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

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

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

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

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

even if not serious or incurable. whether or not she was pregnant at the time of the marriage. 45 v. 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. 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. intimidation. 6. b. It argued that since Delizo was “naturally plump.” Aquino could hardly be expected to know. 47) 1. 2. The consent of either party was obtained through force. 47) 1. Ochoterena AM No. The consent of either party was obtained through fraud (different from mistake in identity): a. habitual alcoholism or homosexuality/lesbianism. through concealment of drug addiction. or undue influence. Annulment not granted. Any time before the death of insane party Ratification (Art. During lucid interval or after regaining sanity. FC) 4. Either party is physically unable to consummate the marriage (impotence. 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 .* d. intimida tion. through concealment of a sexuallytransmitted disease. Corpuz v. Aquino v Delizo 109 Phil. through non-disclosure of a previous conviction of a crime involving moral turpitude. RTJ-04-1861 (2004) In a legal separation or annulment case. 21 The Supreme Court granted annulment because the wife concealed the fact that she was 4 months pregnant during the time of the marriage. through concealment of the wife of the fact that she was pregnant by another man. Parent or guardian Insanity 1. this is different from sterility). 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. 45) Free cohabitation after attaining age of 21. 45) Lack of parental consent Who can file (Art. 46 Art. 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. Legal guardian of insane party 3. and before death Five years after discovery of fraud Free cohabitation of insane party after coming to reason Force. Underage party Prescription (Art. 5. 45 STD Ground annulment Art. 5 years after attaining 21. 2. Sane spouse with no knowledge of the other’s insanity 2. (Art. Ground (Art. a prior collusion investigation by the prosecuting attorney is a condition sine qua non for 100% UP LAW UP 2.* *STD: Art.PERSONS & FAMILY RELATIONS 3. even if not concealed. c. by mere looking. Either party has a serious and incurable sexually-transmissible disease. Before child reaches 21.46. 1.

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

the Regional Trial Courts have jurisdiction over such cases. G. Collusion between parties to obtain decree of legal separation 6. it is only a ground for legal separation.R. 8. Consent by aggrieved party to the commission of the offense 3.1) C. B. An action for legal separation is purely personal between the spouses. Drug addiction or habitual alcoholism of respondent. Lapuz v. CIVIL LAW Contracting by respondent of a subsequent bigamous marriage. When it occurred only after the marriage. b. 10. Abandonment of petitioner by respondent without justifiable cause for more than one year. Lesbianism or homosexuality of respondent. 55. FC) 1. a. WHEN TO FILE/TRY ACTIONS Prescription: Action prescribes in five years occurrence of cause (Art. 1. can be a ground for annulment of marriage. 56. Dela Cruz. Death of either spouse dissolves the marriage. Condonation by aggrieved party 2. to engage in prostitution or connivance in such corruption or inducement. Reconciliation of parties during pendency of action (Art. whether in the Philippines of abroad. or a child of the petitioner. FC) legal separation Effect of death of parties Can no longer be impugned after death of parties E. 4. FC) 2008 6. Mutual guilt in ground for legal separation 5. the shari'a courts are not vested with original and exclusive jurisdiction when it comes to marriages celebrated under both civil and Muslim laws. Final judgment sentencing respondent to imprisonment of more than 6 years. 9. LEGAL SEPARATION A. v. even if pardoned (executive pardon. Connivance between parties in the commission of the offense 4. 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. Hence. as opposed to proof beyond reasonable doubt required in concubinage. GROUNDS (VAPIDHIBLA) (Art. 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. whether concealed or not. Attempt of respondent to corrupt or induce petitioner.PERSONS & FAMILY RELATIONS Void Marriage How to impugn May be attacked DIRECTLY or COLLATERALLY . No. and concealed from petitioner. Prescription of action for legal separation (5 years from occurrence of the cause of action) 7. 3. a. Attempt on the life of petitioner by respondent. 66 par. When it existed from the time of celebration. because legal separation only requires a preponderance of evidence. Gandioco v Peñaranda 155 SCRA 725 (1989) In sexual infidelity as a ground for legal separation. not pardon from offended party). 57. VI. a common child. Physical violence or moral pressure to compel petitioner to change religious or political affiliation. Ortiz 291 SCRA 584 (1998) PD No. Dela Cruz 22 SCRA 333 Abandonment is not mere physical abandonment but also financial and moral desertion. or child of petitioner. Same as rules on drug addiction 2. L-30977. 5. Consequently. Repeated physical violence or grossly abusive conduct directed against petitioner. JURISDICTION Tamano v. 1972) 8. There must be an intention never to return. Eufemio 43 SCRA 177 The action of the plaintiff in filing for legal separation does not survive after her death. DEFENSES Grounds for denying (4CMRPD) (Art. there is no need for prior conviction for concubinage. a. Death of either party during pendency of action (Lapuz-Sy v Eufemio. Sexual infidelity or perversion. from 100% UP LAW UP BAROPS Page 14 of 325 . a common child. There is no need for criminal conviction.

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

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

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

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

Either by both spouses or one of them. Debts and Obligations Contracted During Marriage . 134 to 138 Rules on De Facto Separation: (ART.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 . CHARGES UPON THE ACP (Art. FC) 3. Properties acquired before the marriage. (Art. or Self-Improvement Course of Spouses 7. not those that do not benefit the family. it is presumed that she agreed with the husband’s decision. Moderate donations to charity due to family rejoicing or distress.Includes both major and minor repairs 5. unless it be proven that they are excluded. Presumption: All properties acquired during the marriage form part of the ACP. 94. applicable rule is (9). Expenses of Litigation between Spouses 4. Donation of property: Donation of one spouse without the consent of the other is not allowed (Art. (Art. FC): De facto separation does not affect the ACP. DISSOLUTION OF ACP ACP terminates upon: (Art.ACP liable only to the extent that the debt benefited the family. FC) Except: When the other spouse is incapacitated. the will should refer only to his/her own share in the community property. or unable to participate in the administration (e. Ante-nuptial Debts that Benefited the Family . 2 taxes. donation) 1. 2. Donations by Both Spouses to Common Legitimate Children 9. Moderate gifts by each spouse to the other due to family rejoicing. Vocational. Spouse who leaves the conjugal home without just cause shall not be entitled 2008 Page 19 of 325 BAROPS . Expenses for professional. 8. FC) 1. with the consent of the other. Liens.PERSONS & FAMILY RELATIONS 3. Support . 98. 100. FC) Except: 1. However. 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. 93.Common children . FC): (4 debts. 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. ADMINISTRATION. Otherwise. (Art. through a will. 50 to 52 4. Annulment or judicial declaration of nullity – follow rules in Arts. support. 97. 63 and 64 3.Legitimate children of previous marriage 2. the wife has five years from the date of the decision to go to court for recourse. 3. 99. If they disagree the husband’s decision prevails. 96. . 6. Debts Contracted by one Spouse Without Consent of the other . - 10.Expenses limited to minor repairs. 4. Support of Illegitimate Children.Applies only to separate properties by either spouse being used by the family. EXCEPT that: 1. Legal Separation – follow rules in Arts. (note: What’s moderate depends on the socio-economic status of the family) 5. Judicial separation of property during marriage – follow rules in Arts. 103 2. Repairs on Community Property . Tax. OWNERSHIP AND DISPOSITION OF ACP Administration of property: Belongs to both spouses jointly. when abroad).If the ante-nuptial debt did not benefit the family. FC) However. for those with legitimate descendants with a former marriage (to protect rights of children by a former marriage).In (2) and (3). Taxes and Expenses for Mere preservation of Separate properties . creditors need not prove that the debts benefited the family. Disposition of property: Either spouse may. Ante-Nuptial Debts not under (7). .g. Death of either spouse – follow rules in Art. 2 expenses. dispose his/her interest in the community property.

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

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

A different proportion or division was agreed upon in the marriage settlements b. Disposition or encumbrance of conjugal property requires: A. the ownership of which has been vested by law in the conjugal partnership. No. used for the benefit of the family 7. All taxes and expenses for mere preservation made during the marriage upon the separate property of either spouse 6. 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. Ante-nuptial debts of either spouse insofar as they have redounded to the benefit of the family 8. or the profits. even due to fortuitous event. [NOTE: Dissolution of the conjugal property must be recorded in the registry of property in order to affect third persons dealing with registered property. Death of either spouse – follow rules in Art. Amounts advanced by the conjugal partnership in payment of personal debts and obligations of either spouse shall be credited to the conjugal partnership. Indemnify loss or deterioration of movables belonging to either spouse. Expenses of litigation between the spouses unless the suit is found to groundless If the conjugal partnership is insufficient to cover the foregoing liabilities. Debts and obligations of the conjugal partnership shall be paid out of the conjugal assets. 103 6. 3. 99 AND 126): 5. Support of the spouse. vocational. OR B. All taxes. which is prohibited. 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. the creditors cannot go against the conjugal partnership property of the husband in satisfying the obligation subject of the surety agreement. charges. Charges to ACP]: (3 debts. the spouses shall be solidarily liable for the unpaid balance with their separate properties. The consent or approval by both spouses. 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. Legal Separation – follow rules in Arts. All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the CPG. 121) [cf.R.] De Ansaldo v.PERSONS & FAMILY RELATIONS CHARGES UPON CPG (ART. Sheriff of Manila G. Prepare an inventory of all properties 2. 2 taxes. 128): 1. There has been a voluntary waiver or forfeiture of such share as provided in this Code. The net remainder of the conjugal partnership properties. 4. Hence. Expenses to enable either spouse to commence or complete a professional. their common children. 63 and 64 2008 Page 22 of 325 BAROPS . donation) 1. 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. Whatever remains of the exclusive properties of the spouses shall be delivered 6. support. and expenses upon conjugal property 5. liens. 2 expenses. Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have benefited 4. Judicial authority secured in court Mere awareness of a transaction is NOT consent Ayala Investment v. or by both spouses or by one of them with the consent of the other 3. and the legitimate children of either spouse 2. 5. 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. which shall be divided equally between husband and wife EXCEPTIONS: a. or other activity for selfimprovement 7. DISSOLUTION OF CPG (ART. 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.

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

When parental authority is judicially restored to the spouse previously deprived thereof.When the spouses who have separated in fact for at least one year. No voluntary separation of property may thereafter be granted. When one spouse becomes the guardian of the other. 142): 1. reconcile and resume common life.When the spouse who has left the conjugal home without a decree of legal separation resumes common life with the other. man and woman 2. 4.147 Remains exclusive provided there is proof Separately owned parties Art. adulterous relationship (e. under 38 (void Art. incestuous marriage) marriages  not Art. 3.35(1) under 18 years old) 4. man and woman 2.37 marriage 7. F. or any other just cause.PERSONS & FAMILY RELATIONS administration in the marriage settlements will not again abuse that power. If the other spouse is not qualified by reason of incompetence.g.38 4. there is a presumption of equal sharing Forfeiture 2008 If one party is validly married Page 24 of 325 100% UP LAW . When one spouse is sentenced to a penalty which carries with it civil interdiction. 5. authorizes the resumption of said administration.When after voluntary dissolution of the absolute community of property or conjugal partnership has been judicially decreed upon the joint petition of the spouses. they agree to the revival of the former property regime. When one spouse becomes a fugitive from justice or is in hiding as an accused in a criminal case. 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. 2. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE Art. olygamous 37 marriage (incestuo (Art.147 1.148 1. 4. conflict of interest. Void by reason marriages of public by reason of policy) public policy  not under bigamous Art. the court shall appoint a suitable person to be the administrator. 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.35(4)) us void 6. living together as husband and wife 3. living together as husband and wife 3. 7. When there is evidence of joint acquisition but none as to the extent of actual contribution. with capacity to marry (Art. bigamous/p UP BAROPS CIVIL LAW not Art. TRANSFER OF ADMINISTRATION TO THE OTHER SPOUSE WHEN (GACA) (ART. When one spouse is judicially declared an absentee. NOT capacitated to marry (Art.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. 6. concubinage ) 5.5 without any legal impedimen t)  at least 18 years old Art.

Nonpayment of taxes. the following are required: 1. THE FAMILY FAMILY – basic social institution which public policy cherishes and protects hence. 4. It must be owned by person constituting it 3. In case of default of or waiver by any or all of the common children or their descendan ts. 156): 1. such share belongs to the innocent party to another: . Earnest efforts towards a compromise have been made 2. full or half blood. In favor of their common children 2. IX.PERSONS & FAMILY RELATIONS parties is in good faith. d.159) 6. the share of the party in bad faith shall be forfeited: 1. Debts due to laborers. Such efforts have failed 100% UP LAW UP BAROPS 2008 Page 25 of 325 . Future support. In the absence of such descendan ts. no suit between members of the family shall prosper unless compromise between parties has failed. each vacant share shall belong to the respective surviving descendan ts 3. architects. e. b. 2. FAMILY HOME . Validity of marriage or a legal separation. f. Can only constitute one family home GENERAL RULE: The family home is exempt from: 1. RTC 309 SCRA 340 (1999) Whenever a stranger is a party in a case involving family members. Civil status of persons. Among brothers and sisters. It must be permanent 4. Future legitime Hontiveros v. Rule applies to valid and voidable and even to common-law marriages under Arts. Any ground for legal separation. Jurisdiction of courts. Debts incurred prior to the constitution of the family home. Between parents and children 3. 3. builders. Among other ascendants and descendants 4.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. as such inclusion of a stranger takes the case out of the ambit of FC 151. Attachment Exceptions in the exemption of the family home from execution (Art. It is deemed constituted from time of actual occupation as a family residence 2. 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. c. Debts secured by mortgages on the premises before or after such constitution. 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. Forced sale 3. FAMILY RELATIONS INCLUDE: 1.147 and 148 5. Between husband and wife 2.dwelling place of a person and his family Guidelines: 1. 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. General Rule: For a suit between members of the same family to prosper. Execution 2. the requisite showing of earnest efforts to compromise is no longer mandatory.] Exceptions to the general rule (VJLAFF): a. materialmen and others who have rendered service or furnished material for the construction of the building. mechanics.

The heirs cannot partition the home unless the court finds compelling reasons therefor.PERSONS & FAMILY RELATIONS Beneficiaries of the family home (Art. Legitimated 3. He must be a judgment creditor. donation. 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. PATERNITY AND FILIATION PATERNITY . First. Illegitimate (Arts. Legitimate proper 2. Adopted 2 TYPES OF ILLEGITIMATE CHILDREN: 1. Children of parents qualified to marry each other A. Legitimate (Art. Conceived or born of a subsequent marriage under Art. the Court will decide. 8043 (“Intercountry Adoption Act”) 3 TYPES OF LEGITIMATE CHILDREN: 1. descendants. 167-172) 2. the proceeds shall be applied as follows: a.A. No. 175.the status of a person with respect to his or her parents. shall be delivered X. majority of the beneficiaries of legal age [NOTE: If there is a conflict. if any. His claim is not among those excepted under Article155. Conceived or born before judgment of annulment or absolute nullity under Art. who are living in the family home and who depend on the head of the family for support Requisites to be a beneficiary: 1. 3. brothers and sisters (legitimate/illegitimate). assignment.165. or an unmarried person who is the head of the family 2. or as long as there is a minor beneficiary. 176) c. TYPES OF FILIATION: 1. Parents (may include parent-in-laws). 53 (failure to record the judgment. The excess. alienation. Children of parents disqualified to marry each other at conception and marriage. or encumbrance of the family home: 1. Legitimated (Arts. 2. CIVIL LAW 4. By Adoption (R. conceived and born outside of wedlock of parents without impediment at 2008 Page 26 of 325 100% UP LAW UP BAROPS .] In case of death (ART. 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. 159): . Conceived as a result of artificial insemination 2. If the family home is sold for more than the value allowed. and delivery of children’s presumptive legitime) 5. Legitimated. Of mothers who may have declared against their legitimacy or was sentenced as an adulteress 6. Husband and wife. Then the judgment in favor of the creditor will be paid. 36 (psychological incapacity) becomes final & executory 4.A. Natural a. his/her spouse. Requisites for creditor to avail of the right under article 160: 1.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. and 3.the relationship or status of a person with respect to his or her child (paternity includes maternity). partition and distribution of properties. . 2. They are dependent for legal support on the head of the family Requirements for the sale. 2. The creditor must file a motion in the court proceeding where he obtained a favorable for a writ of execution against the family home. plus all the costs of execution c. 8552 (“Domestic Adoption Act”) and R. They live in the family home 3. 164) b. Legally adopted 7. 2. the written consent of the person constituting it. The relationship is within those enumerated 2. FILIATION . the obligation enumerated in Article 155 must be paid b. Born of a voidable marriage before decree of annulment 3. No. and 3. If the creditor proves that the actual value exceeds the maximum amount the court will order its sale in execution. 154): 1. 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. ascendants.

or both the husband and a donor AND 3. Human Leukocyte Antigen Test (HLA) – can prove identity between child and father with a probability exceeding 98%. intimidation. 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. STA. MARIA: The fact that the husband has undergone vasectomy is not enough proof to rebut the presumption of legitimacy (Cocharan v. Within 1 year – from knowledge of the birth or its recording in the civil register. and the latter cannot choose to be the child of his mother’s alleged paramour. It can only be impugned in a direct action. not on another woman AND 2. 3. 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. or of a donor. or undue influence Who can impugn the legitimacy of a child For children by artificial insemination to be considered legitimate: 1. 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. 2. Blood grouping tests – can determine non-paternity but not paternity (ex. except in the case of children conceived through artificial insemination a. c. 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. does not impugn the legitimacy of the child. Biological or other scientific grounds that the child could not have been that of the husband. The written instrument is recorded in civil registry together with the birth certificate of the child IMPUGNING LEGITIMACY: Liyao v. Cocharan). The artificial insemination is made on the wife. If the husband. violence. can show the impossibility of the alleged father siring his supposed child. Within 3 years – from knowledge of the birth or its recording in the civil register. together with other pieces of evidence. Physical incapacity of the husband to have sexual intercourse with his wife b. if the impugner resides in the city or municipality where the birth took place or was recorded. Serious illness of the husband which absolutely prevented intercourse 2. or c. AND 4. 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. Within 2 years – from knowledge of the birth or its recording in the civil register. The artificial insemination on the wife is done with the sperm of the husband.] 3. then the status of the child is fixed. Vasectomy [NOTE: SEMPIO-DIY: A double vasectomy.PERSONS & FAMILY RELATIONS the time of conception subsequently married and who CIVIL LAW d. b. If the husband dies before the expiration of period for filing the action b. The fact that the husband and wife were living separately in such a way that sexual intercourse was not possible. fraud. when the was obtained through mistake. Grounds to impugn the legitimacy of the child: 1. if the impugner resides abroad NOTE: Legitimacy cannot be collaterally attacked. 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 . if the impugner resides in the Philippines other than in the city or municipality where the birth took place or was recorded. A-B-O test). Written authorization or ratification of either parent of children conceived through artificial insemination. The child himself cannot choose his own filiation.

However. The mother must have married again within 300 days from the termination of her first marriage 2. whichever is earlier.CA G.PERSONS & FAMILY RELATIONS If the birth of the child has been concealed or was unknown to the husband or his heirs. Or. the claim of filiation must be made by the putative father himself and the writing must be the writing of the putative father. PROOF OF FILIATION 1. 169) [Reason: 300 days is the longest period of gestation. Jison v.  There is no presumptive rule on the status of a child born after 300 days following the termination of the marriage. The child can bring the action during his lifetime 2. While a baptismal certificate may be considered a public document. From the discovery or knowledge of the fact of registration of the birth. Standing alone. or a marriage contract where the putative father gave consent. a written consent to a father’s operation. Herrera v.R. the following requisites must concur: 1. Alba G. 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. a student permanent record. his heirs can file the action for him within 5 years form the child’s death 4. the action will survive and his heirs will substitute for him BAROPS 2008 Page 28 of 325 . Thus. but does not require any particular length of time. ACTION TO CLAIM LEGITIMACY 1. If the child dies after reaching majority without filing an action. The open and continuous possession of the status of a legitimate or illegitimate child. No. 148220 (2005) To be effective. A notarial agreement to support a child whose filiation is admitted by the putative father was considered acceptable evidence. 2. If the child dies after commencing the action. (Art. cannot be taken as authentic writing. 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 record of birth appearing in the civil register or a final judgment. “Continuous” means uninterrupted and consistent. the above periods shall be counted: 1. 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. The local civil registrar has no authority to record the paternity of an illegitimate child on the information of a third person.R No. neither a certificate of baptism nor family pictures are sufficient to establish filiation. his heirs can longer file the action after death 3. 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. The mother must have married again within 300 days from the termination of the marriage 2. or 2. in their Absence: 1. by continuous and clear manifestations of parental affection and care. the following requisites must concur: 1. The child was born within the same 300 days after the termination of the former marriage of its mother 3. 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. From the discovery or knowledge of the birth of the child 2. Cabatania v. The child was born within the same 300 days after the termination of its mother's first marriage 3. IN CASE OF TWO MARRIAGES OF THE MOTHER:  For the child to be considered the child of the 1st husband. If the child dies during minority in the state of insanity. proved filiation. 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. Any other means allowed by the Rules of Court and special laws. CA 286 SCRA 495 (1998) To prove open and continuous possession of the status of an illegitimate child. together with the certificate of live birth.] B. 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. 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.

[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. (Art. 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. The parents. ILLEGITIMATE FILIATION GENERAL RULE: Those who are conceived and born outside a valid marriage are illegitimate. and 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 . Bigamous relationships 4. within five years from the time of the cause of action accrues. Incestuous relationships 3. There is a valid marriage subsequent to the child’s birth. Persons affected Procedure Who applies Effect Only natural children Extrajudicial acts of parents Only by parents both D. (Art. his guardian can bring the action in his behalf C. WHO CAN BE LEGITIMATED: 1. were not disqualified by any impediment to marry each other 3. Void marriages by reasons of public policy under Art. Adulterous relationships 2. (Art. 179)  RETROACTIVITY: The effects of legitimation shall retroact from the time of the child’s birth. 180)  DEATH OF CHILD: When the child dies before the celebration of the marriage. 2. their legitimation shall benefit their descendants. the parents were not disqualified by any impediment to marry each other. REQUISITES FOR LEGITIMATION: 1.PERSONS & FAMILY RELATIONS 5. their ascendants. If the child is a minor. 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. and retroacts to the time of the child’s birth.A. LEGITIMATED CHILDREN Legitimation takes place by the subsequent marriage of the child’s parents. 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. The child was conceived and born outside of wedlock. It confers on the child the rights of legitimate children. at the time of child’s conception. Child who is conceived and born outside of wedlock. 181)  IMPUGNING: Only those who are prejudiced by their rights. 182) To receive support from their parents. 9255)] To receive support in conformity with the Family Code CIVIL LAW [i. 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. 38  RIGHTS: Legitimated children shall enjoy the same rights as legitimate children (Art. At the time of conception.e. and in proper cases. incapacitated or insane. their brothers and sisters.

No. said person has been consistently considered and treated by the adopter(s) as his/her child since minority 5. and prospective adoptee 2.PERSONS & FAMILY RELATIONS R. Of good moral character 4. Filipino Citizens 1. business. prior to the adoption. Aliens 1. 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. if spouses are legally separated from each other PRE-ADOPTION SERVICES: The DSWD shall provide for the following services: 1. It also applies in case the petitioner dies before the issuance of the decree of adoption to protect the interest of the adoptee. Possession of the same as the qualifications for Filipinos 2.A 8552: Domestic Adoption Act of 1998 WHO MAY ADOPT: A. A person of legal age if. provided that no proceedings shall be initiated within 6 months from the time of death of said parent(s) CONSENT NECESSARY FOR ADOPTION: 1. His/her government allows the adoptee to enter his/her country as his/her adoptee 6. 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. 85044 (1992) Where the petition for adoption was granted after the child had shot and killed a girl. illegitimate children living with them 4. His/her country has diplomatic relations with the Philippines 3. The legitimate child of one spouse by the other spouse 3. Emotionally and psychologically capable of caring for children 6. Counseling services for the biological parents. Exhaust all efforts to locate the biological parents. An illegitimate child by a qualified adopter to improve the child’s status to that of legitimacy 4. except when adopter is biological parent of the adoptee or is the spouse of the adoptee’s parent 7. if one spouse seeks to adopt the legitimate child of the other b. 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. if one of the spouse seeks to adopt his/her illegitimate child provided that other spouse has signified his/her consent CIVIL LAW c. A child whose previous adoption has been rescinded 6. if unknown WHO MAY BE ADOPTED: 1. The prospective adoptee if 10 years or older 2. if any. In a position to support and care for his/her children in keeping with the means of the family B. Has submitted all the necessary clearances and such certifications as may be required C. 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 been living continuously for 3 years (provided that absences not exceeding 60 days per 1 year for professional. 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 . Any person below 18 years old who has been administratively or judicially declared available for adoption 2. In possession of full civil capacity and legal rights 3. Of legal age 2. A child whose biological or adoptive parent(s) has died. The prospective adoptee’s biological parents or legal guardian 3. CA G. 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.] Tamargo v.R. At least sixteen (16) years older than adoptee. Has not been convicted of any crime involving moral turpitude 5. The prospective adopters’ legitimate and adopted children who are ten years or over and. prospective parents.

and has undergone the appropriate counseling from an accredited counselor in his/her country 4.N. shall not be subject to rescission by the adopter(s). 3. sexual assault or violence 4. but only as of the date of judgment of judicial rescission. 2. If married. if known. The reciprocal rights and obligations of the adopters and the adoptee to each other shall be extinguished. The parental authority of the adoptee's biological parents. The court shall order the Civil Registrar to cancel the amended certificate of birth of the adoptee and restore his/her original birth certificate. WHO MAY BE ADOPTED: Only a legally-free child may be the subject of inter-country adoption. EFFECTS OF ADOPTION: 1. OR the legal custody of the DSWD shall be restored if the adoptee is still a minor or incapacitated. Legitimacy: The adoptee shall be considered legitimate son/daughter of the adopter for all intents and purposes. 3. 919 of the NCC. except if the biological parent is the spouse of the adopter. No child shall be matched to a foreign adoptive family unless it is satisfactorily shown that the child cannot be adopted locally. being in the best interest of the child. R. abandonment and failure to comply with parental obligations However. Is eligible to adopt under his/her national law 6. Succession rights shall revert to its status prior to adoption. 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. 2. his/her spouse must jointly file for the adoption 3. A legally-free child is one who has been voluntarily or involuntarily committed to the DSWD of the Philippines. If adoptee and his/her biological parents had left a will. Has the capacity to act and assume all rights and responsibilities of parental authority under his national laws. however. Is least 27 years of age and at least 16 years older than the child to be adopted. 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. Adopted may request for rescission based on the ff grounds: 1. EFFECTS OF RESCISSION: 1. the law on testamentary succession shall govern. Convention on the 2008 Page 31 of 325 . in accordance with the Child and Youth Welfare Code. 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. the U. Has not been convicted of a crime involving moral turpitude 5. and the decree of adoption is issued outside the Philippines. including the child to be adopted 7. Succession: Adopter and adoptee shall have reciprocal rights of succession without distinction from legitimate filiation. Agrees to uphold the basic rights of the child as embodied under Philippine laws. Parental Authority: All legal ties between biological parents and adoptee are severed. in legal and intestate succession. 100% UP LAW UP BAROPS CIVIL LAW 4. 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. Vested rights acquired prior to judicial rescission shall be respected.PERSONS & FAMILY RELATIONS essential to permit the accrual of some benefit or advantage in favor of the adopted child. In the instant case. and the same shall be vested on the adopter. RESCISSION OF ADOPTION: Adoption. the adopter(s) may disinherit the adopted based on causes ias enumerated in Art. repeated physical and verbal maltreatment 2. attempt on life of adoptee 3. the supervised trial custody is undertaken. Is in a position to provide the proper care and support and to give the necessary moral values and example to all his children.A.

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

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

pre-nuptial. PD603]  strive to live an upright and virtuous life  love. donation propter nuptias. Spouse b. and love and understanding  Defend them against unlawful aggression  Answer for damages caused by their fault or negligence. 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. 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. The funeral shall be in keeping with the social position of the deceased 3. obey. Ascendants in nearest degree d. 199 of FC shall decide 4. and intellectual development [ART.4. 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 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. the persons in Art. The funeral shall be in accordance with the expressed wishes of the deceased a. PD603]  to be born well  right to a wholesome family life  right to a well-rounded development  right to a balanced diet. his religious beliefs or affiliation shall determine b. shelter. moral. and for civil liability for crimes committed by them  Give their lawful inheritance RIGHTS OF CHILDREN: [ART.3. in case of doubt. proper medical attention. 199 of FC: a. 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. adequate clothing.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. in the absence of expressed wishes. instruct. 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. Descendants in nearest degree c. 356.357. adoption. Any person who disrespects the dead or allows the same shall be liable for damages *** BAROPS 2008 Page 34 of 325 . Brothers and sisters 2. and provide them with moral and spiritual guidance. FUNERALS GENERAL GUIDELINES: 1. Duty and right to make arrangement in funerals in accordance with Art.

XVIII. XIX. VII. Classification Ownership Accession Quieting of Title Ruinous Buildings and Tress in Danger of Falling Co-Ownership Condominium Law (Act. XIII. X. No. IX.PROPERTY CIVIL LAW Property TABLE OF CONTENTS I. II. XV. XVII. VI. IV. III. XII. XVI. VIII. V. XI. XIV. 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 .

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

(Makati Leasing and Finance Corp v. patrimonial property of state. from a) Public Dominion 420 i. (6) Produces only personal actions against definite debtor. Lease 4. machinery is personal property and mortgage is not null and void. cities. municipalities -exist for attaining economic ends of state -property of public dominion when no longer intended for public use/service – declared patrimonial ii. cities. 1981) Where chattel mortgage is constituted on machinery permanently attached to the ground. Fountains. cannot be burdened by voluntary easement * Art. Public Waters. Squares. Possession 3. Streets. not subject to attachment & execution iv. provinces. Easement 7. Wearever Textile Mills 1983) mode and title. It gives direct and immediate juridical power over a thing susceptible of being exercised against a determinate person and the whole world. Public Works for public service paid for by the local government All other property possessed by any of them is patrimonial. 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. (b) Right of obligation or Personal (jus ad rem)—rights belonging to one person to demand of another as a definite passive subject. provinces. Antichresis 9. 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. b) Private Ownership – 421 i. Usufruct 5. (3) Real right affects the thing directly. Ownership 2. as long as no interest of third parties may be prejudiced thereby. (5) Not extinguished by the loss or destruction of the thing. cannot be acquired through prescription iii. (Leung Yee v.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. (5) Extinguished by the loss or destruction of the thing. (2) Object is an intangible thing. (4) Creation of the juridical title is by title 100% UP LAW UP BAROPS 2008 Page 37 of 325 . 424. Preemption Real Rights (1) One definite active subject and the rest of the world as passive (2) Object is a corporeal thing. (3) Personal affects the thing directly through the prestation of the debtor.PROPERTY property. Pledge 8. (6) Gives rise to real actions against 3rd persons CIVIL LAW alone. Promenades. regardless of who owns the land. and municipalities. Strong Machinery. Mortgage 6. to do. outside the commerce of men ii. the fulfillment of a prestation to give. or not to do. Redemption 10. intended for public service of state. cities & municipalities Characteristics: i. Real rights arises (OPLUMEPARP) 1. in the provinces.  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. intended for public use ii. Property for public use. consist of: (RSS FW P3) Roads.

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

The legal representatives/ assigns of any such landlord. 2. Ownership. to: 1) its rightful and legal owner. This action is distinct and different from an action for recovery of title or ownership. When. what is sought is the transfer of the property which has been wrongfully/ erroneously registered in another person’s name. threat. vendor. although any of the special circumstances is present. this is the only action that can be filed. NOT civil possession or possession de jure. A judgment rendered here is conclusive only as to the question of possession. If the issue of possession has already been decided. 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. vendor.PROPERTY WHEN APPLICABLE 1. 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. vendee. It is not necessary to wait until the expiration of 1 year before commencement of action. Legal owner or one with the better right over the property. express or implied (unlawful detainer). strategy. A landlord. When dispossession is by any means other than those mentioned in SEC 1 RULE 70 RoC 2. but not as to the question of ownership. 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. An owner who is dispossessed by means other than those mentioned in RULE 70 RoC. In an action for reconveyance. or 2) to one with the better right 100% UP LAW BAROPS 2008 Page 39 of 325 . recovery of the dominion over the property as owner. intimidation.e. or when the possession of land is due to tolerance of the owner. 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. barred. which arises from the ownership or is one of the attributes of ownership). otherwise. A person deprived of the possession of any land or building by force. UP CIVIL LAW ISSUE WHO MAY INSTITUTE Possession de jure of realty independent of the title and restitution of possession. or 3. or stealth (forcible entry under RULE 70) .

issue of ownership can be passed upon by the court only by determining the issue of possession de facto. 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. the remedy should be either accion publiciana or accion reinvindicatoria. 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 . An action for ejectment is merely a quieting process. Prior possession de facto 2. Imprescriptible— when plaintiff is in possession of property 4. WHERE FILED RTC Prescriptive Periods: 1. If plaintiff has in his favor priority in time. 4 years—if based on fraud from date of issuance of certificate of title over property 2. 10 years—if based on implied or constructive trust 3. In an ejectment suit. Undue deprivation thereof When the complaint fails to aver acts constitutive of forcible entry/unlawful detainer (how he was dispossessed).PROPERTY vendee or other person 1. 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.

Jus Disponendi—the right to dispose or encumber. 427. 5. and even destroy the thing owned. safety or security 11. 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. 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. Right to accession 14. 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. Ownership may be exercised over things or rights. Ownership is subject imposed by: 1. RIGHTS of others to restrictions CIVIL LAW owners of such tenements. 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 . by the proper action for restitution. 431.  Discovery by chance When there is no purpose or intent to look for the treasure. taxation) Attributes of Ownership (UFADVPA) 1. jus accessionis. 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. 3. cannot make use thereof in such manner as to injure the rights of a third person. 9. with the fruits. 12. Jus possidendi. transform. Jus Utendi (right to use)—right to enjoy by receiving the thing that it produces. immovable – a) forcible entry b) unlawful detainer c) accion publiciana d) accion reinvindicatoria e) Writ of Possession -. he would have no legal interests. 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.PROPERTY II. 7.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. 13. Jus Fruendi – right to receive fruits 6. movable – replevin (return of a movable) 2.right to possess 2. OWNERSHIP Art.Art. LAW and 2. eminent domain. and indemnification for damages. Jus abutendi—right to enjoy by consuming the thing by its use 4. Beyond these limits. do not appear or answer. the finder must not be trespasser be entitled to a share. accessions. Meneses) 10. if already lost – resort to judicial process -May be exercised by 3rd person – negotiorum gestio .right to the accessories Other specific rights: (HARJEES) 8. 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. 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. Right to recovery or possession/ ownership Actions for possession: 1. having been served with process. (Lunod v.

453). or those produced by lands of any kinds through cultivation or labor (Art. falling of trees. unless otherwise proved (Art. (Bachrach vs. whether in cash or stock. General Principles of Accession (1) Accessory follows the principal (2) No unjust enrichment (Art.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. (5) Bad faith involves liability for damages (6) Bad faith of one party neutralizes bad faith of the other (Art. 442) (c) Civil fruits. 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. 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. The ownership of property gives the right by accession to everything which is produced thereby. 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. rather than the owner of the shares of stock.  Different from concept of selfhelp. the price of leases of and other property and the amount of perpetual or life annuities or other similar income (Art. action is plenary action for recovery of possession (De La Paz vs. or rents of buildings. (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. (7) Ownership of fruits belong to the principal thing. either naturally or artificially. and planting are presumed made by owner & at his expense.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. 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. or which is incorporated or attached thereto. 1995) 100% UP LAW UP BAROPS 2008 Page 42 of 325 . Panis. Dividend is declared only out of the profits of a corporation and not out of its capital. 440. Seifert). and the young and other products of animals (Art. is income or fruit and consequently should go to the usufructuary. for damagegs caused by exposion of machinery. or spontaneous products of the soil. ACCESSION Art. 443) (3) All works. 442) (b) Industrial fruits. excessive smoke. sowing. 442)  A dividend. 1958) Can file action for recovery of possession even if one has never possessed the land.

445-456) (a. 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 . Right to remove materials if he can do so w/o injury to work constructed if owner has not paid 3.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. PLANTING. Talisay-Silay) Right of owner of materials (OM) CIVIL LAW 1. or (iii) Sowing (Arts. Right to damages and demolition even if with injury to work if owner of land is in bad faith BUILDING.2) Commixtion or confusion (b. 446 establishes 2 disputable presumptions regarding BPS: (a) The works etc. 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. (Bachrach vs.3) Specification Accession Industrial  Art. Right to be indemnified or paid of value of property by owner of land 2. either naturally or artificially. (ii) Planting. metals (iii) tejido or weaving (iv)pintura or painting (v) escritura or writing (b.1) Adjunction or conjunction (i) inclusio or engraftment (ii) soldadura or attachment (a) ferruminatio – objects are of the same metal (b) plumbatura – objects are diff. It is not income delivered from the property but a compensation granted for the risk assumed by the owner of the property. (a) With regard to property (a.1) Accession (BPS) immovable industrial (i) Building.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.

Appropriate without indemnity 449 2. no reimbursement BF: (both considered good faith) a) BPS / Owner of Materials + Land-owner Land-owner GF: options 1. Compel BP to pay price of land (no conditions) and Sower. Appropriate works. the proper rent 450 Whichever option chosen. 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. if not. sowing or planting + pay indemnity 2. Oblige BP to pay price of land (or pay rent if land value > building and trees) or Sower to pay rent Rent – fixed by agreement of parties. Compel removal without indemnity at BPS’s expense 450 3. by court 448 GF: options 1. 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. 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. plant or sow BPS / Owner of Materials GF GF: options (447 by analogy – 454) 1. sowing or planting even with damage 2. Remove works. entitled to receive damages 451 BF: 447 by analogy 454 Pay value of materials + damages BF: loses what is built. no reimbursement BF: (both considered good faith) GF: pay value of materials regardless of bf/gf of OM Another view: 449 by analogy. loses right to materials. 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 . planted or sown.

BPS solely liable LO appropriates and pays indemnity: OM can proceed against LO only after BPS refuses/cannot pay. 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. 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. in both cases + damages BPS forces LO payment of indemnity: OM can’t demand removal/return but OM can proceed against BPS and subsidiarily. the LO BF BF (GF) GF Similar to GF-GF-(GF)-GF LO appropriates and pays indemnity: OM can proceed against LO only after BPS refuses/cannot pay. LO can’t be prejudiced.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 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 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. 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. 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 .

Iriola) (2) Accession in Natural (i) Alluvium 457 – the accretion which lands adjoining the banks or rivers. And as good faith is presumed. the LO has the burden of proving bad faith on the part of the BPS. however. by the principle of accession.PROPERTY Cases: A forced co-ownership occurs when the BPS has acted in good faith. (Tecnogas Phil. (Ortiz vs Kayanan) A BPS in good faith does not lose his rights under Art. (Bernardo vs. creek or torrent segregates from an estate on its bank a known portion of land and transfers it to another estate Avulsion 1. though automatically owned by the riparian owner from the moment the soil deposit can be seen. He may. The spouses. Manufacturing Corp. is not automatically registered property. 448 merely because of the fact that some years after acquiring the property in good faith. v CA. Deposit of soil is sudden or abrupt 2. lake. 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. The detached portion can be identified Distinguished from Alluvium Alluvium 1. Agana) While a possessor in good faith may retain the property until he is reimbursed for necessary and useful expenses. 448. 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). 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. 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. (Sarmiento v. helearned about and aptly recognized the right of the LO to a portion of the land occupied by the building. lakes. An implied tenancy or possession in fact is created pending the payment of the corresponding indemnity. Owner of the land ihas the right of retention (to pay) because his right is older and because. all the fruits he receives from the moment his good faith ceases must be deferred or paid by him to the LO. (Grande vs CA) (ii) Avulsion 459– takes place whenever the current of a river. since it is subject to acquisition through prescription by 3rd persons. the LO could no longer be regarded as having impliedly assented or conformed to the improvements thereafter made by appellant on the premises. having opted to appropriate the improvement on the lot. The BPS has the right to retain the improvements until he is reimbursed. (Pleasantville Dev’t. have to reimburse the BPS of the cost of construction of the building (in accordance with Art 546). (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. The owner of the property from which a part was detached retains the ownership thereof (2 yrs) 3. vs CA) The BPS in good faith should not pay rentals to the LO spouses. 1996) After the BPS had refused to restore the land to the LO. He is entitled to such removal only when after choosing to sell his land. The soil cannot be identified 100% UP LAW UP BAROPS 2008 Page 46 of 325 . Corp. The supervening awareness does not prejudice its right to claim the status of a builder in good faith. (Felices v. the other party fails to pay for the same. he cannot refuse to exercise his right of choice and compel the builder to remove or demolish the improvement. Deposit of the soil belongs to the owner of the property where the same was deposited 3. Deposit of soil is gradual 2. he is entitled to the ownership of the accessory thing.

459 governs. (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. Test: A river is navigable if it is used or susceptible of being used. If a known portion of land with trees standing thereon is carried away by the current to another land. 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.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.3) on navigable or floatable waters. Right to old bed ipso facto in proportion to area lost 2. 464) or nonnavigable and non-floatable rivers (Art.2) it is divided longitudinally in halves.1) on the jurisdiction seas within Phil. 461) Requisites for the application of Art. 461: (a) There must be a change in the natural course of the waters of the river. that is. 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.2) on lakes. AND pays OA for its value in uncontroverted state. for trade and travel in the usual and ordinary modes. as a highway of commerce.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. 100% UP LAW UP BAROPS 2008 Page 47 of 325 . (iii) Change of river beds (a. 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. Art. 466) Ownership of new object formed by adjunction Owner of Principal  OP Owner of Accessory  OA (a) union in Good Faith OP acquires accessory. thereby forming a single object (Art. 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. and on navigable or floatable rivers (Art. 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. (1) Ownership of islands formed through alluvion (a) If formed: (a. and (a. 460 applies only to uprooted trees. in its ordinary condition. Art. Right of owner of land occupied by new river course 1. 465). the island belongs to the State (b) If formed in non-navigable and non-floatable rivers: (b. The change must be abrupt (b) or sudden.

the mixture of solids being called commixtion. which has for its purpose an adjudication that a claim of title or an interest in property. their respective rights shall be determined as though both acted in good faith. or has prescribed (4) Plaintiff must return benefits received from the defendant. OM shall appropriate work to himself Without paying maker OR 2. (3) Specification – that which takes place whenever a person imparts a new form to materials belonging to another person (Art. 466 should be applied in an equitable manner. 1. the principal is that: (a) To which the other (accessory) has seen united as an ornament or for its use or perfection (Art. Ownership of specification the new object in IV. demand indemnity for materials 100% UP LAW UP BAROPS 2008 Page 48 of 325 . QUIETING OF TITLE It is a remedy or form of proceeding originating in equity jurisprudence. lose the thing and 2. OA has right to choose -payment of value -separation (even if destroys principal) 2. 476) (2) Plaintiff has legal or equitable title to or interest in the subject/real property. Rights 1. is invalid. 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. OA indemnified (c) If OP or OA made the incorporation with the knowledge and without the objection of the other. Requisites (1) There is a cloud on title to real property or any interest to real property (Art. record. Person who made Transformation  PT Owner of Material  OM (a) If PT is in Good Faith. 472). 474). 467)INTENT (a) Of greater value. voidable or unenforceable. confusion (Art. appropriate thing transformed as his own 2. he shall 1. (d) if involves 3 things Art. 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. indemnify owner of material BUT If material is more precious than transformed thing OM may 1. if they are of an equal value (Art. claim. merits. encumbrance or proceeding must be valid and binding on its face but in truth and in fact invalid.PROPERTY -if OA incorporated in BF 1. appropriate new thing to himself and indemnify labor OR 2. The principal should be determined and distinguished from the others which would be considered the accessories. (3) Instrument. utility and volume of their respective things. while that of liquids. TEST to determine adjunction: principal in CIVIL LAW (b) If PT is in Bad Faith. demand indemnity for value of material & damages BUT If transformed thing is more valuable than material. If both in bad faith no cause of action against each other In order of application. so that the complainant and those claiming under him may be forever free from any danger of the hostile claim. adverse to that of complainant. 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. 468)-VOLUME (a) That of greater merits taking into consideration all the pertinent legal provision applicable as well as the comparative. if they are unequal values-VALUE (a) Of greater volume. indemnify OP for damages -if OP acted in BF 1. ineffective. contract upon which defendant relies has been extinguished or terminated.

doubt.PROPERTY CIVIL LAW Differences between action to quiet title. encumbrance hostile claim. architect or contractor 2. state may compel him to demolish or make necessary work to prevent if from falling 3. collapse – engineer. b) Is IMPRESCRIPTIBLE if the person claiming to be an owner is in actual possession of the property. involved or claim. RUINOUS BUILDINGS AND TREES IN DANGER OF FALLING Liability for damages: 1. if no action – done by government at expense of owner VI. 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. CO-OWNERSHIP Art. CA) What plaintiff imagined as clouds cast on his title were PR’s alleged acts of physical intrusion and not. action to remove a cloud. claim. 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. 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. CA)  It is not necessary that the vendee has an absolute title. release foundation for a future litigation over the property of an instrument. (Pingol v. the acts alleged may be considered grounds for an action for forcible entry but definitely not one for quieting of title. if not. which constitutes a claim in plaintiff’s title. question or shadow upon the owner’s title or interest in real property. no repair made – owner. 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. and which may be used to injure or to vex him in his enjoyment of his title. 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. 484. CA) V. (Olviga v. Clearly. Here. prescribes within period for filing accion publiciana. An equitable title is sufficient to clothe him with personality to bring an action to quiet title. the right to seek reconveyance in effect seeks to quiet title. 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. claims are more general in nature Declares his own title and also avers he source and nature of the defendant’s claim. record. There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. collapse resulting from total or partial damage. accion reivindicatoria. encumbrance or proceeding which constitutes or casts a cloud. (Titong v.  100% UP LAW UP BAROPS 2008 Page 49 of 325 . delivery.

Tenancy in common. an agreement to keep the ownership for more than 10 years is void. FC) (ii) Between man and woman not capacitated to marry each other (Art. In case there is a co-owner who is a minor. and preservation of the property owned in common. Fortuitous Event. 90. Profits of a coowner depend on his proportionate share. 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. 148. Differences between co-ownership and joint tenancy Co-ownership Tenancy in Common. not over specific portions of the property (5) mutual respect among co-owners in regard to the use. 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. CIVIL LAW common. As a rule. Joint Ownership Joint tenancy. FC) (b) Absolute community property (Art. A co-owner can freely dispose of his share without need to ask the consent of the other co-owners. (Art. minority as a defense against prescription is exclusive to him. 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. 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. (Art 147. profitsharing is invariable (Art. Occupancy. Notion of “all-for one. 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 . 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. Contract. 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.PROPERTY Characteristics of Co-ownership (PUSAM) (1) plurality of owners. an implied trust is created in favor of the others in proportion to each to interest of each. 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. onefor-all” Common Law/ Anglo-American origin Each joint owner. enjoyment. Ownership in Common. The defense of one joint owner can be used as a defense by all joint owners.

Boon Liat et al. 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. 492) .e.a lone co-owner cannot incur such expenses without the consent of the others and then ask reimbursement (resolution of majority as per Art. 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.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. v. Portions are presumed equal unless contrary is proved. 6(c) of RA 4726 – unless otherwise provided. extendable by a new agreement. common areas are held in common by the holders of the units in equal shares. NCC) (c) Associations and Societies.increase the income of the thing owned in common for the benefit of all the co-owners . he must give reasonable notice to the other co-owners Useful expenses . there shall be a right of accretion. unless contrary so provide. He will not be fully reimbursed if others can prove that i. repairs for (2)Right to make preservation  Necessary expenses . (b) Universal Partnership (i) Of all present properties (Art. one for each unit. 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 .. could have hired a contractor who would charge less  (3)Right to compel the other coowner to contribute  For: 1. NCC) (g) Hidden treasure – co-ownership between finder and owner (h) Easement of a party wall (i) Occupation – Harvesting and fishing (Punsalan et al.may be incurred upon the will of 1 co-owner. (2)Contract (a) Two or more persons agree to create a co-ownership—maximum of ten years (494.Effect of failure to notify coowners even if it was practicable to do so: does not deprive coowner of right to reimbursement. 1780. expenses for preservation 2. 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.) (j) Condominium law Sec. 2nd par). 472. (e) Donation  donation to several persons jointly. NCC) (ii) Of profits (Art. He is merely given the burden to prove the necessity of such repairs. 1778-1779. 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.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 . but if practicable. (f) Chance – commixtion in good faith (Art.

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. Boiser) The written notice of sale is mandatory for the tolling of the 30day redemption period. which can remove all doubts as to the fact of the sale. (Mariano v CA) By the very nature of the right of "legal redemption". Only then will the period of prescription being to run. 1998) Art. 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. within a specified period. express or implied. within the meaning of Art. alienating or mortgaging his ideal share in the property held in common. Both lands—that sought to be redeemed and the adjacent lot belonging to the person exercising the right of redemption—must be rural. not from any other person. The law does not prohibit a co-owner from selling.PROPERTY (4)Right to use the thing according to its intended purpose  may be altered by agreement. 1996) A third person. (Verdad v CA. Judge Concepcion)  Art 1621 presupposes that the land sought to be redeemed is rural. or the thing    100% UP LAW UP BAROPS 2008 Page 52 of 325 .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. 1620 of the Civil Code (on the right of legal redemption of a coowner) is anyone who is not a coowner. (Halili v. its perfection. 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. and its validity. CA. when partition would render the thing Unserviceable. 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. (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. It is the notification from the seller. (Cortes v.without injury or prejudice to interest of co-ownership. that the remaining co-owners have the right to redeem. 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. for in a contract of sale. provided: . the right cannot be invoked. 1623 requires that the written notification should come from the vendor or prospective vendor. (Francisco v. joins tenants or tenants in common. and . If one or both are urban. Redemption is not a mode of termination of relationship. There is no prescriptive period. Exceptions: (PUI SCAN) 1. notwithstanding actual knowledge of a co-owner. Gen rule: A co-owner can always ask for a partition. as earlier discussed. the shares which may have been sold to the third party (Reyes vs. effected by the setting apart of such interests so that they may enjoy and possess it in severalty. when partition is generally Prohibited by law 2. however.

 Either co-owner may demand the sale of the house and lot at any time and the other cannot object to such demand. Creditors of co-owners may intervene in the partition to attack the same if prejudicial (Art. obligation of warranty is proportionate to respective hereditary shares. (Carvajal v CA) Art 493 of the NCC allows the alienation of the co-owner of his part in the co-ownership. Thereafter the proceeds of the sale shall be divided equally according to their respective interests. liability for defects of title and quality of portion assigned to each 3. 4. 5. It shall NOT prejudice third persons who did not intervene in the partition 2. (Aguilar v. 497) Unless the partition is effected. reimbursements. 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.  6. payment of damages due to negligence or fraud. Limited to his share in the partition 2. 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.  Co-owner can substitute another person in the enjoyment of the thing Effect of transaction by each coowner: 1.PROPERTY in common is essentially Indivisible . (Castro v. mutually account (500) 4. Atienza) 3. each heir cannot claim ownership over the definite portion and cannot dispose of the same.g. CA) Effects of partition: 1. when legal Nature of community prevents partition (e.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. 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. pay for charges (485) 2. 6. 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 . insolvency of one makes the others liable subject to reimbursement (joint liability) full ownership of    Duties and Limits to Rights of Coowners 1. except that creditors cannot ask for rescission even if not notified in the absence of fraud (Art. Therefore. Under Art. not to make alterations (491) after partition… 3. 4. Heir is exclusive owner of property adjudicated to him. 1093. Co-owners reciprocally bound to each other for warranty of title and quality of part given to each (hidden defect) after partition. party wall) CIVIL LAW quota or ideal portion without any physical adjudication. a co-owner can enter into a contract of lease insofar as to his interest. Transferee does not acquire any specific portion of the whole property until partition 3. 5. There should be mutual accounting of benefits. 499). Co-heir can only sell his successional rights. he can also cancel such lease without the consent from the other co-owner. 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.

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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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) Of enjoyment of possession in the same character in which was acquired until the contrary is proved. the one longer in possession (3) if dates of possession are the same. the one who presents a title (4) if all the condition are equal.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. consumed. 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.  Possessor in BF has no right to receive any fruits. 100% UP LAW UP BAROPS 2008 Page 60 of 325 . (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. until a competent court rules otherwise. if disturbed therein. with respect to those lost. first who possessed in GF (c) if no possession. 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.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. or which could have been received. because such amount is unliquidated. But the possessor in BF does not have to pay interest on the value of fruits he has to pay. Within 10 days from filing of complaint in forcible entry . Those already gathered and existing will have to be returned. he must pay the value. 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. 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). 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. (Yu v Honrado) (1) Of good faith until the contrary is proved (Sideco vs. the following order of preference must be followed: (1) present possessor or actual possessor (2) if 2 or more possessors. one who presents the oldest title (2) for movable property: first who possessed in GF Effects of Possession (1) In general. Plaintiff may ask for writ of preliminary mandatory injunction may be asked.

1078) (iii)Of just title in favor of possessor in concept of owner. i. 533. 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. not the legal right of possession (de jure) NOTE: all the other 3 cases of loss of possession (abandonment. domesticated or tamed animals are considered domestic or tame if they retain the habit of returning to the premises of the possessor. if possession is recovered. subject to Art. (Art. (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.e.. without paying for any indemnity except if possessor acquired it in public sale but the possessor in GF is entitled to reimbursement. (2) Civil (Art 1123)— will start from the service of summons but the proper action must be filed  in case of natural interruption. 1120-1124) 2 Kinds of Interruption (1) Natural (Art 1122)—if interruption is for more than 1 year. Wild animals are possessed only while they are under one's control. assignment. 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. 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. destruction) refer to loss of possession de jure (real right of possession) and CIVIL LAW therefore cannot be recovered anymore by any action. recovery or reivindication of the thing by the lawful owner 100% UP LAW UP BAROPS 2008 Page 61 of 325 .PROPERTY (4) Of non-interruption of possession in favor of present possessor who proves possession at a previous time until the contrary is proved. (554. 426) (ii) Non-interruption of possession of hereditary property (Art. 560) (5) Reivindication—the most natural mode of losing possession. 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). 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.

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). no indemnity (545) Must share with the legitimate possessor. 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. gathering. 551). (Art. (Art.  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. Entitled to expenses for production. and preservation Fruits received Pending Fruits Entitled to a part of the expenses of cultivation and a part of the network harvest. negligence. 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. 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. 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. 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 .

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

PROPERTY Rights of the naked owner 1.may be made by the usufructuary To notify owner of any act detrimental to ownership  OR ELSE. Termination of the right of the person constituting the usufruct Special Cases of Usufruct 1. over a pension or periodical income (570) 2. 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 by the fulfillment of any resolutory condition provided in the title creating the usufruct. but are not necessary for its preservation  Naked owner obliged to undertake them but when made by the owner. with right of reimbursement from the usufructuary To Notify the Owner of Need to Undertake Extra-Ordinary Repairs  Those caused by exceptional circumstances. At the beginning of the usufruct or before the exercise of the right of the usufruct 1. Merger of the usufruct and ownership in the same person. 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.603) DERM PLT 1. 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. the latter may pay for the repairs. or agent of the usufructuary 3. of head of cattle (591) 4. 7. Total Loss of the thing in usufruct. 4. Causes of extinguishment of Usufruct (Art. even after the CIVIL LAW demand by the owner. 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. Prescription. 4. 5. To undertake Ordinary Repairs  for the preservation  if not repairs made by usufructuary. During the usufruct 1. 5. of property owned in common (582) 3. over deteriorable property (578) 100% UP LAW UP BAROPS 2008 Page 64 of 325 . 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. 2. unless a contrary intention clearly appears. Expiration of the period for which it was constituted. During the usufruct  retains title to the thing and improve it  may alienate the property 3. At the beginning of the usufruct  all obligations of the usufructuary at the beginning of the usufruct 2. 6. A. 6. lessee. Renunciation of the usufructuary. 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. Death of the usufructuary. 3. WON they are necessary for the preservation of the thing  Those caused by the natural use of the thing.

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

It is inherent or inseparable from estate to which they actively or passively belong. 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). (Solid Manila vs. Portion not affected can be alienated without the servitude. 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.615) no of * In general. It can exist only between neighboring tenements.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. 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).619) Legal Impose d by law either for public use or in the interest of private persons (Art.615) (10) It is intransmissible. This doesn’t mean they don’t have juridical existence of their own. (Art.614) i. It creates a relation between tenements. It is a right constituted over an immovable by nature not over movables. Being an abnormal limitation of ownership. without the intervention of any act of man. (11) It is indivisible. As to WON its existence is indicated Nonapparent Show external indication their existence (Art. (618) (12) It has permanence.615) Discontinou s Used at intervals and depend upon acts of men (Art. It can’t be created on another servitude. They are merely accessory. 617) Servitudes cannot exist without tenements. It can’t be the object of mortgage and exists even if not annotated. negative easements are nonapparent. Bio Hong) Inherence refers only to that portion of the tenement affected by it. 100% UP LAW UP BAROPS 2008 Page 66 of 325 . (Art.PROPERTY estates have to belong to different persons. may be public or private (Art. cannot be alienated separately from the tenement. 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.613) CIVIL LAW (3) (4) Personal In favor of a community or of 1 or more persons. 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. It limits the servient owner’s right of ownership or the benefit of the dominant estate.615) Apparent Made known and are continually kept in view by external signs that reveal the use and enjoyment of the same (Art. it cannot be presumed. Public: vested in the public at large or in some class of indeterminate individuals ii. But servient tenement remains unimpaired.

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

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

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. 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.   (3)     Modes of Extinguishment of Easements (Art. This mode arises from the condition of the tenements and only suspends the servitude unlit such time when it can be used again. in accordance with the provisions of the preceding number. Erection of works incompatible with the exercise of the easement or totally obstructing the servitude. Flooding of servient tenement over which a right of way exists. If extrinsic. Injunction is another remedy.631) (MINERRO) (1)Merger – must be absolute. If dominant estate is used in common. 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. (Art. 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.    (2)Non. easement is not reestablished. Right or power to claim exercise of the legal servitude do not prescribe. (Art. exercise of the easement of one of the co – owner inures to the benefit of all others and preserves the easement which is indivisible. there is no revival. If dominant owner violates restrictions. If dominant tenement is alienated.  CIVIL LAW If cause for cessation of merger is inherent like nullity or rescission. 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. agreed to by the owner of the dominant estate. but it shall revive if the subsequent condition of the estates or either of them should again permit its use.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. Eg. perfect and definite.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. sufficient time for prescription has elapsed. 10 years cap for suspension. otherwise. he can be compelled to restore the things their original condition and to pay indemnity for the damages.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.  When either or both of the estates fall into such condition that the easement cannot be used. 100% UP LAW UP BAROPS 2008 Page 69 of 325 . easement is reestablished. unless when the use becomes possible. not merely temporary. extinguished by prescription as previously provided. If owner of the servient estate performs act or constructs works impairing the use of the servitude. amounts to tacit renunciation and extinguishes the servitude. If the owner of the merged estate sells one of the estates later.

PROPERTY (4) Expiration of term or fulfillment of resolutory condition By the expiration of the term or the fulfillment of the condition. LEGAL EASEMENTS CIVIL LAW  DEFINITION Art. 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. 1618) (c) Abandonment of the servient estate (d) Eminent domain (e) Special cause of extinction of legal right of way. clear. (5)    (6) It must be specific. Redemption agreed between the owners.g. 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. if servient owner makes a demand for such extinguishment. (a) Those established for the use of water or easements relating waters (Arts.      100% UP LAW UP BAROPS 2008 Page 70 of 325 . (7) Other causes not mentioned (a) Annulment or rescission or cancellation of the title constituting the easement. (b) Termination of the right of grantor to create the easement ( e. redemption of the property sold a retro because of the exercise of the right of conventional redemption ( Art. express. Occurs only in voluntary easements. which extinguish easements. 634. if the easement is temporary or conditional. 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.(Art. -Voluntary -Stipulated conditions. Owner of tenements cannot construct works to increase the burden of this servitude. Owner of the lower tenements cannot make works which impede the servitude. and thereby become a continuing property right. 2. 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. 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. upon  By the redemption agreed upon between the owners of the dominant and servient estates. 655) (f) Registration of the servient estate as FREE (g) Permanent impossibility to make use of the easement. 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. Renunciation dominant estate of owner of the XI. the opening of an adequate outlet to the highway extinguishes the easement. Imposed or mandated by law and which have for their object either public use or the interest of private persons.

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

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

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

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

PROPERTY Nevertheless. Distance may be increased by stipulation of the parties. 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 .  Openings allowed are for the purpose of admitting light. 674. and not on the land of his neighbor. balconies or belvederes overlooking an adjoining property. 672. unless there be a distance of sixty centimeters. without leaving a distance of two meters between the wall in which they are made and such contiguous property. The provisions of Article 670 are not applicable to buildings separated by a public way or alley. 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. Whenever by any title a right has been acquired to have direct views. or prescription. It may also be extended by prescription. balconies or belvederes overlooking an adjoining property. the owner shall be obliged to collect the water in such a way as not to cause damage to the adjacent land or tenement. He can also obstruct them by constructing a building on his land or by raising a wall thereon contiguous to that having such openings. (e)Drainage of Buildings Art. apertures. 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. Art. Neither can side or oblique views upon or towards such conterminous property be had. such that from the opening in such wall. Even if it should fall on his own land. The nonobservance of these distances does not give rise to prescription.  Falling water is res nullius and has no owner. No windows. 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. 670. CIVIL LAW rise to the easement of light and view by prescription. 673. Acquisition may be through contact. 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. balconies. if there be no stipulation to the contrary. subject to special regulations and local ordinances. 673. this does not mean servitude has been acquired by person who opened them.  This article refers to a true servitude. Any stipulation permitting distances less than those prescribed in Article 670 is void. Art. Art. 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. one of whom is the owner of the roof. 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. 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. 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. But it is only the action to compel the closure which prescribes Although action to compel the closing has prescribed. testament. Whenever by any title a right has been acquired to have direct views.  Direct View— that which is obtained from a wall parallel to the boundary line. unless an easement of light has been acquired. Any stipulation permitting distances less than those prescribed in Article 670 is void. even though the adjacent land may belong to two or more persons. which is not less than three meters wide. or other similar projections which afford a direct view upon or towards an adjoining land or tenement can be made.   Art.

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

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

or anything else which: (HOSDU) (1) Injures or endangers the health or safety of others. and even the possessor in good faith. Mixed Nuisance Per Se (Nuisance at Law)  nuisance at all times and under any circumstances. or 100% UP LAW UP BAROPS 2008 Page 78 of 325 . 690 and 691)  Hence. 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.PROPERTY Who may establish voluntary easements:  The OWNER possessing capacity to ENCUMBER property may constitute voluntary servitudes. omission. 694. condition of property. their consent need not be simultaneous. REGARDLESS OF LOCATION OR SURROUNDINGS. and no one but an owner may do this. Nuisance Per Accidens (Nuisance in Fact)  One that becomes a nuisance by reason of circumstances and surroundings Public Nuisance  It causes hurt.  If there are various owners. his liability continues as long as the nuisance continues. business. Public 2. Private 3. Nuisance Per Se or at Law 2. and (2) Possession (in case of prescription enlarging or diminishing the initial voluntary easement) (Art. Nuisance Per Accidens or in Fact Scope Of Their Injurious Effects 1. 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. 693)  To produce the transmission of ownership over the tenement abandoned. CIVIL LAW (2) Annoys or offends the senses. A nuisance is any act. or (5) Hinders or impairs the use of property. inconvenience. and generally. Liability of Transferees  To render him liable. (Art. he is not liable for XIII. generally. or (3) Shocks. NUISANCE Art. but consent once given is irrevocable. Classification of Nuisance Nature 1. if the owner ratifies it.  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. the abandonment must be made in the proper juridical form required for the transmission of the ownership of immovable property. establishment. 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. defies or disregards decency or morality. ALL must CONSENT. or any body of water. ordinarily. or (4) Obstructs or interferes with the free passage of any public highway or street. (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. does not have the right to do so because the creation of a servitude is a disposition of part of the right of ownership. (Art. 688)  The usufructuary. or injury to the public.  A general capacity to contract is not sufficient. he must knowingly continue the nuisance.

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

707. Art. 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. as well as the form. the Land Registration Act. effects.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. Even a possessor may sue Art. or of other rights over immovable property. 710. Art. which are not duly inscribed or annotated in the Registry of Property shall not prejudice third persons. REGISTRY OF PROPERTY Art. 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. and not an authority to continue the wrong. A private person or a public official extrajudicially abating a nuisance shall be liable for damages: (1) If he causes unnecessary injury. 709. and cancellation of inscriptions and annotations. 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 . 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.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. 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. 708. The titles of ownership. the manner of keeping the books in the Registry.  each repetition of it gives rise to a new cause of action Defenses to Action  Public Necessity  Estoppel Art. Any person injured by a private nuisance may abate it by:  removing. XV. and other special laws shall govern. Remedies of Property Owner  He may bring an action for replevin. 706. 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. or (2) If an alleged nuisance is later declared by the courts to be not a real nuisance. capacity. or enjoin its sale and damages if it is has been sold. For determining what titles are subject to inscription or annotation. the provisions of the Mortgage Law. and the value of the entries contained in said books. 711. or  if necessary.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.

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. person who are capable of acquiring property by other legal modes b. peaceful. between co-heirs/co-owners 9. just title is proved 2. minors – through guardians of personally Against whom prescription run: 1. 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. absentees who have administrators 3. within time fixed by law  10 years for movables  30 years for immovables 3. within time fixed by law  4 years for movables  8 years for immovables 4. persons living abroad who have administrators 4. private property b. uninterrupted  GOOD FAITH. 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. 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. public. public domain 2. juridical persons except the state with regards to property not patrimonial in character 5. STATE c. movables possessed through a crime 4. patrimonial property of the state CIVIL LAW Things not subject to prescription: 1. also a means by which one loses ownership. uninterrupted Requisites for extra-ordinary prescription: 1.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 . between guardian & ward (during guardianship) 8. Acquisitive 1. between parents & children (during minority/insanity) 7. extra-ordinary Requisites for ordinary prescription: 1. retroactive from the moment period began to run Kinds: 1. ordinary 2. peaceful. in transmissible rights 3. in concept of an owner 5. public. minors & incapacitated person who have guardians 2. rights & actions. in concept of an owner 4. between husbands & wife 6. just title 3. PRESCRIPTION It is the mode by which one acquires ownership and other real rights thru lapse of time.PROPERTY XVI. possession in good faith 2.

Just cause or title for the transmission 3. physically. TRADITION Requisites: 1. An act giving it in outward form. declare contract void 4. Intention. Pre-existence of right in estate of grantor 2. First day excluded. sed tranditione. Capacity. 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.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. quiet title XVII. 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. except  void for lack of legal solemnities  plaintiff desist from complaint/allow proceedings to lapse  possessor is absolved from complaint i. express or tacit renunciation ii. or legally Legal Maxim: “Non nudis pactis. demand right of way 2.to transmit and to acquire 5. placed in the sight of 100% UP LAW UP BAROPS 2008 Page 82 of 325 .“long hand”. recover property subject to expressed trust 5. Traditio Longa Manu.of both grantor and grantee 4. Present possessor presumed to be in continuous possession I intervening time unless contrary is proved c. Delivery by Public Instrument iii. possession in wartime  RULES IN COMPUTATION OF PERIOD: a. abate public /private nuisance 3. is ownership transferred) Kinds of Tradition: a. Real Tradition b. Constructive Tradition i. probate of a will 6. possession ceases for more than 1 year -if 1 year of less – as if no interruption b) Civil -produced by judicial summons. Symbolic Delivery ii. dominia rerum transferentur” (Not by mere agreement but by delivery. symbolically. Present possessor may tack his possession to that of his grantor or predecessor in interest b.

no lease for more than ninetynine years shall be valid. right to collect credit vii. Wedding cakes for display in Goldilocks.PROPERTY vendee so that he can take possession of the property anytime iv. Lease Sale Only the use or enjoyment of the things is transferred. or Price must be in in fruits. e. one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain. (2) Consumable things cannot be the subject matter of lease. transferee already in possession of the property but not as owner v. 1643. Traditio Brevi Manu. independently of the lessee. In the lease of things. and for a period which may be definite or indefinite.owner remains in possession but not as owner e. coal in a factory (3) Special characteristics of lease of things. However. 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. lease vi. commodatum In case of doubt-INTENTION of the parties should be the guide in determining the contract entered into. 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.g.g. eg. 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.. 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.“short hand”. Traditio Constitum Possessorium.g. (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. Tradition by operation of law XVIII. Except (a) consumables only for display or advertising. 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. usufrunct. Quasi-Traditionsubject matter: property right. 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 .

when its duration has not been fixed. or in fruits.1682 shall apply. 1646.g. although it is not recorded upon the certificate of title. (ART. But is regarded as having the character more of a partnership rather than a lease.there must always be a period. which may be definite or indefinite If the period is indefinite. 1490. 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. The lease of a piece of rural land. 1682. if the rent agreed upon is annual. from month to month. it is understood to be from year to year. from week to week. The lessee cannot assign the lease without the consent of the lessor. it is considered as on for life. or in some other useful things. 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. 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. (7) Assignment of lease Art. 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 the period for the lease has not been fixed. 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.1491) Lease of Real Estate Every lease of real estate may be recorded in the Registry of Property to be binding upon 3rd persons. (6) Period of lease  When the lease is for such time as the lessor or lessee may please. if it is urban land art. sublessor.when the price consists of a certain percentage of the fruits obtained from the thing. if the rent is weekly. or which it may yield once. 1687. art. 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. some other prestation  TENANCY CONTRACT. he is BOUND to respect said lease. if the rent is to be paid daily. he will be liable for the damages for the occupation of the thing. If the thing is neither rural nor urban land. If the lessee has entered upon the possession and enjoyment of the thing. or the basis for its determination. although two or more years have to elapse for the purpose. Amount of Rent  If the parties are not able to fix the price. and from day to day. otherwise court may fix the same through the proper action BOTH the lessee and the usufructuary USE and ENJOY the thing. ending upon the death of the party who would have terminated the contract. 100% UP LAW UP BAROPS 2008 Page 84 of 325 .PROPERTY Real right only by exception: when registered and for more than 1 year Constitutor/Lessor need not be an owner e. Capacity of Lessee Those who are disqualified to buy certain things cannot lease such things. and the thing leased is rural land. (ii) urban land Art. the contract is ABSOLUTELY VOID. (i) rural land Art. 1687 governs. the provisions of the two articles should be applied by analogy. 1649. if it is monthly.

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. in whole or in part. unless there is an express stipulation to the contrary. (3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract. unless there is a stipulation to the contrary.  Art. (9) Rights and obligations of lessor and lessee (a) obligation of lessor Art. 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. there is no express prohibition. (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. 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. even when UNKNOWN to said lessor. which is only to be  Effects (1) Remedy when property is subleased despite prohibition: recission and damages. the original lessee is released Succession by particular title to one contract of lease  Sublease Merely another contract of lease. the lessee may sublet the thing leased. 1651. 1567. and when the lessor gives his consent. (i) for rents (8) Sublease Art. the lessee may sublet the thing leased. 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. without prejudice to his responsibility for the performance of the contract toward the lessor. or damages only. (i) Warranty of Lessor  IN the cases where the return of the price is required. without prejudice to his responsibility for the performance of the contract toward the lessor. 1568. Payments of rent in advance by the sublessee shall be deemed not to have been made. a mere transfer of rights of the lessee. 1569  Liability for the warranty is not equivalent to liability in 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 liable for the warranty of the thing leased against any hidden defects it may have. would not require the lessor’s consent.  But this liability for warranty of the thing leased does not amount to an obligation to indemnify the tenant for damages. 1650. and not of the contract itself. 1652. 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 . (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. 1555. in whole or in part. 1654. (ii) for the use and preservation of the thing leased Without prejudice to his obligation toward the sublessor. (2) When in the contract of lease. 1547. CIVIL LAW preservation of the thing leased in the manner stipulated between the lessor and the lessee.  However.PROPERTY unless there is a stipulation to the contrary. REDUCTION shall be made in proportion to the time during which the lessee enjoyed the thing. 1561. the original lease contract subsists and is binding on the lessee Juxtaposition of 2 leases Art. so far as the lessor's claim is concerned. Without prejudice to his obligation toward the sublessor. unless said payments were effected in virtue of the custom of the place. 1566.

(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. Dangerous Conditions  The lessee may terminate the lease at once by notifying the lessor. which cannot be deferred until the termination of the lease. Right of lessee to suspend payment of rentals 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 . to avoid imminent danger. 1661. iii. unless he proves that it took place without his fault. (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.  If the repair lasts for more than 40 days. 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. the lessee is obliged to tolerate the work. the rent shall be reduced in proportion to the time-including the 40 days. and with respect to the time. and he shall be liable for the damages which by his neglect may be suffered by the owner. plus accrued legal interest thereon at the rate of 6% per year.  Lessor is NOT bound to make repairs caused by the lessee himself.and the part of the property of which the lessee has been deprived. according to the custom of the place. 1658. the lessee. net of the assessed violation of the property Failure to Pay for Rent  Eviction. 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. Effect of Urgent Repairs  During the lease it should become necessary to make some urgent repairs upon the thing leased. may order the repairs at the lessor’s expense.PROPERTY allowed.  If after having been notified. recover the unpaid rent. Place and Time  Payment of rent shall be made at the domicile of the lessee.  The lessee is liable for any deterioration caused by members of his household and by his guest and visitors. he may rescind the contract if the main purpose of the lease is to provide a dwelling for the lessee. the lessor fails to make urgent repairs.  The lessee is responsible for the deterioration of the thing leased. to that which may be inferred from the nature 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. ii. (b) obligations of lessee (Art. 1662-1667) c. 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. when lessor acted with fraud and in bad faith by concealing the defect and not revealing it to the lessee. Alteration Art. the custom of the place shall be followed. Increase and Decrease of Rent  Increase and decrease in the price of lease shall be 10% per year. 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. Use the Thing Leased as a Diligent Father  Standard: diligent father of a family. in the absence of stipulation. Pay Expenses for the Deed of Lease (Art.

has expired. (3) by the resolution of the right of the lessor. he has the remedy of rescission. or that which is fixed for the duration of leases under Art 1682 (rural) and 1687(urban). such as when the lessor is usufruct is terminated. (2) the lessor has a right to rescind the contract. 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. (3) only damages.  If the thing leased has never been placed in possession of the lessee. 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. it is understood that there is an implied new lease. 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 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. (2) indemnification for damages. allowing the contract to remain in force  The lessor cannot be held responsible for damages from defects unknown to both parties. Judicial Ejectment  The lessor may judicially eject the lessee for any of the following causes: (1) When the period agreed upon. Enforcement of Lease  Where the lessor resumes possession of his leased property for its protection after the lessee has abandoned the same. the aggrieved party may ask for: (1) rescission of the contract. (2) by the total loss of the thing. is not applicable to successive renewals. the duration of the tenancy is governed by article 1682 and 1687. Alternative Remedies  Performance of the contract and rescission  In either case. 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. the lessor has still the right to hold the lessee responsible until the termination of the lease. (5) by rescission due to nonperformance of the obligation of one of the parties. 100% UP LAW UP BAROPS 2008 Page 87 of 325 . he may be compelled. d. by reason of his inability to pay to: (1) return the leased property. (4) by the will of the purchaser or transferee of the things. (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. not for the period of the original contract but for the time established in art. and unless a notice to the contrary by either party has previously given. Tacit Renewal  The fifteen-day period which brings about a tacit renewal of the lease. 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. and the latter has not paid the proper rents.PROPERTY maintain the lessee in peaceful and adequate enjoyment of the property leased.

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

form – depends on value of donation Kinds of Donation A. to its taking effect Inter Vivos (729. 3. Requirements of a donation: 1. causa – anything to support a consideration: generosity. 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. donation is inter vivos  General rule: Donation inter vivos is irrevocable EXCEPT: 1. 731) Donation mortis causa (728) Propter nuptias (Art. subject matter – anything of value. must not impair legitime 2. if donor does not die. Failure of donee to comply which conditions imposed 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. debt 3. 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. there is no donation inter vivos but mortis causa. conveyance should be deemed a donation inter vivos to avoid uncertainty as to the ownership of the property. 82. goodwill. Ingratitude of donee. 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. As 1. charity.e. whether it is disposition or execution. and 4. present property & not future.PROPERTY XIX. past service. During the subsequent birth of the donor’s children 2. 2. 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 .  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. To determine whether mortis causa or inter vivos. nature of act. capacity to donate & dispose & accept donation 4. 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. 730. is controlling. o Inter vivos  In doubt.  If the donor reserves the right to dispose of all the properties purportedly donated.

000. As to Cause or Consideration 1. 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. Simple (Art. As to its Effectivity or Extinguishment 1. When the donation and the acceptance are in the same instrument. if separate.725) 2. 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. otherwise. donation can only be revoked by the consent of the donee or by judicial decree especially when the donation is onerous. Mere declaration of an intention without intent to transfer is not a donation even if accepted.000 Requires simultaneous delivery of the thing or the document which represents the thing In writing Value of the thing donated > P5. ART 748 Oral Value of the thing donated < or = P5. signed by both donor and donee. After perfection. otherwise. Onerous (Art. Remuneratory (Art. Conditional (730.726) 3.PROPERTY B. Acceptance is necessary because nobody is obliged to receive a benefit against his will. 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 . DONATION OF MOVABLES.733) (See Table in the appendix) C. 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. donation is perfected. The donor can no longer withdraw and he can be compelled to comply. Pure 2.

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

Donee cannot bring an action to compel the donor to execute a public instrument of donation.PROPERTY simultaneous delivery. modal donations iii. If the instrument of donation has been recorded in the registry of property. Where the donor executed private instruments of donation and after his death his only heir executed a public instrument ratifying the donation. the instrument that shows the acceptance should also be recorded. Rules in Art. 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 P5.000). 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. It might serve as a quitclaim on the part of the heir who is estopped from asserting any right to the properties. mortis causa donations iv. the donor dies. If the donor’s heirs ratify the donation and CIVIL LAW the donee or his heirs accept. (b) Real property (Art. 749) Art. 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. onerous donations ii. the donation is not perfected. While a donation of immovable property not made in a public instrument is not effective as a transfer of title. may be reduced on petition of persons affected  except: conditional donation & donation mortis causa  except: future property (Osorio vs. such public instrument cannot be considered as having retroactively perfected the gift. If acceptance has been made but before the donor has been notified. donation is void unless it is made in writing. 1357 is not applicable. the donation subsists but in reality it is a new and valid one. 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. 748 and 749 applicable to: i. Osorio) 100% UP LAW UP BAROPS 2008 Page 92 of 325 .

e. 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. 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. 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.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. 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. 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 . 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. 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.

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

shall be reduced with regards to the excess 2. action to reduce to be filed by heirs who have right to legitimate at time of donation 3. spouse or children under his parental authority 3. 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. if there are 2 or more donation: recent ones shall be suppressed 5. 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. 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. personal to the donor. general rule is heir cannot institute if donor did not institute 2. can only make heirs of donee liable if complaint was already filed when donee died Inofficious donations: 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 .PROPERTY 2. donees/creditors of deceased donor cannot ask for reduction of donation 4. 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.

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.. 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 . 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. no need for action.PROPERTY CIVIL LAW MODES OF EXTINGUISHMENT BIRTH OF CHILD Ipso jure revocation.

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. adoption TIME OF ACTION Within 4 years from birth. 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.PROPERTY CIVIL LAW REVOCATION/ REDUCTION OF DONATION BASIS Birth. 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 .

SUCCESSION CIVIL LAW Succession TABLE OF CONTENTS I. III. 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 . IV. II.

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

dated. 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. or caused some other person to write his name. 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. The number of pages used upon which the will is written. b. (Art. in the presence of the instrumental witnesses. Each and every page of the will must be numbered correlatively in letters placed on the upper part of each page. c.SUCCESSION page of a testament. validated by part of the will. 820 – 821. testator shall designate two persons to read the will and communicate its contents to him in some practicable manner. 810. 2. Not blind. CC) CIVIL LAW AMENDING A WILL 1. Otherwise. 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. CC) a. Icasiano. CC) 2. CC) 3. CC) example. It must be acknowledged before a notary public by the testator and the witnesses. CC (SABRDC)) 1. 807. is not per se sufficient to justify denial of probate. Once by the notary public before whom the will is acknowledged REQUISITES FOR A HOLOGRAPHIC WILL 1. Testator must personally read the will. Contemporaneous to Will is void because the execution of the will it is not written entirely by the testator. Entirely written. and everything is written by the hand of the testator himself b. under his express direction. 804. 805. Cruz vs. 8. 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. 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. The validity of the will cannot be defeated by the malice or caprice of a third person. deaf or dumb 2008 Page 100 of 325 100% UP LAW UP BAROPS . without the considered not consent of the testator written. Of the age of 18 years or more 3. provided that said dispositions are also dated and signed. Of sound mind 2. In writing (Art. The fact that the testator signed the will and every page. 806. 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. (Art. 54 SCRA 31 ADDITIONAL REQUISITES FOR A NOTARIAL WILL IF THE TESTATOR BE DEAF OR A DEAF-MUTE (Art. Dispositions may be added below the signature. 808. CC) The will shall be read to the testator twice – 1. It must contain an attestation clause. Once by one of the subscribing witnesses 2. Icasiano vs. Holographic – a. with the Insertion is void. Notarial – only through a codicil 2. After the execution of Will is valid. due to the simultaneous lifting of two pages in the course of signing. if able to do so. Villasor. All the instrumental witnesses witnessed and signed the will and all the pages in the presence of the testator and of one another. 805. and signed by the hand of the testator himself (Art. the will. ADDITIONAL REQUISITES FOR A NOTARIAL WILL IF THE TESTATOR BE BLIND (Art. 11 SCRA 422 6. stating the following (Art. page one of five pages 7. 804. In a language or dialect known to the testator (Art. consent of the testator After the execution of Insertion becomes the will. CC) 1.

SUCCESSION 4. The will must clearly describe and identify the same. 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. 819. added to. executed. Able to read and write 5. Amount of successional rights 100% UP LAW UP BAROPS . *Effect: The devise or legacy. Have not been convicted of falsification of a document. It must be signed by the testator and the witnesses on each and every page. CC) 1. (Art. the will is CC) executed. Law of the the country in Philippines which it is (Art. 827. REQUISITES FOR INCORPORATION BY REFERENCE (Art. Domiciled in the Philippines 6. Outside the 1. CC. D. shall be void unless there are three other witnesses to such will. 817. or 2. 16 and 1039. 2. the provisions of which are reciprocal and which shows on its face that the devises are made in consideration of the other. 825 – 826. CODICIL AND INCORPORATION BY REFERENCE DEFINITION OF A CODICIL (Arts. or CC) 2. CC) 1. 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. CC) As to Place Place of Governing Law Execution of the Will Philippines Philippine Law (Art. Capacity to succeed 3. 823. Philippine Law Philippines 1. The document or paper referred to in the will must be in existence at the time of the execution of the will. 3. or 3. stating among other things the number of pages thereof. Law of the place where the testator resides. His competence as a witness shall subsist. Philippine Law 4. 816. Law of the testator’s country. Prohibition is applicable only to joint wills executed by Filipinos. CC) Outside of 1. CC) A witness who attests to the execution of a will which gives a legacy or devise to that witness. or his spouse. Law of the Philippines place where (Art. 16. Philippine Law. or CC) 2. Law of the Country of which testator is a citizen or subject. It must be identified by clear and satisfactory proof as the document or paper referred to therein. or 4. Order of succession 2. And 4. insofar as it concerns that witness or his spouse or his parent or his child. or altered It is executed as in the case of a will. perjury or false testimony INTERESTED WITNESS (Art. except in case of voluminous books of account or inventories. 16. or his parent or his child. 2008 Page 101 of 325 Alien ASPECTS OF THE WILL GOVERNED BY THE NATIONAL LAW OF THE DECEDENT (Arts. 815. Such is prohibited under Art. 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.

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

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

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

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

i. 854.e. 100% UP LAW UP BAROPS 2008 Page 106 of 325 . SS. SS LC. SS Adopter ILC. Determine the gross value of the estate at the time of the death of the testator. CC would come in to play. 3. Art.. SS STEPS IN DETERMINING THE LEGITIME OF COMPULSORY HEIRS 1. there will be an annulment of the institution of heirs and a reduction of devises and legacies. Determine the amount of the legitime from the total thus found. ILC LP alone LP. 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. SS. ILC ILC alone ILC. If the impairment is total. 6. then the compulsory heir is entitled to completion of legitime under Art. Distribute the residue of the estate in accordance with the will of the testator. If the impairment is partial. 7. SS LC. ILC 2 or more LC.SUCCESSION CIVIL LAW SUMMARY OF LEGITIMES OF COMPULSORY HEIRS LC & SS ILC LP & DESCENDANTS ASCENDANT S SURVIVING REL. SS LP. REMEDY OF COMPULSORY HEIR IN CASE OF IMPAIRMENT OF LEGITIME 1. ILC 1 LC. 2. SS. ILC LP. 906. Collate or add the value of all donations inter vivos to the net value of the estate. 5. 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. LC alone 1 LC. 4. Determine all debts and charges which are chargeable against the estate. Determine the net value of the estate by deducting all debts and charges from the gross value of the estate. CC. 2.

78 SCRA 406 and Gonzales vs. violence.SUCCESSION 3. It must be unconditional. stating the cause in the will itself. It must be made expressly. 2. SUMMARY OF CAUSES OF DISINHERITANCE Art. It must be made in a valid will. 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 .unworthiness GROUNDS FOR DISINHERITANCE 919 * 920 * 921 10 32 * A B E F (Reservatario) C D G (Reservista) H (Prepositus) J. 104 SCRA 161 1. that the property is inherited by another ascendant (reservista) by operation of law 4. The cause must be certain and true. CC) It is the act by which the testator for just cause deprives a compulsory heir of his right to the legitime. CC) The ascendant who inherits from his descendant any property which the latter may have acquired by gratuitous tile from another ascendant. that there are relatives within the 3rd degree (reservatarios) belonging to the line from which said property came (Source) CIVIL LAW 3. REQUISITES FOR RESERVA TRONCAL Chua vs. the remedy is collation. 7. 5. 4. 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. that the property was acquired by a descendant (prepositus) from an ascendant or from a brother or sister (source) by gratuitous title 2.children/ descendants 920.spouse 1032. CONCEPT OF RESERVA TRONCAL (Art. and must be proved by the interested heir if the person disinherited should deny it. CFI. or a brother or sister. false Causes testator/decedent to make will or change one by fraud. REQUISITES FOR A VALID DISINHERITANCE 1. 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. DISINHERITANCE DEFINITION OF DISINHERITANCE (Art. 891. 6. If the impairment is through donation. CFI. found groundless. 915. Art. It must be for a cause designated by law. 919.parents/ ascendants 921. Art. It must be total. that the prepositus died without an issue 3. 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. intimidation. Art.

Compulsory heir 2. CC ART. 911. 6. Belonging to the Effective testator at the time of the execution of the will until his death 2. Effective Ineffective K. violence. LEGACIES AND DEVISES PERSONS CHARGED WITH LEGACIES AND DEVISES 1. CIVIL LAW * Effective * Void * REVOCATION OF DISINHERITANCE 1. ORDER OF PAYMENT IN CASE THE ESTATE IS INSUFFICIENT TO COVER ALL LEGACIES AND DEVISES – ART. 11. Not belonging to the testator at the time the will is executed and the testator erroneously believed that the thing pertained to him. reconciliation renders the disinheritance ineffective. Legatee or devisee 4. unless authorities have already taken action Force. 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. Subsequent institution of the disinherited heir 3. 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. he thereby submits it to the rules on disinheritance. 911 ART. 950. Belonging to the Revoked testator at the time of the execution of the will but alienated in favor of a 3rd person 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. 8. Estate VALIDITY AND EFFECT OF LEGACY OR DEVISE STATUS OF EFFECT ON THE PROPERTY GIVEN LEGACY/DEVISE BY LEGACY/DEVISE 1. CC VS. estate. favor of the legatee or devisee gratuitously 4.SUCCESSION for legal separation Failure to report violent death of decedent within one month. Reconciliation 2. Belonging to the No revocation. 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. Voluntary heir 3. Thus. Not belonging to the testator at the time the will is executed but afterwards it becomes his by whatever title. There testator at the time of is a clear intention to the execution of the comply with the will but alienated in legacy/devise. Already belonged to the legatee/devisee at the time of the execution of the will even though another person may have interest therein 9. 10. 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. ART. 950 Order of Preference Order of Preference 2008 Page 108 of 325 BAROPS . 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. 7.

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

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

ILC. Adoptive parents SS Siblings. ILP LC. Nephews. Collaterals and State ILP. Nieces State 1 2 3 4 5 6 7 SS Illegitimate siblings. ILC. Nephews. 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. ILP Siblings Nephews Nieces SS Collaterals in the same degree No one CONCURS WITH Siblings. 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 . Collaterals and State Collaterals and State Collaterals and State Collaterals other than siblings. 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 Nieces Other collaterals within 5th degree State LC. ILC. LP. 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.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. LP. Nephews.

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. 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. of Varies on no. Same share as a LC. of ILC 100% UP LAW UP BAROPS 2008 Page 112 of 325 . 1 for wouldn’t be impaired each ILC TOTAL Varies on # of children Varies on # of children 1 5 ONE LEGITIMATE CHILD. 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 ILC no. LC provided legitimes provided legitimes are not impaired are not impaired TOTAL Varies depending on Varies depending on 1 no. ILLEGITIMATE CHILD. 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. 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.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.

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 .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.

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

or any one claiming under such witness. 1027. 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 . WHO ARE INCAPABLE OF SUCCEEDING 1. community. associations and corporations not permitted by law to inherit. d. BASED ON UNDUE INFLUENCE OR INTEREST (Art. b.SUCCESSION CIVIL LAW EFFECT OF PREDECEASE. e. the church. 739. parents. the spouse. organization. legatee or devisee must be living or in existence at the moment the succession opens. The heir. 1024 – 1025. and 2. He must not be incapacitated or disqualified by law to succeed. Relatives of the priest or minister of the gospel within the fourth degree. CC) 1. 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. or spouse. 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. 3. c. BASED ON ACTS OF UNWORTHINESS (Art. even if the testator should die after the approval thereof. by reason of his public office. c. Those made in consideration of a crime of which both the testator and the beneficiary have been found guilty. health officer or druggist who took care of the testator during his last illness. Those made in favor of a public officer or his spouse. descendants and ascendants. nurse. Individuals. B. brother. chapter. descendant. Guardian with respect to testamentary dispositions given by a ward in his favor before the final accounts of the guardianship have been approved. or the minister of the gospel who extended spiritual aid to him during the same period. 100% UP LAW UP BAROPS 2. Priest who heard the last confession of the testator during his last illness. BASED ON MORALITY OR PUBLIC POLICY (Art. CAPACITY TO SUCCEED REQUISITES FOR CAPACITY TO SUCCEED BY WILL OR BY INTESTACY (Art. sister. parents. surgeon. except if the guardian is his ascendant. 1032. INCAPACITY. or institution to which such priest or minister may belong. CC) PIGRAP a. CC) a. Physician. or children. Attesting witness to the execution of a will. b. order. spouse. or children.

1056. during his lifetime by donation or other gratuitous title but which the law considers as an advance from the inheritance. Voluntary and free 2. 1051. Repudiation is equivalent to an act of disposition and alienation. 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. or 3. 4. CC) 1. 3. PERSONS OBLIGED TO COLLATE 1. or 2. 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). when the heir demands partition of the inheritance. COLLATION (Articles 1061 – 1077. he may still accept it in the latter capacity. Acceptance involves the confirmation of transmission of successional rights. 2. he will be considered to have also repudiated the inheritance as a legal heir. donates or assigns his right. Examples would be when the heir sells. General Rule: compulsory heirs Exceptions: a. CC) 1. 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. CC) 1. 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. certainty of death of the decedent 2. in an authentic document – equivalent of an indubitable writing or a writing whose authenticity is admitted or proved. when the testator should have so expressly provided b. 2. Restitution – return or payment of the excess to the mass of hereditary estate. It is the act by virtue of which. CC) 1. ACCEPTANCE AND REPUDIATION OF INHERITANCE CHARACTERISTICS – VIR (Articles 1041 – 1042. OPERATIONS RELATED TO COLLATION Collation – adding to the mass of the hereditary estate the value of the donation or gratuitous disposition. when the heir alienates some objects of the inheritance. certainty of the right to the inheritance ACCEPTANCE VS.SUCCESSION C. in a public instrument acknowledged before a notary public. 1055. 2. Retroactive REQUISITES (Art. If he repudiates it as a legal heir. REPUDIATION 1. The publicity required for repudiation is necessary for the protection of other heirs and also of creditors. Irrevocable except if there is vitiation of consent or an unknown will appears 3. etc. while repudiation renders such transmission ineffective. FORMS OF REPUDIATION (Art. 1043. 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. D. - - - 1. by petition presented to the court having jurisdiction over the testamentary or intestate proceeding HEIRS IN TWO CAPACITIES (Art. FORMS OF ACCEPTANCE (Articles 1049 – 1050. 3. when the compulsory heir should have repudiated his inheritance 100% UP LAW UP BAROPS 2008 Page 116 of 325 . without his being a testamentary heir. Reduction – determining to what extent the donation will remain and to what extent it is excessive or inofficious. Express Acceptance – one made in a public or private document.

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

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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Inc. National Railways.. which is the malice or bad faith in the performance of the obligation. there being no malice. 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. It is any voluntary act or omission.. (Manresa) It implies some kind of malice or dishonesty and it cannot cover cases of mistake and errors in judgment made in good faith. 1996) The rule for measuring degree of care and vigilance is dependent upon the circumstances in which a person finds himself situated. If both the contract and law are silent. That agreed upon by the parties 2.OBLIGATIONS & CONTRACTS FRAUD It is the deliberate or intentional evasion of the normal fulfillment of an obligation. 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. (Mandarin Villa. March 25. 1174) Distinction between fraud and negligence Fraud There is deliberate intention to cause damage. 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.R. 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. (Cusi v. The fraud referred to is fraud in Article 1170. v. 1979) Kinds of Culpa 1. Waiver for future negligence may be allowed in certain cases: a) gross – can never be excused in advance. (1173. It is synonymous to bad faith. 21383. CA. Waiver for future fraud is void. 1170) Fraud in the Execution Causal Fraud (dolo causante) (Art. *Past fraud can be renounced. Inc. which prevents the normal fulfillment of an obligation. G. Macondray & Co. then he is guilty of negligence. Liability may be mitigated. 90 SCRA 357. No. In the absence of stipulation. Kinds of Fraud Fraud in the Performance (Art. 257 SCRA 538. that required by law in the particular case 3. 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. 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 . Negligence There is no deliberate intention to cause damage. Phil. 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. 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. Liability cannot be mitigated. (O’leary v.

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. Mora solvendi 2. Mora Accipiendi CIVIL LAW There is a delay on the part of the creditor to accept the performance of the obligation Requisites: 1. 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 expenses incurred by the debtor for the preservation of the thing after the mora shall be chargeable to the creditor. The general rule is that fulfillment by both parties should be simultaneous. 6. – There was demand made judicially or extra-judicially. 3. 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. Offer of performance by the debtor who has the required capacity. If the obligation bears interest. the debtor does not have to pay from time of delay. Instance when there is no default or mora solvendi: a) In negative obligations. 5. The responsibility of debtor is reduced to fraud and gross negligence. Creditor refuses the performance without just cause. Effects when these elements are present: 1. The debtor shall bear the risk of loss. Compensatio morae – the delay of the obligors in reciprocal obligations 1. 4. The creditor is liable for damages. Culpa Contractual – wrong or negligence in the performance of an obligation 3. Mora accipiendi 3. 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. 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. Offer must be to comply with the prestation as it should be performed. because the performance is optional or voluntary on the part of the debtor. delay happens from the moment one party fulfills his undertaking. Delay or Default Unilateral Obligations General Rule: “No demand – no delay. due and demandable.OBLIGATIONS & CONTRACTS 2. 3.” The mere expiration of the period fixed by the parties is not enough in order that the debtor may incur in delay. Compensatio Morae 1. Rules on Mora. neither incurs delay Kinds of delay 3. Reciprocal Obligations One party incurs in delay from the moment the other party fulfills his obligation. The effect is that it is as if there is no default. When different dates for the performance of obligation is fixed by the parties. (1169) If neither party performs his undertaking. 2. 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 . 2. The debtor may relieve himself of obligation by consigning the thing. It is the delay of the parties or the obligors in reciprocal obligations. while he himself does not comply or is not ready to comply in a proper manner with what is incumbent upon him. – The debtor is guilty of non-performance. 2.

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

Creditor must have the right of return against debtor 2. negligence. or when it is otherwise declared by stipulation. electronic paa/foot or e-foot) 1. (Nakpil v. except those exempt by law. impossible for debtor to fulfill his obligation in a normal manner 4. 2148. C. Pursue the leviable – to attach the properties of the debtor. whether due to his active intervention or neglect or 100% UP LAW UP Definition Novation via change of creditor (1291. Accion Pauliana Accion Subrogatoria Requisites for exemption 1. (1165(3)) CIVIL LAW failure to act. a subsidiary of SD. debtor free from participation in the aggravation of the injury to the creditor (Nakpil v.. Inc. Ordinary – those which are common and which the contracting parties could easily foresee. 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. 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. cannot take refuge under Article 1280 of the New Civil Code. 1942. CA. 1268. 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. 1992) Herbosa v. impossible to foresee or avoid 3. no person shall be responsible for those events which. or when the nature of the obligations requires assumption of risk. delay or violation or contravention in any manner of the tenor of the obligation. 211 SCRA 162. 3. (NAPOCOR v. could not be foreseen. are inevitable. REMEDIES OF CREDITORS GENERAL RULE Rights acquired by virtue of an obligation are transmissible in character. 552(2). not merely a proximate cause. the whole occurrence is then humanized and removed from the rules applicable to the acts of God. par. 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.e. 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. substitute or equivalent performance 2. or which though foreseeable. from execution. CA) When the effect is found to be in part the result of the participation of man.OBLIGATIONS & CONTRACTS Kinds of Fortuitous Events 1. 2. (see 1680) General Rule Except in cases expressly specified by law. Held: PVE or SD. CA 374 SCRA 578 (2002) PVE. CA and Lasam v.. Accion subrogatoria 4. his obligation to comply is extinguished subject to the following exceptions: – – – – cases expressly specified by law (i. Exact fulfillment – to demand fulfillment of the obligation or specific performance – either specific. Inc. cause of event or debtor’s failure independent of human will 2. Requisites 1. There must be no fraud. *When a debtor is unable to fulfill his obligation because of fortuitous events or force majeure. 2147. Smith) *It must be the ONLY and SOLE cause. The debt is due and demandable BAROPS 2008 Page 127 of 325 . Extraordinary – those which are uncommon and which the contracting parties could not have reasonably foreseen. 3). 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. 1165.

b. 1) CONDITIONAL OBLIGATION The consequences are subject in one way or another to the fulfillment of a condition. 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. giving advantage to other persons 3. Joint and solidary obligations (1207-1222) 5. (1179. therefore. Requisites 1. The right of account is not purely personal Accion Pauliana Definition Rescission. Obligations with a Penal clause (12261230) SECONDARY CLASSIFICATION (U R D PoLiCe) 1. and it shall be regulated by the rules of the preceding section. The debtor's acts are fraudulent 5. c. Pure or Conditional b. 3. Juridical quality and efficaciousness 2. Natural obligations c. With a Period I. d. Term A day certain is understood to be that which must necessarily come. The debtor has performed an act subsequent to the contract. Obligations with a Period (1193-1198) 3. 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 parties or subject 3. If the uncertainty consists in whether the day will come or not. By the object of the obligation or prestation 4. immediately demandable. 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. By their juridical perfection and extinguishment 100% UP LAW UP BAROPS 2008 Page 128 of 325 . The creditor has no other legal remedy 4. (1193) Chapter III: Different Kinds of Obligations PRIMARY CLASSIFICATION (PaPA. Civil obligations b. the obligation is conditional. *Difference between conditional and those with a term: There is uncertainty or certainty of day or time. Just Don’t Preach) 1. The debtor's assets are insufficient 5. Alternative obligations (1199-1206) 4. e. By the a. 6. although it may not be known when. upon the happening of which. Mixed – according to natural and civil law By the a. There is a credit in favor of plaintiff 2. c. the effectivity or extinguishment of an obligation (or rights) subject to it depends. f. 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. g. b. 2. Divisible and indivisible obligations (12231225) 6. Pure and conditional obligations (11791192) 2. par. 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.OBLIGATIONS & CONTRACTS 3. There is a failure of the debtor to collect his own debt from 3rd persons either through malice or negligence 4. 5. Condition It is a future and uncertain event. 4.

Divisible – the condition is susceptible of partial performance b. the happening of the event which constitutes the condition. Negative – the condition consists in the omission of an act 6. As to divisibility a. Positive – the condition consists in the performance of an act (1184) b. Suspensive When it is fulfilled. Conjunctive – there are several conditions and all must be fulfilled b. Except when the obligation is a preexisting one. 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”. BAROPS . As to possibility a. Express – the condition is clearly stated b. In other words. As a.OBLIGATIONS & CONTRACTS Pay v. therefore. the obligation arises. 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. only the 2008 Page 129 of 325 Resolutory The obligation is extinguished. 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. hence. As to numbers a. The tie of law is consolidated Its effects flow. b. hovers the possibility of termination The loss (termination) of rights already acquired 5. As to mode a. the action to collect could no longer prosper. c. Possible b. be legally demanded as it will cause the debtor not to fulfill the condition to escape liability. that is. the tie of law (juridical or legal tie) does not appear Until it takes place. 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. RESOLUTORY CONDITION (Condition subsequent) CIVIL LAW event which It causes the extinguishment or loss of rights already acquired upon the fulfillment of the condition. Impossible 4. 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. The Supreme Court ruled that. Implied – the condition is merely inferred 3. that is. Classification of Conditions 1. 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 b. Resolutory 2. the fulfillment of which will extinguish an obligation (or right) already existing. As to form a. to cause or origin Potestative Casual Mixed happening of the uncertain constitutes the condition. Disjunctive – there are several conditions and only one or some of them must be fulfilled 7. but over it. The case for collection on the note was filed 15 years after its execution. 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. the existence of the obligation is a mere hope Effect: The acquisition of rights (Manresa) Potestative. When it takes place.

cannot exist or cannot be undone.. MIXED CONDITION The condition depends partly on the will of a party and partly on chance or the will of a 3rd person. 2. The obligation is valid if the suspensive condition depends partly upon chance and partly upon the will of a third person. v. however. (Naga Telephone. 2. The obligor actually prevents fulfillment of the condition. To do an impossible or illegal thing. IMPOSSIBLE CONDITIONS The condition is not capable of fulfillment. 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. showing that he has no intention to comply with his obligation. or b) from the moment it has become evident that the event cannot occur. CASUAL CONDITION The condition depends upon chance or the will of a third person. the condition and the obligation are void. public order and public policy. Negative (not to do an illegal thing). although the time indicated has not yet elapsed (1185) Constructive Fulfillment (1186) For Suspensive Conditions Requisites 1. 4. thus. 1994) Possible and Impossible Conditions (1183) *Applies to suspensive conditions. Two Kinds 1. POSSIBLE CONDITIONS The condition is capable of fulfillment. the obligation remains. morals. Co. Effects of Impossible and Illegal Conditions If the condition is: 1. legally or physically. Effects of Suspensive Conditions 1. 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. good customs. 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. in case of conditions impossible thing Effect It renders the conditional obligation void since the obligor knows that his obligation cannot be fulfilled. CA. Before the condition is fulfilled. pre-existing obligation divisible obligations simple or remuneratory donations testamentary dispositions UP CIVIL LAW 5. 3. He acts voluntarily. The condition is suspensive. 2. in the nature of things. 230 SCRA 351. Legally impossible conditions – those which are contrary to law. Inc. Negative (not to do the impossible thing). the demandability and acquisition or effectivity BAROPS 2008 Page 130 of 325 not to do an the 100% UP LAW . disregard the condition. and 3. General Rule They shall annul the obligation which depends upon them Exceptions 1. 3. 2.OBLIGATIONS & CONTRACTS condition is void. legally and physically. the condition and the obligation are valid.

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

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

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

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

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. Compound obligation – one where there are two or more prestations a. Failure to renew an expired surety with the bonding company constituted an impairment of the securities or guaranties. THE OBLIGATION SHALL BECOME IMMEDIATELY PAYABLE OR DEMANDABLE. The obligor was obliged to pay the indebtedness from the time it received the proceeds of the sale of iron ore. time to sell the iron ore. Fonacier lost his right to the period. ALTERNATIVE OBLIGATIONS Kinds of Obligation according to Object 1. unless he gives guaranties or securities for the debt 2. *IN ALL THE CASES ABOVE. Conjunctive obligation – one where there are several prestations and all of them are due b. i.e. the Supreme Court ruled that the obligor in this case lost its right to the period. unless he gives new ones equally satisfactory when the debtor violates any undertaking in consideration of which the creditor agreed to the period 4. III. 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 . belongs to the debtor. (Manresa) FACULTATIVE OBLIGATION It one where only one prestation has been agreed upon but the obligor may render another in substitution. Distributive obligation – one where one of two or more of the prestations is due *A distributive obligation may be – alternative (1199). IT SHOULD BE UNDERSTOOD IN ITS ORDINARY MEANING WHICH MAY EMBRACE DIFFERENT DEGREES OF FINANCIAL EMBARRASSMENT. as a general rule. OCCURRED CONSTITUTED. THE INSOLVENCY MUST HAVE THE OBLIGATION WAS AFTER Gaite v. the debtor has impaired established guaranties or securities and when through a fortuitous event they disappear. When the debtor does not furnish promised guaranties or securities he promised 3. DESPITE THE FACT THAT THE PERIOD HAS NOT YET LAPSED.OBLIGATIONS & CONTRACTS 1. Thus. When the debtor attempts to abscond. 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. unless he immediately gives new ones equally satisfactory. 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. When by his own act. *THE WORD “INSOLVENT” DOES NOT REQUIRE A JUDICIAL DECREE OF INSOLVENCY. the debtor suffers from insolvency. Simple obligation – one where there is only one prestation 2. When after contracting the obligation. 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.

OBLIGATIONS & CONTRACTS Right of Choice General Rule The right of choice belongs to the debtor. (1207) *In a joint obligation. 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. 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 . 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. when expressly stipulated by the parties or when called for by the nature of the obligation. the others may have become illegal or impossible). thing lost. Except: When expressly granted to the creditor. (1202) Limitations on the Debtor’s Right of Choice 1. 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. unlawful or which could not have been the object of the obligation. Solidarity exists only 1. 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. each debtor shall be liable only for his part of the debt presumed to be equal with the other debtors. collective obligations are presumed to be joint if there is concurrence of two or more debtors and/ or creditors. the right of choice belongs to the debtor. When Stipulated by the parties using such words like “jointly and severally. and/or is to be demanded proportionately by the different creditors. the debtor may expressly give the right of choice to the creditor. However. The debtor cannot choose the part of one prestation and part of another. 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. SOLIDARY OBLIGATION Obligacion Solidaria It is an obligation where each one of the debtors is bound to render. (conventional solidarity) 2. in alternative obligations. and/ or each one of the creditors has a right to demand compliance with the prestation. The Right of Choice belongs to the Debtor As a general rule. hence.” “in solidum. civil liability arising from crimes.e. 3. for damages IV. (Jurado) (see 1208) General Rule By default.” “I promise to pay” in a note signed by two or more debtors. 2. no damages damages or any of the remaining One Deliver. or similar words.. The debtor cannot choose those prestations which are impossible. (1200) The debtor has no more right of choice when among the prestations whereby he is alternatively bound. When solidary liability is provided by Law. only one is practicable.

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

v. 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. Most importantly. solidary debtors Francisco. 2. (1212) 2. the question as to who should sue was a personal issue among the solidary creditors. A surety does not have an actual loan of his own. GIVES RISE TO INDEMNITY FOR DAMAGES: NON-COMPLIANCE WITH UNDERTAKING (1224) 2. Suretyship If a person binds himself solidarily with the principal debtor. Furthermore. he benefited from the remission. but the first one to demand receives the payment. After paying the debt. Action against and payment by solidary debtor. called the guarantor. (1214) *Payment made by the debtor to any one of the solidary creditors extinguishes the obligation. CIVIL LAW observed. he has the right to do so and payment must be made to him. but not the extension of the period for payment. (2047) Distinguishing Solidarity Suretyship from 1. The Supreme Court rejected the dismissal of the suit invoking Art. Do only what is useful to others. only insofar as such is demandable. 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. 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. while a solidary debtor has right to collect from solidary co-debtor. DEBTORS READY TO FULFILL SHALL NOT BE LIABLE (1224) *AS ALREADY STATED. Title I of this Book shall be 100% UP LAW UP BAROPS . If one of the solidary creditors demands payment of the debt. However. (Villa v. 1212 and stated that recovery of the contract price was surely a useful act and can be done even by one solidary creditor. 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. N. Inchausti & Co. 2008 Page 138 of 325 3. But an act beneficial to all like interruption of prescription may be performed by one of the creditor. binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. IN A JOINT INDIVISIBLE OBLIGATION. A solidary guaranty is suretyship. The debtors moved for the dismissal of the suit on the ground that the other solidary creditors should have been included in the case. Chapter 3. a surety has right to collect from principal debtor. the provisions of Section 4. Manuel and Carmen entered into a compromise agreement with plaintiff. Anyone has right to receive the payment. solidary debtor is also liable for his own debt in addition to that of others. Gregorio Yulo was sued for payment of entire indebtedness. Garcia Bosque) (Jurado) Rights of solidary creditor/s 1. The concurrence of all the creditors is also necessary for acts which are prejudicial. In such case the contract is called a suretyship.B. 3. (Jurado) Quiombing v. thus there was partial demandability. The same is inversely true as regards the debtors. nothing prejudicial to co-creditors. (Jurado) 3. Gregorio was ordered to pay the part of the reduced indebtedness. Yulo Six brothers and sisters admitted solidary liability. A SUIT FOR SPECIFIC PERFORMANCE MUST BE DIRECTED AGAINST ALL THE DEBTORS AND IF ANY ONE OF THEM IS NOT WILLING TO FULFILL. 4. Greg Yulo was solidarily liable. 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. 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.OBLIGATIONS & CONTRACTS RULES 1. THE OTHER DEBTORS BEING WILLING TO DELIVER.

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

BY THE NATURE OF THE OBLIGATION Quantum Meruit Principle Divisible Obligation If only partially performed. (F. 1997) VI. Funcion coercitiva or de garantia . Exceptions 1. Penalty as a Substitute for Damages General Rule b. Funcion estrictamente penal . A penal clause is an accessory undertaking to assume greater liability in case of breach. Funcion liquidatoria . NATURAL INDIVISIBILITY . GR 122196.to punish the debtor for the non-fulfillment of his obligation. The sellement of claim under this principle requires application of judgment and discretion and cannot be adjusted by simple arithmetical process. partial performance is equivalent to nonperformance. 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. LEGAL INDIVISIBILITY . he cannot recover on this principle because in indivisible obligations. Manocop v. the obligor can enforce his right in proportion to the services performed. Principal and Accessory Obligations PRINCIPAL OBLIGATION That which can stand by itself and does not depend upon other obligations for its validity and existence.BY LAW. Indivisible Obligation If obligor fails to perform the work completely.OBLIGATIONS & CONTRACTS KINDS OF INDIVISIBILITY OF AN OBLIGATION a.to substitute a penalty for the indemnity of damages and the payment of interest in case of noncompliance. 15. This principle allows recovery of the reasonable value of the work done regardless of any agreement as to the value. if there is no stipulation to the contrary. the penalty shall substitute the indemnity for damages and the payment of interest in case of non-compliance. 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”.to ensure performance of the obligation 2. When there is a stipulation to the contrary 2. 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. 3. 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. OBLIGATIONS WITH A PENAL CLAUSE In an obligation with a penal clause.F. CA.  The penalty fixed by the parties is a compensation or substitute for damages in case of breach. 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 . When the debtor is sued for refusal to pay the agreed penalty 3.

the delivery of the thing (other than money). After payment. or not doing of an act. However. Creditor ratifies payment to 3rd person 3.creditor or obligee or successor in interest of transferee. the penalty may be enforced. Remission or condonation 5. the place and time in which it must be made 6. Merger or confusion 4.only the creditor's consent.3 the benefit is total so. performance is total (c) anyone in possession of the credit . or agent (b) 3rd person .2. Fulfillment of the Resolutory condition 10.the one performing. Loss of the thing due 7.but will apply only if debt has not been previously garnished Payment made to an Incapacitated Person It is valid when: 1. he can be the debtor himself or his heirs or assigns or his agent. the doing of an act. With respect to parties CIVIL LAW This must be made by the proper party to the proper party (1) Payor (a) Payor .OBLIGATIONS & CONTRACTS Effect of Nullity of the Penal Clause If only the penal clause is void.who may pay to whom payment may be made 2. The incapacitated person kept the thing delivered. or anyone interested in the fulfillment of the obligation. Novation 2. Prescription 8. By creditor’s conduct. If performance is done also with debtor's consent . the principal obligation remains valid and demandable. 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. 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.he takes the place of the debtor. PAYMENT OR PERFORMANCE The delivery of money. persons. the mode or form thereof 5. Compensation 3. Payment or performance 6. or 2. (1230) Nullity of the Principal Obligation If the principal is void. it falls under art 1241. the repayment is only to the extent that the payment has been beneficial to debtor (2) Payee (a) payee .if any of the ff. concur: i. 3rd person acquires the creditor’s rights 2. thing or object in which the payment must consist 3. if the nullity of the principal obligation is due to the debtor’s fault who acted in bad faith. the cause thereof 4. Elements The elements of payment are analyzed into: 1. the penal clause is also void because the penal clause cannot stand along without the principal obligation to which it is subordinated. Annulment I. the imputation of expenses occasioned by it 7. debtor has been led to make the payment (estoppel) BAROPS 2008 Page 141 of 325 . can be anyone as long as it is with the creditor's consent (b) 3RD person pays/performs . par 1. Rescission 9. and by reason of which the creditor suffered damages on equitable grounds. valid if proved & only to the extent of benefit Presumed if: 1. 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. Insofar as the payment has been beneficial to him Payment to a 3rd party not authorized.

Rules of Court shall govern. 2. the action derived from the original obligation shall be held in the abeyance. out of 2 or more debts owing the same creditor: 1. extrajudicial expenses required by payment shall be for the account of debtor. For the application to be valid. 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. or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed. In case an extraordinary inflation or deflation of the currency stipulated should supervene. Obligor may recover as though there has been strict and complete fulfillment. unless there is an agreement to the contrary. or when through the fault of the creditor they have been impaired. Effect of payment The obligation is extinguished. 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. Balane) During encashment: action in abeyance. (1250) Expenses: Unless it is otherwise stipulated. 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. In the place designated in the obligation 2. 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. May be made according to the stipulation of the parties or application of party given benefit of period. less damages suffered by the obligee 2. Various debts of the same kind 2. Except in an order to retain the debt. Must not be so material that intention of parties is not attained Effect of Substantial performance in good faith 1. creditor can just ask from creditor again but without interest as there was no delay. With regard to judicial costs.OBLIGATIONS & CONTRACTS Payment made in good faith to a person in possession of credit shall release debtor Requisites: 1. otherwise. 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 . The delivery of promissory notes payable to order. and if it is not possible to deliver such currency. Deviation is slight 3. Attempt in Good Faith to perform without willful or intentional departure 2. Omission/Defect is technical or unimportant 4. Same creditor 4. Same debtor 3. (1249) *Impairment contemplates an issuance by a third party. (Jurado. (1249) CIVIL LAW Mercantile documents. Substantial Performance 1. (1170) Extraordinary inflation/ deflation Stipulation (1250) Currency value at time of agreement. In the meantime. 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. then in the currency which is legal tender in the Philippines. (1247) Special Rules/Forms Of Payment – Application of Payments – the designation of the debt which payment shall be made.

extinguish up to amount of property unless w/ contrary stipulation. 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. 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. A special form of payment because 1 element of payment is missing: IDENTITY. 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. apply the proceeds to their credits. 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. or in default of agreement. generally requires prior tender of payment Requisites of valid consignation: 1. 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 . Debtor makes the designation 2. Existence of valid debt 2. *Governed by the law on sales Conditions for a valid dacion: 1) If creditor consents. creditor makes it by so stating in the receipt that he issues. 3.previous valid tender was unjustly refused or under circumstances making previous tender exempt. If debts are of the same nature and burden. extinguish up to amount of net proceeds ( unless w/ contrary stipulation ) Kinds 1. Apply payment to the most onerous 2. unless there is cause for invalidating the contract 3. then application. unless there is a stipulation to the contrary c) Creditors will collect credits in the order of preference agreed upon. Payment is not enough to extinguish all debts How the application is made: 1. If neither the debtor nor creditor has made the application or if the application is not valid.OBLIGATIONS & CONTRACTS 5. 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. If not. Legal – governed by the insolvency law 2. they are merely assignees with authority to sell b) Debtor is released up to the amount of the net proceeds of the sale. Consignation was made because of some legal cause . 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. Prior Notice of Consignation had been given to the person interested in performance of obligation (1st notice) 4.

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. 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. but not impossible (because if it is impossible. This is allowed when: a. 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 . flood. obligation remains (debtor bears risk of loss at the meantime. earthquake. Effect of Difficulty Beyond Parties’ Contemplation Rule: The obligor may be released in whole or in part. 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. without receiving any price or equivalent. refuses to issue receipt w/o just cause d. LOSS OF THE THING DUE This is partial or total which includes the impossibility of performance. renounces the enforcement of the obligation.OBLIGATIONS & CONTRACTS 5. 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. title of obligation has been lost II. creditor absent or unknown/ does not appear at the place of payment b. 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. CONDONATION/REMISSION OF THE DEBT An act of pure liability by virtue of which the obligee. 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. incapacitated to receive payment at the time it is due c. 2 or more creditor claiming the same right to collect e.

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

NOVATION The substitution or change of an obligation by another. if made after compensation took place – no effect. Initiative for substitution must emanate from the new debtor 2. The existence of a previous valid obligation 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. Substitution with the knowledge consent of the old debtor and The new debtor is entitled to reimbursement of the entire amount paid and subrogation. BAROPS 2008 Page 146 of 325 . 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. It is the total or partial extinction of an obligation through the creation of a new one which substitutes it. The creation of a valid new obligation (Tiu Siuco v. either by changing its object or principal conditions. Mixed 2. (Tolentino) 2. 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. As to essence a. 45 Phil. Requisites 1. resulting in its extinguishment or modification. or by substituting another in place of the debtor. The extinguishment or modification of the obligation 4. compensation already perfected 2. Habana. Implied – When the old and new obligation are incompatible with each other on every point Forms of Substitution by Debtors 1. Consent of the creditor to the substitution Kinds 1. or by subrogating a 3rd person in the rights of the creditor. 2.OBLIGATIONS & CONTRACTS Effect of assignment of credit to 3rd person. object or principal b. Expromision 2. Substitution without the knowledge or against the will of the old debtor (Jurado) Effect of Payment by the New Debtor 1. 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. can there still be compensation 1. If the substitution was effected with the knowledge and consent of the original debtor. 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. 707. Substitution with the knowledge and consent of the old debtor 2. As to its form/ constitution a. the new debtor’s insolvency or non-fulfillment of the obligation shall revive the original debtor’s liability to the creditor. A new obligation is created Kinds of Novation 1. Requisites 1. The original obligation is extinguished 2. The intention or agreement and capacity of the parties to extinguish or modify the obligation 3. 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. 1924) Purpose of Novation 1. Objective/ Real – This refers to the change in either the cause.

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

stipulation. 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. Exceptions 1. Accessory – a contract that is dependent upon another contract for its existence and validity c. 3. not only to the fulfillment of what has been expressly stipulated but also to all the consequences which. Preparatory – means through which other (future) contracts may be made. Accion Directa . d. e. one or more persons bind themselves in favor of another or others. c. 2.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. (1305) A contract is a juridical convention manifested in legal form. Neither of the contracting parties bears the legal representation or authorization of a 3rd party. 3. Stipulation Pour Autrui – a stipulation in favor of a third person Requisites a. b. (1313) 5. (1308) OBLIGATORY FORCE & CONSENSUALITY Contracts are perfected by mere consent and from that moment. it must not be the whole of the contract.g. Except As 1. (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. not an end in itself. or not to do. The contracting parties clearly and deliberately conferred the favor to the third person. by virtue of which. to give something or to render some service. their assigns and their heirs. 100% UP LAW UP BAROPS 2008 Page 148 of 325 . 4.g. the parties are bound. to do. may be in keeping with good faith. General Rule The parties are free to stipulate anything they may deem convenient. The stipulation must only be a part of the contract. When a third person induces another to violate his contract. Agency AUTONOMY This is the freedom or liberty to stipulate. Accion Pauliana (see Obligations > Breach of Obligation > Remedies of Creditors) Kinds of Contracts 1. 4. 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. 5. The 3rd person must have communicated his acceptance to the obligor before its revocation by the original parties. Obligations arising from contract which are not transmissible by their nature. usage and law.. Principal Characteristics (AMOR = love) 1. to the fulfillment of a prestation to give. RELATIVITY General Rule Contracts take effect only between parties. 2. 3. with respect to the other. or reciprocally.the right of a creditor to sue on a contract entered into by his debtor. or provision of law. donation 2. Autonomy Mutuality Obligatory Force and Consensuality Relativity CIVIL LAW 2. According to degree of importance a. e. The favorable stipulation should not be conditioned or compensated by any kind of obligation. Principal – a contract that can stand alone b. Third persons who come into possession of the object of the contact creating real rights (1312) 6. according to their nature. e.

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

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

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

weak mind and other similar causes. d. 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. 3. 4.Error must be a mistake of fact. Contracts agreed to in a state of drunkenness or during a hypnotic spell are voidable. (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. take care of themselves and manage their property. or upon the person or property of his spouse. Knowledge of doubt. 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. Correction only if: A simple mistake of account shall give rise to its correction. (1335) Requisites a. or to those conditions which have principally moved one or both parties to enter into the contract.Error must be excusable. hospitalized lepers 3. (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. The evil must be the determining cause for the party upon whom it is employed in entering into the contract. (1329) Rule on Contracts Entered into under Mistake In order that mistake may invalidate consent. those who by reason of age. risk affecting the object of the contract (1333) 3. Hongkong and Shanhai Bank. not of law Exceptions on Mistake: 1. deaf and dumb who are unable to read and write 5. prodigals 4. 2. those under civil interdiction 2. descendants or ascendants. disease. The evil must be unjust. 15 Phil 252) 100% UP LAW UP BAROPS 2008 Page 152 of 325 .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. Contracts are also valid even though they are entered into by one of the parties without hope of advantage or profit. 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. 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. serious or irresistible force is employed. it should refer to the substance of the thing which is the object of the contract. One of the parties is compelled to give his consent by a reasonable and wellgrounded fear of an evil b. Irresistible physical force b. (Martinez v. cannot without outside aid. Violence Intimidation Mistake Fraud Undue Influence VIOLENCE There is violence when in order to wrest consent. and is understood to be without prejudice to special disqualifications established in the laws. 5. Requisites a. Illiterate party (1332) 2. not caused by negligence . to give his consent. contingency. c. The evil must be imminent and grave.

UNDUE INFLUENCE There is undue influence when a person takes improper advantage of his power over the will of another. Misrepresentation by a third person does not vitiate consent. 595) Simulated Contracts SIMULATION Simulation is the declaration of a fictitious intent manifested deliberately and by agreement by the parties in order to produce. depriving the latter of a reasonable freedom of choice. unless such misrepresentation has created substantial mistake and the same is mutual. There must be a deliberate intent to deceive or to induce 2. as when the parties are bound by confidential relations. are not in themselves fraudulent. unless made by an expert and the other party has relied on the former's special knowledge. Except when: 1. It induced another party to enter into a contract d. buyer beware ii. 2008 Page 153 of 325 100% UP LAW BAROPS . without them. the other is induced to enter into a contract which. Requisites: a. Mistake must be with respect to the legal effect of an agreement b. Insidious words or machinations are employed b. 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. 3. (Coso v. 42 Phil. (1338) (Dolo Causante) Failure to disclose facts When there is a duty to reveal them. Incidental fraud only obliges the person employing it to pay damages. There is collusion by one of the parties o fthe contract with the 3rd person. (1344) 1. (Manresa) General Rule Mistake does not vitiate consent. Opinions: A mere expression of an opinion does not signify fraud. (1339) Kinds of Fraud Fraud in the perfection of the contract 1. (1343) General Rule on Fraud In order that fraud may make a contract voidable. the appearance of a transaction which does not exist or which is different from the true agreement. (1341) iii. 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. (1340) UP CIVIL LAW *Caveat Emptor – dealer’s talk. It must be serious c. when the other party had an opportunity to know the facts. The other party relied on this untrue statement. (1342) iv. Usual exaggerations in trade. Misrepresentation made in good faith is not fraudulent but may constitute error. 2. constitutes fraud. for the purpose of deceiving others. he would not have agreed to. The real purpose of the parties must have been frustrated FRAUD There is fraud when. through insidious words or machinations of one of the contracting parties. Fernandez Deza.OBLIGATIONS & CONTRACTS MISTAKE It is not only a wrong conception of the thing but also the lack of knowledge with respect to it. It must be mutual c. Exception: Mutual error as to the effect of an agreement when the real purpose of the parties is frustrated. Dolo Causante (1338) – renders the contract voidable 2. (1344) Fraud by Third Persons General Rule: Fraud by a 3rd person does not vitiate consent and merely gives tise to action for damages. it should be serious and should not have been employed by both contracting parties. There is misrepresentation that has created a substantial mistake and the same is mutual.

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

otherwise sale is void. contract is valid but right to enforce cannot be exercised. void. when the parties intended a donation or some other contract EXCEPTION CIVIL LAW 1. Cession of action of rights proceeding from an act appearing in a public inst. otherwise. 2. otherwise void. Donation of personal property exceeding P5. it is still valid and binding as far as contracting parties are concerned. sale of land thru agent. Law requires contract to be in some form for convenience . Law requires contract to be in some form for validity . Formal – required by law to be in certain specified form such as: donation of real property. so that after its existence have been admitted. Cession. Contracts w/c object is creation.produce no legal effect VOID . when there is fraud. When form is required for Convenience FOR VALIDITY (formal/solemn contracts) 1. 4. needed only to bind 3rd parties Ex: public documents needed for the ff: a. When form is required for Validity 2. as long as all essential requisites are present. Consequently both presuppose the existence of a valid and enforceable contract. or 2. 3.000 must be in writing.Statute of Frauds. e. even if orally entered into. the party bound may be compelled to execute necessary document. Power to administer property for another d. contract of partnership.OBLIGATIONS & CONTRACTS When Cause Renders Contract Voidable: Unless specified by law. repudiation. registration of chattel mortgage. lesion or inadequacy will not invalidate a contract as long as there has been no fraud. contract of antichresis. need ratification to be enforceable 3.000 c. 100% UP LAW UP BAROPS 2008 Page 155 of 325 . (1356) 1. stipulation to pay interest. Informal – may be entered into whatever form as long as there is consent. Law requires contract to be in some form to be enforceable . only to ensure its efficacy. Solis v. Acuna Articles 1357 and 1358 do not require a particular form to validate or enforce a contract. otherwise void. renunciation of hereditary rights/CPG c.donation and acceptance of real property 2. Contribution of a partner of immovable property in a partnership. transfer of large cattle. object & cause b. transmission or reformation of real rights over immovables b. When form is required for Enforceability 3. Dievas v. (1355) Cause Absence of causa Illegality of causa Falsity of causa Effect VOID . mistake or undue influence.produce no legal effect VOIDABLE – party must prove that cause is untruthful. 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. Authority of agent to sell land must be in writing. mistake or undue influence. Barroso Even where the contract has not been reduced to the required form. donation of personal prop in excess of 5. 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.contract is valid and enforceable. Real – creation of real rights over immovable property – must be written General Rule SPIRITUALITY PRINCIPLE Contracts are valid and enforceable in whatever form. must be in writing. Donation of real property must be in a public instrument.

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

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

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

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. to protect some preferential right. and the doubts refer to incidental circumstances of a gratuitous contract. 3. Deterioration because suspensive condition debtor’s fault d. 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. 4. it is a relief to protect one of the parties or a third person from all injury and damages which the contract may cause. 2. Plaintiff must be able to return whatever he may be obliged to return due to rescission. a VURV – an action word) 1. by reason of external conditions. Payment made by insolvent b. Those agreed upon in representation of Absentees. Nonperformance by the other is not important It applies to both unilateral and reciprocal obligations Even a third person UP 1. causing an economic prejudice to a party or his creditor.  The things must not have been passed to 3rd parties who did not act in bad faith. the doubt shall be settled in favor of the greatest reciprocity of interests. Plaintiff has no other means to obtain reparation. 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. Partition with lesion to heirs by at least ¼ (1098) c. and normally binding. the contract shall be null and void. There is lesion or pecuniary prejudice. of the latter suffers lesion by more than ¼ of the value of things which are the subject thereof 3. Court cannot grant extension of time for fulfillment of the obligation Its purpose is to seek reparation for the damage or injury caused. 3. thus allowing partial rescission of the contract Requisites of Rescission *DEFECTIVE CONTRACTS Kinds of Defective Contracts (VURV.OBLIGATIONS & CONTRACTS When it is absolutely impossible to settle doubts by the rules established in the preceding articles. 2. The VURV Pipe or. 4. 2. Contract is essentially valid. the least transmission of rights and interests shall prevail. Those undertaken in Fraud of creditors when the latter cannot in any manner claim what are due them 4. 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. All other contracts especially declared by law to be subject to rescission and payments made in the state of insolvency. If the contract is onerous.  It must be made within the prescribed period. a. *According to the SC. *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. When the conditions have been imposed with the intention of 2008 Page 159 of 325 BAROPS . 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. Rescissible Contracts Voidable Contracts Unenforceable Contracts Void or Inexistent Contracts 1.

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

Sale upon credit by an insolvent debtor 4. no other means. plus interests 3. Consideration of the conveyance is inadequate or fictitious 2. They are susceptible of ratification. Can be assailed only by the party whose consent was defective or his heirs or assigns Grounds 1. the design to defraud creditors may be proved in any other manner recognized by the law of evidence. (1542. no acquirer in good faith. Minors ( below 18 ) b. If the person is under guardianship.e.OBLIGATIONS & CONTRACTS By Onerous Title Alienations by onerous title are also presumed fraudulent when made by persons against whom some judgment has been issued. Acquirer in bad faith (1388) *If there are two or more alienations. within 4 years from the time the guardianship ceases b. 1 and 2 are not court approved 2. Transfer of all his property by a debtor when he is financially embarrassed or insolvent 6. These contracts are binding. 1189 – rules on improvement. May be assailed or attacked only in an action for that purpose 3. In case of alienation in fraud of creditor. The decision or attachment need not refer to the property alienated. within 4 years from the time domicile is known CIVIL LAW c. *In addition to these presumptions. violence. Evidence of indebtedness or complete insolvency 5. Damages: Who are liable? a. One who alienates to acquirer in good faith (1385. the first acquirer shall be liable first. intimidation. loss. Can be confirmed ( NOTE: confirmation is the proper term for curing the defect of a voidable contract) 4. (1388) c. 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. Intoxicated persons f. object of contract or its price. nos. things under litigation and payment of the state of insolvency. and need not have been obtained by the party seeking the rescission. The consent is vitiated by mistake. and so on successively. i. Art. Characteristics 1. together with fruits. due to civil interdiction e. One of the parties is incapable of giving consent to a contract 2. Deaf mutes who cannot read or write d. 3) Prescriptive Period General Rule Within four (4) years from the date it was entered into: a. Grant rescission – only to extent necessary. unless they are annulled by a proper action in court.. Exception 100% UP LAW UP BAROPS 2008 Page 161 of 325 . In case of absentees. or deterioration b. 1571. counted from the day of deliver. (1387) Badges of Fraud 1. Effective until set aside 2. par. ability to restore. within 4 yeas from the time of discovery of fraud. the period is 6 months or even 40 days. Insane persons unless they acted in lucid interval c. Transfer made between father and son where there is present any of the above circumstances 7. Order return – ability to restore. Exception In certain contracts of sale which are specially declared by law to be rescissible. 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. Failure of the vendee to take exclusive possession of the property Reliefs 1. Persons who are specially disqualified. 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 cause of the nullity or defect should have already disappeared d. 2. 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. Curable by Acknowledgment .Both parties incapable of giving consent -2 minor or 2 insane persons 3. 23 SCRA 1141) Causes of Extinction of an Action to Annul 1. Obligation to do or not to do – there will be apportionment of damages based onteh value of such prestation with corresponding interests. Special promise to answer for debt. and can show detriment which would positively result to him from the contract in which he has no intervention. but without interest thereon 4. (Carantes v. Due to the fault of the plaintiff. 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. Due to the fault of an incapacitated person. 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. No authority conferred b. The confirmation should be effected by the person who is entitled to do so under the law c. Kinds 1.Failure to comply with Statute of Frauds a. Curable by Ratification . exception: auction when recorded sale in sales book e. the time the violence. Due to a fortuitous event. *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. the time the incapacity ends b. the person obliged to return shall pay the value of the thing at the time of loss. Agreement to be performed within a year after making contract b. Representation as to credit of another 2008 Page 162 of 325 100% UP LAW UP BAROPS . Agreement for lease of property for more than one year and sale of real property regardless of price f. (Teves v. 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. CA. intimidation or undue influence ends c. Unauthorized or No sufficient authority – entered into in the name of another when: a. It is considered valid but one cannot compel its execution unless ratified due to the extrinsic defect of the contract. Restitution between Parties Obligation of Mutual Restitution 1. chattels or things in action at price not less than 500. Agreement made in consideration of promise to marry d. Due to the fault of the defendant. 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. default or miscarriage of another c. In excess of authority conferred (ultra vires) 2. (Manresa) Effect of a Failure to make a Restitution When the thing is lost: 1. It should be effected with the knowledge of the vice or defect of the contract. People’s Homesite and Housing Corp. annulment cannot be made 3. Registration constitutes constructive notice to the whole world. Agreement for sale of goods. 76 SCRA 514) RATIFICATION Requisites a. The contract should be tainted with a vice which is susceptible of being cured b.OBLIGATIONS & CONTRACTS If a 3rd person is prejudiced in his rights with respect to one of the contracting parties.. (Jurado) 2. no restitution can be made. (1399) *It is presumed in the absence of proof that no such benefit has accrued to the incapacitated person. Ratification 3. except in cases provided by law. It produces legal effects only after ratified. Prescription 2. there is no restitution.

public order or public policy. it is a sufficient memorandum. price. or who has acted beyond his powers. (1347 par. good customs. Those contracts which are entered into in the name of another by one without or acting in excess of authority. .An agreement for the sale of goods. of such things in action or pay at the time some part of the purchase money. Acceptance of benefits under the contract. names of the purchasers and person on whose account the sale is made. evidence. Grounds (Art. subscribed by the party charged or by his CIVIL LAW agent. of the agreement cannot be received without the writing. (1347. of the amount and kind of property sold.OBLIGATIONS & CONTRACTS Grounds for Unenforceable Contracts (1403) 1. (1346) 7. 2. 1352) 2. . otherwise.An agreement made in consideration of marriage. The cause. 3) Inexistent Contracts 6.1409) Void Contracts 1. object or purpose is contrary to law. (1318) 100% UP LAW UP BAROPS 2008 Page 163 of 325 . good customs. default. The intention of the parties relative to the principal object of the contract cannot be ascertained. the said contract shall be unenforceable. Those which do not comply with the Statute of Frauds 3. other than a mutual promise to marry. In the following cases an agreement hereafter made shall be unenforceable by action. 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. at the time of the sale. at a price not less than five hundred pesos. Those contracts in which both parties are incapable of giving consent. or some of them. Those expressly prohibited or declared void by law. INEXISTENT CONTRACTS Those where one or some or all of the requisites essential for the validity of a contract are absolutely lacking. The object is outside the commerce of men. morals. or by his agent. (1348) 4. Curing Unenforceable Contracts 1. therefore. or the evidences.A special promise to answer for the debt. 1) 3. It contemplates an impossible service. memorandum or writing. It is absolutely simulated or fictitious. unless the buyer accept and receive part of such goods and chattels. or the contract itself is prohibited or declared void by law. public order or public policy. the defect of unenforceability is cured 2. The cause or object did not exist at the time of the transaction. 3. or a secondary evidence of its contents: . or miscarriage of another. be in writing. unless the same. chattels or things in action. thereof. unless partial compliance / Auction entry in sales book sufficient . but when a sale is made by auction and entry is made by the auctioneer in his sales book. The maxim is “no contract at all”. (1378) 5.An agreement of the leasing for a longer period than one year. it takes it out of unenforceable contracts. If there is performance in either part and there is acceptance of performance. (1347.Sale of at least Php 500.A representation as to the credit of a third person. and subscribed by the party charged. par. or for the sale of real property or of an interest therein. or some note or memorandum. . par. 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. terms of sale.Propter nuptias . also estoppel sets in by accepting performance.An agreement that by its terms is not to be performed within a year from the making thereof (executory contracts) . morals. 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. . VOID CONTRACTS Those where all the requisites of a contract are present but the cause. to the presentation of parole evidence in court. object or purpose is contrary to law. *The contact or agreement under the Statute of Frauds require that the same be evidenced by some note.

RPC) Requisites of illegal contracts 1. the law refuses them every remedy and leaves tehm where they are. A judicial declaration to that effect is merely a declaration 3. Contract whereby a laborer undertakes to work longer than the maximum number of hours fixed by law. any The parties are in pari delicto  No action for specific performance  No action for restitution on either side.OBLIGATIONS & CONTRACTS Characteristics 1. 4. Consumer protection 2. If the purpose has not yet been accomplished and if the damage has not been cause to any 3rd person 2. If performed. before it takes effect – party w/c is remorseful prevents it Where Laws Are Issued To Protect Certain Sectors 1. except if pari delicto will apply 5. 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. Payment of money or delivery of property for an illegal purpose. where the party who paid or delivered repudiates the contract before the purpose has been accomplished. Imprescriptible 7. (315. (1418) 8. There is no action for annulment necessary as such is ipso jure. One who lost in gambling because of fraudulent schemes practiced on him is allowed to recover losses even if the gambling is prohibited. illegality is accomplished when parties entered into contract. 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. Contract is for an illegal purpose 2. restoration is in order. It cannot be confirmed. It produces no effect whatsoever either against or in favor of anyone 2. 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. Contract must be repudiated by any of the parties before purpose is accomplished or damage is caused to 3rd parties 3. Payment of usurious interest (1413) 3. 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 made by an incapacitated person (1416) 5. Usury law Consumer protection – if price of commodity is determined by statute. Contract whereby a laborer accepts a wage lower than the minimum wage fixed by law. The court believes that public interest will be served by allowing recovery (discretionary upon the court ) – based on remorse. Labor 3.  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 .  No confiscation will be confiscated in favor of the governement CIVIL LAW Exception 1. (1419) 9. Agreement or contract which is not illegal in itself and the prohibition is designed for the protection of the plaintiff (1416) 6. ratified or cured. The right to set up the defense of nullity cannot be waived 6. or before any damage has been caused to a 3rd person (1415) 4.

other party is less guilty or not guilty Angeles v. incapacitated – not obliged to return what he gave but may recover what he has given b. paridelicto does not apply. applying article 1416. courts may allow recovery of money. 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. any laborer who agreed to receive less may still be entitled to recover the deficiency. 100% UP LAW UP BAROPS 2008 Page 165 of 325 . and the improvements made by the other party.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. CA A sale of homestead within five year prohibitive period is void but in pari delicto does not apply because of public policy. v. The unjust enrichment principle must apply as to the recovery of the price paid. 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. recovery does not extend to products or fruits of the land. However. pari delicto cannot apply because an incapacitated person does not know what he is entering into. since the prohibition was only for protection and security of Filipino ownership of land. except: a. However.  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. property delivered by incapacitated person in the interest of justice. 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.

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

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

V. IX.SALES CIVIL LAW Sales TABLE OF CONTENTS I. VIII. VI. VII. X. XI. III. II. IV. 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 .

1458. Real obligation (‘to give’) a determinate thing is created 4. the seller’s ownership or title to the property is automatically transferred to the buyer (see Ursal v. 1475) EXCEPTIONS: 1. Nominate 2. CA. but is NOT the MODE of transferring ownership. Commutative. RULE: NO form required – may be o Written o Oral o Partly written. 100% UP LAW UP BAROPS . NOT to contracts either partially or totally performed.with reciprocal obligations 5. 2008 Page 169 of 325 1 Art. Sale not to be performed within 1 year b. 2005) E. Principal 7.begins when the parties perform their respective undertakings under the contract of sale.for the seller: payment of price . (Aznar v. 1967) 2. CA. 529.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. and the other to pay therefore a price certain in money or its equivalent. Object. Sale of personal property at a price of P500 up.the fulfillment of the suspensive condition. otherwise. Under Statute of Frauds (contract or some memorandum thereof must be written and subscribed. 1965) A. 1458(2)) 1. Sale of real property or an interest therein The Statute of Frauds applies only to executory contracts. 1994) o A contract of sale only constitutes a TITLE or right to the transfer of ownership. 1318) 1. 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. c.  In some cases.determinate thing 3.for the buyer: transfer of ownership and delivery of thing B. 1994) C. Transfer of large cattle must be registered with the municipal treasurer to be valid (Sec. STAGES: 1.1358(1)) 3. Book 4. Transmission of real rights over immovable property (must appear in public document to bind third parties) (Art. culminating in the extinguishment thereof (Ang Yu Asuncion v.from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected 2. Consentmeeting of offer and acceptance on the thing and the price 2. 1483) GEN. which is the full payment of the purchase price. CONTRACT OF SALE 1 CIVIL LAW normally the full payment of the purchase price. CHARACTERISTICS: 1. Cause .with exchange of equivalent values 6. When certain form required by other law a. Consummation .fulfillment predetermined in advance D. the SC makes finer distinctions between a conditional sale and a contract to sell in that: o In a contract to sell. will not automatically transfer ownership to the buyer although the property may have been previously delivered to him. which is the meeting of the minds of the parties as to the object of the contract and upon the price 3. (Iñigo v.SALES SALES (Title VI. one of the parties obligates himself to transfer the ownership of and to deliver a determinate thing. ABSOLUTE sale 2. Bilateral. FORM (Art. Estate of Maloto. contract unenforceable UNLESS ratified by failure to object to oral evidence OR acceptance of benefits under the contract) (Art1403(2)): a. Consensual. By the contract of sale. Onerous. Civil Code) I. o In a conditional sale. KINDS: (Art.perfected by mere consent 3. Yapdiangco. partly oral o Inferred from the conduct of the parties Why: because sale is consensual (Art. A contract of sale may be absolute or conditional. Arts 14581637. Negotiation . CA. CONDITIONAL sale (“Contract to sell”) o Ownership of the thing sold is retained until the fulfillment of a positive suspensive condition. (Ang Yu Asuncion v. ESSENTIAL REQUISITES: (Art.

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

Eng. 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. 1994) . Agency to Sell (Art.SALES Distinct consideration of offer BEFORE acceptance ONLY IF there is an abuse of right under Art. CA. (Parañaque Kings Enterprises. Habituality test: WON the job requires the use of extraordinary or additional equipment. 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. CA. 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. 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.CC.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).The grantee has no right to buy or sell. Inc. 1997) 6 Buyer becomes the owner Buyer can make profit if he resells AGENCY TO SELL Agent does not pay price. again under the same terms as offered to the optionee. look at manifest intention of the 8 Equatorial. 1956) 2. or involves services not generally performed (Celestino v. v. the LESSEE shall have the priority right to purchase the same. 2001)6 .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. DISTINGUISHED FROM OTHER ACTS/CONTRACTS 1. Only after the optionee fails to exercise its right of first priority under the same terms and within the period contemplated.. v. CIR.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. CA. 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. 2005)8 H. 19. 2005) LIKE sale: there must be a determinate thing to be sold UNLIKE sale: . Inc. 2008 Page 171 of 325 100% UP LAW UP BAROPS . could the owner validly offer to sell the property to a third person.price and other terms yet to be agreed upon (Ang Yu Asuncion v. reverting to the doctrine in Guzman. (Equatorial Realty Development. 1996) 7 3.it is unilateral UNLIKE option: . Fausto. only a right to the first offer should the grantor decide to sell (Polytechnic University of the Philippines v. 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. Right of first refusal o Example: “That should the LESSOR decide to sell the leased premises. the right of first refusal is an integral and indivisible part of the contract of lease and is inseparable from the whole contract.” (Tanay Recreation Center and Development Corp. WON the thing is one which would have never existed but for the order of the party desiring to acquire it.&Supply. Mayfair Theater Inc. 1975) SALE 2. v. Contract for a piece of work (Art. v.Separate consideration NOT required7 . The consideration for the lease includes the consideration for the right of first refusal and is built into the reciprocal obligations of the parties. Fausto.

good customs. is DETERMINATE when it is: Particularly designated. ELEMENTS OF A VALID SALE A. Undivided interest in a thing (Art.1088) Rules in case of loss at perfection (Baviera: loss occurred before the contract was entered into without the knowledge of both parties) (Arts. Innominate contracts most analogous to sale (Art. Physically segregated. Withdraw from contract OR 2.e. True (Art. 2. CA. Things under litigation. Outside the commerce of men. land acquired by homestead or free patent.1381(4)) 3.1458) 2. braches or institutions (CA 141) 2. 1458) 2.sale of a mere hope or expectancy: subject to the CONDITION that the thing will come into existence . 3. Licit (1459) 3. 1493-1495): contract without any effect (no object) Buyer may: 1. 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. 1641) . Certain (Art. 1458) 3. or acquired by the seller after the perfection of sale): VALID . 1245) SALE No pre-existing debt Creates obligation DATION w/ pre-existing debt Extinguishes obligation (mode of payment) CIVIL LAW avenues and parks. things acquired under a legal or conventional right of redemption B. dangerous drugs.1638) . 1460) Example: specific mention of some lots plus the phrase “lots needed for the city hall site. Demand remaining part and pay proportional price 5. Things subject to a resolutory condition (Art.sale of a vain hope or expectancy: VOID  Future inheritance cannot be the object of sale (Art. Dation (Art.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.g. Actual or Possible (Arts. Barter (Art.1347(2)) but heir may sell his hereditary rights (Art. In money or its equivalent (Art.1245) .g.1463) 2. Lease of things SALE Ownership transferred 6. Determinate (Art.g.a mode of payment where property is alienated to the creditor in satisfaction of a debt in money 2. BUT if without the knowledge and approval of the litigants or of the court. .t or any of its units.sale of “future goods” (goods to be manufactured. . 1974) A thing is o ACTUAL when it is existing. Donation SALE onerous DONATION gratuitous LEASE OF THING Ownership not transferred Other contracts governed by the law of sales: 1. City of Iloilo. 1353) 2008 Page 172 of 325 BAROPS . THING sold must be: 1. except if sale in favor of the Gov. public order.within 5 years from issuance of patent or grant.e. 1968) A thing is LICIT if it is NOT: (Art. or public policy. 1461 & 1462) A thing 1. 1465) . morals.governed by title on sales in matters not specifically provided for in title on barter 3. Real (Art 1471) 4. 1307)  Total loss Partial loss OR material deterioration in whole or in part II. Contrary to law. o POSSIBLE when it is has a potential existence. according to the Arellano development plan of the Municipality” (Melliza v. (Art. raised. property of public dominion such as a river (Martinez v. Dation (Art. or Capable of being made determinate without the necessity of a new or further agreement between the parties.SALES parties to characterize the transaction. PRICE must be: 1. 1409) 1. e. 2. 100% UP LAW UP The following may be objects of sale: 1. sale rescissible (Art.

upon the theory that the lesser the price.1328) 8. or undue influence (Arts. 1472) 4. It may indicate that the parties intended a donation or some other act or contract (Art1470) e. the parties are bound by their real agreement. (Hulst v. or a particular exchange or market. the ward or absentee represented suffers lesion by more than ¼ of the value of the thing sold. 1327) 5. for reason of equity.If 3rd person unable or unwilling to fix price: sale inefficacious UNLESS the parties subsequently agree upon the price . 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.1474) CIVIL LAW GROSS INADEQUACY of price does not affect a contract of sale.sale void unless proved to be founded on another true and lawful price (Art. In an ordinary sale. except that: 1. Insane Except: during lucid interval (Art.sale INEFFICACIOUS . or a certain amount above or below such price (Art. Certain with reference to another thing certain (Art. AND c.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: . 1966) o If false price stated . 1473) 2. the easier it is for the owner to effect redemption. he must pay a reasonable price therefor (Art. Fixed by agreement of the parties (Art.e. the sale is entered into by a guardian or by a representative of an absentee. hence.e.If 3rd person acts in BF or by mistake: courts may fix price . 1469) . 2007) C. letter of credit (Baviera) Price must be REAL. Drunk person 7. not simulated. RPC) 6. when the price of a sale with right to repurchase is unusually inadequate. Absolute Incapacity: (MIDDD-HI-C) 1.sale is vOID . o The price is false when the real consideration is not the same as that stated in the contract (Mapalo v. Inc. 2004) 100% UP LAW UP BAROPS 2008 Page 173 of 325 . not false. thing sold 2. mistake.34. CONSENT perfects a contract of sale. Demented persons 4. it is presumed to be an equitable mortgage (Art1602(1)) 3. or when such inadequacy shocks one’s conscience as to justify the courts to interfere. Those judicially declared “Incompetent” a) prodigals b) hospitalized lepers Price must be in o MONEY or o its EQUIVALENT .1328) 3.BUT if the thing or part thereof has been delivered to and appropriated by the buyer. Deaf-mutes who do not know how to write (Art. PR Builders. The price which the thing sold would have on a definite day.1470 & 1355) 2. Hypnotized person (Art. o If price is simulated: . 1469) . Sale is rescissible if: a. a transaction may be invalidated on the ground of inadequacy of price. Minors 2.BUT the act may be shown to have been really a donation or some other act or contract (Art.1471) Price must be TRUE. (Balite v. It may indicate a defect in the consent such as fraud.SALES Price is CERTAIN when it is: 1. 1353) . the sale is not approved by the court (Arts. CA. Mapalo. b. To be fixed by a third person (Art. BUT such does not follow when the law gives the owner the right to redeem as when a sale is made at public auction. 1995) o The buyer and the seller must have CAPACITY to enter into a contract of sale.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.g. Consent: meeting of offer and acceptance on the 1.g.SC says the contract is not void but is a relatively simulated contract.g.1381(1)(2) & 1386) 4. Persons suffering civil interdiction (Art. 10% below invoice price 3. Lim. . price .

weak mind. PNB.What: property and rights object of any litigation handled by them (Art.g.Prohibition applies to common-law spouses (Matabuena v. clothing. 1971) 2.2. in any manner. but by reason of age. institution administered . becoming thereby an easy prey for deceit and exploitation (Sec. prosecuting attorneys.1325) 2.ROC) o Status of sale: .Where both parties incapacitates: UNENFORCEABLE (Art. GOCC. disease. (Arts. education.1390(1)) . experts who. 1491) 8. 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. 1409(7)) 100% UP LAW UP The OFFER must be CERTAIN (Art. CA. Executor/Administrator . (Art. but may even forfeit it to pay the depending on the terms of balance the option BAROPS 2008 Page 174 of 325 . Intimidation 5.Except: when property regime is separation of property (marriage settlement or judicial order) .1326) The ACCEPTANCE must be ABSOLUTE. agreement on terms of payment) is admittedly lacking (Velasco v. Mistake 3. Guardian . OPTION MONEY (Limson v.Where 1 party incapacitated: VOIDABLE (Art.12. other officers and employees connected with the administration of justice) . 1482) o BUT mere payment of earnest money is not sufficient proof of a perfected sale when some essential element (e.SALES c) persons not being of unsound mind. o Offer a. Constitution) o Status of sale: VOID (Art. sec. Others specially disqualified by law . 2000) o The ff. the would-bewhen given. agents.Except: principal consents 4. 1973) o Relative Incapacity to buy (HW-PAGE-JLO) 1. Husband/Wife .Does NOT apply to sale of hereditary right bec. Judicial officers and employees (justices.Applies to judges and gov’t. transportation) are sold and delivered to incapacitated person. otherwise sale is VOIDABLE. judges. 1319) o Qualified acceptance= counter-offer Consent must not be VITIATED. 1319) as to the object and the price (Villanueva v. are not definite offers but mere invitations to make an offer. Fraud 2.a. Rule 92. Batiller. aliens. (Art..What: property of estate administered . medical attendance. take care of themselves and manage their property. 1973) EARNEST MONEY v. Agent . imperfect promise or policitacion (Litonjua v.e.k. court clerks.What: property of State. 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. (Art. without outside aid. and other similar causes. CA. executors/administrators can be “ratified” by the execution of a new contract.What: property of ward 3. 1330 &1390(2)) o Vices of consent: 1. 2006). take part in the sale 6. Lawyers . 1904) 5. unless the contrary appears: 1. L&R Corp. dwelling. Undue influence Payment of EARNEST MONEY is considered as proof of the perfection of sale.g. wrt private land in the Philippines (Art. Cervantes. the buyer is not required to buyer is bound buy.What: property of principal . he must pay a reasonable price therefor. it is not administered by the executor/administrator (Naval v Enriquez. Public officers and employees . Advertisements for bidders (Art.7. cannot.What: property of spouse .1403(3)) BUT when necessaries (those indispensable for sustenance.1489) o CIVIL LAW BUT sale to guardians. making the sale valid from the time the new contract is executed. Business advertisements of things for sale (Art.What: property or rights in litigation or levied upon an execution before the court within their territorial jurisdiction 7. Violence 4.

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

. Inc. where ownership transfers only when the buyer o signifies his approval or acceptance to the buyer or does any other act adopting the transaction. if no time has been fixed. or o authorizing or purporting to authorize the possessor of the document to transfer or receive goods represented by such document (Art. GEN RULE: owner bears the risk of loss (res perit domino:the thing is lost to the owner) B.1636(1)) Examples: .g. The presence of lessees or illegal occupants who do not have claims of ownership does not prevent symbolic delivery (Power Commercial and Industrial Corp. 2008 Page 176 of 325 Discussed in detail under obligation of the seller to deliver. Traditio constitutum possessorium real or personal property 5. Delay in actual delivery through the fault of the seller or buyer. Quasitradition incorporeal property D. 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 o retains the goods without giving notice of rejection within the time fixed or a 9 V.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. Security title: goods delivered and ownership retained by the seller merely to secure payment. 1502 (1)) 3.party in fault bears the risk 6. NOT possession. or to the order of the seller or his agent (Art. CONTROL o The efficacy of symbolic delivery can be prevented if the seller does not possess control over the thing sold. Delivery to a carrier9 goods C. The International Corporate Bank. 2001) IV. (Art. in which case this legal fiction must yield to reality. Sabio v. v. 100% UP LAW UP BAROPS . INTENTION TO TRANSFER OWNERSHIP Ownership is not transferred despite delivery in the following cases: 1. Tradition by operation of law (Art.1434) 7.1503(2)) 2.warehouse receipt It may be negotiable (bearer or order) or nonnegotiable. 1997. Stipulation to the contrary 2. o The key word is control. (Art.buyer bears the risk from the time of delivery 3. Traditio brevi manu personal property 4. RISK OF LOSS Transfer of ownership is relevant in determining who bears the risk of loss. CA.bill of lading . Sale on approval (trial or satisfaction).1502 (2)) cf. as o In conditional sale o When under the bill of lading. 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. real or personal property A. EXCEPTIONS: (Art.1504) 1. Ownership is reserved. if no time has been fixed. DOCUMENT OF TITLE Document of title is a document o used as proof of possession or control of the goods sold.quedan . the goods are deliverable to the seller or his agent.

if order.theft .SALES o Words like “not negotiable” or “nonnegotiable” do not affect negotiability 1.1513(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.levy of attachment of execution upon the goods by the transferor’s creditor. right to notify the bailee issuing the document of the transfer thereof. the title and right of the transferee may be defeated by . by indorsement  indorsement of a non-negotiable document gives the transferee no additional right (Art. by delivery . 1519) 3.impounded by the court (Art.1517) 2.loss . unless a contrary intention appears o negotiation takes effect from actual indorsement (Art.1518) CIVIL LAW Rights under transfer 1. whenever such warranties would have been implied had the contract been transfer the goods without a document (Art.surrendered to him or . 1515) o 3. if the buyer of the document paid value therefor in good faith and without notice (Art. 100% UP LAW UP BAROPS 2008 Page 177 of 325 . right to compel the transferee to indorse it.1519) IMPLIED WARRANTIES of indorser or transferor (unless a contrary intention appears): 1.1511) o Goods in the possession of the bailee cannot be attached or levied under an execution unless the document . Rights under negotiation title to the goods of the one who negotiated and of the original consignee (Art.accident . If the document is negotiable. No knowledge of fact which would impair the validity or worth of the document 4. Genuineness of document 2.a notification to such bailee by the transferor or a subsequent buyer of a subsequent sale of the goods by the transferor (Art.breach of duty .its negotiation enjoined o Bailee cannot be compelled to deliver up the actual possession of the goods until the document is . title to the goods as against the transferor. Right to transfer the title to the goods and merchantability or fitness for a particular purpose. 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.1516) o The indorser does NOT warrant the fulfillment by the bailee issuing the document or previous indorsers of their respective obligations (Art. subject to any agreement with the latter 2. When document of title is negotiable: o It may be negotiated .1513(2)) freedom from the defenses of: .if bearer. or . Legal right to negotiate or transfer 3.be first surrendered or .mistake .conversion.

(Power Commercial and Industrial Corp. 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. as when: UP BAROPS o 100% UP LAW . b. Where the goods at the time of sale are possessed by a 3rd person. Inc. Warrant the thing sold (Art. (Art. (Art. Demand or tender of delivery must be made at a reasonable hour. the buyer has not paid him the price or no period for payment has been fixed in the contract (Art. d.1198) o Rules wrt delivery of goods (tangibles) 1.1521) 2008 Page 178 of 325 1. he violates any undertaking.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. to Art.1524). 1997. to Art.the character of the goods. Where the seller is bound to send the goods but no time for sending is fixed. contract (express or implied) or usage of trade to the contrary b. 2. no delivery unless and until such 3rd person acknowledges to the buyer that he holds the goods on the buyer’s behalf. 1480 in rel. By Stipulation 3.UNLESS another standard of care required is required by law or stipulation Liability for fortuitous event: 1. c. (Art.SALES VI.not entitled to indemnity but may remove the improvement if it can be done without damage tot the thing sold. he impairs the guaranties or securities or they disappear fortuitously UNLESS he immediately gives new ones equally satisfactory.  What constitutes a reasonable time is determined by the circumstances of the particular transaction. Promised to deliver the same thing to 2 or more persons who do not have the same interest 2. place of delivery: seller’s place of business or residence if no place of business exceptions: a. such as: . v. 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. 1538 in rel. RECIPROCAL OBLIGATIONS OF THE SELLER AND THE BUYER A.1163) 2. 2. he attempts to abscond. .. Preserve (take care of) the thing sold until delivery (Art. 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.the purpose for which they are intended. Deliver o Thing sold (Art.the usual course of business in the particular trade (Smith Bell & Co. V. Sabio v. 6. 1922) 4. when symbolic delivery has been made. e. . 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. Guilty of delay b. and . 2001) The seller is NOT bound to deliver if: 1.1536 in rel. he does not does not furnish the seller the guaranties or securities he promised. the buyer loses the right to make use of the term.the ability of the seller to produce the goods if they are manufactured. By Law a. The International Corporate Bank. Preservation o Standard of care: diligence of a good father of a family . 1495) o Fruits (Arts. Ltd. CA..the facilities available for transportation and the distance the goods must be carried.1495) CIVIL LAW a. Nature of obligation requires assumption of risk o 2. in consideration of which the seller agreed to the period. 1198 & 579) 3. . he becomes insolvent UNLESS he gives a guaranty or security for the debt. UNLESS otherwise agreed. OBLIGATIONS OF THE SELLER: (WPD) 1. Matti. 5. otherwise it may be treated as ineffectual. he must send them w/in a reasonable time. 1164 &1537) o Accessions and accessories (Arts. to Arts. Delivery o o Recall: kinds of delivery Unless otherwise agreed.

1989) o express intimation that all taxes and duties had already been paid (Harrison Motors Corporation v. point c.a. under bill of lading.f.e.” “c. insurance. if one had been given.1545) o c. goods deliverable to the seller or his agent or to the order of the seller of his agent (seller reserves ownership in the goods) .1523 in rel. contrary stipulation b.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. The seller makes an affirmation of fact or any promise relating to the thing sold. the buyer may treat the nonperformance of the condition as a breach of warranty. 1503) o The expenses for the execution and registration of the sale shall be borne by the seller.a.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. .1546)  Cf.b.. 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 .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.only right of possession reserved (Art.f (cost. contrary intent .  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. what does not appear on the face of the written instrument should be regarded as dealer's or trader's talk.O. goods deliverable to the order of the buyer or his agent. (Moles v. and must take the consequences of his own imprudence. and freight charges on the goods up to the place of destination F. the owner pays for the freight). Navarro. and we will not now hold the seller to a liability equal to that which would have been created by a warranty. Where the seller is authorized or required to send the goods. IAC. 2. (Art.O. unless there is a contrary stipulation. 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. Warranty o may be express or implied o cf. delivery to a carrier for transmission to the buyer is deemed delivery to the buyer Exceptions: a. what is specifically represented as true in said document cannot be considered as mere dealer's talk.” merely make rules of presumption which yield to proof of contrary intention. AND o It was relied upon by the buyer. freight) Price quoted includes the costs of the goods. conversely.B. . (Songco v. 1917)  Examples of express warranty: o certification that the machine sold was in “A-1 condition” (Moles v. (free on board) Seller bears the expenses of transportation up to the f.i. under bill of lading. The natural tendency of such affirmation or promise is to induce the buyer to buy.SALES 7.S.1487) 3. but the seller or his agent retains possession of the BoL.if condition not performed. insurance. condition on performance of obligation: . IAC. The buyer buys the thing relying thereon. to Art. (Art.B. Sellner. however the terms “F.. Dealer’s talk (usual exaggerations of trade) o Ordinarily.. (Art.i.cf. 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.” and “F.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. 2000) If seller has promised that the condition should happen or be performed. party whose obligation is subject to the condition may refuse to proceed Express Warranty (APIR) There is an EXPRESS warranty when: 1. F.o. Machuca. AND 3.

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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)

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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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o Rescission made by manifesting an intention to rescind by: 1. 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.when the lessor has deprived the lessee of the possession or enjoyment of the thing  When the seller assigns his credit to another person. or 3. has a right of lien.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. Buyer defaults in payment for an unreasonable time. 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. 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. Price payable on a certain day irrespective of delivery and buyer wrongfully neglects or refuses to pay. or 2. OR 2. OR 2. (Borbon II v. (Art. notice to the buyer. lease of personal property . The seller may recover damages from the original buyer for any loss occasioned by the breach of the contract of sale. 3.upon the contract of sale. Right to RESCIND o Available to unpaid seller who: 1. Notifying carrier or bailee of his claim  If carrier or bailee has issued a negotiable document of title. The buyer in the resale acquires a good title as against the original buyer. Goods are of a perishable nature. right of a holder in due course NOT defeated.1595) Under the Recto Law (Arts. Servicewide Specialists. has stopped the goods in transitu o Available when: 1. o The seller CANNOT buy the goods. 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. the assignee is likewise bound by the same law. The carrier or baileewrongfully refuses to deliver the goods to the buyer or his agent Exercised by: 1. 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. 2. o The seller must exercise reasonable care and judgment in making a resale o The resale may be by public or private sale.with option to buy . the seller need NOT notify the original buyer of: 1. 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. 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. The seller is NOT liable anymore to the original buyer: .. has a right of lien. Ownership has passed to buyer and buyer wrongfully neglects or refuses to pay. has stopped the goods in transitu o Available when: 1.for any profit made by the resale 100% UP LAW UP BAROPS 2008 Page 186 of 325 .1484 & 1485) o Applies in cases of: 1. OR 2. Action for the price of goods o Available when: 1. directly or indirectly. Seller expressly reserved the right to rescind in case the buyer defaults. 2. or 3. sale of movables in installment 2. OR . Inc. 3. and the goods cannot readily be resold for a reasonable price. 1486) o o o Right of RESALE o Available to unpaid seller who: 1. Buyer defaults in payment for an unreasonable time o For the resale to be valid. Obtaining actual possession of the goods. o Effects of resale: 1. Seller expressly reserves the right of resale in case the buyer defaults. the intention to resell 2.

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

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

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

Buyer (or his agent/heirs/assigns)  If the land is registered. (Paez v. v. b. 2004)  Tender of payment is enough (i. But that tender does not in itself relieve the buyer from his obligation to pay the price when redemption is allowed by the court. 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. stipulated o Available to: 1. Complying with any other stipulation agreed upon. Loss of thing due 4. Condonation/remission 7. Redemption a. Price of the sale. if any. sell an undivided immovable.pd. EXTINGUISHMENT OF SALE A. Seller (or his agent/heirs/assigns) 2. and if he afterwards grants the vendor the right to repurchase. because when the sale is made without such an agreement. but NOT > 10 yrs. 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.e. (BPI Family Savings Bank. 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. in which case he may be sued for redemption of the whole thing Redemption exercised by: 1. CAUSES: (Arts.any document showing acquisition of the land in good faith. 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. Icasiano. UNLESS in the partition. The statement of intention must be accompanied by an actual and simultaneous tender of payment for the full amount of the repurchase price. Creditors of seller. Rescission 10. 100% UP LAW UP o o o BAROPS .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. (Ramos v. Resolutory condition fulfilled 11. the purchaser acquires the thing sold absolutely. (Baviera) o CIVIL LAW Enforceable against: 1. Veloso.  The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. Inc. 1919) o Older title.  In these 2 cases. c. 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. Magno. as a basis for action against the buyer to compel him to resell. Payment/performance 2. the right to redeem must be annotated in the title in order to prejudice a subsequent buyer from the buyer a retro. like a receipt for the price. each may redeem only his respective share  If a sole owner sells an immovable and leaves several heirs. as absolute owner already of the object. each heir may redeem only his share.SALES the execution of a public instrument (Sanchez v. 1949) Effects of redemption: 1. Returning the ff. OR . one heir was awarded with the thing sold. Confusion/merger 8. Necessary and useful expenses made on the thing sold 2.4 yrs from date of contract. Novation 6. Expenses of the contract and other legitimate payments made by reason of the sale. if made on time. consignation is not necessary). Annulment 5. Ramos. Conventional B. Legal b. 1968)  An agreement to repurchase becomes a promise to sell when made after the sale.  If the buyer leaves several heirs. Compensation 9. stipulated.1600 &1231) (P-PLAN-CCC-RRR) 1. action to redeem may be brought against each heir only for his own share. 2.  A buyer of a part of an undivided immovable who acquires the whole thereof may compel the seller to redeem the whole property. if no pd. it is a new contract entered into by the purchaser. WON the thing has been partitioned. If there were no growing fruits at the time of sale. jointly and in the same contract.. Presription 3. 1927) o Period for redemption: . AFTER they have exhausted the seller’s property  If co-owners. to the buyer: (PEN) a. CONVENTIONAL REDEMPTION (Arts.

1602. ) 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 . successors-ininterest.  If the court declares the contract as an equitable mortgage. Period of redemption extended (or granted anew) upon or after the expiration of the right to repurchase. or form or words. any person having a lien on the property. even if it is not alternatively prayed for. 1619-1623) o Legal redemption UP CIVIL LAW the right to be subrogated. after the vendor has been duly heard. o For the presumption of an equitable mortgage to arise under Art. although lacking in some formality.SALES consolidation shall not be recorded in the Registry of property w/o a judicial order.1620.119. Sec. Part of the purchase price retained by the seller. 3135. Possession retained by the seller as lessee or otherwise. Public Land Act) Taxpayer in case of tax sale (Sec. 6. LEGAL REDEMPTION (Arts. Sec. or creditor with subsequent lien. (Molina v.of the actual execution and delivery of the deed of sale *Actual knowledge of the sale immaterial (Doromal v CA.seller may redeem w/in 30 days from finality of judgment. from date of conveyance To whom granted Co-owner (Art. nevertheless reveals the intention of the parties to charge real property as security for a debt. 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. judicial/judgment creditor.in writing . 215. Payment of taxes on the thing sold borne by the seller. Diaz. 5. cases: (5P-R) 1. 2003) o In case of doubt. and (b) that their intention was to secure an existing debt by way of a mortgage. upon the same terms and conditions. 2. fruits or other benefit to be received by the buyer as rent or otherwise considered as interest. 3. successor–ininterest.by the seller .CC) Debtor in case a credit or incorporeal right in litigation is sold (Art.CC) Adjoining owner of urban land (Art. 6. a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage. Price unusually inadequate. o Remedy of apparent vendor if equitable mortgage is the real intention: REFORMATION  If decreed to be an equitable mortgage. in case of extrajudicial foreclosure of mortgage (Act No. in case of execution sale (Rule 39. the right of action to foreclose the mortgage or to collect the indebtedness arises from the judgment. 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. CA.1634) Applicant or his widow or legal heirs in case of sale of homestead (Sec.1622. CA. 4. C.  If decreed as a true sale with right to purchase. two (2) requisites must concur: (a) that the parties entered into a contract denominated as a contract of sale. 1973) CONTRACT OF SALE (with right to repurchase or absolute) vis-à-vis EQUITABLE MORTGAGE o An equitable mortgage is defined as one which.27. or other requisites demanded by a statute. even if the period for redemption has expired. (Molina v. 1975) 30 days from the date the assignee demands payment from debtor 5 yrs. and contains nothing impossible or contrary to law. NIRC) Judgment debtor.1621. (Heirs of Arches v. ROC) Debtor-mortgagor. CC) Adjoining owner of rural land (Art. 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.

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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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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the partnership. Lease agency Based on representation. similar contracts 1. 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. b. whether general or special. the agent has the obligation to determine existence and scope of agency… Against the agent. If he knows or has good reason to believe that the agent is exceeding his authority. 4. 2 parties: Lessor and lessee.AGENCY The rules on service of process make service on "agent". 3. As between principal and 3rd person. Acts under the principal’s control and instruction. Employer not liable for torts committed by the independent contractor. 100% UP LAW UP BAROPS 2008 Page 198 of 325 . there is agency regardless of WON parties understood the exact nature of the relation. 2. things other than property. independent contractor Employed by the employer. unable to sell the same to a 3rd person. CA. Exceptions: a) When agency arises ipso jure b) To prevent unjust enrichment 4. No presumption of existence: agency must exist as a fact. An agent acts only for his principal. Agent can return the Buyer.equal proprietary interest in the capital or property and exercises equal rights in the conduct of the business. CIVIL LAW Acts according to his own method. Intention of the parties to create relationship. proceeds of the sale. Agent delivers the Buyer pays the price. 1922] Agency vs. Lessor ordinarily performs only ministerial functions. he cannot claim protection. lease of service Based on employment. sale Buyer receives the goods as owner. Against the principal. 2. 3 parties: Principal. Determination of existence of agency 1. 2006). Lessee cannot bind the lessor. Relates to commercial or business transactions.. Designation by parties is not controlling. Independent contractor Agent Represents his principal. as a general object in case he is rule. Partnership a. and for himself. lease of property Lessee is not controlled by the lessor. Agent can bind the principal. Parity of standing test: A partnership generally presupposes a parity of standing between the partners-. [Harry Keeler Electric v Rodriguez. Inc. Fact of existence: if relations that constitute agency exist. agent and the 3rd person with whom the agent contracts. agency Agent is controlled by the principal. a partner acts for his partners. agency may exist without the direct assent of the agent. v. 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. 3. Agent exercises discretionary powers. Contract of sale agency to sell Agent receives the goods as the principal’s goods. cannot return the object sold. Principal is liable for torts committed by the agent within the scope of his authority. sufficient even if agent has limited authority. Relates more to matters of mere manual or mechanical execution. Agency may involve Lease of property involves property.

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

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

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

Exception: When the contract involves things belonging to the principal. However. c. CC) Basis: principal’s obligation to reimburse the agent Exception: insolvent principal (Art. CC) The agents who made a contract in their own names may sue the third person. Obligation to finish business upon principal’s death: if delay will entail any danger to the subject of the agency/principal. The substance of estoppel is the principal’s inducement to another to act to his prejudice. 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. the agent must finish the transaction/business already begun on the principal’s death (Art. 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. 1888. CC) Rationale: There is no representation. scope of action.) 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. 1884. b) To act within authority the scope of 7. His recourse is against the agent. 1886. 1883. 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. 100% UP LAW UP BAROPS 2008 Page 202 of 325 . 1884. the transaction. c) To advance the necessary funds Obligation to advance funds: when the contract stipulates that the agent shall advance the necessary funds. 1886. CC). Sotto Matti). Undisclosed General rule: If the principal is undisclosed. the agent is directly liable to the person with whom he had contracted as if the transaction were his own. This is an exception to the gen. v. Partially disclosed third is unaware of the principal’s identity. in order to protect 3rd persons against possible collusion between the agent and the principal. (Behn Mayer & Co. (Art. the owner must act as soon as practicable either by appointing an agent or by taking charge of the property. Banco Español-Fil. Kinds of principal a. If there are ambiguous instructions c. 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. CC). rule that death extinguishes agency.AGENCY Affects the entire Affects only transaction from the relevant parts of beginning. 1888. When departure from instructions is justified: a. CC) When agency shouldn’t be carried out: if its execution would manifestly result in loss/damage to the principal (Art. (Art. (Art. The substance of ratification is confirmation of unauthorized acts or conduct after it has been done. CC): authority is the power to act within the scope of his assignment on his principal’s behalf with binding effect on the latter. 1885. 1884. Obligation to answer for damages: the agent is liable for damages suffered by the principal due to his non-performance (Art. CC). 1882. CC) since he’s authorized to do such acts as may be conducive to the accomplishment of the agency’s purpose (Art. In sudden emergencies b. 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. (Art. 1883. Disclosed b. 1881. v. but once he accepts he’s bound to carry it out (Art. 1881. The agent must act within the scope of his authority (Art. CC).

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

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

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

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

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

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

without anything showing termination. 100% UP LAW UP BAROPS 2008 Page 209 of 325 .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.

7. 5. 4. 2.PARTNERSHIP CIVIL LAW Partnership TABLE OF CONTENTS Section Section Section Section Section Section Section Section Section Section 1. 9. 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 . 8. 3. 10. Nature. 6.

A debt by installment b. Where the capital is at least P3. 1768. in money or property – need a public instrument. Bilateral/multilateral 5. exception: partnership by estoppel.PARTNERSHIP NATURE. which must be recorded in the SEC. CIR) Whether a partnership exists is a factual matter. the collective effect of these circumstances may be such as to support a finding of the existence of the parties’ intent. (Heirs of Tan Eng Kee v CA) Distinctions Partnership Created by mere agreement of the parties. Interest on a loan e. Consensual 4. CC) But a partnership has a juridical personality even if requirement is not complied with. An annuity d. Rules to determine the existence of a partnership (Art.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. With legal personality (Art. 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. c. to contribute money. Nominate 3. property. CC) 1. or industry to a common fund. CREATION OF A PARTNERSHIP Essential Features Contract of Partnership: a. CC) Exceptions: 1. CC) Essential features: 1. A mutual contribution of money. Where immovable property or real rights are contributed (Art. CC) – written in a public instrument with a signed inventory of the contributions. Prima facie evidence of partnership: receipt of a share of the business profits Except if received in payment as: a. Wages or rent c. The primary purpose is to obtain profits and divide the same among the parties Characteristics: 1. General Rule: Persons who are not partners to each other are not partners as to third persons. Onerous 7. Where circumstances taken singly may be inadequate to prove the intent to form a partnership. Fiduciary 2. Form of Contract General Rule: No special form is required (Art. or illegal purposes (Aguila v CA). . by itself 3. property. 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. 1773. (Oña v. 1769. 2/more persons bind themselves b. CC) 2. 100% UP LAW UP BAROPS 2008 CIVIL LAW 2. or industry to a common fund 4. Consideration in a sale For tax purposes. 1770. with the intent of dividing the profits among themselves. 1771. 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. Has a lawful object (Art. (Art.000. 1772.’s name Page 211 of 325 . There must be a valid contract 2. Principle of delectus personae: no one can be a partner without the consent of all the partners. If no agreement as to mgt. (Art. unfair. Principal 6. The parties must have legal capacity 3. Co-ownership and sharing of gross returns don’t establish a partnership. CC) 9. (Art. 1767. Preparatory 8. 1771. etc. CC) 5. 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.

may exist even without a contract Has no juridical personality Juridical Personality Has a separate. 6. With a fixed term . Secret As to its object a. Partnershi p Creation Always created by a contract Coownership Gen. 1783. 1785.. which would be inconsistent with the policy that the corporation shall manage its own affairs. Ostensible/by estoppel – deemed one only in relation to transacting third persons (Art. This is based on public policy. Professional As to duration a. CC) b. since in a partnership the corporation would be bound by the acts of persons who aren’t duly appointed and authorized agents and officers. As to all present property (Art. CC) b. Representa -tion Profits Must be stipulated upon Must always depend upon proportionate UP 7. (SEC OPINION to Antonio Librea dated Feb. Open – known to the public b. a joint adventure is a form of partnership. while the joint adventure is formed for the execution of a single transaction. Although a corporation cannot enter into a partnership contract. CC) i. it may engage in a joint venture (Heirs of Tan Eng Kee v CA). De jure – has complied with all the necessary requisites for lawful establishment (Arts. 1772. separately and exclusively. 4. 1825. CC) ii. De facto – failed to comply with the requisites As to representation to others a. 1980) The main distinction is that the partnership contemplates a general business with some degree of continuity. Commercial/trading b.PARTNERSHIP Has no right succession of Has right succession of CIVIL LAW shares and any stipulation to the contrary is void. 29. created by law. 1830[1a]. CC) As to publicity a. distinct juridical personality Realization of profits CLASSIFICATION OF PARTNERSHIPS AND PARTNERS Kinds of Partnerships 1. 1773. 1778. Under Phil. As to profits (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. As to nature a. Particular (Art. At will (Art. 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. CC) b. BAROPS 100% UP LAW .(Art. and is of a temporary nature. can’t enter into a partnership contract. 1780. 2. CC) As to legality of existence a. Universal (Art. 1777. law. 1785. CC) unless continued by some/all the partners (Art. 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. Ordinary/real – really exists between & among the partners themselves and as to third persons b.

Discontinuing 3. stipulation as to losses 2. 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. by stipulation. represents himself as a partner of an existing partnership when he isn’t. The person – a. CC) b. pro rata to contribution Who are prohibited from entering into universal partnerships: those prohibited from giving donations (Art. 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. As to membership a.PARTNERSHIP a. Subpartner – related only to the regular partner (Art. consents to another representing him to anyone as a partner in an existing partnership. 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. common law spouses (Art. Capitalist-Industrial 9. CC). By estoppel/Quasi-partner – not really a partner but represents himself as one 2. Other special classifications a. 1776. ascendants) by reason of his office (Art. As to nature of contribution a. 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. 1789. Continuing b. the agreement as to profits 3. CC) b. if none. 739. Majority b. Universal Partnership: All present property All present property actually owned by partners are contributed  become common property of the partnership & the partners. if none. 1843. be considered as common property. 87. or BAROPS 2008 Page 213 of 325 . 1816. As to effect of expulsion a. other profits may. 1840[6]. General – liable pro rata (Art. legally married. descendants. CC) Kinds of Partners 1. 1822-1824. Limited (Art. such as: a. As to nature of membership a. pro rata to his contribution 1. As to continuation of business affairs after dissolution a. Nominal 4. 1843. 1804. As to liability a. Managing – manages the firm’s affairs b. FC) b. criminals convicted for the same offense in consideration of the same d. Real – a contributing member b. Expelling 7. As to value of contribution a. Limited/Special – only to extent of contribution (Art. As to state of survivorship a. if none. Liquidating – winds up the affairs after dissolution 10. CC) c. CC) b. CC) Types. parties guilty of adultery/concubinage c. Original b. Capitalist – contribute money or property b. Expelled (Art. Only profits from the property contributed become common property. CC) or solidarily (Arts. CIVIL LAW unless expressly permitted (Art. CC) 8. or b. Silent – doesn’t participate in management c. 1782. Industrial – contribute industry/labor. Deceased 6. General/Real – liability extend to separate property (Art. As to management a. Incoming 5.

unaware of the deception.PARTNERSHIP c.partner becomes the firm’s debtor for interest and damages from the time of 100% UP LAW UP BAROPS 2008 Page 214 of 325 . the partner will be liable for the value of these fruits (Art. Rozamin). It’s only insofar as 3rd persons are involved and for the purpose of protecting them that the principal of estoppel is recognized.Comply if mode of appraisal is agreed upon b. Corp. no agreement– by experts chosen by partners (Art. (Art. Corporation by estoppel: all persons are liable as general partners (Sec. the other partners may dissolve the firm (11 Planiol & Ripert. and the fruits weren’t delivered at the execution of the contract or any specified time. If the partnership wouldn’t have been constituted had it not been for the contribution. Meyer & Co. CC) Liability for undelivered fruits: if the property is fruit-producing. and money converted to personal use Sanctions: a. the 3rd person gave credit to the actual/apparent partnership. 21. No demand is necessary. it is a partnership de Rule when contribution is in goods: the amount must be determined by proper appraisal at the time of contribution. Third person relied on the misrepresentation. It arises when all the members of the existing partnership consented to the representation (Art. Obligation with respect to contribution of money. it should have such attribute of partnership as domicile. consents to another representing him to anyone as a partner with 1/more persons not actual partners. (MacDonald v. 1170. 1163. Remedy for breach of warranty: partnership may recover indemnity from contributing partner. Obligation with respect to contribution of property Partner is a debtor: for whatever he had promised to contribute thereto (Art. a. CC) b. v. OBLIGATIONS OF PARTNERS A. He is bound as a “partner” though he actually isn’t. CC) Partnership by estoppel: composed of the alleged partner and the partnership itself. eviction (Art. 1787. Although it has no legal standing or juridical personality. 1787. to indemnify the partnership for damages caused to it by delay in contribution of property (Art. to preserve the property with the diligence of a good father of a family (Art. CC) Subsequent changes in value: will be for the firm’s account (Art. 1786. CC) 2. CC). No real partnership is created by estoppel. 3. Code). 1786. Contribute 1. 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. 276) Other duties of contributing partners: a. Applicability of general provisions of partnership: 1. 4. A de facto partnership is created. The person becomes an agent of the existing firm and his act/obligation binds the firm. If the law recognizes a defectively organized partnership as de facto as far as 3rd persons are concerned. CC) 3. 1786. On the faith of the misrepresentation. The alleged partner can’t disallow liability by claiming he isn’t actually a partner. National City Bank) 2. 1825. 2. 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. CC) Partner is a warrantor wrt contributions of specific & determinate things: he’s bound to warrant vs. 1825. CC).

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

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

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

may be entrusted to a 3rd person. CC) Reasonable hours on business days throughout the year. he hasn’t questioned it within 3 months from knowledge of it (Art. 1804. omissions of a partner: firm is liable to the same extent as the partner (Art. 1823.Purely industrial partner not liable for losses For capitalist-industrial partner: wrt his capital contribution. save in dissolution Basis: his right of access to the books Except: 1. rule: a partner isn’t entitled to a formal account.If no profit sharing stipulated losses shall be borne UP 100% UP LAW BAROPS 2008 Page 218 of 325 . Trillana) E. place agreed upon 2. 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. CC). (Congco vs. Industrial partner not liable for losses Designation of shares: by agreement. 1799.1798. 1821.PARTNERSHIP D. C. CC). WON a partner at the time as long as he still remembers the partnership matter 3. and could’ve communicated it to the acting partner (Art. not merely during some arbitrary period of a few days chosen by the managing partners (Pardo v. the partnership is solidarily liable with the misappropriating partner (Art. Liable for wrongful act of partner Extent of liability for wrongful acts. Share of capitalist partner is in proportion to his capital contribution 2. Bound by notice to partner Notice to the firm: 1. it must be connected with partnership affairs 2. 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. Requisite so subpartner is part of the main partnership: consent of all (Art. CC) Prohibited stipulation: the exclusion of a partner from the profits or from sharing in the losses (Art. if he’s wrongfully excluded from the business/possession of the property by his copartners RIGHTS OF PARTNERS A. CC) 3. CC) F. CC). Associate another person Subpartnership: partnership of a partner with another person wrt the former’s share. 1805. Share of purely industrial partner is not fixed OF LOSSES According to agreement 1. at principal place of business (Art. Where kept: 1. Bound by partner’s admission Requisites to be admissible against the partnership: 1. CC). Share in losses and profits Rules for distribution of profits and losses. 1820. The partner who acquired it has reason to believe that it be the subject of the business. if without agreement. CC). When the designation of a 3rd person can no longer be impugned: 1. the partner has begun to execute the decision 2. Notice to a partner while already a partner 2. 1805. 1822. as may be just and equitable under the circumstanc es CIVIL LAW according to capital contribution 3. 1797.) D. unless it is manifestly inequitable or unreasonable (Art. Access partnership books Partnership books: open to inspection of all the partners at a reasonable hour (Art. Obtain formal account Gen. If sharing of profits is stipulated apply to sharing of losses 2. Lumber Co. B. in addition. Knowledge is acquired by a partner who’s acting in a particular matter. (Art. CC). receive a share in the profits in proportion to the amount of his capital contribution. he shall. it’s within the scope of the partner’s authority (Art. The subpartner isn’t a part of the partnership. 1798. CC) OF PROFITS With agreement Without agreement According to agreement 1.

property was acquired after dissolution but before winding up Partner’s interest in the partnership: his share in the profits & surplus (Art. 1812.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. CC) 2.Conveyance in partner's name BAROPS 2008 Page 219 of 325 . IAC). 1813. Property rights Property rights (Art. whenever other circumstances render it just & reasonable (Art. if the right exists by agreement 3. their separate property 2.PARTNERSHIP 2. a partner’s right in specific property isn’t subject to attachment/execution except on a claim against the partnership 4. CC) F. dissolve the partnership (Art. The assignee is only entitled to the profits assigned. the Require information account any or Inspect any of the partnership books. E. 1819. CC): Title in partnership name . contrary intention appears 2. a partner’s right in specific property isn’t subject to support payment (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. 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. with partnership property. of itself. CC). 1814. CC): 1. can seek a formal accounting (Art. Conveyance of partner’s entire interest: doesn’t. The prescription period begins to run only upon the dissolution when the final accounting is done (Fue Leung v. in the partnership. This may be assigned.1811. 1809. CC) Property used by the partnership: a partner may 1. or 2) Buyer had no knowledge of the lack of authority of the seller Conveyance does not pass title but only equitable interest. 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. a partner’s right in specific property can’t be assigned except when all partners assign their rights in that property 3. CC): the judgment creditor may – 1. a partner has an equal right with his copartners to possess specific property for partnership purposes  if excluded from this. 1831. attached. as provided in Art. in the specific partnership property 2. 1809. 1807 4. 100% UP LAW UP Enforcement of a judgment vs. a debtorpartner’s interest (Art. allow partnership to use his separate property 3. have a receiver appointed Redemption: a partner or more may redeem the interest with – 1. Convey real property Effects of Conveyance (Art. & subject to payment of support as there was already a liquidation of the partnership affairs. Cea). Partners are co-owners of specific partnership property: the incidents are – 1. apply for an order charging the partner’s interest with payment of the unsatisfied amount of the final judgment with interest 2. 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. to participate in the management Partnership capital vs. 1810. and 3. CC) The right of a partner to demand an accounting exists as long as the partnership exists. CC) or judicial dissolution (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 . 1814. contribute only the use of property 2.

Loss of specific thing i. Effect of dissolution on the partners: 1. 2006) 2008 Page 220 of 325 Title in name of 1/ more partners. Sycip). Termination: point in time after all partnership affairs have been wound up. 2. (Estate of Grimm v. Insolvency g. generally they’re spared from new obligations to which they didn’t consent. he’ll be liable for damages but he can’t be compelled to remain in the firm (Rojas v. Promised specified thing lost before delivery – dissolved ii. unless these are essential for the winding up (Testate Estate of Mota v. Promised specific thing lost after delivery & transfer of ownership – not dissolved iii. Serra) Causes of Dissolution 1.PARTNERSHIP CIVIL LAW 3. Cf Art. only the equitable interest is passed to the buyer in good faith. Transfer of usufruct – dissolved e. Expulsion of a partner in good faith b. By a partner’s express will. It may be that the succeeding partnerships merely continued the business started by the original one. it must be alienated in the name of the firm. it must be alienated in the name of said partner/s. Dissolution: the change in the partners’ relation caused by any partner ceasing to be associated in the carrying on of the business (Art. Winding up: process of settling business affairs after its dissolution. Remedy of private creditors of partners: seek the attachment/public sale of the shares DISSOLUTION AND WINDING UP Definitions: 1. 1827. 1819: if the immovable is in the firm’s name. Business becoming unlawful d. and title so acquired can only be conveyed in the partnership name (Art. CC). Acquire immovables Immovables/an interest therein may be acquired in the partnership name. The death of a partner causes dissolution. CC). B. they can’t evade prior obligations 2. If the immovable is in the firm’s name but conveyed by a partner or some of them in his/their names. End of the definite term or agreed undertaking ii. in good faith. 1831 The articles didn’t provide that the heirs would be limited partners. CC) a. 1879. Death of any partner f. Estate of Parsons. 1830. A new partnership (with the same name) was formed with the remaining living partners. 1829. Causes in violation of partnership agreement c. which provide that a special power to sell excludes the power to mortgage (Art. CC). Preference of creditors Preference: partnership creditors preferred to creditors of individual partners (Art. CC). the co-partnership would be continued with the heirs. Maglana) iii. If in bad faith. Court decree in relation to Art. Conveyance executed in partnership name of in name of partners Cf agency: this is different from the provisions on agency. Express will of all partners who haven’t assigned their interests or suffered them to be charged for their separate debts iv. if it’s in the partner/s’ name. 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. 100% UP LAW UP BAROPS .Extrajudicial causes (Art. 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. 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. Causes w/o violation of partnership agreement i. RIGHTS OF PARTNERSHIPS A. they expressly stipulated that in case of death. or 2) Buyer had no knowledge of the lack of authority of the seller Conveyance will only pass equitable interest. CA) Effect of dissolution: partnership continues until winding up is completed (Art. 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. 1828. 1774. Civil interdiction h. (Idos v. CC).

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

all the partners c. secure by bond or pay the value of the guilty partner’s partnership interest (less the value of damages he caused).PARTNERSHIP New partner’s liability: satisfied out of partnership property only. Rights of guilty party (Art. Jur. 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. 1837. 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. may borrow money or sell property to pay its debts (40 Am. CC) 5. to have the partnership property applied to discharge partnership liabilities b. Rights of innocent party If dissolution in contravention of agreement: a. rights of innocent partners i. The action for accounting & liquidation of partnership against the deceased industrial & managing partner can’t be continued against the heirs. based on breach of the agreement (Art. Rights of parties entitled to annul When entitled to rescind: if with fraud or misrepresentation Rights: a. distributed in cash to the respective partners. present & future. A withdrawing partner remains liable to a 3rd party creditor of the old partnership (Singsong vs. Tolentino). To continue the business in the same name e. the surplus assets. and b. 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. Claim for damages against guilty partner d. 4. When a partner dies. if any. to indemnify him against all partnership’s liabilities. 1837. CC) Kinds of winding up: judicial & extrajudicial Who can initiate: (PALA) a. Apply partnership property to discharge its liabilities b. Right to wind up (Art. 1837. may incur obligations necessary to complete existing contracts or to preserve partnership assets (40 Am. CC) Business isn’t continued Guilty partner with all the ff. after deducting what may be due to the firm from them as partners (Art. 100% UP LAW UP BAROPS 2008 Page 222 of 325 . 2. if there’s no agreement. To subrogate partnership creditors after his payment of liabilities to them. for payment in cash of the net amount owed to partners c. may enter into new contracts necessary for winding up. d. if any. CC) 6. 3. 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. To possess partnership property if the business is continued (Art. 1837. have the value (in cash or secured by a bond) of his interest in the partnership less damages ii. Jur. assignee Powers of a liquidating partner: limited to what’s necessary to wind up the affairs a. may engage the services of counsel to prosecute/defend the firm’s cases. b. the partner expressly authorized b. not on the deceased’s legal representatives (Lota v. Right to dissolution damages for wrongful CIVIL LAW a. [1960] Supp. 325). Rights of expelled partner Expelled with just cause Receive in cash only the net amount due him from the partnership. 1836. apply partnership property to discharge the partnership liabilities ii. the duty of liquidating its affairs devolves on the surviving partners. receive in cash his share of surplus less damages he caused Business is continued Guilty partner shall i. CC) When arises: if he’s an innocent partner (haven’t caused a wrongful dissolution). Rights of partners upon dissolution 1. CC). be released from all the firm’s existing liabilities 7. Right to continue business on wrongful dissolution (Art. Isabela Sawmill). 1837. Rights where dissolution contravention of agreement not in Rights of each partner against his copartners: a. Have the surplus. c. are liable for the debts of the prior partnership. 36). the legal representative of the last surviving partner who’s not insolvent for cause d. he has the right to claim damages against the partner who caused the wrongful dissolution.

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

1845. becomes insolvent or insane. of limited partnership containing the required data. 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. all gen partners have an equal right in business mgt Cash. & set forth clearly the change desired 2. partners: secure capital from others while retaining control & supervision of the business 2. not industry Not proper party to proceedings by/against partnership unless: 1. CC) When the certificate shall be cancelled: BAROPS 2008 Page 224 of 325 contribution Cash or property only. For gen. under oath. he is also a gen. or under civil interdiction & the business is continued 6. To fix the time for dissolution or return of a contribution 10. Gen. partner 2.PARTNERSHIP 3. UP . partnership may be a limited partner in the limited partnership formed. Obligations/debts are paid out of partnership assets and the gen. partner is admitted 5.. 1864. Must be in writing. & a partner in the former gen. partnership may be changed into a limited one. including the new members & assigning members 3. of partnership may be amended: 1. to make it more accurate (Art. partners’ separate assets 6. rights transferred to legal rep. When the cert. must be filed in the SEC (Art. A change in the character of business 7. #14-00) unless it’s a professional partnership Firm name Limited Partnership Executed in a cert. 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. A change in the time as stated in the cert. partners and 1/more limited partners Name must include the word “Limited” (SEC Memo Circ. for the dissolution of the partnership or return of a contribution 9. A partnership – no 2. partners Must contain the word “Company” (SEC Memo Circ. Partnership In any form unless immovables are contributed Composition Only gen. dies. 1865. 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. 1848. 1844. The members want to change a statement in the cert. The cert. #14-00) right to participate in managemen t Who may be limited partners: 1. A false/erroneous statement in the cert. Limited partners may get back their capital contributions subject to conditions prescribed by law (Arts. 1857 CC) Advantages of limited partnerships: 1. The limited partners aren’t personally liable for obligations beyond their contribution (Arts. 1/more limited partners contribute to the capital & share in the profits but don’t manage the business 4. 8. duly signed & sworn to by all partners & filed in the SEC 1/more gen. Additional limited partner is admitted 4. CC) Requirements to amend: 1. Substitution of a limited partner 3. partner retires. not agreed upon. as amended. A gen. A gen. Change in partnership name or in the amount/character of contribution of any limited partner 2. 1856 CC) 5. Signed & sworn to by all the members.

2. partner. Surname in firm name (Art. 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. not Liabilities of a limited partner Gen. partner. 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. 1845. When the partnership is dissolved 2. if cancellation is courtordered. 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. e. Difference between his actual contribution & that stated in the certificate as having been made b. Control of business (Art.1865. or which he contributed but was wrongfully returned to him b.1846. Non-compliance with requisites formation (Art. property. CC). partners: 1. 1858. CC) Effect: he will be considered an industrial & general partner. Liabilities to partnership creditors & other partners a. rule: not liable as a gen. partner without acquiring the rights of one. 100% UP LAW UP Effect of lack of substantial compliance: partnership becomes a general partnership wrt 3rd persons. 1848. 1844 par. 1862. which is relied upon by an innocent person and who suffered loss because of the falsity d. f. CC) Gen. Receiving/holding as collateral security any partnership property 2. he will be a general partner & limited partner at the same time. 2.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. partner. False statement (Art. 1864. Fraud on creditors (Art. or release from liability if it will prejudice the rights of 3rd persons If performed prohibited acts: presumption of fraud on the creditors. partner. (Art. c. 3. To the partnership (Art. Control here contemplates active participation in the business. CC) for LIMITED PARTNER Contribution Restriction: only cash or services (Art. Receiving any payment. Specific property which he committed but didn’t contribute. 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. 1. CC) Prohibited transactions of limited partners: 1. 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. His liability is limited to the extent of his contribution to the partnership. and the members are liable as general partners. CC) Who’s liable: any party to the certificate who knew the falsity of a statement therein. CC) Requirements to cancel: 1. partner to creditors who didn’t know that he isn’t a gen. Redemption: with the separate property of any gen. 1854. Signed by all the members 3. conveyance. But the law doesn’t absolutely prohibit the taking as collateral security of the property. Must be in writing 2. Demand that partnership books be kept at the principal place of business 2008 Page 225 of 325 BAROPS . Contributes services (Art. b. a certified copy of the order shall also be filed (Art. CC) Effect: he becomes liable as a gen. CC) Rights of Limited Partners Common rights of limited & gen. Return of contribution: if a limited partner rightfully received back his contribution to capital. If the certificate states that he’s a limited partner. 1847. CC) Limited partner is responsible for: a. A receiver may be appointed to preserve the interest. Filed with the SEC. as the prohibitions are modify by the requirement of sufficient assets to discharge the partnership obligations. 1845. When all limited partners cease to be such (Art.

The preference covers – 1. unless the limited partner desiring the return has lawfully demanded the return of his contribution. all restrictions & liabilities of the assignor 2. other matters where some benefit is granted (Art. Receive a share of the profits & surplus 7. CC) Restrictions on gen. and 3. His contribution wasn’t returned/paid In case of several limited partners: members may agree to give priority to 1/more limited partners. It is still required that the certificate be amended (Art. 1856. 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 . If assignee didn’t become a substituted limited partner: 1. retirement. Continue the business with partnership property on the death. To require any info/account transactions 2. All liabilities to non-partner creditors had been paid. 1865. Sharing pro rata: he’s entitled to a pro rata share of the partnership assets together with the creditors. or there are sufficient assets to satisfy them 2. a limited partner may recover a share in the profits/compensation by way of income stipulated in the certificate. To inspect partnership books of the Liability of substituted limited partner: 1. without the written consent or written ratification of all limited partners. Admit a person as a gen. partner 6. upon petition of limited partner: 1.PARTNERSHIP 2. transact business: the relationship between the limited partner & partnership isn’t based on trust & confidence. 1859. remains a mere assignee 2. 2. and he gave the assignee the right to be a substituted limited partner. On the arrival of the date specified in the certificate 3. insanity. All members consent. Resort to the court for the dissolution and winding up of the business 6. 1854. return of contributions. content 3. Inspect & copy any of the books. 1850. CC) Partner’s share: when the assets exceed liabilities (except those to limited & general partners). Any act which would make it impossible to carry on the partnership business 3. Any act in contravention of the certificate 2. Rights of substituted limited partner: 1. When return may be demanded: 1. civil interdiction or insolvency of a gen.CC) Conditions for return: 1. CC) Loan & other business transactions Allowed to loan money. unless the right is granted in the certificate 7. On the lapse of 6 months from notice in writing to all other members if no time is specified Gen. partner. (Art. 1847. The certificate had been cancelled or amended as to reflect the withdrawal/reduction of contribution. Possess partnership property. Demand the return of his contribution provided assets are more than the liabilities (Art. CC). Demand true & full info of all things affecting the partnership 4. Confess judgment 4. with right to receive the share of the profits/compensation by way of income. Demand a formal account 5. 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. CC) and registered with the SEC. When his demand for return of contribution wasn’t acted upon/denied 2. partners can’t. CC) Return of contribution (Art. do the ff: 1. 1851. or 2. 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. 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. or assign their rights in specific partnership property for other than a partnership purpose 5. Assign interests (Art. 3. On the dissolution of the partnership 2. compensation.1857. 1855. and this must be stated in the certificate of partnership. unless the power is granted in the certificate (Art. Share of profits (Art. There is no conflict of interests. 1858 CC). all the members consent. Admit a person as a limited partner. partners: gen. The assignee may become a substituted limited partner if – 1. the assignor is empowered in the articles of partnership.

CC) Effect: he doesn’t. Those to limited partners in respect of their capital contributions 4. 1860. in the order of priority provided by law (Arts. 1852. 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. The retirement. 1861. Those to limited partners in respect to their share of the profits and other compensation by way of income in their contributions 3. 22362251. 1863. death. his surname doesn’t appear in the partnership name 3. insolvency. except those to limited partners on account of their contribution & to general partners 2. By mutual consent of the partners before the end of the firm’s original term 7. by reason of his exercise of the rights of a limited partner. when all members consented to the continuation (Art. Those to general partners other than for capital and profits 5. Those to general partners in respect to profits 6. 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. insanity. CC) 4. If the deceased had assigned his interest in the partnership. CC). CC) 5. 1844. Conditions for exemption: 1. the limited partners shall share in the partnership assets and profits in proportion to the respective amounts of their claims (Art. When all the limited partners ceased to be such (Art. All the rights of a limited partner for the purpose of settling the estate 2. He’s exempt from general liability. Neither is he bound by the obligations of the person/partnership. ii. The causes in Arts. 1864. Those owed to creditors. CC) Rights of executors/administrators: 1. 1863. and a 100% UP LAW UP BAROPS 2008 Page 227 of 325 . under a right stated in the cert. CC). 1857.PARTNERSHIP Effect of death (Art. Fraud on the limited partner by the general partner 3. or civil interdiction of a general partner Except: if the business is continued by the remaining general partners – i. become a gen. Settling accounts after dissolution Order of priority in the payment of liabilities (Art. CC): 1. on ascertaining the mistake. If dissolved by express will of the partners: the certificate should be cancelled. he promptly renounces his interest in the profits of the business 2. When the limited partner demanded the return of his contribution but was unjustifiably denied (Art. CC) 6. The misconduct of a general partner 2. 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. 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. End of the term for which it was to exist (Art. he doesn’t participate in the management of the business Dissolution When a limited partnership may be dissolved: 1. partner. CC) 8. 1830 & 1831.

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

g. or money or other consumable thing.only the borrower has the obligation Cause or consideration in a contract of loan: 1. hire of carriage of goods – for carriage d. hire of service – for work or labor c. SECURED TRANSACTIONS – THOSE SUPPORTED BY A COLLATERAL OR AN ENCUMBRANCE OF PROPERTY 2. hire of custody – for storage Subject matter Nonconsumable thing (Art 1936) Except: when purpose of contract is not consumption. upon the condition that the same amount of the same kind and quality shall be paid. as to the lender – the right to demand its return or its equivalent SECURITY is something given. gratuitous simple loan or mutuum 3.g. involuntary deposit. bailor – the giver.g. gratuitous deposit. unilateral contract . for the sole benefit of the bailee (gratuitous) e. with a contract. 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. 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. is binding upon the parties) 2. hire of things – temporary use b. deposit for compensation. 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. as to the borrower – the acquisition of the thing 2. in which case the contract is called commodaturm. 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. either something not consumable so that the latter may use the same for a certain time and return it. in which case the contract is simply called a loan or mutuum. the party who receives the possession/custody of the thing delivered KINDS OF CONTRACTUAL BAILMENT W/ REFERENCE TO COMPENSATION 1. express or implied. commodatum. the party who delivers possession/custody of the thing bailed 2. for the sole benefit of the bailor (gratuitous) e. for the benefit of both parties e. being consensual. mandatum (do some act w/ respect to a thing) 2. but merely for exhibition the subject matter may be a consumable 100% UP LAW UP BAROPS 2008 Page 229 of 325 . real contract – delivery is essential for perfection of the loan (BUT a promise to lend.(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.CREDIT TRANSACTIONS CREDIT TRANSACTIONS include all transactions involving the purchase or loan of goods. personal – when an individual becomes a surety or a guarantor 2. bailee – the recipient. pledge and bailments for hire: a. 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.

None. precarium – one whereby the bailor may demand the thing loaned at will. ownership is retained by bailor (Art 1933) None. death of either party extinguishes the contract 2. (Art 1962) YES. the contract may be a deposit. ordinary commodatum . but the contract of loan shall not be perfected until delivery of the contract.e. if the use of the thing is merely tolerated by the owner. Otherwise. but for another purpose. there is stipulation to the contrary. 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. and not to its fruits. since he is the owner (Art 1942. (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.CREDIT TRANSACTIONS thing. Except: There is stipulation to the contrary. In this case. exists in cases where: i. the nature of the thing forbids such use. the use is exhibition of the thing. (Art 418) COMMODATUM 2 KINDS OF COMMODATUM: 1. 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. Transfer of ownership consideration Ownership is transferred to the debtor May be gratuitous or onerous. (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. (Art 1939) 1. The bailor in commodatum need not be the owner of the thing loaned. the right to use is limited to the thing loaned. (Art 1934) Who may be bailor in commodatum?  Anyone. (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. or 2. 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. 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 . the contract that arises is a lease contract (Art. Art 1174) NO. essentially gratuitous (Art 1933) Note that if there is any compensation.use by the bailee of the thing is for a certain period of time 2. the contract ma be one of usufruct. i. enjoyment of the fruits must be incidental to the use of the thing itself. 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. (Art 1940) In cases where there is such a stipulation.

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

b. 4. loan of fungible thing Kinds of interest: 1. extraordinary expense for preservation 2. Compound Interest – that which is imposed interest due and unpaid. 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. oil. b. 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. obligation on the part of debtor to pay (not exactly to return) When is a contract deemed a barter? (Art 1954) 1. Simple interest – which is paid for the principal at a certain rate fixed or stipulated by the parties 2. quantity. weight. obligation on the part of the latter to give things of the same kind. such as grain. or measure. even if without fault are borne equally by the bailor and the bailee. bailee gives bailor notice before incurring the expenses. the legal rate shall be imposed Except: a. Lawful Interest – that which the laws allow or do not prohibit 5. loan of money 2. transfer of ownership of non-fungible thing to another 2. unless there is contrary stipulation c. ordinary expenses for use and preservation are also borne by bailor (Art 1950. 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 . 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. Legal Interest – that which the law directs to be charged in the absence of any agreement as to the rate between the parties. extraordinary expenses on the occasion of actual use by bailee. Wine is consumable by nature. except when the expense is so urgent that a reply to notice cannot be awaited without danger to the thing b. when judicially demanded as provided in art 2122. 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. (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.g. delivery of a money or other consumable thing 2. sugar. and quality What is a fungible thing?  Fungibles are those which are dealt with by number. 1. etc.  e. but it may be non-fungible if the intention is merely for display or exhibition.  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.CREDIT TRANSACTIONS Requisites for liability of bailor to arise: 1. (Art 1953) Elements of a mutuum: 1. 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.

bec it’s perfected by the delivery of the subj matter. goods or chattels 2. 2. which may also be regarded as necessary. goods or chattels 6. Deposit v. 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 there is no delivery. Bilateral – if it’s for a compensation.CREDIT TRANSACTIONS principal obligation and the resulting total amount shall earn interest Payment of unstipulated interest 1. increase is provided by law/ resolution by the monetary board b. 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. 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. 5. Deposit v. there is a corresponding deescalation clause c. (This is why if it’s only an accessory or secondary oblig of the recipient. Interest is the compensation allowed by law or fixed by the parties for the loan or forbearance of money. Commodatum Safekeepin Transfer of Purpose g the Use May be Essentially Remuneratio gratuitous & always n gratuitous In Both extrajudicia movable & Object l deposit. 4. 1. bec it gives rise to obligs on both the depositary & the depositor. bec only the depositary has an oblig. Real – like commodatum & mutuum. Requirements for a valid escalation clause a. 3. Unilateral– if it’s gratuitous. 1962) 2. is binding & enforceable upon the parties. there is merely an agreement to deposit w/c. with the obligation of safely keeping it and of returning the same. Hence. 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. 3. a contract of future deposit is consensual (see 1934 CC). Usury is contracting for or receiving something in excess of the amount allowed by law for the loan or forbearance of money. 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. If the safekeeping of the thing delivered is not the principal purpose of the contract. there is no deposit but some other contract. The usury law has not been repealed. where property saved from destruction w/o knowledge of the owner PRINCIPAL PURPOSE Safekeeping of the thing delivered. where depositary engaged in the business of storing goods 3. where unstipulated interest is paid by mistake the debtor may recover as this would be a case of solution indebiti or undue payment 2. deposit is not constituted but some other contract). there may still be unconscionable interest if the court finds it so 5. where there is contrary stipulation 2. it is just suspended. however. Gratuitous as a general rule Exceptions: 1. immovable only property 2008 Page 233 of 325 100% UP LAW UP BAROPS . a floating interest rate is not invalid per se but there must be a reference point 7. Voluntary as a general rule. (Art. Where there is no loan or forbearance there is no usury 4.

1967) a. 3.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. upon the death of the depositary. b. the depositor has complete freedom in choosing the depositary. the depositor must be the owner of the thing deposited.made in compliance with a legal obligation. merger. extrajudicial (Art. c. Judicial deposit may cover movable as well as immovable property. necessary. voluntary. the depositary may be a 3rd person. 2. when two or more persons claiming to be entitled to a thing may deposit the same with a third person. the third person assumes the obligation to deliver to the one to whom it belongs. however is liable to: a) return the thing deposited while still in his possession. 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. there is lack of free choice in the depositor. ONLY in gratuitous deposits. 2. Only movable/personal property may be the object of extrajudicial deposit. The main difference btw a voluntary deposit & a necessary deposit is that in voluntary deposit. like rights & actions. other provisions in the Civil Code (novation. 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. EFFECTS OF INCAPACITY Depositary is incapacitated. For example. Sometimes. upon the loss or deterioration of the thing deposited. The depositary may bring an action of interpleader to compel the depositors to settle their conflicting claims. 2. there are only 2 persons involved. etc. Ordinarily. 3. 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 . whether voluntary or necessary. whereas in the latter. judicial when an attachment or seizure of property in litigation is ordered 2. it may belong to another person than the depositor. A deposit is extinguished: a. AND b) pay the depositor the amount by which Page 234 of 325 EXTINGUISHMENT OF DEPOSIT 1. Here one of the depositors is not the owner. Depositor is capacitated Depositary does not incur the obligations of a depositary Depositary. b. 4. By virtue of a court order.) KINDS OF DEPOSIT 1. However. however. 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.CREDIT TRANSACTIONS movable things may be the object CREATION OF A DEPOSIT 1. 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. In such case. As a general rule. PARTIES TO A DEPOSIT 1. its purpose being to protect the rights of the parties to a suit. The provisions do not embrace incorporeal or intangible property.

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. Obligation not to change the way of deposit (Art. or The thing is lost through the negligence of his employees whether the latter are manifestly careless or not. even in the absence of negligence. Exception The depositary is express stipulation."” (Thus. ii. 1094). cui humana infirmitas resistere non potest. Obligation not to transfer deposit (Art. The presumption that the depositor took into account the diligence which the depositary is accustomed with respect to his own property. in this case. he is culpably negligent in selecting one whereas he would not have been if he had selected the other”). or which having been foreseen were inevitable. major casus est. has taken into consideration the latter’s qualification. that "no one shall be liable for events which could not be foreseen.” 3. b) Return of the thing when required – even though a specified term or time for such may have been stipulated in the contract.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. He deposits the thing with a third person who is manifestly careless or unfit although authorized. it also provides. Rationale: i. 100% UP LAW UP BAROPS 2008 Page 235 of 325 . Requisites: a) The depositary must notify the depositor of such change and b) Must wait for the reply of the depositor to such change. 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. He transfers the deposit with a third person without authority although there is no negligence on his part and the third person. b) General rule: Depositary is liable for loss of the thing deposited when: i. 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. 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. in choosing the depositary. Two primary 1972) obligations (Art. 1973) a) General rule the depositary is not allowed to deposit the thing with a third person. iii. following the principle of the Roman law. Exception: If the delay of the reply would cause danger. Essential requisite of judicial relation which involves the depositor’s confidence in his good faith and trust worthiness. ii. 20 THE ROMAN CATHOLIC BISHOP OF JARO v. 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. a) safekeeping of the object. 2. 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. with the exception of the cases expressly mentioned in the law or those in which the obligation so declares. authorized by OBLIGATIONS OF THE DEPOSITARY 1.

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

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

Depositary’s liability in case of loss by force majeure or government order. If the depositor refuses to receive the thing. 1990) The depositary is not liable in cases of loss by force majeur or by government order. c) Depositor notified the depositary of such dangerous character. 17. 20. 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. 1993). b) Pay the actual price of the thing deposited. (Art. However. b) The reason is justifiable. (Art. 1992) of alienation is done in GOOD 2. even though a specified period or time for such return may have been fixed. 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. Exception: When the deposit is for a valuable consideration. 1991) When FAITH: a) Return the value of the thing deposited b) Assign the right to collect from the buyer. (Art. Note: The debt must be prior to the deposit. 1965. the depositary may deposit the thing at the disposal of the judicial authority.Obligation to return at the place of return (Art.Liability in case of alienation of the depositary’s heir. CIVIL LAW 19. 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. the thing must be returned to his legal representative. 1993) General rule: The depositary must be reimbursed for loss suffered by him because of the character of the thing deposited. 21. 16. transportation expenses shall be borne by the depositor. 1992. (see Art. (Art. he has the duty to deliver to the depositor money or another thing he receives in place of the thing. 1988) General rule: The thing deposited must be returned to the depositor upon demand. (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.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. When alienation is done in BAD FAITH: a) Liable for damages. Exceptions: a) Depositor was not aware of the danger.  The heir does not need to pay the actual price of the thing deposited.Depositary may retain the thing in pledge until the full payment of what may be due him by reason of the deposit. 1987) General rule: At the place agreed upon by the parties. 2008 Page 238 of 325 100% UP LAW UP BAROPS . Obligation to pay losses incurred due to character of thing deposited. OBLIGATIONS OF THE DEPOSITOR 1. (Art. d) Depositary was aware of the danger without advice from the depositor. Obligation to pay expenses preservation. b) Depositor was not expected to know the dangerous character of the thing. (Art. 1989) (NOTE: in this case. 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 return upon the time of return.Right of the depositary to return the thing deposited.

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

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

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

c. but which contemplates a future course of dealing. not by reason of the contract. as they accrue. It is prospective in its operation and is generally intended to provide security with respect to future transactions within certain limits. until the expiration or termination thereof. 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. Filing of the complaint (upon judicial demand). covering a series of transactions. Interest runs from: a. including those arising in the future. 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. a. b. 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. of guaranty. Future debts. 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. especially if the right to recall the guaranty is expressly reserved. 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. Penalty may be provided – a surety may be held liable for the penalty provided for in a bond for violation of the condition therein. judicial costs. The surety agreement itself is valid and binding even before the principal obligation intended to be secured thereby is born. 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. 2. 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. even if the amount is not yet known. Interest. Rationale: A contract of guaranty is subsidiary. 2. interest at the legal rate. 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. 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. Principal obligation subject to a suspensive condition – the guarantor is liable only after the fulfillment of the condition. may be guaranteed but there can be no claim against the guarantor until the amount of the debt is ascertained or fixed and demandable. even without stipulation and even if the surety would thereby become liable to pay more than the total amount stipulated in the bond. or b.” CIVIL LAW 8. Exceptions: 1. his liability shall be reduced to the limits of that of the debtor. Principal obligation subject to a resolutory condition – the happening of the condition extinguishes both the principal obligation and the guaranty 9. generally for an indefinite time or until revoked. and contemplates a succession of liabilities. But the guarantor may bind himself for less than that of the principal. and attorney’s fees when appropriate. 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. which are within the description or contemplation of the contract. for which.CREDIT TRANSACTIONS 1. the latter’s liability being governed by the 100% UP LAW UP BAROPS 2008 Page 242 of 325 . but by reason of his failure to pay when demanded and for having compelled the creditor to resort to the courts to obtain payment. A guaranty may secure the performance of a conditional obligation 1. judicial costs. the guarantor becomes liable. A continuing guaranty is one which covers all transactions. especially if the right to recall the guaranty is expressly reserved.

He has sufficient property to answer for the obligation which he guarantees. quality. GUARANTY WARRANTY DISTINGUISHED FROM Primarily liable – undertakes directly for the payment without reference to the solvency of the principal. Rationale: 1. A contract of guaranty is covered by the Statute of Frauds Guaranty must not only be expressed but must so be reduced into writing. 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. by the use of due diligence. The existence of a guaranty is not presumed (2055) Guaranty requires the expression of consent on the part of the guarantor to be bound. evidence. To make certain that on making it. of the agreement cannot be received without the writing. It need not appear in a public document. On the guarantor (2056-2057) 1. It cannot be presumed because of the existence of a contract or principal obligation. 11. the responsibility or obligation assumed by the surety is greater or more onerous than that of a guarantor 13. Specified person stipulated as guarantor: Substitution of guarantor may not be demanded 2008 Page 243 of 325 100% UP LAW UP BAROPS . the guarantor proceeded with consciousness of what he was doing. Hence. 2. therefore. or a secondary evidence of its contents. without any demand by the creditor upon the principal whatsoever or any notice of default Undertakes to pay if the principal does not pay. it shall be unenforceable by action. unless the same or some note or memorandum thereof be in writing.CREDIT TRANSACTIONS obligations contract. However. Hence. or by his agent. or quantity of the subject matter of a contract is what it has been represented to be. 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. and is so responsible at once the latter makes default. and the contract of guaranty continues. 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. and subscribed by the party charged. the dent cannot be paid CIVIL LAW 10. He possesses integrity. He has capacity to bind himself. 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. 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. There be assurance that the guarantor had the true intention to bind himself. Selection of Guarantor: Charged as an original promisor 1. 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. 2. he assumed under his undertaking Secondarily liable – he contracts to pay if. 3.

3. The guarantor has the right to benefit from excussion/ exhaustion25 Exceptions to the benefit of excussion (2059) 1. Where a pledge or mortgage has been given by him as a special security. The guarantor becomes primarily liable as a solidary codebtor. v SIA: “The surety in the present case bound itself "jointly and severally" (in solidum) with the defendant. the liability of the guarantor as the debtor cannot fulfill his obligation d. 3. therefore. If he fails to interpose it as a defense before judgment is rendered against him. Point out to the creditor: i. the creditor is. 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. 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. EFFECTS OF GUARANTY BETWEEN THE GUARANTOR AND THE CREDITOR 1. 2. Sufficient to cover the amount of the debt. The exception is when the debtor has left a manager or representative. exists only when a pledge or a mortgage has not been given as special security for the payment of the principal obligation. Guarantor selected by the principal debtor: Debtor answers for the integrity. iii. 2. b. In effect. Exception: SOUTHERN MOTORS. 2059: a. v BARBOSA: “The right of guarantors…to demand exhaustion of the property of the principal debtor. 2. he renounces in the contract itself the benefit of exhaustion26. Term of the agreement. As provided in Art. As a party. and solvency of the guarantor. If the debtor becomes insolvent. In case of insolvency of the debtor – guarantor guarantees the solvency of 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. 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. When he (debtor) has absconded. Set it up against the creditor upon the latter’s demand for payment from him. 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. the liability assumed is that of a surety. Available property of the debtor – the guarantor should facilitate the realization of the excussion since he is the most interested in its benefit. 2060: In order that the guarantor may make use of the benefit of excussion. If he has bound himself solidarily with the debtor. he must: a. INC. b. If he is a judicial bondsman and subsurety (2084) 4. It is not necessary that the debtor be judicially declared insolvent. and to incur the delays and expenses incident thereto.” 26 LUZON STEEL CORP. capacity. bound thereby.” 100% UP LAW UP BAROPS 2008 Page 244 of 325 . may demand exhaustion of all the property of the debtor before he can be compelled to pay. e. 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). ii. c. b. 5. If he does not comply with Art. If the guarantor has expressly renounced it . 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".CREDIT TRANSACTIONS Reason: The selection of the guarantor is: a.

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

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

Liability is contractual and accessory but direct: 2. 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. should be protected against unjust pecuniary impoverishment by imposing on the principal. This rule will apply only after it has been definitely ascertained that the contract is one of suretyship or guaranty. for profit and on an impersonal basis. Reason: They are not mere guarantors. the second. 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. and the latter can always claim that it was never his intention to be the sole person obligated thereby. Compensated corporate sureties are business association organized for the purpose of assuming classified risks in large numbers. 4. 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. In the absence of collusion. the contract is called suretyship and the guarantor is called a surety. b. the rules peculiar to suretyship do not apply. Exception: Unless otherwise expressly provided. separately or together. STRICTISSIMI JURIS RULE NOT APPLICABLE TO COMPENSATED SURETIES Reasons: 1. the surety is bound by a judgment against the principal event though he was not a party to the proceedings. NOTE: Surety is not entitled to notice of principal’s default 5. Such corporations are in fact insurers and in determining their rights and liabilities. The creditor may sue. 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. rather than the first should perform. Undertaking is to creditor. a pledge or mortgage sufficient to cover the obligation shall be admitted in lieu thereof. Liability arises only if principal debtor is held liable a. the principal debtor and the surety. Liability is limited by terms of contract 3. 100% UP LAW UP BAROPS 2008 Page 247 of 325 . A surety bond is void where there is not principal debtor because such an undertaking presupposes that the obligation is to be enforceable against someone else besides the surety. and as between the two who are bound. 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.CREDIT TRANSACTIONS If the person required to give a legal or judicial bond should not be able to do so. but sureties whose liability is primary and solidary. 2. 3. c. NATURE OF SURETY’S UNDERTAKING 1. They are secured from all possible loss by adequate counter-bonds or indemnity agreements. 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. duties akin to those of a fiduciary. 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. who is entitled to but one performance. If a person binds himself solidarily with the principal debtor.

and in the absence thereof. 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. Property is delivered to the pledgee. 100% UP LAW UP BAROPS 2008 Page 248 of 325 . 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. Requisites of pactum commissorium28: a) Pledge or mortgage. 5) Debtor retains the ownership of the thing given as a security. IMPORTANT POINTS 1) Debtor-owner bears the risk of loss of the property. 6) Thing pledged or mortgaged alienated. ANTICHRESIS ESSENTIAL REQUISITES COMMON TO PLEDGE AND MORTGAGE 1) Constituted to secure the fulfillment of a principal obligation27. 27 MANILA SURETY V VELAYO: The accessory character is of the essence of pledge and mortgage. Effect on security contract: Nullity of the stipulation does not affect validity and efficacy of the principal contract. 8) Pledgor or mortgagor may be a third person. 4) Cannot exist without a valid obligation. 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.CREDIT TRANSACTIONS PLEDGE. Not valid against 3rd persons unless a description of the thing pledged and the date of the pledge appear in a public instrument. the thing pledged or mortgaged may be alienated for the payment to the creditor. pledge Constituted on movables. 3) Mortgage of a conjugal property by one of the spouses is valid only as to ½ of the entire property. Not valid against 3rd persons if not registered. and not to foreclosure of mortgages. Exceptions: a) Where each of several things guarantees a determinate portion of the credit. 3) The persons constituting the pledge or mortgage have the free disposal of their property. 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. b) Where only a portion of loan was released. consisting of several lots should be sold separately. mortgage Constituted on immovables. 6) When the principal obligation becomes due. PROHIBITION AGAINST PACTUM COMMISSORIUM 1. 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. 2) Pledgor or mortgagor must be the absolute owner of the thing pledged or mortgaged. that they be legally authorized for the purpose. As stated in Art 2085 CC. IMPORTANT POINTS 1) Future property cannot be pledged or mortgaged. 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. 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. 2. may be CIVIL LAW 2) Creditor cannot appropriate to himself the thing nor can he dispose of the same as owner. 3. 5) Pledgor or mortgagor has free disposal of property. 2) Pledge or mortgage is indivisible. c) Where there was failure of consideration. 4) In case of property covered by Torrens title. MORTGAGE. applies to sales in execution. b) A stipulation for an automatic appropriation by the creditor of the property in the event of nonpayment. or by common consent to a 3rd person. Delivery not necessary.

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

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

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

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

there being nothing in the Code to show that antichresis is only applicable to securing the payment of interest-bearing loans. 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. 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. taking into consideration the peculiar circumstances. amount of principal and interest must be specified in writing 4. it can cover only the fruits of an immovable property 2. NOTE: The obligation to pay interest is not of the essence of the contract of antichresis. EFFECT OF INADEQUACY OF PRICE IN FORECLOSURE SALE 1) Where there is right to redeem. express agreement that debtor will give possession of the property to creditor and that the latter will apply the fruits to the interest. it does not produce a real right The creditor. The title to land sold under mortgage foreclosure remains. 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. 2) If the deficiency is embodied in a judgment. 2) Property may be sold for less than its fair market value. and thereafter to the principal of the credit (Art 2132) CHARACTERISTICS 1. 3) The value of the mortgaged property has no bearing on the bid price at the public auction. in the mortgagor or his grantee until the expiration of the redemption period and conveyance by the master's deed. ANTICHRESIS is a contract whereby the creditor acquires the right to receive the fruits of an immovable of the debtor. 3) Action for recovery of deficiency may be filed even during redemption period. upon the theory that the lesser the price the easier it is for the owner to redeem. then to the principal of his credit 5.Exception: Where the price is so inadequate as to shock the conscience of the court. unless there is stipulation to the contrary. WAIVER OF SECURITY BY CREDITOR 1) Mortgagee may waive right to foreclose his mortgage and maintain a personal action for recovery of the indebtedness. 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.CREDIT TRANSACTIONS RIGHT OF MORTGAGEE TO RECOVER DEFICIENCY 1) Mortgagee is entitled to recover deficiency. 2134) SPECIAL REQUISITES: 1. 4) Action to recover prescribes after 10 years from the time the right of action accrues. it is referred to as deficiency judgment. 2) Mortgagee cannot have both remedies. hence. if any. inadequacy of price is immaterial because the judgment debtor may redeem the property. antichresis is susceptible of guaranteeing all kinds of obligations. formal contract – it must be in a specified form to be valid (Art. . On the contrary. provided that the public auction was regularly and honestly conducted. if owing. 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. with the obligation to apply then to the payment of the interest. delivery of the immovable is necessary for the creditor to receive the fruits and not that the contract shall be binding 3. Accessory contract – it secures the performance of a principal obligation 2. There is no such 100% UP LAW UP BAROPS Page 253 of 325 .

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

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

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

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

To one not lawfully entitled to possession . the warehouseman warrants: a. upon giving of a bond with sufficient securities . Persons entitled to deliver under: a. upon proof of the loss or destruction of the receipt. 7) (3) Misdelivery of the goods (Sec. 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. such original receipt is uncancelled at the date of the issue of the duplicate .A warehouseman does not have a cause of action against a person to whom he misdelivered the thing. and 2. 11) .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. and b.Still liable for conversion if: 1. authorized or not. b. or b. etc. 10) a. Alteration material: but it was authorized. he had been requested NOT to make such delivery 2. prior to delivery.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 . 34) EFFECTS OF ALTERED RECEIPTS a. Alteration immaterial: whether fraudulent or not. To a person entitled to delivery under a non-negotiable receipt or written authorization OR person in possession of a negotiable receipt . 6 and 15) . 36 a. 33) or because the goods are perishable and hazardous (Sec.Exception: If the description consists merely of marks or labels upon the goods or upon the packages containing them. Acts for which a warehouseman is liable (1) Failure to stamp “duplicate” on copies of a negotiable receipt (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.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. person in possession of a negotiable receipt (which was lawfully negotiated) . with written authority 3.This is applicable ONLY to negotiable receipts but NOT to a situation where there was a valid sale in accordance with Sec. (7) Failure to take care of the goods (Sec. Material alteration innocently made: though unauthorized. 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. (2) Failure to place “non-negotiable” on a non-negotiable receipt (Sec. 14) .Remember that a warehouseman must deliver to the one who has the receipt but if such was lost. a competent court may order the delivery of the goods only: a.The duplicate imposes no other liability upon the warehouseman. the word “duplicate” must be plainly placed by the warehouseman upon the face of every such receipt except the 1st. Material alteration fraudulently made: warehouseman is liable according to the original tenor to a: 1. the warehouseman is liable on the altered receipt according to its original term. purchaser of the receipt for value without notice.. a non-negotiable receipt.CREDIT TRANSACTIONS 2. 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.When more than one negotiable receipts are issued for the same goods. . unless the depositor sues him. c. d. 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. 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 liable according to the terms of the receipts as altered. 12) (8) Failure to give notice in case of sales of goods to satisfy his lien (Sec. that the duplicate is an accurate copy of the original receipt b. In such case. 20) . the warehouseman is liable on the altered receipt according to its original tenor.

weighing 5.Effect: He will be liable after a lapse of a reasonable time. labor 3. from the warehouseman’s lien b. Investigate and determine within a reasonable time the validity of the claims. insurance 6. 36) DUTY OF WAREHOUSEMAN WHEN THERE ARE SEVERAL CLAIMANTS . interest 4. not on the goods. cooperating 7. Therefore.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.The goods themselves cannot readily be attached or levied upon by ordinary legal process EXTENT OF WAREHOUSEMAN’S LIEN a. To the person who wins in the interpleader case (Sec. c. preservation of the goods b.Exception: In case of fungible goods of the same kind and grade provided: a. the goods cannot be attached or levied upon under an execution. the document is impounded by the court  The warehouseman cannot be compelled to deliver the goods until: a. or b. He may bring a complaint in interpleader .The warehouseman may either: a. 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. the negotiation is enjoined. . directly or indirectly from a transfer made by the depositor at the time of the deposit for storage or subsequent thereto. he is authorized by custom . WITH REGARD TO OWNERSHIP a. the receipt is surrendered to him. b.CREDIT TRANSACTIONS owner. Ownership is not a defense for refusal to deliver .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. money advanced 2. or c. of conversion as of the date of the original demand for the goods. 17) 3. He may not do (a) and (b) . except: 1. To the buyer in case there was a valid sale of the goods (Sec. and deliver to the person whom he finds is entitled to the possession of the goods . he is authorized by agreement b. Adverse title of a 3rd person is not a defense for refusal to deliver by a warehouseman to his bailor on demand. To persons to whom the goods must be livered (Sec. transportation c. it is impounded by the court . 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.Effects: a. and 2. b) he is liable for refusal to deliver to the rightful claimant when it is required to have an interpleader. reasonable charges and expenses for notice and advertisements of sale 100% UP LAW UP BAROPS 2008 Page 259 of 325 . 18) 4. . To the person he finds to be entitled to the possession after investigation (Sec. lawful claims for 1. 2.Effect: a) he will be relieved from liability in delivering the goods to the person whom the court finds to have better right. COMMINGLING OF DEPOSITED GOODS CIVIL LAW . . lawful charges for 1.Effect: He is not excused from liability in case he makes a mistake b. the document be first surrendered.This does NOT apply to cases where the warehouseman himself makes a claim to the goods. 9) 2. other charges and expenses in relation to such goods d.General rule: A warehouseman may not mingle goods belonging to different depositors. REMEDY OF CREDITOR WHOSE DEBTOR OWNS A NEGOTIABLE RECEIPT Attachment of the negotiable receipt. each depositor shall own the entire mass in common and entitled to his portion b. unless: a. storage.

a description of the goods to be sold b. including the reasonable charges of notice. By refusing to deliver the goods until his lien is satisfied. for the protection of the warehouseman and to avoid criminal liability b. c. Even if without lien. an offer to surrender the receipt a.A warehouseman has NO lien on goods belonging to another and stored by a stranger in fraud of the true owner’s right. other charges expressly enumerated (from b. the sale will be advertised stating: a. b. time and place of the sale C. brief description of the goods c. place where the lien was acquired b. . After the time for payment of the claim if the notice has elapsed. Written notice to the person on whose account the goods are held or to persons who claim an interest in the goods containing: a. b. 4. advertisement and sale c. 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.The lien may be lost through: a. the warehouseman shall satisfy his lien b. Publication: a. an acknowledgment that they have been delivered REMEDIES FOR A WAREHOUSEMAN 1. the name of the owner or person on whose account the goods were held c. an offer to satisfy the warehouseman’s lien (because a warehouseman may refuse delivery until his lien is satisfied) 2. all remedies allowed by law to a creditor against his debtor for collection of charges. 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. an offer to sign when the goods are delivered. not less than 10 days from: 1. voluntarily surrendering possession of goods constitutes a waiver or abandonment . a demand that a claim be paid on or before a day mentioned. statement that if the claim is not paid. 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 . From the proceeds of the sale: a. to the possession of the goods on payment of the charges. the balance shall be held by the warehouseman and delivered on demand to the person to whom he should deliver it F. Any time before the goods are sold. GOODS SUBJECT TO LIEN a. d and e above) although the amount is NOT stated . 2008 Page 260 of 325 BAROPS . By causing the extrajudicial sale of the property and applying the proceeds to the value of the lien Process: A. wrongfully refusing to deliver the goods to a person who holds the receipt or the depositor upon DEMAND accompanied with: 1. 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. The warehouseman shall deliver the goods to that person if he is entitled under this Act. time when notice should reach its destination if sent by mail d. 3. the goods will be advertised for sale and then sold at a specified time and place B. 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. if such place is manifestly unsuitable for the purpose. this is subject to waiver 3. Sale itself in: a. delivery of notice if personally delivered 2.For claims not specified. goods of the depositor who is liable to the warehouseman as debtor wherever such goods are deposited. the warehouseman shall retain ownership of the goods. itemized statement of warehouseman’s lien showing the sum due and when it became due b.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. 2. any person may pay the warehouseman for his lien and the other expenses. Otherwise.CREDIT TRANSACTIONS e. charges for storage and preservation of the goods b. at the nearest suitable place E.

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

All civil proceedings pending against the insolvent debtor shall be stayed. Mortgages or pledges. whose credits or demands accrued in the Philippines. INVOLUNTARY INSOLVENCY – an adjudication of insolvency may be made on the petition of three or more creditors. residents of the Philippines. 2. Possessing sufficient property to cover all his debts.000. 4.00 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. 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. 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. Two thirds (2/3) of the creditors voting upon the same proposition. attachments or executions on property of the debtor duly recorded and not dissolved are not affected by the order. which 2.000. Petition is filed by a debtor.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. KINDS OF INSOLVENCY VOLUNTARY INSOLVENCY – an insolvent debtor owing debts exceeding the amount of P1. and 4. Foreseeing the impossibility of meeting them when they respectively fall due. Represents at least three fifths (3/5) of the total liabilities of the debtor.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.000.CREDIT TRANSACTIONS 1. and in case where there are preferences. 20) The amount of indebtednes s must exceed P1. 2. three or more creditors are required EFFECT OF COURT DEBTOR INSOLVENT 1. some creditors may not receive any amount at all In case of involuntary insolvency. 3. 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 Bond is not required An order of adjudication may be 100% UP LAW UP BAROPS 2008 . 3. 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.000. and the amount of which credits or demands are in the aggregate of not less than P1.

CA: Assignment of Credit/Consent: As provided in Article 2096 in relation to Article 2141 of the Civil Code. and effects of the debtor. Properties fraudulently conveyed. the legal title to all the property of the insolvent is vested in the assignee. 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. EFFECTS OF ASSIGNMENT38 1.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. To establish his right to sue in that capacity The bond is solely for the benefit of the creditors of the insolvent. 100% UP LAW UP BAROPS . d. b. 3. Dissolve any attachment levied within one month next preceding the commencement of insolvency proceedings. Vacate and set aside judgment entered in any action commenced within 30 days immediately prior to the commencement of insolvency proceedings. Holders of claims for unliquidated damages arising out of pure tort. 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. Those who did not file their claims at least two days prior to the time appointed for such election 2. PROPERTIES OF INSOLVENT THAT PASS TO THE ASSIGNEE 1. a thing pledged may be alienated by the pledgor or owner with the consent of the pledgee. debts. 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. wrongfully takes property from such third persons and converts it to his own use. Purpose: 1. and the 38 SERVICEWIDE v. Property held in trust. 2. including all deeds. A mortgage credit may be alienated or assigned to a third person. and papers in relation thereto. Those whose claims are barred by the statute of limitations 3. Right of action for damages to real property 4. and effects of the insolvent shall be brought by the assignee and not by the creditors. or any part thereof. 2. books. 2. To establish his official character 2. The assignment shall: a. purporting to be as such. the assignee is required to give a bond for the faithful performance of his duties. Property exempt from execution. Vacate and set aside execution issued thereon. 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. 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. 3. Assignee takes the property in the plight and conditions that the insolvent held it. 3. This provision is in accordance with Act No. 1508 which provides that a mortgagor of personal property shall not sell or pledge such property. Upon appointment. 4. CREDITORS NOT ENTITLED TO VOTE IN THE ELECTION OF ASSIGNEE 1. 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. All real and personal property. and that third persons have no remedy against the sureties if the assignee. estate. All actions to recover all the estate. c. Since the assignee of the credit steps into the shoes of the creditor-mortgagee to whom the chattel is mortgaged.

With reference to specific movable and immovable property of the debtor. (The general rule is that the purpose of insolvency proceeding is the equitable distribution of the insolvent’s assets among the debtor’s creditors. 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. Creditors claiming preference must sufficiently establish their credits and their right to preference to entitle them to such preference. ORDER OF DISTRIBUTION 1. and claims belonging to or due to the debtor. whether in the same proportion with other creditors or in a different proportion. The claims which are given priority must be paid in full in the order of their priority. 5. 2. It is paid by the assignee only upon order of the court. 5. 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. DIVIDENDS IN INSOLVENCY Dividends in insolvency – parcel if the fund arising from the assets of the estate. To recover any property fraudulently conveyed by the debtor. PREFERENCE – an exception to the general rule. the taxes due the State shall first be satisfied. To settle all accounts between the debtor and his debtors subject to the approval of the court. to demand and receive of every sheriff all the property and money in his possession belonging to the debtor. Section 37 constitutes a sort of penal clause which shall be strictly construed. To sell. 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. before the general creditors receive anything. To compound. the law on preferences is strictly construed. 8. CIVIL LAW When Sec. 2244 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. CLASSIFICATION CREDITORS AND PREFERENCE OF 4. any estate of the debtor which has come into his possession. 2241 and 2242 are considered as mortgages and pledges of real or personal property or liens within the purview of the Insolvency Law. Preferred claims as to unencumbered property of the debtor which shall be paid in the order named in Art. Property to which a mortgage or pledge exists unless the creditor surrenders his security or lien. 7. To sue and recover all the estate. By it. 2245 of the CC. The priorities fixed by law govern 2. Hence. 3. rightfully allotted to a creditor entitled to share in the fund. 4.) RULES ON ORDER OF DISTRIBUTION 1. debts. under the order of the court. 6. Equitable claims under Sec. Common or ordinary credits which shall be paid pro rata regardless of dates under Art. 3. To take into his possession all the estate of the debtor except property exempt from execution. 37 does not apply: Not applicable where what has been disposed of is the creditor’s own credit and not the insolvent’s property. POWERS OF THE ASSIGNEE 1. 48. In case of non-resident or absconding or concealed debtor. 3. 2. 100% UP LAW UP BAROPS 2008 Page 264 of 325 . 7. 2241 and 2242 of the CC. one person is given a superior right or claim over another. 4. 6.CREDIT TRANSACTIONS insofar as the debtor’s obligations redounded to the benefit of the family. to be received for the benefit of the insolvent’s estate. upon order of the court. Preferred claims with respect to specific movable property and specific immovable property under Art. with any person indebted to such debtor. The preferred claims enumerated in Art.

Property held by the insolvent on deposit. FOR A VALID OFFER OF 1. or assignee. 2. If it is in the best interest of the creditors. The offer must be accepted in writing by a majority of the creditors representing a majority of the claims which have been allowed. 3. 5. 2. Waiver – release or surrender of the claim to the receiver. the consideration to be paid and the costs of the proceedings. 3. and 4. Money held by the debtor for remittance. 2. 100% UP LAW UP BAROPS 2008 Page 265 of 325 . Voting of a secured claim. 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. 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. the ownership of which has not been conveyed to him by legal and irrevocable title. Goods or chattels wrongfully taken by the insolvent or the amount of the value thereof. that the 1. ALTERNATIVE CREDITOR RIGHTS OF SECURED COMPOSITION CIVIL LAW An agreement. WHEN COURT MAY CONFIRM A COMPOSITION 1. whereby the latter for the sake of immediate or sooner payment. 8. 3. The insolvency proceedings shall be dismissed. The consideration shall be distributed as the judge shall direct. agree to accept a dividend less than the whole amount of their claims. The offer and its acceptance are in good faith and have not been made or procured in a manner forbidden by the Act. on order of the court on petition of the assignee or any creditor whose right to the estate of the insolvent has been established. 2. Amounts due the insolvent for sales or merchandise on commission. Negotiable instruments for collection or remittance. 2. 1.CREDIT TRANSACTIONS EQUITABLE CLAIMS UNDER THE INSOLVENCY LAW Section 48 of the Insolvency Law: Any property found among the property of the insolvent. administration. The debtor has not been guilty of any of the acts. 4. shall not be considered to be property of the insolvent and shall be placed at the disposal of its lawful owners. 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. 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. 7. Merchandise held by the debtor on commission. lease. 6. in discharge and satisfaction of the whole debt. It must be made after depositing in such place designated by the court. EFFECTS OF COMPOSITION CONFIRMATION OF 1. 2. or of a failure to perform any of the duties which would create a bar to his discharge. between an insolvent or embarrassed debtor and his creditors. Mere recommendation assignee be appointed. The following do not constitute waiver: 1. To waive his right under the security or lien – thereby. and 3. or usufruct. made upon a sufficient consideration. 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. 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. share in the distribution of the assets of the debtor. sheriff. to be distributed pro rata. The terms of the composition must be approved or confirmed by the court. Paraphernal property belonging to the wife of the insolvent.

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

absolutely or conditionally. FRAUDULENT PREFERENCES AND TRANSFERS TRANSFER – includes the sale and every other and different modes of disposing of or parting with property. If such payment. EQUAL EXCHANGE NOT A PREFERENCE An exchange of securities within the thirty-day period is not a fraudulent preference under the law. on the ground that the discharge was fraudulently obtained. WHEN PREFERENTIAL TRANSFER EXISTS 1. the assignee appears for. 2. transfer. 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. and represents the general creditors. if: 1. or 2. conveyance. 2. Whose debt was proved or provable against the estate in insolvency. 2. It is made with a view to giving preference to any creditor or person having a claim against him. WHEN FRAUDULENT PREFERENCE EXISTS Fraudulent preference – when the debtor procures any part of his property to be attached. 3. pledge. and provided. 3. Any payment. or seized on execution or makes any payment. The security given up is a valid one at the time the exchange. The transaction in question is made within 30 days before the filing of a petition by or against the debtor. There must be a parting of the insolvent’s property. sale.CREDIT TRANSACTIONS 1. as a payment. even when both parties know that the debtor is insolvent. That the debtor is insolvent. and 4. assignment. 2. If such seizure is made under a judgment which the debtor has confessed or offered to allow. In all actions or proceedings to set aside or nullify fraudulent preferences or transactions as VOID. that fact shall be prima facie evidence of fraud. 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. assignment or transfer is not made in the usual and ordinary course of business of the debtor. or security. Of equal value with the one received in exchange. For the benefit of the creditor. *Date of registration of sale of real property should determine whether the sale was prohibited by the Insolvency Law or not. mortgage. mortgage. sale. The debtor is insolvent or in contemplation of insolvency. 4. sequestered. sale or conveyance of any part of his property. WHEN FRAUDULENT TRANSFER EXISTS 1. gift. Made by the insolvent. 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 . pledge. mortgage. or to defeat the object of or any way hinder the operation or evade the provisions of the Insolvency Law. mortgage. b. WHEN PRESUMPTION OF FRAUD EXISTS 1. 3. or the possession of property. Reason: Exchange takes nothing away from the other creditor Equal value: Not necessary that their value should be mathematically equal. assignment. absolutely or conditionally. 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. The person receiving a benefit thereby has reasonable cause to believe: a. or to prevent the same from being distributed ratably among his creditors. pledge. conveyance. 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. or transfer of property of whatever character. but it is sufficient if they are substantially equal. With the result that such creditor receives a greater proportion of his claim than other creditors of the same class. 2. whether directly or indirectly. Consequent diminution of the insolvent’s estate. pledge. to any one under the following circumstances: 1.

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

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

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

negligent. not for civil liability arising from the criminal act. Hill. in common law. 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). (Elcano vs. for which a court of law will afford a remedy in the form of an action for damages. Garcia) Acquittal from an accusation of criminal negligence. if there is no pre-existing contractual relation between the parties. imprudence) DELICT Act/omis sion committ ed by means of dolo (delibera te." solidary liability of employer ER’s defense is that accused observed due diligence of a good father of a family TORTS I. in bad faith) Proof beyond reasona ble doubt B. Garcia) 100% UP LAW UP Preexistin g contra 2008 No preexisting contract BAROPS Page 271 of 325 . injurious acts outside the ambit of penal laws. 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. (Barredo vs. Such fault or negligence. What is a TORT? Essentially. What is the relation of quasidelict to tort? Quasi-delict. but for damages due to a quasidelict. "tort" consists in the violation of a right given or the omission of a duty imposed by law. known in Spanish legal treatises as culpa aquiliana. What is a QUASI-DELICT? Whoever by act or omission causes damage to another. embrace both delicts and quasi-delicts.TORTS & DAMAGES CIVIL LAW D. is obliged to pay for the damage done. (Naguiat vs. 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. Our concept of culpa aquilania embraces both negligent and intentional acts. 1977) E. (Art. is a civil law concept while torts is an Anglo-American or common law concept. other than breach of contract. shall not be a bar for a subsequent civil action. maliciou s. IN GENERAL A. 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. whether on reasonable doubt or not. NLRC) A tort is civil wrong. Quasi-delict is seemingly a refinement of the torts concept in that it refers particularly to wrongful. Torts. is called a quasi-delict and is governed by the provisions of the Civil Code Chapter on quasidelicts. Tort is a breach of a legal duty. there being fault or negligence. What is the relation of quasi-delict to breach of contract and delict? CONTRAC T Contract QUASI DELICT Negligent act/ omission (culpa.

reckless driving OR 2. NEGLIGENCE TORT A. 2. What are the tests of negligence? Since negligence is the lack of due care required by the circumstances. Negligence tort 2. 3. 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. EXCEPT when the possession or use thereof is indispensable in his occupation or business. breach Victim. if he had been found guilty of 1. 1756 regarding common carriers. CA) F. (US vs. (Art. What is the relation of negligence to the elements of negligence tort? Negligence is the breach (element no. In cases where the law creates a presumption of negligence.TORTS & DAMAGES ct Burden of proo f Contractu al party. violating traffic regulations at least twice within the next preceding two months. 2176)? 1. Strict liability tort 4. Prove the ff. (Art. Legal duty Breach Causation Damage Generally. D. the test is whether due care was observed. What is NEGLIGENCE? Negligence is lack of due care required by a particular situation.: 1. 2) of the legal duty (element no. the burden is then placed on the defendant. good father of the family or bonus paterfamilias A standard of extraordinary diligence is imposed by law in certain situations. such as in the case of a common carrier. What are the elements of negligence tort (Art. the Civil Code provides for other instances where negligence is presumed. Example: Art. What are some classifications of tort? 1. existen ce of a contra ct 2. Accused is presume d innocent until the contrary is proved. 2184) b) Driver has been negligent if at the time of the mishap. When is negligence presumed? In motor vehicle mishaps: a) A driver was negligent. 1999) C.: 1. unless the emergency was brought by his own negligence. damage 2. 1) to observe a certain standard of conduct in a particular situation. Other Torts (Human relations torts) F. it is the plaintiff or injured party. 1. Reasonable man. B. Ordinarily prudent man. And most commonly. (Valenzuela vs. (Art. 1912) An accident pertains to an unforeseen event in which no fault or negligence attaches to the defendant. E. (Jarco Marketing vs. such as for common carriers or for persons vicariously liable. causal connecti on between negligen ce and damage done Prosecut ion. Intentional tort 3. conduct which falls below the standard required by law. Who has negligence? the burden of proving II. 2188) Elsewhere. 100% UP LAW UP BAROPS 2008 Page 272 of 325 . 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. he was violating any traffic regulation. CA. What is the “emergency rule?” Under the "emergency rule. such as firearms and poison. CIVIL LAW 3. negligen ce 3. G." 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. Barias. 4. 2.

such subsequent act or condition is the proximate cause. (Layugan vs. and 4) The injury suffered must not have been due to any voluntary action or contribution of the injured person. De Bataclan vs. If no danger existed in the condition except because of the independent cause. as an ordinarily prudent and intelligent person. res ipsa loquitur requires: 1) Evidence of the specific acts of negligence is absent and not readily available. successive. 3) The instrumentality which caused the injury was under the exclusive control of the person in charge. each having a close causal connection with its immediate predecessor. IAC) To be applicable. such condition was not the proximate cause and if an independent negligent act which results in injury because of the prior defective condition. K. In this jurisdiction. and that the occurrence was such that in the ordinary course of things would not happen if reasonable care had been used. all constituting a natural and continuous chain of events. 1956) For purposes of apportioning responsibility in medical negligence cases. Prof. Remoquillo.TORTS & DAMAGES H. the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted. the duty of providing quality medical service is no longer the sole prerogative and responsibility of the physician. J. (Manila Electric Co. no action will prosper. 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. a distinct. and a necessary element in establishing legal liability. Its formulation proceeds from the judiciary’s acknowledgment that in these modern times. (Vda. 100% UP LAW UP BAROPS 2008 Page 273 of 325 . res ipsa loquitur is not a rule of substantive law but a mere evidentiary rule. 2) The accident is of a kind which does not necessarily occur unless someone is negligent. even though such injury would not have happened for such condition or occasion. if there intervened between such prior or remote cause and the injury. The control test is determinative. Mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. unrelated and efficient cause of the injury. What is CAUSATION? CIVIL LAW Causation is the bringing about of a result. either immediately or by setting other events in motion. What is PROXIMATE CAUSE? Proximate legal cause is that acting first and producing the injury. 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. have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result. 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. Medina. L. 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. vs. 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. absent facts to support the application of respondeat superior or apparent authority. under such circumstances that the person responsible for the first event should. Agana I. vs. Services Inc.

Conduct that is precisely excused or EXEMPTED by the statute. but such liability may be regulated by the courts. were inevitable. (Art. that which is expected of a good father of a family shall be required.” BAROPS 2008 Page 274 of 325 . 2176) 3.” (Art.TORTS & DAMAGES EXCEPTION: However. CA. 2. 2178) Art. Any waiver of an action for future fraud is void. of the time and of the place. 2176) 2. What happened was a fortuitous event. What is NEGLIGENCE PER SE? Negligence per se is the legal doctrine whereby certain acts are considered intrinsically negligent. bad faith. Art. “There was no damage. or when the nature of the obligation requires the assumption of risk. and 4.2 In case of fraud. What are some of the defenses to prevent or mitigate negligence tort liability? 1. 1171. 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. par. 2004) Illustration: The law requires registration of service and repair enterprises for motor vehicles. though foreseen. the proximate cause of the injury. shall apply. DISPUTABLE in the ff. Fernandez) M. CONCLUSIVE: It is not available in cases where the statute provides for negligence per se. the violation of the statute is presumed to be. the provisions of Articles 1171 and 2201. 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. Art. 1996) O. If the law or contract does not state the diligence which is to be observed in the performance. proximate cause is presumed and the injured party need not establish proximate cause in the traditional sense. I exercised due diligence. If the very injury which a particular statute intends to prevent happens. 1174. It depends. 1172. Anything over which the defendant has NO CONTROL and places him in a position contrary to that required by the statute. or which. Responsibility arising from negligence in the performance of every kind of obligation is also demandable. The violation of ordinance intended to promote safety is in itself negligence. “I was not negligent. or when it is otherwise declared by stipulation. 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. It is the law that determines which acts constitute negligence per se. it was not the proximate cause of the damage. (Cipriano vs. (Anonuevo vs. according to the circumstances. 2201. “I was not negligent. An EMERGENCY not of the defendant’s making causing him to violate the statute.” (Art. Except in cases expressly specified by the law. Responsibility arising from fraud is demandable in all obligations. “Even if I was negligent. Art. The legal grounds or excuse for violation of a statute: 1. Art. 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. paragraph 2. In this case. Anything that would make complying with the statute IMPOSSIBLE. N. 1173. 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. CA.” (Art. the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. 3. 2176) 4. 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. no person shall be responsible for those events which could not be foreseen. malice or wanton attitude. When negligence shows bad faith. (Teague vs.

(Ilocos Norte Electric Company vs. (Afialde vs. 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. he must abide by the consequences.” 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.” rights. BUT THE PLAINTIFF CANNOT RECOVER DAMAGES RULE: The maxim “volenti non fit injuria” states that when a person voluntarily assents to a known danger. 100% UP LAW UP BAROPS 2008 Page 275 of 325 . it is damnum absque injuria. IF only CONTRIBUTORY. The obligor (debtor) must be free from any participation in the aggravation of the injury resulting to the creditor. 2. damage sustained is not actionable. EXCEPTIONS (LAS): 1. Cases declared by stipulation (Art. The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner and 4. (Custodio vs. he must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff. but I already paid.” What is the effect of plaintiff’s negligence on his right to recover? IF it is the immediate and proximate CAUSE of his injury. 1174) Q. The cause of the unforeseen and unexpected occurrence. must be independent of the human will.TORTS & DAMAGES RULE: No person shall be seen responsible for those events which. Fontanar. or harm which results from the injury. In order that a plaintiff may maintain an action for the injuries of which he complains. CA) “I was negligent and I am the proximate cause of the damage but the plaintiff was guilty of contributory negligence. 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. The owner would be liable only if he had been negligent or at fault under article 1902 of the Civil Code. Nature of obligation requires assuming the risk 3. could not foreseen. DAMAGE is the loss. though foreseen. (Juntillla vs. Thus. Illustration: The owner of an animal is answerable only for damages caused to a stranger. or the failure of the debtor to comply with his obligation. the immediate and proximate cause of the injury being the defendant's lack of due care. and DAMAGES are the recompense or compensation awarded for the damage suffered. Volenti non fit injuria. Cases expressly specified by law 2. These situations are often called damnum absque injuria. What is a FORTUITOUS EVENT? A fortuitous event presents the following essential characteristics: 1. A caretaker of animals voluntarily assumes the risks of his occupation. he CANNOT recover damages. but the courts shall MITIGATE the damages to be awarded. Damage v. 1989) “I was just exercising my Damnum absque injuria. hurt. CA. (Art. or which. the plaintiff may recover damages. It must be impossible to foresee the event or if it can be foreseen. and that for damage caused to the caretaker of the animal.” 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. were inevitable. it must be impossible to avoid. There must be damnum et injuria. Since conjunction of damage and wrong is absent. Injury INJURY is the illegal invasion of a legal right. 2179) “I was negligent and I am the proximate cause of the damage. 1985) DEFENSES “The plaintiff voluntarily assumed the risk. 3.

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

He shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed. Parents and Guardians Article 2180 (a) has been REPEALED by Art. parents are still liable for the torts committed by their children below 21 years of age. d. parent(s) exercising parental authority is liable for the torts of their children. f. The ward if minor is below 21 years old. in which case what is provided in Article 2176 shall be applicable. The child is under the parental authority of the parents 3. 2180) Rule on Construction: Because it imposes strict liability. Art 2180. so long as they remain in their custody. 2180 should be interpreted strictly and cannot be extended to persons not enumerated therein. Now. D. Instances where there is vicarious liability. par 4 may be unnecessary as Art 2180. The child is under the parental authority of the parents 2. EMPLOYERS shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks. even though the former are not engaged in any business or industry. the guardian is liable for the acts of the ward regardless of the latter’s age. par 3 FC.TORTS & DAMAGES persons who are under their authority and live in their company. Art. but not when the damage has been caused by the official to whom the task done properly pertains. The tortfeasor is under his authority 3. (Art. C. The tortfeasor is living in his company Is a minor or insane tortfeasor with NO parent or guardian liable? Yes.” hence. Despite the lowering of the age of majority from 21 to 18. (Art 236. Art. 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. If Incapacitated. par 5 already covers the cases under par 4. Lastly. 221 of the Family Code. REQUISITES for liability to attach: Parents (mnemonic: Company): 21 + CIVIL LAW Authority & 1. TEACHERS or HEADS of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices. 100% UP LAW UP BAROPS 2008 Page 277 of 325 . as amended by RA 6809). (Art. Who are liable vicariously? (continued) e. The child is living in the company of the parents Guardians (mnemonic: Authority & Company) 1. managers cannot be liable since they themselves are employees of the enterprise. The STATE is responsible in like manner when it acts through a special agent. 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. 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. The child is below 21 years old 2. c. 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 State assumes a limited liability for the acts of its special agents. The employer can interpose the defense of due diligence in selection and supervision of his employees. and even though he was not within the scope of his assigned tasks when the accident happened. engaged in his own affairs or carrying out a personal purpose when he went to a restaurant at 2:00 a.m. he bumped a tricycle.m. In one case decided by the Supreme Court. Does state immunity mean that injured persons are deprived of remedy? 2008 Page 278 of 325 BAROPS . then the State assumes the role of an ordinary employer and can be held liable for the agent’s tort. However. The State filed the case Instances where the consent to be sued: state gives its a. Art. De Leon) Who is a special agent? A special agent is a. (321 SCRA 393 [1999]). employers are liable for damages caused by their employees who were acting within the scope of their assigned tasks. and after office hours. Jr. 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. (Mendoza vs. The time of the accident (also 2:00 a.) was outside normal working hours..TORTS & DAMAGES REQUISITES OF LIABILITY: CIVIL LAW of the car and met an accident. BAR QUESTION After working overtime up to midnight.m. This act must be the one that gives rise to the injury claimed. Vasquez. The latter is the same as that of a private corporation or individual. There is express legislative consent b. or B. AND 4) THE ILLICIT ACTS OF THE EMPLOYEE WAS ON THE OCCASION OR BY REASON OF THE FUNCTIONS ENTRUSTED TO HIM. b. CA. 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. 2189 provides for state liability for damages caused by defective condition of public works. Alberto was not acting within the assigned tasks of his employment. Consti) Exceptions: 1) existence of the employer-employee relationship 2) THE EMPLOYER WAS CHOSEN BY THE EMPLOYEE. 253 SCRA 303 [1996]). 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 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. Alberto. the employer was also made liable under Art. 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. Here. the executive made personal use 100% UP LAW UP a. after coming out from work. Art XVI. 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. Art. 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. It is true that under Art. he drove home. Government) If the State’s agent is not a public official and is commissioned to perform nongovernmental functions. 3) THE WORK BEING PERFORMED WAS IN ACCORDANCE WITH A VALID ORDER. vs. A public official required to do a particular task that is foreign to said official’s usual government functions. State General Rule: The State cannot be sued. where an executive of a pharmaceutical company was given the use of a company car. but in doing so. 2180 (par. A PRIVATE INDIVIDUAL WHO IS COMMISSIONED FOR A SPECIAL GOVERNMENT TASK. 5) of the Civil Code. nevertheless. resulting in the death of its driver. (Sec 3. 2180 (6) is an example of an express legislative consent. the former was.” At 2:00 a. the Supreme Court held that notwithstanding the fact that the employee did some overtime work for the company. In Castilex Industrial Corp. (Merritt vs. The agent must be empowered by a definite order or commission to perform some act. c.

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. AND 3) Proof of the amount of damage. judicial guardians or the persons exercising substitute parental authority over said minor shall be subsidiarily liable. What are the requisites for liability to attach under Article 2180? REQUISITES: Teachers and heads of establishments of arts and trades Art. The school. Responsibility ceased when they prove that they observed all the diligence of a good father of a family to prevent damage. “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. But as a rule. 218. thus: Art. All other cases not covered by this and the preceding articles shall be governed by the provisions of the Civil Code on quasi-delicts. What is the liability of joint tortfeasors? The responsibility of two or more persons who are liable for quasi-delict is SOLIDARY.TORTS & DAMAGES No. (Art. 2180) F. CIVIL LAW 1) The tortfeasor is a minor (below 18 only) 2) Under their supervision. including break times (lunch or recess). entity or institution engaged in child care shall have special parental authority and responsibility over the minor child while under their supervision. The parents. WAS UNDER THE CUSTODY OF THE DEFENDANT. Cases which do not fall under the provision on substitute parental authority will be governed by Art 2180 of the Civil Code. or the individual. 2) THE DAMAGE TO THE PLAINTIFF MUST BE CAUSED BY THE ACT OR OMISSION OF A STUDENT WHO. unlike in the case of parents and guardians. A regular official is liable under Art 2176 for the damage he causes. 2180 have a defense? Yes. (Art. 2194) G. AT THE TIME OF ITS COMMISSION. Authority and responsibility shall apply to all authorized activities whether inside or outside the premises of the school. even if injury is caused in the course of the performance of a governmental duty. 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. 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. 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. its administrators and teachers. E. 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 . May they recover what they paid and from whom? Yes. entity or institution. 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. (Art. instruction or custody. 2180 must be read together with the provisions of the Family Code. Do tortfeasors vicariously liable under Art. Art. 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. 219.

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

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

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

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

2191) F. (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.TORTS & DAMAGES the defective condition of roads. and c) By the inflammation of explosive substances which have not been kept in a safe and adequate place. and other public works UNDER THEIR CONTROL OR SUPERVISION. (Art. bridges. streets. 2190) b) By the explosion of machinery which has not been taken care of with due diligence. and the inflammation of explosive substances which have not been kept in a safe and adequate place  by excessive smoke. drinks. E. public buildings. e) By the falling of trees situated at or near highways or lanes. d) By excessive smoke. f) By emanations from tubes. toilet articles and similar goods (FDTAS) Defendant in possession of dangerous weapons/ substances such as firearms and poison Provinces. public buildings. 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. streets. 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 . Things thrown or falling from a building Manufacturers and Processors of foodstuffs. if not caused by force majeure. bridges. constructed without precautions suitable to the place. sewers or deposits of infectious matter. 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. (Art. which may be harmful to persons or property. 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. (Art. canals. 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.

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

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

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

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

220 1 Contra cts and quasi contrac ts Liability extends to those: 1. Art. Recoletos et al.TORTS & DAMAGES (6) Events which occur after the wrong complained of may serve to render the damage sufficiently certain. 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. Sandejas). natural and in a sense the necessary damage resulting from the breach. 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. However. including subsequent aggravations.). Where. established experience or direct inference from known circumstances. (TalisaySilay vs. (7) The damages must be susceptible of ascertainment in some manner other than by mere speculation. known as special damages. prove the substantive right. 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. those that have been foreseen 3. which. This proposition must be understood with the qualification that. its breach and the amount of damages flowing from the breach. Special damages of this character cannot be recovered unless made the subject of special stipulation." or 100% UP LAW UP BAROPS . 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. such as market value. it is reasonably certain that injury consisting of failure to realize otherwise reasonably expected profits had been incurred. Fair and reasonable estimate of the amount of damage. malice or wanton attitude (FBM-WA). Proximate cause – the cause. produces the injury. the probability of which the law regards as a consequence and natural result likely to flow form the original injury. note that if the subsequent aggravations are due to his own negligence then the tortfeasor shall not be liable for such since Art. 2203 imposes a duty on the injured party to avoid loss or minimize resulting damages. the ordinary. 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. Associacion) What is the extent of recovery? Recovery of all proximately traceable to the primary negligence. however. and without which the injury would not have occurred. 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. primarily. natural and probable consequences of the breach 2. Extent of recovery in breach of contract: The damages recoverable upon breach of contract are. in a natural and continuous sequence. knowledge of the special conditions which render such damages possible will not make them recoverable. Fact of Injury Cause Amount Art. unbroken by any efficient intervening cause. (“without which test of cause in fact”) Need not be proved with the same degree of certainty. bad faith. 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. Usual burden of proof required in a negligence case. conjecture or surmise and by reference to some fairly definite standard. if the damages are in the legal sense remote or speculative. Other damages. uncertainty as to the precise amount of such unrealized profits will not prevent recovery or the award of damages.

Robert Brodett y Pajaro.the recipient who is not a testate or intestate heir may demand support from the person causing the death. necessary living expenses] Life expectancy= 2/3 (80. (4) In criminal cases of malicious prosecution against the plaintiff. laborers and skilled workers. (8) In actions for the recovery of wages of household helpers.age of deceased) (MMTC v. other than judicial costs. even though there may have been mitigating circumstances. (9) In actions for indemnity under workmen's compensation and employer's liability laws. Earning Capacity 2. 18.demanded by the spouse. If there is no stipulated interest the legal interest of 6%. (7) In actions for legal support. for a period not exceeding five years (d) Moral damages . it is P75. (6) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid. (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. 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. Obligation to Support 3. (12) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. whether already training for a specific profession or still engaged in general studies. . 2208).As of 2008.unless the deceased on account of permanent physical disability not caused by the defendant. 2209) 100% UP LAW UP BAROPS 2008 Page 290 of 325 . had no earning capacity at the time of death. the attorney's fees and expenses of litigation must be reasonable. Jan. (Art. 2008) (b) Loss of the earning capacity of the deceased.TORTS & DAMAGES Damages for Personal Injury & Death (Art. be recovered? (SELMUBSCREWD) (Art. The argument for allowing compensation for loss of earning capacity of a minor is even stronger if he or she was a student. legitimate and illegitimate descendants and ascendants of the deceased Factors: CIVIL LAW When can attorney’s fees. 2206) Recoverable damages for death caused by a crime or quasi-delict: (a) At least three thousand pesos.000 (People vs. In all cases. (10) In a separate civil action to recover civil liability arising from a crime. 2 Concepts of Attorney’s Fees (1) Retainer’s agreement between the lawyer and the client (in writing). just and demandable claim. (1) If there is a stipulation to that effect (2) When exemplary damages are awarded. CA) ATTORNEY’S FEES Attorney’s Fees is the exception NOT the general rule. (c) Support according to the provisions of Article 291 . (11) When at least double judicial costs are awarded. (2) Award as an indemnity to the client. (BELONGS to the client hence the litigant is the judgment creditor who may enforce the judgment by execution) (Quirante vs. (5) In case of a clearly unfounded civil action or proceeding against the plaintiff. Formula established in decided cases for computing net earning capacity: Net earning capacity (X) = life expectancy * [gross annual income – reasonable.paid to his heirs . 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. .

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

or quasi-delict. By special rule in Article 1764. 2219 NCC. or (b) where the defendant is guilty of intentional tort. within the limits of the possible. (Visayan Sawmill vs. 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. illegal search. 7. and it must be proportional to the suffering inflicted.TORTS & DAMAGES 1. adultery or concubinage. 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. 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. whether physical. Moral damages must somehow be proportional to the suffering inflicted. 2. or defamation. Malicious prosecution can also give rise to a claim for moral damages. lascivious acts. CA) When are moral damages awarded? . of the spiritual status quo ante. 5. d. B. Salvador) General Principles of Recovery (as outlined in Expertravel & Tours vs. (Art. e. 2214) 2. i. In crimes→ mitigating circumstances (Art. clearly sustained by the claimant. g. (2) there must be a culpable act or omission factually established. 2204) The inordinate amount of damages calls for the moderating hand of the court. must be held similar to those expressly enumerated by the law. (Villanueva vs. 3. 2204) Note: aggravating circumstances in case of crimes can increase the damages adjudicated (Art. 6. 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 . exceptionally. in relation to Article 2206. Standard: good father of a family (Art. moral damages may also be awarded in case the death of a passenger results from a breach of carriage. (a) when an act or omission causes physical injuries. In culpa criminal. (3) the wrongful act or omission of the defendant must be the proximate cause of the injury sustained by the claimant. the defendant has done his best to lessen the plaintiff's loss or injury (Art. CA #1 to 7) 1. and (4) the award of damages is predicated on any of the cases stated in ART. that justice may be tempered with reason instead of being tainted when it appears to be a result of ruthless vindictiveness. following the ejusdem generis rule.If injury consists of any of the ff: (PBMF-MWSSS) a. Its award is aimed at the restoration. 4. f. c. illegal or arbitrary detention. b. mental or psychological. Moral What is the nature of moral damages? Moral damages are emphatically not intended to enrich a complainant at the expense of the defendant." referred to in Article 2219. In culpa aquiliana. when the act of breach of contract itself is constitutive of tort resulting in physical injuries. In culpa contractual or breach of contract. Doctrine of avoidable consequences a) This refers to the duty to minimize damages once a cause of action has accrued. 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. 2215) 4. illegal arrest. This rule also applies to contracts when breached by tort. In contracts. In quasi-delicts contributory negligence (Art. The term "analogous cases. 2203) 3. h. moral damages may aptly be recovered. 2217) What are the requisites for awarding moral damages? (1) there must be an injury. moral damages could be lawfully due when the accused is found guilty of physical injuries.

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

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

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

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

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. 2230 Art.or correction for the public good . 2231 Art. (Art.TORTS & DAMAGES instance. Exceptions (1) When there is stipulation to the contrary. (1) These damages are agreed upon in a contract in case of breach thereof. (Art. but NOT as to exemplary damages because aggravating circumstances are personal to the accused. PNB vs. CA However. EXEMPLARY OR (Art. 2235) Notes (1) Amount need not be proven. (Art. discretion of the court. partial or irregular performance General Rule: The penalty shall substitute the indemnity for damages and the payment of the interests in case or breach. to be paid in case of breach thereof. 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.Imposed by way of example . (2) Cannot be recovered as a matter or right. temperate or compensatory damages If arising from Art.unconscionable. 100% UP LAW UP BAROPS 2008 Page 297 of 325 . 2233) Requisites to recover exemplary damages and liquidated damages agreed upon in addition to exemplary (Art. NOTE: In this case actual and temperate damages were awarded. may be waived. temperate. reckless. (3) When the obligor is guilty of fraud. It is postulated that the actual damages is for the car while the temperate damages is for the lost actual income not sufficiently proved. temperate or liquidated damages arising from an employee’s criminal offense. oppressive. 2227) b.in addition to the moral. F. fraudulent. 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. only the fact of the breach. liquidated or compensatory damages.000. unconscionable as determined by the court (Art. (Art. 2229.000 exemplary damages is also far too excessive and should likewise be reduced to an equitable level. 2226) What are the grounds for equitable reduction of liquidated damages? . actual. the award of P1. An employer may be subsidiarily liable to pay moral. E. Liquidated What are liquidated damages? Those agreed upon by the parties to a contract. 2228) CIVIL LAW Exemplary damages cannot be recovered as a matter of right. injury to one's commercial credit or to the goodwill of a business firm is often hard to show certainty in terms of money. the law shall determine the measure of damages. In this case. 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. (2) There is no need to prove the amount. (2) When the obligor is sued for refusal to pay the agreed penalty.iniquitous or . (3) The amount can be reduced if: a.2234): The plaintiff must show that he is entitled to moral. Exemplary or Corrective Art. Nature of exemplary or corrective damages .

V. II. IV. III. VII. 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 . IX. VIII.LAND TITLES AND DEEDS CIVIL LAW Land Titles and Deeds TABLE OF CONTENTS I. VI.

3. PURPOSE OF REGISTRATION The real purpose of that system is to quiet title to land. or which may arise subsequent thereto Legarda vs. 100% UP LAW UP BAROPS CIVIL LAW To establish and certify to the ownership of an absolute and indefeasible title to realty. 43. LAND TITLE Evidence of the right of the owner or the extent of his interest. and to be there registered like other deeds and conveyance. Land is conferred upon a man and his heirs absolutely and without any limitation imposed upon the state. 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. 2. 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. to put a stop forever to any questions of the legality of the title. A proceeding in rem. THE TORRENS SYSTEM A system for registration of land under which. KINDS 1. 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. grant. grant.00 (sec. by virtue of judicial or administrative proceedings.cadastral and land registration cases covering: o lots without controversy or opposition o contested lots where the value does not exceed P100. without personal service Roxas vs. dealing with a tangible res. in the certificate. tenements. and the volume and page of the registration book in which the latter is found. Enriquez. giving the record number. 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. INTRODUCTION A. 2. The deed.LAND TITLES AND DEEDS I. 6. the same shall be brought forthwith under the operation of this Decree. PATENTS Whenever public land is by the Government alienated. or hereditaments. CONCEPTS AND DEFINITIONS 1. 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 . 5. PD 1529). C. and as a rule assert right to exclusive possession and enjoyment of property. BP 129) II. D. RECORDING Provides for the recording of conveyance and other instrument without guaranteeing the title. TORRENS CERTIFICATE OF TITLE A. 4. the court may. and to simplify its transfer Grey Alba vs. after appropriate proceedings. 34.land registration proceedings and over all petitions filed after original registration of titles (Sec. It shall be the duty of the official issuing the instrument of alienation. except claims which were noted at the time of the registration. wherein a person grants or conveys to another certain land. JURISDICTION  RTCs of province or city where the land or a portion or it lies. NATURE Land registration is a proceeding in rem (Sec. REGISTRATION The State provides a public record of the title itself upon which a prospective purchaser or someone else interested may rely. may be instituted and carried to judgment. DEED A written instrument executed in accordance with law. the number of the original certificate of title. PD 1529)  MTCs. PD 1529) 3. B. direct the issuance of a certificate of title. CA. upon landowner’s application. granted or conveyed to any person. Saleeby. 2. absolute estate in perpetuity. (Sec.000. FEE SIMPLE Absolute title. (Black’s Law Dictionary) 2. and by which means he can maintain control.

2 and 3 Art. ORIGINAL REGISTRATION A. without being for public use. the same shall be brought forthwith under the operation of the Decree 3. 100% UP LAW UP BAROPS . public forest. it does not give the owner any better title than he has.) Forest or timberland. CA. It expressly converts ancestral lands into public agricultural lands. GR No. ENFORCEABILITY OF TORRENS TITLE The title. All persons must take notice. such land shall be deemed to be registered land (sec.REGISTRABLE LANDS 1. 2. It is the act of registration that shall be the operative act to affect and convey the land. and defines the extent of these lands and domains. 161136. 103. C. 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. EFFECT OF REGISTRATION Registration does not vest or give title to the land. (sec.LAND TITLES AND DEEDS contract between the Government and the grantee and as evidence of authority to the Register of Deeds to make registration. No one can plead ignorance of the registration Egao vs. PD 1529) B. It must be classified as such AT THE TIME OF FILING THE APPLICATION FOR REGISTRATION. CA141 Public Land Act governs the procedure for the judicial confirmation of imperfect or incomplete titles. banks. (Republic vs. granted. GR No. all other natural resources shall not be alienated. 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. 29. mineral lands (Sec. Vagalidad. 2 and 3 Art. RA No. ports and bridges constructed by the State. such as roads.) Those intended for public use. 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. 1997) recognize the rights of ownership and possession of indigenous cultural communities to their ancestral domains and lands on the basis of native title. and are intended for some 2008 Page 300 of 325 III. CA and Naguit. 1529 Property Registration Decree covers both ordinary and cadastral registration proceedings. XII of the Constitution) NON. After due registration and issuance of the certificate of title. CIVIL LAW B. 144057) With the exception of agricultural lands. shores. forest reserves lands. It supersedes the Land Registration Act and the Cadastral Act. WHAT ARE THE REGISTRABLE LANDS? PRIVATE LANDS If in the public domain. the land must be classified as alienable and disposable. PD No. making it imprescriptible by occupation of third parties. once registered. 8371 The Indigenous Peoples Rights Act (Oct. and others of similar character 3. LAWS GOVERNING LAND REGISTRATION 1. but merely confirms and thereafter protects the title already possessed by the owner. rivers. torrents. is notice to the world.) Those which belong to the State. conveyed to any person by the government. roadsteads. Registration is not a mode of acquiring ownership. XII of the Constitution) 2. 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.

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

or on a lake. navigable stream or shore. and (3) posting. all the world are made parties defendant and shall be concluded by the default order. in which the land lies. It shall be signed and sworn to by him or by some other duly authorized person. (as appropriate) if the land borders on a river. PD 1529) 6. PD 1529) If no person appears and answers within the time allowed. The opposition shall state:  all the objections and  the interest claimed by the party  the remedy desired. (Sec. CA. (a) By Publication The Commissioner of Land Registration shall cause it to be published:  once in the Official Gazette (sufficient to confer jurisdiction) and  once in a news