ALL ABOUT THE AUTHOR

Judge FABIO TECSON ALBAO, JR. hails from Tanauan, Leyte and presently
residing at Saint Scholastica Village, Baras, Palo, Leyte. He is an alumnus of the
University of the Philippines College at Tacloban (UPCT), and Leyte Colleges
where he obtained his Bachelor of Laws degree in 1997. In the same year, he
passed the Bar examinations. Since then, he held various positions in the
government, as Legal Officer of the Department of Agriculture, Regional Field
Office No. VIII, as District Public Attorney of the Public Attorney’s Office for nine
(9) years, until he was appointed to the Judiciary in February 2007 as Municipal
Trial Judge of Liloan, Southern Leyte. Due to lack of judges, he is currently
designated as Acting Presiding Judge of the Municipal Trial Court of San Francisco,
also of the same province. He had been in the government service for about
twenty-seven (27) years now including his pre-judiciary position.

He is a law review professor of the College of Maasin, Maasin City,

Southern Leyte handling Civil Law Review and Commercial Law Review classes
and Law on Property.

He is married to Emilia Brazil Goles of Palo, Leyte and blessed with three (3)
children, Tyron Jan, Jim Kaye and Kimberly Mae.

LECTURE NOTES ON CIVIL LAW REVIEW

Civil Law is one of the bar subjects comprising fifteen (15) percent of your
entire grade in the Bar. Unless revised by the 2016 Bar Committee, it is usually
given on the second Sunday of the Bar Examinations schedule. For your purpose,
we will be delving on the pertinent provisions of the New Civil Code of the
Philippines, the amendatory laws, if any, and latest jurisprudence involving
these provisions of law. I suppose you have familiarize yourself some of these
provisions during your study on each particular subject matter or title. This is
important because we will not be discussing in toto each and every provision,
otherwise, we will run out of time. Take note that the New Civil Code of the
Philippines is consist of 2,270 provisions divided into 7 parts, to wit:

• Preliminary Title (Human Relations) - Arts. 1-36;

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 • Book I - Persons and Family Relations (Arts. 37-413 including the Family
Code of the Philippines Arts. 1-257))
• Book II - Property, ownership and its modifications (Arts. 414-773)
• Book III - Modes of Acquiring Ownership (Arts. 774-1155)
• Book IV – Obligations and Contracts (Arts. 1156-2251)
• Book V - Sales and other Special Contracts
• Transitional Provisions - Arts. 2252-2269
• Repealing Clause – Art. 2270.

For these two (2) semesters, we will be having 30 meetings more or less
excluding mid-term and final examinations schedule. By simple mathematical
computation, if we will go by provision, we must cover at least 77 provisions of
law each meeting or 20 articles every hour which is very difficult and near to
impossible for us to do so. That is why, I decided to be selective in the discussion
of these provisions, specifically those that were the subject of new jurisprudence.
In doing so, I would suggest to focus your attention on the Top 400 provisions of
the New Civil Code of the Philippines. The list of these specific provisions will be
given to you later.

Also, to better understand the subject matter, I will be playing to you

recorded lectures of noted civilists which I have compiled for your purpose. In a
way, these recorded lectures will take the place of my actual lecture and we will
be discussing latest jurisprudence to complement the discussion of our speakers.
If you may, better provide me a good CD player so that we can hear the
substantive lectures of our invited speakers audibly and clearly. Is it okay with
you?

To complement your understanding on the application of the provisions of

law that we will be discussing, I will be assigning cases for you to report in class.
Aside from delivering this report by way of a digested case, you will have to
submit this to me in a prescribed format furnishing copy of such assigned case to
each of your classmates. I will give to you the format for you to be guided in your
research work, as follows:

ELEMENTS OF CASE ANALYSIS

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 • Case Title or Identity of the parties (Limit yourself to principal parties
only)
• Key facts/Synopsis (What are the factual backdrop of the case which
resulted into a legal controversy between the parties?)
• Theories of the parties (What legal doctrine or theory did the parties rest
their cases on)
• Issues (What were the legal or factual issues considered by the court?)
• Findings of the Court (Conclusion of facts and conclusion of law by the
Supreme Court )
• Ratio decidendi (The ratio decidendi is the reasoning that supports the
holding of the court)

By the way, as usual, our 10-minute lightning quiz will be given every before the
lecture. The questions will be taken from the assigned articles for your readings.
Therefore, you must prepare for this because the over-all result of your quiz will
comprise 25 per cent of your grade, while the remaining 75 percent comprise: 30 per
cent mid-term, 30 per cent finals and 15 percent graded recitation. Your attendance will
be based on the quiz result, because if you are not around, definitely, you will not be
able to take the lightning quiz and there is no special quiz to be given. I hope this is
very clear to you.

Let us start with Article 2. The question is “when do laws in the Philippines
take effect? Article 2 is the answer. The original provision does not contain the
phrase “in a newspaper of general circulation” but now, publication is either
through the Official Gazette which, for all you know, is not circulated at all or a
national newspaper which has a nationwide circulation. A law may provide for
the date of its effectivity and it is valid because of the inherent power of the
legislature to amend or modify a law. The Civil Code is an enactment of Congress
and Congress itself may modify or amend any provision of the Civil Code by a
subsequent legislation. If the law is silent as to its own effectivity, then it shall
take effect after fifteen (15) days following its complete publication in
accordance with Article 2 of the NCC. In short, its effectivity is subject to the
requirement of publication as ruled in the landmark case of Tanada vs. Tuvera,
146 SCRA 446 (1986).

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 As regards to the 15-day period of effectivity , it may either be on the 15th
day or on the 16th day depending on the language used by Congress in fixing the
effectivity date of the subject law. If the law declares that it shall become
effective “15 days after its publication”, it means that its effectivity is on the 15th
day after such publication. However, if the law declares that it shall be effective
“after 15 days following its publication”, then its effectivity is on the 16th day
thereafter. Take notice of the effectivity clause of the law subject of the
question.

Suppose a law provides in its effectivity clause that “this law shall take
effect immediately upon approval”, when will this particular law take effect?

Answer: There are two (2) conflicting views. First, in Farinas vs. The Executive
Secretary (417 SCRA 503 (2003), Article 2 is the answer, meaning, it will
become effective after fifteen (15) days following the completion of its
publication in the Official Gazette or in a newspaper of general circulation. If it
will not be published, it will be violative of due process clause, hence,
unconstitutional. Second, in La Bugal-B’laan Tribal Association, Inc. vs. Ramos
(421 SCRA 148 (2004), it was held that a law which provides that it “shall take
effect immediately upon approval” becomes effective immediately after its
publication. Meaning, it will no longer wait for fifteen (15) days after completion
of its publication to be effective. What is mandatory and what due process
requires is the publication of law. This is the very essence of the phrase “unless it
is provided otherwise”.

In one Bar examination, a law was enacted by Congress to facilitate the

release of rehabilitation fund to provinces badly hit by a typhoon. In view of the
urgency of the situation, the said law provides that it shall take effect upon
approval and after completion of publication in the Official Gazette and in a
newspaper of general circulation in the Philippines. Let us assume that the law
was passed by Congress on July 1, 2015, approved by the President on July 3,
2015, published in the newspaper on July 7, 2015 and in the Official Gazette on
July 10, 2015. Question: when did this law take effect? Answer: The law takes
effect upon compliance with all conditions for its effectivity and the last condition
was complied with only on July 10, 2015. Hence, the law became effective on the
day after completion of its publication, and that date is July 10, 2015.

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 Question: When is the law deemed published? On the date of the actual
circulation of the Official Gazette or the date of issue appearing in the Official
Gazette? In People vs. Beridiano, the SC held that the date of publication is the
date of actual circulation of the Official Gazette. Publication is given an ordinary
meaning and that is, to made known to the public the contents of the law. Such
that, unless and until the Official Gazette is circulated to the public, nothing is
known about the law. It is not even binding to the public.

Question: Does the term “law” in Article 2 includes executive issuances?

It depends. If the executive issuance is of general application, publication is
necessary for its effectivity. Conversely, if it is not of general application, then it
is not covered by Article 2 and publication is not needed. This is the case of
Pesigan vs. Angeles. Follow up question: How do we know that such executive
issuance is of general application? An executive issuance is of general application
if it prescribed a rule of conduct applicable to the public at large. Therefore,
administrative or office circulars issued to government personnel, even if it is
punitive in nature , does not require publication to be effective because such is
not of general application.

“Ignorantia legis neminem excusat”. This is the rule on “conclusive

presumption of law” as embodied in Article 3. A person cannot interpose the
defense that he is unaware of the existence of a particular law in order to escape
liability so long as the law itself became effective at the time its provision was
violated. Because if the law violated was infirmed due to non-publication, the
same did not take effect and as if there is no law existing at the time of the
supposed violation. There being no law violated, there could be no sanction
whatsoever. (See the old case of Ynot vs. CA).

Ignorance of a foreign law is a mistake of fact, it is not a mistake of law.

This is because existence of a foreign law must be proven as a fact. Failure to
prove a foreign law will call the application of the principle of processual
presumption, meaning, that foreign law will be treated as similar to that of
Philippine law. Take note that mistake of law is not an excuse in complying with
the law but mistake of fact may be an excuse in compliance with the law
applicable to the given fact.

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 Example: A man and a woman were married by the Chief of Police. The
parties believe in good faith that the Chief of Police is authorized to solemnize
marriages. Is the marriage valid? No. The marriage is void because the Chief of
Police is not one of those persons mentioned in the Family Code of the Philippines
authorized to solemnize marriages. The mistake of the parties, therefore, is one
of law not of fact. Ignorance of the law excuses no one, hence, the belief of the
parties in good faith that the Chief of Police is authorized to solemnize marriage
will not make their marriage valid. It is a mistake of law and not of fact.

Another example. A man and woman were married by a Parish Priest but the
commission of the priest to solemnize marriage has expired already. Is the
marriage valid? Yes. Because it was a mistake of fact. The parish priest is one of
those mentioned in the law authorized to solemnize marriage. The fact that his
commission has expired is not a question of law rather it is a question of fact.
Therefore, we apply the provision in the Family Code that whenever the parties
believe in good faith that the solemnizing officer has authority to solemnize
marriage, the marriage is valid.

Article 3 is limited to mandatory and prohibitive laws. Permissive or

directory provisions of law, therefore, are not included. You must bear in mind
also that the term “law” as used in Article 3 refers not only to the literal words of
the statute but also the interpretation and meaning given to said statute by the
courts. Suppose a client acted pursuant to the legal advice of his counsel
however, it turned out that the advice of his counsel was illegal, may a party
excused himself of the effect of the illegal act which he relied pursuant to the
advice of his lawyer? No, the advice of counsel is not a valid excuse for non-
compliance with the law. A party is bound by the mistakes committed by his
lawyer.

As a rule, all laws are generally prospective in its application according to

Article 4. But there are exceptions to this rule. A law may be given retroactive
application if the law itself expressly provides of its retroactive application.
Secondly, if retroactive application is necessarily implied from the purpose and
letter of the law. However, even if the law expressly provides or it is necessarily
implied in the purpose of the law that it be given retroactive application, such
retroactive application will not be allowed in the following cases, to wit, (1) when
retroactive application will make the law an ex post facto law, (2) when

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retroactive application will impair obligations and contracts and vested rights.
Retroactive application is necessarily implied in the following cases, (1) in case of
a penal statute in so far as it favors a deserving accused, such that even if the law
is silent as to its retroactive application, it will be given retroactive application so
long as it favors a deserving accused, (2) a remedial statute whereby a law is
passed by Congress to remedy an anomaly already existing in the law and such
remedial statute is to be given retroactive effect unless its retroactive effect will
impair obligations and contracts and vested rights, (3) if it is a curative statute.

Take note that a litigant has no vested rights on procedural laws that were
in effect at the time of the commencement of his action. Procedural law is
colorless and no one acquires vested rights over it. Hence, procedural laws that
covers the bringing or prosecuting of actions may be changed or modified and be
made to apply even on pending cases. Maybe you were aware of the Judicial
Affidavit Rule which became effective last January 1 2013. This rule requires the
execution of affidavit of litigants and that of their witnesses which will constitute
as his/her direct testimony in court. Now, despite that it was promulgated and
became effective only in January 1, 2013, it was made to apply in all pending
cases, be it criminal or civil cases.

Rights may be waived. This is the pronouncement in Article 6. The right

referred to under this Article is limited only to “patrimonial” rights and does not
include natural rights of a person. Or rights pertaining to status, capacity or
family. Waiver to be valid presupposes knowledge on the part of the person
possessed of a known right with the intention to relinquish it. A waiver to be valid
must pertain to a right that is existing at the time the waiver was made. A right in
the future, therefore, may not be waived validly. Waiver may be express or
implied. Implied waiver, however, must be clear and cannot be implied from
doubtful acts. Waiver cannot be done if contrary to law, public order, public
policy, morals or good custom or prejudicial to a third person with a right
recognized by law. Examples of rights that cannot be waive includes future
inheritance which cannot be waived under Article 1347 of the Code by express
provision of a law, the right to be supported, the right to be heard in court, and
right to inheritance where waiver thereof will prejudice the creditors of the heirs.
For waiver to be valid, the person waiving his rights must have full capacity to
act. Waiver of a minor is voidable, but of course, upon the instance of the said
minor.

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2014 Bar Examination question: #20

Mabuhay Elementary School organized a field trip for its Grade VI students
in Fort Santiago, Manila Zoo and Star City. To be able to join, the parents of the
students had to sign a piece of paper that reads as follows:

“I allow my child (name of student), Grade ___ Section ___, to join the school’s field trip
on February 14, 2014.

I will not file any claim against the school, administrator or teacher in case something
happened to my child during the trip.”

Joey, a 7-year old student of Mabuhay Elementary School was bitten by a

snake while the group was touring Manila Zoo. The parents of Joey sued the
school for damages. The school, as a defense, presented a waiver signed by
Joey’s parents.

Was there a valid waiver of right to sue the school? Why? (4 pts.)

Suggested Answer:

No, there was no valid waiver of right to sue the school because such is
contrary to law. Article 2241 of the NCC imposes liability upon the school or its
administrator for its wrong or omission on the basis of their secondary parental
authority wherever the child is under their custody. Besides, for waiver of right
to be valid, such must be existing at the time the waiver was made, not if such is
still in the future.

Case: In Michael C. Guy vs. Court of Appeals, G.R. No. 163707, September 15,
2006.

Ruling: In this case, only the mother of minors, acknowledged illegitimate children of the
deceased, signed a Release and Waiver of Claim in exchange of the financial and educational
assistance received from the estate of Sima Wei. It was ruled that the waiver does not state
with clarity the purpose of its execution, that is, the intent to waive hereditary rights. To be
valid and effective, the waiver must be couched in clear and unequivocal terms which leave no
doubt as to the intention of a party to give up a right or benefit which legally pertains to him.
Besides, the waiver had no legal effect due to want of judicial authorization as required under

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Article 1044 of the New Civil Code. Under this law, parents or guardians may repudiate
inheritance left to their ward provided there is judicial authorization.

Question: What is the legal effect if a penal law was subsequently repealed but
violations had already been committed?

Answer: This is basic in your criminal law because I know your professor in this
subject discussed to you the legal implications whenever a law was subsequently
repealed, yet, violation had already been made, others where even convicted
under the said law, while some cases were still pending in courts.

In some commentaries, there are references as to whether the repeal is

express or implied. This is not accurate because it has nothing to do with the
criminal liability of the offender. It refers only to the manner or mode by which
the law is repealed. Express repeal takes place when a subsequent law contains a
provision that such law repeals an earlier enactment. While, in implied repeal,
there is a law on a particular subject matter and a subsequent law is passed also
on the same subject matter but is inconsistent with the prior law such that the
two (2) laws cannot stand together. One of the two (2) laws must give way and it
is the older law that will give way to the later law because the later law expresses
the recent legislative sentiment. Implied repeal is not favored. Courts will try to
reconcile the two (2) inconsistent law or provision of law, if possible.

Its legal effect are as follows:

• When a law which expressly repeals a prior law is itself repealed, the law
first repealed shall not be thereby revived, unless expressly so provided.
(Sec. 14, Revised Administrative Code).

Example: Law A is expressly repealed by Law B. If Law B is itself repealed by Law C, is

Law A revived? No, unless Law C expressly so provides.

• When a law which repeals a prior law not expressly but by implication, is
itself repealed, the repeal of the repealing law revives the prior law unless
the language of the repealing statute provides otherwise.

Example: Law A in impliedly repealed by Law B. Law B is later repealed by Law C. Is

Law A revived? Yes, unless Law C provides otherwise.

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 As I said, the determination of whether the repeal is express or implied is
inaccurate with respect to its legal effect especially with regards to the criminal
liability of the offender. It is because of the fact that criminal liability varies
whether the repeal is absolute/total or relative/partial. A repeal is absolute or
total when the crime punished under the repealed law has been decriminalized
by the repeal. Because of that repeal, the act or omission which used to be a
crime is no longer a crime. Example is PD 722 or the Anti-Squatting Law which
was repealed by Republic Act No. 8368 on October 27, 1997. Another example is
RA No. 1700 or the Anti-Subversion Law which was totally repealed by Republic
Act No. 7636 on September 22, 1992. A repeal is relative or partial when the
crime punished under the repealed law continues to be a crime despite of the
repeal. This means that the repeal merely modified the conditions affecting the
crime under the repealed law. The act or omission which is punished under the
repealed law still remains as a crime only certain elements, certain conditions
whether of punishment or evidence had been changed. The modification may be
prejudicial to the accused or beneficial to him. Example is PD 1866 as amended
by RA 8294 or Illegal Possession of Firearms and Ammunition Law which was
partially amended by the passage of RA 10591 otherwise known as “The
Comprehensive Firearm and Ammunition Regulation Act”.

Hence, if the repeal of the penal law is absolute or total, the following legal
consequences are:

• For cases pending in court involving violation of the repealed law, it must
be dismissed even though the accused is a habitual offender. This is so
because all persons accused of a crime are presumed innocent until they
are convicted by final judgment. The accused, therefore, should be not be
made to answer for it.

• For cases already decided including those already serving sentence, if the
convict is not habitual delinquent, he is entitled to release unless there is a
reservation clause in the penal law that it will not apply to those serving
sentence at the time of the repeal. But if there is no reservation clause,
those who are not habitual delinquents even if they are already serving
their sentences will benefit from the repealing law. They are entitled to
release. However, if the convict is a habitual delinquent, he will continue
serving the sentence despite of the fact that the law under which he was

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 convicted had been already absolutely repealed. This is so because the
retroactive application of penal laws favors only those who are not habitual
delinquents.

On the other hand, if the repeal is relative or partial, the consequences are
as follows:

• For cases pending prosecutions, if the repealing law is more favorable to

the offender, it shall be the one to be applied to him. So, whether he is
habitual delinquent or not, if the case is still pending in court, the
repealing law will be the one to apply unless there is a saving clause in the
repealing law that it shall not apply to pending cases.

• For those already serving sentence, since the crime still remains to be a
crime, they will continue to serve their sentences. Those who are not
habitual delinquent will benefit on the effect of the repeal. Such that if the
repeal is more lenient to them, say for instance, the penalty was reduced,
it will be the repealing law that will be applied.

Question: Are Philippine laws obligatory on Filipinos abroad?

Answer: Yes, but only those laws relating to family rights and duties, or to the
status, conditions, and legal capacity of persons are binding upon citizens of the
Philippines even though living abroad. (Article 15, NCC). This expresses the
principle of nationality. Though, capacity to enter into other relations or
contracts is not necessarily governed by the national law of the persons
concerned. For example, capacity to donate, sell or mortgage real or personal
property depends on the law of the place where the property is situated (lex
situs) (Art. 16 par. 1, NCC). Such that, were it involved property, be it personal
or real, the rule is that it is subject to the law of the country where it is situated.
This is the principle of lex rei sitae. However, where it pertains to aspects of
succession, like, the amount of successional rights and capacity to succeed, it is
the national law of the person whose succession is under consideration and not
the law of the place where the property as part of the inheritance is situated.
Also, capacity to get married abroad does not generally depends on the national
law of the parties but on the law of the place where the marriage was entered
into, provided that the marriage is not bigamous, polygamous or incestuous as

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determined by Philippine law. (Art. 71, NCC). This is the principle of lex loci
celebraciones where we follow the rule that the forms and solemnities of
contracts, wills and other public instruments shall be governed by the laws of the
place in which they are executed. (Art. 17, NCC). Take note, however, that with
respect to the nature, construction and validity of contracts what applies is the
doctrine of lex contractus or lex loci contractus, where it may pertain to the law
voluntarily agreed by parties (lex loci voluntatis) or the law intended by them
either expressly or impliedly (lex loci intentions).

Since the provisions on human relations has something to do with liability or

damages, we will discuss this chapter, from Article 19-36, in conjunction with
the law on damages.

Let us go now to Persons on the aspect of civil personality.

There are two (2) elements of full civil capacity, (1) juridical capacity and (2)
capacity to act. Juridical capacity is the fitness to be the subject of legal relations
while capacity to act is the power to do acts with legal effects. The concurrence
of these two (2) elements bestowed upon such person full civil capacity. He
becomes qualified for all acts of civil life.

Example. A fetus inside the mother’s womb was recognized by the father. Is the
recognition valid? Yes, it is valid. Can the father interpose the defense of
invalidity of recognition because what was recognized was not a person but a
fetus? No, the argument is untenable because such recognition is beneficial to
the child provided the child is born in accordance with the provisions of the New
Civil Code. Since that recognition is favorable to the fetus, it is a valid
recognition.

2012 Bar Examination Question:

Ricky donated P1 million to the unborn child of his pregnant girlfriend which
she accepted. After six (6) months of pregnancy, the fetus was born and baptized
as Angela. However, Angela died 20 hours after birth. Ricky sought to recover
the P1 million. Is Ricky entitled to recover? Explain. (5%)

Who will try to answer this question?

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Answer: Yes, Ricky can recover the Php1M donated to the fetus because there
was ineffective donation. The supposed donee, the fetus which has a 6-month
intra-uterine life, did not attain civil personality due to its death which occurred
twenty (20) hours after its severance from the mother’s womb.

Question: May a fetus be a donee? May a person donate something to a fetus?

Answer: Yes, the donation is valid for as long as the fetus is born alive in
accordance with the provisions of the Civil Code. But for the donation to be
effective, it must be accepted by the fetus, through the mother of course. Every
juridical act favorable to the fetus shall be valid, but if such juridical act is not
favorable to the fetus, it will not take effect.

Question: When is a fetus considered born?

Answer: The fetus is considered born depending on its intra-uterine life. If the
fetus has an intra-uterine life of seven (7) months or more, then it is considered
born when it is alive after its complete separation from the mother’s womb.
When is the fetus considered completely separated from the mother’s womb?
From the cutting of the umbilical cord or the total expulsion from the placenta,
whichever comes first. If the fetus reach at this point and born alive, then it is
already considered a person. But if the intra-uterine life of the fetus is less than
seven (7) months, it is considered born only when it lives for 24 hours from the
time of its complete separation from the mother’s womb pursuant to Article 21 of
the Code.

Illustrative Problem. A woman was pregnant for six (6) months, and for one
reason or another, she gave birth when the fetus was only six months old. The
fetus was alive at the time of its complete separation from the mother’s womb. It
was placed inside the incubator. While in the incubator, a nurse, who happened
to be the mistress of the husband killed the baby. The baby died six (6) hours after
complete separation from the mother’s womb. Is the baby considered born? Is it
considered a person? No, it was not considered born because it did not live for at
least 24 hours. The fact that it was killed is immaterial because whether it will be
alive for at least 24 hour-period remains speculative. So, the child was not born
for purposes of the civil law. What crime was committed by the nurse since the
one killed is not yet a person? Malicious mischief? Ask your criminal law

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professor ha? (Answer: Intentional Abortion) With this, even if the child was
alive for a single second, so long as it has an intra-uterine life of 7 months or
more, it is considered born and considered a person for all legal intents and
purposes.

Another illustrative problem. A woman was so vain that she did not want to get
pregnant. Such that every time her husband would impregnate her, she will go to
a doctor for abortion. She had an abortion for six times already and in the
seventh, it was discovered by the husband. The husband sued the doctor, the
abortionist for damages for the death of the seven fetuses. May the husband
recover damages for the death of the fetus aborted by the doctor? The answer is
no. The husband is not entitled to the claim of damages for the death of the 7
fetuses because they were not considered persons. The 7 fetuses were not born
alive in accordance with the New Civil Code. Unless and until the fetus is born in
accordance with the provisions of the New Civil Code, the fetus is considered an
internal organ of a woman. The moment this thing is expelled for some reasons
or another, it is the woman who is to claim for damages and no other, but, as in
this case, it was she who procured the abortion from the doctor. Who has the
burden of proof to show that the fetus is born alive from the time it was
completely separated from the mother’s womb? Or it was born alive for at least
24 hours in case it was a premature delivery? As a rule, he who alleges proves.
But the moment it is proven that the child was born alive, the presumption that
life continues applies, and he who alleges that the child did not live for at least 24
hours will be the one to prove it. He who alleges that the premature child did not
live for 24 hours shall be the one to prove it.

Restrictions on capacity to act.

2012 Bar Examination - Multiple Choice Question #2

Which of the following is NOT a restriction on one’s capacity to act?

(a) Minority;
(b) marriage;
(c) deaf-mute;
(d) civil interdiction.

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What is your answer to this question? Answer: (b).

Let us discuss minority.

Problem: A 12-year old boy approach you selling to you his car but he
misrepresents himself telling you that he is already 20 years old. Thus, a deed of
sale was executed. Two years later, when the boy was already 14 years old, he
went to court to annul the contract of sale. Will his action prosper? The answer
is yes. Note that in the case of Mercado vs. Espiritu, the minor was estopped in
questioning the contract because he actively misrepresented himself that he is
already of legal age. Will the doctrine in Mercado case applies in the given
problem? The answer is no because at the time the minor question the contract,
he was still a minor unlike in the Mercado case, where he was already nearing 21
years of age. But if the 10 year old minor misrepresents himself and he
questioned the contract while still a minor, he is not estopped from doing so
because the other party could not have believed the child is already of age. The
case applicable in the given problem is Young vs. Tecson. A minor cannot be
bound even by his own misrepresentation. If he does not have the capacity to
bind himself by contract neither may he bind himself by simple
misrepresentation.

Age restricts the capacity to act of a person. In the Civil Code, we have age
of contract which is 18 years of age with the passage of Republic Act No. 6809.
Before the amendment, however, it was 21 years of age. The age of suffrage
which is, under our Constitution, is 18 years of age. Age of marriage which,
under the Family Code, is 18 years of age. The age of testament which, under
the New Civil Code, it is 18 years old. The age of majority which, under RA 6809,
it is 18 years old. The age of a child to choose a guardian, it is 8 years old under
Article 213 of the Family Code. Age of criminal discernment, 15 years old, by
virtue of the passage of RA 9344 or the Juvenile Justice Welfare Act. Before, it
was 9 years old under the Revised Penal Code.

What is the effect of non-age? In the case of a contract entered into one of
which is a minor, the contract is voidable under Article 1319] (1) of the New Civil
Code. If the minor entered into a contract of marriage, the marriage is void ab
initio under Article 35(1) of the Family Code. In case a minor writes a will, the will
is void under Article 796 and 797 of the Civil Code. Suppose two (2) minors

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entered into a contract, what is the status of the contract? The contract is
unenforceable under the Law on Obligations and Contract. Under Article 1398 of
the Civil Code, when the contract is annulled, the contracting parties shall
restore to each other what they have both received under the contract. Where
the contract was annulled on the ground of minority whereby one of the
contracting parties is a minor, will the minor be ordered to restitute what he
have received under the contract? Yes, the minor is bound to restitute under
Article 1399 but to the extent only of what or how much he benefitted. He
cannot be ordered to restore in full what he received under the contract.

The capacity of a natural person is presumed in the absence of any proof or

in the absence of any provision of the law restricting the capacity of a person.
The capacity of a person is always presumed as enunciated in the case of
Standard Oil vs. Arenas. Therefore, in case of doubt as to whether a person is
sane or insane, the presumption is that he is sane unless there is proof showing
that he is insane.

Another restriction on capacity to act is civil interdiction. Civil interdiction

is an accessory penalty imposed upon an accused who is sentenced to a principal
penalty not lower than reclusion temporal which is a penalty ranging from 12
years and 1 day to 20 years. It produces the following effects during the time of
the sentence, to wit: (1) deprivation of the rights of parental authority or
guardianship, (2) deprivation of marital authority, (3) deprivation of the right to
manage his property, and (4) deprivation of his right to dispose of his property
by any act or conveyance inter vivos, hence, if by will, it is allowed.

Let us go now to the Law on Marriage.

Under the Family Code, marriage is a special contract. Why is it a special

contract? Because it is only a contract in form. Why is it in form? Because it
requires only the consent of the parties in order that their marriage will be valid.
It is not a contract in substance because the parties are not allowed to stipulate
on their relationship during the marriage. They are only allowed to stipulate as far
as their property relations is concerned with certain limitations as provided for
under the Family Code. This is manifested through the provisions on marriage
settlement.

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 May a man marry another man? The answer is no because it is an essential
element of legal capacity. But in the State of California, U.S.A., and in other
countries, same sex marriage is already allowed although it is not called marriage
but “domestic partnership”. Under the Family Code, there are two (2) kinds of
requisites of a valid marriage. The first is the essential requisites and the second
is the formal requisites. What is the effect if an essential requisite is absent? The
marriage is void. What is the effect if a formal requisite is absent? The marriage is
void. What is the effect if an essential requisite is defective? The marriage is
voidable. What is the effect if a formal requisite is irregular? It has no effect on
the validity of marriage. The person responsible may only incur liability, either
administratively, civilly or criminally.

What are the essential requisites of marriage? First is age. The parties must
be at least 18 years of age. A 17-year old boy marries a woman 23 years of age.
What is the status of the marriage? It is void because of the absence of one
essential requisite, that the party must be of age. Suppose the parents of the boy
consented to the marriage, will such marriage be valid? No, the marriage is still
void even if the parents of the 17 year old boy consented to the marriage. Why?
Because of absence of an essential requisite, the legal capacity of the contracting
party. Take note that there are two (2) essential requisites, (1) legal capacity of
the contracting parties, and (2) consent. The three (3) components of legal
capacity are (1) age, and (2) difference in sex and (3) absence of an impediment.
Therefore, a man cannot marry another man nor a woman cannot marry another
woman. At least, this marriage is not allowed at present. Suppose a homosexual
underwent a sex change operation just like Lady Valerie. This transsexual who is
now holding himself to the public as a woman, may he or she marry a man? He
cannot because in the eyes of the law, he is still a man despite of the fact that he
no longer has a genital of a man. What determines the sex of a person is not the
existence of genital. Suppose you underwent castration, do you think you are no
longer a man? You are still a man because what determines the sex of a person is
the totality of his reproductive system. Hence, even if his genital was removed,
still his reproductive system is still that of a man. The marriage between a man
and a man is void because of the absence of essential requisite which is legal
capacity because of the requirement that the parties must belong to different
sexes. Number (3) is absence of impediment. What are these legal impediments?
First is, prior subsisting marriage, such that if you were married before and your
marriage is still subsisting, you cannot contract a subsequent marriage. If you are

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still married, the subsequent marriage is invalid. Why invalid? Because of
absence of an essential requisite. The party has no legal capacity because of an
impediment. The second impediment is relationship like incestuous relationship,
a man cannot marry his sister because their marriage will be incestuous. Lastly,
psychological capacity. The Family Code does not include psychological capacity
under the legal capacity requirement or consent requirement. That is why, it was
embodied in a separate provision because the authors of the Code were unable to
agree where to place the provision on psychological incapacity. Since
psychological incapacity makes the marriage void from the very start, then, an
essential requisite must be missing or absent, it is not? According to Article 36,
where the party is psychologically incapacitated, the marriage is void ab initio.
Since it is void ab initio, an essential requisite or a formal requisite must be
absent. To my opinion, psychological capacity must fall under the legal capacity
because of its effect on the validity of the marriage. It has nothing to do with
consent according to Justice Simpio-Dy and the members of the Revision
Committee. Therefore, it is one of the elements of legal capacity, thus, the third
component of legal capacity. If a party is psychologically incapacitated, he has
no legal capacity. Therefore, absence of one of the essential requisite, the
marriage is void under Article 4 of the Family Code.

With regards to consent, the consent of the contracting parties must be

freely given in the presence of the solemnizing officer. Is marriage by proxy valid
in the Philippines? No, because the contracting party cannot give his consent
freely in the presence of a solemnizing officer due to non-appearance. But if the
marriage by proxy is solemnized abroad and valid there as such, it is arguable
that such marriage is valid in the Philippines. Why? Because Article 26 does not
mention marriage by proxy as one of those invalid marriages more that was
celebrated abroad. Take note that Article 26 contains an enumeration, and those
that are not included are deemed excluded. First, Art. 35 (1) referring to those
contracted by a person below 18 years of age, Art. 35 (4) bigamous or
polygamous marriages, Art. 35 (5) those contracted through mistake, Art. 35 (6)
those that are void under Art. 53 where subsequent marriage was contracted
without delivering the presumptive legitime to the children of the first marriage.
Art. 36 on psychological incapacity, Art. 37 those incestuous marriages, those
that were prohibited by public policy and Art. 38. Take note that marriage by
proxy was not mentioned in the enumeration, therefore, it may be valid in the
Philippines if valid abroad where the marriage was celebrated.

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 Let us go now to the formal requisites. The Family Code enumerates what
the formal requisites are: namely, (1) authority of the solemnizing officer, (2) a
valid marriage license , and (3) a marriage ceremony. For marriage to be valid,
the solemnizing authority must have the authority to solemnize it. If the
solemnizing authority who solemnize it has no authority to solemnize the
marriage, what is the status of the marriage? The marriage is void under Article 4
of the Family Code. A formal requisite is absent, therefore, the marriage is void.

Now, who are authorized to solemnize marriages? The answer is in Article

7 which enumerates the persons authorized to solemnize marriages, (1) any
incumbent member of the judiciary within the court’s jurisdiction, (2) Any priest,
rabii, imam or minister of any church or religious sect. If the membership of one
of the contracting parties in the religious sect to where the solemnizing officer
also belongs is not an essential element of authority, will it constitute an
irregularity? This question had been asked already in the Bar, and the Bar
Committee suggested two (2) alternative answers, one is that it is an essential
requisite of authority, and the other is that it is not an essential requisite of
authority. (3) any ship captain or airplane chief only in cases mentioned in Article
31 (these are situations on marriages in articulo mortis only).

Problem: An ocean-going luxury vessel sailed to the South Pacific. During the
voyage, the vessel met Typhoon “Yoland” and was shipwrecked. There was no
casualty, however, the crew were washed ashore in a tiny unchartered virgin
island in the Pacific. While in that island, two (2) members of the crew fell in love
with each other. The ship captain solemnized their marriage. Is the marriage
valid? No, the marriage is not valid because the authority of the captain to
solemnize marriage is limited only to marriage in articulo mortis. Suppose one of
the crew fell in love with a native and the native was about to die, and the ship
captain solemnize the marriage between them. Is the marriage valid? Under
Article 31, the ship captain can solemnize marriage between the crew members,
between passengers, and between a crew member and a passenger. The
provision did not mention an inhabitant as one of the contracting parties. So, the
marriage is invalid. To make it valid, let us make the inhabitant a passenger and
let her buy a ticket of the luxury liner. This situation had been the subject of a Bar
question in the past already.

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 Another problem.. An airplane was airborne, and while on flight, a
hijacker went to the cockpit and hijacked the plane. The airplane chief pilot was
shot and the co-pilot took over the command of the airplane. The hijacker was
subdued, however, one of the passengers was shot and about to die. This
passenger was flying with his girlfriend and so, they decided to get married
requesting the co-pilot to solemnize the marriage. The co-pilot obliged and
celebrated the marriage. Is the marriage valid? The issue to be determined is
whether the solemnizing officer is clothed with authority to solemnize the
marriage. In Article 7, it made mention of the term “airplane chief”, but in
Article 31, it mentioned “airplane pilot”. It did not mention “chief pilot”. Take
note that in the problem, the one who solemnize the marriage was only a “co-
pilot”. The Bar Committee suggested that since the chief pilot was shot and
became incapable, he was substituted by the co-pilot who has now the authority
of a chief pilot, and therefore, as chief pilot, he has now the authority to
solemnize the marriage. It did not touched on the distinction between an
“airplane chief” and “airplane pilot” in Article 7 and 31. But most of the law
professors believed that it should only be the chief pilot that has the authority to
solemnize marriage. The “airplane pilot” in Article 31 necessarily refer only to an
“airplane chief” mentioned in Article 7. (4) a military commander of a unit to
which a chaplain is assigned, in the absence of the chaplain during military
operation only in cases mentioned in Article 32. Article 32 refer to marriages
between people in the zone of military operations whether members of the
Armed Forces or civilians. I think this may not be the subject of a Bar question
because of the many elements required for this provision to apply. First, what
military unit that has a chaplain assigned to it? Does a platoon have a chaplain?
How about a battalion? How about a regimen? In a military division, I think a
chaplain is already assigned to it. Therefore, only a military commander of a
division has the authority to solemnize marriage because it is that unit only to
which a chaplain is assigned. Second, this military commander cannot solemnize
marriage if the chaplain is around. He can only solemnize marriage if the chaplain
is out of the area of military operation. Third, his unit must be in a military
operation or military mission only not if the military commander is on leave. And
fourth, the marriage must be in articulo mortis only whereby one of the
contracting parties, whether between members of his unit or civilians, is in the
danger of death, so to speak. Let me ask you a question, suppose the marriage
was done in articulo mortis but subsequently the person in the danger of death

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recovered, is the marriage valid? Of course, the marriage is valid. When it is
valid when solemnized, it remains valid until annulled.

Another question, may a governor solemnize a marriage? No, it is only

the municipal or city mayors that is given the authority to solemnize marriage by
express provision of the Local Government Code of 1991. How about a vice-
mayor who is an Acting Mayor, can he solemnize marriage? Yes, so long as he is
acting as the municipal mayor and perform all the functions and duties as such
under the law, by which the duly elected mayor has to undertake. How about
the Ambassador of the Philippines to Malaysia, can he solemnize marriage
between Filipinos in Malaysia? No, it is only the Consul, Consul-general or a vice-
consul that is authorized to solemnize marriage and even if the marriage is not in
articlulo mortis, the consul can solemnize the marriage pursuant to Article 10,
provided, of course, that the marriage is celebrated abroad between Filipinos.
The Consul in Hongkong went to Bangkok, and while in Bangkok, he solemnized
the marriage between Filipinos at the Bangkok Embassy, is the marriage valid?
No, because the authority of the consul to solemnize marriage is limited to his
area of jurisdiction only. This situation is the same as that of the judges, because
judges cannot solemnize marriage anywhere in the Philippines but is limited only
to their respective area of jurisdiction. Now, suppose the Consul went home to
the Philippines and solemnize the marriage, what is the status of that marriage?
The marriage is invalid because it was not solemnized abroad, or outside
Philippine territory according to Article 10.

The next formal requisite is marriage license, and it must be a valid

marriage license. Problem: Juan and Maria decided to get married and they
wanted to be married at once because Maria is about to give birth. They forgo
getting a marriage license because it will still be posted for 10 days. What they
did, they approached a friend working at the Civil Registrar’s Office in Maasin City
and requested that they be issued a marriage license. Since none of them is a
resident of Maasin City, they made it appear in their application that one of them
is a resident of the place. They also misrepresent their age so that they will no
longer be required to submit their parental consent. After submitting their
application to the LCR, the Civil Registrar, through the intercession of their
friend, certified falsely that their application was already posted for 10-days
despite the fact that it was not posted. After which, the Civil Registrar issued a
marriage license on the date they applied. Armed with this license, the couple

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got married. Is the marriage valid? Yes, the marriage is valid because the
marriage license is valid. Take note that the license was issued by the LCR and
registered with that office.

Another situation: This friend of the couple pilfered a form from the LCR
office, filled up all the data therein, forged the signature of the Civil Registrar and
gave it to the couple. Armed with this license, the couple got married. Is the
marriage valid? No, it is void because the marriage license is not valid. It is an
invalid marriage license because it is not recorded in the LCR and in fact, the
signature of the Civil Registrar is a forgery. In short, the license was not officially
issued by the Civil Registrar’s Office, thus, invalid.

Case: Syed Azhar Abbas vs. Gloria Goo Abbas, G.R. No. 183896, January 27,
2013.

SYED AZHAR ABBAS vs. GLORIA GOO ABBAS, G.R. No. 183896, January 27, 2013, 689 SCRA
646
(Bigamy; Void Marriages)

Facts: Syed, a Pakistani, while on vacation in the Philippines together with Gloria, underwent
a wedding ceremony solemnized by a religious minister on the basis of a marriage llicense
issued from Cavite. It was found out that the said license is spurious because the number
reflected therein was assigned to another couple. Due to lack of license, Syed filed a petition
for declaration of nullity of marriage. But prior to its filing, a pending case for bigamy was filed
by Gloria against Syed due to the latter’s marriage to another during the subsistence of their
marriage. Meanwhile, the lower court granted the petition on the basis of a certification only
issued by the LCR of Carmina, Cavite to the effect that there was no marriage license issued to
the couple Syed and Gloria. Is the ruling of the lower court correct?

Answer: Yes because under the Family Code, lack of marriage license makes the married void
and the SC give credence to a certification issued by the Local Civil Registrar to the effect that
no marriage license was issued by their office to the said Abbas couple because the license
number reflected in their purported marriage license was issued to another couple. Being a
custodian of said document, a certification issued by them deserves full faith and credence.
Such that, due to lack of marriage license, their marriage is void ab initio lacking a formal
requisite of marriage. In this case, the SC pronounced that the filing of petition for nullity of
marriage even after the institution of a criminal action for bigamy does not affect the
proceeding or is immaterial because the law is very explicit that lack of marriage license renders
the marriage a nullity under Article 4 of the Family Code. The SC give credence to a
certification issued by the Local Civil Registrar to the effect that no marriage license was issued

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by their office to the said Abbas couple because the license number reflected in their purported
marriage license was issued to another couple. Being a custodian of said document, a
certification issued by them deserves full faith and credence. Such that, due to lack of
marriage license, their marriage is void ab initio lacking a formal requisite of marriage. In this
case, the SC pronounced that the filing of petition for nullity of marriage even after the
institution of a criminal action for bigamy does not affect the proceeding or is immaterial
because the law is very explicit that lack of marriage license renders the marriage a nullity
under Article 4 of the Family Code.

2016 Bar Examination Question No. XIX

Brad and Angelina had a secret marriage before a pastor whose office is
located in Arroceros Street, City of Manila. They paid money to the pastor who
took care of all the documentation. When Angelina wanted to go to the U.S., she
found out that there was no marriage license issued to them before their
marriage. Since their marriage was solemnized in 1995 after the effectivity of the
Family Code, Angelina filed a petition for judicial declaration of nullity on the
strength of a certification by the Civil Registrar of Manila that, after a diligent and
exhaustive search, the alleged marriage license indicated in the marriage
certificate does not appear in the records and cannot be found.

(a) Decide the case and explain. (2.5%)

(b) In case the marriage was solemnized in 1980 before the effectivity of the
Family Code, is it required that a judicial petition be filed to declare the
marriage null and void? Explain. (2.5%)

Answer: (a) I will decide to grant Angelina’s petition for the declaration of her
marriage to Brad void ab initio due to lack of marriage license. (Your answer must
be based on the Abbas case cited above).

(b) Since the marriage was solemnized in 1980 before the effectivity of the Family
Code, judicial declaration of nullity is no longer necessary. Their marriage is
automatically revoked.

There are marriages that do not require a marriage license for its validity,
namely, (1) marriages in articulo mortis, (2) cohabitation for more than 5 years
and the parties have no impediment to contract marriage. Is it necessary that the
5-year cohabitation be consecutive or continuous? The law is silent as to whether
the cohabitation is consecutive or continuous but it is the view of many civilist
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that the 5-year period must be consecutive. Suppose one of the parties was 15
years old at the time they started co-habiting. Upon reaching the age of 20 years
old, they got married without securing a marriage license. Is the marriage valid?
The answer is no. (3) those marriages where one of the contracting parties reside
in a remote place. When is a place considered remote? The place is remote
when it is not accessible by any ordinary means of transportation. Is there still
remote place in the Philippines? I don’t think so.

To recapitulate, what is the effect if one the essential requisite of marriage

is absent? The marriage is void. What is the effect if an essential requisite is
defective? The marriage is voidable. What is the effect if the formal requisite is
absent? The marriage is void. What is the effect if a formal requisite is irregular?
The validity of such marriage is not affected, it remain valid. You must analyze the
factual setting of the problem and know whether a formal requisite is absent or it
is only an irregularity?

Let us look at the third formal requisite, a marriage ceremony. Under the
law, no particular or prescribed form of ceremony is required but for the
contracting parties only to appear personally before the solemnizing officer and
declare in the presence of at least two (2) witnesses of legal age that they take
each other as husband and wife. These declarations will be stated in the marriage
certificate and signed by the contracting parties and their witnesses attested to
by the solemnizing officer. In short, there are many requirements to comply, as
follows, (1) they must personally appear before the solemnizing officer, (2) they
must declare before the solemnizing officer, in the presence of two (2) witnesses
of legal age, their intention to take each other as husband and wife, (3) that
these declarations must be contained in a marriage certificate. First question,
suppose there were no witnesses, will the absence of the witnesses equivalent to
absence of ceremony or it will only be an irregularity? According to some noted
civilists the essence of the ceremony is the declaration of the parties before the
solemnizing officer. The instrumental witnesses is not an element of the
ceremony as a formal requisite. So, even if there are no witnesses, the validity of
the marriage is not affected because it is a mere irregularity. But if there is no
declaration made by the parties before the solemnizing officer of their intention
to take each other as husband and wife, then, if we follow Justice Vitug’s
opinion, it is tantamount to absence of a ceremony and that will make the
marriage void because of the absence of formal requisite.

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 Example. A man and a woman wanted to get married. They went to the LCR to
apply for a license and obtained one after complying with all the requirements.
They went to an RTC judge for the solemnization of their marriage, but, since the
judge was pre-occupied with his work, he signed the marriage certificate after
ascertaining the identity of the parties but without asking them their intention to
take each other as husband and wife. Was the marriage validly solemnized? Yes,
it was validly solemnized because the declaration of the parties to the solemnizing
officer may be done expressly or impliedly. In express declaration, the parties will
manifest orally their declaration to the solemnizing officer, and in implied
declaration, the parties failed to object to the attestation made by the
solemnizing officer when he signed the marriage certificate. Because of the
personal appearance requirement in the ceremony, marriage by proxy is not
feasible in our country. But if one of the parties is only represented by a proxy,
will it amount to absence of ceremony or only an irregularity? According to
Justice Vitug, it is tantamount to absence of a ceremony because of the absence
of the two (2) elements of ceremony, one is personal appearance and two, is
personal declaration. In a situation where one of the parties was represented by
a proxy and through a telephone, the real party declared to the solemnizing
officer his intention to get married to the present spouse. In this case, there was
personal declaration but no there was no personal appearance. Just the same,
there is absence of a ceremony and the marriage will be void.

Let us discuss the validity of marriages celebrated abroad. The general rule
is, for marriages involving Filipino citizens celebrated abroad, the rule is that
such marriages are considered valid in the Philippines if they are valid in the place
where they are celebrated. Thus, (1) absence of marriage license if such is not
required in the place of celebration except if such was celebrated before the
Philippine consular officials, (2) those solemnized by a person who is authorized
to solemnize marriage in the place of celebration even if such person is not one of
those authorized under Philippine law, (3) marriages by proxy, if valid in the
place of celebration and (4) marriages through video conferencing, if valid in the
place of celebration.

But there are marriages, even if it is valid in the place where it was
celebrated yet, such marriage is void, like (1) below 18 years of age and that
he/she is a Filipino citizen, (2) bigamous or polygamous marriage, (3) those

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contracted by mistake of one of the contracting party as to his/her identity, (4)
subsequent marriages which failed to comply Article 52 of the Code, (5) where
one of the parties is psychologically incapacitated to comply with the essential
marital obligations, (6) incestuous marriage, and (7) where the marriage is void
by reason of public policy under Article 38.

Question: Is divorce decree obtained abroad valid in the Philippines?

Answer: Under existing rules and jurisprudence, the rule is that divorce is not
recognized as valid in the Philippines if the parties are both Filipinos. However, if
it involved mixed marriage, between a Filipino citizen and a foreigner, the Code
allows the former to remarry in case the divorce is validly obtained abroad by the
alien spouse capacitating him or her to remarry. (Article 26 par. 2 Family Code).

Case: In applying the provision of the 2nd paragraph of Article 26, take note of
the case of Republic vs. Orbecido III 472 SCRA 114 (2005) where it was ruled that
the reckoning point is not the citizenship of the parties at the time of the
celebration of marriage, but their citizenship at the time a valid divorce is
obtained abroad by the alien spouse capacitating him or her to remarry. Thus, in
a case where both parties were Filipino citizens at the time of the celebration of
the marriage, but later on, one of them becomes naturalized as a foreign citizen
and thereafter obtains a valid divorce decree, Article 26(2) applies. To reiterate,
it is the alien spouse that will obtain a divorce decree and not the Filipino spouse,
otherwise, Article 26 will not apply. Instead it will be Article 15 of the NCC that
will govern, the nationality rule.

Question: Is the capacity to remarry for the Filipino spouse automatic in the
event a divorce decree was validly obtained by the alien spouse?

Answer: This question was answered in the case of Amor-Catalan vs. CA, 484
SCRA 353 (2006). For such capacity to remarry operates, the following factors
should be considered: (1) the divorce decree must capacitates the alien spouse
to remarry (limited divorce), otherwise it will not capacitates the Filipino spouse
to remarry, (2) the divorce decree obtained by the alien spouse must be valid in
accordance with his or her national law, and, (3) the divorce decree must be
proven as a fact and demonstrate its conformity to the foreign law of the alien
spouse allowing divorce in their country. These factors should be threshed out in

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a petition for declaratory relief under Rule 69 of the Revised Ruled of Court,
hence, it is not automatic under our present laws.

2012 Bar Examination Question

No. III (b). Cipriano and Lady Miros married each other. Lady Miros then
left for the US and there, she obtained American citizenship. Cipriano later
learned all about this including the fact that Lady Miros had divorced him in
America and that she remarried there. He then filed a petition for authority to
remarry, invoking par.2 Art. 26 of the Family Code. Is Cipriano capacitated to re-
marry by virtue of the divorce decree obtained by his Filipino spouse who was later
naturalized as an American citizen? Explain. (5%)

Anybody who will answer this question?

Answer: No, unless Cipriano can prove the factors laid down in the Amor-Catalan
case.

Case: David Noveras vs. Letecia Noveras, G.R. No. 188289, August 20, 2014.

Facts: David and Letecia were married in 1988 in Quezon City. They resided in California,
U.S.A. and obtained American citizenship. They begot two (2) children, Jerome and Jena.
During their marriage, they acquired properties in the Philippines and in the U.S.A. Due to
business reverses, David returned to the Philippines in 2001. Upon learning of David’s
infidelity, Letecia filed a petition for divorce in the California court which granted it and
judgment was duly entered in June 2005 giving Letecia the custody of their minor children and
their conjugal properties in the U.S. Subsequently, Letecia filed at RTC, Baler, Aurora a
petition for judicial separation of conjugal properties. The RTC granted the petition and
dissolved the absolute community of the spouses on the basis of a copy of the divorce decree
issued by the California court. Is the RTC ruling correct?

Answer: No. Failure to meet the requirements for recognition of a valid divorce decree by
proving it as a fact as well as the national law of the parties, the liquidation of the absolute
community of the spouses is erroneous. Nonetheless, the petition for judicial separation of
conjugal properties filed by Letecia should be granted, not on the basis of abandonment, but
having been living separately for more than one (1) year already reckoned from the date of
David’s return to the Philippines in 2001. After the grant of the petition, liquidation of spouses’
conjugal assets shall commence with respect to Philippine properties are concerned for the RTC
did not acquire jurisdiction over the properties in the U.S.A. following the rule that real and
personal property are subject to the law of the country were they are located.

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2014 Bar Examination Question No. XXIV

Ted, married to Annie, went to Canada for work. Five (5) years later, Ted
became a naturalized Canadian citizen. He returned to the Philippines to
convince Annie to settle in Canada. Unfortunately, Ted discovered that Annie
and his friend Louie, were having an affair. Deeply hurt, Ted returned to Canada
and filed a petition for divorce which was granted. In December 2013, Ted
decided to marry his childhood friend Corazon in the Philippines. In preparation
for the wedding, Ted went to the Local Civil Registry of Quezon City where his
marriage contract with Annie was registered. He asked the Civil Registrar to
annotate the decree of divorce on his marriage contract with Annie. However,
he was advised by the National Statistics Office (NSO) to file a petition for judicial
recognition of the decree of divorce he obtained in Canada before he can contract
a second marriage in the Philippines.

Is it necessary for Ted to file a petition for judicial recognition of the decree
of divorce he obtained in Canada before he can contract a second marriage in the
Philippines? (4%)

Answer: No. The fact that Ted is no longer a Filipino citizen but a foreigner, all he
has to do is to submit a copy of the divorce decree together with a Certification
coming from the Canadian embassy that he is capacitated to remarry under the
Canadian Law.

2016 Bar Examination Question No. III

Romeo and Juliet, both Filipinos, got married. After a few years, Juliet got
word fro her mother that she can go to the United States for naturalization. Juliet
promised she will be back the moment she becomes an American. After
sometime, Romeo learned from a friend that Juliet already became a U.S. citizen
and even divorced him to marry a wealthy American businessman. Romeo filed a
petition before the Regional Trial Court praying that an order be issued
authorizing him to remarry pursuant to Article 26 of the Family Code. Decide the
petition with reasons. (5%)

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Answer: I will deny Romeo’s petition. (You must based your answer on Amor-
Catalan case cited above).

Case: Minoru Fujiki vs. Maria Paz Galela Marinay, etc., G.R. No. 196049, June
26, 2013.

Facts: Fujiki, a Japanese national, married Maria Paz in the Philippines in January 2004.
Fujiki’s parents were against their marriage, thus, Maria Paz cannot accompany Fujiki to Japan.
Their relationship went into vain. In 2008, Maria Paz married Shinichi Maekara in Quezon City
without her first marriage dissolved. Maria Paz was brought to Japan by Maekara but their
marriage did not last long due to alleged physical abuse. Hence, Maria Paz started to contact
Fujiki and they were able to reestablish their relationship. In 2010, Maria Paz was able to
obtain a judgment from the Japanese court declaring her marriage to Maekara void on the
ground of bigamy.

Utilizing the Japanese court judgment, Fujiki filed a petition for judicial recognition of
foreign judgment in the RTC to recognize the effect of said judgment declaring the bigamous
marriage of Maria Paz and Maekara as void. The RTC dismissed the petition as it grossly
violates A.M. No. 02-11-10-SC (Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages). Under the Rule, since only the husband or the wife can file
the petition to declare their marriage void, and Fujiki is not the husband in the said marriage to
be declared void, he is not allowed to file said petition. (a) Is the ruling of the RTC correct? (b)
Can Maria Paz be still prosecuted for the crime of bigamy?

Answer:

(a) No, the RTC ruling is erroneous. The SC ruled that A.M. No. 02-11-10-SC does not apply
in a petition to recognize a foreign judgment relating to the status of marriage where one of the
parties is a citizen of a foreign country. It also pronounced that said Administrative Matter does
not apply if the reason behind the petition is bigamy. Therefore, since Fujiki is an injured party
as the husband in the first marriage of Maria Paz, he has the personality to file said petition
considering that he has a personal and material interest in maintaining the integrity of his
marriage he contracted with Maria Paz in the Philippines.

(b) Yes, Maria Paz can still be prosecuted for bigamy in Philippine courts because the
recognition of a foreign judgment nullifying a bigamous marriage is not a ground for extinction
of criminal liability under the RPC. Take note that prescription of crime does not run when the
offender is absent in the Philippines.

In this Fujiki case, the SC reiterated that the principle in Article 26 applies
to marriage between a Filipino and a foreign citizen who obtain a foreign
judgment nullifying the marriage on the ground of bigamy. The Filipino spouse

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may file a petition abroad to declare the marriage void on the ground of bigamy.
The principle in the second paragraph of Article 26 applies because, the foreign
spouse, after the foreign judgment nullifying the marriage, is capacitated to
remarry under the laws of his or her country. In this case, the SC clarified that
the Filipino spouse has the option to undergo full trial by filing a petition for
declaration of nullity of marriage under A.M. No. 02-11-10-SC but this is not the
only remedy available to him or her. He or she may utilize a foreign judgment
nullifying his or her marriage because Philippine courts have jurisdiction to
recognize such judgment nullifying a bigamous marriage without prejudice to a
criminal prosecution for bigamy.

Lightning Quiz Questions:

1. May the validity of a void marriage be questioned even after the death of
one of the parties? Why? How about a voidable marriage? Why?
2. What are the instances by which fraud as a ground can be invoked in an
annulment of marriage proceedings?

Let us now go to void marriages.

Know its characteristics. (1) it is inexistent from the very beginning.

Hence, as a rule, if the marriage is void, it is ipso facto void without need of any
judicial declaration of nullity. But for purposes of remarriage, there is a need for
the judicial declaration of its nullity before a subsequent marriage can be
contracted, otherwise, the subsequent marriage is in itself void, and the party is
criminally liable for the crime of bigamy. (2) its nullity can be questioned even
after the death of either party, but not by way of a petition for declaration of
nullity of marriage, but in the proceeding for the settlement of estate of the
deceased spouse by any compulsory or intestate heir; (3) action or defense for
the declaration of absolute nullity of a marriage is imprescriptible; (4) petition
for declaration of nullity of marriage may be filed solely by the husband or the
wife during their lifetime, and in case any of the party dies at any stage of the
proceeding before the entry of judgment, the court shall order the case closed
and terminated, (5) void marriages have no legal effects except those declared
by law (property relations under Article 147 and 148 and legitimacy of children
under Article 36 and 53 of the Family Code).

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Question: What are these marriages considered void?

Answer: There are eighteen (18) marriages that are considered void under the
Family Code. These are found in Articles 35, 36, 38 and 40 of the Code. But there
are void marriages that were not expressly mentioned in the Family Code like (1)
marriages between persons of the same sex, (2) marriages where the parties did
not appear personally before the solemnizing officer or did not give their consent
in the presence of the solemnizing officer, (3) marriages where the parties
merely signed a marriage contract without the presence of the solemnizing
officer, thus, no marriage ceremony was performed.

(Play Concepcion’s Lecture- CD No. 1 Side B 29:05-36:56 (Void Marriages)

Under Article 36, where one or both contracting parties are psychologically
incapacitated, such marriage is, likewise void. This is a new ground for
declaration of nullity of marriage under our present law.

Play Elepaňo’s Lecture Segment No. 3

58:18-1:07:38 (Psychological Incapacity)

Play Concepcion’s lecture- CD No. 1 Side B 36:57-38:45 (Psychological Incapacity)

Resume at 39:12 up to 42:16 only)

With regards to psychological Incapacity as a ground for declaration of

nullity of marriage, jurisprudence is still unstable as far as the facts which may
constitute psychological incapacity and the requirements by which a marriage will
be declared a nullity under this ground.

(Play Justice Elepaňo’s Lecture: Civil Law No. 4)

Start @ 00:17- 09:15

As I said a while ago, jurisprudence on this matter is unstable, please

consider the following cases:

Case: Leonilo Antonio vs. Marie Ivonne Reyes, G.R. No. 155800, March 10,
2006 (423 SCRA 272).

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Facts: Leonilo and Ivonne were civilly married on August 1990 and in a church wedding in
December of the same year. Out of their union, they begot a child but died at the age of 5
months old. In his petition, it was alleged that Ivonne persistently told lies about herself
including her having an illegitimate child (introduced to Leonilo as adopted child of her family),
the people around her, her occupation as voice talent, income, educational attainment as
psychiatrist, for which reason, the lower court declared respondent to be psychologically
incapacitated as it rendered her incapable of giving meaning and significance to her marriage.
Her persistent, constant and repeated lying is abnormal and pathological, thus, undermining
the basic relationship that is based on love, trust and respect.

Ivonne opposed the petition belying the allegations of Leonilo and argued that the totality
of the evidence is not sufficient for a finding of psychological incapacity on her part.
Nonetheless, the RTC held that Ivonne’s propensity to lying about almost anything and her
fantastic ability to invent and fabricate stories and personalities made her psychologically
incapacitated as it rendered her incapable of giving meaning and significance to her marriage.
Appeal was made by Ivonne.

Pending appeal with the CA, the National Appellate Matrimonial Tribunal (NAMT)
annulled the parties’ Catholic marriage on the ground of lack of due discretion and the CA was
duly notified of the NAMT decision. However, this was not given weight by the CA and
reversed the RTC ruling because it failed to establish the parameters of Article 36 as established
in the Molina decision.

The SC reversed the CA decision and reinstated the RTC ruling declaring the parties
marriage as a nullity because the NAMT decision must have been given persuasive effect by
the court. It further postulated that our law on psychological incapacity is rooted on the Canon
law such that, the NAMT decision should have been given great weight by the CA.

Case: Arabelle Mendoza vs. Republic and Dominic Mendoza, G.R. No. 157649,
November 12, 2012 whereby the petition was granted by the RTC but was
reversed by the CA. On review, the SC affirmed the reversal by the Court of
Appeals, thus, dismissing the petition because of insufficiency of evidence to
establish psychological incapacity upon the respondent.

Facts: Here, the petition alleges that Dominic was unable to share or to take marital
responsibilities, lack of remorse for his dishonesty, failure to share his earnings with his family,
sexual infidelity and criminal offenses are constitutive of psychological incapacity which warrant
the declaration of nullity of their marriage under Article 36. To prove her allegations, Arabelle
presented a psychiatrist who testified on his Case Study Report based on the interview made
upon Arabelle and declared that these are clinical manifestations of a person who is
psychologically incapacitated. The lower court was convinced and granted the petition.

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 The CA reversed the RTC ruling holding that these acts do not constitute psychological
incapacity in consonance with the parameters laid down in the Molina ruling.

On review, the SC pronounced that immaturity, deceitfulness and lack of remorse for his
dishonesty and lack of affection do not necessarily constitute psychological incapacity. Inability
to have or to take responsibility or to feel remorse over his misbehavior or to share his
earnings with family members, albeit indicative of immaturity, were not necessarily a
medically rooted psychological affliction that is incurable. Emotional immaturity and
irresponsibility do not equate with psychological incapacity. Nor were his supposed sexual
infidelity and criminal offenses are manifestations of psychological incapacity. If at all, they
would constitute a ground for legal separation under Article 55 of the Family Code.

It further noticed that the expert witnesses failed to interview Dominic and based only
their Case Study Report on information obtained from Arabelle who harbored ill-feeling against
her husband.

However, in the earlier case of Ma. Socorro Camacho-Reyes vs. Ramon

Reyes, G.R. No. 185 286, August 18, 2010, the High Court held that lack of
personal examination and interview of the respondent, or any other person
diagnosed with personality disorder, does not per se invalidate the testimonies
of the doctors . Neither do their findings automatically constitute hearsay that
would result in their exclusion as evidence.

Case: Republic vs. Court of Appeals and Eduardo de Quintos, Jr., G.R. No.
159594, November 12, 2012 where the RTC decision declared the marriage of
the parties as a nullity on the ground of psychological incapacity, for which the
CA affirmed it but, upon review by the SC, it reversed the ruling of the lower
courts.

Facts: Here, respondent Catalina was interviewed by the psychiatrist and, on the basis of
which, a Case Study Report was submitted and testified to in court finding that Catalina was
mentally and physically ill to the extent that she could not have known her marital obligations.
In fact, Catalina submitted her Answer/Manifestation admitting that she is psychologically
incapacitated. In his petition, petitioner alleged that Catalina left their house without his
consent, engaged in petty arguments with him, refused to give in to his sexual needs, spent
most of the time gossiping with neighbors, squandered their money in gambling and
abandoned their conjugal dwelling to live with her paramour. After due hearing, the lower
court was convinced that, indeed, Catalina was psychologically incapacitated. Said judgment
was even affirmed by the CA.

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 Simply, to reverse the lower court’s ruling, the SC pronounced that there was no
evidence to show about the root cause, gravity and incurability of Catalina’s supposed
psychological incapacity.

Understanding Article 36.

Article 36 of the Family Code states that “a marriage contracted by any

party who, at the time of the celebration, was psychologically incapacitated to
comply with the essential marital obligations of marriage, shall likewise be void
even if such incapacity becomes manifests only after solemnization.”
Jurisprudence on this issue always refer to Republic vs. CA and Roridel Olaviano
Molina, G.R. No. 108763, February 13, 1997 as a guideline in deciding cases
pertaining to psychological incapacity as a ground for declaring a marriage a
nullity, to wit:

1. The burden of proof to show the nullity of the marriage belongs to the
plaintiff. Any doubt should be resolved in favor of the existence and
continuation of the marriage and against its dissolution or nullity;

2. The root cause of the psychological incapacity must be: (a) medically or
clinically identified, (b) alleged in the complaint, (c) sufficiently proven by
experts and (d) clearly explained in the decision;

3. The incapacity must be proven to be existing at the time of the celebration

of the marriage

4. Such incapacity must also be shown to be medically or clinically permanent

or incurable;

5. Such illness must be grave enough to bring about the disability of the party
to assume the essential obligations of marriage;

6. 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, 221 and 225 of the same Code in regard to parents and their children;

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 7. Interpretations given by the National Appellate Matrimonial Tribunal of the
Catholic Church of the Philippines, while not controlling or decisive, should
be given great respect by our courts.

8. The trial court must order the prosecuting attorney or fiscal and the
Solicitor General to appear as counsel for the State in order to prevent
collusion between parties. The certification by the Solgen stating his
reasons for his agreement or opposition to the petition was dispensed with
following the implementation of A.M. No. 02-11-10-SC or the Rule on
Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages.

Question: Is there necessity for an expert testimony of a phychiatrist or

psychologist before one can be declared psychologically incapacitated for
purposes of declaration of nullity of marriage?

Answer; No more. In Marcos vs. Marcos 343 SCRA 755 where it was clarified
that there is no requirement that the defendant-spouse be personally examined
by a physician or psychologist as a condition sine qua non for the declaration of
nullity of marriage based on psychological incapacity. What is important is the
presence of evidence that can adequately establish the party’s psychological
condition. If the totality of evidence is enough to sustain a finding of
psychological incapacity and its gravity, juridical antecedence and incurability,
then, expert opinion can be dispensed with.

Even in case of mixed marriages, the psychological incapacity of the alien-

spouse must be proven to the same extent regardless of the nationality of the
party sought to be declared as such. (Republic vs. Quintero-Hamano, 428 SCRA
735 (2004)

In recent cases decided by the Supreme Court, consider the following

cases:

Case: Robert F. Mallilin vs. Luz G. Jamesolamin and Republic, G.R. No. 192718,
February 18, 2015.

Facts: Robert and Luz were married in 1972. In 1994, Robert filed a complaint for Declaration
of Nullity of Marriage on the ground of psychological incapacity. In his Complaint, he alleged
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that Luz had been remiss in her duties both as a wife and as a mother because of infidelity and
do not know how to housekeep. An expert witness was presented to bolster his allegations but
Luz was not subjected to psychological examination. Though Luz filed her Answer imputing that
it is her husband who is psychologically incapacitated, but, she did not substantiate her
allegations and failed to appear during the trial. Pending decision, Robert filed a petition for
marriage annulment with the Metropolitan Tribunal of the Archdiocesan of Manila which
granted and declared his marriage invalid ab initio on the ground of grave lack of due discretion
on the part of both parties. Said decision was affirmed by the National Appellate Matrimonial
Tribunal (NMAT). But prior to the affirmation by NMAT, the RTC granted Robert’s petition and
declared their marriage null and void on the ground of psychological incapacity on the part of
Luz as she failed to comply with the essential marital obligations. The State, through the OSG,
appealed to the CA. The CA reversed RTC’s decision and ruled that the totality of the evidence
fell short of establishing the fact that at the time of the celebration of marriage, Luz was
psychologically incapacitated. Is the ruling of the CA in reversing the decision of the RTC
correct?

Answer: Yes, the CA ruling is correct. While it is true that the NMAT decision has persuasive
effect upon the courts but the same is not controlling. It is to be noted that the NMAT decision
is based primarily on the ground of grave lack of due discretion on the part of both parties. Said
NMAT decision is based on the second paragraph of Canon 1095 and not third paragraph
thereof which provides “those who, because of causes of psychological nature, are unable to
assume the essential obligations of marriage.” Hence, NMAT decision cannot be given
persuasive effect on the decision of the court.

2014 Bar Examination Question No. 1

Ariz and Paz were officemates at Perlas ng Silangan Bank (PSB). They fell in
love with each other and had a civil and church wedding. Meanwhile, Paz rapidly
climbed the corporate ladder and eventually became its Vice-President, while
Ariz remained as one of its bank supervisors, although he was short of 12 units to
finish his Masters in Business Administration (MBA) degree.

Ariz became envious of the success of his wife. He started to drink alcohol
and became a drunkard. He preferred to join his barkadas; became a wife-
beater; would hurt his children without any reason; and failed to contribute to
the needs of the family. Despite rehabilitation and consultation with psychiatrist,
his ways did not change.

After 19 years of marriage, Paz, a devout Catholic, decided to have their

marriage annulled by the church. Through the testimony of Paz and a
psychiatrist, it was found that Ariz was a spoiled brat in his youth and was
[Type text]
sometimes involved in brawls. In his teens, he was once referred to a psychiatrist
for treatment due to his violent tendencies. In due time, the National Appellate
Matrimonial Tribunal (NMAT) annulled the union of Ariz and Paz due to the failure
of Ariz to perform and fulfill his duties as a husband and as a father to their
children. The NAMT concluded that it is for the best interest of Paz, Ariz and
their children to have the marriage annulled.

In view of the NAMT decision, Paz decided to file a Petition for Declaration
of Nullity of Marriage of their civil wedding before the RTC of Makati City using
the NAMT decision and the same evidence in the church annulment proceedings
as basis.

If you are the judge, will you grant the petition? Explain.

Suggested Answer: No, if I am the judge, I will not grant the petition because the
totality of the evidences presented does not constitute psychological incapacity.
Jurisprudence is replete that petitions which does not comply with the
requirements laid down in the Molina case should be denied like in the case at
bar. Though NAMT decisions may be given persuasive effect but the same is not
controlling.

Case: Valerio E. Kalaw vs. Ma. Elena Fernandez, G.R. No. 166357, January 14,
2015.

Facts: Valerio filed an annulment case against his wife for her constant mahjong sessions, visit
to beauty parlor, going out with friends, adultery and neglect of their children, which petition
was granted by the RTC but was reversed on appeal to the CA. Part of Valerio’s evidence are
the testimonies of expert witnesses, a psychiatrist and an expert in Canon Law. The CA
contended that the evidence adduced does not warrant the finding that his wife is
psychologically incapacitated constitutive as NPD. Sexual infidelity is not equated with
psychological incapacity. Is the CA ruling correct?

Answer: No. Expert witnesses should be given weight in finding that Maria Elena is, indeed,
psychologically incapacitated while it still upheld the guidelines set forth in the Molina case,
rigid as it is. But courts are advised to approach the issue of nullity “not on the basis of priori
assumptions, predilictions or generalizations, but according to its own facts”. Thus, every
judge must take pains in exhausting the factual evidences in each case. The SC likewise
cautioned that the task of ascertaining the presence of psychological incapacity as a ground for
the nullity of marriage, must of necessity rely on the opinions of experts in order to inform
themselves on the matter, and thus, enable themselves to arrive at an intelligent and judicious

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judgment. Indeed, the conditions of the malady of being grave, antecedent and incurable
demand the in-depth diagnosis of experts. In short, appreciation of evidences whether
presence or absence of psychological incapacities of the parties must be judged in a case to
case basis.

2016 Bar Examination Question No. IV

Leo married Lina and they begot a son. After the birth of their child, Lina
exhibited unusual behavior and started to neglect her son, she frequently went
out with her friends and gambled in casinos. Lina later had extra-marital affairs
with several men and eventually abandoned Leo and their son. Leo was able to
talk to the psychiatrist of Lina who told him that Lina suffers from dementia
praecox, a form of psychosis where the afflicted person is prone to commit
homicidal attacks. Leo was once stabbed by Lina but fortunately he only suffered
minor injuries. Will a petition for Declaration of Nullity of Marriage filed with the
court prosper? Explain. (5%).

Answer: I will deny Leo’s petition. (You must based your answer on the totality of
the evidence rule following the parameters laid down in the Molina ruling. But if
you can reason out your answer based in Kalaw case abovecited, the testimony of
an expert witness may be given weight).

When the Family Code took effect on August 3, 1988, Article 39 thereof
reads as follows:

“Art. 39. The action or defense for the declaration of absolute nullity of marriage
shall not prescribe. However, in the case of marriages celebrated before the
effectivity of the Family Code, and falling under Article 36, such action or defense
shall prescribe in ten (10) years after this Code shall have taken effect”.

In 1998, Congress enacted Republic Act No. 8533 for the purpose of
removing the prescriptive period for the filing of a petition for declaration of
nullity of marriage based in Article 39 of the Family Code. Hence, the last
sentence of Article 39 was removed. Now, regardless of the date of the
celebration of marriage, Article 36 on psychological incapacity may be invoked
for purposes of declaring such marriage null and void.

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 In Article 38, these are marriages that are also void by reason of public
policy, meaning, the Family Code expanded the application of “legal
impediment” to the effect that relationship of the parties are taken into
consideration and if the relationship falls within the enumeration, their marriage
is likewise void.

(Play Elepaňo’s Lecture Segment No. 4)

10:02-15:11 (Marriages Void by reason of Public Policy)

Let us proceed to Article 40 of the Family Code which requires for judicial
declaration of nullity of the previous marriage before contracting a subsequent
marriage.

As I said, there are eighteen (18) void marriages in the Family Code as we
have mentioned before, such that if somebody’s marriage is one of the eighteen
(18) void marriages which in the eyes of the law does not exist, he/she cannot
just jump into a subsequent marriage without incurring the risk of being charged
with the crime of bigamy under Article 349 of the Revised Penal Code.

In your study of Criminal Law, the requisites of the crime of bigamy are:

(1) The offender has been legally married;

(2) The first marriage has not been legally dissolved, or in case his or her
spouse is absent, the absent spouse has not been judicially declared
presumptively dead;
(3) He contracts a subsequent marriage;
(4) The subsequent marriage would have been valid had it not been for the
existence of the first.

Before the effectivity of the Family Code in 1988, if a spouse’s marriage is

void ab initio and he/she remarried without first securing a declaration of the
nullity of the first marriage, it does not matter. He/she incurred no criminal
liability. For the rule then was that for bigamy to stand, the two marriages,
considered independently, are both valid marriages. If one is void, there is no
bigamy to speak of.

Under the Family Code, the rule has radically changed. Thus, a spouse
could no longer put up the defense that because his/her first marriage is void and
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he/she has only one valid marriage, he /she is not liable for bigamy. Without first
securing a final judicial declaration that the first marriage is void, he/she is liable
for bigamy.

(Resume Concepcion’s Lecture

CD No. 1 Side B 42:21 to 47:07)

The following cases will illustrate the application of Article 40 of the Family
Code.

Case: Merlinda Cipriano Montanez vs. Lourdes Tajolosa Cipriano, G.R. No.
181089, October 2, 2012 wherein the SC held that contracting a subsequent
marriage prior to the declaration of nullity of the first marriage by competent
court will make such person liable for the crime of bigamy.

Facts: This case arose due to irreconcilable differences between a daughter of the first
marriage, Merlinda, as against her stepmother, Lourdes. Lourdes contracted her first marriage
in 1976. While her marriage was still subsisting, she contracted subsequent marriage in 1983
with Silverio Cipriano, then a widower, and father of Merlinda. In 2001, Lourdes filed a petition
for nullity of her first marriage on the ground of psychological incapacity and granted by the
court on 2003. The judgment became final and executory.

In 2004, a complaint for bigamy was filed against Lourdes. A Motion to Quash was filed
and was granted by the court on the basis that the two marriages were contracted prior to the
effectivity of the Family Code, and that Lourdes cannot comply the provision of Article 40
because it was then inexistent at the time she contracted her second marriage. Since the
criminal complaint was filed after the declaration of nullity of the 1976 marriage, it is as if there
was no first marriage to speak of. Petitioner appealed the ruling of the lower court, hence this
question: will the bigamy case prosper?

The SC held that Lourdes can be held liable for the crime of bigamy because at the time
she contracted her second marriage in 1983, her first marriage was still subsisting having not
been judicially declared as null and void. It was only in 2003 that her first marriage was
declared null and void by reason of psychological incapacity. Clearly, the crime of bigamy was
consummated upon her entering the subsequent marriage without first declaring her first
marriage a nullity by competent court.

In this case, the defense of the accused that both marriages were
contracted prior to the effectivity of the Family Code was brushed aside by the SC
consistent with the ruling of Jarillo vs. People of the Philippines, G.R. No.
164435, June 29, 2010. She persistently argued that by declaring her marriage

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as null and void by reason of psychological incapacity, it retroacts to the date of
celebration of her first marriage as if there is no marriage to speak of did not
persuade the SC in view of the ruling in Tenebro vs. Court of Appeals, G.R. No.
150758, February 18, 2004, 423 SCRA 272.

Case: Veronico Tenebro vs. Court of Appeals, G.R. No. 150758, February 18,
2004.

Ruling: In this case, the SC ruled that 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 in so far as the Philippine penal laws are concerned. As such, an individual who
contracts a second and subsequent marriage during the subsistence of a valid marriage is
criminally liable for bigamy, notwithstanding the subsequent declaration that the second
marriage is void ab initio on the ground of psychological incapacity.

Case: Joselito R. Pimentel vs. Maria Chrysantine L. Pimentel and People of the
Philippines, G.R. No. 172 060, September 13, 2010.

Ruling: Where it was held that the action for declaration of nullity of a void marriage will not
constitute a prejudicial question for the crime of attempted parricide where the criminal action
was filed ahead of the civil case and that the alleged wrongful act was committed while their
marriage was still subsisting.

Case: Noel A. Lasanas vs. People of the Philippines, G.R. No. 159031, June 23,
2014 where the SC consistently ruled that “any person who contracts a second
marriage without first having a judicial declaration of nullity of his or her first
marriage, albeit on its face void and inexistent for lack of marriage license, is
guilty of bigamy”.

Facts: Accused contracted a civil wedding with Socorro Patingo in 1968 without a marriage
license nor an affidavit of cohabitation being executed. They re-affirmed their marriage vows in
a church wedding in 1980. But because of irreconcilable differences, they separated de facto.

Eleven (11) years after, accused contracted marriage with Josefa Eslaban in a religious
ceremony. In their marriage contract, accused’ civil status was single. In 1996, accused filed a
complaint for annulment of marriage on the ground of fraud alleging that his consent was
vitiated in contracting his first marriage to Socorro. While the case was pending, Socorro
countered by filing a criminal complaint for bigamy. In his defense, accused interposed that
such bigamy case will not prosper because his first marriage was clearly void, thus, there was
no valid and subsisting first marriage to speak of which is an element in the crime for bigamy. Is
accused’ contention correct?

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Answer: No, accused’ contention is not correct. The crime of bigamy was consummated from
the moment he contracted the second marriage without his marriage to Socorro being first
judicially declared null and void, because at the time of the celebration of the second marriage,
his marriage to Socorro was still deemed valid and subsisting due to such marriage not being
yet declared null and void by a court of competent jurisdiction.

Play Elepaňo’s Lecture: Segment No. 4

17:52-19:54 (Explanatory Notes on Article 40)

Presumptive Death of the Absentee Spouse

Before going into voidable marriages, there are marriages that are, indeed
bigamous, yet the same is declared valid by the Family Code, and the spouse
who contracted the second marriage is not liable of the crime of bigamy despite
contracting two (2) marriages. In short, this is an exception to Article 40 which
we have just discussed. These are marriages that fall under Article 41 of the
Family Code. For these marriages to be valid, the following requisites must
concur: to wit: (1) the prior spouse (absentee) of the present spouse must have
been absent for 4 consecutive years, or 2 years where there is danger of death
under the circumstances stated in Article 391 of the NCC at the time of
disappearance; (2) the spouse present has a well-founded belief that the absent
spouse is already dead; and (3) the spouse present has obtained a judicial
declaration of presumptive death of the absent spouse. Of course, this situation
is true only if the present spouse wishes to remarry or for purposes of re-marriage
and for no other purpose.

Question: Is it always necessary that a judicial declaration of presumptive death

be had in order that the subsequent marriage be declared valid?

Answer: It depends. Because if the subsequent marriage took place prior to

August 3, 1988, judicial declaration of presumptive death is not necessary
provided the prescribed period of absence is met, that is, seven (7) years for
ordinary absence and four (4) years for extra-ordinary absence. Here, the NCC
shall govern which does not require such judicial declaration. However, if the
subsequent marriage is celebrated during the effectivity of the Family Code, such
judicial declaration is a must even if the required period of absence is met ,
otherwise, the subsequent marriage is void for being bigamous and the party
who contracted the second marriage is liable for the crime of bigamy.
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 Take note that the order of the trial court granting the petition for judicial
declaration of presumptive death pursuant to Article 41 of the Family Code is
immediately final and executory, hence, the right to appeal is not available to
any party. This is the ruling in Republic vs. Bermudez-Lorino, 449 SCRA 57.

Marriages under these circumstances are, however, voidable in character.

If such subsequent marriage was contracted prior to the effectivity of the Family
Code, such is terminated by final judgment of the court in an annulment
proceedings of said subsequent marriage instituted by the absent spouse who
reappears (reincarnates or rise from the dead), or by either spouses in the
subsequent marriage. But, if the subsequent marriage happened during the
effectivity of the Family Code, no judicial proceeding to terminate the
subsequent marriage is required. Such subsequent marriage is automatically
terminated by the recording at the LCR office the affidavit of reappearance of the
absent spouse.

Question: Suppose the absent spouse reappeared and such reappearance was
known to both spouses in the subsequent marriage but no affidavit of
reappearance was executed nor was there any court action instituted to
terminate the subsequent marriage, what is the status of the second marriage?

Answer: The subsequent marriage will not be terminated and will remain as
valid. Since the second marriage was contracted because of the presumption that
the former spouse is dead, such presumption continues despite of the spouse’s
physical appearance, and by fiction of law, he or she must still be regarded
legally as an absentee until the subsequent marriage is terminated as provided by
law.

In the case of Social Security System vs. Jarque Vda. De Bailon, 485 SCRA
376 (2006) it was held that since the subsequent marriage was not terminated by
registration of the affidavit of re-appearance or by judicial declaration, but by
death of either spouse, the effects of dissolution of valid marriages shall arise,
hence, the second spouse is entitled to the SSS death benefits of the deceased
member even if the absent spouse was, in truth, still alive.

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Question: Suppose the absent spouse reappeared but did not execute an affidavit
of reappearance, and he contracted another marriage with another, what will be
the status of the subsequent marriage?

Answer: The subsequent marriage is void for being bigamous and the person
who contracted the second marriage will be liable for the crime of bigamy. His
having been judicially declared to be presumptively dead will not exonerate him
from the legal effects of contracting a second marriage.

The effect of the automatic termination of the subsequent marriage, after

recording of the required affidavit of re-appearance, are as follows:

(1) The first or previous marriage shall automatically “resume”;

(2) The children of the terminated marriage are considered legitimate;
(3) The absolute community or conjugal partnership shall be dissolved or
liquidated, however, if either party contracted the marriage in bad faith,
his or her share in the net profits shall be forfeited in favor of their common
children, if none, to the children of the guilty spouse by a previous
marriage, and if none, to the innocent spouse. But if both parties acted in
bad faith, the marriage is void and their property relation will be governed
by Article 148 of the Family Code.

Question: Suppose either spouses in the subsequent marriage was designated as

beneficiary in the insurance policy, what is its effect the moment their marriage
was terminated?

Answer: If the designation of the beneficiary in the insurance policy is

irrevocable, the insured has no right to change the designated beneficiary, but if
said beneficiary acted in bad faith in contracting the subsequent marriage, the
innocent spouse may revoke such designation even if the same be stipulated as
irrevocable.

Let us now discuss Voidable Marriages.

Be familiar of the contrasting characteristics of a voidable marriage in

comparison to the characteristics of a void marriage, as follows:

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 • It is considered valid and produces all its civil effects, until it is set aside by
final judgment of a competent court in an action for annulment. But while
the annulment of a voidable marriage dissolves the marriage itself as if it
had never been entered into, the law makes express provisions that its
legal effects may still subsist. As a consequence, children of voidable
marriages are legitimate if conceived or born before the finality of the
judgment of annulment, and their property relations during the period of
their cohabitation shall be absolute community of property or conjugal
partnership of gains.

• The defects of a voidable marriage can generally be ratified or confirmed

by free cohabitation or prescription, except if the ground invoked is
impotency which appears to be incurable and, or if the ground invoked is
affliction of STD which is found to be serious and incurable.

• The action for annulment is subject to prescriptive period or statute of

limitations which is normally five (5) years.

• A voidable marriage can be assailed only in a direct proceeding for that

purpose and not collaterally.

• A voidable marriage can be questioned only during the lifetime of the

parties and not after the death of either, in which case the marriage will be
deemed perfectly valid.

Case: Amelia Garcia-Quiazon, et.al. vs. Ma. Lourdes Belen, etc., G.R. No.
189121, July 31, 2013.

Ruling: Where the Supreme Court ruled that void marriages can be questioned even after
the death of either party but voidable marriages can be assailed only during the lifetime of
the parties and not after death of either, in which case, the parties and their offspring will
be left as if the marriage had been perfectly valid. That is why the action or defense for
nullity is imprescriptible, unlike in voidable marriages where the action prescribes. Only
the parties to a voidable marriage can assail it but any proper interested party may attack a
void marriage.

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 • The ground or defect must be in existence at the time of the celebration of
the marriage.

Of all the grounds for annulment of marriage, vitiated consent by reason

of fraud under Article 46 is the most favorite topic of Bar examiners, hence, you
must familiarize yourself what are those that constitute fraud that will make the
marriage annullable. (At this juncture, play CD No. 2 Side B of Concepcion’s
lecture). These grounds are as follows, (a) non-disclosure of previous conviction,
(b) concealment of pregnancy by a man other than the husband, (c)
concealment of STD, and (d) concealment of drug addiction, habitual alcoholism,
homosexuality or lesbianism.

(Play Concepcion’s Lecture

CD No. 2 Side B- 01:42-24:02 -Fraud as a ground for Annulment)

Another ground for annulment that is equally important is in paragraph 4 of

Article 45 on vitiated consent by reason of force, intimidation, undue influence,
etc.

24:03-34:51 stop (Force and other grounds for Annulment)

resume at 35:28-37:51. End.

Questions for Lightning Quiz

(1) What is the status of the children born in a marriage declared void ab
initio? How about in marriages annulled by competent court?
(2) Distinguish the property regime of absolute community of property and
that of conjugal partnership of gains?

Question: What are its effects if the marriage is declared void ab initio or was
annulled by competent court?

Answer: (Our guest lecturer will answer this question).

Concepcion’s Lecture
(Play CD No. 2 Side B- 38:01-44:13 proceed to 44:17-47:17)
(Play CD No. 3 Side A- 7:03-13:21) For Void Marriages;
(13:28-14:38 stop then proceed to 15:06 -16:45) For Annulled Marriages

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Question: Can a spouse still inherit from the other once a decree of nullity of
their marriage is issued? Explain your answer.

Answer: It depends. In intestate succession, since the parties are no longer

spouses, they are no longer heirs to each other thus, cannot inherit from each
other except if they are collateral blood relatives within the 5th civil degree. This is
because relatives within this degree are not prohibited to marry each other and
under our present law, they are considered legal heir under Article 1010 of the
NCC, hence, entitled to inherit intestate. But, if there is a will and a
testamentary provision is executed by one in favor of the other, said disposition
shall remain valid except in two (2) situations:

(1) If the subsequent marriage is judicially declared void by reason of Article

40 of the Family Code (subsequent marriage contracted without the
previous marriage declared void, hence, bigamous) , the spouse who
contracted the subsequent marriage in bad faith is disqualified to inherit
from the innocent person; and,

(2) If the marriage is void under Article 44 of the Family Code (marriage
contracted by reason of presumptive death of the absentee spouse), where
both parties to a subsequent marriage acted in bad faith, all testamentary
dispositions made by one in favor of the other are revoked by operation of
law.

Question: Can a spouse still inherit from the other spouse once a decree of
annulment is issued by the court? Elaborate.

Answer: No, the spouse who contracted the marriage in bad faith shall be
disqualified to inherit from the innocent spouse by testate and intestate
succession.

Legal Separation

For you to determine the proper action to be filed in cases of problematic

marriages, you ought to know as well the grounds in which only legal separation
should be the proper remedy. This is because, in legal separation, the marital
bond is not severed only that the parties are allowed to live separately from bed

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and board. Article 55 gives us the grounds for legal separation subject however,
to certain defenses like condonation, consent, mutual guilt or recrimination and
prescription of action.

Play Elepaňo’s Lecture-Segment No. 4

47:47-55:02 (Defenses in Legal Separation)

2012 Bar Examination Question No. IV(a)

After they got married, Nikki discovered that Christian was having an affair
with another woman. But Nikki decided to give it a try and lived with him for two
(2) years. After two (2) years, Nikki filed an action for legal separation on the
ground of Christian’s sexual infidelity. Will the action prosper? Explain. (5%)

Suggested Answer: No, because of condonation by cohabiting with him again

after the said infidelity.

The most important thing for you to know is the legal effects once a decree
of legal separation is issued by the court, as follows:

• Right to live separately from each other but there is no severance of the
marital bond, meaning, parties are not free to remarry. Right of
consortium of the husband ceases;

• Dissolution and liquidation of the absolute community or conjugal

partnership and the offending spouse would have no right to any share of
the net profits earned by the conjugal partnership.

Question: Is the forfeiture of the share consist ½ of the share of the offending
spouse in conjugal partnership?

Answer: No, it is only the share of the offending spouse in the net profits
which is forfeited in favor of the children. Article 102(4) of the Family Code
provides that for purposes of computing the net profits subject to forfeiture,
the said profits shall be the increase in value between the market value of the
community property at the time of the celebration of marriage and the market
value at the time of its dissolution. Clearly, what is forfeited in favor of the

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 children is not the share of the offending spouse in the conjugal partnership
but merely the net profits of the conjugal partnership property.

• The offending spouse shall be disqualified to inherit from the innocent

spouse but the innocent spouse shall remain as an intestate heir of the
offending spouse. In case there is a will, testamentary disposition in favor
of the offending spouse existing at the time of the finality of the decree of
legal separation shall be revoked by operation of law;

• Obligation to give support between spouses ceases, but court may order
the offending spouse to give support to the innocent spouse;

• Donation propter nuptias made by the innocent spouse in favor of the

offending spouse may be revoked by the former and the action to revoke
must be filed within five (5) years from the finality of the decree of legal
separation;

• The innocent spouse may revoke the designation of the guilty spouse as
beneficiary in the insurance policy of the former even if the designation be
stipulated as irrevocable;

• Be it separation de facto or legal separation, parental authority shall be

exercised by the parent designated by the court. However, if the child is
below 7 years old, the law presumes that the mother is the best custodian
unless the court will find compelling reasons to deprive her of custody;

Pending the issuance of the decree of legal separation or even if the decree
has already been issued , parties may reconcile upon joint manifestation of the
spouses under oath that they have reconciled, thus, court may issue a decree of
reconciliation.

Let us discuss the Property Relations Between Spouses.

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 In property relations between spouses, the parties are allowed to stipulate
as to what regime to govern their property relations during the marriage. This is
the only matter that parties are allowed to stipulate or agree, to choose what will
be their property relations. Although they are allowed to stipulate but it is
subject to certain limitations as provided for in the Family Code. Q. What is the
property relations of the spouses? As to what is their property relations, the
marriage settlement executed by the parties shall govern. But if there is no
marriage settlement, what will govern their property relations? Under the Family
Code, if there is no marriage settlement, the regime of absolute community
property will govern. Suppose the parties executed a marriage settlement but the
marriage settlement they choose is void, meaning, the property regime they have
chosen in their marriage settlement is void, then what will be their property
relationship? Still, absolute community property pursuant to Article 75. Article
75 provides that when there is no marriage settlement or the property relation
agreed upon is void, the regime of absolute community will govern the property
relations of the parties. Suppose the parties executed a marriage settlement and
they agreed with only one stipulation, that the absolute community property will
not apply but did not specify what property relations will they adopt. Question:
what will be their property relationship? What property regime will apply to
them. Definitely not absolute community because the parties had rejected it
expressly in their marriage settlement? According to the writers of the Code, it
will be the local custom that will be adopted according to Article 74. What is
provided in Article 74 is that the property relationship will be that specified in the
marriage settlement. If no marriage settlement, absolute community property.
But, here, they rejected absolute community, then follow the local custom. But
what is the local custom with regards to property relationship of the spouses?
Still absolute community. In other words, even if the parties rejected the regime
of absolute community, still absolute community will govern their property
relationship. Is it clear to you?

When does the parties execute the marriage settlement? The marriage
settlement must be executed before the celebration of the marriage. Will the
marriage settlement be in writing? Yes, it must be in writing under Article 77.
Must it be notarized? No, it is not required to be notarized to be valid as
between the parties but not binding as to third persons unless recorded in the
Registry of Properties. But for it to be registrable in the Registry of Properties, it
must be in a public instrument. But when not recorded, or not in a public

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instrument, such marriage settlement will still be binding as between the parties
themselves also under Article 77. Will the marriage settlement be modified or
amended? Yes, it can be modified but the modification must be done before the
celebration of the marriage. But such modification must also be in writing and it
will not bind third persons unless the modification is recorded in the Registry of
Properties. After the solemnization of the marriage, no amendment will be
allowed. What may the parties stipulate in the marriage settlement? The parties
may provide for the rules on how their property relationship will be governed in
their marriage settlement. They may also have donations propter nuptias in their
marriage settlement.

What is this “donation propter nuptias”? Let me give you a problem. Piolo
wanted to marry Angel. So, the parents of Piolo went to Angel’s house to ask the
hand of Angel. While they were in the house of Angel, her father told the parents
of Piolo, I will not allow Angel to marry unless you will give to our family two (2)
heads of carabao. Angel is helping me out in the farm and if we will lose Angel,
nobody will help me, hence, you must give to us two (2) carabaos. The father of
Piolo agreed to give to the parents of Angel the animals but commented that if
not for this marriage, we will not give you these animals. This donation of two (2)
carabaos, is this a donation propter nuptias? No, it is not. Why not? Because
for it to be a donation propter nuptias, it must be in favor of one or both of the
future spouses. Take note that these animals were given not to the future
spouses but to the parents of the future spouses. So, this is not a donation
propter nuptias.

Another problem. Dingdong and Marian will get married. The aunt of
Marian gave her a pair of gold earrings on the occasion of their wedding. Is the
donation a donation propter nuptias? Yes, it is a donation propter nuptias.
Maybe you will ask, why is it a donation propter nuptias when it did not come
from the future husband, Dingdong? The source of the donation is not important
for as long as the donation is in favor of one or both of the spouse by reason of
their forthcoming marriage, the donation is still donation propter nuptias. Why is
it important to know this type of donation? It is because, if the wedding will not
push through, the donation is revocable under Article 86 of the FC. How about
with regards the future spouses, can they donate to each other by reason of their
marriage? Yes, they may donate which donation may be contained in a marriage
settlement or in a separate document. What may they donate to each other?

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May they donate present property? Yes, but only to the extent of 1/5 of all their
present properties. How about future property, may future spouses donate to
each other their future properties? Yes, but only mortis causa and the same
should be in accordance with the provisions on testamentary succession of the
Civil Code. It is mortis causa donation only, not donation inter vivos. In short,
the donation will take effect only upon the death of the donor-spouse.

Suppose the future husband donated to his future wife a piece of land
belonging to him and such donation is contained in the marriage settlement, the
marriage did not push through. What happened to the donation proper nuptias?
Is it revocable or automatically revoked? It is automatically revoked by operation
of law under Article 81 of the Family Code. The future spouses need not go to
court to file an action for revocation because it was contained in a marriage
settlement. But if the donation was not contained in a marriage settlement but,
rather, in a separate document, the donor should go to court to file an action for
the revocation of the donation. If he fails to file an action for revocation, then the
donation will remain valid. And when the action to revoke had already
prescribed, the donor can no longer recover the donated property. What is the
prescriptive period? Five (5) years after the cause of action accrue. Clear?

Now, the donation of future property between spouses must be mortis

causa donation only. Under the New Civil, Code, this donation propter nuptias of
future properties of future spouses, being mortis causa, is a specie of the so
called “contractual succession”. Because under the New Civil Code, a donation
propter nuptias of future properties must comply with the Statute of Frauds for
its formal validity. However, according to the writers of the Family Code, the
rule had already been changed. Donation propter nuptias of future property will
have to comply the formal requirements of a valid will and therefore, and for it
be valid, it must comply with the formalities required by law on testamentary
succession. This is no longer a case of contractual succession because it will be
revocable at will by the donor, unlike before, under the Civil Code, donation
propter nuptias of future property is not revocable at will by the donor. It may
only be revoked if the ground for its revocation exists. But now, under the Family
Code, donation propter nuptias of future property is revocable at will by the
donor, and now therefore it partakes of a testamentary disposition. Since it is a
testamentary disposition, it is no longer a contract, hence, no longer a
contractual succession.

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 On what grounds will a donation propter nuptias be revoked? Only if the
marriage will not be celebrated or the marriage is judicially declared void ab initio.
Or if the marriage takes place without the consent of the parents or legal
guardian as required by law, or when the marriage is annulled and the donee
acted in bad faith, or upon legal separation, the donee being the guilty spouse,
or it is founded on a resolutory condition and the condition has been complied
with or when the donee committed an act of ingratitude pursuant to the
provisions of the Civil Code on donations in general. This is the rule in Article 86
of the Family Code.

Under Article 86, such donation is revocable but look at Article 43 of the
Family Code. Under Article 43 no. 3, donation by reason of marriage shall remain
valid except if the donee contracted marriage in bad faith, hence, such donation
made to such donee are revoked by operation of law. Article 43 applies to a case
if a marriage is annulled under Article 50 where it provides that the effects in
paragraphs 2, 3, 4, and 5 of Article 43 and Article 44 shall also apply in proper
cases to marriages which were declared void ab initio or annulled by final
judgment under Article 40 and 45. Therefore, if the marriage is annulled, Article
43 no. 3 applies. And under Article 43 no. 3, if the marriage is annulled, and the
donee acted in bad faith, the donation in favor of that donee is revoked by
operation of law. But Article 86 no. 3, if the marriage is annulled and the donee
acted in bad faith, it is only revocable. Which is which now? Is it revocable or
revoked by operation of law? If this is the question of the Bar examiner, it will
surely be difficult to answer, is it not? Which is which now?. Is it revoked by
operation of law or merely revocable under Article 86 of the Family Code.

Here, the framers of the Family Code committed an error. It should have
been stated in Article 86 that when the marriage is annulled regardless of the
good faith or bad faith of the donee, the donation propter nuptias should have
been revocable. But when the donee is in bad faith, it is to be revoked by
operation of law under Article 43 no. 3. If asked in the Bar, how are you going to
answer this question? There seems to be a conflict between these two (2)
provisions and according to a noted civilist, Art.86(3) should prevail because it is
later in position in the arrangement of articles in the Family Code and more
specific as it relates to donation propter nuptias.

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 For purposes of Bar examinations, understand the concept of the different
property regimes under the Family Code, particularly the basic features of the
regime of absolute community of property and conjugal partnership of gains.

Question: What is the concept of absolute community of property?

Answer: The spouses are considered co-owners of all properties brought into the
marriage, as well as those acquired during the marriage, which are not otherwise
excluded from the community either by the provisions of the Family Code or by
the marriage settlement. It is a special form of co-ownership. Special form
because there are certain provisions in the law on co-ownership that are not
applicable. Nonetheless, some provisions of the Civil Code on co-ownership apply
to this regime in a suppletory character.

Question: Since the provision of the Civil Code on co-ownership apply to the
regime of absolute community in suppletory character, may the disposition or
encumbrance made by one spouse of a community property without the consent
of the other be considered as a valid disposition only of the share of the
consenting spouse in the said property?

Answer: No, the transaction is void in its entirety because prior to the liquidation
of the absolute community, the right of either spouse to one-half (1/2) of the
community assets does not vest until after such dissolution and liquidation. The
actual share of the spouses in the dissolved community property is finally
determined only after settlement of their obligations, if any. Only if there are
net assets left which will be divided by and between spouses.

For your purpose, you must be aware of those properties that are included
as well as those excluded in the absolute community in accordance with Article 90
and 92 of the Family Code. Be sure to memorize these important provisions.

Let me give you a problem. Before Angel got married to Piolo, she
inherited a piece of land situated in Makati City in 1990. Her father died that is
why she was able to inherit this property from her father. One year after her
father’s death, she married Piolo and they did not execute a marriage settlement.
First question, what regime will govern their property relations? Absolute
community property. Second question, will that property inherited by Angel

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form part of their absolute community property or separate property of Angel? It
will form part of the absolute community property because when Angel married
Piolo, she was already the owner of the property as she inherited it from her
father before she got married.. But if Angel inherited the property during her
marriage to Piolo, that property will be a separate property of Angel. Not only the
property itself that is separate but also the fruits are separate even if it accrue
during the marriage. Suppose Angel is a bank executive earning Php1 million a
year, is the salary of Angel community or separate? Absolute community. Out of
her salary, Angel bought a condominium unit, is this property community or
separate property of Angel? Absolute community property as it is substitution of
values only. During her marriage, Angel’s mother died and Angel was able to
inherit Php10 million bank deposit. Is the money community or separate?
Separate property. How about the interest of her bank deposit, since it will earn
interest. Is the interest community or separate? Separate also. Now, Angel
withdraw Php1 million from the deposit and bought a 2-carat diamond earrings.
Is the diamond earrings community or separate? Separate property even if it is a
jewelry because the source of fund is separate. It is simply substitution of values.
Suppose Angel used her salary in buying the diamond earrings, is the jewelry
community or separate? Absolute community property of spouses. Angel bought
a dozen of panties using her salary, are the panties community property or
separate? Separate property because it is for personal exclusive use of Angel,
unless of course, Piolo also wear Angel’s panty. This is the rule in Article 92 of
the Family Code. What is the moral lesson in our example? Let your future
spouse inherit first before you marry because the moment he/she inherited the
property already, it will form part of your community property and ½ of it
automatically belongs to you already. But if she will inherit after you got married,
you have no share in that property because it will be a separate property. You
will have to wait until she will die, as this will be the time that the surviving
spouse will become the owner of the property by succession together with the
other concurring heirs, if any. But it will not form part of the absolute community
property. Suppose Piolo won Php1 million peso at Solaire Resort and Casino, is
the winnings community or separate? Absolute community. How about if he will
lost Php1 million, is the losses community or separate? Separate property under
Article 95 of the Family Code. Who is the administrator of the absolute
community property? The husband and the wife shall jointly administer their
community property. In case of conflict, whose decision will prevail? The
decision of the court will prevail because it is the court who will resolve their

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conflict. Some even say that the court is the head of the family because it is its
will that will be followed by the conflicting spouses.

Question: What is the concept of conjugal partnership of gains?

Answer: This is a special type of partnership, where the husband and wife place
in a common fund the proceeds, products, fruits and income of their separate
properties and those acquired by either or both spouses through their efforts or
by chance. Hence, the provisions of the Civil Code on partnership apply to this
regime in a suppletory character.

CD No 3 Side B- Concepcion’s Lecture

Conjugal Partnership of Gains
Start: 00:41-14:00

In the regime of conjugal partnership of gains, take note of the nature of the
property when the same was acquired during the marriage by gratuitous title
(pages 116-117) and onerous title (pages 117-118).

Sale or Alienation of Conjugal Property Without the Consent of the Other

Spouse

Pursuant to the law on co-ownership specifically Article 493 of the Civil

Code, a co-owner in an ordinary co-ownership can sell or alienate his rights or
share in the co-owned property without the consent of his co-owners. There is
freedom of disposition. There is no restriction. However, the co-owners may
repurchase what had been sold within thirty (30) days after having been informed
of the sale. This is by way of the exercise of the right of legal redemption by the
other co-owners.

Under the Family Code, the rule is different. While the spouses are co-
owners of conjugal properties acquired through their joint efforts but, a spouse
cannot sell a conjugal property without the consent of the other. Otherwise, the
sale is void. By express provision of Article 124 of the Family Code, in the
absence of court authority or written consent of the other spouse, any
disposition or encumbrance of the conjugal property shall be void. It is to be
stressed that the invalidity of the sale included the share which pertains to the
spouse who sold the conjugal property.

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 Take note of the rule in case of sale or disposition of community property
by only one of the spouses without the consent of the other spouses as
enunciated in Homeowners’s Savings and Loan Bank vs. Miguela C. Dailo, G.R.
No. 153802, March 11, 2005, 453 SCRA 291 (2005).

Facts: In this case, the mortgage constituted upon the conjugal property without the consent
of the other spouse is void. Here, Marcelino Dailo Jr., husband of Miguela, executed a SPA in
favor of one Lilibeth Geismundo, for the latter to use their titled conjugal property as collateral
for a loan to be obtained from Homeowner’s Savings. Said authority and availment of loan was
without the consent of Miguela. After the maturity of the loan, since it was unpaid,
Homeowner’s Savings foreclosed the mortgage and consolidated its ownership over it. Miguela
became aware of such disposition after the death of her husband, and forthwith an action to
nullify the same was instituted and the court granted the same. In ruling for Miguela, the SC
stick to the rule that any disposition or encumbrance like mortgage of the conjugal property
shall be void. But, be sure to understand the implication of the signature of one the spouses
signing as a witness in the deed if it amount to consent as ruled in Pelayo vs. Perez, 459 SCRA
475 (2005).

In the case of Mario Siochi vs. Alfredo Gozon, et.al., G.R. No. 169900,
March 18 2010, and in Inter-Dimensional Realty, Inc. vs. Mario Siochi, Alfredo
Gozon, et.al. G.R. No. 169977, March 18, 2010, the same principle was applied
by the SC.

Facts: Alfredo Gozon and Elvira owned a 3-hectare titled property in Malabon registered in the
name of Alfredo Gozon married to Elvira Gozon. In 1991, Elvira filed a legal separation case
against Alfredo. While the case was pending, Alfredo entered into an “Agreement to Buy and
Sell” involving subject property for Php18M with Mario Siochi. Their agreement was annotated
in the title. Mario took possession of the property after paying partially Alfredo the amount of
Php5M.

In 1994, the legal separation case was granted ordering the dissolution and liquidation of
the conjugal assets of the spouses. Nonetheless, on the same year, Alfredo executed a Deed
of Donation over the subject property to their only child Winifred and a new title was issued in
Winifred’s favor without, however, annotating therein the “Agreement to Buy and Sell” found
in the original title.. Subsequently, Winifred executed in Alfredo’s favor a Special Power of
Attorney authorizing the latter to sold subject property. Indeed, Alfredo sold subject property
to Inter-Dimensional Realty for Php18M. As a consequence, Winifred’s title was cancelled and
a new title was issued in the name of Inter-Dimensional Realty. Is the sale or disposition of
subject property valid?

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Answer: No. Since the property is conjugal, and its disposition occurred after the effectivity of
the Family Code, Article 124 of the said Code applies. Thus, even if the spouses are separated
in-fact, and the property is left to the sole administration of one of the spouses, Alfredo still
cannot sell or dispose of the subject property without the written consent of Elvira or authority
of the court. Without such consent or authority, the sale or any disposition is void. The
absence of the consent of one of the spouses render the entire sale void, including the portion
of the conjugal property pertaining to the spouse who contracted the sale. Same is true to the
Agreement to Buy and Sell between Alfredo and Mario, and the Deed of Donation made by
Alfredo in favor of their daughter Winifred, it is void due to lack of consent of Elvira. It must be
remembered that neither spouse may donate any community property without the consent of
the other except moderate donations for charity or on occasions of family rejoicing or family
distress. This is expressly proscribed by Article 68 of the Family Code.

Under the regime of absolute community of property, alienation or

encumbrance of community property must bear the written consent of the other
spouse or the authority of the court without which the disposition or
encumbrance is void. But even if the disposition or encumbrance is void, the
transaction shall be construed as a continuing offer on the part of the consenting
spouse and the third person, and 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 of the offerors. Here, the claim of Mario Siochi
that their Agreement is a “continuing offer” cannot stand because the subsequent
donation and sale of subject property to another, said offer is deemed
withdrawn.

In another case, in Titan Construction Corp. vs. David, Sr., G.R. No.
169548, March 15, 2010, the SC ruled that property purchased during the
spouses’ marriage is presumed to be part of the conjugal partnership and this
presumption applies even when the manner in which the property was acquired
does not appear. It reiterated the rule that any disposition or encumbrance of
conjugal property, without the written consent of the other spouse is void.

Even if the marriage took place before the effectivity of the Family Code but
the disposition or conveyance was made during its effectivity, the provisions of
the Family Code will apply. This was the ruling in Sps. Manuel and Leticia
Fuentes, et.al. vs. Roca et.al. , G.R. No. 178902, April 21, 2010. Here, the sale
made by the husband without the written consent of the estranged wife was
declared void for it violates Article 124 of the Family Code. Even if the action for

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declaration of nullity was brought by the heirs of the erstwhile spouses, the same
does not prescribed pursuant to Art. 1410 of the NCC.

Finally, in the case of Ilona Hapitan vs. Jimmy and Warlily Lagradilla and
Esmeralda Blacer, G.R. No. 170004, January 13, 2016.

Facts: A complaint for collection of sum of money with prayer for attachment was filed by Sps.
Lagradilla against Nolan Hapitan and Esmeralda Blacer Hapitan whereby their conjugal house
and lot was the subject of attachment. Later, Sps. Lagradilla discovered that said house and lot
was sold to Spouses Terosa by Ilona by virtue of separate SPA’s executed by Nolan and
Esmeralda in her favor. Ilona is the sister of Nolan. Thus, alleging that Nolan and Esmeralda is
about depart from the Philippines with intent to defraud their creditors, it insisted that a
preliminary attachment should be granted. In their separate Answers, Esmeralda admitted to
have incurred the Php 510,463.98 obligation, while Nolan and Ilona argued that the debts were
incurred solely by Esmeralda and their conjugal partnership did not benefitted out of it.
Nonetheless, the lower court declared as invalid the sale of Ilona to Sps. Terosa after
Esmeralda withdraw her SPA executed in favor of Ilona, and directed Nolan and Esmeralda to
pay their obligation. Said decision was appealed to the CA. Pending decision by the latter, an
Amicable Settlement between Sps. Largadilla with Nolan and Ilona was submitted asking for the
modification of the RTC decision in view of the full settlement of the monetary obligation and
that the sale to Sps. Terosa be declared valid. Will the parties’ request be granted?

Answer: No, the Amicable Settlement signed by Nolan without the participation of Esmeralda
is not allowed under Article 124 of the FC which requires that any disposition or encumbrance
of conjugal property must have the written consent of the other spouse, otherwise such
disposition is void. Further, under Article 89 of the FC, no waiver of rights, interests, shares
or effect of conjugal partnership of gains during the marriage can be made except in case of
judicial separation of property. Clearly, Esmeralda’s right over the subject house and lot
cannot be validly disposed of by Nolan in said Amicable Settlement.

Also, focus your attention to the obligations chargeable to the absolute

community in case of ante-nuptial debts or those contracted by one of the
spouses before the marriage. Take note that ante-nuptial debts (contracted
before the marriage) by either spouse are chargeable to the absolute community
only if they have redounded to the benefit of the family. For those contracted
during the marriage, it will also be chargeable to the community property if (1)
contracted by both spouses, (2) if contracted by one spouse with the consent of
the other, (3) if contracted by one spouse without the consent of the other but
only to the extent that they have redounded to the benefit of the family, and (4)
if contracted by the administrator-spouse for the benefit of the family or

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community property. The burden of proving that the debt redounded to the
benefit of the family lies with the creditor-party litigant claiming as such.

Question: Suppose the property was acquired or bought by installment prior to

the celebration of marriage, what is the rule?

Answer: In a situation where the property is bought on installment prior to the

marriage and such was paid partly from exclusive funds and partly from conjugal
funds, the rule is that ownership of the same is upon the buyer-spouse as his/her
exclusive property if full ownership was vested prior to marriage. However, if full
ownership was vested during the marriage, the property is conjugal in nature. In
either case, there shall be reimbursement upon liquidation of the conjugal
partnership.

Question: What is the rule in determining ownership of the improvement

introduced on the separate property of either spouse?

Answer: To determine ownership of the improvement made on the separate

property of the spouse, the rule is that, if cost of the improvement and any
resulting increase in value are more than the value of the property at the time of
the improvement, the entire property shall belong to the conjugal partnership.
However, if it is less than, the entire property shall belong to the owner-spouse.
In either case, there shall be reimbursement upon liquidation of the conjugal
partnership.

In case the property was sold by the owner-spouse, take note of the legal
implication on the ruling in Ferrer vs. Ferrer, 508 SCRA 570 (2008) where it was
ruled that the obligation to reimburse of the improvement does not pertain to
the purchaser of the property in case it was sold by the owner-spouse prior to
reimbursement. Rather, it is the seller-spouse that has the obligation of
reimbursing the other spouse.

2012 Bar Examination Question:

III (a). Maria, wife of Pedro, withdrew P5 million from their conjugal funds.
With this money, she constructed a building on a lot which she inherited from
her father. Is the building conjugal or paraphernal?

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Answer: It depends. If Maria inherited the lot before their marriage, there is no
question that the building is conjugal because the money used to construct the
building is conjugal and the lot where it was constructed form part of the
community property of the spouses. But if Maria inherited the lot during their
marriage, the building is conjugal if the cost of the building is more than the value
of the lot, but if the value of the lot is more than the value of the building, the
same is paraphernal subject to reimbursement to the conjugal funds the value of
the building upon liquidation.

Anybody who can provide a correct answer to this question? You have to
qualify your answer here as stated in the rule on improvement as stated above.

Question: Suppose, after the death of one of the spouses, the surviving spouse
sold a portion of their conjugal property prior to liquidation, is the disposition or
conveyance valid, void or voidable?

Answer: This question was properly answered in the case of Heirs of Protacio
Go, Sr. et.al. vs. Ester Servacio, et al., G.R. 157537 September 7, 2011.

Ruling: Where the conveyance of 5,560 square meters out of 17,140 square meters made by
Protacio, Sr. and Rito Go to Ester Servacio was upheld to be valid even prior to liquidation even
if it seems contrary to the provisions of Article 130 of the Family Code. Article 130 provides
that “If upon the lapse of six-month period no liquidation is made, any disposition or
encumbrance involving the conjugal partnership property of the terminated marriage is void”
Nonetheless, since co-ownership ensued after the death of Marta Barola, Protacio Sr.’s wife,
the latter together with the other heirs became co-owners of her estate. As a co-owner, the
sale made by Protacio Sr. and Rito Go are not necessarily void with respect to their undivided
share in the estate in accordance with the rules on co-ownership. Upon acquisition of the
undivided interest of Protacio, Sr. and Rito Go, Ester became a co-owner of the property
together with the other heirs, thus, annulment of sale is not the proper remedy but partition.

Of importance to you also is your understanding of the rules with respect to

the property relations of the parties outside of wedlock. These are the so called
“property regimes of unions without marriage” including of course, in case of
void marriages. Be sure to compare the applicability of Article 147 and Article
148 of the Family Code.

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 Article 147 applies when a man or a woman, suffering no legal impediment
to marry each other, so exclusively live together as husband and wife under a
void marriage or without the benefit of marriage (live-in partners). Examples of
void marriages are those declared void by reason of psychological incapacity or
marriages without a valid marriage license.

Question: What is the rule on the distribution of their properties?

Answer: Wages and salaries earned by either party during the cohabitation shall
be owned by the parties in equal shares and will be divided equally between
them, even if only one party earned the wages and the other did not contribute
thereto. Property acquired by both parties through their work and industry shall
be governed by the rules on equal co-ownership. Any property acquired during
the union is prima facie presumed to have been obtained through their joint
efforts. A party who did not participate in the acquisition of the property shall
still be considered as having contributed thereto jointly if said party’s efforts
consisted in the care and maintenance of the family household.

Question: Since their property relation is governed by the rule on co-ownership,

can any of the party dispose or encumber his/her share in the co-ownership?

Answer: No, the parties are prohibited from disposing by acts inter vivos or
encumbering their respective shares in the co-owned property without the
consent of the other. Hence, Art. 493 of the NCC on co-ownership does not
apply.

Article 148, on the other hand, applies in cases where the parties in union
are incapacitated to marry each other. It refers to the property regime of
bigamous marriages, adulterous relationships, relationship in a state of
concubine, relationship where both man and woman are married to other
persons, and multiple alliances of the same married man.

Question: What is the rule in the distribution of their properties in the above
situation?

Answer: Wages and salaries earned by each party belong to him or her
exclusively. Only properties acquired by both of the parties thru actual joint

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contribution of money, property or industry shall belong to the co-ownership in
proportion to their actual contribution. If the actual contribution of the party is
not proved, there will be no co-ownership and no presumption of equal shares.

Question: How does it differ to the rule of distribution of property in Article 147?

Answer: In Article 147, the efforts of the party in the care and maintenance of
the family and household are regarded as contribution to the acquisition of
common property by one who has no salary, income, work or industry, while in
Article 148, actual contribution is the basis for the distribution.

In the case of Alain Diňo vs. Caridad Diňo, G.R. No. 178044, January 19,
2011, (640 SCRA 183), the marriage of the spouses was nullified on the ground
of psychological incapacity. In the dispositive portion of the judgment, it
provides that the decree of absolute nullity of marriage shall be issued after
liquidation, partition and distribution of the parties’ properties under Article 147
of the Family Code. Is the ruling of the court correct?

Answer: No, such ruling of the court is incorrect. The Rule on Liquidation,
Partition and Distribution of Properties whereby delivery and registration must
first be complied with before a decree is issued, applies only if the ground for
declaring a marriage a nullity or annulled by judgment are Article 40 on bigamous
marriage and Article 45 on voidable marriages. Hence, if the ground for the
declaration of nullity of marriage is psychological incapacity, said Rule does not
apply. The SC held that what govern the liquidation of properties owned in
common by the parties shall be the rules on co-ownership pursuant to Article 496
of the Civil Code as mandated by Article 147 of the Family Code. Under Article
496, partition may be made by agreement between the parties or by judicial
proceedings. It is not necessary to liquidate the properties of the spouses in the
same proceeding for declaration of nullity of marriage. With the dissolution of
the marriage, there is no more conjugal property or community property to talk
about. Hence, the rules on co-ownership shall govern.

This Diňo case was the subject in the 2014 Bar Examination Question No. 6
in Civil Law.

Bar Question:

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 Miko and Dinah started to lived together as husband and wife without the
benefit of marriage in 1984. Ten (10) years after, they separated. In 1996, they
decided to live together again, and in 1998, they got married.

On February 17, 2001, Dinah filed a complaint for declaration of nullity of

her marriage with Miko on the ground of psychological incapacity under Article 36
of the Family Code. The Court rendered the following decision:

(1) Declaring the marriage null and void;

(2) Dissolving the regime of absolute community of property; and
(3) Declaring that the decree of absolute nullity of marriage shall only be
issued after liquidation, partition and distribution of the parties’ properties
under Article 147 of the Family Code.

Dinah filed a motion for partial reconsideration questioning the portion of

the decision on the issuance of a decree of nullity of marriage only after the
liquidation, partition and distribution of properties under Article 147 of the Code.

If you are the judge, how will you decide petitioner’s motion for partial
reconsideration? Why? (4 pts.)

Answer: If I am the judge, I will grant Dinah’s motion for partial reconsideration.
(Your answer must be based on the ruling handed down in the Diňo case).

Also, in Juan Sevilla Salas, Jr. vs. Eden Villena Aguila, G.R. No. 202370,
September 23, 2013, the SC ordered the partition of the properties pursuant to
the rules on co-ownership.

Facts: Juan and Eden were married in 1985. Out of their union, a daughter was born. Five (5)
months later, Juan left their conjugal dwelling and did no longer communicated with his family
since then.

In 2003, Eden filed a petition for Declaration of Nullity of Marriage against Juan on the
ground of the latter’s psychological incapacity, alleging therein, among others, that they had
no conjugal property. Despite service of summon, Juan failed to file his Answer nor attend the
hearing. The RTC granted the petition on May 2007. On September 10, 2007, Eden filed a
Manifestation and Motion alleging that there were real properties that were acquired during
the subsistence of their marriage registered in the name of Juan S. Salas married to Rubina C.

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Salas. On September 19, 2007, Juan entered his appearance and manifested that judgment be
entered since the decision had attained finality already and that no conjugal properties are
involved based on Eden’s petition. Despite the finality of the decision, and after hearing, the
court was convinced and ordered the partition of the said conjugal properties of the spouses. Is
the action of the court correct?

Answer: Yes, even if the decree of nullity is already final, the court may order the partition or
liquidation of the conjugal assets of the parties, if there are any properties acquired during the
marriage is prima facie presumed to have been obtained through the couple’s joint efforts, and
pursuant to Article 147, should be governed by the special rules on co-ownership. Thus, the
order of partition of the subject properties is in order even if the decree of nullity is already
final.

2016 Bar Examination Question No. V

Bernard and Dorothy lived together as common-law spouses although they

are both capacitated to marry. After one (1) year of cohabitation, Dorothy went
abroad to work in Dubai as a hair stylist and regularly sent money to Bernard.
Bernard both a lot. For a good price, Bernard sold the lot. Dorothy came to
know about the acquisition and sale of the lot and filed a suit to nullify the sale
because she did not give her consent to the sale.

(a) Will Dorothy’s suit prosper? Decide with reason. (2.5%)

(b) Suppose Dorothy was jobless and did not contribute money to the
acquisition of the lot and her efforts consisted mainly in the care and
maintenance of the family and household, is her consent to the sale a
prerequisite to its validity? Explain. (2.5%)

Answer: (a) Yes, Dorothy’s action will prosper. Under Article 147 of the FC,
wages and salaries earned by either party during the cohabitation shall be owned
by the parties in equal shares and will be divided equally between them, even if
only one party earned the wages and the other did not contribute thereto.
Property acquired by both parties through their work and industry shall be
governed by the rules on equal co-ownership. Any property acquired during the
union is prima facie presumed to have been obtained through their joint efforts.
Since their property relation is governed by a special rule of co-ownership, any
disposition of property must be with the consent of the other spouse, otherwise,
the same is void.

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(b) Yes. Even if Dorothy was jobless, her consent is likewise indispensable for the
validity of any conveyance of property they acquired during their cohabitation
because even if she did not participate in the acquisition of the property, still she
be considered as having contributed thereto due to her efforts in the care and
maintenance of the family household as enunciated in Article 147 of the Family
Code.

In the case of Betty B. Lacbayan vs. Bayani S. Samoy, Jr., G.R. No. 165427,
March 21, 2011 (645 SCRA 677), it was held that mere cohabitation under Article
148 of the Family Code without proof of contribution, will not result in a co-
ownership- proof of actual contribution must be established by clear evidence
showing that the party either used his/her own money or property or industry in
the acquisition of the property.

Facts: In this case, Betty and Bayani, live-in partners, established a business partnership.
Later, several real properties were registered in the name of Bayani Samoy, Jr. described as
married to Betty Lacbayan but in truth Bayani is married to his lawful wife. When the
relationship turned sour, the parties decided to divide their acquisitions giving some parcels to
Betty but since the latter demanded more, it did not sign the Partition Agreement instead she
filed a partition case against Bayani. Bayani claims all the properties and denied any
contribution coming from Betty. There being a denial, Betty should prove first her ownership
over the properties before she can seek partition because as stated, Bayani denied that Betty is
a co-owner.

The inscription of her name as the wife of Bayani in the certificates of titles is not
sufficient proof that she contributed money or anything in the acquisition thereof. Not being
legally married, there is no presumption that the properties are conjugal. Bayani was declared
the sole owner of all the properties he having proved that the properties were acquired
through his own money, property and efforts.

And lastly, in the case of Elenita M. Dewara vs. Sps. Ronie and Gina
Lamela, G.R. No. 179010, April 11, 2011, 647 SCRA 483, the SC ruled that all
property of the marriage is presumed to belong to the conjugal partnership,
unless it be proved that it pertains exclusively to the husband or to the wife.
Registration in the name of the husband or the wife alone does not destroy this
presumption. The separation in-fact between the husband and the wife without
judicial approval shall not affect the conjugal partnership. The lot retains its
conjugal nature. Moreover, the presumption of conjugal ownership applies even
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when the manner in which the property was acquired does not appear. The use
of the conjugal funds is not an essential requirement for the presumption.

The presumption that the property is conjugal property may be rebutted

only by strong, clear, categorical, and convincing evidence- there must be strict
proof of the exclusive ownership of one of the spouses, and burden of proof rests
upon the party asserting it.

FAMILY HOME

Question: How does family home be constituted?

Answer: Prior to the effectivity of the Family Code on August 3, 1988, a family
home can be constituted either judicially or extra-judicially, the latter by
recording of a public instrument in the Registry of Property declaring the
establishment of the family home. However, under the Family Code, a family
home is deemed constituted on a house and lot from the time it is occupied as a
family residence. There is no need to constitute the same judicially or extra-
judicially as required in the New Civil Code of the Philippines. Meaning, court
action nor written document is no longer necessary in its constitution. The only
requirement is that there must be actual occupancy of the family home by the
owner thereof or by any of its beneficiaries.

Take note of the ruling in Versola vs Court of Appeals, 497 SCRA 385
(2006) where it was ruled that to effectively claim exemption of family home from
execution, forced sale or attachment, it is not sufficient to allege merely that the
property is a family home, rather, he must show proof that the requirements for
its constitution is duly met. Here, pending trial, Versola did not claim that the
property subject of the execution was their family home. It raised the defense
only when the sheriff’s Final Deed of Sale was to be issued on the subject house
and lot. By not raising the issue on the earliest opportunity, estoppel or waiver of
defenses comes into play. Thus, the sale of the family home was upheld to be
valid.

Case: Juanita Trinidad Ramos, et.al. vs. Danilo Pangilinan, et.al. G.R. No.
185920, July 20, 2010

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Facts: To satisfy the award for damages in favor of Pangilinan, the Pandacan property of
Ramos was levied by the sheriff. Ramos moved to quash the Writ of Execution arguing that said
property was constituted as a family home of Ramos’ family since 1944, hence, exempt from
execution. It also posited that pursuant to Article 153 of the Family Code, they no longer had
to resort to judicial or extra-judicial constitution of a family home. Is the Ramos correct?

Answer: No, petitioners’ contention is bereft of merit because aside from the fact that proof
must be shown before one can claim exemption of a family home, where such family home
was constituted prior to the effectivity of the Family Code, like in this case, proof that such
was constituted extra-judicially or judicially must be shown, otherwise, it cannot claim such
privilege.

Discuss also the case of Sps. Araceli Oliva de Mesa and Ernesto S. de Mesa
vs. Sps. Claudio D. Acero, Jr. and Ma. Rufina D. Acero, et.al., G.R. No. 185064,
January 16, 2012.

Facts: This involves a parcel of land at Mt. Carmel Subd., Meycauayan, Bulacan registered in
Araceli de Mesa’s name. Sps. De Mesa purchased the subject property in 1984 while they were
still cohabiting before their marriage. A house was constructed thereon which was later
occupied as a family home after they got married in 1987.

Sometime in 1988, Araceli obtained a loan from Sps. Acero in the amount of Php100,000
secured by a mortgage over subject property. To pay her obligation, Araceli issued checks but
when presented for payment, it was dishonored as the account for which it was drawn was
already closed. Because Araceli failed to settle her obligation, a criminal complaint for violation
of BP 22 was filed against her.

After trial, Araceli was acquitted but made to pay the Php100,000 with legal interest
from date of demand until fully paid. A writ of execution was issued and subject property was
levied and sold at public auction. Sps. Acero was the highest bidder. A certificate of title was
correspondingly issued to them.

Sometime in February 1995, Sps. Acero leased the subject property to Sps. De Mesa and
Juanito Oliva at Php5,500.00 per month, however, said spouses failed to pay the rent which
ballooned to Php170,500.00. Unable to collect the arrear rentals from Sps. De Mesa, Sps.
Acero filed an ejectment suit against the former. In their defense, Sps. De Mesa claimed that
they are not lessee but owners of subject property. The court was not convinced and ordered
them to vacate the premises, which decision was affirmed by RTC and CA. Decision became
final.

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 In 1999, Sps. De Mesa filed an action for annulment of title against Sps. Acero seeking to
annul the title over subject property contending that it is their family home and is exempt from
execution. Will their action prosper?

Answer: No. While it is true that subject property is their family home, the exemption from
execution cannot be availed of for their failure to assert such exemption within a reasonable
time, that is, before the sale thereof at public auction. Failure to do so, they are now
estopped from invoking such exemption.

Question: What are the requirements for the constitution of a family home?

Answer: (Refer to the procedure for its constitution under Article 224-251 of the
New Civil Code and under Article 153 of the Family Code).

Question: Up to what extent or value does a family home enjoy its protection as
exempt from forced sale, execution or attachment:

Answer: Php 300,000.00 in urban areas and Php 200,000.00 in rural areas. Thus,
if a judgment creditor has reasonable grounds that the value of the family home is
actually more than the maximum amount mentioned above, he may petition the
court for the sale of the family home.

While it is true that a family home is exempt from execution, such

exemption shall not apply in the following cases:

1. For non-payment of realty taxes over such property;

2. For debts incurred prior to the constitution of family home;
3. For debts secured by mortgages on the premises before or after such
constitution, and
4. For debts due to laborers’ wages, mechanics, architects, builders,
materialmen and others who have rendered service or furnished materials
for the construction of the building.

Likewise, be aware of the effect of death of a person constituting the

family home as ruled in the case of Pilar G. Patricio vs. Marcelino G. Dario III,
G.R. No. 17029, November 20, 2006, 507 SCRA 438 (2005).

Illustration: H died intestate, survived by his wife, W and two (2) sons A and B. One of the
properties left by the deceased was a residential house which, upon extra-judicial settlement

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of the estate of the deceased, was transferred in the names of W, A and B as co-owners. W
and A filed a petition in court for the partition and sale of the subject property when B refused
to accede to an extra-judicial partition. B is opposing the partition of the property on the
ground that it is a family home, the partition of which is prohibited because his minor son X,
who is the grandson of the deceased H, still resides in the premises. It is claimed that X is a
beneficiary of the family home. Is the contention of B meritorious?

Answer: No. While it is true that upon the death of a person who constituted the family home,
the same shall continue and its partition is prohibited while there is a minor beneficiary who
lives therein. X is not, however, a beneficiary of the family home concerned. Three (3)
requisites must be considered a beneficiary of a family home, to wit: (1) he or she must be
among the relationship enumerated in Article 154 of the Family Code; (2) he or she must live
in the family home, and (3) he or she must be dependent for legal support from the head of
the family. While X satisfies the first two (2) requisites, he does not, however, satisfies the
third requisite since he cannot demand support from his paternal grandmother W because the
liability for his legal support falls primarily on his parents, especially his father B who is the
head of his immediate family.

Grandsons are not dependent from their paternal grandmother for legal support but
from their immediate parents unless there is a showing that the latter is not capable of giving
support to their child. Thus, even if living in the family home, it will not prevent the
beneficiaries from partitioning the property after the lapsed of 10 years following the death of
one of the spouses who constituted the family home.

2014 Bar Examination-Question # XVIII

On March 30, 2000, Mariano died intestate and was survived by his wife,
Leonora and children, Danilo and Carlito. One of the properties he left was a
piece of land in Alabang where he built his residential house.

After his burial, Leonora and Mariano’s children extra-judicially settled his
estate. Thereafafter, Leonora and Danilo advised Carlito of their intention to
partition the property. Carlito opposed invoking Article 159 of the Family Code.
Carlito alleged that since his minor child Lucas still resides in the premises, the
family home continues until that minor beneficiary becomes of age.

Is the contention of Carlito tenable? (4%).

Suggested Answer: (Cite Patricio vs. Dario III case as discussed above).

PATERNITY AND FILIATION

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 Be sure to distinguish the status of children vis-a vis the status of the
marriage of the spouses, thus, the rule:

Question: How does status of children determined?

Answer: The status of the marriage determines primarily the filiation of the
children born on such marriage, thus:

• It is legitimate if conceived or born during a valid marriage

• It is illegitimate if conceived or born outside a valid marriage, except those
born under void marriages in Article 36, and children of void marriages
under Article 53.

Under Article 164 of the Family Code, a child conceived or born during a
valid marriage is presumed to be legitimate. For this presumption to be availed
of, it must be upon convincing proof of the factual basis that (1) the child’s
parents were legally married and (2) his or her conception or birth occurred
during the subsistence of the marriage of his/her putative parents. Otherwise,
the presumption of legitimacy does not apply.

To understand the application of the presumption, better discuss the

cases of William Liyao, Jr. vs. Juanita Tanhoti-Liyao, G.R. No. 138961, March 7,
2002, 378 SCRA 563 (2002) and the subsequent case of Gerardo B. Concepcion
vs. Court of Appeals and Maria Theresa Almonte, G.R. No. 123450, August 31,
2005, 468 SCRA 438 (2005). Included as one of the issues in these cases was the
rule that the mother cannot declare against child’s legitimacy, otherwise, it will
run counter to the presumption earlier stated.

In Liyao, Jr. vs. Tanhoti Liyao case, the husband and wife were separated
de facto for many years already. During their separation, the wife had an illicit
relation with another man, with whom she cohabited and had a child. When the
paramour died, the wife, on behalf of her child, filed an action for compulsory
recognition of the latter as the illegitimate child of the paramour for the purpose
of partaking in the latter’s vast estate. The SC denied the action for compulsory
recognition because the child is presumed to be a legitimate child of the husband
and the wife, the child being conceived and born during the couple’s valid
marriage.

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 In the case of Concepcion vs. Court of Appeals, the wife, during the
subsistence of her marriage with her first husband, married anew. Thereafter,
upon petition of the second husband, the second marriage was declared void for
being bigamous and the common child of the wife and the second husband was
declared illegitimate child by the trial court. The custody of the child was
awarded to the mother while the second husband was granted visitation rights.
On appeal from the decision granting the second husband visitation rights over
the child, the SC held that the second husband is not entitled to visitation rights
because of the absence of parent-child relationship that exist between him and
the child. The Court explained that since the child was born during the valid
marriage of the wife and the first husband, the child is presumed to be a
legitimate child of that first marriage.

Here is a situation where there will be hiatus in the actual treatment of the
child with respect to his or her entitlement of the rights accorded to him or her.
Under the law, the child is the legitimate child of the first husband but, the first
husband does not recognize him as his legitimate child because he fully knew that
said child is the child of his wife’s paramour. It is a tangible evidence of the wife’s
infidelity. It will cause great prejudice and humiliation on the person of the child,
unless addressed by an appropriate legislative action.

Still on the legitimacy issue, take note of the valid grounds to impugn the
legitimacy of the child as enumerated in Article 166 of the Family Code. Of all the
grounds stated in this Article 166 focus on the ground that there was physical
impossibility of sexual intercourse between spouses specially so if they were
already living separately de facto.

Question: What are the accepted proof of filiation?

Answer: The accepted proofs of filiation are, (1) record of birth appearing in the
Civil Register or in a final judgment; (2) written admission of
(legitimate/illegitimate) filiation in either public or private instrument; (3) open
and continuous possession of status, and (4) any other means allowed by the
Rules of Court or special laws like DNA testing. Be sure to master the matters as
to who may file or institute an action for recognition of legitimate filiation or
illegitimate filiation and its prescriptive periods.

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 Case: Rodolfo S. Aguilar vs. Edna G. Siasat, G.R. No. 200169, January 28, 2015.

Facts: Rodolfo filed a case for Mandatory Injunction with Damages seeking to recover lost
titles of two (2) parcels of land owned by Spouses Alfredo Aguilar and Candelaria Siasat-Aguilar
in the possession of Edna Siasat. Claiming that he is the sole heir of Spouses Aguilar, he
prayed that the owner’s duplicate copy of said title be surrendered to him. In her Answer,
Edna contended that Rolando is not the son and sole surviving heir of the Aguilar spouses but
a mere stranger who was raised by the Aguilar spouses out of generosity and kindness of
heart. Hence, Rodolfo was forced to prove his filiation by presenting documents including
Alfredo’s SSS Form E-1 dated October 10, 1957, a public document subscribed and made
under oath by Alfredo Aguilar during his employment with BMMC. Unfortunately, Rodolfo
failed to produce his Certificate of Live Birth because records of birth from 1945-1946 were no
longer available at the Local Civil Registrar’s Office as it was totally destroyed. The lower court
and the Court of Appeal was not convinced and dismissed Rodolfo’s petition. Is the ruling of
the lower courts correct?

Answer: No, the lower courts erred in dismissing the petition. The SC ruled that such SSS
record Form E-1 satisfies the requirement for proof of filiation and relationship of Rolando to
the Aguilar spouses under Article 172 of the Family Code. By itself, said document constitutes
an admission of legitimate filiation on a public document or a private handwritten instrument
and signed by the parent concerned. Such fact was appreciated in Rodolfo’s favor because his
birth occurred during the marriage of the Aguilar’s spouses and before their respective deaths.

Qusetion: What is legitimation? What is the status of children who were

legitimated?

Answer: In order for legitimation to be effective, the following requisites must

concur, (a) that at the time of the conception of the child, his/her parents were
not disqualified by any impediment to marry each other; (b) that the child is
conceived and born out of wedlock; (c) that after the birth of said child, his/her
parents subsequently got married; and (d) that such marriage is not void ab
initio.

Hence, if the parents were disqualified by any impediment to marry each

other at the time of the child’s conception, the child cannot be legitimated by the
subsequent marriage of his her parents, hence, illegitimate. What is the remedy
in order to raise the child to its legitimate status.

Answer: Adoption is the remedy.

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 Take note of the rule as to the status of children conceived and born through
artificial insemination. Thus, whether the sperm is that of the husband or that of
the donor, the child is legitimate if, (a) both husband and the wife authorized or
ratified such insemination in a written instrument; and (b) such written
instrument is executed and signed by them before the birth of the child.

Recognition of Illegitimate Child- Cite the cases of Jenie San Juan-De la

Cruz vs. Ronal Paul S. Gracia, etc., G.R. No. 177728 , July 31, 2009 which
liberalize the rule on the investigation of the paternity and filiation of children,
especially of illegitimate children. The SC promulgated the rule respecting the
requirement of affixing the signature of the acknowledging parent in any private
handwritten instrument. Though, in this case, even if unsigned by the father, it
uphold the acknowledgment of the child as it appeared or was stated in the
autobiography of his putative father. Thus, the SC established the rule in the
event a private handwritten instrument acknowledging or recognizing filiation of
illegitimate children, viz: (1) where a private handwritten instrument is the lone
piece of evidence submitted to prove filiation, it must be signed by the putative
father; (2) where a private handwritten instrument is accompanied by other
relevant and competent evidence, it need not be signed by the putative father.

In Puno vs. Puno Enterprises, Inc., G.R. No. 177066, September 11, 2009,
the SC pronounced that the Civil registrar has no authority to record the paternity
of an illegitimate child on the information of third person. It also ruled that the
status of an illegitimate child who claims to be an heir to a decedent estate
cannot be adjudicated in an ordinary civil action.

Also, be aware of the period within which recognition of illegitimate

filiation may be filed depending on the evidence to prove illegitimate filiation as
ruled in Michael C. Guy vs. Court of Appeals, et.al. G.R. No. 163707, September
15, 2006. It is important to note that under the Family Code, when filiation of an
illegitimate child is established by a record of birth appearing in the civil register
or a final judgment, or an admission of filiation in a public instrument or a private
handwritten instrument signed by the parent concerned, the action for
recognition may be brought by the child during his or her lifetime. However, if
the action is based upon open and continuous possession of the status of an

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illegitimate child, or any other means allowed by the rules or special laws, it may
only be brought during the lifetime of the alleged parent.

Of more importance for your purpose and is more controversial because

of the numerous jurisprudence pertaining to this issue is on the action to claim
illegitimate filiation as enunciated in Benhur Nepomuceno vs. Arhbencel Ann
Lopez rep. by her mother Araceli Lopez , G.R. No. 181258, March 18, 2010.

Facts: Arhbencel Lopez, born on June 8, 1999, claims to be an illegitimate child of Benhur.
But the latter refused to sign her Certificate of Live Birth acknowledging such fact as her
putative father. Hence, she filed a petition for compulsory recognition. Nonetheless, by a
handwritten note, Benhur obligated himself to give her financial support in the amount of
Php1,500.00 every 15th and 30th of every month beginning August 1999, as stated hereunder:

Manila, August 7, 1999

I, Benhur C. Nepomuceno, hereby undertake to give and provide financial support in the
amount of Php1,500.00 every 15th and 30th day of each month for a total of Php3,000.00 a
month starting August 15, 1999, to Arhbencel Ann Lopez, presently in the custody of her
mother, Araceli Lopez without the necessity of demand, subject to adjustment later depending
on the needs of the child and my income.

(Sgd.) Benhur C. Nepomuceno

Is this handwritten note of giving financial support sufficient to prove illegitimate

filiation?

Answer: No, such handwritten note is not sufficient because it did not contain any statement
whatsoever about Arhbencel’s filiation to Benhur. It is, therefore, not within the ambit of
Article 172(2) vis-à-vis Article 75 of the Family Code which admits as complete evidence of
illegitimate filiation or admission of filiation in a private handwritten instrument signed by the
parent concerned.

Case: Narciso Salas vs. Annabelle Matusalem, G.R. No. 180284, September 11,
2013 which also reveals the policy of the SC with regards to claim of illegitimate
filiation.

Facts: Annabelle, then 24 years of age was enticed by Narciso, 56 years old to submit to him
making her believed that he was a widower. Out of their sexual tryst was born Christian Paulo.
During her pregnancy, Narciso rented an apartment for Annabelle to stay, shouldered all the
expenses in the delivery of their child including the cost of a ceasarian operation and hospital
confinement. Narciso disclosed his infidelity to his family and the birth of his illegitimate child

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Christian Paulo, thus, they decided to take Christian Paulo into their family. But, when
Annabelle refused the plan of Narciso’s family, the latter abandoned her. Annabelle sued
Narciso for support and damages.

In his Answer, Narciso denied to have sired Christian Paulo, but did not present any
evidence to buttress his claim. Thus, the case was submitted for decision on the basis of the
evidence of Annabelle. The lower ruled in favor of Annabelle and directed Narciso to give
support to Christian Paulo, his illegitimate son.

Among her evidences to prove filiation of Christian Paulo to Narciso, she presented the
Certificate of Birth of her son where the name of Narciso as the father though not signed by
Narciso, the Baptismal Certificate indicating Narciso as his father, handwritten notes and
letters showing exchanges of affectionate words and romantic trysts, hospital bills and
photographs taken of Narciso and Annabelle together with their son inside their rented
apartment. Are these pieces of evidence sufficient to prove illegitimate filiation of Christian
Paulo to Narciso?

Answer: No. Unsigned Certificate of Live Birth by the putative father is not a competent
evidence of paternity absent any showing that the putative father had a hand in the
preparation of the certificate. While baptismal certificates may be considered as public
documents, they can only serve as evidence of the administration of the sacrament on the date
specified. It is not necessarily competent evidence of the veracity of the entries therein with
respect to child’s paternity. The rest of evidences, like pictures, letters and hospital bills are
inconclusive evidence to prove paternity. In short, the testimony of Annabelle, even if
corroborated by the owner of the apartment they were renting, by themselves, are not
competent proof of paternity and the totality of Annabelle’s evidence failed to establish
Christian Paulo’s filiation to Narciso. Time and again, the Supreme Court ruled that a high
standard of proof is required to establish paternity and filiation.

Question: Does recognition of paternity by the natural father entitles the latter to
joint parental authority and custody of the illegitimate child?

Answer: No. Its effect is for the natural father to give support and have visitorial
rights only and not joint parental authority. This ruling was enunciated in the case
of Briones vs. Miguel 440 SCRA 455 (2004).

Look into the effect of the termination of marriage and the remarriage of
the mother on the status of her child. Article 168 gives a situation where the
mother contracted another marriage within 300 days after the termination of the
previous marriage and that a child was born within said period. How is paternity
of the child determined? Or who is the father of the said child?

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Answer: In the absence of proof to the contrary, the child belongs to the first
marriage and the first husband is considered the father if the child is born BEFORE
180 days after the solemnization of the second marriage and WITHIN 300 days
after the termination of the previous marriage. Example: In January 1, 2015, H,
husband of W, died in a vehicular accident. By June 1, 2015 or 5 months
thereafter, W contracted second marriage with X. On October 15, 2015 or 9 ½
months after H’s death and 4 ½ months after she remarry, W delivered a healthy
baby boy, A. According to Article 168, A’s father is the first husband of W and
not her second husband. However, if W contracted her second marriage on
March 1, 2015 or 3 months after H’s death and subsequently, A was born on
October 15, 2015, his father is the second husband of W. Take note that the 300-
day period is still on November 1, 2015.

Lastly, always bear in mind that paternity and filiation must be judicially
established. It is not subject to compromise because Article 2035(1) of the NCC
prohibits a compromise agreement upon the civil status of a person. Thus, where
a compromise agreement was executed between the heirs of a deceased person
wherein the latter acknowledged a claimant to the estate as an illegitimate child
of the deceased person, such acknowledgment has no legal effect for two (2)
reasons: (1) civil status or filiation cannot be subject of compromise under Art.
2035(1) of the NCC; and (2) such recognition should be made by the putative
father during the latter’s lifetime. Read the case of Jose Rivero, et.al. vs. Court of
Appeals and Mary Jane Dy Chiao-de Guzman, et.al., G.R. No. 141273, 458 SCRA
714 (May 17, 2005) to easily understand the policy of the law.

Also, take note that if the proof of illegitimate filiation is not based in an
admission of paternity or filiation in the birth certificate or other written
instrument but only an “open and continuous possession of the status of an
illegitimate child” or “any other means allowed by the Rules of Court or other
special laws” like DNA test, the action to claim illegitimate filiation must be
brought during the lifetime of the putative father even if the child is still a minor.

As to when the action to claim illegitimate filiation will be brought, discuss

the ruling in Ernestina Bernabe vs. Carolina Alejo, G.R. No. 140500, January 21,
2002, 374 SCRA 180 (2002).

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Facts: Out of illicit relationship, Adrian Bernabe was born in 1981 to Fiscal Bernabe and his
secretary, Carolina, then 23 years old. Fiscal Bernabe died in 1993 and his wife Rosalina, died
also later that same year, leaving Ernestina as the sole surviving heir.

In 1994, Carolina, in behalf of her son Adrian, filed a complaint for recognition so that
Adrian be declared as illegitimate son of Fiscal Bernabe and have a share in the latter’s estate,
now being held solely by Ernestina. On motion of Ernestina, the RTC dismissed the case on the
ground that such should have been filed during the lifetime of the putative father, hence,
already barred. Is the ruling of the lower court correct?

Answer: No. The ruling of the court is erroneous because at the time the Family Code took
effect, Adrian was still a minor and his putative father died while he was still a minor. Thus,
the right to seek recognition granted by the Civil Code to illegitimate children who were still
minors at the time the Family Code took effect cannot be impaired or taken away. The minors
have up to four (4) years from attaining majority age within which to file an action for
recognition. Here, Adrian was still 13-year old when the petition for recognition was filed and
well within the period to seek recognition even if his putative father is already dead. This right
was already vested upon Adrian under the Civil Coode which cannot be impaired by the
enactment of the Family Code. Article 255 of the Family Code provides a caveat that rights
that have already vested prior to its enactment shall be prejudiced or impaired.

The same rule was applied in the case of Heirs of Valentin Basbas, et.al. vs.
Ricardo Basbas, represented by Eugenio Basbas, G.R. No. 188773, September
10, 2014.

Ruling: Both petitioners and respondents claimed as descendants of Severo Basbas, the
original owner of a parcel of land subject of a case for Annulment of Title, Reconveyance and
Damages. Title was issued to respondents upon a claim that they inherited it from their father,
Nicolas Basbas, who was purportedly also a son of Severo Basbas, though the former’s filiation
to the latter was not clearly established whether he was a legitimate or illegitimate son of
Severo Basbas. Conversely, petitioner was able to prove that their predecessor, Valentin, was
the only legitimate child of Severo Basbas. In ruling for the petitioner, and reversing the CA
decision, the SC pronounced that the respondent can no longer proved illegitimate filiation of
Nicolas because such should have been made while Severo was still alive. Severo died in 1911.
Failing to prove Nicolas filiation to Severo, it follows that respondents are not heirs of Severo,
hence, not entitled to succeed from the latter.

ADOPTION

The governing law in case of adoption is Republic Act No. 8552 otherwise
known as the “Domestic Adoption Act of 1998”, if adoption involves Filipino

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children and that the adoption proceedings is made in the Philippines. However,
if the petition for adoption is filed abroad though it also involves Filipino children,
the applicable law is Republic Act No. 8043 or the “Inter-country Adoption Act of
1995”.

Whenever there is a question on adoption in the Bar examination, it

usually focused on the validity of the adoption where one of the adopter is a
foreigner. Hence, you must have working knowledge on the rules pertaining
thereto.

Question: Are aliens qualified to adopt by way of domestic adoption?

Answer: Yes. Under the Family Code, the following aliens are qualified to adopt
by way of domestic adoption if he/she is: (1) a former Filipino citizen who seeks
to adopt a relative by consanguinity; (2) one who seeks to adopt the legitimate
child of his or her Filipino spouse; or (3) one who is married to a Filipino citizen
and seeks to adopt JOINTLY with his or her Filipino spouse a relative by
consanguinity of the latter. Under the present law, however, aliens who have
been living in the Philippines for at least three (3) continuous years prior to the
filing of the application for adoption and maintains such residence until the
adoption decree is entered, are now qualified to adopt a Filipino child by way of
domestic adoption, provided that they satisfy the other requirements.

Generally, husband and wife shall JOINTLY adopt, otherwise the adoption
shall not be allowed except in the following cases, (1) if one spouse seeks to
adopt the legitimate son/daughter of the other; (2) if one spouse seeks to adopt
his/her own illegitimate son/daughter BUT the other spouse must give his/her
consent; and (3) if the spouses are legally separated from each other. In other
words, there is no need for joint adoption if the adopter seeks to adopt his/her
own illegitimate son/daughter, but the law requires the consent of the spouse of
the adopter to such adoption. However, if one spouse adopts the illegitimate
son/daughter of the other, joint adoption is still mandatory.

2014 Bar Examination- Question # XXVIII

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 Spouses Esteban and Maria decided to raise their two (2) nieces, Faith and
Hope, both minors, as their own children after the parents of the minors died in
a vehicular accident.

Ten (10) years after Esteban died, Maria later on married her boss Daniel, a
British national who had been living in the Philippines for two (2) years.

With the permission of Daniel, Maria filed a petition for the adoption of
Faith and Hope. She did not include Daniel as her co-petitioner because for
Maria, it was her former husband Esteban who raised the kids.

If you were the judge, how will you resolve the petition? (4%).

Answer: (The answer to this question is the case cited below)

Case: In Re: Petition for Adoption of Michelle P Lim/ Michael Jude Lim, Monina
P. Lim, Petitioner, G.R. Nos. 168992-93, May 21, 2009 where the SC reiterated
that joint adoption by husband and wife is mandatory even if adoptee reaches the
age of majority.

Written consent of the natural parents of the adoptee who are minors are
indispensable unless such parent had been divested of parental authority, or
guilty of abandonment or there exist valid ground wherein his consent may be
dispensed with.

Case: Herbert Cang, petitioner vs. CA and Sps. Ronald Clavano and Maria Clara
Clavano, G.R. No. 105308, September 25, 1998, where the SC pronounced that
minor children cannot be adopted without the written consent of a natural parent
whose consent cannot be dispensed with by any of the grounds like
abandonment.

Case: Rosario Mata Castro, et.al. vs. Jose Maria Jed Lemuel Gregorio and Ana
Maria Regina Gregorio, G.R. No. 188801, October 15, 2014.

Facts: Atty. Jose G. Castro and Rosario were married in Laoag City in 1962. Barely a year into
their marriage, they separated. Subsequently, they briefly reconciled in 1969 and Joanne was
born in the following year. Finally, they separated permanently due to Jose’s homosexual
tendencies.

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 In August 2000, Jose filed a petition for adoption at RTC Batac, Ilocos Norte. In his
petition, Jose alleged that Jed and Regina were his illegitimate children with Lilibeth, their
househelp. He also alleged that, though he is married to Rosario, they were childless. An
Affidavit of Consent purportedly executed by Rosario form part of the petition for adoption.
Upon favorable recommendation of the assigned social welfare officer, the petition was
granted and a Certificate of Finality was issued on February 9, 2006.

In October 2007, Rosario and her daughter Joanne filed a petition for annulment of the
Decree of Adoption alleging that her consent was not secured and the Affidavit of Consent was
fictitious. Likewise, they also raised the issue that Joanne never give her written consent to
adoption. Will Rosario’s action prosper?

Answer: Due to lack of jurisdiction and extrinsic fraud, the decree of adoption should be
annulled. The court did not acquire jurisdiction because of lack of notice and consent of the
wife, Rosario and the written consent of Joanne, Jose’s daughter, which is mandatory in
adoption proceedings. Without notice to them, Rosario and Joanne were prevented from
taking part in the adoption proceedings which constitute extrinsic fraud which would warrant
the annulment of the decree of adoption. (In this case, the counsel of petitioners was Atty.
Rene Saguisag).

PARENTAL AUTHORITY

Case: Bernardina P. Bartolome vs. SSS and Scanmar Maritime Services, Inc.,
G.R. No. 192531, November 12, 2014.

Facts: John Colcol, a single seafarer, while on board a foreign vessel, met an accident
resulting in his untimely death in 2008. Being an SSS member, Bernardina, his biological
mother, filed a claim for death benefits under the Employees Compensation Program (ECP)
with SSS. It was denied. The denial was based on the fact that John was legally adopted by
Cornelio Colcol, his great grandfather. But, the latter died while John was still a minor. SSS
contended that Bernardina ceased to be a beneficiary of John as she is no longer her legitimate
parents and a dependent parent due to adoption of John. Is the denial of the claim proper?

Answer: No. Upon the death of the adopter during the minority of the adopted, parental
authority and legal custody of the adopted is reverted back to the biological parents of the
latter, applying by analogy Sec. 20 of Republic Act No. 8552 (Domestic Adoption Act). Thus,
Bernardina, as the sole remaining heir of John is entitled to receive the death claim under ECP
as a dependent parent as defined under Article 167(j) of the Labor Code. It bears stressing that
dependent parent does not only refer to legitimate parents but it includes all parents, whether
legitimate or illegitimate, and whether by nature or by adoption, who are in need of support
and assistance.

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Liability of Parents on the criminal acts/torts committed by the minor in their
custody. Cite cases.

Parents and other persons exercising parental authority (e.g. judicial

guardians) are PRIMARILY LIABLE for liability of minors under their parental
authority, in the following instances:

• For quasi-delicts, where the minor is living in their company at the time
of its commission and they failed to exercise all the diligence of a good
father of a family to prevent such damage (Art. 221, Family Code);

• For civil liability for a crime committed by a child 15 years of age and
below under their legal authority and control, though exempt from
criminal liability, but there was a finding of fault or negligence on their
part. (Sec. 6 of RA 9344 in relation to Art. 101, RPC);

• For civil liability for a crime committed by a child above 15 but below 18
years of age living in their company and who acted with discernment,
though exempt from criminal liability. (Sec. 6 of RA 9344 in relation to
Art. 101, RPC)

Also, parents and other persons exercising parental authority are

SUBSIDIARILY LIABLE to quasi-delicts committed by a minor while he/she is under
special parental authority of the school, its administrators and teachers or
individual, entity or institution engaged in child care, and the latter is
PRIMARILY and SOLIDARILY LIABLE, in case such was committed during an
authorized activity, whether inside or outside of the school, entity or institution.

• Liability of persons who has special parental authority over the minor. In
St. Joseph’s College vs. Miranda, G.R. No. 182353, June 29, 2010, the SC
affirmed the valid exercise by the school and the teachers over minor
children while under their supervision.

• Agreement of separated spouses as to the custody of the minor is upheld

to be valid. (Separate Opinion of Justice Abad in Dacasin vs. Dacasin, G.R.
No. 168785, February 5, 2010 whereby mutual agreement of separated

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 parents to have some form of joint authority over their children of tender
age was uphold and cannot be regarded as illegal or contrary to public
policy. Here, separated parents were allowed to voluntarily agree on a
child custody arrangement other than sole maternal custody.)

Case: Infant Julian Yusay Caram rep. by Ma. Christina Yusay Caram vs. Atty.
Marijoy D. Segui, et.al., G.R. No. 193652, August 5, 2014.

Facts: Christina had an amorous relationship with Marcelino Constantino III and became
pregnant without the benefit of marriage. After getting pregnant, she misled Marcelino that
she had an abortion when in truth, she completed the term of her pregnancy and gave birth to
Julian on July 29, 2009. While still pregnant, she intended to have her child be adopted
through Sun and Moon Home for Children, and in fact the latter shouldered all the hospital and
medical expenses of Christina’s delivery. Two weeks after delivery, Christina voluntarily
surrendered Julian by way of a Deed of Voluntary Commitment to the DSWD.

On November 26, 2009, Marcelino died and during the wake, Christina disclosed to
Marcelino’s family that she had a son with him and gave her up for adoption due to financial
problems and embarrassment. Sympathizing with Christina, Marcelino’s family promised her to
raise the baby.

Meanwhile, the DSWD declared Julian as legally available for adoption and was matched
with Spouses Medina. Supervised trial custody was, then, commenced. Efforts were exerted
by Christina and Marcelino’s family to derail the adoption process and recovery of custody of
the child but to no avail. Hence, a petition for issuance of a writ of amparo was filed
envisioned to recover the custody of Baby Julian as it is tantamount to “forced separation”
violative of the right to life, liberty and security of the latter. Will the petition prosper?

Answer: No. The petition for issuance of a writ of amparo is a wrong remedy to recover
custody of a child. The issuance of a writ of amparo is true only in cases of extra-judicial killings
and forced disappearance which is not the case obtaining. In fact, pursuant to the Rule on
Custody of Minors and Writ of Habeas Corpus in relation to Custody of Minors, a writ for
issuance of the writ of habeas corpus should have been filed.

• The parents, as legal guardians of the property of their minor children, do

not have the power to dispose or encumber the property of the latter,
such power is granted by law only to a judicial guardian of the ward’s
property and even then, only with the court’s prior approval secured in an
appropriate proceedings. Rule 95 of the Rules of Court requires court
authorization for the sale or encumbrance of properties belonging to the

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 ward. Hence, a guardian has no authority to sell real estate of his ward
merely by reason of his general powers, and in the absence of any special
authority to sell conferred by will, statute or order of the court. A sale of
the ward’s realty by the guardian without authority of the court is void.

But, in case of lease of the minor’s property, parents may validly lease
the same without court authorization because lease is merely considered an act
of administration. However, if the lease is to be recorded in the Registry of
Property, the same can be done only after obtaining court authorization. The
same rule applies if the lease is for a period of more than one (1) year because
this is already deemed an act of dominion or ownership.

PARENTAL AND FILIAL PRIVILEGE (Art. 215, Family Code)

As a rule, a descendant cannot be compelled to testify in criminal cases

against his parents and grandparents except when the testimony is indispensable
in a crime against the descendant or by one parent against the other. In other
words, this privilege is not absolute since the descendant can be compelled to
testify against the parents and grandparents when the testimony is indispensable
in a crime against the descendant or by one parent against the other. But, the
person concerned can waive the privilege by choosing to testify against his
relatives. He cannot be compelled to testify, but he may choose to testify.

Take note, however, that under Sec. 25, Rule 130 of the Rules of Court, a
person may not be compelled to testify against his parents, other direct
ascendants, children or other direct descendants in both criminal as well as civil
cases filed against these persons. But just the same, said person can waive the
privilege by choosing to testify against his relatives. He cannot be compelled to
testify, but he may choose to testify.

Case: Emma K. Lee, Petitioner vs. Court of Appeals, et.al., G.R. No. 177861,
July 13, 2010 where the issue of filial privilege was, again, the subject of a ruling
by the SC in a Petition for Cancellation and Correction of Entries in the Record of
Birth of Emma K. Lee.

Facts: Sps. Lee Tek Sheng and Keh Shiok Cheng came to the Philippines as Chinese immigrants
in 1930. They begot eleven (11) children. In 1948, Lee brought a young lady named Tiu Chan

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as a housemaid, but later they had an illicit relationship. They allegedly had eight (8) children,
but these children of Tin Chuan claimed that they were also the children of the spouses Lee and
Keh, after their respective deaths. This controversy prompted the children of Keh to request
the NBI for the conduct of an investigation as to the true mother of the second set of children
of Lee.

Based on the NBI investigation, the first set of children petitioned for the correction of
entry of petitioner in order to reflect therein the name of her true mother Tiu Chan and not Keh
Shiok Cheng. Pending adjudication, the first set of children of Lee requested for the issuance of
subpoena ad testificandum to compel Tiu Chan to appear and testify. Tiu vigorously moved to
quash the subpoena for being unreasonable and oppressive being violative of the rule on
parental/filial privilege, she being the stepmother of Emma and it will compel her to admit that
she is the mother of Emma K. Lee. Is the invocation of filial privilege proper?

Answer: No, such invocation of filial privilege rule is misplaced. Considering that she claimed to
be the stepmother only of petitioner, such privilege does not apply to her because the rule
applies only to direct ascendants and descendants, a family tie connected by a common
ancestry. A stepdaughter has no common ancestry by her stepmother pursuant to Article 965
of the NCC. Therefore, Tiu can be compelled to testify against petitioner.

LAW ON PROPERTY

Definition/ Requisites

In order to be considered as property, a thing must satisfy the following

requisites, as follows, (a) utility, (b) individuality and, (c) susceptibility of being
appropriated.

Be sure to at least understand the importance of classifying properties into

immovable or real property and movable or personal property. There are six (6)
known reasons. Like in acquisitive prescription, as object of the accessory
contracts of chattel mortgage or real estate mortgage, as to formal requirements
in donation, in extra-judicial deposit, in criminal law, and in procedural law with
regards to venue of actions.

For your purpose, do not enter the Bar examination room without
memorizing in toto Article 415, 416 and 417 of the New Civil Code just as I
reminded you during your study on the Law on Property. Article 415 gives us the
enumeration of what are those classified as immovable properties and Article 416

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and 417 gives us the enumerations of what are those considered as movable
properties.

In your study of the Law on Property, you have known that immovable
properties are of four (4) classes, namely, immovable by nature, by
incorporation, by destination, and by analogy. Take note of the elements or
requisites for it to be classified as such. Say for instance, in paragraph 3 of
Article 415 of the NCC, by its true nature, these objects are movables but it
becomes immovable, having been placed in a fixed manner in another
immovable and in such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object. There is that degree of
permanence in attaching the object to an immovable, such that, if that movable
be detached, removed or separated, it will cause material injury or deterioration
either to that movable object itself or to the immovable to where it is attached or
incorporated. Also, in paragraph 4 of the same Article, by its nature likewise,
these things are movable properties, but to be classified as immovable, they
must be placed in buildings or on lands by the owner of the immovable or by his
agent, and that the attachment must be intended to be permanent. If you will
not study carefully the requisites of paragraphs 3 and 4 of Article 415, it seems
that they are more or less similar in nature, but it is not. There distinctions lies in
that, (1) in par. 4, the incorporation must be made by the owner either
personally or through his agent, while in par. 3, it is immaterial as to who makes
or introduced the incorporation; (2) the incorporation in par. 3 must be such that
separation is not possible, while in par. 4, separation is possible without
deterioration of the immovable or destruction of the material.

Be careful with a problem involving a factual backdrop where a floating

flatform anchored offshore is the description of the property and the examinee is
asked whether the same is immovable or movable property. This is because, in
one Bar examination, the examiners are divided as to the correct answer to the
question, one group suggested that it is immovable and the other suggested that
it is movable depending on its reasoning or justification. Take note of Art. 415(9)
which provides that “docks and structures which, though floating, are intended
by their nature and object to remain at a fixed place on a river, lake or coast”,
moving as it is yet the same is considered immovable property.

Bar Question:

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 Manila Petroleum Co. owned and operated a petroleum operation facility
off the coast of Manila. The facility was located on a floating platform made of
wood and metal, upon which was permanently attached the heavy equipment
for the petroleum operations and living quarters of the crew. The floating
platform likewise contained a garden area, where trees, plants and flowers were
planted. The platform was tethered to a ship, the M/V 101, which was anchored
to the seabed.

• Is the platform movable or immovable property?

• Are the equipment and living quarters movable or immovable property?
• Are the trees, plants and flowers movable or immovable property?

Please briefly give the reason for your answers.

Suggested Answers:

• The platform is an immovable property under Art. 415(9) of the NCC which
provides that “docks and structures which, though floating, are intended
by their nature and object to remain at a fixed place on a river, lake or
coast.” Since the floating platform is a petroleum facility, it is intended to
remain permanently where it is situated, even if it is tethered to a ship
which is anchored to the seabed.

Alternative Answer:

• The platform is a movable property because it is attached to a movable

property, i.e. the vessel which was merely anchored to the seabed. The
fact that the vessel is merely anchored to the seabed only shows that it is
not intended to remain at a fixed place, hence, it remains a movable
property. If the intention was to make the platform stay permanently
where it was moored, it would not have been tethered to a vessel but itself
anchored to the seabed.

The answers to (b) and (c) depends on the answer adopted by the examinee
in his answer in letter (a).

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 Also, the fact that the machineries are heavy, bolted or cemented on the
real property, for example, does not make them ipso facto immovable under
par. 3 of Art. 415. As between the parties, their intent has to be looked into.
Thus, if the parties treat the machinery as chattels, they are bound by their
agreement under the principle of estoppel notwithstanding the fact that the
machinery may have been attached to an immovable in a fixed manner and may
not be separated there from without breaking the material or deterioration of the
object to which it is attached.

Case: Serg’s Products Inc. and Sergio T. Goquiolay vs. PCI Leasing and Finance,
Inc., G.R. 137705, August 22, 2000.

Facts: Sergio, proprietor of Serg’s Products, Inc. , entered a Lease Agreement with PCI Leasing
subject of which are the machineries principally used in their chocolate factory business,
whereby it was stipulated in their Agreement that “the property is, shall at all times be and
remain, personal property notwithstanding that the property or any part thereof may be, or
hereafter become, in any manner affixed or installed to or embedded in real property”. For
failure to pay rentals, PCI Leasing filed a collection suit against Sergio and prayed for issuance
of writ of replevin over the subject machineries. Sergio vigorously opposed the issuance of the
writ seizure arguing that the machineries became an immovable property by destination, thus,
not subject of a replevin writ. However, such contention was brushed aside by the SC which
pronounced that “after agreeing to a contract stipulating that a real or immovable property be
considered as personal or movable, a party is estopped from subsequently claiming otherwise.
Hence, such property is a proper subject of a writ of replevin obtained by the other contracting
party.”

Paragraph 5 of Article 415 requires important requisites in order that the

machinery, receptacles, instruments or implements may be classified as an
immovable. These properties mentioned in paragraph 5 are essentially movables
by its true nature, but by reason of their purpose, it being destined for use in
the industry or work in the tenement, they are converted into real properties.
Thus, in order to be immobilized under this paragraph, the following requisites
must concur: (1) they must be machinery, receptacles, instruments or
implements; (2) they must be placed by the owner of the tenement or by his
agent; (3) there must be an industry or work carried in such building or on the
piece of land; and (4) they must tend directly to meet the needs of said industry
or work. For your purpose, be sure to memorize and be acquainted with these
requisites.

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 First, take note of the enumerated items e.g. machinery, receptacles,
instruments or implements, such that if the thing is not among the items
enumerated, paragraph 5 of Art. 415 will not be applicable following the principle
in statutory construction that “those not included are deemed excluded”.

Second, these items are essentially movable by nature and becomes

immobilized when placed by the owner of the tenement, property or plant, but
not so when placed by tenant, usufructuary, or any other person having only a
temporary right, unless such person acted as the agent of the owner. Hence, if
the machinery, receptacles, instruments or implements are not placed by the
owner of the tenement or by his agent, but by the lessee, these properties
remain as movables and are not converted into real properties. An exception will
arise, however, if in the contract of lease, it is stipulated that such machinery,
receptacles, instruments or implements placed there by the lessee will become,
at the termination of the lease, the property of the lessor for in that case they
will be considered as immovable property since in placing them the lessee will
just be merely acting as an agent of the lessor.

Third, take note also that these properties mentioned in paragraph 5 are
immovable by destination and they are converted into real properties by reason
of their purpose, not by reason of their attachment to an immovable.

Fourth, before movables may be deemed immobilized in contemplation of

paragraph 5, it is necessary that they must be “essential” and “principal”
elements in the industry or works without which such industry or works would be
unable to function or carry on the industrial purpose for which it was established.
Hence, you must know how to distinguish those movables which will become
immobilized by destination because they are essential and principal elements in
the industry from those which may not be so considered immobilized because
they are merely incidental, not essential or principal, to the industry undertaken.
Examples of this are, machineries of breweries used in the manufacture of liquor
and softdrinks, though movable in nature, are immobilized because they are
essential to aid industries, but the delivery trucks, forklifts, typewriters, and
adding machines which they usually own and use and are found within their
industrial compounds are merely incidentals and retain their movable nature.

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 And lastly, aside from the element of essentiality, it is also required that
the industry or works be carried on in a building or on a piece of land, not
somewhere else.

Thus, in the very old case of Ago vs. Court of Appeals, 6 SCRA 360 (1962)
where the Court held that by the installation of the sawmill machineries in the
building of the Golden Pacific Sawmill, Inc., for use in the sawing of logs carried
on in said building, the same became a necessary and permanent part of the
building or real estate on which the same was constructed, converting the said
machineries and equipments into real estate within the meaning of Article 415(5)
of the NCC. Hence, the lack of notice of publication in a newspaper for the
purported sale in execution made such proceeding void as required in the rules
on execution sale of real property.

However, for the purpose of real property taxation, there is a twist in the
requisites for machineries to be considered as realty especially under the Local
Government Code of 1991. What is important is that such machinery must be
essential or necessary to the operation of the business or industry. If so, it is
classified as realty subject to real property tax, even if the other requirements of
paragraph 5 of Article 415 of the NCC may not be present.

With respect to movable or personal property, all properties or things that

can be transported from one place to another and not included in the
enumeration in Article 415 are considered as such. In other words, you ought to
know what are these immovable properties because those that are not included
in the enumeration are considered movables. Though, in Articles 416 and 417,
there are certain properties that are expressly declared as personal property like
forces of nature brought under the control of science, shares of stocks,
obligations and actions which have for their object movables or demandable sums
and others.

In HPS Software and Communication Corp. et.al. vs. PLDT, et.al., G.R. No.
170217, December 10, 2012, interest in business was declared to be personal
property since it is capable of appropriation and not included in the enumeration
of real properties. Same is true with business which is not enumerated as
personal property but can be appropriated and not included in the enumeration
of real properties. This being the case, the business of providing

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telecommunications or telephone service is likewise a personal property which
can be the object of theft under Article 308 of the RPC. This ruling is a reiteration
of the ruling in Luis Marcos Laurel vs. People and Judge Abrogar, et.al. G.R. No.
155076, January 13, 2009.

Also, enhance your understanding on the nature of the properties classified

as of public dominion. By knowing its basic characteristics, you can answer any
question in the Bar pertaining to lands of public dominion. Its basic
characteristics are as follows, (a) outside the commerce of man, (b) not
susceptible to private appropriation, (c) not subject to acquisitive prescription,
(d) not subject to levy, attachment or execution, (e) cannot be burdened by any
voluntary easements. Be reminded that in order to be classified as property of
public dominion, an intention to devote it to public use or to public service is
sufficient and it is not necessary that it must actually be used as such.

Case: Manila Lodge No. 761 vs. Court of Appeals , CA G.R. No. L-41001
September 30, 1976 73 SCRA 162 (1976) where the SC held that the reclaimed
area intended for extension of the Luneta Park shall retain the character of the
old Luneta Park, thus, cannot be disposed of as it is a part of public domain and
for public use. Even if there was no improvement yet upon the subject property
is of no moment, the intention for the use of such area will suffice to vest of its
public use purpose.

2012 Bar examination (MCQ #43)

43. The following things are property of public dominion except:

(a) Ports and bridges constructed by the State;

(b) Vehicles and weapons of the Armed Forces of the Philippines;
(c) Rivers;
(d) Lands reclaimed by the State from the sea.

Would you mind to try what is the correct answer?

While property of public dominion are inalienable and are not subject to
levy, encumbrance or disposition, are patrimonial properties of the State also of
the same nature and classification? Answer: No, because patrimonial properties

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of the State can be alienated or encumbered subject to existing rules and
regulations. These are the kind of properties that the State is holding just like a
private individual or entity.

Be particular on the conversion of property of public dominion to

patrimonial property. Thus, in order to convert property of public dominion into
patrimonial property, there must be an affirmative act, either on the part of the
executive or legislative, to reclassify property of public dominion into
patrimonial. The intention to reclassify must be clear, definite and must be
based on correct legal premise. Hence, the conversion can no longer be inferred
from the non-use alone of the property for the purpose to which it is intended.
This was the case pertaining to the aborted sale of the Roponggi property in Japan
under the Cory Administration.

Case: Salvador H. Laurel vs. Ramon Garcia, et.al. , G.R. No. 92013, 208 SCRA
404 (1992).

Facts: Subject property is one of the four (4) properties in Japan acquired by the Philippine
government under the 1956 Reparations Agreement sort of indemnity payment to the
Philippines brought about by the damage caused by the Japanese government during the World
War II. Under the said agreement, the Roponggi property was specifically designated to house
the Philippine Embassy in Japan. As such, the nature of the Roponggi lot as property for public
service is expressly spelled out in the said agreement. Thus, the sale of the property by the
Aquino Administration was declared invalid because as property of public dominion, such lot is
outside the commerce of men and cannot be alienated.

2012 Bar examination (MCQ #44)

44. Which of the following statement is wrong:

1. Patrimonial property of the State when no longer needed for public use or
for public service shall become property of public dominion;
2. All properties of the State which is not of public dominion, is patrimonial
property;
3. The properties of provinces, cities and municipalities is divided into
property for public use and patrimonial property;
4. Property is either of public dominion or of private ownership.

What is the correct answer? (1)

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 With respect to reclaimed areas, before, it is only the National
Government that can undertake reclamation work and assert title to reclaimed
land. It was only upon the passage of Republic Act No. 1899 that Congress
granted to chartered cities and municipalities a general authority to reclaim
foreshore lands bordering their respective territories. Republic Act No. 7160
otherwise known as “The Local Government Code of 1991” likewise empowers
LGU’s to undertake reclamation projects by themselves or through private
contractors.

Case: Frank Chavez vs. Public Estate Authority 403 SCRA 1

Facts: Republic Act No. 1899 was the basis in invalidating the controversial PEA-Amari deal by
the Supreme Court because the reclamation project involved submerged lands and not a
foreshore land. In this case, the Public Estate Authority (PEA) entered into a joint venture
agreement with Amari Coastal Bay Development Corp. (Amari) obligating itself to convey title
and possession over 750 hectares of land, 592 hectares of which are still submerged lands or
under the waters of Manila Bay. In its ruling, the Supreme Court held that submerged lands,
like the waters above it, are part of the inalienable natural resources of the State, hence,
outside the commerce of man.

OWNERSHIP

In ownership, you ought to familiarize yourself with the different attributes

of ownership. These are the right to enjoy which includes jus fruendi, jus
possidendi, jus utendi and jus abutendi, the right to dispose and the right to
recover, the right to exclude others from the property, the right to enclose or
fence it, the right to the surface, sub-surface and airspace above the land, the
right to hidden treasure and the right to its accession.

One of the most important attributes of ownership is the right to recover

the moment he is deprived of its possession (jus possidendi). The owner is
entitled to the exclusive possession of his property. For this purpose, he may
exclude any person from the enjoyment and disposal thereof by force, if
necessary, and he may also enclose or fence his property by any means. In the
event, however, that the possessor is unlawfully deprived of possession, he is
not justified to take the law into his own hands. Instead, he is required to resort
to the proper legal processes for the purpose of obtaining recovery of its
possession. This principle is embodied in Article 433 of the New Civil Code which
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directs the true owner to resort to judicial processes for the recovery of the
property. Article 536 of the same Code likewise suggests the same course of
action for owners of property whenever they are deprived of its possession.

Thus, in Heirs of Pedro Laurora, et.al. vs. Sterling Technopark III, G.R. No.
146815, April 9, 2003, the SC held that the owners of a property have no
authority to use force and violence to eject alleged usurpers who were in prior
physical possession of it. They must resort to judicial processes to recover
possession.

Since owners of property are directed to resort to judicial action, what are
these actions to recover possession of real property. Under existing laws and
jurisprudence, there are three kinds of actions available to recover possession of
real property; (a) accion interdictal; (b) accion publiciana; and (c) accion
reivindicatoria. For the recovery of possession of personal property, the available
remedy is called replevin.

Accion interdictal or ejectment suit comprises two (2) distinct causes of

action, namely, forcible entry and unlawful detainer. Forcible entry is a
summary action to recover material or physical possession of real property when
the person who originally held it was deprived of possession by force,
intimidation, threat, strategy or stealth. It is “summary” because there is no
more trial, litigants are no longer allowed to present witnesses in the witness
stand, instead, position papers will be submitted by them attaching thereto the
affidavits of their witnesses and documentary evidences. This will expedite the
early resolution of the controversy and courts are directed to render judgment
within thirty (30) days from the submission of position papers. An action for
unlawful detainer, on the other hand, is also a summary action and may be filed
when possession by a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or
implied.

Question: Differentiate forcible entry suit from unlawful detainer.

To fully understand these two (2) concepts of ejectment suit, it is better to

differentiate them. First, their main difference lies in the time when possession

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became unlawful, such that in forcible entry, the possession by the defendant is
unlawful ab initio or from the very beginning because he acquires possession by
force, intimidation, threat, strategy or stealth, while in unlawful detainer,
possession is originally lawful but becomes illegal by reason of the termination of
his right of possession under his contract with the plaintiff having expired already.
Second, in an action for forcible entry, the plaintiff must allege and prove that he
was in prior physical possession of the premises until he was deprived thereof,
while in unlawful detainer, the plaintiff need not have been in prior physical
possession of the premises. For instance, in lease contract, the lessee is in
physical possession of the premises during the term of the lease. However, upon
the end of the lease period, the lessee must vacate and turn over possession
thereof to the lessor-owner unless the lease period is extended. If the lessee will
not vacate, the lessor may institute an unlawful detainer suit to recover its
possession. Or the vendor, who is an unpaid seller, may seek to obtain
possession of the thing sold, by filing a detainer suit. Third, the one-year period
within which to bring an action for forcible entry is counted from the date of
actual entry on the land, except when the entry was made through stealth, that
the one year period is counted from the time the plaintiff learned thereof. In
unlawful detainer, however, the one year period is counted from the date of the
last demand directing defendant to vacate. Such that, for unlawful detainer to
arise, the plaintiff must first make such demand for defendant to vacate or turn-
over its possession to him. This demand, therefore, is jurisdictional in nature.
(Del Rosario vs. Gerry Roxas Foundation, Inc., G.R. No. 170575, June 8, 2010).

Cases:

(1) Marcela M. de la Cruz vs. Sps. Antonio and Remedios Hermano, G.R. No.
160914, March 25, 2015

Facts: As registered owners, Sps. Hermano filed a forcible entry case against Marcela on June
2002. It was alleged that Marcela occupied the house and lot in Tagaytay City since March
2001 pursuant to an agreement with one Don Mario Enciso Benetiz, but without the consent
and authority of the Hermano’s. The fact is, Hermano executed a Deed of Sale in favor of
Benitez on condition that the latter will broker the conveyance of Hermano’s other property.
However, without complying with the condition, Benitez sold subject house and lot to
Marcela who immediately took possession of the same. Under these facts, will an action for
forcible entry prosper?

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 Answer: No, because Hermano failed to prove that they were in physical or material
possession of the subject property. In this case, Hermano submitted their title and tax
declarations covering subject property to prove better right of possession. These documents
are not sufficient to establish priority in possession. While it is true that ownership carries the
right of possession, but the possession contemplated is not the same as that which is in issue
in a forcible entry case. Possession in a forcible entry suit refers only to possession de facto or
actual or material possession, and not one flowing out of ownership. Here, the evidences
presented were merely proof of possession in the concept of an owner and it does not prove
prior possession. Thus, for failure to prove prior possession, Hermano’s action is doomed to
fail and Marcela must remain in possession of subject house and lot until a person with a
better right lawfully causes eviction.

(2) Nenita Quality Foods Corp. vs. Crisostomo Galabo, et.al. G.R. No.
174191, January 24, 2013.

Facts: Donato Galabo, predecessor-in interest of Crisostomo, acquired Lot No. 722 Cad. 102,
a portion of Arakaki Plantation, Toril, Davao, from National Abaca Corp. Believing that Lot No.
102 was included in his acquisition, he also occupied and cultivate the same and built his house
within said lot. Subsequently, Donato received a notice to vacate from one Santos Nantin who
claimed as its owner after it acquired from Galabo which the latter denied. In fact, a free
patent was already issued in Santos’ favor. Santos, in turn, sold his rights over subject
property to Nenita Foods. Thus, Nenita Foods, with armed policemen, forcibly entered and
fenced subject property. Galabo filed a forcible entry case against Nenita Foods. Will the
ejectment suit prosper?

Answer: Yes because Galabo was able to prove his priority in possession of the subject
property. In forcible entry, a party who can prove prior possession can recover such
possession even against the owner himself. Whatever may be the character of his possession,
if he has in his favor prior possession in time, he has the security that entitles him to remain in
the property unti a person with better right lawfully ejects him. He cannot be ejected by force,
violence or terror- not even by its owners.

2014 Bar Question No. XVIII

Spouses Magtanggol managed and operated a gasoline station on a 1,000

square meter lot which they leased from Francisco Bigla-awa. The contract was
for a period of three (3) years. When the contract expired, Francisco asked the
spouses to peacefully vacate the premises. The spouses ignored the demand and
continued with the operation of the gasoline station.

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 One month later, Francisco, with the aid of a group of armed men, caused
the closure of the gasoline station by constructing fences around it.

Was the act of Francisco and his men lawful? Why? (4%)

(3) Anita Monasterio-Pe et.al. vs. Jose Juan Tong, et.al. G.R. No. 151369,
March 23, 2011

Facts: On December 1, 1999, Tong, as its registered owner, send a notice to vacate to Anita
and other occupants of his house and lot located at Brgy. Kauswagan, Iloilo City claiming that
the latter were occupying the premises upon his tolerance. Thus, a forcible entry case was
filed on March 20, 2000. In their Answer, Anita countered that Tong is not the true owner of
the subject lot but acted as a dummy only because the true owner is disqualified to own lands
in the Philippines. It also alleged that the one-year period for the filing of an ejectment suit has
already lapsed, because they had been in occupation of the subject house for several years
already. Is the action already prescribed?

Answer: No, Anita and other occupants were occupying the subject property by mere
tolerance of Tong. While tolerance is lawful, such possession becomes illegal upon demand to
vacate by the owner and the possessor by tolerance refuses to comply with such demand, like
what Anita did. A person who occupies the land of another at the latter’s tolerance or
permission, without any contract between them, is necessarily bound by an implied promise
that he will vacate upon demand, failing which, a summary action for ejectment is the proper
remedy against him. Thus, Tong filed the case on March 29, 2000 which was less than one
year from December 1, 1999, the date of formal demand. Hence, it is clear that the action
was filed within one year period prescribed for filing an ejectment or unlawful detainer case.

(4) Del Rosario vs. Gerry Roxas Foundation, Inc., G.R. No. 170575, June 8,
2010

Facts: Sometime in 1991, GRF took possession and control of a titled property in the name of
del Rosario. Their occupation was by virtue of a MOA with the City of Roxas. On March 2003,
del Rosario sent a notice to vacate to GRF contending that its occupation is without their
consent and authority. Since GRF did not vacate, del Rosario filed an unlawful detainer suit
against GRF. In their Complaint, del Rosario alleged that while they were aware of the
possession of the premises sans any contractual relations, it allowed to continuously occupy
the same upon their tolerance. The fact that a notice to vacate was already sent to GRF, del
Rosario claimed that they can validly institute a detainer suit against GRF. Is del Rosario
correct?

Answer: No. The fact that GRF occupied the premises without the consent and authority of del
Rosario, the former’s entry is characterized as unlawful from the very beginning, thus, a

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forcible entry case is the proper remedy not a detainer suit. The filing of the case beyond the
one year period since GRF occupied the premises in 1991 is fatal to the cause of del Rosario.
What determines the nature of the action as well as which court has jurisdiction over it are the
allegations of the complaint and the character of the relief sought. The act of going on the
property and excluding lawful possessor therefrom necessarily implies the exertion of force
over the property, providing a ground for a suit of forcible entry.

To reiterate, where the issue is possession de facto, accion interdictal is the

correct remedy but if the issue to be resolved is who is the true owner of the
property or recovery of ownership, the appropriate action to be filed is accion
reinvindicatoria. But to successfully maintain this action, Article 434 gives us two
(2) conditions; first, the person who claims a better right must prove the identity
of the property claimed, and second, he must prove his title to the land. In short,
the burden of proving these facts is upon the person who asserts ownership of
the property as against the actual possessor thereof.

If the plaintiff is unable to prove any of the foregoing requisites, his action
will fail even if the defendant cannot prove his title to the property. In an action
to recover real property, the settled rule is that the plaintiff must rely on the
strength of his title, not on the weakness of the defendant’s title. This
requirement is based on two (2) reasons: first, it is possible that neither the
plaintiff nor the defendant is the true owner of the property in dispute, and
second, the burden of proof lies on the party who substantially asserts the
affirmative of an issue for he who relies the existence of a fact should be called
upon to prove that fact. Failure on the part of the plaintiff to prove his right of
ownership will bar an action to recover the property; his right to property must
be founded on positive title or right and not merely on negative ones, such as the
lack or insufficiency of title on the part of the defendant. To reiterate, the
possessor has a presumption of title, and unless the plaintiff proves he has a
better right, he cannot recover the property from the defendant.

Case: Modesto Palali vs. Juliet Awisan represented by Gregorio Awisan, G.R.
No. 158385, February 12, 2010 where the SC reiterated the rule that “a person
occupying a parcel of land, by himself or through his predecessor-in-interest,
enjoys the presumption of ownership. Anyone who desires to remove him from
the property must overcome this presumption by relying solely on the strength of
his claim rather than on the weakness of the defense.”

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 Another attribute of ownership worth discussing is the doctrine of self-help
and the doctrine of state of necessity because these are constant subject matter
in every Bar examination.

The “doctrine of self-help” partakes of a situation where the owner of a

property, in the exercise of his right of exclusive enjoyment and control over it,
may exclude any person from its enjoyment and disposal, that he is allowed to
use such force as may be reasonably necessary to repel or prevent an actual or
threatened unlawful physical invasion or usurpation of his property. This doctrine
is akin to defense of property. On the other hand, the “doctrine of state of
necessity” in property refer to a situation where interference by third person in
the enjoyment of the property by the owner is justified and cannot be prevented
by the latter if such interference is necessary to avert an imminent danger and
the threatened damage compared to the damage arising to the owner from the
interference, is much greater.

Hence, the doctrine of self-help is invoked by the owner or lawful

possessor in the protection of his right to prevent other person from interfering
with the property. Conversely, the state of necessity is availed of by another
person against someone else’s property for the purpose of averting an imminent
danger to himself or to another person or to their property. Therefore, if the
application of one doctrine is proper, it necessarily follows that the application of
the other doctrine is not proper.

In the 2014 Bar examination, I was not expecting that the right of the owner
to the hidden treasure will be asked. In fact, this was Number 16 question in the
the Bar.

2014 Bar Examination Question No. 16

A congregation for religious women by way of commodatum, is using the

real property owned and registered in the name of Spouses Manuel as a retreat
house.

Maria, a helper of the congregation, discovered a chest in the backyard.

When she opened the chest, it contained several pieces of jewelry and money.

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 a. Can the chest containing pieces of jewelry and money be considered as
hidden treasure?
b. Who has the right to claim ownership of it? (4%).

Anybody who will try to answer this question? If you will be able to guess
the correct answer, plus one (1) point in the result of the quiz this morning.

Since the owner of the land is likewise the owner of its sub-surface or sub-
soil, any “hidden treasure” on the sub-surface also belongs to him. The same
rule applies if the “hidden treasure” is located on a building or other property, its
ownership belong to the owner of the building or owner of the other property on
which it is found. However, when the discovery is made by a stranger who is not
a trespasser and the discovery is by chance, the finder is entitled to one-half of
the treasure. If the finder is a trespasser, he shall not be entitled to any share of
the treasure.

Question: What is the concept of “hidden treasure”?

Answer: For legal purposes, “hidden treasure” is understood to be any hidden

and unknown deposit of money, jewelry or other precious objects, the lawful
ownership of which does not appear. Hence, for a property to be considered as
hidden, the following requisites must be satisfied: (1) the deposit of money,
jewelry or other precious objects must be hidden or unknown; (2) the lawful
ownership of which does not appear.

Under the ejusdem generis rule, the “other precious objects” should be
understood as being similar to money or jewelry. Hence, the concept does not
include natural wealth, like minerals and petroleum. Under the Regalian
doctrine, ownership is reserve to the State all natural wealth that may be found
in the bowels of the earth even if the land where the discovery is made be
privately owned. As such, the right of the owner of the land with respect to the
sub-surface or sub-soil is limited by the application of the Regalian doctrine.

Question: What is the rule on ownership with respect to “hidden treasure”?

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 If the finder of the hidden treasure is the owner of the land, building or
property on which it is found, the treasure shall belong to him. If the finder is a
third person, he is entitled to one-half of the treasure if he is not a trespasser and
the discovery of the treasure is only by chance, otherwise, he shall not be
entitled. The same rule shall apply even if the land belongs to the State.
However, if the thing found be of interest to science or the arts, like artifacts or
archaeological remains, the State may acquire them by paying just price whether
the finder of the treasure is the owner of the property on which it is found or a
third person. This rule is in accordance with Article 438 of the NCC.

Take note that the provisions of Article 438 on “hidden treasure” shall apply
only if the discovery of the treasure is by chance. If the search for the hidden
treasure is deliberate or intentional, otherwise known as “treasure hunting”,
such activity is governed by Republic Act No. 8492 otherwise known as the
“National Museum Act of 1998” if it pertains to discovery/recovery of hidden
treasures, shipwrecks/sunken vessels recovery exclusively for materials of
cultural and historical values. If such discovery does not pertain to materials of
cultural or historical values, it is governed by DENR Administrative Order No.
2002-04 as amended by DENR AO No. 2004-2003 in relation to Executive Order
No. 35 dated September 15, 2001. Hence, there is a need to secure first a
government permit before one can start in his treasure hunting operation. The
moment the permitee was able to find treasure out of his operation, the net
proceeds shall be divided in the following sharing: (a) if the treasure was found
on the land belonging to the government, 75% for the government and 25% for
the permit holder; if the treasure was found on a private land, 30% for the
government and 70% for the permit holder and land owner; and should it be a
sunken vessel/shipwrecks that was salvage, the sharing is 50% for the
government and 50% for the permit holder.

And of course, the right of accession as an attribute of ownership.

ACCESSION

The right of the owner of a thing to become the owner of everything that is
produced thereby (fruits) or which may be inseparably attached or incorporated
thereto, (add-on), either naturally (without human intervention) or artificially
(with human intervention). Hence, this right is a means of acquiring ownership of

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anything attached or incorporated or added to his property. This is legally
termed as “accession”.

From this concept, understand that if a thing is the fruit of another thing, it
is referred to as “accession discreta”, and if a thing is added to another thing, it is
referred to as “accession continua”, regardless of class of the property, whether
it is immovable or movable.

With respect to the fruits in accession discreta, familiarize yourself with the
three (3) kinds of fruits, natural, industrial and civil fruits especially its distinct
features. While it is true that the fruits belong to the owner of the thing that
produces it, as a general rule, however, there are noted exceptions to this rule,
like usufruct, possessor in good faith, antichresis, and fruits naturally falling
upon adjacent land.

On this score, an important rule in accession discreta is found in Article 443

of the NCC, in a situation where the recipient of the fruits was not the same
person who incurred the expenses in connection with its production, gathering
and preservation. Thus, while it is true that the fruits belong to the owner of the
property and he is entitled to it, however, if that owner is not the one who was
responsible for its production, gathering and preservation, the law imposes upon
him the obligation to pay the expenses made by a third person in their
production, gathering and preservation, even if the possessor of his property is a
possessor in bad faith. It is because the rule on accession is predicated on the
principle that “no one shall unjustly enrich himself at the expense of another”.

In accession continua, on the other hand, it may refer to both immovable

property or movable property. (For easy understanding of the students, better
illustrate it in a schematic diagram). For immovable property it may either be
accession industrial or accession natural. Accession industrial may take the form
of building, planting or sowing while accession natural may either be alluvium,
avulsion, change of course of river and formation of islands. For movable
property, it may either adjunction or conjunction, commixtion or confusion and
specification. Adjunction or conjunction may further takes place by inclusion or
engraftment, soldadura or attachment, tejido or weaving, pintura or painting or
escritura or writing.

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 Most importantly, you will not lose sight in your quest for a correct answer
in the Bar examination whenever a question is asked pertaining to accession
continua, whether immovable or movable property simply by acquainting
yourself with the basic principles governing accession continua. First, that the
union or attachment or the incorporation of two or more things belonging to
different owners to each other and to one another must be such that they cannot
be separated from each other or from one another without causing a substantial
physical or juridical injury to any one, to some or to all of the things involved. If
such separation is possible without injury, their respective owners retain their
ownership without effects on the others. Hence, there is no accession to speak
of. Second, that the accessory follows the principal. Here, with respect to
immovable property, land is always considered as the principal, while in movable
property, you ought to know how the principal thing is to be determined. Third,
that no one shall unjustly enrich himself at the expense of another. Fourth, that
good faith exonerates a person from punitive liability and damages. He who acts
in good faith may be held responsible for his act, but he should not be penalized.
Fifth, that bad faith subjects a person to damages and other unfavorable
consequences. And sixth, that bad faith of one party neutralizes the bad faith of
the other and, therefore, both should be considered as having acted in good
faith. Be sure to familiarize yourself with these very important principles.

As I was saying before, accession industrial is consists of building, planting

or sowing. Accordingly, there are three (3) controversial situations created in
industrial accession. One, building, planting or sowing on one’s own land using
materials belonging to another. There are two (2) personalities here, the
landowner who is likewise the builder, planter or sower and the owner of the
materials. This situation is governed by Art. 447 of the NCC. Two, building,
planting or sowing using his own materials on the land of another. Again, there
are only two (2) personalities that are involved in this situation, the builder,
planter or sower who at the same time the owner of the materials, and the
landowner. This situation is governed by Arts. 448 to 454 of the NCC. And the
third scenario, building, planting or sowing on the land of another using
materials belonging to third persons. Here, there are three (3) personalities
involved, the builder, planter or sower, the landowner, and the owner of the
materials. This situation is governed by Art. 455 in relation to the other articles I
just mentioned. You ought to know under what scenario does the problem given
in the Bar examination in order for you to determine what article is applicable

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because, in these articles lies the legal effects or consequences of the acts of the
personalities involved depending on their good faith and bad faith. In other
words, you must analyze the problem very carefully as to who, of the persons
involved, is in good faith or in bad faith, thus, the following rules:

• If the LO and the BPS who at the same time is the MO, acted in good faith,
governed by Art. 448 of the NCC;
• If the LO acted in GF and the BPS acted in BF, Art. 449-452 of the NCC;
• If the both LO and BPS acted in BF, Art. 448 in relation to Art. 453 of the
NCC;
• If LO acted in BF and BPS acted in GF, Art. 447 in relation to Art. 454 of
the NCC.

A review on jurisprudence on this matter, it normally centers on a situation

where the BPS who is the MO builds, plants or sow in the land of another, were
both of them acted in good faith. Take note of the rights of the parties pertaining
to their respective claims. Let us presume that the builder, planter or sower who
at the same time the owner of the materials and the landowner are both in good
faith, the legal effects are as follows: Since the landowner is the owner of the
principal, the law gives him the options either (1) to appropriate as his own
works, planting or sowing after paying the builder, planter or sower necessary
and useful expenses, and in proper cases, the expenses for pure luxury or mere
pleasure, incurred by the latter, or (2) to oblige the one who built or planted to
pay the price of the land, if the value of the land is not considerably more than
that of the building or trees. If he is a sower, the proper rent. Take note that the
landowner cannot refuse to exercise either option and compel instead the
builder, planter or sower to remove their improvement on his land. The remedy
of remotion is available only if and when the landowner chooses to compel the
builder to buy the land at a reasonable price but the latter fails to pay such price.
The remedy of the BPS is to compel the LO to make a choice or select any option.

Should the landowner chooses option No. 1, the option to appropriate,

the LO must reimburse the BPS the value of the necessary and useful expenses
incurred, and in proper cases, expenses for pure luxury or mere pleasure.
Pending payment of the reimbursement, the builder has right of retention,
meaning, he may remain in possession of the premises without payment of rental

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until he is fully reimbursed of the value of his improvement. Ownership of this
improvement does not pass unto the landowner until after payment of the
indemnity to the builder.

Should the landowner chooses option No. 2, the option to sell the land,
where the price of the land is not considerably more than the value of the
building or trees. Here, in the event the builder or the planter refuses to pay the
price of the land, the LO does not automatically become the owner of the
improvement without paying any indemnity because there will occur unjust
enrichment. The remedy is any of the following, (1) they may voluntarily agree
to assume the relation of lessor and lessee, and in case they disagree as to the
amount of rental, the court may fix the rental. Take note of the nature of their
agreement, voluntary only, because there could be no “forced lease” here
because this remedy of forced lease is available only if the land is considerably
more than the value of the building or trees. (2) the owner of the land is entitled
to have the improvement removed at the expense, of course, of the builder or
planter. In one case, the SC approved the sale of the land and the improvement
in a public auction applying the proceeds first to the value of the land, and the
remainder is given to the builder or planter.

2015 Bar Examination Question No. VII

Mr. and Mrs. X migrated to the US with all their children. As they had no
intention of coming back, they offered their house and lot for sale to their
neighbors, Mr. and Mrs. A (the buyers) who agreed to buy the property for Php8
million. Because Mr. and Mrs. A needed to obtain a loan from a bank first, and
since the sellers were in a hurry to migrate, the latter told the buyers that they
could already occupy the house, renovate it as it was already in a state of
disrepair, and pay only when their loan is approved and released. While waiting
for the loan approval, the buyers spent Php1 million in repairing the house. A
month later, a person carrying an authenticated special power of attorney from
the sellers demanded that the buyers either immediately pay for the property in
full now or vacate it and pay damages for having made improvements on the
property without a sale having been perfected.

(a) What are the buyer’s options or legal rights with respect to the expenses
they incurred in improving the property under the circumstances? (3%)

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 (b) Can the buyers be made to immediately vacate on the ground that the sale
was not perfected . Explain briefly. (3%).

Case: Rodolfo B. Rosales, et.al. vs. Miguel Castelltort, et.al., G.R. No. 157044,
October 5, 2005.

Facts: Rosales is the registered owner of Lot No. 17. On August 16, 1995, he discovered that a
house was being constructed on his lot without his knowledge and consent by Castelltort.
Castelltort purchased Lot No. 16 from Villegas and the latter pointed to the surveyor Lot No. 17
instead of Lot No. 16. Castelltort also has no approved building permit at the start of the
construction of the building. Negotiations between the parties failed. Thus, Rosales directed
Castelltort to stop its construction and demolish the house and any structures found within Lot
No. 17. Such demand was left unheeded. Subsequently, a suit for recovery of possession was
filed by Rosales against Castelltort. In his Answer, Castelltort claimed to be a builder in good
faith. Is Castelltort a builder in good faith?

Answer: Yes, Castelltort is a builder in good faith because at the time Castelltort began
constructing his house on Lot No. 17, he believed that it was the Lot No. 16 he bought and
delivered to him by Villegas. A builder in good faith is the one who builds with the belief that
the land he is building on is his, or that by some title one has the right to build thereon, and is
ignorant of any defect or flaw in his title. Since both parties acted in good faith, at least until
August 21, 1995 when Castelltort became aware of the error in the delivery of the supposed
property he purchased from Villegas, the applicable provision is Article 448 of the NCC.
2016 Bar Examination Question No. VI

Pedro bought a parcel of land described as Cadastral Lot No. 123 and the
title was issued to his name. Juan also bought a lot in the same place, which is
described as Cadastral Lot No. 124. Pedro hired a geodetic engineer to determine
the actual location of Lot No. 123 but for some reason, the engineer pointed to
Lot No. 124 by mistake. Pedro hired a contractor to construct his house and the
latter put up a sign stating the name of the owner of the project and the
construction permit number. It took more than a year before the house was
constructed. When Pedro was already residing in his house, Juan told him to
remove his house because it was built on his (Juan’s) lot.

Juan filed a Complaint for Recovery of Possession and prayed that the
house be removed because Pedro is a builder in bad faith. Pedro filed his Answer
with Counterclaim that he is entitled to the payment of the value of the house
plus damages because he is a builder in good faith and that Juan is guilty of
estoppel and laches.

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 (a) If Pedro is a builder in good faith, what are the rights given to Juan under
the law? Explain. (2.5%)
(b) If Pedro is a builder in bad faith, what are the rights given to Juan under
the law? Explain. (2.5%)

Answer: (a) Since Pedro is a builder in good faith, Juan has the right to choose
any of the options given to him under Article 448 of the NCC. (You must based
your answer in the Rosales case cited above).

(b) Since Pedro is a builder in bad faith, Juan has the rights pursuant to Article
449 in relation to Article 450 of the NCC. (Your answer must be based on BPI case
cited below penned by Justice Velasco, Chairman, 2016 Bar Examination)

Bar Problem

Believing that a piece of land belonged to him, Aldon erected thereon a

building, using the materials belonging to Cris. Brett, the owner of the land, was
aware of the construction being made by Aldon, but did not do anything to stop
it.

What are the rights of Aldon, Brett and Cris with respect to the building
and against each other?

Answer:

Brett, regardless of his good or bad faith, becomes the owner of the
building. (Arts. 445 and 448). However, Aldon, a builder in good faith, will be
entitled to reimbursement of his necessary and useful expenses, with right to
retain the same until fully paid. He may also remove the construction, since
Brett, the landowner, acted in bad faith in not stopping the construction. (Arts.
454 and 448). Cris, the owner of the materials, shall have the right to
reimbursement. Cris may also remove them but only if he can do so without
injury to the work. (Art. 447).

Take note, however, the right of the lessee who introduced improvement
on the leased premises.

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Question: Is the lessee a builder in good faith or bad faith?

Answer: The lessee is not a builder in good faith, however, he is given certain
rights whenever he introduced improvements on the leased premises as provided
in Article 1678 of the NCC. In the event the landowner appropriates his
improvements, the lessee is entitled to be paid one-half of its value, otherwise,
he ought to remove it without causing substantial injury to the premises.

Of course, where a builder is a builder in bad faith, the landowner has the
so called power of confiscation, and in fact the builder is not entitled to any
reimbursement of the expenses he incurred in constructing a building.

Case: Moreto Millarosa vs. Carmel Development Inc., G.R. No. 194538,
November 27, 2013.

Facts: Carmel Dev’t. is the registered owner of the entire Pangarap Village in Caloocan City
consisting of 156 hectares. In 1973, P.D. 293 was promulgated invalidating the title of Carmel
Dev’t. and declared it open for disposition to the members of Malacanang Homeowners
Association, Inc. (MHAI). On the basis of P.D. 293, Pelagio M. Juan occupied Lot No. 32 and
built his house in it. In 1988, P.D. 293 was declared unconstitutional thus, restoring ownership
of the entire property to Carmel Dev’t. Sometime in 1995, Millarosa occupied Lot No. 32 by
virtue of an affidavit executed in his favor by Juan. A demand to vacate was sent to Millarosa
but to no avail, hence, an unlawful detainer suit was filed against him. Millarosa claimed that
he was a builder in good faith because by the time Lot No. 32 was occupied by his predecessor-
in-interest, it was pursuant to a valid law though, was declared invalid later. Is Millarosa a
builder in good faith?

Answer: No, Millarosa is not a builder in good faith because his entry to the property came
seven (7) years after P.D. No. 293 was declared unconstitutional. He cannot feign ignorance of
such decision by the Supreme Court because judicial decisions form part of the law of the land.
After it was declared invalid and the title was restored to Carmel Dev’t., Millarosa could no
longer claim good faith. Under Article 449, Millarosa losses what he has built on the subject
premises without right of indemnity from that time.

Case: Bank of Philippine Island vs. Vicente Victor Sanchez, et.al.

G.R. No. 179518, November 19, 2014.
(Builder in Bad Faith; Remedies of the Landowner)

Facts: Sanchez and his co-owners were the registered owners of a 900-square meter lot
covered by TCT No. 156254. They entered into an agreement with Garcia doing business under
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the name Trans-american Sales and Exposition, Inc. (TSEI) for the sale of subject property for
Php1.8M. Thus, Sanchez entrusted the owner’s duplicate copy of title to Garcia for the
preparation of documents of sale and to reconstitute its original copy as it was burned. They
also agreed that upon full payment of the purchase price, a deed of conveyance shall be
executed by Sanchez in favor of Garcia and TSEI.

Unknown to Sanchez, Garcia took possession of the lot, advertised the construction and
sale of townhouses to be erected thereon, and in fact started its construction without the
consent and against the will of the landowners. Also, Garcia was able to secure a new title
over the subject property in TSEI’s name. He utilized said title to entice prospective buyers of
townhouses making it appear that he has a clean title over it. Garcia was, likewise, able to
obtain a loan with Far East Bank and Trust Company (now BPI) using Sanchez’ title as collateral.
Due to failure of Garcia to fully pay the purchase price of the lot, Sanchez opted to rescind their
agreement and demanded the return of their title and other documents. Since Garcia did not
return the documents, Sanchez filed an action for rescission impleading those that were able to
buy the townhouses. The latter invoked that they are innocent purchaser for value and in good
faith. FEBTC (now BPI) also claimed that they are mortgagee in good faith over the subject
property. Judgment was rendered in favor of Sanchez, declaring therein Garcia and the
townhouse buyers as builders in good faith, while BPI was declared mortgagee in bad faith,
giving options to Sanchez as provided in Articles 449 and 450 of the NCC. Is the ruling of the
trial court correct?

Answer: Yes. The ruling of the trial court upholding the validity of the extra-judicial recission is
proper due to the violation of the agreement of the parties with respect to the full payment of
the purchase price agreed upon. Hence, the construction and sale of the townhouses made by
Garcia is done with bad faith. Being a builder in bad faith, the acquisition of the same by the
buyers of the townhouses is tainted with bad faith as well for their failure to verify the nature
and character of the title of TSEI over the subject property. Same bad faith can be attributed to
FEBTC (now BPI) for not performing its mandate to examine the title used as security for the
loan. Well-settled is the rule that all persons dealing with property covered by a Torrens
certificate of title are not required to go beyond what appears on the face of the title. This rule,
however, admits of an exception as where the purchaser or mortgagee has knowledge of a
defect or lack of title of th vendor, or that he was aware of sufficient facts to induce a
reasonably prudent man to inquire into the status of the property in litigation. Here, it was
very clear in the deed of conveyances that the title of subject property was still in the name of
the Sanchezes and not TSEI, thus, their failure to inquire made them purchaser or mortgagee
in bad faith.

Having declared that Garcia and the buyers of the townhouses are in bad faith, Sanchez
has three (3) options, (1) acquire the property with the townhouses and other buildings and
improvements that may be made thereon without indemnifying TSEI or the townhouse buyers;
(2) demand from TSEI or the townhouse buyers to demolish what has been built on the
property at their own expense; or (3) ask the townhouse buyers to pay the price of the land
conformably with Articles 449 and 450 of the NCC.

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Case: Department of Education, etc. vs. Delfina C. Casibang, et.al., G.R. No.
192268, January 27, 2016.

Facts: In 1965, upon the request of then Mayor Caronan, Cepeda allowed the construction
and operation of Solana North Central School within his 7,532 square meter titled lot. Upon
Cepeda’s death in 1983, his heirs, including Casibang, tolerated the occupation of the school
within said lot. Sometime in 2000, some heirs of Cepeda entered and occupied vacant portions
of said lot. Upon the knowledge of school officials, it demanded from the heirs of Cepeda to
vacate their occupied portion but refused. Hence, DepEd instituted a forcible entry case
against Casibang and others. Judgment was rendered directing Casibang to vacate the
premises. Subsequently, Casibang instituted an accion publiciana against DepEd. Casibang
prevailed, but DepEd was declared a builder in good faith. Is the DepEd a builder in good faith?

Answer: Yes, even if DepEd knew fully well that the land where they will be constructing does
not belong to them but was only with the consent of the owner, the builder can still be
considered as builder in good faith and is covered by the provisions of Art. 448 of the NCC.
Hence, Casibang has two (2) options, (1) to appropriate the school buildings, or (2) sell the
land to the DepEd if the value of the land is not considerably more than the value of the
building. But, since the first option is not feasible because these are school buildings, Casibang
has the second option left. However, if the value of the land is considerably more than the
value of the building, a forced lease will be created and if they cannot agree on the terms, the
court will fix the terms of the lease.

Question: Suppose the builder was to pay the value of the land, what valuation
will be the basis for the payment of the land, the value at the time of its
acquisition or its current market value?

Answer: It is the current market value of the land which will be the basis for the
payment of the land and not its acquisition cost as ruled in the case of Mercy Vda.
de Roxas, etc. vs. Our Lady’s Foundation, Incorporated, G.R. No. 182378,
March 6, 2013.

With respect to accession natural in immovable property, focus your

concern on the rule on alluvium especially those properties covered by a
certificate of title as enunciated in the ruling of Curig vs. IAC 177 SCRA 313 (1989)
whereby the SC ruled that accretion does not automatically become registered
land just because the lot which received the same is covered by Torrens title.
Also, in Reynante vs. CA 207 SCRA 794 (1992), the SC ruled that accretion to

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registered land does not preclude acquisition of the said area by another person
through acquisitive prescription.

2016 Bar Examination Question No. VII

Benjamin is the owner of a titled lot which is bounded on the north by the
Maragondon River. An alluvial deposit of two (2) hectares was added to the
registered area. Daniel took possession of the portion formed by accretion and
claims that he has been in open, continuous and undisturbed possession of said
portion since 1923 as shown by a tax declaration. In 1958, Benjamin filed a
complaint for Quieting of Title and contends that the alluvium belongs to him as
the riparian owner and that since the alluvium is, by law, part and parcel of the
registered property, the ame may be considered as registered property. Decide
the case and explain. (5%)

Answer: I will dismiss Benjamin’s complaint for Quieting of Title. (Your answer
must be based on the Curig case and Reynante case cited above.

Bar Question:

After one (1) week of torrential rains, a portion of Aldrich’ plantation with
an area of one (1) hectare and planted to 100 coconut trees were eroded, while
to Brent’s farm, on the other bank of the same river, a tract of land also one (1)
hectare in area, on which stood fifty (50) coconut trees was added. An equal
number of trees, their roots exposed, were found lying on the ground of Brent’s
property. Seven (7) months later, Aldrich alleging that the one (1) hectare lot and
100 coconut trees were his, demanded their return but Brent, who had
previously taken possession of them, refused claiming that it was formed by
alluvion, thus, belongs to him. Who has the better right of possession, (1) the
one (1) hectare land, (2) those fifty (50) uprooted trees of coconuts, and the fifty
(50) standing coconut trees. Who will try to answer these questions?

Suggested Answer: (1) Since the erosion of the one (1) hectare portion was
caused by avulsion, Aldrich retained ownership of such portion unless he failed to
remove the same after two (2) years from the attachment or incorporation in
which case, Brent will become its owner by virtue of accession. (2) As far as the
50 uprooted trees is concerned, Brent becomes the owner of the same because

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Aldrich failed to make a claim within a period of six (6) months while with respect
to the standing coconut trees, Aldrich retains its ownership but he may be
required to refund Brent should the latter incurred expenses for the preservation
of the trees.

Question: Suppose the course of the water in the river did not changed its course
but simply it dries up, to whom will the dry river bed belong?

Answer: If the river simply dries up and did not changed its course or without
opening a new bed, it is very clear that the provisions of Article 461 will not
apply. The dry bed will continue to remain property of public dominion. Since
rivers and their natural beds are property of public dominion pursuant to Article
420 of the NCC, in the absence of any provision vesting the ownership of the
dried up bed in some other persons, it must continue to belong to the State.

Case: Republic of the Philippines vs. Arcadio Ivan A. Santos III, et.al. G.R. No.
160453, November 12, 2012

Facts: Arcadio Ivan and Arcadio Jr. filed an application for registration of a 1,045 square meter
lot located at Brgy. Dionisio, Paraňaque City which portion adjoins their respective properties.
Arcadio Ivan claimed that said portion is an accretion of their property located along the bank
of Paraňaque River and they had been in an open, adverse, and continuous possession thereof
for more than thirty (30) years already. The City of Paraňaque opposed the application
contending that it will use the area for its flood control project, it is within the 20 meters
easement and that it is not an accretion but a dried-up river bed of Paraňaque River which was
converted into an orchard. Just the same, the lower court granted the application in
conformity with Article 457 of the NCC which provides “to the owners of lands adjoining the
banks of river belong the accretion which they gradually received from the effects of the
current of the waters. Is the ruling of the lower court correct?

Answer: No, because the subject lot was definitely not an accretion. The process of drying up
of a river to form dry land involved the recession of the water level from the river banks and the
dried up did not equate to accretion which was the gradual and imperceptible deposition of soil
on the river banks through the effects of the current. Hence, Arcadio, as riparian owners, had
no legal right to claim ownership of the subject lot. Also, since Article 502 of the NCC declares
that rivers and their natural bed are public dominion of the State, it follows that the dried-up
portion continue to belong to the State unless there is an express law that provides that dried-
up river beds should belong to some other person. Nor prescription will help the cause of
Arcadio because said dried portion, being a property of public dominion, no matter how long
they possessed the property will not ripen into private ownership. It is well-settled that

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property of public dominion is outside the commerce of man and not susceptible to private
acquisition and acquisitive prescription.

Articles 476 to 481 of the NCC governs the legal remedy of quieting of title,
for the removal of any cloud upon or doubt or uncertainty with respect to title to
real property. Specifically, the purpose of an action to quiet title is to secure an
adjudication that a claim of title to or an interest in property, adverse to that of
the plaintiff, is invalid, so that the plaintiff and those claiming under him may be
forever afterward free from any danger of hostile claim. Such that, in an action
for quieting of title, courts are tasked to determine the respective rights of the
plaintiff and all other persons who has a claim over subject property, to make the
one who has no rights to said immovable respect and not disturb the other, so
that he who has the right can afterwards without fear introduce improvements he
may desire, to use or even to abuse his property as its owner.

For an action to quiet title to prosper, the following indispensable

requisites must concur, namely: (1) the plaintiff has a legal or an equitable title
to or interest in the real property subject of the action; (2) there is a cloud on
title to real property or any interest therein; and (3) the deed, claim,
encumbrance or proceeding claimed to be casting cloud on his title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of
validity or legal efficacy.

Case: Severino Baricuatro, Jr. vs. Court of Appeals, et.al. G.R. No. 105902,
February 9, 2000.

Facts: In 1968, Baricuatro bought Lot Nos. 9 and 10 located at Victoria Village, Minglanilla,
Cebu, from Galeos on installment basis. After the sale, Baricuatro introduced improvements
and resided therein. However, without Baricuatro’s knowledge, the entire subdivision was
sold by Galeos to Amores two (2) months after the sale to him. Nonetheless, Baricuatro was
advised by Galeos to continue paying his installment to Amores. Amores registered their sale
and caused the issuance of the titles to his name including Lot Nos. 9 and 10. Intending to
dispose Lot Nos. 9 and 10, Amores wrote a letter to Baricuatro to fully pay the installment,
otherwise, he will sell the same to another person. Since Baricuatro did not respond, Amores
sold the two (2) lots to Spouses Nemenio who caused the transfer of the titles to their name
and demanded from Baricuatro to vacate the lots. Thus, Baricuatro filed an action for quieting
of title against Nemenio, the registered owner of Lot Nos. 9 and 10. Will the action for quieting
of title prosper?

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Answer: Yes. Even if Nemenio was the registered owner of the titles lots, he cannot be
considered as purchaser for value from Amores because he did not exert effort to verify the
actual condition of the lot prior to the sale, for which he would notice of the occupation by
Baricuatro. Also, Amores’ title to the lots was inferior to the rights of Baricuatro because
despite the knowledge of the previous sale to the latter, he still caused the registration of their
sale with Galeos which resulted in the issuance of title over it. Under the law on double sale,
the prior knowledge of such sale to Baricuatro by Galeos is tantamount to registration making
Amores’ subsequent registration in the Registry of Deeds to be tainted with bad faith. Thus,
Nemenio’s title to the lots is subject to the infirmity suffered by his vendor, Amores when he
transferred the title to his name. In short, Baricuatro has an equitable title or interest over the
contested lots for which his action for quieting of title must prosper.

In the following cases, the Supreme Court ruled that an action for quieting
of title is unavailable to the plaintiffs.

Case: Residents of Lower Atab and Teachers’ Village, etc. vs. Sta. Monica
Industrial and Development Corp., G.R. No. 198878, October 15, 2014

Facts: Lower Atab residents are the actual occupants and possessors of the Torres’ property
consisting of 177 hectares located at Baguio City. Said property was declared as within the
Bagiuo Townsite Reservation. In fact, said residents had a pending application to purchase
their respective lots through Townsite Sales Application with DENR. They also declared for
taxation purposes their respective lots and houses erected thereon and paid its realty taxes,
possessing the same in concept of an owner. In 2000, Sta. Monica started fencing the bigger
portion of the property claiming that it is within their titled lot. Because of the act of Sta.
Monica, the residents of Lower Atab filed an action for quieting of title. Will the suit prosper?

Answer: No, because these residents had no legal or equitable right to be quieted through an
action for quieting of title. The fact that they have a pending application to purchase the lots
that they were actually occupying, it necessarily follows that they are not owners of the subject
property, hence, no cause of action for quieting of title. In quieting of title, legal title denotes
registered ownership while equitable title means beneficial ownership. In the absence of such
legal or equitable title, or interest, there is no cloud to be prevented or removed.

Case: Dionisio Mananquil, et.al. vs. Roberto Moico, G.R. No. 180876,
November 21, 2012.

Facts: Lot Nos. 18 and 19 in Dagat-dagatan, Navotas are part of Tondo Dagat-dagatan
Foreshore Development Project implemented by NHA. Said property is open for sale on
installments to occupants, applicants and beneficiaries. Spouses Iluminado and Priscilla
Mananquil was awarded Lot No. 18 under a Conditional Contract to Sell, while Lot No. 19 was
sold to Priscilla by its occupant. Upon the death of the spouses Mananquil allegedly without

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issue, the relatives of Iluminado, Diosdado and other heirs, executed an Extra Judicial
settlement of Estate and adjudicated ownership over these lots to Dianita Mananquil.
Subsequently, she leased them out to third parties.

In 1997, Eulogio Maypa, allegedly a child of Priscilla in her previous marriage, waived his
rights over these lots to Roberto Moico who started evicting Mananquil’s tenants and
demolishing structure found within said lots. Because of the acts of Moico, the Mananquils
instituted an action for quieting of title. Will the action prosper?

Answer: No, it will not prosper. Absence of proof that spouses Mananquils had been awarded
titles to these lots, they did not become owners of the same, thus, Iluminado’s heirs has no
property to succeed from them. The SC took notice that Diodado and the heirs failed to show
their qualification to succeed from Mananquil spouses a government grant awarded to them,
nor was there proof that Mananquil spouses became the registered owners/awardee or
beneficiaries of these lots. It is not only their right to succeed that must be clearly established
but also their qualification to be a beneficiary of said government project.

Questions for Lightning Quiz

1. X, Y, and Z are siblings who inherited a 10-storey building from their

parents. They agreed in writing to maintain it as a co-owned property for leasing
out and to divide the net profits among themselves equally for a period of 20
years. On the 8th year, X wanted to get out of the co-ownership so he could get
his 1/3 share in the property. Y and Z refused, saying X is bound by their
agreement to keep the co-ownership for 20 years. Are Y and Z correct? Explain.

2. What are the legal effects of possession in the concept of an owner?

.
CO-OWNERSHIP

The concept of co-ownership is easily understood to mean the unity of the

object or property and plurality of the subject. As a consequence, therefore, a
co-owner of an undivided parcel of land is an “owner of the whole, and over the
whole he exercises the right of dominion, but he is at the same time the owner of
a portion which is truly abstract. It is “abstract” because until partition is made,
the interest of each co-owner in a co-owned property is undetermined with
specific metes and bounds. Hence, the term “pro indiviso” or before division. By
such, no co-owner can claim title to any definite portion of the co-owned
property until partition thereof is made judicially or extra-judicially. This is the
general rule.
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 By way of an exception, in Vda. De Cabrera vs. Court of Appeals 267 SCRA
339, despite the absence of judicial or extra-judicial partition, the SC ruled that
there was already an implied and partial partition of the co-owned property.

Case: Felicidad Vda. de Cabrera vs. Court of Appeals, et.al., 267 SCRA 339,
February 3, 1997.

Facts: The siblings Daniel, Albertana and Felicidad, all surnamed Toekemian, owned in
common a parcel of land which they inherited from their father. On January 16, 1950, Daniel
and Albertana, without the participation of Felicidad, executed a deed of sale in favor of
Andres Orais, over a parcel of unregistered land with an area described as 7.3720 hectares. On
January 26, 1950, the land was surveyed in the name of Virgilia Orais, daughter of Andres and
denominated as Lot No. 2239. As surveyed, it had an area of 11.1000 hectares. On June 24,
1957, Virgilia Orais was issued a free patent over the land. Thereafter, she was likewise issued
an OCT.

Notwithstanding such sale and issuance of title in the name of Virgilia Orais, Felicidad
Toekemian remained in possession of the one-third portion of the inherited property. She had
been in possession of that portion since it was left to her by her father in 1941.

On July 27, 1972, the one-third portion occupied by Felicidad Toekemian was sold to
Elano Cabrera, husband of Felicidad Cabrera, who immediately took possession of the same.
When Virgilia Orais learned that the Cabreras were occupying a portion of the subject property,
the former filed an action for quieting of title against Felicidad Cabrera, now a widow. Can a
co-owner validly disposed of a definite portion of the co-owned property?

Answer: Yes, the fact that Felicidad Toekemian was allowed to occupy that one-third portion
of subject property after the sale for a long period of time, there has therefore been a partial
partition. The 1/3 share of Felicidad Toekemian can be validly disposed of even before a formal
partition is undertaken by the co-owners. Article 493 of the NCC is very explicit that each co-
owner shall have full ownership of his part that he may even alienate, assign or mortgage it,
and even substitute another person in its enjoyment.

Questions:

• Can a co-owner sell or alienate his interest on the co-owned property?

• Can a co-owner validly sell or alienate a definite portion of the co-owned
property?
• Can a co-owner sell or alienate his interest on the co-owned property
without the consent of the other co-owners?

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 • Can a co-owner legally prohibit a co-owner from selling or alienating his
interest on the co-owned property to another co-owner? To third persons?
• Can a co-owner compel another co-owner to sell or alienate his interest on
the co-owned property to co-owners first before offering it to third
persons? Is there right of first refusal in co-ownership?
• What legal remedies may the co-owner take in the event a co-owner sells
or alienates his interest on the property?
• Is legal redemption available to a successor-in-interest of the co-owner who
is not an original co-owner?
• Does prescription as a mode of acquiring ownership lie as against another
co-owner? If you will be able to answer correctly these questions, surely
you had a good grasp of knowledge with respect to the law on co-
ownership.

Case: Juan P. Cabrera vs. Henry Ysaac, G.R. No. 166790, November 19, 2014.

Facts: Henry is a co-owner of a 5,517 square meter lot in Naga City covered by OCT No. 506.
Cabrera is a lessee of a 95 square meter portion of said lot. In need of money, Henry offered to
Cabrera a 439 square meter portion thereof including the portion the latter was renting for
Php250.00 per square meter payable on or before June 15, 1992. Initial payments were made
by Cabrera. On June 15, 1992, Cabrera was ready to pay the full amount of the remaining
balance of the purchase price, but cannot do so because Henry was out of the country. Nor did
he consigned his payment in court and allowed the period to elapsed.

On September 1993, upon Henry’s insinuation, Cabrera agreed to reduce the area to be
sold to 321 square meters. Again, Cabrera was ready to pay the balance but failed to do so
because Henry was in Manila. Nor did he consigned his payment in court.

On September 1994, Henry’s counsel sent a letter to Cabrera informing the latter that he
is formally rescinding their contract for his failure to pay the purchase price on the agreed
period. Conversely, to enforce the contract, Cabrera filed a specific performance case against
Henry.

(a) Was there a valid rescission of contract? Why?

(b) Will Cabrera’s specific performance case prosper? Why?

Answer: (a) No. There was no valid rescission simply because there was no contract of sale to
rescind. It must be noted that the subject of their purported sale is a definite portion of a co-
owned property for which a co-owner cannot do so without the consent of all the co-owners.
Sale of a definite portion of a co-owned property is considered an alteration of the thing owned
in common which disposition requires the unanimous consent of all other co-owners. Hence,

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there could be no valid contract of sale to speak of. There being no contract to rescind,
recission, as a remedy, is unavailing.

(b) No, Cabrera’s specific performance case will not prosper because there was no
valid contract of sale between him and Henry, the latter cannot sell a definite portion of the
co-owned property without the consent of all the co-owners. Since their contract is non-
existent, it cannot be a source of a right that can be enforced through court action.

With respect to acquisition by prescription of a co-owner of the whole

property, after an act of repudiation whereby the whole lot was titled in the
name of only one co-owner, what is the reckoning period for prescription to
commence? There are two (2) views espoused by the Supreme Court itself.

Case: Delima vs. Court of Appeals, et.al. 201 SCRA 641, September 24, 1991

Facts: Three brothers and a sister inherited a registered parcel of land from their father Lino
Delima in 1921. In 1953, the inherited property was transferred in the name of the “Legal
Heirs of Lino Delima, represented by Galileo Delima” under TCT No. 2744. In the same year,
Galileo Delima executed an affidavit of “Extra-judicial Declaration of Heirs” and based on this
affidavit, TCT No. 2744 was cancelled and TCT No. 3009 was issued on February 4, 1954 in the
name of Galileo Delima alone to the exclusion of the other heirs. Thereafter, Galileo Delima
declared the lot in his name for taxation purposes and paid the taxes thereon from 1954 to
1965. On February 28, 1968, the surviving heirs of the siblings of Galileo Delima filed an action
for reconveyance and/or partition of the property. Will the action prosper?

Answer: No, because their action had already prescribed. The SC reasoned out that when a
co-owner of the property executed a deed of partition and on the strength thereof obtained a
cancellation of the title in the name of their predecessor for which a new title was issued
exclusive in his name, it has the effect of denying or repudiating the ownership of the other co-
owners over their respective shares. At this point in time, the statute of limitations started to
run for the purpose of the action instituted by the other co-owners seeking a declaration of the
existence of co-ownership and of their rights thereunder. Since an action for reconveyance of
land based on implied or constructive trust prescribes after ten (10) years, it is from the date of
the issuance of such title that the effective assertion of adverse title for purposes of the statute
of limitations is counted. Here, the issuance of the new title to Galileo Delima constituted an
open and clear repudiation of the trust or co-ownership, and the lapse of ten (10) years of his
adverse possession from February 4, 1954 was sufficient to vest title in him by prescription. As
the certificate of title was notice to the whole world of his exclusive title to the land following
the “constructive notice” rule, such rejection was binding on the other heirs and started as
against them the period of prescription. Thus, when the surviving heirs of the siblings of
Galileo Delima filed an action for reconveyance and/or partition on February 9, 1968, or after
14 years, such action was already barred by prescription.

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 But in Maritegui vs. Court of Appeals, 205 SCRA 337, the SC held that
when a co-owner or co-heir registered the properties in his name in fraud of
other co-owners or co-heirs, prescription can only be deemed to have
commenced from the time the latter discovered the act of defraudation
committed by the former. Prescription, as a mode of terminating co-ownership
must have been preceded by repudiation of the co-ownership itself. The act of
repudiation is subject to certain conditions: (1) a co-owner repudiates the co-
ownership; (2) such an act of repudiation is clearly made known to the other co-
owners; (3) the evidence thereon is clear and conclusive; and (4) he has been in
an open, continuous, exclusive and notorious possession of the property for the
period required by law. If any of these requisites will not be complied with, there
could be no repudiation. While it is true that registration under the Torrens
system is constructive notice of title, but if fraud or misrepresentation attended
in obtaining title to the property, such rule will not apply because Torrens title
does not furnish a shield for fraud. It is upon the discovery of the act of
defraudation that prescription will commence to run as against the other co-
owners.

Between the two contrasting views, which will you choose? The ruling in
the Maritegue case is more in keeping with justice and equity and should be the
one followed, not the Delima case.

Take note that these rulings apply only when the person enforcing the trust
is not in possession of the property since if a person claiming to be the owner
thereof is in actual possession of the property, the right to seek reconveyance,
which in effect seeks to quiet title to the property, does not prescribe. The
reason for this is that one who is in actual possession of a piece of land claiming
to be the owner thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his rights, the reason for the rule being,
that his undisturbed possession gives him a continuing right to seek the aid of the
court of equity to ascertain and determine the nature of the adverse claim of a
third party and its effect on his own title, which right can be claimed only by one
who is in possession.

Co-ownership is terminated by way of partition of the thing owned in

common by and between the co-owners, though it may purport to be a sale, an

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exchange, a compromise or any other transaction. Meaning, any act which is
intended to put an end to indivision among co-owners is deemed to be a
partition.

In Article 494 of the NCC, it provides that each co-owner may demand at
any time the partition of the common property. This provision implies that an
action to demand a partition is imprescriptible or cannot be barred by laches so
long as the co-ownership is recognized. Thus, if one of the supposed co-owners
possessed the common property as its exclusive owner, and denies the others
any share therein, the question involved is no longer partition but ownership. In
this situation, the imprescriptibility of the action can no longer be validly invoked
and its ownership may be acquired by such exclusive possessor through
prescription. The period of prescription is ten (10) years reckoned from the time
of repudiation, the action being based on implied or constructive trust.

Case: Heirs of Flores Restar, et.al. vs. Heirs of Dolores Restar-Cichon, et.al. 475
SCRA 731, November 22, 2005.

Facts: In 1935, Emilio Restar died intestate leaving eight (8) children-compulsory heirs,
namely: Flores Restar, Dolores Restar-Cichon, Perpeua Restar-Sta. Maria, Paciencia Restar-
Manares, Dominica Restar-Relojero, Policarpio Restar, Maria Restar-Rose and Adolfo Restar.
In 1960, Restar’s eldest child, Flores, on the basis of a Joint Affidavit he executed with one
Helen Restar, caused the cancellation of Tax Declaration No. 6696 covering a 5,918 square
meters of land denominated as Lot No. 3177 located in Lezo, Aklan. Thus, a new Tax
Declaration No. 11134 was issued in Flores’ name. In fact, after the death of Emilio, Flores
took possession of the subject lot and exercised acts of dominion thereon, tilling and
cultivating the land, introducing improvements and enjoying the produce thereof until he was
able to secure a tax declaration in his name in 1960. Subject lot was also excluded from the
verbal partition of the other properties of Emilio. Flores died on June 10, 1989. On November
5, 1998, the co-heirs of Flores discovered the cancellation of TD No. 6696 and the issuance of a
new TD No. 11134 in the name of Flores. On January 21, 1999, the heirs of Flores’ sisters and
the surviving siblings of Flores filed a Complaint against the heirs of Flores for partition,
declaration of nullity of documents, ownership and damages. The heirs of Flores Restar
invoked prescription as their defense. Are the heirs of Flores Restar’s invocation of
prescription correct?

Answer: Yes, the SC ruled that Flores’ possession ripened into ownership through acquisitive
prescription. Flores took possession of the subject lot after Emilio’s death, tilling and
cultivating the lot, while his other siblings never possessed the lot nor asserted their claim not
until January 21, 1999 when they filed the complaint. The statutory period of prescription,
however, commenced not in 1935 but in 1960 when Flores who had neither title nor good

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faith, secured a tax declaration in his name and had adversely claimed ownership of the lot.
This was the first concrete act of repudiation made by Flores of the co-ownership. Thus,
Flores’ possession ripened into ownership through acquisitive prescription after the lapse of
thirty (30) years or for 38 years to be exact, in accordance with Article 1137 of the NCC. While
tax declaration and tax receipts are not conclusive evidence of ownership and do not prove title
to the land, nevertheless, when coupled with actual possession, they constitute evidence of
great weight and can be the basis of a claim of ownership through prescription.

Case: Vilma Quintos, et.al. vs. Pelagia I. Nicolas, et.al., G.R. No. 210252, June
25, 2014

Facts: Parties are the children of Bienvinido and Escolastica Ibarra, and upon their demise, left
subject property located at Quezon Avenue, Camiling Tarlac and covered by a certificate of
title. Sometime in 2002, Pelagia and other heirs instituted a complaint for partition against
Vilma and the other heirs. Said partition complaint was dismissed for failure of the parties and
counsels to appear during the pre-trial conference despite prior notice. No appeal was made
by any of the parties.

Having failed to partition subject property, Pelagia and other heirs executed a Deed of
Adjudication, thus, its title was cancelled and a new one was issued in favor of the ten (10)
children of Ibarra spouses. Subsequently, Pelagia and other heirs conveyed their 7/10 share of
the subject property to Recto and Rosemarie Candelario. Again, its title was cancelled and a
modified one was issued in the name of Candelario spouses with respect to the 7/10 undivided
share.

On June 1999, Vilma and other heirs filed an action for quieting of title against Pelagia
and other heirs including Candelario spouses, contending that subject property had been
adjudicated to them by their parents during the latter’s lifetime and had been in open,
continuous, and uninterrupted possession of the property for more than four (4) decades
already, thus, entitled to equitable title thereto. For failure to adduced evidence to support
their exclusive ownership over subject property, the quieting of title case was dismissed and
the trial court ordered the partition of the subject property. On appeal, Vilma and other heirs
argued that there could be no more partition because such action was already dismissed by the
court, and invoking laches and res judicata, the counterclaim interposed by Pelagia and other
heirs is already barred pursuant to Rule 17 Section 3 of the Rules of Court whereby an action is
dismissed due to the fault of the plaintiff and such dismissal is considered an adjudication on
the merits. Is partition of the subject property already barred?

Answer: No. Despite the fact that the partition case was dismissed for failure of the plaintiffs
to prosecute their case, such will not constitute an adjudication on the merits and will not
prejudice the filing of another action, otherwise it will defeat the right of a co-owner to ask for
partition at any time pursuant to Article 494 of the NCC. Between dismissal with prejudice
under Rule 17 Section 3 of the Rules of Court and the right granted to co-owners under Article

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494, the latter must prevail. To construe otherwise would diminish the substantive right of a
co-owner through the promulgation of procedural rules. Well-settled is the rule that
procedural laws cannot defeat or modify substantive law. Thus, the SC held that Article 494 is
an exception to Rule 17 Section 3 to the effect that even if the order of dismissal for failure to
prosecute is silent on whether or not it is with prejudice, it shall be deemed to be without
prejudice. Therefore, partition of subject property is not barred by the finality of the dismissal
order of an action for partition due to failure to prosecute.

Case: Ma. Elena R. Divinagracia, etc. vs. Coronacion Parilla, et.al., G.R. No.
196750, March 11, 2015.

Facts: Conrado Nobleza, Sr. owned a 313 square meter lot in Iloilo City. During his lifetime, he
contracted two (2) marriages, the first with Lolita Palermo with whom he had two (2) children,
Cresencio and Conrado, Jr., and the second was with Eusela Niangar with whom he had seven
(7) children, namely, Mateo, Sr., Coronacion, Cecilia, Celestial, Celedonio, Ceruleo, and
Cebeleo, Sr. He begot also 3 illegitimate children, Eduardo, Rogelio and Ricardo. Mateo, Sr.
predeceased Conrado, Sr. and survived by his heirs, and also, Cebeleo, Sr. predeceased
Conrado, Sr. and survived by his wife and children.

According to Santiago Divinagracia, upon Conrado Sr.’s death, he validly acquired the
undivided interests of Cresencio, Conrado, Jr., Felcon (in representation of Mateo, Sr.’s heirs),
Coronacion, Celestial, Rogelio, Ricardo and Eduardo. What was left were the shares of
Ceruleo, Celedonio and Maude (in representation of her husband, Cebeleo, Sr. and their
children). It was agreed that Santiago will pay the full price of the shares he acquired the
moment partition will be had, and the cancellation of title will be realized because Ceruleo,
Celedonio and Maude refused to surrender to him the owner’s copy of the title. Without other
recourse, Santiago filed a complaint for partition against Ceruleo, Celedonio and Maude
without including the other heirs because, according to Santiago, he was the owner of their
respective shares already. His case was dismissed by the trial court for failure to implead
indispensable parties because, according to the court, all the heirs of Conrado, Sr. must be
impleaded. (1) Are the co-owners of subject property indispensable parties in an action for
partition? (2) Was the trial court’s action in dismissing the case proper?

Answer: (1) Yes, all the heirs of Conrado, Sr., whether in their own capacity or in representation
of their direct descendant, have vested rights over the subject property, and as such, should
be impleaded as indispensable parties in an action for partition thereof. In an action for
partition, the court cannot properly issue an order to divide the property unless it first make a
determination as to the existence of co-ownership. The court must initially settle the issue of
ownership, which is the first stage in an action for partition. Until and unless the issue of co-
ownership is definitely and finally resolved, it would be premature to effect partition of the
disputed property. In this case, while it is true that Santiago acquired the shares of the other
heirs of Conrado, Sr., but as a vendee, he merely steps into the shoes of the vendors-heirs.
Since his interest over the subject property is merely derived from that of the vendors-heirs,

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the latter should first be determined as co-owners thereof, thus necessitating the joinder of all
those who have vested interest on such land subject of an action for partition.

(2) The dismissal of the action for partition on the ground of failure to implead indispensable
parties is not sanction by the Rules, hence, improper. Pursuant to Rule 4 Section 6 of the
Rules of Court, while failure to implead indispensable parties makes the complaint defective,
but it should not be dismissed rather, the proper remedy is to implead all of them.

There are instances, however, that partition of common property may not
be available, hence, the rule that a co-owner may demand partition of it anytime
is unavailing. What are these instances?

(1) When there is an agreement among the owners to keep the thing
undivided but must not exceed ten (10) years, but may be extended by a
new agreement;

(2) When the donor or testator prohibits partition for a period which shall no
exceed twenty (20) years;

(3) When the law prohibits partition such as when the origin or juridical nature
of co-ownership prevents partition, like community property of spouses.

(4) When partition would render the thing unserviceable for the use for which
it is intended.

2015 Bar Examination Question No. VIII

X, Y, and Z are siblings who inherited a 10-storey building from their

parents. They agreed in writing to maintain it as a co-owned property for leasing
out and to divide the net profits among themselves equally for a period of 20
years. On the 8th year, X wanted to get out of the co-ownership so he could get
his 1/3 share in the property. Y and Z refused, saying X is bound by their
agreement to keep the co-ownership for 20 years. Are Y and Z correct? Explain.
(3%)

Suggested Answer: No, Y and Z are not correct because under the law on co-
ownership, the agreement to keep the thing undivided for more than 10 years is
proscribed. Nonetheless, X is bound by their agreement to keep the thing

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undivided for 10 years only, and the fact that it is still on the 8th year, he is not
allowed to get out of the co-ownership by virtue of their agreement following the
principle that stipulations in the contract is the law between the parties.

Bar Problem

A lot containing an area of 1,561 square meters located at the heart of

Makati City is owned in common by six (6) persons. One of the co-owners asked
for a physical segregation of his one-sixth (1/6) share. The five (5) co-owners
objected on the ground that the lot being commercial, its value would be greatly
impaired should there be a physical partition. Decide.

Answer:

The co-owner who asked for a partition is entitled to the segregation of his
share. The general rule enunciated in Article 494 of the New Civil Code is
applicable, namely that each co-owner may demand at any time the partition of
the thing owned in common, in so far as his share is concerned.

The objection of the five (5) other co-owners is obviously based on Article
495 which provides that notwithstanding the provisions of Article 494, the co-
owners cannot demand a physical division of the thing owned in common when
to do so would render it unserviceable for the use for which it is intended. Article
495, however, cannot apply to this case for if the one-sixth (1/6) share of the co-
owner is segregated, there will still remain over 1,300 square meters for the
remaining five (5) co-owners and a real estate of this size in the heart of Makati is
not inconsequential.

In relation to the law on co-ownership, it is important for us to moved

forward a little and discuss the exercise of the right of legal redemption by a co-
owner.

Legal redemption is the right to be subrogated, upon the same terms and
conditions stipulated in the contract, in the place of one who acquires a thing by
purchase or dation in payment or by any other transaction whereby ownership is
transmitted by onerous. This right is properly exercised in the event a co-owner
sell his undivided interest in the thing co-owned, whereby any or all of the other

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co-owners can redeem in proportion to what he owns in the said co-ownership.
Importantly, the exercise of the right of legal redemption is good only within a
period of thirty (30) days from notice of the sell or alienation by a co-owner..

Case: Sps. Roman A. Pascual and Mercedita R. Pascual, et.al. vs. Sps. Antonio
Ballesteros and Lorenza Melchor-Ballesteros, G.R. No. 186269, February 15,
2012

Issue: Is the written notice to the co-owners by the vendor or prospective

vendors indispensable in order that the 30-day period for the exercise of the right
of legal redemption commenced to run?

Ruling: Written notice is indispensable in view of the terms in which Article 1623
is couched, mere knowledge of the sale, acquired in some other manner by the
redemptioner, does not satisfy the statute. The written notice was obviously
exacted by the Code to remove all uncertainty as to the sale, its terms and its
validity, and to quiet any doubts that the alienation is not definitive. The statute
not having provided for any alternative, the method of notification prescribed
remains exclusive.

Case: Adalia B. Francisco vs. Zenaida F. Boiser, G.R. No. 137677, May 31, 2000

Issue: Whether or not the notice requirement in the exercise of the right of legal
redemption does not prescribe any particular form of notifying co-owners about
the sale of the property owned in common.

Ruling: The notice should be given by the seller (vendor) because he/she is in the
best position to know who are his co-owners that under the law must be notified
of the sale. Also, the notice by the seller removes all doubts as to fact of the sale,
its perfection, and its validity, the notice being a reaffirmation thereof; so that
the party notified need not entertain doubt that the seller may still contest the
alienation. This assurance would not exist if the notice should be given by the
buyer.

Case: Emiliano S. Samson vs. Sps. Jose and Guillerma Gabor, et.al. G.R. No.
182970, July 23, 2014.

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Facts: Gabor spouses are registered owners of a 61,085 square meters parcel of land in Tanay,
Rizal. In 1985, said spouses executed a Deed of Assignment transferring ownership of a 20,
631 square meters of undivided portion to Samson in payment of attorney’s fees due to the
latter for services rendered. In 1987, Samson executed a Deed of Assignment involving the
same undivided portion to Ramos. Upon knowledge of the sale, spouses Gabor filed an action
for legal redemption. Forthwith, Samson and Ramos executed an Agreement of Recission
revoking the transfer of the undivided portion. By virtue of this document rescinding the
transfer to Ramos, the Court dismissed the legal redemption case. Gabor spouses appealed
and the CA reversed the RTC decision which became final upholding the exercise of their right
of legal redemption Subsequently, Samson filed an action for partition against the spouses
which dismissed for lack of cause of action Is the action of the court tenable?

Answer: Yes, in view of the finality of the decision in the legal redemption case, Samson is
devoid of any legal right r personality to ask for partition of the subject property formerly
owned in common. Having assigned his undivided share to Ramos, Samson ceased to be a co-
owner.

Case: Tobias Selga and Ceferina Garancho Selga vs. Sony Entierro Brar, et.al.
G.R. No. 175151 September 21, 2011

Issue: Whether or not petitioner’ right of legal redemption was lost and barred by
prior judgment.

Ruling: The right of legal redemption, though was not ruled upon by the court a
quo despite the fact that it was interposed and properly claimed in the pleadings,
was lost when the redemptioner failed to contest the judgment by withdrawing
his appeal.

POSSESSION

In order that there be possession, two (2) requisites must concur, (1) there
must be occupancy, apprehension or taking, and (2) there must be intent to
possess or animus possidendi.

Many jurisprudence on the matter hinges on the issue of possession in the

concept of an owner and possession in the concept of holder, which normally
intertwines whenever question of ownership of property is raised. It is because of
the legal effects which results whenever possession is invoked to defeat any claim
on the property. Know by now the effects of possession in the concept of an
owner, namely, (1) it raises a disputable presumption of ownership pursuant to
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Article 433 of the NCC, (2) it creates a disputable presumption that the
possessor has just title for which he cannot be obliged to disclose or show as
provided in Article 541 of the NCC , and (3) it may ripen into ownership thru
acquisitive prescription (Art. 540) upon compliance with the other requisites
mentioned in Art. 1118 of the NCC.

On the other hand, one who possesses the property as a mere holder
acknowledges in another superior right than his which he believes to be
ownership, whether his belief is correct or incorrect, just like possession by a
lessee, usufructuary or a pledgee.

Illustrative example:

Andy, owner of a rice land, leases the same to Bert, who in turn subleases
it to Cris. Cris hires Dindo as his laborer-farmer who actually cultivates the land
but does not stay thereon. The truth, nobody lives on the land for it consists of
rice paddies only.

Question: Who among Andy, Bert, Cris and Dindo may be said to have
possession of the rice land?

Answer: Cris and Dindo are in possession of the rice land. As far as Dindo, as the
one who cultivates the land, his possession is that of a holder though in the name
of another. His being hired as laborer-farmer by Cris, he is in actual possession
of the land but his possession is derived from Cris by virtue of their agreement.
Cris, therefore, is the real possessor, by virtue of the sublease he had with Bert.
His possession is that of a holder but in his own name.

It is imperative also for you to know the concept of possession in good faith
and possession in bad faith because of the legal effects that proceeds from these
kinds of possession.

Question: When is possession deemed a possession in good faith? In bad faith?

Answer: The possessor is considered in good faith if he is not aware that there
exists in his title or mode of acquisition any flaw which invalidates it, otherwise,
he is a possessor in bad faith.

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 Good faith is always presumed, and upon him who alleges bad faith on the
part of the possessor rests the burden of proof. This presumption of good faith of
the possessor continues to subsist until facts exists which show that the possessor
is already aware that he wrongfully or improperly possess the property. In short,
every possessor in good faith becomes a possessor in bad faith from the moment
he becomes aware that what he believed to be true is not so by means of either
extraneous evidence or by suit for recovery of the property by the true owner.

The possession of good faith and bad faith find relevance upon its effect on
who will be entitled to the fruits, which were already received and those still
pending. It is also significant in determining the rights of the possessor over
necessary, useful and ornamental expenses incurred by him and upon the loss of
the thing or property.

For fruits already received, if the possessor is in good faith, he is entitled

to all the fruits already received or gathered before his possession is legally
interrupted. In short, the moment his possession is legally interrupted, wherein
at this very moment he is now aware of the flaw or defect in his possession, his
entitlement of the fruits already gathered or received will be that of a possessor
in bad faith already.

If, at the outset, his possession is already in bad faith, he shall reimburse
the value of the fruits already received by him including those fruits which the
lawful possessor could have received. This is just and proper in order to penalize
him of his bad faith and to compensate for the loss which the lawful possessor
could have received where it not for his possession. Though he is in bad faith,
however, the law gives him the right of reimbursement from the lawful possessor
the expenses for the production, gathering and preservation of the fruits. This is
because, these expenses will likely be incurred just the same by the lawful
possessor had he been in possession of the property. (Article 443, NCC). Also,
the possessor in bad faith is also entitled to the reimbursement of the necessary
expenses incurred by him for the preservation of the land or the thing which bore
the fruit. This is because, for the same reason, whereby the lawful possessor will
incur just the same such expenses had he been in possession of the property.

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 In a situation where possession in good faith was legally interrupted and
there were pending fruits still to be gathered, the possessor and the owner shall
divide the net harvest and the expenses of cultivation in proportion to the time of
their respective possessions. If the owner does not want to share the expenses of
cultivation, he may, at his option, allow the possessor to finish the cultivation
and gathering of its fruits and said possessor can validly appropriate the proceeds
there from. The owner will not have any share in the harvest. If the owner
chooses this option but the possessor does not accede, the latter will lose his
right to the entitlement of the fruits and his right to be indemnified of his
expenses of cultivation.

With regards to possessor in bad faith, he is not entitled to the pending

fruits nor reimbursement of the expenses of cultivation. However, he is entitled
to recover the necessary expenses incurred by him for the preservation of the
land or the thing which bore the fruit, for the same reason as above.

Question: How is possession acquired? How is it lost?

Answer: Pursuant to Article 531 of the NCC, possession is acquired in any of the
following ways:

(1) By material occupation of a thing or the exercise of a right;

(2) By subjecting the thing or right to the action of our will; and
(3) By the proper acts and legal formalities for the acquisition of such right.

The first appears to be an original mode of acquisition while the others

refer to derivative modes.

The acquisition of possession presupposes the existence of two (2)

essential elements: (1) the corpus, and (2) the animus possidendi. The first
refers to the material holding of the thing or the exercise of the right which may
be acquired through any of the modes earlier mentioned. The second, on the
other hand, refers the intent to possess the thing or right. In other words,
possession is not acquired in law in the absence of intent to possess it although
there is physical holding of the thing. For example, if stolen goods are placed in
the bag of a person by another without the former’s knowledge and consent, the

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former is not considered a possessor in law because of the absence of intent to
possess the goods.

The first mode is material occupation which means “actual physical

possession” or “material apprehension”. Obviously, this mode applies only to
corporeal objects and does not find application to acquisition of possession over a
right. It includes two (2) forms of constructive delivery: (1) tradicion brevi manu
and (2) tradicion constitutum possessorium. Take note that in these kinds of
constructive delivery, material occupation is involved. But for those kinds of
constructive delivery where material occupation is not involved, like tradicion
symbolica and tradicion longa manu, the mode of acquisition of possession is by
subjecting the thing to the action of our will or under the second mode.

Question: What is your understanding of the doctrine of “constructive

possession”?

Answer: The doctrine of constructive possession applies when the possession is

under title calling for the whole. As a rule, the possession and cultivation of a
portion of a tract under claim of ownership of all is a constructive possession of
all, if the remainder is not in the adverse possession of another. In other words,
the actual possession of part of the property is deemed to extend to the whole
because 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.

For this doctrine to apply, the following requisites must be present: (1)
the alleged possessor must be in actual possession of a portion or part of the
property; (2) he is claiming ownership of the whole area; (3) the remainder of
the area must not be in the adverse possession of another person; and (4) the
area claimed must be reasonable.

Case: Jesus de la Rosa and Lucila Carlos-de la Rosa, et.al. vs. Santiago Carlos
et.al., G.R. No. 147549, October 23, 2003, 414 SCRA 226 (2003).

Facts: Sps. de La Rosa alleged that they are the owners of a 352 square meter lot and house
erected thereon located at Paombong, Bulacan. In 1966, they bought subject property from
Leonardo Carlos, father of Lucila, Santiago and Teofila. Upon their acquisition, Sps. de la Rosa
renovated the house and put up perimeter fence around the lot. They also occupied the house

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from 1966 up to the present though they can be seen there usually during weekends and
holidays only because they were residing in Manila and their children were studying thereat.
While away, Sps. de la Rosa padlocked the house.

In October 1997, Sps. de la Rosa noticed that Santiago had built a house on the vacant
portion of the subject lot. Toefila had also been bringing some furniture and slept there. A
demand to vacate was sent to Santiago and Teofila but left unheeded. Thus, Sps. de la Rosa
filed a forcible entry suit against them. In their Answer, Santiago and Teofila invoked co-
ownership considering that the sale made by their father did not include the share of their
mother as there was no marital conformity in the deed of sale. They also insisted that Sps. de
la Rosa were not in possession of the subject property but came to visit their parents only while
the latter were still living. Can Santiago and Teofila be ejected from the premises?

Answer: Yes, they can be ejected from the subject property. While both parties are claiming
actual possession thereof, Sps. de la Rosa clearly established prior possession due to the fact
that they were able to renovate the house and constructed perimeter fence around the lot
which acts of dominion is consistent with possession. The fact that Sps. de la Rosa can be seen
during weekends and holidays is evidence of actual and physical possession. Even if the
spouses were residing in Manila, they could continue possessing the subject property and will
not result in loss of possession. The law does not require one in possession of a house to reside
in the house to maintain his possession. While the subject property has vacant portion does
not mean that Sps. de la Rosa were not in possession thereof because possession in the eyes of
the law does not mean that a man has to have his feet on every square meter of the ground
before he is deemed in possession.

The second mode connotes a degree of control over the thing sufficient to
subject the same to the action of one’will. This does not involve any material
apprehension like in the first mode. What is important in this mode is the
intention to possess manifested by certain facts which are present. Included in
this mode are the two (2) forms of constructive delivery, as follows: (1) tradicion
symbolica, and (2) tradicion longa manu.

Tradicion symbolica takes place through delivery of symbols or some object

which represent those to be delivered thus placing the thing under the control of
the transferee. Through this mode, the delivery of the key to a warehouse or key
of the car is sufficient to transfer its possession. On the other hand, tradicion
longa manu is effected by the transferor pointing out to the transferee the things
which are being transferred. Like, pointing to the carabao tied under the coconut
tree as the subject of the sale.

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 The third mode of acquiring possession refers to any juridical act by which
possession is acquired or to which the law gives the force of acts of possession.
Examples of these juridical acts are donations, intestate and testate succession,
execution of public documents including bill of sales in foreclosure sales.

Case: China Banking Corporation vs. Sps. Tobias L. Lozada and Erlina P. Lozada,
G.R. No. 164919, July 4, 2008.

Facts: In 1995, Sps. Lozada entered into a Contract to Sell with Primetown Property Group, Inc.
(PPGI), the developer of Makati Prime City Condominium Townhomes Project, for the
purchase of one (1) condo unit described as Unit No. 402. Six (6) months later, PPGI secured a
loan with China Banking Corp. (CBC) using 51 units of the condominium including Unit No. 402
as security. Since PPGI failed to pay its indebtedness despite repeated demands, CBC filed a
petition for Extra-judicial Foreclosure of Real Estate Mortgage, and in the auction sale that
followed, CBC was the highest bidder. For PPGI’s failure to redeem the property within the
prescribed period, CBC consolidated its ownership over the foreclosed units including Unit No.
402. Thus, the title of said unit in PPGI’s name was cancelled and lieu thereof, new title was
issued to CBC.

It appears, however, that prior to the foreclosure sale, PPGI advised Sps. Lozada, thru a
letter, to directly remit its payments to CBC pursuant to the terms and conditions of their
Contract to Sell. Per record, no immediate action was taken by Sps. Lozada. But a year after
the foreclosure sale, Sps. Lozada caused the annotation of a Notice of Adverse Claim upon the
title of Unit No. 402 in the name of CBC. An exchange of letters ensued between Sps. Lozada
and CBC but no agreement was reached. Hence, CBC demanded from Sps. Lozada to vacate
and turn-over possession of Unit No. 402 but to no avail. Thus, CBC filed with the court a
Petition for Issuance of a Writ of Possession. After reception of evidence, and without Sps.
Lozada’s presence, the trial court issued the Writ of Possession. Is the issuance of the writ
proper?

Answer: Yes, the purchaser in the public auction sale of a foreclosed property is entitled to a
writ of possession, and upon ex parte petition of the purchaser, it is ministerial upon the court
to issue such writ of possession in his favor unless a third party is actually holding the property
adversely to the judgment debtor. Otherwise stated, where there is a third party holding the
property adverse to that of the judgment debtor, issuance of the writ cease to be ministerial.
In this case, the fact that Sps. Lozada derived their right to possess Unit No. 402 from PPGI
pursuant to their Contract to Sell, such possession cannot be considered adverse to that of
PPGI. They have no independent right of possession (like co-owner, agricultural tenant or
usufructuary) other than that they acquired from PPGI. Hence, Sps. Lozada are merely
considered as transferee of or successor to the right of possession of PPGI over Unit No. 402.
Therefore, the exception to the above-cited rule finds no application the spouses.

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 Of importance to you also is the execution of a public document as a mode
of delivery because under the Law on Sales, the execution of a public instrument
of sale is recognized as equivalent to the delivery of the thing sold. Jurisprudence
teaches us, however, that the execution of a contract of sale as a form of
constructive delivery is but a legal fiction. It holds true only when there is no
impediment that may prevent the passing of the property from the hands of the
vendor into those of the vendee. When there is such impediment, fiction yields
to reality- meaning, the delivery has not been effected. Stated differently, the
execution of a public instrument gives rise only to a prima facie presumption of
delivery. Such presumption is destroyed when the instrument itself expresses or
implies that delivery was not intended, or when by other means it is shown that
such delivery was not effected because a third person was actually in possession
of the thing.

Case: Zenaida M. Santos vs. Calixto Santos, Alberto Santos, Rosa Santos-
Careon and Antonio Santos, G.R. No. 133895 October 2, 2001.

Facts: Sps. Jesus and Rosalia Santos owned a parcel of land in Sta. Cruz, Manila where an
apartment is erected. Said spouses bore five (5) children, namely, Salvador, Calixto, Alberto,
Rosa and Antonio. Petitioner Zenaida is the wife of Salvador. In 1959, Sps. Jesus and Rosalia
executed a deed of sale in favor of Salvador and Rosa thereby a title was issued to the two. In
1973, Rosa sold her share to Salvador resulting in the consolidation of title to Salvador.
Despite the transfer of property, Rosalia continued to receive the rentals from its tenants in
the apartment. In 1979, Jesus died, followed by Salvador in 1985 and Rosalia in the same year.
Shortly after, Zenaida, claiming as heir of Salvador demanded rental from one of the tenants
but it did not pay her. An ejectment suit was filed against said tenant and eventually was
ejected.

In 1989, the siblings of Salvador instituted an action for reconveyance of property against
Zenaida claiming that the deeds of sale in 1959 and 1973 were simulated for lack of
consideration, alleging that they were executed to accommodate Salvador in generating funds
for his business ventures. In her Answer, Zenaida countered that her husband is the registered
owner of the property, and the right to reconveyance had already prescribed. The lower court
ruled in favor of the plaintiffs and declared the deeds of sale null and void. CA affirmed. Is the
ruling of the lower court correct?

Answer: Yes. In this case, the SC had the opportunity to answer this question “is a sale
through a public instrument tantamount to delivery of the thing sold?” Article 1477 of the NCC
provides that ownership of the thing sold is transferred to the vendee upon its actual or
constructive delivery. Article 1498, in turn, provides that when a sale is made through a public
instrument, its execution is equivalent to delivery of the thing subject of the contract. But

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nowhere in the NCC does it provide that execution of deed of sale is conclusive presumption of
delivery of possession. The Code merely says that the execution shall be equivalent to delivery.
The presumption can be rebutted by clear and convincing evidence. Presumptive delivery can
be negated by the failure of the vendee to take actual possession of the land sold. Citing
Danguilan vs. IAC, 168 SCRA 22 (1988), it reiterated that for execution of a public instrument
to effect tradition, the purchaser must be placed in control of the thing sold. When there is no
impediment to prevent the thing sold from converting to tenancy of the purchaser by the sole
will of the vendor, symbolic delivery through the execution of public instrument is sufficient.
But if, notwithstanding the execution of the instrument, the purchaser cannot have the
enjoyment and material tenancy nor make use of it himself or through another in his name,
then delivery has not been effected.

See also the case of Equatorial Realty Development, Inc. vs. Mayfair
Theater, Inc., G.R. No. 133879, November 21, 2001.

Lastly, be familiar also with the rules pertaining to possession of movables

or personal property. Know by now that possession of movables acquired in good
faith does not only create a presumption of ownership but it is already equivalent
to title, unlike in immovable property where it creates only a disputable
presumption of ownership. This is the so called “doctrine of irrevindicability” of
movables. For this doctrine to apply, the following requisites must be present:
(1) the movable property must be acquired in good faith, and (2) the possession
must be in concept of an owner. Such that, if these two (2) requisites are
present, the true owner cannot recover it as a general rule for the title of the
present possessor is valid as against said true owner. However, this rule admits
of an exceptions. The exception is that, if the owner has lost a movable, or if he
has been unlawfully deprived thereof, he has the right to recover it, not only
from the finder, thief or robber, but also from third persons who may have
acquired it in good faith from such finder, thief or robber. Article 559 of the NCC
establishes two (2) exceptions to the general rule of irrevindicability, to wit,
when the owner (1) has lost the thing, or (2) has been unlawfully deprived
thereof.

It is imperative for you to know the rules pertaining to recovery of

movables which were lost, or whose possession the owner has been unlawfully
deprived of. The rules are as follows:

(1) In case of loss, the lost movable can always be recovered from its finder
and the latter is entitled to a reward equivalent to one-tenth of the sum or

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 price of the thing if he complies with the procedural requirements of Article
719 of the NCC. (Let the students read Article 719 of the Civil Code). To
reiterate, the recovery must be made, however, within a period of six (6)
months from the time of the publication required in said Article.

(2) If the finder does not comply with the procedural requirements of Article
719 of the NCC, and appropriates for himself the movable property he
found, he shall be liable for the crime of theft under Article 308 paragraph
1 of the Revised Penal Code, in which case, the owner of the movable can
recover its possession without need of paying any indemnity.

(3) If the finder does not comply with the procedural requirements of Article
719 of the NCC and subsequently transfers possession of the lost movable
in favor of third persons, the owner of said movable can still recover its
possession from such third person without need of paying any indemnity,
even if the latter may have acted in good faith or an innocent purchaser for
value. However, if the third person has acquired the movable in good
faith at a public sale (auction sale), its owner may still recover its
possession from said third person but he is required to reimburse the third
person of the price paid therefor.

On the other hand, in case of unlawful deprivation, the owner can always
recover possession of his movable from the present possessor without need of
paying any indemnity unless the latter has acquired the movable in good faith at a
public sale (auction sale). The owner who recovers possession unjustly lost shall
be deemed, for all purposes which may redound to his benefit, to have enjoyed
it without interruption.

USUFRUCT

Know the concept of usufruct whereby it is a real right by virtue of which a

person is given the right to enjoy the property of another with the obligation of
preserving its form and substance, unless the title constituting it or the law
provides otherwise. As we can see, there are two (2) personalities involved in
usufruct, the one who is to enjoy the property of another is called the
“usufructuary”, or “taga-gamit ng ari ng iba” and the owner of the property
known as “naked owner” or “hubad na pag-aari” or “hubad na may-ari”.

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 Now, know its special features because by knowing these features, you will
be able to answer any question relating to usufruct, as follows:

• It is temporary in character. The right of usufruct is extinguished upon

expiration of the period for which it is constituted or upon the death of the
usufructuary, as a rule. This is so because there are usufruct that are not
extinguished upon the death of the usufructuary, e.g. if the contract of
usufruct expressly so provides, or in case of multiple usufruct, wherein
there are two or more usufructuaries.

• It is a real right and an encumbrance upon another’s property. Take note

that usufruct includes both jus utendi (right to use) and jus fruendi (right
to its fruits) whether it be natural, industrial or civil fruits. This being so, it
is a limitation on the right of ownership because the owner is deprived of
its use and entitlement of the fruits of his property.

It imposes upon the usufructuary to preserve the form and substance of

the thing under usufruct. While enjoying its use and its fruits, the
usufructuary is, under normal circumstances, obliged to preserve the form
and substance of the thing under usufruct. Though, this obligation is not,
however, an indispensable requirement for the constitution of usufruct
because there are instance where the usufructuary is not obliged to
preserve its form and substance, to wit:

(a) When the law or the title creating the usufruct provides that the
usufructuary is not so obliged;

(b) When the usufruct includes things which, without being consumed,
gradually deteriorate through wear and tear, and

(c) When the usufruct includes things which cannot be used without being
consumed as in improper or abnormal usufruct.

From our understanding of this concept of usufruct, there are actually

two (2) requisites, (1) essential and (2) accidental. The essential requisite is the

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right to enjoy the property of another, while the accidental requisite is the
obligation of preserving the form and substance of such property.

Question: How is usufruct constituted?

Answer: Article 563 of the New Civil Code is the answer. Usufruct maybe created
through any of the following modes:

• By law or legal usufruct, example, usufruct of the parents over the

property of their minor children living in their custody and under their
parental authority pursuant to Article 226 of the Family Code.

• By the will of private persons expressed in acts inter vivos, such as

contracts and donations, or expressed in a last will and testament. This is
referred to as “voluntary usufruct”.

• By prescription. This is referred to as “mixed usufruct”.

Essential to the exercise of his right to use and the right to the fruits of the
thing in usufruct, the right of the usufructuary includes the right to possess the
property. In fact, usufructuary is deemed a “lawful possessor” for purposes of
applying the provisions of Article 429 of the New Civil Code where the doctrine of
“self-help” applies. As such, he has the right to exclude any person from the
enjoyment of the property, including the naked owner himself, and for such
purpose, he may even use force as may be reasonably necessary to repel or
prevent an actual or threatened unlawful physical invasion or usurpation of the
property. Of course, the right to exclude the owner is not absolute because under
Article 595, the naked owner of an immovable held in usufruct may, during the
existence of the usufruct, enter the property for the purpose of constructing any
works, making any improvements or new plantings thereon if the land is rural,
provided that such acts must not cause a diminution in the value of the usufruct
or prejudice the right of the usufructuary.

Question: Can the right of usufruct be alienated or encumbered?

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Answer: Yes. While the usufructuary has no right to dispose the property subject
of usufruct but he can alienate or encumber his right of usufruct to third persons
even without the consent of the naked owner. In other words, the law does not
require the usufructuary to personally enjoy the property in usufruct. He is
allowed to transfer such right of enjoyment either by leasing it or by alienating
the right of usufruct itself, which contracts, however, are subject to the life of
the usufruct.

However, there are instances where right of usufruct may not be alienated,
as follows:

• The legal usufruct of the parents over the fruits and income of the property
of unemancipated children pursuant to Art. 226 of the Family Code, since
the same is to be devoted primarily to the child’s support and secondarily,
to the collective needs of the family;

• The usufruct that is granted to a usufructuary in consideration of his person

to last during his lifetime since the usufruct is a matter of personal quality;
and

• When the enjoyment of the property held in usufruct is acquired through

caucion juratoria in as much as the basis is the need of the usufructuary.
Caucion juratoria refers to the promise under oath made in court by the
usufructuary who has not given security for the purpose of acquiring the
use of the following: (a) furniture necessary for his use; (b) dwelling house;
or (c) implements, tools and other movable property necessary for an
industry or vocation in which he is engaged.

Question: What is the effect of the alienation of the right to usufruct by the
usufructuary?

Answer: It will not result in the termination of the relation between the
usufructuary and the naked owner. Meaning, the life of the usufruct will
continue to subsist but the usufructuary is under obligation to still preserve the
property, and in the event damage will arise, he will still be personally liable to
the naked owner. In fact, in some cases, the usufructuary is required to give

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security or bond to answer for whatever liabilities he may incur upon the
termination of the usufruct.

Complimentary to these questions are the following:

Question: Can the naked owner alienate or mortgage the property held in
usufruct?

Answer: Yes, the naked owner may alienate or validly mortgage the property in
usufruct to third persons even without the consent of the usufructuary but he
cannot exercise such right in a manner that will have an adverse effect upon the
latter. In other words, the naked owner may not in any way interfere with the
rights of the usufructuary. This is very clear in Article 581 of the New Civil Code.
In short, the buyer of the property from the naked owner will merely steps into
the shoes of the latter such that his right of ownership is limited and subject to
the right of the usufructuary. Same is true with the mortgagee, his rights is
limited to that extent.

Question: What is the effect of the alienation of the property held in usufruct to
the rights of the usufructuary?

Answer: The rights of the usufructuary cannot be curtailed or diminished by the

alienation of the thing in usufruct. Even if the ownership of the property had
been validly transferred to another person, the usufruct already constituted will
still subsist until the same is effectively extinguished.

It is very clear, therefore, that during the existence of the usufruct, the
naked owner may still exercise some of his rights as owner with respect to the
property held in usufruct subject only to the following limitations:

• That there shall be no alteration of the form or substance of the thing;

• That it shall not be prejudicial nor injurious to the right of the usufructuary;
• That there shall be no diminution in the value of the usufruct.

However, over and above these limitations, the naked owner may still
exercise the following rights:

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 • The owner may alienate the property held in usufruct since the owner
retains the jus disponendi;
• The owner may mortgage the property held in usufruct since he retains the
jus disponendi;
• The owner may construct any works and make any improvements of
which the immovable in usufruct is susceptible, or make new plantings
thereof, if it be rural.
• The owner may, without the consent of the usufructuary, impose a
voluntary easement upon the tenement or piece of land held in usufruct
since easement consists only of a limited use and enjoyment of the thing
without possession.

Question: Can the naked owner lease the property held in usufruct to a third
person?

Answer: No, the naked owner may not constitute a lease over the property held
in usufruct to a third person because lease involves use and possession of the
property, which use and possession is already transferred to the usufructuary.
Note that it is the usufructuary who has the right to constitute a lease over the
property held in usufruct but not the naked owner.

For your purpose, since the right of the usufructuary involves the right to its
fruits, you must know the special rules pertaining to the entitlement of the fruits,
natural, industrial and civil, of the usufructuary from the time of its inception
and upon the termination of the usufruct. Say, for instance, at the time the
usufruct was constituted on a mango plantation, there were ungathered fruits,
who will be entitled to these fruits?

The general rule is, fruits, be it natural, industrial or civil, belongs to the
owner of the property but way of exception, the usufructuary, as a rule, is
entitled to all of these. As such, the usufructuary is entitled to the products and
income from the property subject to the usufruct.

There is no question that the usufructuary is entitled to the fruits during the
existence of the usufruct but, what is the rule if there are ungathered or pending
fruits at the commencement and by the time the usufruct is terminated?

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Answer: These are the rules:

• Natural or industrial fruits which are still pending or ungathered at the

time that the usufruct begins, belong to the usufructuary, and he has no
obligation to refund to the owner any expense incurred by the latter in
connection with the cultivation and production of such fruits;

• Natural or industrial fruits which are still pending or ungathered at the time
the usufruct terminates, the same shall belong to the owner of the
property but the latter is obliged to reimburse the usufructuary the
ordinary expenses of cultivation, for seeds and other similar expenses
incurred by the usufructuary;

• Civil fruits shall accrue daily such that is shall belong to the usufructuary in
proportion to the time the usufruct may last. For example, if the
usufructuary has leased the property given in usufruct and the usufruct
expired before the termination of the lease, the usufructuary is entitled to
receive the rents for such period which coincides with his usufruct. Upon
the termination of the usufruct, the lease entered into by the usufructuary
also terminates unless the owner decides to continue with the same, in
which case, the rents accruing upon the termination of the usufruct shall
now belong to the owner.

Also, familiarize yourself the rights and obligations whenever the

usufructuary incurs necessary, useful and ornamental expenses on the property
subject of the usufruct.

Under the law, the usufructuary has the right to introduce improvements
on the property held in usufruct whether the same be a useful improvement or
for mere pleasure provided that he does not alter its form or substance. But,
upon termination of the usufruct he is not entitled to seek reimbursement for the
expenses he incurred in connection with the aforesaid improvements, because if
the rule is otherwise, then the usufructuary might improve the owner out of his
property. In other words, if the builder is a usufructuary, his rights will be
governed by Articles 579 and 580 of the New Civil Code, The rules in industrial
accession and the rules of possession where the builder is entitled to
reimbursement, does not apply.
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 In relation to such improvements, the only rights that may be exercised by
the usufructuary are the following:

• He may, at his option, remove the improvement if such removal is

possible without damage to the property and the owner cannot prevent
him even if the latter offers to pay its value; The option is with the
usufructuary not on the owner unlike the rules in industrial accession
where the landowner is given the option to appropriate the improvements
made on his property;
• He may set-off the improvement against any damage he has caused to the
property held in usufruct.

Now, having discussed the rights of the usufructuary, what, then, are his
obligations?

Answer: The obligations of the usufructuary may be grouped into three (3)
different stages:

• Those required at the commencement of the usufruct;

• Those required during the life of the usufruct; and
• Those required at the termination of the usufruct.

The following are the obligations of the usufructuary at the

commencement of usufruct:

• To make an inventory of all the property covered by the right of usufruct;

• To give security or bond.

Where the usufructuary failed to comply with these obligations, the

usufructuary cannot, as yet, possess and enjoy the property under usufruct, but
the period of the usufruct commence to run or the usufruct becomes effective.
Otherwise stated, the failure of the usufructuary to make the inventory or to give
the security required at the commencement of the usufruct will only prevent him
from exercising his right of usufruct but it will not result in the termination of the
usufruct. It is not one of the causes for the extinguishment of the usufruct. In the
meantime, the owner may retain in possession the property as its administrator.

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The moment the usufructuary was able to comply with these obligations, the
effects thereof shall retroacts to the day of the constitution of the usufruct.

Question: Are there instances where the usufructuary is exempted from the
requirement of giving a security or putting up a bond?

Answer: Yes, in the following instances:

• When the donor has reserved the usufruct of the property donated;
• In case of legal usufruct of the parents over the property of their minor
children living in their custody and under their parental authority, except
when the parents contract a second marriage or when the market value of
the property or the annual income of the child exceeds P50,000.00.

The New Civil Code enumerates the following causes for extinguishment of
usufruct:

1. By the death of the usufructuary, unless a contrary intention appears;

2. By the expiration of the period for which it was constituted, or by the
fulfillment of any resolutory condition provided in the title creating the
usufruct;
3. By merger of the usufruct and ownership in the same person;
4. By renunciation of the usufructuary;
5. By the total loss of the thing in usufruct;
6. By the termination of the right of the person constituting the usufruct; and
7. By prescription.

Case: Mercedes Moralidad vs. Sps. Diosdado Pernes and Arlene Pernes, G.R.
No. 152809, August 3, 2006.

Facts: For many years, Mercedes worked in the U.S. but usually spend her two-month vacation
at Davao City. Being single, she stayed at the house of her neice, Arlene Pernes at Mandug,
Davao City. Afraid of the deteriorating peace and order in Mandug, she bought a lot in Davao
City proper. Initially, she bought subject lot for the Pernes couple to transfer from Mandug,
but later she wanted the property also available to any of her kins wishing to live and settle in
Davao City on condition that they will maintain an atmosphere of cooperation, live in harmony
and avoid bickerings . She made known of such intention in a document she executed dated
July 21, 1986.

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 Following her retirement, Mercedes returned to the Philippines and stayed at Arlene’s
house built within said lot. In the course of time, their relations turned sour to the extent that
Mercedes caused the filing of complaints in the barangay for slander, harassment, threat and
defamation against Pernes family. The Lupon insinuated for Pernes to vacate the lot but they
cannot agree as to the reimbursement of the latter’s improvement. Their conflict became
worst. This was followed by an administrative case before the Ombudsman against the Pernes
couple being both government employees, however, was dismissed. Since the Pernes couple
did not vacate despite demand, an unlawful detainer suit was instituted by Mercedes against
Pernes couple. In their Answer, Pernes couple invoked the stipulation in the July 21, 196
document that their occupation of the lot was with the express consent of Mercedes as long as
they like. Just the same, the MTC ruled for their ouster from the subject lot. Is the ruling of
the court correct?

Answer: Yes, the Pernes couple can be ejected because their right to use the subject lot was
extinguished or terminated pursuant to the document constituting the usufruct itself. In the
said document, the stay of any of her kins including the Pernes couple was subject to the
condition that they will live in harmony, and atmosphere of cooperation and avoid bickerings
with one another. The fact that strained relations prevailed between the parties, the
resolutory condition was fulfilled thereby terminating the usufruct constituted upon the
property. Therefore, the right to use subject lot by Pernes couple ceases upon the demand to
vacate sent to them. For their failure to heed to the demand, the unlawful detainer suit is the
proper remedy resorted to by Mercedes to oust the Pernes couple from their occupation of the
subject lot.

EASEMENT (SERVITUDES)

By understanding the concept of easement or servitude, you will be able to

answer any question in the Bar examination pertaining to the subject matter.
These concepts are as follows:

a) It is a real right;
b) It is a right which consists of a limited use and enjoyment of the thing
without possession;
c) It is a right enjoyed over an immovable property;
d) It is a right which is enjoyed over another’s property.

I presumed you possessed working knowledge on the different kinds of

easement depending on who is the beneficiary or in whose favor it is created, as
to its source, and as to how it is exercised. These are the following:

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 a) As to recipient of the benefit, real, if the one benefitted is another
immovable, and personal, if those benefitted is a community, a group of
persons or an individual.

b) As to its source, legal, those which can be enforced by law , and

therefore can be established even against the will of the owner of the
servient estate, and voluntary, those created by reason of the will of the
owner of the servient estate.

c) As to its exercise, continuous, if its use is incessant without the

intervention of man, and discontinuous, if it is used at intervals or
depends upon the act of man. Easement may also be apparent, if external
signs are visible, or non-apparent, those which have no indication of their
existence. Easements may also be positive, if it imposes upon the owner of
the servient estate the obligation of allowing something to be done on his
property, and negative, when it prohibits the owner of the servient estate
from doing something which he could lawfully do if the easement did not
exist.

Many cases on easement or servitudes reached the Supreme Court on the

issue whether easement was legally constituted on the property subject of
litigation. Hence, you ought to know the kinds of easements and how it is
acquired.

There are two (2) modes of acquiring easements, (1) by title, and (2) by
prescription. All kinds of easements, whether continuous or discontinuous,
apparent or non-apparent, positive or negative, can be acquired by title,
meaning it can be acquired by law, donation, contract and wills. But only
continuous and apparent easements may be acquired by virtue of prescription.

2014 Bar Examination Question No. XI

An easement that can be acquired by prescription. (1%)

(a) Right of way

(b) Watering an animal
(c) Lateral and subjacent support

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 (d) Light and view.

If the easement is both continuous and apparent, it may be acquired by

virtue of prescription within a period of ten (10) years. The commencement of
the 10-year period will depend on whether the easement is positive or negative.
If the easement is positive, the 10-year period is counted from the day on which
the owner of the dominant estate, or the person who may have made use of the
easement, commenced to exercise it upon the servient estate. If the easement is
negative, the 10-year period is counted from the day on which the owner of the
dominant estate forbade, by an instrument acknowledged before a notary public,
the owner of the servient estate, from executing an act which would be lawful
without the easement. To illustrate this concept, let the students imagine by
opening a window in one’s own wall, in a party wall, and in the wall of another.
The first applies the notarial prohibition, while in the second and third, it being a
positive one, the prescription starts to run at the precise moment when the
window was opened.

It is imperative for you to be reminded of the rules pertaining to specific

private legal easements under the New Civil Code, particularly easement of
public use, easement of right of way and easement of light and view. These kind
of easements are usually subject of bar questions in the past.

In easement for public use, consider the following case:

Case: Pilar Development Corporation (PDC) vs. Ramon Dumadag, et.al., G.R.
No. 194336, March 11, 2013.

Facts: PDC is the registered owner of a 5,613 square meter lot of Pilar Village, an open space
intended for village recreation facilities and amenities for subdivision residents. Dumadag and
other settlers built their shanties within the lot situated on the sloping area going down and
leading towards Mahabang Ilog Creek, and within the 3-meter legal easement. Asserting that
the settlers occupied the premises without its knowledge and consent, PDC instituted a
complaint for accion publiciana against them. The trial court dismissed the complaint on the
ground that PDC could not be the owner of the disputed portion because it is a public property
and part of public dominion. Further, the trial court noted that the occupied area is within the
3-meter strip annotated in PDC’s title reserved for public easement, hence, cannot be
privately appropriated. In its appeal, PDC argued that although the portion occupied by the
settlers is within the 3-meter strip reserved for public easement, it still retains ownership

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thereof since the strip does not form part of the public dominion. As the owner of subject
parcel of land, though an easement is constituted therein, it is entitled to its lawful possession
conformably with Article 630 of the NCC. Is PDC’s contention tenable?

Answer: No. While Article 630 of the NCC provides for the general rule that the owner of the
servient estate retains the ownership of the portion on which the easement is established, and
may use the same in such a manner as not to affect the exercise of the easement, Article 635
thereof is specific in saying that “all matters concerning easement established for public or
communal use shall be governed by the special laws and regulations relating thereto”. Thus, in
implementing the provisions of RA No. 1273 and PD Nos. 705 and 1067, which governs
residential subdivisions, the allocation of the 3-meter strip along the banks of stream, like the
Mahabang Ilog Creek, is required and shall be considered as forming part of the open space
requirement pursuant to PD No. 1216 which provides that open spaces are for public use and
are, therefore, beyond the commerce of man, and that the areas reserved for parks,
playgrounds, and recreational use shall be non-alienable public lands and non-buildable. The
same provision is found in Article 51 of PD No. 1067 or the Water Code of the Philippines,
which provides that banks of rivers and streams and the shores of the seas and lake throughout
the entire length and within 3-meters in urban areas, 20 meters in agricultural areas and 40
meters in forest areas, along their margins are subject to the easement of public use in the
interest of recreation, navigation, floatage, fishing and salvage. Thus, PDC’s right of
ownership and possession has been limited by law with respect to the 3-meter strip zone along
the banks of Mahabang Ilog Creek for which it is not the proper party to institute recovery suit
against the settlers.

In the same Pilar Dev’t. case, the SC ruled that it is the Republic of the
Philippines, through the Office of the Solicitor General or the LGU of Las Piňas
City may institute recovery actions against these informal settlers depending on
the purpose sought to be achieved. The former may file and action for reversion
under CA 141 while the latter may act pursuant to the implementation of the
provisions of RA No. 7279 otherwise known as the “Urban Development and
Housing Act of 1992”.

Another important easement to consider is the easement of right of way,

that by demand of necessity, enable owners of isolated estates to make full use
of their properties which lack access to public roads, by allowing them to cross or
traverse a servient estate without being prevented or disturbed by its owner. This
easement may only be acquired by title as it is classified as a discontinuous
easement because it exists only when the dominant owner actually passes or
crosses the servient estate.

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 Easement of right of way may be voluntary or compulsory. A voluntary
easement of right of way is constituted by agreement and does not, therefore,
require that the dominant easement be isolated and without an adequate outlet
to a public highway. If an estate, however, is so isolated and without an
adequate outlet to a public highway, the grant of easement of right of way is
compulsory and hence, legally demandable subject to indemnity and the
concurrence of other conditions enumerated in Article 649 and 650 of the NCC.

There are four (4) essential requisites to be complied with by the owner
before an easement of right of way may be compulsorily granted, to wit: (1) that
the dominant estate is surrounded by other immovables and has no adequate
outlet to a public highway; (2) after payment of proper indemnity; (3) that the
isolation was not due to acts of the owner of the dominant estate; and (4) that
the right of way claimed is at the point least prejudicial to the servient estate,
and in so far as consistent with this rule, where the distance from the dominant
estate to a public highway may be the shortest.

In order to entitle the owner of the dominant estate to demand for a

compulsory right of way, it is required that his estate must be “surrounded by
other immovables pertaining to other persons”, hence, the first requisite. The
estate, however, need not be totally landlocked as the isolation of the dominant
estate is also dependent on the particular need of the dominant owner. What is
important to consider is whether or not a right of way is necessary to fill a
reasonable need therefor by the owner. Further, the first requisite provides that,
aside from its isolation, the dominant estate has without adequate outlet to a
public highway. The true standard, therefore, for the grant of the legal right is
“adequacy”. Hence, when there is already an existing adequate outlet from the
dominant estate to a public highway, even if the said outlet be inconvenient to
the users, the need to open up another servitude is not justified.

Case: Crispin Dichoso, Jr., et.al. vs. Patrocinio Marcos, G.R. No. 180282, April
11, 2011.

Facts: Dichoso, Jr. is the owner of Lot No. 20553. Since they had no access to a public road to
and from their property, they were using portion of Lot No. 1 owned by Marcos as access road
since 1970. However, Marcos blocked the passageway with piles of sand. Meanwhile,
Dichoso, Jr. was granted another passageway by the owner of their adjacent lot but still he filed
a complaint for easement of right of way against Marcos in August 2002 because their new

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passageway is long, circuitous and so inconvenient for them that they need to pass through
different lots. In his Answer, Marcos denied to have allowed anybody to use his lot as
passageway. He also argued that there is already an existing easement of right of way available
for Dichoso, Jr. courtesy of their adjoining lot owner, thus, no need to establish another
easement in favor of Dichoso’s property. The trial court granted the easement to Dichoso but
said decision was reversed by the CA and ruled that even if the other passageway is longer and
circuitous, said access road is adequate. The CA emphasized that the convenience of the
dominant estate is never the gauge for the grant of compulsory right of way. Is the CA correct?

Answer: Yes. In order to justify the imposition of an easement of right of way, there must be
real, not fictitious or artificial, necessity for it. Mere convenience for the dominant estate is
not what is required by law as the basis of setting up a compulsory easement. The convenience
of the dominant estate has never been the gauge for the grant of a compulsory right of way. To
be sure, the true standard for the grant of the legal right is “adequacy”. Hence, when there is
already an existing adequate outlet from the dominant estate to a public highway, as in this
case, even if the said outlet, for one reason or another, be inconvenient, the need to open up
another servitude is entirely unjustified.

In addition, the law makes it clear that an owner cannot, by his own act,
isolate his property from a public highway and then claim an easement of way
through an adjacent estate. In short, the claimant of a right of way must not
himself procured the isolation of his property. This is the third requisite.

Article 650 of the NCC embodies the fourth requisite which explicitly states
that the easement of right of way shall be established at the point least
prejudicial to the servient estate and, in so far as consistent with this rule, where
the distance from the dominant estate to a public highway may be the shortest.
The criterion of least prejudice to the servient estate must prevail over the
criterion of shortest distance although this is a matter of judicial appreciation.
While shortest distance may ordinarily imply least prejudice, it is not always so as
when there are permanent structures obstructing the shortest distance; while
the longest distance may be free of obstructions and the easiest or most
convenient to pass through. In other words, where the easement may be
established on any of several easements surrounding the dominant estate, the
one where the way is shortest and will cause the least damage should be chosen.
However, if these two (2) circumstances do not concur in a single tenement, the
way which will cause the least damage should be used, even if it will not be the
shortest. This is the test.

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 In as much that easement of right of way is an encumbrance on the part of
the servient estate, such that it results in the curtailment of its owner’s
proprietary rights, it is just and reasonable that he should be compensated for
such prejudice consisting of the value of the land occupied and the amount of the
damage caused to the servient estate, if the passage is permanent in nature.
However, in case such passage is not permanent as it is used only for cultivation
of the estate and the gathering of its crops, the indemnity shall consists in the
payment of the damage caused by such encumbrance. In short, the grant of
right of way, as it is acquired by title only, demands payment of indemnity from
the owner of the dominant estate or from whom such are benefitted by it,
hence, the second requisite.

Question: Can a right of way be granted without paying an indemnity to the

owner of the servient estate?

Answer: Yes, because whenever a piece of land which is acquired by sale,

exchange or partition is surrounded by other estates of the vendor, exchanger or
co-owner, the owner is entitled to a grant of right of way without indemnity.
Such grant of right of way is deemed a tacit condition of the contract and
essentially voluntary in character in as much as the estate is surrounded by the
estate of others through the will of the parties. But, if the owner acquires his
land by way of simple donation, there is no such tacit condition because the
donor receives nothing from the donee. Therefore, the donee can only demand
for a right of way after payment of the proper indemnity.

In compulsory right of way, the SC stressed that, by its nature, an

easement involves an abnormal restriction on the property rights of the servient
owner and is regarded as a charged or encumbrance on the servient estate. It is
incumbent upon the owner of the dominant estate to establish by clear and
convincing evidence the presence of all the pre-conditions before his claim for
easement of right of way may be granted.

Case: Liwayway Andres, et.al. vs. Sta. Lucia Realty and Dev’t. Inc., G.R. No.
201405, August 24, 2015.

Facts: Andres and others, claiming as co-owners of an unregistered agricultural land, filed a
complaint for easement of right of way against Sta. Lucia because the latter’s subdivision
known as Binangonan Metropolis East surrounded Andres’ property giving no access to the

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nearest public road, the Col. Guido Street. Andres and others’ claim of ownership was founded
on their alleged continuous possession of subject property for more than fifty (50) years
already, thus, extra-ordinary prescription operates in their favor. The trial court granted
Andres’ complaint and directed Sta. Lucia to yield 50 meters of its subdivision for use as right-
of-way of subject property. On appeal, the CA reversed the decision of the RTC upon the
finding that Andres was not able to establish their claim of ownership over subject property,
hence, no legal personality to asked for right-of-way. Is the CA ruling correct?

Answer: Yes, the CA is correct. It must be noted that subject property is an unregistered
agricultural land and that Andres’ claim was founded on prescription alleging to have been in
continuous possession of subject property for more than 50 years already. The SC is consistent
in its ruling that only lands of public domain subsequently classified and declared as no longer
intended for public use or for the development of national wealth or converted to patrimonial
property or lands of private ownership, may be alienated or disposed through any of the
modes of acquiring ownership. And if the mode of acquisition is prescription, like in this case,
it must first be shown that the land had already been converted to private ownership prior to
the requisite acquisitive prescription period, otherwise, Article 1113 of the NCC does not
apply. Absent such proof that the State declared that such property is no longer for its own
purpose, or converted into patrimonial property, the land remains to be property of public
dominion, hence, not susceptible to acquisition by virtue of prescription.

An equally important legal easement for you consider is the easement of

light and view. This consists of prohibiting or restraining the adjacent owner
from doing anything which may tend to cut-off or interrupt the light. In short, it
is limited to the obligation of the adjoining owner not to impede or interrupts the
light in going into the tenement of the owner who made the opening. Hence, this
easement necessarily includes an easement not to build higher because the latter
requires that the owner of the servient estate shall not build to a height that will
obstruct the window.

Corollarilly, the law prohibits the making of windows, apertures,

balconies, or other similar projections which afford a direct view upon or towards
an adjoining land or tenement without leaving a distance of two (2) meters
between the wall in which they are made and such contiguous or adjoining
property. In like manner, where the window or opening affords a side or oblique
view upon or towards such conterminous property, the law requires that the
distance be sixty (60) centimeters. Such distance shall be measured in cases of
direct views from the outer line of the wall when the opening do not project,
from the outer line of the latter when they do, and in cases of oblique view, from
the dividing line between the two properties.

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 The foregoing requirement does not apply to buildings separated by a
public way or alley, which is not less than three (3) meters wide, unless there is a
special regulation and local ordinance which provides to the contrary.

Question: What is the effect in case of violation of the distances required in

making an opening or window?

Answer: When windows or balconies are opened in violation of the distance

requirement in Article 670 of the NCC, the same may be ordered closed because
they constitute unlawful openings. The mere making of such unlawful opening
does not result in the running of the 10-year prescriptive period for the
acquisition of an easement of light and view. Since the easement is a negative
one, the 10-year period begins to run only from the time of the formal
prohibition is given to the adjoining owner.

If a building is right on the boundary line or the distances required in Article

670 are not observed, the owner of a wall adjoining a tenement or piece of land
belonging to another, which is not a party wall, may not make an opening in the
said wall except if the following conditions are present: (1) the opening must not
be more than 30 centimeters square and made at the height of the ceiling joist or
immediately under the ceiling, and with an iron grating embedded in the wall and
with a wire screen; (2) it must be for the purpose of admitting light only and not
for the purpose of view.

Question: What is the effect if an opening was made but did not comply with the
conditions laid down above?

Answer: If these conditions are violated, the owner of the tenement or property
adjoining the wall may demand for its closure as it constitute an unlawful opening
or he may compel the one who made the opening to comply with the foregoing
requirements.

Even in the absence of any violation, the owner of the adjacent property
may close the opening should he acquire part ownership of the wall where the
opening has been made, if there be no stipulation to the contrary. If the owner
of the adjacent property is not entitled to demand for the closure of the said

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opening because there was no violation of the conditions mentioned above, and
he does not acquire part-ownership of the wall, he may, nonetheless, obstruct
the opening by constructing a building on his land or by raising a wall thereon
contiguous to that having such opening as an exercise of his right of ownership,
except if the owner of the opening has already acquired an easement of light by
prescription.

Bar Problem:

Archie built a house on his residential lot up to the boundary line. In the
presence of Bryan, the adjoining owner, Archie opened windows with a direct
view over the lot of Bryan. Twelve (12) years later, Bryan built a house on his
own lot also right up to the boundary line. Archie brought an action against Bryan
to enjoin the latter from building a house up to the boundary line, alleging that
Bryan cannot build less than two (2) meters from the boundary line as he had
acquired an easement of light and view by prescription, and the action of Bryan
has already prescribed. Decide with reasons.

Answer: Archie’s argument is without merit because he cannot prohibit Bryan

from putting up structure up to his boundary line because he did not acquire
easement of light due to violation of the required distance pursuant to Section
708(a) of the National Building Code (2-meter setback rule) and that no notarial
prohibition was sent to Bryan prohibiting him to construct up to his boundary
line. Prescription did not also commence to run as against Bryan because of
Archie’s violation on the rule of distance.

Still on the rule on distance, violation of the same will not constitute a valid
cause of action. Consider the following case:

Case: Sps. Fernando Vergara and Herminia Vergara vs. Erlinda Torrecampo
Sonkin, G.R. No. 193659, June 15, 2015.

Facts: Vergara and Sonkin are adjoining owners in Norzagaray, Bulacan. In view of the
geographical configuration, Vergara’s property is higher in elevation than that of Sonkin. When
Sonkin bought the property in 1999, they raised the height of the partition wall and caused the
construction of their house thereon making the partition wall as their “fourth” wall where their
bedroom and bathroom are located.

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 In 2001, Vergara leveled their property by filling it up with filling materials. As a result,
Vergara’s property became higher than that of Sonkin by 1/3 of a meter. Thus, Sonkin
complained of the water leaking into their bedroom causing cracks and damaged to the paint
and wooden parquet floor. For failure of Vergara to heed to the demand of Sonkin for them to
put up a retaining wall on their property, a damage suit was filed by the latter against Vergara.
Will the damage suit prosper?

Answer: No. Sonkin’s complaint for damages will not prosper because they themselves
violated the law on distance by not observing the 2-meter setback rule from the boundary line.
It is undisputed that Sonkin’s property is lower in elevation than that of Vergara, thus, it is
legally obliged to receive the water that flow from the latter’s property pursuant to Article 637
of the NCC. Aware of the situation of their property, Sonkin should have accordingly made
necessary adjustments to their property to minimize the burden created by such legal
easement. Instead of doing so, they disregarded the easement and constructed their house
directly against the perimeter wall adjoining the Vergara’s property thereby violating the 2-
meter setback rule from the boundary line.. Hence, they should bear their own loss and the
damage suit must be dismissed.

And lastly, the legal easement of lateral and subjacent support which
pertains to the mutual right of two adjoining owners to have their land support
each other or the soil beneath. Each of two adjoining landowners is entitled to
the support of the other’s land in order to have its stability. Support is lateral
when the supported and the supporting lands are divided by a vertical plane.
Support is subjacent when the supported land is above and the supporting land is
beneath it. In short, this normally exists with respect to the soil in its natural
condition such that the law prohibits any excavation upon one’s land if the same
will deprive any adjacent land or building of sufficient lateral or subjacent
support.

Take note that this easement is a negative one because it is in the form of
prohibition on the part of the landowner from making any excavation that will
deprive the adjacent land or building of sufficient lateral or subjacent support
which may result in cave-ins or erosions. If the right of lateral and subjacent
support is violated, the adjoining landowner is entitled to seek injunctive relief,
in addition to the right to recover damages.

Case: Margarita F. Castro vs. Napoleon A. Monsod, G.R. No. 183719, February
2, 2011

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Facts: Castro is the registered owner of a parcel of land located in Manuela Homes. Adjoining
Casrtro’s lot is the lot of Monsod, though already within Moonwalk Village. There is a 2-meter
high concrete fence that divides Manuela Homes and Moonwalk Village.

When the Manuela Homes was being developed, its developer bulldozed, excavated,
and transferred portions of the elevated land to the lower portions of Manuela Homes. Thus,
Manuela Homes became lower than Moonwalk Village. The developer assured that, as
provided by the National Building Code, an embankment will be retained at the boundary of
Manuela Homes and Moonwalk Village which is more or less fifteen (15) feet higher than
Manuela Homes. Manuela Homes retained the embankment consisting of soil and rocks.
Monsod had the open space riprapped with stones as reinforcement against any potential soil
erosion, earthquake, and possible digging by any person.

Monsod caused the annotation of an adverse claim in Castro’s title over the sixty-five (65)
square meters of the latter’s property. The adverse claim was filed without any claim of
ownership over the property. Monsod was merely asserting the existing legal easement of
lateral and subjacent support at the rear portion of his estate to prevent the property from
collapsing, since his property is located at an elevated plateau of fifteen (15) feet above the
level of the property of Castro.

Prior to the filing of the case, there were deposits of soil and rocks about two (2) meters
away from the front door of the house of Castro. When Castro noticed a leak that caused the
front portion of her house to be slippery, she hired workers as to the source of the leak.
Subsequently, Castro’s workers started digging when policemen sent by Monsod came and
stopped the workers from finishing their job. (1) Does easement of lateral and subjacent
support exists in Monsod’s favor? (2) Is Monsod’s action to annotate his adverse claim in the
certificate of title of Castro necessary?

Answer: (1) Yes, easement of lateral and subjacent support exists in Monsod’s favor. While it
is true that under Article 437 of the NCC provides that the owner of a parcel of land is the
owner of its surface and of everything under it, and he can construct theron any works, or
make any plantation or excavations which may deem proper, however, such right of the
owner is not absolute because it is subject to the following limitations: (a) servitudes or
easements; (b) special laws; (c) ordinances; (d) reasonable requirements of aerial navigation,
and (e) rights of third persons. Thus, Article 684 of the NCC provides that no proprietor shall
make such excavations upon his land as to deprive any adjacent land or building of sufficient
lateral or subjacent support. An owner, by virtue of his surface right, may make excavations on
his land, but his right is subject to the limitation that he shall not deprive any adjacent land or
building of sufficient lateral or subjacent support. Between two adjacent owners, each has an
absolute right to have his land laterally supported by the soil of his neighbor, and if either, in
excavating on his own premises, he she disturbs the lateral support of his neighbor’s land as to
cause it, or, in its natural state, by the pressure of its own weight, to fall away or slide in its
position, the one so excavating is liable.

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 In this case , it was established that the properties of the parties adjoin each other,
Monsod’s property is fifteen (15) feet higher in elevation as that of Castro’s. It was also proven
that Castro has been making excavations and diggings on the subject embankment and, unless
restrained, the continued excavation of the embankment could cause the foundation of the
rear portion of the house of Monsod to collapse which may result in the destruction of the
latter’s house. Clearly, easement of lateral and subjacent support exists in favor of Monsod.

An annotation of the existence of the lateral and subjacent support in the certificate of
title upon the servient estate is no longer necessary. It already exists by the nature of the
properties involved, considering that easements are established by law. Judicial recognition of
such easement is not required for it to be enforced against the servient estate. Otherwise,
every adjoining land owner would come to court or have the easement of subjacent and lateral
support registered for it to be recognized and respected.

What we are discussing previously are legal or compulsory easements.

There are also what we called “voluntary easements”. As a review, it is
compulsory if it can be demanded by the claimant as a matter of right upon
payment of the proper indemnity. If the claimant is not entitled to demand for an
easement as a matter of right because the requisites for a legal easement are not
present, the easement may only be constituted upon the will of the owner of the
servient estate, in which case, the easement is classified as voluntary.

2014 Bar Examination Question No. XV

Mr. Bong owns several properties in Pasig City. He decided to build a

condominium named Flores de Manila in one of his lots. To fund the project, he
obtained a loan from the National Bank (NB) secured by a real estate mortgage
over the adjoining property which he also owned.

During the construction, he built three (3) pumps on the mortgaged

property to supply water to the condominium. After one (1) year, the project
was completed and the condominium was turned over to the buyers. However,
Mr. Bong failed to pay his loan obligation to NB. Thus, NB foreclosed the
mortgaged property where the pumps were installed. During the sale on public
auction of the mortgaged property, Mr. Simon won in the bidding. When Mr.
Simon attempted to take possession of the property, the condominium owners,
who in the meantime constituted themselves into Flores de Manila, Inc. (FMI)
claimed that they have earlier filed a case for the declaration of the existence of
easement before the RTC of Pasig City and prayed that the easement be

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annotated in the title of the property foreclosed by NB. FMI further claimed that
when Mr. Bong installed the pumps in his adjoining property, a voluntary
easement was constituted in favor of FMI. Will the action prosper? (4%)

Answer: For you to find a correct answer, you ought to read the case of
Privatization and Management Office (PMO) vs. Legazpi Towers 300, Inc., G.R.
No. 147957 with a similar backdrop to the bar question.

(Take note that the ponente in this Legazpi Towers case is Associate Justice
Diosdado Peralta who happened to be the Chairman of the 2014 Bar
Examinations.)

NUISANCE

Literally, nuisance means annoyance, anything that works hurt or injury,

but in Article 694 of the NCC it legally and comprehensively define what nuisance
is. It is defined as “any act, omission, establishment, business, condition of
property or anything else which injures or endangers the health or safety of
others, annoys or offends the senses, shocks, defies or disregards decency or
morality, obstructs or interferes with the free passage of any public highway or
street, or any body of water or hinders or impairs the use of property.” Nuisance
is included, not in the chapter on negligence or quasi-delict simply because it is a
restriction or limitation upon ownership on property, hence, a proper subject
under the Law on Property. Such restriction or limitations affects the use or
enjoyment of the property by the owners. Though, there are nuisance that may
have resulted from negligent act or a consequence of such negligent act, but not
all negligent acts may result in nuisance.

I presumed you know already the basic distinction between private

nuisance and public nuisance, and nuisance per accidens and nuisance per se.
As between public and private nuisance, their distinction lies on the extent of the
population affected. In public nuisance, it generally affects considerable number
of persons or a community, though the degree of annoyance to each individuals
affected maybe not be the same. In private nuisance, on the other hand, it
affects only an individual or a limited number of individuals. Thus, private
nuisance includes any wrongful act which destroys or deteriorates the property of
an individual or of a few persons, or interferes with their lawful use or
enjoyment of their own property; or any act which unlawfully hinders them in
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the enjoyment of a common or public right and causes them a special injury
different from that sustained by the general public.

For nuisance per se and nuisance per accidens, be sure to identify their
contrasting features. Nuisance per se (nuisance in law) refers to those which are
recognized as a nuisance under any and all circumstances regardless of location or
surroundings because it constitutes a direct menace to public health or safety.
On the other hand, nuisance per accidens (nuisance in fact) refers to those which
are not nuisance per se but may become a nuisance by reason of the
circumstances of the location or surroundings or manner it is performed or
operated. Such being the case, since the existence of a nuisance per accidens is
a question of fact, it cannot be abated without due hearing thereon by a tribunal
authorized to decide whether such a thing does in law constitute a nuisance. The
basic test, therefore, to determine the existence of nuisance per se is whether
the nuisance has become dangerous at all times and under all circumstances to
life, health or property. Examples of nuisance per se are houses of ill-refute or
gambling dens. Examples of nuisance per accidens are foul-smelling pigpens, and
unregulated videoke bars.

Question: What is the “doctrine of attractive nuisance”?

Answer: This doctrine imposes liability to one who maintains on his premises
dangerous instrumentalities or appliances of a character likely to attract children
in play, and who fails to exercise ordinary care to prevent children from playing
therewith or resorting thereto. Such that, even if the child of tender years is a
trespasser in his premises, the owner cannot escape liability if the former be
injured thereby.

Question: Why does owners of this kind be liable even if there is clear negligence
on the part of the parent, guardian or custodian of the child of tender years?

Answer: Such condition or appliance is so enticing or alluring to children of

tender years as to induce them to approach, get on or use it, and this
attractiveness is an implied invitation to such children.

Question: Are beautiful women an attractive nuisance especially if there beauty

are irresistible and they are oozing with sex appeal?

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Answer: No, the accused cannot validly invoke the defense in the crime of acts of
lasciviousness that he was impelled with irresistible force when he touched the
private parts of the private complainant.

An example of this kind of property is a swimming pool where slides and

floating balls were installed and enticed children to play with thereon. But in
Hidalgo Enterprises vs. Balandan, 48 O.G. 264 (1932), this doctrine was not
applied even to bodies of water, artificial as well as natural, in the absence of
some unusual condition or artificial feature other than the mere water and its
location.

Since nuisance, whether private or public, is injurious to one’s own

interest and affects the use and enjoyment of one’s property, it needs to be
abated. Whatever be the classification of nuisance, it can remedied by (1) by
resorting to judicial recourse by filing a civil action against the person responsible
for it, and (2) abatement, without judicial proceedings. With regard to public
nuisance, the additional remedy of criminal prosecution under the provisions of
the Revised Penal Code, special penal law or any applicable local ordinance is also
available. Example is illegal gambling which can be prosecuted under our existing
laws (P.D. 1602) or local ordinance or violation of the provisions of Clean Air Act if
it emits foul smell in the environment or other environmental laws.

In the summary abatement of nuisance or abatement without judicial

proceedings, our Supreme Court clarified that this remedy is possible only if it is a
nuisance per se. In the old case of Salao vs. Santos, G.R. No. L-45519 (1939), the
business of smoked fish factory of Salao was ordered closed by the mayor and the
health authorities having found out, upon their own findings, that the same is a
nuisance. The SC declared the closure order as null and void as there was no
hearing conducted prior to its issuance simply because a smoked fish factory is
not a nuisance per se. It is a legitimate industry. If, it be a nuisance, it is only a
nuisance per accidens, hence, its abatement needs judicial recourse.

The same pronouncement was made by the SC in a case of Concepcion

Parayno vs. Jose Jovellano, etc., G.R. No. 148408, July 14, 2006, wherein a
resolution passed by the SB of Calasiao, Pangasinan authorizing the closure or
transfer of location of a gasoline station by authority of its Zoning Ordinance, was

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declared arbitrary. The SC declared that the business of gasoline station could not
be considered a nuisance per se which the municipality could summarily abate in
the guise of the exercise of police power. Hence, it cannot be closed down or
transferred summarily to another location without judicial action.

Case: Concepcion Parayno vs. Jose Jovellanos, etc. G.R. No. 148408, July 14,
2006.

Facts: Concepcion is the owner of a gasoline filling station in Calasiao, Pangasinan located in
the commercial/residential area of the municipality. Some residents petitioned the
Sangguniang Bayan of the municipality for the closure or transfer of the station to another
location. After the conduct of the investigation, the SB, through a resolution, recommended
to the Municipal Mayor for the closure or transfer of location of the gasoline station.
Concepcion filed a special civil action for prohibition and mandamus with the trial court with
prayer for preliminary injunction, but the same was dismissed and upheld the propriety of the
closure of the gasoline station by the municipality. Is the action of the municipality proper?

Answer: No. Concepcion’s business could not be considered a nuisance by which the
municipality could summarily abate in the guise of exercising police powers. The abatement of
nuisance without judicial proceedings is possible only if it is a nuisance per se. A gas station is
not a nuisance per se or one affecting the immediate safety of persons and property, hence, it
cannot be closed down or transferred summarily to another location.

Question: How about videoke bars, sauna parlors, motels, can this be ordered
closed by the authorities summarily? Especially if those that are singing in the
videoke bars at the top of their voice during wee hours, are out of tune?

Answer: No. In City of Manila rep. by Hon. Alfredo S. Lim, et. al. vs. Judge
Perfecto A.S. Laguio, Jr., G.R. No. 118127, 455 SCRA 308, April 25, 2005, it was
ruled that the ordinance prohibiting the operation of sauna parlors, massage
parlors, karaoke bars, night clubs, motels and inns within the Ermita-Malati area
known to be “red light district area” is void and was struck down. The SC held
that the City of Manila could not seek cover under the general welfare clause to
authorize the abatement of nuisances without judicial proceedings because these
establishments are not nuisance per se.

In these cases, the SC is sending a clear signal to LGU’s that resort to court
is the appropriate remedy to address nuisances even if it affects considerable

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number of constituents especially so if it is a business establishment because
these are not nuisance per se.

Case: CRISOSTOMO B. AQUINO vs. MUNICIPALITY OF MALAY, AKLAN, etc.

G.R. No. 211356, September 29, 2014 (737 SCRA 145)

Facts: Boracay Island West Cove Mgt. Philippines , through its President, Crisostomo B.
Aquino, operated a resort and commenced the construction of a three-storey hotel in Brgy.
Balagab, Boracay Island, pending approval of their application for a building permit with the
municipality. The area is covered by a Forest Land Use Agreement for Tourism Purposes issued
by the DENR in favor of Boracay West Cove. The Building Official of the municipality denied its
application for it violated Municipal Ordinance No. 2000-131 prohibiting setting up of
structures in designated “no-build zones”. Despite non-issuance of building permit and Mayor’s
Business Permit, Boracay West Cove continued its construction, expansion and operation of
the resort-hotel.

Due to this flagrant violation, a Cease and Desist Order was issued by the municipality
enjoining Boracay West Cove to undertake expansion works, and thereafter, a Closure and
Demolition Order was issued by the municipal mayor. Boracay West Cove questioned the
propriety of the demolition issued since such structure is not a nuisance per se, hence, it
cannot be summarily abated and a court order is required before starting the demolition. Is the
contention of Boracay West Cove tenable?

Answer: No. While it is true that such structure is not a nuisance per se, but the fact that it
was constructed without the required building permit, the municipal mayor, in the exercise of
police power and general welfare bestowed upon it under the Local Government Code, is
empowered to order the closure and removal of illegally constructed establishment for failure
to secure required permits prior to its operation or construction provided notice and hearing is
complied with. In short, the municipality has the power to summarily abate even if such
structure or establishment is not a nuisance per se so long as the same is considered as illegal

As to who will institute abatement, it depends whether the nuisance is

public or private. In Article 700 of the NCC, the health authorities of the locality
are given the power to institute abatement because, usually public nuisance, it
affects the health and safety of those affected. But if it is an illegal construction,
it is the Municipal Engineer that is given the authority to abate it. In short, the
government authorities are tasked to act in case of public nuisance.

Question: Can a private person abate a public nuisance? Elaborate.

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Answer: Yes, more so if such public nuisance is especially injurious to him, he
may remove or destroy the thing which constitute the nuisance without
committing a breach of the peace or doing unnecessary injury. This is true only in
nuisance per se. However, for such act to be valid or prior to the abatement, said
private person must:

• That demand be first made upon the owner or possessor of the property to
abate the nuisance;
• That such demand had been rejected;
• That the abatement be approved by the district health officer and
executed with the assistance of the police authorities;
• That the value of the destruction does not exceed Php 3,000.00.

Whether a nuisance is a public or private one, a civil action for its

abatement or for injunction may be filed. In case of public nuisance which is not
nuisance per se, in which case summary abatement is not available, the action
for its abatement or injunction should be commenced by the city or municipal
mayor. If the nuisance is a private one, any person injured by the same may file
the same action.

Aside from the action for abatement or for injunction, a claim for damages
may likewise be maintained by any person who is injured by a private nuisance.
In case of public nuisance, generally, no action for damages may be maintained
by a private individual unless it is especially injurious to himself. These actions
can be maintained even against successive owners or possessors of the property
who fails or refuses to abate the same in that property even if they are not the
ones who started the nuisance.

Case: Natividad C. Cruz and Benjamin de la Cruz vs. Pandacan Hiker’s Club, Inc.
G.R. No. 188213, January 11, 2016.

Facts: Cruz, Punong Barangay of Brgy. 848, Pandacan, Manila ordered Barangay Tanod de la
Cruz the destruction of the basketball ring after she was irked when it was installed without her
permission and several persons were playing along Central Street. Because of this act, Cruz was
charged for Grave Misconduct and Act Prejudicial to the Best Interest of the Service. Cruz
argued that the playing court blocked jeepneys from passing through and serves as site of
rampant bettings and fights involving persons which oftentimes resulted in armed
confrontations, among others. Thus, the Ombudsman dismissed the complaint on the ground
that Cruz was motivated in performing their sworn duty under the Local Government Code to
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enforce all laws and ordinances applicable within the barangay and to maintain public order in
the barangay. Is the dismissal of the complaint by the Ombudsman proper?

Answer: No, because Cruz performed an abatement of a public nuisance but did the same
without following the proper legal procedure. Cruz has no power to declare a thing as nuisance
unless it is a nuisance per se, for which a basketball ring is not such, thus, not subject to
summary abatement. More so if it is a nuisance per accidens where it can be established only
as such after a hearing conducted for the purpose.

MODES OF ACQUIRING OWNERSHIP

Article 712 of the NCC gives us the different modes of acquiring ownership
as follows: (1) occupation, (2) intellectual creation, (3) law, (4) donation, (5)
succession, (6) tradition, and (7) prescription. If we are to understand this
provision, we can grouped these modes into two (2) classes, namely, the
original mode and derivative mode. These two (2) concepts can be understood if
we are to consider the source from which the right of ownership accrues. If the
right to ownership is not derived from previous owner, meaning, his right as
owner is independent or new, it is original, and if the right of ownership is
derived from a previous owner, it is derivative, as it is derived from another
person.

Original modes consists of (1) occupation, (2) law, (3) intellectual creation
and acquisitive prescription. Examples of derivative mode are (1) tradition,
succession and donation.

OCCUPATION (Arts. 713-720 NCC)

The rule with respect to occupation as a mode of acquiring ownership is

embodied in Articles 713-720 of the New Civil Code. Occupation is a mode of
acquiring ownership by the seizure or apprehension of corporeal things which
have no owner with the intention of acquiring them and accomplished according
to legal rules. The rule of law with respect to occupation is res nullius cedit
occupant.

There are four (4) essential conditions or requisites which must concur in
order that occupation as a mode of acquiring ownership be given full legal
significance, to wit:

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 (1) The thing must be a res nullius- that is a thing which either never had an
owner or has been abandoned that there was no more owner at the time
of occupation;
(2) It must be appropriable by nature or one that can be seized or
apprehended or materially possessed;
(3) It must be brought into the actual possession or control of the one
professing to acquire it;
(4) The person must acquire it with the intention of acquiring ownership.

Question: What things or properties that are subject of occupation as a mode of

acquiring ownership?

Answer: These are the following:

• Wild animals, birds, fishes which are still in their natural state of freedom
becomes the property of captor by virtue of occupation.

• Swarm of bees, even if there is a previous owner but failed to pursue the
swarm or if he initially pursue but later ceases to do so within two (2)
consecutive days having entered a estate of another;

• Domesticated or tamed animals (excluding domestic or tame animals) by

which it losses the habit of returning to the premises of its possessor and
the latter failed to reclaim it within 20 days counted from the occupation of
another person.. Having reverted back to the state of res nullius, it can be
acquired by occupation.

• Hidden treasure as regulated under Art. 438 in relation to Art. 718 of the
NCC. Hidden treasure belongs wholly to the finder if found in his own land,
but if found by chance in another’s property and the finder not being a
trespasser, the treasure is equally divided between the finder and the land
owner.

• Abandoned, mislaid and lost property subject to specific rules as laid down
in Arts. 719 to 720 of the NCC. In case of abandoned property, it is
necessary that the hope of recovery is gone and the intent to recover is

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 given up. In case of lost and mislaid property, ownership is not yet lost by
the owner so long as the property is not under the control of another
person. In case of lost property, the finder does not become the owner
thereof because he is duty bound to return it to the true owner or turn
over it to government authorities.

LAW

2007 Bar Examination Question:

In what situations may law as a mode of acquiring ownership occurs?

Answer: It occurs in the following situations:

(1) The existence of an apparent sign of easement between two (2) estates,
established or maintained by the owner of both, shall be considered,
should either of them be alienated, as a title in order that the easement
may continue actively or passively, unless at the time the ownership of the
two estates is divided, the contrary should be provided in the title of the
conveyance of either of them or the sign of easement be removed before
the execution of the deed. This is expressly provided in Article 624 of the
NCC;

(2) Fruits naturally falling upon adjacent land belong to the owner of said land;

(3) When a person who is not the owner of the thing sells or alienates or
delivers it, and later the seller or grantor acquires title thereto, such title
passes by operation of law to the buyer or grantee.

(4) Alluvium, whereby deposits belong to the riparian owners.

(5) Hidden treasure, whereby ownership of which belongs to the owner of the
tenement where it is found, and if discovered by a stranger who is not a
trespasser, ownership of the same belong to them at 50-50 sharing.

Hence, when we say law as a mode of acquiring ownership, it refers to

those special legal provisions which directly vest ownership or real rights in favor

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of certain persons, independently of the other mode of acquiring and
transmitting ownership or other real rights.

INTELLECTUAL CREATION (Art. 721 to 724 of the NCC)

Intellectual property refers to creations of the mind, inventions, literary

and artistic works, and symbols, names, images and design used in commerce.

Question: When does ownership be acquired on these intellectual creations?

Answer: The author, the composer, the painter, the sculptor and other artists,
the scientists and inventors acquire ownership over their works from the moment
of their creation even before the same are published. Being the owner thereof,
the creator has absolute control over his work and he may do anything with it as
he pleases, including the right to share it with others. He also enjoys the
exclusive right to its publication, but this exclusive right is limited only to the first
publication. Unless placed under the protection of the copyright law, once
published, the work is dedicated to the public and the author losses the exclusive
right to control subsequent publications by others.

In the old case of Filipino Society of Composers, Authors and Publishers,

Inc. vs. Tan, 148 SCRA 461, this pertains to the infringement case filed by the
composers of these popular songs, “Dahil Sa Iyo”, “The Nearness of You”,
“Sapagkat Ikaw ay Akin” and “Sapagkat Kami ay Tao Lamang” for these had been
played and sung in various performances in restaurants, hotels and other venue
without the permission of the authors. The SC ruled that, although these songs
had been registered with the Patent Office then (now Intellectual Property Office)
it has been sung and became popular several years ago, hence, these musical
compositions had long been public property and are therefore beyond the
protection of the copyright law. Under Republic Act No. 165, an intellectual
creation should be copyrighted thirty (30) days after its publication, if made in
Manila, or within sixty (60) days if made elsewhere, failure of which renders
such creation public property. If the general public has made use of the object
sought to be copyrighted for 30 days prior to the copyright application, the law
deems that the object had been donated to the public domain and the same can
no longer be copyrighted.

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Question: Who owns the letters? E-mails? Text messages?

Answer: Article 723 is the answer. Letters and other private communications in
writing are owned by the person to whom they are addressed and delivered, but
they cannot be published or disseminated without the consent of the writer or his
heirs. However, the court may authorize their publication or dissemination if the
public good or the interest of justice so requires.

The special law governing patents, trademarks and copyrights is Republic

Act No. 8293 otherwise known as “Intellectual Property Code of the Philippines”.
This law will be discussed comprehensively in Commercial Law Review.

TRADITION OR DELIVERY

Tradition or delivery, as a mode of acquiring and transmitting ownership and

other real rights, refers to the transfer of possession accompanied by an
intention to transfer ownership or other real rights. In order that there be
tradition, the following requisites must be present:

• Pre-existence of the right to be transmitted in the estate of the grantor,

the same being a derivative mode of acquiring ownership;
• Just cause or title for the transmission such as sale or assignment
• Intention on the part of the grantor to grant or convey and on the part of
the grantee to acquire;
• Capacity to transmit on the part of the grantor and the capacity to acquire
on the part of the grantee;
• An act which gives it outward form, physically, symbolically or legally.

It is very clear in Article 712 of the NCC that “ownership and other real
rights over real property are acquired and transmitted, x x x x in consequence of
certain contracts, by tradition.” Under our laws, therefore, contracts only
constitute titles or rights to the transfer or acquisition of ownership, while
delivery or tradition is the mode of accomplishing the same. In other words,
ownership is transferred, not by contracts alone, but by tradition or delivery.

Kinds of Tradition

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 • Real tradition (physical or actual delivery) takes place when the thing is
placed in the control and possession of the grantee.
• Constructive (feigned) tradition where delivery maybe effected even when
the change of possession is not actual or material but represented by other
signs or acts indicative thereof. Constructive delivery may takes place
through any of the following ways: (a) tradition symbolica, (b) tradition
longa manu, (c) tradition brevi manu, (d) tradition constitutom
possessorium, and (e) execution of public instrument.
• Quasi-tradition, and
• Tradition by operation of law.

In all forms of delivery, it is necessary that the act of delivery, whether

constructive or actual, should be coupled with the intention of transmitting or
delivering the thing. The act, without the intention, is insufficient. The critical
factor in the different modes of effecting delivery which gives legal effect to the
act, is the actual intention of the vendor to deliver and its acceptance by the
vendee. Without that intention, there is no tradition.

To illustrate the principle I just mentioned, consider the following cases:

Case: Norkis Distributors Inc. vs. Court of Appeals, et.al. 193 SCRA 694 (1991) ,

Facts: Alberto Nepales bought from Norkis a brand new motorcycle financed by DBP as said
Nepales secured a motorcycle loan from the said bank. Norkis agreed to this arrangement,
hence, it issued an official receipt for which Nepales acknowledged, sought the registration of
the motorcycle with LTO in Nepales’ name, but the motorcycle remained still in the possession
of Norkis. Two (2) days after it was registered, the motorcycle was delivered to a certain Julian
Nepales, allegedly an agent of Alberto but the latter denies it. Eleven (11) days thereafter, the
motorcycle met an accident while driven by one Zacarias Payba. The unit was a total wreck.
Forty-five (45) days after the accident, the motorcycle loan of Alberto Nepales was released to
Norkis corresponding to the original price of the motorcycle. Hence, Alberto Nepales
demanded for the delivery of the unit but Norkis failed to deliver as it was delivered already
prior to the accident and in fact, it is already a total wreck. While Norkis admitted that there
was no actual delivery to Alberto because the one who received it is Julian Nepales, but it
insists that there was constructive delivery because of the issuance of sales invoice and the
registration papers in Alberto’s name. Hence, Alberto should bear the loss. Is Norkis’
contention correct?

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Answer: No, said the SC, Norkis should bear the loss because the ownership has not yet been
transferred to the buyer at the time of the loss. In all forms of delivery, it is necessary that the
act of delivery whether actual or constructive, be coupled with the intention of delivering the
thing. The act, without the intention, in insufficient. The critical factor in the different modes
of effecting delivery which gives legal effect to the act, is the actual intention of the vendor to
deliver and its acceptance by the vendee. Without that intention, there is no tradition.

Of importance to you is the execution of a public document as a mode of

delivery because under the Law on Sales, the execution of a public instrument of
sale is recognized as equivalent to the delivery of the thing sold. Jurisprudence
teaches us, however, that the execution of a contract of sale as a form of
constructive delivery is but a legal fiction. It holds true only when there is no
impediment that may prevent the passing of the property from the hands of the
vendor into those of the vendee. When there is such impediment, fiction yields
to reality- meaning, the delivery has not been effected. Stated differently, the
execution of a public instrument gives rise only to a prima facie presumption of
delivery. Such presumption is destroyed when the instrument itself expresses or
implies that delivery was not intended, or when by other means it is shown that
such delivery was not effected because a third person was actually in possession
of the thing.

Case: Zenaida M. Santos vs. Calixto Santos, Alberto Santos, Rosa Santos-
Careon and Antonio Santos, G.R. No. 133895 October 2, 2001.

Facts: Sps. Jesus and Rosalia Santos owned a parcel of land in Sta. Cruz, Manila where an
apartment is erected. Said spouses bore five (5) children, namely, Salvador, Calixto, Alberto,
Rosa and Antonio. Petitioner Zenaida is the wife of Salvador. In 1959, Sps. Jesus and Rosalia
executed a deed of sale in favor of Jesus and Rosa thereby a title was issued to the two. In
1973, Rosa sold her share to Salvador resulting in the consolidation of title to Salvador.
Despite the transfer of property, Rosalia continued to received the rentals from its tenants in
the apartment. In 1979, Jesus died, followed by Salvador in 1985 and Rosalia in the same year.
Shortly after, Zenaida, claiming as heir of Salvador demanded rental from one of the tenants
but it did not pay her. An ejectment suit was filed against said tenant and eventually was
ejected.

In 1989, the siblings of Salvador instituted an action for reconveyance of property against
Zenaida claiming that the deeds of sale in 1959 and 1973 were simulated for lack of
consideration, alleging that they were executed to accommodate Salvador in generating funds
for his business ventures. In her Answer, Zenaida countered that her husband is the registered
owner of the property, and the right to reconveyance had already prescribed. The lower court

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ruled in favor of the plaintiffs and declared the deeds of sale null and void. Is the ruling of the
trial court correct?

In ruling for the respondents, the SC has the opportunity to answer the
question “is a sale through a public instrument tantamount to delivery of the thing
sold?” Article 1477 of the NCC provides that ownership of the thing sold is
transferred to the vendee upon its actual or constructive delivery. Article 1498,
in turn, provides that when a sale is made through a public instrument, its
execution is equivalent to delivery of the thing subject of the contract. But
nowhere in the NCC does it provide that execution of deed of sale is conclusive
presumption of delivery of possession. The Code merely says that the execution
shall be equivalent to delivery. The presumption can be rebutted by clear and
convincing evidence. Presumptive delivery can be negated by the failure of the
vendee to take actual possession of the thing sold. Citing Danguilan vs. IAC, 168
SCRA 22 (1988), it reiterated that for execution of a public instrument to effect
tradition, the purchaser must be placed in control of the thing sold. When there
is no impediment to prevent the thing sold from converting to tenancy of the
purchaser by the sole will of the vendor, symbolic delivery through the execution
of public instrument is sufficient. But if, notwithstanding the execution of the
instrument, the purchaser cannot have the enjoyment and material tenancy nor
make use of it himself or through another in his name, then delivery has not been
effected.

Case: Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc., G.R. No.
133879, November 21, 2001.

Facts: Carmelo and Bauermann, Inc. owned a two-storey building and the lot where such
building was erected. In 1969, it leased subject property to Mayfair Theater, Inc. for 20 years.
In the lease contract, it was stipulated that Mayfair has a right of first refusal to buy subject
property. In 1978, within the 20 year lease period, subject property was sold by Carmelo to
Equatorial Realty without first being offered to Mayfair. As a result of the sale, Mayfair filed an
action for annulment of sale against Carmelo and Equatorial Realty. Mayfair prevailed and the
deed of sale between Carmelo and Equatorial Realty was declared rescinded. Said decision
became final and executory on March 1997.

On September 1997, Equatorial Realty filed a collection suit against Mayfair for the
payment of rental after its lease contract had expired in 1989. Equatorial Realty argued that
being the owner of subject property from the time it was sold to them in 1978, it is entitled to
received rentals until the time that the sale was rescinded. Is Equatorial Realty entitled to
payment of rentals?

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Answer: No. Equatorial Realty is not entitled to payment of rentals because it never became
the owner of subject property, its deed of sale with Carmelo was rescinded as “void at its
inception as though it did not happen”. No right of ownership was transferred from Carmelo to
Equatorial Realty in view of the failure to deliver the property to the latter. Ownership of the
thing sold is a real right, which the buyer acquires only upon delivery of the thing to him in any
of the ways specified under the NCC. This right is transferred, not by contract alone, but by
tradition or delivery. And there is said to be delivery if and when the thing sold is placed in the
control and possession of the vendee. Thus, it has been held that while the execution of a
public instrument of sale is recognized by law as equivalent to the delivery of the thing sold,
such constructive or symbolic delivery being merely presumptive, is deemed negated by the
failure of the vendee to take actual possession of the land sold. Like in this case, Equatorial
Realty never took actual control and possession of the property sold in view of Mayfair’s timely
objection to the sale and the continued actual possession of the property, Therefore, there
was legally sufficient impediment that effectively prevented the passing of the property to
Equatorial Realty and to become its owner.

These cases illustrate that for delivery to be effected, the buyer must be in
control and possession of the thing sold in a contract of sale. But, consider the
following case:

Case: Cebu Winland Dev’t. Corp. vs. Ong Siao Hua, G.R. No. 173215, May 21,
2009.

Facts: Cebu Winland is the owner and developer of a condominium called Cebu Winland
Tower Condominium located in Cebu City. While the tower was still under construction, Cebu
Winland engaged in pre-selling of condo units at promotional price. In 1995, Ong accepted the
offer and bought two (2) condo units and four (4) parking slots payable in two (2) years. As
indicated in the price list, the area of each condo unit is 155 square meters and the price is
Php22,378.95 per square meter. The price for the parking slot is Php240,000 each. Ong paid
the 30% down payment and issued 24 post-dated checks to cover the 24 monthly
amortizations. At this stage, no written document was executed by the parties.

In October 1996, possession of the two (2) condo units were turned over to Ong.

After the purchase price was fully paid in 1997, Ong requested Cebu Winland for the
condominium certificates evidencing ownership of the units. Thus, documents of sale were
sent to Ong for his signature. Ong discovered that the floor area indicated in the deed was only
127 square meter per unit, and after verification survey of the units, its actual area was only
110 square meters per unit contrary to the area indicated in the price list which is 155 square
meters. Hence, Ong demanded for the refund of his excess payment. Cebu Winland refused to
refund. With no recourse, Ong filed a complaint before HLURB in August 1998, to insist on the
refund. However, Ong’s complaint was dismissed because, according to the Arbiter, his cause
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of action has already prescribed as it was filed more than six (6) months after the delivery of the
condo units pursuant to Article 1543 of the NCC. Is the ruling of the HLURB Arbiter correct? Or,
was there delivery of the condominium units to Ong?

Answer: No. What was transferred to Ong was possession only and not ownership of the
subject properties. In the Law on Sales, delivery may either be actual or constructive, but both
forms of delivery contemplate the absolute giving up of the control and custody of the property
on the part of the vendor and the assumption of the same by the vendee. Hence, delivery
refers to the concurrent transfer of two (2) things: (1) possession and (2) ownership. If the
vendee is placed in actual possession of the property, but by agreement of the parties,
ownership of the same is retained by the vendor until the vendee has fully paid the price, the
mere transfer of the possession of the property subject of the sale is not the “delivery”
contemplated in the Law on Sales pursuant to Article 1543 of the NCC. Thus, when subject
units were turned-over to Ong in October 1996, ownership of the same was withheld by Cebu
Winland until the full payment of the purchase price in January 1997 and the execution of the
deeds of sale. It is evident, therefore, that the parties did not intend to immediately transfer
ownership of the subject properties until full payment and execution of the deeds of absolute
sale. Hence, the action filed by Ong has not prescribed.

PRESCRIPTION

There are two (2) kinds of prescription provided in the NCC. One is
acquisitive, that is, the acquisition of a right by the lapse of time as expounded in
paragaraph 1 of Article 1106. Other name for acquisitive prescription are adverse
possession and usucapcion. The other kind is extinctive prescription whereby
rights and actions are lost by the lapse of time as defined in Article 1106 and
paragraph 2 of Article 1139 of the NCC. Another name for extinctive prescription
is litigation of action.

Prescription, as a mode of acquiring (or losing) ownership and other real

rights, takes place through the lapse of time in the manner and under conditions
laid down by law, namely, that the possession should be in concept of the
owner, public, peaceful, uninterrupted and adverse. Prescription may either be
ordinary or extra-ordinary. Ordinary acquisitive prescription requires possession
of things in good faith and with just title for the time fixed by law. Extraordinary
acquisitive prescription, on the other hand, does not require just title and good
faith.

Question: What is the required period for prescription, as a mode of acquiring

ownership, to take effect?

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Answer: It depends:

(a) For movable property, four (4) years for ordinary acquisitive prescription
and eight (8) years for extra-ordinary acquisitive prescription;
(b) For immovable property, ten (10) years for ordinary acquisitive
prescription and thirty (30) years for extra-ordinary acquisitive
prescription.

Question: Is the running of the period for prescription be interrupted?

Answer: Yes. Article 1155 of the NCC refers to interruption of the prescription of
actions. Interruption of acquisitive prescription, on the other hand, is found in
Articles 1120-1125 of the NCC. The only kinds of interruption that effectively toll
the period of acquisitive prescription are natural and civil interruption.

Civil interruption takes place with the service of judicial summons to the
possessor. When no action is filed, then there is no occasion to issue a judicial
summon to the possessor. The period of acquisitive prescription continues to
run.

Case: Jesus Virtucio, etc. vs. Jose Alegarbes, G.R. No. 187451, August 29,
2012.

Facts: In 1949, Alegarbes filed a homestead application over a 24-hectare parcel of land in
Lantawan, Basilan. His application was approved in 1952. Somehow, in 1955, subject
property was subdivided into three (3), Lot No. 138, 139 and 140. Lot No 139 was allocated to
Ulpiano Custodio, Lot No. 140 to Jesus Virtucio and Lot No 138 remained with Alegarbes.
Alegarbes opposed the homestead applications of Custodio and Virtucio claiming that his
approved application covers the whole area. Alegarbes’ opposition was dismissed by the
Bureau of Lands. This controversy reached the Office of the President affirming the dismissal of
Alegarbes’ protest. In 1989, an Order of Execution was issued by the DENR for Alegarbes to
vacate the disputed lot but he refused.

This prompted Virtucio to file a complaint for “Recovery of Possession and Ownership”
against Alegarbes in 1997. In his Answer, Alegarbes argued that the approval of his application
for homestead in 1952 had gained finality and can no longer be revoked or set aside. His
possession of the disputed lot had been open, continuous, peaceful and uninterrupted in the
concept of an owner for more than 30 years, thus, he acquired the subject lot by acquisitive
prescription. Is Alegarbes correct?

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Answer: Yes. The approval of a homestead application merely authorizes the applicant to take
possession of the land so that he could comply with the requirements prescribed by law before
a final patent could be issued in his favor,- what divest the government of title to the land is the
issuance of a patent and its subsequent registration with the ROD. Therefore, the disputed lot
remains to be in the name of the State. Neither Virtucio nor Alegarbes can claim ownership.
The fact of approval of the homestead application in Virtucio’s favor or the Order of Execution
issued by the DENR giving due course to Virtucio’s application did not toll the running of
acquisitive prescription. It was tolled only when Virtucio filed a case in 1997 whereby a judicial
summon was issued to Alegarbes pursuant to Articles 1120-1125 of the NCC. But then,
Alegarbes was already in possession of the subject alienable land for 48 years sufficient to vest
ownership on him by extra-ordinary acquisitive prescription.

Question: In what instances may prescription, as a mode of acquiring ownership,

does not lie?

Answer: In the following cases:

(1) In properties covered by Torrens title because no matter how long one will
be in adverse possession of the same, the ownership of the title holder will
never be at stake. A title, once registered, cannot be defeated by adverse,
open and notorious possession;

(2). In properties of public dominion because prescription does not lie against
the State. Possession of properties owned by the government , whether
spanning for decades or centuries, cannot ipso facto ripen into ownership;

(3) In case of trust because of the rule that a trustee cannot acquire by
prescription the ownership of property entrusted to him, or that action to
compel a trustee to convey property registered in his name in trust for the
benefit of the cesti que trust does not prescribe, or that the defense of
prescription cannot be set up in an action to recover property held in trust for
the benefit of another, or that property held in trust can be recovered by the
beneficiary regardless of the lapse of time. The rule with regard to trustee
likewise apply to co-owners and co-heirs involving property owned in common
as long as they still recognizes the co-ownership. Possession by a
usufructuary, lessee, agent or pledgee cannot ripen into ownership no matter
how long it is because their possession of the thing or property is not in
concept of an owner.

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(6) As between husband and wife even though the regime of separation of
property was agreed upon in their marriage settlement. Neither does
prescription run between parents and their children during the minority or
insanity of the latter, and between guardian and ward during the subsistence
of the guardianship.

It is worth discussing the law on acquisitive prescription with respect to

patrimonial property or private property of the government. Under Article 1113
of the NCC, it qualifies that “property of the State or any of its subdivisions not
patrimonial in character shall not be the object of prescription.” The
identification what consists of patrimonial property is provided in Articles 420 and
421 of the NCC. Article 420 refers to what are those properties of public
dominion while Article 421 declares that all other property of the State which is
not the character mentioned in Article 420, is patrimonial property. Hence, it is
very clear that property of public dominion which generally includes property
belonging to the State, cannot be the object of prescription nor be within the
commerce of man. Lands of public domain, whether it is declared alienable and
disposable or not, are property of public dominion and thus, insusceptible to
acquisitive prescription.

But Article 422 of the NCC states that property of public dominion, when
no longer intended for public use or for public service, shall form part of the
patrimonial property of the State. It is this provision that controls how public
dominion property may be converted into patrimonial property susceptible to
acquisition by prescription. Hence, there must be an express declaration by the
State that the public dominion property is no longer intended for public service or
the development of national wealth, or that the property has been converted
into patrimonial property. Without such declaration, the property, even if
classified as alienable and disposable, remains property of the public dominion
pursuant to Article 420(2) of the NCC, and thus incapable of acquisition by
prescription. It is only when such alienable and disposable lands are expressly
declared by the State to be no longer intended for public service or for the
development of national wealth that the period of acquisitive prescription can
begin to run. Such declaration shall be in the form of a law duly enacted by
Congress or a presidential proclamation in cases where the President is duly
authorized by law.

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 Verily, possession of public dominion property before it becomes
patrimonial cannot be the object of prescription under the NCC, meaning,
cannot be counted for the purpose of computing the prescriptive period in order
to justify registration under Section 14(2) of the Property Registration Decree.
(Heirs of Mario Malabanan vs. Republic of the Philippines, G.R. No. 179987,
April 29, 2009).

DONATION (Arts. 725-773 NCC)

It is an act of liberality whereby a person disposes gratuitously of a thing or

right in favor of another, who accepts it. From the very definition itself, we can
infer the basic concept and requisites of a valid donation, to wit:

• It is a gratuitous act of conveyance, and being so, a contractual relation

exists between the giver, technically called the donor, and the receiver,
referred to as the donee;
• The subject of donation may either be real or personal property, and it
may also be a right of the donor over the property given to the donee;
• There must be acceptance by the donee;
• Most importantly, there must be animus donandi or the “intent to
donate.”

Under Article 1318 of the New Civil Code, it defines contract as a “meeting
of the minds between two persons whereby one binds himself, with respect to the
other to give something or to render some service”. Donation, being a contract,
must comply with all the essential elements thereof, consent of the contracting
parties, object certain which is the subject matter of the contract and cause of
the obligation which is established. Like any other contract, it requires the
concurrence of the reciprocal consent of the parties, and it does not become
perfect until it is accepted by the donee. In other words, there is a concurrence of
the offer (coming from the donor) and acceptance (coming from the donee). It is
for this reason that donation inter vivos are governed by the general provisions on
the law on Obligations and Contracts under the NCC. Though, the other kind of
donation, referred to as “donation mortis causa” is governed by the provisions of
testamentary succession which we will be discussing in a short while. Know by
now that as far as the time of the effectivity of the donation is concerned, there

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are two (2) kinds of donations, inter vivos whereby the donation will be effective
immediately or take effect during the lifetime of the donor, and the other is
donation mortis causa whereby it will take effect at the time of the death of the
donor.

Donation is an act of conveyance, hence, a mode of acquiring ownership.

As a mode of acquiring ownership, donation results in an effective transfer of
title over the property from the donor to the donee and the donation is perfected
from the moment the donor knows of the acceptance by the donee. Once
donation is accepted, the donee becomes the absolute owner of the property
donated.

Question: Is it necessary that there must be delivery of the thing donated for
donation to be effective?

Answer: No, because according to Article 712 of the NCC, it provides that
“ownership and rights are acquired and transmitted by donation, succession and
in consequence of certain contracts , by tradition or delivery. A careful reading
of this provision will tell us that tradition or delivery is not necessary for donation
to be effective. Hence, a good example of such contract which does not require
delivery in order to transfer ownership is the gratuitous contract of donation.

For donation to exist, the intent to donate must be effectively carried out
or must concur. Donative intent is only a state of the mind. It is manifest only
through material and tangible acts. Such that, donative intent is presumed to be
present when one gives a part of one’s patrimony to another without
consideration. Donative intent is not negated when the person donating has
other intentions, purposes or motives which do not contradict the presence of the
donor’s intention to donate.

Question: Does contribution to political campaign of a candidate constitute

donation in the legal sense?

Answer: Yes, even if the purpose of some contributors to the campaign fund of a
particular candidate is to derived future benefits in the event such candidate is
elected to public office, in no way does it amount to valuable consideration so as
to remove political contributions from the purview of a donation even if said

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candidate is under no obligation to give any form of benefit to such campaign
contributors. Hence, as ruled in Abello vs. Commissioner of Internal Revenue
(452 SCRA 162 (2005), campaign fund contributors of Senator Angara, then
running for a seat in the 1987 senatorial election, was assessed by the BIR to pay
Php 263,032.66 donor’s tax. Abello, Concepcion, Regala and Cruz questioned
the propriety of the imposition of donor’s tax on the ground that political or
electoral contributions are not considered “gift” under the NIRC. In disregarding
Abello’s contention, the SC ruled that even if there are other intentions or
purpose for which the contribution was given, it is still a donation because all the
requisites of donation are present.

In the following cases, Republic vs. Guzman, 326 SCRA 90 (2000) and Jutic
vs. Court of Appeals, 153 SCRA 269 (1987), the SC ruled that the intent to donate
was missing or was not effectively carried out. In the Republic case, the mother
executed a “Deed of Waiver and Quitclaim” in favor of his son, while in the
second case, a sister executed an affidavit declaring that she will give all her
properties to his brother in the event of her death at some future time.

Donation is classified as: (Arts. 726-733)

• Donation Mortis Causa. This is a donation made in contemplation of the

death of the donor, meaning, the ownership of the donated properties will
pass to the donee upon the donor’s death. The donation, therefore, takes
effect at the moment of the death of the donor. This being the case, such
must be embodied in a last will and testament.

• Donation Inter Vivos. This is a donation that takes effect during the
lifetime of the donor or at some other time, but not by reason of the
latter’s death. Here, the ownership of the donated properties passes to
the donee during the lifetime of the donor.

The determination of whether or not the donor intended to transfer

ownership over the properties upon the execution of the deed is crucial in
knowing whether the donation is inter vivos or mortis causa. Otherwise stated,
whether the donation is inter vivos or mortis causa depends upon the nature of
the disposition made. Did the donor intend to transfer the ownership of the
property donated upon the execution of the deed of donation? If the answer is

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yes, as provided in the deed itself, then it is inter vivos, otherwise, it is merely
mortis causa or made to take effect after death.

The distinction between a transfer inter vivos and mortis causa is important
because the validity or revocation of the donation depends upon its nature. With
regards to validity, for donation is inter vivos, it must be executed and accepted
with the formalities prescribed by Articles 748 and 749 of the NCC, except when
it is onerous in which case the rules on contracts will apply. On the other hand, if
it is mortis causa, the donation must be in the form of a will, with all the
formalities for the validity of wills, otherwise, it is void and cannot transfer
ownership.

Most often, controversies arise when there is a stipulation in the

instrument whereby the donee’s enjoyment of the property donated is
postponed until after the donor’s death. Does it mean that such donation will be
treated automatically as mortis causa? This is the question.

When the time fixed for the commencement of the enjoyment of the
property donated be at the death of the donor, or when the suspensive condition
is related to the donor’s death, confusion may arise as to whether it is a transfer
inter vivos or mortis causa. To solve this question, we must examine when
actual donation may take effect vis-à-vis the execution of the deed. Where the
donation is to take effect during the lifetime of the donor, it does not necesarilly
mean that the delivery of the property must be made during his lifetime. From
the moment that the donor disposes freely of his property and such disposal is
accepted by the donee, the donation exists perfectly and irrevocably. Until the
day fixed arrives or until the condition is fulfilled, the donation, although valid
when made, cannot be realized. Thus, he who makes the donation effective
upon a certain date, even though to take place at his death, disposes of that
which he donated and he cannot afterwards revoke the donation nor dispose of
the said property in favor of another.

It is, therefore, important to ascertain the intention of the donor at the

time the deed was executed notwithstanding the language employed in the
instrument. In short, the provisions stated in the deed itself must be read
altogether in order to ascertain the real nature of the deed. Such that, it is not
sufficient to make a donation one mortis causa, requiring execution of the

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instrument in the form and manner required for a will, or that the instrument of
donation states that it is mortis causa, if it can be gathered from the body of the
instrument that the main consideration is not the death of the donor but rather,
services rendered to him by the donee, or his affection for the latter. In such a
case, title is immediately transferred to the donee, though the gift is
conditioned to take effect after death of the donor in so far as possession and
enjoyment of the property is concerned.

In other words, the designation of the donation as mortis causa, or a

provision in the deed to the effect that the donation is “to take effect at the death
of the donor”, is not controlling. Such title or statements are to be read together
with the rest of the provisions, in order to give effect to the real intention of the
donor. It is now settled that the title given to a deed of donation is not the
determinative factor which makes the donation “inter vivos” or “mortis causa.”

Consider the following cases for understanding on the concept I have just
mentioned:

In a very old case of Laureta vs. Mata, 44 Phil. 68 (1928), the deed of
donation provided that the donor was donating mortis causa certain properties as
a reward for the donee’s services to the donor and as a token of the donor’s
affection for him. The donation was made under the condition that “the donee
cannot take possession of the properties donated before the death of the donor;
that “the donee should cause to be held annually masses for the repose of the
donor’s soul” and that “the donee should defray the expenses for the donor’s
funeral”. The SC ruled that the deed is a donation inter vivos despite the
statement therein that it was mortis causa, because such constitute conveyance
in praesenti or a present grant of a future interest. Title to the donated
properties was conveyed to the donee subject only to the “life estate of the
donor”. In other words, the conveyance became effective upon the making and
delivery of the instrument more so that there was acceptance by the donee found
in the deed itself.

In another old case of Balaqui vs. Dongso, 53 Phil 673, it was provided in
the deed that the donation was made” in consideration of the services rendered
to the donor by the donee”; that “title to the donated properties would not pass
to the donee during the donor’s lifetime”, and that “it would be only upon the

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donor’s death that the donee would become the true owner of the donated
properties”. However, there was a stipulation in the deed that the donor bound
herself to answer to the donee for the property donated and that she warranted
that nobody would disturb or question the donee’s right. The SC ruled that
despite the fact that title will pass only to the donee after the donor’s death,
such donation is inter vivos because by making a warranty, it was implied that
title had already been conveyed to the donee upon the execution of the deed and
that the donor merely reserved to herself the possession and usufruct of the
donated properties.

In case of doubt as to what is the nature of the transfer, it should be

deemed a donation inter vivos than mortis causa in order to avoid uncertainty as
to the ownership of the property subject of the deed. Thus, in the following
cases, the SC declared donations as inter vivos:

In Austria-Magat vs. Court of Appeals, 375 SCRA 556 (2002), the deed of
donation expressly provides that it is irrevocable although there are provisions in
the deed which stated that the same will only take effect upon the death of the
donor, that the donor will remain in possession of the subject properties, and
that there was prohibition imposed upon the donee to alienate, encumber,
dispose or sell the donated properties. The SC ruled that the fact that the donor
will remain in possession just goes to show that the latter has given up his naked
title of ownership over the donated properties and has maintained only the right
to use and right to possess the donated properties. It further ruled that the
prohibition to alienate does not go against the irrevocable character of the
donation. In fact, such provision is a necessary assurance that during the donor’s
lifetime, he (donor) would still enjoy the right of possession over the property,
but his naked title of ownership has passed unto the donee already.

Lastly, in Jarabini G. del Rosario vs. Asuncion G. Ferrer, etc., G.R. No.
187056 September 20, 2010, the donation was styled as “Donation Mortis
Causa” but the SC declared it as inter vivos. The facts of the case are as follows:

Facts: Leopoldo and Guadalupe Gonzales executed a document styled “Donation Mortis
Causa” to their three (3) children. Subject of the donation was their residential house and lot.
Its stipulation includes, among others, that the donation is irrevocable and should be
respected by the surviving spouse; any one surviving spouse reserves the right, ownership,
possession and administration of the property, and that the donation shall be operative and

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effective upon the death of the donors. However, there was no attestation clause and
witnessed only by two (2) persons. Also, the donees accepted the donation.

When Guadalupe died, Leopoldo executed a deed of assignment of his rights and interest
over the property to their only daughter. Upon his death, controversy arose between the
siblings because the daughter was claiming one-half of the subject property based on the deed
of assignment. The relevant issue is, was the donation mortis causa as titled or inter vivos. If it
was mortis causa, then the assignment was valid, however, if not, then the assignment to the
daughter was void.

The RTC ruled that the donation was inter vivos because of its irrevocability
character, however, the CA reversed it by stating that since the donation was not
executed complying the formalities of a will, the donation mortis causa is void.
When the case reached the SC, it reversed CA’s ruling and reinstated the decision
of the lower court.

The distinguishing characteristics of a donation mortis causa are the

following:

• It conveys no title or ownership to the transferee before the death of the

transferor, in short, the transferor should retain the ownership (full or
naked) and control of the property while still alive;
• That before his death, the transfer should also be revocable at will by the
transferor;
• That the transfer should be void if the transferor should survive the
transferee.

In the following cases, the SC declared the conveyances as donation mortis

causa:

In Ursulina Ganuelas, et.al. vs. Cawed, et.al, G.R. No. 123968, April 24,
2003, donor Celestina executed a “Deed of Donation of Real Properties” covering
seven (7) parcels of land to her niece Ursulina. Its provision, among others,
states that “for and in consideration of the love and affection which the donor
has for the donee, and of the faithful services the latter has rendered in the past
to the former, the said donor does, by these presents, transfer and convey, by
way of donation, unto the donee the property above-described, to become
effective upon the death of the donor but in the event that the donee should die

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before the donor, the present donation shall be deemed rescinded and of no
force and effect.”

Eight (8) years after, Celestina executed a document “Revocation of

Donation” and a month after the revocation, she died without issue nor
ascendants and siblings. After Celestina’s death, Ursulina had been sharing the
produce of the donated properties to the other nieces of Celestina, however, it
ceases 24 years after when the properties were declared exclusively in Ursulina’s
name. Aggrieved, the other nieces filed a case against Ursulina for the
annulment of the donation, partition and accounting alleging, among others,
that since the donation did not comply with the formalities of a will, it was void
and have no effect. To refute, Ursulina interposed that the donation was inter
vivos and need not comply with the formalities of a will. It further argued that the
main consideration of the donation was the donor’s affection to the donee rather
than the donor’s death. In short, the donee’s absolute ownership will take effect
only after the donor’s death but its naked ownership is now vested with the
donee upon the execution of the instrument. Thus, the question as to whether
the donation was inter vivos or mortis causa confronted the Court.

Pending decision of the case, the appellants wrote the SC that they are no
longer interested in pursuing the case and are willing and ready to waive
whatever rights they have on the donated property. Nevertheless, the SC
proceeded to resolve the appeal and ruled to uphold that the donation was,
indeed, mortis causa and the donation to Ursulina was declared void and
produces no effect.

Also, in Ma. Estela Maglasang, et.al. vs. Heirs of Corazon Cabatingan,

et.al., G.R. No. 131953, June 5, 2002, whereby the donation contained the same
provision as in the previous case, that “for and in consideration of the love and
affection of the donor for the donee, the donor does hereby, by these presents,
transfer, convey, by way of donation, unto the donee the above-described
property, together with the buildings and all improvements existing thereon, to
become effective upon the death of donor, provided however, that in the event
that the donee should die before the donor, the present donation shall be
deemed automatically rescinded and of no force and effect.” The RTC ruled for
the annulment of donation as it was mortis causa and its failure to comply with
the formalities of a will, however, the CA reversed its decision and uphold its

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validity. On review, the SC declared that the donation was void for it was,
indeed, a mortis causa conveyance.

2014 Bar Examination Question No. XXV

Mario executed his last will and testament where he acknowledges the
child being conceived by his live-in Josie as his own child, and that the house and
lot in Baguio City be given to his unborn conceived child. Are the
acknowledgment and the donation mortis causa valid? Why? (4%).

Answer: Yes, as the stipulations are all favorable to the unborn child, the same
must be given legal effect and validity. Nonetheless, the fact that the donation
was made in the will, the same is revocable at will by the donor during his
lifetime.

Donation inter vivos are classified into:

• Pure or simple donation- where the underlying cause is plain gratuity or

pure liberality. There are no strings attached, so to speak. This is donation
in its truest form.
• Remuneratory or Compensatory donation- made for the purpose of
rewarding the donee for past services which services do not amount to a
demandable debt.
• Conditional donation- where the donation is made in consideration of
future services or where the donor imposes certain conditions, limitations
or charges upon the donee, the value of which is inferior or lesser than
that of the donation given.
• Onerous donation- that which imposes upon the donee a reciprocal
obligation, or made for a valuable consideration, the cost of which is equal
to or more than the thing donated.

The classification of donation into simple, renumeratory or onerous is

important for the purpose of determining, (1) what rules that shall govern a
particular donation, (2) the formalities to be followed, and (3) the effect of
imposition of illegal or impossible conditions.

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 Where the donation is onerous, it is governed by the law on contracts
which, according to Article 1356 of the NCC, “contracts shall be obligatory in
whatever form it may have been entered into”. Thus, if an illegal or impossible
condition is imposed in onerous donation, the obligation thus created shall be
annulled pursuant to Article 1183 of the NCC. On the other hand, if the donation
is simple or renumeratory, it is governed by the law on donation, such that if an
illegal or impossible condition is imposed, the donation will remain valid but the
condition will just be considered as not imposed and thus, disregarded. In
Danguilan vs. Intermediate Appellate Court 168 SCRA 22 (1988), the donation
was couched in private document with the condition that the grantee Danguilan
will take care of the donor and to bury him upon his death which the grantee
fulfilled. Here, the donation was onerous because of the impositions made upon
the grantee, and the fact that the grant was in private document, the SC uphold
the validity of the conveyance because it is not the law on donation that will
govern but the law on contracts.

As I was saying, acceptance is necessary in a donation according to Article

725 of the NCC. Without acceptance, the donation is not perfected. The
requirement of acceptance is based on the fact that nobody is obliged to receive a
benefit against his will.

Question: When does donation deemed perfected?

Answer: Article 734 of the NCC provides that “the donation is deemed perfected
from the moment the donor knows of the acceptance by the donee.” This is the
“theory of cognition”. Hence, prior to the notice of acceptance, the donor may
withdraw the offer of donation. Also, the donee may withdraw his acceptance
of the donation prior to the knowledge of the acceptance by the donor. In short,
the perfection of donation is prevented because, being a contract, the meeting
or concurrence of the minds of the parties is wanting. Of course, if the donor or
the donee dies prior to acceptance, the donation is ineffective.

Question: What is the effect if the donation is accepted by the donee?

Answer: Once the donation is accepted, it is generally considered irrevocable,

meaning, the donor can no longer withdraw and he can be compelled to comply
with his offer or be compelled to deliver the property subject of donation. Hence,

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the donor may not unilaterally revoked or by the sole and arbitrary will of the
donor. Upon acceptance, it results in an effective transfer of title from the donor
to the donee, thus, the latter becomes the absolute owner of the property
donated. However, there are instances where the donation may be revocable as
provided by law.

Question: In what instances may donation be revocable?

Answer: Donations are revocable in the following instances:

• Non-fulfillment of resolutory conditions or charges (Art. 764)

• Ingratitude (Art. 765)

Most often, revocable donations or those donations with reversion clause

reached the Supreme Court on the issue whether there was valid ground for the
reversion of the ownership to the donor for failure to comply with the conditions
imposed in the deed of donation pursuant to Article 764 of the NCC. Thus in
Republic vs. Leon Silim, et.al., G.R. No. 140487, April 2, 2001,

Facts: Silim donated 5,600 square meters to the Bureau of Public Schools, Malangas,
Zamboanga del Sur whereby the condition was that the property should be used exclusively
and forever for school purposes only. Thus, a school building was constructed thereon.
Subsequently, the school was a grantee of another school building but the condition was that it
should be built within a one (1) hectare area, otherwise, the grant will be diverted to other
recipients. In order not to lose the opportunity, the District Supervisor executed a Deed of
Exchange with Palma in exchange for a bigger lot of the latter. Thus, the new school building
was constructed and the old one was dismantled and transferred to the new site. Likewise,
spouses Palma constructed their house on the donated lot of the Silim. To his surprise, Silim
sought the stoppage of the construction and filed a case for the revocation of the donation on
the ground of violation of the conditions imposed. Can the donation be revoked?

Answer: The RTC dismissed the complaint for there was no violation of the condition, it being
that the exchange of the lot was still for school purpose. But, the CA reversed the ruling of the
lower court, thus, it was elevated to the SC. The SC resolved to reinstate the RTC ruling that
the reversion clause was ineffective because there was no violation of the condition imposed
upon the donee.

Also, in the later case of Edgardo Dolar vs. Barangay Lublub of the
Municipality of Dumangas, et.al., G.R. No. 152663, November 18, 2005, the
donation was subject to the following conditions, (1) that the area donated,
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located within the two (2) parcels, shall be for the purpose of constructing
building, establishing public plaza, sports complex, public market, health
centers for use of Barangay Lublub, (2) that the construction and development of
the area must be initiated and completed within 5 years from the execution of
the deed, and if not made or completed, this Deed shall have no force and effect
and the ownership will revert back to the donor; and (3) should the use be
converted to other uses as stipulated, the deed is deemed revoked and the
ownership will revert back to the donor. Indeed, the donee constructed several
government buildings and allowed other government offices to hold office within
the premises like PLDT, PNP and water district. Subsequently, for failure of the
barangay to pay the realty taxes, the property was declared delinquent and sold
at public auction and petitioner was the highest bidder. On the basis thereof,
petitioner filed a complaint for recovery and annulment of deed of donation
against the barangay. The issue was, whether there was valid ground for
revocation and that the ownership of the land donated reverted back to the
owner-donor. The SC ruling was persuasive that there was no violation of the
conditions of the donation which will be made as basis for its revocation. The non-
payment of realty taxes does not in any way affect the validity of the conveyance.
Likewise, petitioner’s action was already time barred as it was filed out of time
beyond the 4 year prescriptive period.

Question: Can donations be reduced? If so, in what instances?

Answer: Donations can be reduced in the following instances:

(a) Birth, adoption or reappearance of children of the donor (Art. 760)
(b) Inofficiousness (Art. 771)
(c) Insufficient property is left for support of donor and his relatives (Art.
750), and
(d) If made in fraud of creditors (creditors at the time of the donation)
(Art. 1387)

Under the law on donations, there are also what we call void, ineffective,
or unperfected donations, and these are the following:

• Those not perfected in accordance with the forms and solemnities of law;
• Those made with property outside the commerce of man;

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 • Those made with future property (Art. 751) except those provided for in
marriage settlements (Art. 130), and
• Those made to persons specially disqualified:
• By reason of public policy (Art. 739)
• By reason of unworthiness (Art. 740)
• By reason of possible undue influence (Art. 133) example: donation
between spouses except in certain cases.

2014 Bar Examination Question No. 3

The Roman Catholic Church accepted a donation of a real property located

in Lipa City. A deed of donation was executed, signed by the donor, Don
Mariano, and the donee, the Church, as represented by Father Damian. Before
the deed could be notarized, Don Mariano died. Is the donation valid? (4%)

Answer: No. Donation of real property is a formal contract such that for donation
to be valid, the same must be couched in a public instrument which requires the
intervention of a notary public. Under Article 749, it was declared that when the
law requires that a contract be in some form in order that it may be valid or
enforceable, or that a contract be proved in a certain way, that requirement is
absolute and indispensable The fact that the donor died prior to the notarization
of the document, such was not converted into public instrument, hence, the
donation is without legal effect.

It be noted that not all persons are capacitated to make donations. To be a

donor, the law requires that a person must be in possession of the following: (1)
capacity to contract; (2) capacity to dispose of his property; and (3) not
specifically prohibited to make a donation. Article 739 enumerates void
donations in view of the incapacity or disqualification of the donor to donate.

• Those who were guilty of adultery and concubinage at the time of

donation whereby criminal conviction is not necessary since the guilt of the
donor and donee may be proved by preponderance of evidence. However,
the prohibition does not apply to cases where the alleged concubine did
not know that the man was married or to the man accused of committing
the crime of adultery not knowing that the woman was married.

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 • Those who were found guilty of the same criminal offense if the donation is
made in consideration thereof whereby criminal conviction is necessary.
Here, the donation by a third party is given to these persons guilty of such
offense.

• Public officers or their spouses, descendants and ascendants, if donation is

made by reason of their office which act is contrary to law as it violates
Anti-Graft Law and other special laws on prohibition on gift giving.

• Those who are incapacitated to succeed by will as enumerated in Article

1072 of the NCC.

• The spouses, if the donation is made between them and made during the
marriage except moderate gifts in times of family rejoicing.

• Those who are living together as husband and wife without a valid marriage
or the so called “live-in partners”.

Lastly, be sure to comprehend the formalities required for a valid donation

where it is movable property or immovable property as provided in Articles 748
and 749 of the NCC.

For personal properties:

• If the value of the donated movable is more than Php5,000.00, donation

must be in writing and also the acceptance. Hence, if the donation is made
in an affidavit, and the donee merely signifies his acceptance orally, the
donation is null and void.
• If the value of the donated movable is Php 5,000.00 or less, it can be made
orally but there must be simultaneous delivery of the thing, or
simultaneous delivery of the document representing the right donated.
Acceptance may, of course, be oral or in written, express or implied; Or
the donation can also be made in writing but the acceptance may be in
writing or oral.

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 For real properties:

• If the deed of donation and the acceptance are in the same instrument,
the instrument must be in public instrument, otherwise, void. It must also
specify the property donated and the charges or burden if any. (Art. 749 of
the NCC)

• If the deed of donation and acceptance are not in the same instrument,
both must be in public instrument, otherwise, void. Also, both must
specify the property donated and the charges or burden, if any.
Notification to the donor must be made pertaining to the acceptance of the
donee. It must be noted on both instruments the fact of notification. If any
of the requisites is not present, the donation is void.

Question: Is the registration of the Deed of Donation of Real Property in the

Registry of Property an indispensable requisite for its validity?

Answer: No. The registration in the Registry of Property of the donation of real
property is not needed for validity between the parties and their assigns; its
registration is only necessary in order to bind third parties.

In Marissa R. Unchuan vs. Antonio J.P. Lozada, et.al. G.R. No. 172671,
April 16, 2009, the validity of the donation was put in issue when Unchuan
contested the sale of the share of Anita Lozada Slaughter in the two (2) titled
parcels located in Cebu City claiming that prior to the sale in 1994, the undivided
share of Anita was already donated to her under an unregistered Deed of
Donation in 1987. Hence, Unchuan caused the annotation of adverse claim over
these contested lots. The lower court ruled for the invalidity of the donation
because of the stark irregularity in the notarization of the deed. What made this
case controversial was that, the judgment invalidating the donation was
promulgated by the regular Presiding Judge. An MR was timely filed by the
plaintiffs, but due to the retirement of the then Presiding Judge, the motion was
resolved by the designated Judge reversing the ruling, and declaring the donation
as valid. The defendants filed an MR on the reversal which MR was resolved by
the newly appointed Judge reinstating the previous decision upholding the
invalidity of the donation.
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 The SC ruled in favor of the invalidity of the donation citing Article 749 of
the NCC. It declared that when the law requires that a contract be in some form
in order that it may be valid or enforceable, or that a contract be proved in a
certain way, that requirement is absolute and indispensable. The fact that the
genuineness of the document was put in issue and that no satisfactory
explanation was made to explain the alteration, the document itself is not
admissible in evidence.

Questions for Lightning Quiz:

(1) Is it necessary that special proceedings be undertaken for the

establishment of the status as heirs of the decedent before said heirs can
institute actions involving the estate of the decedent? Elaborate.
(2) What matters are to be considered by the court in probate of wills?

WILLS AND SUCCESSION

Article 774 of the NCC defines succession as a mode of acquisition by virtue

of which the property, rights and obligations to the extent of the value of the
inheritance of a person are transmitted through his death to another or others
either by his will or by operation of law.

From this definition, let me asked you a question, at what point in time
does an heir acquires right over the inheritance? The rule is, the rights to the
succession are transmitted only from the moment of the death of the decedent.
Meaning, from the moment of the death of the decedent, the heirs become the
absolute owners of his property, subject to the rights and obligations of the
decedent, and they cannot be deprived of their rights to the inheritance except
by the methods provided for by law. In fact, the rights of these heirs vest on
them even before the judicial declaration of their being heirs in the testate or
intestate proceedings.

Case: Heirs of Guido Yaptinchay and Isabel Yaptinchay vs. Hon. Roy S. del
Rosario, et.al. G.R. No. 124320, March 2, 1999.

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Issue: WON the issue of heirship must first be determined before the trial of the main case for
reconveyance of a nearly 60 hectares parcel of land, where plaintiffs have not shown any proof
or even a semblance of it, nor they have been declared the legal heirs of the deceased couple.

Ruling: The determination of who are the legal heirs of the deceased couple must be made in
the proper special proceedings in court, and not in an ordinary suit for reconveyance. Thus,
the trial court cannot make a declaration of heirship in the civil action for the reason that such a
declaration can only be made in a special proceedings. Under Section 3 Rule 1 of the 1997
Revised Rules of Civil Procedure, a civil action is defined as “one by which a party sues another
for the enforcement or protection of a right, or the prevention or redress of a wrong “ while
special proceedings is a “remedy by which a party seeks to establish a status, a right, or
particular fact”. It is then decisively clear that the declaration of heirship can be made only in a
special proceeding in as much as the plaintiffs here are seeking the establishment of a status or
right. Therefore, if the suit is not brought in the name of or against the real party in-interest, a
motion to dismiss may be filed on the ground that the complaint states no cause of action.

Also, in a later case, the Supreme Court consistently ruled where it

involved the institution of an action in the name of the heirs of their deceased
parents.

Case: Faustino Reyes, et.al. vs. Peter B. Enriquez, etc., G.R. No. 162956, April
10, 2008.

Issue: WON plaintiffs has to institute a special proceeding to determine their status as heirs of
Anacleto Cabrera before they can file an ordinary action to nullify affidavit of Anacleto Cabrera
and Dionisia Reyes, the Extra-judicial Settlement with Sale, Deed of Segregation and the
cancellation of certificates of title covering a 2,017 square meters lot.

Ruling: The Rules of Court provides that only a real party in interest is allowed to prosecute and
defend an action in court. The purpose of the rule is to protect persons against undue and
unnecessary litigation. It likewise ensures that the court will have the benefit of having before
it the real adverse parties in the consideration of the case. Thus, a plaintiff’s right to institute
an ordinary civil action should be based on his own right to the relief sought. In cases wherein
alleged heirs of a decedent in whose name a property was registered sue to recover the said
property through the institution of an ordinary civil action such as a complaint for
reconveyance and partition, or nullification of transfer certificates of title and other deeds and
documents related thereto, this Court has consistently ruled that a declaration of heirship is
improper in an ordinary civil action since the matter is within the exclusive competence of the
court in a special proceeding.

But, in a more recent case of Heirs of Valentin Basbas, et.al. vs. Ricardo
Basbas, etc., G.R. No. 188733, September 10, 2014, where the SC held that a

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claim of status as heir of a decedent must always be substantially supported by
evidence as required under our laws. However, not all rights to property and
interests thereof ought to be preceded by a declaration of heirship in a special
proceeding before the heirs can institute an action to annul its title or recover
title to and/or possession of property against third persons.

Facts: Valentin’s heirs filed an action for Annulment of Title, etc. against Crispiniano Talampas
Basbas and Ricardo Talampas Basbas over Lot No 39 located in Sta. Rosa Laguna. They alleged
that subject lot is registered in the name of Severo Basbas, their grandfather, and was
inherited by his son, Valentin, such that as the legal descendants of Valentin, they are entitled
to recover ownership and possession of subject lot. On the other hand, Crispiniano and
Ricardo countered that upon Severo’s death, he was survived by two (2) heirs, Valentin and
Nicolas, the latter is their paternal grandfather. They further averred that Valentin and Nicolas
evenly divided Severo’s estate, Lot No 39 was inherited by Nicolas while Lot No. 40, the
adjacent lot, went to Valentin. During the pre-trial, the parties stipulated that Severo is
married to Ana Rivera; both Crispiniano and Ricardo bore the middle name “Talampas”;
plaintiffs are heirs of Valentin, who is a son of Severo; and the property was originally
registered in the name of Severo. After trial, judgment was rendered in favor of Valentin’s
heirs, but review by the CA, it was dismissed invoking the ruling in the Heirs of Yaptinchay to
the effect that the plaintiffs must first be declared as heirs of Valentin before they can proceed
to file an action for annulment of title. Is the CA ruling correct?

Facts: No. The ruling in the Heirs of Yaptinchay is not applicable in the instant case because
the the heirship of the heirs of Valentin to Severo sufficiently established and uncontroverted.
While Crispiniano and Ricardo failed to establish the status of their ascendant, a purported
predecessor-in-interest Nicolas, as heir of Severo. Hence, there is no need to resort to a
special proceedings for the purpose of establishing heirship of the parties to Severo as
enunciated in the Heirs of Yaptinchay case. The SC added that Valentin’s rights to the
succession vested from the moment of the death of the decedent Severo. In turn, the heirs of
Valentin, the latter as the uncontested heir of decedent Severo, rights to the sucession vested
from the moment of Valentin’s death. As such, they own Lot No. 39 undisputedly titled in
Severo’s name and forming part of Severo’s estate.

Going back to the basic concept of succession, prior to the death of the
decedent, the interest of the purported heir to the inheritance is merely inchoate
or a mere expectancy. This is the very reason why future inheritance cannot be
the subject of contracts like donation or sale, simply because the donor/seller is
not yet the owner of the property prior to the death of the decedent. He cannot
donate what he does not own. In like manner that contracts entered into upon
future inheritance is void.

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Question: If the heirs inherit a shares of stock of a corporation, do they
automatically become stockholders of said corporation?

Answer: No, they must first comply with Section 63 of the Corporation Code on
transfer of shares before they become stockholders of said corporation, e.g. must
be registered in the books of the corporation.

Succession may be testate or intestate. Testate succession occurs when

the decedent known as the testator makes a will and designate therein his heirs
and executed in accordance with the formalities laid down by law. On the other
hand, intestate succession occurs when there is no will, or the person dies
without leaving a will, or there was a will, but the same was declared annulled
or invalid.

Will is defined in Article 783 of the Civil Code, as 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.

Wills may either be holographic or notarial. Their distinction lies on the

formalities that ought to be complied with for its validity. There are significant
requirements in one that is not required in the other kind of will.

Take note of the formalities required by law in order that a will, whether
holographic or notarial, be considered as valid, to wit: (1) must be in writing, (2)
must be executed in a language known to the testator. Additional requirements
for holographic will, are as follows: (1) it must be entirely handwritten by the
testator, (2) must be dated, and (3) must be signed by the hand of the testator.
There is, therefore, no need to have a witness in the execution of a holographic
will.

Question: Is a holograhic will that contains no affirmative disposition of the

property except disinheritance of one of the testator’s compulsory heir
considered valid?

Answer: Yes, while a will does not contain an affirmative disposition of

properties, the disinheritance of one of the compulsory heir is a disposition in

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itself. In other words, the disinheritance results in the disposition of the property
of the testator in favor of those who would succeed but in the absence of the
disinherited heir. This is the case of Dy Yieng Seangio, et al. vs. Hon. Amor A.
Reyes, et.al. G.R. Nos. 140371-72, November 27, 2006, where the decedent left
a written document couched hereunder:

Kasulatan sa Pag alis sa Mana

Tantunin ng sinuman

“Ako, si Segundo Seangio, Filipino, may asawa, naninirahan sa 465-A Flores St. Ermita
Manila at nagtatalay ng maiwanag na pag-iisip at disposisyon ay tahasa at hayagang inaalisan
ko nga lahat at ano mang mana ang panganay kung anak na si Alfredo Seangio dahil siya ay
nagging lapastangan sa akin at isan beses siya nag sasalita ng masama harapan ko at mga
kapatid niya na si Virginia Seangio ay labis kung kinasama ko at sasabe rin ni Alfredo sa akin na
ako nasa ibabaw gayon gunit daratin ang araw na ako nasa ilalim at siya nasa ibabaw.”

To prove the authenticity of a holographic will on probate, only one witness

who knows the handwriting and signature of the testator is sufficient to establish
it in accordance with Article 811 of the NCC.

Question: Suppose a holographic will was contested upon probate, is it necessary

that at least three (3) witnesses be presented to prove the authencity and
genuineness of the will?

Answer: Yes, as ruled in Eugenia Ramonal Codoy, et.al vs. Evangeline R.

Calugay, et.al, G.R. No. 123486, August 12, 1999 where the SC ruled that if the
holographic will is contested, it is mandatory that three (3) witnesses should be
presented to prove its authenticity, otherwise, probate should be denied. Such
obligation is mandatory because of the use of the word “shall” in Article 811 of
the NCC, hence, not merely permissive as ruled by the Court of Appeals.

2012 Bar Examination Question No. VII

Natividad’s holographic will, which had only one (1) substantial provision, as first written,
named Rosa as her sole heir. However, when Gregorio presented it for probate, it already
contained an alteration, naming Gregorio, instead of Rosa, as sole heir, but without
authentication by Natividad’s signature. Rosa opposes the probate alleging such lack of proper
authentication. She claims that the unaltered form of the will should be given effect. Whose
claim should be granted? Explain. (5%)

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Answer: Definitely, the will that is unaltered should be given effect because it has in its favor
the true intent of the testator in executing the will, precisely because the alteration was never
authenticated.

If the will is notarial, on the other hand, additional requirements are

indispensable, as follows: (1) it must be subscribed by the testator himself or by
some person in his presence and under his express direction, (2) it must be
attested and subscribed by at least three credible witnesses in the presence of
the testator and of one another, (3) each page must be signed by the testator,
on its left margin, except the last page, in the presence of his witnesses; (4) the
witnesses must sign every page, except the last, on the left margin in the
presence of the testator and of one another, (5) all pages must be numbered
correlatively in letters on the upper part of each page, (6) it must contain an
attestation clause acknowledged before a notary public.

One of the required formalities of wills is that it must be in writing. With

the passage of Republic Act No. 8792 otherwise known as “Electronic Commerce
Act”, are wills executed in the form of e-document as defined under the Act be
given validity? This is a significant query because of the provision in Sec. 7 of said
law where it provides that “where the law requires a document to be in writing,
that requirement is met by an e-document if said document maintains its
reliability and integrity and can be authenticated so as to be usable for
subsequent reference.” Nonetheless, how could this provision apply or be
reconciled with the requisites set forth under the Civil Code that certain
documents be put in writing like Article 804?

For instance, Article 804 of the NCC provides that every will must be in
writing and strictly following the formalities laid down in the first paragraph of
Article 805 and Article 806 of the NCC, that is, the will must be signed by the
testator and at least 3 witnesses at the end of every page, and acknowledged
before a notary public. However, in Sec. 7(c) of the ECA, it provides that no
provision shall apply to vary any and all requirements of existing laws and
formalities required in the execution of documents for their validity, hence, the
subsequent passage of the ECA did not made it possible to include execution of a
will appearing as an e-document because it is very difficult to comply with the
formalities required for a valid will. Hence, without an amendment to the ECA,
execution of wills cannot be done through e-document. Also, there is that

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requirement that will should be signed by the testator and e-signature appearing
in the e-document is not a handwritten signature that is scanned or graphically
imprinted on the e-document.

Speaking of validity of wills, it is very important to you to know the relevant

laws governing its validity. As to its formal or extrinsic validity, we follow the
principle of “lex loci celebraciones” such that, the forms and solemnities of wills
shall be governed by the laws of the country in which they are executed. Hence,
if the will is executed in the Philippines, it is the Philippine law in force at the time
of the making of the will which shall govern with respect to the formality of the
will.

With respect to the intrinsic validity of testamentary dispositions, they shall

be governed by the national law of the person whose succession is under
consideration. In addition, it is the law in force at the time of the testator’s death
that governs because it is the law at the time when the succession opens which
must determine the intrinsic validity of the provisions of the will.

2014 Bar Examination- Question No. 2

Question: Crispin died testate and was survived by Alex and Josine, his children from his first
wife; Rene and Ruby from his second wife, and Allan, Bea and Cheska, his children from his
third wife.

One important provision in his will reads as follows:

“Ang lupa at bahay sa Lungsod ng Maynila ay ililipat at ilalagay sa pangalan nila Alex at
Rene hindi bilang pamana ko sa kanila kundi upang pamahalaan at pangalagaan lamang nila at
nang ang sinuman sa aking mga anak, sampu ng aking mga apo at kaapuapuhan ko sa habang
panahon, ay may tutuluyan kung magnanais na mag-aral sa Maynila o sa kalapit na lungsod.”

Is the provision valid? (4%)

Suggested Answer: Yes, the provision is valid to the extent of 20 years because
Article 494, 3rd paragraph, NCC provides that “the donor or testator may prohibit
the partition of the property which shall not exceed twenty (20) years.”

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 Still on the laws governing formalities of wills, you must familiarize yourself
with regards to conflict rules on the subject, that is, where a foreign element
intervenes in its determination as when a Filipino executed a will abroad or a
foreigner executing a will in the Philippines.

Where a will is executed by a Filipino in a foreign country, the rule is, he is

authorized to make a will in any of the forms established by the law of the
country in which he may be. This is in accordance with Article 17 of the NCC
following the principle of “lex loci celebraciones”. Being valid, such will may be
probated in the Philippines except when it is a joint will because it is not valid in
our country even though authorized in the country where they are executed.

2012 Bar Examination MCQ

Pedro (Filipino) and his wife Jane (American) executed a joint will in Canada
where such joint will is valid. In case the joint will is probated in Japan, what law
will govern the formalities of the joint will?

a) American law
b) Philippine Law
c) Canadian Law
d) Japanese Law.

For wills executed by aliens who is abroad, it produces effect in the

Philippines if (1) made with the formalities prescribed by the law of the place in
which he resides, or (2) according to the formalities observed in his country, or
(3) in conformity with the formalities prescribed in the Philippines. Likewise, the
will of an alien made in the Philippines shall produce effect in the Philippines if:
(1) executed in accordance with the law of the country of which he is a citizen,
and (2) which might be proved and allowed by the law of his own country.

2015 Bar Examination Question No. I

Alden and Stela were both former Filipino citizens. They were married in the Philippines
but later migrated to the United States were they were naturalized as American citizens. In
their union, they were able to accumulate several real properties both in the US and in the
Philippines. Unfortunately, they were not blessed with children. In the US, they executed a
joint will instituting as their common heirs to divide their combined estate in equal shares, the

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five siblings of Alden and the seven siblings of Stela. Alden passed away in 2013 and a year
later, Stela also died. The siblings of Alden who were all citizens of the US instituted probate
proceedings in a US court impleading the siblings of Stela who were all in the Philippines.

(a) Was the joint will executed by Alden and Stela who were both former Filipinos valid?
Explain with legal basis. (3%)
(b) Can the joint will produce legal effect in the Philippines with respect to the properties
of Alden and Stela found here? If so, how? (3%)
(c) Is the situation presented in Item I an example of depecage? (2%)

Suggested Answer:

(a) Yes, the rule is, where a joint will is executed by non-Filipinos, it is valid provided the
same is valid in the place where it was celebrated.
(b) Yes, pursuant to the Rules of Court.
(c) Depecage is what?

Bar Examination Question:

A and B, a married couple of French citizenship but residents of the Philippines, went to
Argentina and there executed a joint will, mutually instituting each other as sole heir, which
will is valid according to Argentinian law. Subsequently, they returned to the Philippines where
A died. May a joint will executed in Argentina be probated as valid in the Philippines? Reasons.

Answer: Yes, the joint will executed by A and B in Argentina may be probated as valid in the
Philippines. While it is true that joint wills are declared void in our country as provided for in
Article 819 of the NCC, but this prohibition extends only to joint wills executed by Filipinos in a
foreign country even though authorized by the law of the country where they have been
executed. Certainly, this prohibition does not apply to foreigners like A and B, both being
French nationals. Rather, it is the principle of “lex loci celebraciones” that will apply.

Bar Examination Question:

X, a Spanish citizen but a resident of San Francisco, California, U.S.A.,

executed a will in Tokyo, Japan. May such will be probated in the Philippines and
his estate in this country distributed in conformity with the provisions of the will?
Explain your answer.

Answer: Yes, the will of X may be probated in the Philippines and his estate in
this country may be distributed in conformity with the provisions of the will
provided that said will was executed in accordance with the formalities prescribed

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by any of the following laws: (1) California law or the law of the place where X
resides; (2) Spain law or the law of X’s own country; (3) Philippine law, or (4)
Japanese law or the law of the place where the will was made.

2012 Bar Examination MCQ

13. The will of a Filipino executed in a foreign country:

a) Cannot be probated in the Philippines;

b) May be probated in the Philippines provided that properties in the estate
are located in the Philippines;
c) Cannot be probated before the death of the testator;
d) May be probated in the Philippines provided it was executed in accordance
with the laws of the place where the will was executed.

Question: What are the ways of revoking a will?

Answer: Wills may be revoked by:

• By implication of law as in preterition;

• By another will or codicil (the revoking will must be valid);
• By means of overt act (but there must be intent to revoke)

Question: In a will, the testator gave a particular car to X. Subsequently, the

testator executed another notarial will giving the same car to Y. But the second
will had only 2 credible witnesses. On the testator’s death, who gets the car?

Answer: X because Will No. 1 was not validly revoked due to lack of another
witness.

Question: Suppose in the preceding problem, the 2nd will had 3 credible
witnesses, but Y repudiated the inheritance, who gets the car?

Answer: The intestate heirs of the testator. Y does not inherit in view of the
repudiation. X does not also inherit because the 2nd will, though rendered
inoperative because of Y’s repudiation, but validly revoked the 1st will.

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Question: Suppose in a will, an illegitimate child was recognized by the testator.
Subsequently, such will was validly revoked. What is the effect of the revocation
on the recognition of the illegitimate child of the testator?

Answer: The recognition of an illegitimate child does not lose its legal effect even
though the will wherein it was made was revoked. (Art. 834)

2014 Bar Examination Question No. XXV

Mario executed his last will and testament where he acknowledges the
child being conceived by his live-in Josie as his own child, and that the house and
lot in Baguio City be given to his unborn conceived child. Are the
acknowledgment and the donation mortis causa valid? Why? (4%).

Answer: Yes, as the stipulations are all favorable to the unborn child, the same
must be given legal effect and validity especially the acknowledgment of paternity
by Mario. Nonetheless, the fact that the donation was made in the will, the
same is revocable at will by the donor during his lifetime.

In revocation of will, consider the “doctrine of dependent relative

revocation”, and what is this all about? This doctrine occurs when a subsequent
will, containing a clause revoking a previous will, having been disallowed, for the
reason that it was not executed in conformity with the provisions of the law as to
the making of wills, cannot produce the effect of annulling the previous will, in as
much as said revocatory clause is void. Under this doctrine, the failure of the
new testamentary disposition, upon whose validity the revocation depends, is
equivalent to the non-fulfillment of a suspensive condition and hence, prevents
the revocation of the original will. However, even if the new or subsequent will
was inoperative, such revocation made therein will still be given effect if: (1)
incapacity of the heirs, devisees or legatees designated therein; or (2)
renunciation or repudiation.

Question: The testator made a will making X his heir. The testator then learned
that X was dead, so he made another will instituting Y as heir. If X turns out to be
still alive, who inherits?

Answer: X inherits because the revocation was based on false cause.

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 The rule is, when the testator declares in a later will that revokes the
former will because of a certain state of facts or cause which turns out to be false
or illegal, the revocation is null and void. In other words, revocation of a will
based on a false cause or illegal cause is null and void. For this rule to apply, it is
necessary that the fact or cause, with regard to which the mistake was made,
must appear upon the face of the instrument. Parol evidence is not competent to
prove that a revocation, unconditional on its face, was induced by a false
assumption of fact.

Familiarize yourself with the laws governing the validity of revoking a will
where a foreign element is present because this is often the subject of either an
MCQ or in essay-type question asking whether or not the act of revocation is
valid. The rule is, if revocation is done abroad by a person not domiciled in the
Philippines, the revocation is valid when it is done in accordance to the law of the
place where the will was made or in accordance to the law of the place in which
the testator had domicile at the time of revocation. However, if the revocation is
done in the Philippines, it must be done in accordance with Philippine laws,
whether the testator be a domicile of the Philippines or not.

2012 Bar Examination MCQ

A French national revokes his will in Japan where he is domiciled. He then

changed his domicile to the Philippines where he died. The revocation of his will
in Japan is valid under Japanese law but invalid under Philippine law. The affected
heir is a Malaysian national residing in the Philippines. What law will apply?

a) Japanese law
b) Philippine law
c) French law
d) Malaysian law.

Understand also the concept of revival of wills, as the process of renewing

the operative force of a will which had once been revoked by the testator. The
rule, with respect to the revival of wills is that, if a previous will was revoked
expressly by a second will, the revocation of the second will does not revive the
first will. The previous will can only be revived by republishing it either: (1) by

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reproducing the contents of the previous will (to be republished) in a subsequent
will; or (2) by execution of a codicil referring to the previous will to be
republished.

If a previous will was revoked impliedly, the rule stated in Article 837 of the
NCC does not apply. Hence, if a previous will was revoked impliedly, the
revocation of the subsequent will which impliedly revoked the will revives the
latter.

Probate of Wills

Probate is the process of proving before a competent court the due

execution of a will by a person possessed of testamentary capacity and the
compliance with the solemnities prescribed by law, and its approval. In short,
probate is the authentication of the will.

According to Art. 838, no will shall pass either real or personal property
unless it is proved and allowed in accordance with the Rules of Court. The
testator himself may, during his lifetime, petition the court having jurisdiction for
the allowance of his will. This is known as “ante mortem probate”. If probate is
done after the testator’s death, it is referred to as “post mortem probate”. After
a will been probated during the lifetime of the testator, it does not necessarily
mean that he cannot alter or revoke the same before his death. Take note that
the will is essentially ambulatory or revocable at will.

Case: Octavio S. Maloles II vs. Pacita de los Reyes, G.R. No. 129505, January 31,
2000.

Facts: On July 20, 1995, Dr. Arturo de Santos, Filipino and resident of Makati City, filed a
petition for probate of his own will. He alleged that he had no compulsory heirs and named in
his will as sole legatee and devisee the Arturo de Santos Foundation, Inc. naming Pacita as the
executrix. A copy of the will was attached to the petition. The trial court granted the petition
allowing the will. Shortly after the probate of his will, Dr. de Santos died.

Octavio, claiming as the only child of Alicia de Santos, sister of Arturo, filed a motion for
intervention praying for the reconsideration of the order allowing the will and the issuance of
the letters of administration in his name. Octavio’s motion was denied by the trial court
holding that the probate proceedings had been terminated already upon the issuance of the
order allowing the will of Dr. de Santos. Is the trial court correct?

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Answer: Yes. In cases where the testator himself initiated the probate of his own will, there
has nothing else for the trial court to do except to issue a certificate of allowance of the will. It
cannot issue letters testamentary and settle the estate of the testator simply because the
testator is still living. It is well-settled that the authority of the court, in probate of will, is
limited to ascertaining the extrinsic validity of the will, whether the testator is of sound mind,
whether the testator freely executed his will and it is in accordance with the formalities
prescribed by law.

Ordinarily, where the will was probated after the death of the testator, the trial court,
after approving the will, proceeds to issue letters testamentary and settle the estate of the
testator and the proceedings continue until the estate is fully distributed to the lawful heirs,
devisees, legatee of the testator, which is not the circumstance obtaining in the present case.
Therefore, the dismissal of Octavio’s motion to intervene is in order.

Question: In the Maloles case above-cited, does Octavio has the legal personality
to intervene?

Answer: Octavio has no legal personality to intervene because he is not an heir or

legatee under Dr. de Santos’ will. Neither is he a compulsory heir of the latter. As
the only and nearest collateral relative of the decedent, he can inherit from the
latter only in case of intestacy. Since the decedent has left a will which has been
probated and disposes of all his properties, Octavio can inherit only if the will is
annulled. Octavio’s interest, therefore, is not direct or immediate, excluding
him as an “interested person” within the purview of Section 1 Rule 79 of the
Revised Rules of Court.

Subject to the right of appeal, the allowance of the will, either during the
lifetime of the testator or after his death, shall be conclusive as to its due
execution. Hence, until admitted to probate, a will has no effect and no right
can be claimed thereunder.

Generally, therefore, probate proceedings deals with the extrinsic validity

of the will sought to be probated particularly on the following aspects:

(1) Whether or not the will which is offered for probate is, indeed, the
decedent’s last will and testament; in other words , the question is one of
identity;

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 (2) Whether or not the will has been executed in accordance with the
formalities prescribed by law; in other words, the question is one of due
execution;
(3) Whether or not the testator has testamentary capacity at the time of the
execution of his will; in other words, the question is one of capacity.

The main function of a probate court is to settle and liquidate the estates of
deceased persons either summarily or through the process of administration. The
general rule is that the jurisdiction of the trial court, either as a probate or a
testate court, relates only to matters having to do with the probate of the will
and/or settlement of the estate of deceased persons, but does not extend to the
determination of question of ownership that arise during the proceeding.
However, the Supreme Court stated two (2) exceptions to the rule:

(1) The probate court may provisionally pass upon in an intestate or a

testate proceeding the question of inclusion in, or exclusion from, the
inventory of a piece of property without prejudice to the final
determination of ownership in a separate action;

(2) If the interested parties are all the heirs to the estate, or the question is
one of collation or advancement, or the parties consent to the
assumption of jurisdiction by the probate court and the rights of third
parties are not impaired, then the probate court is competent to
resolve issues of ownership. Verily, its jurisdiction extends to matters
incidental or collateral to the settlement and distribution of the estate,
such as the determination of the status of each heir and whether the
property in the inventory is conjugal or exclusive property of the
deceased spouse.

Question: In a probate proceeding, a third person sought to prevent the

distribution of the estate on the ground that certain properties do not belong to
the estate of the testator but to him. Can such third person successfully prevent
the probate proceeding?

Answer: No, the probate proceeding is not the forum for the resolution of
adverse claims of ownership purportedly belonging to the estate of the decedent

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because such can be ventilated in an independent action. In the meantime, the
proper remedy is for the third person to annotate his lis pendens on the subject
property.

Question: What is the prescriptive period to institute probate proceedings?

Answer: None. The statute of limitations is applicable only for civil actions and
not for special proceedings like probate.

2012 Bar Examination Question:

John Sagun and Maria Carla Camua, British citizens at birth, acquired
Philippine citizenship by naturalization after their marriage. During their
marriage, the couple acquired substantial landholdings in London and Makati.
Maria begot three (3) children, Jorge, Luisito and Joshur. In one of their trips to
London, the couple executed a joint will appointing each other as their heirs and
providing that upon the death of the survivor between them, the entire estate
would go to Jorge and Luisito only but the two could not dispose of nor divide the
London estate as long as they live. John and Maria died tragically in the London
subway terrorist attack in 2005. Jorge and Luisito filed a petition for probate of
their parent’s will before a Makati Regional Trial Court. Joshur vehemently
objected because he was preterited.

1. Should the will be admitted to probate? Explain. (2%) Answer: No.

2. Are the testamentary dispositions valid? Explain (2%) Answer: No.
3. Is the testamentary prohibition against the division of the London estate
valid? Explain. (1%) Answer: No.

Case: In the Matter of the Petition to Approve the Will of Ruperta Palaganas,
etc. by Manuel Miguel Palaganas, et.al. vs. Ernesto Palaganas, G.R. No. 169144,
January 26, 2011.

Facts: On November 8, 2011, Ruperta C. Palaganas, a Filipino who became naturalized U.S.
citizen, died single and childless. In the last will and testament she executed in California,
Ruperta designated her brother, Sergio, as the executor of her will for she had left properties
in the Philippines and in the U.S. In 2003, Ernesto, another brother of Ruperta, filed a petition
for probate of Ruperta’s will and for him to be appointed as special administrator of her estate.
It was opposed by Manuel Miguel, a nephew of Ruperta, on the ground that it should not be

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probated in the Philippines but in the U.S. where she executed it. Is the contention of Manuel
Miguel correct?

Answer: No. Our laws do not prohibit the probate of wills executed by foreigners abroad
although the same have not as yet been probated and allowed in the countries of their
execution. A foreign will can be given legal effect in our country. Article 816 of the NCC states
that the will of an alien who is abroad produces effects in the Philippines if made in accordance
with the formalities prescribed by the law of the place where he resides or according to the
formalities observed in his country. This is complemented by Section 1 Rule 73 of the Revised
Rules of Court which provides that if the decedent is an inhabitant of a foreign country, the
RTC of the province where he has an estate may take cognizance of the settlement of the
estate. Sections 1 and 2 of Rule 76 of the same Rules further state that executor, devisee or
legatee named in the will, or any other person interested in the estate, may, at any time,
after the death of the testator, petition the court having jurisdiction to have the will allowed,
whether the same be in his possession or not, or is lost or destroyed. In short, our rules do not
require proof that the foreign will has already been allowed and probated in the country of its
execution.

Question: What is the legal effect if the will is allowed to probate?

Answer: The probate of a will is conclusive as to its due execution and extrinsic
validity and settles only the question of whether the testator, being of sound
mind, freely executed it in accordance with the formalities prescribed by law.
Otherwise stated, the order allowing the will became final and the question
determined by the court is such order can no longer be raised anew, either in the
same proceedings or in a different motion. The matters of due execution of the
will and the capacity of the testator acquired the character of res judicata and
cannot again be brought into question . Such final order makes the will conclusive
against the whole world as to its extrinsic validity and due execution.

Question: Does the provisions of Article 1410 of the NCC that “the action or
defense for the declaration of the inexistence of a contract does not prescribe”
applies to wills?

Answer: No, as ruled in the case of Gallanosa vs. Arcangel, 83 SCRA 676.

Question: Will the judgment of a probate court allowing the will to probate bar
the prosecution of the crime of falsification against the petitioner-offeror?

Answer: Yes, as ruled in the old case of Mercado vs. Santos, 66 Phil 215.

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 Just take note of the grounds by which wills may be disallowed:

(1) Failure to comply with the formalities required by law;

(2) Testator was insane or otherwise mentally incapable of making a will at
the time of its execution;
(3) The will was executed through force or undue duress , or under the
influence of fear or threats;
(4) The will was procured by undue and improper pressure and influence on
the part of the beneficiary or of some other person;
(5) The signature of the testator was procured by fraud;
(6) 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;
(7) The testator was below 18 years of age at the time of the execution of the
will.

If any of the grounds for disallowance is proved, the will shall be set aside
as void, not merely voidable.

Question: What is your understanding of the concept of “preterition”?

Answer: Preterition consists in the omission in the testator’s will of the

compulsory heir in the direct line, or of any one of them, either because they are
not mentioned therein, or though mentioned, they are neither instituted as heirs
nor expressly disinherited.

For preterition to exists, the following requisites must concur:

(1) The heir omitted must be a compulsory heir in the direct line, whether
ascending or descending. Hence, even if the surviving spouse is a
compulsory heir, there is no preterition even if she is omitted from the
inheritance, for she is not in the direct line. But there is preterition if the
one omitted is an adopted child because the latter is a compulsory heir in
the direct line;

(2) The omission must be total and complete, meaning, the omitted heir does
not and has not received anything at all from the testator by any title

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 whatsoever. Hence, there is no preterition where the testator allotted to a
descendant a share less than the legitime, since there was no total
omission of a force heir. In the latter case, the omitted heir is entitled only
to a completion of his legitime.

(3) The omitted heir must survive the testator.

Case: Iris Morales vs. Ana Maria Olondriz, et.al., G.R. No. 198994, February 3,
2016.

Facts: Alfonso Juan P. Olondriz, Sr. died on June 9, 2003. He was survived by his widow, Ana
Maria Olodriz, and his children, Alfonso Juan, Jr, Alejandro Marino, Isabel Rosa, Angelo Jose
and Francisco Javier. Believing that the decedent died intestate, Alfonso Juan, Sr.’ heirs filed a
petition for the partition of the decedent’s estate and the appointment of a special
administrator .However, in a separate petition, Iris Morales filed a separate petition alleging
that Alfonso Juan, Sr. left a will, thus, she prayed for its probate and for her to be appointed as
the special administrator. It was found out, however, that the will omitted Francisco Javier,
an illegitimate son of Alfonso Juan, Sr. Thus, Ana Maria and the six (6) children moved to
dismiss the probate proceeding because Francisco Javier was preterited. No evidence was
presented by Iris to controvert the claim of Alfonso Juan Sr.’s heirs. If you are the judge will you
grant the motion to dismiss?

Answer: Yes, I will grant the motion. Under the NCC, the preterition of a compulsory heir in
the direct line annuls the institution of heirs but the devisees and legatees shall remain valid in
so far as the legitimes are not impaired. Consequently, if a will does not institute any devisees
or legatees, the preterition of a compulsory heir in the direct line will result in total intestacy.
In the present case, Alfonso Juan Sr.’s will evidently omitted Francisco Javier as an heir,
legatee or devisee. As the decedent’s illegitimate son, Francisco Javier is a compulsory heir in
the direct line. Francisco Javier’s omission from the will leads to the conclusion of his
preterition resulting in the annulment of the institution of the heirs. The annulment caused the
total abrogation of the will resulting in total intestacy of the inheritance.

2012 Bar Examination Question No. VIII

Ricky and Arlene are married. They begot Franco during their marriage.
Franco had an illicit relationship with Audrey and out of which, they begot Arnel.
Franco predeceased Ricky, Arlene and Arnel. Before Ricky died, he executed a
will which when submitted to probate was opposed by Arnel on the ground that
he should be given the share of his father, Franco. Is the opposition of Arnel
correct? Why? (5%)

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Suggested Answer: The opposition of Arnel is misplaced because there was no
preterition to speak of, he being not a compulsory heir of Ricky in the direct line.
Take note that an illegitimate child is prohibited from inheriting from the estate of
the legitimate parents of his illegitimate parent. This barrier is known as “iron
curtain rule”.

Question: What is the effect of preterition in the institution of heirs?

Answer: When there is preterition, it shall have the effect of annulling entirely
the institution of heirs, but the legacies and devises shall be valid in so far as they
are not inofficious. Since the institution of heirs is annulled, it will necessarily
open the entire inheritance to total intestacy except that proper legacies and
devises must be respected. However, if the omitted heir is the surviving spouse,
there is no preterition. Hence, the surviving spouse shall be entitled only to
recover his/her legitime but the institution of heirs shall not be annulled.

2014 Bar Examination- Question No. 5

Question: What is the effect of preterition? (1%)

A. It annuls the devise and legacy;

B. It annuls the institution of heir;
C. It reduces the devise and legacy;
D. It partially annuls the institution of heir.

In the case of Heirs of Policronio M. Ureta. et.al vs. Heirs of Liberato

M.Ureta, et.al. 657 SCRA 555, September 14, 2011, the heirs executed a Deed
of Extra-judicial Partition. It was being questioned because some heirs were
allegedly preterited, and the representative of one group of heirs, although
authorized, has no special power of attorney to represent his siblings. One of the
issues is, was there preterition? None, because there was no will, preterition is
true only on testate succession. Thus, the validity of the extrajudicial partition
was upheld.

LEGITIME

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 It is that part of the testator’s property which he cannot dispose of because
the law has reserved it for certain heirs who are called compulsory heirs. As a
rule, the testator cannot prejudice the right of the compulsory heirs to their
legitime. In consonance to this rule, the testator cannot deprive his compulsory
heirs of their legitime except in case of disinheritance legally made. Likewise, the
testator cannot impose any burden, charge, encumbrance, condition or
substitution of any kind upon the legitime. Such that, where a donation inter
vivos was made by the decedent during his lifetime, such donation should not
prejudice the legitime of the compulsory heirs, otherwise, such will be
considered inofficious that reduction of the same, with respect to the excess, is
in order. This is so because of the rule that no person may give or receive, by
way of donation, more than he may give or receive by will.

There are only two (2) instances where the testator may validly affect the
right of the compulsory heirs to their legitime, as follows:

(1) When the testator validly disinherited his compulsory heir, in which case,
the testator can deprive him of his legitime; and
(2) When the testator prohibits partition of the hereditary estate for the
period not exceeding twenty (20) years, which prohibition can apply even
to the legitime of the compulsory heirs.

To fully understand the law on legitime, you ought to know the three
(3) kinds of compulsory heirs, namely: (1) primary compulsory heirs; (2)
secondary compulsory heirs; and (3) concurring compulsory heirs.

Primary compulsory heirs are those who have precedence over and
exclude other compulsory heirs. Secondary compulsory heirs are those who
succeed only in the absence of the primary compulsory heirs. While
concurring compulsory heirs are those who succeed together or
simultaneously with the primary compulsory heirs or secondary compulsory
heirs.

Question: Who are the primary compulsory heirs?

Answer: The primary compulsory heirs are his legitimate children and
descendants to include adopted child and legitimated children for they are

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 also considered legitimate children for all legal intents and purpose. Should
legitimate children or descendants succeed, they will exclude the legitimate
parents or ascendants because the latter are secondary compulsory heirs only.

If all the legitimate children are living and with capacity to succeed and
none of them have been disinherited, only such children succeed to the
exclusion of the other legitimate descendants. In other words, in the
descending line, the children exclude the grandchildren of the decedent
following the rule that the nearer generation excludes the further generations.
However, when representation is proper, the descendants may take the place
in the succession of one or more of the children who do not or cannot succeed
in case of predecease, incapacity to inherit or disinheritance, but not where
such child or children repudiated the inheritance.

However, if no children survive, but only grandchildren, all of them will

inherit, by right of representation, dividing equally among them the share
that would have pertained to the child whom they represented in the
inheritance. If all the children, however, repudiated their inheritance, the
descendants next in degree will succeed in their own right, not by right of
representation, and share equally the estate or per capita.

With respect to an adopted child, the Family Code as well as the

Domestic Adoption Act declare that such child is considered a legitimate child
of the adopter for all intents and purposes, and therefore, entitled to all the
rights and obligations provided by law to legitimate children including the right
to legitime and other successional rights granted under the law. In other
words, an adopted child is a compulsory heir of the adopter and his legitime
is the same as that granted to the legitimate child of the adopter. In effect,
since the adopted child enjoys successional rights as a legitimate child, he
would exclude the legitimate parents and ascendants.

It be noted that under our law on adoption, the relationship established

is limited solely to the adopter and the adopted and does not extend to the
relatives of the adopting parents or of the adopted child except only as
expressly provided by law. Hence, no relationship is created between the
adopted and the collateral relatives of the adopting parents. As a

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 consequence, the adopted is an heir of the adopter but not of the relatives of
the adopter.

Under Article 190 of the Family Code, when parents (whether legitimate
or illegitimate), or the legitimate ascendants of the adopted concur with the
adopters, they shall divide the entire estate, that is, one-half to be inherited
by the parents or ascendants and the other half by the adopters.

For illegitimate children, they become primary compulsory heirs of their

illegitimate parents only if they do not concur with legitimate children or
descendants of their illegitimate parents. Such that, if their illegitimate
parents have legitimate children or descendants, the latter shall be the
primary compulsory heirs while illegitimate children will be considered merely
as concurring compulsory heirs.

Question: Who are the secondary compulsory heirs?

Answer: The secondary compulsory heirs are the: (1) legitimate parents and
ascendants; 2) illegitimate parents; and (3) adopting parents.

In relation to their legitimate child and descendants, legitimate parents

and ascendants become compulsory heir only in default of legitimate children
and descendants of the former. Hence, when the deceased is survived by
legitimate descendants and legitimate ascendants, the latter are not
compulsory heirs. In the event, however, that legitimate ascendants become
compulsory heirs due to the absence of legitimate descendants, the rule is
that the nearest relative excludes the more remote. If both father and mother
survive, they shall divide the legitime equally. If only one of them survives, he
or she gets the entire legitime. If none survives, the nearest ascendant
succeeds. If there are ascendants in the same degree, some of them in the
paternal and others in the maternal line, the legitime is divided equally
between the two lines, irrespective of the number of persons in each line.

In like manner, illegitimate parents become compulsory heir only of

their illegitimate children if the latter has no children of their own, whether
legitimate or illegitimate, and legitimate descendants. In other words, the

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 existence of legitimate children or descendants or illegitimate children of the
deceased shall exclude the illegitimate parents from the legitime.

Even in default of legitimate children or descendants or illegitimate

children of the deceased, only the parents of illegitimate children are entitled
to legitime, other ascendants, like illegitimate grandparents, are excluded.
Clearly, there is no reciprocity of successional rights between the illegitimate
grandparents and the illegitimate grandchild. While an illegitimate grandchild
can succeed to his illegitimate grandparent by representing his illegitimate
parent, the illegitimate grandparent cannot succeed to his illegitimate
grandchild because in the ascending line, only the parents of the illegitimate
child are entitled to the legitime.

Under the Domestic Adoption Act, the adopter and the adoptee shall
have reciprocal rights of succession, just like in legitimate filiation. Hence, the
adopter becomes a legal or compulsory heir of the adopted child, and not the
latter’s biological parents. This is because, under this law, it provides that all
legal ties between the biological parents and the adoptee shall be severed and
the same shall be vested on the adopter. Nonetheless, the adopted and his or
her parents by nature may still succeed from each other by way of
testamentary succession.

Question: Who are the concurring compulsory heirs?

Answer: The concurring compulsory heirs are the: (1) surviving spouse, and
(2) illegitimate children.

Whether the decedent is succeeded by legitimate children or

descendants or illegitimate children, the surviving spouse is still entitled to the
legitime. In other words, he or she concurs with the other kinds of
compulsory heirs and is not excluded in the entitlement of the legitime of his
or her deceased spouse. Even in case of legal separation, so long as he or she
is not the one who had given cause to their separation, the surviving spouse
remains to be the compulsory heir of the deceased spouse. However, if it is
the surviving spouse who had given cause for their separation, he or she
ceased to be a compulsory heir of the deceased spouse. In fact, the guilty

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 spouse is disqualified from inheriting from the innocent spouse even by
intestate succession.

Surviving spouse also concurs with the legitimate parents or ascendants

of the deceased. In short, where the legitimate parents or ascendants
succeed because there was no legitimate children or descendants or
illegitimate children of the deceased, the surviving spouse succeeds together
with the legitimate parents or ascendants in the legitime of the deceased.

Illegitimate children is also entitled to the legitime even with the

presence of legitimate children or descendants, only that his legitime shall
consists only of one-half of the legitime of a legitimate child. If both the
surviving spouse and illegitimate children concur with legitimate children or
descendants, the legitime of the surviving spouse shall have preference over
those of the illegitimate children. The share of the latter, therefore, may
suffer reduction pro rata because there is no preference as among themselves.

With the full grasp of the working knowledge with respect to the kinds of
compulsory heirs we discussed a while ago, you have to memorize the amount of
legitime where such kind of compulsory heir survives alone or concurs with the
other compulsory heir because their entitlement to the legitime varies.

The rule is, when compulsory heir of the same kind survive alone,
meaning, without the concurrence of other kinds of compulsory heirs, the
legitime is always one-half (1/2) of the hereditary estate.

However, in the case of the surviving spouse who survives alone and their
marriage was solemnized in articulo mortis where the other spouse died within
three (3) months from the time of their marriage, the legitime of the surviving
spouse as the sole heir shall be one-third (1/3) of the hereditary estate. But take
note that this rule applies only if the deceased was the spouse who was at the
point of death at the time of marriage, not the healthy spouse. Nonetheless,
even if the deceased died within three (3) months from the time of marriage, but
they were living together as husband and wife already for more than five (5) years
prior to the marriage, the legitime of the surviving spouse shall still be one-half
(1/2) of the hereditary estate.

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 For your purpose, be sure to memorize the Table of Legitimes because it
will help you solve whenever problem on distribution of estate will be asked in
the Bar examination, especially in situations where primary compulsory heirs
concurs with concurring compulsory heirs, or secondary compulsory heirs
concurs with concurring compulsory heirs or it is a concurrence among concurring
compulsory heirs only.

It may be necessary for you to know how legitimes are computed, or the
procedure in ascertaining the estate of the decedent for purposes of determining
the value of the legitime for his compulsory heirs. The procedure are as follows:

First, determine the value of the property of the decedent at the time of
his death;
Second, all debts and charges which are not imposed in the will shall be
deducted. The difference between the assets and the liabilities shall then
constitute the “net hereditary estate”;
Third, to the net value of the hereditary estate shall be added the value of
all donations by the testator subject to collation, at the time such donation was
executed whether in favor of a compulsory heir or stranger. The total value
obtained after adding the value of all donations to the net hereditary estate is the
“distributable estate” which is the basis for computing the legitime and the free
portion;
Fourth, after the amount of the distributable estate has been determined
and the legitime and the free portion ascertained, donations which had been
brought to collation should next be imputed and charged against the
corresponding portion of the estate.

2012 Bar Examination Question No. VIII-b

How can RJP distribute his estate by will, if his heirs are JCP, his wife; HBR
and RVC, his parents; and an illegitimate child, SGO? (5%)

Suggested Answer: If legitimate parents concur with the surviving spouse and
illegitimate children, the sharing in the legitime are as follows: legitimate
parents, ½ of the estate; illegitimate children, in equal shares, ¼ of the estate,
and the surviving spouse, 1/8 of the estate. The share of the surviving spouse
shall have preference over those of the illegitimate children, whose share may

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suffer reduction pro rata because there is no preference as among themselves.
(Art. 895, last paragraph of the NCC).

Questions for Lightning Quiz:

(1) A died intestate leaving a considerable fortune. His widow B gave birth to
a son three (3) months after A’s death. The child died two days after it was
born. The widow B died two days after her child. The inheritance left by A is
claimed by the legitimate mother of B, and a legitimate brother of A. There
are no other relatives. Who do you believe is entitled to the inheritance?
Why?

(2) When does legal or intestate succession takes place?

Question: What is the concept of reserva troncal?

Answer: In order that a property may be impressed with a reservable character,

the following requisites must exist:

(1) That the property was acquired by a descendant (called “praepositus”)

from an ascendant or from a brother or sister by gratuitous title;
(2) That said descendant (praepositus) died without an issue;
(3) That the same property (called “reserva”) is inherited by another
ascendant (called “reservista”) by operation of law (either through intestate
or compulsory succession) from the praepositus; and
(4) That there are living relatives within the third degree counted from the
praepositus and belonging to the same line from where the property
originally came (called “reservatarios”).
Other authors contends that only the first three (3) are the requisites of
reserva troncal, and it considered the fourth not a requisite but merely a
resolutory condition to which the reserve is subject.

2014 Bar Examination Question:

Esteban and Martha had four (4) children: Rolando, Jun, Mark and Hector.
Rolando had a daughter, Edith while Mark had a son, Philip. After the death of
Esteban and Martha, their three (3) parcels of land were adjudicated to Jun.

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After the death of Jun, the properties passed to his surviving spouse, Anita and
son, Cesar. When Anita died, her share went to her son, Cesar. Ten (10) years
after, Cesar died intestate without any issue. Peachy, Anita’s sister, adjudicated
to herself the properties as the only surviving heir of Anita and Cesar. Edith and
Philip would like to recover the properties claiming that they should have been
reserved by Peachy in their behalf and must now revert back to them. Is the
contention of Edith and Philip valid? (4%)

For you to find an answer to this bar problem, you ought to know the case
with a similar backdrop.

Case: Maria Mendoza, et.al. vs. Julia Policarpio de los Santos, G.R. No. 176422,
March 20, 2013 where the SC ruled that reserva troncal is a special rule designed
primarily to assure the return of reservable property to the third degree relatives
belonging to the line from which the property came, and avoid it being dissipated
into and by the relatives of the inheriting ascendant.

Facts: Spouses Placido and Dominga Mendoza were the owners of the subject three (3) parcels
of land. The said spouses had four (4) children, Antonio, Exequiel, Apolonio and Valentin.
Maria and the children of Antonio and Valentin are the grandchildren of said spouses. Maria
and the other heirs alleged that these subject parcels were adjudicated to Exequiel by way of
oral partition. After Exequiel’s death, subject properties were inherited by Exequiel’s wife,
Leonor and their only child, Gregoria. After Leonor’s death, her share went to Gregoria.

In 1992, Gregoria died intestate and without issue. Maria and other heirs claimed that
after Gregoria’s death, Julia, sister of Leonor, adjudicated unto herself all these properties as
the sole surviving heir of Leonor and Gregoria. It was the contention of Maria and other heirs
that the properties should have been reserved by Julia in their behalf and must now revert back
to them applying Article 891 of the NCC on reserva troncal. Is the contention of Maria and
other heirs correct?

Answer: Based on the circumstances of the case, Article 891 of the NCC on reserva troncal is
not applicable. Article 891 provides that a person obliged to reserved the property should be an
ascendant (reservista) of the descendant (prepositus). Here, Julia is not Gregoria’s ascendant,
rather, she is Gregoria’s collateral relative within the third degree. Also, Maria and other
heirs, cannot be considered reservetarios as they are not relatives within the third degree of
Gregoria. In fact, they are Gregoria’s fourth degree relatives, being her first cousins. First
cousins of the prepositus are fourth degree relatives and are not reservetarios. The conclusion,
therefore, is that while it may appear that the properties are reservable in character, Maria
and other heirs cannot benefit from reserva troncal. If at all, what should apply in the
distribution of Gregoria’s estate are Articles 1003 and 1009 of the NCC. Article 1003 provides

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“if there are no desendants, ascendants, illegitimate children or a surviving spouse, the
collateral relatives shall succeed to the entire estate of the deceased in accordance with the
following articles” and Article 1009 provides “should there be neither brothers or sisters nor
children of brothers or sisters, the other collateral relatives shall succeed to the estate.”

Bar Question:

A died intestate leaving a considerable fortune. His widow B gave birth to a

son three (3) months after A’s death. The child died two days after it was born.
The widow B died two days after her child. The inheritance left by A is claimed by
the legitimate mother of B, and a legitimate brother of A. There are no other
relatives. Who do you believe is entitled to the inheritance? Why?

Answer: Upon A’s death, his fortune was inherited by his widow (1/2) and by his
son (1/2) by intestate succession (gratuitous title). The son inherited because at
the time of his father’s death, he was already conceived, and a conceived child is
already considered born for all purposes favorable to it. Upon the death of the
son, without issue, the mother inherited by operation of law, his half-share. On
this half-share, there is a reserva troncal, the requisites, therefor, all being
present- and, therefore, on the widow B’s death, said one-half should properly
go to the legitimate brother of A, who is a relative within the 3rd degree counted
from the prepositus (the baby son). Said half is indeed not part of the estate of B.

But the other half inherited by B direct from A by legal succession is

certainly not reservable property. It belongs to her estate. And, therefore, on
her death, it should go to her nearest intestate heir, her legitimate mother of B.

2016 Bar Examination Question No. XX

Princess married Roberto and bore a son, Onofre. Robert died in a plane
crash. Princess later married Mark and they also had a son, Pepito. Onofre
donated to Pepito, his half-brother, a lot in Makati City worth Php3M. Pepito
succumbed to an illness and died intestate. The lot given to Pepito by Onofre was
inherited by his father, Mark. Mark also died intestate. Lonely, Princess
followed Mark to the life beyond. The claimants to the subject lot emerged- Jojo,
the father of Princess; Victor, the father of Mark; and Jerico, the father of
Roberto.

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 Who among the three (3) ascendants is entitled to the lot? Explain. (5%)

Disinheritance

It is the process or act, thru a testamentary disposition, of depriving in a

will any compulsory heir of his legitime for true and lawful cause.

Question: What are the requisites for a valid disinheritance?

Answer: The requisites are the following:

(1) The heir disinherited must be designated in such a manner that there
can be no doubt as to his identity;
(2) The disinheritance must be for cause designated by law;
(3) The disinheritance must be made in a valid will;
(4) The disinheritance must be made expressly, stating the cause in the will
itself;
(5) The cause for the disinheritance must be certain and true and must be
proved by the interested parties if the person disinherited should deny
it, and
(6) The disinheritance must be unconditional and total.

If there is valid disinheritance, the disinherited heir gets nothing at all. But if
the disinheritance is ineffective, the disinherited heir gets only his legitime.
There are three (3) cases of ineffective disinheritance:

(1) If no cause is stated in the will;

(2) If the cause is not true; and
(3) If the cause is not a legal cause.

Hence, you ought to know the causes of disinheritance. There are many
legal causes for disinheriting compulsory heirs, some of which may pertain to
grounds to disinherit a child or descendant, or to parents or ascendants, or to
disinherit a spouse. Just take note of these different grounds for the examiner
might be tempted to ask an MCQ question on this subject matter.

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Case: Ramon S. Ching vs. Hon. Jansen R. Rodriguez, G.R. No. 192828,
November 28, 2011.

Facts: A complaint was filed in the RTC for Disinheritance, Declaration of Nullity of Agreement
and Waiver, etc. against Ramon Ching. The ground for disinheritance is the claim that subject
heir murdered his own father. The record shows he is the prime suspect in the killing but he is
at large.

A motion to dismiss was filed in the RTC on ground of lack of jurisdiction over the subject
matter. The motion to dismiss was denied. There are several causes and issues raised but for
our purposes, only this issue will be considered, may the RTC entertain a complaint for the
disinheritance of an heir without a will of the decedent?

Answer: Under Article 916 of the NCC, disinheritance can be effected only through a will
wherein the legal cause therefor shall be specified. This Court agrees with the RTC and CA that
while the respondents in their Complaint and Amended Complaint sought the disinheritance of
Ramon, no will or any instrument supposedly effecting the disposition of Antonio’s estate was
ever mentioned. Hence, despite the prayer for Ramon’s disinheritance, Civil Case No. 02-
105251 does not partake of the nature of a special proceeding and does not call for the probate
court’s exercise of its limited jurisdiction.

Question: May disinheritance be allowed even if there was no will and testament
of the decedent?

Answer: Yes, by way of exception to Article 916 of the NCC, Article 43 paragraph
5 of the Family Code and Article 63 paragraph 4 of the same Code provides a
situation where there will be automatic disinheritance. In Art. 43(5) it provides
“the spouse who contracted the subsequent marriage in bad faith shall be
disqualified to inherit from the innocent spouse by testate and intestate
succession”, and in legal separation, Art. 63(4) it provides “the offending spouse
shall be disqualified from inheriting from the innocent spouse by intestate
succession. Moreover, provisions in favor of the offending spouse made in the will
of the innocent spouse shall be revoked by operation of law.”

There are grounds for disinheritance which are also causes for incapacity by
reason of unworthiness under Article 1032 of the NCC. In case of unworthiness,
the rule is that if the testator had knowledge of the cause of unworthiness at the
time he made his will but nonetheless instituted the unworthy heir, the cause
shall be without effect. The same effect will likewise be produced if the testator

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subsequently learns of the existence of a cause of unworthiness but condones it
in writing.

Question: What is the effect of subsequent reconciliation if disinheritance has

already been made on any of the grounds which are also causes for
unworthiness?

Answer: The effect is that, once the testator uses one of these causes for
unworthiness as a ground for disinheritance, it is the rule on disinheritance that
will govern, thus, reconciliation renders the disinheritance ineffective.

Question: Can compulsory heirs of a disinherited heir have a right of

representation?

Answer: Yes, such compulsory heir can represent said disinherited heir because
causes for disinheritance are personal only to the latter. Hence, in case of valid
disinheritance, only the disinherited heir is deprived of his right to the legitime.
The children or descendants of the disinherited heir can take his place and
preserve the disinherited heir’s right to the legitime. But, in case of disinherited
parent, he shall not have the usufruct or administration of the property which
constitute the legitime.

Question: What is the legal effect if disinheritance is invalid?

Answer: The legal effect of an invalid disinheritance is the annulment of the

institution of heirs in so far as it may prejudice the legitime of the person
disinherited but the legacies and devisees and other testamentary dispositions
shall be valid to such extent as will not impair said legitimes. Hence, the legitime
of the disinherited heir shall simply be restored.

The above-quoted rule applies if the testator has made dispositions of the
entire estate, but if the testator did not dispose of the free portion in his will to
others and the disinherited heir is also an intestate heir, the latter will receive not
only his legitime but also his share in the intestate succession.

Question: Suppose the testator and the disinherited heir reconciled after the
latter was disinherited in a will, what is the legal effect?

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Answer: A subsequent reconciliation between the offender and the offended
person deprives the latter of the right to disinherit and renders ineffectual any
disinheritance that may have been made. Take note that there is no required
form in case of reconciliation. It may be tacit or express.

Devise/Legacy

Devises are gifts of real property given by virtue of a will while legacies are
gifts of personal property given by will. By its nature, legacies and devises are a
charge or a burden upon the estate itself and are to be paid by the executor or
administrator, unless the testator expressly burdens a particular heir, legatee or
devisee with their payment.

Just take note of the important rules with respect to different situations
governing bequeathal of legacies or devisees where the property bequeathed was
partly owned by the testator, where the subject of a legacy or devise belongs to
another person at the time of the execution of the will, where the property
belongs already to the legatee or devisee, where the thing bequeathed had been
pledged or mortgaged, in legacy of credit, in legacy of remission of debt, and
legacy in favor of creditor.

Question: May a testator gives as legacy something not owned by him?

Answer: It depends.

(1) If he knows he is not the owner, the legacy can be validly made. This only
means that the estate must acquire the property from the true owner so
that it may be given to the legatee. If the owner refuses or demands an
unreasonable price, the just value will be given to the legatee.
(2) If he does not know that he is not the owner, there is error, and the
legacy is void. However, if he later becomes its owner, the legacy shall be
valid.

A legacy or devise is revoked by operation of law, in the following

instances:

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 (1) If the testator transforms the thing bequeathed in such a manner that it
does not retain either the form or denomination it had;
(2) If the testator by any title or for any cause alienates the thing bequeathed.
If after the alienation the thing should again belong to the testator, even if
it be by reason of nullity of the contract, the legacy or devise shall not
thereafter be valid, unless the reacquisition shall have been effected by
virtue of the exercise of the right of repurchase.
(3) If the thing bequeathed is totally lost during the lifetime of the testator, or
after his death without the heir’s fault.

Question: What is your understanding of the term “ademption”?

Answer: Ademption is the process of making effective inter vivos a disposition

mortis causa. For example, X, in his will, gave Y a parcel of land. A month later,
X noticed that Y was desirous of becoming the owner of the land as soon as
possible. So, to make effective during his own lifetime the testamentary
disposition, X donated by means of public instrument said land to Y, who
accepted the same. This process is called “ademption”.

INTESTATE SUCCESSION

Intestate or legal succession is that which takes place by operation of law in

the absence of a valid will.

Question: When does legal succession takes place?

Answer: Intestate or legal succession takes place in the following instances:

Under Article 960 of the NCC, it mentioned four (4) causes of intestacy, as
follows:

(1) When a person dies without a will or when the will is void or when the will
has subsequently lost its efficacy;
(2) When the will does not institute an heir or when the will does not dispose
of all the property belonging to the testator, in which case, legal
succession shall takes place only with respect to the property of which the
testator has not disposed.

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 (3) When the suspensive condition attached to the institution of heir does not
happen or is not fulfilled, or when the heir repudiates the inheritance and
there being no substitution and no right of accretion takes place;
(4) When the heir dies before the testator, or when the heir instituted is
incapable of succeeding and there being no substitution and no right of
accretion or representation takes place;

In addition to those enumerated in Article 960, there are other causes of

intestacy, as follows:

(1) When there is preterition in the testator’s will of one, some or all of the
compulsory heirs in the direct line;
(2) When a testamentary disposition is subject to a resolutory condition and
such condition is fulfilled;
(3) When a testamentary disposition is subject to a term or period and such
term or period expires;
(4) When a testamentary disposition is impossible of compliance or is
ineffective.

Case: Dolores L. Hacbang, et.al. vs. Atty. Basilio H. Alo, G.R. No. 191031,
October 5, 2015.

Facts: On April 3, 1937, Bishop Sofronio Hacbang died leaving several properties in Leyte and
Samar. He was survived by his parents Basilio and Maria Hacbang, and his siblings, Perfecto,
Joaquin, Lucia, Teresita and Dolores Hacbang Alo. Bishop Sofronio left a will disposing ½ of his
properties to his parents and the other half was devised to Dolores H. Alo. On April 11, 1937,
a petition for probate of Bishop Sofronio’s will was filed and was approved by the court a
month later. The records of the case is bereft as to what transpired after the allowance of the
will as there was no final decree of distribution of properties that was issued by the court. It
was shown, however, that the proceeding was archived in 1957.

Dolores L. Hacbang, granddaughter of Perfecto, questioned the title issued to Atty.

Basilio covering a parcel of land devised to his mother, Dolores H. Alo. She argued that since
the probate proceeding was archived, it did not disposed the properties left by Bishop
Sofronio, thus, all his properties passed to and became part of the estate of Bishop Sofronio’s
parents and must be governed by intestate succession. Is Dolores L. Hacbang’s argument
correct?

Answer: No. Whether under the Spanish Civil Code or NCC, the decedent’s freedom to dispose
of his estate is always respected. Hence, testate succession has always been preferred over

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intestacy. As much as possible, a testator’s will is treated and interpreted in a way that would
render all of its provisions operative. Here, even though the settlement proceedings was
archived, there is no indication that it declared any of the disposition in the will invalid. Bishop
Sofronio was free to dispose of his estate without prejudice to the legitime of his compulsory
heirs. His compulsory heirs were his parents and their legitime was ½ of Bishop Sofronio’s
estate. He was, therefore, free to dispose the other half. In short, the will was intrinsically
valid and there is no basis to apply the provisions on intestacy when testate succession
evidently applies.

For purposes of the Bar examination, you must familiarize yourself with the
basic rules of intestate succession. First is the rule of preference between lines.
According to this rule, those in the direct descending line shall exclude in the
succession those in the direct ascending line and collateral lines, and those in the
direct ascending line shall, in turn, exclude those in the collateral lines. (Better
illustrate this rule by way of diagram).

Question: Who are the legal heirs in the direct descending line?

Answer: The legal heirs in the direct descending line include the legitimate
children and their descendants (grandchildren and great grandchildren), as well
as adopted children. Take note, however, the surviving spouse and the
illegitimate children of the deceased concur with legitimate children and
descendants.

Question: Suppose there is no legitimate or adopted childrenor descendants,

who will succeed?

Answer: In default of the legitimate or adopted children and descendants, the

legitimate parents and ascendants of the deceased shall inherit from him, to the
exclusion of the collateral relatives (brothers and sisters) of the deceased. Of
course, the surviving spouse and illegitimate children of the deceased concur
with these legitimate parents and ascendants.

Question: Suppose there is no legitimate descendants and ascendants, and

illegitimate children and their descendants, whether legitimate or illegitimate,
who will inherit?

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Answer: It is the surviving spouse that will inherit the entire estate, however, if
there are brothers or sisters and their children, they shall concur with the
surviving spouse.

Question: Who will inherit if there are no legitimate descendants and ascendants,
illegitimate children or a surviving spouse?

Answer: The collateral relatives of the deceased within the fifth degree of
relationship shall succeed to the entire estate.

Question: Suppose there are no other heirs that survived the deceased, who will
inherit?

Answer: The State.

To reiterate, this is the rule of preference between lines in intestate

succession.

Also, in legal succession, the relative nearest in degree excludes the more
distant ones except when the right of representation properly takes place. This is
the rule of proximity in intestate succession. Hence, the son excludes the
grandson, a father excludes the grandfather, a brother excludes the nephew.
This rule presupposes, however, that all of the relatives belong to the same line.
Also, know by now that the rule on proximity is subordinated to the rule of
preference between lines. Therefore, those in the direct descending line shall
exclude those in the direct ascending and collateral lines, while those in the
direct ascending line shall exclude those in the collateral lines. Such that, though
the son and the father are both one degree removed from the decedent, still the
son excludes the father. Also, the grandson is two degrees removed from the
decedent so is the latter’s brother, yet, the grandson shall exclude the
decedent’s brother in the succession.

This rule of proximity is modified by the right of representation, if available.

As a general rule, a grandson is excluded by a son. Representation, however,
prevents such exclusion. Thus, if the decedent is survived by his son, and by his
grandchildren, the latter are the children of another son who predeceased the
decedent, these grandchildren are not excluded are not excluded by the surviving

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son in spite of the rule of proximity. The reason for this is that these
grandchildren, by right of representation, are raised to the place and degree of
their deceased father.

To reiterate, the order of preference between lines is first observed, and

within each line, the rule of proximity applies.

Relatives in the same degree shall inherit in equal shares. This is the rule of
equal division. Like the rule on proximity, this rule presupposes that all of the
relatives belong to the same line. Like the rule on proximity, this rule is also
subordinated to the rule of preference between lines. Hence, although a
grandson of the decedent is a relative of the latter in the second degree, while
the father of the decedent is a relative in the first degree, yet, the grandson,
who is in the direct descending line, shall exclude the father of the decedent,
who is in the direct ascending line.

But, there are exceptions to this rule of equal division, as follows:

(a) If brothers and sisters of the full-blood survive together with brothers and
sisters of the half-blood, the former inherits to a share double that of the
latter;
(b) Should there be ascendants in both lines, one-half of the inheritance shall
go to the paternal and the other half to the maternal side, the division shall
be made per capita. Per capita simply means that if the decesased is
survived by a grandfather and grandmother in the paternal side, they shall
divide equally, but if only the surviving grandmother is in the maternal
side, she shall be entitled to the entire half share.
(c) When there is succession by representation, the division shall be made per
stirpes, in such a manner that the representatives, although in the same
degree, shall not inherit more than what the person they represent would
inherit, if he were living or could inherit. Per stirpes means that if there are
two representatives in one share, they will divide the share into two, but if
there are five representatives in one share, they will get 1/5 share of that
share they represent.

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 Know by now that proximity of relationship is determined by the number of
generations. Each generation forms a degree. A series of degree forms a line,
which may be either direct or collateral.

A direct line is that constituted by the series of degrees among ascendants

and descendants. It may either be ascending direct line or descending direct
line. The descending direct line unites the head of the family and those who
descends from him. Example, grandfather to father to grandson. While a direct
ascending line binds a person with those from whom he descends. Example,
grandson, father, to grandfather.

On the other hand, a collateral line is that constituted by the series of

degrees among persons who are not ascendants and descendants, but who come
from a common ancestor. Example, brothers and sisters are collateral relatives
and their common ancestors are their parents.

Do not tell me that you do not know still how to count degrees up to this
time. I will report you to your professor in the Law on Succession.

Question: What is the rule in case of incapacity to succeed?

Answer: In case of incapacity, the share which is rendered vacant shall pass to
the co-heirs (within the same degree) if the right of representation does not
obtain.

Illustrative Example: Ariel is survived by three (3) children, Piolo, Sam and Billy.
Billy is incapacitated to inherit. The share of Billy will accrue to Piolo and Sam,
who will share in the same in equal division. However, if Billy has a son who has
a right to represent him, the share of Billy will not accrue to Piolo and Sam but
will be inherited by his son by virtue of the right of representation. Take note that
the right of representation takes place not only in case of incapacity to inherit,
but also by reason of predecease and valid disinheritance. But it does not take
place in case of repudiation.

Question: What is the rule in case of repudiation?

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Answer: In case of repudiation, if not all of the heirs within the same degree
repudiate, but only some of them, the shares of those who did not accept shall
accrue to the co-heirs within the same degree. This is what we call accretion.
But, if all of the heirs within the same degree repudiate their inheritance, those
of the next degree shall inherit in their own right.

We have been mentioning this right of representation, what is this all

about?

Answer: Representation is the right 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 could have inherited. The
representative thereby steps into the shoes of the person he represents and
succeeds, not from the latter, but from the person to whose estate the person
represented would have succeeded. Thus, the representative can only inherit
the portion which the person represented should rightfully receive. Hence,
whenever there is succession by representation, the division of the estate shall
be made per stirpes, in such a manner that the representative shall not inherit
more than what the person they represent would have inherited.

The right of representation takes place in the direct descending line but
never in the ascending line. Thus, a grandfather cannot inherit from the
grandson by representing the father of the latter. But the grandson can inherit
from his grandfather by representing his father in the inheritance from the
former.

Question: Does right of representation occur in the collateral line?

Answer: Yes, in the collateral line, the right of representation takes place only in
favor of the children of brothers or sisters, whether they be of the full or half
blood, but only cases where the said nephews and nieces survive with their
uncles and aunts. If the said nephews and nieces alone survive, they shall inherit
in their own right.

Case: Ofelia Hernando Bagunu vs. Pastora Piedad, G.R. No. 140975, December
8, 2000 where the SC ruled that right of representation does not apply to other
collateral relatives within the fifth civil degree.

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Facts: Augusto Piedad died without direct descendants or ascendants. Pastora is the maternal
aunt of the decedent, a 3rd degree relative of the decedent while Ofelia is the daughter of the
first cousin of the decedent, or a fifth degree relative of the decedent who wanted to claim
inheritance from the latter. The SC postulated that the right of representation does not apply
to other collateral relatives within the fifth civil degree. Article 1010 of the NCC invoked by the
petitioner is misplaced. The law means only that among the other collateral relatives, no
preference or distinction shall be observed by reason of relationship by the whole blood. In
fine, a maternal aunt can inherit alongside a paternal uncle, and a first cousin of the full blood
can inherit equally with a first cousin of the half blood. But, an uncle or aunt being a third
degree relative excludes the cousins of the decedent being a fourth degree of relationship, the
latter in turn would have priority in succession to a fifth degree relative.

Question: Does illegitimate children has right of representation?

Answer: Yes, in testate succession, illegitimate descendants are allowed to

represent the illegitimate child who predeceases his own parents but only with
respect to the legitime of such illegitimate child. This is very clear in Article 902 of
the NCC. But in intestate succession, illegitimate children can represent their
parents only if the latter are also of illegitimate filiation pursuant to Articles 989
and 990 of the NCC.

Take note that the persons to be represented in these three (3) articles are
themselves illegitimate persons. Hence, the right of representation is available
to illegitimate descendants of illegitimate children in the inheritance of an
illegitimate grandparent , but not available to illegitimate descendants of
legitimate children in the inheritance of a legitimate parent. The fact is, under
Article 992 of the NCC, it prohibits absolutely a succession ab intestado between
the illegitimate child and the legitimate children and relatives of the father or
mother. Because of this rule, the illegitimate child of one who is a legitimate
child cannot represent the latter in the succession to the estate of the
grandfather. Other authors refer this situation as “iron curtain principle”.

Case: Alejandra Arado heirs, et.al. vs. Anacleto Alcoran, et.al., G.R. No.
163362, July 8, 2015.

Facts: Raymundo Alcoran was married to Joaquina Arado, and their marriage produced a son
named Nicolas Alcoran. Nicolas married Florencia Limpahan, but their union had no offspring.
During their marriage, Nicolas had an extra-marital affair with Francisca Sarita who gave birth
to Anacleto Alcoran.

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 Raymundo died in 1939, while Nicolas died in 1954. Likewise, Florencia died in 1960 and
Joaquina in 1981.

Florencia had 3 siblings, namely, Sulpicio, Braulia, and Veronica Limpahan. Joaquina had
4 siblings, namely, Alejandra, Nemesio, Celedonia and Melania, all surnamed Arado.

On January 14, 1992, Alejandra and other children of her siblings filed a complaint for
Recovery of Property and Damages against Anacleto involving ten (10) parcels of land, eight (8)
of which belonged to Raymundo while two (2) are paraphernal property of Joaquina. The trial
court dismissed the complaint and declared that Anacleto was entitled to possess the subject
properties having established that he was the acknowledged illegitimate son of Nicolas. On
appeal, the CA determined the successional rights of the parties, and pronounced that after
Raymundo died in 1939, his wife, Joaquina and his son, Nicolas inherited his properties.
When Nicolas died in 1954, his mother, Joaquina, was entitled to ½ of his estate and the
remaining half to be divided between Florencia, his surviving spouse, and Anacleto, his
acknowledged illegiimate child. When Florencia died in 1960 without issue, her share she
inherited from Nicolas was inherited by his three (3) siblings. When Joaquina died in 1981, her
share she inherited from Nicolas and the two (2) paraphernal properties were inherited by her
sibling Alejandra, nephews and nieces and her illegitimate grandson Anacleto. Is the CA
correct in its determination of the successional rights of the parties?

Answer: No. When Raymundo died in 1939, the Spanish Civil Code was the governing law,
Nicolas inherited his entire estate while Joaquina was entitled to 1/3 portion thereof in
usufruct. When Nicolas died in 1954, the NCC was already in effect, the heirs entitled to
inherit his estate were his mother, Joaquina, his surviving spouse, Florencia and his
acknowledged illegitimate son, Anacleto, in accordance with Article 1000 of the NCC. Said
heirs became co-owners of the properties comprising the entire estate of Nicolas prior to
partition. When Joaquina died in 1981, her collateral relatives should inherit her entire estate
to the exclusion of Anacleto, because she died without any surviving legitimate descendant,
ascendant, illegitimate child or spouse pursuant to Article 1003 of the NCC.

Anacleto is barred by law from inheriting from Joaquina because he has no right of
representation of Nicolas, the legitimate son of Joaquina. The right of representation is not
available to illegitimate descendants of legitimate children in the inheritance of a legitimate
grandparent. Under Article 992 of the NCC, an illegitimate child has no right to inherit ab
intestado from the legitimate children and relatives of his father or mother; in the same
manner, such children or relatives shall not inherit from the illegitimate child Therefore, the
CA erred in including Anacleto to share in the estate of Joaquina.

2016 Bar Examination Question No. XVI

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 Don Ricardo had 2 legitimate children- Tomas and Tristan. Tristan has 3
children. Meanwhile, Tomas had a relationship with Nancy, who was also single
and had the legal capacity to marry. Nancy became pregnant and gave birth to
Tomas, Jr. After the birth of Tomas, Jr., his father, Tomas, died. Later, Don
Ricardo died without a will and Tristan opposed the motion of Tomas, Jr. to be
declared an heir of the deceased since he is an illegitimate child. Tomas, Jr.
countered that Article 992 of the Civil Code of the Philippines is unconstitutional
for violation of the equal protection of the laws. He explained that an illegitimate
child of an illegitimate parent is allowed to inherit under Articles 902, 982 and
990 of the Civil Code while he- an illegitimate child of a legitimate father- cannot.
Civil law commentator Arturo Tolentino opined that Article 992 created an
absurdity and committed an injustice because while the illegitimate descendant
of an illegitimate child can represent, the illegitimate child descendant of a
legitimate child cannot. Decide the case and explain. (5%).

Answer: I will decide to deny the motion of Tomas, Jr. to be declared an heir of
Don Raymundo because it is very clear in Article 992 of the NCC that an
illegitimate child of a legitimate father cannot inherit from the latter’s ascendants
estate in succession ab intestado as this is expressly prohibited. This is known as
the “iron curtain” rule. There could be no violation of the equal protection of the
law considering that illegitimate relationship is not similarly situated to a
legitimate relationship whereby the latter can inherit from the estate of the
ascendants whether of legitimate or illegitimate relationships.

Question: How about adopted children, are they entitled to represent? Or, do
they have the right of representation with respect to their adopting parent or
adopted sisters or brothers?

Answer: No. Take note that the relationship established by the adoption is
limited to the adopting parents and does not extend to their other relatives,
except as expressly provided by law. Following the rule that the representative
does not succeed the person represented but the one whom the person
represented would have succeeded, if the adopting parent should die before the
adopted child, the latter cannot represent the former in the inheritance from the
parents or ascendants of the adopter. This is because, the adopted child is not
related to the deceased in that case, the filiation created by fiction of law being
exclusive between the adopter and the adopted.

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 In the same way, the children and descendants of the adopted child cannot
represent him in the succession to the estate of the adopter since there is no legal
relation between the adopter and the children of the adopted. Always bear in
mind that the legal tie of adoption is personal and exclusively between the
adopter and the adopted.

To further enhanced our understanding on the right of representation, bear

in mind that there are only three (3) causes that justify the right of
representation, as follows:

First, is under Article 981 and 982 of the NCC where it provide for representation
by the grandchildren and other descendants by reason of predecease of the
children represented.

Second, is under Article 923 of the NCC which allows the children and
descendants of the person disinherited to take his place and retain the rights of
compulsory heirs in respect to the legitime, and

Third, in Article 1035 of the NCC which provides for representation of the
unworthy child or descendant by his children and descendants.

Case: Andy Ang vs. Severino Pacunio, et.al., G.R. No. 208928, July 8, 2015.

Facts: On July 12, 1993, Andy bought a 98,851 square meters titled property located in
Cagayan de Oro City from Udiaan, its registered owner. It turned out that an impostor
represented himself as Udiaan who sold subject property to him, because Udiaan was already
dead 20 years ago or on December 15, 1972. Failing to negotiate for the return of the subject
property to them, Severino and other grand children of Udiaan filed a complaint for
Declaration of Nullity of Sale against Andy Ang. The trial court dismissed the complaint because
there is dearth of evidence proving their successional rights to Udiaan’s estate, hence, not
real party in-interest to institute an action against Andy pursuant to Section 2 Rule 3 of the
Revised Rules of Court. On appeal, the CA affirmed the dismissal by the lower court, and
declared that plaintiffs, as mere grandchildren of Udiaan, has no successional rights to
Udiaan’s estate. The CA ratiocinated that they can only succeed to the estate of Udiaan by right
of representation, if it shown that their mother, who is one of the children of Udiaan,
predecease the latter. However, it declared the questioned document as invalid and proceeded
to distribute the subject property to several parties, because it was shown that portions of the
same was sold by the heirs of Udiaan to the Heirs of Gaccion and that Andy was able to buy

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portion of what was sold to the Gaccion’s heirs. Is the act of the CA in distributing the property
tenable?

Answer: No. Since Severino and the other grandchildren of Udiaan were not real party in-
interest, their complaint is dismissible for it states no cause of action. It bears to note that they
are claiming as successors-in-interest of the subject property because they are Udiaan’s
grandchildren. Under the law, Severino and the other heirs will only be deemed to have a
material interest over the subject land if the right of representation provided under Article 970
in relation to Article 982 of the NCC, is available to them. In this situation, representatives will
be called to the succession by the law and not by the person represented, and the
representative does not succeed the person represented but the one whom the person
represented would have succeeded. Hence, for such right to be availble to Severino and the
other grandchildren of Udiaan, they must show that their mother (a) pre-deceased Udian; (b)
is incapacitated to inherit; or (c) disinherited, if Udiaan died intestate. Thus, for their failure to
show that the right of representation is available to them, they are deemed not the real party
in-interest. In fine, the CA erred in distributing the property because the proper recourse was
merely to dismiss the complaint.

Question: May an heir who repudiated his inheritance be represented?

Answer: Heirs who repudiated their share in the inheritance may not be
represented. If there are several relatives of the same degree, and one or some
of them are unwilling to succeed, his portion shall accrue to the others of the
same degree. If the inheritance should be repudiated by the nearest relative,
should there be one only, or by all the nearest relative called by law to succeed,
should there be several, those of the following degree shall inherit in their own
right and cannot represent the person or persons repudiating the inheritance.

Even if the rule is that the person who repudiated his inheritance cannot be
represented, the same person who repudiated has the right of representation
from the person whose inheritance he has repudiated. For example, a son who
repudiated the share he was entitled to receive in the succession of his father,
when the latter died, said son can still represent his father in the succession of his
grandfather who dies subsequently. The reason for this rule is that the person
representing does not succeed the person represented, but simply takes his place
and succeeds in the inheritance of some other relatives.

For your purpose, memorize the order of intestate succession should the
decedent is a legitimate person and the order of intestate succession should the

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decedent is an illegitimate person because it differs. Thus, the order of intestate
succession of a legitimate person is as follows:

(1) Legitimate children and descendants

(2) Legitimate parents and ascendants
(3) Illegitimate children
(4) Surviving spouse
(5) Collateral relatives up to the 5th civil degree
(6) The State

However, if the person whose succession is opened is an illegitimate

person, the order is as follows:

(1) Legitimate children and descendants

(2) Illegitimate children and their descendants
(3) Illegitimate parents
(4) Surviving spouse
(5) Illegitimate brothers and sisters
(6) The State.

Let us first discuss the intestate succession in the descending line upon the
succession of a legitimate person.

The first in the order is legitimate children and descendants which exclude
the legitimate parents and ascendants, the collateral relatives and the State. This
include adopted children because under the Domestic Adoption Act, the adopter
and the adoptee shall have reciprocal rights of succession without distinction
from legitimate filiation. Hence, the adopted child will likewise exclude the
legitimate parent and ascendants and collateral relatives of the decedent.
However, illegitimate children and the surviving spouse concur with legitimate
children in legal succession.

If illegitimate children survive with legitimate children, the shares of the

former shall be one-half of the share of each legitimate child. In determining the
share of each, their respective legitime must first be determined, and the
disposable portion distributed among them in the proportions established in
Article 176 of the Family Code.

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Illustrative Example:

X died intestate survived by one legitimate child and four illegitimate

children. The estate is Php72,000. How shall the distribution be made?

Answer: Since there is a concurrence of one legitimate child and four (4)
illegitimate children in the succession, we must first satisfy the legitime of the
legitimate child and the illegitimate children. Therefore, the ratio is 10:5:5:5:5.
The legitime of the legitimate child is 1/2 of the estate, so, Php 36,000.00. If we
are to follow the principle that the legitime of the illegitimate children is one-half
of the legitime of the legitimate child, only two (2) of the illegitimate children will
received the remaining Php 36,000.00 at Php 18,000.00. Instead, the four
illegitimate children will divide the remaining Php 36,000.00 at Php 9,000.00 each.

The second in the order of intestate succession are legitimate parents or

ascendants. They are called to the succession only in default of legitimate
children or descendants. They cannot be excluded, however, by an adopted
child. It must also be noted that, although they can exclude collateral relatives,
they cannot exclude illegitimate children and surviving spouse.

The third in the order of intestate succession are illegitimate children. Even
in the presence of legitimate children or descendants, or legitimate parents or
ascendants, or the surviving spouse, illegitimate children, under the principle of
concurrence, always participate in the division of inheritance. Like legitimate
children or descendants and legitimate parents or ascendants, they exclude
collateral relatives. In this sense, illegitimate children are superior to the
surviving spouse because the latter cannot exclude brothers and sisters or
nephews and nieces. It is clear, therefore, that in default of legitimate children
or descendants, legitimate parents or ascendants, and the surviving spouse, the
entire inheritance shall pass to the illegitimate children.

The fourth in the order of intestate succession is the surviving spouse. In

the absence of legitimate descendants and ascendants, and illegitimate children
and their descendants, the surviving spouse shall inherit the entire estate
without prejudice to the rights of brothers and sisters, nephews and nieces,
should there be any. Should the decedent is survived either by legitimate

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descendants and descendants, and illegitimate children and their descendants,
the surviving spouse shall always participate in the division of the estate of the
decedent.

The fifth in the order of intestate succession are collateral relatives. If there
are no descendants, ascendants, illegitimate children, or a surviving spouse, the
collateral relatives shall succeed to the entire estate of the deceased. Stated
differently, when there are legitimate descendants, legitimate ascendants or
illegitimate children, collateral relatives do not participate in the inheritance. In
short, they are excluded altogether from the succession. But if the decedent is
survived by a widow or widower, collateral relatives or their children concur with
the former. In short, collateral relatives are not excluded by a surviving spouse.

In default of legitimate children or descendants, legitimate parents or

ascendants, illegitimate children or descendants, the surviving spouse, and
collateral relatives within the fifth degree, the State shall inherit the whole
estate. Hence, according to our theory of intestate succession, the State is a legal
heir called to the succession by operation of law.

We have been saying that the adopted child is considered as a legitimate

child of the adopter according to the Domestic Adoption Act. However, should
the decedent is an adopted person, the following are the rules that will govern
pursuant to Article 190 of the Family Code:

(1) Legitimate and illegitimate children and descendants and the surviving
spouse of the adopted shall inherit from the adopted in accordance with
the ordinary rules of intestate succession;

(2) When parents, legitimate or illegitimate, or the legitimate ascendants of

the adopted concur with the adopters, they shall divide the entire estate,
one-half to be inherited by the parents or ascendants and the other half by
the adopters;

(3) When the surviving spouse or the illegitimate children of the adopted
concur with the adopters, they shall divide the entire estate in equal

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 shares, one-half to be inherited by the spouse or the illegitimate children
of the adopted and the other half by the adopters;

(4) When the adopters concur with the illegitimate children and surviving
spouse of the adopted, they shall divide the entire estate in equal shares,
one-third to be inherited by the illegitimate children, one-third by the
surviving spouse and one-third by the adopters;

(5) When only the adopters survive, they shall inherit the entire estate;

(6) When only collateral blood relatives of the adopted survive, then the
ordinary rules of intestate succession shall apply.

Bar Problem:

A, an adopted person, died intestate, survived by the adopter, X, and his

natural parents, F and M. His entire estate consists of several properties valued
at Php 600,000.00 consisting of properties which he had acquired by gratuitous
title during his lifetime from X valued at Php400,000.00 and Php200,000.00 worth
of properties which he acquired through his own efforts or industry, how shall
you distribute the estate?

Answer: All the properties although consisting of those acquired by gratuitous

title from X and those acquired through the efforts or industry of A, shall be
divided as follows: one-half to be inherited by F and M, and the other half by X.

For an illegitimate person, his order of intestate succession is irregular,

though, this is not expressly stated in the NCC.

Legitimate children or descendants are the first in the order of succession to

the estate of the illegitimate child. It must, however, be observed that
illegitimate children occupy the second position in the order of intestate
succession. Consequently, if the decedent is survived by his illegitimate children
and his illegitimate parents or parents by nature, the latter is excluded by the
former.

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 In default of children or descendants, whether legitimate or illegitimate, the
illegitimate parents or parents by nature shall succeed to the entire estate of the
illegitimate child without prejudice to the concurrent rights of the surviving
spouse. Take note that the succession to the estate of the illegitimate child does
not go beyond the parents by nature. In other words, other ascendants are not
considered as legal or intestate heirs of the illegitimate child.

In default of children or descendants, whether legitimate or illegitimate,

and the illegitimate parents, the surviving spouse shall succeed to the entire
estate, without prejudice to the concurrent rights of brothers and sisters,
nephews and nieces.

In default of children or descendants, whether legitimate or illegitimate,

parents by nature, and the surviving spouse, the brothers and sisters, nephews
or nieces, of the decedent shall succeed to the entire estate. When the law
speaks of “brothers and sisters, nephew and nieces”, as legal heirs of the
illegitimate child, it refers to illegitimate brothers and sisters, as well as to the
children, whether legitimate or illegitimate, of such brothers and sisters. Do not
forget to apply the “iron curtain principle” as enunciated in Article 992 of the
Code, to the effect that there is a barrier dividing members of the illegitimate
family from members of the legitimate family. By virtue of this barrier, the
legitimate brothers and sisters as well as the children, whether legitimate or
illegitimate, of such brothers and sisters, cannot inherit from the illegitimate
child.

In default of brothers and sisters, nephews and nieces, the law does not go
any farther. Other collateral relatives are not allowed to inherit by intestate
succession from the illegitimate child. Consequently, the entire estate shall pass
to the State.

PART II (Civil Law Review 2)

The second half of our review class on Civil Law will cover these different
subject matter, namely, Obligations and Contracts (Arts. 1156-1457) to include
the provisions on Natural Obligations, Estoppel and Trust, Special Contracts to
include Sales, Lease, Partnership, Agency, Loan, Deposit, Aleatory contracts,

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Pledge, Law on Mortgages (Real and Chattel Mortgage), Extra-contractual
Obligations and Damages. May I add that we will be also discussing some of the
relevant issues on Land Titles and Deeds. Now, if we are to go by provisions, we
will be covering Articles 1156 up to Article 2235 of the NCC or 1079 provisions.
Since we will be having at least 11 class meetings excluding schedules for mid-
term and final examinations, we must cover at least 98 articles per meeting
which is impossible to achieved. What I am saying is that, lectures will cover
selected provisions only especially those that are subject of a recent
jurisprudence on the matter and Bar questions. We will also be utilizing recorded
lectures of noted civilist to augment our comprehension on the subject.

Law on OBLIGATIONS AND CONTRACTS

The Civil code defines “obligation” as a juridical necessity to give, to do or

not to do as provided in Article 1156. By its definition, we can safely say that
there is an obligation to give, an obligation to do and an obligation not to do or
not to act. These obligations are derived from many sources, law, contracts,
quasi-contracts, acts or omissions punished by law and quasi-delicts.

Question: How can we determine whether an obligation arises from law or from
some other sources? Is it not that these other sources are likewise covered by
specific provisions of law?

Answer: When the law establishes the obligation and the act or condition upon
which it is based is nothing more than a factor for determining the moment when
it becomes demandable, then the law itself is the source of the obligation.
However, when the law merely recognizes or acknowledges the existence of an
obligation generated by an act which may arises out of a contract, quasi-
contract, criminal offense or quasi-delict, and its only purpose is to regulate such
obligation, then the act itself is the source of the obligation and not the law.

Question: Determine the following obligations, whether sourced from law or

from other sources:

• Obligation of the spouses to support each other.

Answer: Law
• Obligation of the lessee to pay periodic rental

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 Answer: Contract, specifically contract of lease
• Obligation of the owners of the dominant and servient estates in legal
easement.
Answer: Law;
• Obligation of the accused to indemnify the victim of his own criminal act.
Answer: Delict or criminal offense;
• Obligation of the winner to return his winnings to the loser in the game of
chance.
Answer: Law, and many other examples.

In one Bar examination, a question was asked “what are obligations without
an agreement? Give five (5) examples of situations giving rise to this type of
obligation.”

Answer: “Obligations without an agreement” are obligations that do not arise

from contract such as those arising from law, delicts, quasi-delicts, solutio
indibiti, negotiorum gestio and all other obligations arising from law.

In case of negotiorum gestio whereby one who voluntarily takes charge of

the agency or management of the business or property of another, without any
authority from the latter, is obliged to continue the same until the termination of
the affair and its incidents, or to require the person concerned to substitute him,
if the owner is in position to do so. This is the provision of Art. 2144 of the NCC.

Or in case of solutio indibiti, it may also give rise to an obligation without an

agreement. This refers to the obligation to return which arises when something is
received when there is no right to demand it, and it was unduly delivered
through mistake. This is the express provision of Art. 2154 of the NCC.

And many other examples of obligations without an agreement like giving

support to a stranger in lieu of the one who is under obligation to give support or
unjustly withholding support to an orphan, insane or indigent by a person under
obligation to give support, and in cases of treatment of injuries of someone
incapable to give consent in a situation contemplated in Art. 2167 of the NCC.

Obligations are to be performed by the obligor or commonly addressed as

“debtor” in favor of the obligee or commonly referred to as “creditor”, and in

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case of failure to comply with the obligation, the obligee or creditor has three (3)
remedies. What are these legal remedies?

Answer: These remedies are alternatives, dili pwede tanan i avail

• Demand compliance with the obligation (specific performance);

• Demand rescission or cancellation. (in both cases, demand payment for
damages).
• Demand payment for damages even without instituting specific
performance or rescission.

Case: Bank of the Philippine Island (BPI) vs. Vicente Victor C. Sanchez, et al.,
G.R. No. 179518. November 19, 2014.
(Article 1191 of the Civil Code states that rescission is available to a party in a
reciprocal obligation where one party fails to comply therewith).

Facts: Vicente Victor C. Sanchez, Kenneth Nereo Sanchez and Imelda C. Vda. De Sanchez are
co-owners of a registered land. Felisa Yap (Yap), the widow of Kenneth, and one Jesus V. Garcia
(Garcia), doing business under the name Trans American Sales and Exposition, Inc. (TSEI),
entered into an agreement for the sale of the disputed property subject to the condition that
the latter shall cause the reconstitution of the original title of subject lot. Pursuant to this
agreement, Yap turned over to Garcia the original owner’s copy of TCT 156254 and other
related documents. Unknown to Yap and the Sanchezes, Garcia took possession of the property
and advertised the construction and sale of "Trans American Townhouse V" thereon. Later,
Garcia failed to pay the balance of the purchase price as agreed upon by them.

Thereafter, Yap and the Sanchezes filed a complaint for rescission of contract, against
TSEI and Garcia. Meanwhile, Garcia managed to cause the cancellation of TCT 156254 and its
replacement with TCT 383697 now in the name of TSEI was issued. Garcia used said title to
entice buyers to buy the townhouse units being constructed by TSEI on the subject lot.
Furthermore, Garcia was able to convey portions of the property to several buyers who
intervened in the instant case. TSEI argued that rescission of the agreement is barred by the
subsequent transfer of the property to third persons. Is the argument of TSEI tenable?

Answer: No. Rescission of their agreement is not barred by the subsequent transfer of the
portions of the subject property to third persons. In the instant case, the failure of TSEI to pay
the consideration for the sale of the subject property entitled the Sanchezes to rescind their
agreement. More so, that in this case, there was a finding that the buyers acted in bad faith in
purchasing the property, the subsequent transfer in their favor did not and cannot bar
rescission.

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 At this juncture, try to recall your understanding of the concept of specific
or determinate and generic or indeterminate things. When we say determinate,
these are those objects that are particularly described or physically segregrated
from all others of the same class, and when it is indeterminate, these are those
that are not particularly described. Meaning, it belongs to a class of things which
are of the same kind. Why is this important for you to recall this concept?

It is because of the correlative rights available to the creditor orobligee and

the corresponding obligation imposed upon the debtor or obligor in obligation to
give which differs depending on whether the thing to be delivered is specific or
generic.

Question: If the obligation to deliver is for a specific or determinate thing, and

should the debtor fails to deliver, what are the remedies available to the
creditor?

Answer: The remedies of the creditor are as follows: (1) to compel specific
performance, (2) to recover damages in case of breach of the obligation. On the
part of the debtor, he has the following duties, (1) to deliver the thing which he
has obligated himself to give, (2) to take care of the thing with the proper
diligence of a good father of the family, (3) to deliver all accessions and
accessories, and (4) to pay damages in case of breach of these obligations.

Question: If the obligation to deliver is generic or indeterminate, and should the

debtor fails, what are the remedies available to the creditor?

Answer: The remedies available to the creditor are, (1) to ask for the
performance of the obligation, (2) to ask that the obligation be complied with at
the expense of the debtor, and (3) to recover damages in case of breach of the
obligation. On the part of the debtor, his duties are, (1) to deliver a thing which
must be neither of superior nor inferior quality, and (2) to pay damages in case of
breach of obligation.

Illustrative Example:

X bound himself to deliver to Y 43” Samsung TV, 200cc Honda motorcycle with Plate No.
FTA-143 and to repair Y’s car at his garage. X did nothing among these three (3) obligations.

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 Can Y go to court and ask or compel that X (1) deliver the 43” Samsung TV, (2) deliver
the 200cc Honda motorcycle with Plate No. FTA-143, and (3) compel X to repair his car?

Answer:

With respect to the delivery of the 43” Samsung TV, Y cannot compel X because the
obligation is generic, the object for delivery is not specifically described nor physically
segregated from those of the same class or genus. Hence, the remedy of specific performance
is legally and physically impossible. Y’s remedy is to ask X to deliver a 43” Samsung TV which is
neither of inferior or superior quality. X can even ask that the obligation be performed at Y’s
expense and demand for payment of damages.

With respect to the delivery of 200cc Honda motorcycle with Plate No. FTA-123, Y can ask
the court to compel X to deliver the subject motorcycle which was particularly described through
an action for specific performance. Y may also ask for payment of damages.

With respect to the 3rd obligation of X to repair Y’s car, the court cannot compel Y
because this is an obligation to do. It is within X’s freedom to do the repair or not. It is purely
personal for X to undertake the repair. The remedy of Y is to have the obligation be performed
at the expense of X and to recover damages from the latter.

The relevance of knowing whether the subject of the obligation to give is

specific or generic matters most in the event where the thing was lost or
destroyed through a fortuitous event. By the way, is there a difference between
fortuitous event and force majeure?

Answer: A fortuitous event is an event which cannot be foreseen, or which

though foreseen, is inevitable. (Art. 1174, NCC). Force majeure, is a fortuitous
event which is dependent upon human intervention like wars, strikes, etc. If such
event is not dependent upon human intervention or independently of human
intervention, such is referred to as fortuitous event.

Now, going back to the effect of loss or deterioration of determinate thing

or indeterminate thing in case of fortuitous event, where the obligation is
determinate, the debtor cannot be held liable for damages. On the other hand,
where the obligation is indeterminate, the debtor can still be held liable for
damages.

Illustrative Examples:

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 X, debtor, obligated himself to deliver to Y, creditor a 2016 model Toyota Fortuner,
white color, with Plate No. FTA-143, and such vehicle was destroyed by a fire of accidental
origin before X has incurred in delay, Can X be held liable for damages?

Answer: No, X can no longer be held liable for damages because he was obligated to deliver a
specific thing, a 2016 model Toyota Fortuner, white color with Plate No. FTA-143 which was
lost or destroyed by accident.

But suppose X obligated himself to deliver to Y a 2016 Toyota Fortuner without

specifications or particular designation, and subsequently the vehicle was destroyed through
fortuitous event, can X be held liable for damages?

Answer: Yes, X can still be held liable because X was obligated to deliver a generic thing, thus,
he still bound to deliver to Y a 2016 model Toyota Fortuner of the same class or quality.

GR:Of course, while it is true that the loss or deterioration of a determinate

thing will not make the debtor liable, but there are noted exceptions to this rule.

Question: In what situations may a debtor is still liable despite the fact that the
thing to be delivered was lost by fortuitous event?
EXCEPTIONS:
Answer: He is still liable in following instances, namely, (1) in case where it is
expressly provided by law that the debtor is liable even if fortuitous event
concurs, (2) when parties agree by stipulation that even if fortuitous event
concurs, still the debtor is liable, (3) where the nature of the obligation requires
the assumption of risk.

Question: Is the Asian financial crisis which hit almost all countries in Asia in 1997
constitute a fortuitous event which would justify delay in the performance of
contractual obligations?

Answer: No. In the case of Fil-Estate Properties, Inc. et.al. vs. Spouses Conrado
and Maria Victoria Ronquillo, G.R. No. 185798, January 13, 2014, the SC
pronounced that it cannot generalize that the Asian financial crisis in 1997 was
unforeseeable and beyond the control of a business corporation. While it is
unfortunate that Fil-estate met with considerable difficulty, e.g. increase cost of
materials and labor, even before the scheduled commencement of its real estate
project in 1995, however, a real estate enterprise engaged in the pre-selling of
condo units is concededly a master in projections on commodities and currency

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movements and business risks. The fluctuating movement of the Philippine peso
in the foreign currency exchange market is an everyday occurrence, and
fluctuations in currency exchange rates happen everyday, thus, not an instance
of caso fortuito.

Question: Under what circumstances may a debtor be liable in the performance

of an obligation?

Answer: In the following instances, (1) default or mora, (2) fraud or dolo, (3)
negligence or culpa, and (4) violation of the terms of an obligation or violatio.
(MDCV)

Default is delay in the performance of an obligation. Generally, for a debtor

to be put in default, a demand, whether judicial or extra-judicial, must be made.
I said “generally” because there are situations where there is no necessity to
make a demand in order to put a debtor in default.

Question: In what situations may demand no longer required for a debtor to be

put in default?

Answer: In the following situations:

1. When the law so provides.

Example: Under NIRC, taxes should be paid on or before 15th day of April
of every year, and failure to pay, penalties are imposed without need of
demand.

2. When the obligation expressly so provides.

Example: When there is an agreement between the parties that interest

will automatically be imposed in case of failure to comply within the
stipulated period.

3. When time is of the essence of the contract.

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 Example: Sewing of wedding dress where the wedding is scheduled at the
time the dress is due or finished. In fact, it is not essential for the contract
to categorically state that time is of the essence because intent is sufficient
as long as this is implied.

4. When demand would be useless.

Example: When the obligor absconded already, or when the subject

matter had been destroyed already.

5. When the obligor has expressly acknowledged that he really is in default.

Example: Here, estoppel may already sets in.

Case: General Milling Corporation (GMC) vs. Sps. Librado Ramos and Remedios
Ramos, G.R. No. 193723, July 20, 2011. IMPORTANT
(There are three requisites necessary for a finding of default. First, the obligation is
demandable and liquidated; second, the debtor delays performance; and third, the
creditor judicially or extrajudicially requires the debtor’s performance).

Facts: GMC entered into a Grower’s Contract with spouses Librado and Remedios Ramos to
supply broiler chickens for the spouses to raise. The contract was accompanied by a Deed of
Real Estate Mortgage over a piece of real property owned by the spouses. Spouses Ramos
eventually were unable to settle their account with GMC. On March 31, 1997, GMC directed the
spouses to go to their office and settle their account otherwise, it would institute foreclosure
proceedings on the mortgaged property. On May 7, 1997, GMC filed a Petition for Extrajudicial
Foreclosure of Mortgage. The property was subsequently sold. Spouses Ramos filed a
Complaint for Annulment and/or Declaration of Nullity of the Extrajudicial Foreclosure Sale with
Damages. They alleged that the Deed of Real Estate Mortgage had no fixed term. Thus, the RTC
ruled in favor of Spouses Ramos stating that the action of GMC in moving for the foreclosure
was premature because the latter’s obligation under their contract was not yet due or that
they were not yet in default when the foreclosure proceeding was instituted on May 7, 1997.
GMC claims that its March 31, 1997 letter constitute their demand. Is the contention of GMC
correct?

Answer: No. GMC did not make a demand on Spouses Ramos but merely requested them to go
to GMC’s office to discuss the settlement of their account. In spite of the lack of demand made
on the spouses, however, GMC proceeded with the foreclosure proceedings. GMC should have
first made a demand on the spouses to settle their obligation before proceeding to foreclose
the real estate mortgage. In the case of Development Bank of the Philippines v. Licuanan, it was
ruled that the issue of whether demand was made before the foreclosure was held is vital. If
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demand was made and duly received by the obligor and the latter still did not pay, then they
were in default and foreclosure was proper. However, if demand was not made, then the loans
had not yet become due and demandable. Simply, the spouses had not defaulted in their
payments and the foreclosure by GMC was premature. Foreclosure is valid only when the
debtor is in default in the payment of his obligation.

Case: Rodrigo Rivera vs. Spouses Salvador and Violeta Chua, G.R. No. 184458,
January 14, 2015.

Facts: The parties were friends of long standing having known each other since 1973: Rivera
and Salvador are kumpadres, the former is the godfather of the Spouses Chua’s son.

On 24 February 1995, Rivera obtained a loan from the Spouses Chua evidenced by a
promissory note, as hereunder stated:

PROMISSORY NOTE

120,000.00

FOR VALUE RECEIVED, I, RODRIGO RIVERA promise to pay spouses SALVADOR C. CHUA and
VIOLETA SY CHUA, the sum of One Hundred Twenty Thousand Philippine Currency (P120,000.00)
on December 31, 1995.

It is agreed and understood that failure on my part to pay the amount of (P120,000.00) One
Hundred Twenty Thousand Pesos on December 31, 1995. (sic) I agree to pay the sum equivalent
to FIVE PERCENT (5%) interest monthly from the date of default until the entire obligation is fully
paid for. X x x x x

Manila, February 24, 1995[.]

(SGD.) RODRIGO RIVERA

Due to failure of Rivera to pay his loan for more than three (3) years already, Spouses
Chua instituted a collection suit against him. Rivera contended that he is not yet in delay due to
the fact that there was no demand for him to pay his obligation. According to Rivera, for him
to incur delay, demand is necessary. Is the contention of Rivera correct?
Answer: No. Upon cursory eamination of the subject PN, it expressly provided that after
December 31, 1995, default commences and the stipulation on payment of interest starts.
This is enunciated in Artile 1169 (1) of the NCC where demand is no longer required if the
obligation so declares. Therefore, the argument of Rivera is erroneous.

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Question: Distinguish dolo from culpa to enforce liability on the non-fulfillment of
an obligation?

Answer: There are three (3) noted distinctions:

1. In dolo, there is deliberate intention to cause damage or prejudice, while

in culpa, though the act is voluntary, there is no deliberate intention to
cause damage;
2. The liability arising from dolo cannot be mitigated or reduced by the courts,
while in culpa, liability due to negligence may be reduced in certain cases;
3. In dolo, waiver of an action to enforce liability due to future fraud is void,
while in culpa, waiver of an action to enforce liability due to future culpa
may, in a certain sense, be allowed.

There are three (3) kinds of “culpa” according to the source of obligation, to
wit:

• Culpa contractual (contractual negligence) or that which results in a

breach of contract;
• Culpa aquiliana (civil negligence) or commonly known as tort or quasi-
delict;
• Culpa criminal (criminal negligence) or that which results in the commission
of a crime.

If a question is asked for you to distinguish these three (3) kinds of

negligence, are you prepared to answer it? If you do not know how to distinguish
them, then you are not yet ready for the Bar examination. Knowledge on this
subject matter is very basic in the Law on Obligation and Contracts.

To cite some of its important distinctions are:

1. In culpa contractual, there is a pre-existing obligation which is not the case

in other kinds of negligence;
2. In culpa criminal, the proof needed is guilt beyond reasonable doubt while
in the other classes of negligence, preponderance of evidence is sufficient;

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 3. In culpa aquiliana, the defense of a good father of the family in the
selection or supervision of employees is a proper and complete defense in
so far as employers and guardians are concerned, but this defense is not
available in the other classes of negligence;

Question: What is the effect if a fortuitous event intervenes in the fulfillment of

an obligation?

Answer: The general rule is, the debtor is not liable the moment fortuitous event
prevented him in the performance of his obligation. Of course, this admits three
(3) noted exceptions:

• When expressly declared by the law, such as when the possessor is in bad
faith (Art. 552) or is in default (Art. 1165);

• When expressly declared by stipulation in a contract, such as when it was

agreed by the parties that if there be fortuitous event that would cause the
delay in the delivery of the goods, an extension must be sought otherwise
damages can be asked. However, no extension was requested by the
obligor, hence, he is liable for damages despite the fortuitous event that
occurred.

• When the nature of the obligation requires the assumption of risk (other
authors refer this as the doctrine of “created risk”). Example is when a
common carrier transports a truckload of dynamite for mining purposes
and while on its way to the mining site, it suffered an accidental tire blow-
out, swerved and caused damage to properties due to the explosion of the
dynamite it loaded. Despite the accident, the carrier is still liable because
of the nature of the cargo it transported. On the other hand, if the same
carrier suffered accidental blow-out despite the brand new tire it used, and
it carried no dangerous or explosive cargo, the owner is not liable for the
damage it brought because such is due to an avoidable accident.

Question: Elaborate the “Act of God”doctrine. Under what conditions will it

exempt the obligor from liability?

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 IMPORTANT

Answer: An “act of God” is an accident, due directly and exclusively to natural

causes without human intervention, which by no amount of foresight, pains or
care, reasonably to have been expected, could have been prevented.

To exempt the obligor from the liability under Art. 1174, for breach of an
obligation due to an Act of God, the following must concur:

• The cause of the breach of the obligation must be independent of the will
of the debtor;
• The event must be either unforeseeable or unavoidable;
• The event must be such as to render it impossible for the debtor to fulfill
his obligation in a normal manner, and;
• The debtor must be free from any participation in, or aggravation of the
injury to the creditor.

Illustrative Example:

Arnold promised to give Barton his Ford Expedition with Plate No. FTA-143 if
Barton passes the Bar. Pending the result of the bar exam, the car was destroyed
by a fortuitous event without fault on the part of Arnold. When Barton passes the
bar, does Arnold have to give Barton anything?

Answer: No, Arnold does not have to give Barton anything because under Art.
1189, if the thing is lost without the fault of the debtor, the obligation shall be
extinguished. The reason is that as a general rule, no one should be liable for a
fortuitous event unless otherwise provided by law or contract.

The principle embodied in the Act of God doctrine strictly requires that the
act must be one occasioned exclusively by the violence of nature and all human
agencies are to be excluded from creating or entering into the cause of the
mischief. Such that, if it is found that, in part, it was the result of the
participation of man, whether it be from active participation or neglect, or
failure to act, the cause is thereby “humanized” and thus, removed from the
rules applicable to the acts of God. Thus, if upon the happening of the fortuitous
event or an act of God, there concurs a corresponding fraud, negligence, delay
or violation or contravention of the tenor of the obligation, which results in loss
or damage, the obligor cannot escape liability. This was the gist of the SC

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decision in the case of Schmitz Transport and Brokerage Corp. vs. Transport
Ventures, et.al. G.R. No. 150255, April 22, 2005 where a barge sunk outside the
breakwater of Manila Bay due to inclement weather losing in its load worth more
than 5 million, simply because the tug boat which would tow the barge arrived
late exposing the barge to the perils at sea.

If you can still recall the old case of Nakpil and Sons vs. CA (1986), where a
building collapsed due to an earthquake, and it was found out that the contractor
of the building and the architect deviated from the plans and specifications in the
construction. The contractor was sued for damages by the persons injured in the
collapse of the building, and it contended that they are not liable because it is an
act of God, that, is the collapse was due to the earthquake. The SC ruled that
the contractor cannot claim exemption from liability because there was bad faith
in the performance of the obligation on their part when it deviated from the
plans, designs and specifications of the building. It postulated that one who
negligently creates a dangerous condition cannot escape liability for the natural
and probable consequences thereof, although the act of third person or an act of
God for which he is not responsible, intervenes to precipitate the loss.

Do not discount the possibility of a simple question that will tackle basic
classification of obligations, an obligation that is pure, conditional or obligation
with a term or period. Be able also to understand the concept of alternative,
facultative or conjunctive obligations, joint and solidary obligations, and
obligation with a penal clause.

Question: When the debtor binds himself to pay when his means permit him to
do so, is the obligation conditional?
Answer: No. It is considered an obligation with a period or a term. (Art. 1180).

Art. 1197- Obligation with a Period

Albano’s Lecture: CD No. 3 Side B

Start: 00:04- Contemplated period by the parties/ Pacific Banking case
04:37 -Art. 1198 Loss of the right to use the period

Case: Erlinda B. Dandoy, etc. vs. Court of Appeals, et.al., G.R. No. 150089,
August 28, 2007.

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Facts: Dandoy bought on installment pieces of jewelries from Nerissa Lopez in several
occasions until it reached to about Php1.3M. Due to non-payment of the items, Lopez made
several demands, both oral and written, but the same left unheeded. Dandoy promised that
she will fully settle her obligations with Lopez upon the sale of her condominium in Paranaque
or property in Bicutan, which Lopez relied on such insinuations. Since there was no payment
forthcoming, Lopez sued Dandoy for sum of money with preliminary attachment. Dandoy
argued that her obligation to Lopez is still not due and demandable because Lopez agreed that
she will pay the jewelries as soon as she will able to dispose her condominium or the Bicutan
property. Since the property remained undisposed, her obligation is still not demandable,
being an obligation with a period. Is Dandoy correct?

Answer: No. An obligation with a period is one for the fulfillment of which a day certain has
been fixed. A “day certain” is understood to be that which must necessarily come, although it
may not be known when. The sale of the Bicutan property cannot be characterized as a day
certain because the event, though future, is not sure to happen. Notwithstanding the
representation made by Dandoy that there are many buyers, the fact remains that the
property may not be bought at all. At best, the sale of the property may be considered a
condition because it is a future and uncertain event as opposed to a period which future and
certain. Rather, the obligation of Dandoy is pure, and it arises upon the consummation of the
sale with her obligation to pay Lopez of the amount of the jewelry.

14:20 -What is your concept of a “day certain”?

(Delete- 15:25-16:23)
Resume: 16:24 -Alternative/ Facultative obligations

Case: Arco Pulp and Paper Co. Inc. et.al. vs. Dan T. Lim, etc., G.R. No. 206806,
June 25, 2014.

Facts: Dan T. Lim is in the business of supplying scrap papers, cartons, and other raw materials,
under the name Quality Paper and Plastic Products, Enterprises, to factories engaged in the
paper mill business. From February 2007 to March 2007, he delivered scrap papers worth
P7,220,968.31 to Arco Pulp. The parties allegedly agreed that Arco Pulp and Paper would either
pay Dan T. Lim the value of the raw materials or deliver to him their finished products of
equivalent value.

Dan T. Lim alleged that when he delivered the raw materials, Arco Pulp issued a post-
dated check dated April 18, 2007 in the amount of P1,487,766.68 as partial payment, with the
assurance that the check would not bounce. When he deposited the check on April 18, 2007, it
was dishonored for being drawn against a closed account. On the same day, Arco Pulp entered
a memorandum of agreement with one Eric Sy that it will deliver its finished products to the
latter with the raw materials to be supplied to by Dan T. Lim.

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 For failure to pay the raw materails delivered, Dan T. Lim filed a collection suit against
Arco Pulp for the payment of the total amount of the raw materials. In its Answer, Arco Pulp
contended that its obligation is alternative, hence, the collection suit is not proper. Is the
obligation of Arco Pulp alternative?

Answer: No. When Arco Pulp tendered a check to Lim in partial payment for the scrap papers,
they exercised their option to pay the price. Lim’s receipt of the check and his subsequent act
of depositing it constituted his notice to Arco Pulp’s option to pay.

This choice was also shown by the terms of the MOA which declared in clear terms that
the delivery of Arco Pulp’s finished products would be to a third person, thereby extinguishing
the option to deliver the finished products of equivalent value to Lim.

20:29 -Joint/ Solidary obligations

Case: Heirs of George Y. Poe vs. Malayan Insurance Co. Inc. (MICI) G.R. No.
156302, April 7, 2009. states that “a solidary or joint and several obligation is
one in which each debtor is liable for the entire obligation, and each creditor is
entitled to demand the whole obligation. In a joint obligation, each obligor
answers only for a part of the whole liability and to each oblige belongs only a
part of the correlative rights. Well-entrenched is the rule that solidary obligation
cannot lightly be inferred. There is solidary liability only (1) when the contract
expressly so states, (2) when the law so provides, or (3) when the nature of the
obligation so requires.

Facts: George Poe, while waiting for a ride to work, was sidesweeped by a cargo truck owned
by Rhoda Santos and insured with the MICI, for which a complaint for Damages was filed and
the decision was rendered in favor of the heirs of George Y. Poe and against the registered
owner of the cargo truck and MICI, its insurer. It was the contention of MICI that there liability
is only joint and limited only to the extent of the insurable amount. Was the argument of MICI
correct?

Answer: No, since the insurance contract provides for indemnity against liability to third
persons, the liability of the insurer is direct and such third persons can directly sue the insurer.
Meaning, the Law on Insurance so provides that the insurer can be solidarily liable with the
insured in paying indemnity against liability to third persons. Here, while MICI’s liability was
limited to the extent of the insurance policy, it failed to present the insurance contract, thus
they were made to pay solidarily with the registered owner the entire amount of the award. A
solidary or joint and several obligation is one in which each debtor is liable for the entire
obligation, and each creditor is entitled to demand the whole obligation. In a joint obligation,
each obligor answers only for a part of the whole liability and to each obligee belongs only a
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part of the correlative rights. Well-entrenched is the rule that solidary obligation cannot lightly
be inferred. There is solidary liability only (1) when the contract expressly so states, (2) when
the law so provides, or (3) when the nature of the obligation so requires. Here, the Law on
Insurance so provides for its solidary obligation.

31:49 -Obligation with a Penal Clause

35:31 -Extinguishment of Obligation: Law on payment
(Delete: 40:26- 40:28)
End: 47:10

Albano’s Lecture: CD No. 3 Side A

Start: 00:27 -Law on Payment/ Payment to the wrong person;
(Delete: 8:05- 8:08)
(Delete: 9:24- 14:55)

Case: Allied Banking Corporation vs. Lim Sio Wan and MetroBank, et.al., G.R.
No. 133179, March 27, 2008.
(Payment made by the debtor to a wrong party does not extinguish the obligation
as to the creditor, if there is no fault or negligence which can be imputed to the
latter.)

Facts: Lim Sio Wan deposited with Allied Bank a money market placement of PhP 1,152,597.35
for a term of 31 days. Then, a person claiming to be Lim Sio Wan called up an officer of Allied to
pre-terminate the money market placement, instructed to issue a Manager’s check
representing the proceeds of the placement, and to give the check to one Deborah Dee Santos.
As instructed, Allied issued a crossed check bearing "For Payee’s Account Only" and gave it to
Santos. Said check was deposited with Metrobank in the account of FCC as Producers Bank’s
payment of its obligation to FCC. Metrobank stamped a guaranty on the check. The check was
sent to Allied Bank, through the PCHC., for clearing. Upon presentment of the check, Allied
Bank funded the check even without checking the authenticity of Lim Sio Wan’s purported
indorsement.

Subsequently, Lim Sio Wan deposited with Allied Bank a second money market
placement. Upon the maturity date of the first money market placement, Lim Sio Wan went to
Allied Bank to withdraw it. She was then informed of the events that transpired but she denied
authorizing its pre-termination and withdrawal. The bank manager then assured her that her
money would be returned. However, when she realized that the promise would not happen,
she sent a demand letter to Allied Bank. Allied Bank refused to pay claiming that Lim Sio Wan
authorized the pre-termination. Is Allied Bank still liable to Lim Sio Wan?

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Answer: Yes. The relationship between a bank (Allied) and a client (Lim Sio Wan) is one of
debtor-creditor. A money market placement is a simple loan or mutuum. Allied Bank is
negligent in issuing the manager’s check and in transmitting it to Santos without even a written
authorization. Allied Bank did not even ask for the certificate evidencing the money market
placement or call up Lim Sio Wan at her residence or office to confirm her instructions. Both
actions could have prevented the whole fraudulent transaction. Payment made by the debtor
to a wrong party does not extinguish the obligation as to the creditor, if there is no fault or
negligence which can be imputed to the latter. Even when the debtor acted in utmost good
faith and by mistake as to the person of his creditor, or through error induced by the fraud of a
third person, the payment to one who is not in fact his creditor, or authorized to receive such
payment, is void, except as provided in Article 1241. Since no effective payment was made to
Lim Sio Wan, the bank still has an obligation to pay her at 6% interest. However, Metrobank, as
the last indorser of the check, is also liable. When Metrobank indorsed the check in compliance
with the PCHC Rules and Regulations without verifying the authenticity of Lim Sio Wan’s
indorsement and when it accepted the check despite the fact that it was cross-checked payable
to payee’s account only, its negligent indorsement contributed to the easier release of Lim Sio
Wan’s money and perpetuation of the fraud. Given the relative participation of Allied and
Metrobank, both banks cannot be adjudged as equally liable. Hence, the 60:40 ratio of the
liabilities of Allied Bank and Metrobank must be upheld.

15:11 -Art. 1245- Dacion en pago: Caltex Phils. case

(Delete: 18:26- 24:41)

2016 Bar Examination Question No. 9

Butch got a loan from Hagibis Corporation (Hagibis) but he defaulted in the
payment. A case for collection of a sum of money was filed against him. As a
defense, Butch claims that there was already an arrangement with Hagibis on the
payment of the loan. To implement the same, Butch already surrendered five (5)
service utility vehicles (SUV’s) to the company for it to sell and the proceeds to be
credited to the loan as payment. Was the obligation of Butch extinguished by
reason of dacion en pago upon the surrender of the SUV’s? Decide and explain.
(5%)

Answer: No. The turn-over of the vehicles of Butch to Hagibis did not extinguish
the obligation of Butch in the payment of his loan to the former. In dacion en
pago, it totally extinguish the performance of an obligation provided there is
consent of the creditor. Here, the fact that Hagibis instituted a collection suit
against Butch simply shows that there was no consent on the part of Hagibis nor
an arrangement duly agreed by them that the vehicles will constitute payment of

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Butch’ loan obligation. Thus, the law on dacion en pago as a special form of
payment did not validly operate in this case.

24:42 -Tender of payment: Exceptions (TRAIL)

2014 Bar Examination Question:

Dorotea leased portions of her 2,000 square meter lot to Monet, Kathy,
Celia and Ruth for five (5) years. Two (2) years before the expiration of the lease
contract, Dorotea sold the property to PM Realty and Development Corp. The
following month, Dorotea and PM Realty stopped accepting rental payments
from all the lessees because they wanted to terminate the lease contracts.

Due to the refusal of Dorotea to accept the rental payments, the lessees,
Ruth, et. al. filed a complaint for consignation of the rental before the RTC of
Manila without notifying Dorotea.

Is the consignation valid? (4%)

Answer: No. While it is true that the lessees tendered payment of the rentals and
in fact, consigned the same with the court, but for their failure to notify Doretea
of the fact of consignation will invalidate it as if there was no payment at all. For
consignation to be valid, the following essential requisites must concur: (1)
existence of a valid debt; (2) valid prior tender unless tender is excused; (3)
prior notice of consignation (before deposit); (4) actual consignation; and (5)
subsequent notice of consignation. Apparently, not all of the requisites of
consignation are present in the case at bar.

In Elizabeth del Carmen vs. Sps. Restituto Sabordo and Mima Mahilum-
Sabordo, G.R. No. 181723, August 11, 2014, the SC clarified that consignation is
the act of depositing the thing due with the court or judicial authorities whenever
the creditor cannot accept or refuses to accept payment, and it generally
requires a prior tender of payment. It should be distinguished from tender of
payment which is the manifestation by the debtor to the creditor of his desire to
comply with his obligation, with the offer of immediate performance. Tender is
the antecedent of consignation, that is, an act preparatory to the consignation,
which is the principal, and from which are derived the immediate consequences

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which the debtor desires or seeks to obtain. Tender of payment may be
extrajudicial, while consignation is necessarily judicial, and the priority of the
first is the attempt to make a private settlement before proceeding to the
solemnities of consignation. Tender and consignation, when validly made,
produces the effect of payment and extinguishes the obligation.

Questions for Lightning Quiz:

(1) What are the legal effects of loss of the thing due?
(2) What are the requisites of novation?

Another mode of extinguishment of obligation is loss of the thing due or

impossibility or difficulty of performance. A review on recent jurisprudence and
bar questions on this area focuses on the effects of loss of the thing due and who
bears the loss as between the creditor and the debtor.

Question: When is there loss?

Answer: A thing is lost when it perishes, goes out of commerce or disappears in

such a way that its existence is unknown or it cannot be recovered.

Question: What are the legal effects of loss?

Answer: The legal effects of loss is dependent whether the thing lost is specific
thing or a generic thing. If the obligation to deliver involves a specific thing, the
obligation is extinguished if the thing was destroyed without fault of the debtor
and before he has incurred in delay. If the obligation to deliver involves a generic
thing, it does not extinguish the obligation except in case of delimited generic
things, where the kind or class is limited itself and the whole class perishes.

There are, therefore, certain situations where loss can be attributed to the
debtor the moment he failed to perform his obligation to deliver. These are the
following:

(1) Where the law provides that the debtor shall be liable even if the loss is
due to fortuitous events (Arts. 1942, 1979, 2147 and 2159 of the NCC);

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 (2) Where the obligor is made liable by express stipulation;
(3) Where the nature of obligation requires the assumption of risk;
(4) Where fault or negligence concurs with fortuitous event;
(5) Where loss occurs after delay;
(6) Where the debtor promised to deliver the same thing to two (2) or more
different parties;
(7) Where obligation arises from a criminal act;
(8) Where a borrower in commodatum saves his own things and not the thing
of the creditor during fortuitous event.

30:17 – 46:41 -Art. 1189- Loss of the thing due. Correlate with Arts. 1262-1263
and Arts. 1266 and 1267 (Principle of res perit domino).

Case: Rosario Textile Mills Corporation (RTMC) vs. Home Bankers Savings and
Trust Company (HBSTC), G.R. No. 137232, June 29, 2005.

Facts: RTMC applied from HBSTC a credit line for Php8M to finance the purchase of imported
raw materials for its manufacturing business. Upon its approval, RTMC availed of the credit
line by making numerous drawdowns, each drawdown covered by a separate promissory note
and trust receipt covering the goods purchased. RTMC failed to pay its indebtedness despite
the lapse of the due dates of the promisory notes. Hence, HBSTC filed a complaint for sum of
money against RTMC and its President, Edilberto Yujuico, who signed the promissory notes as
surety.

In their Answer, RTMC and Yujuico contended that they should be absolved from liability
because, by virtue of the trust receipt, the bank was still the owner of the goods. They posited
that by applying the principle of res perit domino, the owner bears the risk of loss. RTMC
insisted that since the raw materials did not meet its manufacturing requirements, it offered to
HBSTC to turn over said materials, however, the bank refused, until the materials were totally
destroyed by fire which gutted down RTMC’s warehouse where it was stored. Is the contention
of RTMC correct?

Answer: No. It is very clear that the transaction between RTMC and the bank is a contract of
loan. RTMC used the proceeds of this loan to purchase raw materials from a supplier abroad. In
order to secure the payment of the loan, RTMC delivered the raw materials to the bank as
collateral. Trust receipts were executed by the parties to evidence this security arrangement.
Simply stated, the trust receipts were mere securities.

RTMC’s insistence that the ownership of the raw materials remained with the bank is
untenable. It is settled that, if under the trust receipt, the bank is made to appear as the

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owner, it is but an artificial expedient, more of legal fiction than fact, for if it were really so, it
could dispose of the goods in any manner it wants, which it cannot do, just to give consistency
with purpose of the trust receipt of giving a stronger security for the loan obtained by the
importer. To consider the bank as the true owner from the inception of the transaction would
be to disregard the loan feature thereof. Thus, RTMC cannot be relieved of their obligation to
pay their loan in favor of the bank.

Case: Gaisano Cagayan, Inc. vs. Insurance Company of North America (ICNA),
G.R. No. 147839, June 8, 2006.

Facts: Intercapital Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. Levi
Strauss Phils. Inc. (LSPI) is the local distributor of products bearing trademark “Levis Strauss”.
IMC and LSPI separately obtained from ICNA fire insurance policies covering “book debts” in
connection with ready-made clothing materials sold and delivered to various customers
anywhere in the Philippines. “Book debts” refers to unpaid accounts still appearing in the
Books of Accounts of IMC and LPSI 45 days after the time of the loss.

Gaisano Cagayan is a customer and dealer of Wrangler and Levis sold by IMC and LPSI
respectively. On February 25, 1991, Gaisano Superstore in Cagayan de Oro City was consumed
by fire. Included in the items lost or destroyed in the fire were stocks of ready-made clothing
materials sold and delivered by IMC and LPSI.

On February 4, 1992, ICNA filed a complaint for damages against Gaisano Cagayan. It
alleged that it paid to IMC and LPSI Php 2.1M and 500T respectively, its insurance claims under
the fire insurance policy. By virtue thereof, ICNA was subrogated to their rights against
Gaisano Cagayan for the latter’s unpaid accounts to IMC and LPSI.

In their Answer, Gaisano Cagayan argued that IMC bears the risk of loss because it
expressly reserved ownership of the goods by stipulating in the sales invoices that "it is further
agreed that merely for purpose of securing the payment of the purchase price the above
described merchandise remains the property of the vendor until the purchase price thereof is
fully paid." Following the doctrine of res perit domino, since IMC and LSPI are still the owners
of the goods, it bears the risk of loss. Therefore, it is not liable to ICNA for damages. Is the
contention of Gaisano Cagayan tenable?

Answer: No. Under paragraph (1), Article 1504 of the Civil Code, it provides:

“(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer,
in pursuance of the contract and the ownership in the goods has been retained by the seller
merely to secure performance by the buyer of his obligations under the contract, the goods
are at the buyer's risk from the time of such delivery”.

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 Thus, when the seller retains ownership only to insure that the buyer will pay its debt, the
risk of loss is borne by the buyer. Accordingly, Gaisano Cagayan bears the risk of loss of the
goods delivered.

Question: What is the doctrine of “unforeseen event”?

Answer: Article 1267 is the answer. When the service has become so difficult as
to be manifestly beyond the contemplation of all the parties, the obligor may also
be released therefrom, in whole or in part.

46:42 -Condonation
End: 47:45.

Albano’s Lecture: CD No. 4 Side B

Start: 00:02- 1:07 -Merger
01:08- 20:07 -Compensation or set-off (requisites)
(Delete: 20:08- 20:52)
20:53- 21:29 -When proper.
(Delete: 20:30- 21:52)

In order that legal compensation may be proper, it is necessary:

(1) That each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality, if the
latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy
commenced by third persons and communicated in due time to the debtor.

21:53- 22:17 -Compensation (cases)

Case: International Corporate Bank, Inc. (ICBI) vs. IAC, et. al., G.R. No. 69560,
June 30, 1988.

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Facts: In 1980, Natividad secured from ICBI a loan of Php50M. To secure this loan, Natividad
mortgaged her real properties in Manila and Bulacan. Of this loan, only Php20M was approved
and released, but the proceeds was applied to pay to her other obligations with the bank.
Subsequently, Natividad made a money market placement with the same bank in the amount
of Php1M at 17% interest for a period of 32 days. Meanwhile, Natividad allegedly failed to pay
her loan thus, foreclosure followed, and the properties were sold at public auction. There
being still deficiency of Php6.8M after the foreclosure sale, the bank refused to pay the
proceeds of the money market placement on maturity, instead, it was applied to cover the
deficiency.

In 1982, Natividad sued ICBI for annulment of the sheriff’s sale, the release of the
balance of her loan in the amount of Php30M, and for the recovery of her money market
investment of Php1M including its interest. She also alleges that her loan is not yet due and
demandabe, hence, its foreclosure is illegal. ICBI countered that it has the right to set off or
apply the proceeds of her money market investment to the deficiency of her obligation to the
bank invoking legal compensation. Is the action of the bank proper?

Answer: No. While ICBI is indebted to Natividad in the amount of Php1.06M representing the
proceeds of her money market investment, but whether Natividad is indebted to ICBI in the
amount of Php6.8M representing the deficiency balance after the foreclosure of the mortgage
is still disputed. The fact is, the validity of the foreclosure and ICBI’s claim of deficiency is yet
to be threshed out, hence, the requirement in Article 1279 that the debts must be liquidated
and demandable has yet been met. Therefore, legal compensation cannot take place under
Article 1290 of the NCC.

Case: Philippine Trust Company (PTC), vs. Floro Roxas and Eufemia Roxas, G.R.
No. 171897, October 14, 2015.

Facts: Spouses Roxas procured loans from PTC in the amount of Php 2.5M to finance their real
estate business secured by real estate mortgages on their real properties. Subsequently,
Spouses Roxas, PTC, and Dominguez entered into a “contract of building construction," under
which PTC granted an additional loan of Php 900T to the spouses to enable them to finish their
on-going housing projects. It was stipulated that the money loaned from PTC shall be devoted
to the funding of the housing projects, the rentals of which when finished, would then be used
to liquidate the loan. It also provided that PTC may only release the proceeds of the loan for the
purchase of materials and supplies when requested by Dominguez and with the conformity of
the Spouses Roxas. PTC, however, released to Dominguez the sum of Php 870T out of the Php
900T in violation of their agreement to release onlyPhp450T.

Due to financial difficulties, Spouses Roxas failed to finish the housing project. As a
result, they failed to pay the amortization of their loans from PTC. Thus, Dominguez filed a
complaint against PTC and Spouses Roxas for breach of contract.

[Type text]
 When Spouses Roxas filed their Answer, they filed a cross-claim against PTC. In response,
PTC filed a counterclaim against the spouses on their unpaid loan obligation amounting to Php
3,053,738.50 plus interests and, in default of such payments, the foreclosure of the real estate
mortgages executed by the spouses in favor of PTC. After trial on the merits, the trial court
rendered a decision in favor of Dominguez, thus, PTC and Spouses Roxas appealed. To this
date, their appeal remain unresolved.

Meanwhile, PTC filed with the provincial sheriff of Bataan a petition for extrajudicial
foreclosure of the same real estate mortgages. Spouses Roxas opposed the petition and filed a
complaint against PTC for damages and sought to enjoin the sheriff from proceeding with the
foreclosure sale while previous civil case is still pending.[11] The Bataan RTC rendered a Decision
in favor of the spouses awarding Php500T damages. PTC appealed to CA which decision was
affirmed. The decision became final and executory.

Thus, Spouses Roxas moved for the execution of the final and executory judgment which
was opposed by PTC invoking legal compensation to set off Spouses Roxas’ obligation with
them. Is legal compensation proper?

Answer: No, because not all requisites of legal compensation are present in this case. Under
Article 1279, in order for legal compensation to take place, the following requisites must
concur: (a) that each one of the obligors be bound principally, and that he be at the same time
a principal creditor of the other; (b) that both debts consist in a sum of money, or if the things
due are consumable, they be of the same kind, and also of the same quality if the latter has
been stated; (c) that the two debts be due; (d) that they be liquidated and demandable; and (e)
that over neither of them there be any retention or controversy, commenced by third persons
and communicated in due time to the debtor.

Here, the fourth requisite is absent. A debt is liquidated when its existence and amount
are determined.[37] Compensation can only take place between certain and liquidated debts; it
cannot extend to unliquidated, disputed claims.[38] Since the loan obligation, including its
amount and demandability, is still being disputed on appeal, PTC's credit cannot be considered
liquidated as of yet. Consequently, no legal compensation could have taken place between
PTC's loan credit and the Spouses Roxas' judgment credit.

22:19- 42:55 -Novation

(Delete: 42:56- 43:48)

Question: What are the requisites of novation?

Answer: The requisites of novation are:

(1) The existence of a valid old obligation;

[Type text]
 (2) The nature of the change and the intention of the parties to extinguish or
to modify the old obligation by a substantial difference;
(3) The capacity and consent of all the parties except in the case of
expromission where the old debtor does not participate;
(4) The validity of the new obligation

Case: Sps. Jose T. Valenzuela and Gloria Valenzuela vs. Kalayaan Development
and Industrial Corporation (KDIC), G.R. No. 163244 June 22, 2009.
(Elements of a valid novation)

Facts: Sps. Valenzuela entered into a contract to sell with KDIC whereby they` offered to
purchase a portion of latter’s lot where their house stands. Due to the default in installment
payments, a sister of Gloria named Juliet agreed to pay the balance with a new amortization
schedule. After several payments, Juliet also defaulted. Hence, KDIC filed a complaint for
rescission. Sps. Valenzuela contended that there was novation. Was there novation?

Answer: None. Because there was no express consent from the creditor of the change of the
person of the debtor and that the latter was released from his obligation.

2014 Bar Examination Question:

J.C. Construction (J.C.) bought steel bars from Matibay Steel Industries
(MSI) which is owned by Buddy Batungbacal. J.C. failed to pay the purchased
materials worth Php 500,000.00 on due date. J.C. persuaded its client Amoroso
with whom it had receivables to pay its obligation to MSI. Amoroso agreed and
paid MSI the amount of Php50,000.00. After two (2) other payments, Amoroso
stopped making further payments.

Buddy filed a complaint for collection of the balance of the obligation and
damages against J.C. J.C. denied any liability claiming that its obligation was
extinguished by reason of novation which took place when MSI accepted partial
payments from Amoroso on its behalf.

Was the obligation of J.C. Construction to MSI extinguished by novation?

Why? (4 pts.)

Answer: No, the obligation of J.C. Construction to MSI was not extinguished by
novation. Under Article 1292 of the NCC, in order that an obligation may be
extinguished by another which substitute the same, it is imperative that it be so
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declared in unequivocal terms, or that the old and the new obligations be on
every point incompatible with each other. Novation by substitution of debtor
requires the consent of the creditor as provided under Article 1293 of the NCC.
This requirement is not present in this case. Since there was no novation, the
obligation of the original debtor is not extinguished. Thus, the obligation of J.C.
Construction to MSI subsists.

Case: Bank of the Philippine Islands vs. Amador Domingo, G.R. No. 169407,
March 25, 2015.

Facts: This case was about a car loan obtained by spouses Domingo from the bank payable in
installment by issuing a post-dated checks to cover the monthly amortization as it fell due.
While the loan was subsisting, a buyer became interested to purchase the car and wanted to
assume the obligation of the spouses with the bank. Hence, the spouses and the buyer
executed a Deed of Sale with Assumption of Mortgage furnishing copy thereof to the bank
which did not object. From then on, the buyer issued checks to cover the balance and the
remaining post-dated checks issued by the spouses to cover future amortizations were
returned by the bank. After 30 months, the bank demanded from the spouses the return of
the car and/or payment of the arrears. In their defense, the spouses interposed that there was
novation and their obligation to the bank was extinguished. Were the spouses correct?

Answer: No, there was no novation because there was no express consent on the part of the
creditor that the debtor was released from its obligation. (Read this case for you to understand
the concept of novation).

Bar Problem:

X drew a check with Y as payee for a debt. The check bounced. To cover
the bounced check, X gave another check drawn against another bank. It again
bounced. Y instituted a BP 22 case. However, X said in his defense that there
was novation when Y accepted the 2nd check. Was there novation?

Answer: No. There are only two (2) ways that indicate novation and thereby
produce the effect of extinguishing an obligation by another that substitutes the
same. First, novation must be explicitly stated and declared in unequivocal
terms, as novation is never presumed. Secondly, the old and the new obligations
must be incompatible on every point. The test of incompatibility is whether or
not the two (2) obligations can stand together, each one having its independent
existence. If they cannot, they are incompatible and the latter novates the first.
[Type text]
In other words, acceptance of a replacement check will not extinguish the
obligation covered by the first check. In the instant case, there was no express
agreement that Y’s acceptance of the second check will discharge X from liability.
Neither is there incompatibility because both checks were given precisely to
terminate a single obligation. As novation speaks of two distinct obligations,
such is inapplicable to this case. (Salazar vs. JY Brothers, G.R. No. 171998,
(2010)

2016 Bar Examination Question No. 10

Jerico, the project owner, entered into a Construction Agreement with

Ivan for the latter to construct his house. Jojo executed a Surety undertaking to
guarantee the performance of the work by Ivan. Jerico and Ivan entered into a
Memorandum of Agreement (MOA) revising the work schedule of Ivan and the
subcontractors. The MOA stated that all the stipulations of the original contract
not in conflict with said agreement shall remain valid and legally effective. Jojo
filed a suit to declare him relieved of his undertaking as a result of the MOA
because of the change in the work schedule. Jerico claims there is no novation of
the Construction Contract. Decide the case and explain. (5%).

Answer: I will upheld that Jojo, as surety, be relieved of his obligation under the
undertaking because, as far as he is concerned, the change in the work schedule
is very material with respect to his undertaking to guarantee the performance of
Jojo under the contract. Under Article 2079 of the NCC, an extension of time
granted to the debtor by the creditor without the consent of the guarantor
extinguishes the guaranty. Nonetheless, there is no novation to speak of because
there was no substantial change in the Construction Agreement except the work
schedule. The essential requisites of novation do not exist in the given problem.

Law on Contract:

A contract is a meeting of the mind between two (2) persons whereby one
binds himself, with respect to the other, to give something or to render some
service.

Question: What are the requisites of a valid contract?

[Type text]
Answer: The requisites are:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation.

It is necessary for the existence of a contract that two (2) distinct parties
enter into it. This is the concept of “auto contract”. In short, the existence of a
contract is not determined by the number of persons who intervene in it, but by
the number of parties; not by the number of individual wills but by the number of
declaration of wills. As long as there are two (2) patrimonies, even if they are
represented by the same person, the contract will be valid, say, an agent
representing both the buyer and the seller.

Case: SM Land, Inc. vs. Bases Conversion and Development Authority (BCDA),
G.R. No. 2203655, March 18, 2015.
(Requisites of a Valid Contract; Estoppel)

Facts: Interested to undertake the development of Bonifacio South Property, SM Land

submitted to BCDA its Unsolicited Proposal on December 14, 2009 under the Arroyo
Administration. After series of negotiations, BCDA finally accepted the terms of the Unsolicited
Proposal, and their agreement was reduced into writing by way of Certification of Successful
Negotiations. Said agreement was signed by its authorized representatives and was notarized
on August 6, 2010. Subsequently, under the Aquino Administration, BCDA unilaterally
cancelled their agreement arguing that such is disadvantageous to the government blaming the
previous Administration to be negligent in its action in entering into said questionable
transaction. It also argued that the State is not barred by estoppel by the mistakes or errors of
its official or agents.

(1) Was there a valid contract between SM Land and BCDA? Why?

Answer: Yes, there was a valid contract between SM Land and BCDA. Under Article 1318 of
the NCC, it lays down the essential requisites of a valid contract, to wit: (1) consent of the
contracting parties; (2) object certain which is the subject matter of the contract; (3) cause of
the obligation which is established.

The first requisite, consent, is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract. In the instant
case, when SM Land submitted its Unsolicited Proposal to BCDA on December 14, 2009, the
submission constituted the offer to undertake the development of the subject property. BCDA,

[Type text]
then, entered into negotiations with SM Land until BCDA finally accepted the terms of the final
Unsolicited Proposal and their agreement was, thereafter, reduced into writing through the
issuance of the Certification of Successful Negotiations signed by its authorized representatives.

The second requisite, cause, is the essential reason which moves the parties to enter
into contract. It is the immediate, direct and proximate reason which justifies the creation of
an obligation through the will of the contracting parties. In this case, their interest in the sale,
acquisition and development of the property and their undertaking to perform their respective
obligations as reflected in the Certificate of Successful Negotiations (CSN) issued by BCDA.

Lastly, object certain refers to the subject matter of the contract. It is the thing to be
delivered or the service to be performed. Here, when BCDA issued the CSN, it not only
accepted SM Land Unsolicited Proposaland declare SM Land eligible to enter into joint venture,
but is also agreed to subject SM Land’s proposal to be implemented immediately pursuant to
their Terms of Preference.

(2) Can the State successfully invoke that it is not barred by estoppel for errors or mistakes
committed by its officials or agents?

Answer: BCDA cannot invoked the general rule that the State is not barred by estoppel by the
mistakes or errors of its officials or agents because such rule admits of an exception. It cannot
be properly invoked where it would operate the effective operation of a policy to protect the
public. It must be applied with circumspection and should be applied only in those special
cases where the interest of justice clearly requires it. Thus, government must not be allowed to
deal dishonorably and capriciously with its citizens, and must not play an ignorable part or do a
shaky thing, for the doctrine of equitable estoppel may be invoked against public authorities.
Here, the repeated assurance of BCDA that it will respect SM Land’s rights as an original
proponent, and after putting the latter to considerable trouble and expenses, BCDA
backtracked to comply with its obligations under their agreement and unilaterally cancelled the
same for a plausible reason that such is disadvantageous to the government and the bid of SM
Land is lower than what BCDA is speculating Thus, the cancellation of their contract by BCDA
cannot be sustained.

Aside from understanding the definition and elements of contracts, of

importance to you is to know the basic principles or characteristics of contracts.
For this purpose, we will seek the guidance of our guest lecturer to discuss to us
and enhance our understanding on these basic principles.

Albano’s Lecture: CD No. 4 Side B

43:49 - 46:09 -Principle of Freedom to Stipulate

Cases: Pleasantville Development Corp. (waiver of rights)

[Type text]
 Cui vs. Arellano University (invalid quitclaim)
Carmelcraft Inc. vs. NLRC (invalid quitclaim)
Gatchalian vs. Delim (void stipulation)

Questions: In what instances does freedom to stipulate be limited or prohibited

by law?

Answer: In the following instances:

(1) Pactum commisorium or “automatic foreclosure” (Art. 2088 of the NCC);

(2) Pactum leonina, where one party bears the lion’s share of the risk; (Art.
1799 of the NCC)
(3) Pactum de non alienunda or a stipulation not to alienate. (Art. 2130 of the
NCC).

Albano’s Lecture: CD No. 4 Side A

00:28- 06:07 -Principle of Freedom to stipulate (Art. 1306, NCC)
(Delete: 06:08- 06:37)
06:38- 06:47

Case: Goodrich Manufacturing Corporation vs. Ativo, et. al., G.R. No. 188002,
February 1, 2010.

Facts: Ativo and others are former employees of Goodrich worked as machine or maintenance
operators assigned in the different sections of the company. Sometime in 2004, on account of
perceived financial distress, Goodrich offered to all employees the option to voluntarily resign
from the company, for which Ativo and others availed of. Thus, they were paid separation pay
upon execution of waiver and quitclaim.

A day after, Ativo and others filed an illegal dismissal case at the NLRC on the ground
that they were misled by Goodrich into believing that the company is in financial difficulty. The
Labor Arbiter found no ground for illegal dismissal but awarded payment of unpaid 13 th month,
ECOLA and service incentive pay as the entitlement of these benefits are provided for under our
labor statutes. Is the LA ruling correct?

Answer: No, because despite the award of unpaid ECOLA, 13 th month pay and SIL, the
Supreme Court found out that the amount received by Ativo and other workers prior to the
filing of their complaint do not appear to be grossly inadequate. Thus, the SC pronounced that
“not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties

[Type text]
and may not be disowned simply because of change of mind. It is only when there is clear
proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of the
settlement are unconscionable on its face, that the law will step in to annul the questionable
transaction.

Case: P.L. Uy Realty Corp. (PLU) vs. ALS Management and Dev’t. Corp. et.al.
G.R. No. 166462, October 24, 2012
(Contracts; Principle of Freedom to Stipulate)

Facts: By way of Deed of Absolute Sale with Mortgage, PLU sold to ALS a parcel of land. In the
said instrument, they agreed that PLU shall have the property cleared of any existing occupants
or squatters, the removal of which shall be for the sole expenses and responsibilities of the
latter and ALS is authorized to withhold payment of the first installment unless the above
condition is done and completed to the satisfaction of the vendee. Subsequently, the parties
executed a Partial Release of Mortgage attesting to the payment by ALS of the first installment.
ALS, however, failed to pay the subsequent installments despite demand. Thus, PLU filed a
complaint against ALS to demand payment of the remaining balance. The trial court declared
that the removal of the informal settlers on the property is still a subsisting and valid condition,
thus, it found the obligation of ALS to pay the balance of the purchase price has not yet fallen
due and demandable. Hence, the case was dismissed by the trial court. Is the dismissal of the
case proper?

Answer: Yes. Article 1306 of the NCC guaranteed the freedom of parties to stipulate the terms
of their contract provided that they are not contrary to law, morals, good customs, public
order or public policy. Thus, when the provision of a contract is valid, the parties are bound by
such terms under the principle that a contract is the law between the parties.

Here, both parties knew for a fact that the property subject of their contract was
occupied by informal settlers which may require court action for them to be evicted therefrom.
As to when the property will be cleared by squatters, it is not within the power of the parties to
determine. It is for this reason that the parties stipulated that the payment of the balance of
the purchase price be deferred until the squatters are totally ejected. There was no evidence
showing that PLU was coerced into signing the Deed of Absolute Sale with Mortgage or that its
consent was in any way vitiated. Therefore, PLU cannot be allowed to reneged on their
agreement and for its failure to comply the same, the payment is not yet due and demandable
for which ALS cannot be compelled to pay.

Albano’s Lecture: CD No. 4 Side A

06:48- 14:37 -Principle of Mutuality of Contracts (Binding effect)
(Delete: 14:38-14:41)
14:42- 19:01
(Delete: 19:02- 19:36)

[Type text]
19:37- 20:21

Cases:

GSIS vs. CA, et. al. (No escalation clause)

Security Bank and Trust Co. (With escalation clause).
Sps. Mariano and Gilda Florendo vs. CA and Land Bank of the Philippines, G.R. No.
101771, December 17, 1996. (Sweetheart Loans)

Case: Asiatrust Development Bank vs. Carmelo H. Tuble, G.R. No. 183987, July
25, 2012. (penned by Chief Justice Maria Lourdes Sereno).

Facts: Tuble was, then, the Vice-President of Asiatrust. As top bank executive, he was
extended special loan privileges by Asiatrust. During his incumbency, Tuble obtained three (3)
separate loans; (1) a real estate loan secured by a mortgage over such property without
interest, to mature in 1999; (2) a consumption loan bearing 18% per annum; and (3) a salary
loan. In 1995, Tuble resigned with his loans still subsisting consisting of: (1) Php 421,800 real
estate loan; (2) Php100,000 consumption loan; and (3) Php 16, 250 salary loan. To offset his
loan obligations, Tuble demanded for the payment of his Deferred Incentive Plan (DIP) share as
corporate executive and his last salary and 13th month pay. Asiatrust did not act on Tuble’s
demand, instead, filed a foreclosure case on the real estate mortgage. Asiatrust, as the
highest bidder, won the bid subject to one (1) year redemption period by the Tuble. Within the
period, Tuble redeemed the property at Php 1.3M. The redemption price increased because
the bank unilaterally imposed additional interest and other charges, to cover the other
obligations of Tuble with the bank invoking the dragnet clause in the deed of mortgage. Tuble
questioned the increase of the redemption price and demanded Asiatrust to return the excess
of the Php 421,800 mortgage indebtedness. His request remain unheeded, Tuble filed a
collection of sum of money against the bank and was able to obtained a favorable judgment
from the lower court. The court ruled that the bank cannot unilaterally imposed additional
interest on the mortgage loan because such loan was obtained without interest as borne out in
their deed of mortgage and the terms and conditions in the deed is binding upon the parties. Is
the ruling of the court correct?

Answer: Yes. The SC upheld the ruling of the lower court to the effect that the unilateral
imposition of additional interest upon the mortgage is violative of the principle of mutuality of
contract between the parties. Thus, Asiatrust was made to reimbursed the excess of the
mortgage amount paid by Tuble when it redeemed the property. The high court likewise ruled
that the bank cannot avail of the dragnet clause because the other loans obtained by Tuble has
no reference to the mortgaged real estate as security for the payment of such subsequent
loans.

[Type text]
Question: What is a dragnet clause in the deed of mortgage?

Answer: It is a provision in the deed of mortgage of real properties which

expressly provide that said mortgaged property may secure future advancements
or obligations of the mortgagor with the mortgagee. In the absence of such
stipulation, the general rule is that the mortgage must be limited to the amount
mentioned in the mortgage.

(Read also the case of Sps. Ignacio and Alicia Juico vs. China Banking
Corporation, G.R. No. 187678, April 10, 2013)

Facts: Spouses Ignacio and Alice P. Juico obtained a loan from Chinabank in the amount of
PHP10M evidenced by two promissory notes and was secured by a Real Estate Mortgage (REM)
over their titled property. When spouses failed to pay the monthly amortizations due,
Chinabank demanded the full payment of the outstanding balance with accrued monthly
interests. As of February 23, 2001, the amount due on the two promissory notes totaled
P19,201,776.63 representing the principal, interests, penalties and attorney’s fees. On the same
day, the mortgaged property was sold at public auction, with the bank as highest bidder for the
amount of P10,300,000.

On May 8, 2001, Spouses Juico received a demand letter for the payment of
P8,901,776.63, the amount of deficiency after applying the proceeds of the foreclosure sale to
the mortgage debt. As its demand remained unheeded, Chinabank filed a collection suit for the
said amount representing the deficiency, plus interests at the legal rate and expenses of
litigation.

In their Answer, spouses admitted the existence of the debt but interposed, by way of
special and affirmative defense, that the complaint states no cause of action considering that
the principal of the loan was already paid when the mortgaged property was extrajudicially
foreclosed and sold for P10,300,000. They also argued that even assuming there is a cause of
action, such deficiency cannot be enforced by the bank because it consists only of the penalty
and/or compounded interest on the accrued interest which is generally not favored under the
NCC. The bank reasoned out that the spouses were called by telephone monthly to inform
them of the prevailing rates to be used in computing interest due on their loan based on the
promisory note signed by the spouses.

In its decision, the trial court ruled in favor of Chinabank on the ground that the spouses
were aware of the terms and conditions of the promissory note. Is the ruling of the court
correct?

Answer: No, because such decision is repugnant to the principle of mutuality of contracts as
expressed in Article 1308 of the NCC, which provides:
[Type text]
“Article 1308. The contract must bind both contracting parties; its validity or compliance cannot
be left to the will of one of them.

Article 1956 of the Civil Code likewise ordains that “no interest shall be due unless it has been
expressly stipulated in writing.”

The binding effect of any agreement between parties to a contract is premised on two
settled principles: (1) that any obligation arising from contract has the force of law between the
parties; and (2) that there must be mutuality between the parties based on their essential
equality. Any contract which appears to be heavily weighed in favor of one of the parties so as
to lead to an unconscionable result is void. Any stipulation regarding the validity or compliance
of the contract which is left solely to the will of one of the parties, is likewise, invalid.

The Court took notice that the loan oligation of the spouses ballooned due to the
operation of escalation clause in the promisory note. Escalation clauses refer to stipulations
allowing an increase in the interest rate agreed upon by the contracting parties. This Court has
long recognized that there is nothing inherently wrong with escalation clauses which are valid
stipulations in commercial contracts to maintain fiscal stability and to retain the value of money
in long term contracts. Hence, such stipulations are not void per se.

Nevertheless, an escalation clause “which grants the creditor an unbridled right to adjust
the interest independently and upwardly, completely depriving the debtor of the right to assent
to an important modification in the agreement” is void. A stipulation of such nature violates the
principle of mutuality of contracts. Thus, this Court has previously nullified the unilateral
determination and imposition by creditor banks of increases in the rate of interest provided in
loan contracts.

Questions for Lightning Quiz:

(1) What are the exceptions to the principle of relativity of contracts whereby
its stipulations likewise bind strangers and third persons?
(2) What is accion pauliana and when does it prescribe?

Another important principle you must consider in the Law on Contracts is

the principle of relativity, which simply means that stipulations in the contract
are binding, not only in between parties but it also bind their heirs, assigns,
privies, and even third persons where stipulation is agreed upon in his favor. We
will seek the aid of our guest lecturer to enlighten us about this subject. In the
course of his lecture, he will be mentioning not so old SC decision but the same
are still good law and in fact, some are cited in recent jurisprudence.

[Type text]
20:35- Principle of Relativity of Contracts
(Delete: 22:58-23:05)
23:06- 30:08 -Stipulation in favor of Third Persons
(Delete: 30:09-30:25)
30:26- 30:49
(Delete: 30:50- 30:58)
30:59-33:00 –
(Delete: 33:01-34:32)

Case cited:

Mandarin Villa, Inc. vs. CA and Atty. Clodualdo de Jesus, G.R. No. 119856, June
20, 1996.

As you listen to the lecture, there are exceptions to the principle of

relativity of contracts, whereby contracts may also bind and affect strangers or
third persons though not privy to the contract. What are these exceptions?

Stipulation pour autrui (Art. 1311(2);

(1) Accion directa e.g. suit instituted by a lessor against a sub-lessee or
laborers of a contractor against the owner of the work;
(2) Third person is in possession of the object of the contract (Art. 1312);
(3) Fraud of creditors by contracting parties (Art. 1313);
(4) Tortious interference (Art. 1314);

Three (3) elements are needed to create a perfected contract: (1) consent
of the contracting parties; (2) an object certain which is the subject matter of the
contract; (3) the cause of the obligation which is established. Under the Law on
Sales, a contract of sale is perfected when the seller, obligates himself, for a
price certain, to deliver and to transfer ownership of a thing or right to the buyer
over which the latter agrees. From that moment, the parties may demand
reciprocal performance under the contract.

34:43- Perfection of contracts

35:42- Interference in Contractual Relations (Tort)
(Delete: 37:48- 37:51)
(Delete: 39:23- 39:25)

[Type text]
(Delete: 41:21- 42:50)
42:51 -Perfection of contracts (continuation)
End: 47:01

Case: Starbright Sales Enterprises, Inc. vs. Phil. Realty Corp, Msgr. Domingo
Cirilos, etc. G.R. No. 177936, January 18, 2012.

Facts: On April 17, 1988, Licup wrote Msgr. Cirilos offering to buy three (3) parcels of land
owned by the Holy See, to which he represents, for Php1, 240 per square meter. Licup agreed
to the responsibility for evicting squatters occupying said land. He enclosed a check of Php100T
to close the transaction. He promised to pay the balance upon presentation of title for transfer
and removal of squatters. Msgr. Cirilos accepted the check and signed in the “conforme”
portion of the letter. But the check could not be encashed because Licup ordered it to “stop
payment”. Licup again wrote Msgr. Cirilos requesting that the title to the land be instead
transferred to Starbright, enclosing a check worth Php100T. Msgr. Cirilos wrote Starbright to
remove the squatters first, otherwise, he will return the check. Starbright replied that it will
comply with Msgr. Cirilos’ request provided the purchase price will be reduced to Php1,150 per
square meter. Msgr. Cirilos wrote back rejecting the offer and gave seven (7) days to Starbright
to buy the property at Php1,400/sq.m. He also enclosed a Php100T check as refund.
Subsequently, Starbright wrote Msgr. Cirilos that they had already a perfected contract of sale
on April 17, 1988 and the latter can no longer amend the terms and conditions of the sale. Is
there a perfected contract of sale?

Answer: Yes, there was a perfected contract of sale but when Licup ordered stopped payment
for the check and requested that Starbright instead be named in the title, there exist novation
vacating the original tenor of the contract. Hence, by the exchange of letters of Starbright and
Msgr. Cirilos, there was new negotiation for a new contract of sale between them, and since
there was no meeting of the mind with respect to the offer and counter-offer, there could be
no perfected contract of sale to speak of. Starbright cannot invoked the perfected contract
between Licup and Msgr. Cirilos because it is not privy to that contract of sale, Licup is not a
representative of Starbright nor there was another letter of the same tenor as between Msgr.
Cirilos and Starbright.

There are four (4) kinds of defective contracts, namely: (1) rescissible; (2)
voidable; (3) unenforceable; and (4) void (inexistent or illegal). At first glance, I
presume you can still recall the following principles:

(1) A rescissible contract is valid until rescinded. There is a sort of extrinsic

defect consisting of an economic damage or lesion.

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 (2) A voidable contract, on the other hand, is valid until annulled. It can no
longer be annulled, however, if there has been ratification. Here, the
defect is, more or less, intrinsic, as in the case of vitiated consent.
(3) An unenforceable contract cannot be enforced by court action unless it is
ratified. In a way, it may be considered as a valid transaction, meaning, it
has no effect now, but it may take effect or may be effective upon
ratification. In contrast, a voidable contract has its effect now, but it may
be invalidated, hence, valid until annulled.
(4) A void contract is one that has no effect at all, hence, it cannot be ratified
or validated.

Now, let us first have a review of the basic principles regarding rescissible
contracts. The rule is that to rescind a contract is not merely to terminate it, but
to abrogate and undo it from the beginning, not merely to release the parties
from further obligations to each other with respect to the subject of the contract,
but to annul the contract and restore the parties to their previous status where
they were as if no such contract had ever been made or entered into.

Under Article 1381 of the NCC, it enumerated the different kinds of

recissible contracts. Of all the kinds of rescissible contracts, it is important to
consider those that were entered into in fraud of creditors when the latter cannot
in any other manner collect the claims due them.

In determining whether or not a certain conveyance is fraudulent or in

fraud of creditors, the question in every case is whether conveyance was a bona
fide transaction or a trick and contrivance to defeat creditors, or whether it
conserves to the debtor a special right. It is not sufficient that it is founded on
good consideration, or is made with bona fide intent, it must have both
elements. If defective in either of these particulars, although good as between
the parties, it is rescindable as to creditors. The test as to whether or not a
conveyance is fraudulent is to answer this question: Does it prejudice the rights of
creditors?

In the consideration of whether or not certain transfers were fraudulent ,

courts have laid down certain rules by which the fraudulent character of the
transaction may be determined. The following are some of the circumstances
attending sales which have been denominated by the courts as “badges of fraud”:

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 a. The fact that the consideration of the conveyance is fictitious or
inadequate;
b. A transfer made by a debtor after suit has been begun and while it is
pending against him;
c. A sale upon credit by an insolvent debtor;
d. The transfer of all or nearly all of his properties by a debtor, especially
when he is insolvent or greatly embarrassed financially;
e. Evidence of large indebtedness or complete insolvency;
f. The failure of the vendee to take exclusive possession of all the property.

Question: Under what instances does contracts are presumed to have been made
in fraud of creditors?

Answer: In the following situations:

a. All contracts by virtue of which the debtor alienates property by gratuitous

title when the donor did not reserve sufficient property to pay all debts
contracted before the donation;

b. Alienations by onerous title are also presumed fraudulent when made by

persons against whom some judgment has been rendered in any instance
or some writ of attachment has been issued.

Question: What is accion pauliana and when does it prescribe?

Answer: Accion pauliana is a legal action filed by a creditor to rescind a contract

executed by his debtor to defraud him. It prescribes in four (4) years counted
from the day it becomes clear that the creditor has no other means to recover his
credit. The following are the requisites:

(1) Plaintiff asking for rescission is a prior creditor, even if the credit is
demandable later;
(2) Debtor has entered into a subsequent contract conveying a patrimonial
benefit to a 3rd person;
(3) Creditor has no other legal remedy to satisfy his claim, but would benefit
by rescission of the conveyance to the 3rd person;

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 (4) That act being impugned is fraudulent; and
(5) That the 3rd person who received the property conveyed, if by onerous
title, has been an accomplice in the fraud.

If the contract is rescissible, the proper remedy is to file a direct action for
rescission of contract.

Albano’s Lecture: CD No. 5 Side A

00:02- 01:23 - Action for Rescission
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03:24- 07:08
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07:11- 09:53
(Delete: 09:54- 14:59)

Question: What is the difference between resolution or cancellation under Article

1191 of the NCC and rescission under Article 1383?

Answer: Article 1191 applies only to reciprocal obligations like those that arise
from the same cause, and which each party is a debtor and creditor of each
other. Performance by one is a condition to performace by the other. If one
party is unable to perform his obligation, the other can ask for resolution as a
remedy for the breach. Since this is based on breach of contract, it is a principal
action.

On the other hand, Article 1383 is a subsidiary action which is based on

lesion or fraud of creditors. Both Articles 1191 and 1383 however, refer to valid
contracts and require mutual restitution. Article 1385 requiring mutual
restitution also applies to contracts resolved under Article 1191. (Wellex Group
vs. U-Land Airlines, Co., G.R. No. 167519, January 14, 2015).

Question: May a party extra-judicially rescind a contract even without a specific

stipulation in the contract authorizing extra-judicial rescission?

Answer: No. In the absence of a contractual stipulation allowing extra-judicial

resolution in case of breach, a contracting party cannot extra-judicially rescind
the contract. The party needs to file an action for rescission under Article 1191.

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(EDS Manufacturing vs. Healthcheck International, Inc., G.R. No. 162802,
October 9, 2013).

Case: Anchor Savings Bank (ASB) vs. Henry H. Furigay, et.al., G.R. No. 191178,
March 13, 2013.

Facts: In 1999, ASB filed a complaint for sum of money and damages against Ciudad Transport
Services, Inc. impleading its owners, Henry H. Furigay and his wife. While said collection suit
was pending, Spouses Furigay donated to their minor children their registered properties in
Alaminos, Pangasinan on April 4, 2001 and titles to these lots were transferred to the latter.
After trial, judgment was rendered in November 7, 2003 in favor of ASB and Sps. Furigay were
ordered to pay the former Php8.6M. Claiming that the donation of these properties was made
in fraud of creditors, ASB filed a complaint for Rescission of Deed of Donation on October 14,
2005. Spouses Furigay moved for the dismissal of the complaint for lack of cause of action and
prescription. The trial court dismissed the action due to failure of ASB to allege in the
complaint that it resorted to all other legal remedies to satisfy its claim and on the ground of
prescription because the complaint was filed beyond the four-year period from the time of the
discovery of fraud. Is the trial court ruling correct?

Answer: It depends. As to the ground that ASB failed to allege in their complaint that it
resorted to all other legal remedies to satisfy its claim, the dismissal is proper. A remedy of
rescission is subsidiary in nature; it cannot be instituted except when a party suffering damage
has no other legal means to obtain satisfaction of the same. Following the subsidiary nature of
the remedy of rescission, a creditor would have a cause of action to bring an action for
rescission if it alleged that the following measures had already been take: (1) exhaust the
properties of the debtor through levying by attachment and execution upon all the properties
of the debtor except those exempt from execution; (2) exhaust all the rights and actions of the
debtor save those personal to him, and (3) seek rescission of the contracts executed by the
debtor in fraud of their rights. In the case at bar, since ASB failed to allege in the complaint
that they resorted to these measures first, it has no cause of action against the spouses.

As to the ground of prescription, such dismissal is erroneous because the period of

prescription has not even commence to run. An action to rescind must be of last resort, availed
of only after all other legal remedies have been exhausted and have ben proven futile. In short,
accion pauliana accrues only when the creditor discover that he has no other legal remedy for
the satisfaction of its claim against the debtor than an accion pauliana. Thus, the 4-year
prescription period commences to run fom the day it has became clear that there are no other
legal remedies by which the creditor can satisfy his claim, not on the date of the conveyance
nor the date of the registration of the contract sought to be rescinded.

Voidable contracts

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Question: What contracts are voidable?

Answer: The following contracts are voidable:

1. Those where one of the parties is incapable of giving consent to a contract;

2. Those where the consent is vitiated by mistake, violence, intimidation,
undue influence or fraud.

15:00- 19:34 -Voidable contracts

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21:40- 22:59
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28:10- 31:39

In Serafin Naranja, et.al vs. CA, et. al., G.R. No. 160132, April 17 2009, the
SC ruled that “for undue influence to be present, the influence exerted must have
so overpowered or subjugated the mind of the contracting party as to destroy his
free agency, making him express the will of another rather than his own.”

Facts: Roque Naranja, single, was the registered owner of a parcel of land and a co-owner of
his inherited property. He lived with his half-sister, Belardo, who supported him with his
needs especially so that a catheter was attached to his body to helped him urinate. During his
lifetime, and to show his gratitude to Belardo, he sold the subject property to her for a
consideration. The sale, however, was not registered due to financial limitations.
Subsequently, the same parcel was sold to Dema-ala whereby Belardo acted as instrumental
witness to the deed of conveyance. The sale was actually to cover for the loan obtained by
Belardo from Dema-ala using the titled property as security. Roque died.

Two (2) years after the sale, Belardo was able to fully paid her loan from Dema-ala and
the title of the property was returned to her. Unknown to her, subject property was included
in the extra-judicial settlement among heirs of the brothers of Roque and the title was already
cancelled. Belardo instituted an action for reconveyance and annulment of the extra-judicial
deed against the heirs of her half-brother. The heirs argued that Roque’s consent was vitiated
when he signed the deed of sale in favor of Belardo because the latter exerted undue influence
over him. Was the argument of the heirs correct?

Answer: No. Undue influence is not to be inferred from age, sickness or debility of body, if
sufficient intelligence remains. Thus, it upheld the validity of the deed in favor of Belardo.

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 In Dr. Jose and Aida Yason vs. Faustino Arciaga, et.al., G.R. No. 145017,
January 28, 2005, it was ruled that mere weakness of mind alone, without
imposition of fraud, is not a ground for vacating a contract. Only if there is
unfairness in the transaction, such as gross inadequacy of consideration, that the
low degree of intellectual capacity of the party, may be taken into consideration
for the purpose of showing such fraud as will afford a ground for annulling a
contract. Hence, a person is not incapacitated to enter into a contract merely
because of advanced years or by reason of physical infirmities, unless such age
and infirmities impair his mental faculties to the extent that he is unable to
properly, intelligently and fairly understand the provisions of said contract. In this
case, the questioned deed of sale was executed by Claudia Arciaga, by affixing
her signature by thumbmark, and on the same day, she died. Thus, her heirs
contested the validity of the sale contending, among others, that Claudia was no
longer capable of giving her consent to the contract as she was already sick and
bedridden. Nonetheless, the SC upheld the validity of the conveyance.

Question: When is there fraud in contractual relations?

Answer: There is fraud when one party is induced by the other to enter into a
contract, through and solely because of the latter’s insidious words or
machinations. Simply stated, fraud must be the determining cause of the
contract, or must have caused the consent to be given.

The general rule is that he who alleges fraud or mistake in the transaction
must substantiate his allegation, as the presumption is that a person takes
ordinary care for his concerns and that private dealings have been entered into
fairly and regularly. One who alleges defect or lack of valid consent to a contract
by reason of fraud or undue influence must establish by full, clear and convincing
evidence such specific acts that vitiated a party’s consent, otherwise, the latter’s
presumed consent to the contract prevails. (Fontana Resort and Country Club,
Inc. and RN Development Corp. vs. Spouses Roy S. Tan and Susan C. Tan, G.R.
No. 154670, January 30, 2012).

Unenforceable Contracts

Question: What are those unenforceable contracts under the NCC?

Answer: The following contracts are unenforceable, unless they are ratified:
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 1. Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his
powers;
2. Those that do not comply with the Statute of Frauds as set forth in this
number. In the following cases, an agreement hereafter made shall be
unenforceable by action, unless the same or some note or memorandum
thereof, be in writing, and subscribed by the party charged, or by his
agent; evidence therefore, of the agreement cannot be received without
the writing, or a secondary evidence of its content;

a. An agreement that by its terms is not to be performed within a year

from the making thereof;
b. A special promise to answer for the debt, default, or miscarriage of
another;
c. An agreement made in consideration of marriage, other than a mutual
promise to marry;
d. An agreement for the sale of goods, chattels or things in action, at a
price not less than five hundred pesos, unless the buyer accept and
receive part of such goods and chattels, or the evidences, or some of
them of such things in action, or pay at the time some part of the
purchase money; but when a sale is made by auction and entry is made
by the auctioneer in his sales book, at the time of the sale, of the
amount and kind of property sold, terms of sale, price, names of the
purchasers and person on whose account the sale is made, it is a
sufficient memorandum;
e. An agreement for the leasing for a longer period than one (1) year, or
for the sale of real property or of an interest therein, and
f. A representation as to the credit of a third person.

3. Those where both parties are incapable of giving consent to a contract.

31:40- 40:32 -Unenforceable contracts

(Delete: 40:33- 41:23)

In the case of Iglesia Filipina Independiente vs. Heirs of Bernardino Taeza,

G.R. No. 179579, February 3, 2014, the SC held that when the Supreme Bishop

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executed the contract of sale of petitioner’s lot despite the opposition made by
the laymen’s committee, he acted beyond his powers, hence, the contract is
unenforceable as it was entered into in the name of another person by one who
has been given no authority or legal representation, or who has acted beyond his
power and it was not ratified.

Albano’s Lecture: CD No. 5- Side B

00:29- Start of Lecture

Statute of Frauds
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Unenforceable Contract (Continuation)

((Delete 35:17- 35:22)

Case: Lim Kitkai and Sons vs. Phil. Remnants Corp. and BPI, et. al.

It is worth mentioning some basic principles concerning the Statute of

Frauds as follows:

(1) The statute of frauds applies only to executory contracts (contracts where
no performance by any of the parties has yet been made), and NOT to
partially or consummated contracts.
(2) The statute of frauds cannot apply if the action is neither for damages
because of the violation of the agreement, nor for the specific
performance of said agreement.
(3) The statute of frauds is exclusive, specifically, it applies only to the
agreements or contracts enumerated therein.
(4) The defense of the statute of frauds may be waived.
(5) The statute of frauds is a personal defense, hence, it cannot be invoked by
third persons not a party to the contract.
(6) Contracts infringing the statute of frauds are not void, they are merely
unenforceable.
(7) The statute of frauds is a rule of exclusions, such that oral evidence might
be relevant to the agreements enumerated therein and might, therefore,

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 be admissible were it not for the fact that the law exclude said oral
evidence.
(8) The statute of frauds does not determine the credibility or weight of
evidence. It merely concerns itself with the admissibility thereof.
(9) The statute of frauds does not apply if it is claimed that the contract does
not express the true agreement of the parties. As long as the true
agreement of the parties is not covered by statute of frauds, it is provable
by oral evidence.
(10) The application of the statute of frauds presupposes the existence of
a perfected contract.

Case: Anthony Orduňa, et.al. vs. Eduardo J. Fuentebella, et.al., G.R. No.
176841, June 29, 2010.
(Statute of Frauds)

Facts: Armando Gabriel, Sr. sold subject property to Antonita Orduňa on installment basis but
no formal deed of sale was executed by the parties. Orduňa started paying the installment to
Gabriel, Sr. and after the latter’s demise, to Gabriel, Jr., who accepted the same.
Improvements were, thereafter, made by Orduňa on the subject lot. Without the knowledge
of Orduňa, Gabriel, Jr. sold the subject property to Bernard Banta. Banta, then, sold the same
lot to Cid, and the latter ultimately sold it to Eduardo Fuentebella. As the purported owner,
Fuentebella demanded Orduňa to vacate the subject property. To assert its proprietary rights
over the subject lot, Orduňa filed a complaint for annulment of sale against Gabriel, Jr., Banta,
Cid and Fuentebella, with prayer to be declared as exclusive owner thereof after payment of
the remaining balance. The trial court dismissed the complaint because the verbal sale
between Orduňa and Gabriel, Sr. was unenforceable under the Statute of Frauds. Is the ruling
of the trial court correct?

Answer: No. The Statute of Frauds under Article 1403(2) of the NCC applies only to executory
contracts, or those were no performance has yet been made. Stated differently, the Statute of
Frauds does not operate were the contract or agreement in question is completed, executed or
partially consummated. Indeed, under the Statute of Frauds, it provides that a contract for
the sale of a real property or of an interest therein shall be unenforceable unless the sale or
some note or memorandum thereof is in writing and subscribed by the party or his agent.
However, where the verbal contract of sale of realty has been partially executed through
partial payments of the agreed price made by one party duly received by the vendor, as in this
case, the contract is taken out of the scope of the Statute of Frauds.

A contract that infringes the Statute of Frauds is ratified by the acceptance of benefits
under the contract. Like in this case, partial payments by Orduňa was received by Gabriel, Sr.

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and after his demise, by Gabriel, Jr. Thus, Gabriel, Jr. nor the subsequent purchasers including
Fuentebella could validly invoked the Statute of Frauds to defeat Orduňa in establishing their
lawful right over the subject property. What Orduňa is required is to pay only the remaining
balance of the purchase price and that would complete the execution of the oral sale.

Void contracts

As I was saying, there are four (4) kinds of defective contracts, rescissible,
voidable, unenforceable and void. As a review, rescissible contract is valid until
rescinded, there is a sort of extrinsic defect consisting of an economic damage or
lesion. Voidable contract is valid until annulled, the defect is more or less
intrinsic, as in the case of vitiated consent. Unenforceable contract cannot be
enforced by court action unless it is ratified. In a way, it may be considered as a
validable transaction, it has no effect now but it may be effective upon
ratification. Upon the other hand, a voidable contract has the effect now but it
may be invalidated or rendered ineffective afterwards. Void contract is one that
has no effect at all, it cannot be ratified nor validated.

Question: What are the void or inexistent contract under the NCC?

Answer: Under Article 1409 of the NCC, the following contracts are inexistent
and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplates an impossible service;
(6) Those where the intention of the parties relative to the principal object of
the contrat cannot be ascertained;
(7) Those expressly prohibited or declared void by law.

Start of Lecture: 40:35- Void Contracts

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47:14- End of Lecture

Albano’s Lecture: CD #6- Side A

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Start of Lecture: 00:02- Void Contracts (continuation)
(Delete 16:35- 17:23)

Case: Joaquin Quimpo Sr. substituted by the Heirs of Joaquin Quimpo Sr. vs.
Consuelo Abad vda de Beltran, et.al. G.R. No. 160956, February 13, 2008
where the SC declared a Deed of Absolute Sale as void contract due to lack of
consideration.

Facts: This is a case between a grandchildren and great grandchildren whereby Joaquin,
Consuelo, Ireneo, Danilo, Marites, Anita and Helen inherited in 1948 several parcels of land
from their grandparents and orally partitioned it in 1966. They actually possessed their
respective assigned shares. In view of the failure of the parties to execute a deed of partition
due to the objection of Joaquin, an action for partition was filed against him in 1989. In this
case, Joaquin claimed exclusive ownership of these parcel having acquired the same by
purchase from her mother, Eustaquia, in 1946 evidenced by two (2) separate deeds of sale. He
also claimed continuous, peaceful and adverse possession of these lots since then and that the
occupation of plaintiffs is by his tolerance only. Is Joaquin correct?

Answer: No. The SC brushed aside the claim of exclusive ownership of Joaquin and declared
the subject lots as co-owned by plaintiffs and him. In its ruling, the SC held that a deed of sale
in which the stated consideration has not been, in fact, paid is a false or fictitious contract,
that it is void ab initio. It declared that a contract of purchase and sale is null and void and
produces no effect whatsoever where it appears that the same is without cause and
consideration which should have been the motive thereof, or the purchase price which appears
therein as paid but which in fact has never been paid by the purchaser to the vendor. Here,
Joaquin was found to have no financial capacity to buy these properties in 1946 as he was then
not gainfully employed and had no financial capacity to buy the subject properties.

Notably, in the case of Heirs of Policronio M. Ureta vs. Heirs of Liberato M.

Ureta, G.R. No. 165748 & 165930, September 14, 2011, the SC pronounced
that the most protuberant index of simulation of contract is the complete
absence of an attempt in any manner on the part of the ostensible buyer to assert
rights of ownership over the subject properties. The failure to take exclusive
possession of the subject properties, or, in the alternative, to collect rentals, is
contrary to the principle of ownership. Such failure is a clear badge of simulation
that renders the whole transaction void. This case is actually between first
cousins, who litigated six (6) parcels of land left by their grandfather. Policronio’s
heirs claimed that these properties were sold by their grandfather to their father
by way of sale, but the other set of heirs claimed that the sale was void being

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simulated and fictitious. Read the case and you will understand the principle laid
down by SC in ruling for the nullity of the questioned deeds.

Case: United Overseas Bank of the Phils. vs. HLURB and Eduplan, G.R. No.
182133, June 23, 2015.

Facts: Eduplan purchased a one (1) unit of the Maritime Towers developed by JOS Builders.
Upon full payment of the purchased price, Eduplan demanded for the transfer of title to its
name but JOS failed to deliver. Unknown to Eduplan, subject lot and the condomimium was
mortgaged by JOS to United Overseas and for failure to pay, the security was foreclosed.
Hence, Eduplan filed a suit for specific performance against JOS and United Overseas for the
delivery of title to it. It was found out that the mortgage was without the approval of HLURB in
violation of the Condominium Act. The lower court declared the mortgage invalid and a void
contract and mandated JOS and United Overseas to transfer title of the subject unit to Eduplan.
Is the lower court correct?

Answer: No, the declaration that the entire mortgage contract is erroneous because as far as
Enduplan is concerned, its interest is only a one (1) unit condominium and it will not nullify the
entire mortgage contract executed by JOS in favor of United Overseas.

Case: Joey R. Peňa vs. Jesus de los Santos and the Heirs of Rosita de los Santos
Flores, G.R. No. 202223, March 2, 2016

Facts: Jesus and Rosita were adjudged owners of 9,915 square meters of a parcel of land
located at Boracay Island, Malay, Aklan. Peňa, claiming as the transferee of the shares of
Jesus and Rosita, wanted to execute the decision by way demolition of structures erected
within said portion, claiming that he bought subject portion from one Atty. Romeo Robiso,
who in turn acquire subject portion from Jesus and Rosita. Atty. Robiso acquired the same as a
contingent professional fee paid by Jesus and Rosita as their counsel in the cases involving
subject parcel. The deeds of conveyance were executed after the judgment of the cases in the
lower court but during the pendency of the appeal. (1) Are these conveyances valid? (2) If
void, is there a necessity to file a case to declare such contract a nullity?

Answer: (1) No, it is not valid because the conveyances made by Jesus and Rosita in favor of
Atty. Robiso is null and void because it is a prohibited transaction under Article 1491(5) of the
NCC expressly prohibiting lawyers from acquiring property or rights that may be the object of
any litigation which they may take part by virtue of their profession. In fact, a complimentary
provision is also embodied in Rule 10 of the Canon of Professional Ethics where it states that a
lawyer should not purchase any interest in the subject matter of the litigation he is conducting.
The rationale advanced for the prohibition in Article 1491(5) is that public policy disallows
transaction in view of the fiduciary relationship involved, the relation of trust and confidence

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and the peculiar control exercised by these persons. It is founded on public policy because by
virtue of his office, an attorney may easily take advantage of the credulity and ignorance of his
client and unduly enrich himself at the expense of his client.

(2) There is no need to bring a separate action for the declaration of subject conveyances as
void. The need to bring a separate action for declaration of nullity applies only if the void
contract is no longer fully executory. If the void contract is still fully executory, no party need
an action to declares its nullity but if any party should bring an action to enforce it, the other
party can simply set up the nullity as a defense.

Lastly, in the case of Spouses Ireneo T. Fernando, et.al. vs. Marcelino T.

Fernando, G.R. No. 191889, January 31, 2011, it reiterated the rule that a
forged deed is a nullity; it passes no right; and it is held in trust. Thus, the heirs
of a decedent whose signature in the deed of extrajudicial settlement and sale
was forged can file an action to nullify such contract, because the deed is void,
for lack of consent, hence subject to attack anytime. It is recognized in our
jurisprudence that a forged deed is a nullity and conveys no title. An action to
declare the inexistence of a void contract does not prescribe.

Question: Discuss the principle of in pari delicto and give seven (7) instances in
the NCC corresponding to the exception to the principle.

Answer: When the defect of a void contract consists in the illegality of the cause
or object of the contract, and both the parties are at fault, the law refuses them
every remedy and leaves them were they are. Exceptions to this principle are the
following:

(a) payment of money or deliver of property for an illegal purpose, where the
party who paid or delivered repudiates the contract before the purpose has
been accomplished, or before any damage has been caused to a third
person (Art. 1414, NCC);
(b) payment of money or delivery of property by an incapacitated person (Art.
1415, NCC)
(c) agreement or contract which is not illegal per se but is merely prohibited
by law, and the prohibition is designed for the protection of the plaintiff
(Art. 1416, NCC)
(d) payment of any amount in excess of the maximum price of any article or
commodity fixed by law. In such case, the buyer may recover the excess.
(Art. 1417, NCC)

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 (e) a contract whereby a laborer undertakes to work longer than the
maximum number of hours fixed by law. In such case, the laborer may
demand for overtime pay (Art. 1418, NCC)
(f) a contract whereby a laborer accepts a wage lower than the minimum
wage fixed by law. In such case, the laborer may demand for the
deficiency (Art. 1419, NCC).

Case: Jose Menchavez, et.al. vs. Florentino Teves Jr., G.R. No. 153201, January
26, 2005.

Facts: Menchavez is an applicant of a fishpond lease agreement, and while the same was
pending approval, it leased a portion thereof to Teves and the latter developed the area
incurring substantial expenses therefor. Unknown to Teves, Menchaves was a judgment
debtor whereby he lost the right to apply for the subject fishpond to another person. Thus, the
area developed by Teves was taken by the sheriff and awarded to the prevailing party. Teves
filed a damage suit against Menchavez. Will the suit prosper?

Answer: No, because the contract of lease is void in violation of PD 704 and the Regalian
doctrine. Menchavez, et.al. were not owners of the fishpond, hence, they cannot leased the
same to other persons. The doctrine of in pari delicto was applied, thus, were both parties are
at fault, the court will not protect any of them.

Question: A had a contract with DPWH. He subcontracted with B without

DPWH’s approval, a requirement under the law. A then reneged on his
agreement with B and refused to pay him as agreed, contending that there
agreement was an illegal contract and that B could not collect under the principle
of pari delicto. Is B barred from recovering?

Answer: No, B can recover despite the fact that the subcontract is void for being
contrary to law. According to Article 1412, the guilty parties to an illegal contract
cannot recover because they are in pari delicto. Nonetheless, the application of
the doctrine of in pari delicto is not always rigid. An accepted exception arises
when its application contravenes public policy. The prevention of unjust
enrichment is a recognized public policy of the State. A would be unjustly
enriched at B’s expense if the latter was to be barred from recovering because of
the rigid application of the doctrine of in pari delicto. The prevention of unjust
enrichment called for the exception to apply in B’s favor.

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Questions for Lightning Quiz:

(1) Distinguish the three (3) kinds of estoppel. (5 pts.)

(2) A contract to sell is the same as a conditional contract of sale. Do you
agree? (5 pts.)

Natural Obligations (Start of Lecture- 18:55)

Question: Distinguish natural obligations and civil obligations.

Answer: Civil obligations give a right of action to compel their performance .

Natural obligations, not being based on positive law but on equity or 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 therof. (Art. 1423, NCC).

A good example of a natural obligation is one that is regulated by Article

1424 of the NCC, whereby when a right to sue upon a civil obligation has lapsed
by extinctive prescription, the obligor who voluntarily performs the contract
cannot recover what he has delivered or the value of the service he has rendered.

2015 Bar Examination Question No. XV:

Sara borrowed Php50T from Julia and orally promised to pay it within six
months. When Sara tried to pay her debt on the 8th month, Julia demanded the
payment of interest of 12% per annum because of Sara’s delay in payment. Sara
paid her debt and the interest claimed by Julia. After rethinking, Sara demanded
back from Julia the amount she had paid as interest. Julia claims she has no
obligation to return the interest paid by Sara because it was a natural obligation
which Sara voluntarily performed and can no longer recover. Do you agree?
Explain. (4%)

Answer: No, I do not agree with Julia. For a creditor to be entitled to

compensatory interest, the debtor must be in delay. As a rule, in order for delay
to exist, demand must have been made. In this case, there was no demand
made upon the expiration of the 6-month period, thus, cannot be considred in
delay, and is not liable to pay compensatory interest. There being no obligation

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to pay compensatory interest, Julia must return the interest mistakenly paid since
she was not entitled thereto, and delivery was made merely through mistake. If
something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return arises. (Art. 2154, NCC).

Bar Problem

A borrowed from B Php1,000 which amount B failed to collect. After the

debt had prescribed, A voluntarily paid B who accepted the payment. After a few
months, A demanded the return of the Php1,000 on the ground that there was a
wrong payment, the debt having already prescribed. B refused to return the
amount paid. May A succeed in collecting if he sues B in court? Reason out your
answer.

Answer: A will not succeed in collecting the Php1,000 if he sues B in court. This is
expressly covered by Article 1424 of the NCC which declares that when a right to
sue upon a civil obligation has lapsed by extinctive prescription, the obligor who
voluntarily performs the contract cannot recover what he has delivered or the
value of the service rendered.

Because of extinctive prescription, the obligation of A to pay his debt to B

became a natural obligation. While it is true that a natural obligation cannot be
enforced by court action, nevertheless, after voluntary fulfillment by the obligor,
under the law, the oblige is authorized to retain what has been paid by reason
thereof. (Art. 1423, NCC).

Estoppel (Start of Lecture- 25:13)

(Delete 25:25- 26:13)

There are three (3) kinds of estoppels, to wit: (1) estoppel in pais; (2)
estoppel by deed; and (3) estoppel by laches.

Under the first kind, a person is considered in estoppel if by his conduct,

representations, admissions or silence when he ought to speak out, whether
intentionally or through culpable negligence, causes another to believe certain
facts to exist and such other rightfully relies and acts on such belief, as a

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consequence of which he would be prejudiced if the former is permitted to deny
the existence of such facts.

Case: Manila International Airport Authority vs. Ding Velayo Sports Center, Inc.
G.R. No. 161718, December 14, 2011.

Facts: Velayo leased a portion of a vacant lot owned by CAA (now MIAA) for 25 years which
contract of lease provide that Velayo will introduce improvement thereon for the development
of the vacant area, and that the contract may be renewed, at the option of the lessee, for
another 25 years. While the expiration of the lease was forthcoming, Velayo notified MIAA of
its intention to exercise its option for renewal for another 25 years, but such offer was turned
down by MIAA contending that Velayo violated the terms and conditions of the lease, and
because of its refusal to pay the increased rental as mandated by several MIAA isuances.
Hence, Velayo did no longer insisted on the renewal, instead, it notified MIAA of the eventual
transfer of the property to them. Fifteen (15) days later, upon the assumption of its new
President, it rebuked the act of Velayo for being without authority from the BOD, and insisted
for the renewal of the lease for another 25 years in conformity with their lease contract. Such,
however, was refused by MIAA and the latter contended that the corporation is already
estopped in insisting on the renewal of the lease when, in fact, their previous President has
acquiesced already to the turn-over of the property to MIAA. Was there estoppel?

Answer: There was no estoppel because there was no misrepresentation on the part of
Velayo’s which misled CAA (or MIAA) nor the change of Velayo’s proposition which resulted in
the prejudice or injury of the right of MIAA.

Under estoppel by deed, a party to a deed and his privies are precluded
from denying any material fact stated in the deed as against the other party and
his privies.

Case: Jose Go, Gotesco Properties, Inc. et.al. vs. Bangko Sentral ng Pilipinas,
G.R. No. 202262, June 8, 2015.

Facts: In order to settle the obligations and liabilities of Orient Commercial Banking
Corporation (OCBC) with BSP, Go and Evercrest Golf and Country Club, being the majority
stockholder, entered into a compromise agreement. In the said Compromise Agreement, Go,
and Evercrest , agreed that their titled properties including the improvements thereon be used
as security for the faithful compliance of the terms of their agreement. Due to default in the
scheduled amortization, BSP moved for the writ of execution against Evercrest properties,
which the trial court granted. Eventually, these properties were levied and ultimately sold by
the sheriff. BSP was the highest bidder and titles were transferred to it. Go and Evercrest
contested and asked for the nullification of the execution sale. The trial court brushed aside

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Evercrest’ argument on the ground of estoppel by deed due to the fact it is bound upon the
terms of their Compromise Agreement. Is the ruling of the court correct?

Answer: Yes, Evercrest are estopped by deed by virtue of the execution of the compromise
agreement. They were the ones who had offered the properties of Ever Crest to Bangko
Sentral, and who had also assured that all the legalities and formalities for that purpose had
been obtained. They should not now be allowed to escape or to evade their responsibilities
under the compromise agreement just to prevent the levy on execution of Ever Crest's
properties.

While in estoppel by laches, an equitable estoppel, a person who has failed

or neglected to assert a rightfor an unreasonable and unexplained length of time
is presumed to have abandoned or otherwise declined to assert such right and
cannot later on seek to enforce the same, to the prejudice of the other party who
has no notice or knowledge that the former would assert such rights and whose
condition has so changed that the latter cannot, without injury or prejudice, be
restored to his former state.

Question: What are the essential elements of laches?

Answer: The four (4) essential elements of laches are:

(1) Conduct on the part of the defendant, or one under whom he claims,
giving rise to a situation of which the complaint seeks a remedy;
(2) Delay in asserting the complainant’s rights, the complainant having had
knowledge or notice of defendant’s conduct and having been afforded an
opportunity to institute a suit;
(3) Lack of knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his suit; and
(4) In jury or prejudice to the defendant in the event relief is accorded to the
complainant, or the suit is not held to be barred.

Bar Problem

In 1928, A, a non-Christian sold a parcel of land to B, father of defendant

C, without executive approval as required by Section 145 of the Administrative
Code. Despite the invalidity of the sale, A allowed B to enter, possess, and enjoy
the land in question without protest from 1928 to 1943 when B died. A later died
too. D, heirs of A, also remained inactive, taking no step to reinvindicate the

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property from 1944 to 1962, when the present suit was commenced in court
against C. Will the suit prosper? Reason.

Answer: The suit will not prosper. Even granting D’ s action has not yet
prescribed as against C’s title, their passivity and inaction for more than 34 years
justifies the defendant in setting up the defense of laches. All of the four (4)
elements are present. As a result, the action of plaintiffs must be considered
barred.

Trust
40:33- Start of Lecture
46:42- End.

Albano’s Lecture: CD No. 6- Side B

00:27- Start of Lecture (Trust)
Delete: (9:28- 10:42)

Concept of Trust

Trust is the right to the beneficial enjoyment of property, the legal title to
which is vested in another. It is a fiduciary relationship that obliges the trustee to
deal with the property for the benefit of the beneficiary. Trust relations between
parties may either be express or implied. An express trust is created by the
intention of the trustor, not necessarily through written words, but by direct and
positive acts of the parties. On the other hand, implied trust comes into being by
operation of law.

In the case of Philippine National Bank vs. Merelo B. Aznar, et.al., G.R.
No. 171805, May 30, 2011, the SC held that since express trusts are
intentionally created by the direct and positive acts of the trustor, it must be
scrutinized with reasonable certainty and cannot be inferred from loose and
vague declarations or from ambiguous circumstances susceptible of other
interpretations.

Facts: In 1958, RISCO ceased operation due to business reverses. In their desire to rehabilitate
RISCO, Aznar and others contributed a total amount of P212,720.00 which was used in the
purchase of the three (3) parcels of land. Titles were issued in the name of RISCO, however,
Aznar and other contributors were annotated as lien on these titles. Thereafter, various

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subsequent annotations were made on the same titles, including Writ of Execution in favor of
PNB. As a result, a Certificate of Sale was issued in favor of PNB, as the highest bidder of the
three (3) parcels of land. A final Deed of Sale was issued and titles were transferred to PNB.

Thus, Aznar filed a complaint seeking the quieting of their supposed title to the subject
properties, insisting that their lien over these properties is superior than that of PNB. It argued
that these properties were placed in trust in RISCO’s name with them as the beneficiaries
evidenced by a Minutes of the BOD Meeting recognizing their interest on these properties.

PNB countered that plaintiffs have no right of action for quieting of title since the order
of the court transferring the titles to PNB had already become final and executor, and their
validity cannot be attacked except in a direct proceeding for their annulment. PNB further
asserted that plaintiffs, as mere stockholders of RISCO do not have any legal or equitable right
over the properties of the corporation, thus, cannot maintain a quieting of title suit. If you
are the judge, will you sustain Aznar’s contention that a express trust was created in their
favor, claiming as the true owners of these properties?

Answer: No. The SC held that since express trusts are intentionally created by the direct and
positive acts of the trustor, it must be scrutinized with reasonable certainty and cannot be
inferred from loose and vague declarations or from ambiguous circumstances susceptible of
other interpretations. No such reasonable certitude in the creation of an express trust obtains
in the case at bar. In fact, a careful scrutiny of the plain and ordinary meaning of the terms used
in the Minutes does not offer any indication that the parties thereto intended that Aznar, et al.,
become beneficiaries under an express trust and that RISCO serve as trustor. Hence, Aznar’s
contention is untenable.

In one Bar examination, a question was asked, explain the concept of “trust
de son tort” and give an example. (5%). Are you ready to answer this question?

Answer: “Trust de son tort” is actually a constructive trust which is a trust not
created by any word or phrase, either expressly or impliedly, evincing a direct
intention to create a trust, but is one that arises in order to satisfy the demands
of justice. It does not come about by agreement or intention but mainly by
operation of law and construed as a trust against one who, by fraud, duress or
abuse of confidence, obtains or holds the legal right to property which he ought
not, in equity and good conscience, to hold. Examples of constructive trust are
Arts. 1456, 1451, 1454 and 1455 of the New Civil Code.

2015 Bar Examination Question No. XIX

[Type text]
 Mr. A, a businessman, put several real estate properties under the name
of his eldest son X because at that time, X was the only one of legal age among
his four children. He told his son he was to hold those assets for his siblings until
they become adults themselves. X then got married. After 5 years, Mr. A asked X
to transfer the titles over three properties to his three siblings, leaving two
properties for himself. To A’s surprise, X said he can no longer be made to
transfer the properties to his siblings because more than 5 years have passed
since the itles were registered in his name. Do you agree? Explain. (4%)

Answer: No, I do not agree with X. This is a clear case of an implied trust
provided in Article 1453 of the NCC which states that “when property is conveyed
to a person in reliance upon his declared intention to hold it for, or transfer it to
another or the grantor, there is an implied trust in favor of the person for whose
benefit it is contemplated”. In this case, A is the trustor, X is the trustee, and
the three other children of A are the beneficiaries. A and /or his three children
may file an action to compel X to transfer title in favor his three siblings within ten
(10) years from the time the cause of action accrues upon an obligation created
by law- when the children attains the age of majority.

Law on Sales

Question: Define a contract of sale.

Answer: By the contract of sale, one of the contracting parties obligates himself
to transfer the ownership of and to deliver a determinate thing, and the other to
pay therefor a price certain in money or its equivalent. A contract of sale may be
absolute or conditional. (Art. 1458, NCC).

Question: What are the elements of a contract of sale?

Answer: The elements of a contract of sale are:

(1) Essential elements (those without which there can be no valid sale)
a. Consent or meeting of the minds;
b. Determinate subject matter;
c. Price certain in money or its equivalent.

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 (2) Natural elements (those which are inherent in the contract, and which in
the absence of any contrary provision, are deemed to exist in a contract).
a. Warranty against eviction;
b. Warranty against hidden defects.

(3) Accidental elements (those which may be present or absent in the

stipulations, but has no effect to its validity).
a. Place or time of payment;
b. Other conditions imposed.

Sales
11:50- Start of Lecture
(Delete 23:46- 23:49)
(Delete 24:53- 25:03)
(Delete 28:20- 30:47)
(Delete 39:03- 39:06)
End of Lecture- (40:53)

Distinction between Sale and an Agency to Sell

(1) In sale, the buyer pays the price; the agent delivers the price which, in
turn, he got from his buyer;
(2) In sale, the buyer after delivery becomes the owner; the agent who is
supposed to sell does not become the owner, even if the property has
been delivered to him;
(3) In sale, the seller warrants; the agent who sells assumes no personal
liability as long as he acts within his authority and in the name of the
principal.

Distinction between Contract of Sale and Contract to Sell

A contract to sell may not be considered as a contract of sale because the

first essential element, that is consent, is lacking. In a contract to sell, the
prospective seller explicitly reserves the transfer of title to the prospective buyer,
meaning, the prospective seller does not as yet agree or consent to transfer
ownership of the property subject of the contract to sell until the happening of an
event, the full payment of the purchase price. What the seller agrees or obliges

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himself to do is to fulfill his promise to sell the subject property when the entire
amount of the purchase price is delivered to him. In other words, the full
payment of the purchase price partakes of a suspensive condition, the non-
fulfillment of which prevents the obligation to sell fom arising, thus, ownership is
retained by the prospective seller without further remedies by the prospective
buyer. Thus, recission of the the contract of sale is not the proper remedy
because there agreement, being a contract to sell, no right to be rescinded has
yet acrrue due to non-payment of the agreed purchase price. (Mila A. Reyes vs.
Victoria T. Tuparan, G.R. No. 188064, June 1, 2011).

2012 Bar Examination Question No. X(a)

A contract to sell is the same as a conditional contract of sale. Do you

agree? (5%)

Answer: (Read the case of Nabus vs. Pacson below)

Case: Julie Nabus, et.al. vs. Sps. Pacson and Julia Pacson, G.R. No. 161318,
November 25, 2009 where the SC differentiated a conditional sale from contract
to sell.

Facts: Spouses Nabus are registered owners of a 1,665 square meter lot which they mortgaged
to PNB. Subsequently, in 1977, they executed a Deed of Conditional Sale in favor of Sps.
Pacson conveying to the latter a 1,000 square meter portion of the said lot conditioned that
Pacson will settle their obligation with PNB and the remaining balance to be paid in installment
at the rate of Php2,000 per month. In the same instrument, the parties agreed that as soon as
the full amount be paid by Pacson, the corresponding transfer documents shall be executed by
Nabus for the portion sold.

Meantime, upon the death of the husband, Julie and her minor daughter executed a
Deed of Extra-judicial Partition affecting subject lot and a new title was issued to them. In
January 1984, Nabus went to Pacson and demanded full payment of the purchase price but the
latter was hesitant to pay unless Nabus will sign a deed of absolute sale. Later, Pacson came to
know that the whole lot was sold by Nabus to Tolero, and the latter caused the issuance of
new title to her name. Pacson filed a complaint for annulment of title, deed of sale and
damages. The lower court rendered judgment in favor of Pacson and directed Tolero to
reconvey the 1,000 square meter portion to the former upon the finding that the conditional
sale was valid and binding between Nabus and Pacson. Is the trial court’s ruling correct?

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Answer: No, the contract entered into by Nabus and Pacson, though denominated as Deed of
Conditional Sale is not a contract of sale, but a contract to sell. In a contract to sell, the
prospective seller reserves the transfer of title to the prospective buyer until the happening of
the suspensive condition, that is, the full payment of the purchase price. Here, the
prospective seller does not as yet agree or consent to the transfer of ownership of the property
subject of the contract to sell until full payment of the purchase price, though delivery has
already been made. What the seller agrees or obliges himself to do is to fulfill his promise to
sell the subject property when the entire amount of the purchase price is delivered to him.
There is no consent or meeting of the mind to transfer ownership in exchange for the price.
Unlike in conditional sale where consent to transfer ownership is present, subject only to a
suspensive condition for the full payment of the purchase price. If the condition is fulfilled, the
transfer will become absolute by operation of law, but if not fulfilled, the perfection of
contract of sale is completely abated. Thus, for failure of Pacson to pay in full the purchase
price, Nabus can validly sell the said lot to Tolero, being still the owner of the property.

2014 Bar Examination Question No. IV

Nante, a registered owner of a parcel of land in Quezon City, sold the

property to Monica under a deed of sale which reads as follows:

“That for and in consideration of the sum of Php500,000.00, value to be paid and
delivered to me, and receipt of which will be acknowledge by me to the full satisfaction of
Monica, referred to as vendee, I hereby sell, transfer, cede, convey, and assign, as by these
presents, I do have sold, transferred, ceded, conveyed and assigned a parcel of land covered
by TCT No. 2468 in favor of the vendee.”

After delivery of the initial payment of Php100,000.00, Monica immediately

took possession of the property. Five (5) months after, Monica failed to pay the
remaining balance of the purchase price. Nante filed an action for the recovery of
possession of the property. Nante alleged that the agreement was one to sell,
which was not consummated as the full contract price was not paid.

Is the contention of Nante tenable? Why? (4%)

Answer: No, the contention of Nante that it is one to sell is untenable. There is a
perfected contract of sale in this case when Nante agreed to sell and Monica
agreed to buy the subject parcel of land at its agreed price. Under Article 1475 of
the NCC, there is a perfected contract of sale at the moment there is a meeting of
the minds upon the thing which is the object of the contract and upon the price.
Ownership was transferred upon delivery or upon the taking of possession by

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Monica, the buyer. The non-payment of the full price affects the consummation
of the contract of sale and not its perfection.

In the Heirs of Paulino Atienza, et.al. vs. Domingo P. Espidol, G.R. No,
180665, August 11, 2010, the SC had the occasion to differentiate again
between a contract of sale and a contract to sell. In a contract of sale, the title to
the property passes to the buyer upon the delivery of the thing sold. In a contract
to sell, on the other hand, the ownership is, by agreement, retained by the
seller and is not pass to the buyer until full payment of the purchase price. In a
contract of sale, the buyer’s non-payment of the price is a negative resolutory
condition; in a contract to sell, the buyer’s full payment of the price is a positive
suspensive codition to the coming into effect of the agreement. In the first case,
the seller has lost and cannot recover the ownership of the property unless he
takes action to set aside the contract of sale.

Therefore, the agreement between the parties is not contract to sell

because nothing in the facts shows that the paries agreed that ownership is
retained by Nante, (seller) and is not to pass to Monica (buyer) until full payment
of the purchase price.

Corollarily, in the case of Delfin Tan vs. Erlinda C. Benolirao, et.al. G.R.
No. 153820, October 16, 2009 604 SCRA 36, and Spouses Jose C. Roque and
Beatriz de la Cruz-Roque vs. Pamela P. Aguado, et.al., G.R. No. 193787, April 7,
2014, it was held that if the contract states that as soon as the total amount of
purchase price of the property has been paid, an absolute deed of sale shall be
executed accordingly, it is actually in the nature of a contract to sell and not one
of sale. Or, where the seller promises to execute a deed of absolute sale upon
completion by the buyer of the payment of purchase price, the contract is only a
contract to sell even if their agreement is denominated as a Deed of Conditional
Sale. This treatment stems from legal characterization of a contract to sell, that
is, a bilateral contract whereby the proscpective seller, while expressly reserving
the ownership of the subject property exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, such as, the full payment of the
purchase price. In a contract to sell, ownership is retained by the vendor and is
not pass to the vendee until full payment of the purchase price.

2016 Bar Examination Question No. XV

[Type text]
 Peter and Paul entered into a Contract to Sell whereby Peter, the lot
owner, agreed to sell to Paul his lot on November 6, 2016 fo the price of Php1M
to be paid at the residence of Peter in Makati City at 1:00PM. If the full price is
paid in cash at the specified time and place, then Peter will execute a Deed of
Absolute Sale and deliver the title to Paul.

On November 6, 2016, Paul did not show up and was not heard of from
that date on. In view of the non-performance by Paul of his obligation, Peter
sent to Paul that he is expressly and extra-judicially declaring the contract to Sell
rescinded and of no legal and binding effect. Peter further stated that failure on
the part of Paul to contest the rescission within thirty (30) days from receipt of
said letter shall mean that the latter agreed to the rescission.

Paul did not reply to this letter for five (5) years. Thus, Peter decided to sell
his lot to Henry in 2021. After hearing that Henry bought the lot, Paul now
questions the sale of the lot to Henry and files a complaint for nullification of the
sale.

Question: Is the exercise by Peter of his power to rescind extra-judicially the

Contract to Sell the proper and legal way of rescinding said contract? Explain.
(2.5%)

Answer: No. In a Contract to Sell, the moment the prospective buyer failed to
comply with his obligation to pay the price in full, the contract is automatically
withdrawn by operation of law. It is because, in a Contract to Sell, it is mere
promise on the part of the prospective seller to sell and transfer ownership and
title of subject property the moment the prospective buyer pay the price agreed
upon in full.

Question: In case Paul made a downpayment pursuant to a stipulation in the

Contract to Sell, what is the legal remedy of Peter? (2.5%)

Answer: Even if Paul made a downpayment, the contract can still be withdrawn
by Peter for failure of the former to fulfill his obligation under the contract.

Albano’s Lecture: CD No.8- Side B

[Type text]
(Start 03:26) -Gross inadequacy of the price: Effect

(03:42) -Perfection of contract of sale

Question: How is a contract of sale perfected?

Answer: It depends. Being a consensual contract, meeting of the minds of the

parties arise in the following instances:

(a) Where parties are face to face, it is perfected when the offer is accepted
without conditions and without qualifications;
(b) Where the contract is thru a correspondence (or thru fax or emails), there
is perfection when the offeror receives or has knowledge of the acceptance
of the offeree;
(c) Where a sale is made subject to a suspensive condition, perfection is had
from the moment the condition is fulfilled;
(d) In a sale by auction, it is perfected when the auctioneer announces its
perfection by the fall of the hammer, by other customary manner.

2015 Bar Examination Question No. VII

Mr. and Mrs. X migrated to the US with all their children. As they had no
intention of coming back, they offered teir house and lot for sale to their
neighbors, Mr. and Mrs. A (the buyers) who agreed to buy the property for
Php8M. Because Mr. and Mrs. Needed to obtain a loan from a bank first, and
since the sellers were in a hurry to migrate, the latter told the buyers that they
could occupy the house, renovate it as it was already in a state of disrepair, and
pay only when their loan is approved and released. While waiting for the loan
approval, the buyers spent Php1M in repairing the house. A month later, a
person carrying an authenticated special power of attorney from the sellers
demanding that the buyers either immediately pay for the property in full now or
vacate it and pay damages for having made improvements on the property
without a sale having been perfected.

(a) What are the buyer’s options or legal rights with respect to the expenses
they incurred in improving the property under the circumstances? (3%)

[Type text]
Answer: (a) The sale was perfected and Spouses A acquired ownership over the
house and lot upon delivery. Payment of the price was subject to an indefinite
period, that is, after the approval of the bank loan. As owners, they have the
right to make improvements on the said property, and to retain the same. Even
assuming for the sake of argument that the sale was not perfected and Spouses A
had not acquired ownership over the house and lot, they may be considered
builders in good faith since they entered into the property believing in good faith
that they were the owners of the property in question. As builders in good faith,
they are entitled to reimbursement therefor. (Arts. 448 and 546, NCC). The
improvements in question are necessary and useful since the house was already
in a state of disrepair.

(b) Can the buyers be made to immediately vacate on the ground that the sale
was not perfected? Explain briefly. (3%)

Answer: No, the buyers may not be made to vacate the property. A contract of
sale is a consensual contract which is perfected at the moment there is meeting
of the minds upon the thing which is the object of the contract and upon the
price. (Art. 1475, NCC). In this case, the sale was already perfected since there
was already meeting of the minds as to the object of the sale, which is the house
and lot, and as to the price, which is Php8M. The fact that there was no payment
yet is immaterial since it is not a requisite for the perfection of the contract.

Even assuming that the sale was rescinded, the buyers may still not be made
to vacate the property. Since the buyers made necessary and useful
improvements upon the property, they have the right to retain the property in
question until the full reimbursement of such expenses. (Arts. 448 and 546,
NCC).

Question: What is the status of the sale perfected at the time the seller was not
the owner of the subject matter thereof?

Answer: The contract is valid. A perfected contract of sale cannot be challenged

on the ground of the seller’s non-ownership of the thing sold at the time of the
perfection of the contract. It is at delivery that the law requires the seller to have

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right to transfer ownership of the thing sold. Once the seller acquired ownership
of the thing sold, title passes to the buyer by operation of law.

Question: Distinguish emptio rei speratae and emptio spei.

Answer: Emptio rei speratae (sale of future goods) is the sale of a thing with
potential existence subject to a suspensive condition that the thing will come into
existence. If the subject matter does not come into existence, the contract is
deemed extinguished as soon as the time expires or if it has become indubitable
that the event will not take place. Emptio spei (sale of contingent goods) is a sale
of mere hope or expectancy. Hence, it does not matter whether the expected
thing materialized or not, what is important is that the hope itself validly existed
like the sale of valid sweepstakes ticket. Whether the ticket wins or not, the sale
itself is valid.

Question: What is an “option contract”?

Answer: An option is a contract by which the owner of the property agrees with
another person that the latter shall have the right to buy the former’s property at
a fixed price within a certain time. It is a condition offered or contract by which
the owner stipulates with another that the latter shall have the right to buy the
property at a fixed price within a certain time, or under, or in compliance with
certain terms and conditions; or which gives to the owner of the property the
right to sell or demand a sale. An option is not of itself a purchase, but merely
secures the privilege to buy. It is not a sale of property but a sale of the right to
purchase.

Question: State the rules in “Option Contracts”.

Answer: The rules are as follows:

(1) If the period is not supportedby a separate consideration, the offeror is

still free and has the right to withdraw the offer before its acceptance, or,
if an acceptance has been made, before the offeror’s coming to know of
such fact, by communicating that withdrawal to the offeree;

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 (2) The right to withdraw, however, must not be exercised whimsically or
arbitrarily, otherwise, it could give rise to a damage claim under Article 19
of the NCC. (Abuse of rights)
(3) If the period has a separate consideration, a contract of option is deemed
perfected, and it would be a breach of contract to withdraw the offer
during the agreed period.
(4) The option is an independent contract in itself, and it is to be distinguished
from the proposed sales contract. If the optioner-offeror withdraws the
offer before its acceptance by the optionee-offeree, the latter may not sue
for specific performace on the proposed contract since it has not been
perfected; however, the optioner-offeror is liable for damages for breach
of the option;
(5) In these cases, if the consideration is intended to be part of the
consideration for the main contract with a right of withdrawal on the part
of the optionee, the main contract could be deemed perfected; a similar
instance would be an “earnest money” in sale that can evidence its
perfection.

Question: What is an “earnest money”?

Answer: It is a consideration given initially to the seller to ensure that the latter
will proceed with the sale until the expiration of the term agreed upon and form
part of the purchase price.

In the case of Heirs of Cayetano and Consuelo Pangan vs. Sps. Rodrigo and
Priscilla Perreras, G.R. No. 157374, August 27, 2009, it was held that in the law
on sales, specifically Article 1482 of the NCC, it provides that “whenever earnest
money is given in a contract of sale, it shall be considered as part of the price and
an eloquent proof of the perfection of the contract.” Though this presumption is
not conclusive because the parties may treat the earnest money differently, and
such is not obtaining in the present case. Nonetheless, the SC ruled that where
the money initially paid is given to guarantee that the buyer would not back out
from the sale, considering that the parties to the sale have yet to arrive at a
definite agreement as to its terms- that is a situation where the contract has not
yet been perfected. Unfortunately, Consuelo was no longer allowed to back out
from selling her conjugal share because there was already a perfected contract of
sale between them, proof of which was her receipt of the “earnest money” of

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Php20,000.00 from Spouses Perreras. Her refusal, therefore, to received the
subsequent installment payments is unwarranted.

At this juncture, consider Republic Act No. 6552 otherwise referred to as

the “Realty Installment Buyer Protection Act” popularly known as “Maceda Law”.
Section 3 of RA 6552 is comprehensive enoughto include both contracts of sale
and contracts to sell provided that the terms on the payment of the price require
at least two (2) installments.

Section 4 thereof is the provision applicable to buyers who have paid less
than two (2) years worth of installments. The provision provides for three (3)
requisites before the seller may actually cancel the subject contract:

First, the seller shall give the buyer a 60-day grace period to be reckoned
from the date the installment became due;

Second, the seller must give the buyer a notice of cancellation/demand for
recission by notarial act if the buyer fails to pay the installments due at the
expiration of the grace period;

Third, the seller may actually cancel the contract only after thirty (30) days
from the buyer’s receipt of the said notice of cancellation/demand for recission
by notarial act. (Optimum Development Bank vs. Spouses Jovellanos, G.R. No.
189145, December 4, 2013)

Case: Bonifacio Danan vs. Spouses Gregorio Serrano and Adelaida Reyes, G.R.
No. 195072, August 1, 2016.

Facts: Gregorio Serrano and his wife are the owners of a titled parcel of land in Lubao,
Pampanga. In 1950’s, when the property was still co-owned by Gregorio and his siblings,
Gregorio's sisters, Marciana and Felicidad, gave Bonifacio Danan and a certain Artemio Vitug
permission to possess 400 square meters each in subject lot and to build their homes thereon
in exchange for one cavan of palay every year. Thereafter, in separate documents denominated
as "Agreement in Receipt Form" dated June 27, 1976, Gregorio sold to Bonifacio and Artemio
their respective 400-square-meter portions of the property, as follows:

RECEIVED the amount of Two Thousand (P2,000.00) Pesos, Philippine Currency, as partial payment of the
lot I am selling to x x x of Sta. Cruz, Lubao, Pampanga, specifically the portion where his house is

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presently built, consisting of FOUR HUNDRED (400) SQUARE METERS, x x x x. The full consideration of
this contract is P6,000.00, subject to the following conditions:

(1) The amount of P2,000.00 should be paid by x x x to the undersigned vendor upon the signing of this
contract; (2) The amount of P2,000.00 should be paid to the vendor at his residence at Sta. Cruz, Lubao,
Pampanga, on or before June 30, 1977; (3) The last instalment of P2,000.00 should be paid to the
vendor at his abovementioned residence on or before June 30, 1978.
(4) That on July 2, 1976, Mr. Gregorio Serrano, the herein vendor will execute a document (Deed of
Conditional Sale) incorporating the herein stipulations.

It is further agreed that in June 1978, upon the completion of the full payment of the agreed price, the
herein vendor will deliver to the vendee a title corresponding to the lot or portion sold.

xxxx

While Bonifacio and Artemio paid the P2,000.00 upon the signing of the Agreement, they
were both unable to pay the balance of the purchase price when they fell due. Nevertheless,
they remained in possession of their respective lots. In 1998, Gregorio thus filed an ejectment
suit, but was dismissed by the lower court.

On the same year, Bonifacio and Artemio filed a suit for specific performance allegging
that they purchased their respective portions of land via the Agreement in Receipt Form they
executed. While they admitted to their failure to pay the remaining balance of the purchase
price, they claimed that such was due to the continuous absence of the Spouses Serrano. Thus,
Bonifacio and Artemio prayed for Spouses Serrano to sign, execute, and deliver the proper deed
of sale, and the corresponding titles over the portions of land in their favor.

In their Answer, Gregorio asserted that the Agreement in Receipt Form are mere
contracts to sell, of which failure by the vendees to fully pay the price agreed thereon prevents
the transfer of ownership from the vendor to the vendees. Additonally, Spouses Serrano raised
the defense of prescription, alleging that any right of action, if any, arising from their
agreement dated June 27, 1976, had long prescribed when Bonifacio’s complaint was filed in
1998. If you are the judge, which contention will you sustain, Gregorio or the Serranos?

Answer: (1) I will sustain Serrano’s argument that the Agreement in Receipt Form is a contract
to sell and not a contract of sale. As expressly stipulated therein, the parties "agreed that in
June 1978, upon the completion of the full payment of the agreed price, the herein vendor will
deliver to the vendee a title corresponding to the lot or portion sold." Clearly, the title to the
property was to remain with the Spouses Serrano, to pass only to Bonifacio until his full
payment of the purchase price. In a contract of sale, the title to the property passes to the
vendee upon the delivery of the thing sold whereas in a contract to sell, the ownership is, by
agreement, retained by the vendor and is not to pass to the vendee until full payment of the
purchase price. In a contract of sale, the vendee's non-payment of the price is a negative
resolutory condition, while in a contract to sell, the vendee's full payment of the price is a

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positive suspensive condition to the coming into effect of the agreement. In the first case, the
vendor has lost and cannot recover the ownership of the property unless he takes action to set
aside the contract of sale. In the second case, the title simply remains in the vendor if the
vendee does not comply with the condition precedent of making payment at the time specified
in the contract.Verily, in a contract to sell, the prospective vendor binds himself to sell the
property subject of the agreement exclusively to the prospective vendee upon fulfilment of the
condition agreed upon which is the full payment of the purchase price but reserving to himself
the ownership of the subject property despite delivery thereof to the prospective buyer.

(2) Under this set of facts, will the provision of the RA No. 6552 apply?

Answer: Yes. In view of the nature of their agreement, a contract to sell real property on
installment basis, the provisions of RA No. 6552 must be taken into account insofar as the rights
of the parties in cases of default are concerned. Thus, the rights of the buyer in the event he
defaults in the payment of the succeeding installments depend upon whether he has paid at
least two (2) years of installments or less. In the case at hand, it is undisputed that Bonifacio
was only able to pay the first P2,000.00 installment upon the signing of their agreement,
thereafter, failing to pay the balance of the purchase price when they fell due on June 30, 1977
and June 30, 1978. It is, therefore, Section 4 of RA No. 6552 that applies herein. Essentially, the
said provision provides for three (3) requisites before the seller may actually cancel the subject
contract: first, the seller shall give the buyer a sixty (60)-day grace period to be reckoned from
the date the installment became due; second, the seller must give the buyer a notice of
cancellation/demand for rescission by notarial act if the buyer fails to pay the installments due
at the expiration of the said grace period; and, third, the seller may actually cancel the contract
only after thirty (30) days from the buyer's receipt of the said notice of cancellation/demand for
rescission by notarial act.

Thus, in the case of Gatchalian Realty Inc. vs. Angeles, G.R. 202358,
November 27, 2013, the SC pronounced that for a valid and effective
cancellation of the contract under the Maceda Law, the mandatory twin
requirements of a “notarized notice of cancellation” and a “refund of the cash
surrender value” must be complied with.

Consideration distinct from the price

(11:52) Forms of Contract of Sale

In Elena Jane Duarte vs. Samuel A.E. Duran, G.R. No. 173038, September
14, 2011, the facts are as follows:

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Facts: Sometime in February 2002, Samuel offered to sell a laptop computer for the sum of
P15,000.00 to Elena. Since Elena was undecided, Samuel left the laptop to her. Two days after,
Elena told Samuel that she was willing to buy the laptop on installment. Samuel agreed; thus,
Elena gave P5,000.00 as initial payment and promised to pay P3,000.00 the following week and
P7,000.00 on the following month. Indeed, Elena gave her second installment of P3,000.00,
with receipt of payment. But when asked to pay the remaining balance on March 15, 2002,
Elena offered to pay only P2,000.00 claiming that the laptop was only worth P10,000.00. Due
to the refusal of petitioner to pay the remaining balance, a demand letter was sent to her by
Samuel.

In the collection suit that ensued, Elena claimed that there was no contract of sale. She
averred that Samuel offered to sell his laptop but because she was not interested in buying it,
Samuel asked if she can lend him the amount of P5,000.00. She agreed and in turn the laptop
was left with her. When Samuel came to get the laptop, she refused to give it back because
the loan was not yet paid. Instead, she lend to him an additional amount of P3,000.00 as he
was in dire need of money. She gave the money under agreement that the amounts she lent to
Samuel would be considered as partial payments for the laptop in case she decides to buy it.
Sometime in the first week of March 2002, Elena informed Samuel that she has finally decided
not to buy the laptop. Samuel, however, refused to pay his loan and insisted on Elena to
purchase the laptop instead. Was there a contract of sale between the parties?

Answer: Yes, there was a contract of sale between the parties, and the absence of a written
contract of sale does not mean otherwise. A contract of sale is perfected the moment the
parties agree upon the object of the sale, the price, and the terms of payment. Once perfected,
the parties are bound by it whether the contract is verbal or in writing because no form is
required. Thus, the absence of a written contract is not fatal to Samuel's case. He only needed
to show by a preponderance of evidence that there was an oral contract of sale.

- Sale of Movable Property (Art. 1484 NCC)

(Delete 13:17- 13:35)
15:02 -3 Alternative Remedies of Unpaid Seller (Enforce, cancel or foreclose)

-Recto Law
(Delete 28:22- 28:26)

Case: PCI Leasing and Finance, Inc. vs. Giraffe-X Creative Imaging, Inc., G.R. No.
142618, July 12, 2007.

Facts: In 1996, PCI Leasing and Giraffe entered into a 36-months Lease Agreement, whereby
the former leased out two (2) equipments for use in the printing business of the latter. In
connection with their agreement, the parties signed two (2) separate documents, each
denominated as Lease Schedule. Likewise, forming part of their lease agreement were two (2)

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separate documents denominated Disclosure Statements of Loan/Credit Transaction (Single
Payment or Installment Plan) that GIRAFFE also executed for each of the leased equipment.
These documents illustrated the true nature of the transaction between the parties, whereby,
upon full compliance of the Lease Schedule, ownership of the equipments will pertain to the
lessee-borrower. Furthermore, the same agreement embodied a standard acceleration clause,
operative in the event GIRAFFE fails to pay any rental and/or other accounts due.

A year into the life of the Lease Agreement, Giraffe defaulted in its monthly rental-payment
obligations. And following a three-month default, PCI Leasing sent a formal pay-or-surrender-
equipment type of demand letter to Giraffe but the same left unheeded. Thus, a replevin suit
was filed against Giraffe for the recovery of the equipments with additional prayer for the
payment of the arrears-rentals for its use. Finding the complaint to be meritorious, the trial
court issued a writ of replevin, hence, PCI Leasing re-possessed the equipments. Further, PCI
Leasing demanded for the payment of the arrear-rentals due which Giraffe rebuffed contending
that upon the recovery of the equipments, the former foreclosed its right to demand from
further payments of its obligation invoking the provisions of the Recto Law. Is Giraffe”s
contention correct?

Answer: Yes, the lease agreement between PCI Leasing and Giraffe is in reality a lease with an
option to purchase the equipment. This being so, Article 1485 of the Civil Code should apply.
Thus, considering that PCI Leasing was able to obtain possession of the subject equipments, it
can no longer recover whatever deficiency the lessee-borrower has, otherwise, it will be
repugnant to the provisions of the so called “Recto Law” as embodied in Article 1484(3) of the
NCC.

Sale on installment converted to lease (Art. 1485 & 1486 NCC)

(Delete 41:57- 42:32)

Prohibited Sales
End of Lecture (45:52)

Albano’s Lecture: CD #8- Side A

Start of Lecture (00:25) -Prohibited Sales (Continuation)

Case: Joey R. Peňa vs. Jesus de los Santos and the Heirs of Rosita de los Santos
Flores, G.R. No. 202223, March 2, 2016

Facts: Jesus and Rosita were adjudged owners of 9,915 square meters of a parcel of land
located at Boracay Island, Malay, Aklan. Peňa, claiming as the transferee of the shares of
Jesus and Rosita, wanted to execute the decision by way demolition of structures erected

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within said portion, claiming that he bought subject portion from one Atty. Romeo Robiso,
who in turn acquire subject portion from Jesus and Rosita. Atty. Robiso acquired the same as a
contingent professional fee paid by Jesus and Rosita as their counsel in the cases involving
subject parcel. The deeds of conveyance were executed after the judgment of the cases in the
lower court but during the pendency of the appeal. (1) Are these conveyances valid?

Answer: (1) No, it is not valid because the conveyances made by Jesus and Rosita in favor of
Atty. Robiso is null and void because it is a prohibited transaction under Article 1491(5) of the
NCC expressly prohibiting lawyers from acquiring property or rights that may be the object of
any litigation which they may take part by virtue of their profession. In fact, a complimentary
provision is also embodied in Rule 10 of the Canon of Professional Ethics where it states that a
lawyer should not purchase any interest in the subject matter of the litigation he is conducting.
The rationale advanced for the prohibition in Article 1491(5) is that public policy disallows
transaction in view of the fiduciary relationship involved, the relation of trust and confidence
and the peculiar control exercised by these persons. It is founded on public policy because by
virtue of his office, an attorney may easily take advantage of the credulity and ignorance of his
client and unduly enrich himself at the expense of his client.

(19:45) -Delivery of the Thing Sold (Art. 1458 and 1493 NCC)
Principle of Res Perit Domino

Case: Norkis Distributors, Inc. vs. Court of Appeals and Alberto Napales, 193
SCRA 694 (1991)

Case: Alberto Nepales bought from Norkis a brand new motorcycle financed by DBP as said
Nepales secured a motorcycle loan from the said bank. Norkis agreed to this arrangement,
hence, it issued an official receipt for which Nepales acknowledged, sought the registration of
the motorcycle with LTO in Nepales’ name, but the motorcycle remained still in the possession
of Norkis. Two (2) days after it was registered, the motorcycle was delivered to a certain Julian
Nepales, allegedly an agent of Alberto but the latter denies it. Eleven (11) days thereafter, the
motorcycle met an accident while driven by one Zacarias Payba. The unit was a total wreck.
Forty-five (45) days after the accident, the motorcycle loan of Alberto Nepales was released to
Norkis corresponding to the original price of the motorcycle. Hence, Alberto Nepales
demanded for the delivery of the unit but Norkis failed to deliver as it was delivered already
prior to the accident and in fact, it is already a total wreck. While Norkis admitted that there
was no actual delivery to Alberto because the one who received it is Julian Nepales, but it
insists that there was constructive delivery because of the issuance of sales invoice and the
registration papers in Alberto’s name. Hence, Alberto should bear the loss. Is Norkis’
contention correct?

Answer: No, said the SC, Norkis should bear the loss because the ownership has not yet been
transferred to the buyer at the time of the loss. In all forms of delivery, it is necessary that the
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act of delivery whether actual or constructive, be coupled with the intention of delivering the
thing. The act, without the intention, in insufficient. The critical factor in the different modes
of effecting delivery which gives legal effect to the act, is the actual intention of the vendor to
deliver and its acceptance by the vendee. Without that intention, there is no tradition.

Case: Rosario Textile Mills Corporation (RTMC) vs. Home Bankers Savings and
Trust Company (HBSTC), G.R. No. 137232, June 29, 2005.

Facts: RTMC applied from HBSTC a credit line for Php8M to finance the purchase of imported
raw materials for its manufacturing business. Upon its approval, RTMC availed of the credit
line by making numerous drawdowns, each drawdown covered by a separate promissory note
and trust receipt covering the goods purchased. RTMC failed to pay its indebtedness despite
the lapse of the due dates of the promisory notes. Hence, HBSTC filed a complaint for sum of
money against RTMC and its President, Edilberto Yujuico, who signed the promissory notes as
surety.

In their Answer, RTMC and Yujuico contended that they should be absolved from liability
because, by virtue of the trust receipt, the bank was still the owner of the goods. They posited
that by applying the principle of res perit domino, the owner bears the risk of loss. RTMC
insisted that since the raw materials did not meet its manufacturing requirements, it offered to
HBSTC to turn over said materials, however, the bank refused, until the materials were totally
destroyed by fire which gutted down RTMC’s warehouse where it was stored. Is the contention
of RTMC correct?

Answer: No. It is very clear that the transaction between RTMC and the bank is a contract of
loan. RTMC used the proceeds of this loan to purchase raw materials from a supplier abroad. In
order to secure the payment of the loan, RTMC delivered the raw materials to the bank as
collateral. Trust receipts were executed by the parties to evidence this security arrangement.
Simply stated, the trust receipts were mere securities.

RTMC’s insistence that the ownership of the raw materials remained with the bank is
untenable. It is settled that, if under the trust receipt, the bank is made to appear as the
owner, it is but an artificial expedient, more of legal fiction than fact, for if it were really so, it
could dispose of the goods in any manner it wants, which it cannot do, just to give consistency
with purpose of the trust receipt of giving a stronger security for the loan obtained by the
importer. To consider the bank as the true owner from the inception of the transaction would
be to disregard the loan feature thereof. Thus, RTMC cannot be relieved of their obligation to
pay their loan in favor of the bank.

Case: Gaisano Cagayan, Inc. vs. Insurance Company of North America (ICNA),
G.R. No. 147839, June 8, 2006.

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Facts: Intercapital Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. Levi
Strauss Phils. Inc. (LSPI) is the local distributor of products bearing trademark “Levis Strauss”.
IMC and LSPI separately obtained from ICNA fire insurance policies covering “book debts” in
connection with ready-made clothing materials sold and delivered to various customers
anywhere in the Philippines. “Book debts” refers to unpaid accounts still appearing in the
Books of Accounts of IMC and LPSI 45 days after the time of the loss.

Gaisano Cagayan is a customer and dealer of Wrangler and Levis sold by IMC and LPSI
respectively. On February 25, 1991, Gaisano Superstore in Cagayan de Oro City was consumed
by fire. Included in the items lost or destroyed in the fire were stocks of ready-made clothing
materials sold and delivered by IMC and LPSI.

On February 4, 1992, ICNA filed a complaint for damages against Gaisano Cagayan. It
alleged that it paid to IMC and LPSI Php 2.1M and 500T respectively, its insurance claims under
the fire insurance policy. By virtue thereof, ICNA was subrogated to their rights against
Gaisano Cagayan for the latter’s unpaid accounts to IMC and LPSI.

In their Answer, Gaisano Cagayan argued that IMC bears the risk of loss because it
expressly reserved ownership of the goods by stipulating in the sales invoices that "it is further
agreed that merely for purpose of securing the payment of the purchase price the above
described merchandise remains the property of the vendor until the purchase price thereof is
fully paid." Following the doctrine of res perit domino, since IMC and LSPI are still the owners
of the goods, it bears the risk of loss. Therefore, it is not liable to ICNA for damages. Is the
contention of Gaisano Cagayan tenable?

Answer: No. Under paragraph (1), Article 1504 of the Civil Code, it provides:

“(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer,
in pursuance of the contract and the ownership in the goods has been retained by the seller
merely to secure performance by the buyer of his obligations under the contract, the goods
are at the buyer's risk from the time of such delivery”.
Thus, when the seller retains ownership only to insure that the buyer will pay its debt, the
risk of loss is borne by the buyer. Accordingly, Gaisano Cagayan bears the risk of loss of the
goods delivered.

(31:45) -Sale or Return Contract (Art. 1503, NCC)

(39:11) -Buyer in Good Faith and for Value (Art. 1505 NCC)
(Delete 41:45- 42:17)
(44:30) -Rights of Unpaid Seller (Lien, stoppage in transit, rescission)
End of Lecture (46:33)

Albano’s Lecture: CD No. 7- Side B

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(00:02) -Double Sales
(Delete 7:10- 7:13)

Case: Spouses Ramy and Zenaida Pudadera vs. Ireneo Magallanes, et.al., G.R.
No. 170073, October 18, 2010.

Facts: Belen Lazaro (Lazaro) was the absolute owner of a titled lot designated as Lot 11-E, with
an area of 5,333 sq. m. located in the Iloilo City. On March 13, 1979, Lazaro sold a 400 sq. m.
portion of Lot 11-E to Daisy Magallanes for the sum of P22,000.00 under a "Contract To Sale"
payable in two years. On July 21, 1980, upon full payment of the monthly installments, Lazaro
executed a "Deed of Definite Sale" in favor of Magallanes. Thereafter, Magallanes had the lot
fenced and had a nipa hut constructed thereon.

The other portions of Lot 11-E were, likewise, sold by Lazaro to eight (8) other buyers
including Mario Gonzales. On July 14, 1980, Lazaro executed a "Partition Agreement" in favor of
Magallanes and the aforesaid buyers delineating the portions to be owned by each buyer.
Under this agreement, Magallanes and Gonzales were assigned an 800 sq. m. portion of Lot 11-
E, with each owning 400 sq. m. thereof, denominated as Lot No. 11-E-8 in a Subdivision
Plan[which was approved by the Director of Lands.

Despite their partition, however, Lazaro refused to turn over the mother title of Lot 11-E
to the aforesaid buyers, thus, preventing the latter from titling in their names the subdivided
portions thereof. Consequently, Magallanes, along with the other buyers, caused to annotate
their adverse claim at the back of the mother title.

On November 23, 1981, Lazaro sold Lot 11-E-8, the lot previously assigned to Magallanes
and Mario Gonzales, to her niece, Lynn Lazaro, and the latter's husband, Rogelio Natividad
(Spouses Natividad), for the sum of P8,000.00. As a result, a new title was issued in the name of
Spouses Natividad. Due to this development, Magallanes filed a case against Spouses Natividad.
On September 2, 1983, Magallanes caused the annotation of a notice of lis pendens at the back
of Natividad’s title. Subsequently, Spouses Natividad subdivided Lot 11-E-8 into two, Lot 11-E-8-
A and Lot 11-E-8-B, each containing 400 sq. m. Meanwhile, Magallanes’ case was later
dismissed by the trial court and the order of dismissal was inscribed at the back of Natividad’s
title on July 7, 1986. Four days prior to this inscription or on July 3, 1986, Spouses Natividad
sold Lot 11-E-8-A (subject lot) to Ramy Pudadera as evidenced by a "Deed of Sale" for the sum
of P25,000.00. As a consequence, a new title was issued in the name of Pudadera.

Sometime thereafter, Magallanes caused the construction of two houses of strong

materials on the subject lot. On April 20, 1990, Pudadera filed an action for forcible entry
against Magallanes, but the trial court dismissed the action. Having failed to recover the
possession of the subject lot through the forcible entry case, Pudadera filed an action for

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Recovery of Ownership against Magallanes. The trial court ruled in favor of Magallanes and
against Pudadera despite the fact that the latter was the titled owner of the subject lot. Is the
ruling of the court correct?

Answer: Yes, the ruling of the trial court is correct. Pudadera cannot be considered buyer in
good faith because he was aware of other circumstances pointing to a possible flaw in the title
of Spouses Natividad prior to the sale of the subject lot. Despite these circumstances, he did
not take steps to ascertain the status of the subject lot but instead proceeded with the
purchase of the same. One who buys a property with knowledge of facts which should put him
upon inquiry or investigation as to a possible defect in the
title of the seller acts in bad faith.

It was clear that Lazaro sold subject lot to two different buyers. First, it was sold to
Magallanes in 1979, and the second was to Spouses Natividad in 1981. Title was not
transferred to Magallanes because Lazaro did not turn over the mother title of the entire land.
However, Spouses Natividad was able to transfer the title to their name. Subsequently,
Spouses Natividad sold the subject lot to Pudadera and the latter was able to transfer likewise
the title to his name. Clearly, there was double sale for which Article 1544 finds application.

Pursuant to Article 1544, in case of a double sale of immovables, ownership shall belong to
"(1) the first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally,
the buyer who in good faith presents the oldest title." However, mere registration is not
enough to confer ownership. The law requires that the second buyer must have acquired and
registered the immovable property in good faith. In order for the second buyer to displace the
first buyer, the following must be shown: "(1) the second buyer must show that he acted in
good faith (i.e., in ignorance of the first sale and of the first buyer's rights) from the time of
acquisition until title is transferred to him by registration or failing registration, by delivery of
possession; and (2) the second buyer must show continuing good faith and innocence or lack of
knowledge of the first sale until his contract ripens into full ownership through prior
registration as provided by law."

One is considered a purchaser in good faith if he buys the property without notice that
some other person has a right to or interest in such property and pays its fair price before he
has notice of the adverse claims and interest of another person in the same property. Well-
settled is the rule that every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no way oblige him to go
beyond the certificate to determine the condition of the property. However, this rule shall not
apply when the party has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry or when the purchaser has knowledge of a
defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man
to inquire into the status of the title of the property in litigation. His mere refusal to believe
that such defect exists, or his willful closing of his eyes to the possibility of the existence of a
defect in his vendor's title will not make him an innocent purchaser for value if it later develops

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that the title was in fact defective, and it appears that he had such notice of the defect had he
acted with that measure of precaution which may reasonably be required of a prudent man in a
like situation.

In the case at bar, it was found out that Pudadera was not a buyer and registrant in good
faith owing to the fact that Magallanes constructed a fence and small hut on the subject lot and
has been in actual physical possession since 1979. Hence, Pudadera was aware or should have
been aware of Magallanes' prior physical possession and claim of ownership over the subject
lot when they visited the lot on several occasions prior to the sale thereof. By this, his right and
entitlement to the subject lot is defeated by Magallanes.

Case: Rolendo T. Delfin vs. Josefina L Valdez, et.al., G.R. No. 132281,
September 15, 2006 where the issue of whether there was double sale of the
realty was resolved by the SC.

Facts: Josefina, together with her children, were the co-owners of a 24,725 square meters
titled property in the commercial district of Isulan, Sultan Kudarat. To enhance its value, she
caused the subdivision of the lot into eight (8) lots. Subsequently, she sold a 4,094 square
meter portion of the subject lot to Lagon, a successful businessman in their place. When the
sale was effected, no title to the subdivided lots were still issued. Nor did Lagon registered the
sale. Two (2) years after, the mother title was cancelled and eight (8) new titles were issued
corresponding to the 8 subdivisions, all in the name of Josefina. After the issuance of titles,
Josefina caused the subdivision of Lot No. 3-D into two (2) smaller lots and sold the other lot to
Delfin. Delfin registered the sale and caused the issuance of title to his name. It turned out that
the lot bought by Delfin form part of the portion sold to Lagon in 1979. Upon knowledge of the
sale to Delfin, Lagon filed a complaint for Specific Performance against Josefina. Delfin, on the
other hand, filed a case for quieting of title against Josefina and Lagon. In the latter case, the
RTC and CA ruled that there was double sale of the realty applying Article 1544 of the New Civil
Code. Was there double sale in this case?

Answer: None. The SC ruled that for Article 1544 to apply, it presupposes the existence of two
(2) valid and binding contracts of sale, which under legal contemplation, is made possible by
the operation of the Torrens system whereby registration is the operative act which transfers
title or ownership of titled property, such that before the first buyer registers his sale to
consolidate ownership and title in his favor, the seller who retains title and ownership in the
meantime, can validly transfer such title and ownership by way of a second sale to another
buyer, who, in case he succeeds registering said second sale before he acquired notice of the
first sale, can defeat the rights of the first buyer under Article 1544. Here, Josefina has still full
control and complete ownership over the subject lot at the time of the second sale, but with
the obligation to return the amount received by her to Lagon. The title and ownership was
effectively transferred from Josefina to Delfin with the issuance of clean new transfer certificate
of title in the name of Delfin upon the registration of the second sale.

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Case: Sps. Esmeraldo D. Vallido and Arsenia M. Vallido rep. by Atty. Sergio
Sumayod vs. Sps. Elmer Pono and Juliet Pono, et.al. G.R. No. 200173, April 15,
2013- petitioner not buyer in good faith because they are privies to the vendor.

Facts: Martino is a registered owner of a homestead lot in Kananga, Leyte. In 1960, while still
living in Kananga, he sold a portion of the said lot to Purificacion. Upon the execution of the
deed, Martino handed to Purificacion the owner’s duplicate copy of the original title. The
transfer was not recorded in the ROD.

In 1973, Purificacion sold the same portion to Marianito Pono and also handed to the
latter the owner’s copy of the title. Pono declared for taxation purposes the portion he bought,
paid its realty taxes and took possession of the same. He kept the title but did not register the
transfer at the ROD.

Meanwhile, Martino left Kananga and settled in Cavite. In 1990, he sold the entire titled
lot to his grandson, Esmeraldo Vallido but failed to deliver the owner’s copy as it was no longer
in his possession. Hence, Martino filed a petition for reconstitution of lost title and was granted
in 1998. In 1999, Esmeraldo registered the sale and a transfer certificate was issued in his
name.

Subsequently, Esmeraldo filed an action for quieting of title and recovery of possession
against the respondents as actual occupants thereof. In their Answer, respondent averred that
their occupation was with the consent of Marianito who bought subject portion from
Purificacion, and the latter bought the same from Martino, Esmeraldo’s grandfather. The trail
court finds a case of double sale and favored Esmeraldo declaring him as buyer in good faith
and was the first to register the sale, thus, better right to the property. Is the trial court’s
ruling correct?

Answer: No, the ruling of the trial couet is incorrect because Esmeraldo is a buyer in bad faith
and a registrant in bad faith for his failure to inquire as to the supposed condition of the
property before he bought it. The failure of the buyer to take precautionary step would mean
negligence on his part and would preclude him from claiming or invoking the right of a
purchaser in good faith. Besides, the purpose of registration is to give notice to third persons,
and privies are not third person within the contemplation of law. As against them, failure to
register will not vitiate or annul the vendee’s right of ownership conferred by such unregistered
deed of sale.

Case: Hospicio D. Rosaroso et.al. vs. Lucia Laborte Soria, et.al., G.R. No. 194846,
June 28, 2013.- double sale brought about by two (2) marriages contracted by
the original owner.

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Facts: Luis Rosaroso, and his wife Honorata, acquired several parcels of land in Daanbantayan,
Cebu. Upon the death of Honorata, Luis remarried. It was at this instance that Luis, with the
concurrence of his second wife Lourdes, sold these parcels of land including the properties
subject of this litigation, by way of deed of sale, to the four (4) children of the first marriage,
petitioners herein. Later, despite the sale, Laila, daughter of their sister, Lucila, obtained a
Special Power of Attorney from Luis, already sickly at that time, authorizing the former to sell
and convey several parcels including the subject lots which was already sold to the petitioners.
On the basis of this authority, Laila was able to convey three (3) parcels to Meridian Realty
Corporation, whereby Luis was made to affixed his thumbmark to the deed. Hence, this case.

In their Answer, Laila opined that plaintiffs are estopped to question the validity of the
sale to Meridian for their failure to register the first sale and annotate the same in the titles.
Luis’ second wife, Lourdes, further alleged that the first sale was simulated as there was no
consideration involved in the sale. Meridian likewise posited that it is a buyer in good faith
because it checked the veracity of the title with the Register of Deeds free from any annotation.
If you were the judge, which sale will you uphold as valid?

Answer: The first sale is valid, because the defendants failed to overcome the presumption
that in contract, there is always a consideration involved, as it failed to substantiate its claim
that the sale was simulated. Since these lots were already sold to the plaintiffs, Luis is no
longer the owner of these properties when he conveyed the same to Meridian Realty. In fact,
Meridian is not a buyer in good faith for its failure to inquire as to the status of those who were
actually occupying the subject properties. When a piece of land is in the actual possession of
persons other than the seller, the buyer must be wary and should investigate the rights of
those in possession. Without making such inquiry, he cannot claim that he is a buyer in good
faith.

Case: Ruperta Cano Vda. de Viray, et.al. vs. Spouses Jose and Amelita Usi, G.R.
No. 192486, November 21, 2012, 686 SCRA 211 (686 SCRA 211)
(Double Sale; Res Judicata)

Facts: In 1986, Ruperta Viray and her husband Jesus, while still alive, bought a portion of
Ellen Mendoza’s 9,137 square meters titled property located at Masantol, Pampanga. The sold
portion has an area of 3,501 square meters designated as Lot No. 733-F after the subdivision of
the said lot into six (6) smaller portions.. The sale was not annotated in the title of the subject
property. The subdivision plan was not approved by the Bureau of Lands. In 1990, a
Subdivision Agreement between Vda. de Mallari, Sps. Usi and the registered owner, Mendoza,
was executed effecting the subdivision of Lot No. 733 into three (3) lots. Lot No. 733-A to Vda.
de Mallari, Lot No. 733-B to Sps. Usi and Lot No. 733-C to Mendoza. Thus, the title of Mendoza
was cancelled and in lieu thereof, three (3) derivative titles were issued to them.
Subsequently, Lot No. 733-C was subdivided into thirteen (13) smaller lots pursuant to another
Subdivision Agreement whereby Sps. Usi was able to purchase Lot No. 733-C-1 and Lot No. 733-
C-10 comprising 1,200 square meters. Sps. Usi was issued a separate derivative titles pertaining

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to the two (2) additional lots they bought from Mendoza. Virtually, these two (2) Subdivision
Agreements resulted in the loss of identity of Lot No. 733-A and 733-F bought by the Virays.
After the conduct of the ocular inspection of the whole Lot No. 733, the Bureau of Lands found
out that Lot No. 733-A bought by Jesus Viray was within Lot No. 733-B titled in the name of Sps.
Usi, and Lot No. 733-F bought by Jesus Viray was almost identical with Lot No. 733-C in the
name of Mendoza under the Subdivision Agreement including Lot No. 733-C-10 bought by
Spouses Usi. In view of these overlapping transactions involving the same portions, it spawned
series of suits between the Virays and Spouses Usi.

Two (2) annulment of sale cases were filed by Mendoza against Spouses Viray which was
both dismissed by the court which decision attained finality after it was brought before the SC
upholding the validity of the sale to the Virays. A forcible entry case was instituted by Viray
against Spouses Usi and the former prevailed which decision became final after Spouses Usi
opted not to appeal. Subsequently, Spouses Usi filed an Accion Reinvindicatoria against the
Virays for the purpose of recovering ownership and possession of the contested portion. Said
case was dismissed by the trial court on the principle of res judicata. (1) Is the dismissal of the
case proper? (2) Was there double sale of the subject property?

Answer: (1) Yes, the reinvindicatory action instituted by Spouses Usi will no longer prosper as
it is already barred by the principle of res judicata. The judgment upholding the validity of the
sale to the Virays and the confirmation of their entitlement to possession de facto of the
subject portions has been laid to rest by the SC and has the effect of confirming ownership of
the same by the Virays which can no longer be assailed in a subsequent action.

(2) Yes. The fact that the sale to the Virays were made prior to the Subdivision Agreements
participated by Spouses Usi, in effect, there exists a double sale of the subject portion which
calls for the application of Article 1544 of the NCC. As there was no valid deed of conveyance
executed by Mendoza in favor of Spouses Usi as against the deed of sale in favor of the Virays
which was uphold by the SC as valid conveyances, the action to recover ownership by the
former against the latter is doomed to fail.

Thus, according to Article 1544 of the NCC, should there be double sale,
ownership of an immovable shall be transferred: (1) to the person acquiring it
who in good faith first recorded it in the Registry of Property; (2) in default
thereof, to the person who in good faith was first in possession, and (3) in
default thereof, to the person who presents the oldest title provided there is
good faith. The requirement of the law is two-fold, acquisition in good faith and
registration in good faith. Good faith must concur with registration. If it would be
shown that the buyer was in bad faith, the alleged registration they have made
amounted to no registration at all.

(14:43) -Warranties

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 -warranty against eviction;
-warranty against hidden defect (Art. 1561, NCC)
-principle of caveat emptor

Requisites to recover due to hidden defect:

1. The defect must be hidden (not known or could have been known)
2. The defect must exist at the time the sale must made;
3. The defect must ordinarily have been excluded from the contract;
4. The defect must be important (renders the thing unfit or considerably
decreases fitness)
5. The action must be instituted within the statute of limitations.

(21:50) -Obligations of the Vendee (withdraw or reduction)

(22:19) - Sale with Right to Repurchase (Art. 1601 NCC)

(Delete 28:50- 29:30)

Case: Victoria Claravall vs. Ricardo Lim, et.al., G.R. No. 152695, G.R. No.
152695, July 25, 2011.

Facts: Claravall sold with right to repurchase a commercial building and lot located in Ilagan,
Isabela to Lim stipulating the exercise of said right within a period of two (2) years from the
date of execution. After the expiration of the period, Claravall did not notify her intention to
repurchase the property as agreed upon, nor tender the payment of repurchase price. Hence,
Lim filed a consolidation of ownership over the subject property. In her Answer, Claravall
intimated that Lim did not pay the consideration in full and that their contract is merely an
equitable mortgage. Is the contention of Claravall correct?

Answer: For failure to repurchase the property within the stipulated period, her right expired
and the vendee-a-retro is entitle to the full ownership of the subject properties. The belated
claim that there contract was an equitable mortgage cannot be sustained because it was
adopted as a ploy merely to resurrect a right which she already lost.

(29:43) - Thirty (30) -day period rule (Art. 1606 NCC)

(Delete- 29:55-30:40)
(36:23) - How much to repurchase? (Art. 1616 NCC)

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(41:17) - Equitable Mortgage (Art. 1502 NCC)
End of Lecture (46:27)

Case: FELIPE SOLITARIOS AND JULIA TORDA vs. Sps. GASTON AND LILIA JAQUE
G.R. No. 199852, November 12, 2014 (740 SCRA 226)
(Contracts; Intention of the Contracting Parties)

Facts: A 4-hectare agricultural land located in Calbayog City, Samar was originally registered in
the name of Felipe Solitarios under OCT No. 1249. This original title was subsequently
cancelled by TCT No. 745 in the name of Spouses Jaque. According to Jaque, they acquired
subject lot by way of purchase from Solitarios in 1983. Initially, they bought one-half (1/2) of
the subject lot covered by a notarized deed of conveyance. Two (2) months later, the other
half was mortgaged to them by Solitarios. Two (2) years thereafter, Solitarios allegedly sold
the mortgaged half by executing another deed of conveyance covering the whole lot now. On
the basis of this instrument, OCT No. 1249 was cancelled.

Despite the sale, Solitarios remained in possession of the subject lot and regularly remit
to Jaque their share of its produce. But, in the year 2000, Solitarios stopped remitting their
share and claimed ownership of the subject lot. Thus, a complaint for recovery of ownership
and possession was filed by them against Solitarios.

In their defense, Solitarios alleged that they did not sold subject property to Sps. Jaque
but they merely mortgaged it after the latter helped them in redeeming it from the bank in
1976. To effect payment of their obligation, Solitarios delivered to Jaque one-half (1/2) of the
produce of the riceland and one-fourth (1/4) from the coconut land. Said arrangement lasted
until 2000 when Jaque insisted to take physical possession of the subject lot. Having failed to
possess, it instituted this recovery suit. The RTC ruled and declared that the agreement of the
parties was not of sale but an equitable mortgage. On appeal, the CA reversed RTC’s ruling and
upheld the validity of the sale giving faithful credence to notarized deed especially so that the
Jaque are the ones paying its realty taxes. Is the ruling of the CA correct?

Answer: No, the CA ruling is incorrect because the evidence of the parties tend to show that
the real intention was to enter into a mortgage transaction and not of sale. The SC pronounced
that “in determining the nature of the contract, courts are not bound by the title or name
given by the parties. The decisive factor in evaluating such agreement is the intention of the
parties, as shown not necessarily by the terminology used in the contract, but by their
conduct, words, actions and deeds prior to, during and immediately after executing the
agreement. This ruling is founded under Article 1370 of the NCC which instructs that if words
of a contract appears to be contrary to the evident intention of the parties, the latter shall
prevail over the former.

The SC further upheld the finding of the RTC that the agreement of the parties is that of
equitable mortgage considering that the Soltarios remained in possession of the subject lot and

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exercised acts of ownership over the same even after the purported absolute sale to Jaque.
Where the vendor remains in physical possession of the land as lessee or otherwise, is an
indicium of an equitable mortgage pursuant to Article 1602 of the NCC. The reason for this rule
lies in the legal reality that in a contract of sale, the legal title to the property is immediately
transferred to the vendee. Thus, retention by the vendor of the possession of the property is
inconsistent with the vendee’s acquisition of ownership under a true sale.

Albano’s Lecture: CD No. 7 Side A

00:48- Start of Lecture
(Delete 00:55- 00:59)
01:32- End of Equitable Mortgage

Case: Sps. Cesar R. Romulo and Nenita S. Romulo vs. Sps. Moises P.`Layug, Jr.
and Felisarin Layug, G.R. No. 151217, September 8, 2006.

Facts: In 1986, Sps. Romulo obtained a Php 50,000.00 loan with 10% interest per month from
Sps. Layug which ballooned to Php 580, 292.00. To secure the payment of the loan, the latter
duped Sps. Romulo to execute a Contract of Lease and a Deed of Absolute Sale covering their
house and lot at BF Homes. Because of the sale, the title to the property was cancelled and
was transferred to Sps Layug but the vendor remained in possession of the property. Five
years after, an ejectment suit was instituted against Sps. Romulo for non-payment of rental. It
was at this juncture that they came to know that their title to the property was already
cancelled. Hence, they filed an action for cancellation of title, annulment of sale and contract
of lease. The ejectment suit was dismissed for lack of cause of action. Subsequently, the RTC
decided in favor of Sps. Romulo contending that the sale was an equitable mortgage. Is the
contention of Sps. Romulo correct?

Answer: Yes, Sps. Romulo is correct. The SC ruled that the deed was in the nature of an
equitable mortgage because of these facts obtaining, (1) the value of the property at the time
of execution of the deed was Php700,000 but the consideration was only Php 200,000.00, (2)
Sps. Romulo remained in possession of the property, (3) the contract of lease was executed
earlier than the deed of sale, (4) it took five (5) years for Sps. Layug to file an ejectment suit for
non- payment of rental when in fact, Sps. Romulo never paid any rental ever since.

2015 Bar Examination Question No. XVII

Z, a gambler, wagered and lost Php2M in baccarat, a card game. He was

pressured into signing a Deed of Absolute Sale in favor of the winner covering a
parcel of land with improvements worth 20M. One month later, the supposed

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vendee of the property demanded that he and his family vacate the property
subject of the deed of sale. Was the deed of sale valid? What can Z do? (4%).

Answer: No, the sale is not valid because it was not the true intention of the
parties. Rather, it is an equitable mortgage due to gross adequacy of the price
and the circumstances by which Z conveyed subject property. Therefore, Z must
ask for the reformation of the instrument to that of a Contract of Loan secured by
a real estate mortgage.

Case: Benjamin Bautista vs. Shirley G. Unangst, et.al. G.R. No. 173002, July 4,
2008

Issue: Whether or not it is incumbent upon the buyer to adduce evidence to

prove that the contract was a bona fide deed of sale with right to repurchase
thus, overthrow the presumption of equitable mortgage.

Ruling: The nomenclature used by the contracting parties to describe a contract

does not determine its nature. The decisive factor in determining the true nature
of the transaction between the parties is the intent of the parties as shown by all
the surrounding circumstances, such as the relative situations of the parties at
that time, the attitudes, acts, conduct and declarations of the parties, the
negotiations between them leading to the deed, and generally, all pertinent
facts having a tendency to fix and determine the real nature of their design and
understanding. There is no conclusive test to determine whether a deed absolute
on its face is really a simple loan accommodation secured by a mortgage. When
in doubt, courts are generally inclined to construe a transaction purporting to be
a sale as an equitable mortgage, which involves a lesser transmission of rights
and interests over the property in controversy.

Read these cases for the enhancement of your knowledge on equitable

mortgage.

2016 Bar Examination Question No. XII

On March 13, 2008, Ariel entered into a Deed of Absolute Sale (DAS) with
Noel where the former sold his titled lot in Quezon City with an area of three
hundred (300) square meters to the latter for the price of P300,000.00. The

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prevailing market value of the lot was P3,000.00 per square meter. On March 20,
2008, they executed another “Agreement to Buy Back/Redeem Property” where
Ariel was given an option to repurchase the property on or before March 20,
2010 for the same price. Ariel, however, remained in actual possession of the
lot. Since Noel did not pay the taxes, Ariel paid the real property taxes to avoid a
delinquency sale.

On March 21, 2010, Ariel sent a letter to Noel, attaching thereto a

manager’s check for P300,000.00 manifesting that he is redeeming the property.
Noel rejected the redemption claiming that the DAS was a true and valid sale
representing the true intent of the parties. Ariel filed a suit for nullification of the
DAS or the reformation of said agreement to that of a Loan with Real Estate
Mortgage. He claims the DAS and the redemption agreement constitute an
equitable mortgage. Noel however claims it is a valid sale with pacto de retro and
clearly failed to redeem the property.

As RTC judge, decide the case with reasons. (5%)

Answer: If I am the RTC judge, I will decide in favor of Ariel and sustain his
argument that, indeed, their agreement was that of an equitable mortgage for
the following reasons: (1) the price was inadequate; (2) Ariel remained in
possession of the subject property; (3) Ariel was the one who paid the realty
taxes despite the execution of the document of sale; and (4) their subsequent
execution of a document “Agreement to Buy Back/Redeem Property” which
discloses the true intention of the parties. Hence, Ariel’s redemption of the
subject property is proper.

Resume of Lecture (05:32) Review of Previous Lecture

Start: 7:25- Legal Redemption
(Delete 16:36- 16:38)

Case: Sps. Roman A. Pascual and Mercedita R. Pascual, et.al. vs. Sps. Antonio
Ballesteros and Lorenza Melchor-Ballesteros, G.R. No. 186269, February 15,
2012

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Issue: Is the written notice to the co-owners by the vendor or prospective
vendors indispensable in order that the 30-day period for the exercise of the right
of legal redemption commenced to run?

Ruling: Written notice is indispensable in view of the terms in which Article 1623
is couched, mere knowledge of the sale, acquired in some other manner by the
redemptioner, does not satisfy the statute. The written notice was obviously
exacted by the Code to remove all uncertainty as to the sale, its terms and its
validity, and to quiet any doubts that the alienation is not definitive. The statute
not having provided for any alternative, the method of notification prescribed
remains exclusive.

Case: Adalia B. Francisco vs. Zenaida F. Boiser, G.R. No. 137677, May 31, 2000

Issue: Whether or not the notice requirement in the exercise of the right of legal
redemption does not prescribe any particular form of notifying co-owners about
the sale of the property owned in common.

Ruling: The notice should be given by the seller (vendor) because he/she is in the
best position to know who are his/her co-owners that under the law must be
notified of the sale. Also, the notice by the seller removes all doubts as to fact of
the sale, its perfection, and its validity, the notice being a reaffirmation thereof;
so that the party notified need not entertain doubt that the seller may still
contest the alienation. This assurance would not exist if the notice should be
given by the buyer.

Case: Emiliano S. Samson vs. Sps. Jose and Guillerma Gabor, et.al. G.R. No.
182970, July 23, 2014

Facts: Gabor spouses are registered owners of a 61,085 square meters parcel of land in Tanay,
Rizal. In 1985, said spouses executed a Deed of Assignment transferring ownership of a 20,
631 square meters of undivided portion to Samson in payment of attorney’s fees due to the
latter for services rendered. In 1987, Samson executed a Deed of Assignment involving the
same undivided portion to Ramos. Upon knowledge of the sale, spouses Gabor filed an action
for legal redemption. Forthwith, Samson and Ramos executed an Agreement of Recission
revoking the transfer of the undivided portion. By virtue of this document rescinding the
transfer to Ramos, the Court dismissed the legal redemption case. Gabor spouses appealed
and the CA reversed the RTC decision which became final. Subsequently, Samson filed an

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action for partition against the spouses which dismissed for lack of cause of action Is the action
of the court tenable?

Answer: Yes. The court’s action is proper because, at the time Samson filed the partition case,
he ceased to be a co-owner of the subject property because Spouses Gabor effectively
exercised the right of legal redemption against himand Ramos The conveyance, therefore,
between Samson and Ramos was upheld valid subject to the right of legal redemption which
Spouses Gabor was able to exercise within the allowable period.

Case: Tobias Selga and Ceferina Garancho Selga vs. Sony Entierro Brar, et.al.
G.R. No. 175151 September 21, 2011.

Issue: Whether or not petitioner’ right of legal redemption was lost and barred by
prior judgment.

Ruling: The right of legal redemption, though was not ruled upon by the court a
quo despite the fact that it was interposed and properly claimed in the pleadings,
was lost when the redemptioner failed to contest the judgment by withdrawing
his appeal.

Law on Lease: Start: 26:00

(Delete 26:46- 26:56)

Case: Willem Kupers vs. Atty. Johnson B. Hontanosas, A.C. No. 5704, May 8,
2009 where, in this case, Atty. Hontanosas drafted two (2) contract of leases
between two (2) foreign nationals involving two (2) parcels of land in Alcoy,
Cebu. The first lease contract has a term of 50 years renewable for another 50
years, while the second lease contract has a term of 49 years renewable for
another 49 years. Are these stipulations valid and legal?

Answer: No, because it violated the law limiting lease of private lands to aliens
for a period of 25 years renewable for another 25 years. In his defense, Atty.
Hontanosas invoked Republic Act No. 7652 otherwise known as “An Act Allowing
the Longer Term Lease of Private Lands by Foreign Investors” but it did not helped
his cause because in this law, it allows the lease for the original period of 50 years
renewable for another period of 25 years. For causing his clients to violate the
law, and for his ignorance of the law, Atty. Hontanosas was meted a suspension
in the practice of law for 6 months.
End of Lecture (47:32)
[Type text]
CD No. 9- Side B

Start: 00:07- Law on Lease (continuation) Art. 1655 NCC

(Delete 07:57- 08:20)

Case: Maunlad Homes, Inc., etc. vs. Union Bank of the Philippines, G.R. No.
179898, December 23, 2008.

Facts: Maunlad Homes, Inc. was the previous owner of Maunlad Malls located in Malolos,
Bulacan after it was foreclosed by Unionbank. Before consolidation of ownership, Maunlad
and Unionbank entered into an agreement sort of a buy-back scheme where the purchase price
will be paid by Maunlad in installment. By virtue of the contract to sell, Maunlad remained in
possession and management of the mall and continued collecting rentals from its tenants.
Because of the delay of Maunlad to pay the amortization as embodied in their contract to sell,
Unionbank prodded the tenants of the mall to pay rentals directly to them claiming that under
the contract to sell, ownership is still vested in them as owners until full payment of the
purchase price. Is the act of Unionbank justified?

Answer: No. It is not essential under the law on lease that the lessor be the owner of the
leased property. A mere lessee may be a lessor under a sub-lease contract. Even a mere
possessor may enter into a contract of lease as lessee, like in this case, where Maunlad
remained in possession of the mall though there was a contract to sell the said property. In
fact, they were the ones who entered into the lease contract with the tenants of the mall, and
not Unionbank.

Implicit Renewal of Contract of Lease (Art. 1670 NCC)

(Delete 12:30- 12:32)
Right of Retention (Lessee/Builder in Good Faith)
(Delete 28:40- 30:01)
(Delete 30:23- 32:06)
End of Lecture (35:47)

Case: Sps. Samuel Parilla, et.al. vs. Dr. Prospero Pilar, G.R. No. 167680,
November 30, 2006.

Facts: Pilipinas Shell and Dr. Pilar executed a 10-year lease agreement pertaining to a parcel of
land in Bantay, Ilocos Norte. Sps. Parilla, as dealer of Pilipinas Shell were in possession of
subject property and introduced useful improvements including building, restaurant, billiard
hall, etc. After the expiration of the lease, Dr. Pilar demanded Sps. Parilla to vacate but the
same left unheeded. Hence, an ejectment suit was instituted against Sps. Parilla.
[Type text]
 After trial, judgment was rendered ordering Sps. Parilla to vacate the property and for Dr.
Pilar to reimburse the useful improvements in the amount of Php2M. The order of
reimbursement was premised on the fact that Sps. Parilla became builders in good faith when
Dr. Pilar failed to stopped them in their construction invoking Art. 453 of the NCC which
provides: “if there was bad faith not only on the part of the person who built x x x but also on
the part of the owner of the land, the rights of one and the other shall be the same as though
both had acted in good faith. This being so, they are entitled to be reimbursed of the useful
improvements introduced on the subject property invoking Art. 448 of the NCC. Is the
contention of Sps. Parilla tenable? Decide.

Answer: No. Sps. Parilla cannot be considered as builder in good faith, because as agent of the
lessee, Pilipinas Shell, their relationship is governed by the law on lease under Art. 1678 of the
NCC which provides: “if the lessee makes, in good faith, useful improvements on the property
leased, the lessor upon termination of the lease shall pay the lessee ½ of the value of the
improvements at that time. The option, therefore is with the lessor whether to appropriate or
not. If appropriated, Sps. Parilla is entitled to ½ of the value of the improvement, but if not,
their right is to remove the improvement introduced by them upon the subject property.

Start: 35:48- Law on Carriers (refer to Commercial Law Review lecture)

(Delete: 37:12- 38:37)

In one Bar examination, a simple problem to test the knowledge of the

examinee on the subject of common carrier was asked which question runs this
way:

On October 15, 1983, goods were loaded on a vessel owned by a common

carrier for transportation from Manila to Cebu under a bill of lading which
provided that the carrier would not be responsible for loss arising from theft or
robbery. The goods were stolen while the vessel was docked in Manila.

Sued for damages, the common carrier invoked the cited stipulation to
avoid liability for the loss of the cargo. Additionally, the carrier, which is a
corporation, argued that it could not be held liable because it had done all it
could to prevent the loss by exercising the utmost diligence in the selection and
supervision of its employees.

How valid are these defenses?

[Type text]
Answer: These defenses are not valid. Common carriers cannot escape liability
by stipulation in the bill of lading relieving them for responsibility for the acts of
the thieves or robbers who do not act with grave or irresistible threat or force.

Common carriers are similarly forbidden from exempting themselves from

liability for the acts or omissions of its employees by stipulation to that effect in
the bill of lading.

We will not dwell so much with the law on carrier as we have discussed the
important aspects of this law in our Commercial Law Review. The law on baggage
will likewise be discussed when we reach the law on deposits because these
provisions of law must be correlated. Let us proceed to the law on partnership.

Start: 42:13- Law on Partnership

(Delete 42:25- 42:38)
End of lecture: 46:28

2015 Bar Examination Question No. XIII

X and Y are partners in a shop offering portrait painting. Y provided the

capital and the marketing while X was the portrait artist. They accepted the Php
50,000.00 payment of Kyla to do her portrait but X passed away without being
able to do it. Can Kyla demand that Y deliver the portrait she had paid for
because she was dealing with the business establishment and not with the artist
personally? Why or why not? (3%).

Formalities of a Partnership

Generally, even if the partnership is not registered with the SEC, it legally
possess a distinct personality because registration is merely a requirement for
administrative and licensing purposes.

Exception: Where a real property is contributed by one of its partners, regardless

of its value, the constitution of partnership must be in a public instrument with
an attached inventory, otherwise the partnership is void and has no legal
personality.

[Type text]
 If personal property is contributed to the partnership, such must be in a
public instrument and registered with the SEC if the value thereof is more than
Php3,000.00, otherwise, it can be made orally. However, failure to register has
no effect on the juridical personality of the partnership.

Where partners intend to form a limited partnership, the requirement of

registration with the SEC is necessary, otherwise, it will only be considered a
general partnership. In limited partnership, the liability of some of its partners
are only to the extent of their contribution to the partnership.

CD No. 9- Side A

Start: 2:55- Law on Partnership

(Delete 5:01- 5:25)
22:38 Effect of Dissolution
28:25 Liability of Partnership and that of Partners

Question: A, B and C formed a partnership under the following terms and

conditions:

• Participation; A- 40%; B- 40%; C- 20%

• A and B would supply the entire capital . C would contribute his
management expertise and be a manager for the first 5 years without
compensation.
• C shall not be liable for losses.

The partnership became bankrupt.

• Could A alone, opposed by B and C have C removed as manager?

Explain.
• Could C be personally held liable for debts of the partnership not
satisfied with the assets of the partnership? Amplify.

Answer:

[Type text]
 1. A alone, opposed by B and C cannot have C removed as manager of the
partnership. According to Art. 1800 of the NCC the vote of the partners
representing the controlling interest shall be necessary for such revocation of
power. Under their partnership agreement, it is crystal clear that the vote of A
does not represent the controlling interest.

2. Yes, C can be held personally, although, jointly, liable for debts of the
partnership not satisfied with the assets of the partnership. Under our
partnership law, as among themselves, the industrial partner is always excluded
from any participation in the losses in the absence of an agreement to the
contrary. Hence, the agreement that C, the industrial partner, shall not be liable
for losses is valid. It merely affirms the law. The rule that a stipulation which
excludes one or more partners in the profits or losses is void, is applicable only to
capitalist partners, not to industrial partners. However, as far as third persons
are concerned, the rule is different. The industrial partner can be held personally
liable without prejudice to his right to hold his co-partners proportionately liable
for what he paid to partnership creditors.

In the 2012 Bar examination, a question on partnership was asked:

Question: A partner cannot demand the return of his share (contribution) during
the existence of a partnership. Do you agree? Explain your answer. (5%)

Answer: No, I do not agree. Because the return of his share will put into motion
the dissolution of the partnership and winding up of its assets and liabilities, for
which the share of the withdrawing partner will answer if there are liabilities of
the partnership, unless, of course, the remaining partners will accede to the
withdrawal of one of their partners.

Case: Heirs of Jose Lim, represented by Elenito Lim vs. Juliet Villa-Lim, G.R. No.
172690, March 3, 2010. This case involves squabble of the assets of the
partnership between siblings as against their sister-in-law, who inherited the
business from his husband, elder brother of herein petitioners. The issue that
was resolved by the SC was whether Efledo Lim, respondent’s husband, became
a partner of the trucking business which was initially formed by their father, Jose
together with Jimmy and Norberto. Alleging that their brother Efledo was holding
the share in the partnership in trust for the benefit of the estate of Jose Lim,

[Type text]
petitioners demanded partition and accounting from the respondent who took
over the management and administration of the trucking business after Efledo’s
death. In its ruling, the SC pronounced that petitioners’ claim is without basis
because Efledo was the partner in the business and not Jose Lim, which holding
was based on several facts obtaining while Efledo was still managing affairs of the
business, and in the light of Article 1769 of the NCC pertaining to the rules in
determining whether a partnership exists.

See also Heirs of Tan Eng Kee vs CA, 396 Phil. 68 (2000).

34:21 Partnership by estoppel

(Delete 38:01- 41:24)
(Delete 41:55- 44:14)
Start: Law on Agency (44:15)
End of Lecture: 46:40

CD No. 10- Side A

00:01- Law on Agency (Continuation)

Article 1874 NCC
(Stop 5:50- ask for remedy)
(Delete 8:13- 13:23)

Question: Article 1878 enumerates the instances where special power of attorney
is required before the agent can do any act that will bind the principal. Is it
necessary that this special power of authority be in writing?

Answer: No. Article 1878 does not state that the authority be in writing. As long
as the mandate is express, such authority may be either oral or written. Be it
noted that Article 1878 refers to the nature of the authorization and not to its
form. Thus, the authority must be duly established by competent and convincing
evidence other than the self-serving assertion of the party claiming that such
authority was verbally given.

Correlate Articles 1881, 1882, 1883, 1910 and 1911 NCC

(Delete 28:50-38:06)
Article 1898 NCC

[Type text]
Case: Manila Memorial Park Cemetery, Inc. (MMPCI) vs. Atty. Pedro Linsangan,
G.R. No. 151319, November 22, 2004

The ponente of this case, Justice Tinga, described the issues as a classic and
interesting textbook question in the Law on Agency.

Facts: In 1984, Baluyot, acting as MMPCI’ Agency Manager, offered Atty.

Linsangan a cemetery lot within the memorial garden owned by MMPCI, and to
assume the same since the previous owner is no longer interested to acquire it.
The contract price was for Php95,000.00. Convinced, Atty. Linsangan gave
Baluyot Php35, 295.00 as refund for the amount paid by the original owner. A
year later, Baluyot informed Atty. Linsangan that instead of the old contract
covering the cemetery lot, he will be issued a new one which the latter protested
but was appeased when he was assured by Baluyot that the price will be the same
as the old contract. Atty. Linsangan issued post dated checks covering the
monthly amortizations for two (2) years.

Subsequently, Baluyot brought a Purchase Agreement to Atty. Linsangan

whereby the purchased price of the lot was increased to Php132,250.00 to which
the latter acceded upon insinuation by Baluyot that he will be paying the old
price. In 1987, Baluyot informed Atty. Linsangan that the contract was cancelled
for reasons he do not know. Atty. Linsangan sued MMPCI and Baluyot, as the
latter’ agent for breach of contract. Will Atty. Linsangan’s action against MMPCI
prosper?

Answer: No. Because MMPCI cannot be bound of the misrepresentation of its

agent because it exceeded her authority. Atty. Linsangan should be faulted for
not inquiring into the authority given by MMPCI to Baluyot, which is merely to
procure buyers for cemetery lots and not to alter the terms and conditions of the
contract.

It is settled that persons dealing with an agent are bound at their peril to
ascertain not only the fact of agency but also the nature and extent of the agent’s
authority. If he does not make such inquiry, he is chargeable with knowledge of
the agent’s authority and his ignorance of that authority is not an excuse.

[Type text]
End of Lecture: 46:22

CD No. 10- Side B

00:14- Law on Agency (Continuation)

Articles 1902 and 1908 NCC
(Delete 2:50- 3:26)

Case: Sps. Joselina Alcantara and Antonio Alcantara, and Spouses Josefino Rubi
and Annie Distor-Rubi vs. Brigida L. Nido, as Attorney-in-Fact of Revelen N.
Srivastava, G.R. No. 165133, April 19, 2010.

Facts: Revelen, a US resident, is the owner of a 1,939 square meter unregistered

land located at Cardona, Rizal. Sometime in March 1994, Revelen’s mother,
Brigida, accepted the offer of Sps. Alcantara to purchase in installment a 200
square meter portion of Revelen’s lot. Upon its acquisition, the spouses
constructed their house thereat. In 1986, with Brigida’s consent, it occupied an
additional 150 square meters of the lot. By 1987, spouses paid Php17,500.00
until it defaulted on their installments. Thus, Brigida, acting as administrator and
attorney-in-fact of Revelen filed a complaint for recovery of possession. Will the
case prosper?

Answer: Yes, because when the sale of a piece of land or any interest therein is
through an agent, the authority of the latter must be in writing, otherwise the
sale is void. Since it is void, recession cannot take place. In fact, a special power
of attorney is also necessary to enter into contract by which ownership of an
immovable is transmitted or acquired for valuable consideration.

Start: 01:32- Extinguishment of Agency

Article 1919 NCC
(Delete 8:55- 8:59)
(Delete 9:39- 9:42)
(Delete 9:59- 10:03)
Art. 1930- Stipulation in favor of 3rd persons

2015 Bar Examination Question No. XVIII

[Type text]
 A lawyer was given an authority by means of a Special Power of Attorney by
his client to sell a parcel of land for the amount of Php3M. Since the client owed
the lawyer Php1M in attorney’s fees in a prior case he handled, the client agreed
that if the property is sold, the lawyer was entitled to get 5% agent’s fee plus
Php1M as payment for his unpaid attorney’s fees. The client, however,
subsequently found a buyer of his own who was willing to buy the property for a
higher amount. Can the client unilaterally rescind the authority he gave in favor
of his lawyer? Why or why not? (4%).

Discuss the concept of the “Doctrine of Agency by Necessity” as explained in

Paras’ Reviewer, page 487-488.

Also, try to impart the fundamental principles of Agency and the instances by
which these principles may be obtaining and its effects. (Paras’ Reviewer, pages
490-491).

Start: 12:29 - Law on Commodatum/Mutuum

-Distinctions
-Instances when the borrower is liable for the loss of the thing borrowed even if
fortuitous event occur.

Start: 30:30- Law on Simple Loan/Forbearance of money

(Delete: 34:19- 34:28)
(Delete: 34:42- 34:45)
(Delete: 35:15- 35:23)
(Delete: 42:09- 42:13)
(Delete: 43:34- 43:36)

Payment of interest
End of Lecture: 46:37

Case: Hermosina Estores vs. Sps. Arturo and Laura Supangan, G.R. No. 175139,
April 18, 2012 wherein the SC ruled that even if the transaction involved is a
conditional deed of sale, the stipulation governing the return of the money is
considered forbearance of money which required payment of interest at the rate
of 12%. Here, it was found out that the unwarranted withholding of money
which rightfully belongs to spouses-respondents amounts to forbearance of

[Type text]
money which can be considered as an involuntary loan citing Eastern Shipping
Lines vs. CA, G.R. No. 97412, July 22, 1994, 234 SCRA 38.

CD No. 11 (Side A)

Start: 00:05- Interest payment

(Delete- 1:01- 1:33)

Case: Nunelon Marquez vs. Elisan Credit Corporation, G.R. No. 194642, April 6,
2015.

With respect to payment of interest, there is a need to harmonize Article

1176 and Article 1253 of the New Civil Code.

Art. 1176 provides “the receipt of the principal by the creditor, without
reservation with respect to the interest, shall give rise to the presumption that
said interest has been paid.” On the other hand, Art. 1253 provides “if the debt
produces interest, payment of the principal shall not be deemed to have been
made until the interest have been covered.”

These provisions appear to be contradictory but they in fact support, and

are in conformity with each other. Both provisions are also rebuttable
presumptions and as such, lose their legal efficacy whenever there is proof or
evidence to the contrary.

Art. 1176 is relevant on questions pertaining to the effects and nature of

obligations in general, while Art. 1253 is specifically pertinent on questions
involving application of payments and extinguishment of obligations.

Take note that under Art. 1176, the amount received by the creditor is the
payment for the principal, only that a doubt arises on whether or not the interest
is waived because the creditor accepts the payment for the principal without
reservation with respect to the interest. Art. 1176 resolves the doubt by
presuming that the creditor waives the payment of interest because he accepts
payment for the principal without reservation. Of course, if there is that
reservation, payment of interest is not waived even if the creditor accepts
payment of the principal.

[Type text]
 On the other hand, the presumption under Art. 1253 resolves doubts
involving payment of interest-bearing debts. It is a given under this article that
the debt produces interest, the doubt pertains to the application of payment,
the uncertainty is on whether the amount received by the creditor is payment for
the principal or the interest. Art. 1253 resolves this doubt by providing a
hierarchy: payments shall first be applied to the interest; payment shall then be
applied to the principal only after the interest has been fully paid.

Question: Can lenders impose excessive interest rates and penalties on loans
now that Usury Law was repealed?

Answer: No. While Central Bank Circular No. 905-82 which took effect on January
1, 1983 effectively removed the ceiling on interest rates for both secured and
unsecured loans, regardless of maturity, nothing in the said Circular could
possibly be read as granting carte blanche authority to lenders to raise interest
rates to levels that would be unduly burdensome, to the point of oppression on
their borrowers.

Courts are not without authority to reduce iniquitous and unconscionable

imposition of interest on loans, taking into account the following provisions of
law:

Art. 1229 of the NCC provides: “the judge shall equitably reduce the penalty
when the principal obligation has been partly or irregularly complied with by the
debtor. Even if there has been no performance, the penalty may also be reduced
by the courts is it is iniquitous or unconscionable.”

Art. 2227 of the NCC provides: “Liquidated damages, whether intended as an

indemnity or penalty, shall be equitably reduced if they are iniquitous or
unconscionable.”

And more importantly, Art. 1306 of the NCC is emphatic: “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.”

[Type text]
 Thus, stipulations imposing excessive rate of interest and penalty are void
for being contrary to morals, if not against the law.

Case: Spouses Eduardo and Lydia Silos vs. Philippine National Bank, G.R. No.
181045, July 2, 2014.

Facts: Sps. Silos were in the business operating a department store and in order
to increase their capitalization, they secured a loan from PNB and in fact, was
able to obtain series of loan accomodations in various amount covered by
separate promissory notes and secured by a real estate mortgage. It was
stipulated in the promissory note that: “the borrower agrees that the Bank may
modify the interest rate in the loan depending on whatever policy the Bank may
adopt in the future. Also, it was expressly stated in the promissory note that:
“the borrower hereby agrees that the Bank may, without need of notice to the
borrower, increase or decrease its spread over the floating interest rate at any
time depending on whatever policy the Bank may adopt in the future.” Are these
stipulations valid?

Answer: No. These stipulations are repugnant to the principle of mutuality of

contracts because the imposition of interest rate is left solely to the lender
without giving prior notice to and securing the consent of the borrowers. Further,
excessive interest and penalties not revealed in disclosure statement issued by
banks, even if stipulated in the promissory note, cannot be given effect under
the Truth in Lending Act. Hence, courts must struck down these stipulations as it
is invalid.

Note: Recently, Bangko Sentral ng Pilipinas Monetary Board (BSP-MB) issued

Circular No. 799 Series of 2013 effective July 1, 2013 which gives us the new rate
of interest payment, thus:

“In the absence of an express stipulation as to the rate of interest that

would govern the parties, the rate of legal interest for loans or forbearance of
any money, goods, or credits and the rate allowed in judgment shall no longer be
12% per annum as enunciated in Eastern Shipping Lines case, but will now be 6%
per annum effective July 1, 2013. It should be noted, nonetheless, that the new
rate could only be applied prospectively and not retroactively. Consequently, the
12% per annum legal interest rate shall apply on until June 30, 2013. Come July

[Type text]
1, 2013, the new rate of 6% per annum shall be the prevailing rate of interest
when applicable.” (Dario Nacar vs. Gallery Frames, et.al., G.R. No. 189871,
August 13, 2013).

Start: 02:02- Law on Deposits (Art. 1962)

-Instances when there is necessary deposit. (Arts. 1198- 2004 NCC)

(Delete: 17:41- 19:18)

(Delete: 19:45- 20:45)

Case: Durban Apartments Corp. vs. Pioneer Insurance and Surety Corp., G.R.
No. 179419, January 12, 2011

Facts: Jeffrey See, owner of Suzuki Grand Vitara, checked in at City Garden
Hotel. A parking attendant of said hotel got the key of his car and parked it at the
parking area of Equitable-PCI Bank considering that the hotel’s parking area has a
limited parking slots. There exists an agreement to use Equitable-PCI Bank’s
parking space by the hotel guests. Later, See was awakened because his car was
carnapped and was no longer recovered. Pioneer Insurance paid See the value of
the vehicle, and by right of subrogation, sued Durban Apartments for damages.
Is Durban Apartments liable under the facts obtaining?

Answer: Yes. When See entrusted the key of his car to the parking attendant of
the hotel, a necessary deposit was constituted pursuant to Art. 1998 of the NCC
in relation to Art. 1962. Hence, for failure of Urban Apartments to comply with
its obligation to safe keep and to return the car to See, it is liable for damages.

Start: 27:11- Aleatory contracts (Art. 2010)

(Delete: 30:44- 31:20)

Start: 31:36- Law on Gambling (Art. 2018)

(Delete: 32:28- 33:05)
(Delete: 33:40- 34:02)
(Delete: 35:38- 36:50)

Start: 37:10- Law on Compromise (Arts. 2034 and 2035)

[Type text]
Start: 43:40- Law on Guaranty/ Surety (Distinctions)

End of Lecture: 47:25

Case: Trade and Investment Dev’t. Corp. (TIDCORP) vs. Asia Paces Corp., et.al.,
G.R No. 187403, February 12, 2014.

Facts: Asia Paces Corp. (ASPAC), a domestic corporation, undertook an electric

transmission line project in Libya. To finance the project, it obtained a loan from
foreign banks, Banque Indosuez and PCI Capital Hongkong, which loans were
guaranteed by way of Letters of Guarantee issued by the Philippine Government
through TIDCORP, a government owned and controlled corporation. As a
condition precedent in the issuance of the Letters of Guarantee, TIDCORP
required ASPAC and its President Balderama to execute a Deed of Undertaking
binding themselves to solidarily pay TIDCORP for any liability it may incur under
the Letters of Guarantee. TIDCORP likewise required ASPAC to enter into surety
agreements with bonding companies holding themselves solidarily liable to
TIDCORP in the event it will be made liable to answer for ASPAC’s loan.

ASPAC defaulted its obligation to the foreign banks and the latter
demanded payment from TIDCORP under the Letters of Guarantee. In turn,
TIDCORP demanded from ASPAC, Balderama and from the surety companies for
its obligation under the surety bond. Subsequently, TIDCORP forged a
Restructuring Agreement with the foreign banks extending the payment of its
liabilities under the Letters of Guarantee. The surety companies were not privy to
this Restructuring Agreement. TIDCORP was able to fully settle its obligations to
the foreign banks. When it demanded reimbursement from the surety
companies, it was refused, and the latter argued that the extension to pay given
to TIDCORP without their consent had released them from their obligation as
surety under Article 2079 of the NCC. Are the surety companies correct?

Answer: No. Under Article 2079 of the NCC , it provides that an extension
granted to the debtor by the creditor without the consent of the guarantor
extinguishes the guaranty. But this provision is not applicable in the case at bar
because the contract of suretyship was executed in favor of ASPAC, the principal
debtor in relation to its obligation to the guarantor where no extension of
payment was made. But here, it was the guarantor, TIDCORP after being liable

[Type text]
for the obligation of ASPAC, was able to ask for extension payments from the
foreign banks, ASPAC’s creditor which contract is separate and distinct from that
of ASPAC and TIDCORP were surety companies hold themselves solidarily liable.

In this TIDCORP case, the SC had the occasion to reiterate the difference
between the obligation of the guarantor from that of surety, and the stark
difference between guaranty and surety.

“A surety is an insurer of the debt, whereas a guarantor is an insurer of the

solvency of the debtor. A suretyship is an undertaking that the debt shall be paid;
a guaranty, an undertaking that the debtor shall pay. Stated differently, a surety
promises to pay the principal’s debt if the principal will not pay; while the
guarantor agrees that the creditor, after proceeding against the principal, may
proceed against the guarantor if the principal is unable to pay. A surety binds
himself to perform if the principal does not, without regard to his liability to do
so. A guarantor, on the other hand, does not contract that the principal will pay,
but simply that he is able to do so. In other words, a surety undertakes directly
for the payment and is so responsible at once if the principal debtor makes
default, while a guarantor, contracts t pay if, by the use of due diligence, the
debt cannot be made out of the principal debtor.”

Case: Lirag Textile Mills, Inc. vs. SSS G.R. No. 33205, August 31, 1987 "where
petitioner is precluded from denying his liability under the Purchase Agreement.
After his firm’s representation to pay immediately to the vendee the amount then
outstanding evidencing his commitment as surety, he is estopped from denying
the same. His signature in the agreement carries with it the official imprimatur as
the vendor's President, in his personal capacity as majority stockholder, as surety
and a solidary obligor.

Thus, surety is bound immediately to pay the creditor the amount

outstanding. The obligation of a surety differs from that of a guarantor in that
surety insures he debt, whereas the guarantor merely insures the solvency of the
debtor; and the surety undertakes to pay if the principal does not pay, whereas
the guarantor merely binds itself to pay"

[Type text]
CD No. 11- Side B

Start: 00:09- Law on Guaranty/ Surety (continuation of lecture)

(Delete- 17:30-1733)

The BENEFIT OF EXCUSSION is the right of the guarantor to have the

property of the debtor exhausted before he (guarantor) can be made liable
pursuant to Article 2058 of the NCC.

There are, however, instances when guarantor is not entitled to the

benefit of excussion, as follows:

1. when renunciation has been expressly made by the guarantor (R);

2. when it would be useless because execution on the property of the principal
debtor would not, after all, result in the satisfaction of the debt (U);
3. when guarantor has bound himself solidarily with the principal debtor (S);
4. when the debtor is already insolvent (I);
5. when the debtor has absconded or cannot be sued within the Philippines,
unless he has left a manager or representative (A). Keyword RUSIA.

Moreover, there could be no benefit of excussion in the following

instances:

a. if the guaranty is in a judicial bond;

b. if the guarantor has not pointed out to the creditor the available properties of
the debtor within the Philippines;
c. if the principal debt is a natural, voidable or unenforceable obligation where
there can still be a guaranty but the principal debtor would not be liable.

General Rule: Guarantors can proceed against the debtor only after the former
has paid the creditor. However, in Art. 2071 of the NCC, there are instances
wherein the guarantor can proceed against the debtor even before having paid as
when:

1. when the guarantor is sued for the payment (S);

2. when the principal debtor become insolvent (I);

[Type text]
3. when the debtor has bound himself to relieve the guarantor within a specified
period and the period already expired (P);
4. when the debt has become demandable by reason of the expiration of the
period of payment (E);
5. when the principal obligation has no fixed period for its maturity unless it be of
such nature that it cannot be extinguished except within a period longer than 10
years (T);
6. if there are reasonable grounds to fear that the principal debtor intends to
abscond (A);
7. if the principal debtor is in imminent danger of becoming insolvent (I).
Keyword: SIPETAI

Case: Bank of Commerce and Stephen Z. Taala vs. Sps. Andres and Eliza Flores,
G.R. No. 174006, December 8, 2010 where the SC construed the mortgage
contract between the parties with respect to the continuing guaranty constituted
upon the mortgaged property to secure the payment of future loan obligations of
respondent though not annotated in the title of the property mortgaged.

In this case, the SC illustrated comprehensively what is known as a

“continuing guaranty”.

Start: 22:30- Law on Pledge/Mortgage

Arts. 2085; 2093
Art. 2087 correlate Art. 2115 NCC

Case: H. Tambunting Pawnshop Inc. vs. CIR, G.R. No. 171138, April 7, 2009
where it was ruled that the transaction in the pawnshop whereby a personal
property is delivered to secure the payment of loan is akin to the pledge contract,
and being so, is subject to all taxes and impositions relative to pledges.

Pactum Commissorium (Art. 2088)

(Delete: 32:12- 32:15)
(Delete: 33:18- 33:52)
(Delete: 34:50- 36:37)
(Delete: 37:09- 37:59)

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Case: Philnico Industrial Corp. vs. Privatization and Management Office, G.R.
No. 199420, August 27, 2014 where it was declared that the provision in the
ARDA (Amended and Restated Definitive Agreement) constitute “pactum
commissorium” within the meaning of Art. 2088 of the NCC, thus, null and void.

2015 Bar Examination Question No. XVI

Donna pledged a set of diamond ring and earrings to Jane for

Php200,000.00. She was made to sign an agreement that if she cannot pay her
debt within six months, Jane could immediately appropriate the jewelry for
herself. After six months, Donna failed to pay. Jane then displayed the earrings
and ring set in her jewelry shop located in a mall. A buyer, Juana, bought the
jewelry set for Php300,000.00.

a) Was the agreement which Donna signed with Jane valid? Explain with
legal basis? (2%)
b) Can Donna redeem the jewelry set from Juana by paying the amount she
owed Jane to Juana? Explain with legal basis. (2%)
c) Give an example of a pledge created by operation of law. (2%)

Start: 38:45- Law on Mortgage (Chattel Mortgage/REM)

End of Lecture: 47:30

CD No. 12 (Side B)

Start: 00:08- Real Estate Mortgage (Continuation of lecture)

(See Commercial Law review Notes on the Law on Mortgages)

In Fe H. Okabe vs. Ernesto A. Saturnino, G.R. No. 196040, August 26,

2014, it was ruled that the buyer in a foreclosure sale becomes the absolute
owner of the property purchased if it is not redeemed during the period of one (1)
year after the registration of the sale. As such, he is entitled to the possession of
the said property and can demand it at any time following the consolidation of
ownership in his name and the issuance to him of a new transfer certificate of
title. The buyer can in fact demand possession of the land even during the
redemption period except that he has to post a bond in accordance with Section 7
of Act No. 3135, as amended. No such bond is required after the redemption

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period if the property is not redeemed. Possession of the land then becomes an
absolute right of the purchaser as confirmed owner. Upon proper application
and proof of title, the issuance of the writ of possession becomes a ministerial
duty of the court.

2012 Bar Examination Question NO. IX(a)

Does the right to request for the issuance of a writ of possession over a
foreclosed real property prescribe in five (5) years? (5%).

Start: 02:32- Law on Antichresis (Art. 2134 NCC)

-Form of the contract of antichresis
(Delete: 5:25- 15:45)

Start: 15:45- Law on Negotiorum Gestio

Loss of object under management by the gestor
(Delete: 25:21- 28:13)
Arts. 2147 and 2148 NCC

Start: 30:01- Law on Solutio indibiti

Correlation of Arts. 719 and 720 of the NCC
2012 Bar Examination Question No. VI

Siga-an granted a loan to Villanueva in the amount of Php540,000.00. Such

agreement was not reduced to writing. Siga-an demanded interest which was
paid by Villanueva in cash and checks. The total amount Villanueva paid
accumulated to Php1.2M. Upon advice of her lawyer, Villanueva demanded for
the return of the excess amount of Php660,000.00 which was ignored by Siga-an.

a) Is the payment of interest valid? Explain. (3%)

b) Is solutio indibiti applicable? Explain. (2%).

End of Lecture: 31:21

Side B

(Taped lecture starts in the middle portion of the tape)

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Solutio indibiti (continuation of lecture)

Essential requisites for solution indibiti

1. There is a receipt of something (not mere acknowledgment)

2. There was no right to demand it, or the giver had no obligation to give;
3. The undue delivery was because of mistake, either of fact or of law.

Examples:

1. Erroneous payment of interest not due. Here, the interest paid must be
returned.
2. Erroneous payment of rentals not called for in view of the expiration of the
lease contract;
3. Taxes erroneously given.

Say, for instance, you happened to find a leather shoulder bag while you
were walking along the baywalk, and presumably you do not know who the
owner is. When you opened it, it contained precious jewelries, a diamond ring
and a Rolex watch. Will you keep it to yourself? Of course not, because whoever
found a lost movable property and who appropriates it to himself, or failed to
return to the owner, you will be violating the principle that “no one should enrich
himself at the expense of another” and worst, you can be charged for theft under
Article 308(1) of the Revised Penal Code. What is your obligation, therefore?
Pursuant to Article 219 and 220 of the NCC, you must turn over the same to the
City or Municipal Mayor of the place where the things were found. The mayor
will have to publish the notice for six months. First month, second, third, fourth
and fifth month elapsed but nobody showed up at the Office of the Mayor except
you. You were always at the office to know if somebody had claimed the bag
including the ring and wristwatch because, as its finder, you are entitled to 1/10
of its value. Now, for instance, the value of those jewelries were Php1M, you
will be entitled to Php100,000.00. But after the lapsed of six months, early
morning, you were already at the office of the Mayor. When the mayor saw you,
he asked you what are you doing there? And you said, you were only verifying is
somebody claimed the diamond ring and the Rolex watch. But the mayor, as if
forgotten it already. When he recalled it, the Mayor asked you that the Rolex
watch will be his while the diamond ring is yours. Will you agree? Take note that

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under Art. 719 and 720, it is finder’s keeper, meaning, the finder will now be the
owner of these found movables.

Where you benefitted something but is not due to you, you must return it
because of the principle that “no one shall enrich himself at the expense of
another”. The principle of “solotio indibiti” is actually a very simple one.

Quasi-delict (Art. 2176 NCC) “whoever by act or omission causes damage to

another, there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation between
the parties is called quasi-delict”

“Article 2180. The obligation imposed by Article 2176 is demandable not only for
one’s own act or omission, but also for those of persons for whom one is
responsible”.

If you go into law practice, this is one of the lucrative subject you ought to
specialize, the handling of negligence cases. If you file a case and the cause of
action is based on quasi-delict, you must prove the following requisites:

Essential requisites for quasi-delict:

1. There must be an act or omission;

2. There is fault or negligence on the part of the actor;
3. Causing damage to another;
4. There is a causal connection between the fault or negligence and the
damage done;
5. There is no pre-existing contractual relations.

Distinction between quasi-delict (culpa aquiliana) and breach of contract (culpa

contractual)

1. In quasi-delict, negligence is direct, substantive and independent, while

in breach of contract, negligence is merely incidental to the performance
of contractual obligation; there is a pre-existing contract or obligation;

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 2. In quasi-delict, the defense of “good father of the family” is complete and
proper defense in so far as parents, guardians and employers are
concerned; while in breach of contract, such is not a complete and proper
defense in the selection and supervision of employees;

3. In quasi-delict, there is no presumption of negligence and it is incumbent

upon the injured party to prove the negligence of the defendant,
otherwise, the former’s complaint will be dismissed; while in breach of
contract, negligence is presumed so long as it can be proved that there was
breach of contract and the burden is on the defendant to prove that there
was no negligence in the carrying out of the terms of the contract; the rule
of respondeat superior is followed.

Bear in mind that in Philippine torts, we do not follow the doctrine of

respondeat superior (where the negligence of the servant is the negligence of the
master). Instead, we follow the rule of bonus pater familias (good father of the
family). The theory is that, ultimately the negligence of the servant if known to
the master and susceptible of timely correction by him, reflects his own
negligence if he fails to correct it in order to prevent injury or damage. Hence,
the negligence of the employer is only presumptive, it can be rebutted by proof
to the contrary.

To avoid liability for a quasi-delict committed by his employee, an

employer must overcome the presumption by presenting convincing proof that
he exercised the care and diligence of a good father of the family in the selection
and supervision of his employee. The required diligence of a good father of a
family pertains not only with the selection but also to the supervision of
employees. Once negligence on the part of the employee is shown, the burden
of proving that he observed the diligence in the selection and supervision of its
employees shifts to the employer.

Case: Dr. Genevieve L. Huang vs. Phil. Hoteliers, Inc., et.al., G.R. No. 180440,
December 5, 2012, wherein this case stemmed from an accident that befell on
the visitor of a hotel guest who happened to stay beyond the allowable hours for
the use of the swimming pool of Dusit Hotel. After the expiration of the time to
use, the lights in the pool where put off and the main door leading thereto was
locked without knowing that petitioner and her friend was still at the bathroom

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taking their shower. Since the area was not well lighted, and in order to call the
hotel employees by way of intercom, to unlocked the door, she stumbled upon a
portable wooden bar and hit her head which causes upon her serious brain injury.
Again, following the rule that to be entitled to damages based on quasi-delict,
petitioner must prove that the negligence of respondent was the proximate and
only cause of the injury, failing which, her claim is doomed to fail because it was
found out that the injury she suffered was due to her own negligence.

Case: Indophil Textile Mills, Inc. vs. Engr. Salvador Adviento, G.R. No. 171212,
August 20, 2014 where the SC pronounced that, though the injury sustained by
respondent was contracted as employee of petitioner, but the same cannot be
considered as a labor claim which fall within the Labor Arbiter’s jurisdiction. It
was established that there was negligence on the part of the petitioner in not
improving the working environment of his employees which resulted in
respondent’s permanent injury, thus, a clear case of quasi-delict, which
jurisdiction is vested in the regular courts. In determining as to whom jurisdiction
is vested, the SC adopted the “reasonable causal connection rule” wherein if
there is reasonable causal connection between the claim asserted and the
employer-employee relations, then the case is within the jurisdiction of the labor
arbiter, and in the absence thereof, it is the regular courts that has jurisdiction.

2015 Bar Examination Question No. XIV

A driver of a bus owned by company Z ran over a boy who died instantly. A
criminal case for reckless imprudence resulting in homicide was filed against the
driver. He was convicted and was ordered to pay Php2M in actual and moral
damages to the parents of the boy was an honor student and had a bright future.
Without even trying to find out if the driver has assets or means to pay the award
of damages, the parents of the boy filed a civil action against the bus company to
make it directly liable for the damages.

a) Will their action prosper? (4%)

b) If the parents of the boy do not wish to file a separate civil action against
the bus company, can they still make the bus company liable if the driver
cannot pay the award for damages? If so, what is the nature of the
employer’s liability and how may civil liability be satisfied? (3%)

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 In negligence cases, the aggrieved party has the choice between (1) an
action to enforce civil liability arising from crime under Art. 100 of the RPC; and
(2) a separate action for quasi-delict under Art. 2176 of the NCC. Once the choice
is made, the injured party cannot avail himself of any other remedy because he
may not recover twice for the same negligent act or omission of the accused. This
is the rule against double recovery.

In other words, the same act or omission can create two kinds of liability
on the part of the offender, that is civil liability ex delicto and civil liability quasi
delicto, either of which may be enforced against the culprit subject to the
qualification that the offended party can not recover damages under both types
of liability.

Thus, in the case of Rafael Reyes Trucking Corp. vs. People of the
Philippines and Rosario Dy, G.R. No. 129029, April 3, 2000, the SC explained
clearly the nature of these two sources of civil liability:

“Under Art. 2176 in relation to Art. 2180 of the NCC, it allows an action
predicated on quasi-delict to be instituted by the injured party against the
employer for an act or omission of the employee and would necessitate only a
preponderance of evidence to prevail. Hence, the liability of the employer for
the negligent conduct of the subordinate is direct and primary, subject to the
defense of due diligence in the selection and supervision of the employee. The
enforcement of the judgment against the employer in an action based on Art.
2176 does not require the employee to be insolvent since the nature of the
liability of the employer with that of the employee, the two being ststutorily
considered as joint tortfeasors, is solidary. On the other hand, under Art. 103 of
the RPC, it provides that an employer may be held subsidiarily civilly liable for a
felony committed by its employees in the discharge of his duty. This liability
attaches when the employee is convicted of a crime done in the performance of
his work and is found to be insolvent that renders him unable to properly respond
to the civil liability adjudged”.

Case: Vector Shipping Corp., et.al. vs. American Home Assurance Co. et.al., G.R.
No. 159213, July 3, 2013 where the SC ruled that prescription of action was not
sustained because the cause of action is not upon quasi-delict but upon an
obligation created by law by way of subrogation. Here, respondent was the

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insurer of Caltex with whom has a contract of affreightment with petitioner to
transport petroleum products which perished as the tanker M/T “Vector” collided
with M/V “Dona Paz” on December 20, 1987. Petitioner argued that respondent
has four (4) years only within which to file its claim based on quasi-delict or until
December 20, 1991 but when it filed its complaint on March 5, 1992, its claim
had prescribed already. But, such argument is misplaced because respondent’s
cause of action is not based on quasi-delict but on an obligation created by law
whereby the prescriptive period is ten (10) years.

Case: Dr. Filoteo A. Alano vs. Zenaida Magod-Logmao, G.R. No. 175540, April
14, 2014 which case arose out of the retrieval of internal organs of a dead
patient for transplant purpose without the consent of his immediate relatives.
Both the RTC and CA upheld the finding of negligence on the part of the petitioner
in not giving sufficient time to secure the consent of the decedent immediate
relatives prior to instructing his subordinates to remove the kidneys, heart, and
pancreas of the brain-dead patient for transplant purposes. However, this
findings was reversed by the SC ratiocinating that petitioner was not responsible
for the sufferings of respondent due to the death of his son, for even if there was
no extraction of the patient’s vital organs, just the same, respondent will suffer
as a result of the death of his son.

Case: Philitranco Service Enterprise vs. Felix Paras and Inland Trailways, Inc.,
G.R. No. 161909 where the SC ruled that even if the cause of action is predicated
on breach of contract of carriage, a third-party defendant, to whom respondent
has no contractual relations, was found to have caused the accident resulting in
the injury of the victim and was adjudged liable as joint-tortfeasor in quasi-delict
through the office of a third party complaint. Here, Paras was a passenger of
Inland Trailways that was bumped from behind by Philtranco causing the former
bus to suddenly moved forward hitting a parked cargo trucked resulting in leg
fracture of the victim. Finding no negligence on the part of Inland, there was no
contractual breach committed by it, but the third party who was found to have
directly caused the accident, was held liable under the doctrine of quasi-delict.

Doctrine of res ipsa loquitor

This means “the thing speak for itself”. Negligence must be proved in a suit
on a quasi delict so that the plaintiff may recover. However, since negligence may

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in some cases be hard to prove, we may apply the doctrine of res ipsa loquitor
(the thing speaks for itself). This means that in certain instances, the presence of
facts or circumstances surrounding the injury clearly indicate negligence on the
part of the defendant.

Examples:

1. Where a barge rammed against one of the posts of the bridge as it passes
underneath.
2. When driving at the wrong lane.

In recent jurisprudence on medical malpractice, the doctrine of res ipsa

loquitor had been appropriately applied in lieu of medical evidence and
testimonies of expert witnesses, where the court from its fund of common
knowledge can determine the proper standard of care. Where common
knowledge and experience teach that aa resulting injury would have not occurred
to the patient if due care had been exercised, an inference of negligence may be
drawn giving rise to the application of this doctrine. Resort to res ipsa loquitor is
allowed because there is no other way, under normal and ordinary conditions,
by which the patient can obtain redress for injuries suffered by him. Example is
where a foreign object e.g. pair of scissors, was left inside the abdomen of the
patient or where there was extraction of a tooth while the patient was
undergoing removal of his tonsil, the removal of a body part where another is
intended to be removed, and many others.

In order to allow resort to the doctrine, therefore, the following essential

requisites must first be satisfied, to wit: (1) the accident was of a kind that does
not ordinarily occur unless someone is negligent; (2) the instrumentality or
agency that caused the injury was under the exclusive control of the person
charged; and (3) the injury suffered must not have been due to any voluntary
action or contribution of the person injured.

Case: Dr. Fernando Solidum vs. People of the Philippines, G.R. No. 192123,
March 10, 2014.

Facts: Gerald Gercayo, a 3-year old boy with imperforate anus, was admitted at
the Ospital ng Maynila to undergo operation to open up his anus. Dr. Solidum

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was a member of the medical team tasked to handle Gerald, and assigned as its
anesthesiologist. During the operation, Gerald experience bradycardia or slowing
of the heart beat and went into coma. He regained consciousness after two
weeks but could no longer see, hear or move.

Agitated, Gerald’s parents lodged a criminal complaint for Reckless

Imprudence resulting in Serious Physial Injuries against Dr. Solidum, as he was
tagged to be negligent in administering over dosage of an anesthesia causing
damage to the brain of Gerald which resulted in cardiac arrest and paralysis.
Applying the doctrine of res ipsa loquitor, the lower court convicted Dr. Solidum
on the ground that, prior to the surgery, Gerald was very healthy and declared to
withstand the rigors of surgery. But after the operation, Gerald could barely
talk, walk and move. Is the contention convicting Dr. Solidum proper?

Answer: No. The application of the doctrine is misplaced as there could other
factors which could have triggered the condition of Gerald while he was
undergoing surgery, and taken into account that the fact of administering
overdose dosage of anesthesia and that there was reckless disregard of
monitoring the condition of the patient, which were not convincingly proven by
evidence, there create a reasonable doubt as to the culpability of Dr. Solidum.
Thus, his acquittal is in order.

An action upon medical negligence cases, whether criminal, civil or

administrative, calls for the plaintiff to prove by competent evidence each of the
four (4) elements, namely: (a) the duty owed by the physician to the patient, as
created by the physician-patient relationship, to act in accordance with specific
norms or standards established by his profession; (b) the breach of duty by the
physician’s failing to act in accordance with the applicable standard of care; (c)
the causation, e.i. that there must be a reasonably close and causal connection
between the negligent act or omission to the resulting injury, and (d) the
damages suffered by the patient.

This doctrine of “res ipsa loquitor” had been frequently applied in

administrative cases involving judicial officers, some of which were meted
suspension while other were dismissed from the service, as in the case of
Melecio S. Sy, etc. vs. Carmelita S. Mongcupa, etc.. A.M. No. P-94-1110,

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February 6, 1997 where an Stenographer III of RTC Branch 5, Bongao, Tawi-tawi,
who acted as OIC-Clerk of Court of the said station was found to have
misappropriated the amount of Php237, 084.99 of court funds. Without waiting
for a full blown investigation, the SC suspended said employee and subsequently
dismissed from the service applying the principle of “res ipsa loquitor” as she
deserved not to be in the judiciary even for a single minute.

Dannum Absque Injuria

This means that although there was physical damage, there was no legal
injury. Since there is no legal injury, it follows that entitlement for an award of
damages is remote.

Case: Antonio Diaz vs. Davao Light and Power Co., et.al., G.R. No. 160959, April
4, 2007 where SC pronounced that petitioner can be faulted of his own acts
when series of complaints were filed against him, and whenever he suffered
injuries as a result thereby, it is a case of dannum absque injuria.

Facts: Antonio Diaz is one of the stockholders of Diaz and Co. Inc., the latter is
the owner of Imperial Hotel in Davao City. For failure to settle the electricity bill
of the hotel amounting to Php195,111.02, Davao Electric disconnected its
electrical connection and removed its electric meter. A collection suit was
subsequently instituted against Diaz and Company.

Antonio Diaz wrote Davao Electric that he is renting one of the untenanted
stall at the ground floor of the hotel, and applied for electric connection.
Thinking that the leasing is simulated as he is one of the stockholders of Diaz and
Co. Inc., his request was turned down by Davao Electric. Out of his anger, Diaz
threw stones to the office of Davao Electric and caused damage of its glass panel.
Meanwhile, a mandamus suit was filed by Diaz against Davao Electric, but was
dismissed.

In order to restore the electricity in the hotel, Diaz bought his own electric
meter, had it calibrated by DOE and installed it without the approval and consent
of Davao Electric. A criminal complaint for theft of electricity was filed against
Diaz at the Prosecutor’s Office. In retaliation, Diaz distributed handbills and in
the media exposing alleged anomalies of Davao Electric, and because of this, a

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damage suit was filed by Davao Electric as it besmirched its reputation. All cases
against him were dismissed and the collection suit was, likewise, compromised.

Diaz filed a damage suit against Davao Electric contending that the latter
abuse its rights in instituting several cases against him presumably under Article
19 of the NCC, as it put him in ridicule and all these cases are harassment suits
against him. Will the damage suit of Diaz prosper?

Answer: No. The elements of abuse of rights are the following: (a) the existence
of a legal right or duty; (b) which is exercised in bad faith; and (c) for the sole
intent of prejudicing or injuring another. Thus, malice or bad faith is at the core
of this provision. While it is true that Diaz may have suffered damages as a result
of the filing of the complaints, however, there is a material distinction between
damage and injury. Injury is the illegal invasion of a legal right; damage is the
loss, hurt or harm which results from the injury; and damages are the
recompense or compensation awarded for the damage suffered. Thus, there can
be damage without injury in those instances in which the loss or harm was not
the result of a violation of a legal duty. In such cases, the consequences must be
borne by the injured person alone. The law affords no remedy for damages
resulting from an act which does not amount to a legal injury or wrong. These
situations are often called dannum absque injuria. Whatever Diaz may have
suffered would have to be borne by him alone since it was his acts which lead to
the filing of the complaints against him.

A mere sending of a demand letter to vacate the premises resulted in the

filing of a damage suit by the recipient of the letter for he allegedly suffered
sleepless nights, besmirched reputation and public ridicule. This is another
illustrative case of situation of dannum absque injuria.

Case: Heirs of Purisima Nala, et.al. vs. Artemio Cabansag, G.R. No. 161188,
June 13, 2008

Facts: In 1990, Cabansag bought a 50 square meter lot from Spouses Gomez.
Said property is part of the 400 square meter parcel of land registered in the
name of Spouses Gomez. In October 1991, Cabansag received a demand letter
from Atty. Del Prado in behalf of Purisima Nala asking payment for the rentals of
his occupation or to vacate otherwise criminal and civil cases will be filed against

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him. Because of this, Cabansag suffered damages and was constrained to file a
damage suit against Atty. Del Prado and Nala. Atty. Del Prado claimed that he
acted in good faith and merely acting in behalf of his client when he sent the
demand letter. For her part, Nala alleged that said property is part of the 800
square meter lot owned by her late husband, Eulogio Duyan, which was
subsequently divided into two parts. The 400 square meter property was
conveyed to Spouses Gomez in a fictitious deed of sale with the agreement that it
will be merely held in trust by them for the Duyan’s children. Spouses Gomez sold
the subject portion in violation of the trust reposed on them. Will the damage
suit prosper?

Answer: No. Since there was no showing that Atty. Del Prado and Nala acted in
bad faith or malice in sending the demand letter to Cabansag, and Nala was
acting within her rights when she instructed her counsel to send the demand
letter, there is no cause of action for damages because Nala was only protecting
her proprietary rights over the subject property. One who makes use of his own
rights does no injury. Thus, whatever damages suffered by Cabansag should be
borne solely by him.

Doctrine of last clear chance (or doctrine of discovered peril; doctrine of

supervening negligence; the humanitarian doctrine)

The doctrine of last clear chance is to the effect that even if the injured party
was originally at fault, if the person who finally caused the accident had the last
clear opportunity to avoid it, he who could have prevented the injury is still liable
if he did not take advantage of such opportunity or chance.

CD No. 13 (Side B)

Start: 00:02- Doctrine of last clear chance (continuation of lecture)

-not applicable in culpa contractual
-not applicable when there lack of necessary repair of a falling building
-applicable only in vehicular accidents.

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Case: Allied Banking Corp. vs. BPI, G.R. No. 188363, February 27, 2013 where
the SC pronounced that accepting a deposit of a post-dated check worth Php1M
and have it coursed through the clearing house constitute contributory
negligence, and in fact the collecting bank has the last clear opportunity to detect
that the check is post-dated.

Facts: On October 10, 2002, a check in the amount of Php1M payable to Mateo
Management Group (MMG) was presented for deposit and accepted by Allied
Bank, Kawit Branch. The check was post-dated October 9, 2003 drawn against
Silva’s account with BPI. Upon receipt, Allied sent the check for clearing.
Subsequently, the check was cleared by BPI, thus, Allied credited MMG’s
account with Php1M. On October 22, 2002, MMG’s account was closed and all
funds therein were withdrawn. The following month, Silva discovered debit of
Php1M from his BPI account. In response to Silva’s complaint, BPI returned the
Php1M to his account.

Five months later, BPI returned the check to Allied stamped: POST DATED.
Allied refused to accept the check arguing that it was returned way beyond the
24-hour reglementary period under PCHC rules. Initially, PCHC directed the two
(2) banks to split the loss, but Allied insisted that BPI should solely bear the loss
due to its negligence in clearing the check.

BPI contended that it was the acceptance of a post-dated check that was the
proximate cause, thus, imputing gross negligence upon Allied. In its Decision,
PCHC Arbitration Committee declared that both parties were negligent in the
performance of their duties, but applying the doctrine of last clear chance, BPI
should bear the entire loss as it committed gross and deliberate violation of PCHC
rules. Is the ruling of PCHC correct?

Answer: No. The finding that BPI should solely bear the loss is erroneous because
both parties are negligent, and its own specific acts contributed to the
encashment of a post dated check. It is just and reasonable to split the liability at
60:40 as contributory negligence of the other intervenes. Nonetheless, there was
an attempt to adopt the doctrine of last clear chance in banking transactions, but
the SC brushed aside such application in this kind of transactions.

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Case: PNR Corp. vs. Purificacion Vizcara, et.al., G.R. No. 190022, February 15,
2012 where the SC refused to apply the doctrine of last clear chance.

Facts: While crossing a railroad track in Tiaong, Quezon, a passenger jeepney

was rammed by a passing train killing instantaneously four of its occupants
including the driver. It was observed that there was no crossing level bar installed
and the “stop, look and listen” signage was poorly maintained which made the
driver to cross the railroad unmindful of the impending danger of collision. PNR
reasoned out that it was the negligence of the jeepney driver which brought
about the accident as it did not take extra-precaution in crossing the railroad, and
that trains at railroad crossing is accorded with right of way. Applying the
doctrine of last clear chance, PNR asseverated, the jeepney driver has the last
opportunity to prevent the collision has he observed precautionary measure
before traversing. Is the contention of PNR correct?

Answer: No. The proximate cause of the accident is the PNR’s omission of
installing a crossing level bar and in failing to properly maintain the signage in
order to let the crossing motorist to a complete halt. Hence, PNR is negligent.

To determine the existence of negligence, the time-honored test was: did

the defendant in doing the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would have used in the same
situation. If not, then he is guilty of negligence.

The doctrine of last clear chance was not made to apply because there was
no evidence to show that the jeepney driver was also negligent in crossing the
railroad. This doctrine provides that were both parties are negligent but the
negligent act of one is appreciably later in point in time than that of the other, or
where it is impossible to determine whose fault or negligence brought about the
occurrence of the incident, the one who had the last clear opportunity to avoid
the impending harm but failed to do so, is chargeable with the consequences
arising therefrom. But since no negligence is attributable to the jeepney driver,
this doctrine is inapplicable.

18:00- No double recovery of damages

19:36- Doctrine of Proximate cause

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 It is that adequate and efficient cause which in the natural order of events,
and under the particular circumstances surrounding the case, would naturally
produce the event.

-vicarious liability of 3rd persons (parents, employers, etc.)

(Delete: 24:08- 24:31)
(Delete: 24:42- 24:59)
Art. 2180- Bonus pater familias
(Delete: 43:47- 44:09)
Arts. 2189, 2190 and 2191 correlate Art. 1723 (liability of contractors)

End of Lecture: 46:32

CD No. 13 (Side A)

Start: 00:01- Damages (Continuation of lecture)

- Contractor's liability/ Owner's liability)

As a general rule, moral damages are not recoverable in an action

predicated on a breach of contract. This is because such action is not included in
Article 2219 of the NCC as one of the actions in which moral damages may be
recovered. By way of exception, moral damages are recoverable in an action
predicated on a breach of contract: (a) where the mishap results in the death of a
passenger as provided in Art. 1764 in relation to Art. 2206(3) of the NCC; and (b)
where the common carrier has been guilty of fraud or bad faith as provided in Art.
2220. And based on the ruling in Philtranco Service Enterprise vs. Felix Paras and
Inland Trailways, etc., G.R. No. 161909, April 25, 2012, a third exception is
where a third party complaint based on quasi-delict is filed by defendant-common
carrier against the party who was directly responsible for the accident where a
passenger suffered injuries as a result of the accident.

02:32- Human Relations

Art. 19 (Abuse of Rights)

Case: Raul H Sesbreňo vs. Court of Appeals and Visayan Electric Company
(VECO), G.R. No. 160689, March 26, 2014

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Facts: A routine inspection in La Paloma Village, Labangon, Cebu City was
undertaken by Violation of Contract (VOC) inspectors of VECO for illegal
connections, meter tampering, jumpers, etc. When the team of inspectors
arrived at Sesbreno’s house, they were allowed entry by Sesbreno’s maid and
went to the garage to inspect the meter. The team found out that the electric
meter of Sesbreno was turned upside down, and therefore, cannot properly
record the actual consumption of the concessioner. Hence, they replaced
Sesbreno’s meter with a new one and proceeded inside Sesbreno’s house to
inspect the light connection and appliances to determine the electrical load
required by Sesbreno.

A damage suit for abuse of rights was instituted by Sesbreno against VECO
and its inspectors for conducting an unreasonable search because their entry to
the garage ad to his house was without his permission nor was the team armed
with a search warrant. Will Sesbreno’s damage suit prosper?

Answer: No. The entry of the inspection team to Sesbreno’s garage is founded on
the continuing authority from Sesbreno as its consumer to enter his premises at
all reasonable hours to conduct an inspection of the meter without being liable
for trespass to dwelling as embodied in the Service Contract between VECO and
its consumer when it applied for electrical connection. How about the entry to
the house of Sesbreno? Sesbreno contended that the unauthorized entry made
by VECO inspectors is in contravention of the Constitutional mandate against
unreasonable searches. But such contention is misplaced because such right
against unreasonable search is true only against agents of the State or law
enforcers but cannot be invoke for an act committed by a private individual for it
is not unlawful intrusion by the government. In fact, the entry may be covered
by the continuing authority to determine the unbilled electricity consumption of
Sesbreno.

Case: California Clothing, Inc., etc. vs. Shirley G. Quiňones, G.R. No. 175822,
October 23, 2013.

Facts: Quinones, a Cebu Pacific Air employee went inside the Guess Botique at
Robinson’s Department Store in Cebu City. She was able to purchase a black
jeans and allegedly, after paying the price, a receipt was issued to her. While
walking through the skywalk, she was approached by a Guess employee

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informing her that she failed to pay the item. Shirley insisted that she paid the
item and showed the receipt, but, altercation ensued at the Cebu Pacific office in
front of many customers. Guess employees insisted that she failed to pay despite
the issuance of the receipt. In fact, Guess wrote Cebu Pacific management of
the misdemeanor of their employee but the latter did not entertain the letter.
Because of this incident, a damage suit founded on abuse of rights was filed by
Shirley against Guess and its proprietor. Will Shirley’s damage suit prosper?

Answer: Yes. While it is within the right of the Guess employees to verify if the
item was indeed paid, but such exercise of right is not without limitations. The
act of Guess in writing the management of Cebu Pacific, in the guise of seeking
assistance, but in truth, in order to compel Shirley to pay and imputing bad acts
on the part of Shirley placed her in a bad light and purposely to tarnish her
reputation in the eyes of her employer. The SC postulated “to malign Shirley
without substantial evidence and despite the latter’s possession of enough
evidence in her favor, is clearly impermissible. A person should not use his rights
unjustly or contrary to honesty and good faith, otherwise, he opens himself to
liability. The exercise of a right must be in accordance with the purpose for which
it was established and must not be excessive or unduly harsh.” Hence, Guess
obviously abused its rights.

(Delete: 06:25- 10:28)

19:05- Art. 20 and 21 NCC

- Acts or omissions punishable by law constituting civil liability of a person)
- Acts not constituting an offense resulting in damage to another.
(Delete: 24:33- 24:49)

32:32- Breach of Promise to Marry (Not an actionable wrong)

(Delete: 33:01- 34:42)
End of Lecture- 46:04

CD No. 14 (Side A)

Start: 01:19- Breach of Promise to marry

Damages (Human Relations)
Art. 24- Principle of Parens Patriae

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(Delete: 7:44- 7:47)

Case: James M. Imbong, et.al. vs. Hon. Paquito N. Ochoa, et.al., G.R. No.
204819, April 8, 2014, whereby the constitutionality of the Reproductive Health
Law or RA No. 10355 is in issue and by the principle of parens patriae, it uphold
the constitutionality of some provisions thereof particularly in the rearing of the
youth as stakeholders for national development.

Case: Social Weather Station and Pulse Asia vs. COMELEC, G.R. No. 208062,
April 7, 2015, where petitioners assailed the validity of COMELEC Resolution No.
9674 requiring them to disclose the sponsors of election surveys from February
2013 to April 2013 and onwards. Upholding the validity of said resolution, the SC
compared it to the duty of the State for the welfare of the children and the State’s
mandate to protect and care for them, as parens patriae constitute a substantial
and compelling government interest in regulating utterances in TV broadcast.
The regulation of election surveys affects the constitutional policy of guaranteeing
equal access to opportunities in public service. The fact that election surveys may
affect the choice of electorates, it should be regulated by the State.

Art. 36- Independent civil actions

Case: Heirs of Eduardo Simon vs. Elvin Chan and the CA, G.R. No. 157547,
February 23, 2011.

Facts: Eduardo Simon was charged for violation of BP 22 for issuing an unfunded
LBP check worth Php336,000.00. Subsequently, Elvin Chan, the private
complainant in the subject criminal case, instituted a collection suit coupled with
the application of a writ of attachment. Upon approval of the bond and issuance
of the writ of attachment, Simon’s Nissan car was attached. Simon filed an
urgent motion to dismiss and to charged plaintiff’s attachment bond for damages
on the ground of litis pendentia, and that the civil liability was impliedly instituted
in the criminal action as there was no reservation made. Chan vehemently
opposed the motion as the filing thereof was authorized under Sec. 2 Rule 111 of
the Rules of Court where the action is within the ambit of Art. 33 of the NCC.
Besides, the enforcement of the obligation is based upon violation of the
Negotiable Instruments Law since the accused is the drawer in the dishonored

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check. The trial court granted Simon’s motion and dismissed the collection suit
separately filed by Chan. Is the ruling of the court correct?

Answer: Yes, there is no independent civil action to recover the value of the
bouncing check in consonance of BP 22. This is clear from Rule 111 of the Rules of
Court effective December 2000 where it provides: “(b) the criminal action for
violation of BP 22 shall be deemed to include the corresponding civil action. No
reservation to file such civil action shall be allowed”. This rule was to discourage
multiplicity of suit and to compel creditors to pay docket fees before one can
institute a criminal case for violation of the anti-bouncing check law. Here, the
Supreme Court had the occasion to distinguish the allowance of independent civil
action between violation of BP 22 and the crime of estafa, where, in the latter,
the filing of independent civil action based on fraud or deceit can be made
pursuant to Art. 33 of the NCC which is not so, if it is a violation of BP 22
notwithstanding the allegations of fraud and deceit.

Prejudicial question
(Delete: 18:17- 18:40)

A prejudicial question is one which must be decided first before criminal

action may be instituted because a decision therein is vital to the judgment in the
criminal case. In other words, it is one which arises in a case, the resolution of
which is a logical antecedent of the issue involved therein and the cognizance of
which pertains to another tribunal.

It is an established doctrine that injunction will not lie to enjoin a criminal

prosecution because public interest requires that criminal acts be immediately
investigated and prosecuted for the protection of society. However, based on
various decisions of the SC, it laid down exceptions to let them, and one of them
is when it lie to any, when one of them is when there is a prejudicial question
which is sub-judice.

Case: Teresita Villaluz, et.al. vs. Court of Appeals, et.al., G.R. No. 106214,
September 5, 1997.

Facts: Sps. Reynaldo and Zenaida Anzures sold M/V “Rosa Float” to Teresita
Villaluz for HK$ 750,000.00. As agreed by them, even if there was already

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acknowledgment of the purchase price, none was paid because it will be in
Manila where payment will be undertaken. But Villaluz did not pay immediately
upon arrival in Manila despite repeated demands.

Subsequently, Villaluz issued post dated checks worth Php2.1Mand also

sold to the Anzures, her vehicle, parcels of land and a house and a sala set, the
purchase price of which will be deducted from Villaluz’ obligation to the Anzures.

When Anzures deposited the checks, it was dishonored, hence, it filed a

criminal case for violation of BP 22 and several properties of Villaluz were
attached. After trial, Villaluz was acquitted but held civilly liable equivalent to the
amount of the check. Viilaluz appealed.

Meanwhile, Anzures filed an ejectment suit against the occupants of the

house sold to them by Villaluz, and judgment was rendered in their favor
directing the occupants to vacate the premises. On appeal, these persons
invoked the defense that the settlement on the civil aspect of BP 22 case against
Villaluz pose as a prejudicial question to their ejectment since ownership of the
building is yet to be determined. Is this argument correct?

Answer: No. The ejectment suit can stand on its own regardless of the outcome
of the civil aspect of BP 22 case. The resolution of either is not determinative of
the other. This is so because Anzures were already the owners of the property
subject of the ejectment suit upon the sale executed by Villaluz in their favor. The
certificate of title issued in their names confirm their ownership thereto.

Case: Rafael Jose Consing, Jr. vs. People of the Philippines, G.R. No. 161075,
Ju;y 15, 2013.

Facts: Consing obtained for himself and his mother, Cecilia de la Cruz, a loan amounting to
Php18M from Unicapital secured by a real estate mortgage over a parcel of land covered by a
Torrens title in the name of de la Cruz. In accordance with its option to purchase the
mortgaged property, Unicapital agreed to purchase one-half (1/2) of the property for a total
consideration of Php21M. Payment was made by offsetting the loan obligation of Consing and
de la Cruz. The other half of the property was purchased by Plus Builders, Inc., a joint venture
partner of Unicapital.

Later, it was discovered that de la Cruz’s title was spurious, hence, Unicapital demanded
the return of the purchase price and payment of the loan obligation, which demand was

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ignored by Consing. Instead, Consing filed an injunction suit against Unicapital seeking the
latter to enjoin from collecting the amount from him on the ground that he merely acted as a
mere agent of his mother. For their part, Unicapital filed a criminal case for estafa through
falsification of public document before the Prosecutor’s Office. Pending resolution of the
prosecutor, Unicapital instituted a collection suit against Consing.

Upon finding of probable cause, the prosecutor filed an information for estafa through
falsification of public document, and upon arraignment, Consing moved to defer the same
contending that the pendency of the civil action he filed against Unicapital is a prejudicial
question and should be resolved first before the criminal action may proceed. Is Consing’s
contention tenable?

Answer: No. Consing’s contention is meritless, as it is apparent in the allegations of the civil
complaint by Unicapital that Consing and de la Cruz acted in a wanton, fraudulent, oppressive
and malevolent manner in offering as security and later object of sale, a property which they
do not own, and foisting to the public a spurious title. As such, the action was one that could
proceed independently of the criminal case pursuant to Article 33 of the NCC where it provides:
“in cases of defamation, fraud, and physical injuries, a civil action for damages, entirely
separate and distinct from the criminal action, may be brought by the injured party. Such civil
action shall proceed independently of the criminal prosecution and shall require only a
preponderance of evidence.” It is well-settled that a civil action based on defamation, fraud
and physical injuries may be independently instituted pursuant to Article 33 of the NCC and
does not operate as a prejudicial question that will justify the suspension of a criminal case.

End of Lecture- 32:43

REVIEW OUTLINE IN
LAND TITLES AND DEEDS

The REGALIAN DOCTRINE

The Regalian Doctrine is enshrined in the Section 2 of Article XII of the 1987
Constitution provides:

“All lands of the public domain, waters, mineral, coal, petroleum and other mineral oils,
all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of agricultural lands, all other
natural resources shall not be alienated. X x x x x”

Question: What are the effects of the Regalian Doctrine with respect to
ownership of lands in general?
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Answer: Its effects are the following:

(1) All lands of whatever classification and other natural resources not
otherwise appearing to be clearly within private ownership are presumed
to belong to the State which is the source of any asserted right to
ownership of land;

(2) Since all lands of public domain belong to the State, private title to land
must be traced to some grant, express or implied, from the State, like the
Spanish Crown or its successors, the American Colonial government and
thereafter, the Philippine Republic;

(3) The burden of proof in overcoming the presumption of State ownership of

the lands of the public domain is on the person applying for registration for
claiming ownership, who must prove that the land subject of the
application is alienable and disposable. To overcome the presumption,
incontrovertible evidence must be established that the land subject of
application (or claim) is alienable or disposable.

While it seems that almost all lands are of State ownership under the
Regalian Doctrine, a recognized exception to this theory is the recognition of the
existence of native title to land. It does not, therefore, negate native title to
lands held in private ownership since time immemorial. Native title recognizes
ownership of land by Filipinos independent of any grant from the Spanish crown
on the basis of possession since time immemorial. Lands embraced by native title
are presumed to have been held and possessed by the occupant even before
Spanish conquest and never to have been public land. Otherwise stated, lands
under native title are not part and was never been a part of the public domain,
thus, commonly referred to as “ancestral domain”. Private ownership of the
lands forming part of the ancestral domain is institutionalized by the passage of
Republic Act No. 8371 otherwise known as “Indigenous People’s Rights Act of
1997”. A formal recognition of ownership of lands under ancestral domain shall
be embodied in a Certificate of Ancestral Domain Title (CADT) issued to
indigenous cultural communities or indigenous people over the territories
identified and delineated.

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 Article XII, Section 3, Article XII of the 1987 Constitution, provides, in
part:

“Lands of the public domain are classified into agricultural, forest or timber, mineral
lands and national parks. Agricultural lands of the public domain may be further classified by
law according to the uses to which they may be devoted. Alienable lands of the public domain
shall be limited to agricultural lands. X x x x”

Question: Who are those qualified to acquire alienable lands of the public
domain?

Answer: Generally, only to individuals and entities who are Filipino citizens are
qualified to acquire alienable lands of the public domain. The Krivenko doctrine is
still applicable despite the fact that the same was promulgated in 1947 under the
1935 Constitution.

In the old case of Krivenko vs. Register of Deeds, G.R. No. L-630 (1947), it
was ruled that the capacity to acquire public land is made dependent upon the
capacity to acquire or hold lands of the public domain. Private land may be
transferred or conveyed only to individuals or entities qualified to acquire lands of
the public domain.

The 1935 Constitution reserved the right for Filipino citizens or corporations
at least 60% of the capital of which was owned by Filipinos. Aliens, whether
individuals or corporations have been disqualified from acquiring public lands,
hence, they are also disqualified from acquiring private lands. The same
prohibition is found in the 1973 and the 1987 Philippine Constitution.

A. Individuals

The general rule is that non-Filipinos cannot acquire or hold title to private
lands of public domain. There are noted exceptions, however, like:

(1) Aliens by way of hereditary succession;

(2) Natural born citizens who have lost their Philippine citizenship. However, if
said person uses the land for business purposes, he is limited to 5,000
square meters only for urban land and three (3) hectares fro rural lands;

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 (3) A Filipino citizen who was naturalized as a citizen in a foreign country but
“reacquired” his Philippine citizenship pursuant to Republic Act No. 9225
otherwise known as the “Citizenship Retention and Reacquisition Act of
2003” may now own and possess private lands because the law itself
grants him the same rights as any Filipino citizen;

(4) Aliens, although disqualified to acquire lands of the public domain, may
lease private land for a reasonable period provided, that such lease does
not amount to a virtual transfer of ownership. They may also be given an
option to buy the property they leased on condition that he will be granted
Philippine citizenship;

(5) Lands acquired by an American citizen prior to the proclamation of

Philippine Independence on July 4, 1946 but after the passage of the 1935
Constitution may be registered;

(6) Lands sold to an alien who is now a naturalized Filipino citizen can no
longer be annulled because the prohibition no longer apply by virtue of the
naturalization of such alien;

B. Corporations

Private corporations may hold lands, whether private lands or

patrimonial property of the State, subject to the following limitations:

(1) For private lands:

a. At least 60% of the capital is owned by Filipinos;
b. Restricted as to the extent reasonably necessary to enable it to carry
out the purpose for which it was created;
c. If engaged in agriculture, it is limited to 1,024 hectares;

(2) For patrimonial property of the State:

a. May lease only for a limited period of twenty-five (25) years;

b. Limited to 1,000 hectares only;
c. Applies to both Filipino and foreign corporations
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 d. This limitation does not apply where the corporation acquired the land
while the same was already a private land.

A corporation sole may acquire and register private agricultural land.

Though consists of one person only, it is vested with the right to purchase and
hold real estate and register the same in trust for the faithful or members of the
religious society or church for which the corporation was organized.

Classification of Lands

To enhance your understanding of the subject, you must know how lands
are classified. Pursuant to Section 3, Article XII of the 1987 Constitution, it
provides:

“Lands of the public domain are classified into agricultural, forest or timber, mineral
lands, and national parks. Agricultural lands of the public domain may be further classified by
law according to the uses which they may be devoted. Alienable lands of the public domain
shall be limited to agricultural lands.”

Question: How are lands of the public domain classified?

Answer: The classification of lands of the public domain is an exclusive

prerogative of the executive department of the government and in the absence of
such classification, the lands remain as unclassified until it is released therefrom
and rendered open for disposition. No land of the public domain eighteen per
cent (18%) in slope or over shall be classified as alienable and disposable.

The President, through a presidential proclamation or executive order, can

classify or reclassify land to be included or excluded from the public domain. The
DENR Secretary is likewise empowered by law to approve a land classification and
declare such land as alienable and disposable. Since 1919, courts were no longer
free to determine the classification of lands from the facts of each case, except
those that have already became private lands.

With respect to alienable and disposable lands of the State, there are two
(2) categories:

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 (1) Patrimonial lands of the State, or those classified as lands of private
ownership under Article 425 of the NCC;
(2) Lands of the public domain as provided by the Constitution, but with the
limitation that the lands must only be agricultural.

Consequently, land classified as forest or timber, mineral, or national

parks are not susceptible of alienation or disposition unless they are reclassified
as agricultural first.

The classification of lands of the public domain is of two (2) types:

(1) Primary classification- comprises agricultural, forest or timber,

mineral lands and national parks, as classified under Sec. 3 Article XII of
the Constitution;
(2) Secondary classification- pertains to agricultural lands only which is
classified according to its uses according to Section 9 of the Public Land
Act (CA No. 141), into:

a) Agricultural;
b) Residential, commercial, industrial, or for similar productive
purpose;
c) Educational, charitable or other similar purpose; and
d) Reservations for twon sites and for public and quasi-public uses.

Take note, however, that Section 20(a) of RA No. 7160, otherwise known
as the Local Government Code of 1991, states:

(a) “A city or municipality may, through an ordinance passed by the sangguniang

after conducting public hearings for the purpose, authorize the reclassification of
agricultural lands and provide for the manner of their utilization or disposition in the
following cases: (1) when the land ceases to be economically feasible and sound for
agricultural purposes as determined by the Department of Agriculture or (2) where the
land shall have substantially greater economic value for residential, commercial or
industrial, as determined by the sangguniang concerned”.

But while the government has the prerogative to classify lands of the public
domain, in Saad Agro-Industries, Inc. vs. Republic, G.R. No. 152570, September
27, 2006, the SC stressed that the primary right of a private individual who

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possessed nd cultivated the land in good faith much prior to such classification
must be recognized and should not be prejudiced by after-events which could not
have been anticipated.

Once the government classified lands as alienable and disposable, it is

susceptible of registration by any qualified person pursuant to an appropriate
land registration proceedings. There are, however, lands that are non-
registrable, meaning, they are beyond the commerce of man and not susceptible
of private appropriation and acquisitive prescription. They are the following:

(1) Lands intended for public use and for public service;
(2) Forest lands;
(3) Mineral lands;
(4) Foreshore and reclaimed areas;
(5) Mangroves swamps;
(6) Watersheds
(7) Military or naval reservations; and
(8) Protected areas.

Land Registration

To formalize and confirm claim of title and ownership of lands by any

qualified individual or juridical persons, it must undergo the process of land
registration.

Question: What is a land registration proceeding?

Answer: It is a judicial or administrative proceeding whereby a person’s claim of

ownership over a particular land is determined and confirmed or recognized so
that such land and the ownership thereof may be recorded in a public registry.
Judicial proceedings for the registration of lands throughout the Philippines is a
proceeding in rem, and therefore, binding to the whole world.

Question: What is the purpose of land registration?

Answer: The purpose of land registration is:

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 (1) It is a constructive notice to the whole world;
(2) To quiet title to the land and to stop forever any question as to the legality
of said title;
(3) To relieve the land of unknown claims;
(4) To guarantee the integrity of land titles and to protect their indefeasibility
once the claim of ownership is established and recognized;
(5) To give every registered owner complete peace of mind;
(6) To issue a certificate of title to the owner which shall be the best evidence
of his ownership of the land;
(7) To avoid conflicts of title in and to real estate;
(8) To facilitate transactions relative thereto by giving the public the right to
rely upon the face of the Torrens certificate of title and to dispense with
the need of inquiring further its status.

But always bear in mind that registration does not vest title. It is not a
mode of acquiring ownership. It does not give any person any better title than
what he lawfully has. Registration is merely a system of registration of titles to
lands.

Question: What are these governing laws implementing land registration?

Answer: These are the following:

(1) Act No. 2259 or the “Cadastral Act”, issued on February 11, 1913, is an
act providing for special compulsory proceedings for the settlement and
adjudication of titles to lands;

(2) CA No. 141 or the “Public Land Act” approved on November 7, 1936, is
the law governing the classification and disposition of lands of public
domain other than timber and mineral lands, and privately owned lands
which reverted to the State;

(3) PD No. 1529 or the “Property Registration Decree” issued on June 11,
1978, was enacted to codify the various laws relative to registration of
property. It governs registration of lands under the Torrens system as well
as unregistered lands;

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 (4) RA No. 8371 or the “Indigenous People’s Rights Act”, was enacted on
October 29, 1997. The law allows indigenous peoples to obtain recognition
of their right of ownership over ancestral lands and ancestral domains by
virtue of native title.

(5) RA No. 7160 or the Comprehensive Agrarian Reform Act of 1988 as

amended. This law allows the issuance of emancipation patents and
certificate of land ownership awards to qualified farmer-beneficiaries.

To simplify and streamline land registration proceedings, Presidential

Decree No. 1529 otherwise known as the “Property Registration Decree” issued
on June 11, 1978. This decree governs the registration of lands under the
Torrens system as well as the recording of transactions relating to unregistered
lands including chattel mortgages. This decree consolidates, in effect, all pre-
existing laws on property registration including Act No. 496, with such
appropriate modifications as are called by existing circumstances.

Question: Who may apply for registration of registrable lands?

Answer: Under Section 14, Presidential Decree No. 1529, the following may
apply for registration:

1. Those who by themselves or their predecessor-in-interest have been in

open, continuous, exclusive and notorious possession and occupation
of alienable and disposable lands of the public domain under a bona
fide claim of ownership since June 12, 1945, or earlier;

2. Those who have acquired ownership of private lands by prescription

under the provisions of existing laws;

3. Those who have acquired ownership of private lands or abandoned

river beds by right of accession or acquired under existing laws;

4. Those who have acquired ownership of lands in any manner provided

for by law.

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Acquisition and Registration under Sec. 14(1) of PD No. 1529

Section 14(1) deals with possession and occupation in the concept of an

owner while Section 14(2) involves prescription as a mode of acquiring
ownership.

You will notice that Section 14(1) of PD No. 1529 (Property Registration
Decree) is a reiteration of Section 48(b) of CA No. 141 (Public Land Act), where it
provides that “those who by themselves or through their predecessors-in-interest
have been in open, continuous, exclusive and notorious possession and
occupation of alienable and disposable land of the public domain, under a bona
fide claim of acquisition of ownership, since June 12, 1945 or prior thereto, may
apply for the confirmation of imperfect or incomplete title”. There is no
substantial difference between these two (2) provisions of law. In both, the
applicant must show that (1) the land is alienable and disposable public
agricultural land; and (2) he has been in open, continuous, exclusive and
notorious possession thereof under a bonafide claim of ownership since June 12,
1945, or prior thereto. Both refer to original registration proeedings, are against
the whole world, and the decree of registration for both is conclusive and
binding.

To prove that the land subject of the application for registration is alienable,
an applicant must establish the existence of a positive act of the government such
as a presidential proclamation or an executive order, an administrative action,
investigation reports of Bureau of Lands investigators and a legislative act or
statute. The applicant may secure a certification from the government that the
lands applied for are alienable and disposable, but the certification must show
that the DENR Secretary had approved the land classification and released the
land of the public domain as alienable and disposable, and that the land subject
of the application for registration falls within the approved area through survey
by the PENRO or CENRO. The applicant must also present a copy of the original
classification of the land into alienable and disposable, as declared by the DENR
Secretary or a proclaimed by the President. (Gaerlan vs. Republic, G.R. No.
192717, March 12, 2014).

Take note that in the landmark case of Malabanan vs. Republic, G.R. No.
179987, April 29, 2009, the SC reiterated that the law does not require that the

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land subject of registration should have been alienable and disposable during the
entire period of possession, or since June 12, 1945. It is sufficient that the land is
already declared as alienable and disposable land at the time the application for
registration is filed so as to entitle the possessor to registration.

Since the effectivity of PD No. 1073 on May 9, 1977, it must be shown that
possession and occupation of the land started on June 12, 1945 or earlier. A
mere showing of possession and occupation for thirty (30) years is no longer
sufficient. However, PD No. 1073 cannot impair vested rights of applicants who
had complied with the 30-year possession required under RA No. 1942 whish
amended CA No. 141. A vested right is some right or interest in the property
which has become fixed and established, and is no longer open to doubt or
controversy.

Thus, in Republic vs. Remman Enterprises, Inc., G.R. No. 199310, February
19, 2014, the SC held that an applicant who, by himself or his predecessor-in-
interest, has been in open, continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain, under a bonafide cliam of
acquisition of ownership for 30 years prior to the issuance of PD No. 1073 which
became effective only on May 9, 1977, or at least since May 8, 1947, may apply
for judicial confirmation of their imperfect title or incomplete title under Sec.
48(b) of the Public Land Act.

Torrens System of Registration

The Torrens system is a system for registration of land under which,

upon landowner’s application, the court may, after appropriate proceedings,
direct the issuance of a certificate of title. This was adopted by the government as
the most effective measure to guarantee the integrity of land titlesand to protect
their indefeasibility once the claim of ownership is established and recognized.
The government is required to issue an official certificate of title to attest to the
fact that the person named in the certificate is the owner of the property therein
described, subject to such liens and encumbrances as thereon noted or what the
law warrants or reserves.

Thus, a certificate of title is conclusive of ownership. It enjoys the

presumption of validity. It is an indefeasible title and is conclusive as to the

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ownership of the registrant, the identity of the land, and its location. An original
certificate of title issued by virtue of an administrative proceeding is as
indefeasible as a certificate of title issued under judicial proceedings. However,
the indefeasiblity of titlee does not attach to titles secured by fraud and
misrepresentation. One who deals with property registered under the Torrens
system need not go beyond the certificate of title, but only has to rely on the
certificate of title. He is charged with notice only of such burdens and claims as
are annotated on the title. Registration does not vest title. It is not a mode of
acquiring ownership. It does not give any person any better title than what he
lawfully has.

In our discussion, we will deal on several concepts and theories evolving

the issuance of a Torrens certificate of title which, oftentimes, is the subject of a
Bar question in the recent examinations.

CONSTRUCTIVE NOTICE UPON REGISTRATION

Registration in the public registry is notice to the whole world. Section 52

of PD No. 1529 provides that “every conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry affecting registered land shall,
if registered, filed or entered in the Office of the Register of Deeds of the province
or city where the land to which it relates lies, be constructive notice to all persons
from the time of such registering, filing or entering”. Under the rule of notice, it
is presumed that the purchaser has examined every instrument of record
affecting the title. Such presumption may not be rebutted. He is charged with
notice of every fact shown by the record and is presumed to know every fact
which an examination of the record would have disclosed. This presumption
cannot be overcome by any claim of innocence or good faith. Otherwise, the
very purpose and object of the law requiring a record would be destroyed.
(Eufemia Balatico Vda. de Agatep vs. Roberta Rodriguez, G.R. No. 170540,
October 28, 2009).

A deed or other voluntary instrument involving registered shall not take

effect as a conveyance or bind the land but shall operate only as a contract
between the parties and as evidence of authority of the Register of Deeds to
make registration. The act of registration shall be the operative act to convey or
affect the land in so far as third persons are concerned. This is very explicit in

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Section 51 of PD No. 1529. From the standpoint of third parties, a property
registered under the Torrens system remains, for all legal purposes, the property
of the person in whose name it is registered, notwithstanding the execution of
any deed of conveyance, unless the corresponding deed is registered. Simply
put, if a sale is not registered, it is binding only between the seller and the buyer,
but it does not affect innocent third parties. (Spouses Bulaong vs. Gonzales, G.R.
No. 156318, Spetember 5, 2011). Hence, in case of conflict between a vendee
and an attaching creditor, an attaching creditor who registers the order of
attachment and the sale of the property to him as the highest bidder acquires a
valid title to the property as against a vendee who had previously bought the
same property from the same owner but who failed to register his deed of sale.

Entry alone produces the effect of registration, whether the transaction

entered is a voluntary or involuntary one, so long as the registrant has complied
with all that is required of him for purposes of entry and annotation, and nothing
more remains to be done but a duty incumbent solely of the Register of Deeds.
(National Housing Authority vs. Augusto Basa, et.al., G.R. No. 149121, April 20,
2010).

NO COLLATERAL ATTACK ALLOWED ON CERTIFICATE OF TITLE

A collateral attack transpires when, in another action to obtain a different

relief and as an incident to the present action, an attack is made against the
judgment granting the title. This manner of attack is to be distinguished from a
direct attack against a judgment granting the title, through an action whose main
objective is to annul, set aside, or enjoin the enforcement of such judgment if
not yet implemented, or to seek recovery if the property titled under the
judgment had been disposed of. (Vda. de Aguilar vs. Spouses Alfaro, G.R. No.
164402, July 5, 2010).

A certificate of title is not subject to collateral attack. It cannot be altered,

modified, or cancelled except in a direct proceeding. Thus, in a complaint for
recovery of possession, defendant cannot raise in the action the validity of
plaintiff’s title. There must be a direct attack on the title via a separate action;
but a direct attack may be made in a counterclaim or third party complaint.

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 What cannot be collaterally attacked is the certificate of title and not the
title itself. The certificate referred to is that document issued by the Register of
Deeds known as the OCT or TCT. In contrast, the title referred to by law meands
ownership which is, more often than not, represented by that document. The
prohibition against collateral attack does not apply to spurious or non-existent
tiles, since such titles do not enjoy indefeasiblity.

An issue regarding the validity of a title, even if constituting fraud or breach

of trust, can only be assailed in an action instituted for that purpose. (Ingusan vs.
Reyes, G.R. No. 142938, August 28, 2007).

REGISTRATION DOES NOT VEST OWNERSHIP

Registration does not vest title. It is not a mode of acquiring ownership. It

does not give any person any better title than what he lawfully has. Registration
is merely a system of registration of titles to lands. While certificates of title are
indefeasible, unassailable and binding against the whole world, including the
government itself, they do not create or vest title. They merely confirm or record
title already existing and vested. They cannot be used to protect a usurper from
the true owner, nor can they be used as a shield for the commission of fraud,
neither do they permit one to enrich himself at the expense of another.

The issuance of title in one’s favor could not vest upon him ownership of
the entire property, neither could it validate the purchase thereof which is null
and void. Registration does not vest title; it is merely the evidence of such title.
(Perfecto Macabadbad, Jr. vs. Fernando Masirag, G.R. No. 161237, January 14,
2009).

In the case of Reyes vs. Montemayor, et.al., G.R. No. 166516, September
3, 2009, the SC held that “

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