be conveyed in the partnership name (Art. CC). they expressly stipulated that in case of death. Conveyance executed in partnership name of in name of partners Cf agency: this is different from the provisions on agency. Cf Art. Estate of Parsons. It may be that the succeeding partnerships merely continued the business started by the original one. Civil interdiction h. B. CA) Effect of dissolution: partnership continues until winding up is completed (Art. (Estate of Grimm v. Dissolution: the change in the partners’ relation caused by any partner ceasing to be associated in the carrying on of the business (Art. This element of continuity doesn’t detract from the fact that the partnerships of the same name formed after the partner’s demise are entities altogether different and with personalities distinct from the original partnership.

Any time if it’s a partnership at will when the partner’s interest had already been assigned/charged 3. With respect to the partners (Art. CC) 2. Other equitable circumstances b. A partner is insane/of unsound mind ii. 2006) No profits gained after dissolution by death will be due to the heirs. Expulsion of a partner Consequences of dissolution 1. subject to prior payment of his separate debts. and had no knowledge/notice of want of authority due to lack of advertisement of such If after dissolution a person pretends to be a partner though he isn’t. a partner remains liable to his co-partners for his share of any liability 100% UP LAW UP CIVIL LAW incurred by any partner acting for the partnership as if there is no dissolution Except: i. v. Assignment of rights in partnership property d. 1835. Partner’s retirement c. Stipulation expressly declared not binding after dissolution (Art. CC) a. Liability of person/partnership continuing the business (Art. 1832. 3. 1831. BAROPS 2008 Page 221 of 325 . who are entitled only to the profits already obtained at the time of death. the creditor & the person/partnership continuing the business (Art. Aznar Brothers Realty Co. The dissolution being by act. CC) (ARADE) a.PARTNERSHIP The death of 2 partners didn’t disqualify the partnership from being an awardee of a foreshore lease. A partner is guilty of prejudicial acts iv. New transactions entered into by a partner with a 3rd person in good faith. A partner is incapable of performing his part in the contract iii. The business can only be carried on at a loss vi. he’ll be liable as a “partner by estoppel” under Art. The business/transaction is necessary for the winding up ii. With respect to third persons (Art.1834. death. On application by the buyer of partner’s interest under Art. 1813 or 1814: i. As to partner's existing liability Gen. CC) b.Membership changes (Art. Admission of new member b. c. 2. rule: terminates the partners’ authority to bind the partnership (Art. the partnership was merely a “partnership in liquidation” (Bearneza v.. ii. After death. 1832. the representing partner knew/had notice of such. or insolvency of a partner. Insolvency of a partner c. except in transactions with one who – i. On application by/for a partner when: i. 1834. After the end of the specified term/agreed undertaking ii.Judicial causes (Art. Lichauco). (Lu Do and Lu Ym Corp. A partner breaches the partnership agreement v. The dissolution being by death/insolvency. Had extended credit before dissolution and had no knowledge/notice of the want of authority ii. CC) Death of a partner: his individual property shall be liable for all partnership obligations incurred while he was still a partner. As to partner's authority to act for the partnership Gen. rule: dissolution doesn’t by itself discharge the partner’s existing liability Except: if there’s an agreement to that effect between the partner. to wind up partnership affairs and complete unfinished transactions (Art. Dequilla). 1834. 1825 (Art. The partners can’t enter into an agreement where the automatic dissolution caused by law will be limited/restricted (Lichauco v. CC) Exceptions: a. Effect: unpaid old creditors of the dissolved partnership automatically become creditors of the new partnership. Hadn’t extended credit before dissolution. When dissolved because it’s unlawful to carry on the business. 1833. the representing partner knew of such. The death of a partner won’t disqualify the partnership from awards and rights it had gained before the partner’s death. 1840. Death of a partner e. unless the act’s appropriate for winding up b. The partner is w/o authority to wind up partnership affairs. 1840. as it was survived by 7 partners who continued the operations of the partnership. CC) if: i. There’s a need to complete unfinished business already begun iii.CC) When applicable: a partnership is dissolved due to change in membership but the remaining partners continue the business without liquidation. CC): a. CC): if dissolved by act.

if any. the duty of liquidating its affairs devolves on the surviving partners. assignee Powers of a liquidating partner: limited to what’s necessary to wind up the affairs a. 1837. may enter into new contracts necessary for winding up. 325). if any. Jur. [1960] Supp. Rights of guilty party (Art. 1836. apply partnership property to discharge the partnership liabilities ii. to indemnify him against all partnership’s liabilities. based on breach of the agreement (Art. To subrogate partnership creditors after his payment of liabilities to them. 2. The action for accounting & liquidation of partnership against the deceased industrial & managing partner can’t be continued against the heirs. receive in cash his share of surplus less damages he caused Business is continued Guilty partner shall i. the legal representative of the last surviving partner who’s not insolvent for cause d. Tolentino). he has the right to claim damages against the partner who caused the wrongful dissolution. not on the deceased’s legal representatives (Lota v. CC) 6. all the partners c. b. Claim for damages against guilty partner d. 1837. CC). CC) Business isn’t continued Guilty partner with all the ff. Apply partnership property to discharge its liabilities b. if he’s discharged from all liabilities Expelled without just case Have all the rights of an innocent partner plus damages for his unlawful exclusion (Art. are liable for the debts of the prior partnership. 3. Rights of expelled partner Expelled with just cause Receive in cash only the net amount due him from the partnership. Rights of parties entitled to annul When entitled to rescind: if with fraud or misrepresentation Rights: a. Jur. CC) 5. d. and b. secure by bond or pay the value of the guilty partner’s partnership interest (less the value of damages he caused). Rights of partners upon dissolution 1. may incur obligations necessary to complete existing contracts or to preserve partnership assets (40 Am. Of lien/retention of the surplus of the partnership property after satisfaction of the partnership liabilities to 3rd persons for any sum paid or for any capital/advances contributed b. distributed in cash to the respective partners. CC) To continue: all innocent partners may continue the partnership business in the same name either by themselves or jointly with others during the agreed term of the partnership subject to certain conditions – 8.PARTNERSHIP New partner’s liability: satisfied out of partnership property only. if there’s no agreement. may borrow money or sell property to pay its debts (40 Am. To possess partnership property if the business is continued (Art. 1837. CC) When arises: if he’s an innocent partner (haven’t caused a wrongful dissolution). Right to wind up (Art. 1837. 100% UP LAW UP BAROPS 2008 Page 222 of 325 . to have the partnership property applied to discharge partnership liabilities b. When a partner dies. Rights where dissolution contravention of agreement not in Rights of each partner against his copartners: a. A withdrawing partner remains liable to a 3rd party creditor of the old partnership (Singsong vs. c. be released from all the firm’s existing liabilities 7. CC) Kinds of winding up: judicial & extrajudicial Who can initiate: (PALA) a. To continue the business in the same name e. present & future. Have the surplus. unless with a contrary stipulation Not only the retiring partners but also the new partnership itself which continued the business of the dissolved one. 1837. 1837. 4. Isabela Sawmill). Rights of innocent party If dissolution in contravention of agreement: a. may engage the services of counsel to prosecute/defend the firm’s cases. for payment in cash of the net amount owed to partners c. Right to dissolution damages for wrongful CIVIL LAW a. after deducting what may be due to the firm from them as partners (Art. the surplus assets. have the value (in cash or secured by a bond) of his interest in the partnership less damages ii. Right to continue business on wrongful dissolution (Art. rights of innocent partners i. the partner expressly authorized b. 36).

Hernandez). Right to account (Art. 1844 CC) 2. Complied with the statutory requirement of form (Art.Partners who gave contributions Liquidation needed. The business profits can’t be determined by taking into account the result of 1 transaction instead of all the transactions had. Rule of preference in the payment of partnership liabilities: 1. 1842. composed of 1/more general partners & 1/more limited partners (Art. He shall receive as an ordinary creditor an amount equal to the value of his interest in the partnership with interest or. Albaran). CC) The rules for distribution won’t apply if there’s a contrary agreement between the partners. thus the need for a general liquidation before a partner may claim a specific sum as his share of the profits (Sison v. Prescription begins to run only upon the dissolution of the partnership. Pacific Commercial). The retiree/legal rep. 10. 1842 Accounting upon dissolution Art. To be indemnified by the supposed guilty partner against all debts & liabilities of the partnership (Art. The business is controlled by 1/more gen. CC). McQuaid). CC) Right to demand accounting of partner’s interest: reckoned from the date of dissolution. 1843.Separate creditors 2.those owed to partners in respect of capital 4. both in custody of the court for distribution: 1. 1838. 9. CC). Duty to make an account: the winding up/surviving partners or those continuing the business. 3. based on contributed capital. in lieu of interest. in accordance with the requirements of law. If refuses to contribute – a petition in court may be filed for its enforcement. liquidation: a. after final accounting (Fue Leung v IAC). Partnership creditors are preferred with regard to partnership property 2. Anything left from either goes to the other. Limited partners: not bound by the partnership’s obligations (Art. A limited partnership that hasn’t complied with the law of its creation is but a general partnership in which all members are liable (Jo Chung Cang v. Art. partners who are personally liable to creditors (Arts. 1841.those owed to partners other than capital and profits 3.those owed to partners in respect of profits 100% UP LAW UP BAROPS 2008 Page 223 of 325 .PARTNERSHIP c. LIMITED PARTNERSHIP Limited partnership: a. b. c. the profits attributable to the use of his right in the property of the dissolved partnership (Art. If partner is dead – contribution may be enforced against his private property through the administrator Doctrine of Marshalling of Assets: If there are claims over both partnership assets & partners’ individual properties. Individual creditors are preferred wrt individual properties of partners.Partnership creditors 3. CC). 1843. of the deceased may have the value of the interest at the date of dissolution. 1848. No return of shares without dissolution & liquidation. Right of retiring/ deceased partner When applicable: a partner retires/dies & the business is continued without any settlement of accounts Except: no liquidation is necessary when there’s an agreement as to what the retiree shall receive & he in fact received that amount (Bonnevie v. unless with a contrary agreement. CC). formed by 2/more persons. b. 1809 Accounting before dissolution CIVIL LAW When assets are insufficient to satisfy liabilities: the partners are required to contribute. Order in case of insolvency of a partner or his estate (in case of death): 1. Right to demand an accounting exists as long as the partnership exists. 1850 CC) SETTLEMENT OF ACCOUNTS BETWEEN PARTNERS (Art.those owed to creditors other than partners 2. If no agreement. Characteristics: 1. 1839. for the firm’s outside creditors have preference over the firm’s assets and the firm’s property can’t be diminished to their prejudice (Magdusa v.

under oath. Limited partners may get back their capital contributions subject to conditions prescribed by law (Arts. Gen. To fix the time for dissolution or return of a contribution 10. partners: secure capital from others while retaining control & supervision of the business 2. For limited partners: share in the profits without the risk of personal liability General Partner extent liability of Personally liable for partnership obligations If manner of mgt. CC) Requirements to amend: 1. #14-00) unless it’s a professional partnership Firm name Limited Partnership Executed in a cert.PARTNERSHIP 3. A change in the time as stated in the cert. duly signed & sworn to by all partners & filed in the SEC 1/more gen. partnership may be a limited partner in the limited partnership formed. A false/erroneous statement in the cert. A partnership – no 2. for the dissolution of the partnership or return of a contribution 9. partnership may be changed into a limited one. & a partner in the former gen. A gen. Substitution of a limited partner 3. The limited partners aren’t personally liable for obligations beyond their contribution (Arts. all gen partners have an equal right in business mgt Cash. property or industry Proper party to proceeding s by/against partnership Limited Partner Only to the extent of his capital contributions No participation in management insolvency Assignability of interest in partnership Not assignable CIVIL LAW Assignable Creation Gen. 1848. or under civil interdiction & the business is continued 6. including the new members & assigning members 3. CC) When the certificate shall be cancelled: BAROPS 2008 Page 224 of 325 contribution Cash or property only. of partnership may be amended: 1. partner is admitted 5. 1/more limited partners contribute to the capital & share in the profits but don’t manage the business 4. The members want to change a statement in the cert. not industry Not proper party to proceedings by/against partnership unless: 1. to make it more accurate (Art. 1845. Signed & sworn to by all the members. becomes insolvent or insane. he is also a gen. When the cert.. For gen. partners’ separate assets 6. A change in the character of business 7. 1865. of limited partnership containing the required data. partner retires. partners and 1/more limited partners Name must include the word “Limited” (SEC Memo Circ. 8. 1844. Partnership In any form unless immovables are contributed Composition Only gen. & set forth clearly the change desired 2. rights transferred to legal rep. 1857 CC) Advantages of limited partnerships: 1. Change in partnership name or in the amount/character of contribution of any limited partner 2. A gen. #14-00) right to participate in managemen t Who may be limited partners: 1. where the object of the proceedings is to enforce a limited partner's right against or liability to the partnership Name must appear in firm name No prohibition proper party to proceedings by or against the partnership Name in firm name prohibition to engage in other business effect of retirement death insanity or 100% UP LAW Name may appear in firm name Prohibited Dissolves the partnership Different effect. must be filed in the SEC (Art. UP . as amended. The cert. partners Must contain the word “Company” (SEC Memo Circ. Additional limited partner is admitted 4. 1864. Must be in writing. 1856 CC) 5. Obligations/debts are paid out of partnership assets and the gen. dies. partner 2. not agreed upon.

Contributes services (Art. 1847. 2. CC) Prohibited transactions of limited partners: 1. To the partnership (Art. Liabilities to partnership creditors & other partners a. partner. partner. His liability is limited to the extent of his contribution to the partnership. 1858. Return of contribution: if a limited partner rightfully received back his contribution to capital. 1. Receiving any payment. c. A receiver may be appointed to preserve the interest. not Liabilities of a limited partner Gen. CC) Effect: he becomes liable as a gen. he remains liable to the partnership for any sum necessary to discharge the liabilities of the partnership to creditors who extended credit/whose claims arose before such return. Unpaid contributions which he agreed to make at specified future time & on the conditions stated in the certificate Liability as trustee for the partnership: a. which is relied upon by an innocent person and who suffered loss because of the falsity d. When all limited partners cease to be such (Art. 1845. Control of business (Art. partner.PARTNERSHIP 1. CC) CIVIL LAW Here he divests himself of the privilege of limited liability & will be exposed to all the liabilities of a gen. e. Demand that partnership books be kept at the principal place of business 2008 Page 225 of 325 BAROPS . or release from liability if it will prejudice the rights of 3rd persons If performed prohibited acts: presumption of fraud on the creditors.2. partner without acquiring the rights of one. CC) Effect: he will be considered an industrial & general partner. Fraud on creditors (Art. 1862. partner. False statement (Art. rule: the surname of a limited partner shall not appear in the partnership name If used in firm name: he is liable as a gen. Control here contemplates active participation in the business. 100% UP LAW UP Effect of lack of substantial compliance: partnership becomes a general partnership wrt 3rd persons. rule: not liable as a gen. Money/property wrongfully paid or conveyed to him Waiver of liability: if all the partners consent but waiver can’t include the right of a creditor who extended credit or whose claim arose after the filing & before a cancellation/amendment of the certificate is made. CC) for LIMITED PARTNER Contribution Restriction: only cash or services (Art. property. Difference between his actual contribution & that stated in the certificate as having been made b.1865. If the certificate states that he’s a limited partner. 3. b. f. CC) Rights of Limited Partners Common rights of limited & gen. 1864. CC) Who’s liable: any party to the certificate who knew the falsity of a statement therein. as the prohibitions are modify by the requirement of sufficient assets to discharge the partnership obligations. partners: 1. he will be a general partner & limited partner at the same time. But the law doesn’t absolutely prohibit the taking as collateral security of the property. Non-compliance with requisites formation (Art. conveyance. Receiving/holding as collateral security any partnership property 2.1846. CC) Limited partner is responsible for: a. (Art. Signed by all the members 3. and the members are liable as general partners. 1845. Liabilities to separate creditors Right of creditors: to petition the court to charge the interest of the indebted limited partner with the payment of the unsatisfied amount of the claim. Must be in writing 2. if cancellation is courtordered. or which he contributed but was wrongfully returned to him b. partner to creditors who didn’t know that he isn’t a gen. Filed with the SEC. CC). Redemption: with the separate property of any gen. Specific property which he committed but didn’t contribute. 1854. 1848. When the partnership is dissolved 2. Surname in firm name (Art. 1844 par. CC) Requirements to cancel: 1. CC) Gen. a certified copy of the order shall also be filed (Art.

a limited partner may recover a share in the profits/compensation by way of income stipulated in the certificate. It is still required that the certificate be amended (Art. On the arrival of the date specified in the certificate 3.CC) Conditions for return: 1. When his demand for return of contribution wasn’t acted upon/denied 2. partners: gen. 1855. all the members consent. content 3. Receive a share of the profits & surplus 7. 2. or there are sufficient assets to satisfy them 2. 1859. partner. 1847. Assign interests (Art. remains a mere assignee 2. Any act which would make it impossible to carry on the partnership business 3. CC) Restrictions on gen. do the ff: 1. 1851. (Art. Demand true & full info of all things affecting the partnership 4. Rights of substituted limited partner: 1. All members consent. partner 6. 1854. CC) Loan & other business transactions Allowed to loan money. Sharing pro rata: he’s entitled to a pro rata share of the partnership assets together with the creditors. with right to receive the share of the profits/compensation by way of income. Inspect & copy any of the books. Resort to the court for the dissolution and winding up of the business 6. CC). rule: return of contribution is in cash Except: if there’s a statement to that effect in the certificate or all partners consent CIVIL LAW Dissolution. unless the power is granted in the certificate (Art. the assignor is empowered in the articles of partnership. civil interdiction or insolvency of a gen. or 2. or the return of his contribution to which the assignor would’ve been entitled to 100% UP LAW UP BAROPS 2008 Page 226 of 325 . 1850. 3. or assign their rights in specific partnership property for other than a partnership purpose 5. CC) Partner’s share: when the assets exceed liabilities (except those to limited & general partners). CC) Return of contribution (Art. return of contributions. without the written consent or written ratification of all limited partners. compensation. CC) and registered with the SEC. all restrictions & liabilities of the assignor 2. The certificate had been cancelled or amended as to reflect the withdrawal/reduction of contribution.PARTNERSHIP 2. unless the limited partner desiring the return has lawfully demanded the return of his contribution. There is no conflict of interests. If assignee didn’t become a substituted limited partner: 1. upon petition of limited partner: 1. unless the right is granted in the certificate 7. His contribution wasn’t returned/paid In case of several limited partners: members may agree to give priority to 1/more limited partners. transact business: the relationship between the limited partner & partnership isn’t based on trust & confidence. All liabilities to non-partner creditors had been paid. To require any info/account transactions 2. Confess judgment 4. The assignee may become a substituted limited partner if – 1. On the dissolution of the partnership 2. CC) Substituted limited partner: a person admitted to all the rights of a limited partner who has died or assigned his interest in a partnership Rule: limited partner’s interest is assignable. and he gave the assignee the right to be a substituted limited partner. and this must be stated in the certificate of partnership. The preference covers – 1. Possess partnership property. other matters where some benefit is granted (Art. and 3. partners can’t. Any act in contravention of the certificate 2. 1856. Admit a person as a gen. Continue the business with partnership property on the death. On the lapse of 6 months from notice in writing to all other members if no time is specified Gen. Demand a formal account 5. 1865.1857. responsible for the liabilities of the assignor except those he was ignorant of when he became a limited partner and couldn’t be ascertained in the certificate Effect on assignor: that the assignee has become a substituted limited partner doesn’t relieve the assignor of all liabilities to the partnership (Arts. Demand the return of his contribution provided assets are more than the liabilities (Art. When return may be demanded: 1. Admit a person as a limited partner. insanity. Share of profits (Art. retirement. To inspect partnership books of the Liability of substituted limited partner: 1. 1858 CC).

partner. Those owed to creditors. he doesn’t participate in the management of the business Dissolution When a limited partnership may be dissolved: 1. on ascertaining the mistake. Neither is he bound by the obligations of the person/partnership. CC) 4. The causes in Arts. CC) Rights of executors/administrators: 1. 1863. 1861. 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. insolvency. his surname doesn’t appear in the partnership name 3. death. 1863. when all members consented to the continuation (Art. End of the term for which it was to exist (Art. or civil interdiction of a general partner Except: if the business is continued by the remaining general partners – i. Conditions for exemption: 1. CC): 1. the limited partners shall share in the partnership assets and profits in proportion to the respective amounts of their claims (Art.PARTNERSHIP Effect of death (Art. 1852. CC) 8. become a gen. When the limited partner demanded the return of his contribution but was unjustifiably denied (Art. The retirement. Those to limited partners in respect of their capital contributions 4. the executor or administrator may constitute the assignee a substituted limited partner if the deceased was empowered to do so CIVIL LAW dissolution isn’t effected until there has been compliance with this requirement. except those to limited partners on account of their contribution & to general partners 2. 1864. Estate’s liability: for all the deceased’s obligations & liabilities to the partnership as a limited partner Person erroneously believing he’s a limited partner (Art. Those to general partners other than for capital and profits 5. Those to general partners in respect to capital Winding up: general partners have the duty & power to wind up the partnership’s affairs If there’s no agreement. 1860. CC). All the rights of a limited partner for the purpose of settling the estate 2. and a 100% UP LAW UP BAROPS 2008 Page 227 of 325 . under a right stated in the cert. CC) 5. in the order of priority provided by law (Arts. insanity. He’s exempt from general liability. 1830 & 1831. If the deceased had assigned his interest in the partnership. 1844. Fraud on the limited partner by the general partner 3. The misconduct of a general partner 2. ii. Those to general partners in respect to profits 6. 22362251. Settling accounts after dissolution Order of priority in the payment of liabilities (Art. 1857. By mutual consent of the partners before the end of the firm’s original term 7. CC) 6. CC) Effect: he doesn’t. CC). by reason of his exercise of the rights of a limited partner. If dissolved by express will of the partners: the certificate should be cancelled. Those to limited partners in respect to their share of the profits and other compensation by way of income in their contributions 3. When all the limited partners ceased to be such (Art. he promptly renounces his interest in the profits of the business 2.

Insolvency Law 11. Pledge. Credit Transactions 2. Deposit 4. Concurrence and Preference of Credit 7.CREDIT TRANSACTIONS CIVIL LAW Credit Transactions TABLE OF CONTENTS Section Section Section Section Section Section Section Section Section Section Section 1. Special Laws 9. Warehouse Receipts Law 10. Mortgage. Antichresis 7. Loan 3. Guaranty 5. Sample Questions 229 229 233 240 246 248 255 256 256 261 268 100% UP LAW UP BAROPS 2008 Page 228 of 325 . Legal and Judicial Bonds 6.

bailee – the recipient. personal – when an individual becomes a surety or a guarantor 2. deposit for compensation. express or implied. in which case the contract is simply called a loan or mutuum. that the trust shall be faithfully executed and the property returned or duly accounted for when a special purpose is accomplished or kept until the bailor reclaims it.g.only the borrower has the obligation Cause or consideration in a contract of loan: 1. mandatum (do some act w/ respect to a thing) 2. the party who receives the possession/custody of the thing delivered KINDS OF CONTRACTUAL BAILMENT W/ REFERENCE TO COMPENSATION 1. as to the borrower – the acquisition of the thing 2. is binding upon the parties) 2. but merely for exhibition the subject matter may be a consumable 100% UP LAW UP BAROPS 2008 Page 229 of 325 . bailor – the giver. gratuitous simple loan or mutuum 3. the party who delivers possession/custody of the thing bailed 2.CREDIT TRANSACTIONS CREDIT TRANSACTIONS include all transactions involving the purchase or loan of goods. unilateral contract . pledge and bailments for hire: a. for the sole benefit of the bailee (gratuitous) e.g. hire of carriage of goods – for carriage d. SECURED TRANSACTIONS – THOSE SUPPORTED BY A COLLATERAL OR AN ENCUMBRANCE OF PROPERTY 2. 2 KINDS OF LOAN: Commodatum nature bailor delivers to the bailee a nonconsumable thing so that the latter may use it for a certain time and return the identical thing Mutuum or simple loan bailor (creditor) delivers to the bailee (debtor) money or other consumable thing upon the condition that the latter will pay the same amount of the same kind and quality Money or other consumable thing PARTIES IN BAILMENT 1. gratuitous deposit. real contract – delivery is essential for perfection of the loan (BUT a promise to lend. real or property – when an emcumbrance is made on property BAILMENT is the delivery of property of one person to another in trust for a specific purpose. in which case the contract is called commodaturm. as to the lender – the right to demand its return or its equivalent SECURITY is something given. with a contract. hire of custody – for storage Subject matter Nonconsumable thing (Art 1936) Except: when purpose of contract is not consumption. OR UNSECURED TRANSACTIONS THE PERSONAL SUCH AS A – THOSE OF OR SUPPORTED ONLY BY A PROMISE TO PAY COMMITMENT GUARANTOR ANOTHER SURETY CHARACTERISTICS OF A LOAN: 1. upon the condition that the same amount of the same kind and quality shall be paid. hire of service – for work or labor c. services or money in the present with a promise to pay or deliver in the future (contract of security) CIVIL LAW LOAN LOAN is a contract by which one of the parties delivers to another. involuntary deposit.(Art 1933) 2 TYPES OF CREDIT TRANSACTIONS: 1. deposited or serving as a means to ensure the fulfillment or enforcement of an obligation or of protecting some interest in the property 2 TYPES OF SECURITY: 1.g. either something not consumable so that the latter may use the same for a certain time and return it. for the sole benefit of the bailor (gratuitous) e. commodatum. being consensual. for the benefit of both parties e. or money or other consumable thing. hire of things – temporary use b.

the contract that arises is a lease contract (Art. the contract may be a deposit. there is stipulation to the contrary. (Art 1939) 1. (Art 418) COMMODATUM 2 KINDS OF COMMODATUM: 1. creditor may not demand its return before the lapse of the term agreed upon Debtor suffers the loss 100% UP LAW UP BAROPS 2008 Page 230 of 325 . precarium – one whereby the bailor may demand the thing loaned at will. ownership is retained by bailor (Art 1933) None.use by the bailee of the thing is for a certain period of time 2. The bailor in commodatum need not be the owner of the thing loaned. In this case. the right to use is limited to the thing loaned. since he is the owner (Art 1942. i.CREDIT TRANSACTIONS thing. ordinary commodatum . essentially gratuitous (Art 1933) Note that if there is any compensation. (Art 1962) YES. the use is exhibition of the thing. the nature of the thing forbids such use. (Art 1940) In cases where there is such a stipulation. w/ stipulation to pay interest need to return and what Nature of property involved Purpose of loan May involve real or personal property (Art 1937) Loan for use (Art 1935) If the bailee is not entitled to the use of the thing. bailee can neither lend nor lease the thing lent to him to a third person Except: Members of the bailee’s household may make use of the thing loaned Except: Bailee’s household may NOT use it when: 1.e. but for another purpose. Otherwise. (Art 1938)  But the bailee himself may not lend nor lease the thing loaned to him to a third person (Art 1939(2)) General rule: Commodatum is purely personal in character. so the consumable thing is not being used in a manner appropriate to its purpose. neither the duration of the contract nor the use to which the thing loaned should be devoted has been stipulated ii. in case of urgent need (Art 1946) debtor needs only to pay the same amount of the same kind and quality Only personal property Loan for consumption WON return may be demanded before end of term who suffers the loss Bailor. or 2. Transfer of ownership consideration Ownership is transferred to the debtor May be gratuitous or onerous. but the contract of loan shall not be perfected until delivery of the contract. (Art 1934) Who may be bailor in commodatum?  Anyone. and not to its fruits. exists in cases where: i. (Art 562) What is the effect of an accepted promise to deliver by way of commodatum or mutuum?  It is binding upon the parties. if the use of the fruits is the main cause. Except: There is stipulation to the contrary. (Art 1947) General rule: In a commodatum. 1643) Bailee must return the same thing loaned (Art 1933) CIVIL LAW A thing is consumable when it is used in a manner appropriate to its purpose or nature. death of either party extinguishes the contract 2. None. if the use of the thing is merely tolerated by the owner. the contract ma be one of usufruct. enjoyment of the fruits must be incidental to the use of the thing itself. Art 1174) NO.

unless the crime or the act has been committed against the bailee himself. on the ground that the bailor owes him something. he lends or leases the thing to a third person who is a not a member of his household 5. even if loss through fortuitous event. obligation to take good care of the thing with the diligence of a good father of a family (Art 1163) 3. bailee imputes to the bailor any criminal offense. and 5. or children under his authority. he devotes the thing to any purpose different from that for which it was loaned 2. (Art 1946. In case of temporary use by the bailor. Except: Bailee has a right of retention for damages for known hidden flaws mentioned in Art 1951. solidary obligation where there are 2 or more bailees to whom a thing was loaned in the same contract (Art 1945) General rule: Bailee is not liable for loss or damage due to a fortuitous event (Art 1174). and 3. in certain circumstances (Art 1942) 4. being able to save either the thing borrowed or his own thing. par 2) Any of the following constitutes acts of ingratitude: 1. a commodatum is essentially gratuitous. bailee commits offenses against the person.CREDIT TRANSACTIONS What are the OBLIGATIONS OF THE BAILEE in commodatum? 1. because like a donation. except under certain circumstances (Art 1943) 5. or after the accomplishment of the use for which the commodatum has been constituted 3. unless there is stipulation exempting the bailee from responsibility in case of a fortuitous event 4. (Art 1943) General rule: Bailee has no right of retention of the thing loaned. he keeps it longer than the period stipulated. he chose to save the latter. par 2) 2. He does not advise the bailee of the same. or after the accomplishment of the use for which the commodatum has been constituted. or any act involving moral turpitude. liability for loss. 2008 Page 231 of 325 . (Art 1944) What are the requisites for the application of Art 1951? 1. or of his wife or children under his parental authority 2. Except: The deterioration of the thing is due only to the use thereof and without his fault. the rights and duties of the parties are temporarily suspended while the thing is in the possession of the bailor. There is a flaw or defect in the thing loaned 2. even though he should prove it. Except: Bailor may demand return or temporary use before end of term when: 1. The flaw or defect is hidden 100% UP LAW UP BAROPS CIVIL LAW 3. he should have urgent need of the thing (Art 1946) 2. then bailee is not liable. obligation to respect the duration of the loan: The bailor cannot demand the return of the thing loaned till after the expiration of the period stipulated. obligation to refund extraordinary expenses (Art 1949): a. The bailee suffers damages by reason of said flaw or defect What are the OBLIGATIONS OF THE BAILOR in a commodatum? 1. The bailor is aware thereof 4. his wife. the honor. General rule: Bailee is liable for deterioration of thing loaned. obligation to pay for the ordinary expenses for the use and preservation of the thing loaned (Art 1941) 2. obligation to return the thing upon expiration of term or upon demand in case of urgent need 6. liability for deterioration of thing loaned. bailee commits an act of ingratitude specified in Art 765 (Art 1948) The law uses “its return” or “temporary use” because the return demanded may be temporary or permanent. (Art 1933. since the bailor retains ownership of the thing Except: Bailee is liable even for loss due to a fortuitous event when: (Art 1942) 1. extraordinary expenses for the preservation of the thing are borne by the bailor. or the property of the bailor. the thing loaned has been delivered with appraisal of its value. if the bailee unduly refuses the bailor support when the bailee is legally or morally bound to give support to the bailor Article 765 is applicable.

but it may be non-fungible if the intention is merely for display or exhibition. delivery of a money or other consumable thing 2. oil. or measure. Simple interest – which is paid for the principal at a certain rate fixed or stipulated by the parties 2. when judicially demanded as provided in art 2122. transfer of ownership of non-fungible thing to another 2. extraordinary expense for preservation 2. Legal Interest – that which the law directs to be charged in the absence of any agreement as to the rate between the parties. loan of money 2. etc.  Whether a thing is consumable or not depends on the nature and whether it is fungible or not depends on the intention of the parties. obligation on the part of the latter to give things of the same kind. b. (Art 1952) MUTUUM OR SIMPLE LOAN A mutuum or simple loan is a contract by which a person (creditor) delivers to another (debtor) money or other consumable thing with the understanding that the same amount of the same kind and quality shall be paid. b. Loan (both kinds) Money or any other fungible things Obligation to return or to pay Loan may be gratuitous (commodatum) CIVIL LAW barter Non-fungible things Obligation to give an equivalent of that received Barter is always onerous Subject matter obligation consideration The object of simple loan may be either money or consumable or fungible things. Wine is consumable by nature. in rel Art 1941) Bailor has no right of abandonment: He cannot exempt himself from payment of expenses to bailee by abandoning the thing to the latter. ordinary expenses for use and preservation are also borne by bailor (Art 1950. obligation on the part of debtor to pay (not exactly to return) When is a contract deemed a barter? (Art 1954) 1. (Art 1953) Elements of a mutuum: 1.CREDIT TRANSACTIONS Requisites for liability of bailor to arise: 1. weight. quantity. The accrued interest is added to the principal sum and the whole is treated as a new principal upon which the interest for the next period is calculated 3. 1. Compound Interest – that which is imposed interest due and unpaid. Lawful Interest – that which the laws allow or do not prohibit 5. even if without fault are borne equally by the bailor and the bailee. the debtor is liable to pay legal interest (12%) as indemnity even in the absence of stipulation for the payment of interest interest due shall earn legal interest from the time it is judicially demanded although the obligation may be silent upon this point General Rule: Accrued interest shall not earn interest Except: a. the legal rate shall be imposed Except: a. Unlawful or Usurious Interest – paid or stipulated to be paid beyond the maximum fixed by law General Rule: If the exact rate of interest is not mentioned. loan of fungible thing Kinds of interest: 1. extraordinary expenses on the occasion of actual use by bailee. sugar. such as grain. 4. and quality What is a fungible thing?  Fungibles are those which are dealt with by number. when there is an express stipulation made by the parties that the interest due and unpaid shall be added to the 2008 Page 232 of 325 100% UP LAW UP BAROPS . except when the expense is so urgent that a reply to notice cannot be awaited without danger to the thing b.  e.g. unless there is contrary stipulation c. bailee gives bailor notice before incurring the expenses.

Bilateral – if it’s for a compensation. 4. If the safekeeping of the thing delivered is not the principal purpose of the contract. 1962) 2. 3. Real – like commodatum & mutuum. Deposit v. there may still be unconscionable interest if the court finds it so 5. bec it’s perfected by the delivery of the subj matter. where there is contrary stipulation 2. there is a corresponding deescalation clause c. it is just suspended. Usury is contracting for or receiving something in excess of the amount allowed by law for the loan or forbearance of money.CREDIT TRANSACTIONS principal obligation and the resulting total amount shall earn interest Payment of unstipulated interest 1. (This is why if it’s only an accessory or secondary oblig of the recipient. The usury law has not been repealed. there is no deposit but some other contract. where the unstipulated interest is paid voluntarily because the debtor feels morally obliged to do so there can be no recovery as in the case of natural obligations USURY 1. where unstipulated interest is paid by mistake the debtor may recover as this would be a case of solution indebiti or undue payment 2. 2. (Art. 3. which may also be regarded as necessary. Where there is no delivery. with the obligation of safely keeping it and of returning the same. Where there is no loan or forbearance there is no usury 4. bec it gives rise to obligs on both the depositary & the depositor. immovable only property 2008 Page 233 of 325 100% UP LAW UP BAROPS . Mutuum Safekeeping Purpose or mere custody Depositor can demand the return of the Demandability subject matter at will May be both movable & immovable property Consumption of the Subj Matter Lender must wait until the expiration of the period granted to the debtor Only money & other fungible thing Object DEPOSIT DEPOSIT is constituted from the moment a person receives a thing belonging to another. increase is provided by law/ resolution by the monetary board b. Unilateral– if it’s gratuitous. goods or chattels 2. however. bec only the depositary has an oblig. is binding & enforceable upon the parties. Interest is the compensation allowed by law or fixed by the parties for the loan or forbearance of money. It becomes necessary in the 3 cases in 1996 & 1998 CC and in cases of deposit of goods made by travelers/passengers w/ common carriers. Gratuitous as a general rule Exceptions: 1. goods or chattels 6. Hence. Deposit v. the effectivity of the clause is on or after the effect of increase ordered on the maximum interest CHARACTERISTICS OF A DEPOSIT CIVIL LAW 1. Voluntary as a general rule. where depositary engaged in the business of storing goods 3. Requirements for a valid escalation clause a. deposit is not constituted but some other contract). Forbearance signifies the contractual obligation of the creditor to forbear or refrain during a period to require the debtor payment of an existing debt then due and payable. a floating interest rate is not invalid per se but there must be a reference point 7. where property saved from destruction w/o knowledge of the owner PRINCIPAL PURPOSE Safekeeping of the thing delivered. Commodatum Safekeepin Transfer of Purpose g the Use May be Essentially Remuneratio gratuitous & always n gratuitous In Both extrajudicia movable & Object l deposit. 1. a contract of future deposit is consensual (see 1934 CC). there is merely an agreement to deposit w/c. 5.

Depositor is incapacitated Depositary is subject to ALL the obligations of a depositary Depositary must return the property either to: a) the legal representative of the incapacitated. the third person assumes the obligation to deliver to the one to whom it belongs. 2. AND b) pay the depositor the amount by which Page 234 of 325 EXTINGUISHMENT OF DEPOSIT 1. The main difference btw a voluntary deposit & a necessary deposit is that in voluntary deposit. c. b. ONLY in gratuitous deposits.made in compliance with a legal obligation. whereas in the latter. Here one of the depositors is not the owner. its purpose being to protect the rights of the parties to a suit. 1967) a. 1962) may be the object In whose behalf held litigation Person who has a right CIVIL LAW Depositor or 3rd person designated SUBJECT MATTER OF DEPOSIT 1. or on the occasion of any calamity. 3. Ordinarily. when two or more persons claiming to be entitled to a thing may deposit the same with a third person. EFFECTS OF INCAPACITY Depositary is incapacitated. whether voluntary or necessary. the depositor must be the owner of the thing deposited. The depositary may bring an action of interpleader to compel the depositors to settle their conflicting claims. etc. A deposit is extinguished: a. or By law Not by the will of the parties It is essential that the depositary is not the owner of the property deposited (Art. however. it may belong to another person than the depositor. In such case. however is liable to: a) return the thing deposited while still in his possession. judicial when an attachment or seizure of property in litigation is ordered 2. upon the death of the depositary. 3. upon the loss or deterioration of the thing deposited. merger. However. 4. As a general rule. For example. there is lack of free choice in the depositor.delivery is made by the will of the depositor or by two or more persons each of whom believes himself entitled to the thing deposited. or by travelers in hotels and inns or by travelers with common carriers Judicial creation Will of the court Security or ensure the right of a party to property or to recover in case of favorable judgment Generally immovables Always onerous Extrajudici al Will of the contracting parties Custody and safekeeping Depositary is capacitated. voluntary. the depositor has complete freedom in choosing the depositary. b. the depositary may be a 3rd person. like rights & actions. By virtue of a court order.CREDIT TRANSACTIONS movable things may be the object CREATION OF A DEPOSIT 1. extrajudicial (Art. Depositor is capacitated Depositary does not incur the obligations of a depositary Depositary. there are only 2 persons involved. 2. OR b) the depositor himself if he BAROPS 2008 purpose Subject matter cause Return of thing Upon order of the court/ end of Maybe compensate d but generally gratuitious Upon demand of depositor UP 100% UP LAW . other provisions in the Civil Code (novation. Sometimes. The provisions do not embrace incorporeal or intangible property.) KINDS OF DEPOSIT 1. 2. Judicial deposit may cover movable as well as immovable property. PARTIES TO A DEPOSIT 1. necessary. Only movable/personal property may be the object of extrajudicial deposit.

or which having been foreseen were inevitable. This is a situation wherein the depositary would reasonably presume that the depositor would agree to the change if he knows of the facts of the situation. iii. Obligation not to change the way of deposit (Art. ii. He deposits the thing with a third person who is manifestly careless or unfit although authorized. 1094). Exception: If the delay of the reply would cause danger. that "no one shall be liable for events which could not be foreseen. the defendant cannot be held liable for the loss of the money he deposited in his personal trust fund because such was not illegal and the Court cannot say “that in choosing between two means equally legal. DE LA PEÑA: “Although the CC states that "a person obliged to give something is also bound to preserve it with the diligence pertaining to a good father of a family" (art."” (Thus. 100% UP LAW UP BAROPS 2008 Page 235 of 325 . following the principle of the Roman law. major casus est. Essential requisite of judicial relation which involves the depositor’s confidence in his good faith and trust worthiness. a) safekeeping of the object. in this case. even in the absence of negligence. it also provides. cui humana infirmitas resistere non potest. he is culpably negligent in selecting one whereas he would not have been if he had selected the other”). b) General rule: Depositary is liable for loss of the thing deposited when: i.CREDIT TRANSACTIONS should acquire capacity he may have benefited himself with the thing or its price subject to the right of any 3rd person who acquires the thing in good faith CIVIL LAW Rationale A deposit is founded on trust and confidence and it can be supposed that the depositor.” 3. using as a degree of care the same diligence that the depositary would exercise over his property20 Exception: The depositary cannot excuse himself from liability in the event of loss by claiming that he exercised the same amount of care toward the thing deposited as he would towards his own if such care is less than that required by the circumstances. 2. Two primary 1972) obligations (Art. Exception: There is an exemption from liability when The thing is lost without the negligence of the third person with whom he was allowed to deposit the thing if such third person is not “manifestly careless or unfit. He transfers the deposit with a third person without authority although there is no negligence on his part and the third person. in choosing the depositary. authorized by OBLIGATIONS OF THE DEPOSITARY 1. or The thing is lost through the negligence of his employees whether the latter are manifestly careless or not. Obligation not to transfer deposit (Art. Exception The depositary is express stipulation. 1974) General rule: Depositary may not change the way of the deposit Exception: If there are circumstances indicating that the depositor would consent to the change. with the exception of the cases expressly mentioned in the law or those in which the obligation so declares. b) Return of the thing when required – even though a specified term or time for such may have been stipulated in the contract. 1973) a) General rule the depositary is not allowed to deposit the thing with a third person. The presumption that the depositor took into account the diligence which the depositary is accustomed with respect to his own property. has taken into consideration the latter’s qualification. Requisites: a) The depositary must notify the depositor of such change and b) Must wait for the reply of the depositor to such change. Rationale: i. ii. 20 THE ROMAN CATHOLIC BISHOP OF JARO v.

the depositary is not liable without his fault.CREDIT TRANSACTIONS 4. 1976) General rule: The depositary is permitted to commingle grain or other articles of the same kind and quality. b) Each depositor shall be entitled to such portion of the entire as the amount deposited by him bears the whole. Exceptions: a) Expressly authorized depositor. 2008 Page 236 of 325 100% UP LAW UP BAROPS . the depositary is under the obligation to: i. Exceptions: a) If it is so stipulated. unauthorized use will have the following effects: i. Article 1768 CC also states that when the depositary has permission to make use of the thing deposited. Exception: Safekeeping is still the principal purpose of the contract. If it was lost through a fortuitous event. savings. b) If he uses the thing without the depositor’s permission c) If he delays in its return. Relation between depositor (Art. Obligation not to make use of the thing deposited (Art. 1975) a) If the thing deposited should earn interest. In addition. by the General rule: The contract loses the character of a deposit and acquires that of a commodatum despite the fact that the parties may have denominated it as a deposit. 1980) bank and 21 CA AGRO-INDUSTRIAL DEV.21 5. but it becomes an irregular deposit. 7. even though he himself may have been authorized to use the same. v CA: “ the contractual relation between a commercial bank and another party in a contract of rent of a safety deposit box is one of deposit” 22 JAVELLANA v. Obligation to collect on the choses in action deposited (Art. LIM ET AL. the depositary is presumed at fault. hence. the contract LOSES the character of a deposit & becomes a LOAN or BAILMENT. it is not to be strictly governed by the provisions on deposit. Liability for loss through fortuitous events (Art. Collect the capital and interest as they become due.: “a depositary CANNOT make use of the thing deposited w/o the express permission of the depositor. ii. The prevailing rule in the US is that the relation between a bank renting out safety deposit boxes and its customer with respect to the contents of the box is that of bailor and bailee. Exception: Safekeeping is still the principal purpose of the contract. 1979) General rule: If the thing deposited is lost without a fortuitous event. but a special kind of deposit. Effects: a) The various depositors of the mingled goods shall own the entire mass in common. ii. Bank deposits are in the nature of irregular deposits but they are really loans governed by the law on loans. 1977) a) General rule: Deposit is for safekeeping of the subject matter and not for its use22. CIVIL LAW b) Such use is necessary for its preservation but limited for the purpose only. CORP. d) If he allows others to use it. and current deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan. Take such steps as may be necessary to preserve its value and the right corresponding to it. Obligation not to commingle things if stipulated (Art. If the thing deposited nonconsumable: is b) A contract for the rent of safety deposit boxes is not an ordinary contract of lease of things. 8. b) Unauthorized use will result in liability for damages. 6. Thing deposited is money or other consumable thing: General rule: Converts the contract into a simple loan or mutuum.” Fixed. Exception: When there is a stipulation to the contrary.

Obligation when the deposited is closed and (Art. is spite of such information. Exception: The depositary is justified in opening a closed and sealed subject matter a) When the depositary is presumed authorized to do so (the presumption applies if the key has been delivered to him) b) When the instructions of the depositor as regards the deposit cannot be executed without opening the box or receptacle. ii) General Rule: The depositary may return the thing to any one of the solidary depositors Exception: When a demand. the depositary is bound to return it only to the person designated although he has not made any demand for its return. (Art.Where a third person appears to be the owner. 1981) thing sealed CIVIL LAW within the period of one month (30 days) 14. 9. (Art. 1986) a) The depositary is obliged to return the thing deposited.  To the person who made the deposit. 1984) The depositary may be relieved from liability when: a) He advised the true owner of the thing of the deposit. c) Keep the secret of the deposit when the seal or lock is broken. b) If the owner. c) In cases where there is a stipulation of return to one of the depositors – if by stipulation. to:  The depositor. 1985) a) In cases of a divisible thing and joint depositors – each one of the depositors can demand only his share proportionate thereto.Obligation to return to the person to whom return must be made.Obligation to return products. with or without his fault. 1983) 12.CREDIT TRANSACTIONS a) Contract of loan – deposits in banks are really loans because the bank can use the same for its ordinary transactions b) Relation of creditor and debtor – the relation between a depositor and a bank is that of a creditor and a debtor.Obligation of the depositary when there are two or more depositors.  To his heirs or successors. or  To the person who may have been designated in the contract. which is presumed unless proven otherwise. 1212) Exception: Anything which may be prejudicial to the other depositors.Obligation to pay interest on sums converted for personal use (Art. 1983) 11. General rule: The depositary has the obligation to: a) return the thing deposited when delivered closed and sealed in the same condition. judicial or extrajudicial. the thing should be returned to one of the depositors. (Art. 15. 1984) 13. (Art. b) If the depositor was incapacitated at the time of making the deposit. does not claim it 100% UP LAW UP BAROPS 2008 Page 237 of 325 . b) In cases of an Indivisible thing and solidary depositors – rules on active solidarity i) General Rule: Each one of the depositors may do whatever may be useful to the others. when required.  To the depositor himself should he acquire capacity. for its return has been made by one of them in which case delivery should be made to him. b) pay for damages should the seal or lock be broken through his fault. accessories and accessions (Art. the property must be returned to:  His guardian or administrator. (Necessity) 10.The depositary who receives the thing in deposit cannot require that the depositor prove his ownership over the thing (Art.

1988) General rule: The thing deposited must be returned to the depositor upon demand. (Art. (Art. (Art.Right of the depositary to return the thing deposited. Note: The debt must be prior to the deposit.Depositary may retain the thing in pledge until the full payment of what may be due him by reason of the deposit. Exception: (In the absence of stipulation) At the place where the thing deposited might be even if it should not be the same place where the original deposit was made. b) The reason is justifiable. OBLIGATIONS OF THE DEPOSITOR 1. transportation expenses shall be borne by the depositor. 1989) (NOTE: in this case.  The heir does not need to pay the actual price of the thing deposited. 1991) When FAITH: a) Return the value of the thing deposited b) Assign the right to collect from the buyer. 1993) General rule: The depositary must be reimbursed for loss suffered by him because of the character of the thing deposited.CREDIT TRANSACTIONS c) Even if the depositor had capacity at the time of making the deposit but he subsequently loses his capacity during the deposit. it is the depositary who is returning the deposit WITH OR WITHOUT THE DEMAND of the depositor) General rule: The depositary may return the thing deposited notwithstanding that a period has been fixed for the deposit if: a) The deposit is gratuitous. 1990) The depositary is not liable in cases of loss by force majeur or by government order. (Art. Obligation to pay expenses preservation. the depositary may deposit the thing at the disposal of the judicial authority. d) Depositary was aware of the danger without advice from the depositor. 17.Obligation to return at the place of return (Art. 20. Exceptions: a) Depositor was not aware of the danger.Depositary’s liability in case of loss by force majeure or government order. b) Pay the actual price of the thing deposited. c) Depositor notified the depositary of such dangerous character. the depositary has no right to return the thing before the expiration of the time designated even if he should suffer inconvenience as a consequence. 2008 Page 238 of 325 100% UP LAW UP BAROPS .Obligation to return upon the time of return. the thing must be returned to his legal representative. If the depositor refuses to receive the thing. (Art. Exceptions: a) When the thing is judicially attached while in the depositary’s possession b) When notified of the opposition of a third person to the return or the removal of the thing deposited 18. (Art. 1992) of alienation is done in GOOD 2. b) Depositor was not expected to know the dangerous character of the thing. When alienation is done in BAD FAITH: a) Liable for damages. 16.Liability in case of alienation of the depositary’s heir. 1993). (Art. However. (see Art. 1965. 1994) The thing retained serves as security for the payment of what may be due to the depositary by reason of the deposit. Obligation to pay losses incurred due to character of thing deposited. 1987) General rule: At the place agreed upon by the parties. 21. 1992. even though a specified period or time for such return may have been fixed. CIVIL LAW 19. he has the duty to deliver to the depositor money or another thing he receives in place of the thing. Exception: When the deposit is for a valuable consideration.

shipwreck. 2168 3. his family. The right of retention recognized in this article is in the nature of a pledge created by operation of law. Made by passengers with common carriers. (Art. There must be a causal relation between the calamity and the constitution of the deposit. (Art. servants. b) The loss is caused by the act of a thief or robber done without the use of arms and irresistible force. 538. such as fire.” the law really means that the depositary is not obliged to continue with the contract of deposit. CIVIL LAW Extent of liability: a) Liability in hotel rooms which come under the term “baggage” or articles such as clothing as are ordinarily used by travelers b) Include those lost or damages in hotel annexes such as vehicles in the hotel’s garage. It is made in compliance with a legal obligation. Rationale It is given to hotel-keepers to compensate them for the liabilities imposed upon them by law. b) Deposit for compensation – not extinguished by the death of either party. Hotel-keeper’s right to retain The hotel-keeper has a right to retain the things brought into the hotel by the guest. 2000). like flood. as to those baggage the passengers or their agents carry 4. and b) The latter have taken the precautions prescribed regarding their safekeeping.. (Art. In the following cases.CREDIT TRANSACTIONS 3. Effect of death of depositor or depositary.g. 1995) a) Deposit gratuitous – death of either of the depositor or depositary extinguishes the deposit (personal in nature). storm. 1998) The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. in which case it is governed by the law establishing it. Before keepers of hotels or inns may be held responsible as depositaries with regard to the effects of their guests. Made by travelers in hotels or inns. as a security for credits on account of: a) lodging. b) The loss is due to the acts of the guests. (Art. fire. visitors. It takes place on the occasion of any calamity. the hotelkeeper is liable REGARDLESS of the amount of care exercised: a) The loss or injury to personal property is caused by his servants or employees as well as by strangers (Art. 586 and 2104 2. 1998-2001) is suppressed or diminished shall be VOID. 2003) Any stipulation between the hotel-keeper and the guest whereby the responsibility of the former (as set forth in Art. theft or robbery by a stranger (not the hotel-keeper’s servant or employee) with the use of firearms or irresistible force. the rules on voluntary deposit e. 2001) In the following cases. In this case the deposit is governed by the rules on voluntary deposit and Art. c) The loss arises from the character of the things brought into the hotel. By the word “extinguished. pillage. NECESSARY DEPOSITS A deposit is necessary when: 1. or other similar events. JUDICIAL DEPOSIT 100% UP LAW UP BAROPS 2008 Page 239 of 325 . keeper is not liable: a) the hotel- The loss or injury is cause by force majeure. Exception: Unless the hotelkeeper is guilty of fault or negligence in failing to provide against the loss or injury from his cause. Arts. and in case of deficiency. flood. b) supplies usually furnished to hotel guests. the following must concur: Elements: a) They have been previously informed about the effects brought by the guests.

the Rules of Court are applicable. Secure the right of a party to recover in case of favorable judgment. (Art. 2005) Nature: Auxiliary to a case pending in court. 2007) Applicable law: The law on judicial deposit is remedial or procedural in nature. by the judgment. (Art. 2009) Basis of Compariso n Cause or origin Judicial Deposit By will of the courts Extrajudicial Deposit By will of the parties. As to person guaranteed: a. 2007) Obligations: a) To take care of the property with the diligence of a good father of the family. (Art. As to its origin: a. Judicial – required by a court to guarantee the eventual right of one of the parties in a case. As to consideration: a. 3. Onerous – one where the guarantor receives valuable consideration for his guaranty 4. It gives rise only to a duty on the part of the guarantor in relation to the creditor and not vice versa b. Guaranty in the broad sense: a. (Art. Depositary of sequestered property: person appointed by the court. there is a contract Custody. 4. but may be compensate d In behalf of the depositor or third person designated 100% UP LAW UP . Hence. 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 favorable judgment. Either movable or immovable property but generally. Gratuitous – guarantor does not receive any price or remuneration for acting as such (2048) b. Unilateral – a. Personal – guaranty is the credit given by the person who guarantees the fulfillment of the principal obligation. or immovable i. Accessory – dependent for its existence upon the principal obligation guaranteed by it. Guarantor must be a person distinct from the debtor – a person cannot be the personal guarantor of himself CLASSIFICATION OF GUARANTY 1. 2008) b) He may not be relieved of his responsibility until the litigation is ended or the court so orders. movable. Chattel mortgage (2140) or pledge (2093) – guaranty is movable 2.CREDIT TRANSACTIONS When judicial deposit takes place: Judicial deposit takes place when an attachment or seizure of property in litigation is ordered by a court. called the guarantor. 2. Hence. BAROPS 2008 Page 240 of 325 Purpose Subject Matter Remunerati on Security. (Art. has a right Generally gratuitous. (Art. Safekeeping of the thing CIVIL LAW GUARANTY GUARANTY is a contract whereby a person. or b. It may be entered into even without the intervention of the principal debtor. Single – constituted solely to guarantee or secure performance by the debtor of the principal obligation. 2047) CHARACTERISTICS 1. Legal – imposed by virtue of a provision of law c. Subsidiary and conditional – takes effect only when the principal debtor fails in his obligation subject to limitation 3. Conventional – constituted by agreement of the parties (2051[1]) b. binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. Real mortgage (2124) or antichresis (2132) – guaranty is immovable ii. Real – guaranty is property. immovable Always remunerate d (onerous) Only movable property In whose behalf it is held In behalf of the person who.

Without husband’s consent. Creditor has every right to take all possible measures to secure payment of his credit – guaranty can be constituted even against the will of the principal debtor However. a consideration moving to the principal will suffice. Absence of direct consideration or benefit to guarantor: Guaranty or surety agreement is regarded valid despite the absence of any direct consideration received by the guarantor or surety. in cases provided by law. 6. a guaranty may be given to secure even future debts. thereby transforming the obligation from a natural into a civil one.” DIÑO v. Voidable contract – such contract is binding. including judicial costs. CA: “Under the Civil Code.g. Presence of cause which supports principal obligation: Cause of the contract is the same cause which supports the obligation as to the principal debtor23. and natural obligation (2052[2]) A guaranty may secure the performance of a: 1. As to its scope and extent: a.CREDIT TRANSACTIONS b. A guaranty need not be undertaken with the knowledge of the debtor (2050) CIVIL LAW 1. Payment with knowledge or consent of the debtor: Subrogated to all the rights which the creditor had against the debtor 5. bind the community or conjugal partnership property 2. Unenforceable contract – because such contract is not void 3. 100% UP LAW UP BAROPS 2008 Page 241 of 325 . generally Exceptions: 1. unenforceable. it is also void. if the principal obligation is void. The consideration which supports the obligation as to the principal debtor is a sufficient consideration to support the obligation of a guarantor or surety. Payment without the knowledge or against the will of the debtor: a. e. b. This is the basis for contracts denominated as continuing guaranty or suretyship. such as when the guaranty has redounded to the benefit of the family. he impliedly recognizes his liability. or to a specific portion thereof. With her husband’s consent. Guaranty is unilateral – exists for the benefit of the creditor and not for the benefit of the principal debtor 2. On the cause of a guaranty contract a. RULES GOVERNING GUARANTY 1. Guarantor cannot compel the creditor to subrogate him in his rights 2. Hence. Natural obligation – the creditor may proceed against the guarantor although he has not right of action against the principal debtor for the reason that the latter’s obligation is not civilly enforceable. 4. When the debtor himself offers a guaranty for his natural obligation. A guaranty may secure a future debt (2053) Continuing Guaranty or Suretyship24: 24 23 SEVERINO v SEVERINO: “A guarantor or surety is bound by the same consideration that makes the contract effective between the principal parties thereto. Guarantor can recover only insofar as the payment has been beneficial to the debtor b. Double or sub-guaranty – constituted to secure the fulfillment by the guarantor of a prior guaranty 5. Definite – where the guaranty is limited to the principal obligation only. b. A married woman who is a guarantor binds only her separate property. 7. unless it is annulled by a proper court action 2. A guaranty may secure the performance of a voidable. the amount of which may not known at the time the guaranty is executed. costs. The guaranty must be founded on a valid principal obligation (2052[1]) Guaranty is an accessory contract: It is an indispensable condition for its existence that there must be a principal obligation. as regards payment made by a third person: 1. 3. Indefinite or simple – where the guaranty included all the accessory obligations of the principal. such consideration need not pass directly to the guarantor or surety. A guaranty is generally gratuitous (2048) General Rule: Guaranty is gratuitous Exception: When there is a stipulation to the contrary 2.

or b. A continuing guaranty is one which covers all transactions. But the guarantor may bind himself for less than that of the principal. including those arising in the future. even if the amount is not yet known. The surety agreement itself is valid and binding even before the principal obligation intended to be secured thereby is born. but by reason of his failure to pay when demanded and for having compelled the creditor to resort to the courts to obtain payment. judicial costs. as they accrue. Rationale: A contract of guaranty is subsidiary. and attorney’s fees when appropriate. for which. Filing of the complaint (upon judicial demand). a. A guarantor’s liability cannot exceed the principal obligation (2054) General Rule: Guaranty is a subsidiary and accessory contract – guarantor cannot bind himself for more than the principal debtor and even if he does. of guaranty. Future debts. Principal obligation subject to a resolutory condition – the happening of the condition extinguishes both the principal obligation and the guaranty 9. the guarantor becomes liable. To secure payment if any debt to be subsequently incurred – a guaranty shall be construed as continuing when by the terms therof it is evident that the object is to give a standing credit to the principal debtor to be used from time to time either indefinitely or until a certain period. generally for an indefinite time or until revoked. The time demand was made upon the surety until the principal obligation is fully paid (upon extra-judicial demand) Rationale Surety is made to pay. To secure existing unliquidated debts – refer to debts existing at the time of the constitution of the guaranty but the amount thereof is unknown and not to dents not yet incurred and existing at that time. even without stipulation and even if the surety would thereby become liable to pay more than the total amount stipulated in the bond. and attorney’s fees as part of damages may be recovered – creditors suing on a suretyship bond may recover from the surety as part of their damages. and contemplates a succession of liabilities. but which contemplates a future course of dealing. A guaranty may secure the performance of a conditional obligation 1. Principal obligation subject to a suspensive condition – the guarantor is liable only after the fulfillment of the condition. Where the contract of guaranty states that the same is to secure advances to be made "from time to time" the guaranty will be construed to be a continuing one. until the expiration or termination thereof. To secure the payment of a loan at maturity – surety binds himself to guarantee the punctual payment of a loan at maturity and all other obligations of indebtedness which may become due or owing to the principal by the borrower. Interest. interest at the legal rate.CREDIT TRANSACTIONS 1. Exceptions: 1. especially if the right to recall the guaranty is expressly reserved. Interest runs from: a. covering a series of transactions. may be guaranteed but there can be no claim against the guarantor until the amount of the debt is ascertained or fixed and demandable. 2. It is prospective in its operation and is generally intended to provide security with respect to future transactions within certain limits. not by reason of the contract. the latter’s liability being governed by the 100% UP LAW UP BAROPS 2008 Page 242 of 325 . which are within the description or contemplation of the contract. c. his liability shall be reduced to the limits of that of the debtor. Principal’s liability may exceed guarantor’s obligations The amount specified in a surety bond as the surety’s obligation does not limit the extent of the damages that may be recovered from the principal. A guaranty shall be construed as continuing when by the terms thereof it is evident that the object is to give a standing credit to the principal debtor to be used from time to time either indefinitely or until a certain period. any more than there would be in saying that obligations which are subject to a condition precedent are valid and binding before the occurrence of the condition precedent A continuing guaranty is one which is not limited to a single transaction. 2. judicial costs. Penalty may be provided – a surety may be held liable for the penalty provided for in a bond for violation of the condition therein.” CIVIL LAW 8. especially if the right to recall the guaranty is expressly reserved. b.

On the guarantor (2056-2057) 1. or quantity of the subject matter of a contract is what it has been represented to be. and the contract of guaranty continues. 2. the guarantor proceeded with consciousness of what he was doing. without any demand by the creditor upon the principal whatsoever or any notice of default Undertakes to pay if the principal does not pay. the dent cannot be paid CIVIL LAW 10. quality. Hence. GUARANTY WARRANTY DISTINGUISHED FROM Primarily liable – undertakes directly for the payment without reference to the solvency of the principal. therefore. The existence of a guaranty is not presumed (2055) Guaranty requires the expression of consent on the part of the guarantor to be bound. the responsibility or obligation assumed by the surety is greater or more onerous than that of a guarantor 13. without regard to his ability to do so Insurer of the debt Only binds himself to pay if the principal cannot or unable to pay Insurer solvency debtor of of the the Does not contract that the principal will pay. The creditor can merely demand another guarantor with the proper qualifications except that the creditor may waive such remedy if he chooses and hold the guarantor to his bargain.CREDIT TRANSACTIONS obligations contract. 11. A contract of guaranty is covered by the Statute of Frauds Guaranty must not only be expressed but must so be reduced into writing. There be assurance that the guarantor had the true intention to bind himself. but simply that he is able to do so GUARANTY Contract by which a person is bound to another for the fulfillment of a promise or engagement of a third party WARRANTY An undertaking that the title. Hence. The subsequent loss of integrity or property or supervening incapacity of the guarantor would not operate to exonerate the guarantor of the eventual liability he has contracted. unless the same or some note or memorandum thereof be in writing. He has capacity to bind himself. Selection of Guarantor: Charged as an original promisor 1. It need not appear in a public document. or a secondary evidence of its contents. 2. Exception: requirements The creditor waives the GUARANTY SURETYSHIP DISTINGUISHED GUARANTY Liability depends upon an independent agreement to pay the obligation if the primary debtor fails to do so Engagement collateral is a SURETYSHIP Assumes liability as a regular party to the undertaking The qualifications above need only be present at the time of the perfection of the contract. However. and is so responsible at once the latter makes default. and relates to some agreement made ordinarily by the party who makes the warranty FROM Pay the creditor without qualification if the principal debtor does not pay. It cannot be presumed because of the existence of a contract or principal obligation. 3. by the use of due diligence. evidence. Specified person stipulated as guarantor: Substitution of guarantor may not be demanded 2008 Page 243 of 325 100% UP LAW UP BAROPS . Rationale: 1. he assumed under his undertaking Secondarily liable – he contracts to pay if. of the agreement cannot be received without the writing. it shall be unenforceable by action. or by his agent. To make certain that on making it. He possesses integrity. He has sufficient property to answer for the obligation which he guarantees. and subscribed by the party charged.

The guarantor has the right to benefit from excussion/ exhaustion25 Exceptions to the benefit of excussion (2059) 1. the creditor is. As a party. e. If it may be presumed that an execution on the property of the 25 CIVIL LAW principal debtor would not result in the satisfaction of the obligation – if such judicial action including execution would not satisfy the obligation. Set it up against the creditor upon the latter’s demand for payment from him. may demand exhaustion of all the property of the debtor before he can be compelled to pay. Exception: SOUTHERN MOTORS. 2059: a. When he (debtor) has absconded. the liability of the guarantor as the debtor cannot fulfill his obligation d. v BARBOSA: “The right of guarantors…to demand exhaustion of the property of the principal debtor. he must: a.” 100% UP LAW UP BAROPS 2008 Page 244 of 325 . EFFECTS OF GUARANTY BETWEEN THE GUARANTOR AND THE CREDITOR 1. Guarantor selected by the principal debtor: Debtor answers for the integrity. 2. 2. The guarantor becomes primarily liable as a solidary codebtor. c. the liability assumed is that of a surety. Term of the agreement. b. capacity. Point out to the creditor: i. and to incur the delays and expenses incident thereto. iii. If he is a judicial bondsman and subsurety (2084) 4. b. Sufficient to cover the amount of the debt. The creditor has the right to secure a judgment against the guarantor prior to the excussion General rule: An ordinary personal guarantor (NOT a pledgor or mortgagor). exists only when a pledge or a mortgage has not been given as special security for the payment of the principal obligation. As provided in Art. ii. 3. 2060: In order that the guarantor may make use of the benefit of excussion. Available property of the debtor – the guarantor should facilitate the realization of the excussion since he is the most interested in its benefit.” 26 LUZON STEEL CORP. The exception is when the debtor has left a manager or representative. 3. INC. and solvency of the guarantor. It is not necessary that the debtor be judicially declared insolvent.CREDIT TRANSACTIONS Reason: The selection of the guarantor is: a. Guarantor personally designated by the creditor: Responsibility of the selection should fall upon the creditor because he considered the guarantor to have the qualifications for the purpose. If he has bound himself solidarily with the debtor. therefore. Where a pledge or mortgage has been given by him as a special security. In case of insolvency of the debtor – guarantor guarantees the solvency of the debtor. If he does not comply with Art. he renounces in the contract itself the benefit of exhaustion26. 2. In effect. the guarantor can no longer require the creditor to resort to all such remedies against the debtor as the same would be but a useless formality. 5. bound thereby. Within the Philippine territory – excussion of property located abroad would be a lengthy and extremely difficult proceeding and would not conform with the purpose of the guaranty to provide the creditor with the means of obtaining the fulfillment of the obligation. and excussion (previous exhaustion of the property of the debtor) shall not take place "if he (the guarantor) has bound himself solidarily with the debtor". or cannot be sued within the Philippines – the creditor is not required to go after a debtor who is hiding or cannot be sued in our courts.waiver is valid but it must be made in express terms. v SIA: “The surety in the present case bound itself "jointly and severally" (in solidum) with the defendant. If he fails to interpose it as a defense before judgment is rendered against him. If the debtor becomes insolvent. b. If the guarantor has expressly renounced it .

is not duty bound to appear in the case. The guarantor. A compromise shall not prejudice the person not party to it. Absent this right of reimbursement. having the right to have those securities transferred to him though there was no stipulation for it. 2. to stand in the place of the creditor not only through the medium of the contract. secure a judgment against the guarantor. 3. Actual demand has to be made. he shall suffer the loss but only to the extent of the value of the said property. c) If he fails to do so. A compromise between guarantor and the creditor benefits but does not prejudice the principal debtor. however. The guarantor has the duty to set up the benefit of excussion (2060) As soon as he is required to pay. the guarantor will lose the right of reimbursement and consequently the right of subrogation as well. who shall be entitled. EFFECTS OF GUARANTY BETWEEN THE DEBTOR AND THE GUARANTOR 1. it becomes the duty of the creditor to: b) Exhaust all the property of the debtor pointed out by the guarantor. but even by means of the securities entered into w/out the knowledge of the surety. In this case. w/ its consequential effect. prior thereto. The guarantor cannot make payment before the obligation has become due. The assumption. The creditor has the duty to make prior demand for payment from the guarantor (2060) 1. and his nonappearance shall not constitute default. The guarantor has the duty to notify the debtor before paying the creditor. The creditor has the duty to notify the guarantor in the action against the debtor Under this article. 8. The creditor has the duty to resort to all legal remedies (2061) a) After the guarantor has fulfilled the conditions required for making use of the benefit of exhaustion. 2. a coguarantor is liable only to the extent of his share in the obligation as divided among all the co-guarantors. 4. guarantor must also point out to the creditor available property (not in litigation or encumbered) of the debtor within the Philippines. 5. Rationale: The purpose of notification is to give the guarantor the opportunity to allege and substantiate whatever defenses he may have against the principal obligation. to satisfy the latter’s obligation. and supposing the debtor has already made a prior payment. 6. subrogation will not be proper. Co-guarantors are entitled benefit of division (2065) to the The benefit of division applies only when there are several guarantors and one debtor for a single debt. and to avail himself of all securities against the debtor The need to enforce the provisions on indemnity in Article 2066 forms the basis for the subrogation clause of Article 2067. to enforce every security and all means of payments. Except when solidarity has been stipulated among the co-guarantors. General rule: Since a contract of guaranty is only subsidiary. to a deferment of the execution of said judgment against him. Joining the guarantor in the suit against the principal debtor is not the demand intended by law. the debtor would be justified in putting up the defense that the obligation has already been extinguished by the time the guarantor made the payment.CREDIT TRANSACTIONS The creditor may. The demand is to be made only after judgment on the debt 2. is that the guarantor who is subrogated to the rights of the creditor. 3. for the insolvency of the debtor. notice to the guarantor is mandatory in the action against the principal debtor. however. The guarantor has the right to be subrogated to the rights of the creditor A guarantor who pays the debt is entitled to every remedy which the creditor has against the principal debtor. however. Should payment be made without notifying the debtor. and chances to set up such defenses as are afforded him by law if he so desires CIVIL LAW 1. the guarantor cannot be liable for 2008 Page 245 of 325 7. until after the properties of the principal debtor shall have been exhausted. has the right to be reimbursed for his answering for the obligation of the debtor. A compromise between creditor and principal debtor benefits the guarantor but does not prejudice him. 100% UP LAW UP BAROPS .

5. without the guarantor’s consent. 2. Exceptions: 1. Pledge or mortgage is a property or real security. LEGAL AND JUDICIAL BONDS Bond – an undertaking that is sufficiently secured. and against the insolvency of the debtor. 2. The payment was made because a. After the lapse of 10 years. except those that are personal to the debtor. If the principal debtor is in imminent danger of becoming insolvent. The paying guarantor seeks to be indemnified only to the extent of his proportionate share in the total 100% UP LAW UP CIVIL LAW obligation. 3. 6. the obligation of the guarantor is also extinguished. 3. Payment has already been made by one guarantor. If through the fault of the creditor the guarantors are precluded from being subrogated to the former’s rights. By judicial demand 3.CREDIT TRANSACTIONS the obligation before the period on which the debtor’s liability will accrue. extends the time within which the debtor may perform his obligation. He has sufficient property to answer for the obligation which he guarantees. Any payment made by the guarantor before the obligation is due cannot be indemnified by the debtor. Bondsman – a surety offered in virtue of a provision of law or a judicial order. by reason of the expiration of the period for payment. and this period has expired. after the extinguishment of the guarantor’s obligation (as in the case of a release from the guaranty). If one guarantor is released. there may be instances when. Rationale To enable the guarantor to take measures for the protection of his interest in view of the probability that he would be called upon to pay the debt. 4. The guarantor may proceed against the debtor even before payment has been made General rule: Guarantor has no cause of action against the debtor until after the former has paid the obligation. 2073: 1. EXTINGUISHMENT OF GUARANTY 1. the latter are released from the obligation. 2. the obligation of the debtor still subsists. However. He possesses integrity. For purposes of proportionate reimbursement. unless it be of such nature that it cannot be extinguished except within a period longer than 10 years. 7. 2. PLEDGE OR MORTGAGE IN LIEU OF BOND Guaranty or suretyship is a personal security. is valid payment and therefore releases the guarantor. in the alternative. Once the obligation of the debtor is extinguished in any manner provided in the Civil Code. 5. In case of insolvency of the principal debtor. EEFECTS OF GUARANTY AS BETWEEN COGUARANTORS Requisites for the applicability of Art. 4. A guarantor is also released if the creditor. If there are reasonable grounds to fear that the principal debtor intends to abscond. obtain release from the guaranty. when the principal obligation has no fixed period for its maturity. As such. This is to protect the interest of the guarantor should the debtor be insolvent during the period of extension and deprive the guarantor of his right to reimbursement. When the debt has become demandable. Exception: Prior consent or subsequent ratification by the debtor 4. 3. He has capacity to bind himself. Of the insolvency of the debtor. if accepted by the creditor. Qualifications of personal bondsman: 1. When the debtor has bound himself to relieve him from the guaranty within a specified period. BAROPS 2008 Page 246 of 325 . the release would benefit the co-guarantors to the extent of the proportionate share of the guarantor released. or demand security that shall protect him from any proceedings by the creditor. Although the guarantor generally has to make payment in money. any other thing of value. the other guarantors may interpose such defenses against the paying guarantor as are available to the debtor against the creditor. he may. and not cash or currency. or b. When he is sued for the payment.

the second. If a person binds himself solidarily with the principal debtor. They are secured from all possible loss by adequate counter-bonds or indemnity agreements. duties akin to those of a fiduciary. The surety’s undertaking is that the principal shall fulfill his obligation and that the surety shall be relieved of liability when the obligation secured is performed. separately or together. who is entitled to but one performance. for profit and on an impersonal basis. 3. but sureties whose liability is primary and solidary. A demand or notice of default is not required to fix the surety’s liability Exception: Where required by the provisions of the contract of suretyship d. the surety is bound by a judgment against the principal event though he was not a party to the proceedings. STRICTISSIMI JURIS RULE NOT APPLICABLE TO COMPENSATED SURETIES Reasons: 1. NOTE: Surety is not entitled to notice of principal’s default 5. the contract is called suretyship and the guarantor is called a surety. 2. the rules peculiar to suretyship do not apply. 4. Exception: Unless otherwise expressly provided. 100% UP LAW UP BAROPS 2008 Page 247 of 325 . Compensated corporate sureties are business association organized for the purpose of assuming classified risks in large numbers.CREDIT TRANSACTIONS If the person required to give a legal or judicial bond should not be able to do so. Liability is limited by terms of contract 3. the principal debtor and the surety. should be protected against unjust pecuniary impoverishment by imposing on the principal. Effect of negligence of creditor: Mere negligence on the part of the creditor in collecting from the debtor will not relieve the surety from liability. SURETYSHIP is a relation which exists where one person (principal) has undertaken an obligation and another person (surety) is also under a direct and primary obligation or other duty to the obligee. and the latter can always claim that it was never his intention to be the sole person obligated thereby. Reason: They are not mere guarantors. Undertaking is to creditor. Such corporations are in fact insurers and in determining their rights and liabilities. This rule will apply only after it has been definitely ascertained that the contract is one of suretyship or guaranty. c. Prior demand by the creditor upon principal not required Surety is not exonerated by neglect of creditor to sue principal STRICTISSIMI JURIS RULE APPLICABLE ONLY TO ACCOMMODATION SURETY Reason: An accommodation surety acts without motive of pecuniary gain and hence. b. not to debtor: The surety makes no covenant or agreement with the principal that it will fulfill the obligation guaranteed for the benefit of the principal. 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. a pledge or mortgage sufficient to cover the obligation shall be admitted in lieu thereof. BONDSMAN EXCUSSION NOT ENTITLED TO NOTE: Surety exhaustion is not CIVIL LAW entitled to A judicial bondsman and the sub-surety are not entitled to the benefit of excussion. The creditor may sue. Liability is contractual and accessory but direct: 2. NATURE OF SURETY’S UNDERTAKING 1. and as between the two who are bound. Liability arises only if principal debtor is held liable a. In the absence of collusion. rather than the first should perform.

and in the absence thereof. 100% UP LAW UP BAROPS 2008 Page 248 of 325 . 2) Pledge or mortgage is indivisible. 2. c) Where there was failure of consideration. mortgage Constituted on immovables. PROHIBITION AGAINST PACTUM COMMISSORIUM 1. 27 MANILA SURETY V VELAYO: The accessory character is of the essence of pledge and mortgage. 8) Pledgor or mortgagor may be a third person. 5) Debtor retains the ownership of the thing given as a security. 6) When the principal obligation becomes due. 4) Cannot exist without a valid obligation. and not to foreclosure of mortgages. or by common consent to a 3rd person. applies to sales in execution. 4) In case of property covered by Torrens title. 2) Pledge or mortgage executed by one who is not the owner of the property pledged or mortgaged is without legal existence and registration cannot validate it. consisting of several lots should be sold separately. b) A stipulation for an automatic appropriation by the creditor of the property in the event of nonpayment. RIGHT OF CREDITOR WHERE DEBTOR FAILS TO COMPLY WITH HIS OBLIGATION 1) Creditor is merely entitled to move for the sale of the thing pledged or mortgaged with the formalities required by law in order to collect. an essential requisite of these contracts is that they be constituted to secure the fulfillment of a principal obligation UY TONG v CA: The 2 elements for pactum commissorium to exist: (1) that there should be a pledge or mortgage wherein a property is pledged or mortgaged by way of security for the payment of the principal obligation. 3. Not valid against 3rd persons if not registered. IMPORTANT POINTS 1) Future property cannot be pledged or mortgaged. Requisites of pactum commissorium28: a) Pledge or mortgage. that they be legally authorized for the purpose. pledge Constituted on movables. 3) Rule that real property. a mortgagee has the right to rely upon what appears in the certificate of title and does not have to inquire further. 6) Thing pledged or mortgaged alienated. Property is delivered to the pledgee. b) Where only a portion of loan was released.CREDIT TRANSACTIONS PLEDGE. Delivery not necessary. 5) Pledgor or mortgagor has free disposal of property. Not valid against 3rd persons unless a description of the thing pledged and the date of the pledge appear in a public instrument. 3) The persons constituting the pledge or mortgage have the free disposal of their property. and (2) that there should be a stipulation for an automatic appropriation by the creditor of the thing pledged or mortgaged in the event of non-payment of the principal obligation within the stipulated period. may be CIVIL LAW 2) Creditor cannot appropriate to himself the thing nor can he dispose of the same as owner. Stipulation is null and void: Stipulation where thing or mortgaged shall automatically become the property of the creditor in the event of nonpayment of the debt within the term fixed. 2) Pledgor or mortgagor must be the absolute owner of the thing pledged or mortgaged. As stated in Art 2085 CC. IMPORTANT POINTS 1) Debtor-owner bears the risk of loss of the property. MORTGAGE. Exceptions: a) Where each of several things guarantees a determinate portion of the credit. 4) The mere embodiment of a real estate mortgage and a chattel mortgage in one 28 7) Creditor not required to sue to enforce his credit. Effect on security contract: Nullity of the stipulation does not affect validity and efficacy of the principal contract. 3) Mortgage of a conjugal property by one of the spouses is valid only as to ½ of the entire property. ANTICHRESIS ESSENTIAL REQUISITES COMMON TO PLEDGE AND MORTGAGE 1) Constituted to secure the fulfillment of a principal obligation27. the thing pledged or mortgaged may be alienated for the payment to the creditor.

the mortgage can take effect only when the debt secured by it is created as a binding contract to pay. if they be negotiable instruments.Actual delivery is important. 2) Compensation stipulated for the pledge or mere liberality of the pledgor – If pledgor is not the debtor. b) Date of the pledge. CAUSE OR CONSIDERATION 1) Principal obligation – In so far as the pledgor is concerned. 2089 is excepted the case in w/c. 7) Special Laws apply to pawnshops and establishments engaged in making loans secured by pledges. 7) Under the RPC. 6) A promise to constitute pledge or mortgage creates no real right. encumber or mortgage the same knowing that the real property is encumbered and shall dispose of the same as unencumbered. pretending to be the owner of any real property. CIVIL LAW 2) Accessory – Has no independent existence of its own. sell. they must be indorsed. For the debtor. 6) Pledge gives the creditor the right to retain the thing in his possession or in that of a third person to whom it has been delivered. shall have a right to the extinguishment of the pledge or mortgage as the portion of the debt for w/c each thing is specially answerable is satisfied. there is a debtor-creditor relationship. Where the indebtedness actually owing to the holder of the mortgage is less than the sum named in the mortgage. It is not necessary that any consideration should pass at the time of the execution of the contract of real mortgage. 4) Subsidiary – Obligation incurred does not arise until the fulfillment of the principal obligation. 5) Pledge or mortgage may secure all kinds of obligation. The instruments representing the pledged rights shall be delivered to the creditor. 1) Transfer of possession to the creditor or to third person by common agreement is essential in pledge. Provisions of the Civil Code shall apply subsidiarily to them. 3) Unilateral – Creates obligation solely on the part of the creditor to return the thing subject upon the fulfillment of the principal obligation. estafa is committed by a person who. PROVISIONS PLEDGE APPLICABLE ONLY TO 29 CENTRAL BANK vs. But when the consideration is subsequent to the mortgage. in this case. From the wordings of the law. of the Civil Code). 5) The thing pledged may be alienated by the pledgor or owner only with the consent of the pledgee. the consideration of the debtor in furnishing the mortgage is the existence of a valid. until the debt is paid.CREDIT TRANSACTIONS document does not have the effect of fusing both securities into an indivisible whole29. the mortgage cannot be enforced for more than the actual sum due. be they pure or subject to suspensive or resolutory conditions. voidable. indivisibility arises only when there is a debt. there being several things given in mortgage or pledge. Hence. shall convey. CA: The consideration of the accessory contract of real estate mortgage is the same as that of the principal contract. (Art. 2086. The debtor. but the latter shall continue to have possession. the rule of indivisibility of a mortgage cannot apply. Thus. . 2) All movables within the commerce of man may be pledged as long as they are susceptible of possession.Constructive or symbolic delivery of the key to the warehouse is sufficient to show that the depositary appointed by common consent of the parties was legally placed in possession. It is essential that fraud or deceit be practiced upon the vendee at the time of the sale. only right of action to compel the fulfillment of the promise but there is no pledge or mortgage yet. 3) Incorporeal rights may be pledged. The rule of indivisibility of the mortgage as outlined by Article 2089 above-quoted presupposes several heirs of the debtor or creditor which does not obtain in this case. 100% UP LAW UP BAROPS 2008 Page 249 of 325 . PNB: From Art. And. in the accessory contract of real estate mortgage. PLEDGE is a contract by virtue of which the debtor delivers to the creditor or to a third person a movable or document evidencing incorporeal rights for the purpose of securing the fulfillment of a principal obligation with the understanding that when the obligation is fulfilled. It may either be a prior or subsequent matter. the mortgage becomes unenforceable to the extent of such failure. when there is partial failure of consideration. the thing delivered shall be returned with all its fruits and accessions. CHARACTERISTICS 1) Real – Perfected by delivery. or unenforceable debt (Art. that is. BELO vs. in relation to Art. . 2052. only a personal right binding upon the parties. each one of them guarantees only a determinate portion of the credit. the consideration of his obligation to pay is the existence of a debt. 4) Pledge shall take effect against 3rd persons only if the following appear in a public instrument: a) Description of the thing pledged.2085 in rel to 2093) KINDS 1) Voluntary or conventional – Created by agreement of parties. Ownership of the thing pledged is transmitted to the vendee or transferee as soon as the pledgee consents to the alienation. 2) Legal – Created by operation of law.

PLEDGOR 1) Takes responsibility for the flaws of the thing pledged. Court of Appeals) 100% UP LAW UP BAROPS 2008 Page 250 of 325 . the thing given in pledge. CIVIL LAW 3) Is allowed to substitute the thing which is in danger of destruction or impairment without any fault on the part of the pledgee. impairment or dimunition in value of the thing. 3) Has no right to use the thing or to appropriate its fruits without authority from the owner31. the owner may ask that it be judicially or extrajudicially deposited. EFFECT OF THE SALE OF THE THING PLEDGED 1) Extinguishes the principal obligation. 32 MANILA BANKING v TEODORO: In case of doubt as to whether a transaction is a pledge or a dation in payment. IF CREDIT IS NOT PAID ON TIME 1) Debt is due and unpaid. 2) Presumptions32: a) If. subsequent to the perfection of the pledge. the thing is found in the possession of the pledgor or owner. there is prima facie presumption that the thing has been returned by the pledgee. Shall be liable for loss or deterioration of the thing by reason of fraud. the loss should be borne by the pledgor. with expenses in proper cases. 6) May either claim another thing in pledge or demand immediate payment of the principal obligation if he is deceived on the substance or quality of the thing. 30 YULIONGSIU vs. and the pledgee becomes a depositary. or if he misuses the thing when he was authorized to use it. The proceeds of the auction shall be a security for the principal obligation. the pledgor is regarded as holding the pledged property merely as trustee for the pledgee. unless and until he has paid the debt and its interest. or defend it against. there is danger of destruction. with another thing of the same kind and quality. For this purpose. In such a case. the presumption is in favor of pledge. 3) May bring actions pertaining to the owner of the thing in order to recover it from. negligence. The type of delivery will depend upon the nature and the peculiar circumstances of each case. RIGHTS AND DUTIES OF THE PLEDGEE 1) Cannot deposit the thing pledged with a 3rd person. 2) Is responsible for the acts of his agents or employees with respect to the thing pledged. b) If the thing is in the possession of a 3rd person who received it from the pledgor or owner after the constitution of the pledge. without fault on his part. b) Sale of the thing pledged at public auction. it stands to reason that in case of loss of the property. 4) May require that the thing be deposited with a 3rd person. If by the contract of pledge the pledgor continues to be the owner of the thing pledged during the pendency of the obligation. 5) May use the thing if necessary for its preservation. a pledgee cannot become the owner of. 31 PNB vs. delay or violation of the terms of the contract. stating the amount due. there is prima facie presumption that the thing has been returned by the pledgee. EXTINGUISHMENT OF A PLEDGE 1) Ways to extinguish a pledge: a) Payment of the debt. nor appropriate to himself. but not for fortuitous events. 4) Cannot use the thing without the authority of the owner. PNB: There is authority supporting the proposition that the pledgee can temporarily entrust me physical possession of the chattels pledged to the pledgor without invalidating the pledge. c) Thing pledged is returned by the pledgee to the pledgor or owner. 4) Sale must be made with the intervention of a notary public. 2) Cannot ask for the return of the thing against the will of the creditor.CREDIT TRANSACTIONS RIGHTS AND DUTIES OF CREDITOR IN A PLEDGE 1) Shall take care of the thing pledged with the diligence of a good father of a family. whether the price of the sale is more or less than the amount due. REQUIREMENTS IN SALE OF THE THING PLEDGED BY A CREDITOR. neither the acceptance by the pledgor or owner nor the return of the thing pledged is necessary. the latter being the lesser transmission of rights and interests (as earlier established in Lopez v. 2) Has right to reimbursement of the expenses made for preserving the thing. 3) Notice to the pledgor and owner. 2) Sale must be at a public auction. If he uses the thing without authority. 4) May cause the public sale of the thing pledged if. unless there is a contrary stipulation30. ATENDIDO: according to law. if through the negligence or willful act of the pledgee the thing is in danger of being lost or impaired. a 3rd person. d) Written statement by the pledgee that he renounces or abandons the pledge.

the persons in whose favor the law establishes a mortgage have the right to demand the execution and recording of a document formalizing the mortgage.CREDIT TRANSACTIONS 2) if the price is more than amount due. EFFECTS 1) Creates real rights. RA 4882. . 2) Mortgagor must be the absolute owner of the thing mortgaged. and such indivisibility likewise being unaffected by the fact that 'the debtors are not solidarity liable. LAWS GOVERNING MORTGAGE 1) 2) 3) 4) New Civil Code. specially subjecting to such security immovable property or real rights over immovable property in case the principal obligation is not complied with at the time stipulated33. 2) Creates merely an encumbrance. and the creditor does not have to divide his action by distributing the debt among the various things pledged or mortgaged. 3) The persons constituting the mortgage have free disposal of the property. that the amounts named as consideration in said contract do not limit the amount for which the mortgage may stand as security if from the 4 corners of the instrument the intent to secure future and other indebtedness can be gathered. all of them are liable for the debt. . (Art. a lien inseparable from the property mortgaged. 3) If the price of the sale is less. enforceable against the whole world. 6) Must appear in a public document duly recorded in the Registry of Property. "When several things are pledged or mortgaged. or DAYRIT v CA: Well-entrenched in law is the rule that a mortgage directly and immediately subjects the property upon which it is imposed. each thing for a determinate portion of the debt." (Tolentino) 34 MOJICA v CA: Mortgages given to secure future advancements are valid and legal contracts. 1602. neither is the creditor entitled to recover the deficiency. imposed upon immovables. although lacking the proper formalities of a mortgage. 100% UP LAW UP BAROPS 2008 Page 251 of 325 . 1365. Even when only a part of the debt remains unpaid. regarding aliens mortgagees. are considered separate from each other. (Art. A mortgage given to secure advancements is a continuing security and is not discharged by repayment of the amount named in the mortgage. ESSENTIAL REQUISITES 1) Constituted to secure the fulfillment of a principal obligation34. to be validly constituted.Useful expenses shall be refunded only to the possessor in good faith with the same right of retention. OBJECTS OF REAL MORTGAGE 1) Immovables. He may deliver said property to the mortgagee without altering the nature of the contract of mortgage. . the thing in which the mortgage consists may be alienated for payment to the creditor. 2) Alienable real rights in accordance with the laws. 1603. 33 CIVIL LAW shows the intention of the parties to make the property as a security for a debt. they should be legally authorized for the purpose.Future property cannot be object of mortgage. 1731) 3) The agent may retain the things which are the objects of agency until the principal effects the reimbursement and pays the indemnity. 4) Cannot exist without a valid obligation. . 546) 2) He who has executed work upon a movable has a right to retain it by way of pledge until he is paid. becoming IMPORTANT POINTS 1) As a general rule. 1450. the debtor is not entitled to the excess unless the contrary is provided. A contrary stipulation is void. the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired and by reason thereof (Art. 1454. 1914) 4) The laborer’s wages shall be a lien on the goods manufactured or the work done. the pledges or mortgage. Revised Administrative Code. the mortgagor retains possession of the property. (Art. in the absence thereof. Lutero).In a legal mortgage. LEGAL PLEDGES 1) Necessary expenses shall be refunded to every possessor. KINDS 1) Voluntary 2) Legal 3) Equitable – One which.Provisions governing equitable mortgage: Arts. 2) It is not an essential requisite that the principal of the credit bears interest. 1604 and 1607. the same being indivisible even though the debt may be divided. But when the several things are given to secure the same debt in its entirety. 1707) MORTGAGE is a contract whereby the debtor secures to the creditor the fulfillment of a principal obligation. but only a possessor in good faith may retain the thing until he has been reimbursed. PD 1952. 5) When the principal obligation becomes due. until the full amount of the advancements are paid (as established earlier in Lim Julian v. all the things are still liable for such balance.

e) Debtor has the right to redeem the property sold within 1 year from and after the date of sale. Before the confirmation. . f) Remedy of party aggrieved by foreclosure is a petition to set aside sale and cancellation of writ of possession. if any shall be paid to the mortgagor.Act No. it shall operate to divest the rights of all parties to the action and to vest their rights to the purchaser subject to such rights of redemption as may be allowed by law. FORECLOSURE OF MORTGAGE It is the remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation secured by the mortgage. . . the questions regarding the effect or invalidity of instruments are expected to be decided after. ROC. 4) Mortgage deed. 2) Mortgage deed remains evidence of a personal obligation. Sheriff’s certificate is executed. upon 35 SAMANILLA v CAJUCOM: A mortgage. c) Survives death of mortgagor. but neither adds to its validity nor convert an invalid mortgage into a valid one between the parties.Balance.Costs of the sale. NATURE OF JUDICIAL FORECLOSURE PROCEEDINGS: a) Quasi in rem action. c) Public sale should be made after proper notice. . also upon motion. as amended: a) Express authority to sell is given to the mortgagee. b) Authority is not extinguished by death of mortgagor or mortgagee.Both should be distinguished from execution sale governed by Rule 39. b) Foreclosure is only the result or incident of the failure to pay debt. EFFECT OF INVALIDITY OF MORTGAGE ON THE PRINCIPAL OBLIGATION 1) Principal obligation remains valid. 2) Proceedings for registration do not determine validity of the mortgage or its effect35. or the minimum price at which the property shall be sold to become operative in the event of a foreclosure sale at public auction. registration being necessary only to make the same valid against third persons (Art. whether registered or not. registration. 3135. acknowledged and recorded to complete the foreclosure. the court retains control of the proceedings The proceeds of the sale shall be applied to the payment of the: . the court. . 2125. SC ruled that "if the purpose of registration is merely to give notice. In Gurbax Singh Pabla vs.Amount due the mortgagee. KINDS OF FORECLOSURE 1) Judicial. 5) Mortgage by a surviving spouse of his/her undivided share in the conjugal property can be registered. shall order the property to be sold to the highest bidder at a public auction. It must follow as a necessary consequence that registration must first be allowed and validity or effect litigated afterwards". 2) Extrajudicial. and . b) An ancillary stipulation. 3) Registration is without prejudice to better rights of third parties.A stipulation of upset price. not before. is binding between the parties. CIVIL LAW motion. d) Surplus proceeds of foreclosure sale belong to the mortgagor. ROC: May be availed of by bringing an action in the proper court which has jurisdiction over the area wherein the real property involved or a portion thereof is situated. it shall order the mortgagor to pay the amount due with interest and other charges within a period of not less than 90 days nor more than 120 days from the entry of judgment If the mortgagor fails to pay at the time directed.Nature of power of foreclosure by extrajudicial sale: a) Conferred for mortgagee’s protection.CREDIT TRANSACTIONS that the interest as compensation for the use of the principal and the enjoyment of its fruits be in the form of a certain percentage thereof. Upon confirmation of the sale by the court.Foreclosure retroacts to the date of registration of mortgage. once duly registered. If the court finds the complaint to be well-founded. is null and void. forms part of the records for the registration of the mortgaged property. . CC).Claims of junior encumbrancers or persons holding subsequent mortgages in the order of their priority. INCIDENTS OF REGISTRATION OF MORTGAGE 1) Mortgagee is entitled to registration of mortgage as a matter of right. Registration only operates as a notice of the mortgage to others.Rule 68. Reyes. . . c) A prerogative of the mortgagee. 2008 Page 252 of 325 100% UP LAW UP BAROPS .

NOTE: The obligation to pay interest is not of the essence of the contract of antichresis. it is referred to as deficiency judgment. 4) Action to recover prescribes after 10 years from the time the right of action accrues. then to the principal of his credit 5. express agreement that debtor will give possession of the property to creditor and that the latter will apply the fruits to the interest. 3) The value of the mortgaged property has no bearing on the bid price at the public auction. hence. if any. On the contrary. 2134) SPECIAL REQUISITES: 1. pure or conditional Antichresis Refers to real property Perfected by mere consent Consensual contract Pledge Refers to personal property Perfected by delivery of the thing pledged Real contract Antichresis Property is delivered to creditor Creditor acquires only the right to receive the fruits of the property. but the mortgage creates a real right over the property The creditor has no such obligation 36 MEDIDA v CA: The rule up to now is that the right of a purchaser at a foreclosure sale is merely inchoate until after the period of redemption has expired without the right being exercised. Accessory contract – it secures the performance of a principal obligation 2. 2) Property may be sold for less than its fair market value. 3) Action for recovery of deficiency may be filed even during redemption period. and thereafter to the principal of the credit (Art 2132) CHARACTERISTICS 1.Exception: Where the price is so inadequate as to shock the conscience of the court. 2) Kinds: a) Equity of redemption: Right of the mortgagor to redeem the mortgaged property after his default in the performance of the conditions of the mortgage but before the sale of the mortgaged property or confirmation of sale b) Right of redemption: Right of the mortgagor to redeem the property CIVIL LAW within a certain period after it was sold for the satisfaction of the debt. amount of principal and interest must be specified in writing 4. inadequacy of price is immaterial because the judgment debtor may redeem the property. is obliged to pay the taxes and charges upon the estate It is expressly 2008 Real Mortgage Debtor usually retains possession of the property Creditor does not have any right to receive the fruits. unless there is stipulation to the contrary. with the obligation to apply then to the payment of the interest.CREDIT TRANSACTIONS RIGHT OF MORTGAGEE TO RECOVER DEFICIENCY 1) Mortgagee is entitled to recover deficiency. WAIVER OF SECURITY BY CREDITOR 1) Mortgagee may waive right to foreclose his mortgage and maintain a personal action for recovery of the indebtedness. The title to land sold under mortgage foreclosure remains. REDEMPTION 1) It is a transaction by which the mortgagor reacquires the property which may have passed under the mortgage or divests the property of the lien which the mortgage may have created36. upon the theory that the lesser the price the easier it is for the owner to redeem. . there being nothing in the Code to show that antichresis is only applicable to securing the payment of interest-bearing loans. taking into consideration the peculiar circumstances. EFFECT OF INADEQUACY OF PRICE IN FORECLOSURE SALE 1) Where there is right to redeem. if owing. 2) If the deficiency is embodied in a judgment. it can cover only the fruits of an immovable property 2. in the mortgagor or his grantee until the expiration of the redemption period and conveyance by the master's deed. 2) Mortgagee cannot have both remedies. formal contract – it must be in a specified form to be valid (Art. There is no such 100% UP LAW UP BAROPS Page 253 of 325 . delivery of the immovable is necessary for the creditor to receive the fruits and not that the contract shall be binding 3. provided that the public auction was regularly and honestly conducted. antichresis is susceptible of guaranteeing all kinds of obligations. it does not produce a real right The creditor. ANTICHRESIS is a contract whereby the creditor acquires the right to receive the fruits of an immovable of the debtor.

to bear the expenses necessary for its preservation and repair REMEDIES OF CREDITOR IN CASE OF NON-PAYMENT OF DEBT 1. 4) Revised Penal Code. the fact. AFFIDAVIT OF GOOD FAITH An oath in a contract of chattel mortgage wherein the parties "severally swear that the mortgage is made for the purpose of securing the obligation specified in the conditions thereof and for no other purposes and that the same is a just and valid obligation and one not entered into for the purpose of fraud. 5) Ship Mortgage Decree of 1978 (PD 1521) governs mortgage of vessels of domestic ownership. IS DELIVERED TO THE CREDITOR. 68 Phil 712)  a stipulation authorizing the antichretic creditor to appropriate the property upon the non-payment of the debt within the agreed period is void (Art. Procedure: Sec. LAWS GOVERNING CHATTEL MORTGAGE 1) Chattel Mortgage Law37 (Act. and that the same is a just and valid obligation. CC. CIVIL LAW Delivery of the personal property is necessary. 2088) Creditor is entitled to deficiency from the debtor EXCEPT if it is a security for the purchase of personal property in installments. 2112. INSTEAD OF BEING RECORDED. Registration is NOT necessary for validity. the excess over the amount due goes to the debtor. action for specific performance 2. El Hogar Filipino. if owing. if owing." makes it obvious that the debt referred to in the law is a current.1508. however. IT IS PLEDGE AND NOT CHATTEL MORTGAGE. the debtor is not entitled to the to the excess UNLESS it is otherwise agreed or in case of legal pledge. Procedure: Art. CA: A chattel mortgage must comply substantially with the form prescribed by the Chattel Mortgage Law itself. 2) Civil Code. is an affidavit of Good Faith. and thereafter to the principal Subject matter of both is real property obligation on part of mortgagee Delivery of the personal property is NOT necessary. however. as amended). and for no other purpose. ACME SHOE vs. 3) Revised Administrative Code. One of the requisites. 2) Adds nothing to mortgage. OBLIGATIONS OF ANTICHRETIC CREDITOR 1.CREDIT TRANSACTIONS stipulated that the creditor given possession of the property shall apply all the fruits thereof to the payment of interest. Registration is necessary for validity. to pay taxes and charges on the estate. that the statute has provided that the parties to the contract must execute an oath that "x x x mortgage is made for the purpose of securing the obligation specified in the conditions thereof. under Sec 5 thereof. petition for the sale of the real property as in a foreclosure of mortgages under Rule 68 of the Rules of Court  the parties. pledge Involves movable property. to the payment of interest. may agree on an extrajudicial foreclosure in the same manner as they are allowed in contracts of mortgage and pledge (Tavera v. Creditor is not entitled to recover deficiency notwithstanding any stipulation to the contrary. including necessary expenses Creditor may avoid said obligation by: a. to render an account of the fruits to the debtor 4. not an obligation that is yet merely contemplated. IF THE MOVABLE. after receiving them. While it is not doubted that if such an affidavit is not appended to the agreement. the chattel mortgage would still be valid between the parties (not against third persons acting in GF). and thereafter to the principal 3. 37 chattel mortgage Involves movable property. to apply all the fruits. compelling debtor to reacquire enjoyment of the property b. 14 of Act 1508. by stipulation to the contrary 2. 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. If the property is sold. and one not entered into for the purpose of fraud. If the property is foreclosed. as amended. EFFECT OF REGISTRATION 1) Creates real rights. 100% UP LAW UP BAROPS 2008 Page 254 of 325 . Inc.

3. PERIOD TO FORECLOSE 1. the right of redemption is no longer available to the mortgagor. shall not be levied upon on attachment or execution. 4. 152. Public sale. Mortgage lien is deemed abandoned by obtaining a personal judgment. RIGHT OF REDEMPTION 1. CIVIL ACTION TO RECOVER CREDIT 1. 3. present and future. c. 2. in an of the chattel CONCURRENCE OF CREDIT implies possession by two or more creditors of equal right or privileges over the same property or all of the property of a debtor. After 30 days from the time of the condition is broken. for the fulfillment of his obligations. Private sale – There is nothing immoral or against public order agreement for the private sale personal properties covered by mortgage. (Art. subjects to exemptions provided by law. Future property: A debtor who obtains a discharge from his debts on account of insolvency. CIVIL LAW in installments: No deficiency judgment can be asked and any contrary agreement shall be void. ROC. and is a period of grace for the mortgagor. as well as money or property obtained by such support. 13. When the condition of a chattel mortgage is broken. Where mortgage constituted as security for purchase of personal property payable 100% UP LAW UP CONCURRENCE AND PREFERENCE OF CREDITS illegal. 2) Insolvency shall be governed by the Insolvency Law. Claims of persons holding subsequent mortgages in their order. 4. b. 3. 153 and 155. RIGHT OF MORTGAGEE TO RECOVER DEFICIENCY 1. the following may exercise redemption: a. The 30-day period is the minimum period after violation of the mortgage condition for the creditor to cause the sale at public auction with at least 10 days notice to the mortgagor and posting of public notice of time. Costs and expenses of keeping and sale. Sec. Property in custodia legis and of public dominion. Insolvency Law. Person holding a subsequent mortgage. An attaching creditor who so redeems shall be subrogated to the rights of the mortgagee and entitled to foreclose the mortgage in the same manner as a mortgagee. . CC) 2.Exempt property: a. as amended) b. Mortgagor. GENERAL PROVISIONS 1) The debtor is liable with all his property. Sec 118. Balance. 2. After the sale at public auction. 205. to discharge the obligation. 2. CC) 3. Present property: 1. 68 and 69. and purpose of such sale. Rule 39. (Act 1956. Independent action not required. Act 1956) c. 3. Where mortgage foreclosed: Creditor may maintain action for deficiency although The Chattel Mortgage Law is silent on this point. APPLICATION OF PROCEEDS OF SALE 1. Right to receive support. (CA 141. Subsequent attaching creditor. Redemption is made by paying or delivering o the mortgagee the amount due on such mortgage and the costs and expenses incurred by such breach of condition before the sale. Family home. place. 2. if any. 2. (Sec. shall be paid to the mortgagor.CREDIT TRANSACTIONS Registration of assignment of mortgage is not required. 2. PREFERENCE OF CREDIT is the right held by a creditor to be preferred in the payment of his claim above other out of the debtor’s assets. Where mortgaged property subsequently attached and sold: Mortgagee is entitled to deficiency judgment in an action for specific performance. as amended) BAROPS 2008 Page 255 of 325 . or person holding rights under him. FORECLOSURE OF CHATTEL MORTGAGE 1. Payment of the obligation. is not liable for the unsatisfied claims of his creditors with said property. Public Land Act. because a chattel mortgage is given only as a security and not as payment of the debt. (Arts.

2) Ordinary preferred credits (Art.Partnership or community subsists. although in the form of warehouse receipts.CREDIT TRANSACTIONS 3) Exemption of conjugal property or absolute community or property. 5) The excess. 4) If there are 2 or more credits with respect to the same specific real property or real rights. 2244) – Preferred in the order given by law. they shall be satisfied pro rata. WHO MAY ISSUE WAREHOUSE RECEIPTS  Only a warehouseman. (Art. CC) a) Considered as mortgages or pledges of real or personal property or liens within the purview of legal provisions governing insolvency. APPLICATION The special law applies to warehouse receipts issued by a warehouseman as defined in Sec. real or personal. after the payment of duties. Signature of warehouseman: Best evidence of the fact that the warehouseman has received the goods 2008 Page 256 of 325 BAROPS . his undivided share or interest in the property shall be possessed by the assignee in insolvency proceedings because it is part of his assets. Description of goods or packages: For identification purposes. 3) Common credits (Art. . while the Civil Code. Date of issue and receipt: Indicates prima facie the date when the contract of deposit has been perfected and when the computation of storage charges shall begin. taxes and fees due the State or any subdivision thereof 3) Those credits which enjoy preference in relation to specific real property or real rights exclude all others to the extent of the value of the immovable or real right to which the preference refers. Rate of storage charges: Consideration for the contract from the point of view of the warehouseman.  Warehouseman: Person lawfully engaged in the business of storing goods for profit. Location of warehouse: Because the warehouseman may have other warehouses. b) Taxes due to the State shall first be satisfied. 3. or by any other right or title not comprised in Arts. 22412244 shall enjoy no preference. shall be excluded from the insolvency proceedings CLASSIFICATION OF CREDITS 1) Special preferred credits. Person to whom goods are deliverable: Determines the persons who shall prima facie be entitled lawfully to the possession of the goods deposited. Receipts not issued by a warehouseman. 4) If there is co-ownership. and those which enjoy preference. 58(a). bonded or not. 6. they shall be satisfied pro rata. 5) Property held by the insolvent debtor as a trustee of an express or implied trust. Consecutive number of receipt: To identify each receipt with the goods for which it was issued. as to the amount not paid. and one of the co-owners is the insolvent debtor. 5. 2. if any. 6) Those credits which do not enjoy any preference with respect to specific property. but a duly authorized officer or agent of a warehouseman may do so. 2245) – Credits of any other kind or class. 100% UP LAW UP CIVIL LAW shall be satisfied according to the following rules: Order established by Art 2244 Common credits referred to in Art 2245 shall be paid pro rata regardless of dates. but certain essential terms must be present: 1. 2241 and 2242. after the payment of the taxes and assessment of the taxes and assessments upon the immovable property or real right. 2) If there are 2 or more credits with respect to the same specific movable property. provided that: . shall be added to the free property which the debtor may have. are not warehouse receipts  FORM AND CONTENT Need not be in particular form. after the payment of the credits which enjoy preference with respect to specific property. ORDER OF PREFERENCE OF CREDIT 1) Credits which enjoy preference with respect to specific movables exclude all others to the extent of the value of the personal property to which the preference refers. 7. whether public or private. 4. SPECIAL LAWS WAREHOUSE RECEIPTS LAW SCOPE All warehouses. for the payment of other credits. to other cases where receipts are not issued by a warehouseman.Obligations of the insolvent spouse have not redounded to the benefit of the family.

But warehouseman may still refuse delivery on the grounds of some lawful excuse: a. Sec.Any other terms or conditions may be inserted. . not giving statutory notice in case of sale of goods in Sec. 10. Persons lawfully entitled to the possession of the goods or its agent 2008 Page 257 of 325 FAILURE TO MAKE RECEIPT NON-NEGOTIABLE 100% UP LAW UP BAROPS . DEFINITIONS 1) Negotiable receipt: Receipt in which it is stated that the goods received will be delivered to the bearer or to the order of any person named in such receipt. Those contrary to law.Effect of omission of any of the essential terms: a.Effect: Failure to do so will make a holder who (1) purchased for value AND (2) supposing it to be negotiable. . b. morals. except: a. the word ‘DUPLICATE” shall be placed on the face of the receipt except the one first issued. even though the purchase be after delivery of the goods by the warehouseman to the holder of the original receipt. 2. c. DUPLICATE RECEIPTS Applies only to negotiable warehouse receipts: . he has been requested by the person lawfully entitled to the goods not to make delivery. An offer to satisfy the warehouseman’s lien: Because a warehouseman may refuse delivery until his lien is satisfied b. warehouseman will be liable for damages. c.A non-negotiable receipt must contain the word “non-negotiable”. 2. 33 and 34). Warehouseman’s ownership of or interest in the goods: To prevent abuses in the past when warehouseman issued receipt on their goods. Sec. A offer to sign when the goods are delivered. b. . To deliver the goods to the holder of the receipt or the depositor upon demand. accompanied with: a.A negotiable warehouse receipt is not a negotiable instrument in the same sense as in the NIL. c. CONSTRUCTION OF WAREHOUSE RECEIPTS: Liberal construction of the law in favor of bona fide holders. the warehouseman’s lien c. . but he is not liable for loss or injury which could not have been avoided. may at his option treat it as negotiable. he has information that the delivery about to be made was to one not lawfully entitled to the goods.Applies only to non-negotiable warehouse receipts: . 36: He has already lawfully sold the goods Persons to whom the goods must be delivered 1. Sec. 18: If there are several claimants to the goods d.Effect: The warehouseman shall be liable for damages for failing to do this to any one who purchased the subsequent receipt (1) for value. the contract will be converted to an ordinary deposit. and be liable for failure to exercise care. Those contrary to this Act (e. an acknowledgment that they have been delivered. public order or public policy. Exemption from liability and negligence. 10 1. Sec. 2) Non-negotiable receipt: Receipt in which it is stated that the goods received will be delivered to the depositor or to any other specified person. b. 9. 8. 16: He has acquired title to the goods which was derived from 1. validity and negotiability of receipt is not affected. 21: If the goods were lost and he had no fault e. unless there is a stipulation to the contrary.Whenever more than one negotiable receipt is issued for the same goods. this is subject to waiver. OBLIGATION AND RIGHTS OF A WAREHOUSEMAN UPON THEIR RECEIPTS Principal obligations of a warehouseman 1. CIVIL LAW . An offer to surrender the receipt: For the protection of the warehouseman and to avoid criminal liability. good customs. exemption from liability for misdelivery in Sec.CREDIT TRANSACTIONS and has bound himself to assume all obligations connected therewith. To take care of the goods. Sec.g. . . and (2) supposing it to be an original. transfer made by the depositor at the time of the deposit for storage or subsequent thereto 2. This has no application to actions against any party other than a warehouseman.A provision in a negotiable receipt that it is non-negotiable is void. Statement of advances made and liabilities incurred (if present): To preserve the lien of the warehouseman over the goods he stores or the proceeds thereof in his hands .

etc. Alteration immaterial: whether fraudulent or not. 33) or because the goods are perishable and hazardous (Sec. Acts for which a warehouseman is liable (1) Failure to stamp “duplicate” on copies of a negotiable receipt (Sec. 10) a. 34) EFFECTS OF ALTERED RECEIPTS a. and b. . the warehouseman is liable on the altered receipt according to its original tenor. he had received notice of the adverse claim or title of a 3rd person (4) Failure to effect cancellation of a negotiable receipt upon delivery of the goods (Sec.CREDIT TRANSACTIONS 2. a competent court may order the delivery of the goods only: a. 12) (8) Failure to give notice in case of sales of goods to satisfy his lien (Sec.Liable for conversion (unauthorized assumption and exercise of the right of ownership over goods belonging to another through alteration or the exclusion of the owner’s right) b. with written authority 3. upon giving of a bond with sufficient securities . he had been requested NOT to make such delivery 2. prior to delivery. person in possession of a negotiable receipt (which was lawfully negotiated) . to the alterer and subsequent purchasers with notice ( BUT his liability is limited only to delivery as he is excused from any other liability) .The warehouseman is still liable to a holder of the receipt for value without notice since the warehouseman can secure himself in the bond given.The duplicate imposes no other liability upon the warehouseman. such original receipt is uncancelled at the date of the issue of the duplicate . 11) .Even a fraudulent alteration cannot divest the title of the owner of stored goods and the warehouseman is liable to return them to the 2008 Page 258 of 325 100% UP LAW UP BAROPS . and 2. the word “duplicate” must be plainly placed by the warehouseman upon the face of every such receipt except the 1st.When more than one negotiable receipts are issued for the same goods.This is applicable ONLY to negotiable receipts but NOT to a situation where there was a valid sale in accordance with Sec.General rule: A warehouseman is under obligation to deliver the identical property stored with him and if he fails to do so he is liable. the warehouseman is liable on the altered receipt according to its original term. unless the depositor sues him. authorized or not. Material alteration fraudulently made: warehouseman is liable according to the original tenor to a: 1. b. that the duplicate is an accurate copy of the original receipt b. a non-negotiable receipt. purchaser of the receipt for value without notice. d. (7) Failure to take care of the goods (Sec. 6 and 15) . When the goods are delivered already: Failure to cancel will make him liable to any one who purchased for value in good faith such receipt CIVIL LAW b. Persons entitled to deliver under: a. In such case. Alteration material: but it was authorized. or b.Exception: If the description consists merely of marks or labels upon the goods or upon the packages containing them. 7) (3) Misdelivery of the goods (Sec. the warehouseman is not liable even if the goods are not of the kind as indicated in the marks or labels (6) In case of lost or destroyed receipts (Sec. the warehouseman warrants: a.Still liable for conversion if: 1. c. Material alteration innocently made: though unauthorized. To a person entitled to delivery under a non-negotiable receipt or written authorization OR person in possession of a negotiable receipt . (2) Failure to place “non-negotiable” on a non-negotiable receipt (Sec. 36 a.A warehouseman does not have a cause of action against a person to whom he misdelivered the thing. To one not lawfully entitled to possession .. upon proof of the loss or destruction of the receipt. 20) . the warehouseman is liable according to the terms of the receipts as altered.Remember that a warehouseman must deliver to the one who has the receipt but if such was lost. When only some of the goods were delivered: Failure to cancel or to state plainly in the receipt that some goods were delivered will make him liable to any one who purchased for value in good faith such receipt (5) Issuing receipt for non-existing goods or misdescribed goods (Sec. 14) .

REMEDY OF CREDITOR WHOSE DEBTOR OWNS A NEGOTIABLE RECEIPT Attachment of the negotiable receipt. weighing 5. and deliver to the person whom he finds is entitled to the possession of the goods .Effects: a. He may not do (a) and (b) .General rule: A warehouseman may not mingle goods belonging to different depositors. cooperating 7.This provision does not apply if the person depositing is not the owner of the goods or one who has not the right to convey title to the goods binding upon the owner. from the warehouseman’s lien b. Therefore. Adverse title of a 3rd person is not a defense for refusal to deliver by a warehouseman to his bailor on demand.Effect: a) he will be relieved from liability in delivering the goods to the person whom the court finds to have better right. To persons to whom the goods must be livered (Sec. he is authorized by custom . But a bona fide holder acquires no right to the goods under a negotiable receipt which has been stolen or lost or which the indorsement has been forged. 17) 3. COMMINGLING OF DEPOSITED GOODS CIVIL LAW .The goods themselves cannot readily be attached or levied upon by ordinary legal process EXTENT OF WAREHOUSEMAN’S LIEN a. 18) 4. other charges and expenses in relation to such goods d. To the person who wins in the interpleader case (Sec.Exception: In case of fungible goods of the same kind and grade provided: a. c. directly or indirectly from a transfer made by the depositor at the time of the deposit for storage or subsequent thereto. b) he is liable for refusal to deliver to the rightful claimant when it is required to have an interpleader. 9) 2. each depositor shall own the entire mass in common and entitled to his portion b. the document is impounded by the court  The warehouseman cannot be compelled to deliver the goods until: a.The warehouseman cannot refuse to deliver the goods on the ground that he has acquired title or right to the possession of it unless such is derived: 1.CREDIT TRANSACTIONS owner. not on the goods. lawful charges for 1. 2.Effect: He will be liable after a lapse of a reasonable time. it is impounded by the court . WITH REGARD TO OWNERSHIP a. unless: a. warehouseman is severally liable to each depositor for the care and redelivery of their portion as if the goods had been kept separate ATTACHMENT RECEIPTS  OR LEVY ON NEGOTIABLE A warehouseman has the obligation to hold the goods for the owner or for the person to whom the negotiable receipt has been duly negotiated. the document be first surrendered. To the buyer in case there was a valid sale of the goods (Sec. and 2.The warehouseman may either: a. or c. the receipt is surrendered to him. . Ownership is not a defense for refusal to deliver . except: 1. money advanced 2. of conversion as of the date of the original demand for the goods.This does NOT apply to cases where the warehouseman himself makes a claim to the goods. To the person he finds to be entitled to the possession after investigation (Sec. insurance 6. .Effect: He is not excused from liability in case he makes a mistake b. 36) DUTY OF WAREHOUSEMAN WHEN THERE ARE SEVERAL CLAIMANTS . the goods cannot be attached or levied upon under an execution. lawful claims for 1. He may bring a complaint in interpleader . b. preservation of the goods b. Investigate and determine within a reasonable time the validity of the claims. or b. the negotiation is enjoined. storage. . reasonable charges and expenses for notice and advertisements of sale 100% UP LAW UP BAROPS 2008 Page 259 of 325 . interest 4. labor 3. transportation c. he is authorized by agreement b.

2. an offer to surrender the receipt a. place where the lien was acquired b. Sale itself in: a. any person may pay the warehouseman for his lien and the other expenses. From the proceeds of the sale: a. the balance shall be held by the warehouseman and delivered on demand to the person to whom he should deliver it F. if there is a newspaper published in the place of sale: once a week for 2 consecutive weeks and the sale not held less than 15 days from the time of the 1st publication b. including the reasonable charges of notice. an offer to sign when the goods are delivered. to the possession of the goods on payment of the charges. the goods will be advertised for sale and then sold at a specified time and place B. b. time when notice should reach its destination if sent by mail d. The warehouseman shall deliver the goods to that person if he is entitled under this Act. the warehouseman shall retain ownership of the goods.The lien may be lost through: a. the warehouseman shall satisfy his lien b. this is subject to waiver 3.A warehouseman may NOT claim a lien on other goods of the same depositor for unpaid charges on the goods surrendered if the goods were delivered to him under different receipts. c. an offer to satisfy the warehouseman’s lien (because a warehouseman may refuse delivery until his lien is satisfied) 2. time and place of the sale C. Even if without lien. Publication: a. voluntarily surrendering possession of goods constitutes a waiver or abandonment . delivery of notice if personally delivered 2. if such place is manifestly unsuitable for the purpose. the sale will be advertised stating: a. if there is no newspaper: posted at least 10 days before the sale in not less than 6 conspicuous places in the place of sale D. . a description of the goods to be sold b. Written notice to the person on whose account the goods are held or to persons who claim an interest in the goods containing: a.A warehouseman has NO lien on goods belonging to another and stored by a stranger in fraud of the true owner’s right. the name of the owner or person on whose account the goods were held c.CREDIT TRANSACTIONS e. After the time for payment of the claim if the notice has elapsed. other charges expressly enumerated (from b. b. charges for storage and preservation of the goods b. By refusing to deliver the goods until his lien is satisfied. d and e above) although the amount is NOT stated . an acknowledgment that they have been delivered REMEDIES FOR A WAREHOUSEMAN 1. By causing the extrajudicial sale of the property and applying the proceeds to the value of the lien Process: A. itemized statement of warehouseman’s lien showing the sum due and when it became due b. advertisement and sale c. at the nearest suitable place E. sale of the goods where defaults has been made in satisfying the lien EXTENT OF THE LIEN WHEN A NEGOTIABLE RECEIPT HAS BEEN ISSUED a. 3. all remedies allowed by law to a creditor against his debtor for collection of charges. statement that if the claim is not paid. for the protection of the warehouseman and to avoid criminal liability b. goods of the depositor who is liable to the warehouseman as debtor wherever such goods are deposited. not less than 10 days from: 1. the warehouseman shares pro rata with the other creditors of the depositor the balance of the proceeds of the sale for the satisfaction of the claims. goods of other persons stored by the depositor who is liable to the warehouseman as debtor with authority to make a valid pledge . wrongfully refusing to deliver the goods to a person who holds the receipt or the depositor upon DEMAND accompanied with: 1. Otherwise. All remedies allowed by law for the enforcement of a lien against personal 100% UP LAW UP CIVIL LAW property and recovery of any deficiency in case it exists after the sale of the property. 4. 2008 Page 260 of 325 BAROPS . Any time before the goods are sold. GOODS SUBJECT TO LIEN a. brief description of the goods c. a demand that a claim be paid on or before a day mentioned.For claims not specified.

To be discharged from his debts and liabilities by voluntary or involuntary insolvency proceedings. person to whose order the goods are delivered or by a subsequent indorsee indorsed it to bearer CIVIL LAW the debtor from imprisonment.Negotiable receipts negotiable by delivery: 1. Equity Test – a person may be insolvent although he may be able to pay his debts at some future time on a settlement and winding up of his affairs. EFFECTS OF SALE a. To effect an equitable distribution of the bankrupt’s property among his creditors. while possessing sufficient property to cover his debts. to satisfy his lien b. Petition the court to suspend payments. WHAT MAY BE PERMITTED OF A DEBTOR BY THE INSOLVENCY LAW 1. when the sale was made without the publication required and before the time specified by law.Warehouseman will give notice to owner or person in whose name the goods are stored: a. when indorsed in blank. foresees the impossibility of meeting them when they respectively fall due. despite the fact that he has sufficient assets to cover all his liabilities.Proceeds of the sale shall be disposed of in accordance with the process in the sale of the goods. or 3. BANKRUPTCY The only distinction between insolvency and bankruptcy is a matter of terminology and the source of the laws relating thereto. 3. The Insolvency Law is intended to cover the entire subject of insolvency and bankruptcy and must be treated as a complete body of law upon the subject. of the payment of debts of one who. SUSPENSION OF PAYMENTS – postponement. REQUISITES OF PETITION FOR SUSPENSION OF PAYMENTS: INSOLVENCY LAW INSOLVENCY – state of a person whose liabilities are more than his assets. Balance Sheet Test – relative condition of a man’s assets and liabilities that the former if all made immediately available. Either a bankruptcy or insolvency statute may operate to discharge a debt as well as release 100% UP LAW UP BAROPS 2008 Page 261 of 325 . or 2. if sale is not possible. PURPOSE: To suspend or delay the payment of debts the amount of which is not affected although a postponement is declared. BASIS: Probability of the debtor’s inability to meet his obligations when they respectively fall due. and either may operate on the petition of the debtor or that of his creditors. To benefit the debtor in discharging him from his liabilities and enabling him to start afresh with the property set apart to him as exempt. he may dispose of the goods in any lawful manner without liability . such sale is void and the purchaser of the goods acquires no title in them NEGOTIATION AND TRANSFER OF RECEIPTS . if the goods are deliverable to the bearer. failure to do a &b will give the warehouseman authority to sell the goods without advertising d. INSOLVENCY PRIMARILY GOVERNED BY THE CC Insolvency shall be governed by special laws insofar as they are not inconsistent with the CC. The regulatory and unifying influence of the law on credit transactions and business usage throughout the country. warehouseman is NOT liable for nondelivery even if the receipt was given for the goods when they were deposited be negotiated b. Insolvency is thus primarily governed by the CC and subsidiarily by the Insolvency Law.CREDIT TRANSACTIONS PERISHABLE AND HAZARDOUS GOODS . would not be sufficient to discharge the latter. It is the inability of a person to pay his debys as they become due in the ordinary course of business. 2. and 2. by court order. PURPOSES OF INSOLVENCY LAW: 1. to remove the goods c. INSOLVENCY vs.

00 may apply to be discharged from his debts and liabilities by petition to the RTC of the province or city in which he has resided for six months next preceding the filing of the petition. 20) The amount of indebtednes s must exceed P1. Foreseeing the impossibility of meeting them when they respectively fall due. INVOLUNTARY INSOLVENCY – an adjudication of insolvency may be made on the petition of three or more creditors. Two thirds (2/3) of the creditors voting upon the same proposition. 4. Petitioning that he be declared in the state of suspension of payments RULE ON DOUBLE MAJORITY IN THE MEETING OF CREDITORS Majority shall be: 1.00 DISTINCTIONS BETWEEN VOLUNTARY INSOLVENCY AND INVOLUNTARY INSOLVENCY voluntary insolvency One creditor is sufficient Filed by the insolvent debtor involuntary insolvency Three or more creditors are required Filed by three or more creditors who possess the qualifications required by law Debtor must have committed one or more of such acts of insolvency Amount must not be less than P1. KINDS OF INSOLVENCY VOLUNTARY INSOLVENCY – an insolvent debtor owing debts exceeding the amount of P1. 2. Possessing sufficient property to cover all his debts. 3. attachments or executions on property of the debtor duly recorded and not dissolved are not affected by the order.00 (aggregate) Petition must be accompanied by a bond An order of adjudication granted only Page 262 of 325 Purpose Sufficie ncy of property Number of creditors Who may petition Effect on amount of debt Acts of insolvency Amount of debt Number of creditor s required Number of creditors is immaterial Posting of bond Ex parte adjudication Debtor must not be guilty of any of the acts of insolvency (Sec. residents of the Philippines. and the amount of which credits or demands are in the aggregate of not less than P1. some creditors may not receive any amount at all In case of involuntary insolvency. Petition is filed by a debtor. DISTINCTIONS BETWEEN SUSPENSION OF PAYMENTS AND INSOLVENCY suspension of payments Suspend or delay the payment of debts Debtor has sufficient property to pay his debts Amount of indebtedness is not affected insolvency Discharge the debtor from the payment of debts Debtor does not have sufficient property to pay all his debts The creditors receive less than their credits. 3.000.000. The payment to the debtor of any debts due to him and the delivery to the debtor or to any person for him of any property belonging to him and the transfer of any property by him are forbidden. and in case where there are preferences. which 2. and 4. CIVIL LAW ORDER DECLARING All the assets of the debtor not exempt from execution are taken possession of by the sheriff until the appointment of a receiver or assignee.00 Bond is not required An order of adjudication may be 100% UP LAW UP BAROPS 2008 . Represents at least three fifths (3/5) of the total liabilities of the debtor.CREDIT TRANSACTIONS 1. All civil proceedings pending against the insolvent debtor shall be stayed.000. 2.000. whose credits or demands accrued in the Philippines. Mortgages or pledges. three or more creditors are required EFFECT OF COURT DEBTOR INSOLVENT 1.

and papers in relation thereto. 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. Those whose claims are barred by the statute of limitations 3. Since the assignee of the credit steps into the shoes of the creditor-mortgagee to whom the chattel is mortgaged. 1508 which provides that a mortgagor of personal property shall not sell or pledge such property. Vacate and set aside judgment entered in any action commenced within 30 days immediately prior to the commencement of insolvency proceedings. 2. or any part thereof. Dissolve any attachment levied within one month next preceding the commencement of insolvency proceedings. including all deeds. 3. Property exempt from execution. Holders of claims for unliquidated damages arising out of pure tort. PROPERTIES OF INSOLVENT THAT PASS TO THE ASSIGNEE 1. 2. All actions to recover all the estate. a thing pledged may be alienated by the pledgor or owner with the consent of the pledgee. CA: Assignment of Credit/Consent: As provided in Article 2096 in relation to Article 2141 of the Civil Code. debts. wrongfully takes property from such third persons and converts it to his own use. A mortgage credit may be alienated or assigned to a third person. 3. books. and the 38 SERVICEWIDE v. The undivided share or interest of the insolvent debtor in property held under co-ownership PROPERTIES OF INSOLVENT THAT DO NOT PASS TO THE ASSIGNEE 1. 100% UP LAW UP BAROPS . Purpose: 1. purporting to be as such. it follows that the assignee’s consent is necessary in order to bind him of the alienation of the mortgaged thing by the debtormortgagor This is tantamount to a novation. Property held in trust.CREDIT TRANSACTIONS granted ex parte Petition is filed in the RTC of the province or city where the debtor has resided for six months Court issues the order of adjudication declaring the petitioner insolvent upon the filing of the voluntary petition after a hearing Length of residence is immaterial CIVIL LAW control of the property is vested in the court. and effects of the debtor. 4. d. To establish his right to sue in that capacity The bond is solely for the benefit of the creditors of the insolvent. the assignee is required to give a bond for the faithful performance of his duties. estate. CREDITORS NOT ENTITLED TO VOTE IN THE ELECTION OF ASSIGNEE 1. Assignee takes the property in the plight and conditions that the insolvent held it. and that third persons have no remedy against the sureties if the assignee. The assignment shall: a. b. To establish his official character 2. and effects of the insolvent shall be brought by the assignee and not by the creditors. Secured creditors unless they surrender their security or lien to the sheriff or receiver or unless they shall first have the value of such security fixed 4. Right of action for damages to real property 4. Property of the conjugal partnership or absolute community except 2008 Page 263 of 325 Residency duration to vest jurisdiction in courts Requirement of hearing The debtor is not adjudicated insolvent until after hearing of the case ASSIGNEE – person elected by the creditors or appointed by he court to whom an insolvent debtor makes an assignment of all his property for the benefit of his creditors. Properties fraudulently conveyed. the legal title to all the property of the insolvent is vested in the assignee. EFFECTS OF ASSIGNMENT38 1. Vacate and set aside any judgment entered by default or consent of the debtor within 30 days prior to the commencement of insolvency proceedings BOND OF THE ASSIGNEE After his election. c. 3. Those who did not file their claims at least two days prior to the time appointed for such election 2. All real and personal property. Vacate and set aside execution issued thereon. This provision is in accordance with Act No. Upon appointment. 2.

To settle all accounts between the debtor and his debtors subject to the approval of the court. To sell. 6. POWERS OF THE ASSIGNEE 1. In case of non-resident or absconding or concealed debtor. 4. rightfully allotted to a creditor entitled to share in the fund. and claims belonging to or due to the debtor. to demand and receive of every sheriff all the property and money in his possession belonging to the debtor. To take into his possession all the estate of the debtor except property exempt from execution. Equitable claims under Sec. With reference to specific movable and immovable property of the debtor. 3. To sue and recover all the estate. Creditors claiming preference must sufficiently establish their credits and their right to preference to entitle them to such preference.) RULES ON ORDER OF DISTRIBUTION 1. Section 37 constitutes a sort of penal clause which shall be strictly construed.CREDIT TRANSACTIONS insofar as the debtor’s obligations redounded to the benefit of the family. 8. Preferred claims as to unencumbered property of the debtor which shall be paid in the order named in Art. 5. To compound. 48. 3. the taxes due the State shall first be satisfied. To recover any property fraudulently conveyed by the debtor. CLASSIFICATION CREDITORS AND PREFERENCE OF 4. Preferred claims with respect to specific movable property and specific immovable property under Art. CREDITOR’S LIABILITY FOR FRAUDULENTLY ASSIGNING HIS CREDIT A creditor’s transfer or assignment of his credit to another without the knowledge and at the back of other creditors of the insolvent may be a shrews surprise move that enables the transferor creditor to collect almost if not the entire amount of the said creditor. 7. By it. 2241 and 2242 of the CC. To redeem all mortgages and pledges and to satisfy any judgment which may be an encumbrance on any property sold by him. 100% UP LAW UP BAROPS 2008 Page 264 of 325 . before the general creditors receive anything. 6. REMEDY OF THE ASSIGNEE: SECTION 37 OF THE INSOLVENCY LAW: The creditor coming within this purview is liable to an action by the assignee for double the value of the property so embezzled or disposed of. (The general rule is that the purpose of insolvency proceeding is the equitable distribution of the insolvent’s assets among the debtor’s creditors. Hence. whether in the same proportion with other creditors or in a different proportion. 4. the law on preferences is strictly construed. Common or ordinary credits which shall be paid pro rata regardless of dates under Art. After-acquired property except fruits and income of property owned by the debtor Non-leviable assets like life insurance policy which do not have any cash surrender value Right of action for tort which is purely personal in nature. 2245 of the CC. 2244 of the CC. debts. The preferred claims enumerated in Art. 3. Property to which a mortgage or pledge exists unless the creditor surrenders his security or lien. 2241 and 2242 are considered as mortgages and pledges of real or personal property or liens within the purview of the Insolvency Law. 2. ORDER OF DISTRIBUTION 1. 2. 37 does not apply: Not applicable where what has been disposed of is the creditor’s own credit and not the insolvent’s property. CIVIL LAW When Sec. with any person indebted to such debtor. The priorities fixed by law govern 2. any estate of the debtor which has come into his possession. 7. It is paid by the assignee only upon order of the court. DIVIDENDS IN INSOLVENCY Dividends in insolvency – parcel if the fund arising from the assets of the estate. to be received for the benefit of the insolvent’s estate. upon order of the court. under the order of the court. 5. one person is given a superior right or claim over another. PREFERENCE – an exception to the general rule. The claims which are given priority must be paid in full in the order of their priority.

6. 3. 2. 3. To waive his right under the security or lien – thereby. agree to accept a dividend less than the whole amount of their claims. REQUIREMENTS COMPOSITION accord An agreement between a debtor and a single creditor for a discharge of the obligation by a part payment or on different terms. lease. 2. Paraphernal property belonging to the wife of the insolvent. and 4. To have the value of the encumbered property appraised and then share in the distribution of the assets of the debtor with respect to the balance of his credit. or usufruct. Mere recommendation assignee be appointed. 8. Goods or chattels wrongfully taken by the insolvent or the amount of the value thereof. It must be made after depositing in such place designated by the court. 2. If it is in the best interest of the creditors. to be distributed pro rata. 2. composition Designates an arrangement between a debtor and the whole body of his creditors (or at least a considerable portion of them) for the liquidation of their claims by the dividend offered.CREDIT TRANSACTIONS EQUITABLE CLAIMS UNDER THE INSOLVENCY LAW Section 48 of the Insolvency Law: Any property found among the property of the insolvent. that the 1. 5. in discharge and satisfaction of the whole debt. The debtor has not been guilty of any of the acts. the consideration to be paid and the costs of the proceedings. FOR A VALID OFFER OF 1. shall not be considered to be property of the insolvent and shall be placed at the disposal of its lawful owners. Negotiable instruments for collection or remittance. the ownership of which has not been conveyed to him by legal and irrevocable title. between an insolvent or embarrassed debtor and his creditors. 2. or assignee. Merchandise bought by the insolvent on credit where no delivery is made or where the right of ownership or possession has been retained by the seller. Amounts due the insolvent for sales or merchandise on commission. and 3. 3. administration. or of a failure to perform any of the duties which would create a bar to his discharge. The offer and its acceptance are in good faith and have not been made or procured in a manner forbidden by the Act. Voting of a secured claim. Waiver – release or surrender of the claim to the receiver. Merchandise held by the debtor on commission. The terms of the composition must be approved or confirmed by the court. made upon a sufficient consideration. Property held by the insolvent on deposit. WHEN COURT MAY CONFIRM A COMPOSITION 1. The offer must be accepted in writing by a majority of the creditors representing a majority of the claims which have been allowed. The insolvency proceedings shall be dismissed. To maintain his right under his security or lien and ignore the insolvency proceedings – it is the duty of the assignee to surrender to him the property encumbered. The consideration shall be distributed as the judge shall direct. share in the distribution of the assets of the debtor. ALTERNATIVE CREDITOR RIGHTS OF SECURED COMPOSITION CIVIL LAW An agreement. whereby the latter for the sake of immediate or sooner payment. 4. EFFECTS OF COMPOSITION CONFIRMATION OF 1. 1. 2. The offer of the terms of composition must be made after the filing in court of the schedule of property and submission of his list of creditors. sheriff. Money held by the debtor for remittance. 100% UP LAW UP BAROPS 2008 Page 265 of 325 . The following do not constitute waiver: 1. on order of the court on petition of the assignee or any creditor whose right to the estate of the insolvent has been established. 7.

and the regularity of such discharge. Debts which have not been duly schedules in time for proof and allowance. For all legal and practical purposes. Its properties ceased to be in custodia legis. Unliquidated damages. liabilities or demands. 100% UP LAW UP CIVIL LAW 4. debts. Any debt created by the defalcation of the debtor as a public officer or while acting in a fiduciary capacity. LEGAL EFFECTS OF DISCHARGE Discharge takes commencement of insolvency. Exception: The property of the insolvent has not been converted into money without his fault.CREDIT TRANSACTIONS 3. 7. 3. indorser. and liabilities. c. WHEN AN INSOLVENT DEBTOR MAY APPLY FOR A DISCHARGE General rule: A debtor may apply to the RTC for a discharge at three months to one year after the adjudication of insolvency. joint contractor. 2. Exception: The creditors had notice or actual knowledge of the insolvency proceedings 9. Taxes or assessments due the Government. d. although no written discharge is granted. DEBTS RELEASED BY A DISCHARGE 1. Contingent at the time of the discharged. The insolvent shall be released from his debts. Claims for: a. Releases the debtor from all claims. 2. for or with the insolvent debtor. in a certain sense. All claims. It is a special defense which may be pleaded and be a complete bar to all suits brought on any such debts. It does not operate to release any person liable for the same debts. debts. Debts of a corporation (Reason: Corporation is not granted a discharge) 6. effect from the the proceedings in 1. Operates as a discharge of the insolvent and future acquisitions but permits mortgages and other lien 3. Fraud was practiced in procuring such composition. for or with the debtor. Claim for support (Reason: It will make the law a means of avoiding the enforcement of the obligation) 7. Discharged debt but revived by a subsequent new promise to pay (Reason: Discharge does not end the moral obligation to pay) 8. 6. and 2. 5. if his rights as such guarantor or surety are not to be barred by the subsequent discharge of the insolvent debtor from all his liabilities. A lawful composition and its performance by the insolvent has the same effect of a written discharge. Remedy of guarantor or surety when debtor declared judicially insolvent: File a contingent claim in the insolvency proceeding. thereby delaying the distribution of dividends among the creditors in which case the court may extend the period. composition for the insolvency proceedings. either as a partner. joint contractor. WHEN CONFIRMATION MAY BE SET ASIDE 1. All claims. Debt of any person liable for the same debt. The certificate of discharge is prima facie evidence of the fact of release. surety. surety or otherwise. Any debt created by the fraud or embezzlement of the debtor. or otherwise. liabilities and demand set forth in the schedule or which were or might have been proved against his estate in insolvency. 3. Not in existence or not mature at the time of the discharge. DISCHARGE The formal and judicial release of an insolvent debtor from his debts with the exception of those expressly reserved by law. either as partner. debts. the insolvency ended on the date of the confirmation of composition and the firm was restored to its status quo. The title to the insolvent’s property shall revest in him. b. claims. liabilities and demands which were or might have been proved against the estate in insolvency DEBTS NOT RELEASED BY DISCHARGE 1. It reacquired its personality. indorser. 4. Secured creditors. 5. 2. The substitution. Any time within six months after the composition has been confirmed. and 4. and demands set forth in the schedule. WHEN DISCHARGE MAY BE REVOKED Discharge may be revoked by the court which granted it upon petition of any creditor: BAROPS 2008 Page 266 of 325 . Knowledge thereof has come to the petitioner after the confirmation of such composition. 5.

*Date of registration of sale of real property should determine whether the sale was prohibited by the Insolvency Law or not. WHEN FRAUDULENT TRANSFER EXISTS 1. if: 1. Made by the insolvent. The debtor is insolvent or in contemplation of insolvency. With the result that such creditor receives a greater proportion of his claim than other creditors of the same class. mortgage. WHEN PRESUMPTION OF FRAUD EXISTS 1. EQUAL EXCHANGE NOT A PREFERENCE An exchange of securities within the thirty-day period is not a fraudulent preference under the law. The person receiving a benefit thereby has reasonable cause to believe: a. The security given up is a valid one at the time the exchange. mortgage. WHEN FRAUDULENT PREFERENCE EXISTS Fraudulent preference – when the debtor procures any part of his property to be attached. General rule: A debtor is not prohibited from paying one creditor in preference to another Exception: In Insolvency Law cases mentioned in the CIVIL LAW insolvency. sale. Consequent diminution of the insolvent’s estate. even when both parties know that the debtor is insolvent. pledge. that fact shall be prima facie evidence of fraud. 2. Whose debt was proved or provable against the estate in insolvency. or transfer of property of whatever character. 2. Deposit of money to one’s credit on a bank does not create any preference. The petition is filed within one year after the date of the discharge. assignment. That the transfer is made with a view to prevent his property from coming to his assignee in 100% UP LAW UP BAROPS 2008 Page 267 of 325 . If such payment. and provided. absolutely or conditionally. pledge. gift. Reason: The estate of the depositor is not diminished for there is an obligation on the part of the bank to pay the amount of the deposit as soon as the depositor may see fit to draw a check against it. 3. Any payment. 2. mortgage. For the benefit of the creditor. absolutely or conditionally. 2. to any one under the following circumstances: 1. or to prevent the same from being distributed ratably among his creditors. In all actions or proceedings to set aside or nullify fraudulent preferences or transactions as VOID. or to defeat the object of or any way hinder the operation or evade the provisions of the Insolvency Law. sale or conveyance of any part of his property. That the debtor is insolvent. If such seizure is made under a judgment which the debtor has confessed or offered to allow. or seized on execution or makes any payment. FRAUDULENT PREFERENCES AND TRANSFERS TRANSFER – includes the sale and every other and different modes of disposing of or parting with property. the assignee appears for. or the possession of property. and 4. It is made with a view to giving preference to any creditor or person having a claim against him. as a payment. pledge. assignment or transfer is not made in the usual and ordinary course of business of the debtor. Within one month before the filing of the petition in insolvency against him Exception: Transfer for a valuable pecuniary consideration in good faith Effect of fraudulent transfer: Such transfer is VOID RIGHT OF ASSIGNEE TO RECOVER PROPERTY OR ITS VALUE The creditors of the insolvent are not authorized to institute an independent action. WHEN PREFERENTIAL TRANSFER EXISTS 1. sequestered. 2. The transaction in question is made within 30 days before the filing of a petition by or against the debtor. 3. whether directly or indirectly. b. conveyance. or 2. assignment. pledge.CREDIT TRANSACTIONS 1. but it is sufficient if they are substantially equal. Reason: Exchange takes nothing away from the other creditor Equal value: Not necessary that their value should be mathematically equal. or security. sale. transfer. on the ground that the discharge was fraudulently obtained. 4. Of equal value with the one received in exchange. There must be a parting of the insolvent’s property. 3. mortgage. and represents the general creditors. conveyance.

when it appears by the verified petition of a creditor: 1. d. WHEN PETITION MAY BE DISMISSED At anytime before the appointment of an assignee: 1. damages. A claim for property not belonging to the insolvent. if no creditor files written objections.00 3. mortgaged. presented under Sec. letters a and b 3. b. c. 48 (equitable claims) 4. an extrajudicial deposit. a contract. Upon the application of the petitioning creditors. What are the preferred claims that shall be satisfied first from the assets of an insolvent corporation? How shall the remaining non-preferred creditors share in the estate of the insolvent corporation above? Multiple choice: Choose the right answer. Letters a and b 4. or effects remaining in his hands to the assignee who shall be substituted for him in all pending actions or proceedings. a voluntary deposit. in which case. comodatario. 1. assignee in a proceeding under the Insolvency Law does not have the duty of: a. b. That the assets of the insolvent or a considerable portion thereof have been pledged. Death before the order of adjudication – the proceedings shall be discontinued. An. from the order fixing the amount of costs. After the appointment of an assignee. Remedy: File claims in the proper testate or intestate proceedings WHEN RECEIVER MAY BE APPOINTED Anytime before the election of an assignee. 70. transferred. SAMPLE QUESTIONS a. 5. ensuring that a debtor corporation operate the business efficiently and effectively while the proceedings are pending. collecting and discharging debts owed to the insolvent debtor. e. In order to obtain approval of the proposed settlement of the debtor in an insolvency proceeding. letters a and b 2. a. b. All of the above. c. 2. bailee. WHEN APPEAL MAY SUPREME COURT BE TAKEN TO THE CIVIL LAW 5. A creditor’s claim when the amount in dispute exceeds P300. selling property of the insolvent debtor. Settling an account of an assignee. Pedro left his Adventure van with 2008 Page 268 of 325 From an order granting or refusing: 1. or seized on legal process in violation of Sec. e.CREDIT TRANSACTIONS EFFECT OF DEATH OF INSOLVENT DEBTOR 1. That it is necessary to commence an action to recover the same. bailor. all the above. a necessary deposit. d. the proceedings may be dismissed at any time. e. a written contract. d. Voluntary petition – upon the application of the debtor. e. or b. and attorney’s fees allowed the debtor. assets. conveyed. Involuntary petition – a. The parties to a bailment are the: a. c. 2. dismissal is not allowed without the consent of all parties interested in or affected thereby. suing to recover the properties of the state of the insolvent debtor. the court must initiate the proposal b. c. 1/3 of the total debts must be represented by the approving creditors. A contract of antichresis is always: a. An adjudication in insolvency and in the latter case. By written consent of all creditors filed in court. 3/5 of the number of creditors should agree to the settlement. c. 6. A discharge to the debtor. expenses. d. The receiver shall deliver all the property. d. 2. with a stipulation that the debt will be paid through receipt of the fruits of an immovable. 2/3 of the number of creditors should agree to the settlement. 100% UP LAW UP BAROPS . b. assigned. Death after the order of adjudication – the proceedings shall be continued and concluded in like manner and with like validity and effects as if he had lived. if owing. a deposit with a warehouseman. A deposit made in compliance with a legal obligation is: a. Setting apart homestead or other property claimed as exempt from execution. Involves the payment of interests. Letters a and b Before he left for Riyadh to work as a mechanic. 2.

a) Since Aaron was merely forced by circumstances to petition the court to declare him insolvent. Likewise. d) Who shall bear the expenses for the accidental damage caused by the cargo truck. can the judge properly treat the petition as one for involuntary insolvency? Explain. In a separate transaction. a foreign bank.000. but he was not able to pay the purchase price thereof.000. A real estate mortgage may be foreclosed judicially or extrajudicially. Unfortunately. c) Assuming that Aaron has guarantors for his debts. are the guarantors released from their obligations once Aaron is discharged from his debts? Explain. b) Who shall bear the costs for the van’s fuel. Page 269 of 325 . Two months later. He has four creditors with a total claim of P26 Million. c) Does Pedro have the right to retrieve the van even before the lapse of one year? Explain. is suffering from financial reverses. the van was accidentally damaged by a cargo truck without his fault. he opened a letter of credit with the same bank for $500. Tito had the van tuned up and the brakes repaired. if any. he was constrained to file a petition for insolvency. what would be the effect. Pedro returned to the Philippines and asked Tito to return the van.CREDIT TRANSACTIONS Tito. to purchase outboard motors. he leased it to Annabelle. a) Can AC Bank take possession of the outboard motors? Why? b) Can AC Bank also foreclose the mortgage over the fishpond? Explain. He did not tell Tito that the brakes of the van were faulty. his current assets are insufficient to cover all of them. a well-known architect. In what instance may a mortgagee extrajudicially foreclose a real estate mortgage? Aaron. Ricardo mortgaged his fishpond to AC Bank to secure a P1 Million loan.00. Ricardo executed a Surety Agreement in favor of AC Bank. The outboard motors arrived and were delivered to Ricardo. with the understanding that the latter could use it for one year for his personal or family use while Pedro works in Riyadh. Tito discovered that it consumed too much fuel. b) If Aaron is declared an insolvent by the court. After using the vehicle for two weeks.000.00 spent for the repair of the van? Explain. Despite his intention to pay these obligations. He spent a total amount of P15. a) Who shall bear the P15. of such declaration on his creditors? Explain. oil and other materials while it was with Tito? Explain. His creditors are about to sue him. Consequently. while being driven by Tito. To make up for the expenses. d) What remedies are available to the guarantors in case they are made to pay the creditors? Explain.00 in favor of HS 100% UP LAW UP BAROPS 2008 CIVIL LAW Bank. granting that the truck driver and truck owner are insolvent? Explain.

Kinds of Damages 271 271 272 280 281 282 285 287 288 288 288 100% UP LAW UP BAROPS 2008 Page 270 of 325 . Definition and Concept II.TORTS & DAMAGES CIVIL LAW Torts and Damages TABLE OF CONTENTS Title 1. Other Torts V. Torts with Independent Civil Action VII. Damages I. Civil Liability Arising from Crime Title 2. Torts I. Negligence Torts III. In General II. Intentional Torts IV. Strict Liability Tort VI.

is a civil law concept while torts is an Anglo-American or common law concept. Our concept of culpa aquilania embraces both negligent and intentional acts. there being fault or negligence. Quasi-delict is seemingly a refinement of the torts concept in that it refers particularly to wrongful. (Naguiat vs. 2176) Elements: 1) 2) 3) 4) 5) Act or omission Damage or injury is caused to another Fault or negligence is present There are no pre-existing contractual relations between the parties Vinculu m Juris Causal connection between damage done and act/omission Proof Neede d Defens e availab le Preponder ance of evidence Exercise of extraordin ary diligence (in contract of carriage). IN GENERAL A. for which a court of law will afford a remedy in the form of an action for damages. (Barredo vs. Torts. is obliged to pay for the damage done. injurious acts outside the ambit of penal laws. What is a QUASI-DELICT? Whoever by act or omission causes damage to another. What is the relation of quasi-delict to breach of contract and delict? CONTRAC T Contract QUASI DELICT Negligent act/ omission (culpa. Tort is a breach of a legal duty. (Elcano vs.TORTS & DAMAGES CIVIL LAW D. NLRC) A tort is civil wrong. What is the relation of quasidelict to tort? Quasi-delict." solidary liability of employer ER’s defense is that accused observed due diligence of a good father of a family TORTS I. is called a quasi-delict and is governed by the provisions of the Civil Code Chapter on quasidelicts. not for civil liability arising from the criminal act. shall not be a bar for a subsequent civil action. negligent. whether on reasonable doubt or not. Garcia) 100% UP LAW UP Preexistin g contra 2008 No preexisting contract BAROPS Page 271 of 325 . in bad faith) Proof beyond reasona ble doubt B. How is a quasi delict different from a crime? Crime Quasi-delict private concern CC repairs the damage by indemnification includes all acts in which "any kind of fault or negligence intervenes. Such fault or negligence. "tort" consists in the violation of a right given or the omission of a duty imposed by law. imprudence) DELICT Act/omis sion committ ed by means of dolo (delibera te. What is a TORT? Essentially. (Art. Elements: 1) 2) 3) 4) A legal duty Breach Causation Damage public interest RPC punishes and corrects the act punishes only when there is a penal law covering the act subsidiary liability of employer ER’s defense is that employee’s resources must first be exhausted (Barredo vs. Garcia) Acquittal from an accusation of criminal negligence. embrace both delicts and quasi-delicts. maliciou s. in common law. Hill. Force Majeure There is preexisting contract Preponderan ce of evidence Exercise of diligence of good father of a family in the selection and supervision of employees No preexisting contract C. other than breach of contract. 1977) E. known in Spanish legal treatises as culpa aquiliana. if there is no pre-existing contractual relation between the parties. but for damages due to a quasidelict.

Example: Art. Prove the ff. E. causal connecti on between negligen ce and damage done Prosecut ion. 1999) C. violating traffic regulations at least twice within the next preceding two months. (Art. What is NEGLIGENCE? Negligence is lack of due care required by a particular situation. (Valenzuela vs.TORTS & DAMAGES ct Burden of proo f Contractu al party. 1) to observe a certain standard of conduct in a particular situation. 2188) Elsewhere. such as for common carriers or for persons vicariously liable. the Civil Code provides for other instances where negligence is presumed. G. reckless driving OR 2. (Art.: 1. 2. good father of the family or bonus paterfamilias A standard of extraordinary diligence is imposed by law in certain situations. B. CA) F. Other Torts (Human relations torts) F. unless the emergency was brought by his own negligence. such as in the case of a common carrier. Ordinarily prudent man. 1756 regarding common carriers. Reasonable man. is not guilty of negligence if he fails to undertake what subsequently and upon reflection may appear to be a better solution. Prove the ff. 1912) An accident pertains to an unforeseen event in which no fault or negligence attaches to the defendant. What are the elements of negligence tort (Art. 1. the burden is then placed on the defendant. existen ce of a contra ct 2. such as firearms and poison. In cases where the law creates a presumption of negligence. he was violating any traffic regulation." an individual who suddenly finds himself in a situation of danger and is required to act without much time to consider the best means that may be adopted to avoid the impending danger. breach Victim. 2184) b) Driver has been negligent if at the time of the mishap. Barias. if he had been found guilty of 1. CA. negligen ce 3. 100% UP LAW UP BAROPS 2008 Page 272 of 325 . Intentional tort 3. When is negligence presumed? In motor vehicle mishaps: a) A driver was negligent. Legal duty Breach Causation Damage Generally. What are the tests of negligence? Since negligence is the lack of due care required by the circumstances. 3. What is the “emergency rule?” Under the "emergency rule. conduct which falls below the standard required by law. damage 2. it is the plaintiff or injured party. (Art. What are some classifications of tort? 1. 2185) Other cases: There is prima facie presumption of negligence on the part of the DEFENDANT if the death or injury results from his possession of dangerous weapons or substances. (Jarco Marketing vs. Who has negligence? the burden of proving II. Negligence tort 2. the test is whether due care was observed. (US vs. 2) of the legal duty (element no. D. Strict liability tort 4. And most commonly. Accused is presume d innocent until the contrary is proved. CIVIL LAW 3.: 1. NEGLIGENCE TORT A. 2. 4. 2176)? 1. What is the relation of negligence to the elements of negligence tort? Negligence is the breach (element no. EXCEPT when the possession or use thereof is indispensable in his occupation or business.

no action will prosper. as an ordinarily prudent and intelligent person. Services Inc.TORTS & DAMAGES H. either immediately or by setting other events in motion. successive. 100% UP LAW UP BAROPS 2008 Page 273 of 325 . if there intervened between such prior or remote cause and the injury. In this jurisdiction. vs. unrelated and efficient cause of the injury. such subsequent act or condition is the proximate cause. Recent years have seen the doctrine of corporate negligence as the judicial answer to the problem of allocating hospital’s liability for the negligent acts of health practitioners. a distinct. What is RES IPSA LOQUITUR? The doctrine of res ipsa loquitur (the thing speaks for itself) states that the happening of an injury permits an inference of negligence where plaintiff produces substantial evidence that injury was caused by an agency or instrumentality under exclusive control and management of defendant. (Layugan vs. 2) The accident is of a kind which does not necessarily occur unless someone is negligent. the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted. Agana I. 1956) For purposes of apportioning responsibility in medical negligence cases. What is the relation of proximate cause to the elements of negligence tort? The most basic element of any tort action is the causal connection between the act or omission of the tortfeasor and the plaintiff’s injury such that without it. Remoquillo. 3) The instrumentality which caused the injury was under the exclusive control of the person in charge. Mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. (Vda. Prof. all constituting a natural and continuous chain of events. even though such injury would not have happened for such condition or occasion. under such circumstances that the person responsible for the first event should. What is PROXIMATE CAUSE? Proximate legal cause is that acting first and producing the injury. vs. J. and 4) The injury suffered must not have been due to any voluntary action or contribution of the injured person. the duty of providing quality medical service is no longer the sole prerogative and responsibility of the physician. res ipsa loquitur requires: 1) Evidence of the specific acts of negligence is absent and not readily available. an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. 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. have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result. Its formulation proceeds from the judiciary’s acknowledgment that in these modern times. The control test is determinative. IAC) To be applicable. (Manila Electric Co. If no danger existed in the condition except because of the independent cause. De Bataclan vs. L. 1957) A prior and remote cause cannot be made the basis of an action if such remote cause did nothing more than furnish the condition and give rise to the occasion by which the injury was made possible. What is CAUSATION? CIVIL LAW Causation is the bringing about of a result. and a necessary element in establishing legal liability. and that the occurrence was such that in the ordinary course of things would not happen if reasonable care had been used. Medina. such condition was not the proximate cause and if an independent negligent act which results in injury because of the prior defective condition. absent facts to support the application of respondeat superior or apparent authority. res ipsa loquitur is not a rule of substantive law but a mere evidentiary rule. each having a close causal connection with its immediate predecessor. K.

The legal grounds or excuse for violation of a statute: 1. 2176) 2. shall apply. Except in cases expressly specified by the law. cases: violation creates a prima facie case of negligence violation constitutes evidence of negligence The defense that the violation was either justifiable or excusable under the circumstances of the case is available.TORTS & DAMAGES EXCEPTION: However. (Teague vs. bad faith. In this case. Fernandez) M. the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. What Civil Code provisions on obligations are applicable in quasi-delict? The provisions of Articles 1172 to 1174 are also applicable to a quasi-delict. The violation of ordinance intended to promote safety is in itself negligence.” (Art. DISPUTABLE in the ff. malice or wanton attitude. 2004) Illustration: The law requires registration of service and repair enterprises for motor vehicles. 2201. that which is expected of a good father of a family shall be required. and 4. What happened was a fortuitous event. 3. Art. Anything over which the defendant has NO CONTROL and places him in a position contrary to that required by the statute. CONCLUSIVE: It is not available in cases where the statute provides for negligence per se. What are some of the defenses to prevent or mitigate negligence tort liability? 1. Any waiver of an action for future fraud is void. 1172. Art. the violation of the statute is presumed to be. Is the presumption that the violation of the statute is the proximate cause disputable? CIVIL LAW negligence rendering him liable for damages to private respondent for the destruction of the car which was serviced by the petitioner due to the fire. 2178) Art. If the law or contract does not state the diligence which is to be observed in the performance. What is NEGLIGENCE PER SE? Negligence per se is the legal doctrine whereby certain acts are considered intrinsically negligent. Anything that would make complying with the statute IMPOSSIBLE. it was not the proximate cause of the damage. 2176) 4. “Even if I was negligent. 2. “I was not negligent. 1171. Conduct that is precisely excused or EXEMPTED by the statute. “I was not negligent. proximate cause is presumed and the injured party need not establish proximate cause in the traditional sense. There is thus a statutory duty imposed on petitioner and it is for his failure to comply with this duty that he was guilty of 100% UP LAW UP P. 1173. An EMERGENCY not of the defendant’s making causing him to violate the statute.2 In case of fraud. It is the law that determines which acts constitute negligence per se. CA. according to the circumstances. When negligence shows bad faith. It depends. Art. Art. par.” BAROPS 2008 Page 274 of 325 . “There was no damage. Responsibility arising from fraud is demandable in all obligations. the provisions of Articles 1171 and 2201. N. 1996) O. of the time and of the place. no person shall be responsible for those events which could not be foreseen.” (Art. though foreseen. If the very injury which a particular statute intends to prevent happens. 2176) 3. or when the nature of the obligation requires the assumption of risk. 1174. CA. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons. Responsibility arising from negligence in the performance of every kind of obligation is also demandable. the character and purpose of a particular statute may be such that the courts will deem a reasonable connection between the injury and the violation sufficient to award damages based on negligence. (Cipriano vs. I exercised due diligence. were inevitable. or when it is otherwise declared by stipulation. (Anonuevo vs. paragraph 2. but such liability may be regulated by the courts. or which.” (Art. (Art. the proximate cause of the injury.

EXCEPTIONS (LAS): 1. 2179) “I was negligent and I am the proximate cause of the damage. Cases expressly specified by law 2.” rights. he must abide by the consequences. CA. Injury INJURY is the illegal invasion of a legal right. 1174) Q. Nature of obligation requires assuming the risk 3. IF only CONTRIBUTORY. there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. Illustration: The owner of an animal is answerable only for damages caused to a stranger. he CANNOT recover damages. though foreseen. CA) “I was negligent and I am the proximate cause of the damage but the plaintiff was guilty of contributory negligence. Cases declared by stipulation (Art. (Afialde vs. 100% UP LAW UP BAROPS 2008 Page 275 of 325 . could not foreseen. or which. (Custodio vs. it is damnum absque injuria. Thus.” 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. A caretaker of animals voluntarily assumes the risks of his occupation. were inevitable. There must be damnum et injuria. 2. must be independent of the human will. 3. Damage v. Since conjunction of damage and wrong is absent. 1989) “I was just exercising my Damnum absque injuria.” What is the effect of plaintiff’s negligence on his right to recover? IF it is the immediate and proximate CAUSE of his injury. What is a FORTUITOUS EVENT? A fortuitous event presents the following essential characteristics: 1. The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner and 4. damage sustained is not actionable. The cause of the unforeseen and unexpected occurrence. Hisolde) EXCEPTION: If an emergency is found to exist or if the life or property if another is in peril or when he seeks to rescue his endangered property. the immediate and proximate cause of the injury being the defendant's lack of due care. (Juntillla vs. hurt. Volenti non fit injuria.TORTS & DAMAGES RULE: No person shall be seen responsible for those events which. (Ilocos Norte Electric Company vs. The owner would be liable only if he had been negligent or at fault under article 1902 of the Civil Code. and DAMAGES are the recompense or compensation awarded for the damage suffered. or harm which results from the injury. he must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff. 1985) DEFENSES “The plaintiff voluntarily assumed the risk. Fontanar. DAMAGE is the loss. These situations are often called damnum absque injuria. It must be impossible to foresee the event or if it can be foreseen. or the failure of the debtor to comply with his obligation. (Art. but the courts shall MITIGATE the damages to be awarded. but I already paid. In order that a plaintiff may maintain an action for the injuries of which he complains.” What is the maxim of “VOLENTI NON FIT INJURIA”? CIVIL LAW What is the maxim of “DAMNUM ABSQUE INJURIA”? If damage results from a person's exercising his legal rights. The obligor (debtor) must be free from any participation in the aggravation of the injury resulting to the creditor. it must be impossible to avoid. the plaintiff may recover damages. and that for damage caused to the caretaker of the animal. BUT THE PLAINTIFF CANNOT RECOVER DAMAGES RULE: The maxim “volenti non fit injuria” states that when a person voluntarily assents to a known danger.

Who is liable for the obligation imposed by Article 2176? The obligation imposed by Article 2176 is demandable from: 1. the one who had the last clear opportunity to avoid the impending harm and failed to do so is chargeable with the consequences thereof. An antecedent negligence of a person doesn’t preclude the recovery of damages for the supervening negligence of. GUARDIANS are liable for damages caused by the minors or incapacitated 2008 Page 276 of 325 A waiver.1 year for defamation (Art. Hence. acts or omissions of persons for whom one is responsible. Although the plaintiff was guilty of negligence in being in the wrong side of the bridge. 1146) . an award of damages in a civil case does not preclude an award of damages in the subsequent criminal case. 2. the defendant was nevertheless civilly liable for the legal damages resulting from the collision.TORTS & DAMAGES TWICE FOR THE SAME ACT OR OMISSION OF THE DEFENDANT. CA. or when it is impossible to determine whose fault or negligence should be attributed to the incident. Smith. (Black’s Law Dictionary) Extra-contractual liability of this kind has been limited to cases wherein “moral culpability” can be directly imputed to the person charged. B. (Picart vs. must be couched in CLEAR and UNEQUIVOCAL TERMS which leave no doubt as to the INTENTION of a person to give up a right or benefit which legally pertains to him. Robles) “I was negligent but the defendant had the last clear chance.4 years for Quasi-Delict (Art. in case of his death or incapacity. particularly for an employer. (Art. as he had a fair opportunity to avoid the accident after he realized the situation created by the negligence of the plaintiff and failed to avail himself of that opportunity. are responsible for the damages caused by the minor children who live in their company. The liability is primary and solidary. It is a defense for all instances of vicarious liability based on Art. but the negligent act of one is appreciably later in time than that of the other. 2180) A tortfeasor (liable directly or vicariously) may be a natural or a juridical person. b. Who are liable vicariously? a. to be valid and effective. Bonus paterfamilias. C. if the latter. A collision was averted when the car swerved suddenly but the calesa still fell of the bridge. What is VICARIOUS LIABILITY? Vicarious liability is the imposition of liability on one person for the actionable conduct of another. could have avoided the impending harm by the exercise of due diligence. based solely on a relationship between the two persons. (PBCom vs. 1991) 100% UP LAW UP BAROPS . 2177) Article 2177 of the Civil Code forbids ACTUAL double recovery of damages for the same negligent act or omission. (Art. 1918) Last clear chance is inapplicable in culpa contractual. Delim.” What is the doctrine of “LAST CLEAR CHANCE”? The doctrine of “last clear chance” (also “supervening negligence” or “discovered peril”) states that where both parties are negligent. while the plaintiff could by no means then place himself in a position of greater safety. BASES: a. CA.” (usually the employer or person under whose control the tortfeasor was under) which is a manifestation of vicarious liability. b. The FATHER and. Respondeat superior It means nothing more than “look to the man higher up. 2180. who had the last fair chance. (Padua vs. the MOTHER. 2003) Waiver What is the test of validity of a waiver? Prescription CIVIL LAW . c. 1147) PERSONS LIABLE A. Doctrine of Imputed Negligence This doctrine places upon one person the responsibility for another’s negligence. The relationship of pater familias is the basis of civil law liability. (Gatchalian vs. (Consolidated Bank vs. 1997) Illustration: A calesa being driven on the road side of the road and a car converged on a bridge. or bar a defense against liability sought by another. one's own acts or omissions.

so long as they remain in their custody. parent(s) exercising parental authority is liable for the torts of their children. Who are liable vicariously? (continued) e. parents are still liable for the torts committed by their children below 21 years of age. The STATE is responsible in like manner when it acts through a special agent. TEACHERS or HEADS of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices. (Art. The tortfeasor is living in his company Is a minor or insane tortfeasor with NO parent or guardian liable? Yes. 100% UP LAW UP BAROPS 2008 Page 277 of 325 . The tortfeasor is under his authority 3. The child is under the parental authority of the parents 3. 2182) Owners and managers of establishments or enterprises Who liable are For whose acts Their employees Requisites for liability to attach The damage was caused in the service of the branches in which the employees are employed -ORThe damage was caused on the occasion of their functions Owners and managers of an establishment or enterprise The term “owners and managers of an establishment or enterprise” is used in the sense of an “EMPLOYER. 2180) Rule on Construction: Because it imposes strict liability. The child is under the parental authority of the parents 2. 221 (Family Code) PARENTS and OTHER PERSONS EXERCISING PARENTAL AUTHORITY shall be civilly liable for the injuries and damages caused by the acts or omissions of their unemancipated children living in their company AND under their parental authority subject to the appropriate defenses provided by law. Now. par 3 FC. in which case what is provided in Article 2176 shall be applicable. Employers The liability of an employer is based primarily on the presumption that he failed to exercise due diligence in the selection and supervision of his employees. but not when the damage has been caused by the official to whom the task done properly pertains. (Art. 221 of the Family Code. Art. par 5 already covers the cases under par 4. even though the former are not engaged in any business or industry. D. Despite the lowering of the age of majority from 21 to 18. He shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed. The child is below 21 years old 2.” hence. The ward if minor is below 21 years old. Lastly. C. EMPLOYERS shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks. as amended by RA 6809). (Art 236. c.TORTS & DAMAGES persons who are under their authority and live in their company. If Incapacitated. 2180 should be interpreted strictly and cannot be extended to persons not enumerated therein. d. f. Art 2180. par 4 may be unnecessary as Art 2180. managers cannot be liable since they themselves are employees of the enterprise. The child is living in the company of the parents Guardians (mnemonic: Authority & Company) 1. REQUISITES for liability to attach: Parents (mnemonic: Company): 21 + CIVIL LAW Authority & 1. Parents and Guardians Article 2180 (a) has been REPEALED by Art. Art. Instances where there is vicarious liability. The OWNERS and MANAGERS of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. the guardian is liable for the acts of the ward regardless of the latter’s age.

Local Government Code provides for the liability of local government units for the for the wrongful exercise of its proprietary (as opposed to its governmental) functions. The latter is the same as that of a private corporation or individual. 2189 provides for state liability for damages caused by defective condition of public works. The insurance company was held liable even though the employee was not performing within the scope of his assigned tasks when the accident happened (Valenzuela vs. engaged in his own affairs or carrying out a personal purpose when he went to a restaurant at 2:00 a. (Merritt vs.m. 2180 (par. and after office hours. BAR QUESTION After working overtime up to midnight. resulting in the death of its driver. Government) If the State’s agent is not a public official and is commissioned to perform nongovernmental functions. nevertheless. then the State assumes the role of an ordinary employer and can be held liable for the agent’s tort. where an executive of a pharmaceutical company was given the use of a company car. 2180 of the Civil Code for the injury caused by the negligent operation of the car by the executive on the ground that the car which caused the injury was assigned to the executive by the employer for the prestige of the company.m. after coming out from work. The State filed the case Instances where the consent to be sued: state gives its a. However. There is express legislative consent b. 5) of the Civil Code. but in doing so.TORTS & DAMAGES REQUISITES OF LIABILITY: CIVIL LAW of the car and met an accident. Consti) Exceptions: 1) existence of the employer-employee relationship 2) THE EMPLOYER WAS CHOSEN BY THE EMPLOYEE. The time of the accident (also 2:00 a. Art. and even though he was not within the scope of his assigned tasks when the accident happened.m. Alberto. (Mendoza vs. 253 SCRA 303 [1996]). In one case decided by the Supreme Court. b.) was outside normal working hours. 3) THE WORK BEING PERFORMED WAS IN ACCORDANCE WITH A VALID ORDER. (Sec 3.. the State assumes a limited liability for the acts of its special agents. Jr. an executive of an insurance company drove a company vehicle to a favorite videoke bar where he had some drinks and sang some songs with friends to “unwind. This act must be the one that gives rise to the injury claimed. Here. May the insurance company be held liable for the negligent act of Alberto? Why? Suggested Answer: The insurance company is not liable because when the accident occurred. the executive made personal use 100% UP LAW UP a. or B. the former was. the mere fact that Alberto was using a service vehicle of the employer at the time of the injurious accident does not necessarily mean that he was operating the vehicle within the scope of his employment. he drove home.” At 2:00 a. the employer was also made liable under Art. In Castilex Industrial Corp. Art. Art XVI. It is true that under Art. AND 4) THE ILLICIT ACTS OF THE EMPLOYEE WAS ON THE OCCASION OR BY REASON OF THE FUNCTIONS ENTRUSTED TO HIM. c. Alberto was not acting within the assigned tasks of his employment. Vasquez. De Leon) Who is a special agent? A special agent is a. he bumped a tricycle. State General Rule: The State cannot be sued. CA. The employer can interpose the defense of due diligence in selection and supervision of his employees. Alternative Answer: The insurance company is liable if Alberto was negligent in the operation of the car and the car was assigned to him for the benefit of the insurance company. (321 SCRA 393 [1999]). A public official required to do a particular task that is foreign to said official’s usual government functions. A PRIVATE INDIVIDUAL WHO IS COMMISSIONED FOR A SPECIAL GOVERNMENT TASK. 2180 (6) is an example of an express legislative consent. the Supreme Court held that notwithstanding the fact that the employee did some overtime work for the company. The agent must be empowered by a definite order or commission to perform some act. vs. Does state immunity mean that injured persons are deprived of remedy? 2008 Page 278 of 325 BAROPS . employers are liable for damages caused by their employees who were acting within the scope of their assigned tasks.

entity or institution engaged in child care shall have special parental authority and responsibility over the minor child while under their supervision. But as a rule. including break times (lunch or recess). AND 3) Proof of the amount of damage. 2180 have a defense? Yes. instruction or custody. 218.TORTS & DAMAGES No. 2) THE DAMAGE TO THE PLAINTIFF MUST BE CAUSED BY THE ACT OR OMISSION OF A STUDENT WHO. 219. unlike in the case of parents and guardians. AT THE TIME OF ITS COMMISSION. A regular official is liable under Art 2176 for the damage he causes. thus: Art. 2180) F. (Art. Who are liable? Persons exercising substitute authority (SATI) 1) 2) 3) 4) parental 1) The defendant must be the teacher or the head of a school of arts and trades. May they recover what they paid and from whom? Yes. Whoever pays for the damage caused by his dependents or employees may recover from the latter what he has paid or delivered in satisfaction of the claim. entity or institution. or the individual. judicial guardians or the persons exercising substitute parental authority over said minor shall be subsidiarily liable. (Art. What is the liability of joint tortfeasors? The responsibility of two or more persons who are liable for quasi-delict is SOLIDARY. The parents. E. All other cases not covered by this and the preceding articles shall be governed by the provisions of the Civil Code on quasi-delicts. Cases which do not fall under the provision on substitute parental authority will be governed by Art 2180 of the Civil Code. 2181) School Administrators Teachers Individual/entity/institution engaged in child care Substitute parental authority is intermittent What are the requisites for liability to attach under the Family Code? REQUISITES: 100% UP LAW UP BAROPS 2008 Page 279 of 325 . Do tortfeasors vicariously liable under Art. (Art. The respective liabilities of those referred to in the preceding paragraph shall not apply if it is proved that they exercised the proper diligence required under the particular circumstances. 2194) G. WAS UNDER THE CUSTODY OF THE DEFENDANT. What are the requisites for liability to attach under Article 2180? REQUISITES: Teachers and heads of establishments of arts and trades Art. Authority and responsibility shall apply to all authorized activities whether inside or outside the premises of the school. its administrators and teachers. CIVIL LAW 1) The tortfeasor is a minor (below 18 only) 2) Under their supervision. The school. “Custody” means the protective and supervisory custody the school and its head and teachers exercise over the students for as long as they are at attendance in the school. Those given the authority and responsibility under the preceding Article shall be principally and solidarily liable for damages caused by the acts or omissions of the unemancipated minor. even if injury is caused in the course of the performance of a governmental duty. instruction or custody RA 6809 does not provide that persons exercising subsidiary parental authority are liable for the torts of those who are between 18 and 21. no recovery can be had from the government’s officers so long as they performed their duty honestly and in good faith or that they did not act wantonly or maliciously. Responsibility ceased when they prove that they observed all the diligence of a good father of a family to prevent damage. Art. 2180 must be read together with the provisions of the Family Code.

19) Every person who. it is liable as employer under 2180 (5) of CC (St. (Albeson vs. to give everyone his due. 20. or public policy. CA) 100% UP LAW UP BAROPS 2008 Page 280 of 325 . The declaration is implemented by Art. B. Abuse of Rights Every person must. Acts contra bonus mores Any person who wilfully causes loss or injury to another in a manner that is contrary to morals. good custom. 4) There is a loss or injury suffered as a result of said violation. (Art. But to formally set a wedding and go through all the abovedescribed preparation and publicity. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 (i. Inc. only to walk out of it when the matrimony is about to be solemnized. c. give everyone his due. Good faith is presumed and the burden of proving bad faith is on the party alleging it. Secretary of Defense. et al.e. Albenson vs. it is liable for breach of contract. (Cebu Country Club. shall indemnify the latter for the same. public order. good customs or public policy shall compensate the latter for the damage. Francis vs. if the tortfeasor is a student of the school (Art 218 FC) if the tortfeasor is a teacher/ employee of the school. 21) REQUISITES: 1) A person has a legal right 2) Such right is violated by another in a manner contrary to morals. in the exercise of his rights and in the performance of his duties. INTENTIONAL TORTS What are intentional torts? A. 3) FOR THE SOLE INTENT OF PREJUDICING OR INJURING ANOTHER. good customs or public policy. may nevertheless become the source of some illegality.TORTS & DAMAGES Who liable are For Acts whose and Requisite for Liability to Attach pupils and students remain in teacher’s custody regardless of the age custody regardless the age must below 18 of CIVIL LAW A right. a legal wrong is thereby committed for which the wrongdoer must be held responsible. vs. (Wassmer vs. to act with justice. though by itself legal because recognized or granted by law as such. This is palpably and unjustifiably contrary to good customs for which defendant must be held answerable in damages in accordance with Article 21. CA) if the tortfeasor is a stranger. (PSBA vs. CA) Illustrations: a. 2) Which is exercised in BAD FAITH. CA) There is an act which is legal but which may be contrary to morals. b. contrary to law.. is quite different. 20) Art 19 contains a mere declaration of principles. 3) Act is done with intent to injure. and observe honesty and good faith. Velez) Teacher. and to observe honesty and good faith) and results in damage to another. CA) be III. (Ruiz vs. Ricardo F. (Art.incharge (the one designated to exercise supervision over students) Head of establishme nt of arts and trades School (generally not held liable) pupils students Apprentices a. Elizagaque) REQUISITES to find the existence of an abuse of right under Article 19: 1) There is a legal right or duty. An action for damages under either Article 20 or Article 21 would be proper. wilfully or negligently causes damage to another. act with justice. (Art. (Globe Mackay vs. Breach of promise to marry. seduction and sexual assault Mere breach of promise to marry is not an actionable wrong.

23. petitioner had the right to ascertain the identity of the malefactor.(CC) Even when an act or event causing damage to another's property was not due to the fault or negligence of the defendant. e. CA) Note: It seems that the second and third elements are REDUNDANT. True. public policy Willfully Injury or loss Compensate IV. as the complaint alleges. the presence of probable cause signifies the absence of malice. (Meralco vs. CA) Act is Article 19 (as implemented by Art. in the presence of other people in hotel room. Requisites for Malicious Prosecution: (1) (2) (3) (4) (5) Fact of the prosecution Defendant was himself the prosecutor Action was terminated with an acquittal Prosecutor acted without probable cause Prosecutor was impelled by legal malice.(CC) If something is received when there is no right to demand it. Art. good customs. Valmonte Wedding coordinator accused by bride’s aunt for stealing jewelry. REQUISITES: As to the elements of malicious prosecution. and it was unduly delivered through mistake. that is by improper or sinister motive (Drilon vs. (Que vs. for the mere purpose of vexation or injury. Ines 1) defendant is enriched 2) plaintiff suffered damage or loss 3) there is no just or legal ground for defendant's enrichment 4) enrichment is at the expense of plaintiff B. 1701 of the CC and Art 21 of the CC. CA) CIVIL LAW If the dismissal was done anti-socially or oppressively. or other legal proceeding has been instituted maliciously and without probable cause. OTHER TORTS (OTHER HUMAN RELATIONS TORTS) A. Acts Contra Bonus Mores c. the obligation to return it arises. Sta. 25) 100% UP LAW UP BAROPS 2008 Page 281 of 325 . IAC) EXCEPTION: An action for damages brought by one against whom a criminal prosecution. d. after the termination of such prosecution. (Art. Ostentatious Display of Wealth Thoughtless extravagance in expenses for pleasure or display during a period of acute public want or emergency may be stopped by order of the courts at the instance of any government or private charitable institution. the latter shall be liable for indemnity if through the act or event he was benefited. or any other means. were liable to be sued at law when their indictments miscarried. The gist of the action is the putting of legal process in force. (Albenson vs. Failure to give such prior notice amounts to a tort. Abuse of Rights vs. 2154. Public Humiliation Carpio vs. Art. Disconnection of Utilities A prior written notice to the customer is required before disconnection of the service. who had a tolerable ground of suspicion. acquires or comes into possession of something at the expense of the latter without just or legal ground. civil suit. 20) Contrary to law Article 21 Manner Result Sanction Willfully negligently Damage Indemnify or Contrary to morals. Reason: It would be a very great discouragement to public justice if prosecutors. 22. (CC) Every person who through an act of performance by another.TORTS & DAMAGES b. Malicious Prosecution RULE: One cannot be held liable in damages for maliciously instituting a prosecution where he acted with probable cause. Unjust Enrichment Art. then the respondents violated Art. suit or other proceeding in favor of the defendant herein. Unjustified Dismissal Quisaba vs. shall return the same to him. regularly. but to malign respondent without an iota of proof is impermissible.

liability without fault. Acts listed are not exclusive. oppressive or highhanded method shall give rise to a right of action by the person who thereby suffers damage.” there should be proof of malice or arbitrariness in the action. for example. Every person shall respect the dignity. the plaintiff must show that the former’s conduct was PURELY MALICIOUS and served no legitimate purpose. were confused by the distorted. selling homemade ice cream as Magnolia ice cream. 27) REQUISITES (Amaro vs. STRICT LIABILITY TORT What is a STRICT LIABILITY TORT? Tort liability that does not depend on actual negligence or intent to harm but that is based on the breach of an absolute duty to make something safe. Personality. also known as absolute liability. (Art. Unfair Competition Art. or other personal condition. shall produce a cause of action for damages. prevention and other relief: (5) Prying into the privacy of another's residence: (2) Meddling with or disturbing the private life or family relations of another. but need not involve. privacy and peace of mind of his neighbors and other persons. place of birth. 3. PHYSICAL INTERFERENCES. while NEGLECT which is the failure to do a thing. if material Note (Sangco): REFUSAL implies a deliberate act which may be due to erroneous belief in good faith or plain ignorance. For discretionary “duties. though they may not constitute a criminal offense.(4) Vexing or humiliating another on account of his religious beliefs.TORTS & DAMAGES CIVIL LAW The acts and omissions of the firm fall under Article 26. (3) Intriguing to cause another to be alienated from his friends. most often applies to ultrahazardous activities and products-liability cases. a tortuous interference with another’s patronage that may. Damages caused by an animal 2. CA. Motor vehicle mishaps 3. but is not limited to: 1. For a defendant to be liable. Privacy and Peace of Mind of Another Art. and must be owed only to the person who sustains the loss by the failure to fulfill it. 100% UP LAW UP V. without just cause. Product Liability 2008 Page 282 of 325 BAROPS . Respect for Dignity. 2. Furthermore. What are the types of strict liability tort? 1. 28 (CC). Unfair competition in agricultural. deceit. machination or any other unjust. physical defect. (St. Unfair competition includes. commercial or industrial enterprises or in labor through the use of force. Dereliction of Duty Any person suffering material or moral loss because a public servant or employee refuses or neglects. 26. to perform his official duty may file an action for damages and other relief against he latter. VIOLENCE AND THREATS (BOTH AGAINST COMPETITORS AND THEIR CUSTOMERS). D. Passing off. his private life was mistakenly and unnecessarily exposed. lowly station in life. personality. The following and similar acts. trade mark infringement. A civil action based on Art. Samanguit): (1) (2) (3) (4) Defendant is a public officer charged with a performance of a duty in favor of the plaintiff He refused or neglected without just cause to perform the duty Plaintiff sustained material or moral loss as a consequence of such nonperformance The amount of such damages. Louis Realty Corporation vs. lingering impression that he was renting his residence from Arcadio or that Arcadio had leased it from him. may be intentional or unintentional. Either way. the duty to act must be MINISTERIAL. Competition with malice. 1984) E. intimidation. or that any trade or competitive motive was absent. C. without prejudice to any disciplinary administrative action that may be taken. Illustration of a “similar act”: Wrongful advertisement of house in the Sunday times. 28 may be pursued entirely independent from a criminal action. Persons who know the residence of Doctor Aramil.

26 SCRA 410 [1968]). Collapse of a building 6. (Vestil vs. Things thrown or falling from a building A.” C. prevented the misfortune. The amount of the bond and other terms shall be fixed by the competent public official. Orlando was not in the car at the time of the incident. toilet articles and similar goods shall be liable ALTHOUGH no contractual relation exists between them and the consumers. since the presence of such defects would have been readily detected by diligence maintenance check. IAC) B. to answer for damages to third persons. (b) Explain the concept of vicarious liability in quasi-delicts. person who caused the injury and the employer) (Art. (c) Does the presence of the owner inside the vehicle causing damage to a third party affect his liability for his driver’s negligence? Explain. 2186) BAR QUESTION A van owned by Orlando and driven by Diego. he is solidarily liable with his driver IF he could have. Suggested Answer: (a) No. In their defense. (Art.TORTS & DAMAGES 4. causing severe damage to the car and serious injuries to its passengers.e. while negotiating a downhill slope of a city road. by the use of the due diligence. in view of the express given fact that “Orlando was not in the car at the time of the incident. Orlando and Diego contend that the sudden malfunction of the van’s brake system is a fortuitous event and that. (Art. they are exempt from any liability. this question has no factual basis in the problem given. 2184. It holds the possessor liable even if the animal should "escape or be lost" and so be removed from his control. If the owner was NOT in the motor vehicle: Article 2180 is applicable. therefore. Available defenses: Damage should come from force majeure or from the fault of the person who has suffered damage. suddenly gained speed. Yu Khe Thai. drinks. (c) In motor vehicle mishaps. (Art. by the use of due diligence. Diego claims that the downhill 100% UP LAW UP CIVIL LAW slope caused the van to gain speed and that. Defective condition of public works Who are liable for damages caused by defective condition of public works? LGUs (provinces. (a) Is this contention tenable? Explain. Defective condition of public works 5. However. and bumped a car in front of it. 2183) What must be determined is possession regardless of the ownership. cities and municipalities) shall be liable for damages for the death of. 2187) D. Product Liability Who is liable for death or injuries caused by any noxious or harmful substances used? MANUFACTURERS and PROCESSORS of foodstuffs. as he stepped on the brakes to check the acceleration. And it does not matter either that the animal was tame as the law does not speak only of vicious animals. (i.) The law requires every owner of a motor vehicle to file with the proper government office a bond executed by a governmentcontrolled corporation or office. any person by reason of 2008 Page 283 of 325 BAROPS . Motor Vehicle Mishaps Who is liable in motor vehicle mishaps? If owner was in the motor vehicle: DRIVER and OWNER. causing the van to go even faster and eventually to hit the car in front of it. The failure to maintain the vehicle in safe running condition constitutes negligence. The car owner and the injured passengers sued Orlando and Diego for damages cause by Diego’s negligence. (b) The doctrine of vicarious liability is that which renders a person liable for the negligence of others for whose acts or omission the law makes him responsible on the theory that they are under his control and supervision. Damages caused by an animal Who is liable for damages caused by an animal? The POSSESSOR of an animal or WHOEVER MAY MAKE USE of the same is responsible for the damage which it may cause. or injuries suffered by. prevented the mishap (Caedo vs. Mechanical defects of a motor vehicle do not constitute fortuitous event. the owner is made solidarily liable with his driver if he (the owner) was in the vehicle and could have. the brakes locked. NOT available as a defense: Although animal may escape or be lost. obviously beyond the authorized limit in the area.

and other public works UNDER THEIR CONTROL OR SUPERVISION. (Art. 2189) Person Strictly Liable For What CIVIL LAW Defenses or Exception s If not in vehicle 2180 Absence on contractual relation NOT a defense Requisite for liability is supervision NOT ownership. Cities and Municipalities death and injuries caused by any noxious or harmful substances used death or injury results from such possession possession or use thereof is indispensab le in his occupation or business Public works must be under their supervision s Proprietor building/ structure of The HEAD OF A FAMILY that lives in a building or a part thereof. (Art 2193) QUICKGLANCE Person Strictly Liable Possessor of an animal or whoever makes use of them even if the animal is lost or escaped Owner of Motor Vehicle For What Defenses or Exception s Force majeure Fault of the person who suffered damage Solidary liability only if the owner was in the vehicle and if he could have prevented it thru due diligence UP BAROPS 2008 For the damage it may cause Motor vehicle mishaps the death or injuries suffered by any person by reason of the defective condition of roads. and other public works  total or partial collapse of building or structure if due to lack of necessary rep airs  explosion of machinery which has not been taken cared of with due diligence. and the inflammation of explosive substances which have not been kept in a safe and adequate place  by excessive smoke. bridges. E. e) By the falling of trees situated at or near highways or lanes. sewers or deposits of infectious matter. streets. Collapse of a building When are proprietors liable for damages? PROPRIETORS shall damages caused: be responsible for a) By the total or partial collapse of a building or structure if it should be due to the lack of necessary repairs. 2191) F. which may be harmful to persons or property. bridges.TORTS & DAMAGES the defective condition of roads. d) By excessive smoke. constructed without precautions suitable to the place. toilet articles and similar goods (FDTAS) Defendant in possession of dangerous weapons/ substances such as firearms and poison Provinces. f) By emanations from tubes. streets. Things thrown or falling from a building Manufacturers and Processors of foodstuffs. (Art. public buildings. which may be harmful to persons or property  by falling of trees situated at or near Responsibili ty for collapse should be due to the lack of necessary repairs 100% UP LAW Page 284 of 325 . and c) By the inflammation of explosive substances which have not been kept in a safe and adequate place. public buildings. (Art. canals. 2190) b) By the explosion of machinery which has not been taken care of with due diligence. if not caused by force majeure. drinks.

or from being forced to confess his guilt. defeats. Freedom of religion 2. Freedom form being compelled to be witness against one’s self. Freedom of suffrage 6. canals. except when the person confessing becomes a State witness. 17. or from being induced by a promise of immunity or reward to make such confession. it is enough that there was a violation of the constitutional rights of the plaintiffs and UP BAROPS 2008 Page 285 of 325 VI. Architect or Contractor Head of the Family that lives in a building or any part thereof if damage of building or structure is caused by defect in construction which happens within 15 years from construction. The liberty of abode and of changing the same 11. and for other relief. who directly or indirectly obstructs. The right to equal protection of the laws 9. to be informed of the nature and the cause of the accusation against him. violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: 1. Freedom of speech 100% UP LAW . action must be brought within 10 years from collapse liable for damages caused by things thrown or falling from the same In any of the cases referred to in this article. The right to just compensation when property is taken for public use 8. constructed without precautions suitable to the place Engineer. REQUISITE: FACT OF VIOLATION To be liable under Article 32 of the New Civil Code. The right to be free from involuntary servitude in any form 15. house. The right against deprivation of property without due process of law 7. Freedom to write for the press or to maintain a periodical publication 4. the aggrieved party has a right to commence an entirely separate and distinct civil action for damages. to meet the witnesses face to face. 18. Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted) and may be proved by a preponderance of evidence. Any public officer or employee. Exemplary damages may also be adjudicated. Freedom of access to the courts highways or lanes. The right to become a member of associations and societies for purposes not contrary to law 13. whether or not the defendant’s act or omission constitutes a criminal offense. The right of the accused against excessive bail 16. TORTS WITH CIVIL ACTION INDEPENDENT A. papers and effects against unreasonable searches and seizures 10. The right to privacy of communication and correspondence 12. if not caused by force majeure  by emanations from tubes. The responsibility herein set forth is not demandable from a judge unless his act or omission constitutes a violation of the Penal code or any other penal statute. The right to be secure in one’s person. Violation of Civil and Political Rights 32 CC. The right to take part in a peaceable assembly and petition the government for redress of grievances 14. The right of the accused to be heard by himself and counsel. to have compulsory process to secure the attendance of witnesses on is behalf. to have a speedy and public trial. The indemnity shall include moral damages. sewers or deposits of infectious matter. or any private individual.TORTS & DAMAGES Person Strictly Liable For What Defenses or Exception s CIVIL LAW 3. Freedom from arbitrary or illegal detention 5.

if intentionally done would be punishable as a felony. The civil action herein recognized shall be independent of any criminal proceedings. a information should be presented by the prosecuting attorney. the court may require the plaintiff to file a bond to indemnify the defendant in case the complaint should be found to be malicious. entirely separate and distinct from the criminal action. is the execution of the imprudent or negligent act that. Hon. Defamation. When a member of the city or municipal police force refuses or fails to render aid or protection to any person in case of danger to life or property. D. Action for damages where independent civil action is provided no Defamation. and hence the law penalizes the negligent or careless act and no the result thereof. This conclusion is supported by the comment of the Code Commission. which includes libel and slander. no civil action shall proceed independently of the criminal prosecution. There must be a presence of allegations as to special damages suffered by the plaintiff.” Allowing good faith as an excuse would defeat the main purpose of the provision which is the effective protection of individual rights and its objective is to put an end to official abuse by the pleas of good faith. and a preponderance of evidence shall suffice to support such action. Such civil action shall proceed independently of the criminal prosecution. This is manifest in the provision which uses the expressions “criminal action” and “criminal prosecution”. Defamation Under article 33 of the Civil Code. but the justice of the peace finds no reasonable ground to believe that a crime has been committed. Fraud CIVIL LAW Art.. Estafa falls under fraud. Fraud. which states that reckless imprudence or criminal negligence is not included in Art. entirely separate and distinct from the criminal action may be brought by the injured party in cases of defamation. fraud and physical injuries.” (Prudential Bank vs. IAC) 3. the complainant may bring a civil action for damages against the alleged offender. The case of reckless imprudence resulting in physical injuries and homicide is not one of the three crimes mentioned in article 33 and therefore. It is not the crime of physical injuries defined in the RPC. CA) The civil action for damages which it allows to be instituted is ex-delicto. BAROPS 2008 Page 286 of 325 . (Marcia. Article 33 speaks only of defamation. Paje. Neglect of Duty 34 CC. Upon the defendant’s motion. fraud and physical injuries.) REQUISITES for recovery. and PHYSICAL INJURIES. frustrated and attempted homicide. FRAUD. the civil action shall be suspended until the termination of the criminal proceedings. 33 is not authoritative. charges another with the same. The essence of the crime of criminal negligence. et. Hon. Caro) C. respect. Physical injuries (2) defamatory. If during the pendency of the civil action. or the prosecuting attorney refuses or fails to institute criminal proceedings. such peace officer shall be primarily liable for damages and the city or municipality shall be subsidiarily responsible therefore. means the offense of injuring a person’s character. a civil action for damages. (Madeja vs. 100% UP LAW UP 35 CC. Physical Injuries The term “physical injuries” is used in a generic sense. 2. Prove that the defendant (1) Published a statement that was. Ponce De Leon) B. Inc. a civil action for damages. but consummated. (MVRS Publications vs. fame or reputation through false and malicious statements. Words which are merely insulting or offensive are not actionable. et al.TORTS & DAMAGES it is not requires that defendants should have acted with malice or with bad faith. The ruling in Corpus vs. Islamis Da’wah Council of the Philippines. Caro) 1. (3)concerning the plaintiff. (Madeja vs. It is that which tends to injure reputation or to diminish the esteem. for which no independent civil action is granted in this code or any special law. In cases of DEFAMATION. (Lim vs. may be brought by the injured party. al vs. 33 CC. When a person claiming to be injured by a criminal offense. and shall require only a preponderance of evidence. It includes not only physical injuries. Such civil action may be supported by a preponderance of evidence. good will or confidence in the plaintiff or to excite derogatory feelings or opinions about the plaintiff.

they cannot raise the defense. c. Though the general rule provides that one who is not criminally liable cannot be civilly liable. Under Section 1 Rule 111 of the 2000 Rules on Criminal Procedure. 100 provides that every person who is criminally liable for a felony is also civilly liable. 100-103 include: a. It should be emphasized that the same negligent act causing damages may produce a civil liability arising from a crime under Art. (Neplum vs. (Garcia vs. Florido) If Liability being predicated on quasi-delict the civil case may proceed as a separate and independent civil action. This general rule however presupposes that the felony had resulted in damage or injury to another’s person or property. August 26. Laroya. But a separate proceeding for the recovery of civil liability in cases of violations of B. 2176-2194 of the New Civil Code. (Cinco vs. 2177) RPC Art. RPC Arts. CIVIL LIABILITY FROM CRIME ARISING (a) Responsibility for fault or negligence is entirely separate and distinct from the civil liability arising from negligence under the RPC. was seriously injured.” and may be filed separately and prosecuted independently even without any reservation in the criminal action (Section 3. All the other civil actions under Articles 32. (b) It depends. if the action against them is based on culpa contractual or civil liability arising from a crime. 34. must have caused damage or injury to another. 33. Restitution. the civil action provided under this article cannot strictly be considered as an independent civil action.P.TORTS & DAMAGES Notes: Because of the last sentence. Suggested Answer: (a) It depends. X later filed a criminal action against both drivers. the taxicab owners may raise the defense of diligence of a good father of a family in the selection and supervision of the driver. No. The failure to make a reservation the criminal action is not a waiver of the right to file a separate and independent civil action based on these articles of the New Civil Code (Casupanan vs. what is “deemed instituted” with the criminal action is only the action to recover civil liability arising from the crime or ex delicto. VII. otherwise only criminal liability will attach. (Sps. Rule 111. reservation is necessary. 100 of the Revised Penal Code or create an action for quasi-delict or culpa extracontractual under Arts. Benito Lo Bun Tiong etc. The civil liability established by RPC Arts. (Art. contracts or quasi-contracts. a separate civil action for quasi-delict against 100% UP LAW UP BAROPS . If the civil action is based on quasi-delict. No. If the civil action against the taxicab owners is based on culpa contractual or on quasidelict. 22 is allowed when the civil case is filed ahead of the criminal case. (a) Is it necessary for X to reserve his right to institute a civil action for damages against both taxicab owners before he can file a civil action for damages against them? Why? (b) May both taxicab owners raise the defense of due diligence in the selection and supervision of their drivers to be absolved from liability for damages to X? Reason. simultaneously and independently. But double recovery is not allowed. a passenger of the first taxicab. 145391. there is no need for reservation. whether intentional or negligent. 2002) 2008 Page 287 of 325 Deemed instituted in every criminal prosecution is the civil liability arising from the crime or delict per se (civil liability ex delicto). as specifically provided for in Article 2177 of the Civil Code. To create an obligation or give rise to civil liability.R. G. 2000 Rules on Criminal Procedure). 101-103 provide exceptions as they provide for vicarious liability for certain types of offenders and subsidiary liability in case of default of the offender. Vicente Balboa) BAR QUESTION As a result of a collision between a taxicab owned by A and another taxicab owned by B. X. Laroya) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the corresponding civil action and that no reservation to file such civil action separately shall be allowed. an act or omission. vs. but not those liabilities from quasi-delicts. (Casupanan vs. Reparation of the damage caused. and Indemnification for consequential damages. Alternative Answer: No such reservation is necessary. Canonoy) CIVIL LAW the private complainant in the criminal case. b. If the separate civil action is to recover damages arising from the criminal act. 2176 of the New Civil Code are no longer “deemed instituted. Orbeso) An accused in a pending criminal case can validly file.

The provisions of this Title shall be respectively applicable to all obligations mentioned in Article 1157. vs. 2199) A)  When there is a pecuniary loss suffered by him  When he has alleged and prayed for such relief (Manchester Dev’t Corp vs. or satisfaction for an injury sustained.profits which the obligee failed to obtain A. the actual amount of loss. CA.mental anguish. What are damages? Damages may be defined as the pecuniary compensation. Manchester Dev’t. Loss of Earning Capacity of the Deceased Interest Attorney’s Fees & Expenses of Litigation General Principles for Recovery II.for loss actually suffered (2) MORAL. DEFINITION AND CONCEPT Art. KINDS OF DAMAGES Kinds of Damages (MENTAL) (1) ACTUAL/COMPENSATORY. 7. 1988. recompense. only those injuries which could have been reasonably foreseen by the parties by the parties at the time the contract was entered into are recoverable. (3) The damages must be proven by competent evidence (admissible or probative) . Icamina). CA) (4) Complaint and prayer must specify amount of damages and pay filing fees before it may be accepted and admitted for filing.TORTS & DAMAGES CIVIL LAW No proof of pecuniary loss is necessary for: moral. 2200 DAMAGES I.value of the loss suffered B. nominal. or as otherwise expressed. (Circ. CA)  When he has duly proved it B)  When provided by law  Or by stipulation (1) The amount of damages must be fair and just and commensurate to the loss.to serve as an example for the common good (Art. (3) NOMINAL. Ballesteros). Loss of earning capacity due to injury (temporary or permanent) B. (5) The requirement of certainty does not prevent the drawing of reasonable inferences from the fact and circumstance in evidence.000 (as of 2005) B. For a wrong inflicted by the defendant 3. Fuentes vs. (2) The damages must be proximate damages and not remote or speculative.for rights recognized and violated (4) TEMPERATE/MODERATEfor damages proved but the amount was not proven (5) LIQUIDATED. Damage resulting to the plaintiff 2205 2206 2209 2208 A. 2008 Page 288 of 325 100% UP LAW UP BAROPS . Damnum emergente. premised upon competent proof and on the best evidence obtainable by the injured party. Right of action 2. 2216) Kinds of Actual Damages CC Art. Mar. 24. Fixed indemnity for death = Php 50. Actual or Compensatory When is a person entitled to actual or compensatory damages?(Art. Corp. (Integrated Packaging Corp. The assessment of such damages is discretionary upon the court. CA. etc. Elements for recovery of damages: 1. the pecuniary consequences which the law imposes for the breach of some duty or the violation of some right (People vs. Lucro cessante. 2197) A. The obligation to repair the damages exists whether done intentionally or negligently and whether or not punishable by law (Ocena vs. except liquidated ones. temperate. Damage to Business Standing or Commercial Credit A. No.It is necessary to prove with a reasonable degree of certainty. vs.stipulated damages in the contract (6) EXEMPLARY/CORRECTIVE. 1987).In case of contracts. 2195. . liquidated or exemplary damages. (Art.

which. Note: WON damage is foreseen is irrelevant CIVIL LAW those which were "the natural and probable consequences" or "the direct and immediate consequences" of the act or omission (Algarra vs. it is reasonably certain that injury consisting of failure to realize otherwise reasonably expected profits had been incurred. known as special damages. However. (TalisaySilay vs. Fair and reasonable estimate of the amount of damage. What must be proved to allow recovery? Proof Reasonable certainty – only that the fact and cause of injury must be taken out of the area of speculation. 220 1 Contra cts and quasi contrac ts Liability extends to those: 1. conjecture or surmise and by reference to some fairly definite standard. This proposition must be understood with the qualification that. knowledge of the special conditions which render such damages possible will not make them recoverable. the ordinary. natural and in a sense the necessary damage resulting from the breach. unbroken by any efficient intervening cause. primarily. Art. bad faith.TORTS & DAMAGES (6) Events which occur after the wrong complained of may serve to render the damage sufficiently certain. The damages ordinarily recoverable against a vendor for failure to deliver land which he has contracted to deliver is the value of the use and occupation of the land for the tune during which it is wrongfully withheld (Daywalt vs." or 100% UP LAW UP BAROPS . produces the injury. Fact of Injury Cause Amount Art. those that could have been reasonably foreseen Provided: obligor in good faith Liability extends to all damages which are the natural and probable consequence Note: Liability extends to all damages which may be reasonably attributed to the nonperformance of the obligation in case of fraud. note that if the subsequent aggravations are due to his own negligence then the tortfeasor shall not be liable for such since Art. in a natural and continuous sequence. are recoverable where it appears that the particular conditions which made such damages a probable consequence of the breach were known to the delinquent party at the time the contract was made. established experience or direct inference from known circumstances. Extent of recovery in breach of contract: The damages recoverable upon breach of contract are. Sandejas). (“without which test of cause in fact”) Need not be proved with the same degree of certainty. however. including subsequent aggravations. 2216) 3) Loss is presumed (ex: loss of a child or spouse) 4) Forfeiture of bonds in favor of the government for the purpose of promoting public interest or policy (ex: bond for temporary stay of alien) 2008 Page 289 of 325 Actual damages for a negligent act or omission are confined to those which "were foreseen or might have been foreseen. such as market value. Proximate cause – the cause. Associacion) What is the extent of recovery? Recovery of all proximately traceable to the primary negligence. Other damages. Where. those that have been foreseen 3. the probability of which the law regards as a consequence and natural result likely to flow form the original injury. if the damages are in the legal sense remote or speculative. prove the substantive right. uncertainty as to the precise amount of such unrealized profits will not prevent recovery or the award of damages. natural and probable consequences of the breach 2. malice or wanton attitude (FBM-WA). 220 2 Crimes and quasidelicts When pecuniary loss need not be proved 1) Liquidated damages previously agreed upon 2) If damages other than actual are sought (Art. its breach and the amount of damages flowing from the breach. 2203 imposes a duty on the injured party to avoid loss or minimize resulting damages. Recoletos et al. and without which the injury would not have occurred. (7) The damages must be susceptible of ascertainment in some manner other than by mere speculation. Usual burden of proof required in a negligence case. Special damages of this character cannot be recovered unless made the subject of special stipulation.).

(BELONGS to the client hence the litigant is the judgment creditor who may enforce the judgment by execution) (Quirante vs. the attorney's fees and expenses of litigation must be reasonable.paid to his heirs .age of deceased) (MMTC v. just and demandable claim. Earning Capacity 2. (6) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid. whether already training for a specific profession or still engaged in general studies. . Robert Brodett y Pajaro. Formula established in decided cases for computing net earning capacity: Net earning capacity (X) = life expectancy * [gross annual income – reasonable. (11) When at least double judicial costs are awarded. 2 Concepts of Attorney’s Fees (1) Retainer’s agreement between the lawyer and the client (in writing). it is P75. (7) In actions for legal support. (8) In actions for the recovery of wages of household helpers.TORTS & DAMAGES Damages for Personal Injury & Death (Art. (3) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.As of 2008.000 (People vs. other than judicial costs.unless the deceased on account of permanent physical disability not caused by the defendant. 2008) (b) Loss of the earning capacity of the deceased. Obligation to Support 3. for a period not exceeding five years (d) Moral damages . necessary living expenses] Life expectancy= 2/3 (80. . Moral Damages to heirs Compensation should be allowed for loss of earning capacity resulting from the death of a minor who has not yet commenced employment or training for a specific profession if sufficient evidence is presented to establish the amount thereof.demanded by the spouse. be recovered? (SELMUBSCREWD) (Art. (2) Award as an indemnity to the client. (1) If there is a stipulation to that effect (2) When exemplary damages are awarded. legitimate and illegitimate descendants and ascendants of the deceased Factors: CIVIL LAW When can attorney’s fees. even though there may have been mitigating circumstances.the recipient who is not a testate or intestate heir may demand support from the person causing the death. (Art. Jan. The argument for allowing compensation for loss of earning capacity of a minor is even stronger if he or she was a student. (9) In actions for indemnity under workmen's compensation and employer's liability laws. (5) In case of a clearly unfounded civil action or proceeding against the plaintiff. 2208). (4) In criminal cases of malicious prosecution against the plaintiff. had no earning capacity at the time of death. IAC) INTEREST When shall interest accrue as indemnity for damages? the obligation consists in the payment of a sum of money debtor incurs in delay there being no stipulation to the contrary 1. (10) In a separate civil action to recover civil liability arising from a crime. CA) ATTORNEY’S FEES Attorney’s Fees is the exception NOT the general rule. (12) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. 18. (c) Support according to the provisions of Article 291 . 2209) 100% UP LAW UP BAROPS 2008 Page 290 of 325 . If there is no stipulated interest the legal interest of 6%. In all cases. 2206) Recoverable damages for death caused by a crime or quasi-delict: (a) At least three thousand pesos. laborers and skilled workers.

law. this interim period being deemed to be by then an equivalent to a forbearance of credit. from default. quasicontracts. CIVIL LAW ACCRUAL If claim or damages are LIQUIDATED. 2210 From Breach of contract Discretion of the court Discretion of the court Interest imposed on damages awarded Interest is awarded as part of damages BASE c. The actual base for the computation of legal interest shall be on the amount finally adjudged.TORTS & DAMAGES Interest due Art.” hence not a forbearance. 2213) Legal Interests The rules of thumb in the determination of legal interests are as follows: 1. RATE at the rate of 6% per annum. from the time the demand can be established with reasonable certainty.b... CA “Forbearance” in the context of the usury law is a contractual obligation of lender or creditor to refrain during a given time period from requiring payment of a loan then due and payable. When an obligation. When are damages mitigated? from the time it is JUDICIALLY demanded.EXCEPT when the demand can be established with reasonably certainty. With regard particularly to an AWARD OF INTEREST in the concept of actual and compensatory damages. NOT constituting a loan or forbearance of money. as follows: BASE a. 2212) When is interest not recovered? .e. and it consists in the PAYMENT OF A SUM OF MONEY. from such FINALITY UNTIL ITS SATISFACTION. above. the rate of interest shall be 12% per annum (legal interest) legal interest ACCRUAL to be computed from default.e. (Art. shall be 12% per annum (Eastern Shipping Lines vs. 1994) Start of Delay (1) Extrajudicial: demand letter (2) Judicial: Filing of complaint (3) Award Crismina Garments vs. Furthermore. i. as well as the ACCRUAL thereof. the contract is for a “piece of work. the interest due should be b. the contravenor can be held liable for damages.When claims/ damages are unliquidated . 2. the interest shall begin to run only FROM THE DATE THE JUDGMENT OF THE COURT IS MADE (at which time the quantification of damages may be deemed to have been reasonably ascertained). a loan or forbearance of money. is imposed. 2211 Crimes and quasidelicts When shall interest earn legal interest? from judicial demand even if the obligation is silent upon this point.. Hence. from judicial or extrajudicial demand. or c. i. whether the case falls under a. an interest on the AMOUNT OF DAMAGES awarded may be imposed at the discretion of the court. c.. the rate of legal interest. delicts or quasi-delicts) is breached.e. When the JUDGMENT of the court awarding a sum of money becomes final and executory. contracts. 1169. When the obligation is breached. is breached. Civil Code) If UNLIQUIDATED. the INTEREST DUE shall itself earn RATE a) That which may have been stipulated in writing. i. Art. (Art. When an obligation. Here. regardless of its source (i. b) In the absence of stipulation. CA.e. the RATE of interest. (Art. 100% UP LAW UP BAROPS 2008 Page 291 of 325 . from JUDICIAL or EXTRAJUDICIAL demand under and subject to the provisions of Article 1169 of the Civil Code.

Salvador) General Principles of Recovery (as outlined in Expertravel & Tours vs. b. f. (3) the wrongful act or omission of the defendant must be the proximate cause of the injury sustained by the claimant. illegal or arbitrary detention. (2) there must be a culpable act or omission factually established. 2214) 2. the defendant has done his best to lessen the plaintiff's loss or injury (Art. illegal search. lascivious acts. quasi-contracts and quasi-delict (C-BELL): a) plaintiff has contravened the terms of contract b) plaintiff derived some benefit as result of contract c) in case where exemplary damages are to be awarded. i. Moral damages must somehow be proportional to the suffering inflicted. (Visayan Sawmill vs. h. exceptionally. or defamation. Its award is aimed at the restoration. moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and. (Villanueva vs. and (4) the award of damages is predicated on any of the cases stated in ART. of the spiritual status quo ante. In culpa contractual or breach of contract. In culpa aquiliana. By special rule in Article 1764. In quasi-delicts contributory negligence (Art. 2219 NCC. In crimes→ mitigating circumstances (Art. adultery or concubinage. 5.If injury consists of any of the ff: (PBMF-MWSSS) a. 2204) Note: aggravating circumstances in case of crimes can increase the damages adjudicated (Art. g. 2217) What are the requisites for awarding moral damages? (1) there must be an injury. when the act of breach of contract itself is constitutive of tort resulting in physical injuries. 7. (a) when an act or omission causes physical injuries. and it must be proportional to the suffering inflicted. In contracts." referred to in Article 2219. that the defendant acted upon the advise of counsel d) that the loss would have resulted in any event e) that since the filing of the action. Physical suffering Besmirched reputation Mental anguish Fright Moral shock Wounded feelings Social humiliation Serious anxiety Similar injury - CIVIL LAW Though incapable of pecuniary computation If such is the proximate result of defendant’s act or omission. Moral What is the nature of moral damages? Moral damages are emphatically not intended to enrich a complainant at the expense of the defendant. 2215) 4. 4. mental or psychological. clearly sustained by the claimant. d. moral damages may also be awarded in case the death of a passenger results from a breach of carriage. 3. 2203) 3.TORTS & DAMAGES 1. following the ejusdem generis rule. CA #1 to 7) 1. that justice may be tempered with reason instead of being tainted when it appears to be a result of ruthless vindictiveness. Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of attorney's 2008 Page 292 of 325 100% UP LAW UP BAROPS . This rule also applies to contracts when breached by tort. whether physical. or quasi-delict. moral damages may aptly be recovered. Doctrine of avoidable consequences a) This refers to the duty to minimize damages once a cause of action has accrued. Malicious prosecution can also give rise to a claim for moral damages. CA) When are moral damages awarded? . (Art. must be held similar to those expressly enumerated by the law. in relation to Article 2206. In culpa criminal. The term "analogous cases. 2204) The inordinate amount of damages calls for the moderating hand of the court. 6. B. Standard: good father of a family (Art. c. or (b) where the defendant is guilty of intentional tort. illegal arrest. e. moral damages could be lawfully due when the accused is found guilty of physical injuries. within the limits of the possible. 2.

27. (2) Quasi-delicts causing physical injuries. The burden rests on the person claiming moral damages to show convincing evidence for good faith is presumed. (6) Illegal search. such damages are not deemed admitted. 2PI-SALAMI309-Others) (1) A criminal offense resulting in physical injuries.) 11. invoking the stipulation that payment of the last amount of 10% shall be upon completion. (8) Malicious prosecution. for which it has been paid an additional 40% as per agreement. or public policy. 2219) (11) wilful injury to property (Art. 29. descendants. It is also agreed that the balance would be payable periodically after every 10% performance until completed. (6) Illegal search. did not complete the project due to its sudden cessation of operations. and (b) attorney’s fees. serious anxiety. rape. In a case involving simple negligence. rape. Failure to use the precise legal terms or "sacramental phrases" of "mental anguish. Even if the allegations regarding the amount of damages in the complaint are not specifically denied in the answer. 27. Inc. the court can increase damages awarded (Sumalpong vs. Traya et al. 1764 in relation to Art. and 35. CA) Art. 32. Inc. 30. 2220) Labor Cases Moral damages are recoverable only where the dismissal of the employee: (1) Was attended by bad faith or fraud (2) Constituted an act oppressive to labor (3) Was done in a manner contrary to morals. moral damages cannot be recovered. has almost invariably been held not to be a ground for an award of moral damages. vs. demands payment of the last 10% of the contract despite its non-completion of the project. Moral damages may be recovered in the following and analogous cases: (not an exclusive list. Ortillo pays 50% of the contract price as per agreement.Willful injury to property if such damages are justly due. 8. (10) Articles 21. however. (9) Article 309. . 30.Breaches of contract where the defendant acted fraudulently or in bad faith. Fabricato. - What are the other legal grounds for awarding moral damages? . (Raagas. It is sufficient that these exact terms have been pleaded in the complaint and evidence has been adduced (Miranda-Ribaya vs. brings suit for the entire 10% plus damages. An appeal in a criminal case opens the whole case for review and this 'includes the review of the penalty. and brothers and sisters (SDABS) may bring the action mentioned in No. slander or any other form of defamation. Salvador) 9. (Art.’s unfounded suit which has damaged his reputation as a philanthropist and respected businessman in his community. 34. 29. (Villanueva vs. 100% UP LAW UP BAR QUESTION Ortillo contracts Fabricato. (3) Seduction.TORTS & DAMAGES fees. Inc. and 35. (9) Acts mentioned in Article 309. abduction. (5) Illegal or arbitrary detention or arrest. 2008 Page 293 of 325 BAROPS . (Art. Fabricato. (1) A criminal offense of physical injuries. defamation. 2220) (13) death of passenger from breach a breach of carriage (Art. Bautista) 10. raped. (5) Illegal or arbitrary detention or arrest. slander. 26. Instead. After performing about 93% of the contract. and the only party who sought a review of the decision of said court was the accused. Ortillo refuses to pay. (4) Adultery or concubinage. 3 The spouse. (7) Libel. such filing. or other lascivious acts. Inc. indemnity and damages. 34. or abused. good customs. 2219. (3) Seduction. 28. fright. 2206 and (Expertravel & Tours vs. 2220) (12) breach of contract (Art. referred to in No. (2) Quasi-delicts causing physical injuries. (disrespect for the dead) (10) Acts and actions referred to in Articles 21. to supply and install tile materials in a building he is donating to his province. et al. (8) Malicious prosecution. wounded feelings or moral shock" does not justify the denial of the claim for damages. abduction. abducted. Who else can recover moral damages? Parents of the female seduced. Fabricato. 26. Ortillo counters with claims for (a) moral damages for Fabricato. CA) Cases where recovery of moral damages are allowed CIVIL LAW (7) Libel. (4) Adultery or concubinage. ascendants. Even if the offended party had not appealed from said award. Inc. 32. 9 in the order named. or other lascivious acts. 28.

Barcena 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. The law could not have meant to impose a penalty on the right to litigate. of the person offended as well as the business and financial standing of the offender. Arcona vs.000 from each accused as moral and exemplary damages. moral damages must be awarded even in the absence of any allegation and proof of the heirs’ emotional suffering. The adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages. but often leaves them with the gnawing feeling that an injustice has been done to them. financial status. is unsupported. the presence of the qualifying circumstances of minority and relationship entitles the offended party to exemplary damages in the amount of P25K. social. However. NLRC Moral damages are recoverable where the dismissal of the employee was attended by bad faith or fraud or constituted an act oppressive to labor. Factors for the Amount of Moral Damages (1) Political. specifically for the exemplary damages and moral damages sought to be collected since the complaint as has been said has been found to have some merit. 2208 [4] and [11]. Moral damages in murder People vs. however. the award of 100% UP LAW UP BAROPS 2008 Page 294 of 325 . Likewise. Such violent death or brutal killing not only steals from the family of the deceased his precious life. (a) Does Ortillo have a legal basis for his claim for moral damages? (b) How about his claim for attorney’s fees. Castillo While it must be admitted that this case is peculiar in that it is one filed by a daughter against her own mother. such right is so precious that moral damages may not be charged on those who may exercise it erroneously. Teodorico Cleopas and Pirame (2000) The award of P50. or was done in a manner contrary to morals. It does not fall under the coverage of Article 2219 of the New Civil Code. good customs. Ortillo is entitled to attorney’s fees because Fabricato’s complaint is a case of malicious prosecution or a clearly unfounded civil action (Art. having hired a lawyer to defend him? Suggested Answer: (a) There is no legal basis to Ortillo’s claim for moral damages. exemplary damages may be awarded if the dismissal was effected in a wanton. no award of exemplary damages should be allowed. or without malice or bad faith. Castillo vs. Labor Cases Triple Eight Integrated Services. civil indemnity ex delicto is mandatory upon finding of the fact of rape while moral damages is awarded upon such finding without need of further proof because it is assumed that a rape victim has actually suffered moral injuries entitling the victim to such award." Moral damages in rape People vs. In addition. CA Moral damages cannot be recovered from a person who has filed a complaint against another in good faith. that alone does not justify any counterclaim. it is damnum absque injuria. which she suffered as a result of her husband's death. deprives them forever of his love. No factual and legal bases. NCC). CA As borne out by human nature and experience. Calongui Anent the award of damages. CA The social and financial standing of a claimant of moral damages may be considered in awarding moral damages only if he or she was subjected to contemptuous conduct despite the offender's knowledge of his or her social and financial standing. Inc. vs. vs. (2) Degree of anguish (3) Sentimental value where applicable Illustrations: Kierulf et al. Illustrations: Moral damages in malicious prosecution Mijares vs.TORTS & DAMAGES CIVIL LAW P50K as moral damages must be increased to P75K in line with prevailing jurisprudence. affection and support. For this reason. The widow of the victim did not testify on any mental anguish or emotional distress. If damage results from the filing of the complaint. a violent death invariably and necessarily brings about emotional pain and anguish on the part of the victim’s family. or public policy. People vs. oppressive or malevolent manner.

As such they likewise shared his prestige and humiliation. based on breach of contract. Lopez. BAR QUESTION Rosa was leasing an apartment in the city. it has no feelings. Will the action prosper? Explain. et al. Because of the bank's refusal to encash the entire one million face amount of his manager's checks. and cause the water and electricity services to be disconnected. He is at the same time a consultant of DizonEsguerra Real Estate Company. Manero and Mambulao Lumber Co. for a corporation has no reputation in the sense that an individual has. CA The award of moral damages cannot be granted in favor of a corporation because. resulting in social humiliation" is an obiter dictum. PNB that a corporation may recover moral damages if it "has a good reputation that is debased. The statement in People vs. as wife of Senator Lopez. Because of the Rent Control Law. NAPOCOR vs. The records further show that plaintiff is a prominent businessman. unlike in the case of a natural person. Who may recover moral damages? Strebel vs. 100% UP LAW UP CIVIL LAW no emotions.000. Jr. Maria J. As a general rule.” The damage to private respondents' reputation and social standing entitles them to moral damages. Defendant treated him as a valued and VIP client. Exception: Art. Although the action is based on quasi-delict and not on contract. licensed and engaged in the real estate business. The lessor has the obligation to undertake repairs to make the apartment habitable and to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract (Article 1654. we held that: "The financial credit of a businessman is a prized and valuable asset. Answer: Yes. loss of income.. the right of recovery for mental suffering resulting from bodily injuries is restricted to the person who has suffered the bodily hurt. based on quasi-delict under the human relations provisions of the New Civil Code (Articles 19. Bank of America. Mrs. Pan American World Airways International carriers like defendant know the prestige of such an office. Petitioner has besmirched private respondent's reputation and has considerably caused him undue humiliation. CA In the case of Leopoldo Araneta v. It cannot. vs. her landlord could not increase the rental as much as he wanted to. She is also entitled to actual damages. it being a significant part of the foundation of his business. shared his prestige and therefore his humiliation. Alternative Answers: (a) Yes. and there can be no recovery for distress caused by sympathy for another's suffering. A husband or wife cannot recover for mental suffering caused by his sympathy for the other's suffering. Philipp Brothers While it is true that besmirched reputation is included in moral damages. it cannot cause mental anguish to a corporation. which she can prove at trial. medical expenses. In order to force her to leave the premises. which call be experienced only by one having a nervous system. 2219 ABS-CBN vs. Any adverse reflection thereon constitutes some financial loss to him. e. actual damages may be recovered if the lessee is able to prove the losses and expenses she suffered. Producers Bank vs. 20 and 21) because the act committed by the lessor is contrary to morals. Since there was willful breach of contract by the lessor. She sued the landlord for actual and moral damages. Mr. experience physical suffering and mental anguish. it is inherently impossible for a corporation to suffer mental anguish. And he was former Vice-President of the Philippines. the lessee is entitled to moral damages under Article 2220. but the nation's treaty-ratifying body. The difficulty of living without electricity and running water resulted in Rosa’s suffering a nervous breakdown. or for fright due to a wrong against a third person. BAROPS 2008 Page 295 of 325 . nor terminate her lease as long as she was paying her rent. he was so embarrassed for he was not able to purchase a house and lot in Baguio City. being an artificial person and having existence only in legal contemplation. and Mrs.g. CA Petitioner has not presented adequate evidence to show that private respondent is indeed a big time gambler. For the Senate is not only the Upper Chamber of the Philippine Congress. NCC.000 is appropriate. vs. therefore. An award of P100. NCC). etc. were traveling as immediate members of the family of Senator Lopez. Figueras. the landlord stopped making repairs on the apartment. Lopez. Alfredo Montelibano. no senses. Moral damages are recoverable under Article 2219 (10) in relation to Article 21.TORTS & DAMAGES Factors in Determining Amount PNB vs. and besides. et al.

2221. (2) There is no loss or damage suffered or such cannot be proven or was not proved. In fact. And since the conduct of the lessor was contrary to morals. which has been violated or invaded by the defendant. the action should prosper for both actual and moral damages. hence. Temperate damages are incompatible with nominal damages hence. in such cases there is no incompatibility between actual and temperate damages. 2225) Requisites: (1) There is actual damage. What is precluded by the adjudication of nominal damages? . he may also be held liable for quasi-delict. Nominal damages are adjudicated in order that a right of the plaintiff. Armovit vs. temperate damages can and should be awarded on top of actual or compensatory damages. 2223. the lessor’s willful and illegal act of disconnecting the water and electric services resulted in Rosa’s suffering a nervous breakdown. when confronted with their failure to deliver on the wedding day the wedding cake ordered and paid for. moral. Ferrer No moral or exemplary damages was awarded. (2) The pecuniary amount of the damage cannot be proved. when in truth. 2222. and all actual damages which she may have suffered by reason of such conduct under Articles 9. (Art.  In cases where the resulting injury might be continuing and possible future complications directly arising from the injury. which are more than nominal but less than compensatory damages. petitioners must be held liable for nominal damages for insensitivity. Requisites: (1) A legal right has been violated. definite proof of pecuniary loss cannot be offered. 2220 of the NCC. NCC. For such prevarication. 20 NCC and Art.further contest upon the right involved . inadvertence or inattention to their customer's anxiety and need of the hour. petitioners gave the lame excuse that delivery was probably delayed because of the traffic. 20 and 21. (3) Amount must be reasonable. Art. C. temperate and exemplary damages. Francisco v. General Rule: One does not ask for nominal damages and it is in lieu of the actual. . may be vindicated or recognized. Temperate What is the nature moderate damages? of temperate or Temperate or moderate damages. There are cases where from the nature of the case.  Pleno vs. or where any property right has been invaded. The lessor willfully breached his obligations under Article 1654. even exemplary damages and attorney’s fees can be claimed by Rosa. while certain to occur are difficult to predict. Nominal Art. For 2008 Page 296 of 325 100% UP LAW UP BAROPS . For such breach. CA). temperate. (3) The award is to vindicate the right violated. and not for the purpose of indemnifying the plaintiff for any loss suffered by him. IAC (137 SCRA 328). based on contract and/or on tort. Yes. . CA Nominal damages cannot co-exist with actual or compensatory damages. 2224) Temperate damages must be reasonable under the circumstances. on the authority of Magbanua vs.all accessory questions . It may be recovered when some pecuniary loss has been suffered but its amount can not be provided with certainty. D. as given. the lessee may recover moral damages under Art. CA Temperate damages are included within the context of compensatory damages (RCPI vs. considering that. he is liable for breach of contract. Art. CIVIL LAW Nominal damages are incompatible with: actual. The court may award nominal damages: in every obligation in Article 1157. cannot be granted concurrently (Citytrust Bank vs. IAC) Art.TORTS & DAMAGES (b) Yes. although the court is convinced that there has been such loss. and actual damages that she may have suffered on account thereof. ". 21 NCC authorize the award of damages for such willful and illegal conduct. or liquidated damages. The lessee may recover moral damages under Article 2219 (10) in relation to Article 21.between the parties or their respective heirs and assigns. no cake could be delivered because the order slip got lost. Nevertheless. (Art.

In this case. EXEMPLARY OR (Art. (Art. 100% UP LAW UP BAROPS 2008 Page 297 of 325 . PNB vs. the law shall determine the measure of damages. (Art. (Art. E. (1) These damages are agreed upon in a contract in case of breach thereof. Exceptions (1) When there is stipulation to the contrary.iniquitous or . (2) Cannot be recovered as a matter or right. the award of P1. may be waived. (3) When the obligor is guilty of fraud. CA However. Nature of exemplary or corrective damages . (3) The amount can be reduced if: a. liquidated or compensatory damages. temperate or compensatory damages If arising from Art. (2) There is no need to prove the amount.TORTS & DAMAGES instance.000 exemplary damages is also far too excessive and should likewise be reduced to an equitable level. NOTE: In this case actual and temperate damages were awarded. 2235) Notes (1) Amount need not be proven. 2230 Art. It is postulated that the actual damages is for the car while the temperate damages is for the lost actual income not sufficiently proved. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions. 2233) Requisites to recover exemplary damages and liquidated damages agreed upon in addition to exemplary (Art. (Art.Imposed by way of example . fraudulent. or malevolent manner (WFROMM) Quasi-delicts Contracts and Quasicontracts CORRECTIVE DAMAGES Notes A stipulation whereby exemplary damages are renounced in advance shall be null and void. but NOT as to exemplary damages because aggravating circumstances are personal to the accused. 2226) What are the grounds for equitable reduction of liquidated damages? . temperate or liquidated damages arising from an employee’s criminal offense. injury to one's commercial credit or to the goodwill of a business firm is often hard to show certainty in terms of money. 2227) In what instance is the stipulation not controlling? When the breach of the contract is not the one contemplated by the parties in agreeing upon the liquidated damages.000. 2229. only the fact of the breach. unconscionable as determined by the court (Art.in addition to the moral. to be paid in case of breach thereof. temperate. actual. Exemplary or Corrective Art.or correction for the public good . discretion of the court. 2227) b.2234): The plaintiff must show that he is entitled to moral. 2232 Crimes When exemplary damages are granted the crime was committed with an aggravating circumstance/s defendant acted with gross negligence defendant acted in a wanton. partial or irregular performance General Rule: The penalty shall substitute the indemnity for damages and the payment of the interests in case or breach. An employer may be subsidiarily liable to pay moral. F.unconscionable. 2231 Art. 2228) CIVIL LAW Exemplary damages cannot be recovered as a matter of right. (2) When the obligor is sued for refusal to pay the agreed penalty. oppressive. Liquidated What are liquidated damages? Those agreed upon by the parties to a contract. reckless.

VI. III. VIII. IV. V. VII. II. IX.LAND TITLES AND DEEDS CIVIL LAW Land Titles and Deeds TABLE OF CONTENTS I. Introduction Torrens Certificate of Title Original Registration Cadastral Registration Proceedings Subsequent Registration Dealings with Unregistered Lands Patents Remedies of Aggrieved Party Replacement and Reconstitution 299 299 300 305 305 309 309 311 312 100% UP LAW UP BAROPS 2008 Page 298 of 325 .

The deed. absolute estate in perpetuity. after appropriate proceedings. D. 3. B. INTRODUCTION A. Enriquez. C. PD 1529)  MTCs. giving the record number. by virtue of judicial or administrative proceedings. grant. Saleeby. OCT The first title issued in the name of a registered owner by the Register of Deeds covering a parcel of land which had been registered under the Torrens System. upon landowner’s application. grant.cadastral and land registration cases covering: o lots without controversy or opposition o contested lots where the value does not exceed P100. REGISTRATION The State provides a public record of the title itself upon which a prospective purchaser or someone else interested may rely. NATURE Land registration is a proceeding in rem (Sec. 2. tenements.LAND TITLES AND DEEDS I. and to be there registered like other deeds and conveyance. TCT The certificate shall show the number of the next previous certificate covering the same land and also the fact that it was originally registered. PD 1529) 3. 4. or which may arise subsequent thereto Legarda vs.000. without personal service Roxas vs. CONCEPTS AND DEFINITIONS 1. 43. A proceeding in rem. 5. patent or instrument of conveyance from the Government to the grantee shall not take effect as a conveyance or bind the land but shall operate only as a 2008 Page 299 of 325 . 6.land registration proceedings and over all petitions filed after original registration of titles (Sec. and as a rule assert right to exclusive possession and enjoyment of property. may be instituted and carried to judgment. It shall be the duty of the official issuing the instrument of alienation. the same shall be brought forthwith under the operation of this Decree. patent or conveyance in behalf of the Government to cause such instrument to be filed with the Register of Deeds of the province or city where the land lies. except claims which were noted at the time of the registration. 2. THE TORRENS SYSTEM A system for registration of land under which. or hereditaments. direct the issuance of a certificate of title. the court may. LAND TITLE Evidence of the right of the owner or the extent of his interest. PURPOSE OF REGISTRATION The real purpose of that system is to quiet title to land. and to simplify its transfer Grey Alba vs. BP 129) II. JURISDICTION  RTCs of province or city where the land or a portion or it lies. CA. the number of the original certificate of title. PATENTS Whenever public land is by the Government alienated. and the volume and page of the registration book in which the latter is found. Land is conferred upon a man and his heirs absolutely and without any limitation imposed upon the state. dealing with a tangible res. TORRENS CERTIFICATE OF TITLE A. RECORDING Provides for the recording of conveyance and other instrument without guaranteeing the title. 100% UP LAW UP BAROPS CIVIL LAW To establish and certify to the ownership of an absolute and indefeasible title to realty. wherein a person grants or conveys to another certain land. KINDS 1. (Black’s Law Dictionary) 2.00 (sec. DEED A written instrument executed in accordance with law. and by which means he can maintain control. (Sec. to put a stop forever to any questions of the legality of the title. granted or conveyed to any person. PD 1529). 2. in the certificate. FEE SIMPLE Absolute title. 34. leaving to the prospective purchasers or other persons interested to examine the instruments in the records and formulate their own conclusions as to their effect on the title.

and defines the extent of these lands and domains. PD 1529) B. forest reserves lands. CIVIL LAW B. 2. ENFORCEABILITY OF TORRENS TITLE The title. 2 and 3 Art.LAND TITLES AND DEEDS contract between the Government and the grantee and as evidence of authority to the Register of Deeds to make registration. CA and Naguit. granted. WHAT ARE THE REGISTRABLE LANDS? PRIVATE LANDS If in the public domain.) Those which belong to the State. 1997) recognize the rights of ownership and possession of indigenous cultural communities to their ancestral domains and lands on the basis of native title. XII of the Constitution) 2. making it imprescriptible by occupation of third parties. Registration is not a mode of acquiring ownership. mineral lands (Sec. it does not give the owner any better title than he has. but merely confirms and thereafter protects the title already possessed by the owner. It supersedes the Land Registration Act and the Cadastral Act. It is the act of registration that shall be the operative act to affect and convey the land. C. and others of similar character 3. ORIGINAL REGISTRATION A.) Forest or timberland. is notice to the world. 100% UP LAW UP BAROPS . 1529 Property Registration Decree covers both ordinary and cadastral registration proceedings. and individuals members of the cultural communicates shall have the option to secure title to their ancestral lands under the CA 141 or PD 1529. 8371 The Indigenous Peoples Rights Act (Oct. Vagalidad. public forest. (sec. After due registration and issuance of the certificate of title. 2 and 3 Art. the same shall be brought forthwith under the operation of the Decree 3. rivers. CA141 Public Land Act governs the procedure for the judicial confirmation of imperfect or incomplete titles. 161136. such as roads. XII of the Constitution) NON. 144057) With the exception of agricultural lands. EFFECT OF REGISTRATION Registration does not vest or give title to the land. the land must be classified as alienable and disposable. and are intended for some 2008 Page 300 of 325 III. conveyed to any person by the government. RA No. o It applies to lands of the public domain which have been declared open to disposition or concession and officially delimited and classified o Under section 103 of PD 1529 whenever public land is alienated.) Those intended for public use. (Republic vs. GR No. LAWS GOVERNING LAND REGISTRATION 1. 103. GR No. CA. PD No. 29. It must be classified as such AT THE TIME OF FILING THE APPLICATION FOR REGISTRATION. No one can plead ignorance of the registration Egao vs. all other natural resources shall not be alienated. roadsteads. It expressly converts ancestral lands into public agricultural lands. such land shall be deemed to be registered land (sec.REGISTRABLE LANDS 1. ORIGINAL REGISTRATION PROCEEDINGS Steps in Original Registration Proceedings 1) Determine if the land is registrable 2) Determine if you are qualified to apply 3) Survey the land 4) File the application (survey attached) for land registration with the appropriate court 5) Court sets initial hearing 6) Publication of the initial hearing 7) File an opposition to the application 8) Hearing 9) Judgment 10)Issuance of decree 1. ports and bridges constructed by the State. All persons must take notice. torrents. shores. A certificate of title cannot be used to protect a usurper from the true owner or as a shield for the commission of fraud (Vagalidad vs. once registered. banks. without being for public use.

PD 1529)  If the applicant is a non-resident of the Philippines. XII of the Constitution) Exceptions: (a) Aliens by way of hereditary succession (b) Natural born citizens who have lost their citizenshiplimited to 5. 16. SURVEY The survey may be done by a public or private surveyor. 2) Those who have acquired ownership of private lands by prescription under the provision of existing laws. 20. CC) 2. PD 239 withdrew the authority of the Land Registration Authority to approve original survey plans.LAND TITLES AND DEEDS public service or for the development of the national wealth. (Sec. if known  if not known. the latter shall be substituted for the applicant. 1945. (Sec. it shall state WON the applicant claims any portion of the land within the limits of the way or road. PD 1529)  Persons must be natural-born Filipino citizens (sec. 3) Those who have acquired ownership of private lands or abandoned river beds by right of accession or accretion under the existing laws. exclusive and notorious (OCEN) possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12. it shall state the extent of the search made to find them. (sec. If co-owned. It shall contain:  description of the land  citizenship and civil status of the applicant o o if married. WHO MAY APPLY? (OCEN-PAAL) 1) Those who by themselves or through their predecessors-ininterest have been in open. 8179)  As for private corporations. 4) Those who have acquired ownership of land in any other manner provided for by law. and shall agree that service of nay legal process (Sec. or earlier. he shall file an instrument appointing a resident agent in the Phils. continuous. when and how If sold under pacto de retro. 7 Article XII of the 1987 Constitution) 3. 2 Art. APPLICATION The application for land registration shall be:  in writing and  signed and sworn to by the applicant or the person duly authorized in his behalf If there is more than one applicant. When done by a private surveyor it has to be approved by the Land Management Bureau. PD 1529)  If the application describes the land as bounded by a public or private way or road. (Art. jointly. the name of the wife or husband if the marriage has been legally dissolved. the vendor a retro may file an application for the original registration of the land BUT should the period for redemption expire during the registration proceedings and ownership consolidated in the vendee a retro. unless prohibited by the instrument creating the trust. file the application CIVIL LAW 25. 14. white or 2008 Page 301 of 325 100% UP LAW UP BAROPS .000 hectares for 25 years renewable for not more than  full names and addresses of all occupants and those of the adjoining owners.000 sqm for urban land and 3 hectares for rural land (RA No. 4. 15. 7042 as amended by RA No. they may not hold such alienable lands of the public domain except by lease of 1. PD 1529) It must be accompanied by the original tracing cloth plan. A trustee may apply for original registration. and whether the applicant desires to have the line of way or road determined (Sec. 3 Article XII of the 1987 Constitution) Private lands may be owned for as long as the corporation is at least 60% Filipino. 420. the application shall be signed and sworn to by and in behalf of each. (Sec.

25. (as appropriate) if the land borders on a river. and to the Mayor of the municipality or city.  the Secretary of Public Highways. or on an arm of the sea where a river or harbor line has been established.LAND TITLES AND DEEDS blue copes thereof. A person claiming ownership of real property must clearly identify the land claimed by him. or if i