CIVIL LAW

2021 GOLDEN NOTES

FACULTY OF CIVIL LAW
UNIVERSITY OF SANTO TOMAS
MANILA
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 ACADEMIC YEAR 2020-2021
CIVIL LAW STUDENT COUNCIL
LYODYCHIE Q. CAMARAO PRESIDENT
MARIA FRANCES FAYE R. GUTIERREZ VICE PRESIDENT INTERNAL
STEPHEN FLOYD A. GOPEZ VICE PRESIDENT EXTERNAL
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UST BAR-OPS
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JAMES ROSS L. TAN SENIOR MEMBER

ATTY. AL CONRAD B. ESPALDON

ADVISER
 ACADEMICS COMMITTEE 2021
MARIA FRANCES FAYE R. GUTIERREZ SECRETARY GENERAL
NATHAN RAPHAEL D.L. AGUSTIN ASST. SECRETARY GENERAL
JOHN EDWARD F. FRONDA EXECUTIVE COMMITTEE
ANGEL ISAH M. ROMERO EXECUTIVE COMMITTEE
KIRBY ANNE C. RENIA EXECUTIVE COMMITTEE
KAREN ABBIE C. ASPIRAS EXECUTIVE COMMITTEE
JOSE CHRISTIAN ANTHONY I. PINZON EXECUTIVE COMMITTEE
MARIA FRANCES FAYE R. GUTIERREZ LAYOUT ARTIST
CIARI T. MENDOZA COVER DESIGN ARTIST

CIVIL LAW COMMITTEE 2021

MARY JO S. REYES
CIVIL LAW COMMITTEE HEAD

MARIELLE E. RAMACOLA ASST. HEAD, CREDIT/PROPERTY

CARA ANGELA N. FLORES ASST. HEAD, PERSONS AND FAMILY
RELATIONS/ OBLIGATIONS AND CONTRACTS
FLOREE FAYE F. PINZON ASST. HEAD, SUCCESSION/LTD
MARY JO S. REYES ASST. HEAD, TORTS
ANTHONY LUIGI B. DE VERA ASST. HEAD, SALES/PAT

MEMBERS
PIO VINCENT R. BUENCAMINO CHRISTIAN JADE R. RABINO
LAWRENCE JERICHO B. ORTIZ JESSAMINE DENISE W. VALDES
KRISTINE H. SERRANO CHANELLE MIKAELLA T. ISIDRO
KARA C. RAMOS JOANNA A. PAZ
ANGELA MAY S. ALFONSO LARRY MARK S. MORALES
ABIGAIL P. MANALOTO HEATHER MARIAN M. AMOROSO
CLARISSE M. LIBAN LANDREL M. MATAGA

ATTY. KENNETH JAMES CARLO C. HIZON

ATTY. KING JAMES CARLO C. HIZON
ATTY. JOSHUA BARRIETA
Advisers
 ACADEMICS COMMITTEE 2020
AYA DOMINIQUE S. CAPARAS SECRETARY GENERAL
MARIA FRANCES FAYE R. GUTIERREZ ASST. SECRETARY GENERAL
RUTH MAE G. SANVICTORES EXECUTIVE COMMITTEE
NICOLE G. AMANTE EXECUTIVE COMMITTEE
JAYSON GABRIEL R. SORIANO EXECUTIVE COMMITTEE
CARA ANGELA N. FLORES EXECUTIVE COMMITTEE
IANA CASSANDRA Y. ESMILE EXECUTIVE COMMITTEE
AYA DOMINIQUE S. CAPARAS LAYOUT ARTIST
CIARI T. MENDOZA COVER DESIGN ARTIST

CIVIL LAW COMMITTEE 2020

FLOREE FAYE F. PINZON
CIVIL LAW COMMITTEE HEAD

MA. SELYNA V. ROÑO ASST. HEAD, CREDIT/PROPERTY

MARY JO S. REYES ASST. HEAD, PERSONS AND FAMILY
RELATIONS/ OBLIGATIONS AND CONTRACTS
FAITH MARIE A. FLORES ASST. HEAD, SUCCESSION/LTD
KATELYN LEANDER ASST. HEAD, TORTS
FEBREA AREM R. MERCADO ASST. HEAD, SALES/PAT

MEMBERS
JOSE CHRISTIAN ANTHONY I. PINZON MARIE ANGELICA A. CORDOBA
LAWRENCE MENDOZA AIREI KIM P. GUANGA
HAIDEE AMABEL T. UY ARLEIGH SHAYNE A. CASTILLO
DANICE GO GAN JOANNAH KIMBERLY R. GAMBOA
JHEA VERONICA V. MENDOZA FRANZ G. PAROHINOG
ANDREA D.G. GONZAGA PATRICK PAREDES
ANGELICA RUIZ

ATTY. KENNETH JAMES CARLO C. HIZON

ATTY. KING JAMES CARLO C. HIZON
ATTY. LOVERLY AMODO BARQUEZ
ATTY. JOSHUA BARRIETA
Advisers
 FACULTY OF CIVIL LAW
UNIVERSITY OF SANTO TOMAS

ACADEMIC OFFICIALS

ATTY. NILO T. DIVINA REV. FR. ISIDRO C. ABAÑO, O.P.

DEAN REGENT

ATTY. ARTHUR B. CAPILI

FACULTY SECRETARY

ATTY. ELGIN MICHAEL C. PEREZ

LEGAL COUNSEL
UST CHIEF JUSTICE ROBERTO CONCEPCION LEGAL AID CLINIC

JUDGE PHILIP A. AGUINALDO

SWDB COORDINATOR

LENY G. GADIANA, R.G.C.

GUIDANCE COUNSELOR
 OUR DEEPEST APPRECIATION TO OUR
MENTORS AND INSPIRATION

JUSTICE OSWALDO AGCAOILI JUDGE PHILIP A. AGUINALDO

DEAN AUGUSTO K. ALIGADA (+) ATTY. RUBEN F. BALANE

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For being our guideposts in understanding the intricate sphere of Civil Law.
– Academics Committee 2021
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 TABLE OF CONTENTS
PART I -GENERAL PRINCIPLES

I. Effect and Application of Laws (Civil Code)............................................................................................................ 1

Conflict of Laws (Private International Law) ............................................................................................ 12
II. Human Relations (Arts. 19-22, Civil Code) ........................................................................................................ 32

PERSONS AND FAMILY RELATIONS

I. Persons and Personality (Civil Code) ................................................................................................................... 37

II. Marriage (Family Code) .......................................................................................................................................... 42
III. Legal Separation (Family Code)........................................................................................................................... 80
IV. Rights and Obligations Between Husband and Wife (Family Code) .......................................................... 89
V. Property Relations of the Spouses (Family Code) ............................................................................................ 94
VI. The Family (Family Code).................................................................................................................................... 115
A. The family as an institution ..................................................................................................................... 115
B. The family home ......................................................................................................................................... 116
VII. Paternity and Filiation (Family Code) ............................................................................................................ 119
VIII. Adoption ................................................................................................................................................................ 132
A. Domestic Adoption Act of 1998 (R.A. No. 8552)................................................................................. 132
1. When allowed........................................................................................................................................... 133
2. Who can adopt ......................................................................................................................................... 133
3. Adoptee ...................................................................................................................................................... 134
4. Effects of domestic adoption ................................................................................................................ 135
5. Grounds for rescission of the adoption ............................................................................................. 135
6. Effects of rescission of adoption ......................................................................................................... 136
B. Inter-Country Adoption Act of 1995 (R.A. No. 8043) ........................................................................ 137
1. When allowed........................................................................................................................................... 137
2. Who can adopt ......................................................................................................................................... 137
3. Adoptee ...................................................................................................................................................... 138
C. Distinction between domestic adoption and inter-country adoption ......................................... 140
IX. Support (Family Code) ......................................................................................................................................... 143
X. Parental Authority (Family Code) ...................................................................................................................... 149
Child Abuse Law (R.A. No. 7610), specifically Sec. 10 (c). .................................................................... 154
XI. Retroactivity of the Family Code (Art. 256) .................................................................................................... 158
XII. Funerals (Arts. 305-310, Civil Code) ............................................................................................................... 159
XIII. Use of Surnames .................................................................................................................................................. 160
A. Use of surname by a child ......................................................................................................................... 160
B. Use of surname by a married woman ................................................................................................... 161
C. Valid grounds for change of name .......................................................................................................... 161
D. Middle names .............................................................................................................................................. 163
XIV. Absence .................................................................................................................................................................. 165
A. Declaration of absence (Art. 384, Civil Code) ..................................................................................... 166
B. Presumption of Death ............................................................................................................................... 166

PART II - PROPERTY

I. Characteristics .......................................................................................................................................................... 171

II. Classification ............................................................................................................................................................ 171
III. Ownership ............................................................................................................................................................... 181
IV. Hidden Treasure .................................................................................................................................................... 193
V. Accession ................................................................................................................................................................... 194
VI. Quieting of Title...................................................................................................................................................... 215
VII. Co-ownership ........................................................................................................................................................ 218
VIII. Possession ............................................................................................................................................................. 229
IX. Usufruct .................................................................................................................................................................... 248
X. Easement ................................................................................................................................................................... 261
XI. Nuisance ................................................................................................................................................................... 280
XII. Modes of Acquiring Ownership ........................................................................................................................ 283
XIII. Donation ................................................................................................................................................................ 286

PART III - PRESCRIPTION

I. Definition .................................................................................................................................................................... 297

II. Acqusitive Prescription ......................................................................................................................................... 300
III. Extinctive Prescription ........................................................................................................................................ 303
IV. Instances when prescription is not allowed .................................................................................................. 303
V. Prescription or limitation of actions ................................................................................................................. 304

PART IV - SUCCESSION

I. General provisions ................................................................................................................................................... 306

II. Testamentary Succession ..................................................................................................................................... 310
A. Wills ............................................................................................................................................................. 310
B. Non-delegability of will-making .......................................................................................................... 311
C. Testamentary capacity and intent ...................................................................................................... 313
D. Soundness of mind .................................................................................................................................. 314
E. Formal validity of wills........................................................................................................................... 314
F. Governing law as to substantive validity .......................................................................................... 315
G. Notarial wills ............................................................................................................................................. 315
H. Special rules for handicapped testators ............................................................................................ 318
I. Substantial compliance .......................................................................................................................... 319
J. Witnesses ................................................................................................................................................... 319
K. Holographic wills ..................................................................................................................................... 319
L. Requirements in case of alterations ................................................................................................... 320
M. Joint wills ................................................................................................................................................... 322
N. Codicils........................................................................................................................................................ 323
O. Incorporation by reference................................................................................................................... 324
P. Revocation of wills .................................................................................................................................. 324
Q. Republication and revival of wills....................................................................................................... 327
R. Probate requirement .............................................................................................................................. 327
S. Institution of heirs ................................................................................................................................... 328
T. Preterition ................................................................................................................................................. 332
U. Predecease, incapacity, and repudiation .......................................................................................... 334
V. Right of Representation ......................................................................................................................... 335
W. Substitution of heirs................................................................................................................................ 336
X. Legitime ...................................................................................................................................................... 337
Y. Collation .................................................................................................................................................... 343
Z. Compulsory Heirs .................................................................................................................................... 344
AA. Reserva Troncal ....................................................................................................................................... 347
BB. Disinheritance .......................................................................................................................................... 350
CC. Legacies and Devises .............................................................................................................................. 354
III. Legal/ intestate succession ................................................................................................................................. 356
A. General provisions .................................................................................................................................. 356
B. Order of intestate succession ............................................................................................................... 356
C. Right of representation .......................................................................................................................... 360
D. Iron curtain rule ....................................................................................................................................... 361
IV. Provisions common to testate and intestate succession ............................................................................ 361
A. Right of accretion ..................................................................................................................................... 361
B. Capacity to succeed by will or intestacy ............................................................................................ 362
1. Persons incapable of succeeding ..................................................................................................... 363
2. Relative incapacity to succeed.......................................................................................................... 363
V. Acceptance and repudiation of the inheritance ............................................................................................. 365
VI. Partition and distribution of estate .................................................................................................................. 366
 PART V - OBLIGATIONS

I. Definition, Elements ................................................................................................................................................ 368

II. Sources of Obligations ........................................................................................................................................... 370
III. Nature and Effect of Obligations ........................................................................................................................ 375
IV. Kinds of Obligations .............................................................................................................................................. 393
A. Pure and Conditional .............................................................................................................................. 393
B. Obligations with a Period ...................................................................................................................... 397
C. Alternative Obligations .......................................................................................................................... 399
D. Joint and Solidary Obligations ............................................................................................................. 401
E. Divisible and Indivisible Obligations ................................................................................................. 407
F. Obligations with a Penal Clause ........................................................................................................... 408
V. Extinguishment of Obligation .............................................................................................................................. 409
A. Payment or Performance ...................................................................................................................... 410
B. Loss of the Thing Due .............................................................................................................................. 420
C. Condonation or Remission .................................................................................................................... 422
D. Confusion or Merger of Rights ............................................................................................................. 423
E. Compensation ........................................................................................................................................... 424
F. Novation ..................................................................................................................................................... 430

PART VI - CONTRACTS

I. Essential Requisites ................................................................................................................................................. 445

II. Objects, Cause and Form of Contracts ............................................................................................................... 455
III. Reformation of Instruments ............................................................................................................................... 461
IX. Interpretation of Contracts ................................................................................................................................. 463
V. Rescissible Contracts.............................................................................................................................................. 467
VI. Voidable Contracts ................................................................................................................................................ 471
VII. Unenforceable Contracts .................................................................................................................................... 474
VIII. Void and Inexistent Contracts ......................................................................................................................... 475

PART VII- NATURAL OBLIGATIONS

I. Natural Obigations…………………………………………………………………………………………………………………...476
II. Estoppel………………………………………………………………………………………………………………………………… 476

PART VIII - SALES

I. General Principles .................................................................................................................................................... 478

II. Nature and Form of Contract ............................................................................................................................... 479
III. Capacity to Buy or Sell .......................................................................................................................................... 488
IV. Obligations of the Vendor .................................................................................................................................... 496
V. Obligations of the Vendee ..................................................................................................................................... 496
VI. Effects of the Contract when the Thing Sold has been Lost ........................................................................ 509
VII. Remedies of the Parties ...................................................................................................................................... 511
A. Installment Sales Law or Recto Law ................................................................................................... 511
B. Realty Installment Buyer Act or Maceda Law .................................................................................. 514
VIII. Extinguishment of Sale ...................................................................................................................................... 528
IX. Assignment of Credits ........................................................................................................................................... 534

PART IX - TRUST

I. Classification of Trust.............................................................................................................................................. 546

II. Kinds of Trust ........................................................................................................................................................... 546
A. Express Trust ............................................................................................................................................ 547
B. Implied Trust ............................................................................................................................................ 548
 PART X - PARTNERSHIP

I. Contract of Partnership .......................................................................................................................................... 551

II. Rights and Obligations of Partnership .............................................................................................................. 565
III. Rights and Obligations of Partners Among Themselves............................................................................. 565
IV. Obligations of Partnership/Partners to Third Person ................................................................................ 571
V. Dissolution and Winding Up ................................................................................................................................ 574
VI. Limited Partnership .............................................................................................................................................. 580

PART XI - AGENCY

I. Nature, Form, and Kinds of Agency ..................................................................................................................... 587

II. Obligations of the Agent ........................................................................................................................................ 595
III. Obligations of the Principal ................................................................................................................................ 604
IV. Modes of Extinguishment of Agency ................................................................................................................. 605

PART XII - LEASE

I. General Principles .................................................................................................................................................... 610

II. Rights and Obligations of the Lessor and the Lessee .................................................................................... 619
III. Remedies ................................................................................................................................................................. 622

PART XIII - CREDIT TRANSACTIONS

I. General Principles .................................................................................................................................................... 630

II. Loan ............................................................................................................................................................................ 631
III. Pledge ....................................................................................................................................................................... 644
IV. Commodatum.......................................................................................................................................................... 654
V. Mutuum ...................................................................................................................................................................... 661
VI. Deposit ...................................................................................................................................................................... 672
VII. Real Mortgage ........................................................................................................................................................ 680
VIII. Personal Property Security Act ....................................................................................................................... 695
IX. Antichresis ............................................................................................................................................................... 703
X. Guaranty and Suretyship....................................................................................................................................... 708

PART XIV - LAND TITLES AND DEEDS

I. General Principles .................................................................................................................................................... 715

A. Regalian doctrine ..................................................................................................................................... 715
B. Torrens system of registration ............................................................................................................ 716
II. Original Registration ............................................................................................................................................. 718
A. Who may apply for registration........................................................................................................... 718
B. Acquisitions of title by law .................................................................................................................... 723
C. Patents under the Public Land Act ...................................................................................................... 724
D. Land patents.............................................................................................................................................. 724
E. Reclamation .............................................................................................................................................. 728
F. Registration process and requirements............................................................................................ 734
G. Application ................................................................................................................................................ 734
H. Publication................................................................................................................................................. 736
I. Opposition ................................................................................................................................................. 738
J. Evidence required in land registration ............................................................................................. 740
K. Judgment and decree of registration ................................................................................................. 746
L. Writ of possession ................................................................................................................................... 749
M. Decree of confirmation and registration .......................................................................................... 750
N. Review of decree of registration ......................................................................................................... 752
1. Motion for new trial .............................................................................................................................. 753
 2.
Motion for reconsideration ................................................................................................................ 753
3.
Appeal....................................................................................................................................................... 754
4.
Petition for relief from judgment ..................................................................................................... 754
5.
Petition for annulment of judgment ................................................................................................ 754
6.
Claim against the assurance fund ..................................................................................................... 755
7.
Petition for review of decree of registration ................................................................................. 757
Purchaser in good faith and for value .............................................................................. 757
8. Reversion................................................................................................................................................. 763
9. Reconveyance ......................................................................................................................................... 763
10. Quieting of title ...................................................................................................................................... 764
O. Cadastral land registration ..................................................................................................................... 765
III. Certificate of Title .................................................................................................................................................. 765
A. Classification of lands ............................................................................................................................. 771
B. Citizenship requirement ........................................................................................................................ 771
IV. Subsequent registration ...................................................................................................................................... 774
A. Voluntary dealings .................................................................................................................................. 774
B. Involuntary dealings ............................................................................................................................... 778
V. Dealings with unregistered lands ....................................................................................................................... 781
VI. Non-registrable properties ................................................................................................................................. 782

PART XV - TORTS AND DAMAGES

Book I - Torts/Quasi - Delicts

I. General Principles .................................................................................................................................................... 786

II. Quasi – delict ............................................................................................................................................................ 788
III. The Tortfeasor........................................................................................................................................................ 791
IV. Special Liability in Particular Activities .......................................................................................................... 794
V. Strict Liability ........................................................................................................................................................... 806
VI. Classification of Torts ........................................................................................................................................... 809
VII. Negligent Torts...................................................................................................................................................... 813
VIII. Standard of Care .................................................................................................................................................. 816
IX. Torts Concepts and Doctrines ............................................................................................................................ 820
A. Res Ipsa Loquitur ............................................................................................................................. 820
B. Doctrine of Last Clear Chance ....................................................................................................... 821
C. Damnum Absque Injuria ................................................................................................................ 822
D. Presumption of Regularity ............................................................................................................ 823
E. Double Recovery............................................................................................................................... 823

Book II - Damages

I. General Principles .................................................................................................................................................... 824

II. Actual and Compensatory Damages .................................................................................................................. 826
III. Attorney’s Fees and Expenses of Litigation .................................................................................................... 830
IV. Moral Damages ....................................................................................................................................................... 834
V. Nominal Damages ................................................................................................................................................... 839
VI. Temperate or Moderate Damages .................................................................................................................... 840
VI. Liquidated Damages ............................................................................................................................................. 842
VII. Exemplary or Corrective Damages .................................................................................................................. 842
VIII. Damages in case of Death ................................................................................................................................. 844
 General Principles

GENERAL PRINCIPLES legislature may make the law effective

immediately upon approval, or on any other date
EFFECT AND APPLICATION OF LAWS without its previous publication.

Publication requirement
Law
Publication is indispensable in every case, but
Aquinas defined law as “an ordinance of reason
the legislature may in its discretion provide that
for the common good, made by him who has care
the usual fifteen-day (15) period shall be
of the community, and promulgated.” (Republic
shortened or extended. (Umali v. Estanislao, G.R.
v. Sandiganbayan, G.R. No. 104768, July 21, 2003)
No. 104037, May 29, 1992; Tañada v. Tuvera, G.R.
No. L-63915, December 29, 1986)
Effectivity of laws
Publication must be in full or it is no publication
Laws shall take effect after fifteen days following
at all since its purpose is to inform the public of
the completion of their publication either in the
the contents of the law. The mere mention of the
Official Gazette, or in a newspaper of general
number of the presidential decree, the title of
circulation in the Philippines, unless it is such decree, its whereabouts, the supposed date
otherwise provided. [(New Civil Code (NCC), Art.
of effectivity, and in a mere supplement of the
2, as amended by EO 200)]
Official Gazette cannot satisfy the publication
requirement. This is not even substantial
Effectivity: It depends on whether or not it has
compliance. (Tañada v. Tuvera, G.R. No. L-63915,
provided a specific date for its effectivity: December 29, 1986)
1. If date is specified – Upon the lapse of the
Indispensability of publication
said period following its complete
publication and not before.
GR: All laws are required to be published in full.
2. If no date is specified – 15-day period,
which may either be on the 15th or on the
NOTE: The reason for this rule is that the basic
16th day depending on the language used by
constitutional requirement of due process must
the Congress in fixing the effectivity date of
be satisfied. (Rabuya, 2009) Without such notice
the statute. (Rabuya, 2009)
and publication, there would be no basis for the
application of the maxim ignoratia legis non
a. 15th day - If the law declares that it
excusat. (Rabuya, 2009)
shall become effective “15 days
after its publication.”
XPNs to the Publication Requirement: (ORLI)
b. 16th day - If the law declares that it
shall be effective “after 15 days
1. Municipal Ordinances (governed by the
following its publication.”
Local Government Code);
2. Rules and regulations which are internal in
3. If the law provides for immediate
nature;
effectivity or upon approval – It is
3. Letters of Instruction issued by
effective immediately after its complete
administrative supervisors on internal rules
publication and not after signing by the
and guidelines;
President.
4. Interpretative regulations regulating only
4. If the law is voluminous– Reckoning shall
the personnel of administrative agency.
begin from the release of the last of the
series.
XPNs to the XPNs: (DEP)
“Unless it is otherwise provided” provision
on effectivity of law Administrative rules and regulations that
require publication:
This clause refers to the date of effectivity and
1. The purpose of which is to implement or
not to the requirement of publication itself. The
requirement of publication may not be omitted enforce existing laws pursuant to a valid
Delegation;
in any event. This clause does not mean that the
2. Penal in nature; and

1
 Civil Law
3. If it diminishes Existing rights of certain
individuals.
NOTE: Circulars issued by the monetary board
are required to be published if they are meant
not merely to interpret but to “fill in details” of
the Central Bank Act. As a rule, circulars which
prescribe a penalty for violations should be
published before becoming effective. However,
circulars which are mere statements of general
policies as to how the law should be construed
do not need publication in the Official Gazette
for their publication.
Where to publish
1. Official Gazette; or
2. Newspaper of general circulation in the
Philippines.
Newspaper of general circulation
For a newspaper to be considered of general
circulation:
1. It must be published within the court’s
jurisdiction;
2. It must be published at regular intervals for
disseminating local news and general
information;
3. It has a bona fide subscription list of paying
subscribers; and
4. It is not devoted to the interest or published
for the entertainment of a particular class,
profession, trade, calling, race or religious
denomination. (Alvarez v. People, G.R. No.
192591, June 29, 2011)
Q: Honasan questions the authority and
jurisdiction of the DOJ panel of prosecutors
to conduct a preliminary investigation and to
eventually file charges against him, claiming
that since he is a senator with a salary grade
of 31, it is the Office of the Ombudsman, not
the DOJ, that has authority and jurisdiction to
conduct the preliminary investigation.
DOJ claims that it has concurrent
jurisdiction, invoking an OMB-DOJ Joint
Circular which outlines the authority and
responsibilities among prosecutors of the
DOJ and the Office of the Ombudsman in the
conduct of preliminary investigations.
Honasan counters that said circular is
ineffective as it was never published. Is OMB-
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
DOJ Circular No. 95-001 ineffective because it
was not published?
A: NO. OMB-DOJ Circular No. 95-001 is merely
an internal circular between the two offices
which outlines the authority and responsibilities
among prosecutors of the DOJ and of the Office
of the Ombudsman in the conduct of preliminary
investigations. It does not contain any penal
provision nor prescribe a mandatory act or
prohibit any under pain of penalty. It does not
regulate the conduct of persons or the public, in
general. It need not be published. (Honasan, II v.
The Panel of Investigating Prosecutors of the DOJ,
G.R. No. 159747, June 15, 2004)
Q: The Sangguniang Bayan of Hagonoy,
Bulacan enacted an ordinance which
increased the stall rentals of the market
vendors in Hagonoy. Art. 3 of the said
ordinance provided that it shall take effect
upon approval. The ordinance was posted
from November 4 to 25, 1996.
In the last week of November 1997,
petitioners were personally given copies and
were informed that it shall be enforced in
January 1998.
The petitioners contended that the subject
ordinance was not published as required by
law. Did the ordinance comply with the rule
of publication?
A: YES. An ordinance which increased the stall
rentals of the market vendors has complied with
the publication requirement when the same was
posted in 3 conspicuous places. (Sec. 188, Local
Government Code; Hagonoy v. Municipality, G.R.
No. 137621, February 6, 2002)
NOTE: Within ten (10) days after their approval,
certified true copies of all provincial, city, and
municipal tax ordinances or revenue measures
shall be published in full for three (3)
consecutive days in a newspaper of local
circulation: Provided, however, that in
provinces, cities and municipalities where there
are no newspapers of local circulation, the same
may be posted in at least two (2) conspicuous
and publicly accessible places. (Sec. 188, Local
Government Code)
Exceptions to the publication requirement
1. An interpretative regulation;
2
 General Principles
2. A regulation that is merely internal in
nature; and
3. A letter of instruction issued by an
administrative agency concerning rules or
guidelines to be followed by subordinates in
the performance of their duties. (Association
of Southern Tagalog Electric Cooperatives,
Inc. v. Energy Regulatory Board, G.R. No.
192117, September 18, 2012)
Q: Judge Ferdinand Villanueva was appointed
as a presiding judge of MTC, Compostela-New
Bataan. The following year, Judge Villanueva
applied as Presiding Judge in several
Regional Trial Courts.
The Judicial and Bar Council (JBC) then
informed him that he was not included in the
list. The JBC’s decision upheld its long-
standing policy of opening the chance for
promotion to second-level courts to those
judges who have served in their current
positions for at least five years.
Judge Villanueva then directly went to Court
to assail the said policy on the ground it is
unconstitutional; it violates the procedural
due process for lack of publication. Did the
JBC violate the procedural due process for
not publishing the questioned policy?
A: YES. The petition was dismissed but the SC
directed the JBC to comply with the publication
requirement of the assailed policy. According to
SC, it is but a natural consequence that potential
applicants be informed of the requirements to
the judicial positions, so that they would be able
to prepare for and comply with them.
(Villanueva v. Judicial and Bar Council, G.R. No.
211833, April 07, 2015)
Examples of administrative issuances which
were not given force and effect for lack of
publication
1. Rules and regulations issued by the Joint
Ministry of Health-Ministry of Labor and
Employment Accreditation Committee
regarding the accreditation of hospitals,
media clinics and laboratories.
2. Letter of Instruction No. 416 ordering the
suspension of payments due and payable by
distressed copper mining companies.
3. Memorandum Circulars issued by the POEA
regulating the recruitment of domestic
helpers to Hongkong.
3
4. Administrative Order No. SOSPEC 89-08-01
issued by Philippine International Trading
Corporation regulating applications for
importation from the People’s Republic of
China.
5. Corporate Compensation Circular No. 10
issued by the Department of Budget and
Management discontinuing the payment of
other allowances and fringe benefits to
government officials and employees. (Ulep,
2006)
Q: “A” alleges violation of his right to due
process considering that he is summoned to
attend the Senate hearings without being
apprised not only of his rights therein
through the publication of the Senate Rules
of Procedure Governing Inquiries in Aid of
Legislation.
Senate invoked the provisions of R.A. No.
8792, otherwise known as the Electronic
Commerce Act of 2000, to support their claim
of valid publication through the internet. Did
the publication of the assailed Rules of
Procedure through the Senate’s website
satisfy the due process requirement of the
law?
A: NO. R.A. 8792 – Electronic Commerce Act of
2000 considers an electronic data message or an
electronic document as a functional equivalent
of a written document only for evidentiary
purposes. It does not make the internet a
medium for publishing laws, rules or
regulations. (Garcillano v. The House of
Representatives Committee on Public Information,
Public Order and Safety, National Defense and
Security, Information and Communications
Technology and Suffrage and Electoral Reforms,
G.R. No. 170338, December 23, 2008)
IGNORANCE OF THE LAW
Presumption of knowledge of laws
GR: Everyone is conclusively presumed to know
the law. Hence, ignorance of the law excuses no
one from compliance therewith. (NCC, Art. 3)
This conclusive presumption presupposes that
the law has been published. Without such notice
and publication, there would be no basis for the
application of the maxim ignoratia legis non
excusat. (Rabuya, 2009)
 Civil Law

XPNs: October 11, 2010; See case of Del Socorro v.

1. Mistake upon a doubtful or difficult question Brinkman G.R. No. 193707 December 10, 2014)
of law may be the basis of good faith. [NCC,
Art. 526 (3)] Mistake of fact vs. Mistake of law
2. Payment by reason of a mistake in the
construction or application of a doubtful or BASIS MISTAKE OF MISTAKE OF
difficult question of law may come within FACT LAW
the scope of the preceding article. (NCC, Art. Want of Want of
2155) knowledge of knowledge or
3. In order that fraud may make a contract some fact or acquaintance
voidable, it should be serious and should not facts with the laws
have been employed by both contracting Want of
constituting or of the land
parties. Incidental fraud only obliges the knowledge
relating to the insofar as they
person employing it to pay damages. (NCC, pertains
subject matter apply to the
Art. 1344) to
on hand. act, relation,
duty, or matter
NOTE: The rule is that any mistake on a doubtful under
or difficult question of law may be the basis of consideration.
good faith. (Poe-Llamanzares v. Commission on When some Occurs when a
Elections, G.R. Nos. 221697 & 221698-700, March facts which person having
8, 2016) really exist are full knowledge
unknown or of the facts
Laws covered Nature of some fact is come to an
Mistake supposed to erroneous
The laws referred to under Art. 3 of the NCC are exist which conclusion as
those of the Philippine Laws and it applies to all really does not to its legal
kinds of domestic laws, whether civil or penal, exist. effects.
substantive or remedial. However, the article is
limited to mandatory and prohibitory laws. It Good faith is an Not excusable,
does not include those which are merely Defense excuse. even if in good
permissive. (Rabuya, 2006) faith.

Non-applicability to foreign laws Q: Eduardo was married to Ruby. He then

Ignorance of a foreign law is a mistake of fact.
There is no presumption of knowledge of foreign
laws. It must be alleged and proved as a matter
of fact; otherwise, the doctrine of processual
presumption will apply.
Doctrine of Processual Presumption
Also known as Presumed-identity approach;
where a foreign law is not pleaded, or even if
pleaded, is not proved, the presumption is that
the foreign law is the same as Philippine Laws.
met Tina and proposed marriage, assuring
her that he was single. They got married and
lived together. Tina, upon learning that
Eduardo had been previously married,
charged Eduardo for bigamy for which he
was convicted. Eduardo testified that he
declared he was “single” because he believed
in good faith that his first wife was already
dead, having not heard from her for 20 years,
and that he did not know that he had to go to
court to seek for the nullification of his first
marriage before marrying Tina. Is Eduardo
liable for the crime of bigamy?

In international law, the party who wants to
have a foreign law applied to a dispute or case
has the burden of proving the foreign law. The
foreign law is treated as a question of fact to be
properly pleaded and proved as the judge or
labor arbiter cannot take judicial notice of a
foreign law. He is presumed to know only
domestic or forum law. (ATCI Overseas
Corporation, et al. v. Echin, G.R. No. 178551,
A: YES. Eduardo is presumed to have acted with
malice or evil intent when he married
Tina. Mistake of fact or good faith of the accused
is a valid defense in a prosecution for a felony by
dolo; such defense negates malice or criminal
intent. However, ignorance of the law is not an
excuse because everyone is presumed to know
the law. Eduardo has the burden to prove that

UNIVERSITY OF SANTO TOMAS 4

2021 GOLDEN NOTES
 General Principles
when he married Tina, he has a well-grounded
belief that his first wife was already dead. He
should have adduced in evidence a decision of a
competent court declaring the presumptive
death of his first wife as required by Art. 349 of
the RPC, in relation to Art. 41 of the FC. Such
judicial declaration constitutes proof
that Eduardo acted in good faith, and would
negate criminal intent on his part when he
married the private complainant. (Manuel v.
People, G.R. No. 165842, November 29, 2005)
Q: Complainants who were connected with
the Daily Informer (a widely circulated
newspaper in Western Visayas) were
charged before the MTC by Judge Pamonag of
the crime of libel. Respondent judge
conducted a preliminary investigation and
thereafter issued warrants for the arrest of
the complainants. Complainants filed an
administrative case against the judge for
gross ignorance of the law. They contended
that the judge neither has authority to
conduct a preliminary investigation nor to
issue warrants for their arrest. The judge
said that it was his first libel case and that he
issued the warrants in good faith. Is the
respondent guilty of gross ignorance of the
law?
A: YES. Judges are expected more than just
cursory acquaintance with statutes and
procedural rules. They must know the law and
apply them properly in good faith. The
provisions of Art. 360 of the RPC on the persons
authorized to conduct preliminary investigation
in libel cases is elementary. Not to know it
constitutes gross ignorance of the law. (Miaque
v. Judge Pamonag, A.M. No. MTJ-02-1412, March
28, 2003)
Q: Cheong Boo, a native of China died
intestate in Zamboanga. He left a property
worth P100,000. The estate of the deceased
was claimed on one hand by Gee, who alleged
that he was a legitimate child by a marriage
contracted by Boo with Tan Dit in China in
1895. The estate was claimed, on the other
hand, by Mora Adong who alleged that she
had been lawfully married to Boo in 1896.
Gee introduced in evidence a document in
Chinese stating the marriage ceremony that
took place in Amoy, China. Is the document
presented by Gee sufficient enough to prove
the Chinese marriage of Cheong Boo and Tan
Dit?
5
A: NO. The Supreme Court held that the
document is not sufficient to prove the Chinese
marriage between Cheong Boo and Tan Dit. Gee
only presented a document in Chinese stating
the alleged marriage ceremony but there is no
competent testimony as to what the laws of
China in the Province of Amoy concerning
marriage were in 1895. Therefore, there is
lacking proof so clear, strong and unequivocal as
to produce a moral conviction of the existence of
the alleged prior Chinese marriage.
Ignorance of a foreign law is not ignorance of the
law but of fact because such foreign law must be
first alleged and proved as a matter of fact, there
being no judicial notice of said foreign law. Thus,
the Chinese marriage was not adequately
proved. (Estate of Boo v. Gee, G.R. No. 18081,
March 3, 1922)
RETROACTIVITY OF LAWS
Laws shall have no retroactive effect, unless the
contrary is provided. (NCC, Art. 4)
Retroactive law
A legislative act that looks backward or
contemplates the past, affecting acts or facts that
existed before the act come into effect. (Black’s
Law Dictionary, 2009)
Retroactive effect of laws
GR: Laws shall have no retroactive effect (lex
prospicit, non respicit).
XPNs: (TINCREEP)
1. Tax laws;
2. Interpretative statutes;
3. Laws creating New substantive rights;
4. Curative statutes;
5. Remedial/procedural;
NOTE: Statutes regulating the procedure of
the courts will be construed as applicable to
actions pending and undetermined at the
time of their passage. Procedural laws are
retrospective in that sense and to that
extent. (Mun. Gov’t of Coron v. Carino, G.R.
No. 65894, September 24, 1987)
6. Emergency laws;
7. When Expressly provided;
 Civil Law
8. Penal laws favorable to the accused
provided, the accused is not a habitual
delinquent.
XPNs to the XPNs:
If the application of the retroactive law:
1. Impairs obligation of contracts;
2. Is in the nature of ex post facto law or a
bill of attainder,
3. Divests vested rights; or
4. Is constitutionally forbidden. (Black’s
Law Dictionary, 2009)
NOTE: In case of doubt, laws apply
prospectively.
Q: Accused-appellant Belen Mejares was
adjudged guilty of the crime of qualified theft
of cash and jewelry amounting to
P1,056,308.00. Meanwhile, on August 29,
2017, the President signed into law R.A. No.
10951 that sought to help indigent prisoners
and individuals accused of committing petty
crimes. It also increased the baseline
amounts and values of property and damage
to make them commensurate to the penalties
meted on the offenses committed in relation
to them. Should the penalties under the new
law benefit Mejares?
A: YES. R.A. No. 10951 has since come into effect
during the pendency of this case. It likewise
specifically stipulates that its provisions shall
have retroactive effect. Section 100 adds that
this retroactivity applies not only to persons
accused of crimes but have yet to be meted their
final sentence, but also to those already "serving
sentence by final judgment." This retroactivity is
in keeping with the principle already contained
in Article 22 of the RPC that “penal laws shall
have a retroactive effect in so far as they favor
the person guilty of a felony.”
Given these circumstances, it is proper for this
Court to adjust the penalty to be imposed on
accused-appellant. (People v. Mejares, G.R. No.
225735, January 10, 2018, as penned By J.
Leonen)
Non-retroactivity of laws vis-à-vis judicial
decisions
Judicial decisions have no retroactive effect.
When a doctrine of the Supreme Court is
overruled and a different view is adopted, the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
new doctrine should be applied prospectively
and should not apply to parties who had relied
on the old doctrine and acted on the faith
thereon. (Rabuya, 2009)
Lex prospicit, non respicit
The maxim means, “the law looks forward not
backward”. The retroactive application of a law
usually divests rights that have already become
vested or impairs the obligations of contract and
hence, is unconstitutional. (Chavez v. PEA, G.R.
No. 133250, May 6, 2003)
Retroactivity clause of the Family Code
(2005, 2010 BAR)
The Family Code shall have retroactive effect
insofar as it does not prejudice or impair vested
or acquired rights in accordance with the Civil
Code or other laws. (FC, Art. 256)
MANDATORY AND PROHIBITORY LAWS
Mandatory law
A law or a provision in a statute is said to be
mandatory when disobedience to it, or want of
exact compliance with it, will make the act done
under the statute absolutely void. (Black’s Law
Dictionary, 2009)
Prohibitory law
A law or a provision in a statute is said to be
prohibitory when it forbids a certain action.
(Black’s Law Dictionary, 2009)
Permissive law
A law or a provision in a statute is said to be
permissive or directory when it allows certain
acts but does not command them. (Black’s Law
Dictionary, 2009)
Violation of Mandatory or Prohibitory Laws
GR: Acts executed against the provisions of
mandatory or prohibitory laws shall be void.
(NCC, Art. 5)
XPNs: When the law:
1. Itself authorizes its validity (e.g. lotto,
sweepstakes);
6
 General Principles
2. Makes the act valid but punishes the violator
(e.g. Marriage solemnized by a person not
authorized to do so);
3. Makes the act merely voidable;
4. Declares the nullity of an act but recognizes
its effects as legally existing (e.g. Child born
after the annulment of marriage is
considered legitimate).
WAIVER OF RIGHTS
Waiver
It is a voluntary and intentional relinquishment
or abandonment of a known existing legal right,
advantage, benefit, claim or privilege, which
except for such waiver the party would have
enjoyed.
The voluntary abandonment or surrender, by a
capable person, of a right known by him to exist,
with the intent that such right shall be
surrendered and such person forever deprived
of its benefit; or such conduct as warrants an
inference of the relinquishment of such right; or
the intentional doing of an act inconsistent with
claiming it. (Cruz & Co., Inc. v. HR Construction
Corp., G.R. No. 187521, March 14, 2012)
NOTE: Waivers can be express or implied,
however, it cannot be presumed. It must be
clearly and convincingly shown, either by
express stipulation or acts admitting no other
reasonable explanation.
Right
It is a legally enforceable claim of one person
against another, that the other shall do a given
act, or shall not do a given act. (Pineda, 2009)
Kinds of rights
1. Natural Rights – Those which grow out of
the nature of man and depend upon
personality (e.g. right to life, liberty, privacy,
and good reputation);
2. Political Rights – Consist in the power to
participate, directly or indirectly, in the
establishment or administration
government (e.g. right of suffrage, right to
hold public office, right of petition); and
3. Civil Rights – Those that pertain to a person
by virtue of his citizenship in a state or
community (e.g. property rights, marriage,
equal protection of laws, freedom of
contract, trial by jury). (Pineda, 2009)
a. Rights of personality or human rights;
b. Family rights; and
c. Patrimonial rights:
i. Real rights;
ii. Personal rights. (Rabuya, 2009)
Rights which cannot be waived
1. Right to live and right to future support.
2. Right to personality and family rights.
3. Right to future inheritance.
NOTE: This is especially so if the waiver is
intended to prejudice creditors. Hence, if an heir
repudiates the inheritance to the prejudice of his
own creditors, the latter may petition the court
to authorize them to accept it in the name of the
heir. (NCC, Art. 1052; Albano, 2013)
NOTE: If a candidate for mayor agrees to split
his term of office with the vice-mayor to prevent
the latter from running against him, the contract
is void by reason of public policy. (Albano, 2013)
Waiver of rights
GR: Rights may be waived.
XPNs:
1. If waiver is:
a. Contrary to law, public order, public
policy, morals or good customs;
b. Prejudicial to a third person with a
right recognized by law. (e.g. If A
owes B P10M, B cannot waive the
loan if B owes C and B has no other
assets).
2. If the right is:
a. A natural right, such as right to life;
b. Inchoate, such as future inheritance.
A person may waive any matter which affects his
property, and any alienable right or privilege of
which he is the owner or which belongs to him
of or to which he is legally entitled, whether
secured by contract, conferred with statute, or
guaranteed by constitution, provided such rights
and privileges rest in the individual, are
intended for his sole benefit, do not infringe on
the rights of others, and further provided the
waiver of the right or privilege is not forbidden
7
 Civil Law
by law, and does not contravene public policy.
(Cruz & Co., Inc. v. HR Construction Corp., G.R. No.
187521, March 14, 2012)
Requisites of a valid waiver
1. Waiving party must actually have the right
he is renouncing;
2. He must have full capacity to make the
waiver;
3. Waiver must be clear and unequivocal;
4. Waiver must not be contrary to law, public
order, public morals, etc.; and
5. When formalities are required, they must be
complied with.
Q: Edna filed an action for support against
Colonel Otamias. A deed of assignment was
executed by Otamias where he waived 50%
of his pension benefits in favor of Edna and
his children. The RTC issued a notice of
garnishment to AFP Pension and Gratuity
Management Center and ordered the
automatic deduction of support from the
pension benefits of Colonel Otamias. The CA
annulled the order of the RTC and cited PD
No. 1638 which provides for the exemption
of the monthly pension of retired military
personnel from execution and attachment.
Did Colonel Otamias validly waive the
exemption granted by PD no. 1638 upon the
execution of the deed of assignment?
A: YES. Under Article 6 of the Civil Code, rights
may be waived, unless the waiver is contrary to
law, public order, public policy, morals or good
customs, or prejudicial to a third person with a
right recognized by law. When Colonel Otamias
executed the Deed of Assignment, he effectively
waived his right to claim that his retirement
benefits are exempt from execution. The right to
receive retirement benefits belongs to Colonel
Otamias. His decision to waive a portion of his
retirement benefits does not infringe on the
right of third persons, but even protects the
right of his family to receive support. The Deed
of Assignment executed by Colonel Otamias was
not contrary to law; it was in accordance with
the provisions on support in the Family Code.
Hence, there was no reason for the AFP PGMC
not to recognize its validity. (Edna Mabugay-
Otamias, Jeffren M. Otamias and Minor Jemwel M.
Otamias, represented by their Mother Edna
Mabugay Otamias v. Republic of the Philippines,
represented by Col. Virgilio O. Domingo, in his
capacity as the Commanding Officer of the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Pension and Gratuity Management Center (PGMC)
of the Armed Forces of the Philippines, G.R. No.
189516, June 08, 2016, as penned by J. Leonen)
REPEAL OF LAWS
It is the abrogation of an existing law by a
legislative act. (Black’s Law Dictionary, 2009)
Laws are repealed only by subsequent ones, and
their violation or non-observance shall not be
excused by disuse, or custom or practice to the
contrary. (Art. 7, 1st par.)
Ways of repealing laws
1. Express - If the law expressly provides for
such;
2. Implied - If the provisions of the subsequent
law are incompatible or inconsistent with
those of the previous law, provided, it is
impossible to reconcile the two laws.
Requisites of an implied repeal
1. The laws cover the same subject matter; and
2. The latter is repugnant to the earlier.
(Rabuya, 2009)
NOTE: Implied repeals are NOT to be favored
because they rest only on the presumption that
because the old and the new laws are
incompatible with each other, there is an
intention to repeal the old. (Rabuya, 2009)
Q: Sunrise executed an undertaking to
construct a city road at its own expense,
subject to reimbursement through tax
credits. The trial court issued a writ of
preliminary injunction to enjoin persons
from obstructing Sunrise Garden in
proceeding with the construction of the city
road. The Court of Appeals directed the
Division Clerk of Court to issue the writ of
preliminary injunction enjoining
respondents, its agents or representatives
from implementing the trial court’s amended
writ of injunction. Sunrise Garden cited PD
No. 1818 which prohibits a court from
issuing preliminary injunction in any case
involving an infrastructure project. When
this case was filed, RA No. 8975 was already
effective which provides for an express
repeal of PD No. 1818. RA No. 8975 prohibits
the issuance of preliminary injunction
8
 General Principles

against the government or any person to
restrain the development of any national
government project. Is the allegation of
Sunrise acceptable?
A: NO. PD No. 1818 has been repealed by RA No.
8975. The repealing clause of RA No. 8975
provides for an express repeal. The Supreme
Court has held that implied repeals are not
favored, and "the failure to add a specific
repealing clause indicates that the intent was not
to repeal any existing law." The express repeal of
Presidential Decree No. 1818 clearly indicates
Congress' intent to replace Presidential Decree
No. 1818 with Republic Act No. 8975. The new
law covers only national government
infrastructure projects. This case involves a local
government infrastructure project. Hence,
Sunrise’s contention is untenable. (Sunrise
Garden Corporation v. Court of Appeals And First
Alliance Real Estate Development, Inc., G.R. No.
158836, September 30, 2015, as penned by J.
Leonen)
Conflict between general and special laws
If the general law was enacted prior to the
special law, the latter is considered the
exception to the general law. If the general law
was enacted after the special law, the special law
remains.
XPNs:
1. There is an express declaration;
2. There is a clear, necessary and irreconcilable
conflict; or
3. The subsequent general law covers the whole
subject and is clearly intended to replace the
special law on the matter. (Rabuya, 2009)
Self-lapsing laws
Laws that provide for their limited application
(e.g. House Rental Law, Annual Appropriations
Act, Import Control Law).
JUDICIAL DECISIONS

Instances of implied repeal Judicial decisions applying or interpreting the

law or the Constitution shall form a part of the
1. When the provisions in the two acts on the legal system of the Philippines. (NCC, Art. 8)
same subject matter are irreconcilably (1994 BAR)
contradictory, in which case, the later act, to
the extent of the conflict, constitutes an Judicial decisions are evidence of what the laws
implied repeal of earlier one; and mean.
2. When the later act covers the whole subject
of the earlier one and is clearly intended as a The judicial decisions form part of the law of the
substitute; thus, it will operate to repeal the land as of the date of the enactment of said law.
earlier law. (Carmelita Lledo v. Atty. Cesar V. The Supreme Court’s interpretation merely
Lledo, A.M. No. P-95-1167, February 9, 2010) establishes the contemporaneous legislative
intent that the construed law purports to carry
Revival of repealed law into effect. However, the decisions referred to in
Art. 8 of the NCC are only those enunciated by
BASIS EXPRESS IMPLIED the SC. The decisions of subordinate courts are
REPEAL REPEAL only persuasive in nature, and can have no
If the 1st law If the 1st law is mandatory effect. (Rabuya, 2009)
is expressly repealed by
repealed by implication by When a doctrine is overruled and a different
the 2nd law the 2nd law and view is adopted, the new doctrine should be
Manner of
and the 2nd the 2nd law is applied prospectively and should not prejudice
Repeal
law is repealed by parties who relied on the old doctrine.
repealed by the 3rd law.
the 3rd law. Doctrine of Stare Decisis

The 1st law is The 1st law is It is adherence to judicial precedents. Once a
NOT revived revived unless question of law has been examined and decided,
Effect of unless otherwise it should be deemed settled and closed to
Repeal expressly provided. further argument. However, when in the light of
provided so. changing conditions, a rule has ceased to be

9
 Civil Law
beneficial to the society, courts may depart from
it.
Obiter Dictum
An opinion expressed by a court upon some
question of law which is not necessary to the
decision of the case before it. Such are not
binding as precedent. (Rabuya, 2009)
DUTY TO RENDER JUDGMENT
Rendering of judgment by reason of silence
of law
No judge or court shall decline to render
judgment by reason of the silence, obscurity or
insufficiency of the laws. (NCC, Art. 9) (2003
BAR)
However, in criminal prosecutions, the judge
must dismiss the case if a person is accused of a
non-existent crime following the maxim “nullum
crimen, nulla poena sine lege. (Rabuya, 2009)
NOTE: This duty, however, is not a license for
courts to engage in judicial legislation. The duty
of the courts is to apply or interpret the law, not
to make or amend it.
Guidelines on rendition of decisions under
Art. 9
1. When there is no law exactly applicable to
the point in controversy, the custom of the
place shall be applied and in default thereof,
the general principles of law;
2. Decisions of foreign courts;
3. Opinions of known authors and professors;
4. Applicable rules of statutory construction;
5. Principles formulated in analogous cases.
PRESUMPTION AND
APPLICABILITY OF CUSTOM
Presumption in case of doubt in the
interpretation of laws
In case of doubt in the interpretation or
application of laws, it is presumed that the
lawmaking body intended right and justice to
prevail. (NCC, Art. 10) (2003 BAR)
In case of silence, obscurity or insufficiency
of the law with respect to a particular
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
controversy
If the law is silent or is obscure or insufficient
with respect to a particular controversy, the
judge shall apply the custom of the place, and in
default thereof, the general principles of law and
justice.
Customs which are contrary to law, public order,
public policy shall not be countenanced. (NCC,
Art. 11)
Customs
Customs are rules of conduct, legally binding
and obligatory, formed by repetition of acts
uniformly observed as a social rule.
Necessity of proving customs
GR: A custom must be proved as a fact,
according to the rules of evidence. (NCC, Art. 12)
XPN: Courts may take judicial notice of a custom
if there is already a decision rendered by the
same court recognizing the custom.
Requisites before such custom could be
considered a source of right
1. Plurality of acts;
2. Uniformity of acts;
3. General practice by the great mass of the
people of the country or community;
4. Continued practice for a long period of time;
5. General conviction that the practice is the
proper rule of conduct; and
6. Conformity with law, morals or public policy.
(Tolentino, 1987)
Application of customs in civil cases
In civil cases, customs may be applied by the
courts in cases where the applicable law is:
1. Silent;
2. Obscure; or
3. Insufficient.
NOTE: Provided said customs are not contrary
to law, public morals, etc.
Non-applicability of customs in criminal
cases
10
 General Principles
In criminal cases, customs cannot be applied
because of the maxim nullum crimen nulla
poena sine lege (There is neither crime nor
punishment, without a law).
LEGAL PERIODS
Computation of period
1. Year – 12 calendar months. (CIR v.
Primetown Property Group, Inc., G.R. No.
162155, August 28, 2007)
NOTE: In the said case, the Supreme Court
declared that the provision of Section 31,
Chapter VII, Book I of the Administrative Code of
1987, being a more recent law, governs the
computation of legal periods with respect to
counting “a year.”
A Calendar Month is “a month designated in the
calendar without regard to the number of days it
may contain.” It is the “period of time running
from the beginning of a certain numbered day of
the next month, and if there is not sufficient
number of days in the next month, then up to
and including the last day of that month.”
Illustration: One calendar month from
December 31, 2007 will be from January 1, 2008
to January 31, 2008; one calendar month from
January 31, 2008 will be from February 1, 2008
until February 29, 2008. Hence, twelve calendar
months from December 31, 2007 is December
31, 2008; while twelve calendar months from
11
January 31, 2008 to January 31, 2009. (Rabuya,
2009)
2. Month – 30 days, unless designated by their
name, in which case, they shall be computed
according to the number of days which they
respectively have;
3. Day – 24 hours;
4. Nighttime – from sunset to sunrise;
5. Week – 7 successive days regardless of
which day it would start;
6. Calendar week – Sunday to Saturday.
NOTE: In the computation of period, the first
day shall be excluded, and the last day included.
If the last day falls on a Sunday or a legal
holiday
If the act to be performed within the period is:
1. Prescribed or allowed by:
a. The Rules of Court;
b. An order of the court; or
c. Any other applicable statute.
The last day will automatically be the next
working day.
2. From a contractual relationship – The act
will still become due despite the fact that the
last day falls on a Sunday or a legal holiday.
This is because obligations arising from
contracts have the force of the law between
the contracting parties.
 Civil Law

the same, because they manifest a single

CONFLICT OF LAWS concept of law, ultimately addressed to the
same individual.
GENERAL PRINCIPLES
2. Dualist School - This school of thought
Private International Law differentiates private and public
international law in the following manner:
It is a part of the municipal law of a state which
directs its courts and administrative agencies Private Public
when confronted with a legal problem involving International Law International Law
foreign element, as to whether or not they As to nature
should apply the foreign law. Municipal in International in
character character
Conflict of laws As to persons involved
Private individuals Sovereign states and
It is the inconsistency or difference between the other entities
laws of different states or countries, arising in possessed of
the case of persons who have acquired rights, international
incurred obligations, injuries or damages, or personality
made contracts, within the territory of two or As to transactions involved
more jurisdictions. (Black’s Law Dictionary, Fifth Private transactions Transactions generally
Edition) with private affect public interest;
individuals or of interest only to
Functions of Private International Law sovereign states
As to remedies and sanctions
1. Prescribes conditions under which a court Resort to municipal Remedies may be
or agency is competent to entertain tribunals peaceful or forcible
proceedings with foreign elements;
2. Specifies the circumstances in which foreign Sources of Philippine Conflict Rules
judgment will be recognized as valid and
binding in the forum; and 1. Family Code
3. Determines the particular system of law for Articles 10, 21, 26, 35, 36, 37, 38, 80, 96,
each class of cases to ascertain the rights of 184, and 187
the parties. (Paras, 1990) 2. Civil Code
Articles 14, 15, 16, 17, 815, 816, 818,
Elements of Conflict of laws 819, 829, 1039, 1319, and 1753
3. Penal Code
1. Legal problem or case involving foreign Article 2
element; 4. Corporation Code
Section 133 – Doing business without a
Foreign element – a factual situation license
cutting across territorial lines, affected by 5. Constitution
diverse laws of two or more states. Article IV and Article 5, Section 1
6. Rules of Court
2. Primary function is to determine whether Rule 14 and 39, Section 48, Rule 131,
the law or judgments of other state/s will Section 3 (n), 132, Section 35.
govern and if so, the extent of its recognition
or application in the forum. (Coquia, 2000) Territoriality Principle

Private International Law vs. Penal laws and those of public security and
Public International Law safety shall be obligatory upon all who live or
sojourn in Philippine territory, subject to the
Two views principles of international law and to treaty
stipulations. (NCC, Article 14)
1. Monist school - Both subjects are essentially

UNIVERSITY OF SANTO TOMAS 12

2021 GOLDEN NOTES
 Conflict of Laws
Nationality principle
Laws relating to family rights and duties or to
the status, condition, and legal capacity of
persons are binding upon citizens of the
Philippines, even though living abroad. (NCC,
Article 15)
Lex rei sitae
Real property as well as personal property is
subject to the law of the country where it is
situated. (NCC, Article 16)
Lex Loci Celebrationis
The forms and solemnities of contracts, wills,
and other public instruments shall be governed
by the laws of the country in which they are
executed. (NCC, Article 17)
Lex Loci Contractus
Law of the contract. The forms and solemnities
of contracts, wills, and other public instruments
shall be governed by the laws of the country in
which they are executed.
However, when forms and solemnities of the
contract is performed in front of a Filipino
diplomatic or consular office, Filipino
solemnities will be used. (NCC, Art. 17)
JURISDICTION AND CHOICE OF LAW
JURISDICTION
GR: It is the right of a State to exercise authority
over persons and things within its boundaries.
Rules to follow when the court is confronted
with a case involving a foreign element
If the court is faced with a case involving a
foreign element, it should first determine:
1. Whether it has jurisdiction over the case;
2. If it has no jurisdiction, it should be
dismissed on that ground;
3. If it has jurisdiction, the court will determine
whether it should assume jurisdiction or
dismiss the case on the ground of forum non-
convenience; and
4. Once the court has determined it has
jurisdiction over the case, it will next
13
determine whether to apply the internal law
of the forum or apply the proper foreign law.
Forum Non Conveniens
It refers to the refusal to assume jurisdiction
because it will prove inconvenient for the forum.
It is a device akin to the rule against forum
shopping. It is designated to frustrate illicit
means for securing advantages and vexing
litigants that would otherwise be possible if the
venue of litigation (or dispute resolution) were
left entirely to the whim of either party. (Saudi
Arabian Airlines (Saudia) v. Rebesencio, G.R. No.
198587, January 14, 2015)
Elements:
That the Philippine Court:
1. Is one to which the parties may
conveniently resort to;
2. Is in a position to make an intelligent
decision as to the law and the facts; and
3. Has or is likely to have power to enforce its
decision. (Philippine National Construction
Corp. v. Asiavest Merchant Bankers (M)
Berhad, G.R. No. 172301, August 19, 2015)
Grounds for dismissal of the case on the basis
of forum non conveniens
1. Evidence and witnesses may not be readily
available in the forum;
2. Court dockets of the forum are already
clogged which would hamper the speedy
administration of justice;
3. The matter can be better tried and decided in
another forum;
4. To curb the evils of forum shopping;
5. The forum has no particular interest in the
case, as when the parties are not citizens of
the forum or are residents elsewhere;
6. Inadequacy of the local judicial machinery in
effectuating the right sought to be enforced;
or
7. Difficulty in ascertaining the foreign law
applicable.
When can internal or domestic law be
applied
1. Law of the forum expressly so provides in its
conflicts rule;
2. Proper foreign law has not been properly
pleaded and proved; or
 Civil Law

3. Case involves any of the exceptions to the Q: Thousands of banana plantation workers
application of the foreign law. filed a complaint against 11 corporations
including Chiquita Brands. They claimed that
Instances: they have been exposed to a certain pesticide
which caused serious and permanent
1. When the foreign law, judgment or contract damage to their reproductive system. Before
is: pre-trial, the parties entered into a
compromise agreement which explicitly
a. Contrary to sound and established stated that the law which shall govern its
policy of the forum interpretation is the laws of Texas, United
b. Contrary to almost universally States . On July 10, 2009, the RTC issued an
conceded principles of morality (contra Order directing the implementation of the
bonus mores) Writ of Execution against Chiquita Brands
c. Involves procedural matters and its subsidiaries and affiliates who are
d. Purely fiscal or administrative matters allegedly subsidiarily liable under the laws of
e. Involves real or personal property Texas. Is the RTC correct in applying the laws
situated in the forum of Texas?

2. When the application of the foreign law, A: NO. Under the Compromise Agreement, the
judgment or contract: law that shall govern its interpretation is the law
of Texas, United States. In this jurisdiction,
however, courts are not authorized to take
a. May work undeniable justice to the
judicial notice of foreign laws. The laws of a
citizens/residents of the forum
foreign country must be properly pleaded and
b. May work against vital interests &
proved as facts. Otherwise, under the doctrine of
national security of the state of the
processual presumption, foreign law shall be
forum
presumed to be the same as domestic law.
Unfortunately, there is no evidence that Texan
Doctrine of Processual Presumption of law
las had been proven as a fact. Hence, the RTC
should have applied the Philippine law. (Chiquita
When the proper foreign law has not been
Brands, et al. v. RTC of Davao City, G.R. No.
properly proved, the court of the forum may
189102, June 7, 2017, as penned by J. Leonen)
presume that said foreign law is the same as the
law of the forum that said court can now apply.
Q: PNCC and Asiavest Holdings (M) Sdn. Bhd.
It applies when the foreign law is not alleged or
(Asiavest Holdings) caused the incorporation
if alleged, it is not proved.
of an associate company known as Asiavest-
CDCP Sdn. Bhd. (Asiavest CDCP), through
Where a foreign law is not pleaded or, even if
which they entered into contracts to
pleaded, is not proved, the court of the forum
construct rural roads and bridges for the
may presume that the foreign law applicable to
State of Pahang, Malaysia. In connection with
the case is the same as the local or domestic law.
this construction contract, PNCC obtained
various guarantees and bonds from Asiavest
Foreign laws do not prove themselves in our
Merchant Bankers (M) Berhad to guarantee
jurisdiction and our courts are not authorized to
the due performance of its obligations. The
take judicial notice of them. Like any other fact,
four contracts of guaranty stipulate that
they must be alleged and proved.
Asiavest Merchant Bankers (M) Berhad shall
guarantee to the State of Pahang "the due
A Philippine court may take judicial notice of a
performance by PNCC of its construction
foreign law, as when the laws are already within
contracts . . . and the repayment of the
its actual knowledge, such as when they are well
temporary advances given to PNCC." These
and generally known or they have been actually
contracts were understood to be governed by
ruled upon in other cases before it and none of
the laws of Malaysia. There was failure to
the parties concerned claim otherwise. (PCIB v.
perform the obligations under the
Escolin, G.R Nos. L-27860 & 27896, September 30,
construction contract, prompting the State of
1975)
Pahang to demand payment against Asiavest
Merchant Bankers (M) Berhad's performance

UNIVERSITY OF SANTO TOMAS 14

2021 GOLDEN NOTES
 Conflict of Laws
bonds. It "entered into a compromise
agreement with the State of Pahang by
paying . . . the reduced amount of [Malaysian
Ringgit (MYR)] 3,915,053.54." Consequently,
the corporation demanded indemnity from
PNCC by demanding the amount it paid to the
State of Pahang. Asiavest Merchant Bankers
(M) Berhad filed a Complaint for recovery of
sum of money against PNCC before the
Regional Trial Court of Pasig. It based its
action on Malaysian laws. Specifically, it
invoked Section 98 of the Malaysian
Contracts Act of 1950 and Section 11 of the
Malaysian Civil Law Act of 1956. The trial
court declared PNCC in default for failure to
file any responsive pleading, and allowed
Asiavest Merchant Bankers (M) Berhad to
present its evidence ex parte. PNCC submits
that the trial court could have invoked the
principle of forum non conveniens and
refused to take cognizance of the case
considering the difficulty in acquiring
jurisdiction over the two Malaysian
corporations and in determining PNCC's
exact liability. Can the trial court assume
jurisdiction on the ground of forum non
conveniens?
A: YES. PNCC argues that "in view of the
compelling necessity to implead the two foreign
corporations, the Trial Court should have
refused to assume jurisdiction over the case on
the ground of forum non conveniens, even if the
Court might have acquired jurisdiction over the
subject matter and over the person of the PNCC."
We find that the trial court correctly assumed
jurisdiction over the Complaint. "Forum non
conveniens literally translates to 'the forum is
inconvenient.'" This doctrine applies in conflicts
of law cases. It gives courts the choice of not
assuming jurisdiction when it appears that it is
not the most convenient forum and the parties
may seek redress in another one. It is a device
"designed to frustrate illicit means for securing
advantages and vexing litigants that would
otherwise be possible if the venue of litigation
(or dispute resolution) were left entirely to the
whim of either party." On the other hand, courts
may choose to assume jurisdiction subject to the
following requisites: "(1) that the Philippine
Court is one to which the parties may
conveniently resort to; (2) that the Philippine
Court is in a position to make an intelligent
decision as to the law and the facts; and (3) that
the Philippine Court has or is likely to have
power to enforce its decision." The
15
determination of whether to entertain a case is
addressed to the sound discretion of the court,
which must carefully consider the facts of the
particular case.
A mere invocation of the doctrine of forum non
conveniens or an easy averment that foreign
elements exist cannot operate to automatically
divest a court of its jurisdiction. It is crucial for
courts to determine first if facts were
established such that special circumstances exist
to warrant its desistance from assuming
jurisdiction. PNCC is a domestic corporation
with its main office in the Philippines. It is safe to
assume that all of its pertinent documents in
relation to its business would be available in its
main office. Most of PNCC's officers and
employees who were involved in the
construction contract in Malaysia could most
likely also be found in the Philippines. Thus, it is
unexpected that a Philippine corporation would
rather engage this civil suit before Malaysian
courts. Our courts would be "better positioned
to enforce the judgment and, ultimately, to
dispense" in this case against PNCC. (Philippine
National Construction Corporation V. Asiavest
Merchant Bankers (M) Berhad, G.R. 172301,
August 19, 2015, as penned J. Leonen)
CHOICE OF LAW
Important Questions that Choice-of-Law
Problems Seeks to Answer
1. What legal system should control a given
situation where some of the significant facts
occurred in two or more states; and
2. To what extent should the chosen system
regulate the situation. (Saudi Arabian Airlines
v. CA, G.R. No. 122191, October 8, 1998)
NOTE: Foreign law has no extraterritorial effect
and any exception to this right must be traced to
the consent of the nation.
Theories on why the foreign law may be
given effect
1. Theory of Comity - The application of
foreign legal systems in cases involving
foreign element is proper, otherwise, the
non-application would constitute a
disregard of foreign sovereignty or lack of
comity towards other States.
Comity is the recognition which one state allows
 Civil Law
within its territory to the legislative, executive,
or judicial acts of another state, having due
regard both to international duty and
convenience and to the rights of its own citizens
or of other persons who are under the
protection of its laws. (Agpalo. 2004)
Kinds:
a. Comity based on reciprocity
b. Comity based on the persuasiveness of the
foreign judgment.
2. Theory of Vested Rights - Courts enforce
not the foreign law or foreign judgment but
the rights vested under such law or
judgment. Thus, rights acquired in one
country must be recognized and legally
protected in other countries. The forum will
not apply the foreign law but will simply
recognize the right vested by said law.
3. Theory of Local Law - This involves the
appropriation of a foreign rule by the State
of the forum and transforming it into a
domestic rule. A foreign law is applied
because our own law, by applying a similar
rule, requires us to do so, as if the foreign
law as become part of our internal or
domestic law.
4. Theory of Harmony of Law - Identical or
similar problems should be given identical
and similar solutions, thus resulting in
harmony of laws. The application of the
same or similar solution prevents the bad
practice of forum shopping.
5. Theory of Justice - Choice of law should be
determined by considerations of justice and
social expediency and should not be the
result of mechanical application of the rule
or principle of selection.
CHARACTERIZATION
CONFLICT RULES
These are a provision found in our own law
which governs a factual situation possessed of a
foreign element. It is usually expressed in the
form of an abstract proposition that a given legal
question is governed by the law of a particular
country (which may be an internal law or the
proper foreign law), to be ascertained in the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
manner indicated in the provision. (Sempio-diy,
2004)
Kinds of conflict rules
1. One-sided rule – indicates when the
Philippine law will apply,
e.g., Article 15 and Art. 818 of the Civil Code
only apply to Filipinos
2. All-sided rule – indicates whether to apply
the local law or the proper foreign law.
Characterization (Doctrine of Qualification
or Classification)
It is the process of deciding whether or not the
facts relate to the kind of question specified in a
conflicts rule. (Saudi Arabian Airlines v. CA, G.R.
No. 122191, October 8, 1998)
Steps in characterization
1. The determination of facts involved;
2. The characterization of factual situation;
3. The determination of conflicts rule which is
to be applied;
4. The characterization of the point of contact
where the connecting factor;
5. The characterization of the problem as
procedural or substantive;
6. The pleading and proving of the proper
foreign law; and
7. The application of the proper foreign law to
the problem. (Paras, 1990)
Q: A (Iraqi government) granted B (Domestic
corp.) a service contract for the construction
of a building in Iraq. The bond was
guaranteed by C (Domestic corp.). When it
was ascertained that B will not be able to
finish the project in the scheduled
agreement, C paid the bond for the failure of
B to complete such building. When C was
claiming reimbursement, B refused to pay.
Thus, a case was filed. Should Philippine law
govern in determining B's default?
A: YES. It must be noted that the service contract
between SOB and VPECI contains no express
choice of the law that would govern it. In the
United States and Europe, the two rules that
now seem to have emerged as "kings of the hill"
are: (1) the parties may choose the governing
16
 Conflict of Laws
law; and (2) in the absence of such a choice, the G.R. No. 112573, February 9, 1995)
applicable law is that of the State that "has the
most significant relationship to the transaction DOMICILE AND CITIZENSHIP
and the parties." Another authority proposed
that all matters relating to the time, place, and CITIZENSHIP
manner of performance and valid excuses for
non-performance are determined by the law of Personal law
the place of performance or lex loci solutionis,
which is useful because it is undoubtedly always The law which attaches to a person wherever he
connected to the contract in a significant way. may go and generally governs his status,
capacity, condition, family relations, and the
In this case, the laws of Iraq bear substantial consequences of his actuations. (Sempio-Diy,
connection to the transaction, since one of the 2004)
parties is the Iraqi Government and the place of
performance is in Iraq. Hence, the issue of Theories of personal law
whether respondent VPECI defaulted in its
obligations may be determined by the laws of 1. The Nationality Theory or Personal
Iraq. However, since that foreign law was not Theory – the status and capacity of a person
properly pleaded or proved, the presumption of is determined by the law of his nationality or
identity or similarity, otherwise known as the national law. (Sempio-Diy, 2004)
processual presumption, comes into play. Where
foreign law is not pleaded or, even if pleaded, is NOTE: The Philippines follows the
not proved, the presumption is that foreign law Nationality Theory.
is the same as ours. (Philippine Export and
Foreign Loan Guarantee Corporation v. V.P. 2. Domiciliary Theory or Territorial Theory
Eusebio Construction, Inc. Et Al, G.R. No. 140047, – the status and capacity of a person is
July 13, 2004) determined by the law of his domicile. (Ibid.)
Q: A, a foreign corporation, won a collection 3. Situs or eclectic theory – the particular
case in Japan against B, a domestic place or situs of an event or transaction is
corporation doing business in Japan. A filed a generally the controlling law. (Ibid.)
suit for enforcement of the judgment in the
RTC of Manila. B assails the judgment on the
Problems in applying the nationality
ground that the Japanese court did not
principle in dual or multiple citizenship
validly acquire jurisdiction over B’s person
since B was served with summons in the
It arises from the concurrent application of jus
Philippines and not in Japan. Is B correct?
soli and jus sanguinis at birth or from a refusal of
certain States to accept a full application of the
A: NO. It is settled that matters of remedy and
doctrine of expatriation, from marriage, or from
procedure such as those relating to the service
a formal and voluntary act.
of process upon a defendant are governed by the
lex fori or the internal law of the forum. In this
1. In matters of status, a person is usually
case, it is the procedural law of Japan where the
considered by the forum as exclusively its
judgment was rendered that determines the
own national. His additional foreign
validity of the extraterritorial service of process
nationality is disregarded.
on B. As to what this law is a question of fact, not
2. In case litigation arises in a third country, the
of law. It may not be taken judicial notice of and
law most consistently applied is that of the
must be pleaded and proved like any other fact.
country of which the person is not only a
B did not present evidence as to what that
national but where he also has his domicile
Japanese procedural law is and to show that
or habitual residence, or in the absence
under it, the assailed extraterritorial service is
thereof, his residence.
invalid. Accordingly, the presumption of validity
and regularity of the service of summons and the
Theory of effective nationality
decision thereafter rendered by the Japanese
court must stand. (Northwest Orient Airlines, Inc.
A third state shall recognize exclusively in its
v. Court of Appeals and C.F. Sharp & Company Inc.,
territory either the nationality of the country of

17
 Civil Law
which one is habitually and principally a
resident, or the nationality of the country with
which in the circumstances one appears to be in
act most closely connected. (Hague Convention
on Conflict Nationality Lawes, Art. 5)
Q: On February 8, 1961, Lau Yuen Yeung
applied for a passport visa to enter the
Philippines as a non-immigrant. She stated
that she desired to take a pleasure trip to
visit her great grand uncle. On the date of her
arrival, Asher Cheng filed a bond of P1,000 to
undertake that Lau would depart the
Philippines on or before the expiration of her
authorized period of stay or within the
period as in the discretion of the Commission
of Immigration might properly allow. After
repeated extensions, Lau was allowed to stay
in the country until February 13, 1962. On
January 25, 1962, she contracted a marriage
with Moy Ya Lim Yao, a Filipino citizen. As an
alien woman, may Lau be considered as a
citizen of the Philippines by virtue of her
marriage to a Filipino?
A: YES. An alien woman may be deemed a
citizen of the Philippines by virtue of her
marriage to a Filipino citizen only if she
possesses all the qualifications and none of the
disqualifications specified in the law, because
these are the explicit requisites provided by law
for an alien to be naturalized. Section 15 of the
Revised Naturalization Law (Commonwealth Act
No. 473) provides that “Any woman who is now
or may hereafter be married to a citizen of the
Philippines, and who might herself be lawfully
naturalized shall be deemed a citizen of the
Philippines.” Section 15 was obviously to accord
to an alien woman, by reason of her marriage to
a Filipino, a privilege not similarly granted to
other aliens. (Moy Ya Lim Yao “Alias” Edilberto
Aguinaldo Lim And Lau Yuen Yeung v.
Commissioner of Immigration, G.R. No. L-21289
October 4, 1971)
Q: Ernesto S. Mercado and Eduardo Manzano
were candidates for vice mayor of the City of
Makati. Manzano won the elections, however
his proclamation was suspended because a
certain Ernesto Mamaril filed a petition for
his disqualification and alleged that Manzano
was not a citizen of the Philippines but of the
US. COMELEC 2nd Division granted the
petition and cancelled the certificate of
candidacy on the grounds that dual citizens
are disqualified from running any elective
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
position under Sec.40 of the LGC. But,
COMELEC en banc reversed the said decision.
It found that Manzano acquired US
citizenship by operation of the US
Constitution. He was also a natural born
Filipino Citizen by operation of 1935
Constitution, as his father and mother were
Filipinos at the time of his birth. At the age of
6 his parents brought him in the country and
registered him as an alien, but this however
did not result in the loss of his Phil.
Citizenship, as he did not renounce his Phil.
Citizenship and did not take an oath of
allegiance to the US. At the age of Majority,
Manzano registered himself as a voter and
voted in the elections of 1992, 1995 and
1998, which effectively renounced his US
Citizenship under American Law. Is Dual
citizenship a ground for disqualification?
A: NO. Dual citizenship is different from dual
allegiance. The phrase “dual citizenship” in RA
7160 must be understood as referring to “dual
allegiance”, and persons with dual citizenship do
not fall under this disqualification. Dual
Citizenship is involuntary, it arises out of
circumstances like birth or marriage, while dual
allegiance is a result of a person’s volition. It is a
situation wherein a person simultaneously owes,
by some positive act, loyalty to 2 or more states.
Also, Manzano upon filing his certificate for
candidacy has elected Phil, Citizenship thus
terminating his dual citizenship. Particularly, he
made these statements: “I am a Filipino citizen….
Natural born. I am not a permanent resident of,
or immigrant to, a foreign country. I am eligible
for the office I seek to be elected…I will support
the Constitution of the Philippines and will
maintain true faith and allegiance thereto…”.
Such statement was sufficient to revoke his
American citizenship. (Mercado v. Manzano &
COMELEC, G.R. No. 135083 May 26, 1999)
Q: Teodoro Cruz was born in San Clemente,
Tarlac, to Filipino parents making him a
natural-born citizen of the Philippines.
However, respondent Cruz was enlisted in
the United States Marine Corps and, without
the consent of the Republic of the
Philippines, took an oath of allegiance to the
United States. As a consequence, he lost his
Filipino Citizenship by his naturalization as a
U.S. citizen in connection with his service in
the U.S. Marine Corps. Thereafter,
respondent Cruz reacquired his Philippine
18
 Conflict of Laws
citizenship through repatriation under
Republic Act No. 2630. He ran for and was
elected as the Representative of the Second
District of Pangasinan in the 1998 elections.
He won over Antonio Bengson III, who was
then running for reelection. Subsequently,
Bengson filed a case with House of
Representatives Electoral Tribunal (HRET)
claiming that respondent Cruz was not
qualified to become a member of the House
of Representatives since he is not a natural-
born citizen as required under Article VI,
Section 6 of the Constitution. The HRET
dismissed the petition for quo warranto and
declared respondent Cruz was duly elected
as a Representative. The HRET also denied
Bengson’s motion for reconsideration. Can
Cruz, a natural-born Filipino who became an
American citizen, still be considered a
natural-born Filipino upon his reacquisition
of Philippine citizenship?
A: YES. Cruz can still be considered a natural-
born Filipino upon his reacquisition of
Philippine citizenship. He may have lost his
Filipino citizenship when he rendered service in
the Armed Forces of the United States. However,
he subsequently reacquired Philippine
citizenship under R.A. No. 2630, Section 1, which
provides: ”Any person who had lost his
Philippine citizenship by rendering service to, or
accepting commission in, the Armed Forces of
the United States, or after separation from the
Armed Forces of the United States, acquired
United States citizenship, may reacquire
Philippine citizenship by taking an oath of
allegiance to the Republic of the Philippines and
registering the same with Local Civil Registry in
the place where he resides or last resided in the
Philippines. The said oath of allegiance shall
contain a renunciation of any other citizenship”.
Cruz upon taking the required oath of allegiance
to the Republic and having registered the same
in the Civil Registry of Mangatarem, Pangasinan
in accordance with the aforecited provision, is
deemed to have recovered his original status as
a natural-born citizen, a status which he
acquired at birth as the son of a Filipino father. It
bears stressing that the act of repatriation
allows him to recover, or return to, his original
status before he lost his Philippine citizenship.
(Bengson v. HRET and Cruz, G.R. No. 142840. May
7, 2001)
Q: What are the effects of marriages of: 1) a
citizen to an alien; and 2) an alien to a citizen
19
on their spouses and children?
A: The following are the effects:
1. Filipino citizens who marry aliens retain their
citizenship, unless by their act or omission, they
are deemed, under the law, to have renounced it.
(1987 Constitution, Art. IV, Sec. 4)
2. Sec. 15 of the Revised Naturalization Law
provides that a foreign woman who marries a
Filipino citizen becomes a Filipino citizen
provided she possesses all the qualifications and
none of the disqualifications for naturalization.
Sec. 15 was obviously to accord to an alien
woman, by reason of her marriage to a Filipino, a
privilege not similarly granted to other aliens.
On the other hand, a foreign man who marries a
Filipino citizen does not acquire Philippine
citizenship. But under Sec. 3 of the same law, in
such a case, the residence requirement for
naturalization will be reduced from 10 to 5
years. Under Sec. 1(2), Art. IV of the
Constitution, the children of an alien and a
Filipino citizen are citizens of the Philippines.
(Moy Ya Lim Yao “Alias” Edilberto Aguinaldo Lim
and Lau Yuen Yeung v. Commissioner of
Immigration, G.R. No. L-21289, October 4, 1971)
DOMICILE
It is the place to which a person has a settled
connection for certain legal purposes, either
because his home is there or because that is the
place assigned to him by law.
Domiciliary or Territorial Theory/Lex
Domicili
The individual’s private rights, condition, status,
and capacity are determined by the law of his
domicile. It is adopted mostly by common law
countries with population consisting of different
nationalities. Their unity may be achieved by
adopting the law of their domicile.
Basic Fundamental principles of domicile
1. No person shall be without a domicile.
2. A person cannot have two simultaneous
domiciles.
3. Every natural person, as long as he is free
and sui juris, may change his domicile at his
pleasure.
4. A domicile once acquired is retained unless a
new one is gained.
 Civil Law

5. The presumption is in favor of continuance of birth.

domicile, the burden of proof is on the one
who alleges that change of domicile has The domicile of his
taken place. If the child is father at the time of
6. To acquire a fresh domicile, residence and legitimated his birth controls.
intention must concur; to retain an existing
domicile, either residence there or intention
to remain must be present; to abandon a RULES DETERMINING ONE’S
domicile, residence in a new place and CONSTRUCTIVE DOMICILE
intention to abandon the old place must
concur. (Gallego v. Verra, G.R. No. L-48641, MINORS
November 24, 1941) 1. If legitimate, the domicile of both
parents.
Essential requisites needed in order to
acquire a domicile of choice In case of disagreement, that of the father,
unless there is a judicial order to the contrary.
1. Capacity;
2. Actual physical presence in the place chosen; 2. If illegitimate, the domicile of the
3. Freedom of choice; and mother.
4. Provable intent that it should be one’s fixed 3. In case of absence or death of either
and permanent place of abode – one’s home – parent, the domicile of the present
hat is, there should be “animus manendi” parent.
(intent to remain) or: “animus non-
revertendi” (intent not to return to the Even in the case of remarriage of the
original abode). surviving parent, still his/her domicile
determines the constructive domicile of the
Legal classifications of domicile minor child.

1. Domicile of origin – the domicile of a 4. If the child is adopted, the domicile of

person’s parents at the time of birth.
2. Constructive domicile – domicile
established by law after birth in case of
persons under legal disability, regardless of
their intention or voluntary act.
Rules in determining the domicile of a
person
A minor follows the domicile of his parents.
(Imelda Romualdez-Marcos v. Comelec, G.R. No.
119976, September 18, 1995)
His domicile of origin
is that of his parents
at the time of his
birth.
If the child is
If parents are
legitimate
separated, the
domicile of the
custodial parent.
His domicile of origin
If the child is
is that of the mother
illegitimate
at the time of his
choice of the adopter is the child’s
constructive domicile.
INSANES, IDIOTS, IMBECILES
The law assigns their domicile to them:
1. If they are below the age of majority, the
rules on minors apply to them.
2. If they are of age and have guardians, they
follow the domicile of choice of their
guardians.
3. If they are of age and have no guardians,
their constructive domicile is their
domicile of choice before they became
insane.
1. The constructive
domicile of the wife is
the domicile of both
spouses, unless the law
allows the wife to have a
If the marriage separate domicile for
is valid valid and compelling
reasons.
2. If there is legal
separation between the
spouses, the wife can
have her own domicile

UNIVERSITY OF SANTO TOMAS 20

2021 GOLDEN NOTES
 Conflict of Laws
of choice. His domicile is the one he
Convict or
3. If there is a separation de had possessed prior to his
prisoner
facto, the wife can also incarceration.
have a separate Their domicile is their
domicile. Soldiers domicile before their
Apply the same rules when enlistment.
the marriage is valid. Their domicile is the one
If the marriage However, after Public officials they had before they were
is voidable annulment, the wife can or employees assigned elsewhere,
freely select her own abroad unless they voluntarily
domicile of choice. (diplomats, adopt their place of
The wife can have a etc.) employment as their
If the marriage
domicile separate from permanent residence.
is void
the husband.
OTHER PERSONS Q: Does leasing a condominium unit show an
His domicile is the one he intention to establish not just a residence but
Convict or
had possessed prior to his a domicile of choice?
prisoner
incarceration.
Their domicile is their A: NO. While a lease contract may be indicative
Soldiers domicile before their of the petitioner’s intention to reside in a place,
enlistment. it does not engender the kind of permanency
Their domicile is the one required to prove abandonment of one’s original
Public officials they had before they were domicile. (Agapito Aquino V. COMELEC, Move
or employees assigned elsewhere, Makati, Mateo Bedon and Juanito Icaro, G.R. No.
abroad unless they voluntarily 120265, September 18, 1995)
(diplomats, adopt their place of
etc.) employment as their There are three requisites to acquire a new
permanent residence. domicile: (1) Residence or bodily presence in a
MARRIED WOMEN new locality; (2) An intention to remain there;
1. The constructive and (3) An intention to abandon the old
domicile of the wife is domicile. To successfully effect a change of
the domicile of both domicile, one must demonstrate an actual
spouses, unless the law removal or an actual change of domicile; a bona
allows the wife to have a fide intention of abandoning the former place of
separate domicile for residence and establishing a new one and
valid and compelling definite acts which correspond with the
reasons. purpose. In other words, there must basically
If the marriage be animus manendi coupled with animus non
2. If there is legal
is valid revertendi. The purpose to remain in or at the
separation between the
spouses, the wife can domicile of choice must be for an indefinite
have her own domicile period of time; the change of residence must be
of choice. voluntary; and the residence at the place chosen
3. If there is a separation de for the new domicile must be actual. (Poe-
facto, the wife can also Llamanzares v. Commission on Elections, G.R. Nos.
have a separate 221697 & 221698-700, March 8, 2016)
domicile.
Apply the same rules when Q: On January 26, 2010, Enrico Echiverri filed
the marriage is valid. a petition to exclude Luis Asistio from the
If the marriage However, after permanent list of voters of Caloocan City.
is voidable annulment, the wife can Echiverri alleged that Asistio is not a resident
freely select her own of Caloocan City, specifically not of 123
domicile of choice. Interior P. Zamora St., Barangay 15, Caloocan
The wife can have a City, the address stated in his Certificate of
If the marriage Candidacy for Mayor in 2010 elections.
domicile separate from
is void According to him, he found out that the
the husband.
OTHER PERSONS Asistio’s address is non-existent. In defense,

21
 Civil Law
Asistio alleged that he is a resident of No.
116, P. Zamaro St., Caloocan City, and a
registered voter of Precinct No. 1811A
because he mistakenly relied on the address
stated in the contract of lease with Angelina
dela Torre Tengco. Should Asistio be
excluded from the permanent list of voters of
Caloocan city for failure to comply with the
residency required by law?
A: NO. Residency requirements for a voter are:
one, a least one-year residence in the
Philippines; and two, at least, six months in the
place where the person intends to two.
Residence, as used in the law pre-scribing the
qualifications for suffrage and for elective office,
is doctrinally settled to mean domicile,
importing not only an intention to reside in a
fixed place but also personal presence in that
place, coupled with conduct indicative of such
intention inferable from a person’s acts,
activities, and utterances.
Domicile denotes a fixed permanent residence
where, when absent for business or pleasure, or
for like reasons, one intends to return. In the
consideration of circumstances obtaining in each
particular case, three rules must be borne in
mind, namely: (1) that a person must have a
residence or domicile somewhere; (2) once
established, it remains until a new one is
acquired; and (3) that a person can have but one
residence or domicile at a time.
Asistio has always been a resident of Caloocan
city for more than 72 years. Asistio served in
public office of Caloocan City in 1992, 1995,
1998, 2004 and 2007. In all of these occasions,
Asistio cast his vote in the same city.
Taking these circumstances, it cannot be denied
that Asistio has qualified, and continues to
qualify, as a voter of Caloocan city. There is no
showing that he has established, or that he had
consciously and voluntarily abandoned his
residence in Caloocan City. Thus, he should
remain in the list of permanent voters of
Caloocan city. (Luis Asistio v. Hon. Thelma Canlas
Trinidad-Pe Aguirre, G.R. No. 191124, April 27,
2010)
FAMILY LAW AND PERSONAL CAPACITY
Applicable Civil Code Provisions
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Laws relating to family rights and duties, or
to the status, condition, and legal capacity of
persons are binding upon citizens of the
Philippines, even though living abroad.
(NCC, Art. 15)
2. All marriages solemnized outside the
Philippines in accordance with the laws in
force in the country where they were
solemnized, and valid there as such, shall
also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and
(6), 36, 37, and 38. (FC, Art. 26)
GR: Under Article 26 of the Family Code, all
marriages solemnized outside the Philippines, in
accordance with the laws in force in the country
where they were solemnized, and valid there as
such, is also valid in the Philippines.
XPN: If the marriage is void under Philippine
law, the marriage is void even if it is valid in the
country where the marriage was solemnized,
viz:
1. Those contracted by any party below 18
years of age even with the consent of parents
or guardians; [FC, Art. 35 (1)]
2. Those bigamous or polygamous marriages
not falling under Art. 41, FC; [FC, Art. 35 (4)]
3. Those contracted through mistake of one
contracting party as to the identity of the
other; [FC, Art. 35 (5)]
4. Those subsequent marriages that are void
under Art. 53, FC; [FC, Art. 35 (6)]
5. Marriage contracted by any party who, at the
time of the celebration, was psychologically
incapacitated to comply with the essential
marital obligations of marriage; (FC, Art. 36)
6. Incestuous marriage; (FC, Art. 37) and
7. Void ab initio marriages or reasons of public
policy. (FC, Art. 38)
Effect of laws, judgments promulgated or
conventions agreed upon in a foreign country
on Philippine prohibitive laws
GR: Prohibitive laws concerning persons, their
acts, or property and laws which have for their
object public order, public policy or good
customs are not rendered ineffective by laws,
judgments promulgated or conventions agreed
upon in a foreign country.
XPN: Art. 26 par. 2 of the Family Code (FC), on
mixed marriages where the foreigner obtained a
divorce decree abroad and was thereby
22
 Conflict of Laws
capacitated to remarry.
Even though divorce is not recognized in the
Philippines as a mode of terminating marriage,
still the marriage is terminated by virtue of a
judgment of divorce and issuance of a divorce
decree by a foreign court.
Q: Genevieve, a Filipino citizen, and Tetsushi
Toyo (Tetsushi), a Japanese citizen, were
married in Quezon City. After 19 years of
marriage, the two filed a Notification of
Divorce by Agreement, which the Mayor of
Konohana-ku, Osaka City, Japan received and
was later recorded in Tetsushi's family
register as certified by the Mayor of
Toyonaka City. Genevieve filed before the
Regional Trial Court a Petition for judicial
recognition of foreign divorce and
declaration of capacity to remarry. In
support of her Petition, Genevieve submitted
a copy of their (1) Divorce Certificate, (2)
Tetsushi's Family Register, (3) the Certificate
of Acceptance of the Notification of Divorce,
and (4) an English translation of the Civil
Code of Japan. The RTC rendered a Judgment
denying Genevieve's Petition noting that the
copy of the Civil Code of Japan and its English
translation submitted by Genevieve were not
duly authenticated by the Philippine Consul
in Japan, the Japanese Consul in Manila, or
the Department of Foreign Affairs. Are the
copy of the Japan Civil Code and its English
translation sufficient to prove Japan's law on
divorce, requiring no further authentication
by the Philippine Consul in Japan, the
Japanese Consul in Manila, or the
Department of Foreign Affairs?
A: NO. The English translation submitted by
petitioner was published by Eibun-Horei-Sha,
Inc., a private company in Japan engaged in
publishing English translation of Japanese laws,
which came to be known as the EHS Law
Bulletin Series. However, these translations are
"not advertised as a source of official
translations of Japanese laws;" rather, it is in the
KANPO or the Official Gazette where all official
laws and regulations are published, albeit in
Japanese. Accordingly, the English translation
submitted by petitioner is not an official
publication exempted from the requirement of
authentication. (Genevieve Rosal Arreza, A.K.A.
"Genevieve Arreza Toyo," v. Tetsushi Toyo, Local
Civil Registrar of Quezon City, and the
Administrator and Civil Registrar General of the
23
National Statistics Office, G.R. No. 213198, July 01,
2019, as penned by J. Leonen)
Q: Rhodora Tanaka, a Filipino wife married
to Seiichi Tanaka, a Japanese national filed a
Petition for Judicial Determination and
Declaration of Capacity to Marry with the
Regional Trial Court in order to judicially
recognize her divorce against her husband.
She presented a “Certificate of Acceptance of
the Report of Divorce” she obtained from
Japan, which was issued by the Mayor of
Fukaya City, Japan, which was duly
authenticated by the Philippine Consul in
Japan. Is the “Certificate of Acceptance of the
Report of Divorce” sufficient to prove that she
and her husband have legally divorced and
capacitated her to marry?
A: YES. Under Article 26 of the Family Code,
where a marriage between a Filipino citizen and
a foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien
spouse capacitating him or her to remarry, the
Filipino spouse shall have capacity to remarry
under Philippine law. The Certificate of
Acceptance of the Report of Divorce was
accompanied by an Authentication issued by
Consul of the Embassy of the Philippines in
Tokyo, Japan. Considering that the Certificate of
Acceptance of the Report of Divorce was duly
authenticated, the divorce was validly obtained
according to foreign spouse’s law. Here, the
national law of the foreign spouse states that the
matrimonial relationship is terminated by
divorce. The Certificate of Acceptance of the
Report of Divorce does not state any
qualifications that would restrict the remarriage
of any of the parties. There can be no other
interpretation than that the divorce procured by
them completely terminates their marital tie.
(Rhodora Ilumin Racho, a.k.a. "Rhodora Racho
Tanaka," v. Seiichi Tanaka, Local Civil Registrar of
Las Piñas city, and the Administrator and Civil
Registrar General of the National Statistics Office,
G.R. No. 199515, June 25, 2018, as penned by J.
Leonen)
Requirements for the application of par. 2 of
Art. 26 of the Family Code
1. It must be a case of mixed marriage (one
party is Filipino and the other is an alien);
2. The divorce must be obtained by the alien
spouse and not by the Filipino spouse; and
 Civil Law
NOTE: Whether the Filipino spouse initiated the
foreign divorce proceeding or not, a favorable
decree dissolving the marriage bond and
capacitating his or her alien spouse to remarry
will have the same result: the Filipino spouse
will effectively be without a husband or wife.
Divorces obtained abroad by Filipino citizens
may now be validly recognized in the
Philippines but only in cases of mixed marriages
involving a Filipino and a Foreigner. (Republic of
the Philippines V. Marelyn Tanedo Manalo, G.R.
No. 221029, April 24, 2018))
3. The divorce obtained by the alien spouse
must capacitate him or her to remarry.
(Rabuya, 2009)
Law that governs the validity of marriage in
case of mixed marriages
If the marriage is valid
under the law of one of
the spouses while void
under the law of the
Marriage other, the validity of the
between a marriage should be
Filipino and upheld, unless the
foreigner marriage is universally
ABROAD incestuous or highly
immoral (the same rule
as to foreigners who get
married abroad).
The national law of the
Filipino – Philippine
Marriage
law should be
between a
followed – otherwise
Filipino and a
the country’s public
foreigner in the
policy would be
PHILIPPINES
violated.
Ipso facto becomes a
Filipino citizen if she
does not suffer under
any disqualification for
naturalization as a
Alien woman who
marries a Filipino citizen.
Filipino husband
Personal relations:
National law of the
husband shall govern
(GR).
Law that governs the personal relations of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the spouses
GR: The personal relations of the spouses are
governed by the national law of the husband.
Effects of change of nationalities of the
spouses – governing law (NCC, Art. 15).
XPN: Change of nationalities of the spouses —
governing law. (NCC, Art. 15)
Effects:
1. If the spouses have the same nationality
but they acquire a new nationality by
their common act – their new national law
will govern their personal relations.
2. If the husband alone changes his
nationality after the marriage – The law of
the last common nationality of the spouses
would govern.
3. If the spouses retain their different
nationalities after the marriage – National
law of both spouses should govern.
CONTRACTS
The extrinsic or formal validity – is governed
by lex loci celebrationis or lex loci contractus.
(NCC, Art. 17)
Lex loci contractus
It means “the law of the contract;” the law that
governs the intrinsic validity of a contract.
It may be determined either through;
1. Lex voluntatis or the law specifically
stipulated by the parties in their contract; or
2. Lex intentionis or the law intended by the
parties in the absence of an express
stipulation.
Law that governs the validity of contracts
Contract Capacity Intrin
Extrinsic
of sic
validity
parties validit
y
Barter, Lex situs Lex situs Lex
24
 Conflict of Laws
sale, situs (render parties
donation services)
Liability for loss, destruction,
Lease of deterioration of goods in transit:
property: Lex law of destination of goods.
Lex situs Lex situs (NCC, Art. 1753)
creates situs
real rights
If COGSA applies, limitation on
liability applies, unless the
Lex shipper declares value of goods
Lease of and inserts such declaration in
Personal volunt
property: Lex loci the bill of lading.
law of atis or
does not celebration
the lex loci
create real is Contract for air
parties intenti
rights transportation
onis
(Warsaw Convention)

Pledge, 1. The liability of the airline in

chattel case of death, injury to
mortgage, Lex passengers, or loss or damage to
Lex situs Lex situs cargo is governed by Warsaw
real estate situs
mortgage, Convention.
antichresis
2. If there was malice, gross
negligence, or bad faith, or
Lex
improper discrimination, carrier
loci
is liable for damages beyond
Personal volunt
Contract of Lex loci those limited by Warsaw
law of atis or
loan: celebration Convention.
the lex loci
mutuum is
parties intenti
onis NOTE: If contracts involve encumbrances of
property, real or personal, apply lex situs. If
personal contracts, law on contracts will apply.
Contract of
Lex SUCCESSION
loan: Lex situs Lex situs
situs
commodat
um Applicable Civil Code provisions

Lease of 1. Real property as well as personal property

service, is subject to the law of the country where it
agency, is stipulated.
guaranty, Lex
suretyship loci However, intestate and testamentary
NOTE: Lex loci Personal volunt successions, both with respect to the order of
Agency to celebration law of atis or succession and to the amount of successional
alienate or is parties lex loci rights and to the intrinsic validity of
encumber intenti testamentary provisions, shall be regulated by
real onis the national law of the person whose succession
property is is under consideration, whatever may be the
governed nature of the property and regardless of the
by lex situs country wherein said property may be found
(NCC, Art. 16).
Contract of Lex
Lex loci NOTE: Capacity to succeed is governed by the
transporta Personal loci
celebration national law of the decedent. (NCC, Art. 1039)
tion or law of volunt
is
carriage the atis

25
 Civil Law
2. The will of an alien who is abroad produces
effect in the Philippines if made with the
formalities prescribed by the law of the
place in which he resides, or according to
the formalities observed in his country, or in
conformity with those which this Code
prescribes. (NCC, Art. 816)
NOTE: Proof that the will conforms to the laws
mentioned is imperative. (Salud Teodoro Vda. De
Perez v. Hon. Tolete, G.R. No. 76714, June 2, 1994)
3. A will made in the Philippines by a citizen or
subject of another country, which is
executed in accordance with the law of the
country of which he is a citizen or subject,
and which might be proved and allowed by
the law of his own country, shall have the
same effect as if executed according to the
laws of the Philippines. (NCC, Art. 817)
NOTE: Probate is an adjudication that the last
will and testament of a person was executed
with all the formalities required by law. It does
not pass upon the validity of the provisions of
the will. The disallowance of a will being
essentially procedural in character, the law of
the forum will govern the procedural matters.
However, the court will look into the law of the
foreign state where the suit was made as to
whether the extrinsic requirements in the
execution of the will have been complied with.
4. Joint wills executed by Filipinos in a foreign
country shall not be valid in the Philippines,
even though authorized by the laws of the
country where they may have been
executed. (NCC, Art. 819)
Q: How can a will executed abroad be made
effective in the Philippines?
A: A will made in a foreign country may be
probated in the Philippines after sufficient proof
is presented showing that the will was duly
executed in the manner required by law and that
the testator had capacity at the same time he
executed the will.
Evidence necessary for the allowance of wills
which have been probated outside the
Philippines
1. Due execution of the will in accordance with
the foreign laws;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2. The testator has his domicile in the foreign
country and not in the Philippines;
3. The will has been admitted to probate in
such country;
4. The fact that the foreign tribunal is a probate
court; and
5. The laws of a foreign country on procedure
and allowance of wills. (Suntay v. Suntay, G.R.
No. 132524, December 29, 1998)
RENVOI
A procedure whereby a jural matter presented is
referred by the conflict of laws rules of the
forum to a foreign state, the conflict of laws rules
of which in turn refers the matter back to the
law of the forum (remission) or a third state
(transmission). (Coquia, 2000) Thus, it is clear
that renvoi can arise only from conflict of rules
and not from internal rules.
Q: What will the Court do, if it is confronted
with a case with a “Renvoi” Problem?
A:
1. Reject the renvoi – If the conflict rules of the
forum refer later the case to the law of
another state, it is deemed to mean only the
internal law of that state. Thus, the court
will apply the foreign law. (Paras, 1990)
2. Accept the renvoi – If the conflict rules of the
forum refer the case to the law of another
state, it is deemed to include the totality of
the foreign law (internal law and conflict of
law rules). Thus, the court will recognize the
referral back and apply the local law. (Ibid.)
3. Follow the Theory of Desistance – also
referred to as “Mutual Disclaimer of
Jurisdiction Theory.” The forum court upon
reference to another state’s law sees that
such law is limited in application to its own
nationals domiciled in its territory and has
no provision for application to nationals
domiciled outside of the territory. Hence the
local court will apply the local law.
NOTE: This has the same result as the
acceptance of the Renvoi Doctrine but the
process used by the forum court is to desist
applying the foreign law. (Ibid.)
4. Make use of the Foreign Court Theory –
Forum a court assumes the same position
that the foreign court would take if the case
is litigated in the foreign state.
26
 Conflict of Laws
Double renvoi
It is that which occurs when the local court, in
adopting the foreign court theory, discovers that
the foreign court accepts the renvoi. (Sempio-diy,
2004)
Transmission
It is the process of applying the law of a foreign
state through the law of a second foreign state.
Not the same as renvoi. Renvoi involves two
laws while transmission involves three laws.
(Paras, 1990)
Renvoi vs. Transmission
Renvoi Transmission
Deals with 2 Deals with 3 or more
countries countries
Deals with “referring
Deals with
across” or
“referring back”
“transmitting”
Q: Linnie Hodges, an American citizen from
Texas, made a will in 1952. In 1957, she died
while domiciled in Iloilo, Philippines. In her
will, she left her entire estate in favor of her
husband, Charles Hodges. It also states that
should her husband later die, the entire
estate shall be turned over to her brother
and sister. A certain Avelina Magno, a trusted
employee of the Hodges, was appointed as
the estate’s administratrix. When Charles
died in 1962, his lawyer, Atty. Gellada filed a
motion before the probate court (Linnie’s
estate) that Magno be temporarily appointed
as the administratrix of Charles’ estate.
According to Atty. Gellada, Charles left a will
but the same cannot be presently presented.
The court granted the motion. When Charles’
will was later found, a petition for probate
was filed for the said will. Magno opposed the
said petition contending that Charles should
turn over the properties to Linnie’s brother
and sister as provided in Linnie’s will. The
probate court dismissed the opposition.
Thereafter, the Philippine Commercial and
Industrial Bank was appointed as
administrator of Charles’ estate. However,
Magno refused to turn over the properties.
According to Magno, Linnie was a citizen of
Texas, USA at the time of her death. Thus,
successional rights as to Linnie’s estate
27
should governed by the law of Texas. What
law should be applied in the case at bar?
A: The Supreme Court remanded the case back
to the lower court. Both parties failed to adduce
proof as to the law of Texas. Further, the
Supreme Court held that for what the Texas law
is on the matter, is a question of fact to be
resolved by the evidence that would be
presented in the probate court. The Supreme
Court, however, emphasized that Texas law at
the time of Linnie’s death is the law applicable.
As to whether the law of Texas refers the matter
back to Philippine laws must be proven by
evidence presented before the court. (Philippine
Commercial and Industrial Bank v. Hon. Venicio
Escolin, G.R. Nos. L-27860 and L-27896 March 29,
1974)
Q: On November 8, 2001 Ruperta C.
Palaganas (Ruperta), a Filipino who became
a naturalized United States (U.S.) citizen, died
single and childless. In the last will and
testament she executed in California, she
designated her brother, Sergio C. Palaganas
(Sergio), as the executor of her will for she
had left properties in the Philippines and in
the U.S. Respondent Ernesto C. Palaganas
(Ernesto), another brother of Ruperta, filed
with the RTC a petition for the probate of
Ruperta’s will and for his appointment as
special administrator of her estate.
However, petitioners Manuel Miguel
Palaganas (Manuel) and Benjamin Gregorio
Palaganas (Benjamin), nephews of Ruperta,
opposed the petition on the ground that
Ruperta’s will should not be probated in the
Philippines but in the U.S. where she
executed it. The RTC issued an order: (a)
admitting to probate Ruperta’s last will; (b)
appointing re-spondent Ernesto as special
administrator at the request of Sergio, the
U.S.-based executor designated in the will;
and (c) issuing the Letters of Special
Administration to Ernesto. CA affirmed. Can a
will executed by a foreigner abroad be
probated in the Philippines although it has
not been previously probated and allowed in
the country where it was executed?
A: YES. The law does 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 effects in our jurisdiction. The
 Civil Law
Civil Code states that the will of an alien who is
abroad produces effect 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. (Palaganas v. Palaganas, G.R. No.
169144, January 26, 2011)
REVOCATION OF WILLS
Rules if a person dies testate
1. If revocation takes place in the
Philippines, whether the testator is
domiciled in the Philippines or in some
other country, it is valid if in accordance
with Philippine laws.
2. If revocation takes place outside the
Philippines by a testator domiciled in the
Philippines, it is valid when it is in
accordance with the laws of the
Philippines.
3. Revocation done outside the Philippines,
by a testator who does not have his
domicile in this country, is valid when it is
done according to the:
a. Law of the place where the will was
made; or
b. Law of the place where the testator had
his domicile at the time of revocation.
Rule if a person dies intestate
Follow lex nationali or the law of the nationality
of the decedent.
CRIMES
Territoriality Principle
Penal laws and those of public security and
safety shall be obligatory upon all who live or
sojourn in the Philippines, subject to the
principles of international law and treaty
stipulations. (NCC, Article 14)
Extra-territoriality
Penal statutes may find application even outside
the territorial jurisdiction of an enacting state
pursuant to treaty obligations and general
principles of international law. An example of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
extra-territoriality is Art. 2 of the RPC.
Q: May a Filipino convicted of a crime abroad
serve his sentence in the Philippines?
A: NO. Under the territoriality principle, a crime
is punishable only in the territorial jurisdiction
where it was committed. Allowing a Filipino
convicted abroad to serve sentence in the
Philippines will be tantamount to recognizing
and enforcing a foreign judgment which is penal
in nature.
Protective Theory
Any state whose national interests are adversely
affected by the crime may protect itself by
prosecuting and punishing the offender. The
Philippines adheres to this theory to a limited
extent. States claim extraterritorial criminal
jurisdiction to punish crimes committed abroad
which are prejudicial to their national security
or vital interests, even where the offenses are
perpetrated by non-nationals. Jurisdiction is
vested in the state whose national interests are
injured or national security compromised.
Universality Principle
A state has extraterritorial jurisdiction over all
crimes regardless of where they are committed
or who committed them, whether nationals or
non-nationals. This is, however, generally
forbidden under international law. Jurisdiction
is vested with the state which has custody of
offender who committed universal crimes such
as piracy, genocide, etc.
Bigamy is punishable only when committed
in the Philippines
Our penal laws apply to all crimes committed
within Philippine territory. Consequently,
crimes committed outside the territory of the
Philippines are not within the jurisdiction of
Philippine authorities to prosecute, subject only
to certain exceptions. Because of this principle, a
criminal case for bigamy cannot be filed against
a Filipino who contracted a second or bigamous
marriages abroad.
TORTS
GR: Lex loci delicti comissior the law of the place
where the tort was committed will govern.
28
 Conflict of Laws
Reason: The state where the social disturbance local court,
occurred has the primary duty to redress the rendering the
wrong and determine the effects of the injury; to foreign judgment
compensate the victim for the damage or injury and seeking its
suffered. enforcement by the
sheriff on
Obligation Theory accordance with the
Rules of Court.
The tortuous act gives rise to an obligation,
which is transitory and follows the person Requisites for recognition or enforcement of
committing the tortuous act and may be a foreign judgment
enforced wherever he may be found. (Coquia,
2000) 1. The defendant has been given reasonable
notice and opportunity to be heard;
Philippine conflict rules on tort problems 2. There is adequate proof of foreign judgment;
3. The foreign judgment must have disposed of
If the tort law of the Philippines embodies a the controversy on the merits and must be
social or economic policy, then the law of the res judicata, i.e., judgment on the merits is
forum on torts shall be applied. final, issued by a foreign court having
jurisdiction over the subject matter and
If the Philippines has no concern or interest in parties, and there was identity of parties,
the application of the internal law, and the other subject matter, and the cause of action;
State have an interest, apply the law of such 4. It must not be barred by prescription both in
State. the state where it was promulgated and the
where it is sought to be enforced;
NOTE: The state where an injury has occurred 5. State where the foreign judgment was
has interest in compensating the injured party, obtained allows recognition or enforcement
while the state where the tortfeasor acted has an of Philippine judgments;
interest in regulating the conduct of persons 6. If the foreign judgment is for a sum of money,
found in its territory. it must be fixed;
7. Foreign judgment must not be contrary to
RECOGNITION AND ENFORCEMENT OF the public policy or good morals of the
FOREIGN JUDGMENT country where it is to be enforced;
8. Judgment must not have been obtained by
Recognition of Enforcement of fraud, collusion, mistake of fact or law; and
foreign judgment foreign judgment 9. It must be a judgment in civil or commercial
The defendant or the The plaintiff or matters, including questions of status, not on
respondent is petitioner wants the a criminal, revenue, or administrative matter.
presenting the foreign court to positively
judgment merely as a carry out and make NOTE: For Philippine courts to recognize foreign
defense, on the basis of effective the foreign judgment to the status of a marriage where one
res judicata. judgment. of the parties is a citizen of a foreign country, the
petitioner only needs to prove the foreign
Invokes merely as Implies an act of
judgment as fact under the Rules of Court.
sense of justice. sovereignty
Petitioner may prove the Japanese Family Court
Needs no proceeding Requires a separate
judgment through (1) an official publication or
or action but implies action brought
(2) a certification or copy attested by the officer
that the same has precisely to make
who has custody of the judgment. If the office
already been filed the foreign judgment
which has custody is in a foreign country such as
against the defendant effective
Japan, the certification may be made by the
who is invoking the
proper diplomatic or consular officer of the
foreign judgment.
Philippine foreign service in Japan and
Recognition is a Enforcement is an
authenticated by the seal of office. (Fujiki v.
passive effect of active recognition
Marinay, G.R. No. 196049, June 26, 2013)
foreign judgment. and implementation
of the foreign
Effects of a judgment or final order of a
judgment from the

29
 Civil Law
foreign tribunal or court in case the
judgment is being sought in Philippine
Courts
1. In a judgment or final order upon a specific
thing, the judgment or final order is
conclusive upon the title to the thing; and
2. In a judgment or final order against a person,
the judgment or final order is presumptive
evidence of a right as between the parties
and their successors in interest by a
subsequent title.
NOTE: In either case, the judgment or final order
may be repelled by evidence of want of
jurisdiction, want of notice to a party, collusion,
raud or clear mistake of law or fact. (ROC, Rule
39, Sec. 48)
Q: The Special Sixth Division of the Court of
Appeals refused to recognize the Entry of
Appearance of Quasha Law Office as the new
counsel of Legend International Resorts,
Limited (LIRL). It said that the appointment
of LIRL’s joint and several liquidators were
made pursuant to an Order of the Hong Kong
Court. Since it was a foreign judgment,
Philippine Courts could not take judicial
notice thereof as the final orders of foreign
tribunals could only be enforced in the
Philippines after appropriate proceedings.
The CA concluded that Picazo Law Office was
the only counsel entitled to represent and
file pleadings for and on behalf of petitioner
LIRL. Quasha Law Office and LIRL then filed a
special civil action for Certiorari under Rule
65 seeking to reverse and set aside on the
ground of grave abuse of discretion
amounting to lack or excess of jurisdiction of
the Special Sixth Division of the CA. Did the
special CA Division gravely abuse its
discretion in considering the Orders of the
Hong Kong Court appointing liquidators for
LIRL involved enforcement and recognition
of a foreign judgment?
A. NO. It has already been settled in the
aforesaid two Decisions that the Orders of the
Hong Kong Court appointing liquidators for
petitioner LIRL did not involve the enforcement
of a foreign judgment. The act of terminating the
legal services of private respondent Picazo Law
Office and engaging in its place petitioner
Quasha Law Office was a mere exercise of
petitioner LIRLs prerogative, through its
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
appointed liquidators, which was an internal
affair that required no prior recognition in a
separate action. There was no enforcement of a
foreign judgment when one of the appointed
liquidators terminated the legal services of
private respondent Picazo Law Office and
engaged in its stead petitioner Quasha Law
Office to be the duly authorized counsel of
petitioner LIRL.
What is involved is the prerogative of petitioner
LIRL, through its duly authorized representative
-- which, in this case, is its appointed liquidators
-- to terminate and engage the services of a
counsel, which is an internal affair that requires
no prior recognition in a separate action.
(Quasha Ancheta Pea et al v. the Special Sixth
Division of the Court of Appeals, GR No. 182013,
December 4, 2009)
Q: Gerbert, a naturalized Canadian citizen,
married Daisylyn, a Filipino, but
subsequently left for Canada due to work and
other professional commitments. When he
returned to the Philippines, he discovered
that Daisylyn was already romantically
involved with another man. Hurt and
disappointed, Gerbert returned to Canada
and filed a petition for divorce which was
eventually granted. Two years later, he had
fallen in love with another Filipina and
wished to marry her. He then went to the
civil registry to register the divorce decree of
his marriage certificate with Daisylyn.
However, despite the registration, an official
of NSO informed Gerbert that the former
marriage still subsists under the Philippine
law until there has been a judicial
recognition of the Canadian divorce by a
competent judicial court in view of NSO
Circular No. 4, series of 1982. Consequently,
he filed a petition for judicial recognition of
foreign divorce and/or declaration of
dissolution of marriage with the RTC. RTC
denied the same and concluded that Gerbert
was not the proper party to institute the
action for judicial recognition of the foreign
divorce decree as he is a naturalized
Canadian citizen. It ruled that only the
Filipino spouse can avail of the remedy,
under the second paragraph of Article 26 of
the Family Code.
Does the second paragraph of Article 26 of
the Family Code extend to aliens the right to
30
 Conflict of Laws
petition for the recognition of a foreign
divorce decree?

A: YES. While the general rule is that the alien

spouse can claim no right under the second
paragraph of Article 26 of the Family Code as the
substantive right it establishes is in favor of the
Filipino spouse, the foreign divorce decree is
presumptive evidence of a right that clothes the
party with legal interest to petition for its
recognition in this jurisdiction. Divorce obtained
by an alien abroad may be recognized in the
Philippines, provided the divorce is valid
according to his or her national law. The foreign
divorce decree itself, after its authenticity and
conformity with the alien’s national law have
been duly proven according to our rules of
evidence, serves as a presumptive evidence of
right in favor of Gerbert, pursuant to Section 48,
Rule 39 of the Rules of Court which provides for
the effect of foreign judgments.

Ruling with regard to the annotation of

decree on marriage certificate

While the law requires the entry of the divorce

decree in the civil registry, the law and the sub-
mission of the decree by themselves do not ipso
facto authorize the decree’s registration. The law
should be read in relation with the requirement
of a judicial recognition of the foreign judgment
before it can be given res judicata effect. In the
context of the present case, no judicial order as
yet exists recognizing the foreign divorce decree.
Thus, the Pasig City Civil Registry Office acted
totally out of turn and without authority of law
when it annotated the Canadian divorce decree
on Gerbert and Daisylyn’s marriage certificate,
on the strength alone of the foreign decree
presented by Gerbert. For being contrary to law,
the registration of the foreign divorce decree
without the requisite judicial recognition is
patently void and cannot produce any legal
effect. (Corpuz v. Sto. Tomas and the Solicitor
General, G.R. No. 186571, August 11, 2010)

31
 Civil Law
HUMAN RELATIONS
Abuse of right (2006 BAR)
A right, though by itself legal because recognized
or granted by law as such, may become the
source of some illegality. When a right is
exercised in a manner which does not conform
to the norms enshrined in Art. 19 and results in
damage to another, a legal wrong is thereby
committed for which the wrongdoer must be
held responsible.
This principle is based upon the famous maxim
suum jus summa injuria (the abuse of a right is
the greatest possible wrong). (Arlegui v. CA,
G.R. No. 126437, March 6, 2002)
Rationale: The exercise of a right ends when
the right disappears, and it disappears when
it is abused, especially to the prejudice of
others. It cannot be said that a person exercises
a right when he unnecessarily prejudices
another or offends morals or good customs.
(Pineda, 2009)
Elements of abuse of right: (L-B-P-A)
1. There is a Legal right or duty;
2. Such duty is exercised in Bad faith;
3. It is for the sole intent of Prejudicing or
injuring another;
4. The Absence of good faith is essential to
abuse of right. (Rabuya, 2009)
Principle of Damnum Absque Injuria
It means damage without injury. One who
merely exercises one’s rights does no actionable
injury and cannot be held liable for damages.
(Amonoy v. Gutierrez), G.R. No. 140420, February
15, 2001)
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. (Panteleon v. American Express,
G.R. No. 174269, August 25, 2010)
There can be damage without injury in instances
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 (Ibid.)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Article 19, 20 and 21 in the enforcement and
sanctions of abuse of right
While Art. 19 lays down the rule of conduct
for the government of human relations, it does
not provide a remedy. (Rabuya, 2006)
Generally, an action for damages under either
Art. 20 or Art. 21 of the NCC would be proper.
Art. 21 deals with acts contra bonus mores or
contrary to good morals and presupposes loss or
injury, material or otherwise, which one may
suffer as a result of such violation. Under Arts.
19 and 21, the act must be intentional. (Rabuya,
2006)
Article 20 speaks of the general sanction for all
other provisions of law which do not especially
provide for their own sanction. Article 21 on the
other hand, speaks of act which is legal but is
contrary to morals, good custom, public order or
public policy and is done with intent to injure.
Sanction for abuse of right under Article 20
of the NCC
Generally, laws provide for their own sanctions
and methods of enforcement thereof. Article 20
applies only in cases where the law does not
provide for its own sanctions.
In view of the general sanction provided for
under Art. 20, a person however does not have
an absolute right to be indemnified, it is
essential that some right of his be impaired.
Without such, he is not entitled to
indemnification. (Pineda, 2009)
Contra Bonus Mores (1996, 1998, 2006, 2009
Bar)
Any person who willfully causes loss or injury to
another in a manner that is contrary to morals,
good customs or public policy shall compensate
the latter for the damage. (NCC, Art. 21) It fills
countless gaps in the statutes, which leave so
many victims of moral wrongs helpless, even
though they suffered material and moral
damages. (Tolentino, 1987)
Elements of an action under Art. 21:
1. There is an act which is legal;
2. Such act is contrary to morals, good customs,
public order or policy; and
32
 Human Relations
3. It is done with intent to injure.
Civil liability for moral negligence
There is no civil liability for moral negligence. A
person is required to act with prudence towards
others, but not with charity; the law imposes
diligence and not altruism. Hence, the failure to
make sacrifices or egoism does not constitute a
source of liability. (Tolentino, 1987)
Illustration: A person who fails to render
assistance to a drowning person or to the victim
of an accident, cannot be held liable for damages.
(3 Colin & Capitant 826)
While a person can be absolved from criminal
liability because his negligence was not proven
beyond reasonable doubt, he can still be held
civilly liable if his negligence was established by
preponderance of evidence. The failure of the
evidence to prove negligence with moral
certainty does not negate (and is in fact
compatible with) a ruling that there was
preponderant evidence of such negligence. And
that is sufficient to hold him civilly liable.
(Dominguez v. People, G.R. No. 167546, July 17,
2009)
Breach of promise to marry
GR: A breach of promise to marry per se is not an
actionable wrong.
There is no provision in the NCC authorizing an
action for breach of promise to marry.
XPN: When the act constitutes one where
damages pursuant to Art. 21 of the NCC may be
recovered and is not a mere breach of promise
to marry, such as:
1. Where the woman is a victim of moral
seduction. (Gashem Shookat Baksh v. CA, G.R.
No. 97336, February 19, 1993)
2. Where one formally sets a wedding and go
through and spend for all the preparations
and publicity, only to walk out of it when the
matrimony was about to be solemnized.
(Wassmer v. Velez, G.R. No. L-20089, December
26, 1964)
3. Where the woman is a victim of abduction
and rape, and thereafter the accused
promised to marry her to avoid criminal
33
liability but later reneged on his promise.
(Buñag, Jr. v. CA, G.R. No. 101749, July 10,
1992)
A breach of promise to marry per se is not an
actionable wrong. But where a man's promise to
marry is the proximate cause of the acceptance
of his love by a woman and his representation to
fulfill that promise thereafter becomes the
proximate cause of the giving of herself unto him
in a sexual congress, proof that the promise was
only a deceptive device to inveigle her to obtain
her consent to the sexual act, could justify the
award of damages pursuant to Art. 21 not
because of such promise to marry but because of
the fraud and deceit behind it and the willful
injury to her honor and reputation which
followed thereafter. It is essential, however, that
such injury should have been committed in a
manner contrary to morals, good customs or
public policy. (Gashem Shookat Baksh v. CA, G.R.
No. 97336, February 19, 1993)
Q: Soledad a high school teacher used to go
around together with Francisco who was
almost ten (10) years younger than her.
Eventually, intimacy developed between
them after Soledad became an underwriter
in Cebu. One evening, they had sexual
intercourse in Francisco’s cabin on board
M/V Escaño, to which he was then attached
as apprentice pilot. After a few months,
Soledad advised Francisco that she was
pregnant, whereupon he promised to marry
her. Later their child was born. However,
subsequently, Francisco married another
woman. Soledad filed a complaint for moral
damages for alleged breach of promise to
marry. May moral damages be recovered for
breach of promise to marry.
A: NO. It is the clear and manifest intent of our
law-making body not to sanction actions for
breach of promise to marry. Francisco is not
morally guilty of seduction, not only because he
was approximately 10 years younger, and a
mere apprentice pilot when he became intimate
with the 36-year old complainant, who is a
highly enlightened former high school teacher
and a life insurance agent but, also, because, the
Court of First Instance found that, complainant
“surrendered herself” to Francisco because,
“overwhelmed by her love” for him, she “wanted
to bind” “by having a fruit of their engagement
even before they had the benefit of clergy.
(Hermosisima v. CA, G.R. No. L-14628, September
 Civil Law
30, 1960)
NOTE: To constitute seduction there must be
some sufficient promise or inducement and the
woman must yield because of the promise or
other inducement. If she consents merely from
carnal lust and the intercourse is from mutual
desire, there is no seduction.
Prohibition against Unjust Enrichment
No one shall unjustly enrich himself at the
expense of another. (Pacific Merchandising Corp.
v. Consolacion Insurance and Surety Co., Inc., G.R.
No. L-30204, October 29, 1976)
NOTE: The article applies only if:
1. Someone acquires or comes into possession
of “something” which means delivery or
acquisition of things”; and
2. Acquisition is undue and at the expense of
another, which means without any just or
legal ground.
Q: Mekeni Food Corp. offered its employee
Locsin a car plan. One-half of the cost of the
vehicle is to be paid by Mekeni and the other
half is to be deducted from Locsin’s salary.
The car was an absolute necessity in
Mekeni’s business operations. Locsin paid for
his 50% share through monthly salary
deductions. Subsequently, Locsin resigned.
By then, a total of ₱112,500 had been
deducted from his monthly salary and
applied as part of his share in the car plan.
The vehicle remained in the ownership and
possession of Mekeni, and so Locsin sought
reimbursement of his amortization
payments on the vehicle and posits that if the
amount is not reimbursed, unjust
enrichment would result, as the vehicle
remained in the possession and ownership of
Mekeni. Should the amortization payments
be refunded in favor of Locsin?
A: YES. The amortization payments must be
refunded in favor of Locsin. In the absence of
specific terms and conditions governing a car
plan agreement between the employer and
employee, the employer may not retain the
installment payments made by the employee on
the car plan and treat them as rents for the use
of the service vehicle, in the event that the
employee ceases his employment and is unable
to complete the installment payments on the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
vehicle.
The underlying reason is that the service vehicle
was precisely used in the employer's business;
any personal benefit obtained by the employee
from its use is merely incidental. Mekeni may
not enrich itself by charging Locsin for the use of
its vehicle which is otherwise absolutely
necessary to the full and effective promotion of
its business. (Locsin v. Mekeni Food Corporation,
G.R. No. 192105, 09 December 2001)
Q: Ludolfo owns a construction company.
One day, Carlos visited Ludolfo in his office
wherein, he invited Ludolfo to advance
₱2,000,000.00 for a subcontract of a
₱50,000,000.00 river-dredging project in
Guinobatan. He guaranteed Ludolfo that
Ludolfo’s construction company will be
subcontracted by the lowest bidder of the
project. Ludolfo accepted the proposal.
Ludolfo requested his bank to release
₱3,000,000.00 to a certain Grace delos
Santos. Carlos then obtained the money from
Grace. After four days, ₱1,800,000.00 was
returned to Ludolfo. Carlos then collected ₱
800,000.00 balance. However, after
deducting Carlos’ personal loans Ludolfo
issued a check worth ₱ 481,800.00 which was
accepted by Carlos.
The project to dredge the Masarawag and
San Francisco Rivers in Guinobatan was
subjected to public bidding. The project was
awarded to the lowest bidder, Sunwest
Construction and Development Corporation.
However, the project was completed without
Ludolfo’s construction company being
subcontracted. Thus, Ludolfo demanded
Carlos to return his ₱2,000,000.00 which
Carlos did not do so.
Carlos claimed that the principle of unjust
enrichment does not apply in this situation.
He further argued that Ludolfo paid him for a
subcontract of a government project and as
such the subcontract is void for being
contrary to law, specifically, the Anti-Graft
and Corrupt Practices Act, the Revised Penal
Code, and Section 6 of Presidential Decree
No. 1594. Also, according to Carlos, he
followed up the project’s approval with the
Central Office of the Department of Public
Works and Highways as the parties agreed
upon. He was, therefore, entitled to his
representation expenses. Is Carlos liable to
34
 Human Relations
return the ₱2,000,000.00 under the principle
of unjust enrichment?
A: YES. Carlos is liable to return ₱2,000,000.00
under the principle of unjust enrichment. Under
Article 22 of the Civil Code of the Philippines,
"every person who through an act of
performance by another, or any other means,
acquires or comes into possession of something
at the expense of the latter without just or legal
ground, shall return the same to him." There is
unjust enrichment "when a person unjustly
retains a benefit to the loss of another, or when a
person retains money or property of another
against the fundamental principles of justice,
equity and good conscience. The principle of
unjust enrichment has two conditions. First, a
person must have been benefited without a real
or valid basis or justification. Second, the benefit
was derived at another person’s expense or
damage.
In this case, Carlos received ₱2,000,000.00 from
Ludolfo for a subcontract of a government
project to dredge the Masarawag and San
Francisco Rivers in Guinobatan, Albay. However,
contrary to the parties’ agreement, Ludolfo was
not subcontracted for the project. Nevertheless,
Carlos retained the ₱2,000,000.00.
Thus, Carlos was unjustly enriched. He retained
Ludolfo’s money without valid basis or
justification. Under Article 22 of the Civil Code of
the Philippines, Carlos must return the
₱2,000,000.00 to Ludolfo. Contrary to Carlos’
claim, Section 6 of the Presidential Decree No.
1594 does not prevent Ludolfo from recovering
his money because it is premature to rule on the
legality of the parties’ agreement since the
subcontract did not push through. At any rate,
even assuming that there was a subcontracting
arrangement between Sunwest Construction
and Development Corporation and Ludolfo, the
Supreme Court has allowed recovery under a
void subcontract as an exception to the in pari
delicto doctrine.
The Supreme Court discussed that in Gonzalo vs.
Tarnate Jr., Tarnate, Jr. performed his
obligations under the subcontract and the deed
of assignment, this court ruled that he was
entitled to the agreed fee. According to this
court, Gonzalo "would be unjustly enriched at
the expense of Tarnate if the latter was to be
barred from recovering because of the rigid
application of the doctrine of in pari delicto.
35
However, in this case, Carlos never denied that
he failed to fulfill his agreement with Ludolfo.
Carlos, therefore, is retaining the ₱2,000,000.00
without just or legal ground. This cannot be
done. Under Article 22 of the Civil Code of the
Philippines, he must return the ₱2,000,000.00 to
Ludolfo. (Carlos A. Loria v. Ludolfo P. Munoz, Jr.,
G.R. No. 187240, October 15, 2014, as penned by
J. Leonen)
Q: Tarcisius was hired as a project
coordinator/manager of Your Own Home
Development Corp. (YOHDC). Tarcisius
received all 4 checks. However, instead of
delivering them to Rosillas and Delos Reyes,
the payees of the checks, Tarcisius and his
wife, Iris, deposited the checks into their
personal bank account with BPI and
requested BPI to suspend its action on
YOHDC’s claim and instructed it not to deduct
the amount they deposited until they have
clarified the matter. BPI denied this request,
and sent Metrobank, the Drawee Bank, to
reimburse the amounts of the checks, which
was then credited to YOHDC. Hence, Tarcisius
and his wife filed a Complaint for Damages
against YOHDC on the ground of unjust
enrichment. Is YOHDC liable for unjust
enrichment?
A: NO. Unjust enrichment has two (2) elements:
a person benefited without a real or valid basis
or justification, and the benefit was at another
person's expense or damage. Here, Metrobank
rightfully returned to YOHDC the amounts of the
checks considering that Metrobank, as the
drawee bank, is obligated to return the full
amounts of the checks upon discovering that
they were not paid to the correct payees. The
amounts returned were not at the expense of
Tarcisius and his wife considering that the
amounts were not meant for them but for
Rosillas and Delos Reyes. (Iris Rodriguez vs Your
Own Home Development Corporation, G.R. No.
199451, August 15, 2018, as penned by J.
Leonen)
Accion In Rem Verso
It is an action for recovery of what has been paid
or delivered without just cause or legal ground.
If a person acquires or comes into possession of
something at the expense of another without
just or legal ground through an act or of
performance by another or any other means has
the obligation to return the same. (NCC, Art. 22)
 Civil Law
Accion in rem verso is considered merely an
auxiliary action, available only when there is no
other remedy on contract, quasi-contract, crime,
and quasi-delict. Hence, if there is an obtainable
action under any other institution of positive
law, that action must be resorted to, and the
principle of accion in rem verso will not lie.
(Shinryo Philippines Company v. RRN Incorp. G.R.
No. 172525, October 20, 2010)
Requisites (E-L-W-A)
1. The defendant has been Enriched;
2. The plaintiff has suffered a Loss;
3. The enrichment of the defendant is Without
just or legal ground; and
4. The plaintiff has no other Action based on
contract, quasi-contract, crime or quasi-
delict.
Accion in rem verso vs. Solutio Indebiti
In accion in rem verso, it is not necessary that
there should have been mistake in the payment
unlike in solutio indebiti where mistake is an
essential element. (Rabuya, 2006)
Accion in rem verso vs. Unjust Enrichment
An accion in rem verso is merely an auxiliary
action available only when there is no other
remedy on contract, quasi-contract, crime and
quasi-delict, while unjust enrichment, wherein
one is unjustly enriched at the expense of or
from the efforts or obligations of others, may be
availed of as a prerequisite for the enforcement
of the doctrine of restitution. (Shinryo
Philippines Company v. RRN Incorp. G.R. No.
172525, October 20, 2010)
Liability without fault or negligence
Even when an act or event causing damage to
another’s property was not due to the fault or
negligence of the defendant, the latter shall be
liable for indemnity if through the act or event
he was benefited. (NCC, Art. 23)
PREJUDICIAL QUESTION UNDER
ART. 36 OF THE NEW CIVIL CODE
Prejudicial questions, which must be decided
before any criminal prosecution may be
instituted or may proceed, shall be governed by
the Rules of Court which the Supreme Court
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
shall promulgate, and which shall not be in
conflict with the provisions of this Code. (Article
36, NCC)
Concept of a prejudicial question
It is a question of a purely civil character but
connected in such a manner to the crime on
which the criminal case is based that it is
determinative of the guilt or innocence of the
accused. (De Leon vs. Mabanag, 70 Phil. 202)
It is one based on a fact distinct and separate
from the crime but so intimately connected with
it that it determines the guilt or innocence of the
accused, and for it to suspend the criminal
action, it must appear not only that said case
involves facts intimately related to those upon
which the criminal prosecution would be based
but also that in the resolution of the issue or
issues raised in the civil case, the guilt or
innocence of the accused would necessary be
determined. (Rabuya, 2006)
NOTE: It is the issue in the civil action that is
prejudicial to the continuation of the criminal
action, and not vice-versa. (Rabuya, 2006)
Elements
1. The previously instituted civil action
involves an issue similarly or intimately
related to the issue raised in the subsequent
criminal action; and
2. The resolution of such issue determines
whether or not the criminal action may
proceed.
Suspension of Proceedings
A petition for suspension of the criminal action
based upon the pendency of a prejudicial
question in a civil action may be filed in the
office of the prosecutor or the court conducting
the preliminary investigation. When the criminal
action has been filed in court for trial, the
petition to suspend shall be filed in the same
criminal action at any time before the
prosecution rests. The rule authorizes only the
suspension of the criminal action and not its
dismissal by reason of a prejudicial question.
(Rabuya, 2006)
36
 Human Relations
PERSONS
Persons and Personality under the Civil Code
A person is every physical or moral, real or
juridical and legal being susceptible of rights and
obligations or being the subject of legal
relations. (Rabuya, 2006)
Persons v. Things
its own personality, as a golf and country club,
Capitol primarily exists for the utility and benefit
of its members. While legal title in its properties
is vested in Capitol, beneficial use redounds to
its membership. Apart from this, proprietary
interest in Capitol is secured through club
shares. Thus, members and shareholders having
rights to use and enjoy the subject property has
a valid cause of action against Alvarado since
they stood to be deprived of their rights.

A person is the subject of legal relations, while a Also, in accordance with Article 46 of the Civil
thing is the object of legal relations. Code, Capitol is capacitated to incur obligations.
This includes obligations voluntarily incurred
Personality is the aptitude to be the subject, through contracts, as well as encumbrances
active or passive of juridical relations. One is a assumed or imposed as easements. It is in
person, while one has personality. (Rabuya, keeping with a contract entered into by Capitol
2006) and with easements in which Capitol was the
subservient estate that respondents Ayala Land,
KINDS OF PERSONS Inc. and Ayala Hillside initiated the Complaint
assailing the tax sale. With respect to Ayala Land,
1. Natural – Human beings and have physical Inc., the allegations were not limited to its being
existence. a dominant estate to an easement of right of way
but even included a claim of ownership to a
2. Juridical – Artificial persons and product of smaller parcel. (Alvarado vs. Ayala Land Inc. et.
al., G.R. 208426, September 20, 2017, as penned
legal fiction.
by J. Leonen)
Q: A parcel of land owned by Capitol Hills
Juridical capacity v. Capacity to act
Golf and Country Club, Inc. was levied by the
Quezon City Treasurer on account of unpaid
real estate taxes. Alvarado was noted the BASIS JURIDICAL CAPACITY
highest bidder and was issued the Certificate CAPACITY TO ACT
of Sale of Delinquent property. A complaint Fitness to be Power to do
against Alvarado et al. was filed before the Definition the subject of acts with legal
QC RTC to question the validity of the tax legal effect. (Art. 37)
sale. Plaintiffs are some members of the golf relations.
club, Ayala Hillside “association of lot owners (Art. 37)
residing in Ayala Hillside Estate, and Ayala Inherent (co- Through the
Land Inc who has an agreement with Capitol Acquisition exists with fulfillment of
Hills. Alvarado in his answer contends, the specific legal
among others, that plaintiffs failed to state a natural activities.
cause of action because they are not the person).
registered owners of the auctioned property Only Through death
of Capitol Hills. Does the members of Capitol Loss through and other causes.
hills and Ayala Land, Inc. have a valid cause death.
of action? Can exist Cannot exist w/o
In relation without juridical capacity.
A: YES. Members of the Capitol Hills club and to the other capacity to
Ayala Land Inc. have valid cause of action. act.
Capitol is a juridical entity with its own, distinct None. Art. 38
personality. Consistent with Article 46 of the Limitation (restriction)
Civil Code, it may "acquire and possess Art. 39
property'' such as the lot put up for a tax (modification/
delinquency sale. As owner, it exclusively limitation), among
enjoyed the entire bundle of rights associated others.
with dominion over this parcel. Though having

37
 Civil Law

NOTE: A person is presumed to have capacity NOTE: The following are the effects of civil
to act. (Standard Oil Co. v. Arenas, et al., G.R. No. interdiction:
L-5921, December 15, 1908)
1. Deprivation of parental or marital authority;
Status 2. Deprivation of the right to be the guardian
of the person and property of a ward;
The status of a person is the legal condition or 3. Deprivation of his property by act inter
class to which one belongs in a society. (1 Viso vivos; and
32, 2 Sanchez Roman 110) 4. Deprivation of the right to manage one's
properties. (Revised Penal Code, Art. 34)
Civil Personality
They do not exempt the incapacitated person
It is merely the external manifestation of either from certain obligations.
juridical capacity or capacity to act.
Consequently, it may be defined as the aptitude Circumstances that modify or limit capacity
of being the subject of rights and obligations. to act (FC, Art. 39)
(2 Sanchez Roman 114-147)
1. Insanity;
RESTRICTIONS ON CAPACITY TO ACT 2. Prodigality;
3. Age;
Restrictions on capacity to act: (M-I-D-I-P-C) 4. Imbecility;
(NCC, Art. 38) 5. Deaf-Mute;
6. Family Relations;
1. Minority - State of a person who is under 7. Alienage;
the age of legal majority which is eighteen 8. Trusteeship;
years of age; 9. Penalty;
10. Insolvency; and
2. Insanity – State of a person whose mental 11. Absence.
faculties are diseased;
The enumeration in Articles 38 and 39 is not
3. Deaf-mute – Lacking sense of hearing and exclusive. There are others spread throughout
the inability to speak; the code (e.g., a lawyer cannot buy property in
litigation). [NCC, Art. 1491 (5)]
NOTE: Only deaf-mutes who do not
know how to write are declared by law BIRTH
incapable of giving consent.
Determination of personality
4. Imbecility – State of a person who while
advanced in age has the mental capacity The Civil Code provides that birth determines
comparable to that of a child between two personality, but the conceived child shall be
and seven years of age; considered born for all purposes that are
favorable to it, provided it is born later with the
5. Prodigality – A spendthrift or squanderer; conditions specified in Art. 41. (NCC, Art. 40)

NOTE: Prodigality per se does not
automatically modify or restrict a person’s
capacity to act. There must be a
declaration thereof and be placed under
guardianship under the Rules on Special
Proceeding.
This provision has been superseded by Art. 5 of
P.D. No. 603 (The Child and Youth Welfare
Code), which declares that the civil personality
of the child shall commence from the time of his
conception, for all purposes favorable to him,
subject to the requirements of Art. 41.

6. Civil Interdiction – An accessory penalty Acquisition of personality through birth

imposed upon an accused who is
sentenced to a principal penalty not lower GR: Actual/Permanent Personality–
than reclusion temporal. Personality begins at birth, not at conception.

UNIVERSITY OF SANTO TOMAS 38

2021 GOLDEN NOTES
 Human Relations
XPN: Presumptive/Temporary – The law
considers the conceived child as born (Conceptus
pro nato habetur)
The provisional personality of a conceived child
(conceptus pro nato habetur) under Article 40,
expressly limits such provisional personality by
imposing the condition that the child should be
subsequently born alive: "Provided it be born
later with the condition specified in the
following article." (Geluz v. CA, G.R. No. L- 16439,
20 July 1961)
“Born later in accordance with law” (1995,
1999, 2008 BAR)
A fetus with an intra-uterine life of:
1. Less than 7 months – Must survive for at
least 24 hours after its complete delivery
from the maternal womb.
2. At least 7 months – If born alive it shall be
considered born even if it dies within 24
hours after complete delivery.
Complete delivery
It means the cutting of the umbilical cord from
the mother’s womb.
Provisional personality of a conceived child
A conceived child, although as yet unborn, has a
limited and provisional personality. Its
personality is provisional because it depends
upon the child being born alive later under
certain conditions.
Rights of the conceived child
Since a conceived child has a provisional
personality even while inside the mother’s
womb, it is entitled to the following rights:
(SAD)
1. Right to Support
2. To be Acknowledged
3. To receive Donations. (Rabuya, 2009)
DEATH
Civil personality ceases depending upon the
classification of persons
1. Natural persons – by death
39
2. Juridical persons – by termination of
existence
Effect of death on civil personality
Death extinguishes civil personality. However,
the rights and obligations of the deceased are
not necessarily extinguished by his death.
(Pineda, 2009)
Rules to apply in case there is doubt as to
who died first
It depends on whether the parties are called to
succeed each other.
1. If successional rights are involved – Art. 43
of the NCC: Survivorship Rule, and Rule 131,
Sec. 3(kk): Presumption of simultaneous
deaths between persons called to succeed
each other, applies.
2. If no successional rights are involved –
Rule 131, Sec. 3 (jj) of the Rules of Court
applies (Presumption of survivorship).
NOTE: Both are to be applied only in the
absence of facts.
Q: Jaime, who is 65, and his son, Willy, who is
25, died in a plane crash. There is no proof as
to who died first. Jaime’s only surviving heir
is his wife, Julia, who is also Willy’s mother.
Willy’s surviving heirs are his mother, Julia,
and his wife, Wilma. In the settlement of
Jaime’s estate, can Wilma successfully claim
that her late husband, Willy, had a hereditary
share since he was much younger than his
father and therefore, should be presumed to
have survived longer?
A: NO. Wilma cannot successfully claim that
Willy had a hereditary share in his father’s
estate.
The presumption of simultaneous death applies
in cases involving the question of succession as
between the two who died, who in this case, are
mutual heirs, being father and son.
Q: Suppose, Jaime had a life insurance policy
with his wife Julia, and his son, Willy, as the
beneficiaries. Can Wilma successfully claim
that one-half of the proceeds should belong
to Willy’s estate? (1998 BAR)
 Civil Law
A: YES. Wilma can invoke the presumption of
survivorship and claim that one-half of the
proceeds should belong to Willy’s estate, under
Rule 131, Sec.3 (jj), par. 5, Rules of Court, as the
dispute does not involve succession.
Under this presumption, the person between
the ages of 15 and 60 is deemed to have survived
one whose age was over 60 at the time of their
deaths. The estate of Willy endowed with
juridical personality stands in place and stead of
Willy, as beneficiary.
NOTE: The statutory rules in the determination
of sequence of death do not absolutely apply in a
case where indirect and/or inferential evidence
surrounding the circumstances of the deaths
exists.
Where there are facts, known or knowable, from
which a rational conclusion can be made, the
presumption does not step in, and the rule of
preponderance of evidence controls. It is the
"particular circumstances from which
survivorship can be inferred" that are required
to be certain as tested by the rules of evidence.
(Joaquin v. Navarro, G.R. No. L-5426, May 29,
1953)
Q: At the age of 18, Marian found out that she
was pregnant. She insured her own life and
named her unborn child as her sole
beneficiary. When she was already due to
give birth, she and her boyfriend Pietro, the
father of her unborn child, were kidnapped
in a resort in Bataan. The military gave chase
and after one week, they were found in
abandoned hut in Cavite. Marian and Pietro
were hacked with bolos. Marian and the baby
she delivered were both found dead, with the
baby’s umbilical cord already cut. Pietro
survived.
a. Can Marian’s baby be the beneficiary of
the insurance taken on the life of the
mother?
b. Between Marian and the baby, who is
presumed to have died ahead?
c. Will Prieto, as the surviving biological
father of the baby, be entitled to claim
the proceeds of the life insurance on the
life of Marian? (2008 BAR)
A:
1. YES. An unborn child may be designated as
the beneficiary in the insurance policy of the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
mother. An unborn child shall be considered
a person for purposes favorable to it
provided it is born later in accordance with
the NCC. There is no doubt that the
designation of the unborn child as a
beneficiary is favorable to the child.
2. If the baby was not alive when completely
delivered from the mother’s womb, it was
not born as a person, then the question of
whom between two persons survived will
not be an issue. The baby had an intra-
uterine life of more than 7 months; thus, it
would be considered born if it was alive at
the time of its complete delivery from the
mother’s womb. We can gather from the
facts that the baby was completely
delivered. But whether or not it was alive
has to be proven by evidence.
3. Since the baby did not acquire any right
under the insurance contract, there is
nothing for Prieto to inherit. Prieto is not
married to Marian neither was he named as
the beneficiary of the insurance.
Domicile of juridical persons
1. The place fixed by the law creating or
recognizing the juridical person;
2. In the absence thereof, the place where their
legal representation is established or where
they exercise their principal functions.
REPUBLIC ACT NO. 9262 (VAWC)
In case a protection order is issued under
R.A. 9262, Section 8, the respondent spouse
has the obligation to do the following acts:
SECTION 8. Protection Orders.- A protection
order is an order issued under this act for the
purpose of preventing further acts of violence
against a woman or her child specified in Section
5 of this Act and granting other necessary relief.
The relief granted under a protection order
serve the purpose of safeguarding the victim
from further harm, minimizing any disruption in
the victim's daily life, and facilitating the
opportunity and ability of the victim to
independently regain control over her life. The
provisions of the protection order shall be
enforced by law enforcement agencies. The
protection orders that may be issued under this
Act are the barangay protection order (BPO),
temporary protection order (TPO) and
40
 Human Relations
permanent protection order (PPO). The
protection orders that may be issued under this
Act shall include any, some or all of the following
reliefs:
(a) Prohibition of the respondent from
threatening to commit or committing, personally
or through another, any of the acts mentioned in
Section 5 of this Act;
(b) Prohibition of the respondent from
harassing, annoying, telephoning, contacting or
otherwise communicating with the petitioner,
directly or indirectly;
(c) Removal and exclusion of the respondent
from the residence of the petitioner, regardless
of ownership of the residence, either
temporarily for the purpose of protecting the
petitioner, or permanently where no property
rights are violated, and if respondent must
remove personal effects from the residence, the
court shall direct a law enforcement agent to
accompany the respondent has gathered his
things and escort respondent from the
residence;
(d) Directing the respondent to stay away from
petitioner and designated family or household
member at a distance specified by the court, and
to stay away from the residence, school, place of
employment, or any specified place frequented
by the petitioner and any designated family or
household member;
(e) Directing lawful possession and use by
petitioner of an automobile and other essential
personal effects, regardless of ownership, and
directing the appropriate law enforcement
officer to accompany the petitioner to the
residence of the parties to ensure that the
petitioner is safely restored to the possession of
the automobile and other essential personal
effects, or to supervise the petitioner's or
respondent's removal of personal belongings;
(f) Granting a temporary or permanent custody
of a child/children to the petitioner;
(g) Directing the respondent to provide support
to the woman and/or her child if entitled to legal
support. Notwithstanding other laws to the
contrary, the court shall order an appropriate
percentage of the income or salary of the
respondent to be withheld regularly by the
respondent's employer for the same to be
41
automatically remitted directly to the woman.
Failure to remit and/or withhold or any delay in
the remittance of support to the woman and/or
her child without justifiable cause shall render
the respondent or his employer liable for
indirect contempt of court;
(h) Prohibition of the respondent from any use
or possession of any firearm or deadly weapon
and order him to surrender the same to the
court for appropriate disposition by the court,
including revocation of license and
disqualification to apply for any license to use or
possess a firearm. If the offender is a law
enforcement agent, the court shall order the
offender to surrender his firearm and shall
direct the appropriate authority to investigate
on the offender and take appropriate action on
matter;
(i) Restitution for actual damages caused by the
violence inflicted, including, but not limited to,
property damage, medical expenses, childcare
expenses and loss of income;
(j) Directing the DSWD or any appropriate
agency to provide petitioner may need; and
(k) Provision of such other forms of relief as the
court deems necessary to protect and provide
for the safety of the petitioner and any
designated family or household member,
provided petitioner and any designated family
or household member consents to such relief.
Any of the reliefs provided under this section
shall be granted even in the absence of a decree
of legal separation or annulment or declaration
of absolute nullity of marriage.
NOTE: Under Section 19, in cases of Legal
Separation, it states that:
In cases of legal separation, where violence as
specified in this Act is alleged, Article 58 of the
Family Code shall not apply. The court shall
proceed on the main case and other incidents of
the case as soon as possible. The hearing on any
application for a protection order filed by the
petitioner must be conducted within the
mandatory period specified in this Act.
 Civil Law

contract
THE FAMILY CODE

c. Social
MARRIAGE UNDER FAMILY CODE institution
Governin
Law on Law on
A special contract of permanent union between a g Law
marriage contracts
man and a woman entered into in accordance
with law for the establishment of conjugal and GR: Not subject The parties
family life. It is the foundation of the family and Right of to stipulation are free to
an inviolable social institution whose nature, the XPN: Property stipulate
consequences, and incidents are governed by parties to relations in subject to
law and not subject to stipulation, except that stipulate marriage certain
marriage settlements may fix the property settlements. limitation.
relations during the marriage within the limits Minors may
provided by the Family Code. (Family Code, Art. contract
1) through
Capacity
Legal capacity their parents
to
NATURE OF MARRIAGE is required. or guardians
contract
or in some
Under the Constitution, “marriage, as an instances, by
inviolable social institution, is the foundation of themselves.
the family and shall be protected by the State.” Contracting
(1987 Constitution, Art. XV, Sec. 2) Contracting parties may
Gender parties must be two or
Marriage is an institution in which the requirem only be two more
community is deeply interested. The State has ent persons of the persons
surrounded it with safeguards to maintain its opposite sexes. regardless of
purity, continuity and permanence. The security sex.
and stability of the State are largely dependent Can be
on it. It is in the interest and duty of each dissolved
member of the community to prevent the through
bringing about of a condition that would shake express
its foundation and lead to its destruction. The provision of
incidents of the status are governed by law, not the law,
Dissolved only
by will of the parties. (Beso v. Daguman, A.M. No. through
Dissolutio by death or
MTJ-99-1211, January 28, 2000) expiration of
n by annulment,
the term for
agreemen never by
Marriage as a status which the
t mutual
contract was
agreement.
As a status, the principle in contracts that the entered into,
parties may, by mutual agreement, put an end to or by mutual
it, cannot certainly apply, for the consequences agreement
of the marriage as a rule are fixed by law. (Paras, by the
2016) parties
concerned.
Marriage v. Ordinary contract
Evidence of Marriage

ORDINARY The best documentary evidence of a marriage

BASIS MARRIAGE CONTRACT is the marriage contract. However, the failure
a. Special to present it is not, however, proof that no
contract Merely a marriage took place, as other evidence may be
Nature presented to prove marriage. (Balogbog v. CA,
contract
b. Sui generis G.R No. 83598, March 7, 1997)

UNIVERSITY OF SANTO TOMAS 42

2021 GOLDEN NOTES
 Marriage under the Family Code
The following may be presented as proof of 2. Sex – between a male and a female
marriage:
Two females are incapable of entering into
1. testimony of a witness to the matrimony; marriage. There is no constitutional
2. the couple’s public and open cohabitation as protection of the rights of marriage between
husband and wife after the alleged wedlock; two persons of the same sex. (Jones v.
3. the birth and baptismal certificate of Hallahan, 501 S.W.2d 588, November 9, 1973)
children born during such wedlock and
4. the mention of such nuptial in subsequent 3. Lack of legal impediment to marry
documents. (Sarmiento v. CA, G.R. No. 96740,
March 25, 1999) The legal impediments which may affect
legal capacity are those mentioned in
STATUS OF MARRIAGES Articles 37 and 38 of the Family Code. Thus,
the contracting parties are not legally
I. Valid capacitated to marry each other.
II. Void
III. Voidable Other requirements needed for the validity
of such marriage depending upon the age of
I. VALID MARRIAGES the contracting party

ADDITIONAL
The requisites for a valid marriage are AGE
REQUIREMENTS
provided by law.
Parental consent and
18 to 21 years old
The principle that the validity of a marriage is Marriage counseling
determined by the law effective at the time of
the celebration of the marriage is further Parental advice and
22 to 25 years old
highlighted by the fact that, as a general rule, the Marriage counseling
nature of the marriage already celebrated
cannot be changed by a subsequent amendment
Absence of the additional requirement of
to the law. (Sta. Maria, 2010)
parental advice
ESSENTIAL REQUISITES OF A VALID
It does not make the marriage void or voidable,
MARRIAGE (1996, 2009, BAR)
it only affects the release of the marriage license
to be postponed until (3) three months from the
1. Legal capacity of the contracting parties
complete publication of the application. (FC, Art.
who must be a male and a female; and
15)
2. Consent freely given in the presence of the
solemnizing officer. (FC, Art. 2)
Q: A complaint was filed against Judge Rojo
for allegedly violating the Code of Judicial
Legal capacity of the parties to marry
Conduct and for gross ignorance of the law.
Rojo solemnized marriages without the
1. Age – at least 18 years of age
required marriage license. He instead
notarized affidavits of cohabitation and
The attainment of the required minimum
issued them to the contracting parties. He
age for marriage should be reckoned, not on
notarized these affidavits on the day of the
the date of filing of the application for
parties’ marriage.
issuance of a marriage license, but on the
date of the marriage. Pursuant to Article 6 of
Was Judge Rojo’s notarization of affidavits of
the Family Code, parties may contract
cohabitations proper?
marriage on the date of the solemnization of
the marriage, i.e., when they appear
A: NO. Judge Rojo is guilty for violating the Code
personally before the solemnizing officer
of Judicial Conduct and for gross ignorance of
and declare in the presence of not less than
the law. As a solemnizing officer, the judge’s only
two witnesses of legal age that they take
duty involving the affidavit of cohabitation is to
each other as husband and wife. (Rabuya,
examine whether the parties have indeed lived
2009)

43
 Civil Law
together for at least five years without legal
impediment to marry. The guidelines do not
state that the judge can notarize the parties’
affidavit of cohabitation. Affidavits of
cohabitation are documents not connected with
the judge’s official function and duty to
solemnize marriages. Notarizing affidavits of
cohabitation is inconsistent with the duty to
examine the parties’ requirements for marriage.
If the solemnizing officer notarized the affidavit
of cohabitation, he cannot objectively examine
and review the affidavit’s statements before
performing the marriage ceremony. (Rex M.
Tupal v. Judge Remegio V. Rojo, A.M. NO. MTJ-14-
1842, February 24, 2014, as penned by J.
Leonen)
FORMAL REQUISITES OF A VALID MARRIAGE
(C-A-L) (1996, 2009 BAR)
1. Marriage Ceremony;
2. Authority of the solemnizing officer;
3. Valid marriage License, except in a marriage
of exceptional character. (FC, Art. 3)
EFFECT OF ABSENCE OF REQUISITES
Effect in the status of marriage (1995, 1996,
1999, 2008 BAR)
Status of Marriage in case of:
1. Absence of any of the essential requisites -
Void ab initio. (FC, Art. 4)
2. Absence of any of the formal requisites –
Void ab initio. (FC, Art. 4)
XPNs: Valid even in the absence of formal
requisite:
a. Marriages exempt from license
requirement
b. Either or both parties believed in
good faith that the solemnizing
officer had the proper authority [FC,
Art. 35 (2)].
3. Defect in any of the essential requisites –
Voidable. (FC, Art. 4)
4. Irregularity in any of the formal requisites -
Valid, but the party responsible for such
irregularity shall be civilly, criminally or
administratively liable. (FC, Art. 4)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. MARRIAGE CEREMONY
That which takes place with the:
1. Personal appearance of the contracting
parties before the solemnizing officer;
NOTE: There is no marriage ceremony if
what transpired was a mere private act of
signing a marriage contract by the
contracting parties, without the presence of
the solemnizing officer. (Morigo v. People,
G.R. No. 145226, February 6, 2004)
2. Their personal declaration that they shall
take each other as husband and wife; and
3. In the presence of not less than 2 witnesses
of legal age.
No particular form of ceremony or religious rite
for solemnization of the marriage is required by
law. (FC, Art. 6)
The declaration of consent need not be vocally
expressed. It can be shown by other
manifestations or signs of approval and consent.
It is the agreement itself, and not the form in
which it is couched, which constitutes the
contract. (Sta. Maria, 2010)
Common-law marriages are not recognized
in the Philippines
A common-law marriage, otherwise referred to
as a live-in relationship, is one where the man
and the woman just live together as husband
and wife without getting married. (Paras, 2016)
This form of marriage is not recognized in the
Philippines.
Validity of marriage by proxy
It depends on the place of celebration of the
marriage:
1. If performed in the Philippines – No, it
is not allowed, hence the marriage is
void.
Philippine laws prohibit marriages by proxy.
Since the marriage is performed in the
Philippines, Philippine laws shall apply following
the principle of lex loci celebrationis.
44
 Marriage under the Family Code
2. If performed abroad – Whether it is
allowed or not depends upon the law of
the place where the marriage was
celebrated (lex loci celebrationis).
As to marriages between Filipinos - all marriages
solemnized outside the Philippines, in
accordance with the laws enforced in said
country where they are solemnized, and valid
there as such, shall also be valid here in the
country, except those prohibited under Art. 35
(1), (2), (4), (5), (6), 36, 37 and 38 (FC, Art. 26).
2. SOLEMNIZING AUTHORITY
Persons authorized to solemnize marriage
(1994 1995, 1999 BAR)
The following are the persons authorized to
solemnize marriage depending upon the
circumstances:
1. Under ordinary circumstances (FC, Art.
7):
a. Incumbent judiciary member –
Provided, it is within the court’s jurisdiction
NOTE: Where a judge solemnized a marriage
outside his court’s jurisdiction, this is a mere
irregularity in the formal requisite, which while
it may not affect the validity of the marriage,
may subject the officiating official to
administrative liability. (Rabuya, 2009)
b. Priest, rabbi, imam or minister of any
church/religious sector
i. duly authorized by his church
or religious sect and registered
with the civil registrar general,
acting within the limits of the
written authority granted him
by his church or religious sect
ii. Provided at least one of the
parties belongs to such church
or religious sect.
c. Consul general, consul or vice-consul
i. Provided both parties are
Filipinos and marriage takes
place abroad in the country
where the consul holds office.
45
(FC, Art. 10)
d. Mayors (LGC, Arts. 444 and 445) –
including “Acting Mayor”
NOTE: From the time of the effectivity of the
Family Code (August 3, 1988) up to the time of
the effectivity of the Local Government Code
(January 1, 1992), mayors do not have the
authority to solemnize marriage.
2. Marriages in articulo mortis:
a. Ship captain or airplane chief –
Provided the marriage is performed:
i. During voyage, even during
stopovers
ii. Between passengers or crew
members. (FC, Art. 31)
Such authority may be exercised not only while
the ship is at sea or the plane is in flight but also
during stopovers at ports of call. (Rabuya, 2018)
b. Military commander of a unit who is a
commissioned officer – provided the
marriage is performed (FC, Art. 32):
i. In absence of chaplain;
ii. Within zone of military operation;
iii. Between members of the armed
forces or civilians.
Duty of the solemnizing officer in a marriage
in articulo mortis
The solemnizing officer in a marriage in articulo
mortis after solemnizing such marriage shall
state in an affidavit executed before the local
civil registrar or any other person legally
authorized to administer oaths, that the
marriage was performed in articulo mortis and
that he took the necessary steps to ascertain the
ages and relationship of the contracting parties
and the absence of a legal impediment to the
marriage. (FC, Art. 29)
NOTE: If any of the listed solemnizing officers
fails to comply with any of the requisites
mandated by law for them to validly solemnize a
marriage, the marriage is generally void, based
on the ground of an absence of a formal requisite
(authority of solemnizing officer)
 Civil Law
XPN: Unless such marriage was contracted with
either or both parties believing in good faith that
the solemnizing officer had the legal authority to
do so. (FC, Art. 35(a))
Effect of solemnizing officer’s failure to
execute an affidavit
It will have no effect as to the validity of the
marriage. The marriage will still be valid.
The local civil registrar is given the original of
the affidavit which takes the place of a marriage
license. (Paras, 2016)
Such affidavit is not an essential or formal
requisite of marriage, the same with a Marriage
Contract. The signing of the marriage contract
and the affidavit is only required for the purpose
of evidencing the act, not a requisite of marriage.
It is the obligation of the solemnizing officer. It
does not affect the validity of marriage. (De Loria
v. Felix, G.R. No. L-9005, June 20, 1958)
Authorized venues of marriage
GR: Must be solemnized publicly within the
jurisdiction of the authority of the solemnizing
officer:
1. Chambers of the judge or in open court;
2. Church, chapel or temple; or,
3. Office of the consul-general, consul or vice-
consul. (FC, Art. 8)
XPNs:
1. Marriage at the point of death;
2. Marriage in remote places;
3. Marriage at a house or place designated by
both of the parties with the written request
to the solemnizing officer to that effect. (FC,
Art. 8)
NOTE: This provision is only directory, not
mandatory. The requirement that the marriage
be solemnized in a particular venue or a public
place is not an essential requisite for the validity
of the marriage.
A marriage solemnized by a judge outside of
his jurisdiction is valid
Under Art. 3 of the FC, one of the formal
requisites of marriage is the "authority of the
solemnizing officer." Under Art. 7, marriage may
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
be solemnized by, among others, "any
incumbent member of the judiciary within the
court's jurisdiction." Art. 8, which is a directory
provision, refers only to the venue of the
marriage ceremony and does not alter or qualify
the authority of the solemnizing officer as
provided in the preceding provision. If there is
defect in such requirement, the same would not
make the marriage void, but it merely subjects
the officer to criminal, civil, or administrative
responsibility. (Navarro v. Domagtoy, A.M. No.
MTJ-96- 1088, July 19, 1996)
NOTE: In case of a marriage solemnized by a
mayor outside of his territorial jurisdiction, LGC
is silent on the matter, hence the
abovementioned case may be applied by
analogy.
Exception to the rule requiring authority of
the solemnizing officer
The exception to the rule requiring authority of
the solemnizing officer is when a marriage is
contracted with either or both parties believing
in good faith that the solemnizing officer had the
authority to do so. [FC, Art. 35 (2)]
3. MARRIAGE LICENSE
A marriage license is required in order to notify
the public that two persons are about to be
united in matrimony and that anyone who is
aware or has knowledge of any impediment to
the union of the two shall make it known to the
local civil registrar.
The requirement and issuance of marriage
license is the State’s demonstration of its
involvement and participation in every
marriage. (Rabuya, 2018)
What is required is the marriage license, not the
marriage certificate. The latter is not an essential
or formal requisite; thus, an oral solemnization
is valid. In fact, a marriage may be proved by
oral evidence. (Paras, 2016)
Validity of marriage license
The license shall be valid in any part of the
Philippines for a period of 120 days from the
date of issue, and shall be deemed
automatically cancelled at the expiration of
said period if the contracting parties have not
made use of it. (FC, Art. 20)
46
 Marriage under the Family Code
If the parties contracted marriage after the lapse
of 120 days from the issuance of the marriage
license, such marriage shall be considered void
for lack of marriage license.
NOTE: Issuance of a marriage license in a city or
municipality, not the residence of either of the
contracting parties, and the issuance of a
marriage license despite the absence of the 10-
day period for publication are considered mere
irregularities that DO NOT affect the validity of
the marriage. An irregularity in any of the formal
requisites of marriage does not affect its validity
but the parties are civilly, criminally and
administratively liable. (Alcantara v. Alcantara,
G.R. No. 167746, August 28, 2007)
Status of marriages celebrated during the
suspension of the issuance of marriage
license
The status of the marriage if the parties get
married within the said 3-month period
depends:
1. If the parties did not obtain a marriage
license – the marriage shall be void for lack
of marriage license.
2. If the parties were able to obtain a
marriage license – the marriage shall be
valid without prejudice to the actions that
may be taken against the guilty party.
Persons authorized to issue the marriage
license
The marriage license is issued by the local civil
registrar of the city or municipality where either
contracting party habitually resides. (FC, Art. 9)
Obtaining a marriage license in a place other
than where either party habitually resides is a
mere irregularity.
Requirement in the application for marriage
license
Each of the contracting parties is required to file
separately a sworn application for the issuance
of marriage license, specifying the following:
1. Full name of the contracting party;
2. Place of birth;
3. Age and date of birth;
4. Civil status;
47
5. If previously married, how, when and where
the previous marriage was dissolved or
annulled;
6. Present residence and citizenship;
7. Degree of relationship of the contracting
parties;
8. Full name, residence and citizenship of the
father;
9. Full name, residence and citizenship of the
mother; and
10. Full name, residence and citizenship of the
guardian or person having charge, in case
the contracting party has neither father nor
mother and is under the age of twenty-one
years. (FC, Art. 11)
FOREIGN NATIONAL
Additional requirement for foreign national
applicants
When either or both of the contracting parties
are citizens of a foreign country, it shall be
necessary for them to submit a certificate of
legal capacity to contract marriage, issued by
their respective diplomatic or consular officials.
Stateless persons or refugees from other country
shall, in lieu of the certificate of legal capacity
herein required, submit an affidavit stating the
circumstances showing such capacity to contract
marriage. (FC, Art. 21)
Marriage without the required certificate of
legal capacity to marry is valid
The status of the marriage celebrated on the
basis of a license issued without the required
Certificate of Legal Capacity is valid as this is
merely an irregularity in complying with a
formal requirement of the law in procuring a
marriage license, which will not affect the
validity of the marriage. (Garcia v. Recio, G.R. No.
138322, October 2, 2001)
EXCEPTIONS TO MARRIAGE LICENSE
REQUIREMENT
Marriages exempt from the license
requirement (MARCO)
1. Marriages among Muslims or members of
ethnic cultural communities – Provided they
are solemnized in accordance with their
customs, rites or practices (FC, Art. 33);
 Civil Law
2. Marriages in Articulo mortis
a. In case either or both of the
contracting parties are at the point
of death (FC, Art. 27);
b. Solemnized by a ship captain or
airplane pilot (FC, Art. 31); and
c. Within zones of military operation.
(FC, Art. 32)
3. Marriages in Remote places. (FC, Art. 28)
Remote Place - no means of transportation
to enable the party to personally appear
before the local civil registrar. (Rabuya,
2018)
4. Marriages between parties Cohabiting for at
least 5 years and without legal impediment
to marry each other (FC, Art. 34); and
5. Marriages solemnized Outside the
Philippines where no marriage license is
required by the country where it was
solemnized.
Requisites for the 5-year cohabitation as an
exception to the marriage license
requirement (2002, 2008 BAR)
The requisites are:
1. Living together as husband and wife at least
5 years before the marriage.
The 5-year period must be characterized by:
a. Exclusivity – the partners must live
together exclusively, with no other
partners, during the whole 5-year
period.
b. Continuity – such cohabitation was
unbroken.
NOTE: The period is counted from the date
of celebration of marriage. It should be the
years immediately before the day of the
marriage.
2. No legal impediment to marry each other
During the period of cohabitation.
NOTE: The five-year period of cohabitation
must have been a period of legal union had
it not been for the absence of marriage.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
3. Fact of absence of legal impediment must be
present at the time of the marriage.
4. Parties must execute an Affidavit that they
are living together as husband and wife for 5
years and that they do not have any
impediment to marry.
5. Solemnizing officer must execute a Sworn
statement that he had ascertained the
qualifications of the parties and found no
legal impediment to their marriage.
(Manzano v. Sanchez, A.M. No. MTJ-00-
1329, March 8, 2001)
Q: Pepito was married to Teodulfa. Teodulfa
was shot by him resulting in her death. After
1 year and 8 months, he married Norma
without any marriage license. In lieu thereof,
they executed an affidavit stating that they
had lived together as husband and wife for at
least five years and were thus exempt from
securing a marriage license.
a. What is the status of their marriage?
b. Would your answer be the same if Pepito
was separated in fact from Teodulfa?
A:
a. The marriage is void for lack of marriage
license. To be exempt from the license
requirement under the 5-year cohabitation
rule, the cohabitation should be in the
nature of a perfect union that is valid under
the law but rendered imperfect only by the
absence of the marriage contract and is
characterized by continuity, that is,
unbroken, and exclusivity, meaning no third
party was involved at any time within the 5
years. It should be a period of legal union
had it not been for the absence of the
marriage. In this case, Pepito and Norma are
not exempt from the marriage license
requirement because at the time of Pepito
and Norma's marriage, it cannot be said that
they have lived with each other as husband
and wife for at least five years prior to their
wedding day because from the time Pepito's
first marriage was dissolved to the time of
his marriage with Norma, only about twenty
months had elapsed.
b. YES. The marriage is still void. Even if they
were separated in fact, and thereafter both
Pepito and Norma had started living with
each other that has already lasted for five
years, the fact remains that Pepito had a
48
 Marriage under the Family Code
subsisting marriage at the time when he
started cohabiting with Norma. It is
immaterial that when they lived with each
other, Pepito had already been separated in
fact from his lawful spouse. The subsistence
of the marriage even where there was actual
severance of the filial companionship
between the spouses cannot make any
cohabitation by either spouse with any third
party as being one as "husband and wife".
(Niñal v. Bayadog, G.R. No. 133778, March 14,
2000)
Q: Roderick and Faye were high school
sweethearts. When Roderick was 18 and
Faye, 16 years old, they started living
together as husband and wife without the
benefit of marriage. When Faye reached 18
years of age, her parents forcibly took her
back and arranged for her marriage to Brad.
Although Faye lived with Brad after the
marriage, Roderick continued to regularly
visit Faye while Brad was away at work.
During their marriage, Faye gave birth to a
baby girl, Laica. When Faye was 25 years old,
Brad discovered her continued liaison with
Roderick and in one of their heated
arguments, Faye shot Brad to death. She lost
no time in marrying her true love Roderick,
without a marriage license, claiming that
they have been continuously cohabiting for
more than 5 years. Was the marriage of
Roderick and Faye valid? (2008 BAR)
A: NO, the marriage is void because there was no
marriage license. Their marriage was not
exempt from the requisite of a marriage license
because Roderick and Faye have not been
cohabiting for at least 5 continuous years before
the celebration of their marriage. Their lovers’
trysts and brief visitations did not amount to
“cohabitation.”
MARRIAGE CERTIFICATE
Marriage license vs. Marriage certificate
BASIS MARRIAGE MARRIAGE
LICENSE CERTIFICATE
Authorization Best evidence
Nature by the state to of the existence
celebrate of the
marriage. marriage.
Requisite Formal Neither
49
of requisite of essential nor
Marriage marriage. formal
requisite of
marriage.
Q: Guillermo and Josefa lived together as
husband and wife, but there is doubt as to
whether they got married, since no record of
the marriage existed in the civil registry but
their relatives and friends maintained that
the two in fact married each other and lived
as husband and wife for more than half a
century. Is Guillermo married to Josefa?
A: They are presumed to be married. In this
jurisdiction, every intendment of the law leans
toward legitimizing matrimony. Persons
dwelling together apparently in marriage are
presumed to be in fact married. This is the usual
order of things in society and, if the parties are
not what they hold themselves out to be, they
would be living in constant violation of the
common rules of law and propriety. Semper
praesumitur pro matrimonio – always presume
marriage. (Vda.De la Rosa v. Heirs of Vda. De
Damian, G.R. No. 103028, October 10, 1997)
Although a marriage contract is considered a
primary evidence of marriage, its absence is not
always proof that no marriage took place.
(Vda.De la Rosa v. Heirs of Vda. De Damian, G.R.
No. 103028, October 10, 1997)
EFFECT OF MARRIAGE CELEBRATED
ABROAD AND FOREIGN DIVORCE
Rules governing the validity of marriage
(2002, 2004, 2006, 2009, 2010 BAR)
1. As to its extrinsic validity – Lex loci
celebrationis
NOTE: Locus regit actum (the act is
governed by the law of the place where it is
done) - is adhered to here in the Philippines
as regards the extrinsic validity of marriage.
2. As to its intrinsic validity – Personal law
NOTE: Personal law may either be the
national law or the law of the place where
the person is domiciled.
If the person involved is a stateless person,
domiciliary rule applies, otherwise, lex nationalii
applies.
 Civil Law
The 1st paragraph of Article 26 of the Family
Code (FC) on the validity of foreign marriages
applies, however, only to Filipinos. Foreign
marriages of foreigners or of a Filipino and a
foreigner are governed by the Rules on Conflict
of Laws. (Sempio-Diy, 1995)
Marriages between Filipinos solemnized
abroad in accordance with the law in force in
said country
GR: Marriages between Filipinos solemnized
outside the Philippines in accordance with the
law of the foreign country where it is celebrated,
if valid there, shall be valid here as such.
XPNs: It shall be void, even if it is valid in the
foreign country where the marriage was
celebrated, if any of the following circumstances
are present:
1. Lack of legal capacity even with parental
consent (e.g. party is below 18);
2. Incestuous;
3. Contracted through Mistake of one party as
to the identity of the other;
4. Contracted following the annulment or
declaration of nullity of a previous marriage
but Before partition, etc.;
5. Bigamous or polygamous except as provided
in Art. 41 FC on terminable bigamous
marriages;
6. Void due to Psychological incapacity;
7. Void for reasons of Public policy.
Requirements to prove a foreign marriage
1. The existence of the pertinent provision of
the foreign marriage law.
2. The celebration or performance of the
marriage in accordance of said law.
Requirements for the application of par. 2 of
Art. 26 of the Family Code
1. It must be a case of mixed marriage (one
party is Filipino and the other is an alien);
2. The divorce must be obtained by the alien
spouse and not by the Filipino spouse; and
NOTE: Whether the Filipino spouse initiated
the foreign divorce proceeding or not, a
favorable decree dissolving the marriage
bond and capacitating his or her alien
spouse to remarry will have the same result:
the Filipino spouse will effectively be
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
without a husband or wife.
Divorces obtained abroad by Filipino
citizens may now be validly recognized in
the Philippines but only in cases of mixed
marriages involving a Filipino and a
Foreigner. (Republic of the Philippines V.
Marelyn Tanedo Manalo, G.R. No. 221029,
April 24, 2018)
3. The divorce obtained by the alien spouse
must capacitate him or her to remarry.
(Rabuya, 2018)
Q: Suppose in a valid mixed marriage the
foreign spouse obtained a divorce decree
abroad and was capacitated to remarry.
a. May the Filipino spouse remarry despite
the fact that divorce is not valid in the
Philippines?
b. Will your answer be the same if it was a
valid marriage between Filipinos?
A:
a. YES. The Filipino spouse may remarry.
Divorce validly obtained abroad by the
alien spouse capacitating him/her to
remarry will likewise allow the Filipino
spouse to remarry. (FC, Art. 26, 2nd par.)
NOTE: Under the nationality principle
embodied in Art. 16 of the NCC, only
Philippine nationals are covered by the
policy against absolute divorces, the same
being considered contrary to our concept of
public policy and morality. Nevertheless,
aliens may obtain divorces abroad which
may be recognized in the Philippines,
provided they are valid according to their
national law. (Van Dorn v. Romillo, Jr., G.R.
No. L- 68470, October 8, 1985)
b. It depends. What is material in this case
is the citizenship of the spouse who
obtained a divorce decree abroad at the
time the decree was obtained and not
their citizenship at the time the
marriage was celebrated. If the Filipino
spouse was naturalized as a citizen of a
foreign country before he/she obtains a
divorce decree and was thereafter
capacitated to remarry, the Filipino
spouse will be capacitated to remarry.
(Republic v. Orbecido, G.R. No. 154380,
50
 Marriage under the Family Code
October 5, 2005)
Q: A Filipina was married to an American
who obtained a divorce decree in the U.S.
When the Filipina came back to the
Philippines and started her business, the
American followed suit and wanted to
enforce his rights over the Filipina to the
extent of claiming his rights to administer
the properties of the woman, contending that
they are still married. He also claimed
hereditary rights. Is he correct? Why?
A: NO. The divorce in the U.S. released the
Filipina from the marriage. Thus, pursuant to
American law, he is no longer the husband of the
Filipina. He would therefore have no standing to
sue the Filipina. (Van Dorn v. Romillo, Jr., G.R. No.
L-68470, October 8, 1985)
Burden of proof in recognition of foreign
divorce
The naturalization of one of the parties, as well
as the divorce decree obtained by him or her,
must be proven as a fact under our rules on
evidence. The foreign law under which the
divorce was obtained must likewise be proven
as our courts cannot take judicial notice of
foreign laws and judgments; hence, like any
other facts, both the divorce decree and the
national law of the alien must be alleged and
proven according to our law on evidence.
(Garcia v. Recio, G.R. No. 138322, October 2, 2002)
However, if the Filipino spouse remained to be a
citizen of the Philippines when he/she obtained
a divorce decree abroad, such decree will not be
recognized in the Philippines even if that spouse
is subsequently naturalized as a citizen of a
foreign country because at the time the spouse
obtained the divorce decree, he/she was still a
citizen of the Philippines and being naturalized
afterwards does not cure this defect. (Republic v.
Iyoy, G.R. No. 152577, September 21, 2005)
As enunciated in the case of Republic vs. Manalo
where the Supreme Court laid down a landmark
ruling that allows Filipino Citizens to obtain a
foreign divorce as long as such marriage is a
mixed marriage involving a Filipino and a
Foreigner.
Q: A Filipino citizen was married to a
Japanese national. She divorced her husband
in Japan and was able to obtain a divorce
51
decree from the Japanese Court. Will the
Filipino spouse be capacitated to remarry
under Philippine law?
A: YES. Divorces obtained abroad by Filipino
citizens may now be validly recognized in the
Philippines but only in cases of mixed marriages
involving a Filipino and a Foreigner.
Provided, of course, that the party petitioning for
the recognition of such foreign divorce decree –
presumably the Filipino citizen – must prove the
divorce as a fact and demonstrate its conformity
to the foreign law allowing it. (Republic of the
Philippines V. Marelyn Tanedo Manalo, G.R. No.
221029, April 24, 2018)
Q: If a foreigner who was divorced seeks to
obtain a marriage license in the Philippines,
what should he do?
A: The applicant for marriage license has to
prove his legal capacity. If the marriage was
dissolved by reason of divorce, he has to file a
sworn statement as to how the marriage was
dissolved (FC, Art. 11) and furnish the local civil
registrar with the judgment (FC, Art. 13) and
must register the same with the local civil
registrar to bind third persons. (FC, Art. 52)
NOTE: Without the divorce decree and foreign
law as part of the evidence, the Court cannot rule
on the issue of whether petitioner has the
personality to file the petition for declaration of
nullity of marriage. After all, petitioner may have
the personality to file the petition, but the
divorce decree obtained was a limited divorce or
a mensa et thoro or the foreign law may restrict
remarriage even after the divorce decree
becomes absolute. (Garcia v. Recio, G.R. No.
138322, October 2, 2002)
Q: Luzviminda was married to Ryoji
Morisono in Quezon City on December 8,
2009. Thereafter, they lived together in
Japan for 1 year and 3 months but were not
blessed with a child. During their married
life, they would quarrel mainly due to Ryoji’s
philandering ways, in addition to the fact that
he was much older than Luzviminda. As such,
the two of them submitted a “Divorce by
Agreement” before the City Hall of Mizuho-ku
in Nagoya, Japan, which was approved and
duly recorded. In view of this, Luzviminda
filed a petition for recognition of foreign
divorce decree obtained by her and Ryoji
 Civil Law
before the RTC so that she could cancel the
surname of her husband and be able to
marry again.
The RTC denied Luzviminda’s petition,
holding that while a divorce decree held that
while a divorce obtained abroad by an alien
spouse may be recognized in the Philippines
– provided that such decree is valid
according to the national law of the alien –
the same does not find application when it
was the Filipino spouse, i.e., petitioner, who
procured the same. Invoking the nationality
principle provided under Article 15 of the
Civil Code, in relation to Article 26 (2) of the
Family Code, the RTC opined that since
petitioner is a Filipino citizen whose national
laws do not allow divorce, the foreign divorce
decree she herself obtained in Japan is not
binding in the Philippines. Did the RTC
correctly deny Luzviminda’s petition for
recognition of divorce decree she procured?
A: NO. It had been ruled in Republic vs. Manalo
that foreign divorce decrees obtained to nullify
marriages between a Filipino and an alien
citizen may already be recognized in this
jurisdiction, regardless of who between the
spouses initiated the divorce; provided, of
course, that the party petitioning for the
recognition of such foreign divorce decree –
presumably the Filipino citizen – must prove the
divorce as a fact and demonstrate its conformity
to the foreign law allowing it. A plain reading of
the RTC ruling shows that the denial of
Luzviminda's petition to have her foreign
divorce decree recognized in this jurisdiction
was anchored on the sole ground that she
admittedly initiated the divorce proceedings
which she, as a Filipino citizen, was not allowed
to do.
In light of the doctrine laid down in Manalo, such
ground relied upon by the RTC had been
rendered nugatory. However, the Court cannot
just order the grant of Luzviminda's petition for
recognition of the foreign divorce decree, as
Luzviminda has yet to prove the fact of her.
"Divorce by Agreement" obtained in Nagoya
City, Japan and its conformity with prevailing
Japanese laws on divorce. Notably, the RTC did
not rule on such issues. Since these are
questions which require an examination of
various factual matters, a remand to the court a
quo is warranted. (Morisono v. Morisono, G.R. No.
226013, July 2, 2018)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
II. VOID MARRIAGES
Marriages that are void ab initio (1993, 2004,
2005, 2006 BAR)
1. Solemnized without License, except those
marriages that are exempt from the license
requirement;
2. Absence of any of the essential or formal
requisites of marriage;
3. Solemnized by any person not legally
Authorized to perform marriages unless
such marriages were contracted with either
or both parties believing in good faith that
the solemnizing officer had the legal
authority to do so;
4. Contracted through Mistake of one of the
contracting parties as to the identity of the
other;
5. Bigamous or polygamous marriages not
falling under Article 41 of the Family Code
or those allowed under special laws such as
the Muslim Code;
6. Marriages contracted by any party below 18
years of age even with the consent of
parents or guardians;
7. Marriages contracted by any party, who at
the time of the celebration of the marriage,
was Psychologically incapacitated, even if
such incapacity becomes manifest only after
its solemnization (FC, Art. 36);
8. Incestuous Marriages (FC, Art. 37);
9. Marriages declared void because they are
contrary to Public policy (FC, Art. 38);
10. Subsequent marriages which are void under
Art. 53;
11. Marriages in jest; and
“Marriages in jest is a pretended one, legal in
form but entered as a joke, with no real
intentions of entering into the actual
marriage status, and with a clear
understanding that the parties would not be
bound (Republic of the Philippines v. Albios,
G.R. No. 198780, October 16, 2013); and
12. Common-law marriages.
1. ABSENCE OF ANY ESSENTIAL OR FORMAL
REQUISITES OF MARRIAGE
Marriage between Filipinos who are of the
same sex is VOID
For a marriage to be valid, it must be between
52
 Marriage under the Family Code
persons of opposite sexes.
Although gay marriages are definitely not
covered within the purview of Article 2 of the
Family Code, the emerging issue of transsexuals
and intersexual gender identities have called the
attention of the Supreme Court in the cases of
Silverio v. Republic (G.R. No. 174689, October 22,
2007) and Republic v. Cagandahan (G.R. No.
166676, September 125, 2008), respectively. (Sta.
Maria, 2010)
Q: Sidley and Sol were married with one (1)
daughter, Solenn. Sedfrey and Sonia were
another couple with one son, Sonny. Sol and
Sedfrey both perished in the same plane
accident. Sidley and Sonia met when the
families of those who died sued the airlines
and went through grief-counseling sessions.
Years later, Sidney and Sonia got married. At
that time, Solenn was four (4) years old and
Sonny was five (5) years old. These two (2)
were then brought up in the same household.
Fifteen (15) years later, Solenn and Sonny
developed romantic feelings towards each
other, and eventually eloped. On their own
and against their parents’ wishes, they
procured a marriage license and got married
in church.
a. Is the marriage of Solenn and Sonny
valid, voidable or void?
b. If the marriage is defective, can the
marriage be ratified by the free
cohabitation of the spouses? (2018 BAR)
A:
a. The marriage is voidable. Under Article 14
of the Family Code, if a party to the marriage
is between the ages of eighteen and twenty-
one; the consent of their father, mother,
surviving parent or guardian, or persons
having legal charge of them, in the order
mentioned, is an additional requirement. In
the absence of such parental consent, the
consent given by the party between the ages
of eighteen and twenty-one is considered
defective. Also, under Article 4 of the Family
Code, a defect in the essential requisites of
marriage renders the marriage voidable. In
this case, Solenn and Sonny are nineteen
and twenty years old respectively during the
time of the celebration of their marriage.
Thus, the absence of parental consent
renders the marriage of Solenn and Sonny
voidable.
53
b. YES. Although voidable marriage, their
marriage could be ratified by free
cohabitation. Under Article 45(1) of the
Family Code, such marriage may be ratified
by the cohabitation of the contracting
parties (after attaining the age of twenty-
one) as husband and wife.
Q: In case of a change in sex, can the person
who has undergone said change be allowed
to marry another of the same sex as he/she
originally had? (2014 BAR)
A: It depends upon the cause for the change in
sex.
1. If the change is artificial – No, he/she
cannot.
The sex or gender at the time of birth shall
be taken into account. He is still, in the eyes
of the law, a man although because of the
artificial intervention, he now has the
physiological characteristics of a woman.
(Silverio v. Republic, G.R. No. 174689, October
22, 2007)
2. If the change is natural – He/she can. Ex.
Hermaphrodite, Congenital Adrenal
Hyperplasia
Q: Jennifer was registered as a female in her
Certificate of Live Birth. In her early years,
she suffered from clitoral hypertrophy and
was found out that her ovarian structures
had minimized. She also alleged that she has
no breasts or menstruation. She was
diagnosed to have Congenital Adrenal
Hyperplasia (CAH), a condition where
persons thus afflicted possess secondary
male characteristics because of too much
secretion of androgen. She then alleged that
for all interests and appearances as well as in
mind and emotion, she has become a male
person. What is Jennifer’s gender or sex?
A: MALE. Where the person is biologically or
naturally intersex the determining factor in his
gender classification would be what the
individual, having reached the age of
majority, with good reason thinks of his/her
sex. Jennifer here thinks of himself as a male and
considering that his body produces high levels of
androgen, there is preponderant biological
support for considering him as being male.
Sexual development in cases of intersex persons
 Civil Law
makes the gender classification at birth
inconclusive. It is at maturity that the gender of
such persons is fixed. (Republic v. Jennifer
Cagandahan, G.R. No. 166676, September 12,
2008)
Q: Gallo has never been known as “Michael
Soriano Gallo.” She has always been female. It
was stated in her petition before the
Regional Trial Court that her Certificate of
Live Birth contained errors which should be
corrected. For her, she was not changing the
name that was given to her; she was merely
correcting its entry. To accurately reflect
these facts in her documents, Gallo prayed
before the Regional Trial Court of Ilagan City,
Isabela in for the correction of her name
from "Michael" to "Michelle" and of
her biological sex from "Male" to "Female"
under Rule 108 of the Rules of Court. In
addition, Gallo asked for the inclusion of her
middle name, "Soriano;" her mother's middle
name, "Angangan;" her father's middle name,
"Balingao;" and her parent's marriage date,
May 23, 1981, in her Certificate of Live Birth,
as these were not recorded. Does Gallo’s
petition involve substantive changes?
A: NO. Gallo is not filing the petition to change
her current appellation. She is merely correcting
the misspelling of her name. To correct simply
means "to make or set aright; to remove the
faults or error from." To change means "to
replace something with something else of the
same kind or with something that serves as a
substitute. Gallo is not attempting to replace her
current appellation. She is merely correcting the
misspelling of her given name. "Michelle" could
easily be misspelled as "Michael," especially
since the first four (4) letters of these two (2)
names are exactly the same. The differences only
pertain to an additional letter "a" in "Michael,"
and "le" at the end of "Michelle." "Michelle" and
"Michael" may also be vocalized similarly,
considering the possibility of different accents or
intonations of different people. In any case, Gallo
does not seek to be known by a different
appellation. The lower courts have determined
that she has been known as "Michelle" all
throughout her life. She is merely seeking to
correct her records to conform to her true given
name. (Republic of the Philippines vs. Michelle
Soriano Gallo, G.R. No. 207074, January 17, 2018,
as penned by J. Leonen)
Marriage where one or both of the parties
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
are below 18 years of age is VOID
Such marriage is void for lack of legal capacity
even if the parents consented to such marriage.
(Sempio-Dy, 1995)
Validity of the marriage if it is a mixed
marriage where the Filipino is 18 years old
but the foreigner is below 17 years of age
If the national law of the foreigner recognizes
17-year-old person to be capacitated to marry,
then their marriage is valid, otherwise it is void.
Effect of lack of authority of solemnizing
officer
GR: The marriage is void ab initio.
XPNs:
1. Express- If either or both parties believed in
good faith that the solemnizing officer had
the legal authority to do so. (FC, Art. 35)
2. Implied - Article 10 in relation to Article 26
of the Family Code. If the marriage between
a foreigner and a Filipino citizen abroad
solemnized by a Philippine consul assigned
in that country is recognized as valid in the
host country, such marriage shall be
considered as valid in the Philippines. (Sta.
Maria, 2010)
Q: Judge Palaypayon solemnized marriages
even without the requisite of marriage
license. Thus, some couples were able to get
married by the simple expedient of paying
the marriage fees. As a consequence, their
marriage contracts did not reflect any
marriage license number. In addition, the
judge did not sign their marriage contracts
and did not indicate the date of the
solemnization, the reason being that he
allegedly had to wait for the marriage license
to be submitted by the parties. Such marriage
contracts were not filed with the Local Civil
Registry. Are such marriages valid?
A: NO. A valid marriage license is necessary for
the validity of marriage, except in the cases
provided for therein. The absence of any of the
essential or formal requisites shall generally
render the marriage void ab initio. (Cosca v.
Palaypayon, A.M. No. MTJ-92-721, September 30,
1994)
Mistake to render the marriage void
54
 Marriage under the Family Code
For marriage to be rendered void, the mistake in
identity must be with reference to the actual
physical identity of other party, not merely a
mistake in the name, personal qualifications,
character, social standing, etc. (Rabuya, 2018)
2. PSYCHOLOGICAL INCAPACITY
Psychological incapacity is “no less than a
mental (not physical) incapacity that causes a
party to be truly (cognitive) of the basic marital
covenants that concomitantly must be assumed
and discharged by the parties to the marriage
which include their mutual obligations to live
together, observe love, respect, fidelity, and to
render help and support”. (Republic of the
Philippines v. Iyoy, G.R. No. 152577, September 21,
2005)
Psychological incapacity does not refer to mental
incapacity tantamount to insanity. (Paras, 2016)
Clearly, the ground is restricted to psychological
incapacity to “comply with the essential marital
obligations”. (Sta. Maria, 2010)
In such case, the spouse declared to be
psychologically incapacitated cannot be held
liable to pay moral damages to the other spouse
based on Articles 2217 and 21 of the NCC, which
connotes willfulness of the acts complained of, if
the same acts constitutive of the psychological
incapacity were to be made the basis for the
award of moral damages. It is contradictory to
characterize acts as a product of psychological
incapacity, and hence beyond the control of the
party because of an innate inability, while at the
same time considering the same set of acts as
willful. (Rabuya, 2018)
Constitutional provision on marriage vis-à-
vis validity of declarations of nullity of
marriage based on psychological incapacity
Q: Does the grant of the petition for the
declaration of nullity of marriage based on
Art. 36 of the FC destroy the constitutional
mandate to protect the sanctity of marriage
and promoting such marriage as a
foundation of the family?
A: NO. In dissolving marital bonds, the Court is
not demolishing the foundation of families, but it
is actually protecting the sanctity of marriage,
because it refuses to allow a person afflicted
with a psychological disorder, who cannot
comply with or assume the essential marital
55
obligations, from remaining in that sacred bond.
Article 36, in classifying marriages contracted by
a psychologically incapacitated person as a
nullity, should be deemed as an implement of
this constitutional protection of marriage. Given
the avowed State interest in promoting marriage
as the foundation of the family, which in turn
serves as the foundation of the nation, there is a
corresponding interest for the State to defend
against marriages ill-equipped to promote
family life. (Kalaw v. Fernandez, G.R. No. 166357,
January 14, 2015)
Determination of psychological incapacity is
left solely with the courts on a case- to-case
basis
Every court should approach the issue of nullity
“not on the basis of a priori assumptions,
predilections or generalizations, but according
to its own facts” in recognition of the verity that
no case would be on “all fours” with the next one
in the field of psychological incapacity as a
ground for the nullity of marriage; hence, every
“trial judge must take pains in examining the
factual milieu and the appellate court must, as
much as possible, avoid substituting its own
judgment for that of the trial court.
By the very nature of Article 36 of the Family
Code, courts, despite having the primary task
and burden of decision- making, must not
discount but, instead, must consider as decisive
evidence the expert opinion on the psychological
and mental temperaments of the parties. (Kalaw
v. Fernandez, G.R. No. 166357, January 15, 2015)
Requisites of Psychological Incapacity (1996,
1997, 2002, 2006 BAR)
1. Juridical antecedence– Must be rooted in
the history of the party antedating the
marriage, although overt manifestations
may arise only after such marriage.
2. Gravity – grave enough to bring about the
disability of the party to assume the
essential marital obligations.
3. Permanence or Incurability – must be
incurable or, if curable, the cure should be
beyond the means of the parties involved.
Proof of Psychological Incapacity
The root cause of psychological incapacity must
 Civil Law
be:
1. Medically or clinically identified;
2. Alleged in the complaint;
3. Sufficiently proven by experts; and
4. Clearly explained in the decision.
NOTE: Expert evidence may be given by
qualified psychiatrists and clinical psychologists.
The physician’s examination is not required
in establishing psychological incapacity as
ground for declaration of nullity
If the totality of evidence presented is enough to
sustain a finding of psychological incapacity,
physician’s examination of the person concerned
need not be resorted to. (Marcos v. Marcos, G.R.
No. 136490, October 19, 2000; Glenn Viñas v.
Mary Grace Parel-Viñas, G.R. No. 208790, January
21, 2015)
Guidelines set by the Court to aid it in its
disposition of cases involving psychological
incapacity
In the landmark case of Republic of the
Philippines v. Court of Appeals and Molina, the
Supreme Court enumerated the following
guidelines in invoking and proving psychological
incapacity under Article 36 of the Family Code:
1. Burden of proof to show the nullity of the
marriage belongs to the plaintiff;
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 Arts. 68 up to 71 of the
FC as regards the husband and wife, as well
as Arts. 220, 221 and 225 of the same Code
in regard to parents and their children. Such
non-complied marital obligation(s) must
also be stated in the petition, proven by
evidence and included in the text of the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
decision;
7. Interpretations given by the National
Appellate Matrimonial Tribunal of the
Catholic Church in 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.
No decision shall be handed down unless the
Solicitor General issues a certification, which
will be quoted in the decision, briefly stating
therein his reasons for his agreement or
opposition, as the case may be, to the petition.
(Republic of the Philippines v. Court of Appeals
and Molina, G.R. No. 108763, February 13, 1997;
Danilo A. Aurelio v. Vide Ma. Corazon P. Aurelio,
G.R. No. 175367, June 6, 2011)
NOTE: In Republic v. Quintero-Hamano, the SC
held that these guidelines may not be relaxed
just because the spouse alleged to be
psychologically incapacitated happens to be a
foreign national. The norms used for
determining psychological incapacity should
apply to any person regardless of nationality
because the rules were formulated on the basis
of studies of human behavior in general.
(Rabuya, 2018)
In Marcos v. Marcos, the Supreme Court held
categorically that psychological incapacity “may
be established by the totality of evidence
presented” and that “there is no requirement
that the respondent should be examined by a
physician or a psychologist as a condition sine
qua non for such declaration.” (Marcos v. Marcos,
G.R. No. 136490, October 19, 2000)
Instances where allegations of psychological
incapacity were not sustained
1. Mere showing of irreconcilable differences
and conflicting personalities. (Carating-
Siayngco v. Siayngco, G.R. No. 158896,
October 27, 2004)
NOTE: Mere sexual infidelity or perversion,
emotional immaturity and irresponsibility
and the like, do not by themselves warrant a
finding of psychological incapacity as the
same may only be due to a person's refusal
or unwillingness to assume the essential
obligations of marriage. (Castillo v. Republic
of the Philippines, G.R. No. 214064, February
56
 Marriage under the Family Code
6, 2017)
It must be shown that these acts are
manifestations of a disordered personality
which would make respondent completely
unable to discharge the essential obligations
of a marital state, not merely youth,
immaturity or sexual promiscuity. (Dedel v.
CA, G.R. No. 151867, January 29, 2004)
2. Disagreements regarding money matters.
(Tongol v. Tongol, G.R. No. 157610, October
19, 2007)
3. Mere abandonment. To constitute
psychological incapacity, it must be shown
that the unfaithfulness and abandonment
are manifestations of a disordered
personality that completely prevented the
erring spouse from discharging the essential
marital obligations. (Republic of the
Philippines v. Cesar Enselan, G.R. No. 170022,
January 9, 2013)
4. Sexual infidelity (Republic v. Dagdag, G.R No.
109975, February 9, 2001)
5. Living an adulterous life when specific
evidence was shown that promiscuity as a
trait already existing at the inception of
marriage. (Baccay v. Baccay, G.R. No. 173138,
December 1, 2010)
Q: A and B were married. They have four (4)
children. A, the husband, had an affair with C,
who gave birth to a child. After 12 years of
marriage, B left the conjugal home and her 4
children with A. Now, A started living with C.
Nine years since the de facto separation from
B, A filed a petition for declaration of nullity
of marriage based on Article 36 of the Family
Code. A psychologist and a canon law expert
testified that B, was indeed psychologically
incapacitated alleging that she may reflect a
narcissistic personality disorder with her
sexual infidelity, habitual mahjong playing,
and her frequent night-out with friends. They
based their diagnosis on an interview with
the family relative of B and statements made
by their own son. Is the marriage of A and B
void on the ground of psychological
incapacity?
A: YES. The Court held that B was indeed
psychologically incapacitated as they relaxed the
previously set forth guidelines with regard to
57
this case. Article 36 of the Family Code must not
be so strictly and too literally read and applied
given the intendment of the drafter to adopt its
enacted version of “less specificity” obviously to
enable “some resiliency in its application.”
Despite having the primary task and burden of
decision-making, courts must not discount but,
instead, must consider as decisive evidence the
expert opinion on the psychological and mental
temperaments of the parties. The long-term
effects of the respondent’s obsessive mahjong
playing surely impacted her family life
particularly on her very young children. Her
willfully exposing her children to the culture of
gambling on every occasion of her mahjong
sessions was a very grave and serious act of
subordinating their needs for parenting to the
gratification of her own personal and escapist
desires. The respondent revealed her wanton
disregard for her children’s moral and mental
development. This disregard violated her duty as
a parent to safeguard and protect her children.
(Kalaw v. Fernandez, G.R. No. 166357, January 14,
2015)
Q: Was the Molina doctrine abandoned by the
recent ruling in the abovementioned case of
Kalaw vs. Fernandez (G.R. No. 166357,
January 14, 2015)?
A: NO. The Court in this case merely recognized
the unintended consequences of strictly
applying the standards set in Molina. The
resiliency with which the concept (of
psychological incapacity) should be applied and
the case-to-case basis by which the provision
should be interpreted, as so intended by its
framers, had, somehow, been rendered
ineffectual by the imposition of a set of strict
standards in Molina. In hindsight, it may have
been inappropriate for the Court to impose a
rigid set of rules, as the one in Molina, in
resolving all cases of psychological incapacity.
The unintended consequences of Molina have
taken its toll on people who have to live with
deviant behavior, moral insanity and sociopathic
personality anomaly, which, like termites,
consume little by little the very foundation of
their families, our basic social institutions. Far
from what was intended by the Court, Molina
has become a straight-jacket, forcing all sizes to
fit into and be bound by it.
In the abovementioned case, the Supreme Court
is not suggesting the abandonment of Molina. It
simply declares that there is a need to
 Civil Law
emphasize other perspectives as well which
should govern the disposition of petitions for
declaration of nullity under Article 36.
Q: Rodolfo and Natividad were married. On
December 28, 1998, Rodolfo filed a verified
complaint for declaration of nullity of
marriage before the RTC alleging that
Natividad was psychologically incapacitated
to comply with her essential marital
obligations. In support of his complaint,
Rodolfo testified, among others, that he first
met Natividad when they were students at
the Barangay High School of Sindangan, and
he was forced to marry her barely three (3)
months into their courtship in light of her
accidental pregnancy. At the time of their
marriage, he was 21 years old, while
Natividad was 18 years of age. He had no
stable job and merely worked in the
gambling cockpits as "kristo" and "bangkero
sa hantak." When he decided to join and train
with the army, Natividad left their conjugal
home and sold their house without his
consent. Thereafter, Natividad moved to
Dipolog City where she lived with a certain
Engineer Terez (Terez), and bore him a child
named Julie Ann Terez.
After cohabiting with Terez, Natividad
contracted a second marriage on January 11,
1991 with another man named Antonio
Mondarez and has lived since then with the
latter in Cagayan de Oro City. From the time
Natividad abandoned them in 1972, Rodolfo
was left to take care of Ma. Reynilda and Ma.
Rizza and he exerted earnest efforts to save
their marriage which, however, proved futile
because of Natividad’s psychological
incapacity that appeared to be incurable. For
her part, Natividad failed to file her answer,
as well as appear during trial, despite service
of summons. Nonetheless, she informed the
court that she submitted herself for
psychiatric examination to Dr. Cheryl T.
Zalsos (Dr. Zalsos) in response to Rodolfo’s
claims. Rodolfo also underwent the same
examination.
In her two-page psychiatric evaluation
report, Dr. Zalsos stated that both Rodolfo
and Natividad were psychologically
incapacitated to comply with the essential
marital obligations, finding that both parties
suffered from "utter emotional immaturity
[which] is unusual and unacceptable
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
behavior considered [as] deviant from
persons who abide by established norms of
conduct." As for Natividad, Dr. Zalsos also
observed that she lacked the willful
cooperation of being a wife and a mother to
her two daughters. On February 10, 1999, the
Office of the Solicitor General (OSG),
representing petitioner Republic of the
Philippines (Republic), filed an opposition to
the complaint, contending that the acts
committed by Natividad did not demonstrate
psychological incapacity as contemplated by
law, but are mere grounds for legal
separation under the Family Code. Should
the marriage be dissolved?
A: NO. "Psychological incapacity," as a ground to
nullify a marriage under Article 36 of the Family
Code, should refer to no less than a mental – not
merely physical – incapacity that causes a party
to be truly incognitive of the basic marital
covenants that concomitantly must be assumed
and discharged by the parties to the marriage
which, as so expressed in Article 68of the Family
Code, among others, include their mutual
obligations to live together, observe love, respect
and fidelity and render help and support. The
RTC, as affirmed by the CA, heavily relied on the
psychiatric evaluation report of Dr. Zalsos which
does not, however, explain in reasonable detail
how Natividad’s condition could be
characterized as grave, deeply-rooted, and
incurable within the parameters of psychological
incapacity jurisprudence. Aside from failing to
disclose the types of psychological tests which
she administered on Natividad, Dr. Zalsos failed
to identify in her report the root cause of
Natividad's condition and to show that it existed
at the time of the parties' marriage. Neither was
the gravity or seriousness of Natividad's
behavior in relation to her failure to perform the
essential marital obligations sufficiently
described in Dr. Zalsos's report.
To hark back to what has been earlier discussed,
psychological incapacity refers only to the most
serious cases of personality disorders clearly
demonstrative of an utter insensitivity or
inability to give meaning and significance to the
marriage. In the final analysis, the Court does not
perceive a disorder of this nature to exist in the
present case. Thus, for these reasons, coupled
too with the recognition that marriage is an
inviolable social institution and the foundation
of the family, the instant petition is hereby
granted. (Republic v. Gracia, G.R. No. 171557,
58
 Marriage under the Family Code
February 12, 2014)
Q: Rachel worked as a domestic helper in
Hong Kong to provide for the needs of Jose,
the love of her life. Eventually, the couple got
married and settled in a house they acquired.
The married life ran smoothly up until
Rachel filed a petition for declaration of
nullity of marriage. Her petition anchored on
the ground that Jose was psychologically
incapacitated to fulfill his essential marital
obligations. She alleged that Jose was a
violent man who used to physically abuse
her. She added that Jose was a drunkard and
always had sexual relations with different
women aside from Rachel. On his part, Jose
simply denied all the allegations in the
petition. Is Jose psychologically
incapacitated?
A: NO. For psychological incapacity to exist, it
should refer to no less than a mental and not
merely physical incapacity that causes a party to
be truly incognitive of the basic marital
covenants as provided for under Article 68 of
the Family Code. In other words, it must be a
malady that is so grave and permanent as to
deprive one of awareness of the duties and
responsibilities of the matrimonial bond one is
about to assume. Also, following the case of
Republic vs Molina, the totality of evidence must
show that psychological incapacity exists, and its
gravity, juridical antecedence, and incurability
must be duly established. Here, there is no
sufficient evidence to prove that psychological
incapacity exists. Absent sufficient evidence,
Courts are compelled to uphold the
indissolubility of the marital tie. (Del Rosario v.
Del Rosario, G.R. No. 222541, February 15, 2017)
Q: Reghis and Olivia were married and were
blessed with two (2) children. However, the
couple experienced a turbulent and
tumultuous marriage, often having violent
fights and jealous fits. Reghis could not
forgive Olivia for dragging him into marriage
and resented her condescending attitude
towards him. They became even more
estranged when Reghis secured a job as a
medical representative and became
engrossed in his career and focused on
supporting his parents and siblings. As a
result, he spent little time with his family,
causing Olivia to complain that Reghis failed
to be a real husband to her. In 1986, the
couple parted ways. Reghis then filed a
59
petition for declaration of nullity of marriage
citing his psychological incapacity to comply
with his essential marital obligations. The
clinical psychologist submitted a report and
testified that Reghis suffered from Obsessive
Compulsive Personality Disorder (OCPD).
This gave him a strong obsession for
whatever endeavour he chooses, such as his
work, to the exclusion of other
responsibilities and duties such as those
pertaining to his roles as father and husband.
Dr. Basilio surmised that Reghis’ OCPD was
the root of the couple’s disagreements and
that the same is incurable. The Office of the
Solicitor General (OSG), representing the
Republic, opposed the petition. Should the
marriage be declared null and void?
A: NO. The requirements for psychological
incapacity do not concur. Reghis’ testimony
shows that he was able to comply with his
marital obligations which, therefore, negates the
existence of a grave and serious psychological
incapacity on his part. Reghis admitted that he
and Olivia lived together as husband and wife
under one roof for fourteen (14) years and both
of them contributed in purchasing their own
house. Reghis also fulfilled his duty to support
and take care of his family. Moreover, the OCPD
which Reghis allegedly suffered from was not
shown to have juridical antecedence. No specific
behavior or habits during his adolescent years
were shown which would explain his behavior
during his marriage with Olivia. Dr. Basilio
simply concluded that Reghis’ disorder is
incurable but failed to explain how she came to
such conclusion. Based on the appreciation of
the RTC, Dr. Basilio did not discuss the concept
of OCPD, its classification, cause, symptoms, and
cure, and failed to show how and to what extent
the respondent exhibited this disorder in order
to create a necessary inference that Reghis’
condition had no definite treatment or is
incurable.
Article 36 of the Family Code must not be
confused with a divorce law that cuts the marital
bond at the time the grounds for divorce
manifest themselves; rather, it must be limited
to cases where there is a downright incapacity
or inability to assume and fulfill the basic marital
obligations, not a mere refusal, neglect or
difficulty, much less, ill will, on the part of the
errant spouse. (Republic v. Romero II, G.R. No.
209180, February 26, 2016)
 Civil Law
Q: Would the state of being of unsound mind
or the concealment of drug addiction,
habitual alcoholism, homosexuality or
lesbianism be considered indicia of
psychological incapacity, if existing at the
inception of marriage? (2002 BAR)
A: The state of being of unsound mind, the
concealment of drug addiction, habitual
alcoholism, lesbianism or homosexuality may be
indicia of psychological incapacity, depending on
the degree of severity of the disorder. However,
the concealment of drug addiction, habitual
alcoholism, lesbianism or homosexuality is a
ground of annulment of marriage. (Santos v. CA,
G.R. No. 112019, January 4, 1995)
Q: Art. 36 of the FC provides 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 be void.
Choose the spouse listed below who is
psychologically incapacitated.
a. Nagger
b. Gay or Lesbian
c. Congenital sexual pervert
d. Gambler
e. Alcoholic (2006 BAR)
A: B and C. They may serve as indicia of
psychological incapacity, depending on the
degree and severity of the disorder. (Santos v.
CA, G.R. No. 112019, January 4, 1995) If the
condition of homosexuality, lesbianism or sexual
perversion, existing at the inception of the
marriage, is of such a degree as to prevent any
form of sexual intimacy, any of them may qualify
as a ground for psychological incapacity. The law
provides that the husband and wife are obliged
to live together, observe mutual love, respect
and fidelity. (FC, Art. 68)
More than just showing the manifestations of
incapacity, the petitioner must show that the
respondent is incapacitated to comply with the
essential marital obligations of marriage and
that it is also essential that he must be shown to
be incapable of doing so due to some
psychological, not physical illness. (Republic v.
Quintero- Hamano, G.R. No. 149498, May 20,
2004)
Q: After living together as husband and wife
for two (2) years, Gina and Marjune
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
formalized their marital union through civil
rites. As months passed, the communication
between Gina and Marjune became less
frequent until it ceased altogether. Thus,
Gina filed a petition to declare her marriage
with Marjune null and void on the basis of
the latter's psychological incapacity.
During trial, Gina presented the findings of
Professor Emma Astudillo-Sanchez (Prof.
Sanchez), the psychologist who conducted a
psychological examination of the parties. She
concluded that Gina and Marjune's
personality disorders "affected their
behaviors even before they contracted
marriage and, in the presence of situational
factors, became more evident during the
time they were together during the marriage.
Is upholding the annulment based on the
expert opinion of the psychologist sufficient
proof of the presence of psychological
incapacity?
A: NO. The said report failed to show that these
traits existed prior to Gina's marriage and that
her alleged personality disorder is incurable or
that the cure is beyond her means. There was
simply no discernible explanation on the
juridical antecedence or incurability of Gina's
supposed condition. More significantly, the
relation of such condition to Gina's inability to
perform her essential marital obligations was
not sufficiently shown. To reiterate, the
psychological condition ought to pertain to
personality disorders that are grave and serious
such that the party would be incapable of
carrying out the ordinary duties required in a
marriage. Unfortunately, the Case Analysis
Report fails to demonstrate this crucial point. In
determining the existence of psychological
incapacity, a clear and understandable causation
between the party's condition and the party's
inability to perform the essential marital
covenants must be shown A psychological report
that is essentially comprised of mere platitudes,
however speckled with technical jargon, would
not cut the marriage tie. (Republic v. Tecag, G.R.
No. 229272, November 19, 2018)
Q: Petitioner Maria Teresa and respondent
Rodolfo De La Fuente, Jr. first met when they
were students at UST before they became
sweethearts. While they were still
sweethearts, petitioner already noticed that
respondent was an introvert and was prone
to jealousy. She also observed that
60
 Marriage under the Family Code
respondent appeared to have no ambition in
life and felt insecure of his siblings, who
excelled in their studies and careers. In June
1994, they got married in Mandaluyong City
and had two children. Respondent’s attitude
worsened and they went on with their
marital life. His jealousy was so severe that
he once poked a gun at his own 15-year old
cousin who was staying at their house
because he suspected his cousin of being
petitioner’s lover.
In addition, respondent treated petitioner
like a sex slave. They would have sex 4 or 5
times a day. At times, he would fetch
respondent from her office during lunch
break just so they could have sex. During
sexual intercourse, he would either tie
petitioner to the bed or poke her with things.
He even suggested that they invite a third
person with them while having sex. This
made petitioner feel molested and
maltreated. Should their marriage be
nullified on the ground of psychological
incapacity?
A: YES. Respondent's repeated behavior
of psychological abuse by intimidating, stalking,
and isolating his wife from her family and
friends, as well as his increasing acts of physical
violence, are proof of his depravity, and utter
lack of comprehension of what marriage and
partnership entail. It would be of utmost cruelty
for this Court to decree that petitioner should
remain married to respondent. After she had
exerted efforts to save their marriage and their
family, respondent simply refused to believe that
there was anything wrong in their marriage.
This shows that respondent truly could not
comprehend and perform his marital
obligations. This fact is persuasive enough for
this Court to believe that respondent's mental
illness is incurable. (Tani-De La Fuente v. De La
Fuente, Jr., G.R. No. 188400, March 8, 2017, as
penned by J. Leonen)
3. INCESTUOUS MARRIAGES
1. Between ascendants and descendants of any
degree;
2. Between brothers and sisters, whether of
the full or half-blood. (FC, Art. 37)
NOTE: Regardless of whether the relationship
between the parties is legitimate or illegitimate.
61
Void marriages by reason of public policy
(1999, 2007, 2008 BAR)
Marriages between:
1. Collateral blood relatives (legitimate or
Illegitimate) up to the 4th civil degree;
2. Step-parents & step-children;
3. Parents-in-law & children-in-law;
NOTE: The prohibition under Nos. 2 and 3
applies even after the termination of the
marriage, which is the very source of the
relationship by affinity, regardless of the
cause of such termination.
Affinity is a relationship gained by marriage
and a fictive kinship created by law. Also, it
is aligned with the spirit of Art. 332 of the
RPC. It holds for all intents and purposes
favorable to the strengthening of the bond of
the family. (Intestate Estate of Carungcong
vs. People, G.R. No. 181409, February 11,
2010)
4. Adopting parent & the adopted child;
5. Surviving spouse of the adopting parent &
the adopted child;
6. Surviving spouse of the adopted child & the
adopter;
7. Adopted child & legitimate child of the
adopter;
8. Adopted children of the same adopter;
9. Parties where one, with the intention to
marry the other, killed the latter’s spouse or
his/her spouse. (FC, Art. 38)
NOTE: The list is EXCLUSIVE. If not falling
within this enumeration, the marriage shall be
valid. Such as marriages between:
1. Adopted and Illegitimate child of the
adopter;
2. Step-brother and step-sister;
3. Brother-in-law and sister-in-law;
4. Parties who have been guilty of adultery
or concubinage.
Q: Amor gave birth to Thelma when she was
15 years old. Thereafter, Amor met David,
and they got married when she was 20 years
old. David has a son, Julian, with his ex-
girlfriend Sandra. Can Julian and Thelma get
married? (2007 BAR)
A: YES. Marriage between stepbrothers and
 Civil Law
stepsisters are not among the marriages
prohibited under the Family Code.
4. SUBSEQUENT MARRIAGE
Q: If a person contracts a subsequent
marriage during the subsistence of a prior
marriage, what is the status of the
subsequent marriage? (1992, 2005, 2008
BAR)
A:
GR: Void for being bigamous or polygamous,
even if celebrated abroad and valid there as
such.
XPN: Valid if it is a terminable bigamous
marriage.
Bigamous Marriage
Bigamy - When a person contracts a second or
subsequent marriage before the former
marriage has been legally dissolved, or before
the absent spouse has been declared
presumptively dead by means of a judgment
rendered in the proper proceedings. (RPC, Art.
349)
NOTE: The same applies to polygamy.
A subsequent void bigamous marriage
contemplates a situation where such subsequent
marriage was contracted at the time when the
first marriage, which is valid in all respects, was
still subsisting. A void bigamous marriage
therefore involves a situation where the first
marriage is not void but completely valid or at
least annullable. (Sta. Maria, 2010)
If the first marriage is void and a party to that
first marriage subsequently remarries without
obtaining a judicial declaration of nullity of the
first marriage, the subsequent marriage is
likewise void. It is void not because it is
bigamous but because it failed to comply with
the requirements under Article 40 in relation to
Articles 52 and 53 of the Family Code. (Valdes v.
RTC, G.R. No. 122749, July 31, 1996)
Q: Arnold, a Filipino, and Britney, an
American, both residents of California,
decided to get married in their local parish.
Two years after their marriage, Britney
obtained a divorce in California. While in
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Boracay, Arnold met Jenny, a Filipina, who
was vacationing there. Arnold fell in love
with her. After a brief courtship and
complying with all the requirements, they
got married in Hong Kong to avoid publicity,
it being Arnold’s second marriage. Is his
marriage with Jenny valid? (2006 BAR)
A: YES. The marriage will not fall under Art.
35(4) of the Family Code on bigamous marriages
provided that Britney obtained an absolute
divorce, capacitating her to remarry under her
national law. Consequently, the marriage
between Arnold and Jenny may be valid as long
as it was solemnized and valid in accordance
with the laws of Hong Kong.
Q: May a person contract a valid subsequent
marriage before a first marriage is declared
void ab initio by a competent court?
A: NO. A judicial declaration of nullity is
required before a valid subsequent marriage can
be contracted; or else, what transpires is a
bigamous marriage, reprehensible and immoral.
(FC, Art. 40; In re: Salvador v. Serafico, A.M. 2008-
20-SC, March 15, 2010)
NOTE: Before one can contract a second
marriage on the ground of nullity of the first
marriage, there must first be a final judgment
declaring the first marriage void. (FC, Art. 40) If a
party fails to secure a judicial declaration of
nullity of the first marriage, he or she runs the
risk of being charged with bigamy as the marital
bond or vinculum in the first nuptial subsists.
(Mercado v. Tan, G.R. No. 137110, August 1, 2000;
Te v. CA, G.R. No. 126746, November 29, 2000)
Special cases when subsequent marriage is
allowed
1. Marriage between a Filipino and a foreigner
and procurement by the alien spouse of a
valid divorce decree abroad, capacitating
him/her to remarry;
2. Terminable bigamous marriages. (FC, Art.
41)
Requisites for validity of subsequent
marriage under Art. 41 under the Family
Code (BAD)
Before the celebration of the subsequent
marriage:
62
 Marriage under the Family Code
1. The Absent spouse had been absent for 4
consecutive years (ordinary absence) or 2
consecutive years (extra-ordinary absence);
2. The present spouse has a well-founded
Belief that the absent spouse is already
dead;
NOTE: The Court in Cantor pointed out the
term “well-founded belief” has no exact
definition under the law. In fact, the Court
notes that such belief depends on the
circumstances of each particular case, as
such must result from diligent efforts to
locate the absent spouse. Such diligence
entails an active effort on the part of the
present spouse to locate the missing one.
The mere absence of a spouse, devoid of any
attempt by the present spouse to locate the
former, will not suffice. (Republic v. Catubag,
G.R. No. 210580, April 18, 2018)
3. There is judicial Declaration of presumptive
death in a summary proceeding in
accordance with Article 253 of the Family
Code.
NOTE: If both spouses of subsequent marriage
acted in bad faith, such marriage is void ab
initio.
Requisites for issuance of judicial declaration
of presumptive death
1. That the absent spouse has been missing for
four consecutive years, or two consecutive
years if the disappearance occurred where
there is a danger of death under the
circumstances laid down in Article 391 of
the New Civil Code;
2. That the present spouse wishes to remarry;
3. That the present spouse has a well-founded
belief that the absentee is dead; and
4. That the present spouse files a summary
proceeding for the declaration of
presumptive death of the absentee.
(Republic of the Philippines v. Nolasco, G.R.
No. 94053, March 17, 1993)
The requirement for a judgment of the
presumptive death of the absent spouse is for
the benefit of the spouse present because she
could be charged and convicted of bigamy if the
defense of good faith based on mere testimony is
found incredible. (Eduardo Manuel v. People, G.R.
No. 165842, November 29, 2005)
63
Finality of judicial declaration of
presumptive death
GR: The order of the trial court granting the
petition for judicial declaration of presumptive
death under Article 41 of the Family Code is
immediately final and executory by the express
provision of Article 247 of the Family Code.
(Republic of the Philippines v. Bermudez-Lorino,
G.R. No. 160258, January 19, 2005)
XPN: Under Article 41 of the Family Code, the
losing party in a summary proceeding for the
declaration of presumptive death may file a
petition for certiorari with the CA on the ground
that, in rendering judgment thereon, the trial
court committed grave abuse of discretion
amounting to lack of jurisdiction. From the
decision of the CA, the aggrieved party may
elevate the matter to this Court via a petition for
review on certiorari under Rule 45 of the Rules
of Court. (Republic of the Philippines v. Yolanda
Cadacio Granada, G.R. No.187512, June 13, 2012)
The declaration of presumptive death is without
prejudice to the effect of reappearance of the
absent spouse. (Sta. Maria, 2010) The declared
presumption will still only be prima facie, and
can be overthrown by evidence. (People v.
Archilla, G.R. No. L-15632, February 28, 1961)
Q: The RTC declared Celerina presumptively
dead after her husband, Ricardo, had filed a
petition for declaration of absence or
presumptive death for the purpose of
remarriage. Ricardo remarried thereafter. In
his petition for declaration of absence or
presumptive death, Ricardo alleged that he
and Celerina rented an apartment
somewhere in San Juan, Metro Manila, after
they had gotten married. After a year, they
moved to Tarlac City. They were engaged in
the buy and sell business. Ricardo claimed
that their business did not prosper. As a
result, Celerina convinced him to allow her to
work as a domestic helper in Hong Kong.
Ricardo initially refused but because of
Celerina's insistence, he allowed her to work
abroad. She allegedly applied in an
employment agency in Ermita, Manila. She
left Tarlac two months after and was never
heard from again. Ricardo further alleged
that he exerted efforts to locate Celerina. He
went to Celerina's parents in Cubao, Quezon
City, but they, too, did not know their
daughter's whereabouts. He also inquired
 Civil Law
about her from other relatives and friends,
but no one gave him any information.
Ricardo claimed that it was almost 12 years
from the date of his RTC petition since
Celerina left. He believed that she had passed
away. According to Celerina, her true
residence was in Neptune Extension,
Congressional Avenue, Quezon City. This
residence had been her and Ricardo's
conjugal dwelling until Ricardo left. As a
result of Ricardo's misrepresentation, she
was deprived of any notice of and
opportunity to oppose the petition declaring
her presumptively dead. Celerina claimed
that she never resided in Tarlac. She also
never left and worked as a domestic helper
abroad. Neither did she go to an employment
agency. She also claimed that it was not true
that she had been absent for 12 years.
Ricardo was aware that she never left their
conjugal dwelling in Quezon City. It was he
who left the conjugal dwelling to cohabit with
another woman. Celerina referred to a joint
affidavit executed by their children to
support her contention that Ricardo made
false allegations in his petition. Is the
reappearance not a sufficient remedy since it
will only terminate the subsequent marriage
but not nullify the effects of the declaration
of her presumptive death and the subsequent
marriage?
A: YES. The proper remedy for a judicial
declaration of presumptive death obtained by
extrinsic fraud is an action to annul the
judgment. An affidavit of reappearance is not the
proper remedy when the person declared
presumptively dead has never been absent.
The filing of an affidavit of reappearance is an
admission on the part of the first spouse that his
or her marriage to the present spouse was
terminated when he or she was declared absent
or presumptively dead. Moreover, a close
reading of the entire Article 42 reveals that the
termination of the subsequent marriage by
reappearance is subject to several conditions.
The existence of these conditions means that
reappearance does not always immediately
cause the subsequent marriage's termination.
Reappearance of the absent or presumptively
dead spouse will cause the termination of the
subsequent marriage only when all the
conditions enumerated in the Family Code are
present. Hence, the subsequent marriage may
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
still subsist despite the absent or presumptively
dead spouse's reappearance.
A subsequent marriage contracted in bad faith,
even if it was contracted after a court
declaration of presumptive death, lacks the
requirement of a well-founded belief that the
spouse is already dead. The first marriage will
not be considered as validly terminated.
Marriages contracted prior to the valid
termination of a subsisting marriage are
generally considered bigamous and void. Only a
subsequent marriage contracted in good faith is
protected by law. Therefore, the party who
contracted the subsequent marriage in bad faith
is also not immune from an action to declare his
subsequent marriage void for being bigamous.
The prohibition against marriage during the
subsistence of another marriage still applies.
Since an undisturbed subsequent marriage
under Article 42 of the Family Code is valid until
terminated, the "children of such marriage shall
be considered legitimate, and the property
relations of the spouses in such marriage will be
the same as in valid marriages." If it is
terminated by mere reappearance, the children
of the subsequent marriage conceived before the
termination shall still be considered legitimate.
Moreover, a judgment declaring presumptive
death is a defense against prosecution for
bigamy.
It is true that in most cases, an action to declare
the nullity of the subsequent marriage may
nullify the effects of the subsequent marriage,
specifically, in relation to the status of children
and the prospect of prosecuting a respondent for
bigamy. However, "a Petition for Declaration of
Absolute Nullity of Void Marriages may be filed
solely by the husband or wife." This means that
even if Celerina is a real party in interest who
stands to be benefited or injured by the outcome
of an action to nullify the second marriage, this
remedy is not available to her. Therefore, for the
purpose of not only terminating the subsequent
marriage but also of nullifying the effects of the
declaration of presumptive death and the
subsequent marriage, mere filing of an affidavit
of reappearance would not suffice. Celerina's
choice to file an action for annulment of
judgment will, therefore, lie. (Celerina J. Santos v.
Ricardo T. Santos, G.R. 187061, October 8, 2014,
as penned by J. Leonen)
NOTE: A mere filing of an affidavit of
64
 Marriage under the Family Code
reappearance would not suffice for the purpose
of terminating the subsequent marriage and also
of nullifying the effects of the declaration of
presumptive death and the subsequent
marriage. Celerina does not admit to having
been absent. She also seeks not merely the
termination of the subsequent marriage but also
the nullification of its effects. A subsequent
marriage contracted in bad faith, even if it was
contracted after a court declaration of
presumptive death, lacks the requirement of a
well-founded belief that the spouse is already
dead; the first marriage will not be considered as
validly terminated. Hence, Celerina’s choice to
file an action for annulment of judgment is the
proper remedy as annulment of judgment is the
remedy when the RTC’s judgment, order, or
resolution has become final, and the remedies of
new trial, appeal, petition for relief (or other
appropriate remedies) are no longer available
through no fault of the petitioner. (Celerina J.
Santos v. Ricardo T. Santos, G.R. No. 187061,
October 8, 2014)
Effect if both parties in the subsequent
marriage under Article 41 acted in bad faith
1. The subsequent marriage is void ab initio.
2. All donations propter nuptias made by one
in favour of the other are revoked by
operation of law.
3. All testamentary dispositions made by one
in favour of the other are revoked by
operation of law.
4. The parties shall be liable for the crime of
bigamy. (Rabuya, 2009)
Termination of Subsequent Bigamous
Marriage
The recording of the affidavit of reappearance of
the absent spouse in the civil registry of the
residence of the parties to the subsequent
marriage shall automatically terminate the
terminable bigamous marriage (subsequent
marriage) unless there is a judgment annulling
the previous marriage or declaring it void ab
initio. (FC, Art. 42)
In Art. 42, no judicial proceeding to annul a
subsequent marriage contracted under Art. 41 is
necessary. Also, the termination of the
subsequent marriage by affidavit provided for in
Art. 42 does not preclude the filing of an action
in court to prove the reappearance of the
absentee and obtain a declaration of dissolution
65
or termination of the subsequent marriage. (SSS
v. Jarque Vda. De Bailon, G.R. No. 165545, March
24, 2006
Q: Gregorio married Janet. When he was
employed overseas, he was informed that
Janet left. Five years later, he filed an action
for her to be declared presumptively dead
without alleging that he wishes to remarry.
Will his action prosper?
A: NO. A petition to declare an absent spouse
presumptively dead may not be granted in the
absence of any allegation that the spouse
present will remarry. (Republic v. Nolasco, G.R.
No. 94053, March 17, 1993)
Q: What is the effect if the parties to the
subsequent marriage obtain knowledge that
the spouse absent has reappeared?
A: NONE. If the absentee reappears, but no step
is taken to terminate the subsequent marriage,
either by affidavit or by court action, such
absentee's mere reappearance, even if made
known to the spouses in the subsequent
marriage, will not terminate such marriage. (SSS
v. Jarque Vda. De Bailon, G.R. No. 165545, March
24, 2006)
Any interested party of the parties, including the
parents, their children, the present spouse, or
the subsequent spouse of the present spouse,
may file the sworn statement of reappearance of
the spouse who was absent. (Sta. Maria, 2010)
Q: Nilda was married to Dante on November
29, 1975. On December 2, 1975, Dante, a
member of the Armed Forces of the
Philippines, left Nilda and went to Jolo, Sulu,
where he was assigned. Since then, Nilda has
heard no news from Dante and has tried
everything to locate him by making inquiries
with his parents, relatives, and neighbors as
to his whereabouts, but unfortunately, they
also did not know where to find him. Thus,
on April 14, 2009, she filed before the RTC a
petition to declare Dante as presumptively
dead for the purpose of remarriage, alleging
that after the lapse of thirty-three (33) years
without any kind of communication from
him, she firmly believes that he is already
dead. Both RTC and CA ruled in favor of
Nilda. Is the ruling of the courts correct?
A: NO. Before a judicial declaration of
 Civil Law
presumptive death can be obtained, it must be
shown that the prior spouse had been absent for
four consecutive years and the present spouse
had a well-founded belief that the prior spouse
was already dead.
The "well-founded belief in the absentee's death
requires the present spouse to prove that
his/her belief was the result of diligent and
reasonable efforts to locate the absent spouse
and that based on these efforts and inquiries,
he/she believes that under the circumstances,
the absent spouse is already dead. It necessitates
exertion of active effort, not a passive one. As
such, the mere absence of the spouse for such
periods prescribed under the law, lack of any
news that such absentee spouse is still alive,
failure to communicate, or general presumption
of absence under the Civil Code would not
suffice.
In this case, Nilda testified that after Dante's
disappearance, she tried to locate him by making
inquiries with his parents, relatives, and
neighbors as to his whereabouts, but
unfortunately, they also did not know where to
find him. Other than making said inquiries,
however, Nilda made no further efforts to find
her husband. She could have called or proceeded
to the AFP headquarters to request information
about her husband but failed to do so. She did
not even seek the help of the authorities or the
AFP itself in finding him. (Republic v. Tampus,
G.R. No. 214243, March 16, 2016)
Q: When are non-bigamous subsequent
marriages void?
A: The subsequent marriage of a person whose
prior marriage has been annulled but contracted
said subsequent marriage without compliance
with Art. 52 of the FC, shall be VOID.
Before he contracts a subsequent marriage, he
must first comply with the requirement
provided for in Art. 52, viz:
The recording in the civil registries and
registries of properties of the following:
1. Judgment of annulment;
2. Partition;
3. Distribution of properties; and,
4. Delivery of presumptive legitimes.
Q: Ana Rivera had a husband, a Filipino
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
citizen like her, who was among the
passengers onboard a commercial jet plane
which crashed in the Atlantic Ocean ten (10)
years earlier, and has never been heard of
ever since. Believing that her husband had
died, Ana married Adolf Cruz Staedler, a
divorced German national born of a German
father and a Filipino mother residing in
Stuttgart. To avoid being required to submit
the required certificate of capacity to marry
from the German Embassy in Manila, Adolf
stated in the application for marriage license
stating that Adolf was a Filipino, the couple
got married in a ceremony officiated by the
Parish Priest of Calamba, Laguna in a beach
in Nasugbu, Batangas, as the local parish
priest refused to solemnize marriage except
in his church. Is the marriage valid? (2008
BAR)
A: If the missing husband was in fact dead at the
time the second marriage was celebrated, the
second marriage was valid. Actual death of a
spouse dissolves the marriage ipso facto
whether or not the surviving spouse had
knowledge of such fact. A declaration of
presumptive death even if obtained will not
make the marriage voidable because
presumptive death will not prevail over the fact
of death.
If the missing husband was in fact alive when the
second marriage was celebrated, the second
marriage was void ab initio because of a prior
subsisting marriage. Had Ana obtained a
declaration of presumptive death, the second
marriage would have been voidable. In both
cases, the fact that the German misrepresented
his citizenship to avoid having to present his
Certificate of Legal Capacity, or the holding of
the ceremony outside the church or beyond the
territorial jurisdiction of the solemnizing officer,
are all irregularities which do not affect the
validity of the marriage.
JUDICIAL DECLARATION
OF NULLITY OF MARRIAGE
Necessity of Judicial Declaration of Nullity of
Marriage
The absolute nullity of a previous marriage may
be invoked for purposes of remarriage on the
basis solely of a final judgment declaring such
previous marriage void. (FC, Art. 40)
66
 Marriage under the Family Code
There has yet to be a judgment declaring it void,
for it is solely on the basis of that final judgment
that a party can remarry. (Albano, 2013)
Remarriage is not the sole purpose of
declaration of nullity of a marriage, as it can be
declared void for other purposes. In Valdes v.
RTC, it was said that the law aims to do away
with any continuing uncertainty on the status of
the second marriage. (Valdez v. Gomez- Valdez,
G.R. No. 122749, July 31, 1996; Albano, 2013)
Prescriptive Period
The time for filing an action or defense for the
declaration of absolute nullity of marriage,
whether in a direct or collateral manner, does
not prescribe. (FC, Art. 39) (2002, 2006 BAR)
Any of the parties in a void marriage can file an
action for the declaration of nullity of marriage
even though such party is the wrongdoer.
Effect of death of a party in a petition for
declaration of nullity of marriages
1. Before the entry of judgment – The court
shall order the case closed and terminated
without prejudice to the settlement of estate
in proper proceedings.
2. After the entry of judgment – The decision
shall be binding upon the parties and their
successors-in-interest in the settlement of
the estate.
Petition for the declaration of nullity of
marriage by the heirs of a deceased person
after his death
The heirs cannot file for declaration of nullity of
marriage. The advent of the Rule on Declaration
of Absolute Nullity of Void Marriages marks the
beginning of the end of the right of the heirs of
the deceased spouse to bring a nullity of
marriage case against the surviving spouse. The
heirs can still protect their successional right, for
compulsory or intestate heirs can still question
the validity of the marriage of the spouses, not in
a proceeding for declaration of nullity but upon
the death of a spouse in a proceeding for the
settlement of the estate of the deceased spouse
filed in the regular courts.
However, with respect to nullity of marriage
cases commenced before the effectivity of A.M.
No. 02-11-10 and marriages celebrated during
67
the effectivity of the NCC, the doctrine laid down
in Niñal v. Bayadog still applies; that the children
have the personality to file the petition to
declare the nullity of marriage of their deceased
father to their stepmother as it affects their
successional rights. (De Dios Carlos v. Sandoval,
G.R. No. 179922, December 16, 2008)
Q: If the court denies a petition for
declaration of nullity of marriage based on
psychological incapacity, may a party to the
said case file another petition for declaration
of its nullity based on the absence of a
marriage license?
A: NO. A petition to declare the marriage void
due to the absence of marriage license, filed after
the court denied a petition to declare the
marriage void due to psychological incapacity is
barred by res judicata. There is only one cause of
action, which is the declaration of nullity of the
marriage. Hence, when the second case was filed
based on another ground, there was a splitting of
a cause of action which is prohibited. (Mallion v.
Alcantara, G.R. No. 141528, October 31, 2006)
Q: Is the declaration of nullity of marriage
applied prospectively?
A: NO, it retroacts to the date of the celebration
of the marriage. Although the judicial
declaration of nullity of a marriage on the
ground of psychological incapacity retroacts to
the date of the celebration of the marriage
insofar as the vinculum between the parties is
concerned, it must be noted that the marriage is
not without legal consequences or effects. One
such consequence or effect is the incurring of
criminal liability for bigamy. To hold otherwise
would be to render nugatory the State’s penal
laws on bigamy as it would allow individuals to
deliberately ensure that each marital contract be
flawed in some manner, and to thus escape the
consequences of contracting multiple marriages.
(Tenebro v. CA, G.R. No. 150758, February 18,
2004)
Q: Is a decree of nullity of the first marriage
required before a subsequent marriage can
be entered into validly?
A:
GR: Under Art. 40 of the FC, the absolute nullity
of a previous marriage may be invoked for
purposes of remarriage on the basis solely of a
final judgment declaring such previous marriage
 Civil Law
void.
XPN: If the second marriage, however, took
place prior to the effectivity of the FC, there is no
need for judicial declaration of nullity of the first
marriage pursuant to the prevailing
jurisprudence at that time. (Rabuya, 2006)
NOTE: Art. 40 is applicable to remarriages
entered into after the effectivity of the FC on
August 3, 1988, regardless of the date of the first
marriage. Besides, under Art. 256 of the FC, said
Article is given “retroactive effect” insofar as it
does not prejudice or impair vested or acquired
rights in accordance with the Civil Code or other
laws”. (Atienza v. Brillantes, A.M. No. MTJ-92-706,
March 29, 1995)
Q: While his first marriage is subsisting,
Veronico married Leticia, which marriage
was later declared void on the ground of
psychological incapacity. When Veronico got
married for the third time, Leticia filed a case
for bigamy against him. For his defense,
Veronico claims that effects of the nullity of
his marriage with Leticia retroacts to the
date when it was contracted, hence, he is not
guilty of bigamy for want of an essential
element – the existence of a valid previous
marriage. Rule on Veronico’s argument.
A: Veronico’s argument has no merit. Art. 349 of
the RPC penalizes the mere act of contracting a
second or subsequent marriage during the
subsistence of a previous valid marriage. Here,
as soon as the second marriage to Leticia was
celebrated, the crime of bigamy had already
been consummated as the second marriage was
contracted during the subsistence of the valid
first marriage. (Tenebro v. CA, G.R. No. 150758,
February 18, 2004)
EFFECTS OF JUDICIAL DECLARATION OF
NULLITY OF MARRIAGE
1. Status of the Children
(1990, 2010 BAR)
GR: Children conceived and born outside a valid
marriage or inside a void marriage are
illegitimate.
XPNs:
1. Legitimate if the marriage is void:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
a. On the ground of psychological
incapacity of either or both parties;
b. Due to the non-compliance with the
requirements set forth under
Article 52 of the Family Code.
2. Legitimate if the children were conceived or
born before the judgment of annulment or
absolute nullity of the marriage under
Article 36 has become final and executory.
(FC, Art. 54, 1st sentence)
3. Legitimate if the children were conceived or
born of the subsequent marriage under
Article 53. (FC, Art. 54, 2nd sentence)
2. Property Relations
GR: Either Article 147 or 148 (Co-Ownership) of
the Family Code will apply.
Article 147 applies if the parties do not suffer
any legal impediment or they are legally
capacitated to enter marriage but nonetheless
void. All properties acquired are made through
the joint efforts and industry of parties, thus
properties, wages or income is divided equally
among them.
Article 148 applies if the parties suffer legal
impediment, i.e. due to age or relationship
pursuant to Article 37 FC (incestuous marriages)
and Article 38 FC (by reason of public policy).
Here, the properties, wages or income acquired
during marriage are divided according to actual
contributions made.
XPN: If the subsequent marriage is void for non-
compliance with Article 40 of the Family Code,
the property relations of the void subsequent
marriage are governed either by absolute
community or the conjugal partnership of gains,
as the case may be, unless the parties agree to a
complete separation of property in a marriage
settlement before marriage. (Diño vs. Diño, G.R.
178044, January 29, 2011)
Q: Is the declaration of nullity of marriage
applied prospectively?
A: NO. It retroacts to the date of the celebration
of the marriage. It is as if the marriage did not
happen at all. (Niñal v. Bayadog, G.R. No. 133778,
March 14, 2000)
Q: When a marriage was declared null and
68
 Marriage under the Family Code
void, does it carry with it any legal effects?
A: YES. When the ground for the declaration of
nullity of marriage is psychological incapacity,
the Supreme Court ruled that insofar as State’s
penal laws on bigamy, the declaration of nullity
of marriage does not retroact from the date of
celebration. Thus, there is still criminal liability
of bigamy although there is a declaration of
nullity of marriage. (Tenebro v. CA, G.R. No.
150758, February 18, 2004)
Q: Is a decree of nullity of the first marriage
required before a subsequent marriage can
be entered into validly?
A:
GR: Under the Art. 40 of the FC, the absolute
nullity of a previous marriage may be invoked
for purposes of remarriage on the basis solely of
a final judgment declaring such previous
marriage void.
XPNs:
1. If parties merely signed the marriage
contract, i.e. without the presence of the
solemnizing officer.
NOTE: The mere private act of signing a
marriage contract bears no semblance to a
valid marriage and, thus, needs no judicial
declaration of nullity of marriage. (Morigo
vs. People, G.R. 145226, February 06, 2004)
2. If one of the parties was a victim of identity
theft. Here, the victim discovered that she
was already married to a Korean national
upon receipt of her NSO’s CENOMAR. The
SC affirmed the trial court’s order for
correction of entry under Rule 108 of ROC
without need of declaration of nullity of the
marriage since there is no marriage to be
declared void in the first place. (Republic vs
Olaybar, G.R. 189538, February 10, 2014)
3. Proxy marriages conducted in the
Philippines.
4. Same sex marriage celebrated abroad
involving Filipino citizens by reason of
public policy. Same sex marriage contracted
by a Filipino citizen is not recognized as a
valid marriage in the Philippines pursuant
Article 1 of FC and Article 15 of the NCC.
69
NOTE: The marriage between the deceased
Teodorico and respondent Marietta was
solemnized on 08 May 1958. The law in force at
that time was the Civil Code, not the Family
Code, which took effect only on 03 August 1988.
Article 256 of the Family Code itself limited its
retroactive governance only to cases where it
thereby would not prejudice or impair vested or
acquired rights in accordance
with the Civil Code or other laws. (Armas v.
Calisterio, G.R. No. 136467, April 6, 2000)
XPN to XPN: In ruling Jarillo and Montañez,
Supreme Court applied Art. 40 retroactively,
though the second marriage took place after the
effectivity of the FC, holding that said provision
is a rule of procedure. The retroactive
application of procedural laws is not violative of
any right of a person who may feel that he is
adversely affected. The reason is that as a
general rule, no vested right may attach to, nor
arise from, procedural laws. (Jarillo v. People,
G.R. No. 164435, September 29, 2009) (Montañez
v. Cipriano, G.R. No. 181089, October 22, 2012)
Q: Will the nullity of the subsequent
marriage constitute a prejudicial question in
the crime of bigamy?
A: NO. The Supreme Court held that the
subsequent declaration of the second marriage
could not be a ground for the dismissal of the
criminal case for bigamy. Accordingly, the
outcome of the civil case for annulment of
petitioner's marriage to [private complainant]
had no bearing upon the determination of
petitioner's innocence or guilt in the criminal
case for bigamy because all that is required for
the charge of bigamy to prosper is that the first
marriage be subsisting at the time the second
marriage is contracted.
What makes a person criminally liable
for bigamy is when he contracts a second or
subsequent marriage during the subsistence of a
valid first marriage. The parties to the marriage
should not be permitted to judge for themselves
its nullity, for the same must be submitted to the
judgment of competent courts and only when
the nullity of the marriage is so declared can it
be held as void, and so long as there is no such
declaration the presumption is that the marriage
exists. Therefore, he who contracts a second
marriage before the judicial declaration of the
first marriage assumes the risk of being
prosecuted for bigamy.
 Civil Law
Finally, it is a settled rule that the criminal
culpability attaches to the offender upon the
commission of the offense, and from that instant,
liability appends to him until extinguished as
provided by law. It is clear then that the crime
of bigamy was committed by petitioner from the
time he contracted the second marriage with
private respondent. Thus, the finality of the
judicial declaration of nullity of petitioner's
second marriage does not impede the filing
of a criminal charge for bigamy against him.
(Capili v. People, G.R. No. 183805, July 3, 2013)
NOTE: If the ground in nullifying the subsequent
marriage is due to psychological incapacity, in
such ground, it cannot be a prejudicial question
in the criminal case of bigamy because as held in
Tenebro v. CA, the nullification still carries the
legal effect in incurring criminal liability for
bigamy.
Although the judicial declaration of nullity of a
marriage on the ground of psychological
incapacity retroacts to the date of the
celebration of the marriage insofar as the
vinculum between the parties is concerned, it
must be noted that the marriage is not without
legal consequences or effects. One such
consequence or effect is the incurring of criminal
liability for bigamy. To hold otherwise would be
to render nugatory the State’s penal laws on
bigamy as it would allow individuals to
deliberately ensure that each marital contract be
flawed in some manner, and to thus escape the
consequences of contracting multiple marriages.
(Tenebro v. CA, G.R. No. 150758, February 18,
2004)
Q: While his first marriage is subsisting,
Veronico married Leticia, which marriage
was later declared void on the ground of
psychological incapacity. When Veronico got
married for the third time, Leticia filed a case
for bigamy against him. For his defense,
Veronico claims that effects of the nullity of
his marriage with Leticia retroacts to the
date when it was contracted, hence, he is not
guilty of bigamy for want of an essential
element – the existence of a valid previous
marriage. Rule on Veronico’s argument.
A: Veronico’s argument has no merit. Art. 349 of
the RPC penalizes the mere act of contracting a
valid second or subsequent marriage during the
subsistence of a previous valid marriage. Here,
as soon as the second marriage to Leticia was
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
celebrated, the crime of bigamy had already
been consummated as the second marriage was
contracted during the subsistence of the valid
first marriage. (Tenebro v. CA, G.R. No. 150758,
February 18, 2004)
3. Donations Propter Nuptias
GR: Donations propter nuptias are revocable at
the instance of the donor.
XPNs:
1. If the donation propter nuptias is embodied
in a marriage settlement, the donation is
void under Article 86 par. 1 of the Family
Code;
2. If the subsequent marriage is judicially
declared void by reason of Article 40 of the
Family Code, the donation remains valid;
XPN to the XPN: If the donee spouse contracted
the marriage in bad faith, all donations are
revoked by operation by law.
When both parties to a subsequent marriage
contracted in bad faith under Article 44 of the
Family Code, all donations propter nuptias are
revoked by operation by law.
4. Designation as Beneficiary in
Insurance Policy
If the subsequent marriage is judicially declared
void by reason of Article 40 of the Family Code,
the innocent spouse may revoke such
designation if the beneficiary spouse acted in
bad faith, even if such designation be stipulated
as irrevocable. However, if the marriage was not
judicially declared void and the designation in
the insurance policy is irrevocable, the insured
cannot change such designation.
5. Right to inherit
1. Intestate Succession: The parties cannot
inherit from each other by way of intestate
succession since they are no longer
considered as spouses;
2. Testate Succession:
GR: Any testamentary provision by one in
favor of the other shall remain valid.
70
 Marriage under the Family Code
XPNs:
1. If the subsequent marriage is rendered
void by non-compliance with Article 40
of the Family Code, the spouse who
contracted the subsequent marriage in
bad faith is disqualified to inherit from
the innocent spouse.
2. If the marriage is void by reason of the
bad faith of both parties under Article
41 of the Family Code, all testamentary
dispositions made by one in favor of the
other are revoked by operation of law.
NOTE: The parties are not disqualified to
institute each other as voluntary heir in their
respective wills to be executed after the judicial
declaration of nullity
6. Parental Authority
and Custody of Children
GR: Since the children are considered as
illegitimate, the parental authority and the
custody of the children will be exercised by their
mother. The illegitimate father, even if he admits
paternity, will only have visitation rights.
XPN: If the marriage is declared void by reason
of psychological incapacity of either or both of
the parties, the parental authority and the
custody will be exercised by the parent
designated by the court. If a child is below seven
years old, the law presumes the mother is the
best custodian unless the court decides
otherwise for compelling reasons. (FC, Art. 213)
Effects of Decree of Annulment
1. Termination of the marital bond, as if it had
never been entered into, but the effects
thereof are not totally wiped out;
2. Children conceived or born before the
judgment of annulment has become final
and executory are considered legitimate;
3. Absolute community property regime or the
conjugal partnership property regime is
terminated or dissolved and the same shall
be liquidated in accordance with the
provisions of Arts. 102 and 129;
4. The innocent spouse may revoke the
designation of the other spouse who acted in
bad faith as beneficiary in the insurance
policy even if the designation is irrevocable;
5. The spouse who contracted the marriage in
bad faith shall be disqualified to inherit from
the innocent spouse by testate and intestate
71
succession; and
6. Donation propter nuptias.
GR: It shall remain valid.
XPN: If the donee spouse acted in bad faith,
the donor may revoke the donation.
Liquidation of Property if either spouse
contracted the marriage in bad faith
His or her share of the net profits of the
community property or conjugal partnership
property shall be forfeited in favor of the
common children or if there be none, the
children of the guilty spouse by previous
marriage or in default thereof, the innocent
spouse.
The final judgment of nullity or annulment
shall provide the following:
1. Liquidation, partition, and distribution of
the properties of the spouses;
2. Custody and support of the common
children; and
3. Delivery of their presumptive legitimes.
Unless such matters had already been
adjudicated in previous judicial proceedings, in
which case, the final judgment of nullity or
annulment need not provide for those which
have already been adjudicated.
NOTE: Where there was a failure to record in
the civil registry and registry of property the
judgment of annulment or absolute nullity of the
marriage, the partition and distribution of the
property of the spouses, and the delivery of the
children’s presumptive legitimes, it shall not
affect third persons. (FC, Art. 52)
Forms of presumptive legitime:
1. Cash
2. Property
3. Sound security
Remarriage after declaration of nullity or
annulment
A person must comply with the requirements of
Art.52 of the FC before he can remarry, viz, the
recording and registration of: (JPDD)
1. Judgment of Annulment
 Civil Law

2. Partition
3. Distribution of properties; and
4. Delivery of presumptive legitime.

UNIVERSITY OF SANTO TOMAS 72

2021 GOLDEN NOTES
 Marriage under the Family Code
Void vs. Voidable marriages

BASIS VOID MARRIAGE VOIDABLE MARRIAGE

Valid until annulled

Status of Void ab initio (the marriage is considered
marriage never to have taken place)

Declaration of Nullity of Marriage Annulment of Marriage

Petition filed

GR: Offended Spouse

GR: Solely by the husband or wife.
XPNs:
XPNs: Any real party in interest, only in the 1. Parents or guardians in
Who may following cases: cases of insanity
file 2. Parents or guardians
1. Nullity of marriage cases before the party reaches
commenced before the effectively of 21 years old on the
A.M. No. 02-11-10 - March 15, 2003. ground of Lack of Parental
2. Marriages celebrated during the Authority
effectivity of the Civil Code. (De Dios
Carlos v. Sandoval, G.R. No. 179922,
December 16, 2008)
3. A party to the previous marriage
may seek the nullity of the
subsequent marriage on the ground
that the subsequent marriage is
bigamous. (Estrellita Juliano-Llave v.
Republic of the Philippines, G.R. No.
169766, March 20, 2011)

For direct proceeding – only during the

lifetime of the parties GR: Within 5 years from discovery
Prescriptive of the ground
period For collateral attack – no prescriptive period
XPNs:
1. Lifetime of spouse in cases
of insanity
2. Before the party reaches
21 in cases where parents
or guardians may file
Annulment
Either directly or collaterally
How may be Judicial declaration is necessary
impugned

Legitimate
GR: Illegitimate;
Children
XPNs: Those conceived or born of marriages
declared void under:
1. Art. 36 (Psychological incapacity) of
the Family Code, or
2. Art. 52 in relation to Art. 53 of the
Family Code

73
 Civil Law

NOTE: If a person falls under a void marriage

fails to get a Judicial Decree of Nullity of
Marriage and remarries, the child in his
second marriage is considered illegitimate.
(FC, Art. 40)

GR: Governed by rules on absolute

GR: Property relations are governed by rules community.
Property on co-ownership Article 147 (without legal
impediment) or Article 148 (with legal XPN: Unless another system is
impediments mentioned under Article 37 and agreed upon in marriage
Article 38). settlement

XPN: If the marriage is declared void by

reason of non-compliance with Article 40 of
the FC, the absolute community or the
conjugal partnership, as the case may be,
unless parties agree to complete separation
of property in a marriage settlement prior
marriage shall be dissolved and liquidated.
(FC, Art. 43 (2), in relation to Art. 50)

Necessary
GR: There is no necessity to obtain a judicial
Judicial declaration
Declaration
XPN: For purposes of remarriage, Judicial
declaration of nullity is required.

UNIVERSITY OF SANTO TOMAS 74

2021 GOLDEN NOTES
 Marriage under the Family Code
III. VOIDABLE MARRIAGES Q: Aurora prayed for the annulment of her
marriage with Fernando on the ground of
A voidable marriage is considered valid and fraud in obtaining her consent after having
produces all its civil effects until it is set aside by learned that several months prior to their
final judgment of a competent court in an action marriage, Fernando had pre-marital
for annulment. (Rabuya, 2018) Simply, a relationship with a close relative of his.
voidable marriage is valid until it is annulled.
(Paras, 2016) According to her, the "non-divulgement to
her of such pre-marital secret" constituted
Determination of the unsoundness of mind as fraud in obtaining her consent within the
a ground for annulment contemplation of Art. 46 of the FC. Is the
concealment by the husband of a pre-marital
It is essential that the mental incapacity must relationship with another woman a ground
relate specifically to the contract of marriage for annulment of marriage?
and the test is whether the party at the time of
the marriage was capable of understanding the A: NO. The non-disclosure to a wife by her
nature and consequences of the marriage. husband of his pre-marital relationship with
(Rabuya, 2018) another woman is not a ground for annulment of
marriage. For fraud as a vice of consent in
Fraud as a ground for annulment marriage, which may be a cause for its
annulment, comes under Art. 46 of the FC, the
Fraud, as distinguished from fraud as a ground fraud, as vice of consent, is limited exclusively by
for annulment of contracts, refers to the non- law to those kinds or species of fraud
disclosure or concealment of some facts deemed enumerated in Art. 46 in relation to Art. 45(3).
material to the marital relations. (Rabuya, 2009)
Q: Under what conditions, respectively, may
No other misrepresentation or deceit as to drug addiction be a ground, if at all, for the
character, health, rank, fortune or chastity shall declaration of nullity of marriage, annulment
constitute such fraud as will give ground for of marriage, and legal separation? (1997
action for the annulment of marriage. (FC, Art. BAR)
46, last par.)
A:
Circumstances constituting FRAUD under
Art. 45(3) (1996, 1997, 2002, 2003, 2006
BAR) a. The drug addiction
must amount to
1. Non-disclosure of a previous conviction by Declaration psychological
final judgment of the other party of a crime of Nullity of incapacity to comply
involving moral turpitude; Marriage with the essential
2. Concealment by the wife of the fact that at obligations of
the time of marriage, she was pregnant by a marriage;
man other than her husband;
3. Concealment of sexually transmissible b. It must be antecedent
disease, regardless of its nature, existing at (existing at the time of
the time of marriage; or marriage), grave and
4. Concealment of drug addiction, habitual incurable.
alcoholism or homosexuality or
lesbianism existing at the time of the a. The drug addiction
marriage. (FC, Art. 46) Annulment must be concealed;
of
NOTE: Where there has been no Marriage b. It must exist at the
misrepresentation or fraud, that is, when the time of marriage;
husband at the time of the marriage knew that
the wife was pregnant, the marriage cannot be c. There should be no
annulled. (Buccat v. Buccat, G.R. No. 47101, April cohabitation with full
25, 1941) knowledge of the drug

75
 Civil Law

addiction; imminent and grave evil upon his person or

property, or upon the person or property of his
d. The case is filed within spouse, descendants, or ascendants, to give his
five (5) years from consent.” (NCC, Art. 1335, par. 2,)
discovery.
Undue influence – control over one’s will
a. There should be no
condonation or XPN: However, if the same having disappeared
Legal consent to the drug or ceased, such party thereafter freely cohabited
Separation addiction; with the other as husband and wife.

b. The action must be A threat to enforce one's claim through

filed within five (5) competent authority however, if the claim is just
years from the or legal, does not vitiate consent.
occurrence of the
cause; Impotence or physical incapacity

c. Drug addiction arises Impotence (impotentia copulandi) refers to lack

during the marriage
and not at the time of
marriage.
Q: If drug addiction, habitual alcoholism,
lesbianism or homosexuality should occur
only during the marriage, would these
constitute grounds for a declaration of nullity
or for legal separation, or would they render
the marriage void? (2002 BAR)
of power of copulation and not to mere sterility
(impotentia genrandi) which refers to ability to
procreate. The test is not the capacity to
reproduce, but the capacity to copulate. (Paras,
2008) Although impotency carries with it
sterility, a sterile person is not necessarily
impotent. (Paras, 2016)
Requisites for impotence to be a ground for
annulment of marriage

A: If drug addiction, habitual alcoholism, 1. Exists at the time of the Celebration of

lesbianism or homosexuality should occur marriage;
during the marriage, they will: 2. Permanent (does not have to be absolute);
3. Incurable;
1. Not constitute grounds for declaration of 4. Unknown to the other spouse; and,
nullity (FC, Art. 35) 5. The other spouse must not also be Impotent.
2. Not constitute grounds to render the
marriage voidable (FC, Art. 45 and 46); and Presumption of potency of one spouse
3. Constitute grounds for legal separation. (FC,
Art. 55) GR: Presumption is in favor of potency.

Vitiated consent as a ground for annulment XPN: Doctrine of triennial cohabitation.

of marriage
There is vitiation of consent when:
GR: Consent of either party was obtained by
force, intimidation or undue influence.
Force or violence – “There is violence when, in
order to wrest consent, serious or irresistible
force is employed.
Intimidation – “There is intimidation when one
of the contracting parties is compelled by a
reasonable and well-grounded fear of an
Doctrine Triennial cohabitation
If after 3 years of living together with her
husband, the wife remained a virgin, the
husband is presumed to be impotent. (Rabuya,
2018) The husband will have to overcome this
presumption.
Relative impotency may now be invoked as a
ground for annulment. The Committee has
decided to include relative impotency of one
party because there are cases where a person is
impotent with respect to his spouse but not with

UNIVERSITY OF SANTO TOMAS 76

2021 GOLDEN NOTES
 Marriage under the Family Code
other men or women. (Sempio Diy, 1995)
Q: The day after John and Marsha got
married, John told her that he was impotent.
Marsha continued to live with John for two
years. Is Marsha now estopped from filing an
annulment case against John? (2007 BAR)
A: NO. Unlike the other grounds for annulment
of voidable marriage which are subject to
ratification by continued cohabitation, the law
does not allow ratification in case of impotency.
Requisites of Affliction of a Sexually
Transmitted Disease (STD) as a Ground for
Annulment
1. One of the parties is afflicted with STD;
2. STD must be:
a. Existing at the time the marriage is
celebrated;
b. Serious; and
c. Apparently Incurable;
3. The other spouse is not aware of the other’s
affliction; and
4. The injured party must be free from STD.
NOTE: Compulsory HIV testing shall be allowed
when it is necessary to resolve relevant issues
under E.O. No. 209, otherwise known as the
Family Code of the Philippines. (R.A. No. 11166,
Sec. 30 (b))
Confidential HIV and AIDS information may be
released by HIV testing facilities without consent
when responding to a subpoena duces tecum and
subpoena ad testificandum issued by a court
with jurisdiction over a legal proceeding where
the main issues it the HIV status of the
individual. Provided:
1. That the confidential medical record, after
having been verified for accuracy shall
remain anonymous and unlinked;
2. Shall be properly sealed by its lawful
custodian, hand-delivered to the court, and
personally opened by the judge; and
3. That the judicial or administrative
proceedings shall be held in executive
session. (R.A. No. 11166, Sec. 45 (c))
Q: Yvette was found to be positive for HIV
virus, considered sexually transmissible,
serious and incurable. Her boyfriend Joseph
77
was aware of her condition and yet married
her. After two (2) years of cohabiting with
Yvette, and in his belief that she would
probably never be able to bear him a healthy
child, Joseph now wants to have his marriage
with Yvette annulled on the ground that
Yvette has STD. Yvette opposes the suit
contending that Joseph is estopped from
seeking annulment of their marriage since he
knew even before their marriage that she
was afflicted with HIV virus. Can the action of
Joseph for annulment of his marriage with
Yvette prosper?
A: NO. Concealment of a sexually transmitted
disease may annul the marriage it there was
fraud existing unknown to the party concerned.
In this case, there was no fraud because Joseph
knew that Yvette was suffering from HIV when
he married her. (FC, Art. 46, par. 3)
Art. 45 v. 46 of the FC on STD as ground for
annulment
ARTICLE 45 ARTICLE 46
Affliction Concealment
Ground for Annulment
The fact of being The act of concealing
afflicted because it constitutes
fraud
Concealment
Not necessarily Necessary
Nature of the Disease
Must be serious and Does not have to be
incurable serious and incurable
PRESENCE OF PROSECUTOR
Role of the prosecutor or Solicitor General in
cases of annulment and judicial declaration
of nullity
The prosecutor or Solicitor General shall take
steps to prevent collusion between the parties
and to take care that evidence is not fabricated
or suppressed. Even if there is no suppression of
evidence, the public prosecutor has to make sure
that the evidence to be presented or laid down
before the court is no fabricated. Only the active
participation of the public prosecutor or the
Solicitor General will ensure that the interest of
the State is represented and protected in
proceedings for declaration of nullity of
marriages by preventing the fabrication or
suppression of evidence. (FC, Art. 48)
 Civil Law

NOTE: The non-intervention of the prosecutor is

not fatal to the validity of the proceedings in
cases where the respondent in a petition for
annulment vehemently opposed the same and
where he does not allege that evidence was
suppressed or fabricated by any of the parties.
(Tuason v. CA, G.R. No. 116607, April 10, 1996)

Collusion – Where for purposes of getting an

annulment or nullity decree, the parties come up
with an agreement making it appear that the
marriage is defective due to the existence of any
of the grounds for the annulment of marriage or
the declaration of its nullity provided by law and
agreeing to represent such false or non-existent
cause of action before the proper court. (Sta.
Maria, 2010)

Actions prohibited in annulment and

declaration of absolute nullity of marriage
cases

1. Compromise;
2. Confession of judgment;
3. Stipulation of facts;
4. Summary judgment; and
5. Judgment on the pleadings.

What the law prohibits is a judgment based

exclusively or mainly on defendant's confession.
(Ocampo v. Florenciano, G.R. No. L-13553,
February 23, 1960) Thus, stipulation of facts or
confession of judgment if sufficiently supported
by other independent substantial evidence to
support the main ground relied upon, may
warrant an annulment or declaration of absolute
nullity.

PENDENCY OF ACTION

During the pendency of the action for

annulment, declaration of absolute nullity of
marriage or legal separation, the Court shall, in
the absence of adequate written agreement
between the spouses, provide for the:

1. Support of the spouses;

2. Support and custody of the common
children;
3. Visitation rights of the other parent. (FC,
Art.49)

UNIVERSITY OF SANTO TOMAS 78

2021 GOLDEN NOTES
 Marriage under the Family Code
Voidable marriages and its ratification (1999, 2003, 2006, 2007, 2009 BAR)

GROUND RATIFICATION WHO MAY FILE WHEN TO FILE

Marriage of a Contracting party who By the contracting party Within 5 years after
party 18 years of failed to obtain whose parent did not attaining the age of 21.
age or over but parental consent: give consent.
below 21 Through free
solemnized cohabitation after
without the attaining the age of 21. Parent, guardian, or At any time before such
consent of the person having legal party has reached the
parents, guardian NOTE: The parents charge of the contracting age of 21.
or person having cannot ratify the party.
substitute marriage. The effect of
parental authority prescription on their
over the party, in part is that they are
that order barred from contesting
it but the marriage is
not yet cleansed of its
defect.

Insane spouse: GR: Sane spouse who At any time before the
Through free had no knowledge of the death of either party.
Either party was of cohabitation after other’s insanity
unsound mind coming to reason. During a lucid interval
XPN: Any relative, or after regaining sanity.
guardian or person
having legal charge of the
insane; or
Insane spouse during a
lucid interval or after
regaining sanity.

Consent of either Injured party: Through Injured party Within 5 years after the
party was free cohabitation with discovery of fraud.
obtained by fraud full knowledge of the
facts constituting the
fraud.

Vices of consent Injured party: Through Injured party Within 5 years from the
such as force, free cohabitation after time the force,
intimidation or the vices have ceased intimidation or undue
undue influence or disappeared. influence disappeared or
ceased.

Impotence Only the potent spouse

(impotencia May not be ratified but can file the action (,) Within 5 years after the
copulandi) and action may be barred and he or she must not celebration of marriage.
afflicted with STD by prescription only, have been aware of the
found to be serious which is 5 years after other’s impotency at the
and appears to be the marriage. time of the marriage.
incurable

79
 Civil Law
LEGAL SEPARATION
Legal separation is a legal remedy available to
parties in a valid but failed marriage for the
purpose of obtaining a decree from the court
entitling him or her certain reliefs such as the
right to live separately from each other (without
affecting the marital bond that exists between
them), the dissolution and liquidation of their
absolute community or conjugal partnership
property regime and the custody of their minor
children.
Nature of legal separation
An action for legal separation which involves
nothing more than bed-and-board separation of
the spouses is purely personal. The Civil Code
recognizes this:
1. By allowing only the innocent spouse and no
one else to claim legal separation;
2. By providing that the spouses can, by their
reconciliation, stop or abate the proceedings
and even rescind a decree of legal
separation already granted. (Lapuz v.
Eufemio, G.R. No. L-31429, January 31, 1972)
GROUNDS FOR LEGAL SEPARATION (FC, ART.
55) (1997, 2002, 2003, 2006, 2007 BAR)
1. Repeated physical violence or grossly
abusive conduct against petitioner, common
child, child of petitioner;
NOTE: Respondent’s child is not included
2. Attempt to corrupt or induce petitioner,
common child, child of petitioner to engage
in prostitution, or connivance in such
corruption or inducement;
3. Attempt by respondent against the life of
petitioner;
4. Final judgment sentencing respondent to
imprisonment of more than 6 years, even if
pardoned;
NOTE: The final judgment must be
promulgated during the marriage.
5. Drug addiction or habitual alcoholism of
respondent;
NOTE: It must exist after celebration of
marriage
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
6. Physical violence or moral pressure to
compel petitioner to change religious or
political affiliation;
7. Bigamous marriage subsequently contracted
by respondent in the Philippines or abroad;
8. Sexual infidelity or perversion;
NOTE: Sexual perversion includes all
unusual or abnormal sexual practices which
may be offensive to the feelings or sense of
decency of either the husband or wife.
9. Lesbianism or homosexuality of respondent;
and
NOTE: It must exist after celebration of
marriage
10. Abandonment of petitioner by respondent
without justifiable cause for more than 1
year.
Q: If a man commits several acts of sexual
infidelity, particularly in 2002, 2003, 2004,
2005, does the prescriptive period to file for
legal separation run from 2002? (2007 BAR)
A: The prescriptive period begins to run upon
the commission of each act of infidelity. Every
act of sexual infidelity committed by the man is a
ground for legal separation.
Q: Lucita left the conjugal dwelling and filed a
petition for legal separation due to the
physical violence, threats, intimidation, and
grossly abusive conduct she had suffered at
the hands of Ron, her husband. Ron denied
such and claimed that since it was Lucita who
had left the conjugal abode, then the decree
of legal separation should not be granted,
following Art. 56 par. 4 of the FC which
provides that legal separation shall be
denied when both parties have given ground
for legal separation. Should legal separation
be denied on the basis of Ron’s claim of
mutual guilt?
A: NO. Art. 56 par. 4 of the FC does not apply
since the abandonment that is a ground for legal
separation is abandonment without justifiable
cause for more than one year. In this case, Lucita
left Ron due to his abusive conduct. Such act
does not constitute the abandonment
contemplated in the said provision. Therefore,
there is no mutual guilt between them as there is
only one erring spouse. (Ong Eng Kiam v. CA, G.R
80
 Marriage under the Family Code
No. 153206, October 23, 2006)
NOTE: No criminal conviction is necessary to
issue a decree of legal separation. In legal
separation, preponderance of evidence is
enough. (Gandionco v. Penaranda, G.R. No. 79284,
November 27, 1987)
Act considered as acts of violence under R.A.
No. 9262
1. Causing, threatening to cause, or attempting
to cause physical harm to the woman or her
child;
2. Threatening to cause the woman or her
child physical harm;
3. Attempting to cause the woman or her child
physical harm;
4. Placing the woman or her child in fear of
imminent physical harm;
5. Attempting to compel or compelling the
woman or her child to:
a. Engage in conduct which the woman or
her child has the right to desist from; or
b. Desist from conduct which the woman or
her child has the right to engage in;
6. Attempting to restrict or restricting the
woman’s or her child’s freedom of
movement or conduct by:
a. Force, or
b. Threat of force;
c. Physical, or Other harm; or
d. Threat of physical or other harm; or
e. Intimidation directed against the woman
or child.
This shall include, but not limited to, the
following acts committed with the purpose
or effect of controlling or restricting the
woman’s or her child’s movement or
conduct:
a. Threatening to deprive or actually
depriving the woman or her child of
custody to her/his family;
b. Depriving or threatening to deprive the
woman or her children of financial
support legally due her or her family, or
deliberately providing the woman’s
children insufficient financial support;
c. Depriving or threatening to deprive the
woman or her child of a legal right;
d. Preventing the woman in engaging in
81
any legitimate profession, occupation,
business or activity or controlling the
victim’s own money or properties, or
solely controlling the conjugal or
common money, or properties.
e. Inflicting or threatening to inflict
physical harm on oneself for the
purpose of controlling her actions or
decisions;
f. Causing or attempting to cause the
woman or her child to engage in any
sexual activity which does not
constitute rape, by:
i. Force, or
ii. Threat of force;
iii. Physical harm, or
iv. Through intimidation directed
against the woman or her child
or her/his immediate family;
7. Inflicting or threatening to inflict physical
harm on oneself for the purpose of
controlling her actions or decisions;
8. Causing or attempting to cause the woman
or her child to engage in any sexual activity
which does not constitute rape, by:
i. Force, or
ii. Threat of force;
iii. Physical harm, or
iv. Through intimidation directed against
the woman or her child or her/his
immediate family
9. Engaging in purposeful, knowing, or
reckless conduct, personally or through
another that alarms or causes substantial
emotional or psychological distress to the
woman or her child. This shall include, but
not be limited to, the following acts:
a. Stalking or following the woman or her
child in public or private places;
b. Peering in the window or lingering
outside the residence of the woman or
her child;
c. Entering or remaining in the dwelling
or on the property of the woman or her
child against her/his will;
d. Destroying the property and personal
belongingness or inflicting harm to
animals or pets of the woman or her
child; and
e. Engaging in any form of harassment or
 Civil Law
violence; and
10. Causing mental or emotional anguish, public
ridicule or humiliation to the woman or her
child, including, but not limited to, repeated
verbal and emotional abuse, and denial of
financial support or custody of minor
children of access to the woman’s
child/children.
Protection Order
A protection order under R.A. 9262 is an order
issued under this act for the purpose of
preventing further acts of violence against a
woman or her child and granting other
necessary relief.
The relief granted under a protection order
serves the purpose of safeguarding the victim
from further harm, minimizing any disruption in
the victim’s daily life, and facilitating the
opportunity and ability of the victim to
independently regain control over her life. The
provisions of the protection order shall be
enforced by law enforcement agencies. The
protection orders that may be issued under this
Act are the Barangay Protection Order (BPO),
Temporary Protection Order (TPO) and
Permanent Protection Order (PPO).
Who may file Petition for Protection order
1. The offended party;
2. Parents or guardians of the offended party;
3. Ascendants, descendants or collateral
relatives within the fourth civil degree of
consanguinity or affinity;
4. Officers or social workers of the DSWD or
social workers of local government units
(LGUs);
5. Police officers, preferably those in charge of
women and children’s desks;
6. Punong barangay or Barangay Kagawad;
7. Lawyer, counselor, therapist or healthcare
provider of the petitioner; or
8. At least 2 concerned responsible citizens of
the city or municipality where the violence
against women and their children occurred
and who has personal knowledge of the
offense committed. (Sec. 9. R.A. 9262)
DEFENSES
Grounds for denial of petition for legal
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
separation (2006 BAR)
1. Condonation of the act complained of;
2. Consent to the commission of the
offense/act;
3. Connivance in the commission of the act;
4. Collusion in the procurement of decree of
LS;
5. Mutual Guilt;
6. Prescription: 5 yrs from occurrence of
cause;
7. Death of either party during the pendency of
the case (Lapuz-Sy v. Eufemio, G.R. No. L-
31429, January 31, 1972);
8. Reconciliation of the spouses during the
pendency of the case. (FC, Art. 56)
Prescriptive period for filing a petition for
legal separation
An action for legal separation shall be filed
within five years from the time of the occurrence
of the cause. (FC, Art. 57)
Failure to interpose prescription as a defense
When prescription was not interposed as a
defense, the courts can take cognizance thereof,
because actions seeking a decree of legal
separation, or annulment of marriage, involve
public interest and it is the policy of our law that
no such decree be issued if any legal obstacles
thereto appear upon the record.
This is an exception to the Rules of Court
provision that defenses not raised in the
pleadings will not be considered since
provisions on marriage are substantive in
nature. (Brown v. Yambao, G.R. No. L- 10699,
October 18, 1957)
Q: Rosa and Ariel were married in the
Catholic Church of Tarlac, Tarlac on January
5, 1988. In 1990, Ariel went to Saudi Arabia
to work. There, after being converted into
Islam, Ariel married Mystica. Rosa learned of
the second marriage of Ariel on January 1,
1992 when Ariel returned to the Philippines
with Mystica. Rosa filed an action for legal
separation on February 5, 1994.
a. Does Rosa have legal grounds to ask for
legal separation?
b. Has the action prescribed? (1994 BAR)
82
 Marriage under the Family Code
A:
a. YES. The abandonment of Rosa by Ariel for
more than one (1) year is a ground for legal
separation unless upon returning to the
Philippines, Rosa agrees to cohabit with
Ariel which is allowed under the Muslim
Code. In this case, there is condonation. The
contracting of a subsequent bigamous
marriage whether in the Philippines or
abroad is a ground for legal separation
under Art. 55 par. 7 of the FC. Whether the
second marriage is valid or not, Ariel having
converted into Islam, is immaterial.
b. NO. The aggrieved spouse must file the
action within 5 years from the occurrence of
the cause. (FC, Art. 57) The subsequent
marriage of Ariel could not have occurred
earlier than 1990, the time he went to Saudi
Arabia. Hence, Rosa has until 1995 to bring
the action under the FC.
COOLING – OFF PERIOD
An action for legal separation shall be in no case
tried before 6 months has elapsed since the
filing of the petition, to enable the contending
spouses to settle differences. In other words, it is
for possible reconciliation. (FC, Art. 58)
GR: The 6 months cooling-off period is a
mandatory requirement. Petition shall not be
granted if it is not observed. (Pacete v. Carriaga,
G.R. No. L-53880, March 17, 1994)
Note: Matters other than the merits of legal
separation can be determined by the court
without waiting for the lapse of the 6-month
period.
XPN: There is no cooling-off period if the
grounds alleged are those under R.A. 9262.
(Anti-Violence against Women and Children Act)
The court can immediately hear the case.
RECONCILIATION EFFORTS
The Court is required to take steps toward the
reconciliation of the spouses and must be fully
satisfied that, despite such efforts, reconciliation
is highly improbable. (FC, Art. 59)
CONFESSION OF JUDGMENT
Rule in rendering a judgment of legal
83
separation based upon a stipulation of facts
or confession of judgment
A decree of legal separation cannot be issued
solely on the basis of a stipulation of facts or a
confession of judgment. The grounds for legal
separation must be proved. Neither confession
of judgment nor summary judgment is allowed.
In any case, the court shall order the prosecuting
attorney or fiscal to take steps to prevent
collusion between the parties and to take care
that the evidence is not fabricated or
suppressed. (FC, Art. 60)
What the law prohibits is a judgment based
exclusively or mainly on defendant’s confession.
(Ocampo v. Florenciano, G.R. No. L-13553,
February 23, 1960)
Filing of petition for legal separation
Who may Husband or wife
file
When to Within 5 years from the time of
file the occurrence of the cause
Family Court of the province or
Where to city where the petitioner or the
file respondent has been residing for
at least 6 months prior to the
date of filing or in case of a non-
resident, where he may be found
in the Philippines, at the election
of the petitioner.
EFFECTS OF FILING A PETITION FOR LEGAL
SEPARATION (FC, ART. 61)
The spouses shall be entitled to live separately
from each other. In the absence of a written
agreement between the parties, the court shall
designate either the husband or the wife or a 3rd
person to administer the absolute community or
conjugal partnership property.
Effect of death of a party during pendency
Being personal in character, it follows that the
death of one party to the action causes the death
of the action itself– actio personalis moritur cum
persona. (Rabuya, 2009)
 Civil Law
Effect of death of a party before entry of
judgment
The court shall order the case closed and
terminated without prejudice to the settlement
of estate proper proceedings in the regular
courts. (Sec. 21, A.M. 02-11-11- SC)
Effect of death of a party after entry of
judgment
If the party dies after the entry of judgment, the
same shall be binding upon the parties and their
successors in interest in the settlement of the
estate in the regular courts. (Sec. 21, A.M. 02-11-
11-SC)
Q: May the heirs of the deceased spouse
continue the suit (petition for decree of legal
separation) if the death of the spouse takes
place during the pendency of the suit?
A: NO. An action for legal separation is purely
personal, therefore, the death of one party to the
action causes the death of the action itself –
action personalis moritur cum persona.
NOTE: In cases where one of the spouses is
dead, or where the deceased’s heirs continue the
suit, separation of property and any forfeiture of
share already effected subsists, unless spouses
agree to revive former property regime.
EFFECTS OF LEGAL SEPARATION
1. Spouses entitled to live separately but the
marriage bond is not severed;
2. ACP/CPG shall be dissolved and liquidated.
The share of the offending spouse in the net
profits shall be forfeited in favor of:
a. Common children,
b. In default of the common children,
children of the guilty spouse by a
previous marriage,
c. In default of common children and the
children of the guilty spouse, innocent
spouse;
3. Custody of minor children is awarded to the
innocent spouse (subject to FC, Art. 213);
4. Offending spouse is disqualified to inherit
from innocent spouse by intestate
succession;
5. Provisions in the will of innocent spouse
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
which favors offending spouse shall be
revoked by operation of law;
6. Innocent spouse may revoke donations
he/she made in favor of offending spouse;
and
NOTE: Prescriptive period: 5 years from
finality of decree of legal separation
7. Innocent spouse may revoke designation of
offending spouse as beneficiary in any
insurance policy, even when stipulated as
irrevocable.
Q: In case an action for legal separation is
granted, what will happen to a child below
the age of seven? Is the rule absolute?
A: As a rule, the custody of the child shall be
awarded to the innocent spouse, except if the
child is below the age of seven where the law
says that the child cannot be separated from the
mother, except if there is a compelling reason to
do so. The common-law relationship of a child's
mother with a married man is a ground to
separate the child from the mother, because
such a situation will not afford the child a
desirable atmosphere where he can grow and
develop into an upright and moral-minded
person. (Cervantes v. Fajardo, G.R. No. 79955,
January 27, 1989)
Q: Which of the following remedies:
a. Declaration of nullity of marriage;
b. Annulment of marriage;
c. Legal separation; and/or
d. Separation of property.
can an aggrieved spouse avail
himself/herself of:
1. If the wife discovers after the
marriage that her husband has
“AIDS”?
2. If the wife goes abroad to work as a
nurse and refuses to come home after
the expiration of her three-year
contract there?
3. If the husband discovers after the
marriage that his wife has been a
prostitute before they got married?
4. If the husband has a serious affair
with his secretary and refuses to stop
notwithstanding advice from
relatives and friends?
84
 Marriage under the Family Code
5. If the husband beats up his wife
every time he comes home drunk?
(2003 BAR)
A:
1. ANNULMENT OF MARRIAGE
Since AIDS is a serious and incurable sexually
transmissible disease, the wife may file an action
for annulment of the marriage on this ground
whether such fact was concealed or not from the
wife, provided that the disease was present at
the time of the marriage. The marriage is
voidable even though the husband was not
aware that he had the disease at the time of
marriage.
2. SEPARATION OF PROPERTY
If the wife refuses to come home for three (3)
months from the expiration of her contract, she
is presumed to have abandoned the husband
and he may file an action for judicial separation
of property. If the refusal continues for more
than one year from the expiration of her
contract, the husband may file the action for
legal separation under Art. 55, par. 10 of the FC
on the ground of abandonment of petitioner by
respondent without justifiable cause for more
than one year. The wife is deemed to have
abandoned the husband when she leaves the
conjugal dwelling without any intention of
returning. (FC, Art. 101) The intention not to
return cannot be presumed during the 3-year
period of her contract.
3. NONE
If the husband discovers after the marriage that
his wife was a prostitute before they got
married, he has no remedy. No
misrepresentation or deceit as to character,
health, rank, fortune or chastity shall constitute
fraud as legal ground for an action for the
annulment of marriage. (FC, Art. 46)
4. LEGAL SEPARATION
The wife may file an action for legal separation.
The husband’s sexual infidelity is a ground for
legal separation. (FC, Art. 55)
She may also file an action for judicial separation
of property for failure of her husband to comply
with his marital duty of fidelity. [FC, Art. 135(4),
85
Art. 101]
5. LEGAL SEPARATION, AND SEPARATION OF
PROPERTY
The wife may file an action for legal separation
on the ground of repeated physical violence on
her person. [FC, Art. 55(1)]
She may also file an action for judicial separation
of property for failure of the husband to comply
with his marital duty of mutual respect. [FC, Art.
135(4), Art. 101]
She may also file an action for declaration of
nullity of the marriage if the husband’s behavior
constitutes psychological incapacity existing at
the time of the celebration of marriage.
Effect to the donations made by the spouses
to each other
The revocation of the donations shall be
recorded in the registries of property in the
places where the properties are located.
Alienations, liens and encumbrances registered
in good faith before the recording of the
complaint for revocation in the registries of
property shall be respected. The revocation of or
change in the designation of the insurance
beneficiary shall take effect upon written
notification thereof to the insured.
The action to revoke the donation must be
brought within five years from the time the
decree of legal separation has become final. (FC,
Art. 64)
EFFECTS OF RECONCILIATION
1. As to the Decree
During the pendency of the case:
LS proceedings terminated at whatever stage
After the issuance of the decree:
Final decree of LS to be set aside. (FC, Art. 66)
2. As to the Property Regime
GR: In case there had been already separation of
property and forfeiture of the share of the guilty
spouse, the same shall be maintained. (Pineda,
2008)
 Civil Law

XPN: The parties, however, can come into an thereby be terminated at whatever stage.
agreement to revive their previous regime. Their
agreement must be under oath and must contain
a list of the properties desired to be returned to
the community or conjugal property and those
which will remain separate, a list of creditors
and their addresses.

4. As to Capacity to Succeed

The Family Code does not provide for the revival

of revoked provisions in a will originally made in
favor of the offending party as a result of the LS.
This absence gives the innocent spouse the right
to choose whether the offending spouse will be
reinstituted.

5. As to the Forfeited Shares

Those given to the children cannot be returned

since the spouses are no longer the owners of
such. But those given to the innocent spouse
may be returned.

Revival of previous property regime after

reconciliation

Reconciliation does not automatically revive the

former property regime of the spouses. If the
spouses want to revive the previous property
regime, they must execute an agreement to
revive the former property regime, which
agreement shall be submitted in court, together
with a verified motion for its approval. (FC, Art.
67)

The agreement to revive must be under oath

and specify:

1. The properties to be contributed anew to

the restored regime;
2. Those to be retained as separated properties
of each spouse; and
3. The names of all their known creditors, their
addresses and the amounts owing to each.
(Pineda, 2008)

Effects of reconciliation while the petition is

being heard by the court

If the spouses should reconcile, a corresponding

joint manifestation under oath duly signed by
them shall be filed with the court in the same
proceeding for legal separation. The legal
separation proceedings, if still pending, shall

UNIVERSITY OF SANTO TOMAS 86

2021 GOLDEN NOTES
 Marriage under the Family Code
Declaration of Nullity of Marriage vs. Annulment vs. Legal Separation

DECLARATION OF NULLITY OF
BASIS ANNULMENT LEGAL SEPARATION
MARRIAGE

Marriage No effect; marriage

Dissolved Dissolved
bond bond remains

GR: Illegitimate

XPN: Children conceived or born of

Status of Legitimate
marriages before declaration of
children
nullity under Arts. 36 and 53 of the
FC considered legitimate

GR: Governed either by Article 147

or Article 148 of the Family Code
ACP/CPG shall be dissolved & liquidated.
FC. Thus, property regime shall be
[FC, Art.43(2)]
liquidated pursuant to the ordinary
rules on co- ownership.
1. Share of spouse, who contracted the
subsequent marriage in bad faith, in the
XPN: Marriages declared void
net profits of the community property or
under Article 40 which shall be
conjugal partnership, shall be forfeited in
liquidated in accordance with
favor of the common children; or
Property Article 43 par. 2 which property
relations relations could either be governed
2. If there are none, the children of the
by absolute community or conjugal
guilty spouse by a previous marriage; or
gains unless the parties agree to
complete separation of property in
3. In default of children, the innocent
a marriage settlement prior
spouse.
marriage. (Valdes v. RTC, G.R. No.
122749. July 31, 1996)

GR: Donations propter nuptias are

revocable at the instance of the
donor.
GR: Shall remain valid. [FC, Art.43(3)]
XPN:
i. If the donation propter XPN:
nuptias is embodied in a marriage 1. If donee contracted the marriage
settlement, the donation is void in bad faith, such donations made to said
under Article 86 par. 1 of the FC. donee shall be revoked by operation of
Donations law.
propter ii. If the subsequent marriage
nuptias is judicially declared void by 2. If both spouses to the marriage
reason of Art. 40 of the FC, the acted in bad faith, all donations propter
donation remains valid. nuptias shall be revoked by operation of
law.
XPN to the XPN:
1. If the donee spouse
contracted the marriage in bad

87
 Civil Law

faith, all donations are revoked by

operation by law.
2. When both parties to a
subsequent marriage contracted
in bad faith under Article 44 of
the FC, all donations propter
nuptias are revoked by operation
by law.

If the subsequent marriage is

judicially declared by void by
If one spouse acted in bad faith, innocent
reason of Article 40 of the FC, the
spouse may revoke his designation as
innocent spouse may revoke such
beneficiary in the insurance policy even if
Insurance designation if the beneficiary
such designation be stipulated as
spouse acted in bad faith, even if
irrevocable. [FC, Art.43 (4)]
such designation be stipulated as
irrevocable.

Intestate Succession:
The parties cannot inherit from
each other by way of intestate
succession since they are no longer
considered as spouses.

Testate Succession:
GR: Any testamentary provision by
one in favor of the other shall
remain valid.

XPN:
1. If the subsequent marriage
is rendered void by non-
compliance with Article 40 of the
Family Code FC, the spouse who If one spouse contracted the marriage in
contracted the subsequent bad faith, he shall be disqualified to
Succession marriage in bad faith is inherit from innocent spouse by testate
disqualified to inherit from the and intestate succession. [FC, Art. 43(5)]
innocent spouse.

2. If the marriage is void by

reason of the bad faith of both
parties under Article 41 of the
Family Code FC, all testamentary
dispositions made by one in favor
of the other are revoked by
operation of law.

NOTE: The parties are not

disqualified to institute each other
as voluntary heir in their respective
wills to be executed after the
judicial declaration of nullity.

UNIVERSITY OF SANTO TOMAS 88

2021 GOLDEN NOTES
 Marriage under the Family Code
RIGHTS AND OBLIGATIONS BETWEEN from her coercively or violently. (People v.
HUSBAND AND WIFE Jumawan, G.R. No. 187495, April 21, 2014)

ESSENTIAL OBLIGATIONS Therefore:

a. The right to sexual intercourse involves
normal intercourse. The wife may
Rights and obligations of the spouses (2010
refuse to have sexual intercourse with
BAR)
the husband if he resorts to abnormal or
perverse practices.
1. Essential marital obligations (LOR) (FC,
b. The wife can also refuse to have sexual
Art. 68):
intercourse with the husband if she is ill,
if it would endanger her health, or if he
a. Live together which includes is suffering from some venereal disease.
consortium (cohabitation) and c. If the husband forces the wife to have
copulation (sexual intercourse); sexual intercourse with him against her
will, he may be charged with coercion.
XPN: The Court may exempt a spouse (Sempio-Diy, 1995)
from the obligation to live together for
the following reasons: 2. Fix the family domicile (FC, Art. 69);
i. The other spouse should live NOTE: In case of disagreement the Court
abroad. shall decide.
ii. If there are other valid compelling
reasons.
3. Jointly support the family (FC, Art. 70);
NOTE: The exceptions would not apply
a. Expenses shall be paid from the
if the same is not compatible with the community property,
solidarity of the family. (FC, Art. 69, par
b. In the absence thereof from the
2)
income or fruits of their separate
properties,
b. Observe mutual love, respect, fidelity; c. In the absence or insufficiency thereof
and from their separate properties
c. Render mutual help and support
4. Manage the household (FC, Art. 71);
NOTE: It is true that the Family Code,
obligates the spouses to love one another
5. Not to neglect duties, or commit acts
but this rule sanctions affection and sexual
which tend to bring danger, dishonor, or
intimacy, as expressions of love, that are
injury to family (FC, Art. 72);
both spontaneous and mutual and not the
kind which is unilaterally exacted by force
6. Either spouse may practice any
or coercion. Further, the delicate and
legitimate profession/business, even
reverent nature of sexual intimacy between
without the consent of the other.
a husband and wife excludes cruelty and
coercion. When sexual intimacy it is
NOTE: The other spouse may object on
egoistically utilized to despoil marital union
valid, serious and moral grounds. In case of
in order to advance a felonious urge for
disagreement, the court shall decide
coitus by force, violence or intimidation, the
whether:
Court will step in to protect its lofty
purpose, vindicate justice and protect our
a. Objection is proper; and
laws and State policies. Besides, a husband
b. Benefit has accrued to the family prior
who feels aggrieved by his indifferent or
to the objection or thereafter. If the
uninterested wife's absolute refusal to
benefit accrued prior to the objection,
engage in sexual intimacy may legally seek
the resulting obligation shall be
the court's intervention to declare her
enforced against the community
psychologically incapacitated to fulfill an
property. If the benefit accrued
essential marital obligation. But he cannot
thereafter, such obligation shall be
and should not demand sexual intimacy

89
 Civil Law
enforced against the separate
property of the spouse who has not
obtained consent. (FC, Art. 73 as
amended by R.A. 10572)
The foregoing provisions shall not prejudice the
rights of creditors who acted in good faith.
Other obligations of spouses
1. Exercise the duties and enjoy the rights of
parents;
2. Answer for civil liability arising from
injuries caused by children below 18;
3. Exercise parental authority over children’s
property
Essential marital obligations cannot be
compelled by court
GR: Performance of essential marital obligation
under Art. 68 of the FC cannot be compelled by
court because it will be a violation of personal
liberty. (Arroyo v. Arroyo, G.R. No. L-17014,
August 11, 1921)
XPN:
1. Giving mutual help and support.
NOTE: A husband is liable to pay the
expenses arising from the medical
assistance rendered to his wife even though
he is not the one who actually called the
attending physician on the ground that he
has the obligation to provide support to his
wife. (Pelayo v. Lauron, 12 Phil. 453)
2. Wife left the conjugal home for justifiable
reasons, is entitled to separate maintenance.
(Goitia v. Campos Rueda, 35 Phil. 252)
Reasons when the Court may exempt one
spouse from living with the other
1. If one spouse should live abroad.
2. Other valid and compelling reasons.
NOTE: The Court shall not grant the exemption
if it is not compatible with the solidarity of the
family
PROPERTY RELATIONS OF THE SPOUSES
The property relations shall be governed by the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
ff. in the stated order:
1. Property relation agreed and embodied in
the marriage settlement;
2. Provisions of the FC; and
3. Local custom. (FC, Art. 74)
Commencement of Property Regime
A property regime commences at the precise
moment of the celebration of the marriage (i.e.
actual time the marriage is celebrated on a
certain date).
Any stipulation, express or implied, for the
commencement of the community regime at any
other time shall be void. (FC, Art. 88)
Laws that will govern the property relations
of the spouses
GR: Philippine laws shall govern, regardless of
place of celebration of marriage and residence of
spouses, in the absence of contrary stipulation in
a marriage settlement. (FC, Art. 80)
XPN: Lex rei sitae applies:
1. Where both spouses are aliens;
2. With respect to the extrinsic validity of
contracts affecting property not situated in
the Philippines, and executed in the country
where the property is located; or
3. With respect to extrinsic validity of
contracts entered into in the Philippines but
affecting property situated in a foreign
country whose laws require different
formalities for its extrinsic validity. (FC, Art.
80)
Rule on waiver of rights over the share in the
community or conjugal property
GR: Cannot be waived during the marriage.
XPN: In case of judicial separation of property.
NOTE: The waiver must be in a public
instrument and recorded in the office of the local
civil registrar where the marriage contract was
recorded as well as in the proper registry of
property.
Property regime governing the property
relations of spouses in the absence of
90
 Marriage under the Family Code
marriage settlement or when regime agreed 1. In Writing;
upon is void (1992, 1995, 2005 BAR) 2. Signed by the parties;
3. Executed before the celebration of marriage;
DONATION PROPTER NUPTIAS OR 4. Registration (to bind 3rd persons)
DONATIONBY REASON OF MARRIAGE
(FC, ART. 82) The provisions in the marriage settlement must
be in accordance with law, morals or public
policy; otherwise such agreement is void. (Paras,
GR: Absolute Community Property. (FC, Art. 75)
2008)
XPNs:
A marriage settlement need not be notarized.
The law is clear that the marriage settlements
1. For marriages contracted prior to the
and any modification thereof shall be in writing
effectivity of the FC on August 3, 1988,
signed by the parties and executed before the
conjugal partnership of gains shall govern
celebration of the marriage. (FC, Art. 77) The law
the property relations and Art. 116 of the
merely requires it to be in writing; it does not
NCC will apply. The provisions of the FC
require that it be in a public instrument for
shall have no retroactive effect because it
purposes of its validity. (Albano, 2013)
shall impair vested rights.
The marriage settlements must be registered in
2. Subsequent marriage contracted within one
the proper local civil registry where the
year from the death of the deceased spouse
marriage contract was recorded as well as in the
without liquidation of the community
proper registries of property in order that they
property or conjugal partnership of gains,
may prejudice or bind third persons. (FC, Art. 77)
either judicially or extra-judicially, as
required under Arts.103 and 130 of the FC.
Additional requirements for validity of the
In such case, a mandatory regime of
MS
complete separation of property shall
govern the subsequent marriage. (Rabuya,
FACTUAL ADDITIONAL
2009)
SITUATION REQUIREMENT
Q: Marriage being a contract, may the parties
enter into stipulations which will govern If the ff. must be
their marriage? If one of both of the made a party to the
parties are: MS, otherwise the
A: The nature, consequences and incidents of MS is void:
marriage are governed by law and not subject to
stipulation between the spouses. This, however, 18-21 years old Parents; or those
is not an absolute rule. The law allows the required to give
spouses to fix their property relations during the consent
marriage through a device known as “marriage
settlement” subject only to the condition that Sentenced with civil Guardian appointed
whatever settlement they may have must be interdiction by the court
within the limits provided by the Family Code.
Disabled Guardian appointed
MARRIAGE SETTLEMENT by the court

It is a contract entered into by a man and a

woman who intend or plan to get married fixing Modification of the marriage settlement (FC,
the property regime that will govern their Art. 76) (2005 BAR)
present and future properties during their
marriage. It is also called as Ante-nuptial For any modification in the MS to be valid:
Agreement. (Sempio-Diy, 1995)
1. The requisites for a valid MS must be
Requisites of a valid Marriage Settlement (FC, present;
Art. 77) (W-S-E-R) 2. There must be judicial approval;
3. Subject to the provisions of Arts. 66, 67, 128,

91
 Civil Law

135, and 136 of FC. 84) support

from him
Effect on the ante-nuptial agreement in case (NCC, Art.
the marriage is not celebrated (FC, Art. 81) 750) and
further no
GR: Everything stipulated in the settlements or legitimes of
contracts in consideration of the marriage shall compulsory
be rendered void. heirs shall be
impaired.
XPN: Those stipulations not dependent upon, or (NCC, Art.
are not made in consideration of, the marriage, 752)
subsist.
Future property
Those donations which are made before the As to may be included, Future
celebration of the marriage, in consideration of inclusio provided the property
the same, and in favor of one or both of the n of donation is cannot be
future spouses. futurepr mortis causa. included.
operty [NCC, Art. 84(2)] (NCC, Art.
The formalities of the donation propter nuptias 751)
follows the same formalities as set forth in the
law on donations.
Revocati Grounds for Grounds for
NOTE: Donations of future property are on revocation are revocation
governed by provisions on testamentary found in Art. 86 of are found in
succession and formalities of wills. FC. law in
donations.
Donation propter nuptias (DPN) v. Ordinary
Donation
Requisites for Donation Propter Nuptias

BASIS DONATION ORDINARY 1. Made before celebration of marriage;

PROPTER DONATION 2. Made in consideration of the marriage; and
NUPTIAS 3. Made in favor of one or both of the future
spouses.
Donations of
As to future property Governed by Rule regarding DPN made between spouses
formalit are governed by Title III,
ies the provisions Book III of GR: Future spouses cannot donate to each other
on testamentary the NCC. more than 1/5 of their present property and any
succession and excess from which shall be considered void.
the formalities
of wills. [FC, Art. XPN: If they are governed by ACP, then each
84(2)] spouse can donate to each other in their
marriage settlements present property without
As to Present property There is no limit, provided there is sufficient property left for
inclusio may be donated up limit except their support and the legitimes are not impaired.
n of to 1/5 of the that the
present donor’s present donor shall Effect of donations of encumbered property
property property if the leave
future spouses sufficient Such donations are valid. In case of foreclosure
have chosen a property for of the encumbrance and the property is sold for
regime other than his support less than the total amount of the obligation
absolute and that of secured, the donee shall not be liable for the
community of all relatives deficiency. If the property is sold for more than
property. (FC, Art. entitled to the total amount of the obligation, the donee

UNIVERSITY OF SANTO TOMAS 92

2021 GOLDEN NOTES
 Marriage under the Family Code
shall be entitled to the excess. (FC, Art. 85)
Donations that may be revoked by the donor
(FC, Art. 86)
A donation by reason of marriage may be
revoked by the donor in the following cases:
1. GR: Marriage is not celebrated or is judicially
declared void ab initio.
5. If with a resolutory condition which was
complied with.
6. Donee has committed an act of ingratitude as
specified by the provisions of the Civil Code
on donations in general.
Grounds for filing an action for revocation of
a DPN and their respective prescriptive
periods

Effect: Donations stipulated in marriage The prescriptive periods in other provisions of

settlement which are made not in the Civil Code should apply, depending on the
consideration of the future marriage remains ground of revocation. Except for the action to
valid. Thus, can be revoked by the donor. revoke a donation to the guilty spouse in case of
a legal separation, which the second paragraph
XPN: of Art. 64 of the Code states must be brought
a. Donations made in the marriage within 5 years from the time of the decree of
settlements in consideration of a legal separation has become final, there is no
future marriage because such other provision in the Family Code on the period
donations are rendered void when of prescription of the action to revoke a donation
marriage did not take place and, thus, proper nuptias. (Sempio-Diy, 2010)
there is nothing to revoke.
b. If the marriage is judicially declared
void by reason of non-compliance with PRESCRIPTIVE
GROUNDS
Article 40 of the FC and the done PERIOD
(FC, Art. 86)
spouse contracted the marriage in bad (reckoning point)
faith. The donation is deemed revoked
by operation of law. 1. Marriage is not
c. If both parties acted in bad faith, all 5 years from the
celebrated.
donations by reason of marriage and time the marriage
testamentary dispositions made by was not
XPN: Those
one in favor of the other are revoked solemnized on the
automatically rendered
by operation of law. (Article 44, FC) fixed date. (FC,
void by law.
Art. 149)
2. Marriage takes place without the required
Ground for
consent of parents or guardians.
nullity:
NOTE: If the donor knew of the absence of
consent of the parents before the marriage, a. Contracted
he may not revoke the donation because the 2. subsequent
parent can still give their consent any time Marriage marriage Revoked by
before the marriage ceremony takes palace. is before prior operation of law.
(Sta. Maria, 2017) judicially marriage has
declared been
3. Marriage is annulled and donee acted in bad void. judicially
faith. declared void.

4. Upon legal separation, the donee being the

guilty spouse. b. Any other
5 years
grounds.
NOTE: Prescription is 5 years from the judicial Finality of judicial
3. Marriage took place
declaration of legal separation (a decree is declaration of
without consent of
necessary for the donor to revoke the nullity (if action is
parents or guardian,
donation). to recover
when required by law.
property).

93
 Civil Law

XPN: Moderate gifts on the occasion of any

5 years from the family rejoicing.
time the donor
came to know that The aforementioned rules also apply to common
the required law spouses. (Matabuena v. Cervantes, G.R. No. L-
parental consent 28771, March 31, 1971)
was not obtained.
PROPERTY RELATIONS OF SPOUSES
4. Marriage is annulled
5 years from
and donee acted in bad
finality of decree. Different property regimes which may be
faith.
adopted by future spouses
5 years from the
5. Upon legal separation, I. Absolute Community of Property (ACP)
time the decree of
donee being the guilty II. Conjugal Partnership of Gains (CPG);
legal separation
spouse. III. Absolute Separation of Property
has become final.
(ASOP);
6. Donation subject to 5 years from the IV. A combination of the above regimes;
resolutory condition happening of the V. Any other regime within limits provided
which was complied resolutory by the FC.
with. condition.
The rule against donation to one another
between the spouses do not include a spouse
1 year being a beneficiary of an insurance contract over
From donor’s the life of the other. (Gercio v. Sun Life Assurance
7. Donee committed an
knowledge of the Co., of Canada, G.R. No. 23703, September 28,
act of ingratitude.
commission of an 1925)
act of ingratitude.

Acts of ingratitude: (NCC, Art. 765)

1. Commission of an offense against the

person, honor or property of the donor, his
wife or his children under his parental
authority;

2. GR: Imputation to the donor any criminal

offense or any act involving moral turpitude;

XPN: if the crime was committed against the

donee himself, his wife or his children under
his authority

3. Undue refusal to support the donor when he

is legally or morally bound to give such
support.

DONATIONS DURING MARRIAGE

Rule regarding donations between spouses

during the marriage (FC, Art. 87)

GR: Every donation or grant of gratuitous

advantage, direct or indirect, between spouses is
considered void.

UNIVERSITY OF SANTO TOMAS 94

2021 GOLDEN NOTES
 Marriage under the Family Code
ACP vs. CPG vs. CSOP

ABSOLUTE CONJUGAL COMPLETE

COMMUNITY OF PROPERTY PPARTNERSHIP OF GAINS SEPARATION OF PROPERTY
(ACP) (CPG) (CSOP)
When applicable
When spouses: 1. When the future spouses 1. When future spouses
1. Adopt it in a marriage adopt it in a marriage adopt it in a marriage
settlement; settlement. settlement;
2. Do not choose any economic 2. If the marriage is celebrated 2. ACP or CPG is dissolved;
system property regime and under the New Civil Code or 3. Prior marriage is dissolved
the marriage took place prior the effectivity of the due to death of one spouse
during the effectivity of the Family Code and they have and surviving spouse
Family Code (on August 3, not adopted any economic failed to comply with the
1988 or after); or system property regime. requirements under Art.
3. Adopted a different 103 (judicial settlement
property regime and the proceeding of the estate of
same is void. deceased spouse);
4. By judicial order. Judicial
separation of property
may either be voluntary or
for sufficient cause.
Composition
All the properties owned by the Each spouse retains his/her
spouses at the time of marriage property before the marriage
become community property. and only the fruits and income
of such properties become part
of the conjugal properties
during the marriage.
Effect of Separation In Fact
The separation in fact shall not affect the regime of ACP, but:
1. The spouse who leaves the conjugal home or refuses to live
therein, without just cause, shall not have the right to be
supported;
2. When consent of one spouse to any transaction of the other is
required by law, judicial authorization shall be obtained in a
summary proceeding.
3. In case of insufficiency of community or conjugal partnership
property, separate property of both spouses shall be solidarily
liable for the support of the family. Spouse present shall, upon
proper petition in a summary proceeding, be given judicial
authority to administer or encumber any specific separate
property of the other spouse and use the fruits or proceeds
thereof to satisfy the latter’s share. (FC, Arts. 100 & 127)
Effect of Dissolution
Upon dissolution and Upon dissolution of the
liquidation of the community partnership, the separate
property, what is divided properties of the spouses are
equally between the spouses or returned and only the net
their heirs is the net remainder profits of the partnership are
of the properties of the divided equally between the
ACP. spouses of their heirs.

95
 Civil Law

Grounds for revival of former property community

regime
1. All the property owned by the spouses:
1. Civil interdiction of the prisoner-spouse a. At the time of the celebration of the
terminates; marriage; or
2. Absentee spouse reappears; b. Acquired thereafter;
3. Court authorizes resumption of
administration by the spouse formerly 2. Property acquired during the marriage by
exercising such power; gratuitous title, if expressly made to form
4. Spouse who has abandoned the conjugal part of the community property by the
home returns and resumes common life donor, testator or grantor; or
with the other; 3. Jewelry or properties with monetary value;
5. Parental authority is judicially restored to 4. Winnings in gambling.
the spouse previously deprived thereof;
6. Reconciliation and resumption of common Properties excluded in the Absolute
life of spouse who had been separated in Community
fact for at least 1 year; or
7. Spouses agree to revive their former 1. Property acquired during the marriage by
property regime. gratuitous title and its fruits as well as
income thereof, unless the grantor expressly
Grounds for transfer of administration of the provides that they shall form part of the
exclusive property of each spouse community property;
2. Property for personal and exclusive use of
When one spouses: either spouse but jewelries shall form part
of the ACP because of their monetary value;
1. Is sentenced to penalty with civil 3. Property acquired before the marriage by
interdiction; one with legitimate descendants by former
2. Becomes fugitive from justice or is hiding as marriage and its fruits and income, if any;
an accused in a criminal case; 4. Those excluded by the marriage settlement.
3. Is judicially declared absent; (FC, Art. 92)
4. Becomes guardian of another
Presumption of inclusion in the absolute
NOTE: Transfer of administration of the community
exclusive property of either spouses does not
confer ownership over the same. (Rodriguez v. In absence of evidence, property acquired
De la Cruz, G.R. No. 3629, September 28, 1907) during the marriage is presumed to belong to
the community, unless proven otherwise by
I. ABSOLUTE COMMUNITY OF PROPERTY strong and convincing evidence. (FC, Art. 93)
(ACP)
The sale or encumbrance of a conjugal property
A property regime wherein the spouses are requires the consent of both the husband and
considered co-owners of all property brought the wife. (Guiang v. CA, G.R. No. 125172, June 26,
into the marriage, as well as those acquired 1998) The absence of the consent of one renders
during the marriage, which are not otherwise the entire sale or encumbrance null and void,
excluded from the community either by the including the portion of the conjugal property
provisions of the Family Code or by the marriage pertaining to the husband who contracted the
settlement. (Rabuya, 2009) sale. Neither would the conjugal partnership be
liable for the loan on the ground that it
Laws that govern the absolute community of redounded to the benefit of the family.
property (Homeowners Savings & Loan Bank v. Dailo, G.R.
No. 153802, March 11, 2005)
1. Family Code
2. Civil Code provisions on co-ownership A wife, by affixing her signature to a deed of sale
on the space provided for witnesses, is deemed
Properties included in the absolute to have given her implied consent to the contract
of sale. The consent need not always be explicit

UNIVERSITY OF SANTO TOMAS 96

2021 GOLDEN NOTES
 Marriage under the Family Code
or set forth in any particular document so long
as it is shown by acts of the wife that such
consent or approval was in fact given. (Pelayo v.
Perez, G.R. No. 141323, June 8, 2005)
When the sale was entered into prior to the
effectivity of the FC Art.173, in relation to Art.
166 of the NCC will apply if there was a finding
of lack of the wife's consent. Under said
provisions, the sale would have been merely
voidable, and not void.
The use of the jurat, instead of an
acknowledgment, does not elevate the marital
consent into the level of a public document but
instead consigns it to the status of a private
writing. Hence, the presumption of regularity
does not apply, and the wife still needs to prove
its genuineness and authenticity as required
under the rules of evidence. The fact that the
document contains a jurat, and not an
acknowledgment, should not affect its
genuineness or that of the related document of
conveyance itself, the Deed of Absolute Sale. In
this instance, a jurat suffices as the document
only embodies the manifestation of the spouse's
consent, a mere appendage to the main
document. (Pan Pacific Industrial Sales Co., Inc. v.
CA, G.R. No. 125283, February 10, 2006)
A. CHARGES UPON AND OBLIGATIONS OF THE
ABSOLUTE COMMUNITY PROPERTY
Charges upon the ACP
1. The support of:
a. The spouses
b. Their common children
c. Legitimate children of either
spouse;
NOTE: Support of illegitimate children of either
spouse is chargeable to exclusive property of the
illegitimate parent. (FC, Art. 197)
XPN: Support of illegitimate children of either
spouse is chargeable to community in case
absence or insufficiency of the exclusive
property of the debtor-spouse which shall be
considered advances to be deducted from the
share of the debtor-spouse upon liquidation of
the community. (FC, Art. 94 (9))
2. All debts and obligations contracted
during the marriage by:
97
a. the designated administrator-spouse for
the benefit of the community
b. by both spouses
c. by one spouse with the consent of the
other;
3. Debts and obligations contracted by either
spouse without the consent of the other to
the extent that the family may have been
benefited;
a. All taxes, liens, charges and expenses,
including major or minor repairs, upon the
community property;
b. All taxes and expenses for mere
preservation made during marriage upon
the separate property of either spouse
used by the family;
c. Expenses to enable either spouse to
commence or complete a professional or
vocational course, or other activity for self-
improvement;
d. Ante-nuptial debts of either spouse insofar
as they have redounded to the benefit of
the family; (2007 BAR)
NOTE: For ante-nuptial debts, those
contracted by one spouse without the
consent of the other during the marriage
and those contracted by the administrator-
spouse, the burden of proof that such
debts were contracted for the benefit of
the community or of the family lies with
the creditor- party litigant claiming as
much. (Rabuya, 2009)
4. The value of what is donated or promised by
both spouses in favor of their common
legitimate children for the exclusive purpose
of commencing or completing a professional
or vocational course or other activity for
self- improvement;
5. Payment, in case of absence or insufficiency
of the exclusive property of the debtor-
spouse, of:
a. Ante-nuptial debts of either spouse which
did not redound to the benefit of the
family;
b. The support of illegitimate children of
either spouse;
c. Liabilities incurred by either spouse by
reason of a crime or quasi-delict;
NOTE: The payment of which shall be
 Civil Law

considered as advances to be deducted from the chargeable from from separate

share of the debtor-spouse upon liquidation of separate property of property of person
the community. person obliged to give obliged to give
support. In case of support. In case of
6. Expenses of litigation between the spouses. insufficiency or absence insufficiency or
However, if suit is found to be groundless, it of separate property, absence of
cannot be charged against the ACP. (FC, Art. 94) ACP shall advance separate property,
support, chargeable to CP shall advance
ACP vs. CPG as to charges share of parent upon support,
liquidation. (FC, Art 94 chargeable to share
ACP (FC, Art. 94) CPG (FC, Art. 121) (9)) of parent upon
liquidation, but
Support of the spouses, their common only after
children, and legitimate children of either obligations in Art.
spouse. 121 have been
covered. (FC, Art.
Debts and obligations contracted 121)
during marriage:
1. Ante-nuptial For ante-nuptial
a. By the administrator spouse designated debts are debts, same as ACP
in the marriage settlement/appointed chargeable to but in case of
by court/one assuming sole ACP if they insufficiency of
administration; redounded to the separate property,
b. By one without the consent of the other; benefit of family. obligations
c. By one with the consent of other; or enumerated in Art.
d. By both spouses. 2. Personal debts 121 must first be
not redounding satisfied before
For (a) and (b), creditor has the burden of to benefit of the such debts may be
proving benefit to the family and ACP/CPG family such as chargeable to the
chargeable to the extent of benefit proven, liabilities CPG.
otherwise, chargeable to the separate incurred by the
property of the obligor spouse. reason of crime
or quasi-delict
For (c) and (d), real benefit to family is are chargeable to
presumed. the separate
property of the
All taxes, liens, charges and expenses debtor spouse.
including minor repairs upon ACP or CPG.
3. In case of
Expenses to enable either spouse to insufficiency of
commence/complete a professional, separate
vocational or other activity for self- property,
improvement. chargeable to
ACP but
Value donated/promise by both spouses in considered
favor of common legitimate children for advances
exclusive purpose of commencing or deductible from
completing professional or vocational course the share of the
or other activity for self-improvement. debtor-spouse
upon liquidation.
Expenses of litigation between spouses unless
the suit is found to be groundless. Q: An individual, while single, purchases a
house and lot in 1990 and borrows money in
For illegitimate For illegitimate 1992 to repair it. In 1995, such individual is
children, support children, support married while the debt is still being paid.

UNIVERSITY OF SANTO TOMAS 98

2021 GOLDEN NOTES
 Marriage under the Family Code
After the marriage, is the debt still the
responsibility of such individual? (2007 BAR)
A: NO. Ante-nuptial debts of either spouse shall
be considered as the liability of the absolute
community of property insofar as they have
redounded to the benefit of the family.
There is no presumption that the obligations
incurred by one of the spouses during the
marriage are charged against their community
of property. Before any obligation may be
chargeable against the community of property, it
must first be established that such obligation is
among the charges against the same. (Wong, et
al, v. IAC, G.R. No. 70082, August 19, 1991)
Insufficiency of the community property to
cover liabilities
GR: The spouses shall be solidarily liable for the
unpaid balance with their separate properties.
XPN: Those falling under paragraph 9 of Art. 94.
of the Family Code (Ante-nuptial debts, support
of illegitimate children, liabilities incurred by
spouse by reason of a crime or quasi-delict) – in
which case the exclusive property of the spouse
who incurred such debts will be liable. However,
if the exclusive property is insufficient, payment
will be considered as advances to be deducted
from share of debtor- spouse. (FC, Art. 94 [9])
B. OWNERSHIP, ADMINISTRATION,
ENJOYMENT AND DISPOSITION OF THE
ABSOLUTE COMMUNITY PROPERTY
Administration of Community Property
GR: The administration of community property
belongs to both spouses jointly.
XPN:
1. Agreement that only one of the spouses shall
administer the community property;
2. If one spouse is incapacitated or otherwise
unable to participate in the administration
of the common properties – capacitated or
able spouse may assume sole powers of
administration without the need of court
approval or authorization;
3. If a spouse without just cause abandons the
other or fails to comply with his or her
obligations to the family, the aggrieved
spouse may petition the court for sole
administration;
99
4. During the pendency of the legal separation
case, the court may designate either of the
spouses as sole administrator.
NOTE: But such powers do not include:
1. Disposition;
2. Alienation; or
3. Encumbrance of the conjugal or community
property.
"Court authorization" in the sale of conjugal
properties
Court authorization is resorted to in cases where
the spouse who does not give consent is
incapacitated. If there is no showing that the
spouse is incapacitated, court authorization
cannot be sought. (Manalo v. Fernandez, G.R. No.
147928, January 23, 2002)
Disagreement in the administration of
community property (FC, Art. 96)
In case of disagreement, the decision of the
husband shall prevail but subject to recourse to
the court by the wife for proper remedy.
NOTE: Prescriptive period for recourse is within
5 years from the date of the contract
implementing such decision.
Sale or Disposition of Community Property
Alienation or encumbrance of community
property must have the written consent of the
other spouse or the authority of the court
without which the disposition or encumbrance
is VOID. However, 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 offerors. (FC, Arts. 96 and 124; Sps.
Antonio and Luzviminda Guiang v. CA, et al., G.R.
No. 125172, June 26, 1998)
The absence of consent of one of the spouses
renders the entire sale null and void, including
the sale of the portion of the conjugal property
pertaining to the spouse who contracted the
sale. The consent of one spouse regarding the
disposition does not always have to be explicit
or set forth in any particular document, so long
as it is shown by acts of the said spouse that
 Civil Law
such consent or approval was indeed given. (Sps.
Cirelos v. Sps. Hernandez, et al. G.R. No. 146523,
June 15, 2006) However, even if the other spouse
actively participated in negotiating for the sale
of the property, that other spouse's written
consent to the sale is required by law for its
validity. Being aware of a transaction is not
consent. (Jader-Manalo v. Camaisa, G.R. No.
147978, January 23, 2002)
Q: Marco and Gina were married in 1989. In
1999, Gina left Marco and lived with another
man, leaving the two children of school age
with Marco. When Marco needed money for
their children’s education, he sold a parcel of
land registered in his name, without Gina’s
consent, which he purchased before his
marriage. Is the sale by Marco valid, void, or
voidable? Explain with legal basis. (2015
BAR)
A: The sale is VOID. The parties were married
in 1989. In the absence of a marriage settlement,
the parties shall be governed by ACP whereby all
the properties owned by the spouses at the time
of the celebration of the marriage as well as
whatever they may acquire during the marriage
shall form part of the absolute community. In
ACP, neither spouse can sell or encumber
property belonging to the ACP without the
consent of the other. Any sale or encumbrance
made by one spouse without the consent of the
other shall be void although it is considered as a
continuing offer on the part of the consenting
spouse upon authority of the court or written
consent of the other spouse.
Q: Does the prohibition cited above include
lease by the husband over properties of the
community of property without the consent
of the wife?
A: YES. In the contract of lease, the lessor
transferred his right of use in favor of the lessee.
The lessor's right of use is impaired therein. He
may even be ejected by the lessee if the lessor
uses the leased realty. Therefore, the lease is a
burden on the land. It is an encumbrance on the
land. Moreover, lease is not only an
encumbrance but also a qualified alienation,
with the lessee becoming, for all intents and
purposes, and subject to its terms, the owner of
the thing affected by the lease. (Roxas v. CA, G.R.
No. 92245, June 26, 1991)
Donation of a community property by a
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
spouse
GR: A spouse cannot donate any community
property without the consent of the other.
XPN: Moderate donations for charity or on
occasion of family rejoicing or distress. (FC, Art.
98)
Separation in fact between husband and wife
(FC, Art. 100)
GR: Such separation does not affect the regime
of absolute community.
XPNs:
1. Spouse who leaves the conjugal home or
refuses to live therein without just cause has
no right to be supported;
2. When consent of one spouse to any
transaction of the other spouse is required
by law, judicial authorization must be
obtained;
3. If community property is insufficient, the
separate property of both spouses shall be
solidarily liable for the support of the family.
Abandonment (1999, 2003 BAR)
If a spouse without just cause abandons the
other or fails to comply with his or her
obligations to the family, the aggrieved spouse
may petition the court for:
1. Receivership;
2. Judicial separation of property;
3. Authority to be the sole administrator of the
absolute community. (FC, Art. 101)
Presumption of Abandonment
A spouse is deemed to have abandoned the other
when he or she has left the conjugal dwelling
without intention of returning. The spouse who
has left the conjugal dwelling for a period of
three (3) months or has failed within the same
period to give any information as to his or her
whereabouts shall be prima facie presumed to
have no intention of returning to the conjugal
dwelling. (Pineda, 2008)
The presumption is rebuttable by the
presentation of clear, strong and convincing
evidence that the absent spouse did not intend
to leave the present spouse and family. (Pineda,
100
 Marriage under the Family Code
2008)
Prohibition against the sale of property
between spouses
GR: Spouses cannot sell property to each other.
XPNs:
1. When a separation of property was agreed
upon in the marriage settlement;
2. When there has been a judicial separation of
property under Articles 135 and 136 of the
Family Code. (NCC, Art. 1490)
NOTE: The proscription against the sale of
property between spouses under Art. 1490 of
the New Civil Code applies even to common law
relationships. In an earlier ruling, the Supreme
Court nullified a sale made by a husband in favor
of a concubine, after he had abandoned his
family and left the conjugal home where his wife
and children lived, and from whence they
derived their support, for being contrary to
morals and public policy. The sale was regarded
by the court as subversive of the stability of the
family, a basic social institution which public
policy cherishes and protects. (Ching v. CA, G.R.
No. 165879, November 10, 2006)
C. DISSOLUTION OF ABSOLUTE
COMMUNITY REGIME
Dissolution of Absolute Community Property
(2009 BAR)
Absolute Community Property is terminated by:
(FC, Art. 99)
1. Death of either spouse;
NOTE: If the surviving spouse contracts
another marriage without compliance with
the foregoing requirement, a mandatory
regime of complete separation shall govern
the property relations of the subsequent
marriage.
Upon lapse of the one-year period and
liquidation is made, any disposition or
encumbrance involving the community
property of the terminated marriage shall be
void. (FC, Art. 103)
The reason for the law is that, the law seeks
to protect the children's interest in the first
marriage. (Albano, 2013)
101
2. Legal separation;
3. Annulment;
4. When the marriage is declared void under
Art.40 of the Family Code;
5. Judicial separation of property during
marriage. (FC, Art. 99)
NOTE: The absolute community of property or
the conjugal partnership is considered dissolved
only upon the issuance of the judicial decree of
separation, not at the moment when the parties
enter into a compromise agreement in the
course of the proceedings for separation of
property. (Albano, 2013)
D. LIQUIDATION OF THE ABSOLUTE
COMMUNITY ASSETS AND LIABILITIES
Procedure in case of dissolution of ACP
1. Inventory of all properties of the ACP, listing
separately the communal properties from
exclusive properties of each spouse;
2. Payment of community debts;
NOTE: First, pay out of the community
assets. If not enough, husband and the wife
are solidarily liable for the unpaid balance
with their separate properties.
3. Delivery to each spouse of his/her
remaining exclusive properties;
4. Equal division of net community assets
Unless there is:
a. An agreement for a different
proportion; or
b. A voluntary waiver of such share;
5. Delivery of the presumptive legitimes of the
common children; and
6. Adjudication of conjugal dwelling and
custody of common children. (FC, Art. 102)
Applicable procedure in the dissolution of
the ACP in case the marriage is terminated by
death
Community property shall be liquidated in the
same proceeding for the settlement of the estate
of the deceased.
If no judicial proceeding is instituted, the
surviving spouse shall, judicially or extra-
judicially, liquidate the community property
within 1 year from the death of the deceased
 Civil Law
spouse. (FC, Art. 103)
Consequences of failure to liquidate within 1
year
1. Failure to liquidate the community property
within 1 year from the death of the deceased
spouse contrary to Art. 103 of the Family
Code, would render any disposition or
encumbrance involving community
property of the terminated marriage void.
2. If the surviving spouse contracts a
subsequent marriage without compliance
with the foregoing requirements, the
subsequent marriage shall be governed,
mandatorily, by a regime of complete
separation of property. (Rabuya, 2006)
II. CONJUGAL PARTNERSHIP OF GAINS (CPG)
It is the property relation formed by the
husband and the wife by placing in a common
fund: (FC, Art. 106)
1. The proceeds, product, fruits and income of
their separate properties;
2. Those acquired by either or both of them
through:
a. Effort – an activity or undertaking which
may or may not be rewarded;
b. Chance – activities like gambling or
betting.
Commencement of CPG
CPG shall commence at the precise moment
when the marriage ceremony is celebrated.
Law that governs the conjugal partnership
The rules on the contract of partnership in all
that is not in conflict with what is expressly
determined in the FC and by the spouses in their
marriage settlements. (FC, Art. 108)
Only inchoate right over conjugal property
The interest of the spouses in the conjugal
properties is only inchoate or a mere expectancy
and does not ripen into title until it appears the
dissolution and liquidation of the partnership
that there are net assets. (Sempio-Diy, 1995)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Q: Melinda is the widow of Jose. In December
18, 1984, they acquired a 310-square meter
lot. Subsequently, a TCT was issued to "Jose,
married to Melinda," covering the disputed
property. Melinda discovered that the TCT
had long been canceled through a string of
transactions, and that the property was
registered under the name of Spouses
Montano. The Court found that since Jose
acquired the gift by gratuitous title during
marriage, the property was excluded from
the conjugal partnership of gains. As it was
his exclusive property, Jose can dispose it
without Melinda's consent. Is the property in
dispute a conjugal property?
A: YES, it is a conjugal property. The
circumstances here transpired prior to the
effectivity of the Family Code on August 3, 1988.
Thus, petitioner and Jose's marriage and
property relations are governed by the Civil
Code.
Under the Civil Code, property acquired during
marriage is presumed to be conjugal. What must
be established is that the property was acquired
during marriage. Only through "clear,
categorical, and convincing" proof to the
contrary will it be considered the paraphernal
property of one (1) of the spouses. (Melinda M.
Malabanan V. Francisco Malabanan, Jr., Spouses
Ramon and Prescila Malabanan, and Spouses
Dominador III And Guia Montano, G. R. No.
187225, March 06, 2019, as penned by J.
Leonen)
EXCLUSIVE PROPERTY OF THE SPOUSES
(FC, ART. 109)
1. Those brought into the marriage as
his/her own;
NOTE:
a. A property purchased before the
marriage and fully paid during the
marriage remains to be a separate
property of either spouse. (Lorenzo v.
Nicolas, G.R. No. L-4085, July 30, 1952)
b. Fruits and income of said properties
shall be included in the conjugal
partnership.
c. Those included therein in the marriage
settlement, subject to the 1/5 limitation
under Article 84 and the rule in Article
92(3) of the Family Code which apply by
102
 Marriage under the Family Code
analogy
2. Those acquired during the marriage by
gratuitous title;
NOTE:
a. Pensions will not form part of the
conjugal partnership of gains when it is
given to him voluntarily and he is not
entitled as a matter of right such as a
fruit of industry or labor.
b. Proceeds of life insurance policy will not
form part of the conjugal partnership of
gains when the beneficiary of the life
insurance is the estate and the
premiums are sourced from the
separate property of the spouse.
c. Retirement Benefits will not form part
of the conjugal partnership of gains
when it is given to him voluntarily and
he is not entitled as a matter of right
such as a fruit of industry or labor.
3. Those acquired by right of redemption,
barter or exchange with exclusive
property;
NOTE: In right of redemption, for it to form
part of the exclusive property of the spouse,
the ownership over such property must still
pertain to the said spouse.
4. That purchased with exclusive money of
either spouse.
NOTE: The controlling factor is the source of
the money used, or the money promised to
be paid.
Alienation of exclusive properties of either
spouse
Either spouse may mortgage, encumber, alienate
or otherwise dispose of his or her exclusive
property. (FC, Art. 111 as amended by R.A. 10572)
Rules in cases of improvement of exclusive
property (FC, Art. 120)
1. Reverse accession – If the cost of the
improvement and the value of the
improvement is more than the value of the
principal property at the time of the
improvement, the entire property becomes
conjugal.
103
NOTE: For reverse accession to apply, the
separate property must be owned by a
spouse exclusively at the time of the
introduction of the improvement. It will
apply if the property is partly owned by a
spouse and partly owned by a third person.
2. Accession – If the cost of the improvement
and the value of the improvement is equal to
or less than the value of the principal
property, the entire property becomes the
exclusive property of the respective spouse.
NOTE: In either case, there shall be
reimbursement upon the liquidation of the
conjugal partnership and ownership of
entire property shall be vested only upon
reimbursement.
Q: A parcel of land is owned by the father of
W. With his permission, H and W constructed
their house over the said parcel of land. After
some time, the father of W died, leaving W as
his sole heir. Who now owns the parcel of
land and the improvements introduced by
the H and W? Assume that the property
regime of the H and W is conjugal
partnership of gains.
A: W. The wife will now own both the parcel of
land the house introduced by H and W. Reverse
Accession under Article 120 of the Family Code
will not apply since at the time of the
introduction of the improvement the parcel of
land is owned by the father of W which she
inherited it when her father died. What will
apply here instead is the ordinary rule of
accession. However, the conjugal partnership of
gains will still enjoy the said property as a
usufructuary and W will be the naked owner
thereof.
Q: A, prior to his death, sold his lot. There
were improvements made on the said lot
which was paid out of the conjugal funds of A
and B. When A died, using Art. 120 of the FC
to support her claim, B sought
reimbursement of her half of the sale from C,
the buyer of the property. Will the petition of
B prosper?
A: NO. The SC ruled that Art. 120 does not give
any cause of action on the part of B to claim from
C, the subsequent buyer of the property of A, the
deceased husband. Art. 120 of the FC only allows
claims from the husband if the latter is still the
 Civil Law
owner of the lot upon liquidation. (Ferrer vs
Ferrer, G.R. No. 166496, November 9, 2006)
Presumption of inclusion of property in the
Conjugal Partnership of Gains
GR: All property acquired during the marriage,
whether the acquisition appears to have been
made, contracted or registered in the name of
one or both spouses, is presumed to be conjugal.
XPN: Unless the contrary is proved.
Obligations Chargeable to Separate Property
1. Support of illegitimate children;
2. Liabilities incurred by reason of a crime or
quasi- delict;
3. Expenses of litigation between the spouses if
found to be groundless;
4. Debts contracted during the marriage by the
administrator-spouse which does not
benefit the community;
5. Debts contracted during the marriage
without the consent of the other which did
not benefit the family;
6. Ante-nuptial debts by either spouse which
did not benefit the family;
7. Taxes incurred on the separate property
which is not used by the family;
8. Expenses incurred during the marriage on a
separate property if the property is not used
by the family and not for its preservation.
CONJUGAL PARTNERSHIP PROPERTY
Composition of CPG (1995, 1998, 2004, 2005,
2008 Bar) (FC, Art. 117)
1. Those acquired by onerous title during the
marriage with conjugal funds;
Requisites:
a. Acquisition is made during the
marriage,
b. Thru onerous title,
c. At the expense of common fund;
2. Livestock in excess of what was brought to
the marriage;
3. Those acquired by chance such as winnings
from gambling or betting;
4. Those obtained from labor, industry, work
or profession of either or both spouses;
5. Fruits of conjugal property due or received
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
during the marriage and net fruits of
separate property;
NOTE: Net fruits refer to the remainder of
the fruits after deducting the amount
necessary to cover the expenses of
administration of said exclusive property.
6. Share of either spouse in hidden treasure;
and
7. Those acquired through occupation such as
hunting or fishing. (FC, Art. 117)
Property bought through installment (FC,
Art. 118)
Requisites:
1. Property is bought on installment prior to
the marriage; and
2. Paid partly from exclusive funds and partly
from conjugal funds.
Rules in determining ownership
1. If full ownership was vested before the
marriage – it shall belong to the buyer
spouse;
2. If full ownership was vested during the
marriage – it shall belong to the conjugal
partnership;
NOTE: In either case, any amount advanced
by the partnership or by either or both
spouses shall be reimbursed by the
owner/s upon liquidation of the
partnership.
Q: Yamane asserts that the parcel of land,
which was purchased at auction,
belonged to the conjugal partnership of
him and his late wife. In the title, his
name appeared to be merely descriptive
of the civil status of the registered owner,
his late wife. The purchase took place
prior to the advent of the Family Code. Is
the property conjugal or paraphernal
property of his late wife?
A: CONJUGAL. In this case, the provisions of
the NCC would apply since the property was
purchased before the FC took effect. Under
Art. 160 of the NCC, all properties of the
marriage are presumed to belong to the
conjugal partnership, unless it be proved
that it pertains exclusively to the husband or
the wife. In this case, there was no proof that
104
 Marriage under the Family Code
the property had been acquired exclusively
by Yamane's late wife. The mere registration
of a property in the name of one spouse
does not destroy its conjugal nature in the
absence of strong, clear and convincing
evidence that it was acquired using the
exclusive funds of said spouse. (Spouses Go v.
Yamane, G.R. No. 160762, May 3, 2006)
3. Those obtained from labor, industry, work
or profession of either or both spouses;
4. Fruits of conjugal property due or received
during the marriage and net fruits of
separate property;
NOTE: Net fruits refer to the remainder of
the fruits after deducting the amount
necessary to cover the expenses of
administration of said exclusive property.
5. Share of either spouse in hidden treasure;
6. Those acquired through occupation such as
hunting or fishing;
Q: Dolores seeks to recover a parcel of land,
alleging that she and her husband acquired
such during their marriage, that it formed
part of their conjugal properties and that he
sold it without her consent. She presents
their marriage contract and the initial tax
declaration over the property as pieces of
evidence. Will her action prosper?
A: RECOVERY IS NOT WARRANTED because
rule is all properties of the marriage are
presumed to be conjugal in nature. However, for
this presumption to apply, the party who
invokes it must first prove that it was acquired
during the marriage. Here, Dolores' evidence
consisted of her marriage contract and the initial
tax declaration over the property. She did not
identify when she and her husband first
occupied and possessed the land.
Neither did she present any witness to prove
that they first occupied the property during their
marriage and that they both worked on the land.
(Pintiano-Anno v. Anno, G.R. No. 163743, January
27, 2006)
The presumption of conjugality of the properties
of the husband and wife applies only when there
is proof that the property was acquired during
the marriage. If there is no showing as to when
the properties alleged to be conjugal were
acquired, the presumption does not apply
105
(Francisco v. CA, G.R. No. 102330, November 30,
1998). Proof of acquisition during the coverture
is a condition sine qua non to the operation of
the presumption in favor of the conjugal
partnership. (Pintiano-Anno, v. Anno, et al., G.R.
No. 163743, January 27, 2006)
Effect if properties were registered during
the marriage
The fact that the properties were registered in
the name of the spouses is no proof that the
properties were acquired during the marriage. It
is well-settled that the registration does not
confer title but merely confirms one already
existing. (Jocson v. CA, G.R. No. L-55322, February
16, 1989)
Q: H & W got married on October 1926. H
subsequently cohabited with X. During the
cohabitation of H with X, H acquired certain
properties and places his status as single.
What is the nature of said properties?
A: THEY ARE CONJUGAL PROPERTIES.
Whether a property is conjugal is determined
by law and not by the will of one of the spouses.
No unilateral declaration by one spouse can
change the character of conjugal property. The
clear intent of H in placing his status as single is
to exclude W from her lawful share in the
conjugal property. The law does not allow this.
The cohabitation of a spouse with another
person, even for a long period, does not sever
the tie of a subsisting previous marriage.
H and X’s cohabitation cannot work to the
detriment of Was the legal spouse. The marriage
of H and W continued to exist regardless of the
fact that H was already living with X. Hence, all
property acquired from the date of their
marriage until the death of W are presumed
conjugal. It was neither claimed nor proved that
any of the subject properties was acquired
outside or beyond this period. (Villanueva v. CA,
G.R. No. 143286, April 14, 2004)
Q: Suppose a property was acquired by one
spouse while they were living separately, is
this property conjugal or not?
A: It is presumed to be conjugal. All property
acquired during the marriage regardless of
whether the spouses are living together or not,
are presumed to be conjugal property. (Flores v.
Escudero, G.R. No. L-5302, March 11, 1953)
 Civil Law
A. CHARGE UPON AND OBLIGATIONS OF THE
CONJUGAL PARTNERSHIP OF GAINS (CPG)
1. Support of the spouses, their common
children and the legitimate children of
either spouse;
2. Debts and obligation by one without the
consent of the other to the extent of the
family benefited;
3. Debts and obligations contracted during the
marriage by an administrator-spouse, both
spouses or one with the consent of the
other;
4. Taxes, liens, charges, expenses, including
major or minor repairs upon conjugal
property;
5. Taxes and expenses for mere preservation
made during the marriage of separate
property;
6. Expenses for professional, vocational or
self- improvement courses of either spouse;
7. Ante-nuptial debts to the extent the family
has been benefited;
8. Value of what is donated or promised to
common legitimate children for
professional, vocation or self- improvement
courses; and
9. Expenses of litigation between the spouses
unless the suit is found to be groundless.
(FC, Art. 121)
NOTE: If the conjugal partnership is insufficient
to cover the foregoing liabilities, spouses shall be
solidarily liable for the unpaid balance with their
separate properties.
Charges against the Separate Property that
may be charged upon the CPG
Requisites:
1. All the responsibilities of the partnership
have already been covered; and
2. The spouse who is bound has no exclusive
properties or the same are insufficient.
Charges:
1. Personal debts of either spouse contracted
before the marriage which did not redound
to the benefit of the family;
2. Support of the illegitimate children of either
spouse;
3. Fines and indemnities arising from delicts
and quasi- delicts.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
If levy was made on the conjugal property by
reason of the husband being a guarantor, the
levy is improper. The payment of personal debts
contracted by the husband or the wife before or
during the marriage shall not be charged to the
conjugal partnership except as they redounded
to the benefit of the family. (FC, Art. 122) (2000,
2005 BAR)
Q: If one of the spouses committed the crime
of slander and was held liable for damages in
a damage suit, is it chargeable against the
conjugal partnership?
A: NO. Unlike in the system of absolute
community where liabilities incurred by either
spouse by reason of a crime or quasi-delict is
chargeable to the absolute community of
property, in the absence or insufficiency of the
exclusive property of the debtor-spouse, the
same advantage is not accorded in the system of
conjugal partnership of gains. To reiterate,
conjugal property cannot be held liable for the
personal obligation contracted by one spouse,
unless some advantage or benefit is shown to
have accrued to the conjugal partnership. (Go v.
Yamane, G.R. No. 160762, May 3, 2006)
Q. Venancio is married to Lilia since 1973.
During their union, they acquired three (3)
parcels of land in Malolos, Bulacan. The
properties were mortgaged to Philippine
National Bank on August 25, 1994 to secure a
loan worth P1,100,000.00, and was increased
to P3,000,000.00. According to PNB, the
spouses duly consented with the loan. When
the Reyes Spouses failed to pay the loan
obligations, Philippine National Bank
foreclosed the mortgaged real properties.
The auction sale happened and PNB emerged
as the highest bidder and a certificate of sale
was issued in its favor. Venancio claimed
that his wife undertook the loan and the
mortgage without his consent and his
signature was falsified on the promissory
notes and the mortgage.
1. What is the status of the real estate
mortgage?
2. Can the conjugal partnership be held
liable for the loan contracted unilaterally
by Lilia?
A.
106
 Marriage under the Family Code
1. The real estate mortgage over a conjugal
property is void if the non-contracting
spouse did not give consent. Any disposition
or encumbrance of a conjugal property by
one spouse must be consented to by the
other; otherwise, it is void.
2. YES. They are jointly and solidarily liable
with each other with their separate
properties if their conjugal partnership is
insufficient to fully pay for the loan. What
the lower courts declared void was the real
estate mortgage attached to the conjugal
property of the Reyes Spouses. Since the real
estate mortgage was an encumbrance
attached to a conjugal property without the
consent of the other spouse, it is void and
legally inexistent. Although petitioner
cannot foreclose the mortgage over the
conjugal property in question, it can still
recover the loan amount from the conjugal
partnership. (Philippine National Bank v.
Venancio C. Reyes, JR., G.R. No. 212483,
October 5, 2016, as penned by J. Leonen)
B. ADMINISTRATION OF THE CONJUGAL
PARTNERSHIP OF GAINS (ART. 124)
GR: The right to administer the conjugal
partnership belongs to both spouses jointly.
XPN:
1. If one spouse is incapacitated or otherwise
unable to participate in the administration
of the common properties – capacitated or
able spouse may assume sole powers of
administration.
2. If a spouse without just cause abandons the
other or fails to comply with his or her
obligations to the family, the aggrieved
spouse may petition the court for sole
administration.
3. During the pendency of a legal separation
case, the court may designate either of the
spouse as sole administrator.
But such powers do not include:
1. Disposition;
2. Alienation; or
3. Encumbrance of the conjugal or community
property.
NOTE: The sale of conjugal property without the
consent of the husband is void. If one spouse is
incapacitated or otherwise unable to assume
107
sole powers of administration of the conjugal
properties, the other spouse may assume sole
powers of administration. These powers do not
include disposition or encumbrance without
authority or written consent of the other spouse.
(Aggabao v. Parulan, G.R. No. 165803, September
1, 2010)
Disagreement in the administration of the
CPG
In case of disagreement, the decision of the
husband shall prevail subject to recourse to the
court by the wife for proper remedy.
NOTE: Prescriptive period for recourse is 5
years from the date of the contract
implementing such decision. (2000, 2002 BAR)
C. DISSOLUTION OF CONJUGAL
PARTNERSHIP OF GAINS
Conjugal partnership is terminated by:
1. Death of either spouse;
2. Legal separation;
3. Annulment or Declaration of Nullity;
4. Judicial separation of property during
marriage. (FC, Art. 126)
D. LIQUIDATION OF THE CONJUGAL
PARTNERSHIP ASSETS AND LIABILITIES
1. Inventory of all the properties;
2. Restitution of advances made to each of the
spouses;
3. Reimbursement for use of exclusive funds;
4. Debts and obligations of the CP are paid;
5. Delivery of exclusive properties;
6. Payment of losses and deterioration of
movables belonging to each of the spouses,
unless the owner had been indemnified
from whatever source;
7. Division of the net conjugal partnership;
8. Delivery of the common children’s
presumptive legitimes;
9. Adjudication of conjugal dwelling and
custody of common children. (FC, Art. 129)
Liquidation of community property if the
termination of the marriage is by death
Upon termination of marriage by death, the
community property shall be liquidated in the
same proceeding for the settlement of the estate
of the deceased spouse. (FC, Art. 130)
 Civil Law

Support to the surviving spouse and to the
children during liquidation
The support to be given to the surviving spouse
and to the children during liquidation shall come
from the common mass of property and shall be
particularly charged against the fruits, rents or
income pertaining to their shares to the
inventoried property. But where the support
given exceeds the fruits, rents or income
pertaining to their shares, the excess shall be
deducted from their respective shares as these
are deemed advances from the inventoried
property. (FC, Art. 133)
Liquidation of community property in the
absence of a judicial settlement proceeding
(FC, Art. 130)
1. Any disposition or encumbrance made by
the surviving spouse involving community
property of the terminated marriage shall be
void.
2. Should the surviving spouse contract a
subsequent marriage a mandatory regime of
complete separation of property shall
govern the property relations of the
subsequent marriage.
Rules governing the regime of separation of
property
1. Marriage settlement
2. Family Code in supplemental character (FC,
Art. 149)
Kinds of separation of property

In the absence of a judicial settlement 1. As to extent: (FC, Art. 144)

proceeding, the surviving spouse shall liquidate
the community property either, judicially or a. Total
extra-judicially within 1 year from the death of b. Partial – In this case, the property not
the deceased spouse. agreed upon as separate shall pertain to
the absolute community.
NOTE: The system of complete separation of
property will govern the property relations 2. As to kinds of property: (FC, Art. 144)
between the spouses only in the following cases:
a. Present property
1. When it is expressly provided for in the b. Future property
marriage settlement. c. Both present and future property
2. When it is so decreed by a competent court.
3. Mandatory regime of complete separation of Instances when separation of property is
property. allowed (FC, Art. 134)
4. By failure of the surviving spouse to
liquidate the absolute community or 1. By agreement through marriage settlement
conjugal partnership of gains of a previous 2. By judicial order
marriage which has been terminated by
death within the one-year period required Sufficient causes for judicial separation of
by law prior to contracting another property
marriage. The subsequent marriage is
mandatorily governed by a regime of 1. Civil interdiction of the spouse of petitioner;
complete separation. 2. Judicial declaration of absence;
3. Loss of parental authority as decreed by the
III. COMPLETE SEPARATION OF PROPERTY court;
(CSOP) 4. Abandonment or failure to comply with
family obligation; (2003 BAR)
If during the liquidation of the CP, the conjugal 5. Administrator spouse has abused authority;
partnership assets are less than the conjugal 6. Separation in fact for one year and
partnership liabilities, the surviving spouse and reconciliation is highly improbable. (FC, Art.
the children shall not be entitled to support. 135)

Effects if the community property is not NOTE: In cases provided in 1, 2 and 3, the
liquidated (FC, Art. 130) presentation of the final judgment against the
guilty or absent spouse shall be enough bases for

UNIVERSITY OF SANTO TOMAS 108

2021 GOLDEN NOTES
 Marriage under the Family Code
the grant of the decree of judicial separation of
property.
Effects of judicial separation of property
between spouses
1. The absolute community or conjugal
partnership is dissolved;
2. The liability of the spouses to creditors shall
be solidary with their separate properties;
3. Mutual obligation to support each other
continues except when there is legal
separation;
4. Rights previously acquired by creditors are
not prejudiced.
In case of voluntary agreement for the
separation of property, the law does not require
specific reasons to justify the Court in approving
the same. The law leaves the matter to the
discretion of the court. (Sempio-Diy, 1995)
(2005 BAR)
Rights of the spouses under the regime of
separation of property
1. Each spouse shall own, dispose of,
administer, possess, and enjoy his or her
own separate property, without need of the
consent of the other.
2. Each spouse shall own all earnings from his
or her profession, business or industry and
all fruits, natural, industrial or civil, due or
received during the marriage from his or her
separate property. (FC, Art. 145)
Liabilities of the spouses for family expenses
under the regime of separation of property
(FC, Art. 146)
GR: Both spouses shall bear the family expenses
in proportion to their income.
XPN: In case of insufficiency or default thereof,
to the current market value of their separate
properties.
Revival of previous property regime
If the spouses opted for voluntary separation of
property, the parties may agree to the revival
even in the absence of a reason/ground.
However, a subsequent voluntary separation of
property is no longer allowed.
If the separation of property is for a sufficient
109
cause, the revival of the previous property
regime depends upon the cessation of the
ground which was the basis of the judicial order.
A subsequent judicial separation of property for
a sufficient cause may be allowed so long as
there is a new ground to rely on.
The procedure of the revival of previous
property regime is the same as those followed
upon reconciliation of the spouses after the
finality of legal separation.
Transfer of Administration of Exclusive
Property to another Spouse during the
Marriage
1. By agreement
Requisites:
a. By means of a public instrument;
b. To be recorded in the registry of
property of the place where the
property is located.
2. By order of the court upon petition
Based on these grounds:
a. Other spouse becomes the guardian of
the other;
b. The other spouse is judicially declared
an absentee;
c. Other spouse is sentenced to a penalty
which carries with it civil interdiction;
or
d. Other spouse becomes fugitive from
justice or hiding as an accused in a
criminal case. (FC, Art. 142)
NOTE: For as long as it is proven that s property
was acquired during marriage, the presumption
of conjugality will attach regardless in whose
name the property is registered.
The presumption is not rebutted by the mere
fact that the certificate of title of the property or
the tax declaration is in the name of one of the
spouses. (Villanueva v. CA, G.R. No. 143286, April
14, 2004)
Property regime in case the marriage is
declared null and void on the ground of
psychological incapacity
The property relation between the parties is
 Civil Law
governed by Art. 147 of the Family Code.
Property acquired by both spouses 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." Unlike
the conjugal partnership of gains, the fruits of
the couple's separate property are not included
in the co-ownership.
Q: Miko and Dinah started to live together as
husband and wife without the benefit of
marriage in 1984. 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. 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 a decree of absolute
nullity of marriage shall only be
issued after liquidation, partition,
and distribution of the parties’
properties under Art, 147.
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. If you are the judge, how
will you decide the petitioner’s Motion?
Why? (2014 BAR)
A: I will grant the partial reconsideration. If the
marriage is declared void under Art. 36, the
provisions of the Family Code on liquidation,
partition and distribution of the properties on
absolute community or conjugal partnership will
not apply but rather Art 147 or Art. 148
depending on the presence or absence of the
legal impediment between them.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Art. 50 of the Family Code, and Sec. 19 of the
Rules on Declaration of Nullity applies only to
marriages which are declared void ab initio or
annulled by final judgment under Art. 40 and 45
of the Family Code. Art. 50 does not apply to
marriages which are declared void ab initio
under Art. 36 which should be declared void
without waiting for the liquidation of the
properties of the parties.
In this case, petitioner’s marriage to respondent
was declared void under Art. 36 of the FC and
not under Art.40. Thus, what governs the
liquidation of property owned in common by
petitioner and respondent are the rules on co-
ownership under Art. 496 of the NCC. Partition
may be made by agreement between the parties
or by judicial proceedings. It is not necessary to
liquidate the property of the spouses in the same
proceeding for declaration of nullity of marriage.
(Dino v. Dino, G.R. No. 178044, January 19, 2011)
Co-ownership under Art. 147
When a man and a woman who are capacitated
to marry each other, live exclusively with each
other as husband and wife without the benefit of
marriage or under a void marriage, their wages
and salaries shall be owned by them in equal
shares and the property acquired by both of
them through their work or industry shall be
governed by the rules of co-ownership.
In the absence of proof to the contrary,
properties acquired while they lived together
shall be presumed to have been obtained by
their joint efforts, worker industry, and shall be
owned by them in equal shares. A party who did
not participate in the acquisition by the other
party of any property shall be deemed to have
contributed jointly in the acquisition thereof if
the former's efforts consisted in the care and
maintenance of the family and of the household.
Under this article, there is a presumption that
the properties which they acquired during their
cohabitation were acquired through their joint
efforts, work or industry. It further provides that
a party who did not participate in the acquisition
thereof shall be deemed to have contributed
jointly in the acquisition thereof if his or her
efforts consisted in the care and maintenance of
the family and of the household.
Co-ownership under Art. 148
110
 Marriage under the Family Code
Co-ownership may ensue in case of cohabitation
where, for instance, one party has a pre-existing
valid marriage, provided that the parties prove
their actual joint contribution of money,
property or industry and only to the extent of
their proportionate interest thereon. (Francisco
v. Master Iron Works Construction Corp., G.R. No.
151967, February 16, 2005)
Q: Romeo and Juliet lived together as
husband and wife without the benefit of
marriage. During their cohabitation, they
acquired a house. When they broke up, they
executed an agreement where he agreed to
leave the house provided Juliet will pay his
entire share in their properties. She failed to
do so but she also ignored his demand for her
to vacate. Romeo sued her for ejectment
which the court granted. Was the court
correct in granting the same?
A: NO. Under Art.147 of the Family Code, the
property is co- owned by the parties. In the
absence of proof to the contrary, any property
acquired by common-law spouses during their
cohabitation is presumed to have been obtained
thru their joint efforts and is owned by them in
equal shares. Their property relationship in such
a case is essentially governed by the rules on co-
ownership. Thus, Romeo cannot seek the
ejectment of Juliet therefrom. As a co- owner,
she is as much entitled to enjoy its possession
and ownership as him. (Abing v. CA, G.R. No.
146294, July 31, 2006)
Q: Bert and Joe, both male and single, lived
together as common law spouses and agreed
to raise a son of Bert’s living brother as their
child without legally adopting him. Bert
worked while Joe took care of they were able
to acquire real estate assets registered in
their names as co-owners. Unfortunately,
Bert died of cardiac arrest, leaving no will.
Bert was survived by his biological siblings,
Joe and the boy.
Can Article 147 on co-ownership apply to
Bert and Joe, whereby all properties they
acquired will be presumed to have been
acquired by their joint industry and shall be
owned by them in equal shares?
If Bert and Joe had decided in the early years
of their cohabitation to jointly adopt the boy,
would they have been legally allowed to do
so? Explain with legal basis.
111
A:
a. NO. Article 147 of the Family Code cannot
apply to Bert and Joe because the law only
applies to a man and a woman who are
capacitated to marry each other who live
together as husband and wife without the
benefit of marriage or under a void
marriage. In the case of Bert and Joe, they
are both men, so the law does not apply.
b. NO. Joint adoption is allowed between
husband and wife, even if Bert and Joe are
cohabiting with each other, they are not
vested with the right to jointly adopt under
the Family Code or even under the
Domestic Adoption Act. (Sec. 7, R.A. 8552)
Q: Benjamin is married to Azucena. While
Azucena is out of country, Benjamin
developed a romantic relationship with Sally,
but her father was against this. In order to
appease her father, Sally convinced Benjamin
to sign a purported marriage contract.
Eventually, their relationship ended a few
years later. Benjamin asked the court for the
partition of the properties he acquired with
Sally in accordance with Article 148 of the FC,
for his appointment as administrator of the
properties during the pendency of the case.
Among the 44 properties which were the
subject of the partition, 7 were enumerated
by Benjamin while Sally named 37 properties
in her answer. Is Benjamin’s contention
correct?
A: YES. The property relations of Benjamin and
Sally is governed by Article 148 of the Family
Code. They cohabitated without the benefit of
marriage. Thus, only the properties acquired by
them through their actual joint contribution of
money, property, or industry shall be owned by
them in common in proportion to their
respective contributions. Thus, the 37 properties
being claimed by Sally is excluded as part of her
conjugal properties with Benjamin because Sally
was not legally married to Benjamin. As regards
the seven remaining properties, only one of
them is registered in the names of the parties as
spouses. The other four were registered in the
name of either one of them with the description
“married to” and the last two were named to
Sally as an individual. The words “married to”
preceding the name of a spouse are merely
descriptive of the civil status of the registered
owner, which do not prove co-ownership.
Without proof of actual contribution from either
 Civil Law

or both spouses, there can be no co-ownership

under Article 148 of the Family Code. (Go-
Bangayan v. Bangayan, Jr., G.R. No. 201061, July 3,
2013)

Retroactive application of Art. 148 of the

Family Code

Although the adulterous co-habitation of the

parties or the acquisition of the property
occurred before the effectivity of the Family
Code on August 3, 1998, Article 148 applies
because the said provision was intended
precisely to fill up the hiatus in Article 144 of the
NCC. Before Article 148 of the Family Code was
enacted, there was no provision governing
property relations of couples living in a state of
adultery or concubinage. (Atienza v. De Castro,
G.R. No. 169698, November 29, 2006)

UNIVERSITY OF SANTO TOMAS 112

2021 GOLDEN NOTES
 Marriage under the Family Code
IV. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE

BASIS ART.147 ART.148

(1997, 2000, 2006, 2009, 2010 BAR) (1992, 1998, 2000, 2006, 2009 BAR)

1. Parties without legal With legal impediment caused by:

Applicability impediment to marry;
2. Void marriage on the ground of 1. Adulterous relationships
psychological incapacity. 2. Bigamous/polygamous
marriages
3. Incestuous void marriages
under Art.37
4. Void marriages by reason of
public policy. (FC, Art. 38)

1. The man and the woman must
As to requisites be capacitated to marry each
other;
2. live exclusively with each other
as husband and wife; and
3. their union is without the
benefit of marriage or their
marriage is void. (Mercado Fehr
v. Fehr, G.R. No. 152716, October
23, 2003 Salas, Jr. v. Aguila, G.R.
No. 202370, September 23, 2013)
1. The man and the woman
must be incapacitated to
marry each other, or they do
not live exclusively with each
other as husband and wife;
and
2. Their union is without the
benefit of marriage or their
marriage is void. (FC, Art.
148)

Owned in equal shares Separately owned by the parties. If

Salaries & wages any is married, his/her salary pertains
to the CPG of the legitimate marriage.

Property Belongs to party upon proof of Belongs to such party.

exclusively acquisition through exclusive funds.
acquired
Property acquired
by Governed by rules of co-ownership. Owned in common in proportion to
both through their their respective contributions.
work or industry
Property acquired while living together No presumption of joint acquisition.
presumed obtained by their joint efforts,
Presumption work or industry and owned by them in Actual joint contribution of money,
equal shares. property or industry shall be owned
by them in common proportion.
If one party did not participate in
acquisition: presumed to have However, their contributions are
contributed through care and presumed equal, in the absence of
maintenance of family and household. proof to the contrary.
(Buenaventura v. CA, G.R. No. 127358,
March 31, 2005)

113
 Civil Law

When only one of the parties to a void If one of the parties is validly married
marriage is in good faith, the share of the to another, his/her share in the co-
Forfeiture party in bad faith in the co-ownership ownership shall accrue to the ACP or
shall be forfeited in favor of: CPG existing in the marriage.

1. their common children If the party who acted in BF is not

2. in case of default of/or waiver validly married to another or if both
by any or all of the common parties are in BF, such share be
children or their descendants, forfeited in a manner provided in the
each vacant share shall belong last par. of Art. 147
to the respective surviving
descendants
3. In the absence of descendants,
such shares shall belong to the
innocent party.

Proof of actual Not necessary Necessary

contribution

UNIVERSITY OF SANTO TOMAS 114

2021 GOLDEN NOTES
 The Family under the Family Code
THE FAMILY UNDER THE FAMILY CODE
THE FAMILY AS AN INSTITUTION
Being the foundation of the nation, it is a basic
social institution which public policy cherishes
and protects. (FC, Art. 149)
Family relations include
1. Between husband and wife;
2. Between parents and children;
3. Among other ascendants and descendants;
4. Among brothers and sisters, whether of the
full or half-blood. (FC, Art. 150)
A suit between a brother-in-law and a sister-in-
law is not within the coverage of the law, hence,
the failure of the plaintiff to allege earnest
efforts to effect a compromise is not necessary.
The relationship is based on consanguinity,
except that of the husband and wife. (Gayon v.
Gayon, G.R. No. L-28394, November 26, 1970)
The enumeration of brothers and sisters as
members of the same family does not
comprehend brothers- or sisters- in-law.
(Guerero v. RTC, G.R. No. 109068, January 10,
1994)
Rules to remember
1. Family relations exists even if they are not
living together.
2. Illegitimate children are not included in the
family relations under this Article because
they have their own families.
3. Adopted children are included. (Minutes of
Committee Meeting of August 24, 1985)
Rules governing family relations
Family relations are governed by law. No
custom, practice or agreement destructive of the
family shall be recognized or given effect. (FC,
Art. 149)
NOTE: Even if not all forms of extra-marital
relations are punishable under penal law, the
sanctity of marriage is constitutionally
recognized and likewise affirmed by our statutes
as a special contract of permanent union.
Accordingly, the Court has had little qualms with
penalizing judicial employees for their dalliances
with married persons or for their own betrayals
of the marital vow of fidelity. (Concerned
115
Employee v. Glenda Mayor, A.M. No. P- 02-1564,
November 23, 2004)
Requisites before a suit between members of
the same family may prosper
1. Earnest efforts toward a compromise have
been made;
2. Such efforts failed;
3. The fact that earnest efforts toward a
compromise have been made but the same
have failed appears in the verified complaint
or petition. (FC, Art. 151)
This rule shall not apply to cases which may not
be subject of compromise under the Art. 2035 of
the New Civil Code.
Q: Jose alleged that he and his family have
been occupying two (2) parcels of land,
which was then offered to sell to Jose the
subject lands which Jose accepted. However,
Consuelo decided to "cancel" their
agreement. In response, Jose expressed his
disapproval to Consuelo's plan and
demanded that respondents proceed with
the sale, which the latter ignored. Upon
learning of such sale, Jose sent a demand
letter to Rene asserting his right to the
subject lands. As his demands went
unheeded, Jose brought the matter to the
barangay upon for conciliation proceedings
between him and Rene. When it reached the
CA such Court moto proprio dismissed the
case on the ground that they failed to apply
article 151. Can the CA motu proprio dismiss
such case?
A: NO. Non-compliance with the earnest effort
requirement under Article 151 of the Family
Code is not a jurisdictional defect which would
authorize the courts to dismiss suits filed before
them motu proprio. Rather, it merely partakes of
a condition precedent such that the non-
compliance therewith constitutes a ground for
dismissal of a suit should the same be invoked
by the opposing party at the earliest
opportunity, as in a motion to dismiss or in the
answer. Otherwise, such ground is deemed
waived.
If the respondents as parties-defendants could
not, and did not, after filing their answer-to-
petitioner’s complainant, invoke the objection of
absence of the required allegation on earnest
efforts at a compromise, the appellate court
 Civil Law
unquestionably did not have any authority or
basis to motu propio order the dismissal of
petitioner’s complaint. (Moreno vs. Kahn, G.R. No.
217744, July 30, 2018)
The following cannot be compromised:
1. Civil status of persons;
2. Validity of a marriage or legal separation;
3. Any ground for legal separation;
4. Future support;
5. Jurisdiction of courts; and
6. Future legitime. (NCC, Art. 2035)
NOTE: A sister-in-law or a brother-in-law is not
covered by these two provisions. Being an
exception to the general rule, Art. 150 of the
Family Code must be strictly construed. (Gayon
v. Gayon, G.R. No. L-28394, November 26, 1970)
THE FAMILY HOME
It is the dwelling house where the husband and
wife and their family reside, and the land on
which it is situated. It is constituted jointly by
the husband and the wife or by an unmarried
head of a family. (FC, Art. 152)
Constitution of Family Home (FH)
The FH is deemed constituted on a house and lot
from the time it is occupied as a family
residence. (FC Art. 153)
Guidelines in the constitution of the Family
Home
1. FH is deemed constituted from the time of
actual occupation as a family residence;
2. Only 1 FH may be constituted;
3. Must be owned by the person constituting it;
4. Must be permanent;
5. Same rule applies to both valid and voidable
marriages and even to common law
spouses; (FC, Arts. 147 and 148)
6. It continues despite death of one, either
spouses, or an unmarried head of the family
for 10 years or as long as there is a minor
beneficiary. (FC, Art 159)
The heirs cannot partition the same unless the
court finds compelling reasons therefor. This
rule shall apply regardless of whoever owns the
property or constituted the FH. (FC, Art 159)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
The FH must be part of the properties of the
absolute community or the conjugal partnership
or the exclusive properties of either spouse, with
the latter’s consent. It may also be constituted by
an unmarried head of a family on his or her own
property. (FC, Art 156)
NOTE: Property that is subject of a conditional
sale on installments where ownership is
reserved by the vendor only to guarantee
payment of the purchase price may be
constituted as a FH.
Beneficiaries of a Family Home (FC, Art. 154)
1. Husband and wife, or
2. Unmarried head of the family,
3. Parents (may include parents-in-law),
4. Ascendants,
5. Descendants
6. Brothers and sisters (legitimate or
illegitimate) living in the FH and dependent
on the head of the family for legal support.
Requisites to be considered as beneficiary
(FC, Art 156)
1. They must be among the relationships
enumerated in Art. 154 of the Family Code;
2. They live in the FH; and
3. They are dependent for legal support upon
the head of the family.
Q: 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.
Thereafter, Leonora and Danilo advised
Carlito of their intention to partition the
property. Carlito opposed invoking Art. 159
of the Family Code. Carlito alleged that since
his minor child Lucas still resides in the
premises, the family home continues until
the minor beneficiary becomes of age. Is the
contention of Carlito tenable? (2014 BAR)
A: NO. To qualify as beneficiary of the FH, the
person must be among those mentioned under
Art. 154 of the Family Code, he/she must be
actually living in the FH and must be dependent
for legal support upon the head of the family.
(Patricio v. Darion, G.R. No. 170829, November 20,
2006) While Lucas satisfies the first and second
116
 The Family under the Family Code
requisites, he cannot, however, directly claim
legal support from his grandmother, Leonora
because the person primarily obliged to give him
support is his father Carlito. Thus, the partition
may be successfully claimed by Leonora and
Danilo.
Occupancy of the FH either by the owner thereof
or by “any of its beneficiaries” must be actual.
That which is “actual” is something real, or
actually existing, as opposed to something
merely possible, or to something which is
presumptive and constructive. Actual occupancy,
however, need not be by the owner of the house.
Rather, the property may be occupied by the
“beneficiaries” enumerated by Art. 154 of the
Family Code. (Manacop v. CA, G.R. No. 97898,
August 11, 1997)
NOTE: This enumeration may include the in-
laws where the FH is constituted jointly by the
husband and wife. But the law definitely
excludes maids and overseers.
Effect of death of one or both spouses or of
the unmarried head of the family upon the
family home
The FH shall continue despite the death of one or
both spouses or of the unmarried head of the
family for a period of 10 years or for as long as
there is a minor beneficiary and the heirs cannot
partition the same unless the court finds
compelling reasons therefor. This rule shall
apply regardless of whoever owns the property
or constituted the FH. (FC, Art. 159) (2010 BAR)
Exemption of Family Home from execution,
forced sale or attachment
GR: FH is exempt from execution, forced sale or
attachment.
From the time of its constitution and so long as
any of its beneficiaries resides therein, the FH
continues to be such and is exempt from
execution, forced sale or attachment. (FC, Art.
153)
However, the rule is not absolute. Art. 155 of the
Family Code provides the circumstances
wherein the FH will not be exempt from
execution, forced sale of attachment, to wit:
XPN: Under Art. 155 of the Family Code:
117
1. Debts due to laborers, mechanics, architects,
builders, material men and others who
rendered service or furnished materials for
the constitution of the building;
2. Non-payment of Taxes;
3. Debts incurred Prior to its constitution;
4. Debts secured by Mortgages on the premises
before or after such constitution.
NOTE: Exemption is limited to the value allowed
in the Family Code.
Rule for the family home to be exempted
from execution
1. If the FH was constructed before the
effectivity of the FC, then it must have been
constituted either judicially or extra-
judicially as provided under Arts. 225, 229-
231 and 233 of the NCC. Judicial constitution
of the FH requires the filing of a verified
petition before the courts and the
registration of the court’s order with the
Registry of Deeds of the area where the
property is located. Meanwhile, extrajudicial
constitution is governed by Arts. 240 to 242
of the New Civil Code and involves the
execution of a public instrument which must
also be registered with the Registry of
Property.
2. For FH constructed after the effectivity of
the FC, there is no need to constitute extra-
judicially or judicially, and the exemption is
effective from the time it was constituted
and lasts as long as any of its beneficiaries
actually resides therein. Moreover, the FH
should belong to the absolute community or
conjugal partnership, or if exclusively by one
spouse, its constitution must have been with
consent of the other, and its value must not
exceed certain amounts depending upon the
area where it is located. Further, the debts
incurred for which the exemption does not
apply as provided under Art. 155 for which
the FH is made answerable must have been
incurred after the effectivity of the Family
Code.
3. And in both cases, whether under the Civil
Code or the Family Code, it is not sufficient
that the person claiming exemption merely
alleges that such property is a FH. This claim
for exemption must be set up and proved.
(Juanita Trinidad Ramos, et al. v. Danilo
Pangilinan et al. G.R. No. 185920, July 20,
 Civil Law
2010)
Exemption of Family Home must first be set
up and proved
The FH’s exemption from execution must be set
up and proved to the Sheriff before the sale of
the property at public auction. It should be
asserted that the property is a FH and that it is
exempted from execution at the time it was
levied or within a reasonable time thereafter. It
is not sufficient that the person claiming
exemption merely alleges that such property is a
FH. Failure to do so will estop one from later
claiming the said exemption. (Spouses Araceli
Oliva-De Mesa and Ernesto de Mesa v. Spouses
Claudio D. Acero Jr. and Ma.Rufina D. Acero,
Sheriff Felixberto L. Samonte and Registrar
Alfredo Santos, G.R. No. 185064, January 16,
2012)
Requisites for the creditor to avail of the
right to execute (FC, Art 160)
1. He must be a judgment creditor;
2. His claim must not be among those excepted
under Art. 155;
3. He has reasonable grounds to believe that
the FH is worth more than the maximum
amount fixed in Art. 157.
Procedure in exercising the right to execute
1. Creditor must file a motion in the court
proceeding where he obtained a favorable
judgment for a writ of execution against the
FH;
2. There will be a hearing on the motion where
the creditor must prove that the actual value
of the FH exceeds the maximum amount
fixed by the Family Code, either at the time
of its constitution or as a result of
improvements introduced after its
constitution;
3. If the creditor proves that the actual value
exceeds the maximum amount, the court
will order its sale in execution;
4. If the FH is sold for more than the value
allowed, the proceeds shall be applied as
follows:
a. The obligations enumerated in Art.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
155 of the Family Code must be paid
b. The judgment in favor of the creditor
will be paid, plus all the costs of
execution
The excess, if any, shall be delivered to the
judgment debtor. (FC, Art. 160)
NOTE: The actual value of the FH shall not
exceed, at the time of its constitution, the
amount of P300,000 in urban areas, and
P200,000 in rural areas, or such amounts as may
hereafter be fixed by law. (FC, Art. 157)
Q: A complaint for damages was filed against
Hinahon in 1986 when she incurred
liabilities as early as 1977, which action
prospered in 1989. The house and lot that
she owned was levied upon and sold at
auction. She assails the levy and sale on the
ground that it was her family home and
therefore exempt from execution. Decide.
A: IT IS NOT EXEMPT. Under Art. 155 of the
Family Code, the FH shall be exempt from
execution, forced sale, or attachment except for,
among other things, debts incurred prior to the
constitution of the FH. The house and lot was not
constituted as a FH, whether judicially or extra-
judicially, at the time that the debtor incurred
her debts. Under prevailing jurisprudence, it is
deemed constituted as such by operation of law
only upon the effectivity of the Family Code on
August 3, 1988, thus, the debts were incurred
before the constitution of the FH. (Gomez-
Salcedo, et al. v. Sta. Ines, et al., G.R. No. 132537,
October 14, 2005)
Here, the complaint against Hinahon was
instituted on June 17, 1986, to seek redress for
damages suffered by them due to acts and
omissions committed by her as early as 1977.
This means that Hinahon’s liability arose long
before the levied property was constituted as FH
by operation of law in August 1988. It is thus
clear that the liability incurred by Hinahon falls
squarely under one of the instances when a FH
may be the subject of execution, forced sale, or
attachment to answer for debts incurred prior to
the constitution of the FH. (Gomez-Salcedo, et al.
v. Sta. Ines, et al., G.R. No. 132537, October 14,
2005)
Q: Has the residential house and lot of
Cesario Montana which he and his family
118
 The Family under the Family Code
built in 1960 but which was not constituted
as a family home, whether judicially or
extrajudicially, under the NCC been
constituted as a family home by operation of
law under Art. 153 of the FC, and therefore,
exempt from execution from a money
judgment where the debt or liability was
incurred before the effectivity of the FC?
A: NO. Under Art. 162 of the Family Code, it is
provided that “the provisions of this Chapter
shall also govern existing family residences
insofar as said provisions are applicable.” It does
not mean that Arts. 152 and 153 of the Family
Code have a retroactive effect such that all
existing family residences are deemed to have
been constituted as a FH at the time of their
occupation prior to the effectivity of the FC and
are exempt from execution for the payment of
obligations before the effectivity of the Family
Code. Art. 162 simply means that all existing
family residences at the time of the effectivity of
the Family Code are considered FH and are
prospectively entitled to the benefits accorded
to a family home under the Family Code.
(Manacop v. CA, 277 SCRA 64, August 11, 1997)
NOTE: The Family Code does not have a
retroactive effect. Thus, prior to August 5, 1988,
the procedure mandated by the Civil Code had to
be followed for a Family Home to be constituted
as such. There being no proof that the subject
property was judicially or extrajudicially
constituted as a family home, it follows that
petitioner cannot avail of the law’s protective
mantle. (Modequillo v. Breva, G.R. No. 86355, May
31, 1990)
Q: On March 17, 1997, Evangeline A. Abuda
loaned P250,000.00 to Florante Vitug and his
wife, Narcisa. As a security for the loan, Vitug
mortgaged to Abuda his property in Tondo
Foreshore. The property was then subject of
a conditional Contract to Sell between the
NHA and Abuda. Later, the parties executed a
“restructured” mortgage contract on the
property to secure P600,000.00 representing
the original P250,000.00 loan, additional
loans, and subsequent credit
accommodations. By then, the property was
covered by TCT No. 234246 under Vitug’s
name. Unfortunately, spouses Vitug failed to
pay their loans despite demands. Vitug
claimed that the property was exempt from
execution because it was constituted as a
family home before its mortgage. Is Vitug’s
119
contention proper?
A: NO. Even though Vitug’s property has been
constituted as a family home, it is not exempt
from execution. Article 155 of the Family Code
explicitly provides that debts secured by
mortgages are exempted from the rule against
execution, forced sale, or attachment of family
home. Since the property was voluntarily used
by Vitug as a security for a loan he obtained from
respondent, it may be subject to execution and
attachment. (Vitug v. Abuda, G.R. No. 201264,
January 11, 2016, as penned by J. Leonen)
Requisites in the sale, alienation, donation,
assignment or encumbrance of the FH
The following must give their written consent:
1. The person who constituted the FH;
2. The spouse of the person who constituted
the FH;
3. Majority of the beneficiaries of legal age.
NOTE: In case of conflict, the court shall decide.
Limitations on Family Home
1. Each family can have only one FH. After one
FH has been constituted, no other FH can be
established without first dissolving the
existing one.
2. FH can be constituted only on the dwelling
place, and therefore in the locality where the
family has its domicile.
3. The value of the FH must not exceed the
limit fixed by law. (Tolentino, 2013)
PATERNITY AND FILIATION
Paternity is the civil status of a father with
regard to the child.
Filiation is the civil status of a child with regard
to his parents.
Filiation may be by nature or adoption,
legitimate or illegitimate.
NOTE: Paternity or filiation is established by
clear and convincing evidence. (Constantino v.
Mendez, G.R. No. 57227, May 14, 1992)
Classifications of filiation (2009 BAR)
I. Natural
 Civil Law
a. Legitimate – conceived OR born
within a valid marriage.
b. Illegitimate – conceived AND born
outside a valid marriage.
II. Judicial Act
a. Legitimated – conceived and born
outside of wedlock of parents
without impediment to marry at the
time of conception or were so
disqualified only because either or
both of them were below eighteen
(18) years of age. (FC, Art. 177)
b. Adopted – a filiation created by law
which vests between two persons a
relationship similar to that which
results from legitimate paternity and
filiation.
I. NATURAL
A. LEGITIMATE CHILDREN
Legitimate child
GR: One who is conceived OR born during the
marriage of the parents. (FC, Art. 164)
XPN: Born outside of a valid marriage (void
marriages) but considered as legitimate child:
1. Children of marriages which are declared
void under Art. 36; and
2. Children of marriages which are declared
void under Art. 53. (Rabuya, 2009)
Requisites for a child conceived by artificial
insemination to be considered legitimate (FC,
Art. 164, par. 2)
1. The artificial insemination is made on the
wife, not on another woman;
2. The artificial insemination on the wife is
done with the sperm of the husband or of a
donor, or both the husband and a donor;
3. The artificial insemination has been
authorized or ratified by the spouse on a
written instrument executed and signed by
them before the birth of the child; and
4. The written instrument is recorded in the
civil registry together with the birth
certificate of the child. (FC, Art. 164)
Rights of legitimate children (FC, Art. 174)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. To bear the surname of the father and the
mother;
2. To receive support from their parents, their
ascendants, and in proper cases, their
brothers and sisters; and
3. To be entitled to the legitimate and other
successional rights granted to them by the
Civil Code.
Presumption of legitimacy (2006, 2008, 2010
BAR)
Article 164 of the Family Code provides that the
children conceived or born during the marriage
of the parents are legitimate.
The presumption of legitimacy of children does
not only flow out from a declaration contained in
the statute but is based on the broad principles
of natural justice and the supposed virtue of the
mother. The presumption is grounded in a policy
to protect innocent offspring from the odium of
illegitimacy. (Liyao, Jr. v. Tanhoti-Liyao, G.R.
138961, March 7, 2002)
The presumption of legitimacy under Article 164
of the Family Code may be availed only upon
convincing proof of the factual basis therefor,
i.e., that the child’s parents were legally married
and that his/her conception or birth occurred
during the subsistence of that marriage. Else, the
presumption of law that a child is legitimate
does not arise. (Angeles Maglaya, G.R. No.
153798, September 2, 2005)
NOTE: The child by himself cannot choose his
own filiation. Neither can he elect the paternity
of the husband of his mother when the
presumption of his legitimacy has been
successfully overthrown.
Q: What is the effect of the declaration of a
wife against the legitimacy of the child where
the child is conclusive presumed to be the
legitimate child of H and W?
A: The child shall still be legitimate, although the
mother may have declared against his
legitimacy. This law likewise applies to such
instances where the mother may have been
sentenced as an adulteress. (FC, Art. 167)
NOTE: Art. 167 of the Family Code applies only
to a situation where the wife denies the
paternity of the husband. Art. 167 does not apply
to a situation where a child is alleged not to be
120
 The Family under the Family Code
the child of nature or biological child of the
couple. (Rabuya, 2009)
Q: Roderick and Faye were high school
sweethearts. When Roderick was 18 and
Faye, 16 years old, they started living
together as husband and wife without the
benefit of marriage. When Faye reached 18
years of age, her parents forcibly took her
back and arranged for her marriage to Brad.
Although Faye lived with Brad after the
marriage, Roderick continued to regularly
visit Faye while Brad was away at work.
During their marriage, Faye gave birth to a
baby girl, Laica. When Faye was 25 years old,
Brad discovered her continued liaison with
Roderick and in one of their heated
arguments, Faye shot Brad to death. She lost
no time in marrying her true love Roderick,
without a marriage license, claiming that
they have been continuously cohabiting for
more than 5 years.
a. What is the filial status of Laica?
b. Can Laica bring an action to impugn her
own status on the ground that based on
DNA results, Roderick is her biological
father? (2008 BAR)
A:
a. Having been born during the marriage of
Faye and Brad, she is presumed to be the
legitimate child of Faye and Brad. This
presumption had become conclusive
because the period of time to impugn her
filiation had already prescribed.
b. NO. She cannot impugn her own filiation.
The law does not allow a child to impugn his
or her own filiation. In this case, Laica’s
legitimate filiation was accorded to her by
operation of law which may be impugned
only by Brad, or his heirs in the cases
provided by law within the prescriptive
period.
Period to claim Filiation
Q: Romeo F. Ara and William A. Garcia
(petitioners), and Dra. Fely S. Pizarro and
Henry A. Rossi (respondents) all claimed to
be children of the late Josefa A. Ara (Josefa).
Petitioners, together with Ramon and
respondent Rossi (collectively, plaintiffs a
121
quo), filed a Complaint for judicial partition
of properties left by the deceased Josefa. The
RTC rendered a decision among which is the
declaration that the other properties are
under the co-ownership of all the plaintiffs
and defendant and in equal shares. In
omitting petitioners from the enumeration of
Josefa's descendants, the CA reversed the
finding of the RTC. The CA found that RTC
erred in allowing petitioners to prove their
status as illegitimate sons of Josefa after her
death. May the petitioners prove their
filiation to Josefa through their open and
continuous possession of the status of
illegitimate children, found in the second
paragraph of Article 172 of the Family Code?
A: NO. In Uyguangco v. Court of Appeals, While
the private respondent has admitted that he has
none of the documents mentioned in the first
paragraph (which are practically the same
documents mentioned in Article 278 of the Civil
Code except for the "private handwritten
instrument signed by the parent himself), he
insists that he has nevertheless been "in open
and continuous possession of the status of an
illegitimate child," which is now also admissible
as evidence of filiation.
The problem of the private respondent,
however, is that, since he seeks to prove his
filiation under the second paragraph of Article
172 of the Family Code, his action is now barred
because of his alleged father's death in 1975.
The action must be brought within the same
period specified in Article 173, except when the
action is based on the second paragraph of
Article 172, in which case the action may be
brought during the lifetime of the alleged
parent.
It is clear that the private respondent can no
longer be allowed at this time to introduce
evidence of his open and continuous possession
of the status of an illegitimate child or prove his
alleged filiation through any of the means
allowed by the Rules of Court or special laws.
The simple reason is that Apolinario Uyguangco
is already dead and can no longer be heard on
the claim of his alleged son's illegitimate
filiation. (Romeo F. Ara and William A. Garcia v.
Dra. Fely S. Pizarro and Henry Rossi, G.R. No.
187273, February 15, 2017, as penned by J.
Leonen)
 Civil Law

Action to impugn legitimacy vs. Action to possession”

claim legitimacy of the status.

BASIS ACTION TO ACTION TO Person/s who may attack the legitimacy of

IMPUGN CLAIM the child
LEGITIMACY LEGITIMACY
(FC, ART. 166) (FC, ART. 173) GR: Only the husband can contest the legitimacy
of the child.
Remedy Action to impugn Action to
legitimacy or claim XPNs: Heirs of the husband may impugn the
illegitimacy legitimacy filiation of the child within the period prescribed
(compulsory in Art. 170 of the Family Code only in the
recognition) following cases:

1. If the husband should die before the

GR: Husband. GR: Child. expiration of the period fixed for bringing
Real party his action;
in interest XPNs: Heirs, in XPNs: Heirs 2. If he should die after the filing of the
cases where: of the child, in complaint, without having desisted
cases where: therefrom; or
1. Husband died 3. If the child was born after the death of the
before the 1. Child died husband. (FC, Art. 171) (2008 BAR)
expiration of in state of
the period for insanity; Prescriptive period for filing action
bringing the impugning the legitimacy of the child (2010
action; 2. Child died BAR)
2. Husband died during
after filing the minority. GR: The prescriptive period for filing action
complaint, impugning the legitimacy of the child shall be
without NOTE: Must counted from the knowledge of birth or its
having be filed recording in the civil registry.
desisted; within 5
3. Child was years. XPN: If the birth was:
born after the
death of the 1. Concealed from; or
husband. 2. Was unknown to the husband or his heirs,
the periods shall be counted from the
discovery or knowledge of the birth of the
1 year – husband GR: During child or of the act of registration of said
Prescrip resides in the the lifetime of birth, whichever is earlier. (FC, Art. 170)
tion same the child.
municipality or Grounds in impugning legitimacy of a child
city where birth XPN: Lifetime (FC, Art. 166)
took place. of the
putative Legitimacy of the child may be impugned only on
2 years – father. the following grounds:
husband does
NOT reside in the In cases 1. Physical impossibility for the husband to
same where the have sexual intercourse with his wife within
municipality or action is for the first 120 days of the 300 days which
city. recognition of immediately preceded the birth of the child
illegitimate because of:
3 years – child by
husband is living “open and a. Physical incapacity of the husband to
abroad. continuous have sexual intercourse with his wife,

UNIVERSITY OF SANTO TOMAS 122

2021 GOLDEN NOTES
 The Family under the Family Code
b. The fact that the husband and wife
were living separately in such a way
that sexual intercourse was not
possible, or
c. Serious illness of the husband which
absolutely prevented intercourse;

2. Proved that for biological or other

scientific reasons, the child could not have
been that of the husband, except in the case
of children conceived through artificial
insemination;

3. In case of children conceived through

artificial insemination, the written
authorization or ratification of either parent
was obtained through mistake, fraud,
violence, intimidation or undue influence.

Sterility and Impotency

Sterility is not synonymous with impotency.

Sterility is the inability to procreate, while
impotency is the Physical inability to copulate.
(Menciano v. San Jose, G.R. No. L-1967, May 28,
1951)

Q: Will an infliction of the last stages of

tuberculosis be a ground for impugnation of
the legitimacy of the child?

A: Tuberculosis, even in its last stages, is not the

kind of serious illness of the husband that will
establish physical impossibility of access. (Andal
v. Macaraig, G.R. No. L- 2474, May 30, 1951)

Rule on status of child where the mother

contracted another marriage within 300 days
after termination of the former (1999 BAR)

The child shall be considered as conceived

during the:

1. Former marriage– if child is born:

Before 180 days after the solemnization of

the subsequent marriage, provided it is born
within 300 days after termination of former
marriage

2. Subsequent marriage –if a child is born:

180 days after the celebration of the
subsequent marriage, even though it be
born within 300 days after the termination
of the former marriage.

123
 Civil Law
Illustrations:

180th day takes place before 300th day

180th day from 300th day from

solemnization of termination of former
marriage

Born during this period:

Born during this period:

Marriage
Marriage

180th day takes place after 300th day

th
300 day from
termination of 180th day from
solemnization of
former marriage subsequent
marriage

Born during this period:

Born during this period:
conceived during Former Marriage
Marriage

UNIVERSITY OF SANTO TOMAS 124

2021 GOLDEN NOTES
 The Family under the Family Code
B. ILLEGITIMATE CHILDREN
(2005, 2009, 2010 BAR)
1. Children conceived and born outside a valid
marriage:
2. Children born of couples who are not legally
married or of common law marriages;
3. Children born of incestuous marriage;
4. Children born of bigamous marriage;
5. Children born of adulterous relations
between parents;
6. Children born of marriages which are void
for reasons of public policy under Art. 38,
Family Code;
7. Children born of couples below 18; and
8. Children born of void marriages under art.
35, except where the marriage is void for
lack of authority on the part of the
solemnizing officer, but the parties or either
of them believed in good faith that the
solemnizing officer had authority, in which
case the marriage will be considered valid
and the children will be considered
legitimate.
Rights of an illegitimate child (1990, 2003,
2006, 2009, 2010 BAR)
1. They shall use the surname of the mother;
2. They shall be under the parental authority
of the mother;
3. They shall be entitled to support in
conformity with the FC, PROVIDED, only as
to the separate property of the parent; and
4. They shall be entitled to a legitime which
shall consist of ½ of the legitime of a
legitimate child. (FC, Art. 176)
Q: Richelle alleged that while she was still a
minor in the years 2000 to 2002, she was
repeatedly sexually abused by respondent
Cabañero inside his rest house at Barangay
Masayo, Tobias Fornier, Antique. As a result,
she allegedly gave birth to a child on August
21, 2002. Richelle added that on February 27,
2002, she initiated a criminal case for rape
against Cabañero. This, however, was
dismissed. Later, she initiated another
criminal case, this time for child abuse under
Republic Act No. 7610. This, too, was
dismissed. Richelle prayed for the child's
monthly allowance in the amount of
P3,000.00. She presented the child’s birth
certificate in evidence.
Cabañero denied sexually abusing Richelle,
125
or otherwise having any sexual relations
with her. Thus, he asserted that he could not
have been the father of Richelle’s child.
Is Richelle’s child entitled for support?
A: NO. The obligation to give support shall only
be demandable from the time the person
entitled to it needs it for maintenance, but it
shall not be paid except from the date of judicial
or extrajudicial demand. Support pendente lite
may also be claimed, in conformity with the
manner stipulated by the Rules of Court.
An illegitimate child, "conceived and born
outside a valid marriage," as is the admitted case
with petitioner's daughter, is entitled to support.
To claim it, however, a child should have first
been acknowledged by the putative parent or
must have otherwise previously established his
or her filiation with the putative parent." When
"filiation is beyond question, support shall then
follow as a matter of obligation."
Having thus far only presented her child's birth
certificate, which made no reference to
respondent as the child's father, the necessary
condition of filiation had yet to be established.
(Richelle P. Abella, For and In Behalf of Her Minor
Daughter, Marl Jhorylle Abella v. Policarpio
Cabañero, G.R. No. 206647, August 09, 2017, as
penned by J. Leonen)
Effect of the recognition of an illegitimate
child by the Father
Such recognition would be a ground for ordering
the latter to give support to, but not the custody
of the child. The law explicitly confers to the
mother sole parental authority over an
illegitimate child; it follows that only if she
defaults can the father assume custody and
authority over the minor. (Briones v. Miguel, G.R.
No. 156343, October 18, 2004)
Also, under the R.A. 9255, the illegitimate child
has the option to use the surname of the father.
Republic Act No. 9255
This act provides that illegitimate children may
optionally use the father’s surname provided
that:
1. Filiation has been recognized by the father
through the record of birth appearing in the
 Civil Law
civil register
2. Admission in public document OR private
handwritten instrument is made by the
father
NOTE: Provided that the father has the right
to institute an action before the regular
courts to prove non-filiation during his
lifetime.
Establishing Illegitimate Filiation (1995,
1999, 2005, 2010 BAR)
Q: Julie had a relationship with a married
man who had legitimate children. A son was
born out of the illicit relationship in 1981.
Although the putative father did not
recognize the child in his birth certificate, he
nevertheless provided the child with all the
support he needed and spent time regularly
with the child and his mother. When the man
died in 2000, the child was already 18 years
old so he filed a petition to be recognized as
an illegitimate child of the putative father
and sought to be given a share in his putative
father’s estate. The legitimate family
opposed, saying that under the FC his action
cannot prosper because he did not bring the
action for recognition during the lifetime of
his putative father.
1. If you were the judge, how would you
rule?
2. Wishing to keep the peace, the child
during the pendency of the case decides
to compromise with his putative father’s
family by abandoning his petition in
exchange for what he would have
received as inheritance if he were
recognized as an illegitimate child. As the
judge, would you approve such
compromise? (2015 BAR)
A:
1. If I were the judge, I will not allow the
action for recognition filed after the
death of the putative father.
Filiation of illegitimate children, like
legitimate children is established by:
a. Record of birth appearing in the
civil register or a final judgment;
b. An admission of legitimate filiation
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
in a public document or in a private
handwritten instrument signed by
the parent concerned; AND IN THE
ABSENCE THEREOF; and Filiation
may be proved by:
c. The open and continuous
possession of the status of a
legitimate child;
An illegitimate child who has not been
recognized by options (1) or (2) of the
abovementioned enumeration MAY PROVE
his filiation under number (3) based on
open and continuous possession of the
status of an illegitimate child but pursuant
to Article 175 of the NCC, he or she must file
the action for recognition during the lifetime
of the putative father. The provision of
Article 285 of the Civil Code allowing the
child to file the action for recognition even
after the death of the father will not apply
because in the case presented, the child was
no longer a minor at the time of death of the
putative father.
2. NO. I will not approve the compromise
agreement because filiation is a matter to be
decided by law. It is not for the parties to
stipulate whether a person is a legitimate or
illegitimate child of another. (De Jesus v.
Estate of Dizon, G.R. No. 142877, October 2,
2001) In all cases of illegitimate children,
their filiation must be duly proved. (NCC,
Art. 887)
Public instrument subscribed and made
under oath by the putative father indicating
the illegitimate child as his is sufficient to
establish illegitimate filiation
Q: Why is an illegitimate child of a woman,
who gets married, allowed to bear the
surname of her subsequent spouse, while a
legitimate child may not?
A: To allow the child to adopt the surname of his
mother’s second husband, who is not his father,
could result in confusion in his paternity. It
could also create the suspicion that the child,
who was born during the covertures of his
mother with her first husband, was in fact sired
by the second husband, thus bringing his
legitimate status into discredit. (Republic v.
Vicencio, G.R. No. 88202. December 14, 1998)
II. JUDICIAL
126
 The Family under the Family Code
A. LEGITIMATE CHILDREN
Legitimated children are those who, because of
the subsequent marriage of their parents to each
other, are by legal fiction considered legitimate.
Legitimation (2004, 2010 BAR)
Legitimation is a remedy or process by means of
which those who in fact not born in wedlock and
should therefore be ordinarily illegitimate, are
by fiction, considered legitimate.
It takes place by a subsequent valid marriage
between parents. Furthermore, it shall retroact
to the time of the child’s birth. (FC, Art 180)
NOTE: The annulment of a voidable marriage
shall not affect the legitimation. (FC, Art. 178)
Children entitled to legitimation
Only children conceived and born outside of
wedlock of parents who, at the time of
conception of the former, were not disqualified
by any impediment to marry each other, or were
so disqualified only because either or both of
them were below eighteen (18) years of age.
(Art. 177, FC as amended by R.A. 9858) (1990,
2004, 2008, 2009 BAR)
Requisites of legitimation
1. Child must have been conceived and born
outside of wedlock;
2. Child’s parents, at the time of former’s
conception, were not disqualified by any
impediment to marry each other or were so
disqualified only because either or both of
them were below eighteen (18) years of age;
and
3. The subsequent valid marriage of the
parents.
Q: Who may impugn the legitimation? (FC,
Art. 182)
A: Legitimation may be impugned only by those
who are prejudiced in their rights, within 5 years
from the time their cause of action accrues, that
is, from the death of the putative parent.
NOTE: The right referred to are successional
rights. Hence, only those whose successional
rights are directly affected may impugn the
legitimation that took place.
127
Q: Roderick and Faye were high school
sweethearts. When Roderick was 18 and
Faye, 16 years old, they started living
together as husband and wife without the
benefit of marriage. When Faye reached 18
years of age, her parents forcibly took her
back and arranged for her marriage to Brad.
Although Faye lived with Brad after the
marriage, Roderick continued to regularly
visit Faye while Brad was away at work.
During their marriage, Faye gave birth to a
baby girl, Laica. When Faye was 25 years old,
Brad discovered her continued liaison with
Roderick and in one of their heated
arguments, Faye shot Brad to death. She lost
no time in marrying her true love Roderick,
without a marriage license, claiming that
they have been continuously cohabiting for
more than 5 years. Can Laica be legitimated
by the marriage of her biological parents?
(2008 BAR)
A: NO, she cannot be legitimated by the
marriage of her biological parents. In the first
place she is not, under the law, the child of
Roderick. In the second place, her biological
parents could not have validly married each
other at the time she was conceived and born
simply because Faye was still married to
Roderick Brad at that time. Only children
conceived or born outside of wedlock of parents
who, at the time of the conception of the child
were not disqualified by any impediment to
marry each other, may be legitimated. (FC, Art.
177)
RIGHTS OF LEGITIMATE AND ILLEGITIMATE
CHILDREN
NOTE: Legitimated children shall enjoy the same
rights as legitimate children. (FC, Art. 179)
BASIS LEGITIMATE ILLEGITIMA
CHILDREN TE
CHILDREN
Surname Bear the Bear the
surnames of surname of
both parents either the
(mother and mother or the
father) father under
R.A. 9255
NOTE: Under
the
amendatory
 Civil Law
provisions of ty of right to
RA 9255, the file an action
use of to claim
illegitimate legitimacy
father's
surname is
permissive Right to Yes No right to
and not inherit ab inherit ab
obligatory. intestato intestate
(Rabuya, from
2008) legitimate
children and
relatives of
Support Receive Receive father and
support from: support mother under
according to Art. 992, New
1. Parents; provision of Civil Code.
2. Ascendan Family Code (Iron Curtain
ts; and Rule)
3. In proper
cases,
brothers ACTION TO CLAIM FILIATION
and
sisters Paternity and filiation or the lack of the same is a
under Art. relationship that must be judicially established,
174 of the and it is for the court to declare its existence or
Family absence. It cannot be left to the will or
Code. agreement of the parties. (De Asis v. CA, G.R.
127578, February 15, 1999)
Legitime Full Legitimes Share is The manner of claiming filiation is the same for
and other equivalent to both legitimate and illegitimate children
successional ½ of the
rights under share of a Person/s who may file for claim legitimate
the New Civil legitimate filiation (FC, Art. 173)
Code child
GR: The right of claiming legitimacy belongs to
the child
Period for His/her For primary
filing action whole proof: XPN: The right is transferred to his heirs when
for claim of lifetime his/her whole the child dies:
legitimacy or regardless of lifetime.
illegitimacy type of proof 1. During minority or
provided For 2. In a state of insanity.
under Art. secondary 3. After commencing the action for legitimacy
172 of the proof:
Family Code only during NOTE: Questioning legitimacy may not be
the lifetime of collaterally attacked. It can be impugned only in
the alleged a direct action
parent.
Person/s who may file for claim illegitimate
filiation

GR: The right of claiming illegitimacy belongs to

the child
Transmissibili Yes No

UNIVERSITY OF SANTO TOMAS 128

2021 GOLDEN NOTES
 The Family under the Family Code
XPN: The right is transferred to his heirs when: Person/s who may file for claim illegitimate
filiation
1. During minority or
2. In a state of insanity. GR: The right of claiming illegitimacy belongs to
3. After commencing the action for illegitimate the child
filiation
XPN: The right is transferred to his heirs when:
Prescription of action to claim legitimacy or
illegitimacy 1. During minority or
2. In a state of insanity.
An action must be brought: 3. After commencing the action for illegitimate
filiation
1. By the child – during his lifetime
2. By his heirs – within 5 years should the Prescription of action to claim legitimacy or
child dies during minority, in a state of illegitimacy
insanity or after commencing the action for
legitimacy An action must be brought:

NOTE: Provided that the action for illegitimacy
is based on admission of paternity or filiation in
a birth certificate or written instrument.
However, if the action for illegitimacy is based
on an open and continuous possession of status
of illegitimate filiation or any other means
allowed by the Rules of Court and special laws,
the action must be brought during the lifetime of
the alleged parent.
Paternity and filiation or the lack of the same is a
relationship that must be judicially established,
and it is for the court to declare its existence or
absence. It cannot be left to the will or
agreement of the parties. (De Asis v. CA, G.R.
127578, February 15, 1999)
The manner of claiming filiation is the same for
both legitimate and illegitimate children
Person/s who may file for claim legitimate
filiation (FC, Art. 173)
GR: The right of claiming legitimacy belongs to
the child
XPN: The right is transferred to his heirs when
the child dies:
1. During minority or
2. In a state of insanity.
3. After commencing the action for legitimacy
NOTE: Questioning legitimacy may not be
collaterally attacked. It can be impugned only in
a direct action
1. By the child – during his lifetime
2. By his heirs – within 5 years should the
child dies during minority, in a state of
insanity or after commencing the action for
legitimacy
NOTE: Provided that the action for illegitimacy
is based on admission of paternity or filiation in
a birth certificate or written instrument.
However, if the action for illegitimacy is based
on open and continuous possession of status of
illegitimate filiation or any other means allowed
by the Rules of Court and special laws, the action
must be brought during the lifetime of the
alleged parent.
Kinds of proof of filiation (1995, 1999, 2010
BAR)
Proof of filiation has two kinds (FC, Art 172, 1st
par):
1. Primary proof consists of the ff.:
a. Record of birth appearing in civil
registrar or final judgment;
b. Admission of legitimate filiation in
public document or private
handwritten instrument signed by
parent concerned.
2. Secondary consists of the ff. (FC, Art 172,
2nd par):
a. Open and continuous possession of
legitimacy;
b. Any means allowed by the Rules of
Court and special laws.

129
 Civil Law
NOTE: To prove open and continuous
possession of the status of an illegitimate child,
there must be evidence of manifestation of the
permanent intention of the supposed father to
consider the child as his, by continuous and clear
manifestations of parental affection and care,
which cannot be attributed to pure charity.
Such acts must be of such a nature that they
reveal not only the conviction of paternity, but
also the apparent desire to have and treat the
child as such in all relations in society and in life,
not accidentally, but continuously. (Jison v. CA,
G.R. No. 124853, February 24, 1998)
Rules in proving filiation
GR: Primary proof shall be used to prove
filiation.
XPN: In absence of primary proof, secondary
proof may be resorted to.
Pictures or certificate of baptism do not
constitute authentic documents to prove the
legitimate filiation of a child
Pictures or canonical baptismal certificate do not
constitute the authentic documents to prove the
legitimate filiation of a child. The baptismal
certificate of the child, standing alone, is not
sufficient. It is not a record of birth. Neither is it
a public instrument nor a private handwritten
instrument. (Abelle v. Santiago, G.R. No. L- 16307,
April 30, 1963)
Baptismal certificate does not prove filiation
Just like in a birth certificate, the lack of
participation of the supposed father in the
preparation of a baptismal certificate renders
this document incompetent to prove paternity.
And “while a baptismal certificate may be
considered a public document, it can only serve
as evidence of the administration of the
sacrament on the date specified but not the
veracity of the entries with respect to the child’s
paternity. Thus, baptismal certificates are per se
inadmissible in evidence as proof of filiation and
they cannot be admitted indirectly as
circumstantial evidence to prove the same”.
(Antonio Perla v. Mirasol Baring and Randy B.
Perla, G.R. No. 172471, November 12, 2012)
NOTE: A will which was not presented for
probate sufficiently establish filiation because it
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
constitutes a public document or private
handwritten instrument signed by the parent
concerned.
Prima facie case of sexual relations with the
putative father
A prima facie case exists if a woman declares —
supported by corroborative proof — that she
had sexual relations with the putative father; at
this point, the burden of evidence shifts to the
putative father. Further, the two affirmative
defenses available to the putative father are:
1. Incapability of sexual relations with the
mother due to either physical absence or
impotency; or
2. That the mother had sexual relations with
other men at the time of conception.
(Charles Gotardo v. Divina Buling, G.R. No.
165166, August 15, 2012).
Q: Rosanna, as surviving spouse, filed a claim
for death benefits with the SSS upon the
death of her husband, Pablo. She indicated in
her claim that the decedent is also survived
by their minor child, Lyn, who was born in
1991. The SSS granted her claim but this was
withdrawn after investigation, when a sister
of the decedent informed the system that
Pablo could not have sired a child during his
lifetime because he was infertile. However, in
Lyn’s birth certificate, Pablo affixed his
signature and he did not impugn Lyn’s
legitimacy during his lifetime. Was the SSS
correct in withdrawing the death benefits?
A: NO. Children conceived or born during the
marriage of the parents are legitimate. (FC, Art.
164) This presumption becomes conclusive in
the absence of proof that there is physical
impossibility of access under Art. 166 of the
Family Code. Upon the expiration of the periods
for impugning legitimacy under Art. 170, and in
the proper cases under Art. 171, of the Family
Code, the action to impugn would no longer be
legally feasible and the status conferred by the
presumption becomes fixed and unassailable. In
this case, there is no showing that Pablo, who
has the right to impugn the legitimacy of Lyn,
challenged her status during his lifetime. There
is adequate evidence to show that the child was
in fact his child, and this is the birth certificate
where he affixed his signature. (SSS v. Aguas, et
al., G.R. No. 165546, February 27, 2006)
130
 The Family under the Family Code
Q: In an action for partition of estate, the trial
court dismissed it on the ground that the
respondent, on the basis of her birth
certificate, was in fact the illegitimate child of
the deceased and therefore the latter's sole
heir, to the exclusion of petitioners. However,
trial court failed to see that in said birth
certificate, she was listed therein as
“adopted.” Was the trial court correct in
dismissing the action for partition?
A: NO. The trial court erred in relying upon the
said birth certificate in pronouncing the filiation
of the respondent. However, since she was listed
therein as “adopted”, she should therefore have
presented evidence of her adoption in view of
the contents of her birth certificate. In this case,
there is no showing that she undertook such. A
record of birth is merely prima facie evidence of
the facts contained therein. It is not conclusive
evidence of the truthfulness of the statements
made there by the interested parties. (Rivera v.
Heirs of Romualdo Villanueva, G.R. No. 141501,
July 21, 2006)
Q: In a complaint for partition and
accounting with damages, Ma. Theresa
alleged that she is the illegitimate daughter
of Vicente, and therefore entitled to a share
in the estate left behind by the latter. As
proof, she presented her birth certificate
which Vicente himself signed thereby
acknowledging that she is his daughter. Is the
evidence presented by Ma. Theresa sufficient
to prove her claim that she is an illegitimate
child of Vicente?
A: YES. Ma. Theresa was able to establish that
Vicente was in fact her father. The due
recognition of an illegitimate child in a record of
birth, a will, a statement before a court of record,
or in any authentic writing is, in itself, a
consummated act of acknowledgment of the
child, and no further court action is required. (De
Jesus v. Estate of Juan Dizon, G.R. No. 142877,
October 2, 2001) Any authentic writing is treated
not just as a ground for compulsory recognition;
it is in itself a voluntary recognition that does
not require a separate action for judicial
approval. (Eceta v. Eceta, G.R. No. 157037, May
20, 2004)
Q: Gerardo filed a complaint for bigamy
against Ma. Theresa, alleging that she had a
previous subsisting marriage when she
married him. The trial court nullified their
131
marriage and declared that the son, who was
born during their marriage and was
registered as their son, as illegitimate. What
is the status of the child?
A: The first marriage being found to be valid and
subsisting, whereas that between Gerardo and
Ma. Theresa was void and non-existent; the child
should be regarded as a legitimate child out of
the first marriage. This is so because the child's
best interests should be the primordial
consideration in this case.
Q: Gerardo and Ma. Theresa, however,
admitted that the child was their son. Will
this affect the status of the child?
A: NO. The admission of the parties that the
child was their son was in the nature of a
compromise. The rule is that: the status and
filiation of a child cannot be compromised. Art.
164 of the Family Code is clear that a child who
is conceived or born during the marriage of his
parents is legitimate. (Concepcion v. CA, G.R. No.
123450, August 31, 2005)
Q: What is the effect of Ma. Theresa’s claim
that the child is her illegitimate child with
her second husband, to the status of the
child?
A: NONE. This declaration – an avowal by the
mother that her child is illegitimate – is the very
declaration that is proscribed by Art. 167 of the
Family Code. This proscription is in consonance
with, among others, the intention of the law to
lean towards the legitimacy of children.
(Concepcion v. CA, G.R. No. 123450, August 31,
2005)
Q: In a petition for issuance of letters of
administration, Cheri Bolatis alleged that she
is the sole legitimate daughter of decedent,
Ramon and Van Bolatis. Phoebe, the
decedent’s second wife, opposed the petition
and questioned the legitimate filiation of
Cheri to the decedent, asserting that Cheri’s
birth certificate was not signed by Ramon
and that she had not presented the marriage
contract between her alleged parents which
would have supported her claim.
In said birth certificate, it was indicated that
her birth was recorded as the legitimate
child of Ramon and Van Bolatis, and it also
contains the word “married” to reflect the
 Civil Law
union between the two. However, it was not
signed by Ramon and Vanemon Bolatis. It
was merely signed by the attending
physician, who certified to having attended
to the birth of a child. Does the presumption
of legitimacy apply to Cherimon?
A: NO. Since the birth certificate was not signed
by Cher’s alleged parents but was merely signed
by the attending physician, such a certificate,
although a public record of a private document
is, under Sec. 23, Rule 132 of the Rules of Court,
evidence only of the fact which gave rise to its
execution, which is, the fact of birth of a child. A
birth certificate, in order to be considered as
validating proof of paternity and as an
instrument of recognition, must be signed by
the father and mother jointly, or by the
mother alone if the father refuses. There
having been no convincing proof of respondent’s
supposed legitimate relations with respect to the
decedent, the presumption of legitimacy under
the law did not therefore arise in her favour.
(Angeles v. Angeles- Maglaya, G.R. No. 153798,
September 2, 2005)
Q: On the basis of the physical presentation
of the plaintiff-minor before it and the fact
that the alleged father had admitted having
sexual intercourse with the child's mother,
the trial court, in an action to prove filiation
with support, held that the plaintiff- minor is
the child of the defendant with the plaintiff-
minor's mother. Was the trial court correct in
holding such?
A: NO. The birth certificate that was presented
by the plaintiff-minor appears to have been
prepared without the knowledge or consent of
the putative father. It is therefore not a
competent piece of evidence on paternity. The
local civil registrar in this case has no
authority to record the paternity of an
illegitimate child on the information of a third
person. A baptismal certificate, while considered
a public document, can only serve as evidence of
the administration of the sacrament on the date
specified therein but not the veracity of the
entries with respect to the child's paternity.
(Macadangdang v. CA, G.R. No. L- 49542,
September 12, 1980) Thus, certificates issued by
the local civil registrar and baptismal certificates
are per se inadmissible in evidence as proof of
filiation and they cannot be admitted indirectly
as circumstantial evidence to prove the same.
(Jison v. CA, G.R. No. 124853, February 24, 1998;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Cabatania v. CA, G.R. No. 124814, October 21,
2004)
NOTE: In this age of genetic profiling and DNA
analysis, the extremely subjective test of
physical resemblance or similarity of features
will not suffice as evidence to prove paternity
and filiation before courts of law. This only
shows the very high standard of proof that a
child must present in order to establish filiation.
Q: Ann Lopez, represented by her mother
Araceli Lopez, filed a complaint for
recognition and support of filiation against
Ben-Hur Nepomuceno. She assailed that she
is the illegitimate daughter of Nepomuceno
submitting as evidence the handwritten note
allegedly written and signed by Nepomuceno.
She also demanded for financial support
along with filial recognition. Nepomuceno
denied the assertions reasoning out that he
was compelled to execute the handwritten
note due to the threats of the National
People’s Army. RTC ruled in favor of Ann.
Later, the RTC dismissed Araceli’s complaint
for insufficiency of evidence. Is the dismissal
of the complaint proper?
A: YES. Ann’s demand for support is dependent
on the determination of her filiation. However,
she relies only on the handwritten note executed
by petitioner. The note does not contain any
statement whatsoever about her filiation to
petitioner. It is, therefore, not within the ambit
of Article 172(2) vis-à-vis Art. 175 of the Family
Code which admits as competent evidence of
illegitimate filiation an admission of filiation in a
private handwritten instrument signed by the
parent concerned.
The Court is mindful that the best interests of
the child in cases involving paternity and
filiation should be advanced. It is, however, just
as mindful of the disturbance that unfounded
paternity suits cause to the privacy and peace of
the putative father’s legitimate family. (Ben-Hur
Nepomuceno v. Archbencel Ann Lopez,
represented by her mother Araceli Lopez G.R. No.
181258, March 18, 2010)
ADOPTION
Adoption is the process of making a child,
whether related or not to the adopter, possess in
general, the rights accorded to a legitimate child.
It is a juridical act, a proceeding in rem which
132
 The Family under the Family Code
creates between two persons a relationship
similar to that which results from legitimate
paternity and filiation. The modern trend is to
consider adoption not merely as an act to
establish a relationship of paternity and filiation,
but also as an act which endows the child with a
legitimate status. (In the Matter of the Adoption
of Stephanie Nathy Astorga Garcia, G.R. No.
148311, March 31, 2005)
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. Thus, the adopted
child cannot be considered as a relative of the
ascendants and collaterals of the adopting
parents, nor of the legitimate children which
they may have after the adoption, except that the
law imposes certain impediments to marriage by
reason of adoption. Neither are the children of
the adopted considered descendants of the
adopter.
Preference in adoption (AID)
1. Adoption by the extended family;
2. Domestic Adoption;
3. Inter-Country Adoption.
I. DOMESTIC ADOPTION (R.A. 8552)
Applies to adoption of Filipino children, where
the entire adoption process beginning from the
filing of the petition up to the issuance of the
adoption decree takes place in the Philippines.
(Rabuya, 2009)
A. WHEN ALLOWED
Adoption need NOT be a last resort.
B. WHO CAN ADOPT
1. Filipino citizens who are:
a. of legal age, in possession of full
civil capacity and legal rights;
b. of good moral character;
c. not been convicted of any crime
involving moral turpitude;
d. emotionally and psychologically
capable of caring for children;
e. at least sixteen (16) years older
than the adoptee (may be waived
when the adopter is the biological
133
parent of the adoptee, or is the
spouse of the adoptee's parent);
and
f. in a position to support and care for
his/her children in keeping with the
means of the family.
2. Aliens who have the same qualifications as
Filipinos and:
a. that his/her country has diplomatic
relations with the Republic of the
Philippines;
b. has 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;
c. has been certified by his/her
diplomatic or consular office or any
appropriate government agency
that he/she has the legal capacity to
adopt in his/her country;
d. that his/her government allows the
adoptee to enter his/her country as
his/her adopted son/daughter.
NOTE: The requirements on residency and
certification of the alien's qualification to
adopt in his/her country may be waived for
the following:
a. a former Filipino citizen who seeks to
adopt a relative within the fourth (4th)
degree of consanguinity or affinity; or
b. one who seeks to adopt the legitimate
son/daughter of his/her Filipino
spouse; or
c. one who is married to a Filipino citizen
and seeks to adopt jointly with his/her
spouse a relative within the fourth (4th)
degree of consanguinity or affinity of
the Filipino spouse.
3. Guardians with respect to their ward.
NOTE: A guardian may only adopt his ward
after termination of guardianship and
clearance of his financial accountabilities.
4. Husband and wife
NOTE: Spouses shall jointly adopt except in
 Civil Law
the following cases:
a. If one spouse seeks to adopt the
legitimate child of the other;
b. If one spouse seeks to adopt his or her
own illegitimate child, provided that the
other spouse as given his or her
consent; and
c. If the spouses are legally separated from
each other. (Domestic Adoption Act of
1998 (RA 8552))
Q: Petitioner Monina P. Lim is an optometrist
by profession and was married to Primo Lim.
They were childless. Soon after, they
registered two minor children to make it
appear that they were the children’s parents.
The children were named Michelle and
Michael. They reared and cared for the
children as if they were their own and sent
the children to exclusive schools. They used
the surname “Lim” in all their school records
and documents. In 2000, Monina married
Angel Olario, an American citizen. She then
decided to adopt the children by availing of
the amnesty given RA 8552 to those
individuals who simulated the birth of a
child. At the time of the filing of the petitions
for adoption, Michelle was 25 years old and
already married, while Michael was 18 years
old. Both Michelle and Michael gave consent
to the adoption. The trial court dismissed the
petition and ruled that Monina should have
filed the petition jointly with her new
husband. Monina, in a Motion for
Reconsideration argues that mere consent of
her husband would suffice and that joint
adoption is not needed, for the adoptees are
already emancipated. Is the trial court
correct in dismissing the petition for
adoption?
A: YES. Section 7, Art. 3 of R.A. 8552 reads: Sec. 7
– Husband and wife shall jointly adopt x x x.
The use of the word “shall” in the above-quoted
provision means that joint adoption by the
husband and the wife is mandatory. This is in
consonance with the concept of joint parental
authority over the child which is the ideal
situation. As the child to be adopted is elevated
to the level of a legitimate child, it is but natural
to require the spouses to adopt jointly. The rule
also ensures harmony between the spouses.
The law is clear. There is no room for ambiguity.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Monina, having remarried at the time the
petitions for adoption were filed, must jointly
adopt. Since the petitions for adoption were filed
only by Monina herself, without joining her
husband, Olario, the trial court was correct in
denying the petitions for adoption on this
ground. (In Re: Petition for Adoption of Michelle
P. Lim, In Re: Petition for Adoption of Michael Jude
P. Lim, Monina P. Lim, G.R. Nos. 168992-93, May
21, 2009)
Joint adoption when the adoptees are
already emancipated
Even if emancipation terminates parental
authority, the adoptee is still considered a
legitimate child of the adopter with all the rights
of a legitimate child such as:
1. To bear the surname of the father and the
mother;
2. To receive support from their parents; and
3. To be entitled to the legitime and other
successional rights. Conversely, the adoptive
parents shall, with respect to the adopted
child, enjoy all the benefits to which
biological parents are entitled such as
support and successional rights.
C. ADOPTEE
1. Any person BELOW eighteen (18) years of
age who has been administratively or
judicially declared available for adoption;
2. The legitimate son/daughter of one spouse
by the other spouse;
3. An illegitimate son/daughter by a qualified
adopter to improve his/her status to that of
legitimacy;
4. A person of legal age if, prior to the
adoption, said person has been consistently
considered and treated by the adopter(s) as
his/her own child since minority;
5. A child whose adoption has been previously
rescinded; or
6. A child whose biological or adoptive
parent(s) has died: Provided, that no
proceedings shall be initiated within six (6)
months from the time of death of said
parent(s). (Sec. 8, Art. 3, RA 8552)
Child
A child is any person below 18 years old. (Sec. 3,
Art. 1, RA 8552)
134
 The Family under the Family Code
NOTE: The prohibition against physical transfer
shall not apply to adoption by a relative or
children with special medical conditions.
(Rabuya, 2018)
Necessity of written consent for adoption
under domestic adoption
The written consent of the following is necessary
for adoption:
1. Biological parent(s) of the child, if known, or
the legal guardian, or the proper
government instrumentality which has legal
custody of the child;
2. Adoptee, if ten (10) years of age or over;
3. Illegitimate sons/daughters, ten (10) years
of age or over, of the adopter if living with
said adopter and the latter's spouse, if any;
4. Legitimate and adopted sons/daughters, ten
(10) years of age or over, of the adopter(s)
and adoptee, if any;
5. Spouse, if any, of the person adopting or to
be adopted. (Sec. 9, Art. 3, RA 8552)
Q: Bernadette filed a petition for adoption of
the three minor children of her late brother,
Ian. She alleged that when her brother died,
the children were left to the care of their
paternal grandmother, because their
biological mother Amelia went to Italy to
work and has allegedly abandoned her
children. However, the grandmother died, so
she filed the petition for adoption. The
minors gave their written consent to the
adoption and so did all of her own grown-up
children. The trial court granted the decree
of adoption even though the written consent
of the biological mother of the children was
not adduced by Bernadette. Was the trial
court correct in granting the decree of
adoption?
A: NO. The rule is, adoption statutes must be
liberally construed in order to give spirit to their
humane and salutary purpose which is to uplift
the lives of unfortunate, needy or orphaned
children. However, the discretion to approve
adoption proceedings on the part of the courts
should not to be anchored solely on those
principles, but with due regard likewise to the
natural rights of the parents over the child. The
written consent of the biological parents is
indispensable for the validity of the decree of
adoption. Indeed, the natural right of a parent to
his child requires that his consent must be
135
obtained before his parental rights and duties
may be terminated and vested in the adoptive
parents. In this case, petitioner failed to submit
the written consent of Amelia Ramos to the
adoption. This is so under Sec. 9 (b) of R.A. 8552,
otherwise known as the Domestic Adoption Act
of 1998. Bernadette failed in this respect, thus
necessitating the dismissal of her petition for
adoption. (Landingin v. Republic, G.R. No. 164948,
June 27, 2006)
Effects of Domestic Adoption
GR: Severance of all legal ties between the
biological parents and the adoptee and the same
shall then be vested on the adopters. (Sec. 16,
Art. 5, RA 8552)
XPN: In cases where the biological parent is the
spouse of the adopter;
1. Deemed a legitimate child of the adopter
(Sec. 17, Article 5, RA 8552);
2. Acquires reciprocal rights and obligations
arising from parent-child relationship;
3. Right to use surname of adopter (NCC, Art.
365);
4. In legal and intestate succession, the
adopters and the adoptee shall have
reciprocal rights of succession without
distinction from legitimate filiation.
However, if the adoptee and his/her
biological parents had left a will, the law on
testamentary succession shall govern. (Sec.
18, Art. 5, RA 8552)
Who may file the action for rescission of
domestic adoption
The adoptee has the sole right to severe the legal
ties created by adoption and the one who will
file the action for rescission. However, if the
adoptee is still a minor or above 18 years of age
but incapacitated, the Department of Social and
Welfare Development as the adoptee’s guardian
or counsel may assist the adoptee for rescinding
the decree of adoption.
The adopter cannot seek the rescission of the
adoption but he may disinherit the adoptee.
(Section 19, Art. 6, RA 8552)
Grounds upon which an adoptee may seek
judicial rescission of the adoption (SARA)
When the adopter has committed the following:
 Civil Law
1. Sexual assault or violence committed 5. Vested rights acquired prior to judicial
against the adoptee; rescission shall be respected. (Sec. 20, Art. 6,
2. Attempt on the life of the adoptee; RA 8552)
3. Repeated physical and verbal maltreatment
by the adopter despite having undergone Q: Despite several relationships with
counseling; or different women, Andrew remained
4. Abandonment and failure to comply with unmarried. His first relationship with Brenda
parental obligations. produced a daughter, Amy, now 30 years old.
His second, with Carla, produced two sons:
Grounds by which an adopter may disinherit Jon and Ryan. His third, with Donna, bore
the adoptee him two daughters: Vina and Wilma. His
fourth, while Elena, bore him no children
1. Groundless accusation against the testator although Elena has a daughter, Jane, from a
of a crime punishable by 6 years or more previous relationship. His last, with Fe,
imprisonment; produced no biological children but they
2. Found guilty of attempt against the life of informally adopted without court
the testator, his/her spouse, descendant or proceedings, Sandy, now 13 years old, whom
ascendant; they consider as their own. Sandy was
3. Causes the testator to make changes or orphaned as a baby and was entrusted to
changes a testator’s will through violence, them by the midwife who attended to Sandy’s
intimidation, fraud or undue influence; birth. All the children, including Amy, now
4. Maltreatment of the testator by word or live with Andrew in his house.
deed; a. Is there any legal obstacle to the legal
5. Conviction of a crime which carries a adoption of Amy by Andrew?
penalty of civil interdiction; b. To the legal adoption of Sandy by Andrew
6. Adultery or concubinage with the testator’s and Elena?
wife; c. In his old age, can Andrew be legally
7. Refusal without justifiable cause to support entitled to claim support from Amy, Jon,
the parent or ascendant; or Ryan, Vina, Wilma and Sandy assuming
8. Leads a dishonorable or disgraceful life. that all of them have the means to
(NCC, Art.919) support him?
d. Can Amy, Jon, Ryan, Vina, Wilma and
Effects of rescission of the adoption under Sandy legally claim support from each
the Domestic Adoption Act of 1998 (R.A. other?
8552) e. Can Jon and Jane legally marry? (2008
BAR)
1. If adoptee is still a minor or is incapacitated
– Restoration of: A:
a. NO, there is no legal obstacle to the legal
a. Parental authority of the adoptee’s adoption of Amy by Andrew. While a person
biological parents, if known; or of age may not be adopted, Amy falls within
b. Custody of the DSWD; two exceptions: (1) she is an illegitimate
child and she is being adopted by her
2. Reciprocal rights and obligations of the illegitimate father to improve her status;
adopters and adoptee to each other shall be and (2) even on the assumption that she is
extinguished; not an illegitimate child of Andrew, she may
still be adopted, although of legal age,
3. Court shall order the civil registrar to cancel because she has been consistently
the amended certificate of birth of the considered and treated by the adopter as his
adoptee and restore his/her original birth own child since minority. In fact, she has
certificate; been living with him until now.

4. Succession rights shall revert to its status b. YES. There is a legal obstacle to the adoption
prior to adoption, but only as of the date of of Sandy by Andrew and Elena. Andrew and
judgment of judicial rescission; Elena cannot adopt jointly because they are
not married.

UNIVERSITY OF SANTO TOMAS 136

2021 GOLDEN NOTES
 The Family under the Family Code
c. YES. Andrew can claim support from all of
them, except from Sandy, who is not his
legitimate, illegitimate or adopted child.
d. YES. Amy, Jon, Ryan, Vina and Wilma can ask
support from each other because they are
half-blood brothers and sisters, and Vina
and Wilma are full-blood sisters (Art. 195
[5], FC), but not Sandy who is not related to
any of them.
e. YES. Jon and Jane can legally marry because
they are not related to each other. Jane is not
a daughter of Andrew
II. INTER – COUNTRY ADOPTION
ACT OF 1995 (R.A. 8043)
Inter-Country Adoption
It is a socio-legal process of adopting a Filipino
child by a foreigner or a Filipino citizen
permanently residing abroad where the petition
is filed, the supervised trial custody is
undertaken, and the decree of adoption is issued
outside the Philippines. (Sec. 3 (a), RA 8043)
A. WHEN ALLOWED
Adoption ONLY AS A LAST RESORT: No child
shall be matched to a foreign adoptive family
unless it is satisfactorily shown that the child
cannot be adopted locally. (Sec. 11, Article 3, R.A.
8043)
B. WHO MAY ADOPT
An alien or Filipino citizen permanently residing
abroad
Qualifications needed for a Filipino or alien
to adopt (Sec. 9, Article 3, RA 8043)
1. At least 27 years old and 16 years older than
the child to be adopted at the time of the
application unless:
a. Adopter is the parent by nature of
the child;
b. Adopter is the spouse of the parent
by nature of the child to be adopted;
2. Has undergone the appropriate counselling
from an accredited counselor in his or her
country;
137
3. Has the capacity to act or assume all rights
and responsibilities of parental authority
under his national laws;
4. Not been convicted of a crime of involving
moral turpitude;
5. Eligible to adopt under his national law;
6. Is in a position to give the necessary moral
values and example to all his children,
including the child to be adopted;
7. Agrees to uphold the basic rights of the child
as embodied under Philippine laws, the U.N.
Convention on the Rights of the Child, and to
abide by the Rules and regulations issued to
implement this Act;
8. Comes from a country whose government
maintains a similarly authorized and
accredited agency;
9. The adoption is allowed under his or her
nation laws; and
10. Possess all the qualifications and none of the
disqualifications under the law or other
applicable Philippine laws.
Note: If married, his or her spouse must jointly
file for adoption.
Necessity of written consent for adoption in
inter-country adoption
The written consent of the following is necessary
for adoption:
1. Written consent to the adoption in the form
of a sworn statement by the biological
and/or adopted children of the applicants
who are ten (10) years of age or over, to be
attached to the application filed with the
Family Court or Inter- Country Adoption
Board (Sec. 28, Art. 8, Amended
Implementing Rules and Regulations of RA
8043); and
2. If a satisfactory pre-adoptive relationship is
formed between the applicant and the child,
the written consent to the adoption
executed by the DSWD is required. (Sec. 50,
Art. Art. 8, Amended Implementing Rules and
Regulations of RA 8043)
Q: Sometime in 1990, Sarah, born a Filipino
but by then a naturalized American citizen,
and her American husband Sonny Cruz, filed
a petition in the Regional Trial Court of
Makati, for the adoption of the minor child of
her sister, a Filipina. Can the petition be
granted? (2000 BAR)
 Civil Law
A: IT DEPENDS. If Sonny and Sarah have been
residing in the Philippines for at least three (3)
years prior to the effectivity of R.A. 8552, the
petition may be granted. Otherwise, the petition
cannot be granted because the American
husband is not qualified to adopt.
While the petition for adoption was filed in
1990, it was considered refiled upon the
effectivity of R.A. 8552. This is the applicable law
since the petition is still pending with the lower
court. Under the Act, Sarah and Sonny must
adopt jointly because they do not fall in any of
the exceptions where one of them may adopt
alone. When husband and wife must adopt
jointly, the Supreme Court has held in a line of
cases that both of them must be qualified to
adopt. While Sarah, an alien, is qualified to
adopt, for being a former Filipino citizen who
seeks to adopt a relative within the 4th degree of
consanguinity or neither a former Filipino
citizen nor married to a Filipino. One of them not
being qualified to adopt, their petition has to be
denied. However, if they have been residents of
the Philippines 3 years prior to the effectivity of
the Act and continues to reside here until the
decree of adoption is entered, they are qualified
to adopt the nephew of Sarah under Sec. 7(b)
thereof, and the petition may be granted.
C. ADOPTEE
Only a legally freed child may be adopted
provided the following are submitted:
1. Child study;
2. Birth certificate/ foundling certificate;
3. Deed of Voluntary Commitment/Decree of
Abandonment/Death Certificate of parents;
4. Medical evaluation or history;
5. Psychological evaluation; and
6. Recent photo.
Child
A child is any person below 15 years old. (Sec. 3,
RA 8043)
Child legally free for adoption
A child voluntarily or involuntarily committed to
the DSWD as a dependent, abandoned or
neglected pursuant to the provisions of the Child
and Youth Welfare Code maybe subject of Inter-
Country Adoption; provided that in case of a
child shall be made not earlier that six (6)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
months from the date the Deed of Voluntary
Commitment was executed by the child’s
biological parent/s. A legally-free child is freed
of his biological parents, guardians, or adopters
in case of rescission.
NOTE: No child shall be matched to a foreign
adoptive family unless it is satisfactorily shown
that the child cannot be adopted in the
Philippines.
GR: There shall be no physical transfer of a
voluntarily committed child earlier than 6
months from the date of execution of Deed of
Voluntary Commitment.
XPN:
1. Adoption by relative;
2. Child with special medical condition.
INTER – COUNTRY ADOPTION BOARD
Function of Inter-Country Adoption Board
The Inter-Country Adoption Board (ICAB) acts
as the central authority in matters relating to
inter-country adoption. The Board shall ensure
that all the possibilities for adoption of the child
under the Family Code have been exhausted and
that the inter-country adoption is in the best
interest of the child.
Trial custody
It is the pre-adoptive relationship which ranges
six (6) months from the time of the placement. It
starts from the actual transfer of the child to the
applicant who, as actual custodian, shall exercise
substitute parental authority over the person of
the child.
Results of Trial Custody
1. If unsatisfactory – the relationship shall be
suspended by the board and the foreign
adoption agency shall arrange for the child’s
voluntary care.
2. If satisfactory – the Board shall submit the
written consent of the adoption to the
foreign adoption agency within 30 days
after the request of the latter’s request.
NOTE: The child shall be repatriated as a last
resort if found by the ICAB to be in his/her
138
 The Family under the Family Code
interests.
Q: Rosario alleged that she and Jose were
married on August 5, 1962 in Laoag City.
Their marriage had allegedly been troubled.
They had a child, Rose Marie, who was born
in 1963, but succumbed to congenital heart
disease and only lived for nine days. Rosario
allegedly left Jose after a couple of months
because of the incompatibilities between
them. Rosario and Jose, however, briefly
reconciled in 1969. Rosario gave birth to
Joanne a year later. She and Jose allegedly
lived as husband and wife for about a year
even if she lived in Manila and Jose stayed in
Laoag City. Jose would visit her in Manila
during weekends.
Afterwards, they separated permanently
because Rosario alleged that Jose had
homosexual tendencies. She insisted,
however, that they "remained friends for
fifteen (15) years despite their separation(.)"
On August 1, 2000, Jose filed a petition for
adoption before the Regional Trial Court of
Batac, Ilocos Norte. In the petition, he alleged
that Jed and Regina were his illegitimate
children with Lilibeth Fernandez Gregorio
(Lilibeth), whom Rosario alleged was his
erstwhile housekeeper. At the time of the
filing of the petition, Jose was 70 years old.
The petition for adoption was granted.
On October 18, 2007, Rosario and Joanne
filed a petition for annulment of judgment
under Rule 47 of the Rules of Civil Procedure
with the Court of Appeals, seeking to annul
the October 16, 2000 decision of the trial
court approving Jed and Regina's adoption.
In their petition, Rosario and Joanne allege
that they learned of the adoption sometime
in 2005. They alleged that Rosario's affidavit
of consent, marked by the trial court as "Exh.
K," was fraudulent. They also alleged that Jed
and Regina's birth certificates showed
different sets of information, such as the age
of their mother, Lilibeth, at the time she gave
birth. They argue that one set of birth
certificates states the father to be Jose and in
another set of National Statistic Office
certificates shows the father to be Larry,
Jose's driver and alleged lover. It was further
alleged that Jed and Regina are not actually
Jose's illegitimate children but the legitimate
children of Lilibeth and Larry who were
139
married at the time of their birth. On May 26,
2009, the Court of Appeals denied the
petition. WON the petition for adoption must
be denied?
A: YES. It is settled that "the jurisdiction of the
court is determined by the statute in force at the
time of the commencement of the action." As
Jose filed the petition for adoption on August 1,
2000, it is Republic Act No. 8552 which applies
over the proceedings. The law on adoption
requires that the adoption by the father of a
child born out of wedlock obtain not only the
consent of his wife but also the consent of his
legitimate children.
The law provides for several exceptions to the
general rule, as in a situation where a spouse
seeks to adopt his or her own children born out
of wedlock.
In this instance, joint adoption is not necessary.
However, the spouse seeking to adopt must first
obtain the consent of his or her spouse. In the
absence of any decree of legal separation or
annulment, Jose and Rosario remained legally
married despite their de facto separation.
For Jose to be eligible to adopt Jed and Regina,
Rosario must first signify her consent to the
adoption. Jose, however, did not validly obtain
Rosario's consent. His submission of a
fraudulent affidavit of consent in her name
cannot be considered compliance of the
requisites of the law.
Had Rosario been given notice by the trial court
of the proceedings, she would have had a
reasonable opportunity to contest the validity of
the affidavit. Since her consent was not obtained,
Jose was ineligible to adopt. (Raul S. Imperi
Rosario Mata Castro And Joanne Benedicta
Charissima M. Castro, A.K.A. "Maria Socorro M.
Castro" And "Jayrose M. Castro” v. Jose Maria Jed
Lemuel Gregorio And Ana Maria Regina Gregorio,
G.R. No. 188801, October 15, 2014, as penned by
J. Leonen)
 Civil Law
Distinction between Domestic Adoption Act and Inter-country Adoption Act

DOMESTIC ADOPTION ACT INTER-COUNTRY ADOPTION ACT

(R.A. 8552) (R.A. 8043)

Governing DSWD Inter-country Adoption Board (ICAB)

body

When may Adoption need not be the last resort Adoption only as last resort: No child
adoption be shall be matched to a foreign adoptive
resorted to family unless it is satisfactorily shown that
the child cannot be adopted locally. (Sec.
11)

1. Any FILIPINO CITIZEN (regardless 1. FILIPINO CITIZEN permanently

of where residing) residing abroad may file an application
for inter-country adoption of a Filipino
a. Of legal age; child if he/she:
Who may b. At least sixteen (16) years older
adopt than the adoptee, (may be a. Is at least twenty-seven (27) years of
waived when the adopter is the age;
biological parent of the adoptee,
or is the spouse of the adoptee’s b. At least sixteen (16) years older than
parent; the child to be adopted, at the time of
c. In possession of full civil application unless the adopter is the
capacity and legal rights; parent by nature of the child to be
d. Of good moral character, has not adopted or the spouse of such parent;
been convicted of any crime
involving moral turpitude, c. Has the capacity to act and assume all
emotionally and rights and responsibilities of parental
psychologically capable of caring authority under his national laws, and
for children; and has undergone the appropriate
e. Who is in a position to support counseling from an accredited
and care for his/her children in counselor in his/her country;
keeping with the means of the
family. d. Has not been convicted of a crime
involving moral turpitude;

2. Any ALIEN possessing the same e. Is in a position to provide the proper

qualifications as above stated for care and support to give the necessary
Filipino nationals, Provided; moral values and example to all his
children including the child to be
a. That he/she has been living in adopted;
the Philippine for at least three
(3) continuous years prior to the f. If married, his/her spouse must jointly
filing of the application for file for the adoption;
adoption and maintains such
residence until the adoption g. Is eligible to adopt under his/her
decree is entered; national law;
b. That his/her country has
diplomatic relations with the h. Agrees to uphold the basic rights of the
Republic of the Philippines; child as embodied under Philippine

UNIVERSITY OF SANTO TOMAS 140

2021 GOLDEN NOTES
 The Family under the Family Code
c. He/she has been certified by laws, the U.N. Convention on the Rights
his/her diplomatic or consular of the Child and to abide by the rules
office or any appropriate and regulations issued to implement
government agency that he/she the provisions of this Act;
has the legal capacity to adopt in
his/her country; i. Comes from a country with whom the
d. That his/her government allows Philippines has diplomatic relations
the adoptee to enter his/her and whose government maintains a
country as his/her adopted similarly
son/daughter; and
e. That the requirements on j. Authorized and accredited agency and
residency and certification to that adoption is allowed under his/her
adopt in his/her country may be national laws; and
WAIVED for the following:
k. Possesses all the qualifications and
i. A former Filipino citizen who none of the disqualifications provided
seeks to adopt a relative within herein and in other applicable
the fourth (4th) degree of Philippine laws.
consanguinity or affinity; or
ii. One who seeks to adopt the
legitimate son/daughter of
his/her Filipino spouse; or
iii. One who is married to a
Filipino citizen and seeks to
adopt jointly with his/her
spouse a relative within the
fourth (4th) degree of
consanguinity or affinity of the
Filipino spouse.

3. The GUARDIAN with respect to the

ward after the termination of the
guardianship and clearance of his/her
financial accountabilities. (Sec. 7)

a. Any person below eighteen (18) a. Filipino children [Sec. 3(a)];

years of age who has been
administratively or judicially
declared available for adoption;
b. The legitimate son/daughter of one
spouse by the other spouse;
c. An illegitimate son/daughter by a
qualified adopter to improve his/her
Who may be status to that of legitimacy;
adopted d. A person of legal age if, prior to the
adoption, said person has been
consistently considered and treated
by the adopter(s) as his/her own
child since minority;
e. A child whose adoption has been
previously rescinded; or
f. A child whose biological or adoptive
parent(s) has died: Provided, that no
proceedings shall be initiated within
six (6) months from the time of
b. Below 15 years of age [Sec. 3(b)]; and
c. Who are legally free, meaning children
who have been voluntarily or
involuntarily committed to the DSWD.
[Sec. 3(f) and Sec. 8)]
NOTE: IRR of 2004 adds that: Any child
who has been voluntarily or involuntarily
committed to the Department as
dependent, abandoned or neglected
pursuant to the provisions of the Child
and Youth Welfare Code may be the
subject of Inter-Country Adoption xxx.
(Sec. 26)

141
 Civil Law
death of said parent(s). (Sec. 8)

Petition for adoption shall be filed with Either with the Philippine RTC having
Family Court of the province or city jurisdiction over the child, or with the
where the prospective adoptive parents Inter-country Board through an
reside. (Rule on Adoption, Sec. 6) intermediate agency, in the country of the
Venue adoptive parents. (Sec. 10)

IRR of 2004 provides that: Application

shall be filed with the Board or the Central
Authority or the Foreign Adoption Agency
in the country where the applicant
resides. In case of foreign nationals who
file petition for adoption under RA 8552
or Domestic Adoption Law, the Court after
finding petition to be sufficient in form
and substance and proper case for inter-
country adoption shall immediately
transmit the petition to the board for
appropriate action. (Sec. 30)

Trial Custody Takes place in the Philippines Where adoptive parents reside

No provision limiting act of rescission only

to adoptee. In IRR, the procedure is
provided for when adoption process is
terminated:

SECTION 47. DISRUPTION AND

TERMINATION OF PLACEMENT. – In the
event of serious damage in the
relationship between the child and the
applicant/s where the continued
placement of the child is not in his/her
best interests, the Central Authority
Rescission Only upon petition of adoptee, never by and/or the FAA shall take the necessary
adopters. (Sec.19) measures to protect the child, in
particular, to cause the child to be
withdrawn from the applicant/s and to
arrange for his/her temporary care. The
Central Authority and/or FAA shall
exhaust all means to remove the cause of
the unsatisfactory relationship which
impedes or prevents the creation of a
mutually satisfactory adoptive
relationship. A complete report should be
immediately forwarded to the Board with
actions taken as well as recommendations
and appropriate plans. Based on the
report, the Board may terminate the pre-
adoptive relationship.

SEC. 48. NEW PLACEMENT FOR CHILD.

UNIVERSITY OF SANTO TOMAS 142

2021 GOLDEN NOTES
 The Family under the Family Code
In the event of termination of the pre-
adoptive relationship, the Board shall
identify from the Roster of Approved
Applicants a suitable family with whom to
place the child. The Central Authority
and/or the FAA may also propose a
replacement family whose application
shall be filed for the approval of the Board.
No adoption shall take place until after the
Board has approved the application of
such replacement family.

SUPPORT
3. Conventional – by agreement.
It comprises everything indispensable for
sustenance, dwelling, clothing, medical Rules on support of illegitimate children of
attendance and transportation, in keeping with either spouse
the financial capacity of the family, including the
education of the person entitled to be supported 1. It depends upon the property regime of the
until he completes his education or training for spouses.
some profession, trade or vocation, even beyond
the age of majority. (FC, Art. 194) (2010 BAR) ACP or CPG for the support of the following:

Characteristics of support (PRIMPEN) a. spouses;

b. common children of the spouses; and
1. Personal; c. legitimate children of either spouse
2. Reciprocal on the part of those who are by
law bound to support each other; NOTE: If the community property or the
3. Intransmissible; conjugal partnership is insufficient to cover
4. Mandatory; them, the spouses shall be solidarily liable
5. Provisional character of support judgment; for the unpaid balance with their separate
6. Exempt from attachment or execution; and properties.
7. Not subject to waiver or compensation
2. Separate property of person, for the support
COMPOSITION OF SUPPORT of the following:

Support comprises everything indispensable for: a. Illegitimate children;

b. Legitimate ascendants;
1. Sustenance; c. Descendants, whether legitimate or
2. Dwelling; illegitimate;
3. Clothing; d. Brothers and sisters, whether
4. Medical attendance; legitimately or illegitimately related.
5. Education – includes schooling or training (Rabuya, 2009)
for some profession, trade or vocation, even
beyond the age of majority;
6. Transportation – includes expenses going to SUMMARY OF SUPPORT OF
and from school, or to from place of work. SPOUSES TO OTHERS

Kinds of support Who are Property Insufficiency/Abse

entitled Regime to nce
1. Legal – required or given by law; be Liable
2. Judicial– required by court; may be:
a. Pendente lite Legitimat ACP or CPG ACP or CPG is
b. In a final judgment e is principally insufficient,

143
 Civil Law
children liable separate property of the legitimate and illegitimate children of
of both or both spouses are the latter;
either solidarily liable
spouse 4. Parents and their illegitimate children, and
and the legitimate and illegitimate children of
common the latter;
children.
NOTE: The alleged father of a child must
first recognize the latter before he or she
Illegitima Separate If Separate property may be entitled to support.
te property is of the spouse is
children principally insufficient, the 5. Legitimate brothers and sisters whether full
of either liable; spouses can use or half- blood. (FC, Art. 195)
spouse ACP can ACP or CPG
advance the NOTE: Brothers and sisters not legitimately
support; related, whether full or half-blood, are
CPG can be likewise bound to support each other.
liable if the However, when the need for support of the
responsibiliti brother or sister, being of age, is due to a
es in Art. 121 cause imputable to the claimant’s fault or
are covered negligence, the illegitimate brother or sister
has no right to be supported. (FC, Art. 196;
Rabuya, 2009)
Parents Separate There must be a
and property is complete absence of Q: Rule when:
siblings principally separate property a. Two or more persons are obliged to give
liable; on the part of the support;
ACP or CPG obligor-spouse. b. Two or more recipients at the same time
can advance claim support from the same persons
support, but who does not have sufficient means to
only if there satisfy all claims
is complete A:
absence of a. The payment of the same shall be divided
separate between them in proportion to the
property resources of each. However, in case of
urgent need and by special circumstances,
the judge may order only one of them to
PERSONS OBLIGED TO SUPPORT furnish support provisionally, without
prejudice to his right to claim
reimbursement from the other obligors of
Persons obliged to support each other (2008
their corresponding shares. (FC, Art. 200)
BAR)
b. The order established under Art. 199 of the
1. Spouses;
Family Code shall be followed, unless the
NOTE:
concurrent obliges should be the spouse and
a. The spouse must be the legitimate
a child, in which case, the child shall be
spouse in order to be entitled to
preferred. (FC, Art. 200)
support
b. The spouse who leaves the conjugal
Sources of Support
home or refuses to live therein,
without just cause, shall not have
the right to be supported. (FC, 100 DURING PENDING AFTER
and 127) MARRIAGE LITIGATION LITIGATION
Spouses
2. Legitimate ascendants & descendants;
From the ACP GR: No
3. Parents and their legitimate children, and community GR: From the obligation to

UNIVERSITY OF SANTO TOMAS 144

2021 GOLDEN NOTES
 The Family under the Family Code
property. community support A: YES. There appears to be no dispute that the
property children are indeed the daughters of Federico by
assets XPN: If there Belen. Under Art. 199 of the Family Code,
is Legal “Whenever two or more persons are obliged to
XPN: Separation. give support, the liability shall devolve upon the
If Art. 203 In which following persons in the following order herein
applies, that if case, the provided:
the claimant court may
spouse is the require the 1. The spouse;
guilty spouse, guilty 2. The descendants in the nearest degree;
he/she is not spouse to 3. The ascendants in the nearest degree; and
entitled to give 4. The brothers and sisters.
support. support.
The obligation to give support rests principally
CPG on those more closely related to the recipient.
Support is However, the more remote relatives may be held
considered an to shoulder the responsibility should the
advance of claimant prove that those who are called upon to
such spouses’ provide support do not have the means to do so.
share. Here, since it has been shown that the girls'
father, Federico, had no means to support them,
NOTE: The then Francisco, as the girls’ grandfather, should
rule does not then extend the support needed by them.
apply if the
spouses are NOTE: The second option in Art. 204 of the
under ACP Family Code, that of taking in the family dwelling
based on Art. the recipient, is unavailing in this case since the
153. filing of the case has evidently made the
relations among the parties bitter and
Children unpleasant. (Mangonon, et al. v. CA, et al., G.R. No.
125041, June 30, 2006)
From the From the From the
community community separate Q: Marcelo and Juana called Dr. Arturo to
property property properties of their house to render medical assistance to
the spouses their daughter-in- law who was about to give
birth to a child. He performed the necessary
operation. When Dr. Arturo sought payment,
Liability to support (FC, Art. 199) Marcelo and Juana refused to pay him
without giving any good reason. Who is
The liability to support should be observed in bound to pay the bill for the services
the following order: rendered by Arturo?

1. Spouse; A: HER HUSBAND, not her father and mother-

2. Descendants in the nearest degree;
3. Ascendants in the nearest degree;
4. Brothers and sisters.
Q: Belen, in behalf of her minor children,
instituted a petition for declaration of
legitimacy and support against Federico,
their alleged father, and Francisco, father of
Federico. It appears that the marriage of the
two was annulled due to the minority of
Federico. May Francisco be ordered to give
support?
in-law. The rendering of medical assistance in
case of illness is comprised among the mutual
obligations to which the spouses are bound by
way of mutual support. (FC, Arts. 142 and 143)
If every obligation consists in giving, doing or
not doing something (NCC, Art. 1088), and
spouses are mutually bound to support each
other, there can be no question but that, when
either of them by reason of illness should be in
need of medical assistance, the other is under
the unavoidable obligation to furnish the
necessary services of a physician in order that

145
 Civil Law
health may be restored, and he or she may be
freed from the sickness by which life is
jeopardized. (Pelayo v. Lauron, G.R. No. L-4089,
January 12, 1909)
Q: Cheryl married Edward Lim and they
begot three children. Cheryl, Edward and
their children lived at the house of Edward’s
parents, Prudencio and Filomena, together
with Edward’s ailing grandmother and her
husband. Edward was employed with the
family business, which provided him with a
monthly salary of P6,000 and shouldered the
family expenses. Cheryl had no steady source
of income. Cheryl caught Edward in “a very
compromising situation” with the midwife of
Edward’s grandmother. After a violent
confrontation with Edward, Cheryl left the
Forbes Park residence. She subsequently
sued, for herself and her children, Edward,
Edward’s parents and grandparents for
support. Edward and his parents were
ordered by the RTC to “jointly” provide,
monthly support to Cheryl and her children.
Is the court’s judgment in making Edward’s
parents concurrently liable with Edward to
provide support to Cheryl and her children
correct?
A: YES. However, the Supreme Court modified
the appealed judgment by limiting liability of
Edward’s parents to the amount of monthly
support needed by Cheryl’s children. Edward’s
parents are liable to provide support but only to
their grandchildren. By statutory and
jurisprudential mandate, the liability of
ascendants to provide legal support to their
descendants is beyond cavil. Petitioners
themselves admit as much — they limit their
petition to the narrow question of when their
liability is triggered, not if they are liable.
There is no showing that private respondent is
without means to support his son; neither is
there any evidence to prove that petitioner, as
the paternal grandmother, was willing to
voluntarily provide for her grandson's legal
support. Cheryl is unable to discharge her
obligation to provide sufficient legal support to
her children. It also shows that Edward is unable
to support his children. This inability of Edward
and Cheryl to sufficiently provide for their
children shifts a portion of their obligation to the
ascendants in the nearest degree, both in the
paternal (petitioners) and maternal lines,
following the ordering in Article 199. (Spouses
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Lim v. Cheryl Lim, G.R. No. 163209, October 30,
2009)
SUPPORT DURING MARRIAGE LITIGATION
During the pendency of the action for annulment
or declaration of absolute nullity of marriage
and action for legal separation, the court shall
provide for the support of the spouses and their
common children in the absence of a written
agreement between the spouses. (FC, Art. 49)
Sources of support shall be the properties of the
absolute community or conjugal partnership.
Mutual support of the spouses after the final
judgment granting the petition for legal
separation, annulment and declaration of
nullity of marriage
GR: Spouses are no longer obliged to render
mutual support after final judgment. The
obligation of mutual support ceases after final
judgment.
XPN: In case of legal separation the Court may
order that the guilty spouse shall give support to
the innocent one. (FC, Art. 198)
Effect of adultery of the wife
Adultery of the wife is a valid defense in an
action for personal support (i.e. support
coming from the spouse’s own funds). If adultery
is proved and sustained, it will defeat the action
for support. But if both are equally at fault, the
principle of in pari delicto applies in which the
husband cannot avail of the defense of adultery.
NOTE: Adultery is not a defense when it is to be
taken from the conjugal properties or the
absolute community of properties of the
spouses.
Q: H and W are living separately. Both had
been unfaithful to each other. After their
separation, H had been giving money to W for
her support. Subsequently, W brought an
action against H for separate maintenance.
Will the action prosper?
A: YES. The principle of in pari delicto is
applicable. Both are at fault. Consequently, H
cannot avail of himself of the defense of adultery
of W. Besides, the act of H in giving money to W
is implied condonation of the adultery of W.
146
 The Family under the Family Code
(Amacen v. Baltazar, G.R. No. L-10028, May 28,
1958)
AMOUNT
Amount shall be in proportion to the resources
or means of the giver and to the necessities of
the recipient. (FC, Art. 201)
Support may be decreased or increased
proportionately according to the reduction or
increase of the necessities of the recipient and
the resources of the person obliged to furnish
the same. (FC, Art. 202)
WHEN DEMANDABLE
The obligation to give support is demandable
from the time the person who has a right to
receive support needs it for maintenance.
The support shall be paid only from the date of
judicial or extrajudicial demand.
The right to support does not arise from mere
fact of relationship but from imperative
necessity without which it cannot be demanded.
The law presumes that such necessity does not
exist unless support is demanded.
Effect of Reaching Age of Majority
If a person is of age and no longer studies, he still
entitled to support unless there are just reasons
for the extinguishment of the right. (Javier v.
Lucero, 94 Phil. 634) If, upon the other hand, he
has not yet finished his studies even if already of
age, he still entitled generally to be supported. Of
course, if the person supporting dies, the
obligation ceases. (Falcon v. Arca, L-18135, July
31, 1963)
MANNER OF PAYMENT
Payment shall be made within first five days of
each corresponding month. In case of death of
the person entitled to receive support, his heirs
shall not be obliged to return what he has
received in advance for such support. (FC, Art.
203)
Payment by Third Person under Article 208
The obligation to reimburse under this article is
one that likewise arises from quasi-contract. As
147
distinguished from articles 206 of the Family
Code and 2164 of the Civil Code, “the obligor
unjustly refuses or fails to give support.” The law
creates a promise of reimbursement on the part
of the person obliged to furnish support, inspite
of the deliberate disregard of his legal and moral
duty. (Rabuya, 2006)
OPTIONS
Options given to persons giving support
1. To give a fixed allowance; or
2. To receive and maintain the recipient in the
giver’s home or family dwelling. (FC, Art.
204)
NOTE: In cases when there is a moral or legal
obstacle, the latter alternative in giving support
cannot be availed of.
If support is given by a stranger without the
knowledge of the person obliged to give
support;
GR: The stranger shall have the right of
reimbursement
XPN: Unless it appears that he gave it without
any intention of being reimbursed. (FC, Art. 206)
NOTE: If the person obliged to give support
unjustly refuses or fails to give it when urgently
needed, any third person may furnish support to
the needy individual, with a right of
reimbursement. (FC, Art. 207)
ATTACHMENT
Attachment or execution of the right to
receive support (FC, Art. 208)
GR: The right to receive support and any money
or property obtained as support cannot be
attached nor be subject to execution to satisfy
any judgment against the recipient.
XPN: In case of contractual support or support
given by will, the excess in amount beyond that
required for legal support shall be subject to levy
on attachment or execution.
NOTE: Contractual support shall be subject to
adjustment whenever modification is necessary
due to changes in circumstances beyond the
contemplation of the parties.
 Civil Law
Q: Jurisdictional questions may be raised at
any time. What is the exception with respect
to the provisional character of judgment for
support and the application of estoppel?
A: Judgment for support is always provisional in
character. Res Judicata does not apply. The
lower court cannot grant a petition based on
grounds, such as bigamy, not alleged in the
petition. Such decision based on grounds not
alleged in the petition is void on the ground of
no jurisdiction.
However, if the lower court’s void decision is not
assailed on appeal which dealt only with the
matter of support, the losing party is now
estopped from questioning the declaration of
nullity and the SC will not undo the judgment of
the RTC declaring the marriage null and void for
being bigamous.
It is axiomatic that while a jurisdictional
question may be raised at any time, this however
admits of an exception where estoppel has
supervened. (Lam v. Chua, G.R. No. 131286,
March 18, 2004)
Q: Edward abandoned his legitimate children
when they were minors. After 19 years from
the time Edward left them, they, through
their mother, finally sued him for support,
which the court granted. The court ordered
him to pay 2M pesos as support in arrears.
Edward assails the grant of the support in
arrears as erroneous since under Art. 203 of
the FC, there was never any demand for
support, judicial or extra- judicial, from
them. Is his contention correect?
A: NO. Edward could not possibly expect his
daughters to demand support from him
considering their tender years at the time that
he abandoned them. In any event, the mother of
the girls had made the requisite demand for
material support although this was not in the
standard form of a formal written demand.
Asking one to give support owing to the urgency
of the situation is no less a demand just because
it came by way of a request or a ppeal. (Lacson v.
Lacson, et al., G.R. No. 150644, August 28, 2006)
Q: Noel helped Lea by extending financial
help to support Lea’s children with Edward.
May Noel seek reimbursement of his
contributions? If yes, from whom may he do
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
so?
A: YES. Pursuant to Art. 207 of the Family Code,
Noel can rightfully exact reimbursement from
Edward. This provision reads that “[W]hen the
person obliged to support another unjustly refuses
or fails to give support when urgently needed by
the latter, any third person may furnish support to
the needy individual, with right of reimbursement
from the person obliged to give support.” The
resulting juridical relationship between the
Edward and Noel is a quasi-contract, an
equitable principle enjoining one from unjustly
enriching himself at the expense of another.
(Lacson v. Lacson, et al., G.R. No. 150644, August
28, 2006)
Q: Fe and her son Martin sued Martin’s
alleged biological father Arnel for support.
Arnel denied having sired Martin, arguing
that his affair and intimacy with Fe had
allegedly ended in long before Martin’s
conception. As a result, Fe and Martin moved
for the issuance of an order directing all the
parties to submit themselves to DNA
paternity testing. The said motion was
granted by the court. Did the order of the
court convert the complaint for support to a
petition for recognition?
A: The assailed order did not convert the action
for support into one for recognition but merely
allowed Fe to prove their cause of action. But
even if the order effectively integrated an action
to compel recognition with an action for
support, such was valid and in accordance with
jurisprudence. The integration of an action to
compel recognition with an action to claim one’s
inheritance is allowed. (Tayag v. CA, G.R. No.
95229, June 9, 1992) A separate action will only
result in a multiplicity of suits. Furthermore, the
declaration of filiation is entirely appropriate to
the action for support. (Agustin v. CA, G.R. No.
162571, June 15, 2005)
Q: Can DNA testing be ordered in a
proceeding for support without violating the
constitutional right against self-
incrimination?
A: YES. Compulsory DNA testing and the
admissibility of the results thereof as evidence
are constitutional. (People v. Yatar, G.R. No.
150224, May 19, 2004)
Moreover, it has mostly been in the areas of
148
 The Family under the Family Code
legality of searches and seizure and in the
infringement of privacy of communication
where the constitutional right to privacy has
been critically at issue.
If, in a criminal case, an accused whose very life
is at stake can be compelled to submit to DNA
testing, so much more so may a party in a civil
case, who does not face such dire consequences,
be likewise compelled. DNA testing and its
results is now acceptable as object evidence
without running afoul self-incrimination rights
of a person. (Agustin v. CA, G.R. No. 162571, June
15, 2005)
PARENTAL AUTHORITY
Parental Authority is “the mass of rights and
obligations which parents have in relation to the
person and property of their children until their
emancipation and even after this under certain
circumstances.” (Sempio- Diy, 1995)
Parental authority includes
1. Caring for and rearing of such children for
civic consciousness and efficiency;
2. Development of their moral, mental and
physical character and well-being. (FC, Art.
209)
Characteristics of parental authority
1. Jointly exercised by the father and mother;
2. Natural right and duty of the parents;
GR: Cannot be renounced, transferred or
waived.
XPN: In cases authorized by law such as in
cases of adoption, guardianship and
surrender to a children's home or an orphan
institution. (Santos v. CA, G.R. No. 113054,
March 16, 1995).
3. Purely personal;
4. Temporary.
Exercise of parental authority
The father and the mother shall jointly exercise
parental authority over the persons of their
common children. In case of disagreement, the
father’s decision shall prevail unless there is a
judicial order to the contrary. (FC, Art. 211)
149
If the child is illegitimate, parental authority is
with the mother. (FC, Art. 176)
NOTE: Joint parental authority may be exercised
over an illegitimate child when:
1. The father is certain;
2. The illegitimate children are living with the
said father and mother, who are cohabiting
without the benefit of marriage or under a
void marriage not falling under Art. 36 and
53. (Sta. Maria, 2017)
Parental authority and responsibility are
inalienable and may not be transferred or
renounced except in cases authorized by law.
The right attached to parental authority, being
purely personal, the law allows a waiver of
parental authority only in cases of adoption,
guardianship and surrender to a children's home
or an orphan institution. (Arts. 222-224, FC; Act
No. 3094)
Visitation rights
It is the right of access of a noncustodial parent
to his or her child or children.
Who are entitled of visitation rights
1. The non-custodial parent in cases of:
a. Legal separation;
b. Separation de facto;
c. Annulment;
d. Declaration of nullity on the ground of
psychological incapacity or failure to
comply with the requirements of Article
52;
2. Illegitimate father over his illegitimate child.
NOTE: In case of annulment or declaration of
absolute nullity of marriage, Article 49 of the
Family Code grants visitation rights to a parent
who is deprived of custody of his children. Such
visitation rights flow from the natural right of
both parent and child to each other’s company.
There being no such parent-child relationship
between them, a person has no legally
demandable right of visitation. (Concepcion v. CA,
G.R. No. 123450, August 31, 2005)
Q: Carlitos Silva and Suzanne Gonzales had a
live-in relationship. They had two children,
namely, Ramon Carlos and Rica Natalia. Silva
 Civil Law
and Gonzales eventually separated. They had
an understanding that Silva would have the
children in his company on weekends. Silva
claimed that Gonzales broke that
understanding on visitation rights. Hence,
Silva filed a petition for custodial rights over
the children before the RTC. The petition was
opposed by Gonzales who claimed that Silva
often engaged in gambling and womanizing
which she feared could affect the moral and
social values of the children. In the
meantime, Suzanne had gotten married to a
Dutch national. She eventually immigrated to
Holland with her children Ramon Carlos and
Rica Natalia. Can Silva be denied visitation
rights?
A: GR: NO.
XPN: If the fears and apprehensions were
founded as to the father’s corrupting influence
over the children and if it is proven therefore
that indeed the father is a negative influence
because of reasons like immorality,
drunkenness, etc. on the children, the court,
taking into consideration the best interest of the
children, can deny his petition for the exercise of
his visitation rights. (Silva v. CA, G.R. No. 114742,
July 17, 1997)
Parental Preference Rule
The natural parents, who are of good character
and who can reasonably provide for the child,
are ordinarily entitled to custody as against all
persons.
NOTE: Tender-Age Presumption:
No child under seven years of age shall be
separated from the mother, unless the court
finds compelling reasons to order otherwise [FC,
Art 213(2)]. (2006 BAR)
The paramount consideration in matters of
custody of a child is the welfare and well-being of
the child.
The use of the word “shall” in Art. 213 of the FC
is mandatory in character. It prohibits in no
uncertain terms the separation of a mother and
her child below 7 years, unless such separation
is grounded upon compelling reasons as
determined by a court. (Lacson v. San Jose-
Lacson, G.R. No. L-23482, August 30, 1968)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
“Compelling Reasons”
The so-called “tender-age presumption” under
Article 213 of the Family Code may be overcome
only by compelling evidence of the mother’s
unfitness. The mother has been declared
unsuitable to have custody of her children in one
or more of the following instances:
1. Insanity
2. Abandonment
3. Neglect
4. Drug addiction
5. Affliction with a communicable disease
6. Maltreatment of the child Immorality
7. Unemployment
8. Habitual drunkenness
NOTE: In one case, the SC ruled that sexual
preference or moral laxity alone does not prove
parental neglect or incompetence; to deprive the
wife of custody of her minor child, her moral
lapses must have an adverse effect on the
welfare of the child or it must have distracted
the offending spouse from exercising proper
parental care. (Pablo-Gualberto v. Gualberto, G.R.
No. 154994 & 156254, June 28, 2005.
Exercise of parental authority in case of
absence, death, remarriage of either parent,
or legal or de facto separation of parents
1. Absence or death of either parent – parent
present shall continue exercising parental
authority.
2. Remarriage of either parent – it shall not
affect the parental authority over the
children, unless the court appoints another
person to be the guardian of the person or
property of the children. (FC, Art. 213)
NOTE: Parental authority is not
automatically given to the new spouse over
the child of the surviving parent, unless such
new spouse legally adopts the children.
3. Legal or de facto separation of parents – the
parent designated by the court.
Considerations in the designation of child
custody
The Court shall take into account all relevant
considerations in the designation of the parent,
especially the choice of the child over seven
150
 The Family under the Family Code
years of age except when the parent chosen is
unfit. (FC, Art. 213)
Q: Herald, an American citizen, and Sharon,
Filipino, got married in Manila in 1994. Their
union was blessed with one daughter,
Stephanie who was born in 1995. In 1999,
Sharon sought and obtained a divorce decree
against Herald from Illinois. The Illinois
court dissolved the parties’ marriage and
awarded to Sharon the sole custody of
Stephanie. In 2002, Herald and Sharon
executed in Manila a contract for the joint
custody of Stephanie. In 2004, Herald sued
Sharon alleging that she violated their
contract as she retained sole custody over
Stephanie. The RTC dismissed Herald’s
complaint and ruled that the parties’
contract is void for contravening Article 2035
(5) of the Civil Code. Is the RTC correct?
A: YES. The contract is not only void ab initio for
being contrary to law, it has also been
repudiated by the mother when she refused to
allow joint custody by the father. The agreement
would be valid if the spouses have not divorced
or separated because the law provides for joint
parental authority when spouses live together.
However, upon separation of the spouses, the
mother takes sole custody under the law if the
child is below seven years old and any
agreement to the contrary is void. Thus, the law
suspends the joint custody regime for (1)
children under seven of (2) separated or
divorced spouses. Simply put, for a child within
this age bracket (and for commonsensical
reasons), the law decides for the separated or
divorced parents how best to take care of the
child and that is to give custody to the separated
mother. Indeed, the separated parents cannot
contract away the provision in the Family Code
on the maternal custody of children below seven
years. The Philippine courts do not have the
authority to enforce an agreement that is
contrary to law, morals, good customs, public
order, or public policy. (Dacasin v. Dacasin, G.R.
No. 168785, February 5, 2010)
Q: If the parents are separated de facto, who
between them has custody over their child/
children?
A: In the absence of a judicial grant of custody to
one parent, both of them have custody over their
child/children
The parent who has been deprived of the
151
rightful custody of the child may resort to the
remedy of habeas corpus. (Salientes v. Abanilla,
G.R. No. 162734, August 29, 2006)
NOTE: The general rule that children less than 7
years of age shall not be separated from the
mother finds its raison d'etre in the basic need of
minor children for their mother's loving care.
This is predicated on the "best interest of the
child" principle which pervades not only child
custody cases but also those involving adoption,
guardianship, support, personal status and
minors in conflict with the law. (Pablo-Gualberto
v. Gualberto, G.R. No. 154994/G.R. No. 156254,
June 28, 2005)
This also avoids the tragedy where a mother has
seen her baby torn away from her. No man can
sound the deep sorrows of a mother who is
deprived of her child of tender age. (Dacasin v.
Dacasin, G.R. No. 168785, February 5, 2010)
Q: Queenie was born to Renalyn and Ricky
James, who had been living together with
Renalyn's parents without the benefit of
marriage. Three (3) years later, the
relationship ended. Renalyn went to Manila,
supposedly leaving Queenie behind in the
care and custody of her father, Ricky James.
Ricky James alleged that, the parents of
Renalyn took Queenie from the school where
he had enrolled her. When asked to give
Queenie back, Renalyn's parents refused.
Consequently, Ricky James filed a petition for
habeas corpus and child custody before the
RTC (petition a quo). Upon reaching the CA it
remanded the case a quo for determination
of who should exercise custody over Queenie.
Was such action proper?
A: NO, CA erroneously applied Section 6 of Rule
99 of the Rules of Court. This provision
contemplates a situation in which the parents of
the minor are married to each other but are
separated either by virtue of a decree of legal
separation or because they are living separately
de facto. In the present case, it has been
established that petitioner and Respondent
Loreta were never married. Hence, that portion
of the CA Decision allowing the child to choose
which parent to live with is deleted, but without
disregarding the obligation of petitioner to
support the child.
General rule is that the father and the mother
shall jointly exercise parental authority over the
 Civil Law
persons of their common children. However,
insofar as illegitimate children are concerned,
Article 176 of the Family Code states that
illegitimate children shall be under the parental
authority of their mother. Accordingly, mothers
(such as Renalyn) are entitled to the sole
parental authority of their illegitimate children
(such as Queenie), notwithstanding the father's
recognition of the child. In the exercise of that
authority, mothers are consequently entitled to
keep their illegitimate children in their company,
and the Court will not deprive them of custody,
absent any imperative cause showing the
mother's unfitness to exercise such authority
and care. (Masbate vs. Relucio, G.R. No. 235498,
July 30, 2018)
SUBSTITUTE PARENTAL AUTHORITY
Substitute Parental Authority (2004 BAR)
It is the parental authority which the persons
designated by law may exercise over the persons
and property of unemancipated children in case
of death, absence or unsuitability of both
parents, or in default of a judicially appointed
guardian.
Order of substitute parental authority
1. Surviving Grandparent;
NOTE: The law considers the natural love of
a parent to outweigh that of the
grandparents, such that only when the
parent present is shown to be unfit or
unsuitable may the grandparents exercise
substitute parental authority. (Santos v. CA,
G.R. No. 113054, March 16, 1995)
2. Oldest brother or sister, over 21 years
unless unfit or disqualified;
3. Actual Custodian over 21 years unless unfit
or disqualified (FC, Art. 216);
4. In case of foundlings, abandoned, neglected
or abused children similarly situated,
parental authority shall be entrusted in
summary judicial proceedings to heads of
children’s homes, orphanages and similar
institutions duly accredited by the proper
government agency. (FC, Art. 217)
NOTE:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Foundlings – newborn child abandoned by its
parents who are unknown
Abandoned – a child who has no proper parental
care or guardianship
Neglected – a child whose basic needs have been
deliberately or inadequately unattended
Q: Bonifacia Vancil, a US citizen, is the mother
of Reeder C. Vancil, a US Navy serviceman
who died in the USA on December 22, 1986.
During his lifetime, Reeder had two children
named Valerie and Vincent by his common-
law wife, Helen G. Belmes. Bonifacia obtained
a favorable court decision appointing her as
legal and judicial guardian over the persons
and estate of Valerie Vancil and Vincent
Vancil, Jr. She alleged that Helen was morally
unfit as guardian of Valerie considering that
Helen’s live-in partner raped Valerie several
times.
Can Bonifacia exercise substitute parental
authority over Valerie and Vincent?
A: NO. Bonifacia, as the surviving grandparent,
can exercise substitute parental authority only
in case of death, absence or unsuitability of
Helen. Considering that Helen is very much alive
and has exercised continuously parental
authority over Vincent, Bonifacia has to prove, in
asserting her right to be the minor’s guardian,
Helen’s unsuitability.
Bonifacia, however, has not proffered convincing
evidence showing that Helen is not suited to be
the guardian of Vincent. Bonifacia merely insists
that Helen is morally unfit as guardian of Valerie
considering that her live- in partner raped
Valerie several times. (But Valerie, being now of
major age, is no longer a subject of this
guardianship proceeding).
Even assuming that Helen is unfit as guardian of
minor Vincent, still Bonifacia cannot qualify as a
substitute guardian. She is an American citizen
and a resident of Colorado. Obviously, she will
not be able to perform the responsibilities and
obligations required of a guardian. In fact, in her
petition, Bonifacia admitted the difficulty of
discharging the duties of a guardian by an
expatriate, like her. To be sure, she will merely
delegate those duties to someone else who may
not also qualify as a guardian. (Vancil v. Belmes,
152
 The Family under the Family Code
G.R. No. 132223, June 19, 2001) parents temporarily
relinquish parental
SPECIAL PARENTAL AUTHORITY authority over the child
to the latter.
Special Parental Authority (2003, 2004,
2005, 2010 BAR)
EFFECTS OF PARENTAL AUTHORITY UPON
It is the parental authority granted by law to THE PERSON OF THE CHILDREN
certain persons, entities or institutions in view
of their special relation to children under their Special Parental Authority (2003, 2004,
supervision instruction or custody. It is 2005, 2010 BAR)
denominated as special because it is limited and
is present only when the child is under their It is the parental authority granted by law to
supervision instruction or custody. It can also certain persons, entities or institutions in view
co- exist with the parents’ parental authority. of their special relation to children under their
supervision instruction or custody. It is
Persons who may exercise special parental denominated as special because it is limited and
authority (FC, Art. 218) is present only when the child is under their
supervision instruction or custody. It can also
1. The school; co- exist with the parents’ parental authority.
2. School administrators;
3. School teachers; Persons who may exercise special parental
4. Individual, entity or institution engaged in authority (FC, Art. 218)
child care.
1. The school;
Scope of special parental authority 2. School administrators;
3. School teachers;
The scope of special parental authority and 4. Individual, entity or institution engaged in
responsibility applies to all authorized activities, child care.
whether inside or outside the premises of the
school, entity or institution. Scope of special parental authority

NOTE: The nature of the liability of persons The scope of special parental authority and
having special parental authority over said responsibility applies to all authorized activities,
minors for their acts or omissions causing whether inside or outside the premises of the
damage to another is principal and solidary. The school, entity or institution.
parents, judicial guardians or the persons
exercising substitute parental authority over NOTE: The nature of the liability of persons
said minor shall be subsidiarily liable. (FC, Art. having special parental authority over said
219) (2003, 2010 BAR) minors for their acts or omissions causing
damage to another is principal and solidary. The
Substitute parental authority vis-à-vis parents, judicial guardians or the persons
Special parental authority exercising substitute parental authority over
said minor shall be subsidiarily liable. (FC, Art.
SUBSTITUTE SPECIAL 219) (2003, 2010 BAR)
PARENTAL PARENTAL
AUTHORITY AUTHORITY Right to Child’s Custody

Exercised in Exercised concurrently The right of parents to the custody of their

case of: (DAU) with the parental minor children is one of the natural rights
1. authority of the parents; incident to parenthood, a right supported by law
2. Death Rests on the theory that and sound public policy. The right is an inherent
3. Absence, or while the child is in the one, which is not created by the state or
Unsuitability of custody of the person decisions of the courts but derives from the
parents. exercising special nature of the parental relationship. (Sagala-
parental authority, the Eslao v. CA, G.R. No. 116773, January 16, 1997)

153
 Civil Law
Parents’ right to custody of the child
GR: Parents are never deprived of the custody
and care of their children.
XPNS:
1. For cause;
NOTE: the law presumes that the child’s
welfare will be best served in the care and
control of his parents.
2. If in consideration of the child’s welfare or
well- being, custody may be given even to a
non-relative.
Basis for the duty to provide support
Family ties or relationship, not parental
authority.
NOTE: The obligation of the parents to provide
support is not coterminous with the exercise of
parental authority.
Rule on the parent’s duty of representation
GR: Parents are duty-bound to represent their
minor children in all matters affecting their
interests;
NOTE: This duty extends to representation in
court litigations.
XPN: A guardian ad litem may be appointed by
the court to represent the child when the best
interest of the child so requires.
Scope of the parent’s right to discipline the
child (FC, Art. 223)
Persons exercising parental authority may:
1. Impose discipline on minor children as may
be required under the circumstances;
2. Petition the court for the imposition of
appropriate disciplinary measures upon the
child, which include the commitment of the
child in entities or institutions engaged in
childcare or in children’s homes duly
accredited by the proper government
agency.
NOTE: Such commitment must not exceed 30
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
days.
Limitations on the exercise of the right to
discipline the child and its consequences
Persons exercising such right are not allowed to:
1. Treat the child with excessive harshness or
cruelty; or
2. Inflict corporal punishment.
Otherwise, the following are its consequences:
1. Parental authority may be suspended;
2. Parent concerned may be held criminally
liable for violation of RA 7160 (Special
Protection of Children against Abuse,
Exploitation and Discrimination Act)
CHILD ABUSE (R.A. 7610) SEC. 10
Section 10. Other Acts of Neglect, Abuse,
Cruelty or Exploitation and Other Conditions
Prejudicial to the Child's Development. –
1. Any person who shall commit any other acts
of child abuse, cruelty or exploitation or to
be responsible for other conditions
prejudicial to the child's development
including those covered by Article 59 of
Presidential Decree No. 603, as amended,
but not covered by the Revised Penal Code,
as amended, shall suffer the penalty of
prision mayor in its minimum period.
2. Any person who shall keep or have in his
company a minor, twelve (12) years or
under or who in ten (10) years or more his
junior in any public or private place,
hotel, motel, beer joint, discotheque,
cabaret, pension house, sauna or
massage parlor, beach and/or other
tourist resort or similar places shall suffer
the penalty of prision mayor in its maximum
period and a fine of not less than Fifty
thousand pesos (P50,000): Provided, That
the provision shall not apply to any person
who is related within the fourth degree of
consanguinity or affinity or any bond
recognized by law, local custom and
tradition or acts in the performance of a
social, moral or legal duty.
3. Any person who shall induce, deliver or
offer a minor to any one prohibited by
the Act to keep or have in his company a
154
 The Family under the Family Code
minor as provided in the preceding
paragraph shall suffer the penalty of prision
mayor in its medium period and a fine of not
less than Forty thousand pesos (P40,000);
Provided, however, that should the
perpetrator be an ascendant, stepparent
or guardian of the minor, the penalty to be
imposed shall be prision mayor in its
maximum period, a fine of not less than Fifty
thousand pesos (P50,000), and the loss of
parental authority over the minor.
4. Any person, owner, manager or one
entrusted with the operation of any
public or private place of
accommodation, whether for occupancy,
food, drink or otherwise, including
residential places, who allows any
person to take along with him to such
place or places any minor as described in
the law shall be imposed a penalty of prision
mayor in its medium period and a fine of not
less than Fifty thousand pesos (P50,000),
and the loss of the license to operate such a
place or establishment.
5. Any person who shall use, coerce, force or
intimidate a street child or any other
child to:
a. Beg or use begging as a means of living;
b. Act as conduit or middlemen in drug
trafficking or pushing; or
c. Conduct any illegal activities, shall
suffer the penalty of prision correccional
in its medium period to reclusion
perpetua.
NOTE: The penalty for the commission of acts
punishable under Articles 248, 249, 262,
paragraph 2, and 263, paragraph 1 of Act No.
3815, as amended, the Revised Penal Code, for
the crimes of murder, homicide, other
intentional mutilation, and serious physical
injuries, respectively, shall be reclusion perpetua
when the victim is under twelve (12) years of
age.
The penalty for the commission of acts
punishable under Article 337, 339, 340 and 341
of Act No. 3815, as amended, the Revised Penal
Code, for the crimes of qualified seduction, acts
of lasciviousness with the consent of the
offended party, corruption of minors, and white
slave trade, respectively, shall be one (1) degree
higher than that imposed by law when the victim
155
is under twelve (12) years age.
The victim of the acts committed under this
section shall be entrusted to the care of the
Department of Social Welfare and Development.
(Sec. 10, R.A. 7610)
Liabilities of Parents under Art. 59 of
Presidential Decree No. 603 (Child and Youth
Welfare Code)
Article 59. Crimes. - Criminal liability shall
attach to any parent who:
1. Conceals or abandons the child with intent
to make such child lose his civil status.
2. Abandons the child under such
circumstances as to deprive him of the love,
care and protection he needs.
3. Sells or abandons the child to another
person for valuable consideration.
4. Neglects the child by not giving him the
education which the family's station in life
and financial conditions permit.
5. Fails or refuses, without justifiable grounds,
to enroll the child as required by Article 72.
6. Causes, abates, or permits the truancy of the
child from the school where he is enrolled.
"Truancy" as here used means absence
without cause for more than twenty
schooldays, not necessarily consecutive.
7. It shall be the duty of the teacher in charge
to report to the parents the absences of the
child the moment these exceed five
schooldays.
8. Improperly exploits the child by using him,
directly or indirectly, such as for purposes of
begging and other acts which are inimical to
his interest and welfare.
9. Inflicts cruel and unusual punishment upon
the child or deliberately subjects him to
indignation and other excessive
chastisement that embarrass or humiliate
him.
10. Causes or encourages the child to lead an
immoral or dissolute life.
11. Permits the child to possess, handle or carry
a deadly weapon, regardless of its
ownership.
12. Allows or requires the child to drive without
a license or with a license which the parent
knows to have been illegally procured. If the
motor vehicle driven by the child belongs to
the parent, it shall be presumed that he
permitted or ordered the child to drive. (Art.
59, PD 603)
 Civil Law
Liability of persons exercising special responsibility shall apply to all authorized
parental authority over the child (FC, Art. activities whether inside or outside the premises
219) of the school, entity or institution.

GR: They are principally and solidarily liable for In this case, the petitioners’ negligence and
damages caused by the acts or omissions of the failure to exercise the requisite degree of care
child while under their supervision, instruction and caution was demonstrated by the following:
or custody. (i) petitioner school did not take affirmative
steps to avert damage and injury to its students
XPN: Unless they exercised the proper diligence although it had full information on the nature of
required under the particular circumstance. This dangerous science experiments conducted by
may extinguish the liability with the minor. (FC, the students during class; (ii) petitioner school
Art. 219) did not install safety measures to protect the
students who conduct experiments in class; (iii)
NOTE: Parents, judicial guardians or those petitioner school did not provide protective
exercising substitute parental authority over the gears and devices, specifically goggles, to shield
minor are subsidiarily liable for said acts and students from expected risks and dangers; and
omissions of the minor (iv) petitioner Tabugo (the teacher) was not
inside the classroom the whole time her class
Q: Jayson and his classmates were conducted the experiment, specifically, when the
conducting a science experiment about accident involving the student occurred. (St.
fusion of sulphur powder and iron fillings Joseph’s College v. Miranda, G.R. No. 182353, June
under the tutelage of Tabugo, the subject 29, 2010)
teacher and employee of St. Joseph College.
Tabugo left her class while the experiment EFFECTS OF PARENTAL AUTHORITY UPON
was ongoing without having adequately THE PROPERTY OF THE CHILDREN
secured the students from any untoward
incident or occurrence. In the middle of the Legal guardianship can be exercised by the
experiment, Jayson checked the result of the father or mother, jointly, without need of court
experiment by looking into the test tube with appointment over the property of an
magnifying glass and it was moved towards emancipated child.
his eyes. At that instance, the compound
spurted from the test tube and several NOTE: In case of disagreement, the father’s
particles hit Jayson’s eyes. His left eye was decision shall prevail unless there is a judicial
chemically burned, for which he had to order to the contrary. (FC, Art. 229)
undergo surgery and spend for medication.
Jayson filed a complaint for damages against Kinds of properties of a minor
the school and Tabugo. Can the said school
and its teacher, Tabugo, be held liable for the ADVENTITIOUS PROSFECTITIOUS
unfortunate incident of Jayson? 1. Earned or 1. Property given
acquired by the by the parents to
A: YES. The proximate cause of the student’s child through his the child for the
injury was the concurrent failure of petitioners work or industry latter to
to prevent the foreseeable mishap that occurred by onerous or administer;
during the conduct of the science experiment. gratuitous title; 2. Owned by the
Petitioners were negligent by failing to exercise 2. Owned by the parents;
the higher degree of care, caution and foresight child; 3. Parents are
incumbent upon the school, its administrators 3. Child is also the usufructuary;
and teachers. Art. 218 of the Family Code, in usufructuary, but 4. Property
relation to Art. 2180 of the New Civil Code, the child’s use of administered by
bestows special parental authority on a school, the property shall the child.
its administrators and teachers, or the be secondary to all
individual, entity or institution engaged in child collective daily
care, and these persons have responsibility over needs of the family;
the minor child while under their supervision, 4. Administered by
instruction or custody. Authority and the parents.

UNIVERSITY OF SANTO TOMAS 156

2021 GOLDEN NOTES
 The Family under the Family Code
Necessity of posting a bond by the parents b. Emancipation of the child;

A parent is required to post a bond if the market NOTE: Child is emancipated upon
value of the property or the annual income of the reaching the age of majority.
child exceeds P50,000.
c. Death of child. (FC, Art. 228)
NOTE: The bond shall not be less than 10% of
the value of the property or annual income. (FC, 2. Temporarily: – it may be revived
Art. 225)
a. Adoption of the child;
Rules regarding the use of the child’s b. Appointment of general guardian;
property (Art. 226, FC) c. Judicial declaration of abandonment of
the child in a case filed for the purpose;
1. The property of minor children shall be d. Final judgment divesting parents of
devoted to their support and education parental authority;
unless the title or transfer provides e. Incapacity of parent exercising parental
otherwise. authority;
f. Judicial declaration of absence or
2. The parents have the right to use only the incapacity of person exercising parental
fruits and income of said property for the authority. (FC, Art. 229)
following purposes:
NOTE: In case of temporary termination of
a. Primarily, to the child’s support; parental authority, parental authority may be
b. Secondarily, to the collective daily revived thru a court judgment. (Rabuya, 2009)
needs of the family.
Grounds for suspension of Parental
NOTE: Income of the child may be used to help Authority
pay the daily collective needs of the family when
the former’s property or income is more than 1. Gives corrupting orders, counsel or
sufficient to maintain his or her needs. example;
2. Treats child with excessive harshness and
Rule on lease of property belonging to minor cruelty;
children 3. Subjects the child or allows him to be
subjected to acts of lasciviousness; (FC, Art.
GR: The parents, as legal guardians of the 231)
minor’s property, may validly lease the same, 4. Conviction of crime with penalty of civil
even without court authorization, because lease interdiction; (FC, Art. 230)
has been considered as an act of administration. 5. Culpable negligence of parent or person
exercising parental authority;
XPNs: Court authorization is required if: 6. Compels the child to beg.

1. If the lease will be recorded in the Registry NOTE: If the person exercising Parental
of Property; Authority has subjected the child or allowed him
2. If the lease is for a period of more than one to be subjected to sexual abuse, he/she shall be
year, because this is already deemed an act permanently deprived of PA.
of dominion.
If the ground for suspension of parental
SUSPENSION OR TERMINATION OF authority is civil interdiction, the suspension is
PARENTAL AUTHORITY automatic so as its reinstatement.

Grounds for Termination of Parental Revocation of suspension of Parental

Authority and its revival
Authority

1. Permanently; The suspension may be revoked, and parental

authority revived by filing a case for the
a. Death of parents; purpose, or in the same proceeding if the court

157
 Civil Law
finds that the cause therefore had ceased and
will not be repeated.
Transfer or renunciation of Parental
Authority
GR: Parental authority and responsibility are
Inalienable and may not be transferred and
renounced.
XPN: In cases authorized by law.
Loss of parental authority over the minor
under the Child Abuse Law (RA 7610)
When an ascendant, stepparent or guardian of
the minor, induces, delivers or offers him to any
person who would keep or have in his company
such minor, twelve (12) years or under or who
in ten (10) years or more his junior, in any
public or private place, hotel, motel, beer joint,
discotheque, cabaret, pension house, sauna or
massage parlor, beach and/or other tourist
resort or similar places.
Corporal punishment
It is the infliction of physical disciplinary
measures to a student. This is absolutely
prohibited under the Family Code. (Sta. Maria,
2010)
NOTE: While a teacher is administratively liable
or civilly liable in the event that he or she inflicts
corporal punishment to a student, it has been
held that where there was no criminal intent on
the part of the teacher who angrily and
repeatedly whipped a student resulting in slight
physical injuries to the said student and where
the purpose of the teacher was to discipline a
student, the said teacher cannot be held
feloniously liable for the criminal offense of
slight physical injuries. (Bagajo v. Marave, G.R.
No. L-33345, November 20, 1978)
Emancipation
It is the release of a person from parental
authority whereby he becomes capacitated for
civil life.
Emancipation takes place by attainment of
majority at the age of (18) eighteen years. (FC,
Art. 234 as amended by RA 6809) (2010 BAR)
Effects of emancipation
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Parental authority over the person and
property of the child is terminated.
2. Child shall be qualified and responsible for
all acts of civil life, save exceptions
established by existing
3. Contracting marriage shall require parental
consent until the age of 21.
4. The responsibility of parents or guardians
for children and wards below 21 under the
second and third paragraphs of Art. 2180 of
the New Civil Code shall not be derogated.
RETROACTIVITY OF FAMILY CODE
GR: The Code shall have retroactive effect. (FC,
Art. 256)
XPN: When retroactivity would prejudice vested
rights. (2005, 2010 BAR)
Vested right
Some right or interest in property that has
become fixed or established and is no longer
open to doubt or controversy. Rights are vested
when the right to enjoyment, present or
prospective, has become the property of some
person as present interest.
Q: Antonia Aruego and her sister Evelyn filed
a petition in the courts seeking Jose Aruego,
Jr. and his five children to recognize them as
illegitimate children and compulsory heirs of
Jose. They claim that there is open and
continuous possession of status of
illegitimate children of Jose who had an
amorous relationship with their mother Luz
Fabian until the time of the death of Jose. The
court declared that Antonia Aruego is an
illegitimate daughter of the deceased with
Luz Fabian while Evelyn is not. Antonia and
Evelyn contested the decision citing
provisions of the Family Code particularly
Art. 127 on Filiation, Art.172 on illegitimate
children’s filiation, and Art.256 on the
retroactivity of the code. Whether the
provisions of the Family Code can be applied
retroactively, and will it impair the vested
rights of the respondents?
A: The action for compulsory recognition and
enforcement of successional rights which was
filed prior to the advent of the Family Code, must
be governed by Art. 285 of the New Civil Code
and not by Art. 175, par. 2 of the Family Code.
The present law cannot be given retroactive
158
 The Family under the Family Code
effect insofar as the instant case is concerned, as
its application will prejudice the vested right of
private respondent to have her case decided
under Art. 285 of the New Civil Code. The right
was vested to her by the fact that she filed her
action under the regime of the New Civil Code.
Presiding from this, the conclusion then ought to
be that the action was not yet barred,
notwithstanding the fact that it was brought
when the putative father was already deceased,
since private respondent was then still a minor
when it was filed, an exception to the general
rule provided under Art. 285 of the New Civil
Code. Hence, the trial court, which acquired
jurisdiction over the case by the filing of the
complaint, never lost jurisdiction over the same
despite the passage of E.O. No. 209, also known
as the Family Code of the Philippines. (Aruego v.
CA, G.R. No. 112193, March 13, 1996)
NOTE: If an action for recognition was filed prior
to the effectivity of the FC, Art. 173 of the Family
Code cannot be given retroactive effect because
it will prejudice the vested rights of petitioners
transmitted to them at the time of the death of
their father, Eutiquio Marquino. "Vested right" is
a right in property which has become fixed and
established and is no longer open to doubt or
controversy. It expresses the concept of present
fixed interest, which in right reason and natural
justice should be protected against arbitrary
State action. (Marquino v. IAC, G.R. No. 72078,
June 27, 1994)
FUNERALS
General Guidelines
1. Duty and right to make arrangements in
funerals in accordance with Art. 199, FC:
a. Spouse; in his absence or incapacity,
b. Descendants in the nearest degree; in
absence or incapacity,
i. Preferred: the eldest descendant
c. Ascendants in the nearest degree;
i. Preferred: the paternal side
d. Brothers and sisters, in absence of all
the above.
i. Preferred: the eldest sibling
159
NOTE: In case of descendants of the same
degree, or of brothers and sisters, the oldest
shall be preferred.
In case of ascendants, the paternal shall have
a better right. (NCC, Art. 305)
2. Funeral shall be:
a. In keeping with the social position of
the deceased; (NCC, Art. 306)
b. In accordance with the expressed
wishes of the deceased;
c. In absence of the expressed wishes, his
religious beliefs or affiliation shall
determine;
d. In case of doubt, the form of funeral is to
be decided upon by the person obliged
to make arrangements for the same,
after consulting the other members of
the family. (NCC, Art. 307)
3. Any person who:
a. Shows disrespect to the dead, or
b. Wrongfully interferes with a funeral
shall be liable to the family of the
deceased for damages, material and
moral. (NCC, Art. 309)
4. Funeral expenses are chargeable against the
property of the deceased. However, if the
deceased is one of the spouses, they are
chargeable against the conjugal partnership
or absolute community of property. (NCC,
Art. 310)
NOTE: No human remains shall be retained,
interred, disposed of or exhumed without the
consent of the persons mentioned in Art. 294
and 305. (Art. 308)
Q: Adriano and Rosario are married to each
other. However, their marriage turned sour
and they were eventually separated-in-fact.
Years later, Adriano met Fe which he courted
and eventually decided to live together as
husband and wife while his marriage with
Rosario is still subsisting. Adriano later died
while Rosario and the rest of his family are in
the United States spending their Christmas
vacation. When Rosario learned of Adriano’s
death, she immediately called Fe for the
delay of Adriano’s interment which was
unheeded by Fe. The remains of Adriano
were interred at the mausoleum of Fe’s
family allegedly according to Adriano’s oral
request from her. Who between Rosario and
 Civil Law
Fe is entitled to the remains of Adriano?
Natural child Father’s
A: The law gives the right and duty to make acknowledged
funeral wife of Atty. Adriano. The fact that she both parents.
was living separately from her husband and was
in the United States when he died has no Natural child by
controlling significance. To say that Rosario had, legal fiction.
in effect, waived or renounced, expressly or
impliedly, her right and duty to make Natural child Recognizing parent
arrangements for the funeral of her deceased acknowledged
husband is baseless. The right and duty to make only one parent.
funeral arrangements, like any other right, will
not be considered as having been waived or Adopted Adopter’s
renounced, except upon clear and satisfactory
proof of conduct indicative of a free and Illegitimate Mother’s or father’s if
voluntary intent to that end. requisites of R.A. 9255
are complied with.
Even assuming, ex gratia argumenti, that Atty.
Adriano truly wished to be buried in the Fe’s NOTE: An illegitimate
family plot at the Manila Memorial Park, the child shall have the
result remains the same. Art. 307 simply seeks "option" to use the
to prescribe the “form of the funeral rites: that surname of the father in
should govern in the burial of the deceased. The the following instances:
right and duty to make funeral arrangements 1.
reside in the persons specified in Article 305 in 1. If his/her filiation has
relation to Article 199 of the Family Code. Even been expressly
if Article 307 were to be interpreted to include recognized by the
the place of burial among those on which the father through the
wishes of the deceased shall be followed, Dr. record of birth
Arturo M. Tolentino (Dr. Tolentino), an eminent appearing in the civil
authority on civil law, commented that it is registry; or
generally recognized that any inferences as to
the wishes of the deceased should be established 2. When an admission of
by some form of testamentary disposition. paternity is made by
(Valino v. Adriano, G.R. No. 182894, April 22, the father in a public
2014) document or private
handwritten
USE OF SURNAMES instrument
PROVIDED, the father
Rule with regard to the use of surname by a has the right to
child who is: institute an action
before the regular
(1) legitimate; (2) legitimated; (3) adopted; courts to prove non-
and (4) illegitimate filiation during his
lifetime. (Art. 176, FC,
CHILD SURNAME TO BE USED as amended by R.A.
CONCERNED 9255)

Legitimate Father’s or mother’s Under the amendatory

provision of R.A. 9255,
Note: There is no legal the use of the
Legitimated obstacle if the child illegitimate father’s
chooses to use the surname is PERMISSIVE
surname of the mother, and not obligatory.
as he is equally entitled (Rabuya, 2009)
to. (Sta. Maria, 2017)

UNIVERSITY OF SANTO TOMAS 160

2021 GOLDEN NOTES
 The Family under the Family Code
Conceived prior Father’s Legally separated Wife shall continue
to annulment (NCC, Art. 372) using the name and
of marriage surname employed
Conceived Mother’s by her, prior to the
after annulment legal separation.
of marriage Widowed spouse (NCC, She may use the
Art. 373) deceased’s
husband’s surname
Rule with regard to the use of surname of a as though he is still
married woman living.

FACTUAL
SURNAME
CIRCUMSTANCE Valid grounds for a change of name
TO BE USED
OF THE WIFE
1. One has continuously used and been known
Valid marriage (before1. First name and since childhood by a Filipino name and was
husband dies) (NCC, maiden name (Her unaware of alien parentage;
Art. 370) maiden first name 2. The change results as a legal consequence,
and surname) (FC, as in legitimation;
Art. 370) + 3. There is a sincere desire to adopt a Filipino
husband’s name to erase signs of former alienage, all in
surname. good faith and without prejudicing anyone;
2. 4. The change will avoid confusion;
3. First name + 5. The new first name or surname has been
husband’s surname habitually and continuously used by the
4. petitioner and is publicly known by that first
5. Husband’s full name or nickname. (Pineda, 2010)
name + prefix 6. The name is:
indicating that she
is his wife (e.g., a. Ridiculous,
Mrs.) b. Extremely difficult to write or
6. pronounce; and
7. Retain the use of c. Dishonorable.
her maiden name
8. Q: Can a person change his registered first
*Use of husband’s name and sex on the basis of a sex
surname is not a reassignment?
duty but merely an
option for the wife. A: NO. Before a person can legally change his
Marriage Wife is Shall resume using given name, he must present proper or
is the guilty her maiden name reasonable cause or any compelling reason
annulled party justifying such change. In addition, he must
(NCC, Art. show that he will be prejudiced by the use of his
371) Wife is Choices:
true and official name. Under the Civil Register
the 1. Resume using her
Law, a birth certificate is a historical record of
innocent maiden name
the facts as they existed at the time of birth.
party 2. Continue using
Thus, the sex of a person is determined at
husband’s surname
birth, visually done by the birth attendant (the
3.
physician or midwife) by examining the genitals
Unless:
of the infant. Considering that there is no law
a. Court decrees
legally recognizing sex reassignment, the
otherwise;
determination of a person’s sex made at the time
b. She or the former
of his or her birth, if not attended by error, is
husband is married
immutable. (Silverio v. Republic, G.R. No. 174689,
again to another
October 22, 2007)
person

161
 Civil Law
Procedural requirements for a petition for In case of identity of names and surnames, the
change of name younger person shall be obliged to use such
additional name or surname as will avoid
1. 3 -year residency in the province where the confusion. (NCC, Art. 374)
change is sought prior to the filing; (Sec. 2,
Rule 103, Rules of Court) In case of identity of names and surnames
2. Must not be filed within 30 days prior to an between ascendants and descendants, the word
election; (Sec. 3, Rule 103, Rules of Court) "Junior" can be used only by a son. Grandsons
3. Petition must be verified. (Sec. 2, Rule 103, and other direct male descendants shall either:
Rules of Court)
1. Add a middle name or the mother’s
Q: Virginia Remo, a Filipino citizen, is surname, or
married to Francisco Rallonza. In her 2. Add the Roman Numerals II, III, and so on.
passport, the following entries appear: (NCC, Art. 375)
"Rallonza" as her surname, "Maria Virginia"
as her given name, and "Remo" as her middle NOTE: No person can change his name or
name. Prior to the expiration of her passport, surname without judicial authority. (NCC, Art.
Virginia applied for the renewal of her 376)
passport with the DFA, with a request to
revert to her maiden name and surname in Elements of usurpation of name
the replacement passport. Virginia, relying
on Article 370 of the Civil Code, contends that 1. Actual use of another’s name by the
the use of the husband’s surname by the wife defendant;
is permissive rather than obligatory. Is 2. Use is unauthorized;
Virginia correct? 3. Use of another’s name is to designate
personality or identify a person.
A: NO. A married woman has an option, but not
a duty, to use the surname of the husband in any Remedies available to the person whose
of the ways provided by Art. 370 of the New Civil name has been usurped
Code. However, R.A. 8239 or the Philippine
Passport Act of 1996 limits the instances when a 1. Civil – insofar as private persons are
married woman applicant may exercise the concerned:
option to revert to the use of her maiden name. a. Injunction
These are death of husband, divorce, annulment, b. Damages
and declaration of nullity of marriage.
2. Criminal – when public affairs are
In case of renewal of passport, a married woman prejudiced.
may either adopt her husband’s surname or
continuously use her maiden name. However, NOTE: If the purpose of the usurpation is to
once she opted to use her husband’s surname in conceal one’s true identity then, he is guilty of
her original passport, she may not revert to the concealing true name under Art.178 of the RPC.
use of her maiden name, except if any of the four (Pineda, 2010)
grounds provided under R.A. 8239 is present.
It can also be a violation of CA 142 or the Anti-
Further, even assuming R.A. 8239 conflicts with Alias Law.
the Civil Code, the provisions of R.A. 8239 which
is a special law specifically dealing with passport Use of another’s name is not always
issuance must prevail over the provisions of the actionable
Civil Code which is the general law on the use of
surnames. A basic tenet in statutory GR: The unauthorized or unlawful use of
construction is that a special law prevails over a another person’s surname gives a right of action
general law. (Remo v. Sec. of Foreign Affairs, G.R. to the latter. (NCC, Art. 378)
No. 169202, March 5, 2010)
XPN: It is not actionable when it is used as
Identity of names and surnames stage, screen or pen name.

UNIVERSITY OF SANTO TOMAS 162

2021 GOLDEN NOTES
 The Family under the Family Code
Provided:
1. Use is in good faith;
2. No injury is caused to the rights of the
person whose name was used;
3. Use is motivated by:
a. Modesty
b. Desire to avoid unnecessary trouble
c. Other reason not prohibited by law or
morals.
MIDDLE NAMES
A middle name has practical or legal significance
as it serves to identify the maternal pedigree or
filiation of a person and distinguishes him from
others who may have the same given name and
surname as he has. Art. 364 of the Civil Code
states that legitimate and legitimated children
shall principally use the surname of their father.
Art. 174 of the Family Code gives legitimate
children the right to bear the surnames of the
father and mother, while illegitimate children,
under Art. 176, as amended by R.A. 9255, shall
use the surname of their mother, unless their
father recognizes their filiation, in which case,
they may bear the father's surname. In the case
of these children, their registration in the civil
registry requires that their middle names be
indicated therein, apart of course from their
given names and surnames. (In re: Petition for
Change of Name and/or Correction of Entry in the
Civil Registry of Julian Lin Carulasan Wang, G.R.
No. 159966, March 30, 2005)
Q: Does an illegitimate child have a middle
name?
A: NO. An illegitimate child whose filiation is not
recognized by the father bears only a given
name and his mother's surname and does not
have a middle name. It is only when the
illegitimate child is legitimated by the
subsequent marriage of his parents or
acknowledged by the father in a public
document or private handwritten instrument
that he bears both his mother's surname as his
middle name and his father's surname as his
surname. (In Re: Petition for Change of Name of
Julian Wang v. Cebu Civil Registrar, G.R. No.
155966, March 30, 2005)
Q: Honorato filed a petition to adopt his
minor illegitimate child Stephanie. Stephanie
has been using her mother's middle name
and surname. He prayed that Stephanie's
163
middle name be changed from "Astorga" to
"Garcia," which is her mother's surname and
that her surname "Garcia" be changed to
"Catindig," which is his surname. This the
trial court denied. Was the trial court correct
in denying Honorato’s request for
Stephanie’s use of her mother’s surname as
her middle name?
A: NO. The name of an individual has two parts –
the given name or proper name and the surname
or family name. The given name may be freely
selected by the parents for the child, but the
surname to which the child is entitled is fixed by
law. The Civil Code (Arts. 364 to 380) is silent as
to the use of a middle name. Even Art. 176 of the
Family Code, as amended by RA 9225 (An Act
Allowing Illegitimate Children to Use the
surname of Their Father) is silent as to what
middle name a child may use.
An adopted child is entitled to all the rights
provided by law to a legitimate child without
discrimination of any kind, including the right to
bear the surname of her father and her mother.
As she had become a legitimate child on account
of her adoption, it follows that Stephanie is
entitled to utilize the surname of her father,
Honorato Catindig, and that of her mother,
Gemma Garcia.
Since there is no law prohibiting an illegitimate
child adopted by her natural father, like
Stephanie, to use, as middle name her mother's
surname, the High Court found no reason why
she should not be allowed to do so.
NOTE: The Supreme Court granted the petition
for 2 reasons:
1. The adopted child's continued use of her
mother's surname as her middle name will
maintain her maternal lineage; and
2. It will also eliminate the stigma of her
illegitimacy.
The Supreme Court, in granting the petition,
predicated its ruling upon the statutory
principle that adoption statutes, being humane
and salutary, should be liberally construed to
carry out the beneficent purposes of adoption.
The modern trend is to consider adoption not
merely as an act to establish a relationship of
paternity and filiation, but also as an act which
endows a child with legitimate status. (In the
Matter of the Adoption of Stephanie Nathy
 Civil Law
Astorga Garcia, G.R. No. 148311, March 31, 2005)
Q: The petition filed by the parents in behalf
of their minor son Julian Lin Carulasan Wang
sought the dropping of the latter's middle
name, "Carulasan." The parents averred that
their plan for Julian to study in Singapore
and adjust to its culture necessitates the drop
since in that country, middle names or the
mother's surname are not carried in a
person's name. They therefore anticipate
that Julian may be subjected to
discrimination on account of his middle
name, which is difficult to pronounce in light
of Singapore's Mandarin language which
does not have the letter "R" but if there is,
Singaporeans pronounce it as "L." Should the
petition for the dropping of his middle name
be granted?
A: NO. Petitioners’ justification for seeking the
change in the name of their child, that of
convenience, was characterized by the Supreme
Court as amorphous, to say the least, and would
not warrant a favorable ruling. As Julian is only a
minor and has yet to understand and appreciate
the value of any change in his name, it is best
that the matter be left to his judgment and
discretion when he reaches legal age.
The State has an interest in the names borne by
individuals and entities for purposes of
identification, and that a change of name is a
privilege and not a right, such that before a
person can be allowed to change the name given
him either in his birth certificate or civil registry,
he must show proper or reasonable cause, or
any compelling reason which may justify such
change. Otherwise, the request would be denied.
(In Re: Petition for change of name and/or
correction/cancellation of entry in civil registry of
Julian Lin Carulasan Wang, G.R. No. 159966,
March 30, 2005)
NOTE: The touchstone for the grant of a change
of name is that there be proper and reasonable
cause for which the change is sought.
Q: Giana was born to Andy and Aimee, who at
the time of Giana’s birth were not married to
each other. While Andy was single at that
time, Aimee was still in the process of
securing a judicial declaration of nullity on
her marriage to her ex-husband. Gianna’s
birth certificate, which was signed by both
Andy and Aimee, registered the status of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Gianna as “legitimate”, her surname carrying
that of Andy’s, and that her parents were
married to each other.
Can a judicial action for correction of entries
in Gianna’s birth certificate be successfully
maintained to:
a. Change her status from “legitimate” to
“illegitimate”;
b. Change her surname from that of Andy’s
to Aimee’s maiden surname?
c. Instead of a judicial action, can
administrative proceedings be brought
for the purpose of making the above
corrections?
d. Assuming that Aimee is successful in
declaring her former marriage void, and
Andy and Aimee subsequently married
each other, would Gianna be legitimated?
(2008 BAR)
A:
a. A judicial action cannot be maintained to
change the status of Gianna from
“legitimate” to “illegitimate” child of Andy
and Aimee. While it is true that Gianna is the
biological daughter of Andy and Aimee
conceived and born without marriage
between them, Gianna is presumed, under
the law as the legitimate child of Aimee and
her husband. This filiation may be impugned
only by the husband. To correct the status of
Gianna in her birth certificate from
“legitimate child of Andy and Aimee” to
“illegitimate child of Andy and Aimee” will
amount to indirectly impugning her filiation
as the child of Aimee’s husband in a proper
action. What cannot be done directly cannot
be done indirectly.
b. A judicial action to change the surname of
Gianna from the surname of Andy to the
maiden surname of Aimee is also not
allowed. Gianna, being presumed to be the
legitimate child of Aimee’s husband is
required by law to be registered under the
surname of Aimee’s husband. While it is true
that Gianna’s registered surname is
erroneous, a judicial action for correction of
entry to change the surname of Gianna to
that of Aimee’s maiden surname will also be
erroneous. A judicial action to correct an
entry in the birth certificate is allowed to
correct an error and not to commit another
error.
164
 The Family under the Family Code
Alternative Answers: It may be noted that
the problems do not show whether Gianna
was born while Aimee was living with her
ex-husband. Neither does it show who filed
the judicial action to correct the entries.
If the problem is intended only for purpose
of determining whether factual changes are
in order, then the answers are:
a. A Change from “legitimate to
illegitimate” is proper upon the proof
of lack of marriage between Andy
and Aimee.
b. If the child is considered
illegitimate, then she should follow
the surname of her mother.
c. Under R.A. 9048, only typographical errors
are allowed to be corrected
administratively. The change of status from
legitimate to illegitimate is not a
typographical error and even assuming that
it is, its administrative correction is not
allowed under R.A. 9048. Typographical
errors involving status, age, citizenship, and
gender are expressly excluded from what
may be corrected administratively.
The change of the surname is also not
allowed administratively. R.A. 9048
provides for an administrative procedure
for change of first name only and not for
change of surname.
d. NO, Gianna will not be legitimated. While
the court may have declared the marriage
void ab initio and, therefore, no marriage
took place in the eyes of the law, Gianna will
still not be legitimated. This is because at the
time she was conceived and born, her
biological parents could not have validly
married each other. For their marriage to be
valid, the court must first declare the first
marriage null and void. In the problem,
Gianna was conceived and born before the
court has decreed the nullity of her mother’s
previous marriage.
NOTE: The word "principally" as used in the
codal provision is not equivalent to "exclusively"
so that there is no legal obstacle if a legitimate or
legitimated child should choose to use the
surname of its mother to which it is equally
entitled. If the mother's surname is used by the
165
child since childhood and the child has been
using it already in various records, then there is
an ample justification for the continuation of the
use of the mother’s surname. It is therefore, not
whimsical, but on the contrary, is based on a
solid and reasonable ground, i.e. to avoid
confusion. (Alfon v. Republic, G.R. No. L- 51201,
May 29, 1980)
ABSENCE
The special status of a person who has left his
domicile and thereafter his whereabouts and
fate are unknown, it being uncertain whether he
is already dead or still alive. (Olaguiviel v.
Morada, 63 O.G. 4940)
Kinds of absence
1. Physical Absence
2. Legal Absence
Stages of Absence
1. Provisional Absence – when a person
disappears from his domicile his
whereabouts being unknown, without
leaving an agent to administer his property.
(NCC, Art. 381)
2. Declared Absence– when a person
disappears from his domicile and 2 years
thereafter have elapsed without any news
about him or since the receipt of the last
news, or 5 years have elapsed in case he left
a person to administer his property. (NCC,
Art. 384)
3. Presumptive Death – the absentee is
presumed dead. (Jurado, 2011)
Provisional absence
1. When a person disappears from his domicile
2. His whereabouts are unknown; and
a. he did not leave any agent; or
b. he left an agent but the agent’s power
has expired.
Remedy of an interested party, a relative or a
friend of the absentee to protect the latter's
interest
They may petition the Court for the appointment
of a representative to represent the absentee in
all that may be necessary.
 Civil Law
Duty of the Court after appointing the
representative
The Court shall:
1. Take the necessary measures to safeguard
the rights and interests of the absentee;
2. Specify the powers, obligations, and
remuneration of the representative;
3. Regulate the powers, obligations and
remuneration according to the
circumstances by the rules concerning
guardians. (NCC, Art. 382)
Order of preference in the appointment of a
representative
1. Spouse present, except, when legally
separated.
2. In the absence of spouse, any competent
person. (NCC, Art. 383)
NOTE: The administrator of the absentee's
property shall be appointed in accordance with
the same order.
DECLARATION OF ABSENCE
Requisites (NCC, Art. 384)
1. The absentee has disappeared from his
domicile;
2. His whereabouts are not known; and
3. He has been absent without any news for 2
years, if nobody was left to administer his
property or 5 years if somebody was left to
administer such property.
Absence may be judicially declared if (NCC,
Art. 387)
1. The absentee left no agent to administer his
property- after two (2) years without any
news about the absentee or since receipt of
the last news.
2. The absentee has left a person to administer
his property- after five (5) years.
Person who may ask for the declaration of
absence (NCC, Art. 385)
1. Spouse present;
2. Heirs instituted in a will, who may present
an authentic copy of the same;
3. Relatives who may succeed by intestacy;
4. Persons who may have over the property of
the absentee some right subordinated to the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
condition of his death.
Effectivity of judicial declaration of absence
(NCC, Art. 386)
Judicial declaration of absence takes effect six
(6) months after its publication in a newspaper
of general circulation.
NOTE: A judicial declaration of absence is
necessary for interested persons to be able to
protect their rights, interests and benefits in
connection with the person who has
disappeared. It is also necessary to protect the
interest of the absentee. (Sta. Maria, Jr., 2010)
ADMINISTRATION OF THE
PROPERTY OF THE ABSENTEE
Administration of the property of the
absentee ceases when (NCC, Art. 389)
1. Absentee appears personally or by means of
an agent.
2. Death of the absentee is proved, and his
testate or intestate heirs appear.
3. A third person appears, showing by a proper
document that he has acquired the
absentee's property by purchase or other
title.
PRESUMPTION OF DEATH
Kinds
1. Ordinary presumption – ordinary absence;
absentee disappears under normal
conditions without danger or idea of death.
2. Extraordinary presumption – qualified
absence; disappearance with great
probability of death.
Rules in ordinary presumption of death (NCC,
Art. 390)
In case of:
1. Disappearance upon or before reaching the
age of seventy-five (75) years:
a. After an absence of seven (7) years -
the absentee is presumed dead for
all purposes except succession.
b. After an absence of ten (10) years -
the absentee is presumed dead for
all purposes including succession.
2. Disappearance at the age of seventy-six (76)
166
 The Family under the Family Code
years or older after an absence of five (5)
years - the absentee is presumed dead for all
purposes including succession.
(Disappearance after the age of seventy-five
(75) years after an absence of five years -the
absentee is presumed dead for all purposes
including succession.)
NOTE: The word “absence” in the rule that a
presumption of death is raised by the “absence”
of a person from his domicile when unheard of
for seven years, means that a person is not at the
place of his domicile and his actual residence is
unknown, and it is for this reason that his
existence is doubtful, and that, after seven years
of such absence, his death is resumed. But
removal alone is not enough. (Gorham v.
Settegast, 98 SW 655, also cited by Sta. Maria,
2010)
Presumption of death of absentee under an
ordinary presumption
Absentee is presumed to have died under an
ordinary presumption at the end of the five,
seven or ten-year period, as the case may be.
Presumption of death for all purposes
The following are presumed dead for all
purposes including the division of estate among
heirs in case of extraordinary presumption of
death (NCC, Art. 391):
1. Person on board a vessel lost during a sea
voyage, or an airplane which is missing, who
has not been heard of for four (4) years
since the loss of the vessel or airplane;
2. Person in the armed forces who has taken at
in war, and has been missing for four (4)
years;
3. Person who has been in danger of death
under other circumstances and his existence
has not been known for four (4) years.
Presumption of death of absentee under an
extraordinary presumption
The absentee presumed to have died under an
extraordinary presumption at the time of
disappearance. e.g. when the calamity took
place.
Q: May a petition for the declaration of
presumptive death be the subject of a judicial
167
declaration, if it is the only question upon
which a competent court has to pass?
A: NO. Under the NCC, the presumption of death
is established by law and no court declaration is
needed for the presumption to arise. Moreover,
it is clear that a judicial declaration that a person
is presumptively dead, being a presumption juris
tantum only, subject to contrary proof, cannot
become final. If a judicial decree declaring a
person presumptively dead, cannot become final
and executory even after the lapse of the
reglementary period within which an appeal
may be taken, then a petition for such a
declaration is useless, unnecessary, superfluous
and of no benefit to the petitioner.
Q: Juana married Arturo in January 1973.
However, because the latter was unemployed
the spouses constantly argued. Thus, Arturo
left the conjugal dwelling on October 1975.
Years passed without any word from Arturo.
Juana didn’t hear any news of Arturo, his
whereabouts or even if he was alive or not.
Believing that Arturo was already dead,
Juana married Dante on June 1986.
Subsequently, however, Dante's application
for naturalization filed with the United States
Government was denied because of the
subsisting marriage between Juana and
Arturo. Hence, on March 2007, Juana filed a
Petition for declaration of presumptive death
of Arturo with the RTC. The RTC dismissed
the petition on the ground that Juana was not
able to prove the existence of a well-
grounded belief that her husband Arturo was
already dead as required under Article 41 of
the Family Code.
a. Was the RTC correct in dismissing the
petition based on Article 41 of the Family
Code?
b. Will the petition for declaration of
presumptive death, therefore, prosper?
A:
a. NO. Since the marriages were both
celebrated under the auspices of the Civil
Code, it is the Civil Code that applies to this
case not Art. 41 of the Family Code. Under
the Civil Code, proof of well-founded belief
is not required. Juana could not have been
expected to comply with the requirement of
proof of "well- founded belief" since the FC
was not yet in effect at the time of her
marriage to Dante. Moreover, the enactment
of the FC in 1988 does not change this
 Civil Law
conclusion. The FC shall have no retroactive
effect if it impairs vested rights. To
retroactively apply the provisions of the FC
requiring Juana to exhibit "well- founded
belief" will, ultimately, result in the
invalidation of her second marriage, which
was valid at the time it was celebrated.

Such a situation would be untenable and

would go against the objectives that the
Family Code wishes to achieve.

b. NO. Under the NCC, the presumption of

death is established by law and no court
declaration is needed for the presumption to
arise. For the purposes of the civil marriage
law, Art. 83 of the Civil Code, it is not
necessary to have the former spouse
judicially declared an absentee. The law only
requires that the former spouse has been
absent for seven consecutive years at the
time of the second marriage, that the spouse
present does not know his or her former
spouse to be living, that such former spouse
is generally reputed to be dead and the
spouse present so believes at the time of the
celebration of the marriage. Since death is
presumed to have taken place by the
seventh year of absence, Arturo is to be
presumed dead starting October 1982.

Further, the presumption of death cannot be

the subject of court proceedings
independent of the settlement of the
absentee’s estate. In case the presumption of
death is invoked independently of such an
action or special proceeding, there is no
right to be enforced nor is there a remedy
prayed for by the petitioner against her
absent husband. Neither is there a prayer
for the final determination of his right or
status or for the ascertainment of a
particular fact, for the petition does not pray
for a declaration that the petitioner's
husband is dead, but merely asks for a
declaration that he be presumed dead
because he had been unheard of for seven
years. In sum, the petition for a declaration
that the petitioner's husband is
presumptively dead, even if judicially made,
would not improve the petitioner's
situation, because such a presumption is
already established by law. (Valdez v.
Republic, G.R. No. 180863, September 8,
2009)

UNIVERSITY OF SANTO TOMAS 168

2021 GOLDEN NOTES
 The Family under the Family Code
Declaration of presumptive death for purpose of contracting subsequent marriage vs. Opening
succession and declaration of absence under the Rules of Court
OPENING OF SUCCESSION
NCC, Arts. 390-396
Absentee’s co-heirs, heirs,
assigns, representative or
successors-in-interest
To open succession
GR: Absence of ten years.
XPN: If he disappeared
after the age of seventy-five
years, an absence of five
years shall be sufficient in
order that his succession
may be opened
If the absentee appears, or
without appearing his
existence is proved, he shall
recover his property in the
condition in which it may
be found, and the price of
any property that may have
been alienated or the
property acquired
therewith; but he cannot
claim either fruits or rents.
(Art. 392, Civil Code)
CONTRACTING
DECLARATION OF ABSENCE
SUBSEQUENT MARRIAGE
Applicable laws
Arts. 41-44, Family Code Rule 107, Rules of Court
Who may file petition
1. Spouse present;
2. Heirs instituted in the will;
3. Relatives who will succeed by
intestacy; or
4. Those who have over the
Spouse present
property of the absentee some
right subordinated to the
condition of his death. (Sec. 2,
Rule 107)
Purpose of petition
To appoint an administrator over
For the purpose of contracting
the properties of the absentee. This
subsequent marriage by
is proper only where the absentee
spouse present
has properties to be administered
When to file petition
GR: 4 consecutive years
absence of spouse – and the
spouse present has a well-
After 2 years:
founded belief that the absent
1. From his disappearance and without
spouse was already dead.
any news about the absentee; or
2. From the last news about the
XPN: 2 consecutive years
absentee.
absence of spouse – In case of
3.
disappearance where there is
After 5 years: If he left an
danger of death under the
administrator of his property. (Sec.
circumstances set forth in the
2)
provisions of Article 391 of the
Civil Code. (Art. 41, FC)
Effect of reappearance
It does not automatically
terminate the subsequent
marriage. To cause the
termination of the subsequent
marriage, the reappearance
must be made in an affidavit of
reappearance and the The trustee or administrator shall
recording of a sworn cease in the performance of his
statement of the fact and office, and the property shall be
circumstances of such placed at the disposal of those who
reappearance in the civil may have a right thereto.
registry.
If, however, there was
previous judgment annulling
or declaring the prior
marriage void, then the
169
 Civil Law
reappearance of the absent
spouse, the execution of the
affidavit, and the recording of
the sworn statement shall not
result to the termination of the
subsequent marriage.

UNIVERSITY OF SANTO TOMAS 170

2021 GOLDEN NOTES
 Property
PROPERTY
CHARACTERISTICS
GR: Those properties belonging to everyone.
While in particular no one owns common
property, still in another sense, res communes are
really owned by everybody in that their use and
enjoyment are given to all of mankind. (Paras,
2008) e.g. air, wind, sunlight.
All things which are or may be the object of
appropriation considered as either real or
personal property. (NCC, Art. 414)
It is an object or a right which is appropriated or
susceptible of appropriation by man, with
capacity to satisfy human wants and needs.
(Pineda, 1999)
NOTE: Property does not only cover material
things because it mentions of rights which could
either be classified as real or personal right.
Distinction between things and property
1. The term thing is broader in scope than
property. All kinds of property are things
but not all things are property;
2. Things refer to all objects that exist
including those which could not be
appropriated by man. Property refers to
objects already possessed by man or are in
their possession;
3. Things involve only corporeal objects.
Property may refer to intangible matters.
(Pineda, 2009)
Q: Are the rights under the Bill of Rights
considered as property?
A: NO. They are not susceptible of
appropriation.
Requisites for a thing to be considered as
property (USA)
1. Utility –It can serve as a means to satisfy
human needs;
2. Substantivity/Individuality – It has a
separate and autonomous existence and not
simply a part of a whole.
3. Appropriability - Susceptibility to
ownership/possession, even if not yet
actually appropriated.
171
Properties NOT susceptible of appropriation
1. Common things (res communes) –
XPN: Those that may be appropriated
under certain conditions in a limited way.
e.g. electricity, oxygen, distilled water
2. Not susceptible due to physical impossibility
e.g. sun, moon, and other heavenly bodies
3. Not susceptible due to legal impossibility
e.g. human body while the person is alive
The human body is NOT a property
It is neither real nor personal property, whether
alive or dead. It is not even property at all, in that
it generally cannot be appropriated.
While a human being is alive, he cannot, as such,
be the object of a contract, for he is considered
outside the commerce of man. He may donate
part of his blood, may even sell part of his hair,
but he cannot sell his body. (Paras, 2008)
Under the R.A. 7170 or the Organ Donation Act
of 1991, donation of all or a part of a human body
may only occur after a person’s “death” (i.e., the
irreversible cessation of circulatory and
respiratory functions or the irreversible
cessation of all functions of the entire brain,
including the brain system) [Sec. 2(j), RA 7170, as
amended]
CLASSIFICATIONS OF PROPERTY
1. As to nature/mobility
a. Immovable or real property; and
b. Movable or personal property.
2. As to ownership
a. Public dominion; and
b. Private ownership.
3. As to alienability
a. Alienable or within the commerce of
men; and
b. Inalienable or outside the commerce
of men.
4. As to individuality
a. Specific property; and
b. Generic property.
5. As to susceptibility to touch
a. Tangible; and
 Civil Law
b. Intangible.
6. As to susceptibility to substitution
a. Fungible; and
b. Non-fungible.
7. As to accession dependence or importance
a. Principal; and
b. Accessory
8. As to existence
a. Existing or present property (res
existentes); and
b. Future property (res futurae)
9. As to consumability
a. Consumable; and
b. Non-consumable
10. As to divisibility
a. Divisible; and
b. Indivisible
CLASSIFICATIONS OF THINGS
1. Res nullius – belonging to no one
Those objects which have not yet been
appropriated, or have been abandoned by
the owner with the intention of no longer
owning them.
2. Res communes – belonging to everyone
Things which are used and enjoyed by all of
mankind. (e.g. sunlight, starlight, and wind)
3. Res alicujus – belonging to someone
Objects, whether tangible or intangible,
which are privately owned, either in a
collective or individual capacity
CLASSIFICATION OF PROPERTY BY MOBILITY
REAL OR IMMOVABLE PROPERTY
(1995, 1997, 2007 BBAR)
Categories of immovable property:
Real properties are categorized by: (NIDA)
1. Nature – Those which by their essence and
nature are immovable or cannot be moved
from one place to another;
2. Incorporation – Those which are attached to
an immovable in a fixed manner and
considered as an integral part thereof,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
irrespective of its ownership;
3. Destination – Things placed in buildings or
on lands by the owner of the immovable or
his agent in such a manner that it reveals the
intention to attach them permanently
thereto; and
4. Analogy – Classified by express provision of
law or those which are not actually tangible
properties but are rights and interests over
existing immovable properties.
IMMOVABLE BY NATURE AND
INCORPORATION
Par. 1, Art. 415. Land, buildings, roads and
constructions of all kinds adhered to the soil.
Land
By its very nature is immovable property. In
whatever transaction land is involved, it is
always immovable.
A truck full of soil taken from the land (like
garden soil) becomes a personal property
because it is no longer adhered to the land.
However, the moment it is used to cover a land
for ornamentation or gardening, it becomes
immovable again. (Pineda, 2009)
Building
GR: A building is always immovable whether
built in one’s own land or rented.
XPN: When a building is merely superimposed
on the soil or is sold for immediate demolition,
in which case it may be considered as movable
or personal property. (e.g. Barong-barongs are
not permanent structures but mere
superimpositions on land.)
Effect of demolition of a house
Once a house is demolished, its character as an
immovable ceases because a house is classified
as an immovable property by reason of its
adherence to the soil on which it is built.
(Bicerra v. Teneza, G.R. No. L-16218, November
29, 1962)
Mortgage of a building erected on a land
belonging to another
A building, by itself, may be mortgaged apart
from the land on which it was built even if a
172
 Property
mortgage of land necessarily includes, in the
absence of stipulation of the improvements
thereon, buildings. Such a mortgage would still
be a real estate mortgage (REM) for the building
would still be considered immovable property
even if dealt with separately and apart from the
land. (Yee v. Strong Machinery Company, G.R. No.
11658, February 15, 1918)
A building can be the subject of a chattel
mortgage
When the parties have so expressly designated,
especially when it is considered that the
property given as a security is a house of mixed
materials which by its very nature is considered
as personal property. (Luna v. Encarnacion, G.R.
No. L-4637, June 30, 1952)
Requisites for a building to be the subject of a
chattel mortgage
1. Parties mutually agreed to consider the
house a personal property; and
2. That no innocent third party is prejudiced.
NOTE: Under the doctrine of estoppel, parties to
a contract who agreed to treat as personal
property that which by nature would be real
property are prohibited from assuming
inconsistent positions and repudiating an
obligation voluntarily assumed.
Insofar as execution proceedings are considered,
the house or building is considered real
property.
A building subjected to a chattel mortgage
cannot be sold extrajudicially. For purposes of
sale at public auction on execution sales, the
building or house shall be treated as real
property. The requirements of the Rules of Court
on foreclosure of real estate mortgages must
therefore be followed. (Pineda, 2009)
Par. 2, Art. 415. Trees, plants and growing
fruits, while they are attached to the land or
form an integral part of an immovable.
Trees and Plants
1. A real property; or
a. By nature - If they are spontaneous
products of the soil; or
b. By incorporation - If they have been
planted through cultivation or labor.
173
2. A personal property.
The moment trees are detached or uprooted
from the land it is considered as personal
property.
NOTE: In case of uprooted timber, they are still
not considered as personal property because
timber is an integral part of the timber land.
Growing fruits
GR: Growing fruits are considered as real
property so long as they are still attached to the
soil. Once removed from the soil, they become
personal properties.
XPN: Growing fruits may be exceptionally
treated as personal property pursuant to the
provisions of Art. 416(2) of the New Civil Code.
(Rabuya, 2008)
E.g.
1. For the purposes of sale of the whole or part
of the crops;
2. For purposes of attachment and execution;
and
3. For applying the provisions of the Chattel
Mortgage Law.
IMMOVABLE BY INCORPORATION
Par. 3, Art. 415. Everything attached to an
immovable in a fixed manner, in such a
way that it cannot be separated therefrom
without breaking the material or
deterioration of the object.
An incorporated thing is considered as real
property when in cases of separation, the injury,
breakage, or deterioration is substantial.
Res vinta
These are immovables by incorporation, which
when separated from the immovable, regain
their condition as movable.
Steel towers are personal properties
They are not buildings adhered to the soil [(NCC,
Art. 415(1)]; they are not attached to an
immovable in a fixed manner; they can be
separated without substantial damage or
deterioration, and they are not machineries
intended for works on the land. (Board of
 Civil Law
Assessment Appeals v. Meralco, G.R. No. L- 15334,
January 31, 1964) 1. The industry or work must be Carried on in
a building or on a piece of land;
IMMOVABLE BY INCORPORATION & BY
DESTINATION 2. The machinery must:
Par. 4, Art. 415. Statues, reliefs, paintings a. Be placed by the Owner of the
or other objects for use or ornamentation, tenement or his agent;
placed in buildings or on lands by the b. Tend directly to meet the needs of
owner of the immovable in such a manner the said industry or work; and
that it reveals the intention to attach them
permanently to the tenements. 3. Be Essential and principal to the industry or
work, and not merely incidental thereto.
“Placed by the owner”
Machinery placed by a tenant or by a
usufructuary is NOT real property.
This means that the objects must be placed by
the owner of the immovable and not necessarily
Since it is placed by a person having only a
the owner of the object.
temporary right, it does not become
immobilized. (Valdez v. Central Altagracia, 225
Requisites
U.S. 58, 1912)
1. Placed in buildings or on lands by the owner
Where a tenant places the machinery under the
of the immovable or by his agent; and
express provision of lease that it shall become a
2. Placed there in a manner that it reveals the
part of the land belonging to the owner upon the
intention to attach them permanently to the
termination of the lease without compensation
tenements.
to the lessee, the tenant acts as an agent of the
owner and the immobilization of the
Par. 3 distinguished from Par. 4
machineries arises from the act of the owner in
PAR. 3 PAR. 4
giving by contract a permanent destination to
Cannot be Can be separated
the machinery. (Ibid.)
separated from the from the
immovable immovable without
Equipment and living quarters of the crew
without breaking breaking or
permanently attached are immovable
or deterioration. deterioration.
properties
Need not be placed Must be placed by It is intended to meet the needs of the industry
by the owner. the owner of the being undertaken by MPC. The equipment
immovable, or by partakes of the nature of the immovable upon
his agent whether which it has been placed.
express or implied. The living quarters, if attached to the immovable
platform with permanence, becomes an
Real property by Real property by immovable as well. Permanence means they
incorporation. incorporation and cannot be separated without destroying the
destination. platform or the quarters. If the attachment is not
permanent, or not merely superimposed on the
platform, then the living quarters are movable
Par. 5, Art. 415. Machinery, receptacles, properties. (2007 BAR)
instruments or implements intended by the
owner of the tenement for an industry or Equipment of a transportation business
works which may be carried on in a classified as personal property
building or on a piece of land & which tend
directly to meet the needs of the said A transportation business is not carried on in a
industry or works. building or on a specified land. Hence,
equipment destined only to repair or service a
Requisites for machinery to be considered transportation business may not be deemed real
real property (COTE) property, but personal property.

UNIVERSITY OF SANTO TOMAS 174

2021 GOLDEN NOTES
 Property
Machines must be essential and principal
elements in the industry and must directly meet
the needs of said industry. It does not include
movables which are merely incidentals, without
which the business can still continue or carry on
their functions.
Cash registers, typewriters, etc. usually found
and used in hotels and restaurants are merely
incidentals not considered immobilized by
destination because these businesses can carry
on their functions without this equipment.
(Mindanao Bus Co. v. City Assessor and Treasurer,
G.R. No. L-17870, September 29, 1962)
Machineries bolted or cemented on real
property mortgaged
It is NOT considered an immovable property.
The fact that machineries were bolted or
cemented on real property mortgaged does not
make them ipso facto immovable under Art. 415
(3) and (5) as the parties’ intent has to be looked
into.
When immovable property by nature may be
treated as a chattel
Even if the properties appear to be immovable
by nature, nothing detracts the parties from
treating them as chattels to secure an obligation
under the principle of estoppel. (Tsai v. CA, G.R.
No. 120098, October 2, 2001)
Effect of temporary separation of movables
from the immovables to which they are
attached
There are two views:
1. They continue to be regarded as
immovables; and
2. Fact of separation determines the condition
of the objects thus recovering their
condition as movables.
Machines though essential and principal
elements of the industry are personal
properties when provided in the lease
agreement
The Court’s holding that the machines should be
deemed personal property pursuant to the Lease
Agreement is good only insofar as the
contracting parties are concerned. Hence, while
the parties are bound by the Lease Agreement,
175
third persons acting in good faith are not
affected by its stipulation characterizing the
subject machinery as personal. (Serg’s Products,
Inc. v. PCI Leasing and Finance, Inc., G.R. No.
137705, August 22, 2000)
Par. 6, Art. 415. Animal houses, pigeon-
houses, beehives, fish ponds or breeding
places of similar nature, in case their
owner has placed them or preserves them
with the intention to have them
permanently attached to the land, and
forming a permanent part of it; the
animals in these places are included.
Animal Houses, Pigeon Houses, Etc.
These are immovables by destination or by
incorporation. The Code requires that they be
placed by the owner of the land in order to
acquire the nature of real property. However,
they are still considered as real property even if
not placed by the owner if such structures are
adhered to the soil in a permanent manner.
Beehives, Fishponds or Breeding Places of
Similar Nature Are Real Property; Animals
Contained Therein, Included
When purposely constructed or attached to the
ground or on another immovable (like a tree-
wall), fishponds and other similar breeding
places, like cemented container where breeding
of fishes or crustaceans is done, are considered
immovable property if the owner of the land or
tenement intended them to be permanent
The animals in the animal houses, the pigeons in
the pigeon houses, the bees in the beehives, the
fish in the fishponds are included and
considered part of the immovable property.
(Pineda, 2009)
Cages are not included
It will be considered as personal property since
they can be moved from one place to another.
Par. 7, Art. 415. Fertilizer actually used on a
piece of land.
Fertilizers in sacks are not included
Fertilizers which are still in the sacks, although
there is intention to place them or use them on
land, are movable. Only fertilizers actually used
on a piece of land are deemed immovable since
 Civil Law
it is already placed in the land and can never be
separated from it.
Par. 8, Art. 415. Mines, quarries and slag
dumps, while the matter thereof forms part
of the bed, and waters either running or
stagnant.
By their nature, mines quarries and slag dumps
are immovable property.
Mines - These are mineral lands where
excavations are done to extract minerals such as
gold, ores etc.
Quarries - These are lands where stones are
chipped of or where sand is being extracted.
Slag dumps - They consist of waste and dirt
taken from a mine and mounted on the surface
of the ground under excavation
Running or Stagnant Waters – These waters
refer to waters still running through the soil or
ground in mines and quarries. (Pineda, 2009)
Par. 9, Art. 415. Docks and structure which,
though floating, are intended by their
nature and object to remain at a fixed place
on a river, lake or coast.
When power barges are classified as real
properties
Power barges are categorized as immovable
property by destination, being in the nature of
machinery and other implements intended by
the owner for an industry or work which may be
carried on in a building or on a piece of land and
which tend directly to meet the needs of said
industry or work. (Fels Energy, Inc. v. Province of
Batangas, G.R. No. 168557, February 19, 2007)
Floating platform is an immovable property
The platform is an immovable property by
destination. It was intended by the owner to
remain at a fixed place on a river or coast. Art.
415 (9) of the NCC considers as real property
“docks and structures which, though floating are
intended by their nature and object to remain at a
fixed place on a river, lake, or coasts.” (Fels
Energy, Inc. v. The Province of Batangas, G.R. No.
168557, February 16, 2007)
Vessels are considered personal property under
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the civil law and common law and occasionally
referred to as peculiar kind of personal property.
It is essential that a record of documents affecting
the title to a vessel be entered in the record of
the Collector of Customs at the port of entry.
(Code of Commerce, Art.585)
Par. 10, Art. 415. Contracts for public works
and servitudes and other real rights over
immovable property.
Immovable by Analogy
These properties refer to contracts for public
works, servitudes and real rights over
immovable property (like usufruct). They are
inseparable from their sources which are
immovable, Hence, for convenience, they are
considered immovable not by their nature,
destination or incorporation but by analogy.
While no tangible, they have the characteristics
of real property. (Pineda, 2009)
e.g. Contract over a construction of a bridge
Art. 416. The following things are deemed
to be personal property:
(1) Those movables susceptible of
appropriation which are not included in
the preceding article;
(2) Real property which by any special
provision of law is considered as
personality;
(3) Forces of nature which are bought
under control by science; and
(4) In general, all things which can be
transported from place to place without
impairment of the real property to which
they are fixed.
Art. 417 The following are also considered
as personal property:
(1) Obligations and actions which have
for their object movables or demandable
sums; and
(2) Shares of stock of agricultural,
commercial and industrial entities,
although they may have real estate
PERSONAL OR MOVABLE PROPERTY
(1995 BAR)
Movable properties (SOFTSS)
1. Movables Susceptible of appropriation
176
 Property
which are not included in Art. 415;
2. Real property which by any Special
provision of law considers as personality;
e.g. Growing crops under the Chattel
Mortgage Law
3. Forces of nature which are brought under
the control of science;
e.g. Electricity generated by electric
powers, solar light for batteries power.
4. In general, all things which can be
Transported from place to place without
impairment of the real property to which
they are fixed (NCC, Art. 416);
5. Obligations and actions which have for their
object movables or demandable sums; and
6. Shares of stock of agricultural, commercial
and industrial entities, although they have
real estate. (NCC, Art. 417)
Special Kind of Personal Property
The author, composer, painter, sculptor,
inventor have rights over their works. These
rights are personal property. (Pineda, 2009)
Interest in business is a personal property
With regard to the nature of the property
mortgaged which is one-half interest in the
business, such interest is a personal property
capable of appropriation and not included in the
enumeration of real properties in articles 335 of
the Civil Code, and may be the subject of
mortgage. (Strochecker v. Ramirez, G.R. No.
18700, September 26, 1922)
The business of providing
telecommunication is a personal property
The business of providing telecommunication or
telephone service is likewise personal property
which can be the object of theft under Art. 308 of
the RPC.
Indeed, while it may be conceded that
international long-distance calls, the matter
alleged to be stolen in the instant case, take the
form of electrical energy, it cannot be said that
such international long-distance calls were
personal properties belonging to PLDT since the
latter could not have acquired ownership over
such calls. PLDT merely encodes, augments,
enhances, decodes and transmits said calls using
its complex communications infrastructure and
facilities. (Laurel v. Abrogar, G.R. No. G.R. No.
155076, January 13, 2009)
Tests to determine whether a property is a
movable property (MES)
1. Test of Exclusion – Everything not included
in Art. 415 of NCC; e.g. ships or vessels or
interest in a business
2. By reason of a Special law – Immovable by
nature but movable for the purpose of the
special law; e.g. Growing crops for purposes
of the Chattel Mortgage Law
3. Test of Mobility – If the property is capable of
being carried from place to place without
injuring the real property to which it may in
the meantime be attached.
Art. 418. Movable property is either
consumable or non-consumable. To the first
class belong those movables which cannot
be used in a manner appropriate to their
nature without their being consumed; to the
second class belong all others.
CLASSIFICATION OF PROPERTY BY NATURE
Properties classified according to
consumability
1. Consumable property – That which cannot be
used according to its nature without being
consumed or being eaten or used up;
e.g. cigarette, glass of wine
2. Non-consumable property – That which can
be used according to its nature without
being consumed or being eaten or used up.
e.g. eyeglasses, book
Properties classified according to
susceptibility to substitution
1. Fungible property – That property which
belongs to a common genus permitting its
substitution; and
2. Non- fungible property – That property
which is specified and not subject to
substitution.
NOTE: As to whether a property is fungible or
non-fungible is determined by the agreement of

177
 Civil Law
the parties and not on the consumability of the
thing.
Art. 419. Property is either of public
dominion or of private ownership
CLASSIFICATION OF PROPERTY
BY OWNERSHIP
1. In relation to the State
a. Public Dominion; and
b. Patrimonial.
2. In relation to political subdivisions/local
government unit
a. Public use; and
b. Patrimonial.
3. In relation to private persons
a. Owned individually; and
b. Owned collectively.
NOTE: Sacred and religious objects are
considered outside the commerce of man. They
are neither public nor private party. (Barlin v.
Ramirez, G.R. No. L-2832, November 24, 1906)
PUBLIC DOMINION
It means ownership by the public in general, in
that not even the State or subdivisions thereof
may make them the object of commerce as long
as they remain properties for public use. (Paras,
2008)
Properties classified as public dominion cannot
be alienated but are not totally outside the
commerce of man as the Constitution allows the
State to enter into co-production, joint ventures
or production-sharing agreements with private
individuals or corporations for their exploration,
development and utilization.
NOTE: 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.
Art. 420. The following things are property
of public dominion:
(1) Those intended for public use, such
as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks,
shores, roadsteads, and others of similar
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
character;
(2) Those which belong to the State,
without being for public use, and are
intended for some public service or for the
development of the national wealth.
Kinds of property of public dominion (USD)
1. For public Use – may be used by anybody;
2. Intended for public Service and not for
public use – may be used only by duly
authorized persons; and
3. For the Development of the national wealth
– like our natural resources. (NCC, Art. 420)
Characteristics of properties of public
dominion (ULEP-ROB)
1. In general, they can be Used by everybody;
2. Cannot be Levied upon by execution or
attachment;
3. May Either be real or personal property;
4. Cannot be acquired by Prescription;
5. Cannot be Registered under Land
Registration Law and be the subject of
Torrens Title;
6. Outside the commerce of man – cannot be
alienated or leased or be subject of any
contract;
7. Cannot be Burdened by voluntary
easement.
Art. 421. All other property of the State,
which is not of the character stated in the
preceding article, is a patrimonial property.
Patrimonial Property
This is a property pertaining to the State which
is not intended for public use, public service, or
for the development of the national wealth. It is
intended rather for the attainment of the
economic ends of the State, that is, for its
subsistence.
NOTE: The patrimonial property of the State or
any of its subdivisions may be acquired by
private individuals or juridical persons through
prescription. It can be the object of an ordinary
contract. (Cebu Oxygen & Acetylene Co., Inc. v.
Bercilles, 66 SCRA 481 [1975])
Art. 422. Property of public dominion, when
no longer intended for public use or for
public service, shall form part of the
178
 Property
patrimonial property of the State.
Conversion From Property of Public
Dominion To Patrimonial Property, How
Effected.
When no longer intended or operated for public
use or public service, a property of public
dominion shall form part of the State’s
patrimonial property as of the date the
Government, through the Executive or
Legislative Departments, has formally declared
that it is no longer needed for said purposes.
(Ignacio vs. Director of Land [S.C], 58 Off. Gaz.
2403 [1960]; Cebu Oxygen Acetylynne Co. vs.
Bercilles, 66 SCRA 481)
Art. 423. The property of provinces, cities,
and municipalities is divided into property
for public use and patrimonial property.
Art. 424. Property for public use, in the
provinces, cities, and municipalities, consist
of the provincial roads, city streets,
municipal streets, the squares, fountains,
public waters, promenades, and public
works for public service paid by said
provinces, cities, or municipalities
All other property possessed by any of them
is patrimonial and shall be governed by this
Code, without prejudice to the provisions of
special laws.
Properties for public service and properties
for the development of national wealth
1. Public service – It depends on who pays for
the service. If paid for by the political
subdivision, public; if for profit, patrimonial;
and
2. National wealth – It is still property for
public use under the regalian doctrine.
Property of municipal corporations
1. Provincial roads;
2. City streets;
3. Municipal streets;
4. Squares;
5. Fountains;
6. Public waters;
7. Promenades; and
8. Public works for public service paid for by
said provinces, cities, or municipalities.
(NCC, Art. 424)
NOTE: All other property possessed by any of
179
them are patrimonial.
Charging of fees does not remove property as
public dominion
The charging of fees to the public does not
determine the character of the property whether
it is of public dominion or not. The airport lands
and buildings are devoted to public use because
they are used by the public for international and
domestic travel and transportation. The
terminal fees MIAA charges to passengers, as
well as the landing fees MIAA charges to airlines,
constitute the bulk of the income that maintains
the operations of MIAA. (Manila International
Airport Authority v. CA, G.R. No. 155650, July 20,
2006)
PRIVATE OWNERSHIP
Art. 425. Property of private ownership,
besides the patrimonial property of the
State, provinces, cities, and municipalities,
consists of all property belonging to private
persons, either individually or collectively.
Properties in private ownership of private
persons or entities
All properties not belonging to the State or its
political subdivision are properties of private
ownership pertaining to private persons, either
individually or collectively.
Patrimonial property of the State
It is the property intended for the attainment of
the economic ends of the State, that is, for
subsistence. It is owned by the State in its private
or proprietary capacity. It is the property not
devoted to public use, public service, or the
development of the national wealth.
An executive or legislative act is necessary to
reclassify property into patrimonial. The
conversion cannot be inferred from non-use.
NOTE: It may be disposed of by the State in the
same manner that private individuals dispose of
their own property subject, however, to
administrative laws and regulations.
The fact that the Roppongi site has not been
used for a long time for actual Embassy service
does not automatically convert it to patrimonial
property. An abandonment of the intention to
use the Roppongi property for public service and
 Civil Law
to make it patrimonial property must be definite.
Abandonment cannot be inferred from the non-
use alone. (Laurel vs Garcia, G.R. No. 92013, July
25, 1990)
Any such conversion happens only if the
property is withdrawn from public use.
Accordingly, the withdrawal of the property in
question from public use by the City of Cebu and
its subsequent sale to the petitioner is valid.
(Cebu Oxygen and Acetylene Co. v. Bercilles, 66
SCRA 481, August 29, 1975)
Sewage system of a city is a patrimonial
property
It is property of the city, purchased with private
funds and not devoted to public use (it is for
profit). It is therefore patrimonial under the Civil
Code. Nor can the system be considered “public
works for public service” under Art. 424 because
such classification is qualified by ejusdem
generis; it must be of the same character as the
preceding items. (City of Cebu v. NAWASA, G.R.
No. 12892, April 20, 1960)
Q: The Delfin Spouses claimed that they were
the owners of a 28,800 square meter parcel
of land in Iligan City. They had been
declaring the Iligan Property in their names
for tax purposes since 1952, and had been
planting it with mangoes, coconuts, corn,
seasonal crops, and vegetables. They alleged
that NHA took possession of a 10,798 square
meter portion of the property. Despite their
repeated demands for compensation, the
National Housing Authority failed to pay the
value of the property.
The NHA alleged that the Delfin Spouses'
property was part of a military reservation
area. It reserved the area in which property
is situated for Iligan City's slum improvement
and resettlement program as cited in
Proclamation No. 2143, and the relocation of
families who were dislocated by the National
Steel Corporation's five-year expansion
program. Does the Spouses have the right to
claim the just compensation?
A: YES. Section 48 of Commonwealth Act
141(Public Land Act) enabled the confirmation
of claims and issuance of titles in favor of
citizens occupying or claiming to own lands of
the public domain or an interest therein. Section
48 (b) specifically pertained to those who "have
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
been in open, continuous, exclusive, and
notorious possession and, occupation of
agricultural lands of the public domain, under a
bona fide claim of acquisition or ownership,
since June 12, 1945”.
Section 48(b) of the Public Land Act therefore
requires that two (2) requisites be satisfied
before claims of title to public domain lands may
be confirmed: first, that the land subject of the
claim is agricultural land; and second, open,
continuous, notorious, and exclusive possession
of the land since June 12, 1945. That the Iligan
property was alienable and disposable,
agricultural land, has been admitted. What is
claimed instead is that petitioners' possession is
debunked by how the Iligan Property was
supposedly part of a military reservation area57
which was subsequently reserved for Iligan
City's slum improvement and resettlement
program, and the relocation of families who
were dislocated by the National Steel
Corporation's five-year expansion program.
(Heirs Of Leopoldo Delfin And Soledad Delfin,
Namely Emelita D. Fabrigar And Leonilo C. Delfin
v. National Housing Authority, G.R. No. 193618,
November 28, 2016, as penned by J. Leonen)
Private ownership of land prohibited to
Aliens (KRIVENKO DOCTRINE)
GR: Aliens have no right to acquire any public or
private agricultural, commercial or residential
lands in the Philippines.
The same rule is applicable to a foreign
corporation even if it is a religious and non-stock
corporation. A foreign-owned corporation
cannot be the transferee of a land in the
Philippines even temporarily. (Pineda, 2009)
XPN: Aliens may only acquire such lands by
hereditary succession. (Krivenko v. Registry of
deeds, G.R. No. L-630, November 15, 1947)
Effect of a subsequent sale by the disqualified
alien vendee to a qualified Filipino citizen
If land is invalidly transferred to an alien who
subsequently becomes a citizen or transfers it to
a citizen, the flaw in the original transaction is
considered cured and the title of the transferee
is rendered valid.
Thus, the subsequent transfer of the property to
qualified Filipinos may no longer be impugned
180
 Property
on the basis of invalidity of the initial transfer.
The objective of the constitutional provision to
keep our lands in Filipino hands has been
achieved. (Lee v. Republic of the Philippines, G.R.
No. 12819, October 3, 2001)
NOTE: The constitutional proscription on alien
ownership of lands of the public or private
domain was intended to protect lands from
falling in the hands of non-Filipinos. (Lee v.
Republic of the Philippines, G.R. No. 12819,
October 3, 2001)
Regalian Doctrine: All lands not otherwise
appearing to be clearly within private ownership
are presumed to be owned by the state. (Pineda,
2009)
Reversion - An action where the ultimate relief
sought is to revert the land back to the
government under the Regalian Doctrine.
(Pineda, 2009)
Art. 426. Whenever by provision of the law,
or an individual declacration, the
expression “immovable things or property,”
or “movable things or property, “is used, it
shall be deemed to include, respectively, the
things enumerated in Chapter 1 and in
Chapter 2.
Whenever the word “muebles,” or
“furniture,” is used alone, it shall not be
deemed to include money, credits,
commercial securities, stocks and bonds,
jewelry, scientific or artistic collection,
books medals, arms, clothing, horses or
carriages and their accessories, grains,
liquids and merchandise, or other things
which do not have as their principal object
the furnishing or ornamenting of a building
except where from the context of the law, or
the individual declaration, the contrary
clearly appears.
“Muebles” Or “Furniture” When Used Alone;
Effects.
If used alone in a contract or agreement, it will
not include things found therein like money,
jewelry, collections, books, medals, arms,
clothing, etc., which do not have as their
principal purpose the furnishing or the
ornamenting of the building where the
“muebles” or “furniture” is found.
181
XPN: When the law or the individual declaration
clearly provides that the aforesaid things are
included.
OWNERSHIP
Art. 427. Ownership may be exercised over
things or rights.
Ownership is the juridical relation of a person
over a thing by virtue of which said person has
the exclusive power or authority to receive all
the benefits and advantages arising from said
thing, save those restricted by law or the
recognized rights of others.
Kinds of ownership
1. Full ownership – Includes all the rights of an
owner;
NOTE: Naked ownership + Usufruct
2. Naked ownership – Ownership where the
rights to the use and to the fruits have been
denied;
NOTE: Full ownership – Usufruct
3. Sole ownership – Ownership is vested in only
one person; and
4. Co-ownership– Ownership is vested in two
or more persons. There is Unity of the
property, and plurality of the subjects.
Q: Respondents inherited the subject
property from Emiliana Bacalso, by virtue of
Decree No. 98992. Sometime later, they
found the heirs of Alejandra Delfin to be
occupying the said property, to which they
even constructed houses there. The heirs
argued they have better right for it was
inherited to them after it was bought by the
predecessor from Emiliana Bacalso; also,
they are the ones paying the subject
property’s realty taxes. Do the respondents
have the better right to the ownership and
possession of the subject property?
A: YES, respondents have the better right to the
ownership and possession of the subject
property. The basis is the LRA certification,
daybook entry, and Decree No. 98992 that was
issued to Emiliana Bacalso. The Decree bars all
claims and rights which arose as may have
 Civil Law
existed prior to the decree of registration. (Heirs
of Delfin v. Rabadon, G.R. No. 165014, July 31,
2013)
Art. 428. The owner has the right to enjoy
and dispose of a thing, without other
limitations than those established by law.
The owner has also a right of action against
the holder and possessor of the thing in
order to recover it.
Art. 429. The owner or lawful possessor of a
thing has the right to exclude any person
from the enjoyment and disposal thereof.
For this purpose, he may use such force as
may be reasonably necessary to repel or
prevent an actual or threatened unlawful
physical invasion or usurpation of his
property
JUS UTENDI, FRUENDI, ABUTENDI,
VINDICANDI, DISPODENDI, POSSIDENDI,
ACCESIONES
Attributes of ownership
1. Right to enjoy (jus utendi) (NCC, Art. 428);
2. Right to the fruits (jus fruendi);
3. Right to abuse (jus abutendi);
4. Right to dispose (jus dispodendi) (NCC Art.
428);
5. Right to recover (jus vindicandi) (NCC. Art.
428);
6. Right to accessories (jus accessiones);
7. Right to possess (jus possidendi).;
8. Right to exclude (NCC, Art. 429); and
9. Right to enclose (NCC, Art. 430).
Lease merely follows the property as a lien
or encumbrance
Q: On April 15, 1991, Nicolasa authorized her
daughter, Carmelita, Artemio's sister, to
mortgage the subject property to Jose, the
predecessor-in-interest of Jose, Jose Jr. and
Virginia in order to secure a loan in the
amount of P112,000.00. As Nicolasa failed to
settle her loan obligation when it fell due,
Jose, led an application for extra-judicial
foreclosure of mortgage before the Regional
Trial Court of Olongapo City, Branch 72
(RTC), docketed as Case No. 07-0-91. After
the requirements of posting, notices, and
publication were complied with, the subject
property was sold at a public auction, where
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Jose emerged as the highest bidder. A
Certificate of Sale was thus issued in his
favor. The period of redemption expired
without the subject property being
redeemed; hence, a Final Bill of Sale was
issued and registered in Jose's name.
Thereafter, the latter executed an Affidavit of
Consolidation of Ownership. This
notwithstanding, Nicolasa persisted in her
occupancy of the subject property and
refused to deliver possession to Jose. Is the
Writ of Possession and Notice to Vacate
issued by the RTC is valid?
A: YES. "It is well-settled that the purchaser in
an extrajudicial foreclosure of real property
becomes the absolute owner of the property if
no redemption is made within one 1 year from
the registration of the certificate of sale by those
entitled to redeem. As absolute owner, he is
entitled to all the rights of ownership over a
property recognized in Article 428 of the New
Civil Code, not least of which is possession, or jus
possidendi."
It should be clarified that the purpose of a
petition for the issuance of a writ of possession
under Act No. 3135, as amended by Act No.
4118, is to expeditiously accord the mortgagee
who has already shown a prima facie right of
ownership over the subject property (based on
his consolidated title over the same) his
incidental right to possess the foreclosed
property. To reiterate, "possession being an
essential right of the owner with which he is able
to exercise the other attendant rights of
ownership, after consolidation of title, the
purchaser in a foreclosure sale may demand
possession as a matter of right."
Thus, it is only upon a credible showing by a
third- party claimant of his independent right
over the foreclosed property that the law's
prima facie deference to the mortgagee's
consolidated title should not prevail. Verily, a
mere claim of ownership would not suffice.
As jurisprudence prescribes, the demonstration
by the third party- claimant should be made
within the context of an adversarial hearing,
where the basic principles of Evidence and Civil
Procedure ought to be followed, such as: (1) it is
the claimant who has the burden of proving his
claim; (2) the claim must be established through
a preponderance of evidence; and (3) evidence
not presented or formally offered cannot be
182
 Property
admitted against the opposing party. In this case,
none of these principles were followed for the CA
considered evidence that were not only
submitted in a totally different case against an
entirely different party, but are also innately
inadequate to — at least — prima facie show the
source of the third party claimant's independent
title, all to the detriment of the mortgagee who
had already consolidated his title to the
contested property. (Heirs of Peñaflor v. Dela
Cruz, G.R. No. 197797, August 8, 2017)
REMEDIES TO RECOVER POSSESSION
Legal remedies to recover possession of
one’s property
1. Personal property – Replevin
2. Real property
a. Accion Interdictal;
i. Forcible entry; or
ii. Unlawful detainer.
b. Accion Publiciana; or
c. Accion Reinvindicatoria.
3. Ancillary remedies common to both
a. Writ of preliminary mandatory
injunction; or
b. Writ of possession.
Q: Spouses Gregorio and Rosario Centeno
previously owned the subject lots, which they
mortgaged in favor of Rural Bank of Sta.
Barbara, Inc. as security for a P1,753.65 loan.
Sps. Centeno, however, defaulted on the loan,
prompting the bank to cause the
extrajudicial foreclosure of the mortgage.
Consequently, the subject lots were sold to
the bank, being the highest bidder at the
auction sale. Sps. Centeno failed to redeem
the subject lots within the one- year
redemption period pursuant to Section 6 of
Act No. 3135. Yet, they still continued with
the possession and cultivation of the
aforesaid properties.
Gerry Centeno, son of Sps. Centeno, later on
purchased the said lots from his parents.
Accordingly, Rosario paid the capital gains
taxes on the sale transaction and tax
declarations were eventually issued in the
name of Gerry.
On March 19, 1998, Rural Bank of Sta.
Barbara, Inc. filed a petition for the issuance
183
of a writ of possession before the trial court,
claiming entitlement to the said writ by
virtue of the Final Deed of Sale covering the
subject lots. Gerry opposed the petition,
arguing that he purchased and has, in fact,
been in actual, open and exclusive possession
of the same properties for at least 15 years.
Is the Rural Bank of Sta. Barbara, Inc. is
entitled to a writ of possession over the
subject lots?
A: YES. It is well-established that after
consolidation of title in the purchasers’ name for
failure of the mortgagor to redeem the property,
the purchasers right to possession ripens into
the absolute right of a confirmed owner. At that
point, the issuance of a writ of possession, upon
proper application and proof of title, to a
purchaser in an extrajudicial foreclosure sale
becomes merely a ministerial function, unless it
appears that the property is in possession of a
third party claiming a right adverse to that of the
mortgagor.
Gerry Centeno acquired the subject lots from his
parents, Sps. Centeno, on March 14, 1988 after
they were purchased by Rural Bank of Sta.
Barbara, Inc. and its Certificate of Sale at Public
Auction was registered with the Register of
Deeds of Iloilo City in 1971. It cannot therefore
be disputed that Gerry is a mere successor-in-
interest of Sps. Centeno. Consequently, he cannot
be deemed as a third party who is actually
holding the property adversely to the judgment
obligor under legal contemplation. (Rural Bank
of Sta. Barbara, Inc. v. Gerry Centeno, G.R. 200667,
March 11, 2013)
Q: On June 26, 2003, petitioner Teodorico A.
Zaragoza (petitioner) bought a 3,058-square
meter (sq. m.) parcel of land. His father leased
a 1,000-sq. m. portion of Lot 937-A (subject
land) to respondent Iloilo Santos Truckers,
Inc. (respondent). This notwithstanding,
petitioner allowed the lease to subsist and
respondent had been diligent in paying its
monthly rent amounting to P10,000.00 per
month. Petitioner claimed that when his
father died, respondent stopped paying rent.
On the other hand, respondent maintained
that it was willing to pay rent, but was
uncertain as to whom payment should be
made. Respondent made a consignation on
the RTC br. 24 for the amount of P521,396.89
equivalent for the rent of February 2007 to
 Civil Law
March 2011.
Petitioner averred that the amount was
insufficient to cover the unpaid rentals plus
interests from February 2007 to May 2011.
Petitioner clarified that his earlier demand to
pay was for the period of February 2007 to
May 2011. Thus, petitioner posited that
respondent had continuously failed and
refused to comply with the terms and
conditions of the lease contract concerning
the payment of monthly rental. May
petitioner eject respondent from the subject
land?
A: YES. For an unlawful detainer suit to prosper,
the plaintiff-lessor must show that: first,
initially, the defendant-lessee legally possessed
the leased premises by virtue of a subsisting
lease contract; second, such possession
eventually became illegal, either due to the
latter's violation of the provisions of the said
lease contract or the termination thereof; third,
the defendant-lessee remained in possession of
the leased premises, thus, effectively depriving
the plaintiff-lessor enjoyment thereof; and
fourth, there must be a demand both to pay or
to comply and vacate and that the suit is brought
within one (1) year from the last demand.
In this case, all requisites have been indubitably
complied with, considering that at the time the
suit was instituted on June 21, 2011: (a) there
was a subsisting lease contract between
petitioner and respondent; (b) , respondent was
not updated in its monthly rental payments, as
there is no evidence of such payment for the
months of April, May, and even June 2011-- said
omission constitutes a violation of the lease
contract on the part of respondent; (c)
respondent was still in possession of the subject
land; and (d) the case was filed within one (1)
year from petitioner's letter dated May 24, 2011
demanding that respondent pay monthly rentals
and at the same time, vacate the subject land.
(Teodorico Zaragoza v. Iloilo Santos Truckers,
Inc., G.R. No. 224022, June 28, 2017)
RECOVERY OF POSSESSION OF
MOVABLE PROPERTY
Replevin
It is the remedy when the complaint prays for
the recovery of the possession of personal
property.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: A property validly deposited in custodia
legis cannot be subject of a replevin suit. (Calub
v. CA, G.R. No. 115634, April 27, 2000)
RECOVERY OF POSSESSION
OF IMMOVABLE PROPERTY
Accion interdictal
It is a summary action to recover physical or
material possession only and it must be brought
within one year from the time the cause of
action arises. It may be:
1. Forcible Entry; or
2. Unlawful detainer.
Accion publiciana
It refers to an ejectment suit filed within 10
years after the expiration of one year from
accrual of cause of action or from the unlawful
witholding of possession of the realty. (Gabriel Jr.
v. Crisologo, G.R. No. 204626, June 9, 2014)
It is an ordinary civil proceeding to recover the
better right of possession, except in cases of
forcible entry and unlawful detainer. What is
involved here is not possession de facto but
possession de jure.
Accion reinvindicatoria
It is an action to recover real property based on
ownership. Here, the object is the recovery of
the dominion over the property as owner.
NOTE: Where the facts averred in the complaint
reveals that the action is neither one of forcible
entry nor unlawful detainer but essentially
involves a boundary dispute, the same must be
resolved in an accion reinvindicatoria.
(Sarmiento v. CA, G.R. No. 116192, November 16,
1995)
Requisites of accion reivindicatoria
1. Identity of property; and
2. Plaintiff’s title to the property.
Q: A contract of lease executed by Alava
(lessor) and Anita Lao (lessee) was not
registered with the Register of Deeds. Aside
from Anita, Rudy Lao also leased a portion of
the same property where he put up his
business. At that time, Rudy knew that Anita
184
 Property
and her husband were the owners of the said
building. He also knew that she had leased
that portion of the property, and that Jaime
Lao, their son, managed and maintained the
building, as well as the business thereon.
Rudy eventually purchased the entire
property from Alava. Rudy then filed a
complaint for unlawful detainer against
Jaime alleging that the latter had occupied a
portion of his property without any lease
agreement and without paying any rentals,
and prayed that an order be rendered
directing Jaime to vacate the premises.
Should the complaint be dismissed?
A: YES. The records in this case show that the
respondent has been in possession of the
property in question, not by mere tolerance or
generosity of Rudy, but as the manager of his
mother, who conducted her business in the
building which stood on a portion of the
property leased from Alava. Jaime’s possession
was in behalf of his mother, and not in his own
right. (Lao v. Lao, G.R. No. 149599, May 16, 2005)
Q: In August 2001, the Spouses Javier offered
to purchase the Marikina property. However,
they could not afford to pay the price of
₱3,500,000.00. They offered instead to lease
the property while they raise enough money.
Racelis hesitated at first but she eventually
agreed. The parties agreed on a month-to-
month lease and rent of ₱10,000.00 per
month. This was later increased to
₱11,000.00. The Spouses Javier used the
property as their residence and as the site of
their tutorial school.
Sometime in 2002, Racelis inquired whether
they are still interested to purchase the
property then Sps. Javier agreed and even
said that they would pay Php 100,000.00 to
buy them more time within which to pay the
purchase price. But they only delivered Php
78,000.00 but they consistently paid rent
until February 2004. Then Racelis wrote to
inform them that her family had decided to
terminate the lease agreement and to offer
the property to other interested buyers. In
the same letter, Racelis demanded that they
vacate the property by May 30, 2004. The
Spouses Javier refused to vacate due to the
ongoing operation of their tutorial business.
They insisted that the sum of ₱78,000.00 was
advanced rent and proposed that this
amount be applied to their outstanding
185
liability until they vacate the premises.
Whether or Not they can suspend their
payment?
A: NO. In this case, the disconnection of
electrical service over the leased premises on
May 14, 2004 was not just an act of physical
disturbance but one that is meant to remove
respondents from the leased premises and
disturb their legal possession as lessees.
Ordinarily, this would have entitled respondents
to invoke the right accorded by Article 1658 of
the Civil Code. However, this rule will not apply
in the present case because the lease had already
expired when petitioner requested for the
temporary disconnection of electrical service.
Petitioner demanded respondents to vacate the
premises by May 30, 2004. Instead of
surrendering the premises to petitioner,
respondents unlawfully withheld possession of
the property. Respondents continued to stay in
the premises until they moved to their new
residence on September 26, 2004. At that point,
petitioner was no longer obligated to maintain
respondents in the "peaceful and adequate
enjoyment of the lease for the entire duration of
the contract." (Victoria Racelis v. Sps. Javier, G.R.
No. 189609, January 29, 2018, as penned by J.
Leonen)
Effect of non-registration of the contract of
lease
Although the lease contract was not filed with
the Register of Deeds, nevertheless, the buyer of
the property was bound by the terms and
conditions of said contract. The lease, in effect
became a part of the contract of sale. He had no
cause of action for unlawful detainer against the
lessee because of the subsisting contract of lease;
hence, he could not file the complaint against
her. (Lao v. Lao, G.R. No. 149599, May 16, 2005)
Q: Spouses Magtanggol managed and
operated a gasoline station on a 1,000 sq.m.
lot which they leased from Francisco Bigla-
awa. The contract was for a period of three
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.
One month after, Francisco, with the aid of a
group of armed men, caused the closure of
the gasoline station by constructing fences
 Civil Law
around it. No previous demand Demand is
Was the act of Francisco and his men lawful? for the defendant to jurisdictional if the
Why? (2014 BAR) vacate is necessary. ground is non-
payment of rentals
A: NO, the act was not lawful. Even if the lessee’s or failure to comply
right to occupy the premises has expired, the with the lease
lessor cannot physically oust the lessee from the contract.
leased premises if the latter refuses to vacate. As to necessity of proof of prior physical
The lessor must go through the proper channels possession
by filing an appropriate case for unlawful Plaintiff must prove Plaintiff need not
detainer or recovery of possession. Every that he was in prior have been in prior
possessor has a right to be respected in his physical possession physical possession.
possession (NCC, Art. 539) and in no case can of the premises until NOTE: The fact that
possession be acquired through force or he was deprived petitioners are in
intimidation as long as there is a possessor who thereof by the possession of the lot
objects thereto (NCC, Art. 536). The act of defendant. does not
Francisco is an abuse of rights because even if he automatically
has the right to recover possession of his entitle them to
property, he must act with justice and give the remain in
lessees their day in court and observe honesty possession. (Ganilla
and good faith. v. CA, G.R. No.
150755, June 28,
DISTINCTION BETWEEN FORCIBLE ENTRY 2005)
AND UNLAWFUL DETAINER As to when one-year period is counted from
One-year period is One-year period is
Forcible Entry Unlawful Detainer generally counted counted from the
from the date of date of last demand
As to when possession became unlawful actual entry of the or last letter of
Possession of the Possession is land. demand.
defendant is unlawful inceptively lawful
from the beginning as but becomes illegal REQUISITES FOR RECOVERY OF PROPERTY
he acquired from the time
possession by defendant 1. Clearly identify the land he is claiming in
(FISTS) unlawfully accordance with the title/s on which he
1. Force; withholds bases his right of ownership; and
2. Intimidation; possessions after
3. Strategy; the expiration or NOTE: Burden of proof lies on the party
4. Threat; or termination of his who asserts the affirmative of an issue. The
5. Stealth. right thereto. description should be so definite that an
officer of the court might go to the locality
NOTE: The question where the land is situated and definitely
of possession is locate it.
primordial, while
the issue of 2. Prove that he has a better title than the
ownership is defendant.
generally a. Best proof is a Torrens certificate; and
unessential in b. Tax receipts, tax declarations are only
unlawful detainer. prima facie evidence of ownership; it is
(Rosa Rica Sales rebuttable.
Center v. Sps. Ong,
G.R. 132197, August NOTE: Plaintiff’s title must be founded on
16, 2005) positive right or title and not merely on the lack
As to necessity of demand or inefficiency of the defendant’s title. In other
words, he shall not be permitted to rely upon the
defects of the defendant’s title. (NCC, Art. 434)

UNIVERSITY OF SANTO TOMAS 186

2021 GOLDEN NOTES
 Property
Q: In 1998, Intramuros leased certain real
properties of the national government which
it administered to Offshore Construction.
Three properties were subjects of the
Contracts of Lease: Baluarte De San Andres,
Baluarte De San Francisco De Dilao and
Revellin De Recoletos. All three properties
were leased for five years from September
1,1998 to August 31,2003.
Offshore Construction occupied and
introduced improvements in the leased
premises. However, Intramuros and the DOT
halted the projects due to Offshore
Construction’s non-conformity with PD 1616,
which required 16th to 19th centuries
Philippine-Spanish Architecture in the area.
During the lease period, Offshore
Construction failed to pay its utility bills and
rental fees, despite several demand letters.
Intramuros tolerated the continuing
occupation, hoping that Offshore
Construction would pay its arrears. To settle
its arrears, Offshore Construction proposed
to pay the DOT’s monthly operational
expenses and the parties executed a
Memorandum of Agreement covering the
period of August 15,2004 to August 25,2005.
But Offshore Construction failed to pay its
arrears amounting to Php 13,448,867.45. Is
Intramuros entitled to possession to the said
leased properties to Offshore Construction?
deforciant illegally occupying the land or
property the moment he is required to
leave. More than once has this Court adjudged
that 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.
(Intramuros Administration v. Offshore
Construction Development Company, G.R. No.
196795, March 7, 2018, as penned by J. Leonen)
Reasons why the plaintiff is NOT allowed to
rely on the weakness of defendant’s title
1. Possibility that neither the plaintiff nor the
defendant is the true owner of the property.
In which case, the defendant who is in
possession will be preferred;
2. One in possession is presumed to be the
owner and he cannot be obliged to show or
prove a better title;
3. Possessor in the concept of an owner is
presumed to be in good faith and he cannot
be expected to be carrying every now and
then his proofs of ownership over the
property; and
4. He who relies on the existence of a fact,
should prove that fact. If he cannot prove,
the defendant does not have to prove.
REAL v. PERSONAL RIGHTS

A: YES, Intramuros tolerance of respondent's Real Right Personal Right

occupation and use of the leased premises after (Right of (Right to possess;
the end of the lease contracts does not give the possession; possidendi)
latter a permanent and indefeasible right of possessionis)
possession in its favor. When a demand to vacate Creation
has been made, as what petitioner had done,
Created by both Created by title
respondent’s possession became illegal and it
title and mode alone.
should have left the leased premises. More than
directly over a It is not directly
once has this Court adjudged that a person who
thing. created over a
occupies the land of another at the latter's
thing but is
tolerance or permission without any contract
exercised through
between them is necessarily bound by an
another against
implied promise that he will vacate upon
whom the action is
demand, failing which a summary action for
to be brought.
ejectment is the proper remedy against him. The
Object
situation is not much different from that of a
tenant whose lease expires but who continues in Generally corporeal Incorporeal or
occupancy by tolerance of the owner, in which or tangible. intangible.
case there is deemed to be an unlawful Object is specific Object covers all
deprivation or withholding of possession as of property or thing. the present and
the date of the demand to vacate. In other words, future property of
one whose stay is merely tolerated becomes a the debtor. (NCC,
Art. 2236).

187
 Civil Law
Subjects d. Lease;
a. One definite a. An active 4. Grantor of the property on the grantee, either
active subject subject (creditor); by:
(e.g. owner) and a. Contract
b. One indefinite b. A definite b. Donation or
passive subject passive subject c. Will;
which is the (debtor).
whole world 5. Those arising from Conflicts of private rights -
Right of pursuit is Those which take place in accession
therefore available. continua;
Real right follows
its object in the 6. Constitution - On the prohibition against the
hands of any acquisition of private lands by aliens;
possessor.
Enforceability 7. Acts in state of necessity – The law permits
Enforceable against Enforceable only injury or destruction of things owned by
the whole world. against the original another provided this is necessary to avert a
debtor or his greater danger (with right to indemnity v.
transferee charged principle of unjust enrichment); and
with notice of the
personal rights 8. True owner must resort to judicial process –
Limit When thing is in possession of another; law
Limited by No such limitation. creates a disputable presumption of
usefulness, value or ownership to those in actual possession.
productivity of the (2008 BAR)
thing.
Extinguishment Art. 429. The owner of lawful possessor of a
thing has the right to exclude any person
Extinguished by Not so
from the enjoyment and disposal thereof.
loss or destruction extinguished.
For this purpose, he may use such force as
of the thing Claim for damages
may be reasonably necessary to repel or
may still be
prevent an actual or threatened unlawful
pursued-in case of
physical invasion of usurpation of his
loss or destruction
property
of the thing.

LIMITATIONS ON THE RIGHT OF OWNERSHIP PRINCIPLE OF SELF-HELP

This principle authorizes an owner or lawful

Those imposed by the: (SLOG-C2-SO) possessor of a property to use reasonable force
to prevent or repel an actual or threatened
1. State in the exercise of: unlawful physical invasion or usurpation of
a. Power of taxation; property. (NCC, Art. 429) There must be no delay
b. Police power; and in the pursuit, otherwise, his recourse will be to
c. Power of eminent domain go to the court for the recovery of property.
2. Law; Requisites of the Principle of Self-Help
a. Legal easements (i.e., (RODA)
easements of waters and of
right of way) and 1. Reasonable force used
b. The requirement of legitime in 2. Such force is used by the owner or lawful
succession; possessor
3. There is no delay
3. Owner himself; 4. Actual or threatened physical invasion or
a. Voluntary easement usurpation of the property.
b. Mortgage
c. Pledge Counterpart of Self-Help in Criminal Law

UNIVERSITY OF SANTO TOMAS 188

2021 GOLDEN NOTES
 Property
The loose counterpart of the principle of self-
help under the criminal law is self-defense
provided for in Article 11, par. 1 of the Revised
Penal Code Art. 11.
Justifying circumstances. — The following do not
incur any criminal liability:
1. Anyone who acts in defense of his person or
rights, provided that the following
circumstances concur:
First. Unlawful aggression.
Second. Reasonable necessity of the
means employed to prevent or repel it.
Third. Lack of sufficient provocation on
the part of the person defending
himself.
Right of self-help exercised by third person
A third person who is not a possessor may repel
unlawful possession on the property owned by
another. In such an event, he is acting as a
negotorium gestor. The owner must indemnify
him for injuries sustained. (Pineda, 2009)
Test of reasonableness
The reasonableness of the defensive acts
resorted to by a possessor is determined not by
what he imagined to exist but by the objective
situation. (Pineda, 2009) He will be liable for
damages, if he uses force more than what is
necessary in repelling the aggression.
German Management's drastic action of
bulldozing and destroying the crops of private
respondents on the basis of the doctrine of self-
help was unavailing because the doctrine of self-
help can only be exercised at the time of actual
or threatened dispossession which is absent in
the case at bar. (German Mgmt. Services Inc. v. CA,
G.R. No. 76216, September 14, 1989)
NOTE: The intruder must not have succeeded in
its entry, for otherwise, he must resort to court
action; self-help cannot apply. One cannot put
the law into his own hands. Art. 429 must be
read in relation to Art. 536.
“Sic utere tuo ut alienum non laedas”
The owner of a thing cannot make use thereof in
such manner as to injure the rights of a third
person. (NCC, Art. 431)
189
Property owner can use his property in any
manner he desires provided he does not injure
the rights of others (sic utere tuo ut alienum non
laedas). (Pineda, 2009)
Art. 430. Every owner may enclose or fence
his land or tenements by means of walls,
ditches, live or dead hedges, or by any other
means without detriment to servitudes
constituted thereon.
Limitation on the right of the owner to
enclose or fence one’s land or tenement
Every owner may enclose or fence his land or
tenement by means of walls, ditches, live or dead
hedges or by any other means provided that in
so fencing the property, no servitude or
easement constituted thereon should be
impaired. (Pineda, 2009)
DOCTRINE OF STATE OF NECESSITY
The owner of a thing has no right to prohibit the
interference of another with the same, if the
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. The owner may
demand from the person benefited indemnity
for the damage to him. (NCC, Art. 432)
This principle authorized the destruction of
property which is lesser in value to avert the
danger poised to another property of greater
value.
Requisites of Doctrine of State of Necessity
1. Interference necessary to avert an imminent
danger and the threatened damage to the
actor or a third person;
2. Damage to another is much greater than the
damage to the property.
Art. 433. Actual possession under claim of
ownership raises a disputable presumption
of ownership. The true owner must resort to
judicial process for the recovery of the
property.
Disputable presumption of ownership
There is disputable presumption of ownership
when a person is in actual possession of the
property under the claim of ownership. (Pineda,
 Civil Law
2009)
Resort of the owner rebutting the
presumption
Under Art. 433 the remedy is judicial process to
recover the property of the person.
Requisites to prove claim of ownership
1. Proper identification of the property; and
2. Title must be clear, strong and credible.
(Pineda, 2009)
Art. 434. In an action to recover, the
property must be identified, and the
plaintiff must rely on the strength of his title
and not on the weakness of the defendant’s
claim.
Requisites For Action To Recover Property
1. To clearly identify the land he is claiming in
accordance with the title or titles on which
he bases his right of ownership; and,
2. To prove that he has a better title than the
defendant. (Pineda, 2009)
Art. 435. No person shall be deprived of his
property except by competent authority
and for public use and always upon payment
of just compensation
Should this requirement be not first
complied with, the courts shall protect and,
in a proper case, restore the owner in his
possession.
Eminent Domain
This is the superior right of the State to acquire
private property whether registered or not for
public use upon payment of just compensation.
It is one of the limitations on the right of
ownership in the pursuit of public interest.
(Pineda, 2009)
Elements of “Taking” of Property For
Purposes of Eminent Domain
1. The expropriator must enter a private
property;
2. The entrance into private property must be
for more than a momentary period;
3. The entry into the property should be under
warrant or color of legal authority
4. The property must be devoted to a public use
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
or otherwise informally appropriated or
injuriously affected; and
5. The utilization of the property for public use
must be in such a way as to oust the owner
and deprive him of all beneficial enjoyment
of the property. (National Power Corporation
vs. Court of Appeals, 254 SCRA 577)
Q: Alfredo Hababag, Sr. (Alfredo) was the
owner of several parcels of agricultural land
situated in the Municipality of Gubat,
Sorsogon. The aforesaid landholdings were
voluntarily offered for sale (VOS) to the
government under Republic Act No. (RA)
6657, otherwise known as the
"Comprehensive Agrarian Reform Law of
1988,". The Land Bank of the Philippines
(LBP) initially valued the subject lands at
P1,237,850.00, but Alfredo rejected the
valuation. After summary administrative
proceedings for the determination of the
amount of just compensation, the Office of
the Provincial Agrarian Reform Adjudicator
(PARAD) of the Department of Agrarian
Reform (DAR) Adjudication Board (DARAB)
fixed the value of the subject lands at
P1,292,553.20.
Dissatisfied, Alfredo filed a Complaint for the
determination of the amount of just
compensation before the RTC. RTC rendered
a Decision fixing the amount of just
compensation of the subject lands at
P5,653,940.00. The RTC applied the Income
Productivity Approach. CA set aside the RTC's
valuation for failure to give due
consideration to the factors enumerated in
Section 17 of RA 6657 and the formula under
DAR AO 6-92, as amended by DAR AO 11-94.
Moreover, contrary to the limitation imposed
by DAR AO 6-92 - i.e., that the computed
value using the applicable formula shall not
exceed the landowner's offer to sell - the CA
found that the amount as recomputed by the
RTC was way beyond the landowner's offer of
P1,750,000.00 as stated in the Claims
Valuation and Processing Form. Is the CA
correct in setting aside the computation of
RTC?
A: YES. Just compensation is defined as the full
and fair equivalent of the property taken from
its owner by the expropriator. It has been
repeatedly-stressed by this Court that the
measure is not the taker's gain but the owner's
loss. The word "just" is used to intensify the
190
 Property
meaning of the word "compensation" to convey
the idea that the equivalent to be rendered for
the property to be taken shall be real,
substantial, full [and] ample.
In this relation, the RTC, sitting as a Special
Agrarian Court, has been conferred with the
original and exclusive power to determine just
compensation for parcels of land acquired by the
State pursuant to the agrarian reform program.
To guide the RTC in this function, Section 17 of
RA 6657 enumerates the factors which must be
taken into consideration to accurately determine
the amount of just compensation to be awarded
in a particular case. They are: (a) the acquisition
cost of the land; (b) the current value of like
properties; (c) the nature and actual use of the
property, and the income therefrom; (d) the
owner's sworn valuation; (e) the tax
declarations; (f) the assessment made by
government assessors; (g) the social and
economic benefits contributed by the farmers
and the farmworkers, and by the government to
the property; and (h) the nonpayment of taxes
or loans secured from any government financing
institution on the said land, if any. Corollarily,
pursuant to its rule-making power under Section
49 of the same law, the DAR translated these
factors into a basic formula, which courts have
often referred to and applied, as the CA did in
this case. It, however, bears stressing that courts
are not constrained to adopt the said formula in
every case since the determination of the
amount of just compensation essentially
partakes the nature of a judicial function. In this
accord, courts may either adopt the DAR formula
or proceed with its own application for as long
as the factors listed in Section 17 of RA 6657
have been duly considered.
In keeping with these considerations, the Court
finds the CA's valuation - which made use of the
DAR formula - as reflective of the factors set
forth in Section 17 of RA 6657. Records disclose
that the CA's computation, as adopted from the
LBP's own computation, is based on: (a) actual
production data; (b) the appropriate industry
selling prices of the products from the Philippine
Coconut Authority and the Bureau of
Agricultural Statistics of Sorsogon; and (c) the
actual uses of the property. Likewise, the (a)
income from the coconut fruit- bearing trees, as
well as the unirrigated riceland, (b) cumulative
cost of the non-fruit-bearing trees; and (c)
market value of the cogonal land have been duly
considered. The Court observes that the holistic
191
data gathered therefrom adequately consider
the factors set forth in Section 17 of RA 6657, as
well as the DAR formula. As such, the CA's
computation, which was derived from the same,
must be sustained. Lest it be misunderstood, the
ascertainment of just compensation on the basis
of the landholdings' nature, location, and market
value, as well as the volume and value of the
produce is valid and accords with Section 17 of
RA 6657 and the DAR formula, as in this case
On the contrary, the Court finds the RTC's
valuation to be improper, as it contradicts the
definition of "market value" as crafted by
established jurisprudence on expropriation.
(Land Bank of the Philippines v. Alfredo Hababag,
Sr., Substituted by his wife, Consolacion, and
children, namely: Manuel, Salvador, Wilson,
Jimmy, Alfredo, Jr., and Judith, all surnamed
Hababag, G.R. No. 171352, September 16, 2015)
Q: The Republic of the Philippines filed
before the RTC a complaint against an
unknown owner for the expropriation of a lot
located in Barangay Ugong, Valenzuela City
for the construction of the C-5 Northern Link
Road Project, otherwise known as North
Luzon Expressway (NLEX) Segment 8.1,
traversing from Mindanao Avenue in Quezon
City to the NLEX in Valenzuela City. Petitioner
applied for a writ of possession over the
subject lot on May 5, 2008, which was
granted, and was required to deposit with
the court the amount of P550,000.00 (i.e., at
P2,750.00/sq. m.) as provisional deposit.
However, respondent Macabagdal was
substituted as party- defendant upon
sufficient showing that the subject lot is
registered in her name under the Transfer
Certificate Title of the lot. Respondent did not
oppose the expropriation, and received the
provisional deposit.
The RTC appointed a board of commissioners
to determine the just compensation for the
subject lot, which thereafter submitted
report dated May 23, 2014, recommending a
fair market value of P9,000.00/sq. m. as the
just compensation for the subject lot, taking
into consideration its location, neighborhood
and land classification, utilities, amenities,
physical characteristics, occupancy and
usage, highest and best usage, current
market value offerings, as well as previously
decided expropriation cases of the same RTC
involving properties similarly situated in the
 Civil Law
same barangay. The Court of Appeals
affirmed this decision and imposed interest
the rate of 12% per annum from the time of
the filing of the complaint until June 30,
2013, and thereafter, at 6% per annum until
full payment. Is the 12% per annum interest
on the unpaid balance be computed from the
time of the taking of the subject until full
payment valid?
A: NO. The value of the landholdings should be
equivalent to the principal sum of the just
compensation due, and interest is due and
should be paid to compensate for the unpaid
balance of this principal sum after taking has
been completed. From the date of the taking of
the subject lot on May 5, 2008 when the RTC
issued a writ of possession in favor of petitioner,
until the just compensation therefor was finally
fixed at P9,000.00/sq. m., petitioner had only
paid a provisional deposit in the amount of
P550,000.00 (i.e., at P2,750.00/sq. m.). Thus, this
left an unpaid balance of the "principal sum of
the just compensation," warranting the
imposition of interest. It is settled that the delay
in the payment of just compensation amounts to
an effective forbearance of money, entitling the
landowner to interest on the difference in the
amount between the final amount as adjudged
by the court and the initial payment made by the
government. It bears to clarify that legal interest
shall run not from the date of the filing of the
complaint but from the date of the issuance of
the Writ of Possession on May 5, 2008, since it is
from this date that the fact of the deprivation of
property can be established. As such, it is only
proper that accrual of legal interest should begin
from this date. (Republic v. Leonor Macabagdal,
G.R. No. 227215, January 10, 2018)
Q: National Power Corporation instituted
expropriation proceedings for the
acquisition of a right-of-way easement and
for the construction of the Substation Island
Grid Project over the parcels of land owned
by respondents. During the pendency of the
proceedings, NPC filed a motion to
discontinue the proceedings since the delay
in the possession of the properties would
adversely affect the project. NPC also claims
that the properties were no longer needed as
it was set to acquire an alternative site.
May NPC be allowed to discontinue the
expropriation proceedings?
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A: YES. No expropriation proceeding can
continue if the property to be expropriated will
not be for public use. In Metropolitan Water
District v. De Los Angeles, the Court held that the
fundamental basis then of all actions brought for
the expropriation of lands, under the power of
eminent domain, is public use. That being true,
the very moment that it appears at any stage of
the proceedings that the expropriation is not for
a public use, the action must necessarily fail and
should be dismissed, for the reason that the
action cannot be maintained at all except when
the expropriation is for some public use.
Considering that the National Power
Corporation is no longer using respondents'
properties for the purpose of building the
Substation Project, it may be allowed to
discontinue with the expropriation proceedings,
subject to the approval of the court. (National
Power Corporation v. Socorro T. Posada, Renato
Bueno, Alice Balin, Adrian Tablizo, Teofilo
Tablizo, and Lydia T. Olivo, Substituted By Her
Heirs, Alfredo M. Olivo, Alicia O. Salazar, Anita O.
Ordono, Angelita O. Lim, And Adelfa O. Espinas,
G.R. No. 191945, March 11, 2015, as penned by J.
Leonen)
Art. 436. When any property is condemned
or seized by competent authority in the
interest of health, safety or security, the
owner thereof shall not be entitled to
compensation, unless he can show that such
condemnation or seizure is unjustified.
Extent of ownership of parcel of land
The owner of a parcel of land is the owner of its
surface and of everything under it, and he can
construct thereon any works or make any
plantations and excavations which he may deem
proper, without detriment to servitudes and
subject to special laws and ordinances. He
cannot complain of the reasonable requirements
of aerial navigation. (NCC, Art. 437)
AD COLEUM
The owner of a land has rights not only to its
surface but also to everything underneath and
the airspace above it up to a reasonable height.
Presumably, the landowner’s right extends to
such height or depth where it is possible for
them to obtain some benefit or enjoyment, and it
is extinguished beyond such limit as there would
be no more interest protected by law. (Napocor
v. Ibrahim, G.R. No. 168732, June 29, 2007)
192
 Property
Art. 438. Hidden treasure belongs to the
owner of the land, building, or other
property on which it is found.
Nevertheless, when the discovery is made
on the property of another, or of the State or
any of its subdivisions, and by chance, one-
half thereof shall be allowed to the finder. If
the finder is a trespasser, he shall not be
entitled to any share of the treasure.
If the things found be of interest to science
or the arts, the State may acquire them at
their just price, which shall be divided in
conformity with the rule stated.
Art. 439. By treasure is understood, for legal
purposes, any hidden and unknown deposit
of money, jewelry or other precious objects,
the lawful ownership of which does not
appear.
HIDDEN TREASURE
Treasure is understood, for legal purposes, as
any hidden and unknown deposit of money,
jewelry, or other precious objects, the lawful
ownership of which does not appear. (NCC, Art.
439) (1997, 2008, 2014 BAR)
“Other precious objects”
Under the ejusdem generis rule, the phrase
should be understood as being similar to money
or jewelry.
Oil or gold NOT considered as hidden
treasure
These are natural resources. The Regalian
Doctrine applies and not the provisions on
hidden treasure.
Rule regarding discovery of hidden treasure
(NCC, Art. 438 in relation to Art. 718)
GR: If the finder is the owner of the land,
building, or other property where it is found, the
entire hidden treasure belongs to him.
XPN: If the finder is not the owner or is a
stranger (includes the lessee or usufructuary), he
is entitled to ½ thereof. (NCC, Art. 566)
193
If the finder is married
If the finder is married, he or she gets one half of
the treasure or its value. His or her spouse is
entitled to share one-half of that share, it being a
conjugal property. (NCC, Art. 117, par. 4, FC)
Requisites in order that the finder be entitled
to any share in the hidden treasure (ACTA)
1. Discovery was made on the property of
Another, or of the State or any of its political
subdivisions;
2. Made by Chance; and
3. He is not a Trespasser or Agent of the
landowner. (NCC, Art. 438, par. 2)
NOTE: If the things found be of interest to
science or the arts, the State may acquire them
at their just price, which shall be divided in
conformity with the rule stated. (NCC, Art. 438)
“By chance”
The finder had no intention to search for the
treasure. There is no agreement between the
owner of the property and the finder for the
search of the treasure.
Yamashita treasure
The State is entitled to 75% share and the finder
to 25%. (PD 7056-A)
The finder is not entitled to the hidden
treasure if it was deliberately searched.
(1976 BAR)
It was not found by chance (NCC, Art. 438).
Moreover, treasure is defined as hidden and
unknown deposit of precious objects, the lawful
ownership of which does not appear. There
being a tip, the deposit is known. (NCC, Art. 439)
Nature and ownership of the old notes and
coins
The ownership of the vault, together with the
notes and coins can now legally be considered as
hidden treasure because its ownership is no
longer apparent. The contractor is not a
trespasser and therefore entitled to one-half of
the hidden treasure and the owner of the
property is entitled the other half. (NCC, Art.
438) Since the notes and coins have historical
value, the government may acquire them at their
just price which in turn will be divided equally
 Civil Law
between them. (NCC, Art. 438, par. 3) The vault
has been buried for about a century and the
successor of the bank which previously owned it
cannot succeed by inheritance to the property.
(2008 BAR)
NOTE: Bills and notes found are not hidden
treasures. The owner can be traced through the
serial numbers.
Q: O, owner of Lot A, learning that Japanese
soldiers may have buried gold and other
treasures at the adjoining vacant Lot B,
belonging to Spouses X and Y, excavated in
Lot B where she succeeded in unearthing
gold and precious stones. How will the
treasures found by O to be divided – (1)
100% to O as finder, (2) 50% to O and 50%
to X and Y, (3) 50% to O and 50% to the State
(4) none of the above? (2010 BAR)
A: NONE OF THE ABOVE. The finding of the
treasure was not by chance because O knew that
the treasure was in Lot B. While a trespasser is
also not entitled to any share and there is no
indication in the problem whether or not O was
a trespasser, O is not entitled to share because
the finding was not by chance.
ACCESSION
The right pertaining to the owner of a thing over
everything which is produced thereby, or which
is incorporated or attached thereto, either
naturally or artificially. (NCC, Art. 440)
Right of accession
It is that right of ownership of which an owner of
a thing has over the products of said thing
(accession discreta), as well as to all things
inseparably attached or incorporated thereto
whether naturally or artificially (accession
continua). (Pineda, 2009)
Accession is NOT a mode of acquiring
ownership
It is not one of the modes enumerated under Art.
712 (different modes of acquiring ownership). It
is, therefore, safe to conclude that accession is
not a mode of acquiring ownership.
Reason: Accession presupposes a previously
existing ownership by the owner over the
principal. Fundamentally, accession is a right
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
implicitly included in ownership, without which
it will have no basis or existence. (Paras, 2008)
NOTE: In general, the right to accession is
automatic (ipso jure), requiring no prior act on
the part of the owner or principal.
Q: Filipinas Palm Oil Plantation Inc. is a
private organization engaged in palm oil
plantation with a total land area of more than
7,000 hectares of National Development
Company (NDC) lands in Agusan del Sur.
Harvested fruits from oil palm trees are
converted into oil through Filipinas' milling
plant in the middle of the plantation area.
Within the plantation, there are also three
(3) plantation roads and a number of
residential homes constructed by Filipinas
for its employees.
The LBAA found that the P207.00 market
value declared in the assessment by the
Provincial Assessor was unreasonable. It
found that the market value should not have
been more than P85.00 per oil palm tree. The
sudden increase of realty tax assessment
level from P42.00 for each oil palm tree in
1993 to P207.00 was confiscatory. The LBAA
adopted Filipinas' claim that the basis for
assessment should only be 98 trees. Although
one (1) hectare of land can accommodate
124 oil palm trees, the mountainous terrain
of the plantation should be considered.
Because of the terrain, not every meter of
land can be fully planted with trees. The
LBAA found that roads of any kind, as well as
all their improvements, should not be taxed
since these roads were intermittently used
by the public.
Should the roads the respondent constructed
within the leased area be assessed with real
property taxes?
A: NO, the roads that respondent constructed
within the leased area should not be assessed
with real property taxes.
The roads that respondent constructed became
permanent improvements on the land owned by
the NGPI-NGEI by right of accession under the
Civil Code, thus:
Article 440. The ownership of property gives the
right by accession to everything which is
produced thereby, or which is incorporated or
194
 Property
attached thereto, either naturally or artificially.
Article 445. Whatever is built, planted or sown on
the land of another and the improvements or
repairs made thereon, belong to the owner of the
land[.]
Despite the land being leased by respondent
when the roads were constructed, the
ownership of the improvement still belongs to
NGPI-NGEI. As provided under Article 440 and
445 of the Civil Code, the land is owned by the
cooperatives at the time respondent built the
roads. Hence, whatever is incorporated in the
land, either naturally or artificially, belongs to
the NGPI-NGEI as the landowner. (Provincial
Assessor Of Agusan Del Sur v. Filipinas Palm Oil
Plantation, Inc., G.R. No.183416, October 5, 2016,
as penned by J. Leonen)
Art. 441. To the owner belongs:
(1) The natural fruits;
(2) The industrial fruits;
(3) The civil fruits.
ACCESSION DISCRETA
The right of accession with respect to what is
produced by the property.
To the owner belongs the:
1. Natural fruits - The spontaneous products of
the soil, and the young and other products of
animals;
2. Industrial fruits - Are those produced by
lands of any kind through cultivation or
labor;
3. Civil fruits - The rents of buildings, the price
of leases of lands and other property and the
amount of perpetual or life annuities or
other similar income. (NCC, Art. 441-442)
Obligation of the owner who receives the
fruit from a third person
He who receives the fruits has the obligation to
pay the expenses made by a third person in their
production, gathering and preservation. (NCC,
Art. 443) (2009 BAR)
Meaning of third person
One who is NOT the owner, builder, planter or
sower.
Art. 444. Only such as are manifest or born
195
are considered as natural or industrial
fruits.
Which respect to animals, it is sufficient that
they are in the womb of the mother,
although unborn.
Existence of the fruit
It depends on the type of fruit:
1. Annual (must be planted every year/must
re-plant after harvest; rice, wheat, corn) –
deemed manifest the moment their
seedlings appear; and
2. Perennial (only planted once and bear fruit
for several seasons; mango and coconut
trees) – deemed to exist only when they
actually appear.
Animal young
They are considered existing even if still in the
maternal womb. They should be considered
existing only at the commencement of the
maximum ordinary period for gestation.
Pratus sequitor ventrem – offspring follows
the mother
This legal maxim means that the offspring
follows the dam (mother). The legal
presumption, in the absence of proof to the
contrary, is that the calf, as well as its mother
belongs to the owner of the latter, by the right of
accretion. (US v. Caballero, G.R. No. 8608,
September 26, 1913) Thus, when the ownership
over the offspring of the animal when the male
and female belongs to different owners, the
owner of the female was considered also the
owner of the young, unless there is a contrary
custom or speculation.
Art. 445. Whatever is built, planted or sown
on the land of another and the
improvements or repairs made thereon,
belong to the owner of the land, subject to
the provisions of the following articles.
When fruits are deemed to exist
1. Civil fruits accrue daily and are considered
personal property and may be pro-rated;
and
2. Natural and industrial fruits, while still
growing, are considered as real property;
ordinarily, they cannot be pro-rated.
 Civil Law

Art. 446. All works, sowing, and planting are
presumed made by the owner and at his
expense, unless the contrary is proved.
Ownership of fruits
GR: Fruits belong to the owner. (NCC, Art. 441)
XPNS: If the thing is: (PULPA)
1. In possession of a Possessor in good faith
(NCC, Art 546) (1992, 1996, 2000 BAR);
before the possession is legally interrupted;
2. Subject to a Usufruct (NCC, Art. 566);
3. Lease of rural land;
4. Pledged [NCC, Art. 1680 and Art. 2102(7)];
pledge is entitled to the fruits but has the
obligation to compensate or set-off what he
receives with those which are owing to him;
or
5. In possession of an Antichretic creditor.
(NCC, Art. 2132)
GENERAL RULLES OF ACCESSION
Accession exists only if separation is not feasible.
Otherwise, separation may be demanded.
ACCESSION CONTINUA
It is the right pertaining to the owner of a thing
over everything incorporated or attached
thereto either naturally or artificially; by
external forces.
1. He who is in Bad faith is liable for damages.
2. Accessory follows the principal;
3. Union or incorporation must generally be
effected in such a manner that to separate
the principal from the accessory would
result in substantial Damage to either or
diminish its value;
4. To the Owner of the thing belongs the
extension or increases to such thing;
5. Bad faith of one party Neutralizes the bad
faith of the other so that they shall be
considered in good faith;
6. He who is in Good faith may be held
responsible but not penalized; and
7. No one shall unjustly Enrich himself at the
expense of another.
FOR IMMOVABLES
ACCESSION INDUSTRIAL
Three kinds of industrial endeavors (BPS)
1. Building – Erecting a structure or
construction of any kind, with roof for
residential, office, social, commercial or
other purposes;
2. Planting – Setting into the soil or land seeds
or seedlings of trees such as mangoes,
coconuts, etc;
3. Sowing – The act of scattering or spreading of
germinated seeds indiscriminately or evenly
through hand or mechanical device.

1. Immovable Property Maxims in connection with accession

a. Accession industrial (Art. 445-455) industria
i. Building;
ii. Planting; and 1. The accessory follows the principal;
iii. Sowing. 2. The accessory follows the nature of that to
which it relates; and
b. Accession natural 3. What is built upon the land goes with it; or
i. Alluvium (Art. 457); the land is the principal, and whatever is
ii. Avulsion (Art. 459); built on it becomes the accessory.
iii. Change of course of rivers (Art. 461-
462); and Rule on ownership regarding accession
iv. Formation of islands. (Art. 464- 465) industrial

2. Movable property GR: The owner of the land is the owner of

a. Adjunction or Conjunction; whatever is built, planted or sown on that land,
b. Mixture; and including the improvements or repairs made
c. Specification. thereon.

Basic principles in accession continua XPNs:

(BADONG-E) 1. When the doer is in good faith the rule is
modified; or

UNIVERSITY OF SANTO TOMAS 196

2021 GOLDEN NOTES
 Property
2. Improvements on the land of one of the
spouses at the expense of the conjugal
partnership will belong to the partnership or
to the spouse who owns the land depending
on which of the two properties has a higher
value. (FC, Art. 120)

NOTE: If the doer is in bad faith, he is entitled

only to necessary expenses for the preservation
of the land.

Art. 447. The owner of the land who makes

thereon, personally or through another,
plantings, constructions or works with the
materials of another, shall pay their value;
and, if he acted in bad faith, he shall also be
obliged to the reparation of damages. The
owner of the materials shall have the right
to remove them only in case he can do so
without injury to the work constructed, or
without the plantings, constructions or
works being destroyed. However, if the
landowner acted in bad faith, the owner of
the materials may remove them in any event,
with a right to be indemnified for damages.

Good faith and bad faith distinguished.

Good Faith - A person who is not aware that

there exists in his title or mode of acquisition
any flaw which invalidates it.

Bad Faith - A person who is aware that there

exists in his title or mode of acquisition any flaw
which invalidates it.

When Both Parties Are in Bad Faith

If both parties are in bad faith, the bad faith of
one cancels the bad faith of the other. Hence,
both are considered in good faith.

NOTE: Good faith is always presumed; and upon

him who alleges bad faith on the part of the
possessor rests the burden of proof.

197
 Property

RULE IF THE PLANTER AND OWNER OF THE LAND ARE DIFFERENT

Gathered Fruits
Planter in GF Planter in BF
Keeps fruits before possession is Reimbursed for expenses for
Planter legally interrupted. (NCC, Art. 544, production, gathering and
par. 1) (2008 Bar) preservation. (NCC, Art. 443)
No necessity to reimburse the Owns fruits provided he pays
planter of expenses since the planter expenses for production,
Landowner
planter retains the fruits. (NCC, gathering and preservation.
Art. 544, par. 1) (NCC, Art. 443)
Standing Crops
Planter in GF Planter in BF

Loses what is built, planted or

sown without right to
Reimbursed for expenses, for indemnity. (NCC, Art 449)
Planter production, gathering and Entitled to reimbursement for
preservation. (NCC, Art.443) the necessary expenses of
preservation of the land. (NCC,
Art. 452)

Owns fruits provided he pays

planter expenses for production,
Landowner Owns fruits. (NCC, Art. 449)
gathering and preservation. (NCC,
Art. 443)

RULE WHEN THE LAND OWNER IS THE BUILDER, PLANTER OR SOWER (1999 BAR)

Land Owner and Builder, Planter or Sower Owner of Materials

Good faith Good faith
1. Receive indemnity for value of materials; or
Acquire building etc. after paying indemnity for
value of materials. (NCC, Art. 447) (1999 Bar) 2. Remove materials if without injury to works,
plantings or constructions. (NCC, Art. 447)
Bad faith Good faith
1. Acquire building etc. after paying value of
1. Be indemnified for value of materials and
materials; and
damages; or
2. indemnity for damages, subject to the right of
2. Remove materials, with or without injury and
the owner of materials to remove. (NCC, Art.
be indemnified for damages. (NCC, Art. 447)
447)
Good faith Bad faith
1. Lose materials w/o being indemnified and
1. Acquire w/o paying indemnity and right to pay damages (NCC, Articles 445 and 449, by
damages (NCC, Art 445 and 449, by analogy); analogy); and
and
2. Recover necessary expenses for preservation
2. Pay necessary expenses for preservation. of land without the right to retain the thing
(NCC, Articles 452 and 546) until the indemnity is paid. (NCC, Articles 452
and 546)
Bad faith Bad faith
As though both acted in good faith (in pari delicto). ( NCC, Art. 453) (1999 BAR)

UNIVERSITY OF SANTO TOMAS 198

2021 GOLDEN NOTES
 Civil Law
RULE WHEN THE LAND OWNER IS NOT THE BUILDER, PLANTER OR SOWER
Land Owner
Good faith
He can either: (NCC, Art. 448) (1992, 1996, 2000
Bar)
1. Acquire improvements after paying indemnity
for:
a. Necessary expenses; and
b. Useful expenses which could either be:
1. Original costs of improvements; or
2. Increase in the value of the whole.
(NCC, Articles 443 and 546)
2. Sell the land to builder or planter or collect
rent from sower unless the value of the land is
considerably greater than the building etc., in
which case, the builder and planter shall pay
rent.
The parties shall agree upon the terms of the lease
and in case of disagreement, the court shall fix the
terms thereof.
Good faith
1. The land owner can either:
a. Acquire improvements without paying
indemnity and collect damages. (NCC,
Articles 445, 449 and 451)
b. Order the demolition of work or
restoration to former condition and collect
damages in both cases (NCC, Art. 450); or
c. Sell the land to builder and planter or rent
it to the sower, and collect damages in both
cases. (NCC, Art. 450) (2008 Bar)
2.Pay necessary expenses for preservation.
(NCC, Articles 452 and 546)
Bad Faith
Acquires improvements after paying indemnity and
damages to builder, planter, sower, unless the latter
decides to remove. (NCC, Articles 454 and 447)
He cannot compel the builder planter or sower to
buy the land.
The reason why said article (NCC, Art. 447) applies
199
Builder, Planter, Sower and Owner of Materials
Good faith
If the Land Owner:
1. Acquires the improvements after paying
indemnity, Builder, Planter, or Sower has the
right to retain the thing (and cannot be
required to pay rent) until indemnity is paid.
(NCC, Art. 546)
2. If the useful improvements can be removed
without damage to the principal thing, the
Builder, Planter or Sower may remove them,
unless the person who recovers the
possession exercises the other. (NCC, Articles
547 and 447)
3. Sells the land, Builder or Planter cannot be
obliged to buy the land if its value is
considerably more than that of the building or
trees.
In such case, he shall pay reasonable rent.
The parties shall agree upon the terms of the lease
and in case of disagreement, the court shall fix the
terms thereof. (NCC, Art. 448) (1992, 1996, 1999,
2000, 2001 BAR)
Bad faith
1. Lose improvements without right to be
indemnified unless the latter sells the land.
(NCC, Art. 449) (1996, 2000 BAR)
2. Recover necessary expenses for
preservation of land without the right to
retain the thing until the indemnity is paid.
(NCC, Articles 452 and 546)
3. Pay damages to land owner. (NCC, Art. 451)
Good Faith
1. Receive indemnity for improvements and
receive damages; or
2. Remove them in any event and receive
damages. (NCC, Articles 454 and 447)
 Property
may be explained as follows:

That if the land owner knew that something was

being built, planted or sown on his land by another
and he did not interpose any objection thereto, it is
as if he was the one building, planting or sowing in
bad faith on his own land with materials belonging
to another, using the owner of the materials as his
worker. (Rabuya, 2008)
Bad Faith Bad Faith
As though both acted in good faith (in pari delicto). (Art. 453)

RULE WHEN THE LAND OWNER, BUILDER, PLANTER,

SOWER AND OWNER OF MATERIALS ARE DIFFERENT PERSONS

Land-Owner Builder, Planter, Sower Owner of Materials

Good faith Good faith Good faith

He shall answer subsidiarily for Pay value of materials to its

their value and only in the
event that the one who made
use of them has no property
with which to pay. (NCC, Art.
455)
He can either (NCC, Art. 448):
1. Acquire improvements
after paying indemnity
for:
a. Necessary expenses;
and
b. Useful expenses
which could either
be:
c. Original costs of
improvements; or
d. Increase in the value
of the whole. (NCC,
Art. 546 & 443)
2. Sell the land to builder
and planter or collect rent
from sower unless the
value of the land is
considerably greater than
the building etc., in which
case, the builder and
planter shall pay rent.
The parties shall agree
upon the terms of the
lease and in case of
disagreement, the court
shall fix the terms thereof.
owner without paying damages
(NCC, Art. 455) and if the Land
Owner:
1. Acquires the improvement,
Builder, Planter, or Sower
may demand from the
landowner the value of the
materials and labor. (NCC,
1. Collect value of materials
Art 455)
primarily from builder,
planter, sower, subsidiarily
And he has the right to
from land owner (NCC, Art.
retain the thing (and cannot
455); or
be required to pay rent)
until indemnity is paid.
2. Remove the materials only if
(NCC, Art. 546)
without injury to the work
constructed, or without the
If the useful improvements
plantings, constructions or
can be removed without
works being destroyed. (NCC,
damage to the principal
Art. 447)
thing, the possessor in good
faith may remove them,
NOTE: Landowner is subsidiarily
unless the person who
liable only if he
recovers the possession
appropriates/acquires the
exercises the other (NCC,
improvements.
Articles 547 and 447); or
2. Sells the land or rents it,
Builder or Planter cannot
be obliged to buy the land if
its value is considerably
more than that of the
building or trees.
In such case, he shall pay
reasonable rent.

UNIVERSITY OF SANTO TOMAS 200

2021 GOLDEN NOTES
 Civil Law

The parties shall agree upon the

terms of the lease and in case of
disagreement, the court shall fix
the terms thereof. (NCC, Art. 448)
Land-Owner Builder, Planter, Sower Owner of Materials
Good faith Bad faith Good faith
Option to:

1. Acquire improvements
without paying indemnity
and collect damages (NCC,
Art. 445 & 449); 1.
2. Order the demolition of
work or restoration to
former condition and
collect damages in both 2.
cases (NCC, Art. 450); or
3. Sell the land to builder
and planter or rent it to
the sower and collect
damages in both cases. 3.
(NCC, Art. 450) (2008
BAR)
Lose improvements without
right to be indemnified
unless the landowner sells
the land (NCC, Art. 449);
1. Collect value of materials
Recover necessary expenses
primarily from builder, planter,
for preservation of land
sower, subsidiarily from land
without the right to retain
owner (NCC, Art. 455); or
the thing until the indemnity
is paid (NCC, Art. 452 & 546);
2. Remove materials in any event
if builder, planter, sower
Pay value of materials to its
acquired materials.
owner plus damages (NCC,
Art. 455); and

4. Pay necessary expenses 4. Pay damages to land owner.

for preservation (NCC, (NCC, Art. 451)
Articles 452 and 546); and

5. Subsidiarily liable to
owner of materials.

Land-Owner Builder, Planter, Sower Owner of Materials

Good faith Good faith Bad faith
Land Owner can either: (NCC, If the Land Owner:
Art. 448)
1. Acquires the improvement,
1. Acquire improvements Builder, Planter, or Sower
1. Loses materials without right
after paying indemnity has the right to retain the
to indemnity (NCC, Art. 449);
for: thing (and cannot be
and
a. Necessary expenses; required to pay rent) until
and indemnity is paid. (NCC,
2. Pays damages (NCC, Art. 451)
b. Useful expenses Art. 546)
The builder, planter or sower
which could either
would be considered merely an
be: If the useful improvements
agent of the owner of materials.
i. Original costs of can be removed without
improvements; damage to the principal
Therefore, the provisions of Article
or thing, the possessor in
449 of the Civil Code will apply by
ii. Increase in the good faith may remove
analogy. He is even liable for
value of the them, unless the person
damages. (Rabuya, 2008)
whole. (NCC, who recovers the
Articles 546 and possession exercises the
443) other (NCC, Art. 547); or

201

4. Sell the land to builder and
planter or collect rent from
sower unless the value of
the land is considerably
greater than the building
etc., in which case, the
builder and planter shall
pay rent.
The parties shall agree
upon the terms of the lease
and in case of
disagreement, the court
shall fix the terms thereof.
Without subsidiary liability for
cost of materials.
Land Owner
Good faith
Option to:
1. Acquire improvements
without paying indemnity
and collect damages (NCC,
Articles 445 and 449);
2. Order the demolition of
work or restoration to
former condition and
collect damages in both
cases (NCC, Art. 450); or
3. Sell the land to builder
and planter or rent it to
the sower, and collect
damages in both cases
(NCC, Art. 450);
4. Has right to demand
damages from both (NCC,
Art. 451);
5. Pay necessary expenses
for preservation (NCC, Art.
452 & 546); and
6. Not subsidiarily liable to
the owner of the materials
because as to him, the two
acted in bad faith. (De
Leon, 2006)
Land-Owner
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Property
2. Sells or rents it, Builder or
Planter cannot be obliged
to buy the land if its value
is considerably more than
that of the building or
trees.
In such case, he shall pay
reasonable rent.
The parties shall agree
upon the terms of the lease
and in case of
disagreement, the court
shall fix the terms thereof.
(NCC, Art. 448)
Without indemnity to owner of
materials and collects damages
from him.
Builder, Planter, Sower Owner of Materials
Bad faith Bad faith
1. Lose improvements
without right to be
indemnified unless the
landowner sells the land
(NCC, Art. 449);
1. Recover value from Builder,
2. Recover necessary Planter, Sower (in pari delicto);
expenses for preservation
of land without the right to 2. If Builder, Planter, Sower
retain the thing until the acquired improvements,
indemnity is paid (NCC, remove the materials only if
Articles 452 and 546); without injury to the work
constructed, or without the
3. Pay the value of the plantings, constructions or
materials to the owner of works being destroyed (NCC,
the materials.; and Art. 447);
Since both the owner of the 3. No action against land owner;
materials and the builder, and
etc. acted in bad faith, as
between them, they are 4. May be liable to the land owner
treated as having both for damages. (NCC, Art. 451)
acted in good faith. (De
Leon, 2006)
4. Pay damages to land
owner. (NCC, Art. 451)
Builder, Planter, Sower Owner of Materials
202

Bad faith
1. Acquires improvements
after paying indemnity
and damages, unless the
latter decides to remove
(NCC, Art. 454, 447 & 443);
and
2. Cannot compel builder,
planter and sower to buy
land.
Land Owner
Bad faith
1. Acquires improvements
after paying indemnity
and damages, unless the
builder, planter or sower
decides to remove (NCC,
Art. 454, 447 & 443); and
2. Cannot compel builder,
planter and sower to buy
land.
Land-Owner
Bad faith
The owner of the land shall
answer subsidiarily for their
value and only in the event that
the one who made use of them
has no property with which to
pay (NCC, Art. 455); and
Land Owner can either: (NCC,
Art. 448)
1. Acquire improvements
after paying indemnity
for:
1. Necessary expenses,
and
2. Useful expenses
which could either
be:
Civil Law
Good faith
If he pays the owner of the
materials, plants or seeds:
1. He may demand from the
landowner the value of the
materials and labor (NCC,
Art 455) and shall also be
obliged to the reparation of
damages (NCC, Art. 447); or
2. Remove the materials in
any event, with a right to
be indemnified for
damages. (NCC, Articles 454
and 447)
Builder, Planter, Sower
Good faith
If he pays the owner of the
materials, plants or seeds:
1. He may demand from the
landowner the value of the
materials and labor (NCC,
Art. 455) and shall also be
obliged to the reparation of
damages (NCC, Art. 447); or
2. Remove the materials in
any event, with a right to
be indemnified for
damages. (NCC, Articles 454
and 447)
Builder, Planter, Sower
Bad faith
Pay value of materials to its
owner (NCC, Art. 455) and
If the Land Owner:
1. Acquires the improvement,
Builder, Planter, or Sower
may demand from the
landowner the value of the
materials and labor. (NCC,
Art 455)
And he has the right to
retain the thing (and cannot
be required to pay rent)
until indemnity is paid (Art.
546).
203
Good faith
1. Collect value of materials
primarily from builder,
planter, sower, subsidiarily
from land owner (NCC, Art.
455); or
2. Remove the materials in any
event, with a right to be
indemnified for damages.
(NCC, Art. 447)
Owner of Materials
Bad faith
1. Loses materials without right
to indemnity (NCC, Art. 449);
and
2. Pays damages. (NCC, Art. 451)
The builder, planter or sower
would be considered merely an
agent of the owner of materials.
Therefore, the provisions of Article
449 of the Civil Code will apply by
analogy. He is even liable for
damages. (Rabuya, 2008)
Owner of Materials
Good faith
1. Collect value of materials
primarily from builder,
planter, sower, subsidiarily
from land owner (NCC, Art.
455); or
2. Remove the materials in any
event, with a right to be
indemnified for damages.
(NCC, Art. 447)

i. Original costs of
improvements
ii. Increase in the
value of the
whole. (NCC,
Articles 546 and
443)
2. Sells or rents it, Builder or
2. Sell the land to builder and
planter or collect rent from
sower unless the value of
the land is considerably
greater than the building
etc., in which case, the
builder and planter shall
pay rent.
The parties shall agree
upon the terms of the lease
and in case of
disagreement, the court
shall fix the terms thereof.
Land-Owner Builder, Planter, Sower
Bad faith
Same as though both acted in good faith (in pari delicto). (NCC, Art. 453)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Property
If the useful improvements
can be removed without
damage to the principal
thing, the possessor in good
faith may remove them,
unless the person who
recovers the possession
exercises option 2 (NCC,
Articles 547 and 447);
Planter cannot be obliged to
buy the land if its value is
considerably more than that
of the building or trees.
In such case, he shall pay
reasonable rent.
The parties shall agree upon
the terms of the lease and in
case of disagreement, the
court shall fix the terms
thereof. (NCC, Art. 448)
Owner of Materials
Bad faith Bad faith
204
 Civil Law
When there is good faith on the part of both
the owner of the land and the builder,
planter or sower
The owner of the land only has the options of
paying the value of the building or selling the
land.
He cannot refuse either to pay or sell and compel
the owner of the building to remove it from the
land where it is erected. He is entitled to such
removal only when, after having chosen to sell
the land, the other party fails to pay for the
same. (Ignacio v. Hilario, G.R. No. L-175, April 30,
1946; Sps. Espinoza vs. Mayandoc, G.R. No.
211170, July 3, 2017)
The landowner upon demand for payment
CANNOT automatically become the owner of the
improvement for failure of the builder to pay for
the value of the land. There is nothing in Articles
448 and 546 which would justify the conclusion
that upon failure of the builder to pay the value
of the land, when such is demanded by the
landowner, the land owner becomes
automatically the owner of the improvement
under Art. 445.
When the land’s value is considerably more than
the improvement, the landowner cannot compel
the builder to buy the land. In such event, a
“forced lease” is created and the court shall fix
the terms thereof in case the parties disagree
thereon. (Depra v. Dumalo, G.R. No. L-57348, May
16, 1985; Communities Cagayan, Inc. v. Sps.
Arsenio, G.R. No. 176791, November 14, 2012)
Rule when landowner sells the land to a third
person who is in bad faith
Builder must go against the third person but if
the latter has paid the land owner, a case against
such land owner may still be filed by the builder
and the third person may file a third-party
complaint against land owner.
Recourse left to the parties where the builder
fails to pay the value of the land
The Civil Code is silent on this point. Guidance
may be had from these decisions:
1. In Miranda v. Fadullon, G.R. No. L-8220,
October 29, 1955, the builder might be made
to pay rental only, leave things as they are,
205
and assume the relation of lessor and lessee;
2. In Ignacio v. Hilario, G.R. L-175, April 30,
1946, Pen Development Corporation v.
Martinez Leyba, Inc., G.R. No. 211845, August
9, 2017 owner of the land may have the
improvement removed; or
3. In Bernardo v. Bataclan, G.R. No. L-44606,
November 28, 1938, the land and the
improvement may be sold in a public
auction, applying the proceeds first to the
payments of the value of the land, and the
excess if any, to be delivered to the owner of
the house in payment thereof.
As to the pending crops planted in good faith,
the landowner has the option of allowing the
planter in good faith to continue the cultivation
and to harvest the crops, or to continue the
cultivation and harvest the crops himself. In the
latter option, however, the landowner shall have
the right to a part of the expenses of cultivation
and to a part of the net harvest, both in
proportion to the time of possession. (NCC, Art.
545)
Q: Believing that a piece of land belonged to
him, A erected thereon a building, using
materials belonging to C. The owner of the
land, B, was aware of the construction being
made by A, but did not do anything to stop it.
What are the rights of A, B, and C, with
respect to the building and as against each
other? (1984 BAR)
A: B, regardless of his good or bad faith, becomes
the owner of the building. (NCC, Arts. 445 and
448) However, A, a builder in good faith will be
entitled to reimbursement of his necessary and
useful expenses, with right to retain the same
until paid. He may also remove the construction,
since B acted in bad faith in not stopping the
construction. (NCC, Arts. 454 and 447) C shall
have the right to reimbursement and may also
remove them but only if he can do so without
injury to the work. (NCC, Art. 447)
Q: Suppose X was in good faith but Y knew
that X was constructing on his (Y's) land but
simply kept quiet about it, thinking perhaps
that he could get X's house later. What are
the respective rights of the parties over X's
house in this case? (1999 BAR)
A: Since the lot owner Y is deemed to be in bad
faith (Art. 453), X as the party in good faith may
(a) remove the house and demand
 Property
indemnification for damages suffered by him, or
(b) demand payment of the value of the house
plus reparation for damages (Art. 447, in relation
to Art. 454). Y continues as owner of the lot and
becomes, under the second option, owner of the
house as well, after he pays the sums demanded.
Q: Bartolome constructed a chapel on the
land of Eric. What are Bartolome’s rights if he
were: (1) possessor of the land in good faith,
or (2) in bad faith? (1996 BAR)
A:
(1) A chapel is a useful improvement, Bartolome
may remove the chapel if it can be removed
without damage to the land, unless Eric chooses
to acquire the chapel. In the latter case,
Bartolome has the right of reimbursement of the
value of the chapel with right of retention until
he is reimbursed. (NCC, Arts. 448, 546 & 547)
(2) Bartolome loses whatever he built, without
any right to indemnify. (NCC, Art. 449)
Q: Pecson owned a commercial lot on which
he built a building. For failure to pay realty
taxes, the lot was sold at public auction to
Nepomuceno, who in turn sold it to the
spouses Nuguid. The sale, however, does not
include the building. The spouses
subsequently moved for the delivery of
possession of the said lot and apartment.
Pecson filed a motion to restore possession
pending determination of the value of the
apartment.
May Pecson claim payment of rentals?
A: YES, Pecson is entitled to rentals by virtue of
his right of retention over the apartment. The
construction of the apartment was undertaken
at the time when Pecson was still the owner of
the lot. When the Nuguids became the
uncontested owner of the lot, the apartment was
already in existence and occupied by tenants.
NOTE: Art. 448 does not apply to cases where
the owner of the land is the builder but who
later lost the land; not being applicable, the
indemnity that should be paid to the buyer must
be the fair market value of the building and not
just the cost of construction thereof. To do
otherwise would unjustly enrich the new owner
of the land.
Q: Pending complete reimbursement, may
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the spouses Nuguid benefit from the
improvement?
A: NO. Since spouses Nuguid opted to
appropriate the improvement for themselves
when they applied for a writ of execution
despite knowledge that the auction sale did not
include the apartment building, they could not
benefit from the lot’s improvement until they
reimbursed the improver in full, based on the
current market value of the property. (Pecson v.
CA, G.R. No. 115814, May 26, 1995)
The builder is entitled to a refund of the
expenses he incurred and not on the market
value of the improvement (2000 BAR)
Under Art. 448 in relation to Art. 546, the
builder in good faith is entitled to a refund of the
necessary and useful expenses incurred by him,
or the increase in value which the land may have
acquired by reason of the improvement, at the
option of the landowner. The builder is entitled
to a refund of the expenses he incurred, and not
to the market value of the improvement.
NOTE: The case of Pecson v. CA, G.R. No. 115814,
May 26, 1995 is not applicable.
The landowner is entitled to the rentals of
the building if he opted to appropriate it,
subject to the right of retention of the builder
in good faith (2000 BAR)
The landowner is entitled to the rentals of the
building. As the owner of the land, he is also the
owner of the building being an accession
thereto. However, the builder in good faith is
entitled to retain the building until indemnity is
paid. Consequently, he is also entitled to retain
the rentals. He, however, shall apply the rentals
to the indemnity payable to him after deducting
reasonable cost of repair and maintenance.
Q: The Church, despite knowledge that its
intended contract of sale with the National
Housing Authority (NHA) had not been
perfected, proceeded to introduce
improvements on the disputed land. On the
other hand, NHA knowingly granted the
Church temporary use of the subject
properties and did not prevent the Church
from making improvements thereon. Did the
Church and NHA act in bad faith?
A: YES. The Church and the NHA, both acted in
206
 Civil Law
bad faith, hence, they shall be treated as if they
were both in good faith. (National Housing
Authority v. Grace Baptist Church, G.R. No.
156437, March 1, 2004)
Q: A squatter, X, is sought to be evicted by the
landowner Y, seeks reimbursement from the
latter for the improvements he made on the
property, while Y demands the value of all
the fruits X gathered from the land during
the occupancy thereof. Is X entitled to the
indemnity he prays for? Is he bound to pay
for the fruits he received? Why? (1983 BAR)
A: As a possessor in bad faith, X may recover
only the necessary expenses he may have
incurred while in possession and
reimbursement for useful improvements
introduced by him if owner Y chooses to retain
them and X must pay Y the value of all the fruits
he received.
Q: 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 128 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 Pl 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.
What are the buyers' options or legal rights
with respect to the expenses incurred in
improving the property under
circumstances? (2015 BAR)
A: The buyers here may be deemed possessors
or builders in good faith because they were
made to believe that they were allowed to make
repairs or renovation by the sellers themselves.
As builders in good faith, they have the right to
seek reimbursement for the value of the
207
improvements in case the owner decides to
appropriate them. They cannot be asked to
remove the improvements because that is not
one of the options given by law to the landowner
in case the builder is in good faith.
When there is bad faith on the part of both
the owner of the land and the builder,
planter or sower
Q: The Municipality instituted an action for
the recovery of a tract of land in the pueblo of
Oas claiming that it was a part of the public
square. Roa alleged that he was the owner of
the property and admitted in writing that he
knew that the land is owned by the
Municipality and that Castillo, whom he
bought the property from did not own the
land. On the other hand, when Roa
constructed a substantial building on the
property in question the Municipality did not
oppose the construction. Is there bad faith on
both of the parties?
A: YES. Roa was not a purchaser in good faith.
The Municipality, having permitted the erection
by the defendant of a building on the land
without objection, acted in bad faith. The rights
of the parties must, therefore, be determined as
if they both had acted in good faith. When there
has been bad faith, not only on the part of the
person who built, sowed, or planted on
another's land, but also on the part of the owner
of the latter, the rights of both shall be the same
as if they had acted in good faith. Therefore, the
owner of the land on which the building, sowing,
or planting is done in good faith shall have a
right to appropriate as his own the work,
sowing, or planting after the indemnity
mentioned in Articles 453 and 454, or, to oblige
the person who has built or planted, to pay him
the value of the land and to force the person who
sowed to pay the proper rent. (Art. 453)
(Municipality of Oas vs Roa, G.R. No. L-2017,
November 24, 1906)
Good faith can concur with negligence
Art. 456 applies to Arts. 447-455 where good
faith was mentioned.
Good faith does not necessarily preclude
negligence, for, in fact, in negligence there is no
intention to do wrong or cause damage unlike in
bad faith which presupposes such intention. (De
Leon, 2006)
 Property
made or artificial accretions to lands that adjoin
Thus, person who is in good faith may be guilty canals or esteros or artificial drainage system.
of negligence for which he may be made liable (Ronquillo v. CA, G.R. No 43346, March 20, 1991)
under Art. 2176 involving quasi-delicts. (Pineda,
2009) NOTE: If the deposits accumulate, not through
the effects of the current of the water, but
ACCESSION NATURAL because of the constructions made by the owner
purely for defensive purposes against the
damaging action of the water, the deposits are
ALLUVION
still deemed to be alluvion and will belong to the
riparian owner.
Alluvium or alluvion (2001, 2003, 2008,
2009 BAR)
If the deposit is brought about by sea water
It is the gradual deposit of sediment by natural
When the sea moves towards the estate and the
action of a current of fresh water (not sea water),
tide invades it, the same becomes a foreshore
the original identity of the deposit being lost.
land which consequently becomes part of the
Where it is by sea water, it belongs to the State.
public domain. Thus, it belongs to the state.
(Government of Philippine Islands v. Cabangis,
G.R. No. L-28379, March 27, 1929)
Registration
NOTE: Art. 457 of NCC states “To the owners of Alluvial deposits must be registered. Though,
the lands adjoining the banks of the rivers
automatically it is owned by the riparian owner
belongs the accretion which they gradually
(Heirs of Navarro v. IAC, G.R. No. 68166, February
receive from the effects of the current of the
12, 1997), it is still subject to acquisitive
waters.
prescription which may divest the riparian
owner the ownership over the accretion.
Riparian owner
Failure to register
He is the owner of the land adjoining rivers.
If the riparian owner fails to register the
Accretion v. Alluvium
deposits within the prescriptive period of
acquiring real property (10 years if ordinary
Accretion is the process whereby the soil is
prescription or 30 years if extraordinary
deposited while alluvium is the soil deposited. prescription), it subjects said accretion to
acquisition thru prescription by third persons.
Requisites of accretion
(Reynante v. CA, G.R. No. 95907, April 8, 1992)
1. Deposit be gradual and imperceptible;
However, registration under the Torrens System
2. Resulted from the effects of the current of does not protect the riparian owner against the
the water; and
diminution of the area of his registered land
3. The land where the accretion takes place is
through gradual changes in the course of an
adjacent to the banks of a river.
adjoining stream.
If all the requisites are present, the riparian
Q: Benjamin is the owner of a titled lot which
owner is automatically entitled to the accretion.
is bounded on the north by the Maragondon
River. An alluvial deposit of two (2) hectares
NOTE: The alluvion starts to become the was added to the registered area. Daniel took
property of the riparian owner from the time
possession of the portion formed by
that the deposit created by the current of water
accretion and claims that he has been in
becomes manifest. (Heirs of Navarro v. IAC, G.R.
open, continuous and undisturbed
No. 68166, February 12, 1997)
possession of said portion since 1923 as
shown by a tax declaration. In 1958,
Man-made or artificial accretions to lands
Benjamin filed a Complaint for Quieting of
NOT included
Title and contends that the alluvium belongs
to him as the riparian owner and that since
The rule on alluvion does not apply to man-

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2021 GOLDEN NOTES
 Civil Law
the alluvium is, by law, part and parcel of the
registered property, the same may be
considered as registered property. Decide
the case and explain. (2016 BAR)
A: I will decide in favor of Daniel and dismiss
the action to quiet title filed by Benjamin.
Under Article 457 of the Civil Code, the owner of
lands adjoining the banks of rivers belong the
accretion which they gradually receive from the
effects of the current of the waters. The
accretion, however, does not automatically
become registered land. It must be brought
under the Torrens system of registration by
Benjamin, the riparian owner. Since he did not,
the then increment, not being registered land,
was open to acquisition through prescription by
third persons, like Daniel. (Ignacio Grande, et. al.
v. Court of Appeals, G.R. No. L-17652, June 30,
1962; Leonida Cureg v. Intermediate Appellate
Court, G.R. No. 73465, September 7, 1989)
Reasons for granting a riparian owner the
right to alluvion deposited by a river
1. To compensate him for:
a. Danger of loss that he suffers due to the
location of his land; and
b. The encumbrances and other easements
on his land
2. To promote the interests of agriculture as he
is in the best position to utilize the accretion.
The owners of estates adjoining ponds or
lagoons do not acquire the land left dry by the
natural decrease of the waters, or lose that
inundated by them in extraordinary floods.
(NCC, Art. 458)
NOTE: This rule does not apply to lakes.
Q: The First Accretion adjoined the southern
portion of the Motherland. Decades later, the
Second Accretion abutted the First Accretion
on its southern portion. OCT was issued in
the names of all the respondents covering
the Second Accretion. Petitioners alleged
that through deceit, fraud, falsehood, and
misrepresentation, respondent Victoriano,
with respect to the First Accretion, and the
respondents collectively, with regard to the
Second Accretion, had illegally registered the
said accretions in their names,
notwithstanding the fact that they were not
209
the riparian owners. Are the petitioners the
exclusive owners of the First and Second
Accretion?
A: NO. Petitioners are not the riparian owners of
the Motherland to which the First Accretion had
attached, hence, they cannot assert ownership
over the First Accretion. Consequently, as the
Second Accretion had merely attached to the
First Accretion, they also have no right over the
Second Accretion. Neither were they able to
show that they acquired these properties
through prescription as it was ·not established
that they were in possession of any of them.
Being the owner of the land adjoining the
foreshore area, respondent is the riparian or
littoral owner who has preferential right to lease
the foreshore area. Accordingly, therefore,
alluvial deposits along the banks of a creek or a
river do not form part of the public domain as
the alluvial property automatically belongs to
the owner of the estate to which it may have
been added. The only restriction provided for by
law is that the owner of the adjoining property
must register the same under the Torrens
system; otherwise, the alluvial property may be
subject to acquisition through prescription by
third persons. (Heirs of Francisco I. Narvasa, Sr.
et.al v. Emiliana Imbornal et.al, G.R. No. 182908,
August 6, 2014)
Art. 459. Whenever the current of a river,
creek or torrent segregates from an estate
on its bank a known portion of land and
transfers it to another estate, the owner of
the land to which the segregated portion
belonged retains the ownership of it,
provided that he removes the same within
two years.
CHANGE IN THE COURSE OF THE RIVER
Whenever a river, changing its course by natural
causes, opens a new bed through a private
estate, this bed shall become of public dominion.
(NCC, Art. 462)
Requisites (NAPA)
1. There must be a Natural change in the
course of the waters of the river; otherwise,
the bed may be the subject of a State grant;
2. The change must be Abrupt or sudden;
3. The change must be Permanent; and
 Property
NOTE: The rule does not apply to temporary ALLUVIUM AVULSION
overflowing of the river. Gradual and Sudden or abrupt
imperceptible. process.
4. There must be Abandonment by the owner Soil cannot be Identifiable and
of the bed. identified. verifiable.
Belongs to the Belongs to the
NOTE: Abandonment pertains to the decision owner of the owner from whose
not to bring back the river to the old bed. property to property
which it is attached. it was detached.
Effect when the river bed is abandoned Merely an Detachment
attachment. followed by
River beds which are abandoned through the attachment.
natural change in the course of the waters ipso
facto belong to the owners whose lands are Requisites of avulsion (CAI)
occupied by the new course in proportion to the
area lost. However, the owners of the lands 1. Transfer is caused by the Current of a river,
adjoining the old bed shall have the right to creek, or torrent;
acquire the same by paying the value thereof, 2. Transfer is sudden or Abrupt; and
which value shall not exceed the value of the 3. The portion of the land transported is known
area occupied by the new bed. (NCC, Art. 461) or Identifiable.

NOTE: The rule on abandoned river bed does NOTE: By analogy, land transferred from one
not apply to cases where the river simply dries tenement to another by forces of nature other
up because there are no persons whose lands than the river current can still be considered as
are occupied by the waters of the river. an avulsion.

Under the Water Code, the government or the Rule on acquisition of titles over an avulsion
riparian owner may return the river back to the
original bed. (P.D. 1067, Art. 58) GR: Original owner retains title.

Art. 460. Trees uprooted and carried away
by the current of the waters belong to the
owner of the land upon which they may be
cast, if the owners do not claim them within
six months. If such owners claim them, they
shall pay the expenses incurred in gathering
them or putting them in a safe place.
AVULSION
It is the deposit of known (identifiable) portion
of land detached from the property of another
which is attached to the property of another as a
result of the effect of the current of a river, creek
or torrent. (2001 BAR)
XPNs: The owner must remove (not merely
claim) the transported portion within two years
to retain ownership, otherwise, the land not
removed shall belong to the owner of the land to
which it has been adjudicated in case of:
1. Abandonment; or
2. Expiration of two years, whether the failure
to remove be voluntary or involuntary, and
irrespective of the area of the portion known
to have been transferred.
Rule on avulsion of uprooted trees
GR: The owner of the tree retains ownership.

Whenever the current of a river, creek, or XPN:

torrent segregates from an estate on its banks a
known portion of land and transfers it to
another estate, the owner of the land to which
the segregated portion belonged retains the
ownership of it, provided that he removes the
same within 2 years. (NCC, Art. 459) (2001 BAR)
Alluvium vs. Avulsion (2001 BAR)
1. The owner must claim them within a period
of six months; and
NOTE: The claim does not require actual
recovery. It can be recovered on the basis of
prescriptive period for acquiring movables
which is four years.
2. If uprooted trees have been transplanted by
the owner of the land which the trees may

UNIVERSITY OF SANTO TOMAS 210

2021 GOLDEN NOTES
 Civil Law
have been cast and said trees have taken
root in said land, the owner of the trees,
upon making the claim, is required to refund
the expenses incurred in gathering them or
in putting them in safe place, including the
expenses incurred by the owner of the land
for the preservation of the trees. (Rabuya,
2008)
Art. 463. Whenever the current of a river
divides itself into branches, leaving a piece
of land or part thereof isolated, the owner of
the land retains his ownership. He also
retains it if a portion of land is separated
from the estate by the current.
Effects of Ramifications of A River
1. Some parts of the original estate may be
isolated but remaining steady and secure on
their location;
2. Other parts may be separated and pushed
away from the original estate.
Art. 464. Islands which may be formed on
the seas within the jurisdiction of the
Philippines, on lakes, and on navigable or
floatable rivers belong to the State.
Art. 465. Islands which through successive
accumulation of alluvial deposits are
formed in non-navigable and non-floatable
rivers, belong to the owners of the margins
or banks nearest to each of them, or to the
owners of both margins if the island is in the
middle of the river, in which case it shall be
divided longitudinally in halves. If a single
island thus formed be more distant from
one margin than from the other, the owner
of the nearer margin shall be the sole owner
thereof.
ISLANDS
Rules on ownership with regard to formation
of islands
LOCATION OWNER
If formed on the sea
Within territorial State
waters
Outside territorial First country to occupy
waters
If formed on lakes or navigable/floatable
rivers
State
211
If formed on non-navigable/non-floatable
rivers
Nearer in margin to Owner of nearer
one bank margin is the sole
owner
If equidistant Island divided
longitudinally in halves.
Q: Eduave is the owner of land forming part
of an island in a non-navigable river. Said
land was eroded due to a typhoon,
destroying the bigger portion thereof and
improvements thereon. Due to the
movements of the river deposits on the part
of the land that was not eroded, the area was
increased. Later, Eduave allowed Dodong to
introduce improvements thereon and live
there as a caretaker. However, Dodong later
denied Eduave’s claim of ownership so the
latter filed action to quiet title over the
property. Who has a better right to the land?
A: EDUAVE has a better right to the land. The
land in question is an island that appears in a
non- floatable and non-navigable river, and it is
not disputed that Eduave is the owner of the
parcel of land. The island belongs to the owner
of the parcel of land nearer the margin. (NCC,
Art. 465) Because the island is longer than the
property of Eduave, he is deemed ipso jure the
owner of that portion which corresponds to the
length of his property along the margin of the
river. (Jagualing v. CA, G.R. No. 94283, March 4,
1991)
NOTE: There is no accession when islands are
formed by the branching of a river; the owner
retains ownership of the isolated piece of land.
MOVABLES
Art. 466. Whenever two movable things
belonging to different owners are, without
bad faith, united in such a way that they
form a single object, the owner of the
principal thing acquires the accessory,
indemnifying the former owner thereof for
its value
Different kinds of accession continua as
regard movables
1. Adjunction or conjunction;
2. Mixture; and
3. Specification.
 Property
Adjunction
It is the process by virtue of which two movable
things belonging to different owners are united
in such a way that they form a single object and
each of the things united preserves its own
nature. (NCC, Art. 466)
Requisites of adjunction (2BUS)
There is adjunction when there are:
1. Two (2) movables;
2. Belonging to different owners;
3. United forming a single object; and
4. Separation would impair their nature or
result in substantial injury to either thing.
Classes of adjunction or conjunction
1. Painting (pintura);
2. Engraftment or Inclusion - Like setting a
precious stone on a golden ring;
3. Writing (escritura);
4. Weaving; and
5. Soldering- Joining a piece of metal to another
metal
a. Ferruminacion -Principal and accessory
are of the same metal; or
b. Plumbatura – Different metals (NCC, Art.
468)
Ownership of the resulting object
The owner of the principal by law becomes
owner of the resulting object and should
indemnify the owner of the accessories for the
values thereof.
Good faith is necessary in Adjunction
Art. 526 explains that good faith is that condition
of the mind where the person concerned is not
aware that there exists in his title or mode of
acquisition any flaw which invalidates it.
If the owner of the principal thing acted in bad
faith, Art. 470 (par. 2) will apply NOT Art. 466.
(Pineda, 2009)
Art. 467. The principal thing, as between
two things incorporated, is deemed to be
that to which the other has been united as
an ornament, or for its use or perfection.
Art. 468. If it cannot be determined by the
rule given in the preceding article which of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the two things incorporated is the principal
one, the thing of the greater value shall be
so considered, and as between two things of
equal value, that of the greater volume.
Tests to determine the principal
1. That of greater value;
2. If two things are of equal value – That of
greater volume;
3. If two things are of equal volume – That to
which the other has been united as an
ornament, or for its use or perfection; and
4. That which has greater merits, utility and
volume if things. (NCC, Art. 468)
NOTE: In painting and sculpture, writings,
printed matter, engraving and lithographs, the
board, metal, stone, canvas, paper or parchment
shall be deemed the accessory thing. (NCC, Art.
468)
Ownership when the adjunction involves
three or more things
If the adjunction involves three or more things,
the court should first distinguish the principal
and apply Art. 466 in an equitable manner such
that the principal acquires the accessory,
indemnifying the former owner thereof for its
value.
Art. 469. Whenever the things united can be
separated without injury, their respective
owners may demand their separation.
Nevertheless, in case the thing united for
the use, embellishment or perfection of the
other, is much more precious than the
principal thing, the owner of the former
may demand its separation, even though the
thing to which it has been incorporated may
suffer some injury.
Separation of things is allowed in the
following cases:
1. Separation without injury;
2. Separation with injury – Accessory is much
more precious than the principal, the owner
of the former may demand its separation
even though the principal may suffer injury;
3. Owner of the principal acted in Bad faith.
(NCC, Art. 469)
Art. 470. Whenever the owner of the
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 Civil Law
accessory thing has made the incorporation though there is or without
in bad faith, he shall lose the thing injury to the injury to
incorporated and shall have the obligation principal and pay principal and
to indemnify the owner of the principal damages. receive
thing for the damages he may have suffered. damages.
If the one who has acted in bad faith is the Bad faith
owner of the principal thing, the owner of
the accessory thing shall have a right to Same as though both acted in good faith.
choose between the former paying him its
value or that the thing belonging to him be Art. 471. Whenever the owner of the
separated, even though for this purpose it material employed without his consent has
be necessary to destroy the principal thing; a right to an indemnity, he may demand that
and in both cases, furthermore, there shall this consist in the delivery of a thing equal
be indemnity for damages. in kind and value, and in all other respects,
to that employed, or else in the price
If either one of the owner has made the thereof, according to expert appraisal.
incorporation with the knowledge and
without the objection of the other, their
Indemnity
respective rights shall be determined as
though both acted in good faith.
It is made either by:
1. Delivery of a thing equal in kind and value;
Rights of owners over the thing in adjunction or
2. Payment of its price including the
PRINCIPAL OWNER OF THE sentimental value. (NCC, Art. 471)
ACCESSORY
Good faith
1. Acquire 1. Receive Art. 472. If by the will of their owners two
accessory and payment for things of the same or different kinds are
pay owner of the value of mixed, or if the mixture occurs by chance,
accessory for its accessory; or and in the latter case the things are not
value; or 2. GR: Demand separable without injury, each owner shall
2. Demand separation acquire a right proportional to the part
separation provided the belonging to him, bearing in mind the value
provided the thing thing suffers no of the things mixed or confused.
suffers no injury. injury.
XPN: If
Art. 473. If by the will of only one owner, but
accessory is
in good faith, two things of the same or
more precious
different kinds are mixed or confused, the
than principal,
rights of the owners shall be determined by
he may demand
the provisions of the preceding article.
separation with
or without
If the one who caused the mixture or
injury to the
confusion acted in bad faith, he shall lose
thing.
the thing belonging to him thus mixed or
Good faith Bad faith
confused, besides being obliged to pay
Acquire accessory Lose accessory and
indemnity for the damages caused to the
without paying the pay damages.
owner of the other thing with which his own
owner of accessory
was mixed.
and entitled to
damages.
Bad faith Good faith Mixture
1. Pay value of 1. Receive
It is the combination of materials where the
accessory and pay payment and
respective identities of the component elements
damages; or damages; or
are lost either voluntarily or by chance. (NCC,
2. Have the things 2. Have accessory
Articles. 472-473)
separated, even separated with

213
 Property
new thing to himself, after first paying
Kinds of mixtures (COM-CON) indemnity for the value of the work, or
1. Commixtion – mixture of solids; and demand indemnity for the material.
2. Confusion – mixture of liquids
If in the making of the thing bad faith
Proportionate Ownership In Commixtion Or intervened, the owner of the material shall
Confusion have the right to appropriate the work to
himself without paying anything to the
If the things mixed or confused are not separable maker, or to demand of the latter that he
without injury, each owner shall have a right to indemnify him for the value of the material
the resulting thing proportionate to the value of and the damages he may have suffered.
the thing he owns. (Pineda, 2009) However, the owner of the material cannot
appropriate the work in case the value of
Rules regarding mixtures the latter, for artistic or scientific reasons, is
considerably more than that of the material.
By Will of Both Owners or by Accident
Good faith Specification (NCC, Art. 474)
1. Right is subject to stipulations; or
2. Right is in proportion to the part belonging It is the giving of new form to another’s material
to. him (Co-ownership arises) (NCC, through application of labor. The material
Art.422) undergoes a transformation or change of
By will of only one owner/ by chance identity. The labor is the principal and the
Good faith material used is the accessory.
1. Have the things separated provided the
thing suffers no injury; or Respective rights of the maker and the owner
2. If cannot be separated without injury, of the materials in specification
acquire interest on mixture in proportion
to his part (co-ownership). OWNER OF
MAKER
Bad faith (caused Good faith MATERIALS (OM)
the mixture) Good faith
First owner will lose Second owner will GR: Appropriate the Receive payment for
his part on the acquire entire mixture thing transformed and value of materials.
mixture and pay and entitled to pay the owner of the
damages to the damages. materials for its value.
second owner.
Bad faith Good faith (caused XPN: If the material is
the mixture) more precious than the
As if both acted in GF, As if both acted in GF, thing transformed, the
because the 2nd since the first owner owner of the materials
owner in GF was the is in BF and the has the option to:
one who caused the second owner who 1. Acquire the work
ratification, because caused the mixture in and indemnify the
the first owner. GF in a way ratifies maker for his
the BF of first owner. labor; or
2. Demand indemnity
Art. 474. One who in good faith employs the for the material.
material of another in whole or in part in Good faith
order to make a thing of a different kind, 1. Receive payment 1. Appropriate new
shall appropriate the thing thus for value of his thing and pay the
transformed as his own, indemnifying the work; or maker for the
owner of the material for its value. 2. Appropriate the work; or
new thing and 2. Receive payment
pay the owner of for value of
If the material is more precious than the materials for its materials.
transformed thing or is of more value, its value.
owner may, at his option, appropriate the Bad faith Good faith

UNIVERSITY OF SANTO TOMAS 214

2021 GOLDEN NOTES
 Civil Law
1. Lose the new thing 1. Appropriate the QUIETING OF TITLE
and pay damages new thing
to owner of the without paying It is a proceeding in equity, the purpose of which
materials; or and receive is the declaration of the invalidity of a claim on a
2. Pay value of damages; or title or the invalidity of an interest in property
materials and adverse to that of the plaintiff, and thereafter to
damages to owner NOTE: Not free the plaintiff and all those claiming under
of the materials. available if the him from any hostile claim thereon. (Pineda,
new thing is 2009)
more valuable
than materials Quieting of title is a common law remedy for the
for scientific removal of any cloud upon, doubt, or uncertainty
or artistic affecting title to real property. Whenever there
reasons. is a cloud on title to real property or any interest
in real property by reason of any instrument,
2. Receive payment record, claim, encumbrance, or proceeding that
for the value of is apparently valid or effective, but is, in truth
materials and and in fact, invalid, ineffective, voidable, or
damages unenforceable, and may be prejudicial to said
title, an action may be brought to remove such
Adjunction, mixture, and specification cloud or to quiet the title. In such action, the
distinguished competent court is tasked to determine the
respective rights of the complainant and the
ADJUNCTIO MIXTURE SPECIFICATIO other claimants, not only to place things in their
N N proper places, and make the claimant, who has
Involves at Involves May involve no rights to said immovable, respect and not
least two at least one thing (or disturb the one so entitled, but also for the
things. two more) but form benefit of both, so that whoever has the right
things. is changed, will see every cloud of doubt over the property
Accessory Co- Accessory dissipated, and he can thereafter fearlessly
follows the ownershi follows the introduce any desired improvements, as well as
principal. p results. principal. use, and even abuse the property. (Phil-Ville
Things joined Things The new object Development and Housing Corporation v. Maximo
retain their mixed or retains or Bonifacio, et al., G.R. No. 167391, June 8, 2011)
nature. confused preserves the
may nature of the Nature of the action to quiet title
either original object.
retain or Significantly, suits to quiet title are characterized
lose their as proceedings quasi in rem. Technically, they
respective are neither in rem nor in personam. In an action
natures. quasi in rem, an individual is named as
defendant. However, unlike suits in rem, a quasi
Art. 475. In the preceding articles, in rem judgment is conclusive only between the
sentimental value shall be duly parties. A proceeding quasi in rem is one brought
appreciated. against persons seeking to subject the property
of such persons to the discharge of the claims
Sentimental Value assailed. (Portic v. Cristobal, G.R. No. 156171, 22
April 2005)
The value placed by the owner on the property
is more than the actual value by reason of some Classifications of actions
sentiments like, love, affection, respect and
honor. 1. Remedial action – one to remove cloud on
title; and
2. Preventive action – one to prevent the
casting of a (threatened) cloud on the title.

215
 Property
Scope of the action to quiet title
Only real properties can be subject of an action
for quieting of title. (Pineda, 2009)
Requisites for an action to quiet title (LCDR)
1. Plaintiff must have a Legal or equitable title
to, or interest in the real property which is
the subject matter of the action;
NOTE: He need not be in possession of said
property. (NCC, Art.477)
2. There must be Cloud in such title;
3. Such cloud must be Due to some (IRCEP)
a. Instrument;
b. Record;
c. Claim;
d. Encumbrance; or
e. Proceeding which is apparently valid
but is in truth invalid, ineffective,
voidable or unenforceable, and is
prejudicial to the plaintiff’s title; and
4. Plaintiff must
a. Return to the defendant all benefits he
may have received from the latter; or
b. Reimburse him for expenses that may
have redounded to his benefit.
Reasons for quieting of title
1. Prevent future litigation on the ownership of
the property;
2. Protect true title & possession;
3. To protect the real interest of both parties;
and
4. To determine and make known the precise
state of title for the guidance of all.
Persons who may file an action to quiet title
1. Registered owner;
2. A person who has an equitable right or
interest in the property; or
3. The State.
Q: Lim filed in the RTC in Cebu City a petition
for the reconstitution of the owner's
duplicate copy of OCT No. RO-9969-(O-
20449), alleging that said OCT had been lost
during World War II by his mother, Luisa,
who acquired title to it by virtue of a deed of
sale, albeit unregistered. On account of the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Oños' opposition, and upon order of the RTC,
Lim converted the petition for reconstitution
into a complaint for quieting of title. The
Oños now contend that this action for
quieting of title should be disallowed
because it constituted a collateral attack on
OCT No. RO-9969-(O-20449). Is their
contention correct?
A: NO. The attack is direct when the objective is
to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is
indirect or collateral when, in an action to obtain
a different relief, an attack on the judgment is
nevertheless made as an incident thereof. The
averments readily show that the action was
neither a direct nor a collateral attack for Lim
was asserting only that the existing title
registered in the name of the petitioners'
predecessors had become inoperative due to the
conveyance in favor of Lim's mother, and
resultantly should be cancelled. (Oño vs Lim, G.R.
No. 154270, March 09, 2010)
Art. 476. Whenever there is a cloud on title
to real property or any interest therein, by
reason of any instrument, record, claim,
encumbrance or proceeding which is
apparently valid or effective but is in truth
and in fact invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to
said title, an action may be brought to
remove such cloud or to quiet the title.
An action may also be brought to prevent a
cloud from being cast upon title to real
property or any interest therein.
Rules in actions for quieting of title
1. These put an end to vexatious litigation in
respect to property involved; plaintiff
asserts his own estate & generally declares
that defendant’s claim is without foundation;
2. Remedial in nature;
3. Not suits in rem nor personam but suits
against a particular person or persons in
respect to the res (quasi in rem);
4. May not be brought for the purpose of
settling a boundary disputes;
5. Applicable to real property or any interest
therein;
6. An action to quiet title brought by the
person in possession of the property is
IMPRESCRIPTIBLE; and
7. If he is not in possession, he must invoke his
remedy within the prescriptive period as
216
 Civil Law
follows; Plaintiff asserts own Plaintiff declares his
a. Ordinary prescription- 10 years claim and declares own claim and title
b. Extraordinary prescription- 30 years. that the claim of the and at the same time
defendant is indicates the source
Requisites for existence of a cloud (ATP) unfounded and calls and nature of
on the defendant to defendant’s claim
1. There is an Apparently valid or effective justify his claim on pointing its defect
instrument; the property that and prays for the
same may be declaration of its
NOTE: They must appear valid or effective – determined by the validity.
and extraneous evidence is needed to prove court.
their invalidity or ineffectivity. Filed against whom
Against people who Against defendant who
2. But such instrument is in Truth: have claims; claims asserts claims based on
a. Invalid; are more general in an invalid instrument
b. Ineffective; nature (but not apparent).
c. Voidable;
d. Unenforceable; Action to quiet title cannot be availed until
e. Has been extinguished or terminated; or the donation has been first revoked
f. Has been barred by extinctive
prescription. The barangay traces its claim of ownership over
the disputed property to a valid contract of
3. Such instrument may be Prejudicial to the donation which is yet to be effectively revoked.
title. Such rightful claim does not constitute a cloud
on the supposed title of Edgardo over the same
Purpose of an action to remove cloud on title property removable by an action to quiet title.
(Dolar v. Brgy. Lublub, G.R. No. 152663, November
It is intended to procure the cancellation, or 18, 2005)
delivery of, release of an instrument,
encumbrance, or claim constituting a claim on Art. 477. The plaintiff must have legal or
plaintiff’s title, and which may be used to injure equitable title to, or interest in the real
or vex him in the enjoyment of his title. property which is the subject matter of the
action. He need not be in possession of said
Action to quiet title v. Action to remove cloud property.
on title
Indispensable Requirement for Action To
ACTION TO QUIET ACTION TO REMOVE Quiet Title
TITLE CLOUD ON TITLE
As to purpose For an action to quiet title or remove cloud on a
To put an end to To procure the title to stand, the plaintiff must have legal or
vexatious litigation in cancellation; delivery; equitable title to or interest in the subject real
respect to the release of an property. This requirement is indispensable, the
property involved. instrument, absence of which is fatal to the action. (Pineda,
encumbrance or claim, 2009)
which constitutes a
claim in plaintiff’s title, Legal title covers a situation when the owner is
and which may be used registered as the owner of the property.
to injure or to vex him Equitable title covers a situation when the
in his enjoyment of his person has the beneficial ownership of the
title. property. (Ibid.)
As to nature of the action
Remedial in nature, Preventive in nature, Art. 478. There may also be an action to
involving a present to remove a cloud quiet title or remove a cloud therefrom
adverse claim. which may be used when the contract, instrument or other
for future actions. obligation has been extinguished or has
As to nature of claims terminated or has been barred by extinctive

217
 Property
prescription.
PRESCRIPTION OR
NON-PRESCRIPTION OF ACTION
Prescriptive periods for bringing an action to
quiet title
1. Plaintiff in possession – Imprescriptible; or
2. Plaintiff not in possession –
a. 10 years (ordinary) or
b. 30 years (extra-ordinary).
Imprescriptibility of action to quiet title
It is imprescriptible if plaintiff is in possession. If
not, it prescribes within period for filing accion
publiciana or accion reinvidicatoria.
Laches
It is the failure or neglect, for unreasonable and
unexplained length of time, to do that which by
exercising due diligence, could or should have
been done earlier.
The negligence or omission to assert a right
within a reasonable time, warranting a
presumption that the party entitled to assert it
either has abandoned it or declined to assert it.
(Tijam v Sibonghanoy, G.R. No. L-21450, April 15,
1968)
An action filed within the period of limitations
may still be barred by laches. (NCC, Articles
1431, 1433 and 1437)
RUINOUS BUILDINGS AND TREES IN DANGER
OF FALLING
Art. 482. If a building, wall, column, or any
other construction is in danger of falling,
the owner shall be obliged to demolish it or
to execute the necessary work in order to
prevent it from falling.
If the proprietor does not comply with this
obligation, the administrative authorities
may order the demolition of the structure at
the expense of the owner, or take measures
to insure public safety.
If a building, wall, column or any other
construction is in danger of falling, the owner
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
must demolish the same to forestall the
possibility of causing death or harm to anyone,
or injury to property. (Pineda, 2009)
Art. 483. Whenever a large tree threatens to
fall in such a way as to cause damage to the
land or tenement of another or to travelers
over a public or private road, the owner of
the tree shall be obliged to fell and remove
it; and should he not do so, it shall be done
at his expense by order of the
administrative authorities.
CO - OWNERSHIP
Art. 484. There is co-ownership whenever
the ownership of an undivided thing or
right belongs to different persons.
In default of contracts, or of special
provisions, co-ownership shall be governed
by the provisions of this Title.
There is co-ownership whenever the ownership
of an undivided thing or right belongs to
different persons. (NCC, Art. 484) It is the right of
common dominion which two or more persons
have in a spiritual (or ideal) part of the thing
which is not physically divided.
CHARACTERISTICS OF
CO-OWNERSHIP IN GENERAL
1. Plurality of subjects or owners;
2. There is no mutual representation by the co-
owners;
3. It exists for the common enjoyment of the
co-owners;
4. There is a single object which is not
materially divided;
5. It has no distinct legal personality; and
6. It is governed first of all by the contract of
the parties; otherwise, by special legal
provisions, and in default of such provisions,
by the provisions of Title III of the New Civil
Code on co-ownership.
Legal effect of co-ownership
Co-ownership creates rights in favor of each one
of the co-owners with respect to the property
owned in common.
The rights of a co-owner can be viewed in two
senses:
1. His right over the thing owned in common is
218
 Civil Law
limited by the other co- owner’s the others for the
concomitant rights; or purpose of
2. His right over his ideal share or his prescription.
undivided interest over the same property; Prescription
the individual co-owner has absolute control
Prescription will Prescription will not
and ownership over his ideal share.
continue to run run among them.
among co-owners.
Requisites of co-ownership (PUS)
Co-ownership vs. Partnership
1. Plurality of owners;
2. Unity of object, which is an undivided thing
or right; and CO-OWNERSHIP ORDINARY
3. Each co-owner’s right must be limited only PARTNERSHIP
to his ideal Share of the physical whole. No legal personality Has legal
personality.
NOTE: By the very nature of co-ownership, a co- Can be created Can be created only
owner cannot point to any specific portion of the without the by contract, express or i
property owned in common as his own because formalities of a
his share remains intangible and ideal. (Spouses contract
Avila et al v. Spouses Barabat, GR. No. 141993, By contract or by By contract only.
May 17, 2006) will.
Agreement to exist No term limit is set
Rules to govern in co-ownership for more than 10 by law.
years is void.
1. Contracts; No mutual There is mutual
2. Special provision of law; and representation. representation.
3. Provisions of the civil code. Not dissolved by the Dissolved by death
death/incapacity of or incapacity of a
Co-ownership vs. Joint tenancy a co- owner. partner.
A co-owner can A partner cannot be
CO-OWNERSHIP JOINT OWNERSHIP dispose of his share substituted without
Tenancy in Joint Tenancy w/o the consent of the consent of the
common the others hence in a others.
As to the extent of ownership way a co- owner is
Each co-owner is the Each joint owner substituted.
owner of his own owns the whole Profits of a co-owner Profits may be
ideal share. thing. depend on his stipulated upon;
As to disposition proportionate share. (e.g., profit-
sharing agreements).
Each co-owner may Joint owner may not
dispose of his dispose of his own For collective For profit.
undivided share share without the enjoyment.
without the other co- consent of all the No public May be made in any
owners’ consent. rest, because he instrument is form except when
really has no ideal needed even if the real property is
share. object of the co- contributed.
As to transfer of shares in case of death ownership is an
immovable.
Upon the death of a Upon the death of a
co- owner, his ideal joint owner, his
Alienation of property co-owned
share goes to his share goes to the
heirs. other joint owners
When a co-owner sells the whole property as
by accretion.
his, the sale will affect only his own share but
As to minority or legal disability not those of the other co-owners’ who did not
In case of a minor The legal disability consent to the sale.
who is a co-owner, of one joint owner
this does not benefit benefits the others. A sale of the entire property by one co-owner

219
 Property
without the consent of the other co-owners is
not null and void but affects only his undivided
share and the transferee gets only what would
correspond to his grantor in the partition of the
thing owned in common. (Paulmitan v. CA, G.R.
No. 51584, November 25, 1992)
Q: Is there such a thing as perpetual co-
ownership?
be void. (NCC, Art. 485, par. 1) Consequently, in
order to determine the share of the co-owners in
the benefits and charges, we must first
determine their respective interests in the co-
ownership.
Interests are presumed equal, unless the
contrary is proved. (NCC, Art. 485, par. 2)

A: NO. Any of the co-owners may demand SOURCES OF CO-OWNERSHIP (LOST-C²)

partition any time.
1. Law – e.g. Easement of party walls (NCC, Art.
No co-owner ought to be compelled to stay in a
658); co-ownership between a man and a
co- ownership indefinitely. He may insist the
woman capacitated to marry each other (Art.
partition of the property any time. Such action to
147, FC); between a man and a woman not
demand for partition does not prescribe.
capacitated to marry each other (Art. 148,
(Patricio v. Dario, G.R. No. 170829, November 20,
FC);
2006)
2. Occupancy – e.g. When two persons gather
forest products or catch a wild animal;
A co-owner has a right to freely sell or dispose
3. Succession – e.g. Heirs of undivided property
his undivided share of interest but has no right
before partition;
to sell a divided or definite part of a real estate
4. Testamentary (or mortis causa) / Donation
owned in common. (Lopez v. Illustre,G.R. No.
inter vivos – e.g. Where the donor prohibits
2426, January 24, 1906; Torres vs. Lapinid, G.R.
partition of the property for a certain period
No. 187987, November 26, 2014)
of time;
5. Contract; or
In a property co-owned by the compulsory heirs,
6. By Chance or fortuitous event – e.g. Hidden
any act tantamount to partition such as
treasure
identifying their shares and constructing their
respective houses automatically terminates co-
NOTE: One who is merely related by affinity to
ownership. (Avila v. Sps. Arabat, G.R. No.141993,
the decedent does not become a co-owner of the
March 17, 2006)
latter’s property
Duration of the co-ownership (2000, 2002,
Q: Hilaria Bagayas, an adoptive child, filed a
2008 BAR)
complaint against her siblings who excluded
her from inheriting from the estate of their
An agreement to keep the thing undivided for a
parents. She asked to include her as a
certain period of time, not exceeding ten years,
registered owner to the extent of one-third of
shall be valid. This term may be extended by a
the lands covered therein; citing Section 108
new agreement.
of PD No. 1529 or the “Property Registration
Decree”. In an earlier complaint, she asked
A donor or testator may prohibit partition for a
for the annulment of a Deed of Absolute Sale
period which shall not exceed twenty years (in
in favor of her brothers wherein the RTC
relation to NCC, Art. 1083).
found otherwise. They found that the lands
where transferred to the brothers by the
Neither shall there be any partition when it is
father’s execution of the deed of sale before
prohibited by law. (NCC, Art. 494)
he died. Is the dismissal of the earlier
complaint on the ground that it is in the
Share of the co-owners in the benefits and
nature of a collateral attack on the
charges arising from the co-ownership
certificates of title constitutes a bar to a
subsequent petition under Section 108 of PD
The share of the co-owners in the benefits and
No 1529?
charges arising from the co-ownership shall be
proportional to their respective interests and
A: It does not. Section 108 of PD No. 1529 is
any stipulation in a contract to the contrary shall
used only for contemplating corrections or

UNIVERSITY OF SANTO TOMAS 220

2021 GOLDEN NOTES
 Civil Law
insertions of mistakes which are only clerical
but certainly not controversial issues. Although
Hilaria Bagayas was able to prove that she is a
legally adoptive child, the action is not proper.
As her petition was of an annulment of sale and
partition. She must first prove that she is a co-
owner of the estate and conveyance of her lawful
shares. However, she failed to do so. As regards
to her citing of Section 108 of PD No. 1529, it
was improper as her intent for using it is as a
mode of directly attacking the certificates of title
issued to the Bagayas brothers. It was ruled that
it was not a direct attack, therefore cannot be
used. The complaint is not covered by the
intention of the decree. (Bagayas v. Bagas, G.R.
Nos. 187308 & 187517, September 18, 2013)
Art. 486. Each co-owner may use the thing
owned in common, provided he does so in
accordance with the purpose for which it is
intended and in such a way as not to injure
the interest of the co-ownership or prevent
the other co-owners from using it according
to their rights. The purpose of the co-
ownership may be changed by agreement,
express or implied.
RIGHT OF CO-OWNERS
General rights of each co-owner as to the
thing owned in common (USA-COPE-P)
1. To Use the thing according to the purpose
intended provided that:
a. It is without prejudice to the interest of
the co-ownership; and
b. Without preventing the use of other co-
owners. (NCC, Art. 486)
NOTE: The purpose of the co-ownership may
be changed by an agreement, express or
implied.
2. To Share in the benefits in proportion to his
interest, provided the charges are borne in
the same proportion (NCC, Art. 485);
NOTE: A contrary stipulation is void. Hence,
benefits cannot be stipulated upon by the co-
owners.
3. Each co-owner may bring an Action for
ejectment (NCC, Art. 487);
NOTE: Action for ejectment covers; forcible
entry, unlawful detainer, accion publiciana,
221
quieting of title, accion reivindicatoria, and
replevin.
4. To Compel other co-owners to contribute to
expenses for preservation of the thing (NCC,
Art. 488) and to the taxes;
5. To Oppose to any act of alteration (NCC, Art.
491) even if beneficial to the co-owners;
6. To Protect against acts of majority which are
prejudicial to the minority (NCC, Art. 492,
par. 3);
7. To Exercise legal redemption;
8. To ask for Partition (NCC, Art. 494);
9. Right to exempt himself from obligation of
paying necessary expenses and taxes by
renouncing his share in the pro-indiviso
interest; but cannot be made if prejudicial to
co-ownership (NCC, Art.488);
10. Right to make repairs for preservation of
things can be made at will of one co-owner;
receive reimbursement therefrom; notice of
necessity of such repairs must be given to
co- owners, if practicable (NCC, Art.489);
11. Right to full ownership of his part and fruits.
(NCC, Art. 493);
12. Right to alienate, assign or mortgage own
part; except personal rights like right to use
and habitation (NCC, Art.493);
13. Right of pre-emption;
14. Right to be adjudicated thing (subject to
right of others to be indemnified); and
15. Right to share in proceeds of sale of thing if
thing is indivisible and they cannot agree
that it be allotted to one of them. (NCC,
Art.498)
Duties/liabilities of co-owners
1. Share in charges proportional to respective
interest; stipulation to contrary is void;
2. Pay necessary expenses and taxes – May be
exercised by only one co-owner;
3. Pay useful and luxurious expenses – If
determined by majority;
4. Duty to obtain consent of all if thing is to be
altered even if beneficial; resort to court if
non-consent is manifestly prejudicial;
5. Duty to obtain consent of majority with
regards to administration and better
enjoyment of the thing; controlling interest;
court intervention if prejudicial –
Appointment of administrator;
6. No prescription to run in favor of a co-owner
as long as he recognizes co-ownership;
 Property
Requisites for acquisition through
prescription: A suit for ejectment CANNOT be brought by one
a. He has repudiated through co-owner against another co-owner, since the
unequivocal acts; latter also has a right of possession; the only
b. Such act of repudiation is made effect of the action will be to obtain recognition
known to other co-owners; of the co-ownership.
c. Evidence must be clear and
convincing RIGHT TO PROPERTY OWNED IN COMMON
vs. FULL OWNERSHIP OVER
7. Co-owners cannot ask for physical division if HIS/HER IDEAL SHARE
it would render thing unserviceable; but can
terminate co-ownership;
1. Right to property owned in common
8. After partition, duty to render mutual
accounting of benefits and reimbursements
NOTE: Each co-owner is granted the right to
for expenses.
use the property owned in common for the
purpose for which it is intended.
Rights of a co-owner to third parties
Two restrictions in the enjoyment of this
1. Assignees or creditors of the co-owners may
right:
take part in the division of the thing owned
a. The co- ownership shall not be
in common and object to it being effected
injured; and
without their concurrence, but they cannot
b. The exercise of such right shall not
impugn any partition already executed; and
prevent the other co- owners from
using the property according to their
XPN: If there has been fraud or it was made
own rights.
notwithstanding their formal opposition
presented to prevent it, without prejudice
2. Full ownership over his/her ideal share
to the right of the debtor or assignor to
maintain its validity. (NCC, Art. 497)
NOTE: A co-owner has full ownership of his
share (undivided interest) and the fruits and
2. Non-intervenors – Retain rights of mortgage
benefits arising therefrom. Being the full owner
and servitude and other real rights and
thereof, he may alienate, assign or mortgage it.
personal rights belonging to them before
He can also substitute another person in the
partition was made.
enjoyment of his share, except only when
personal rights are involved.
Any of the co-owners may bring an action in
ejectment
Q: Melecio Heirs inherited a residential lot,
ancestral house and two other structures
One of the co-owner’s action for ejectment
erected thereon, the administration and
against a defendant is deemed to be instituted
management of which were left to the care of
for the benefit of all co-owners of the property.
Erna who was then residing in their ancestral
(Resuena v. CA, G.R. No. 128338, March 28, 2005)
home. The Melecio Heirs purportedly
executed a notarized Special Power of
Consent of the co-owners is not required to
Attorney (SPA) authorizing Erna to apply for
bring an action for ejectment
a loan with RBCI and mortgage the subject
properties. Erna defaulted in the loan
The law does not require that consent of all the
payment causing RBCI to extrajudicially
co- owners must be first secured before one of
foreclose the mortgaged properties.
them can bring an action for ejectment. If the
demanded RBCI to release the subject
case does not prosper:
properties from the coverage of Erna's loan
obligation to the extent of their shares and
GR: The other co-owners are NOT bound by the
refused to vacate the premises. RBCI applied
judgment.
for and was issued a writ of possession. The
Melecio Heirs filed a complaint in court
XPN: If they were also served with summons,
alleging that the SPA submitted by Erna was
even as unwilling plaintiffs.
spurious and their signatures appearing

UNIVERSITY OF SANTO TOMAS 222

2021 GOLDEN NOTES
 Civil Law
thereon were falsified. Is the mortgage of the
entire property valid?
A: NO. Erna did not validly mortgage the entire
property. While Erna, as herself a co-owner, by
virtue of Article 493 of the Civil Code, had the
right to mortgage or even sell her undivided
interest in the said properties, she, could not,
however, dispose of or mortgage the subject
properties in their entirety without the consent
of the other co-owners. The settled rule is that
persons constituting a mortgage must be legally
authorized for the purpose. In the present case,
while Erna appears to be a co-owner of the
mortgaged properties, she made it appear that
she was duly authorized to sell the entire
properties by virtue of the notarized SPA. (Rural
Bank of Cabadbaran, Inc. v. Jorgita A. Melecio-Yap
et. al, G.R. No. 178451, July 30, 2014)
Q: Vda. Rosario is the registered owner of 4
parcels of land, which she mortgaged to and
foreclosed. Upon the expiration of the
redemption period, she asked the assistance
of Bobby Tan. Thereafter, she sold the lands
to him. The children of Vda. Rosario said they
are co-owners as they are inheritors of their
deceased father, whose approval was needed
to dispose the subject properties. Are the
subject properties of conjugal in nature, thus
making the children of Vda. Rosario co-
owners?
A: NO. SC ruled that Vda. Rosario is the sole
owner of the parcel of lands. Conjugal
partnership terminates upon the death of one
spouse. Vda. Rosario was already a widow when
she sold the subjected lands to Bobby Tan.
Therefore, at the time of the sale, Vda. Rosario, a
widow, can now dispose the properties on her
own volition. (Bobby Tan v. Grace Andrade, G.R.
No. 171904, August 07, 2013)
Q: Spouses Roque Magsano and Susana
Capelo (Sps. Magsano), the parents of Norma,
et. al., executed in favor of PSLB a Real Estate
Mortgage over their parcel of land as security
for their loan. Sps. Magsano defaulted in their
obligation, causing the extra-judicial
foreclose of the mortgaged property in which
PSLB emerged as the highest bidder. It
subsequently sold the subject land to Sps.
Manuel. Thereafter, Sps. Magsano refused to
vacate the premises despite PSLB’s demands;
hence, the latter applied for and was granted
a writ of possession and demolition. Norma
223
et. al. sought to annul the Real Estate
Mortgage. They averred that Roque Magsano
passed away prior to the execution of the
Real Estate Mortgage; hence, the mortgage
was void, and could not have conferred any
right to PSLB which it could pass to Sps.
Manuel. PSLB and the heirs of Sps. Manuel
denied knowledge of the death of Roque, and
averred that petitioners have no cause of
action to seek the annulment of the Real
Estate Mortgage since they were not parties
thereto.
1. Is the Real Estate Mortgage void?
2. Are Sps. Manuel purchasers in good faith?
A:
1. NO. The validity of the Mortgage in favor of
PSLD should be limited only to the Susana’s
portion. At the time the Mortgage was
constituted, Roque was already deceased.
Upon Roque’s death, the conjugal
partnership between him and Susana was
dissolved. Thus, an implied co-ownership
arose among Susana and the other heirs of
Roque with respect to his share in the
assets of the conjugal partnership pending
liquidation.
While she herself as co-owner had the right
to mortgage or even sell her undivided
interest in the subject property, she could
not mortgage or otherwise dispose of the
same in its entirety without the consent of
the other co-owners.
2. NO. While the rule is 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,
where the land sold is in the possession of a
person other than the vendor, as in this
case, the purchaser must go beyond the
certificate of title and make inquiries
concerning the actual possessor. (Norma C.
Magsano, et. al. v. Pangasinan Savings &
Loan Bank, G.R. No. 215038, October 17,
2016)
Co-owner’s right to use the property owned
in common
Each co-owner may use the thing owned in
common, provided he does so in accordance
with the purpose for which it is intended and in
 Property
such a way as not to injure the interest of the co- Transitory in Permanent
ownership or prevent the other co-owners from character.
using it according to their rights. Does not affect the Affects or relates to
substance or form. the substance or
NOTE: If one co-owner alone occupies the entire essence of the
house without opposition from the other co- thing.
owners, and there is no lease agreement, the
In relation to the Require the
other co-owners cannot demand the payment of right of a co-owner, consent of all co-
rent.
they require the owners.
consent of the
Rules on determination of the purpose of the majority who
property
represents the
controlling interest.
1. Purpose stipulated in the agreement, express
Can be exercised by Must be exercised
or implied;
the co- by the co-owners
2. In default thereof, its purpose ordinarily
owners through themselves.
adapted based on its nature; or
other persons.
3. In default thereof, the use for which it was
formerly intended.
Effect of alteration without the express or
implied consent of co-owners
ACTS OF ALTERATION
The co-owner who makes the alteration shall:
Alteration (2008 BAR)
1. Lose what he has spent;
It is a change which is more or less permanent, 2. Be obliged to demolish the improvements
which changes the use of the thing and which done; and
prejudices the condition of the thing or its 3. Pay for the loss and damages the
enjoyment by the others. (Paras, 2008) community property or other co-owners
may have suffered.
Alteration includes the act by virtue of which a
co- owner changes the thing from the state in NOTE: Estoppel will operate against the co-
which the others believe it should remain. It is owners who were aware of the execution of the
not limited to material charges. acts of alteration, but did not object thereto.
They are deemed to have given their implied
Acts of administration v. Acts of alteration consent.

ACTS OF ACTS OF Conversion

ADMINISTRATION ALTERATION
Refers to the Acts, by virtue of
enjoyment, which, a co-owner,
exploitation, in opposition to the
alteration of the expressed or tacit
thing which do not agreement of all
affect its substance, the co- owners, and
form, or purpose. in violation of their
will, changes the
thing from the state
in which the others
believe it would
remain, or
withdraws it from
the use to which
they believe it is
intended.
It is the act of using or disposing of another’s
property without lawful authority to do so in a
manner different from that with which a
property is held by the trustees to whom the
owner had entrusted the same. It is not
necessary that the use for which the property is
given be directly to the advantage of the person
misappropriating or converting the property of
another.
RIGHT TO PARTITION
Rights of co-owners as to the ideal share of
each (FARTS)
1. Each has Full ownership of his part and of
his share of the fruits and benefits;

UNIVERSITY OF SANTO TOMAS 224

2021 GOLDEN NOTES
 Civil Law
2. Right to Alienate, dispose or encumber;
3. Right to Renounce part of his interest to
reimburse necessary expenses incurred by
another co-owner;
4. Right to enter into Transaction affecting his
ideal share; and
NOTE: The transaction affects only his
ideal share and not that of the other co-
owners.
5. Right to Substitute another person in its
enjoyment, except when personal rights are
involved.
NOTE: Personal rights or jus in personam
is the power belonging to one person to
demand from another, as a definite passive
subject- debtor, the fulfillment of a
prestation to give, to do, or not to do.
(Paras, 2008)
Right to demand partition
GR: Every co-owner has the right to demand
partition. (NCC, Art. 494) (2000, 2002, 2008
BAR)
XPNs: (EASI-PAUL)
1. When partition would render the thing
Unserviceable;
2. When the thing is essentially Indivisible;
3. When partition is prohibited by Law by
reason of their origin or juridical nature -
e.g. party walls and fences;
4. When the co-owners Agree to keep the
property undivided for a period of time but
not more than 10 years;
5. When partition is Prohibited by the
transferor (donor/testator) but not more
than 20 years (NCC, Art. 1083);
6. When a co-owner possessed the property
as an Exclusive owner for a period
sufficient to acquire it through prescription
(acquisitive prescription);
NOTE: 10 years ordinary prescription, 30
years extra-ordinary partition.
7. When co-owners may agree that it be
Allotted to one of them reimbursing the
others; and
8. If they cannot agree, they may Sell the thing
and distribute the proceeds.
NOTE: The right to ask for partition CANNOT be
waived or renounced permanently. Such waiver
or renunciation is void.
225
Q: X, Y, Z are siblings who inherited a 1O-
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 9th 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. (2015
Bar)
A: Y and Z ARE PARTLY CORRECT. If the co-
owners agree to keep the thing undivided, such
agreement shall govern provided the period
shall not exceed ten (10) years. In this case, the
agreement to keep the thing undivided shall be
valid at the most for 10 years. (NCC, Art. 494)
When partition is not allowed
1. When indivision within 10 years is
stipulated by the co-owners;
2. When co-ownership is imposed as a
condition in a donation or in a last will and
testament;
3. When from the nature of the property in
common, it cannot just be divided (without
following the requisites of the law) such as
conjugal property and party walls;
4. When partition will render the property
unserviceable for the use and purpose for
which it is intended; and
5. When the issue of ownership had not been
definitely resolved, it is premature to effect
a partition of the properties. (Pineda, 2009)
Prescription
Q: May prescription run against a co-owner?
(2000, 2002, 2008 BAR)
GR: As long as the co-owner expressly or
impliedly recognizes the co-ownership,
prescription cannot run in favor of or against
him.
Reason: Possession of a co-owner is like that of
a trustee and shall not be regarded as adverse
to the other co-owners but in fact is beneficial
to all of them. Acts considered adverse to
strangers may not be considered adverse
insofar as co-owners are concerned. (Salvador
v. CA, G.R. No. 109910, April 5, 1995)
XPN: Co-owner's possession may be deemed
 Property
adverse to the cestui que trust or the other co-
owners provided the following elements must
concur:
1. That he has performed unequivocal acts of
repudiation amounting to an ouster of the
cestui que trust or the other co- owners;
2. That such positive acts of repudiation have
been made known to the cestui que trust or
the other co-owners; and
3. That the evidence thereon must be clear
and convincing. (Salvador v. CA, G.R. No.
109910, April 5, 1995)
NOTE: Prescription begins to run from the time
of repudiation.
Example of acts of repudiation: filing of an
action to:
1. Quiet title; or
2. Recovery of ownership.
XPN to XPN: Constructive trusts can prescribe.
Express trust cannot prescribe as long as the
relationship between trustor and trustee is
recognized. (Paras, 2008)
Q: The two lots owned by Alipio were
inherited by his nine children, including
Maria, upon his death. Pastor, Maria’s
husband, filed a complaint for quieting of
title and annulment of documents against
the spouses Yabo, alleging that he owned a
total of 8 shares of the subject lots, having
purchased the shares of seven of Alipio's
children and inherited the share of his wife,
Maria, and that he occupied, cultivated, and
possessed continuously, openly, peacefully,
and exclusively the parcels of land. He
prayed that he be declared the absolute
owner of 8/9 of the lots. His co-heirs then
instituted an action to partition the lots. Did
Pastor acquire by prescription the shares of
his other co-heirs or co-owners?
A: NO. The only act which may be deemed as
repudiation by Pastor of the co-ownership over
the lots is his filing of an action to quiet title.
The period of prescription started to run only
from this repudiation. However, this was tolled
when his co-heirs, instituted an action for
partition of the lots. Hence, the adverse
possession by Pastor being for only about six
months would not vest in him exclusive
ownership of his wife's estate, and absent
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
acquisitive prescription of ownership, laches
and prescription of the action for partition will
not lie in favor of Pastor. (Salvador v. CA, G.R.
No. 109910, April 5, 1995)
Notice of the proposed partition to creditors
and/or assignees
The law does not require that a notification be
given but:
1. If notice is given – it is their duty to appear
to concur /oppose, otherwise creditor’s
claims are deemed waived; and
2. If no notice is given – creditors and/or
assignees may still question the partition
made on ground of fraud or for being
prejudicial to existing rights.
NOTE: Third persons who have rights attached
to the community property before its partition,
shall retain such rights even after the partition
of the property. The protection granted by law
applies to both real and personal rights.
(Pineda, 2009)
Impugning partition already implemented
GR: A partition already executed or
implemented CANNOT be impugned.
XPNs:
1. In case of fraud, regardless of notification
and opposition; or
2. In case partition was made over their
objection even in absence of fraud. (NCC,
Article 497)
Remedies available to co-owners where the
co- owned property cannot be physically
divided without rendering it useless or
unserviceable (NCC, Art. 498)
1. Agree on the allotment of the entire
property to one of them who in turn will
indemnify the others for their respective
interests; or
2. Sell the property and distribute the
proceeds to the co-owners. (Pineda, 2009)
Rights of third persons that are not affected
by partition (MRS-P)
1. Rights of
a. Mortgage;
b. Servitude; and
c. Any other Real rights existing before
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 Civil Law
partition.
2. Personal rights pertaining to third persons
against the co-ownership. (NCC, Art. 499)
Illustration: A, B and C where co-owners of
parcel of land mortgaged to M. If A, B, and C
should physically partition the property, the
mortgage in M’s favor still covers all the three
lots, which, together, formerly constituted one
single parcel. If A alone had contracted an
unsecured obligation, he would of course be the
only one responsible. (Paras, 2008)
Rights of third persons in case of partition
(NCC, Art. 499)
1. The partition of a thing owned in common
shall not prejudice third persons, who shall
retain the rights of mortgage, servitude or
any other real rights belonging to them
before the division was made; and
2. Personal rights pertaining to them against
the co-ownership shall also remain in force,
notwithstanding the partition.
RIGHT TO CONTRIBUTION FOR EXPENSES
Expenses which the co-owners can be
compelled to contribute
Only necessary expenses. Useful expenses and
those for pure luxury are not included.
Necessary expenses, useful expenses, and
expenses of pure luxury defined
Are those made for the
preservation of the thing, or
those without which the thing
would deteriorate or be lost, or
Necessary those that augment the income
Expenses of the things upon which are
expended, or those incurred for
cultivation, production, upkeep,
etc. (Mendoza v. De Guzman, G.R.
No. L-28721 October 5, 1928)
Incurred for the preservation of
the realty in order that it may
Useful
produce the natural, industrial,
Expenses
and civil fruits it ordinarily
produces.
Adds value to the thing only for
certain persons in view of their
Ornamental
particular whims, neither
Expenses
essential for preservation nor
useful to everybody in general.
227
Acts of preservation (NCC, Art.489)
Acts of preservation may be made in the
property of the co-owners at the will of one of
the co- owners, but he must, if practicable, first
notify the others of the necessity of such
repairs.
Acts requiring the majority consent of the
co- owners
1. Management;
2. Enjoyment; and
3. Improvement or embellishment.
Remedy of the minority who opposes the
decision of the majority in co-ownership
Minority may appeal to the court against the
majority’s decision if the same is seriously
prejudicial.
There is no majority unless the resolution is
approved by the co-owners who represent the
controlling interest in the object of the co-
ownership. [NCC, Art. 492(2)]
WAIVER
A co-owner may opt not to contribute to the
expenses for the preservation of the
property
GR: YES, by renouncing his undivided interest
equal to the amount of contribution.
XPN: If the waiver or renunciation is prejudicial
to the co-ownership, otherwise he cannot
exempt himself from the contribution. (NCC,
Art. 488)
NOTE: The value of the property at the time of
the renunciation will be the basis of the portion
to be renounced.
Failure or refusal of a co-owner to
contribute pro rata to his share in expenses
NOT tantamount to renunciation
There must be an express renunciation,
otherwise he is required to reimburse the
others for the expenses they incurred.
Effect of renunciation
Since renunciation is intended as payment for
expenses already made, it is in nature of dacion
en pago - there is a change in the object of the
 Property
obligation (i.e. from sum of money to interest in
the co-ownership). Consequently, the consent
of the other co-owner who made the advances
is necessary. (Tolentino, 2013)
Renunciation CANNOT be made without the
consent of any unpaid creditor. This is because
it is in effect a novation by substitution. It will
prejudice the rights of the unpaid creditor.
RIGHT OF REDEMPTION OF
CO-OWNERS SHARE
The shares of all or any other co-owner if sold
to a third person may be redeemed by a co-
owner.
If two or more co-owners want to redeem, they
may do so in proportion to the shares they
respectively have.
Effect of redemption by a co-owner
Redemption of the whole property by a co-
owner does not vest in him sole ownership over
said property. Redemption within the period
prescribed by law will inure to the benefit of all
co-owners. Hence, it will not put an end to
existing co-ownership. (Mariano v. CA, GR. No.
101522, May 28, 1993)
Right of legal redemption cannot be
exercised when there is no co-ownership
Once the property is subdivided and distributed
among the co-owners, the community ceases to
exist and there is no more reason to sustain any
right of legal redemption. The exercise of this
right presupposes the existence of a co-
ownership at the time the conveyance is made
by a co-owner and when it is demanded by the
other co-owners. (Vda. de Ape v. CA, G.R. No.
133638, April 15, 2005)
A co-owner cannot alienate the shares of his
other co-owners
While a co-owner has the right to freely sell and
dispose of his undivided interest, nevertheless,
as a co-owner, he cannot alienate the shares of
his other co-owners. The disposition made by
Villaner affects only his share pro indiviso, and
the transferee gets only what corresponds to
his grantor's share in the partition of the
property owned in common. The property
being conjugal, Villaner's interest in it is the
undivided one-half portion. When his wife died,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
her rights to the other half was vested to her
heirs including Villaner and their 8 legitimate
children. (Acabal v. Acabal, G.R. No. 148376,
March 31, 2005)
Status of the sale by a co-owner
A sale of the entire property by one co-owner
without the consent of the other co-owners is
valid. However, it will only affect the interest or
share in the undivided property of the co-
owner who sold the same. The remedy is an
action for partition under Rule 69 of the
Revised Rules of Court, the division of the
common property. (Acabal v. Acabal, G.R. No.
148376, March 31, 2005)
TERMINATION/EXTINGUISHMENT
Extinguishment of Co-ownership (CALSTEP)
1. Confusion or merger of the rights in one co-
owner;
2. Acquisitive prescription in favor of a third
person or a co-owner who repudiates;
3. Loss or destruction of thing co-owned;
4. Sale of thing co-owned;
5. Termination of period agreed upon;
6. Expropriation; or
7. Judicial or extra-judicial Partition.
EFFECT OF PARTITION
1. It confers upon the co-owner exclusive title
over the property adjudicated to him (NCC,
Art. 1091); and
2. Possession of the co-owner over the
property adjudicated to him shall be
deemed exclusive for the period during
which the co-possession lasted. (NCC, Art.
543) In other words, it is deemed
continuous.
3. By judicial proceedings. (NCC, Art. 496)
Rule in case the co-owners cannot agree in
the partition
1. If realty is involved, an action for partition
(Rule 69, Rules of Court) against the co-
owners may be filed; and
2. In case of personality and actual partition
could not be made, it may be sold under the
discretion of the court and the proceeds be
divided among the owners after deducting
the necessary expenses.
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 Civil Law
Rule in case the co-owners cannot agree as
to the partition of a thing which is
essentially indivisible
1. Firstly, the property may be allotted to one
of the co-owners, who shall indemnify the
other; or
2. Otherwise, it shall be sold, and the proceeds
distributed. (NCC, Art. 498)
Acts of co-ownership
the necessary expenses.
Rule in case the co-owners cannot agree as
to the partition of a thing which is
essentially indivisible
1. Firstly, the property may be allotted to one
of the co-owners, who shall indemnify the
other; or
2. Otherwise, it shall be sold, and the proceeds
distributed. (NCC, Art. 498)

1. Ejectment – any of the co-owners may file Acts of co-ownership

such action.
2. Administration – majority of the co- owners 1. Ejectment – any of the co-owners may file
shall decide. such action.
3. Improvements – majority of the co-owners 2. Administration – majority of the co- owners
shall take part. shall decide.
4. Alteration – all of the co-owners must agree. 3. Improvements – majority of the co-owners
5. Preservation – any of the co-owners can do shall take part.
so. 4. Alteration – all of the co-owners must agree.
5. Preservation – any of the co-owners can do
RIGHTS AGAINST INDIVIDUAL CO-OWNERS so.
IN CASE OF PARTITION
POSSESSION
Obligations of co-owners upon partition
(WARD) It refers to the holding of a thing or the
enjoyment of a right. (NCC, Art. 523) (2007
1. Mutual Accounting for benefits received, BAR)
fruits and other benefits (in relation to Art.
1087 of NCC); Requisites of possession (EPAV)
2. Mutual Reimbursements for expenses;
3. Indemnity for Damages caused by reason of 1. Existence of the thing or right;
negligence/fraud; and Reciprocal Warranty 2. Possession in fact or holding or control of a
for defects of title and quality of the portion thing or right;
assigned to the co-owner. (NCC, Articles. 3. Animus possidendi or the deliberate
500-501) intention to possess; and
4. Possession is by Virtue of one’s own right,
PARTITION IN CASE CO-OWNERS either as an owner or as a holder.
CANNOT AGREE
Right TO Possession v. Right OF Possession
Partition is effected either by (1998 BAR):
Right TO Possession Right OF Possession
1. By agreement between the parties; or Jus possidendi Jus possessionis
2. By judicial proceedings. (NCC, Art. 496) An incident or An independent right,
attribute of separate from
Rule in case the co-owners cannot agree in ownership over a ownership.
the partition thing.
e.g. The owner of a e.g. The lessee of a
1. If realty is involved, an action for partition house is entitled to property, who is not
(Rule 69, Rules of Court) against the co- possess it. the owner thereof, is
owners may be filed; and entitled to possess it
2. In case of personality and actual partition for the period of the
could not be made, it may be sold under the lease.
discretion of the court and the proceeds be
divided among the owners after deducting Object of possession

229

GR: All things and rights susceptible of being
appropriated. (NCC, Art. 530)
XPNs:
1. Res communes;
2. Property of public dominion;
3. Easement; and
4. Prohibited by law.
Degrees of possession
1. Possession with no right or title
(Grammatical Degree) – Possessor knows
that his possession is wrongful.
e.g. possession by a thief.
2. With Juridical title (Juridicial Possession) –
Title is not one of ownership. Possession
peaceably acquired and will not ripen into
full ownership as long as there is no
repudiation of the concept under which
property is held.
e.g. possession of a tenant, depositary.
3. With Just title sufficient to transfer
ownership, but not from the true owner (Real
Possessory Right) – ripens to full ownership
by the lapse of time.
e.g. Possession of a buyer of a car
purchased from one who pretends to be the
owner.
4. With a title in fee Simple (Dominium
Possession) – Arises from ownership;
highest degree of possession; perfect
possession.
CLASSES OF POSSESSION
1. According to the name used as to its
existence
a. In one’s own name – possessor claims
the thing for himself. (NCC, Art. 524)
b. In the name of another – held by the
possessor for another; agent, subject
to authority and ratification; if not
authorized, negotiorum gestio. (NCC,
Art. 524)
i. Voluntary – by virtue of an
agreement; e.g. possession of an
agent.
ii. Legal – by virtue of law; e.g.
possession in behalf
incapacitated.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Property
2. According to the concept of possession
a. In the concept of an owner (en concepto
de dueno) – possessor, by his actions, is
believed by others as the owner,
whether he is in good or bad faith. (NCC,
Art. 525) Such possessor is presumed to
possess just title (NCC, Art. 540);
b. In the concept of a holder – possessor
holds it merely to keep or enjoy it, the
ownership pertaining to another; e.g.
usufructuary with respect to the thing
itself. (NCC, Art. 525)
NOTE: None of these holders may assert a
claim of ownership for himself over the
thing but they may be considered as
possessors in the concept of an owner, or
under a claim of ownership, with respect to
the right they respectively exercise over the
thing.
There can be possession in concept of both
owner and holder or in either.
3. According to the condition of the mind
(2008 BAR)
a. Possession in good faith – possessor is
not aware that there is in his title or
mode of acquisition a defect that
invalidates it (NCC, Art. 526); and
b. Possession In bad faith – possessor is
aware of the invalidating defect in his
own title. (NCC, Art. 526)
NOTE: Only personal knowledge of the flaw
in one’s title or mode of acquisition can
make him possessor in bad faith. It is not
transmissible even to an heir. Possession in
good faith ceases from the moment defects
in his title are made known to the
possessor.
4. According to extent of possession
a. Actual possession – occupancy in fact of
the whole or at least substantially the
whole property; and
b. Constructive possession – occupancy of
part, in the name of the whole, under
such circumstances that the law extends
the occupancy to the possession of the
whole.
Q: What is the doctrine of constructive
possession?
of A: The possession of a part is a possession of
the whole. To be considered in possession, one
230
 Civil Law
need not have actual or physical occupation of
every square inch of the property at all times.
(Habagat Grill v. DMC-Urban Property
Developer, Inc., G.R. No. 155110, March 31, 2005)
Requisites of constructive possession
1. Possessor was in actual possession of a
portion or part of the property;
2. Claim of ownership of the whole area;
3. Remainder of the area must not be in the
adverse possession of another person; and
4. Area claimed must be reasonable.
Possession vs. Occupation (2007 BAR)
POSSESSION OCCUPATION
Apply to properties Applies only to
whether with or property without an
without an owner. owner
Possession does not Occupation confers
confer ownership. ownership.
There can be There can be no
possession without occupation without
ownership ownership.
Person declared as the owner of a certain
property may still not be entitled to its
possession
Possession and ownership are distinct legal
concepts. Ownership confers certain rights to
the owner among which are the right to enjoy
the thing owned and the right to exclude other
persons from possession thereof. On the other
hand, possession is defined as the holding of a
thing or the enjoyment of a right. Literally, to
possess means to actually and physically
occupy a thing with or without a right. Thus, a
person may be declared an owner but not
entitled to possession. (Heirs of Roman Soriano
v. CA, G.R. No. 128177, August 15, 2001)
Tax declarations are not conclusive
evidence of ownership
Although tax declarations or realty tax payment
of property are not conclusive evidence of
ownership, nevertheless, they are good indicia
of possession in the concept of owner for no
one in his right mind would be paying taxes for
a property that is not in his actual or at least
constructive possession. They constitute at
least proof that the holder has a claim of title
over the property. The voluntary declaration of
a piece of property for taxation purposes
manifests not only one’s sincere and honest
231
desire to obtain title to the property and
announces his adverse claim against the State
and all other interested parties, but also the
intention to contribute needed revenues to the
Government. Such an act strengthens one’s
bona fide claim of acquisition of ownership.
(Ganila v. CA, G.R. No. 150755, June 28, 2005)
ACQUISITION OF POSSESSION
Modes of acquiring possession
1. By Material occupation (detention) of a
thing or the exercise of a right (quasi-
possession);
This includes:
a. Constitutum possessorium – when the
possessor who is the owner of the
property continues his possession no
longer under a title of ownership but
under a title less than ownership, i.e.
lessee, depositary, etc.
b. Traditio brevi manu – when the
possessor who is possessing the thing
by a title other than ownership,
continues to possess it under a new title,
now of ownership.
2. By Subjection of the thing/right to our will
which does not require actual physical
detention or seizure; and
This includes:
a. Traditio longa manu – delivery by
consent or mere pointing.
b. Traditio symbolica – delivery of a mere
symbol (e.g. key) placing the thing
under the control of the transferee.
3. By constructive possession or proper Acts
and legal Formalities established by law
such as succession, donation, execution of
public instruments. (NCC, Art. 531)
Q: Respondents inherited the subject
property from Emiliana Bacalso, by virtue of
Decree No. 98992. Sometime later, they
found the heirs of Alejandra Delfin to be
occupying the said property, to which they
even constructed houses there. The heirs
argued they have better right for it was
inherited to them after it was bought by the
predecessor from Emiliana Bacalso; also,
they are the ones paying the subject
property’s realty taxes. Do the respondents
have the better right to the ownership and
 Property
possession of the subject property?
A: YES, respondents have the better right to the
ownership and possession of the subject
property. The basis is the LRA certification,
daybook entry, and Decree No. 98992 that was
issued to Emiliana Bacalso. The Decree bars all
claims and rights which arose as may have
existed prior to the decree of registration.
(Heirs of Alejandra Delfin v. Alevina Rabadon,
G.R. No. 165014, July 31, 2013)
Q: Spouses Gregorio and Rosario Centeno
previously owned the subject lots, which
they mortgaged in favor of Rural Bank of Sta.
Barbara, Inc. as security for a P1,753.65
loan. Sps. Centeno, however, defaulted on
the loan, prompting the bank to cause the
extrajudicial foreclosure of the mortgage.
Consequently, the subject lots were sold to
the bank, being the highest bidder at the
auction sale. Sps. Centeno failed to redeem
the subject lots within the one-year
redemption period pursuant to Section 6 of
Act No. 3135. Yet, they still continued with
the possession and cultivation of the
aforesaid properties.
Gerry Centeno, son of Sps. Centeno, later on
purchased the said lots from his parents.
Accordingly, Rosario paid the capital gains
taxes on the sale transaction and tax
declarations were eventually issued in the
name of Gerry.
On March 19, 1998, Rural Bank of Sta.
Barbara, Inc. filed a petition for the issuance
of a writ of possession before the trial court,
claiming entitlement to the said writ by
virtue of the Final Deed of Sale covering the
subject lots. Gerry opposed the petition,
arguing that he purchased and has, in fact,
been in actual, open and exclusive
possession of the same properties for at
least 15 years. Is the Rural Bank of Sta.
Barbara, Inc. is entitled to a writ of
possession over the subject lots?
A: YES. It is well-established that after
consolidation of title in the purchasers’ name
for failure of the mortgagor to redeem the
property, the purchasers right to possession
ripens into the absolute right of a confirmed
owner. At that point, the issuance of a writ of
possession, upon proper application and proof
of title, to a purchaser in an extrajudicial
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
foreclosure sale becomes merely a ministerial
function, unless it appears that the property is
in possession of a third party claiming a right
adverse to that of the mortgagor.
Gerry Centeno acquired the subject lots from
his parents, Sps. Centeno, on March 14, 1988
after they were purchased by Rural Bank of Sta.
Barbara, Inc. and its Certificate of Sale at Public
Auction was registered with the Register of
Deeds of Iloilo City in 1971. It cannot therefore
be disputed that Gerry is a mere successor-in-
interest of Sps. Centeno. Consequently, he
cannot be deemed as a third party who is
holding the property adversely to the judgment
obligor under legal contemplation. (Rural Bank
of Sta. Barbara, Inc. v. Gerry Centeno, G.R. No.
200667, March 11, 2013)
Essential elements of acquiring possession
1. Corpus – Refers to the existence of the thing
and its holding; and
2. Animus – Refers to the intent to possess the
thing.
Actual possession distinguished from
constructive possession
Actual possession consists in the manifestation
of acts of dominion over property of such a
nature as a party would naturally exercise over
his own; Constructive possession may be had
through succession, donation, execution of
public instruments, or the possession by a
sheriff by virtue of a court order. (Remington
Industrial Sales Corp v. CYMCAPI, G.R. No.
171858, January 22, 2007)
Acquisition of possession according to
person of possessor (NCC, Art. 532)
1. Personal – The possession acquired by the
same person who is to enjoy it, either the
owner or a mere holder.
Requisites:
a. Capacity to possess;
b. Intent to possess; and
c. Object must be capable of being
possessed.
2. Through an authorized person – Acquisition
of possession through a legal
representative as provided by law or by
appointing an agent.
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 Civil Law
Requisites:
a. Capacity to possess of the
representative or agent;
b. Authority to possess (for another) of
the representative or agent;
c. Intent to possess for principal; and
d. Principal has intent and capacity to
possess
3. Through a person without authority (but
only if subsequently ratified) – acquisition of
possession through a person who is not
clothed with authority by the supposed
“principal.”
Requisites:
a. Intent to possess for another the
“principal”;
b. Capacity of the “principal” to possess;
and
c. Ratification by “principal.”
NOTE: The ratification does not suppress the
consequences of negotiorum gestio. (Art. 2144)
The principal is deemed to have acquired
possession from the time the gestor had
voluntarily took the management of the affairs
of the former. (Pineda, 2009) If the stranger
(gestor) had possessed it in his own name, it is
he who had possession, and not the so-called
“principal.” (Paras, 2008)
Acquisition of possession thru succession
One who succeeds by hereditary title shall not
suffer the consequences of the wrongful
possession of the decedent, if it is not shown
that he was aware of the flaws affecting it; but
the effects of possession in good faith shall not
benefit him except from the date of death of the
decedent. (NCC Art. 534)
Effects
If the father or decedent was in bad faith, it
does not necessarily mean that the son was also
in bad faith. The son is presumed to be in GOOD
FAITH. (Arriola v. De la Serna, G.R. No. L-5397,
December 17, 1909) However, since the father
was in BAD FAITH, the consequences of the
GOOD FAITH of the son should be counted only
from the date of the decedent’s death.
NOTE: If the father had been in GOOD FAITH,
the article is not applicable, for the son would
not ‘‘suffer.” In such a case, the possession of
233
the father in GOOD FAITH is added to the
possession of the son in GOOD FAITH, and we
cannot say that the effects of possession in good
faith shall commence only from the decedent’s
death. (Paras, 2008)
Acquisition of minors or incapacitated
persons
Minors or incapacitated persons may acquire
the possession of things; but they need the
assistance of their legal representatives for
them to be able to exercise the rights arising
from the possession. (NCC, Art. 535)
NOTE: Minors and incapacitated persons may
acquire property or rights by prescription,
either personally or thru their parents,
guardians, or legal representatives. (NCC, Art.
1107)
Nature of minors or incapacitated persons’
possession
Possession is allowed only in those matters
where they have capacity to act (as in the case
of physical seizure of res nullius or donation of
personal property simultaneously delivered to
them) and NOT possession where juridical acts
are imperative like the possession of land the
ownership of which he desires to test in court,
for in such a case, and in similar ones, the
intervention of the legal representatives or
guardians is needed. (Paras, 2008)
Acts which do not give rise to possession
(FATV)
1. Through Force or intimidation as long as
there is a possessor who objects thereto
(NCC, Art. 536); (2006 BAR)
2. Through Acts executed clandestinely and
without the knowledge of the possessor
which means that:
a. Acts are not public; and
b. Unknown to the owner or
possessor
3. Acts merely Tolerated by the owner or the
lawful possessor; and
4. Acts executed by Violence. (NCC, Art 537)
Through Force or intimidation as long as
there is a possessor who objects thereto.
(NCC, Art. 536)
NOTE: Impliedly, if at first there was objection
 Property
but later on such objection ceases, the
possession begun by force or intimidation may
be acquired. (Paras, 2008)
Through acts executed clandestinely and
without the knowledge of the possessor
NOTE: Clandestine possession by itself is hidden
or disguised possession
Acts merely tolerated by the owner or the
lawful possessor.
“Tolerance” is permission, as distinguished
from abandonment. If an owner abandons, as
when within the proper period for prescription,
he brings no action, the possession of another
will ripen into ownership. As a matter of fact,
silence or inaction is NEGLIGENCE, not
tolerance. But where a person occupies
another’s land with the latter’s permission (or
tolerance), the occupier, no matter how long he
may remain, can never acquire ownership,
because he never had possession. Whether
there was permission, or there has been an
abandonment, is a question of fact. Of course, it
is possible that although there was permission
at first, the permission was subsequently
withdrawn, and abandonment has resulted. But
this must be proved by clear and convincing
evidence. (Paras, 2008)
How to recover possession
First, he should request the usurper to give up
the thing and if the latter refuses, the former
should invoke the aid of the proper and
competent court (that which has jurisdiction
over the subject matter and the parties).
(Repide v. Astuar, G.R. No. 505, April 8, 1902)
Otherwise, the owner can be made the
defendant in a forcible entry case with all its
repercussions. (Santiago v. Cruz, G.R. No. 6276.
March 21, 1911) (Paras, 2008)
Possession by Force or Violence
The force may be:
1. Actual or merely threatened;
2. Done by possessor himself or by his agent;
3. Done against the owner or against any
other possessor or against the owner’s
representative, such as a capataz; or
4. Done to oust possessor; or if occupied
during the latter’s absence, done to prevent
his getting back the premises. (Paras, 2008)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Rule when two or more persons claim
possession over the same property
GR: Possession as a fact cannot be recognized at
the same time in two different personalities.
XPN:
1. Co-possessors (since here, there is no
conflict of interest, both of them acting as
co-owners, as in the case of property owned
or possessed in common).
2. Possession in different concepts or
different degrees (e.g. both owner and
tenant are possessors as a fact at the same
time; the first, in the concept of owner; the
second, in the concept of holder; other
examples: principal and agent; depositor
and depositary; owner and administrator).
(Paras, 2008)
Rules to follow in case there is a dispute of
possession of two or more persons
1. Present/actual possessor shall be
preferred;
2. If there are two possessors, the one longer
in possession; or
3. If the dates of possession are the same, the
one with a title.
4. If both claimants have titles, the competent
court will determine the rightful possessor,
and in the meantime, the thing shall be
placed in judicial deposit. (NCC, Art. 538)
Only the possession acquired and enjoyed in the
concept of owner can serve as a title for
acquiring dominion. (NCC, Art. 540)
NOTE: Art. 538 applies to preference of
POSSESSION (whether real or personal
property is involved). It also applies whether
the possession was longer or shorter than one
year. Art. 1544 applies to preference of
OWNERSHIP in case of DOUBLE SALE (Art.
1544) or a DOUBLE DONATION. (NCC, Art. 744)
(Paras, 2008)
EFFECTS OF POSSESSION
POSSESSOR IN GOOD FAITH
One is a possessor is in good faith when he is
not aware that there exists in his title or mode
of acquisition any flaw which invalidates it.
(NCC, Art. 526) (2008 BAR)
Requisites in order to be considered a
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 Civil Law
possessor in good faith
1. Ostensible title or mode of acquisition;
2. Vice or defect in the title; and
3. Possessor is ignorant of the vice or defect
and must have an honest belief that the
thing belongs to him.
Cessation of possession in good faith
Possession in good faith ceases from the
moment defects in his title are made known to
the possessor by extraneous evidence or by suit
for recovery by the true owner.
This interruption of good faith may take place
1. At the date of summons; or
2. That of the answer if the date of summons
does not appear.
Effect of cessation of possession in good
faith
Possessor is now considered as a possessor in
bad faith and he may be required to pay rent or
vacate the property. In both cases he is required
to pay damages to the lawful owner or
possessor of the property.
Q: A Deed of Sale was executed between Jose
(seller) and Rosario (buyer). However, later
on, Jose could not continue the sale because
he sold the lot to Emma with whom he
executed a formal deed of sale. Informed
that the sale in favor of Emma was not
registered, Rosario registered her adverse
claim. Later, Emma registered her deed of
sale and a TCT was issued to her but with
Rosario’s adverse claim. Emma then took
possession of the lot.
a. Who has a better right to the land?
b. Is Emma entitled to the improvements she
introduced in the lot?
A:
a.. ROSARIO has a better right. Rosario’s prior
purchase of the land was made in good faith;
she was the only buyer at that time. Her good
faith did not cease after Jose told him of the
second sale to Emma. In order to protect her
right, Rosario registered her adverse claim. Said
recording is deemed to be in good faith and
emphasized Emma’s bad faith. (Carbonell v. CA
G.R. No. L-29972, January 26, 1976)
b. NO. The possessor in bad faith has neither
235
the right of retention of useful improvements
nor the right to demand refund for useful
expenses. (Art. 546 & 547; Carbonell v. CA G.R.
No. L-29972, January 26, 1976)
Mistake upon a doubtful or difficult question
of law
Mistake upon a doubtful or difficult question of
law may be the basis of good faith provided that
such ignorance is not gross and therefore
inexcusable. (NCC, Art. 526) Ignorance of the
law may be based on an error of fact. (2008
BAR)
RIGHTS OF A POSSESSOR
Right to be respected in possession
Every possessor has a right to be respected in
his possession; and should he be disturbed
therein he shall be protected in or restored to
said possession by the means established by the
laws and the Rules of Court.
A possessor deprived of his possession through
forcible entry may within ten days from the
filing of the complaint present a motion to
secure from the competent court, in the action
for forcible entry, a writ of preliminary
mandatory injunction to restore him in his
possession. The court shall decide the motion
within thirty (30) days from the fi ling thereof.
(NCC, Art. 539)
Rights of a possessor
1. To be respected in his possession;
2. To be protected in said possession by legal
means;
3. To secure in an action for forcible entry the
proper writ to restore him in his
possession; and
4. To secure from a competent court in an
action for forcible entry the Writ of
preliminary mandatory injunction to
restore him in his possession. (NCC, Art.
539)
Possession contemplated by law is legal
possession– thief cannot exercise possession.
Such possession is exercised by every
possessor–in good faith or bad faith.
“Every possessor’’ is protected under Art. 539,
whether in the concept of owner or in the
concept of holder.
 Property
NOTE: An adverse possession of property by
another is not an encumbrance in law and does
not contradict the condition that the property
be free from encumbrance. Likewise, the
adverse possession is not a lien for a lien
signifies a security for a claim. (Ozaeta v.
Palanca, L-17455, August. 31, 1964)
Legal Means for Restoration of Possession
A. Reasons for requiring legal means:
1. To prevent spoliation or a disregard of
public order;
2. To prevent deprivation of property
without due process of law; and
3. To prevent a person from taking the
law into his own hand.
B. Thus:
1. The owner should go to court, and not
eject the unlawful possessor by force.
2. A tenant illegally forced out by the
owner- landlord may institute an action
for forcible entry even if he had not
been paying rent regularly.
3. The proper actions are forcible entry or
unlawful detainer (summary action or
accion interdictal), accion publiciana,
accion reivindicatoria; replevin;
injunction (to prevent further acts of
dispossession). However, injunction is
GENERALLY not the proper remedy to
recover possession, particularly when
there are conflicting claims of
ownership. An accion reivin-dicatoria
would be better. A final judgment in an
unlawful detainer case may be executed
even if there is still pending an accion
reivindicatoria, for the two actions can
co- exist. A mere trespasser, even if
ejected, has no right to institute an
action of forcible entry. (Paras, 2008)
4. Writ of preliminary mandatory
injunction.
Writ of preliminary mandatory injunction
As a rule, injunction cannot substitute for the
other actions to recover possession. This is
because in the meantime, the possessor has in
his favor, the presumption of rightful
possession, at least, until the case is finally
decided. The exception, of course, is a very clear
case of usurpation. Similarly, a receiver should
not ordinarily be appointed to deprive a party
who is in possession of the property in
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
litigation of such possession. (Paras, 2008)
Requisites for the issuance of the writ of
preliminary injunction:
1. In forcible entry cases (in the original
court) — file within 10 days from the time
the complaint for forcible entry is filed (not
from the time the dispossession took place)
(NCC. Art. 538);
2. In ejectment (unlawful detainer cases) in
the CFI (RTC) or appellate court (Court of
Appeals) — file within 10 days from the
time the appeal is perfected (that is, from
the time the attorneys are notified by the
Court of the perfection of the appeal), only
if:
a. The lessee’s appeal is frivolous or
dilatory; or
b. The lessor’s appeal is prima facie
meritorious. (NCC, Art. 1674)
Q: During his lifetime, Velasco acquired Lot
A from spouses Sacluti and Obial evidenced
by a deed of sale. In 1987, spouses Padilla
entered the said property as trustees by
virtue of a deed of sale executed by the
Rural Bank. The Padillas averred that the
Solomon spouses owned the property which
was identified as Lot B. However, it was
proved during trial that the land occupied
by spouses Padilla was Lot A in the name of
Velasco, whereas the land sold by the bank
to the spouses Padilla was Lot B. The heirs of
Velasco demanded that spouses Padilla
vacate the property, but they refused. Thus,
the heirs filed a complaint for accion
publiciana.
a. Who has the better right of possession?
b. Has the action already prescribed?
A:
a. The HEIRS OF VELASCO have the better
right. Accion publiciana, recovery of the
right to possess, is an action filed in the RTC
to determine the better right to possession
of realty independently of the title. The
objective of the plaintiffs in accion
publiciana is to recover possession only, not
ownership. Lot A was the subject of a
cadastral case. The OCT was issued to
Sacluti and Obial who sold the same to
Artemio. From the date of sale, until
Artemio’s death, he was in continuous
possession of the land.
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 Civil Law
b. NO. The remedy of accion publiciana
prescribes after the lapse of ten years. The
action was filed with the RTC in 1991.
Spouses Padilla dispossessed the heirs of
Velasco of the property in 1987. At the time
of the filing of the complaint, only four
years had elapsed from the time of
dispossession. (Spouses Padilla v. Velasco,
G.R. No. 169956, January 19, 2009)
Acquisitive prescription
Only the possession acquired and enjoyed in
the concept of owner can serve as a title for
acquiring dominion. (NCC, Art. 540)
Possession in the concept of an owner
1. If a person possesses en concepto de dueño
— he may eventually become the owner by
prescription; and
2. Thus, a possessor merely in the concept of
holder cannot acquire property by
acquisitive prescription. (This is because
here the possession, far from being adverse,
recognizes right of ownership in others.
One cannot recognize the right of another
and at the same time claim adverse
possession which can ripen to ownership
through acquisitive prescription. For
prescription to set in, the possession must
be adverse, public and to the exclusion of
all. (Paras, 2008)
Possession in the concept of a holder
1. Lessees or those merely permitted to
occupy;
2. Trustees (including parents over the
properties of their unemancipated minor
children or insane children (NCC, Art.
1109); and husband and wife over each
other’s properties, as long as the marriage
lasts, and even if there be a separation of
property which had been agreed upon in a
marriage settlement or by judicial decree
(NCC, Art. 1109);
3. Antichretic creditors;
4. Agents;
5. Attorneys (regarding their client’s
properties)
6. Depositaries; and
7. Co-owners (unless the co-ownership is
clearly repudiated by unequivocal acts
communicated to the other co-owners).
237
Presumption that possessor has a just title
A possessor in the concept of owner has in his
favor the legal presumption that he possesses
with a just title and he cannot be obliged to
show or prove it. (Art. 541)
Requirements under NCC, Art. 541 to raise
the disputable presumption of ownership (of
a thing or a right)
1. One must be in possession (actual or
constructive)
2. The possession must be in the concept of
owner (not mere holder)
NOTE: A tenant cannot avail himself of the
presumption of just title because he is not a
possessor in the concept of owner). (Paras,
2008)
The Article can apply to both real and personal
property. Thus, if a person possesses the key to
a car over which he claims ownership, he can be
presumed to be the owner. But such
presumption may be overcome by documentary
evidence concerning the car’s ownership.
(Paras, 2008)
Presumptions in favor of a possessor
(GCENCE)
1. Good faith;
2. Continuity of initial good faith;
3. Enjoyment in the same character in which
possession was acquired until the contrary
is proved;
4. Non-interruption in favor of the present
possessor;
5. Continuous possession by the one who
recovers possession of which he was
wrongfully deprived; and
6. Extension of possession of real property to
all movables contained therein.
KINDS OF TITLE
1. True and Valid Title
Here, there was a mode of transferring
ownership and the grantor was the
owner. It is defined as a title which by
itself is sufficient to transfer ownership
without the necessity of letting the
prescriptive period elapse.
 Property
e.g. B bought a Ford Expedition Limited
from S, the owner thereof. Then S
delivered the car to B. B now has a true
and valid title.
2. Colorable Title
That title where, although there was a
mode of transferring ownership, still
something is wrong, because the grantor
is NOT the owner.
e.g. B bought a BMW car from S. S then
delivered the car to B. But it turns out that
S never owned the car, and that
somebody else was its owner. Whether B
was in good faith or in bad faith is
immaterial in deciding if he (B) is the
owner; what is important is that he is not
the owner because he did not acquire or
purchase the property from the owner,
his title being merely “colorado’’ or
colorable.
NOTE: It must be remembered that:
a. Ordinary prescription needs good faith
and just title, hence in the example
given, if B is in good faith, he may
become owner of the car by
prescription after four years (the car
being personal property)
b. Extraordinary prescription does not
need either good faith or just title,
hence in the example given, if B is in
bad faith, although there may be just
title (titulo colorado), B may get
ownership by prescription only after
eight years.
In case of real properties, the
prescriptive periods are 10 years and
30 years respectively for ordinary and
extraordinary prescription. (Paras,
2008)
3. Putative Title
That title where although a person
believes himself to be the owner, he
nonetheless is not, because there was no
mode of acquiring ownership.
Presumption of Possession of Movables
Found in an Immovable
The possession of real property presumes that
of the movables therein, as long as it is not
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
shown or proved that they should be excluded.
(NCC, Art. 542) (2008 BAR)
Applicability of the Article:
1. Whether the possessor be in good faith or
bad faith;
2. Whether the possession be in one’s own
name or in another’s; and
3. Whether the possession be in concepto de
dueno or in the concept of holder. Thus, the
lessee of a building is presumed to be the
possessor of the movables found therein,
for he who needs them is supposed to have
been the one who introduced the movables
into the building.
NOTE: By “real property’’ and “movables’’, the
law means only real or personal THINGS, not
rights. (Paras, 2008)
Exclusive possession by a previous co-owner
Each one of the participants of a thing
possessed in common shall be deemed to have
exclusively possessed the part which may be
allotted to him upon the division thereof, for the
entire period during which the co-possession
lasted. Interruption in the possession of the
whole or a part of a thing possessed in common
shall be to the prejudice of all the possessors.
However, in case of civil interruption, the Rules
of Court shall apply. (NCC, Art. 543)
Example of interruption in possession of the
WHOLE thing (NCC, Art. 543)
A, B, and C have been co-possessors of a piece of
land since 2002. If in 2006, A, B, and C lose
possession over the whole land, it can be said
that the three of them were in possession for
only four years.
Example of Interruption in possession of
PART of the thing (NCC, Art. 543)
A and B have been co-possessors of a piece of
land since 2002 thru a mutual agent X. In 2006,
X lost possession of one-fifth of the land. A’s and
B’s possession over the remaining four-fifth
continues, the interruption being limited only to
one-fifth.
NOTE: If A and B had co-possessed the land in
equal shares, the co-possession of the
remaining four-fifths will also be in equal
shares. If A and B had co-possessed in the
238
 Civil Law
proportion of 3 to 1, their shares in the
remaining four-fifths would also be in the
proportion of 3 to 1. In other words, there is a
PROPORTIONATE losing in the area possessed.
(Paras, 2008)
Rules to apply for civil interruption
The “Rules of Court” applies (NCC, Art. 543):
1. Civil interruption is produced by judicial
summons to the possessor (NCC, Art. 1123);
and
2. Judicial summons shall be deemed not to
have been issued, and shall not give rise to
interruption:
a. If it should be void for lack of legal
solemnities;
b. If the plaintiff should desist from the
complaint or should allow the
proceedings to lapse; or
c. If the possessor should be absolved
from the complaint. In all these cases,
the period of the interruption shall be
counted FOR the prescription. (NCC,
Art. 1124)
RIGHTS OF POSSESSOR TO FRUITS
Possessor in good faith is entitled to the fruits
received before the possession is legally
interrupted.
Natural and industrial fruits are considered
received from the time they are gathered or
severed.
Civil fruits are deemed to accrue daily and
belong to the possessor in good faith in that
proportion. (NCC, Art. 544)
Right of a possessor in good faith to fruits
already received
First Paragraph: “A possessor in good faith is
entitled to the fruits received before the
possession is legally interrupted.’’
a. Reason for the law: Justice demands that the
fruits be retained by the possessor who
thought that he was really the owner of the
property, and who, because of such thought
had regulated his daily life, income, and
expenses by virtue of such fruits. Moreover,
the possessor should be rewarded for
239
having contributed to the INDUSTRIAL
WEALTH, unlike the owner, who by his
presumed negligence, had virtually
discarded his property.
b. Fruits refer to natural, industrial, and civil
fruits, not to other things. (If no actual fruits
are produced, reasonable rents— civil
fruits—must be given)
c. Legal interruption happens when a
complaint is filed against him and he
receives the proper judicial summons. (Art.
1123) All fruits accrued and received since
said date must be turned over to the
winner, that is, either the owner or the
lawful possessor adjudged as such by the
court. Before legal interruption, the fruits
received are his own. After the receipt of
the judicial summons, the right to get the
fruits not yet gathered ceases.
d. The reason why fruits should be returned
from the TIME of legal interruption is that it
is ordinarily only from said date that the
possessor should be considered in BAD
FAITH. Therefore, should there be proof
that BAD FAITH had not set in even BEFORE
legal interruption, fruits should be returned
from that date of CONVERSION are not
entitled to the fruits. As a matter of fact, the
law provides that “the possessor in bad
faith shall reimburse the fruits received and
those which the legitimate possessor (or
owner) could have received” (NCC, Art. 549)
This is true whether the possession in BAD
faith was legally interrupted or not. It is
understood of course that he is entitled to
the fruits received BEFORE the conversion
into BAD FAITH, for then, he would still be
in good faith. (Paras, 2008)
When natural and industrial fruits are
considered received
Second Paragraph: “Natural and industrial
fruits are considered received from the time
they are gathered or severed.”
a. If at the time of legal interruption, the crops
are still growing, the rule on pending crops,
not that on gathered crops, should apply.
(NCC, Art. 545)
b. If at the time of legal interruption, the crops
have already been gathered, but are sold
only after such interruption, the sale is
 Property
immaterial, for the law requires only a
gathering or severance, so Art. 544 applies.
When civil fruits are deemed to accrue
Third Paragraph: “Civil fruits are deemed to
accrue daily and belong to the possessor in good
faith in that proportion.’’
a. If civil fruits (like rents) are accrued daily,
Art. 545 does not apply; and
b. Actual receipt of the rents is immaterial;
hence, even if received only, for example,
on the 30th of a month, all rents accrued
before the 21st of the month (date for
example of legal interruption) should
belong to the possessor in good faith.
RIGHT TO PENDING FRUITS
If at the time the good faith ceases, there should
be any natural or industrial fruits, the possessor
shall have a right to a part of the expenses of
cultivation, and to a part of the net harvest, both
in proportion to the time of the possession.
The charges shall be divided on the same basis
by the two possessors.
The owner of the thing may, should he so
desires, give the possessor in good faith the
right to finish the cultivation and gathering of
the growing fruits, as an indemnity for his part
of the expenses of cultivation and the net
proceeds; the possessor in good faith who for
any reason whatever should refuse to accept
this concession, shall lose the right to be
indemnified in any other manner. (NCC, Art.
545)
NOTE: This article applies to PENDING fruits,
natural or industrial.
Q: What if there are natural or industrial
fruits at the time good faith ceases?
A: The possessor shall have the right to a part of
the expenses of cultivation, and to a part in the
net harvest both in proportion to the time of
possession. (NCC, Art 545) (2000, 2008 Bar)
Q: A possessed in good faith a parcel of land.
At the time he received judicial summons to
answer a complaint filed by B, the crops still
growing had been there for two months.
Harvest was made only after 4 more months
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
(For his crop needed a total of 6 months
from planting to harvesting). How should
said crops be divided between A and B?
A: In the proportion of 2 to 4 (or 1 to 2), 2 for A
and 4 for B. This is what the law means when it
says that the net harvest shall be divided in
proportion to the time of possession. (Paras,
2008)
Sharing of expenses and charges
1. The expenses for cultivation shall also be
divided pro rata (2 to 4) The law says “the
possessor shall have a RIGHT to a part of
the expenses for cultivation in proportion to
the time of possession (This may in certain
cases be UNFAIR because although he may
have spent MORE than the owner, still he
will be entitled to a reimbursement of LESS
since his possession is shorter. The better
rule would be for the expenses to be borne
in proportion to what each receives from
the harvest) (NCC, Art. 443) Otherwise,
unjust enrichment would result.
2. The charges (those incurred because of the
land and the fruits, like TAXES, or
INTEREST on MORTGAGES are what are
referred to as CHARGES, and not those
incurred on or in them, such as
improvements) are also to be divided in
proportion to the time of possession. (NCC,
Art. 545, 2nd par.) (Paras, 2008)
Options of the owner in case there are
pending fruits at the time good faith ceases
1. To pay the possessor in good faith
indemnity for his cultivation expenses and
charges and his share in the net harvest; or
2. To allow the possessor in good faith to
FINISH the cultivation and gathering of the
growing crops, as an INDEMNITY for his
part of the expenses of cultivation and the
net proceeds. (Paras, 2008)
NOTE: If the possessor refuses, for any reason,
to finish the cultivation and gathering, he
forfeits the right to be indemnified in any other
manner. [NCC, Art. 545(3)]
Art. 545 applies only to a possessor in GOOD
faith for a possessor in bad faith has no right
whatsoever to fruits already gathered nor to
fruits still pending, except that in the former
case (gathered fruits), he gets back the
240
 Civil Law
necessary expenses for production, gathering,
and preservation of fruits. (Art. 443) In the case
of pending fruits, the principle of accession
applies, and the law clearly states that he who
plants or sows in BAD FAITH on the land of
another, loses whatever is planted or sown
without right to indemnity. (Paras, 2008)
Crops not yet manifest
Art. 545 applies to pending crops. Suppose the
crops have already been planted but are not yet
manifest at the time there is a transfer of
possession, should the article also apply? It is
submitted that the answer is YES, by the
application of the general rules stated in Art.
443. (Paras, 2008)
RIGHT TO BE REIMBURSED
NECESSARY AND USEFUL EXPENSES
Necessary expenses shall be refunded to every
possessor; but only the possessor in good faith
may retain the thing until he has been
reimbursed therefor. Useful expenses shall be
refunded only to the possessor in good faith
with the same right of retention, the person
who has defeated him in the possession having
the option of refunding the amount of the
expenses or of paying the increase in value
which the thing may have acquired by reason
thereof. (NCC, Art. 546)
Necessary expenses (1992, 1996, 2000 BAR)
Necessary expenses are expenses incurred to
preserve the property, without which, said
property will physically deteriorate or be lost.
These expenses are not improvements but are
incurred merely to protect the thing from
becoming useless.
Sample of necessary expenses
1. Those incurred for cultivation, production,
and upkeep; or
2. Those made for necessary repairs of a
house.
Ordinary repairs are understood such as are
required by the wear and tear due to the
natural use of the thing and are indispensable
for its preservation. (NCC, Art. 592) They do not
increase the thing’s value; rather, they merely
prevent the things from becoming useless.
241
Urgent repairs — reparacion urgentisima —
are also necessary expenses.
The following are NOT Necessary Expenses
1. Those incurred for the filling up with soil of
a vacant or deep lot (This is not also a
repair since the term “repair” implies the
putting back into the condition in which it
was originally, and not an improvement in
the condition thereof by adding something
new thereto. The expenses are indeed in
the nature of USEFUL improvements;
2. A house constructed on land possessed by a
stranger (not the owner), because the
house cannot be said to preserve the land
(the house is USEFUL);
3. Land taxes are, for the purposes of the
Article, not necessary expenses, for they are
needed, not for preservation of the land
itself; but for its continued possession.
Failure to pay said taxes results not in
destruction, but forfeiture, therefore they
should be merely considered CHARGES.
Consequently, Art. 545 regarding PRO
RATING of charges should apply; and
4. Unnecessary improvements on a parcel of
land purchased at a sheriff’s auction sale,
made just to prevent redemption from
taking place. (Paras, 2008)
Rights of a possessor (in the concept of
owner) as to the necessary expenses
1. If in good faith — entitled to:
a. Refund; or
b. Retain premises until paid.
2. If in bad faith — entitled ONLY to a refund
(no right of RETENTION, as penalty)
NOTE: If the owner sues the possessor for the
recovery of the property, the possessor in good
faith (who is thus entitled to a refund) must file
a counterclaim for the refund of necessary and
useful expenses, otherwise the judgment in the
case for possession will be a BAR to a
subsequent suit brought solely for the recovery
of such expenses. The purpose is clearly to
avoid the multiplicity of suits. (Paras, 2008)
Right of removal of necessary expenses
 Property
There is NO right of removal of necessary
expenses whether in good faith or bad faith.
Necessary expenses affect the existence or
substance of the property itself.
NOTE: Improvements are so incorporated to
the principal thing that their separation must
necessarily reduce the value of the thing not
curable by ordinary repairs.
Useful expenses
Those which increase the value or productivity
of the property.
Examples of useful expenses
1. Those incurred for an irrigation system;
2. Those incurred for the erection of a chapel,
because aside from its possibility of
conversion into such materialistic things as
a warehouse or a residence, the chapel
satisfied spiritual and religious aspirations
and the attainment of man’s higher
destinies. “To uphold the opposite view
would be to reduce life to a mere
conglomeration of desires and lust, when,
as a matter of fact, life is also a beautiful
aggregate of noble impulses and lofty
ideals”;
3. Those incurred for the making of artificial
fishponds;
4. Those incurred for the construction of
additional rooms in a house, for use as
kitchen, bathroom, stable, etc;
5. Those incurred for clearing up land
formerly thickly covered with trees and
shrubbery. (Paras, 2008)
Rights of a possessor (in the concept of
owner) as to the USEFUL expenses
A. If in GOOD faith.
1. Right to REIMBURSEMENT (of either
the amount spent or the increase in
value — “plus value” — at OWNER’S
OPTION) (NCC, Art. 546)
2. Right of RETENTION (until paid) (NCC,
Art. 546)
3. Right of REMOVAL (provided no
substantial damage or injury is caused
to the principal, reducing its VALUE)
— UNLESS the winner (owner or
lawful possessor) exercises the option
in (1) (NCC, Art. 547)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: The possessor in good faith is
entitled to both the fruits and expenses
(necessary or useful), hence they do not
compensate each other.
B. If in BAD faith.
The possessor in BAD faith is NOT
ENTITLED to any right regarding the useful
expenses [BUT IN Angeles v. Guevara, L-
15697, October. 31, 1960, where the
Supreme Court thru Justice Gutierrez David
made the statement that although a
possessor in bad faith is NOT entitled to
reimbursements for expenses incurred, he
may nevertheless REMOVE the objects
(repairs on buildings) provided the things
suffer NO INJURY thereby, and that the
lawful possessor does not prefer to retain
them by paying the value they may have at
the time he enters into possession.
Evidently, here, the Court was thinking NOT
of useful improvement, but of expenses for
PURE LUXURY or MERE PLEASURE. (NCC,
Art. 549)
Effect of voluntary surrender of property
The voluntary surrender of property is a waiver
of the possessor’s right of retention but his
right to be refunded may still be enforced.
XPN: He also waived the same.
Removal of useful improvements introduced
by the possessor
Only a possessor in good faith is allowed to
remove the useful improvements he introduced
provided that the useful improvements can be
removed without damage to the principal thing.
(NCC, Art. 547)
“Damage’’ here means a substantial one that
reduces the value of the property, thus a slight
injury curable by an ordinary repair does not
defeat the right of removal, but the repairs
should be chargeable to the possessor, for it is
he who benefits by the removal and the object
removed. (Paras, 2008)
NOTE: This right of removal is subordinate to
the owner’s right to keep the improvements
himself by paying the expenses incurred or the
concomitant increase in the value of the
property caused by the improvements.
242
 Civil Law
EXPENSES FOR PURE LUXURY
Expenses for pure luxury or mere pleasure shall
not be refunded to the possessor in good faith;
but he may remove the ornaments with which
he has embellished the principal thing if it
suffers no injury thereby, and if his successor in
the possession does not prefer to refund the
amount expended. (NCC, Art. 548)
Luxurious expenses or expenses for pure luxury
or mere pleasure (ornamental expenses) are
expenses incurred for improvements
introduced for pure luxury or mere pleasure.
Examples of ornamental expenses
a. Hand paintings on the wall of a house;
b. A garage made of platinum; and
c. Water fountains in gardens.
Rights of a Possessor (in the Concept of
Owner) as to Luxurious or Ornamental
Expenses
1. If in GOOD faith:
In general, no right of refund or retention
but can remove if no substantial injury is
caused. However, owner has OPTION to
allow:
a. Possessor to remove; or
b. Retain for himself (the owner) the
ornament by REFUNDING the AMOUNT
SPENT. (NCC, Art. 548)
2. In BAD faith:
In general, no right of refund or retention
but can remove if no substantial injury is
caused. However, owner has OPTION to
allow:
a. Possessor to remove; or
b. Retain for himself (the owner) the
ornament by REFUNDING the VALUE it
has at the TIME owner ENTERS INTO
POSSESSION. (NCC, Art. 549)
POSSESSOR IN BAD FAITH
The possessor in bad faith shall reimburse the
fruits received and those which the legitimate
possessor could have received, and shall have a
right only to the expenses mentioned in
paragraph 1 of Art. 546 and in Art. 443. The
expenses incurred in improvements for pure
luxury or mere pleasure shall not be refunded
243
to the possessor in bad faith; but he may
remove the objects for which such expenses
have been incurred, provided that the thing
suffers no injury thereby, and that the lawful
possessor does not prefer to retain them by
paying the value they may have at the time he
enters into possession. (NCC, Art. 549)
Q: Who is a possessor in bad faith?
A: A possessor in bad faith is one who is aware
that there exists in his title or mode of
acquisition any flaw which invalidates it. Only
personal knowledge of the flaw in one’s title or
mode of acquisition can make him a possessor
in bad faith.
NOTE: No tacking of bad faith, unless the
successors in interest had learned of the defect
in the title and still purchased it.
Bad faith is not transmissible from a person to
another, even an heir is not affected by bad faith
of the deceased predecessor.
Right of the Possessor (in the Concept of
Owner) as to FRUITS
1. If in GOOD faith:
a. Gathered or severed or harvested fruits
are his own (NCC, Art. 544);
b. Pending or ungathered fruits — (pro-
rating between possessor and owner of
expenses, net harvest, and charges) (NCC,
Art. 545)
2. If in BAD faith:
a. Gathered fruits — must return value of
fruits already received as well as value of
fruits which the owner or legitimate
possessor (not the possessor in bad faith)
could HAVE received with due care or
diligence, MINUS necessary expenses
for cultivation, gathering, and
harvesting, to prevent the owner from
being unjustly enriched. (NCC, Arts. 549
and 443)
b. Pending or ungathered fruits — no rights
at all, not even to expenses for
cultivation because by accession, all
should belong to the owner, without
indemnity. (NCC, Art. 449)
NOTE: The costs of litigation over the property
 Property
shall be borne by every possessor. (NCC, Art. GOOD FAITH BAD FAITH
550) “Every possessor’’ refers to one in good As to fruits received
faith or bad faith, in the concept of owner or in Entitled to the fruits Shall reimburse the
the concept of holder, in one’s own name or in received before the fruits received and
that of another, and not to the owner or the possession is legally those which the
person adjudged by the court to be lawfully interrupted. (NCC, Art. legitimate possessor
entitled to possess. (Paras, 2008) 544) could have received
and shall have the a
Improvements caused by nature or time right only to necessary
expenses (Art. 546,
Neither the possessor in good faith nor in bad par. 1) and expenses in
faith is entitled to: the production,
gathering and
1. Improvements caused by NATURE (like preservation of such
alluvium, etc.) Fruits. (NCC, Art. 443)
2. Improvements caused by TIME (like the As to pending fruits
improved flavor of wine) Liable with legitimate None
possessor for expenses
Liability for loss or deterioration of cultivation and shall
share in the net
A possessor in good faith shall not be liable for harvest in proportion
the deterioration or loss of the thing possessed, to the time of their
except in cases in which it is proved that he has Possession. (NCC, Art.
acted with fraudulent intent or negligence, after 545)
the judicial summons. As to expenses
A possessor in bad faith shall be liable for (Necessary expenses)
deterioration or loss in every case, even if Right of Right of
caused by a fortuitous event. (NCC, Art. 552) reimbursement and reimbursement only.
retention.
Rules applicable: (Useful expenses)
Right of None
A. Possessor in GOOD FAITH — reimbursement,
retention and limited
1. BEFORE receipt of judicial summons — right of removal.
NOT LIABLE.
(Ornamental Expenses)
2. AFTER judicial summons
Shall not be refunded Shall not be refunded
i. Loss or deterioration thru
but he has a limited but he has a limited
fortuitous event — not liable.
right of removal, i.e. he right of removal, i.e. he
ii. Thru fraudulent intent
may remove if the may remove if the
or negligence — liable
principal thing suffers principal thing suffers
no injury thereby, and no injury thereby, and
B. Possessor in BAD FAITH —
if the lawful possessor if the lawful possessor
Whether before or after judicial summons,
does not prefer to does not prefer to
and whether due to fortuitous event or not,
refund the amount retain them by paying
such possessor is LIABLE.
expended. its value at the time he
enters into possession.
Requisites to constitute possession whether
As to liability in case of deterioration or loss
in good faith or bad faith
No liability Always liable.
1. Possessor has a title/mode of acquisition; XPN: If due to his
2. There is a flaw or defect in said title/mode; fraudulent act or
and negligence, or after
3. The possessor is aware or unaware of the service of summons.
flaw or defect.
Possessor in good faith has the right of
Summary of rights of a possessor retention until he has been fully reimbursed

UNIVERSITY OF SANTO TOMAS 244

2021 GOLDEN NOTES
 Civil Law
A possessor in good faith has the right of
retention of the property until he has been fully
reimbursed for all the necessary and useful
expenses made by him on the property. Its
object is to guarantee the reimbursement for
the expenses, such as those for the preservation
of the property, or for the enhancement of its
utility or productivity. It permits the actual
possessor to remain in possession while he has
not been reimbursed by the person who
defeated him in the possession for those
necessary expenses and useful improvements
made by him on the thing possessed. (Ortiz v.
Kayanan, G.R. No. L-32974, July 30, 1979)
Presumption of Possession during the
intervening period
A present possessor who shows his possession
at some previous time is presumed to have held
possession also during the intermediate period,
in the absence of proof to the contrary. (NCC,
Art 554)
LOSS/TERMINATION OF POSSESSION
Possession is lost through (PRADA)
1. Possession of another;
2. Recovery of the thing by the legitimate
owner;
3. Abandonment;
4. Destruction or total loss of the thing – a
thing is lost when it perishes or goes out of
commerce, or disappears in such a way that
its existence is unknown, or it cannot be
recovered (NCC, Art. 1189; Art. 555); or
5. Assignment – complete transmission of the
thing/right to another by any lawful
manner. (NCC, Art. 555)
Possession of another
Possession of another subject to the provisions
of Art. 537, if a person is not in possession for
more than one year but less than 10 years he
losses possession de facto. He can no longer
bring an action of forcible entry or unlawful
detainer, since the prescriptive period is one
year for such actions. But he may still institute
an accion publiciana to recover possession de
jure, possession as a legal right or the real right
of possession. (NCC, Art. 555; Paras, 2008)
If a person loses possession for more than 10
years, he loses possession de jure, or the real
245
right of possession. (NCC, Art. 555) An accion
publiciana or reivindicatoria is still possible
unless prescription, either ordinary or
extraordinary, has set in. (Paras, 2008)
NOTE: Acts merely tolerated, and those
executed clandestinely and without the
knowledge of the possessor of a thing, or by
violence, do not affect possession. (NCC, Art.
537) (2001, 2009 Bar)
Abandonment
Abandonment involves a voluntary
renunciation of all rights over a thing. There
must be an intention to lose the thing.
Requisites:
1. The abandoner must have been a possessor
in the concept of owner (either an owner or
mere possessor may respectively abandon
either ownership or possession);
2. The abandoner must have the capacity to
renounce or to alienate (for abandonment
is the repudiation of property right);
3. There must be physical relinquishment of
the thing or object; and
4. There must be no spes recuperandi
(expectation to recover) and no more
animus revertendi (intention to return or
get back). (Paras, 2008)
Additional Doctrines
1. A property owner cannot be held to have
abandoned the same until at least he has
some knowledge of the loss of its
possession or the thing.
2. There is no real intention to abandon
property when as in the case of a
shipwreck or a fire, things are thrown into
the sea or upon the highway.
3. An owner may abandon possession merely,
leaving ownership in force, but a mere
possessor cannot abandon ownership
since he never had the same.
4. If an owner has not lost possession
because there has been no abandonment, it
surely cannot be acquired by another thru
acquisitive prescription. Thus, the mere
fact that land is covered by the sea
completely during high tide for failure in
the meantime of the owner to dam the
water off, does not indicate an
abandonment of the land in favor of public
 Property
dominion. Moreover, abandonment can
hardly refer to land much less to registered
land.
5. There is no abandonment if an owner
merely tolerated (permitted) another’s
possession, nor if the latter was done by
stealth or effected thru force and
intimidation. (NCC, Articles 537 and 558)
6. There is no abandonment of movables
even if there is temporary ignorance of
their whereabouts, so long as they remain
under the control of the possessor (that is,
so long as another has not obtained control
of them). (NCC, Art. 556)
7. In true abandonment, both possession de
facto and de jure are lost.
8. Abandonment which converts the thing
into res nullius (ownership of which may
ordinarily be obtained by occupation), does
not apply to land (NCC, Art. 714, Civil Code)
much less does abandonment apply to
registered land. (Act, 496, Sec. 46) (Paras,
2008)
Assignment
Refers to a total transfer of ownership of
property by the owner to another person either
gratuitously or onerously.
While in assignment, at no time did the thing not
have a possessor (for possession merely
changed hands or control); in abandonment,
there was a time, no matter how short, when
the object did not have any possessor at all.
Moreover, while assignment may in some cases
be by onerous title, abandonment is always
gratuitous, otherwise it becomes a virtual
assignment. Moreover, in assignment, both
possession de facto and de jure are lost, and no
action will allow recovery. (Paras, 2008)
Q: Does Art. 555 refer to both real and
personal property?
A: YES (for the law does not distinguish) except
in the case of paragraph 4, for it is evident that
the reference to possession of more than one
year concerns only real property, the rule as to
movable property being explicitly stated in Art.
556.
LOSS OR UNLAWFUL DEPRAVATION OF A
MOVABLE
A lost thing is one previously under the lawful
possession and control of a person but is now
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
without any possessor.
When possession of movables is lost or not
lost
If the possessor has no idea at all about the
whereabouts of the movable, possession is lost,
but not when he more or less knows its general
location, though he may not know its precise or
definite location. In the former, he has lost
juridical control; in the latter, the object
remains within his patrimony (not in the
patrimony of another). (Paras, 2008)
NOTE: An abandoned property is not
considered as a lost thing. (Pineda, 1999)
Loss of immovables with respect to third
person
The possession of immovables and of real rights
is not deemed lost, or transferred for purposes
of prescription to the prejudice of third
persons, except in accordance with the
provisions of the Mortgage Law and the Land
Registration Laws. (NCC, Art. 557)
NOTE: Art. 557 refers to possession of real
property, and other real rights over real
property (like easement or usufruct)
Acts of mere holder
GR: Acts relating to possession, executed or
agreed to by one who possesses a thing
belonging to another as a mere holder to enjoy
or keep it, in any character, do not bind or
prejudice the owner.
XPNS:
1. Unless he gave said holder express
authority to do such acts; or
2. Ratifies them subsequently. (NCC, Art. 558)
FINDER OF LOST MOVABLE
Rule regarding the right of a possessor who
acquires a movable claimed by another
If the possessor is in:
1. Bad faith – He has no right.
2. Good faith – He has presumed ownership. It
is equivalent to title.
Requisites:
a. Owner has voluntarily parted with the
246
 Civil Law
possession of the thing; and
b. Subsequent possessor is in the concept of
an owner.
c. Possession in good faith;
Possession of movable property acquired in
good faith
GR: Doctrine of irrevindicability – The
possession of movable property acquired in
good faith is equivalent to title and the true
owner cannot recover such movable.
NOTE: This is merely presumptive as it can be
defeated by the true owner. (NCC, Art. 559)
XPNs:
1. When the owner has lost a movable; or
2. Has been unlawfully deprived of a movable.
In which case the possessor cannot retain the
thing as against the owner, who may recover it
without paying any indemnity
XPN to the XPNs: Where the movable is
acquired in good faith at a public sale, the
owner must reimburse to recover. [NCC, Art.
559(2)]
Duty of a finder of a lost movable (NCC, Art.
719)
Whoever finds a lost movable, which is not a
treasure, must return it to its previous
possessor. If the latter is unknown, the finder
shall immediately deposit it with the mayor of
the city or municipality where the finding has
taken place. The mayor in turn must publicly
announce the finding of the property for two
consecutive weeks.
Authorized public auction of lost movable
If the movable cannot be kept without
deterioration, or without expenses which
considerably diminish its value, it shall be sold
at public auction eight days after the
publication.
Awarding of the lost movable to the finder
If the owner or previous possessor did not
appear after 6 months from the publication, the
thing found or its value or proceeds if there was
a sale, shall be awarded to the finder. The
finder, however, shall pay for the expenses
247
incurred for the publication. (NCC, Art. 719)
Duty of the owner who appeared
1. Give a reward to the finder equivalent to
one-tenth (1/10) of the sum or of the price
of the thing found (NCC, Art. 720);
2. Reimburse to the finder for the latter’s
expenses incurred for the preservation of
the thing (NCC, Art. 546) and expenses
spent for the location of the owner; and
3. Reimburse the expenses for publication if
there was a public auction sale. (Pineda,
1999)
Summary of recovery or non-recovery
principle
A. Owner MAY RECOVER WITHOUT
REIMBURSEMENT:
1. From possessor in bad faith; or
2. From possessor in good faith (if owner
had LOST the property or been
unlawfully deprived of it) (the
acquisition being from a private
person). (NCC, Art. 559)
B. Owner MAY RECOVER but should
REIMBURSE:
If possessor acquired the object in good faith
at a PUBLIC SALE or AUCTION. (NCC, Art.
559) Because the publicity attendant to a
public sale should have been sufficient
warning for the owner to come forward and
claim the property.
C. Owner CANNOT RECOVER, even if he
offers to REIMBURSE (whether or not the
owner had lost or been unlawfully deprived):
1. If possessor had acquired it in good faith
by purchase from a merchant’s store, or
in fairs, or markets in accordance with
the Code of Commerce and special laws
(NCC, Art. 1505 and Code of Commerce,
Art. 85 and Art. 86);
2. If owner “is by his conduct precluded
from denying the seller’s authority to
sell.” (ESTOPPEL) (NCC, Art. 1505); and
3. If possessor had obtained the goods
because he was an innocent purchaser
for value and holder of a NEGOTIABLE
document of title to the goods. (NCC, Art.
1518) (Paras, 2008)
 Property
Q: Suppose a recently stolen property is
found in possession of A, is A presumed to be
the thief?
A: YES, it is a disputable presumption “that a
person found in possession of a thing taken in
the doing of a recent wrongful act is the taker
and doer of the whole act.’’ (Rules of Court, Rule
131, Sec. 3[j]) It is true that one who possesses a
movable, acquired in good faith, has what is
called an equivalent of title, but this is
destroyed when it is proved that said movable
belongs to somebody else who has lost it, or has
been unlawfully deprived of its possession.
(NCC, Art. 559) (Paras, 2008)
Q: In order to contest the title of the
possessor in good faith, what should the
true owner do?
A: The true owner should present sufficient
proof of the identity of the object AND that he
had either lost it or has been illegally deprived
of it. This proof is an indispensable requisite a
conditio sine qua non in order that the owner of
the chattel may contest the apparent title of its
possessor. Without adequate proof of such loss
or illegal deprivation, the present holder cannot
be put on his defense, even if as possessor he
has no actual proprietary title to the movable
property in question. (Paras, 2008)
Rule when possessor has already become
the owner
Art. 559 in fact assumes that the possessor is as
yet not the owner, for it is obvious that where
the possessor has come to acquire indefeasible
title, let us say adverse possession for the
necessary period, no proof of loss, or illegal
deprivation could avail the former owner of the
chattel. He would no longer be entitled to
recover it under any condition. (Paras, 2008)
Estafa is considered as unlawful deprivation
Q: Using a falsified manager's check, Justine,
as the buyer, was able to take delivery of a
secondhand car which she had just bought
from United Car Sales Inc. The sale was
registered with the Land Transportation
Office. A week later, the seller learned that
the check had been dishonored, but by that
time, Justine was nowhere to be seen. It
turned out that Justine had sold the car to
Jerico, the present possessor who knew
nothing about the falsified check. In a suit by
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
United Car Sales, Inc. against Jerico for
recovery of the car, plaintiff alleges it had
been unlawfully deprived of its property
through fraud and should, consequently, be
allowed to recover it without having to
reimburse the defendant for the price the
latter had paid. Should the suit prosper?
(1998 BAR)
A: The suit should prosper because the criminal
act of estafa should be deemed to come within
the meaning of unlawful deprivation under Art.
559 as without it, United Car Sales would not
have parted with the possession of its car. Thus,
it was allowed to recover the property without
having to reimburse the defendant.
Possession of wild animals
Wild animals are possessed only while they are
under one’s control; domesticated or tamed
animals are considered domestic or tame, if
they retain the habit of returning to the
premises of the possessor. (NCC, Art. 560)
Lawful recovery of possession that had been
unjustly lost
One who recovers, according to law, possession
unjustly lost, shall be deemed for all purposes
which may redound to his benefit, to have
enjoyed it without interruption. (NCC, Art. 561)
Requisites:
1. Possession was lost unlawfully or unjustly;
2. Possessor lawfully recovers possession; and
3. Uninterrupted possession is beneficial to
him.
USUFRUCT
Usufruct is the right of a person called
usufructuary, to enjoy the property of another
called the owner, with the obligation of
returning it at the designated time and
preserving its form and substance, unless the
title constituting it or the law provides
otherwise. (Pineda, 2009)
NOTE: A usufruct can be constituted in favor of
a town, corporation or association, but it cannot
be for more than 50 years. (NCC, Art. 605)
Characteristics of usufruct (ENA)
1. Essential – Those without which it cannot
248
 Civil Law
be termed as usufruct: require Michael to investigate Chayong’s title
because the latter’s ownership over the
a. Real right (whether registered in the property remains unimpaired despite such
registry of property or not); encumbrance. Only the jus utendi and jus
b. Constituted on property fruendi over the property are transferred to the
i. Real; usufructuary. The owner of the property
ii. Personal; maintains the jus disponendi or the power to
iii. Consumable; alienate, encumber, transform, and even
iv. Non-consumable; destroy the same. (Hemedes v. CA, G.R. Nos.
v. Tangible; 107132 & 108472, October 8, 1999)
vi. Intangible.
c. Temporary duration; KINDS OF USUFRUCT
d. Purpose: to enjoy the benefits and
derive all advantages from the object 1. As to origin:
as a consequence of normal use or a. Legal – Created by law such as
exploitation. usufruct of the parents over the
property of their unemancipated
2. Natural – That which ordinarily is present, children;
but a contrary stipulation can eliminate it NOTE: The right of the parents over
because it is not essential; the fruits and income of the child’s
property shall be limited primarily to
a. The obligation of conserving or the child’s support and secondarily to
preserving the form and substance the collective daily needs of the family.
(value) of the thing.; and (FC, Art. 226)
b. It is transmissible. b. Voluntary – Created by will of the
parties either by act inter vivos (e.g.
3. Accidental – Those which may be present or donation) or by act mortis causa (e.g.
absent depending upon the stipulation of in a last will and testament);
parties. c. Mixed– Created by both law and act of
the person (e.g. acquired by
a. Whether it be pure or a conditional prescription: I possessed in good faith
usufruct; a parcel of land which really belonged
b. The number of years it will exist; to another. Still in good faith, I gave in
c. Whether it is in favor of one person or my will to X, the naked ownership of
several, etc. land and to Y, the usufruct. In due
time, Y may acquire the ownership of
Obligation to preserve the form and the usufruct by acquisitive
substance of the thing in usufruct prescription) (Paras, 2008);
d. Prescriptive – acquired by third
GR: The usufructuary is bound to preserve the persons through continuous use of the
form and substance of the thing in usufruct. usufruct for the period required by
This is to prevent extraordinary exploitation, law.
prevent abuse of property and prevent
impairment. 2. As to the number of beneficiaries
a. Simple – If only one usufructuary
XPN: In case of an abnormal usufruct, whereby enjoys the usufruct;
the law or the will of the parties may allow the b. Multiple – If several usufructuaries
modification of the substance of the thing. enjoy the usufruct;
i. Simultaneous – at the same time
Q: Chayong owned a parcel of land which she ii. Successive – one after the other
mortgaged to Michael. Upon the OCT was an NOTE: In case usufructuary is created by
annotation of usufructuary rights in favor of donation, apply Art. 756. If the usufruct is
Cheddy. Is Michael obliged to investigate testamentary, apply Rules on Fidei
Chayong’s title? Commisary substitution under Art. 863 and
869.
A: NO. The annotation is not sufficient cause to

249
 Property
3. As to the extent of object: giving the usufruct.
a. Total – constituted on the whole 2. In case of deficiency, the provisions on Civil
thing Code. (NCC, Art. 565)
b. Partial – constituted only on a part.
Usufruct vs. Lease
4. As to the subject matter:
a. Over things
i. Normal (or perfect or regular) – BASIS USUFRUCT LEASE
involves non-consumable things
where the form and substance Real right only
are preserved; or if, as in the
ii. Abnormal (or imperfect or case of a lease
irregular) – Involves consumable over real
things – that which involves property, the
things which would be useless to Nature of Always a real lease is
the usufructuary unless they are the right right. registered, or
consumed or expanded. is for more
b. Over rights – involves intangible than one year,
property; rights must not be otherwise it is
personal or intransmissible in a personal
character so present or future right.
support cannot be an object of May not be the
usufruct. owner, as in
Creator of Owner or his the case of a
5. As to the effectivity or extinguishment: Right agent. sub- lessor or
a. Pure – no term or condition a
b. With a term – there is a period which usufructuary.
may be either suspensive or resolutory By contract, by
i. Ex die – from a certain day way of
ii. In diem – up to a certain day exception by
iii. Ex die in diem – from a certain day law (as in the
up to a certain day. case of an
c. Conditional – subject to a condition implied new
which may be either suspensive or lease under
resolutory. By law, Art. 1670), or
contract, will when a builder
GR: No form is required in constituting a Origin of testator or has built in
usufruct. Even an oral usufruct may be by good faith on
constituted. prescription. the land of
another a
XPNs: building, when
1. Usufruct over real property must be the land is
registered to bind third person considerably
2. Statute of Frauds apply in case Real worth more in
Property is involved. If Personal value than the
property, Statute of Frauds will apply building.
where the value is P 500 or higher and Only those
in case the agreement is not to be Extent of All fruits, uses
particular or
performed in one year; Enjoyment and benefits.
specific use.
3. A usufruct by donation or by will must A passive
comply with formalities of a donation owner who
or will An active
allows the
owner who
Cause usufructuary
Rules governing usufruct makes the
to enjoy the
lessee enjoy
object of
1. The agreement of the parties or the title usufruct

UNIVERSITY OF SANTO TOMAS 250

2021 GOLDEN NOTES
 Civil Law
Usufructuary usufructuary may lease the thing to
pays for another, even without the consent of the
ordinary owner.
Lessee cannot
repairs and
constitute a
Repairs pays for 8. To Set-off the improvements he may have
usufruct on
and Taxes annual made on the property against any damage
the property
charges and to the same. (NCC, Art. 580)
leased.
taxes on the
fruits. Rule as to certain rights (rent, pension,
benefits, etc.)
Usufructuary
may lease the The lessee Whenever a usufruct is constituted on the right
Limitation property to cannot to receive a rent or periodical pension, whether
on the use another but constitute a in money or in fruits, or in the interest on bonds
of cannot usufruct on or securities payable to bearer, each payment
property alienate the the property due shall be considered as the proceeds of fruits
thin itself. leased. of such right. Whenever it consists in the
enjoyment of benefits accruing from a
participation in any industrial or commercial
RIGHTS OF USUFRUCTUARY enterprise, the date of the distribution of which
is not fixed, such benefits shall have the same
Rights of the usufructuary as to the thing and character. In either case they shall be
its fruits (RIRICRES) distributed as civil fruits, and shall be applied in
the manner prescribed in the preceding article.
1. To Receive the fruits of the property in (Paras, 2008)
usufruct and half of the hidden treasure he
accidentally finds on the property (NCC, The things referred to in Art. 570 are
Articles 566 and 438); considered civil fruits and shall be deemed to
accrue proportionately to the naked owner and
NOTE: The usufructuary is entitled to the usufructuary, for the time the usufruct lasts.
natural, industrial, and civil fruits that will
accrue during the existence of the usufruct. Rules if the finder of a hidden treasure is a
usufructuary
2. To enjoy any Increase which the thing in
usufruct may acquire through accession If the finder is a usufructuary and he discovers
(NCC, Art. 571); it by chance, the usufructuary shall be entitled
3. To Retain the thing until he is reimbursed to one half of the value thereof. The other half
for advances for extraordinary expenses belongs to the naked owner.
and taxes on the capital (NCC, Art. 612);
4. To make such Improvements or expenses If the finder is a third person and he found
on the property he may deem proper and to hidden treasure by chance in the property
remove the improvements provided no under usufruct, the usufructuary shall be
damage is caused to the property (NCC, Art. considered a stranger. The finder gets half and
the other half shall belong to the naked owner.
579);
(Paras, 2008)
5. To Collect reimbursements from the owner
for indispensable extra ordinary repairs,
Rights of a usufructuary on pending natural
taxes on the capital he advanced, and
and industrial fruits (NCC, Art. 567)
damages caused to him;
6. To Remove improvements made by him if
the same will not injure the property;
7. To personally Enjoy the thing or lease it to FRUITS RIGHTS OF THE
another (NCC, Articles. 572-577) generally GROWING USUFRUCTUARY
for the same or shorter period as the
usufruct; and At the
beginning of a. Belong to the usufructuary;
NOTE: As to the thing itself, the the usufruct

251
 Property
b. Not bound to refund to the
owner the expenses of
cultivation and production
but without prejudice to
the right of third persons;
BUT without prejudice to the
right of third persons. Thus, if
the fruits had been planted by a
possessor in good faith, the
pending crop expenses and
charges shall be pro-rated
between said possessor and the
usufructuary
Belong to the owner but he is
bound to reimburse the
At the usufructuary of the ordinary
termination cultivation expenses (NCC, Art.
of the 545) out of the fruits received.
usufruct (NCC, Art. 443) The right of
innocent third parties should
not be prejudiced.
NOTE: Civil fruits accrue daily; stock dividends
and cash dividends are considered civil fruits.
However, dividends declared from “capital
stocks” are not covered by usufruct because
such are not declared from profits of the
corporation.
Aside from the right to the fruits, the
usufructuary has the right to the enjoyment (use,
not ownership) of:
a. Accessions (whether artificial or natural);
b. Servitudes and easements; and
c. All benefits inherent in the property (like
the right to hunt and fish therein, the right
to construct rainwater receptacles, etc.)
Reason:
The usufructuary, as a rule, is entitled to the:
a. ENTIRE jus fruendi (including fruits of
accessions); and
b. ENTIRE jus utendi (so he can make use for
example of an easement)
When the expenses of cultivation and
production exceeds the proceeds of the
growing fruits
If the expenses exceed the proceeds of the
growing fruits, the owner has no obligation to
reimburse the difference. (NCC, Art. 567)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Limitations to Usufructuary Rights
The usufructuary cannot:
1. Sell, pledge or mortgage the property itself
because he is not the owner;
2. Sell future crops (growing crops at the
termination of the usufruct belong to the
owner); and
3. Lease the thing for a period longer than the
term of the usufruct without the consent of
owner
XPN: In lease of rural lands, it may exceed the
lifetime of the usufruct and shall subsist during
the agricultural year.
Q: Can a usufruct be constituted on an
encumbered or mortgaged land?
A: YES. The mortgage remains inactive until the
debt is not paid, and the mortgage is not for the
purpose of limiting the use of the fruits.
Right of usufructuary to make useful or
luxurious improvements
1. The usufructuary may construct and make
improvements on the property as he may
deem proper;
XPN: If there is an express prohibition to
that effect.
2. Limitation: the usufructuary cannot alter its
form and substance;
3. Removal: usufructuary may generally
remove provided no injury is made on the
principal even against the will of the naked
owner. If he has chosen not to remove he
cannot be compelled to remove them; and
4. Indemnity: no right to be indemnified if the
improvements cannot be removed. He may
however set-off the value of the
improvements against the amount of
damage he had caused to the property.
(Pineda, 2009)
NOTE: If the right of the usufructuary to remove
improvements is not registered in the
registration proceedings of the land in usufruct,
an innocent purchaser for value of the property
is not bound to respect the right.
Offsetting of damages and improvements
introduced by the usufructuary
Requisites before set-off can be made:
1. Damage must have been caused by the
usufructuary;
252
 Civil Law
2. Improvements must have augmented the
value of the property; and
3. Notice of intention to set-off.
If the damages exceed the value of the
improvements, the usufructuary is liable for the
difference as indemnity.
If the improvements exceed the amount of
damages, the usufructuary may remove the
portion of the improvements representing the
excess in value if it can be done without injury;
otherwise, the excess in value accrues to the
owner.
Q: Why do improvements accrue to the
owner?
A: Because there is no indemnity for
improvements.
Rights of the usufructuary as to the usufruct
itself
1. To Alienate, pledge or mortgage the right of
usufruct, even by gratuitous title (NCC, Art.
572);
2. In a usufruct to Recover property/real
right, to bring the action and to oblige the
owner thereof to give him the proper
authority and the necessary proof to bring
the action (NCC, Art. 578); and
3. In a usufruct of part of a Common property,
to exercise all the rights pertaining to the
co-owner with respect to the
administration and collection of fruits or
interests.
Lease, alienation and encumbrance of the
property subject to usufruct
1. Rights with Reference to the THING ITSELF (in
Addition to the Usufruct)
The usufructuary, not being the owner of the
thing subject to usufruct, cannot alienate,
pledge or mortgage the thing itself.
However, the usufructuary may lease the
thing to another (This can be done even
without the owner’s consent; moreover,
ordinarily the lease must not extend to a
period longer than that of the usufruct,
unless the owner consents. Thus, the lease
ends at the time the usufruct ends, except in
the case of rural leases).
NOTE: If the lessee should damage the
253
property, the usufructuary shall answer to
the owner. (Art. 590) The relation between
the owner and the usufructuary, does not end
just because a lease has been made. The
usufructuary, however, can demand
reimbursement from the lessee, because of
the latter’s breach of the contract of lease. If
the usufructuary cannot pay the damage to
the naked owner, his bond shall be liable.
This is precisely one reason for the
requirement of a bond. (NCC, Art. 583)
2. Rights with Reference to the USUFRUCTUARY
RIGHT ITSELF
The usufructuary may alienate (sell, donate,
bequeath, or devise) the usufructuary right
(except a legal usufruct, i.e., the usufruct
which parents have over the properties of
their unemancipated children, because said
usufruct is to be used for certain obligations
towards children); or a usufruct granted a
usufructuary in consideration of his person;
or a usufruct acquired thru a caucion
juratoria, for here, the need of the
usufructuary himself is the reason for the
enjoyment. (NCC, Art. 587)
The usufructuary may pledge or mortgage
the usufructuary right (because he OWNS
said right) BUT he cannot pledge or mortgage
the thing itself because he does not own the
thing [NCC, Art. 2085(2)]. Neither can he sell
or in any way alienate the thing itself, or
future crops, for crops pending at the
termination of the usufruct belong to the
naked owner. (NCC, ArtIcles 567 and 572 and
Mortgage Law, Art. 106)
Q: 120 hectares of land from the NHA
property were reserved for the site of the
National Government Center. 7 hectares from
which were withdrawn from the operation.
These revoked lands were reserved (MSBF)
However, MSBF occupied approximately 16
hectares and leased a portion thereof to
Bulacan Garden Corporation (BGC) BGC
occupies 4,590 sqm. Implementing such
revocation, NHA ordered BGC to vacate its
occupied area. BGC then filed a complaint for
injunction. Has BGC any right over the leased
premises?
A: A usufructuary may lease the object held
in usufruct. The owner of the property must
respect the lease entered into by the
 Property
usufructuary so long as the usufruct exists. MSBF
was given a usufruct over only a 7-hectare area.
NHA cannot evict BGC if the 4,590 square meter
portion MSBF leased to BGC is within the 7-
hectare area held in usufruct by MSBF. However,
the NHA has the right to evict BGC if BGC
occupied a portion outside of the 7- hectare area
covered by MSBF's usufructuary rights. (NHA v.
CA, G.R. No. 148830, April 13, 2005)
Transfer of the usufruct
The transferee can enjoy the rights transferred
to him by the usufructuary until the expiration
of the usufruct. Transfer of usufructuary rights,
gratuitous or onerous, is co-terminus with the
term of usufruct.
Exercise of acts of ownership by a
usufructuary
GR: A usufructuary cannot exercise acts of
ownership such as alienation or conveyance.
XPNs: When what is to be alienated or
conveyed is a:
1. Consumable;
2. Property intended for sale; or
3. Property which has been appraised when
delivered. (NCC, Art. 574)
NOTE: If it has not yet been appraised or if it is
not a consumable, return the same quality
(mutuum)
Abnormal usufruct on consumable things
This is another instance of abnormal usufruct,
and is sometimes referred to as a “quasi-
usufruct” because the form and substance is not
really preserved. Thus, this is really a SIMPLE
loan. It has been included however in the title
on usufructs because in what are called
UNIVERSAL USUFRUCTS, both non-consumable
and consumable properties are included. While
we seldom find usufructs on consumable
properties alone, it is a fact that they indeed
exist. Thus, the Supreme Court has held that
even money may be the object of a usufruct.
(Paras, 2008)
RULES for this ‘QUASI-USUFRUCT’
1. The usufructuary (debtor-borrower) can
use them (as if he is the owner, with
complete right of pledge or alienation)
2. BUT at the end of the usufruct, he must:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Pay the APPRAISED value (if appraised
when first delivered); or
2. If there was no appraisal, return same
kind, quality, and quantity OR pay the
price current at the termination of the
usufruct (therefore not at the original
price or value)
Usufruct on fruit-bearing trees and shrubs
The usufructuary of fruit-bearing trees and
shrubs may make use of the dead trunks, and
even of those cut off or uprooted by accident,
under the obligation to replace them with new
plants. (NCC, Art. 575)
NOTE: This is a SPECIAL usufruct.
Rights
The usufructuary can use (even for firewood,
though he is NOT the naked owner) the
following:
a. Dead trunks; and
b. Those cut off or uprooted by accident.
BUT he must REPLACE them with new plants
(for indeed, he was not the naked owner)
Other SPECIAL usufructs
1. Of periodical pension, income, dividends
(NCC, Art. 570);
2. Of woodland (NCC, Art. 577);
3. Of right of action to recover real property,
real right, or movable property (NCC, Art.
578);
4. Of part of property owned in common
(Art. 582);
5. Of the entire patrimony of a person (NCC,
Art. 598);
6. On a mortgaged immovable (NCC, Art. 600);
and
7. On a flock or herd of livestock. (NCC, Art.
591)
Special usufruct over a WOODLAND
This is not a common or frequent usufruct
because:
1. Natural resources (including forest or
timber lands) belong to the State (Regalian
Doctrine under Art. XII, Sec. 3 of the 1987
Philippine Constitution);
2. A license is generally essential if one desires
to gather forest products (Revised
254
 Civil Law
Administrative Code, Sec. 47)
Obligations of the usufructuary over a
woodland
In the enjoyment of the usufruct, the
usufructuary:
1. Must bear in mind that he is not the owner,
and therefore, in the exercise of the diligence
in caring for the property (required under
Art. 589 he must see to it that the woodland
is preserved, either by development or by
replanting, thus he cannot consume all,
otherwise nothing would be left for the
owner.
2. In the cutting or felling of trees, he must—
a. Follow the owner’s habit or practices;
b. In default thereof, follow the customs of
the place (as to MANNER, AMOUNT and
SEASON) (NCC, Art. 577)
— All without prejudice to the owner,
for while he can USE, he cannot
ABUSE.
NOTE: The rule above is applicable if the
woodland:
i. Is a COPSE (thicket of small trees);
or
ii. Consists of timber for BUILDING.
c. If there be no customs, the only time
the usufructuary can CUT DOWN trees
will be for REPAIR or IMPROVEMENT,
but here the owner must first be
informed (the owner, thus, does not
need to consent)
3. Cannot alienate the trees (for the trees are
not considered fruits) unless he is
permitted, expressly or impliedly by the
owner (as when the purpose of the usufruct
was really to sell the timber) or unless he
needs the money to do some repairs (but in
the last case, the owner must be informed)
Rights of usufructuary to recover the
property held in usufruct
To bring the action, the usufructuary can
DEMAND from the owner:
1. Authority to bring the action (usually a
special power of attorney); and
2. Proofs needed for a recovery.
255
The action may be instituted in the
usufructuary’s name, for being the owner of the
usufruct, he is properly deemed a real party in
interest. (Rules of Court, Sec. 2, Rule 3)
a. If the purpose is the recovery of the
property or right, he is still required under
Art. 578 to obtain the naked owner’s
authority.
b. If the purpose is to object to or prevent
disturbance over the property (once the
property is given him), no special authority
from the naked owner is needed.
Usufructuary of a part of common property
The usufructuary of a part of a thing held in
common shall exercise all the rights pertaining
to the owner thereof with respect to the
administration and the collection of fruits or
interest. Should the co-ownership cease by
reason of the division of the thing held in
common, the usufruct of the part allotted to the
co-owner shall belong to the usufructuary.
(NCC, Art. 582)
A co-owner may give the usufruct of his share
to another, even without the consent of the
others, unless personal considerations are
present. (NCC, Art. 493)
The usufructuary in such a case takes the
owner’s place as to:
a. Administration (management); and
b. Collection of fruits or interest (NCC, Art.
582) (BUT not as to alienation, disposition,
or creation of any real right over the
property, since these are strict acts of
ownership, unless of course he is
authorized by the naked owner) (Paras,
2008)
Rights of usufructuary at the expiration of
the usufruct
1. To collect reimbursement from the owner:
a. For indispensable extraordinary
repairs made by the usufructuary
(NCC, Art. 593);
b. For taxes on the capital advanced by
the usufructuary (NCC, Art. 597);
c. For damages caused by the naked
owner;
d. For payment of increase in value of the
immovable by reason of repairs
provided the owner is notified of the
 Property
urgency of such repairs but the latter point out discrepancies and omissions in
failed to make said repairs despite the the inventory.
notification, and the repair is
necessary for the preservation of the 2. Conditions of immovables must be
property. (NCC, Art. 594) described; and
3. Movables must be appraised.
2. To retain the thing until reimbursement is
made. (NCC, Art. 612) NOTE: As a rule, no form is required, except
when there are real properties. Expenses
OBLIGATIONS OF USUFRUCTUARY are to be borne by the usufructuary. (Paras,
2008)
The usufructuary has obligations
When inventory is not required
1. Before the usufruct (like the making of
inventory); 1. Waived;
2. During the usufruct (like taking due care of 2. No one will be injured by the lack of
property); and inventory (NCC, Art. 585);
3. After the usufruct (like the duty to return 3. When the donor has reserved to himself the
and indemnify in the proper cases) usufruct of the property donated; or
4. Agreement of both parties.
1. Before the usufruct (NCC, Art. 583)
Effects of failure to post a bond or security
a. Make an inventory; and
b. Give security
1. The owner shall have the following options
(NCC, Art. 586):
This article speaks of two obligations (inventory
a. Receivership of realty;
and security) They are not necessary however
b. Sale of movables;
before the right to the usufruct begins; they are
c. Deposit of securities;
merely necessary before physical possession and
d. Investment of money; or
enjoyment of the property can be had, thus if the
e. Retention of the property as
usufructuary fails to give security (unless
administrator.
exempt) the usufruct still begins but the naked
owner will have the rights granted him under
2. The net product shall be delivered to the
Art. 586. (Paras, 2008)
usufructuary;
3. The usufructuary cannot collect credit due
NOTE: The purpose of giving security is to
or make investments of the capital without
insure fulfillment by the usufruct of the
the consent of the owner or of the court
obligation imposed upon him.
until the bond is given.
After the security has been given by the
Effects of failure to give security
usufructuary, he shall have a right to all the
proceeds and benefits from the day on which, in
1. On the rights of the naked owner:
accordance with the title constituting the
a. May deliver the property to the
usufruct, he should have commenced to receive
usufructuary;
them (retroactive effect of security). (NCC, Art.
b. May choose retention of the property
588)
as administrator; and
c. May demand receivership or
Requirements for the inventory
administration of the real property,
sale of movable, conversion or deposit
1. The naked owner or representative must be
of credit instruments or investment of
previously notified;
cash or profits.
NOTE: The purpose is to enable him to
2. On the rights of the usufructuary:
correct errors in the inventory if he desires.
a. Cannot possess the property until he
His absence is a waiver for corrections. If
gives security;
there is non-notification, the inventory can
b. Cannot administer property;
go on but the naked owner may later on

UNIVERSITY OF SANTO TOMAS 256

2021 GOLDEN NOTES
 Civil Law
c. Cannot collect credits that have
matured nor invest them; and
XPN: if the court or naked owner
consents;
d. May alienate his right to usufruct.
Exemption of usufructuary from the
obligation to give security
Usufructuary may be exempt from the obligation
to give security when:
1. No one will be injured by the lack of the
bond (NCC, Art. 585);
2. The donor (or parent) reserved the
usufruct of the property donated (NCC, Art.
584);
3. When there is waiver by the naked owner;
4. When there is parental usufruct (FC, Art.
225);
5. The usufruct is subject to caucion juratoria
where:
a. The usufructuary takes an oath to take
care of the things and restore them to
its previous state before the usufruct
is constituted; and
b. The property subject to such cannot be
alienated or encumbered or leased.
Caucion juratoria – “by virtue of a promise
under oath”
The usufructuary, being unable to file the
required bond or security, may file a verified
petition in the proper court asking for the
delivery of the house and furniture necessary for
himself and his family so that he and his family
be allowed to live in a house included in the
usufruct and retain it until the termination of the
usufruct without any bond or security.
The same rule shall be observed with respect to
implements, tools and other movable property
necessary for an industry or vocation in which
he is engaged. (NCC, Art. 587)
Requisites before the caucion juratoria is
allowed
1. Proper court petition;
2. Necessity for delivery of furniture,
implements or house included in the
usufruct;
3. Approval of the court; and
4. Sworn promise.
257
2. During the usufruct
a. Take care of property;
b. Replace the young of animals that die or
are lost or become prey when the
usufruct is constituted on a flock or herd
of livestock;
c. Make ordinary repairs;
d. Notify the owner of urgent
extraordinary repairs;
e. Permit works & improvements by the
naked owner not prejudicial to the
usufruct;
f. Pay annual taxes and charges on the
fruits;
g. Pay interest on taxes on capital paid by
the naked owner;
h. Pay debts when usufruct is constituted
on the whole patrimony;
i. Secure the naked owner’s/court's
approval to collect credits in certain
cases;
j. Notify the owner of any prejudicial act
committed by third persons; and
k. Pay for court expenses and costs.
Usufructuary’s liability for ordinary repairs
The usufructuary is obliged to make the
ordinary repairs needed by the thing given in
usufruct. It includes such as are required by the
wear and tear due to the natural use of the
thing and are indispensable for its preservation.
(NCC, Art. 592)
NOTE: If the naked owner demanded the repair
and the usufructuary still fails to do so, the
owner may make them personally or thru
another, at the expense of the usufructuary.
(NCC, Art. 592)
Extraordinary repairs (NCC, Art. 593)
It includes:
1. Those required by the wear and tear due to
the natural use of the thing but not
indispensable for its preservation.
Liabilities:
a. The naked owner should be held liable,
whether or not he is notified by the
usufructuary; and
b. The law does not require the naked
owner to make them; what is important
is that he will bear the expenses made
by the usufructuary. (Paras, 2008)
 Property
2. Those caused by exceptional circumstances 3. After the usufruct/ at the termination
and are indispensable for its preservation. a. Return the thing in usufruct to the
naked owner unless there is a right of
Liabilities: retention;
a. The naked owner shall be held liable; b. Pay legal interest for the time that the
and usufruct lasts; and
b. The usufructuary is allowed to make c. Indemnify the naked owner for any
them with the right to get the increase losses due to his negligence or of his
in value and the right of retention at the transferees.
termination of usufruct, provided there
was notification by the usufructuary and NOTE: The usufructuary may be liable for the
failure to repair by the naked owner. damages suffered by the naked owner on
(Paras, 2008) account of fraud committed by him or through
his negligence.
3. Those caused by exceptional circumstances
but are not needed for its preservation. XPN: the usufructuary is not liable for
Liabilities: deterioration due to:
a. The naked owner is liable; and
b. The usufructuary cannot compel the 1. Wear and tear; or
naked owner to make such repairs and 2. Fortuitous event.
he is not allowed to make them even if
the naked owner has failed to make RIGHTS OF THE OWNER
them. (Paras, 2008)
Rights of a naked owner and the limitations
NOTE: Extraordinary repairs shall be at the
imposed upon him
expense of the owner. The usufructuary is
obliged to notify the owner when the need for
such repairs is urgent.
RIGHTS LIMITATIONS
Right of retention of the usufructuary
Can alienate the thing in
Alienation
The usufructuary has a right of retention even usufruct.
after the termination of the usufruct until he is Cannot alter the form and
Alteration
reimbursed for the increase in value of the substance.
property caused by extraordinary repairs for Cannot do anything
preservation. Enjoyment prejudicial to the
usufructuary
Charges or taxes which the usufructuary Can construct any works
must pay and make any
improvement provided it
Construction and
1. The annual charges (in the fruits); does not diminish the
Improvement
2. The annual taxes on the fruits; and value or the usufruct or
prejudice the rights of the
Taxes imposed directly on the capital usufructuary.

These shall be at the expense of the owner Alienation by naked owner

provided they are not annual. (Paras, 2008)
Rules:
1. If paid by the naked owner, he can demand
legal interest on the sum paid; or
2. If advanced by the usufructuary, he shall
recover the amount thereof at the
termination of the usufruct. [NCC, Art.
597(2)]
Since the jus disponendi and the title (dominium
directum) reside with the naked owner, he
retains the right to ALIENATE the property
BUT:
1. He cannot alter its form or substance; or
2. Do anything prejudicial to the usufructuary
(as when he should illegally lease the
property to another, since this right

UNIVERSITY OF SANTO TOMAS 258

2021 GOLDEN NOTES
 Civil Law
ordinarily pertains to the usufructuary)
Improper use of the thing by the
usufructuary
The owner may demand the delivery of and
administration of the thing with responsibility
to deliver net fruits to usufructuary.
Q: On 1 January 1980, Minerva, the owner of
a building granted Petronila a usufruct over
the property until 01 June 1998 when
Manuel, a son of Petronila, would have
reached his 30th birthday. Manuel, however,
died on 1 June 1990 when he was only 26
years old.
Minerva notified Petronila that the usufruct
had been extinguished by the death of
Manuel and demanded that the latter vacate
the premises and deliver the same to the
former. Petronila refused to vacate the place
on the ground that the usufruct in her favor
would expire only on 1 June 1998 when
Manuel would have reached his 30 th
birthday and that the death of Manuel
before his 30th birthday did not extinguish
the usufruct. Whose contention should be
accepted? (1997 BAR)
A: Petronila’s contention should be
accepted. A usufruct granted for the time that
may elapse before a third person reaches a
certain age shall subsist for the number of years
specified even if the third person should die
unless there is an express stipulation in the
contract that states otherwise. (NCC, Art. 606)
There is no express stipulation that the
consideration for the usufruct is the existence
of Petronila’s son. Thus, the general rule and
not the exception should apply in this case.
When buyer must respect the usufruct
A purchaser of the property must respect the
usufruct in case it is registered or known to him
(NCC, Art. 709), otherwise, he can oust the
usufructuary, who can then look to the naked
owner for damages. (NCC, Art. 581)
Effect of the death of the naked owner on the
usufruct
The usufruct does not terminate the usufruct.
The naked owner’s rights are transmitted to his
heirs.
259
OBLIGATIONS OF THE OWNER
1. To make reimbursement for advances of
the usufructuary (NCC, Art. 597);
2. To cancel the security, upon discharge of the
usufructuary’s obligations (NCC, Art. 612);
3. To respect leases of rural lands by the
usufructuary for the balance of the
agricultural year. (NCC, Art. 572)
EXTINCTION/TERMINATION
Usufruct is extinguished by: (PLDT-ERM)
1. Acquisitive Prescription;
NOTE: The use by a third person and not
the non-use by the usufructuary. Mere non-
use of the usufructuary does not terminate
the usufruct.
XPN: unless it is also a renunciation.
2. Total Loss of the thing;
NOTE: If the loss is only partial, the
usufruct continues with the remaining part.
3. Death of the usufructuary;
GR: Death of the usufructuary generally
ends the usufruct since a usufruct is
constituted essentially as a lifetime benefit
for the usufructuary or in consideration of
his person.
XPNs:
a. In the case of multiple usufructs, it
ends on the death of the last survivor
(NCC, Art. 611);
b. In case there is a period fixed based on
the number of years that would elapse
before a person would reach a certain
age, unless the period was expressly
granted only in consideration of the
existence of such person, in which
case it ends at the death of said person
(NCC, Art. 606); or
c. In case the contrary intention clearly
appears.
4. Termination of right of the person
constituting the usufruct;
5. Expiration of the period or fulfilment of the
resolutory condition;
 Property
NOTE: If the usufructuary is a juridical
person, the term should not exceed 50
years.
6. Renunciation by the usufructuary; and
NOTE: It partakes the nature of a
condonation or donation. It can be made
expressly or impliedly as long as done
clearly. If done expressly, it must conform
with forms of donation. Renunciation of
usufructuary’s rights is NOT an assignment
of right. It is really abandonment by the
usufructuary of his right and does not
require the consent of the naked owner but
it is subject to the rights of creditors. There
can be a partial waiver except if it is a
universal usufruct.
7. Merger of the usufruct and ownership in
the same person who becomes the absolute
owner thereof. (NCC, Art. 1275)
Other Causes of termination of usufruct
a. Annulment of the act or title
constituting the usufruct;
b. Rescission;
c. Expropriation;
d. Mutual withdrawal;
e. Legal causes for terminating legal
usufruct; or
f. Abandonment or dissolution of
juridical entity (e.g. corporation)
granted with usufruct before the lapse
of the period.
Usufruct cannot be constituted in favor of a
town, corporation or association for more
than 50 years
Any usufruct constituted in favor of a
corporation or association cannot be
constituted for more than fifty years. (NCC, Art.
605) A usufruct is meant only as a lifetime
grant. Unlike a natural person, a corporation or
association's lifetime may be extended
indefinitely. The usufruct would then be
perpetual. This is especially invidious in cases
where the usufruct given to a corporation or
association covers public land. (NHA v. CA, G.R.
No. 148830, April 13, 2005)
Usufruct on a building and/or land
concerned
Rules:
1. If the usufruct is both on the building and
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the land but the building is destroyed in
any manner whatsoever before the
expiration of the period of usufruct:
a. The usufruct on the building ends, but
the usufruct on the land continues
(usufructuary is still entitled to the use
of the land and remaining materials of
the building);
b. If the naked owner wants to rebuild
but the usufructuary refuses, the latter
prevails but the use of the land is still
his for the remainder of the period.
(Paras, 2008)
2. The usufruct is on the building alone (but
the building is destroyed before the
termination of the period):
a. The usufruct on the building ends, but
the usufructuary can still make use of
whatever materials of the building
remain;
b. The usufructuary is entitled to the use
of the land but the naked owner enjoys
preferential right to its use. (Paras,
2008)
NOTE: While the usufruct on a building does not
expressly include the land on which it is
constructed, the land should be deemed
included, because there can be no building
without land. (De Leon, 2006)
Payment of insurance on a building held in
usufruct (NCC, Art. 608)
1. If the naked owner and usufructuary share in
the premiums and the property is destroyed:
a. If the owner constructs a new building,
the usufruct continues on the new
building.
i. If the cost of the new building is
less than the insurance
indemnity, the usufructuary
should get legal interests on the
difference.
ii. If the cost is more than the
insurance indemnity, the
usufructuary enjoys the new
building completely with no
obligation to give interest on the
additional cost of the naked
owner.
b. If the naked owner does not construct a
260
 Civil Law
new building or rebuild, the naked owner
gets the insurance indemnity but he
should pay the interest thereon to the
usufructuary. (Paras, 2008)
2. If the naked owner alone pays the insurance
indemnity and the usufructuary refused to share:
a. The naked owner gets the whole
indemnity (with no obligation to give the
interest thereon to the usufructuary)
b. If the usufruct was on the building and the
land, the usufruct continues on the land
and the material.
c. If the usufruct was on the building alone,
the naked owner may rebuild, with or
without the approval of the usufructuary,
but he must pay interest on the value of
the land and the old materials that may
have been used. (NCC, Art. 607)
3. If the naked owner alone paid for the
insurance but there is failure or omission on the
part of the usufructuary to share:
The effect is the same as if there was a
sharing, but the usufructuary must
reimburse the owner of the usufructuary’s
share in the insurance premium.
4. If the usufructuary alone pays the insurance
premium:
a. The insurance indemnity goes to the
usufructuary alone, with no obligation
to share it with, nor to give legal interest
thereon to, the naked owner.
b. The usufruct continues on the land for
the remaining period (unless usufruct
has been constituted on the building
alone)
Rule in case of expropriation of the property
(NCC, Art. 609)
In case the property held in usufruct is
expropriated for public use:
1. If the naked owner alone was given the
indemnity, he has the option to:
a. Replace it with another thing of the
same value and of similar condition; or
b. Pay legal interest to usufructuary on
the amount of indemnity for the whole
period of the usufruct, not just the
unexpired period.
NOTE: If the owner chooses the latter
261
alternative, he shall give security for
the payment of interest. (NCC, Art.
609)
2. If both the naked owner and the
usufructuary were separately given
indemnity, each owns the indemnity given
to him, the usufruct being totally
extinguished.
3. If the usufructuary alone was given the
indemnity, he must give it to the naked
owner and compel the latter to return
either the interest or to replace the
property. He may deduct the interest
himself if the naked owner fails to object.
(Paras, 2008)
Effect of bad use of the property held in
usufruct
GR: Usufruct is not extinguished by bad use of
the thing in usufruct.
XPN: If the abuse should cause considerable
injury to the owner, the latter may demand
delivery to and administration by him, but he
will be obliged to pay net proceeds to the
usufructuary. (NCC, Art. 610)
Rules in case of multiple usufructs
1. If constituted simultaneously, all the
usufructuaries must be alive at the time of
the constitution. The death of the last
survivor extinguishes the usufruct (NCC,
Art. 611);
2. If constituted successively by virtue of a
donation, all the donee-usufructuaries must
be living at the time of the constitution-
donation of the usufruct (NCC, Art. 756); and
3. If constituted successively by virtue of a last
will, there should only be two successive
usufructuaries, and both must have been
alive at the time of testator’s death.
EASEMENT OR SERVITUDE
It is an encumbrance imposed upon an
immovable for the benefit of:
1. Another immovable belonging to a different
owner; or
2. For the benefit of a community or one or
more persons to whom the encumbered
estate does not belong by virtue of which
 Property
the owner is obliged to abstain from doing Essential qualities of easements:
or to permit a certain thing to be done on
his estate. (NCC, Articles 613 and 614) 1. Incorporeal;
2. Imposed upon corporeal property;
Where the easement may be established on any 3. Confers no right to a participation in the
of several tenements surrounding the dominant profits arising from it;
estate, the one where the way is shortest and 4. Imposed for the benefit of corporeal
will cause the least damage should be chosen. property;
However, if these two circumstances do not 5. Has two distinct tenements: dominant and
concur in a single tenement, the way which will servient estate; and
cause the least damage should be used, even if it 6. Cause must be perpetual.
will not be the shortest.
Easement vs. Usufruct
There can be no easement over another
easement for the reason that an easement may
be constituted only on a corporeal immovable BASIS EASEMENT USUFRUCT
property. An easement, although it is real right
over an immovable, is not a corporeal right. On real Real or
Constituted on
(1995 BAR) property personal
Limited to a
Easement vs. Servitude particular or
Includes all
specific use
Use granted uses and
of the
EASEMENT SERVITUDE fruits.
servient
estate.
An English law Involves a
Used in civil law countries
term No right of
Real Real or personal As to right of possessory possession in
The right Burden imposed upon possession right over an an
enjoyed another immovable immovable
or movable.
Characteristics of easement (NICE LIAR) Not
extinguished Extinguished
As to effect of
1. A right limited by the Needs of the by death of by death of
death
dominant owner or estate, without dominant usufructuary.
possession; owner.
2. Inseparable from the estate to which it is Real right Real right
attached – cannot be alienated whether or whether or
Nature of right
independently of the estate (NCC, Art. 617) not not
(2001, 2010 BAR); registered. registered.
3. Cannot consist in the doing of an act unless As to
the act is accessory in relation to a real Transmissibl Transmissibl
transmissibilit
easement; e e
y
4. Involves two (2) neighboring Estates: the Cannot be
dominant estate to which the right belongs May be constituted
and the servient estate upon which an constituted on an
obligation rests; in favor, or, easement but
5. A Limitation on the servient owner’s rights How it may be
burdening, a it may be
of ownership; constituted
piece of land constituted
6. Indivisible – not affected by the division of held in on the land
the estate between two or more persons usufruct. burdened by
(NCC, Art. 618); an easement.
7. It is enjoyed over Another immovable never
on one’s own property; and Q: Can there be an easement over a
8. A Real right but will affect third persons usufruct?
only when registered.

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2021 GOLDEN NOTES
 Civil Law
A: There can be no easement over a usufruct.
Since an easement may be constituted only on a
corporeal immovable property, no easement
may be constituted on a usufruct which is not a
corporeal right.
Q: Can there be a usufruct over an
easement?
A: There can be no usufruct over an easement.
While a usufruct may be created over a right,
such right must have an existence of its own
independent of the property. A servitude
cannot be the object of a usufruct because it has
no existence independent of the property to
which it attaches.
Q: Is there such thing as judicial easement?
A: NO. When the court says that an easement
exists, it is not creating one. For, even an
injunction cannot be used to create one as there
is no such thing as a judicial easement. The
court merely declares the existence of an
easement created by the parties. (La Vista
Association v. CA, G.R. No. 95252, September 5,
1997)
PARTIES TO AN EASEMENT
1. Dominant estate – refers to the immovable
for which the easement was established;
and
2. Servient estate – the estate which provides
the service or benefit.
Dominant Estate v. Servient Estate
DOMINANT ESTATE SERVIENT ESTATE
Immovable in favor of That property or estate
which, the easement is which is subject to the
established. dominant estate.
Which the right Upon which an
belongs. obligation rests.
RIGHTS AND OBLIGATION OF THE OWNERS
OF THE DOMINANT AND SERVIENT
ESTATES
The owner of the dominant estate may make, at
his own expense, on the servient state any
works necessary for the use and preservation of
the servitude, but without altering it or
rendering it more burdensome.
263
For this purpose, he shall notify the owner of
the servient estate, and shall choose the most
convenient time and manner so as to cause the
least inconvenience to the owner of the servient
estate. (NCC, Art. 627)
NOTE: The necessity of the works for the use
and preservation of the easement is the basis
and the determining factor for the extent of
such works.
The works must be executed in the manner
least inconvenient to the servient owner, who
cannot recover indemnity for the inevitable
damages or inconveniences which may be
caused thereby.
But if the work is done badly, the dominant
owner will be liable for damages that may be
suffered by the servient owner.
Rights of the dominant owner (MARE)
1. Make on the servient estate all works
necessary for the use and preservation of
the servitude (NCC, Art. 627);
2. Ask for mandatory injunction to prevent
impairment of his right (Resolme v. Lazo,
G.R. No. L-8654, March 30, 1914);
3. Renounce the easement if he desires to be
exempt from contributing necessary
expenses (NCC, Art. 628); and
4. Exercise all rights necessary for the use of
the easement. (NCC, Art. 625)
Obligations of the dominant owner (CANECO)
1. He cannot Exercise the easement in any
other manner than that previously
established (NCC, Art. 626);
2. He cannot Alter the easement or render it
more burdensome [NCC, Art. 627(1)];
3. He shall Notify the servient owner of works
necessary for the use and preservation of
the servitude [NCC, Art. 627(2)];
4. He must Choose the most convenient time
and manner of making the necessary works
as to cause the least inconvenience to the
servient owner;
5. If there are several dominant estates he
must Contribute to the necessary expenses
in proportion to the benefits derived from
the works [NCC, Art. 628(1)]; and
6. He can may make, at his Own expense, on
the servient estate, any works necessary for
the use of servitude, provided it will not
 Property
alter or make it more burdensome. [NCC,
Art.627(1)]
Servient owner
The owner of the immovable whose property is
subject to easement for the benefit of the
dominant owner.
Rights of the servient owner (RMC)
1. Retain the ownership of the portion of the
estate on which easement is imposed;
2. Make use of the easement unless there is an
agreement to the contrary [NCC, Art.
628(2)]; and
3. Change the place or manner of the use of
the easement, provided it be equally
convenient. [NCC, Art. 629(2)]
Obligations or limitations imposed on the
servient owner (IC)
1. He cannot Impair the use of the easement.
XPN: (1) When the easement has become
very inconvenient to the said servient
owner; and (2) If it prevents him from
making any important works, repairs, or
improvements thereon.
2. He must Contribute to the necessary
expenses in case he uses the easement,
unless otherwise agreed upon. [NCC, Art.
628(2)]
CLASSIFICATIONS OF EASEMENT
1. As to recipient of the benefit
a. Real (or predial) – The easement is in
favor of another immovable (NCC, Art.
613); and
NOTE: It requires two distinct
immovables belonging to different
owners to which it relates.
b. Personal – The easement is in favor of
a community, or of one or more
persons to whom the encumbered
estate does not belong e.g. easement of
right of way for passage of livestock.
(NCC, Art. 614)
NOTE: In personal servitude the
person in whose favor the easement is
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
constituted need not to be the owner
of any estate and does not require a
dominant estate because the person in
whose favor the easement is
constituted need not to be the
property owner.
2. As to the manner of exercise
a. Continuous – Their use may or may not
be incessant, without the intervention
of any act of man. E.g. Easement of
drainage (NCC, Art. 615); and
NOTE: For acquisitive prescription,
the easement of aqueduct and
easement of light and view are
considered continuous.
b. Discontinuous – Used at intervals and
depend upon the acts of man. E.g.
Easement of right of way
3. As to whether their existence is
indicated
a. Apparent – Made known and
continually kept in view by external
signs that reveal the use and
enjoyment of the same (NCC, Art. 615);
and
NOTE: By way of exception the
easement of aqueduct is always
apparent, whether or not it can be
seen. (NCC, Art. 646)
b. Non-apparent – They show no external
indication of their existence. (NCC, Art.
615)
4. As to the right given
a. Right to partially use the servient
estate;
b. Right to get specific materials or
objects from the servient estate;
c. Right to participate in ownership; and
d. Right to impede or prevent the
neighboring estate from performing a
specific act of ownership. (Paras, 2008)
5. As to source
a. Legal – Those created by law for public
use or private interests;
b. Voluntary - constituted by will or
agreement of the parties or by
testator; and
NOTE: Like any other contract, a
264
 Civil Law
voluntary easement (of right-of-way)
could be extinguished only by mutual
agreement or by renunciation of the
owner of the dominant estate. (La
Vista Association v. CA, G.R. No. 95252,
September 5, 1997)
c. Mixed – Created partly by agreement
and partly by law.
6. As to the duty of the servient owner:
a. Positive – Imposes upon the owner of
the servient estate the obligation of
allowing something to be done or
doing it himself; and
e.g. Right of way – imposes the duty to
allow the use of said way.
b. Negative – Prohibits the owner of the
servient estate from doing something
which he could lawfully do if the
easement did not exist.
e.g. Easement of light and view – where
the owner is prohibited from
obstructing the passage of light.
MODES OF ACQUIRING EASEMENT
1. By Title – the following easements may be
acquired only by title:
a. Continuous non-apparent easements;
b. Discontinuous apparent easements;
and
c. Discontinuous non-apparent
easements. (NCC, Art. 622) (2005
BAR)
NOTE: Title means:
 It does not necessarily mean
document.
 It means a juridical act or law
sufficient to create the encumbrance.
 E.g. law, donation, testamentary
succession, contract.
a. Intestate succession does not
create an easement, for no act is
involved. Hence, instead of
creating an easement, it transmits
merely an easement already
existing.
b. Prescription is a mode of
acquisition, and is generally and
ordinarily a title, but is not
265
considered as such under Art.
620 which expressly makes it
DISTINCT from title.
2. By Prescription of 10 years (2009 BAR)
NOTE: Prescription runs irrespective of
good faith or bad faith of the possessor and
whether or not he has just title. The only
requirement is adverse possession. Only
continuous and apparent easements can be
acquired by prescription. (NCC, Art. 620)
3. By deed of Recognition
4. By Final judgment
NO JUDICIAL EASEMENTS. Resultantly,
when the court says that an easement
exists, it is not creating one. For, even an
injunction cannot be used to create one as
there is no such thing as a judicial
easement. The court merely declares the
existence of an easement created by the
parties. (La Vista Association, Inc. v. CA, G.R.
No. 95252, September 5, 1997)
NOTE: If the owner of the servient estate
refuses to execute the deed of recognition,
the court may, in its judgment, declare the
existence of the easement.
5. By Apparent sign established by the owner
of the two adjoining estates
XPN: unless at the time the ownership of
the two estates is divided:
a. There are contrary stipulations; or
b. The sign is removed before the
execution of the deed. (NCC, Art. 624)
Computation of prescriptive period
1. Positive easement – The 10-year period is
counted from the day when the owner of
the dominant estate begins to exercise it;
and
2. Negative easement – from the day a notarial
prohibition is made on the servient estate.
Negative easement cannot be acquired by
prescription since they are non-apparent.
However, for purposes of prescription, there are
negative easement that can be considered
“apparent” not because there are visible signs or
 Property
their existence but because of the making of the
NOTARIAL PROHIBITION which makes it
apparent.
NOTE: In negative easement there is a need of a
formal act.
Doctrine of Apparent Sign
Easements are inseparable from the estate to
which they actively or passively pertain. The
existence of apparent sign under Art. 624 is
equivalent to a title. It is as if there is an implied
contract between the two new owners that the
easement should be constituted, since no one
objected to the continued existence of the
windows.
NOTE: It is understood that there is an exterior
sign contrary to the easement of party wall
whenever:
1. There is a window or opening in the
dividing wall of buildings;
2. Entire wall is built within the boundaries of
one of the estates;
3. The dividing wall bears the burden of the
binding beams, floors and roof frame of one
of the buildings, but not those of the others;
or
4. The lands enclosed by fences or live hedges
adjoin others which are not enclosed.
In all these cases, ownership is deemed to
belong exclusively to the owner of the property
which has in its favor the presumption based on
any of these signs.
Acknowledgement of an easement in one
who owns property
An acknowledgement of the easement is an
admission that the property belongs to another.
(BOMEDCO v. Heirs of Valdez, G.R. No. 124669,
July 31, 2003)
MODES OF EXTINGUISHMENT
OF EASEMENTS
Easements are extinguished (MEN-CRR)
(2001, 2010 BAR)
1. By Merger in the same person of the
ownership of the dominant and servient
estates;
2. By Non-user for 10 years; with respect to
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
discontinuous easements, this period shall
be computed from the day on which they
ceased to be used; and, with respect to
continuous easements from the day on
which an act contrary to the same took
place;
3. When either or both of the estates fall into
such condition that the easement Cannot be
used; but it shall revive if the subsequent
condition of the estates or either of them
should again permit its use, unless when
the use becomes possible, sufficient time
for prescription has elapsed, in accordance
with the provisions of the preceding
number;
4. By the Expiration of the term or the
fulfillment of the condition, if the easement
is temporary or conditional;
5. By the Renunciation of the owner of the
dominant estate; and
6. By the Redemption agreed upon between
the owners of the dominant and servient
estates. (NCC, Art. 631)
NOTE: The grounds under Article 631 are not
exclusive.
In addition to the foregoing causes enumerated
in Article 631 of the New Civil Code the
following may be added: (1) annulment or
rescission of title constituting easement; (2)
termination of the right of the grantor; and (3)
abandonment of the servient estate; and (4)
eminent domain. (4 Manresa, 5th ed., 590)
Merger
It is enough that the merger be with respect to
the portion of the tenement that is affected by
the servitude, or the part for the benefit of which
it was established.
Where the merger is temporary or under
resolutory condition, there is at most a
suspension, but not an extinguishment of the
servitude.
Non-user
Non-use must be due to voluntary abstention by
the dominant owner, and not to fortuitous event,
because the basis of this cause of extinguishment
is a presumptive renunciation.
NOTE: Reckoning point:
266
 Civil Law
1. Discontinuous – counted from the day they Private legal easement is for the interest of
ceased to be used. private persons or for private use. It shall be
2. Continuous – counted from the day an act governed by:
adverse to the exercise takes place.
1. Agreement of the parties provided they are
Non-user presupposes that the easement has neither prohibited by law nor prejudicial to
been used before but it was abandoned for 10 third persons;
years. Thus, it cannot apply to easements which 2. In default, general or local laws and
have not been used. ordinances for the general welfare; or
3. In default, title VII of Articles 613-687 of
Impossibility of use the NCC.

The impossibility of use only suspends the Kinds of legal easements (WIND – PLWS)
servitude until such time when it can be used
again. 1. Easement relating to Waters;

Expiration 2. Easement relating to right of Way;

e.g. An easement was agreed upon to last till the

owner of the dominant easement becomes a
lawyer. When the condition is fulfilled, the
easement ceases.

Renunciation

Renunciation must be express, definite, clear,

specific (otherwise it might be confused with 3. Easement of Party wall;
non- user) This is particularly true for
discontinuous easements. Renunciation of a real
right must be reflected in a public instrument.

Redemption

This is voluntary redemption, existing because of

an express stipulation. The stipulation may
provide conditions under which the easement
would be extinguished. (Paras, 2008) 4. Easement of Light and view;

LEGAL EASEMENT

Legal easements are those imposed by law

having for their object either public use of the
interest of private persons. They shall be
governed by the special laws and regulations
relating thereto, and in the absence thereof, by
the Civil Code.

Public legal easement 5. Drainage of Building;

Public legal easement is for public or communal

use.

Private legal easement

267
 Property
Subjacent Support

6. Intermediate distances and works for certain

construction and plantings; EASEMENTS RELATING TO WATERS

Different easements relating to waters:

(NBREWAC)

A. Natural drainage (NCC, Art. 637);

Scope of easement of natural drainage

Lower estates are obliged to receive the waters

which naturally and without the intervention of
7. Easement against Nuisance; and man descend from higher estates, as well as the
stones or earth which they carry with them.
(NCC, Art. 637) (2002 BAR)

NOTE: Art. 637 has already been superseded by

Art. 50 of P.D. 1067. (Water Code of the
Philippines)

Duties of Servient Estate

The owner cannot construct works that would

impede the easement BUT he may regulate or
control the descent of water.
8. Easement relating to lateral and Subjacent
Duties of Dominant Estate
support.
1. He cannot construct works which will
Lateral Support
increase the burden, but he may construct
works preventing erosion;
2. They must compensate the owners of the
servient estates if the waters are result of an
overflow from irrigation dams, or the result
of artificial descent done by man and
damages caused by reason thereof,

Prescription of easement of natural drainage

The easement of natural drainage prescribes by

non-use for 10 years. (Paras, 2008)

Indemnity in easement of natural drainage

UNIVERSITY OF SANTO TOMAS 268

2021 GOLDEN NOTES
 Civil Law
Art. 637 of the New Civil Code, which provides 1. It must be imposed for reasons of public
for the easement of natural drainage, does not use;
speak of any indemnity. It follows that no 2. It must be in favor of a town or village; and
indemnity is required as long as the conditions 3. Indemnity must be paid. (NCC, Art. 640)
laid down in the article are complied with.
(Paras, 2008) NOTE: The right to make the water flow thru or
under intervening or lower estates.
B. Drainage of Buildings (NCC, Art. 674);
Requisites for drawing water or for watering
C. Easement on Riparian banks for navigation, of animals
floatage, fishing, salvage, and tow path (NCC,
Art. 638); 1. Owner of the dominant estate has the
capacity to dispose of the water;
2. The water is sufficient for the use intended;
Easement on Riparian Property
3. Proposed right of way is the most
convenient and the least onerous to third
The banks of rivers and streams and the shores
persons; and
of the seas and lakes throughout their entire
4. Pay indemnity to the owner of the servient
length and within a zone of three meters in
estate. (NCC, Art. 643)
urban areas, 20 meters in agricultural areas, and
40 meters in forest areas along their margins are
NOTE: The absence of any one of these
subject to the easement of public use in the
requirements will prevent the imposition of the
interest of recreation, navigation, floatage,
easement of aqueduct on the intervening estates.
fishing and salvage.
Easement Of Right Of Way Does Not
No person shall be allowed to stay in this zone
Necessarily Include Easement Of Aqueduct
bigger than what is necessary for recreation,
navigation, floatage, fishing or salvage or to
If “A” was granted a right of way by “B” which he
build structures of any kind. (Art. 51, PD 1067)
(“A”) uses in entering and exiting from his
tenement, “A” has no presumed right to dig
D. Easement of a Dam (NCC, Articles 639 and trenches and lay pipelines for conducting water
647); to his tenement. (San Rafael Ranch Co. vs. Rogers,
Co., 154 C 76, P1092)
A person may establish the easement of
abutment or of a dam provided that: F. Easement of Aqueduct (NCC, Articles 642-
646); and
1. The purpose is to divert or take water from
a river or brook, or to use any other
The easement of aqueduct, for legal purposes, is
continuous or discontinuous stream;
considered continuous and apparent even
2. It is necessary to build a dam;
though the flow of water may not be continuous
3. The person to construct it is not the owner
or its use depends upon the needs of the
of the banks or lots which must support it;
dominant estate or upon a schedule of alternate
and
days or hours. (NCC, Art. 646)
4. Payment of proper indemnity is made.
NOTE: Easement of aqueduct is not acquirable
He must seek the permission of the owner and in
by prescription after 10 years because although
case of latter’s refusal, he must secure authority
it is continuous and apparent in character, under
from the proper administrative agency.
the Water Code of the Philippines (P.D. 1067), all
waters belong to the State; therefore, they
E. Easement for drawing Water or for watering cannot be the subject of acquisitive prescription.
animals (NCC, Arts. 640-641); (Jurado, 2011)

This is a combined easement for drawing of It is an easement which gives right to make
water and right of way. water flow thru intervening estates in order that
one may make use of said water. However,
Requisites for easement for watering cattle unlike the easement for drawing water or for

269
 Property
watering animals, the existence of the latter does
not necessarily include the easement of
aqueduct.
Requisites for easement of aqueduct
1. Indemnity must be paid to the owners of
intervening estates and to the owners of
lower estates upon which waters may filter
or descend.
NOTE: The amount usually depends on
duration and inconvenience caused.
2. If for private interests, the easement cannot
be imposed on existing buildings,
courtyards, annexes, out- houses, orchards
or gardens but can be on other things, like
road, provided no injury is caused to said
properties.
3. There must be a proof:
a. That the owner of the dominant estate
can dispose of the water;
b. That the water is sufficient for the use
which it is intended;
c. That the proposed course is the most
convenient and least onerous to third
persons and the servient estate; and
d. That a proper administrative
permission has been obtained. (Paras,
2008)
Right of the owner of the servient estate to
fence
The easement of aqueduct does not prevent the
owner of the servient estate from closing or
fencing it, or from building over the aqueduct in
such manner as not to cause the owner of the
dominant estate any damage, or render
necessary repairs and cleanings impossible.
(NCC, Art. 645)
G. Easement for the Construction of a Stop Lock
or Sluice Gate (NCC, Art. 647)
To make these structures in the bed of a stream
from which they needed water for irrigation or
improvement of the dominant estate will be
drawn, it is required that the dominant owner
pays the riparian owners where the structures
will be constructed for the damages caused to
the latter and to other irrigators who may
sustain damages also.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Q: The original developer of Happy Glen Loop
(HGL) loaned from T. P. Marcelo Realty
Corporation. HGL failed to settle its debts so
he assigned all his rights to Marcelo over
several parcels of land in the subdivision.
Marcelo represented to lot buyers that a
water facility is available in the subdivision.
Marcelo sold the lot to Liwag who
subsequently died. The wife of Liwag
demanded the removal of the overhead
water tank over the parcel of land
contending that its existence is merely
tolerated. HGL Homeowners Association
refused the demand contending that they
have used continuously the facility for more
than 30 years. Is there an established
easement for water facility in the lot?
A: YES. The water facility is an encumbrance on
the lot of the Subdivision for the benefit of the
community. It is continuous and apparent,
because it is used incessantly without human
intervention, and because it is continually kept
in view by the overhead water tank, which
reveals its use to the public. The easement of
water facility has been voluntarily established
either by Marcelo, the Subdivision owner and
the original developer of the Subdivision. For
more than 30 years, the facility was
continuously used as the residents’ sole source
of water. (Liwag vs Happy Glen Loop
Homeowners Association, Inc., G.R. No. 189755,
July 4, 2012)
EASEMENT OF RIGHT OF WAY
(1996, 2005, 2010 BAR)
Easement of right of way is the right granted to
a person or class of persons to pass over the
land of another by using a particular pathway
therein, to reach the former’s estates, which
have no adequate outlet to a public highway
subject, however to payment of indemnity to
the owner of the land burdened by the right.
(Pineda, 2009)
Right of way
It may refer either to the easement itself, or
simply, to the strip of land over which passage
can be done. (Paras, 2008)
Q: May the easement of right of way be
acquired by prescription?
A: Easement of right of way cannot be acquired
270
 Civil Law
by prescription because it is discontinuous or
intermittent. (Ronquillo, et al. v. Roco, G.R. No. L-
10619, February 28, 1958)
Q: What kind of servitude in favor of the
government is a private owner required to
recognize?
A: The only servitude which he is required to
recognize in favor of the government are:
1. The easement of a public highway;
2. Private way established by law; or
3. Any government canal or lateral that has
been pre-existing at the time of the
registration of the land.
NOTE: If the easement is not pre-existing and is
sought to be imposed only after the land has
been registered under the Land Registration
Act, proper expropriation proceedings should
be had, and just compensation paid to the
registered owner. (Eslaban v. Vda De Onorio,
G.R. No. 146062, June 28, 2001)
Requisites for easement on right of way
(POON-D) (1996, 2005, 2010 BAR)
1. The easement must be established at the
point least Prejudicial to the servient estate
(NCC, Art. 649);
2. Claimant must be an Owner of enclosed
3. There must be no adequate Outlet to a
public highway [NCC, Art. 649, (1)];
4. The right of way must be absolutely
Necessary not mere convenience;
5. The isolation must not be Due to the
claimant’s own act (NCC, Art. 649); and
6. There must be payment of proper
Indemnity.
Least prejudicial to the servient estate
(1996, 2000, 2005, 2010 BAR)
“Least prejudicial” in determining the right of
way means it is the shortest way and the one
which will cause the least damage to the
property to the servient estate in favor of the
dominant estate.
Q: Lots A and B are owned by Demit while
Lot C is owned by Dayum. Lot C has an
existing right of way. After inspection of the
area, it has been found out that a fence and
portion of the residential house owned by
Demit have encroached a part of Dayum’s
271
right of way. Dayum demanded that Demit
pay for the area encroached or demolish the
wall fence and portion of the house which
have been encroaching. Demit contends that
as owner of Lot A and B, he is equally
entitled to the road of right of way and
proposed to buy the portion. Is the
contention of Demit correct?
A: NO. As the owner of the servient estate,
Dayum retained ownership of the road right of
way even assuming that said encumbrance was
for the benefit of Lots of Demit. The latter could
not claim to own even a portion of the road
right of way because Art. 630 of the Civil Code
expressly provides that "[t]he owner of the
servient estate retains ownership of the portion
on which the easement is established, and may
use the same in such manner as not to affect the
exercise of the easement." (Sps. Mercader v. Sps.
Bardilas, G.R. No. 163157, June 27, 2016)
Q: What if the property is not the shortest
way but will cause the least damage to the
servient estate?
A: The way which will cause the least damage
should be used even if it will not be the
shortest.
The easement of right of way shall be
established at the point least prejudicial to the
servient estate and where the distance from the
dominant estate to a public highway is the
shortest. In case of conflict, the criterion of least
prejudice prevails over the criterion of shortest
distance.
Mere Inconvenience is not a Justification for
a Right of Way
Thus, it was held that where the petitioner
could have access to Sucat Road (Paranaque)
through the Lombos Subdivision from which he
acquired his lot and not from Gatchalian Realty
Inc., he cannot claim any right of way from the
latter. (Ramos vs. Gatchalian Realty, Inc., G.R.
75905, 154 SCRA 703)
Legal Easement, Not Dependent Upon
Consent
The existence of a legal easement does not
depend upon the consent of the servient owner
or owners
 Property
Claimant must be an owner of enclosed
immovable or with real right
Adequate outlet
The convenience of the dominant estate has
never been the gauge for the grant of
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
when the said outlet, for one reason or another,
be inconvenient, the need to open up another
servitude is entirely unjustified. (Dichoso v.
Marcos, G.R. No. 180282, April 11, 2011; Alicia B.
Reyes v. Spouses Francisco S. Valentin and
Anatalia Ramos, G.R. No. 194488, February 11,
2015, as penned by J. Leonen)
Q: The coconut farm of Federico is
surrounded by the lands of Romulo.
Federico seeks a right of way through a
portion of the land of Romulo to bring his
coconut products to the market. He has
chosen a point where he will pass through a
housing project of Romulo. The latter wants
him to pass another way which is 1km
longer. Who should prevail? (2000 BAR)
A: ROMULO will prevail. Under Art. 650, the
easement of right of way shall be established at
the point least prejudicial to the servient estate
and where the distance from the dominant
estate to a public highway is the shortest. In
case of conflict, the criterion of least prejudice
prevails over the criterion of shortest distance.
Since the route chosen by Federico will
prejudice the housing project of Romulo,
Romulo has the right to demand that Federico
pass another way even though it will be longer.
Q: David owns a subdivision which does not
have access to the highway. When he applied
for a license to establish the subdivision, he
represented that he will purchase a rice
field located between his land and the
highway, and develop it into an access road.
However, when the license was granted, he
did not buy the rice field, which remained
unutilized. Instead, he chose to connect his
subdivision with the neighboring
subdivision of Nestor, which has access to
the highway. When Nestor and David failed
to arrive at an agreement as to
compensation, Nestor built a wall across the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
road connecting with David’s subdivision. Is
David entitled to an easement of right of way
through the subdivision of Nestor which he
claims to be the most adequate and practical
outlet to the highway?
A: NO, David is not entitled to the right of way
being claimed. The isolation of his subdivision
was due to his own act or omission because he
did not develop an access road to the rice fields
which he was supposed to purchase according
to his own representation when he applied for a
license to establish the subdivision. (Floro v.
Llenado, G.R. No. 75723, June 2, 1995)
When Adequate Outlet to a Public Highway
is Available Through Water
If the outlet to a highway is through water, like
a river, lake or sea, and the same is not
dangerous to cross nor do they pose grave
inconvenience, the right of way should not be
granted.
If the waterway is dangerous and to construct a
bridge over it is too expensive, it is as if there is
no available outlet to the highway. In which
case, right of way is grantable.
Determination of proper indemnity to the
servient estate
If the passage is:
1. Continuous and permanent – The
indemnity consists of the value of the
land occupied plus the amount of damages
caused to the servient estate; and
2. Temporary – Indemnity consists in the
payment of the damage caused.
Two instances where indemnity is not
required
1. When a piece of land acquired by sale,
exchange or partition is surrounded by
other estates of the vendor, exchanger or
co-owner. In such case he shall be obliged
to grant a right of way without indemnity
(NCC, Art. 652); or
2. When a piece of land acquired by donation
surround the estate of the donor or grantor.
In such case, the donee or grantee shall be
obliged to grant a right of way without
indemnity. (NCC, Art. 653 (2))
272
 Civil Law
NOTE: If it is the land donated that is
surrounded by the estate of the donor or
grantor, although the latter is obliged to grant a
right of way, he can demand the required
indemnity. (NCC, Art. 652)
Granting of Right of Way, Without Indemnity
When the vendor sells a parcel of land and this
land is surrounded by other estates of said
vendor and is without access to a public
highway, the vendor is obliged to grant a right
of way without demanding an indemnity.
This rule equally applies to an exchange of
property, or partition of property in co-
ownership. The exchanger, or the co-owner
shall have the same obligation as the vendor.
Measurement for the easement of right of
way
The width of the easement shall be that which is
sufficient for the needs of the dominant estate.
(NCC, Art. 651)
Q: Can a dominant owner demand a
driveway for his automobile?
A: YES, due to necessity of motor vehicles in the
present age.
Liability for repairs and taxes
1. As to repairs, the dominant owner is liable
for necessary repairs;
2. As to proportionate share of the taxes, it
shall be reimbursed by said owner to the
proprietor of the servient estate. This
applies only to permanent easements. (NCC,
Art. 654)
Special causes of extinguishment of right of
way
1. The opening of a public road giving access
to isolated estate; or
2. When the dominant estate is joined to
another estate (such as when the dominant
owner bought an adjacent estate) which is
abutting a public road, the access being
adequate and convenient. (NCC, Art. 655)
Both cases must substantially meet the needs of
the dominant estate. Otherwise, the easement
may not be extinguished.
273
NOTE: Said extinguishment is NOT automatic.
There must be a demand for extinguishment
coupled with tender of indemnity by the
servient owner.
Q: Emma bought a parcel of land from
Equitable-PCI Bank, which acquired the
same from Felisa, the original owner.
Thereafter, Emma discovered that Felisa
had granted a right of way over the land in
favor of the land of Georgina, which had no
outlet to a public highway, but the easement
was not annotated when the servient estate
was registered under the Torrens system.
Emma then filed a complaint for
cancellation of the right of way, on the
ground that it had been extinguished by
such failure to annotate. How would you
decide the controversy? (2001 BAR)
A: The complaint for cancellation of easement
of right of way must fail. The failure to annotate
the easement upon the title of the servient
estate is not among the grounds for
extinguishing an easement under Art. 631 of the
NCC. Under Art. 617, easements are inseparable
from the estate to which they actively or
passively belong. Once it attaches, it can only be
extinguished under Art. 631, and they exist
even if they are not stated or annotated as an
encumbrance on the Torrens title of the
servient estate.
Temporary easement of right of way
If it be indispensable for the construction,
repair, improvement, alteration or
beautification of a building, to carry materials
through the estate of another, or to raise
thereon scaffolding or other objects necessary
for the work, the owner of such estate shall be
obliged to permit the act, after receiving
payment of the proper indemnity for the
damage caused him. (NCC, Art. 656)
Easement of right of way for the passage of
livestock or sevidumbres pecurias
Governed by the ordinances and regulations
relating thereto and in their absence, by the
usages and customs of the place.
Maximum width:
1. Animal path – 75 meters;
 Property
2. Animal trail – 37 meters and 50
centimeters; and
3. Cattle – 10 meters (unless to the old Civil
Code, vested rights has been acquired to a
greater width). (Paras, 2008; NCC, Art. 657)
EASEMENTS OF PARTY WALL
Easement of party wall
The easement of party wall is also called
servidumbre de medianera.
Party wall defined
Is a wall erected on the line between the
adjoining properties belonging to different
persons, for the use of both estates. (Pineda,
2009)
Governed by:
1. The Civil Code;
2. Local ordinances and customs; and
3. The rules co-ownership. (NCC, 658)
Q: Is the easement of party wall really an
easement or is it a case of co-ownership?
A: While it is called an easement by the law, the
law in some articles refers to it as a case of co-
ownership or part-ownership. (NCC, Articles
662, 665, 666) The truth is that, it is a
compulsory kind of co-ownership (FORGED
INDIVISION) where the shares of each owner
cannot be separated physically (otherwise the
wall would be destroyed), although said shares
may in a sense be materially pointed out. Thus,
each co-owner owns the half nearest to him.
(Paras, 2008)
The existence of an easement of party wall is
presumed, unless there is a title, or exterior
sign, or proof to the contrary:
1. In dividing walls of adjoining buildings up
to the point of common elevation;
2. In dividing walls of gardens or yards
situated in cities, towns, or in rural
communities; or
3. In fences, walls and live hedges dividing
rural lands. (NCC, Art. 659)
It is understood that there is an exterior
sign, contrary to the easement of party wall
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
whenever:
1. There is a window or opening in the
dividing wall of the buildings;
2. Dividing wall is on one side straight and
plumb on all its facement, and on the other,
it has similar conditions on the upper part
but the lower part slants or projects
outward;
3. Entire wall is built within the boundaries of
one of the estates;
4. The dividing walls bears the burden of the
binding beams, floors and roof frame of one
of the buildings, but not those of the others;
5. The dividing wall between courtyards,
gardens and tenements is constructed in
such a way that the coping sheds the water
upon only one of the estates;
6. The dividing wall, being built by masonry,
had stepping stones, which at certain
intervals project from the surface of one
side only, but not on the other; or
7. The lands enclosed by fences or live hedges
adjoin others which are not enclosed.
In all these cases, the ownership is deemed to
belong exclusively to the owner of the property
which has in its favor the presumption based on
any of these signs. (NCC, 660)
Right to Increase Height of Party Wall
Every part-owner of a party has the right to
increase the height of the party wall subject to
the following conditions:
1. The same shall be done at his expense;
2. He shall pay for any damage which may be
caused by his work, even though such
damage may be temporary; and
3. If the party wall cannot bear the increased
height, the owner desiring to raise it shall
be obliged to reconstruct it at his own
expense, if it be necessary to make it
thicker, he shall give space required from
his own land. (NCC, 664)
Repairs and Maintenance of a Party Wall
GR: The expenses for construction and repairs
of party walls shall be shouldered by all the
owners of the party wall.
XPN: If a part owner renounces his part
ownership on the party wall. The renunciation
must be absolute and total because the
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 Civil Law
easement of party wall is indivisible.
NOTE: The owner of the building or structure
supported by a party wall who desires to
demolish such building or structure, may
RENOUNCE his part ownership of the wall. The
cost of all repairs and works necessary to
prevent any damage which the demolition may
cause to the party wall on this occasion shall be
borne by him.
EASEMENT OF LIGHT AND VIEW
No part-owner may, without the consent of the
others, open through the party wall any
window or aperture of any kind. (NCC, Art. 667)
A window or opening in the dividing wall of
buildings is an exterior sign which rebuts the
presumption that the wall is a party wall; one
part-owner may not, therefore, make any
window or opening of any kind thru a party
wall without the consent of others.
The easement of LIGHT — “Jus luminum” The
opening is for the purpose of admitting light
and not for viewing.
(as in the case of small windows, not more than
30 cm. square, at the height of the ceiling joist,
the purpose of which is to admit light, and a
little air, but not VIEW). (Paras. 2008)
The easement of VIEW — “Servidumbre
prospectus” The opening is for the purpose of
viewing. (as in the case of full or regular
windows overlooking the adjoining estate)
(Incidentally, although the principal purpose
here is VIEW, the easement of light is necessarily
included, as well as the easement of altius non
tollendi [not to build higher for the purpose of
obstruction. (Paras, 2008)
When easement of light and view is positive
and when negative
Positive — If the window is thru a party wall.
(NCC, Art. 668, par. 1) Therefore, the period of
prescription commences from the time the
window is opened.
NOTE: The mere opening of the window does
not create the easement; it is only when after a
sufficient lapse of time the window still remains
open, that the easement of light and view is
created. (NCC, Art. 668, par. 1) Moreover, even if
275
the window is on one’s own wall, still the
easement would be positive if the window is on
a balcony or projection extending over into the
adjoining land. (Paras, 2008)
Negative — If the window is thru one’s own
wall, that is, thru a wall of the dominant estate.
(NCC, Art. 668, par. 2) Therefore, the time for
the period of prescription should begin from
the time of notarial prohibition upon the
adjoining owner. “Formal prohibition’’ or
“formal act’’ (under the old Civil Code, Art. 538)
means not merely any writing, but one executed
in due form and/or with solemnity — a public
instrument. (Laureana A. Cid v. Irene P. Javier, et
al., G.R. No. L-14116, June 30, 1960)
XPN: Even if the window is on the wall of the
dominant estate, still easement of light and
view would be POSITIVE if the window is on the
balcony or extension extending over the land of
the servient estate.
Thus, the period of prescription for the
acquisition shall be counted from the time
of:
1. Opening of the window, if through a party
wall; or
2. The formal prohibition upon the proprietor
of the adjoining land, if window is through a
wall on the dominant estate.
Openings at height of ceiling joints to admit
light (NCC, Art. 669)
When the distances in Art. 670 are not
observed, the owner of a wall which is not a
party wall can make an opening for the purpose
of admitting light and air, but NOT for view.
Restrictions for making an opening for light
and air
1. The size must not exceed 30-centimeter
square;
2. The opening must be at the height of the
ceiling joists or immediately under the
ceiling;
3. There must be an iron grating imbedded in
the wall; and
4. There must be a wire screen.
If the wall becomes a party wall – A part owner
can order the closure of the opening because no
part owner may make an opening through a
 Property
party wall without the consent of the others; it
can also obstruct the opening unless an
easement.
The openings allowed by Art. 669 are for the
purpose of admitting light; hence they can be
made only in the walls of buildings.
NOTE: Art. 669 refers to restricted windows.
Direct and oblique views (NCC, Articles 670-
671)
Articles 670 and 671 deal with regular, full
windows.
Direct view - It is that which is obtained from a
wall parallel to the boundary line, such that
from the opening in such wall it is possible to
see the adjoining tenement without the
necessity of putting out or turning one's head
side.
NOTE: When windows are opened at a distance
less than that prescribed by Art. 670 from the
boundary lines, they constitute unlawful
openings, however, it is not necessary always
that the wall sustaining the opening and the
dividing line be exactly and geometrically
parallel.
Oblique view - It is obtained from a wall at an
angle with the boundary line; in order to see the
adjoining tenement, it is necessary to turn one's
head to the left or to the right.
Restrictions as to easement of views
1. Direct Views: The distance of two (2)
meters between the wall and the boundary
must be observed; and
2. Oblique Views: (Walls perpendicular or at
an angle to the boundary line) must not be
60 cm to the nearest edge of the window.
(NCC, Art. 670)
Any stipulation to the contrary is void. (NCC,
Art. 673) And the owner who opened them may
be ordered by the court to close them.
Prescription may still be acquired as a negative
easement after ten years from the time of
notarial prohibition.
The distance referred to in Art. 670 shall be
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
measured in cases of direct views from the
outer line of the wall when the openings 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. (NCC,
Art. 671)
Where buildings are separated by a public
way or alley (NCC, Art. 672)
The distance provided in Art. 670 is not
compulsory where there is a public way or alley
provided that it is not less than three meters
wide, the minimum width is necessary for the
sake of privacy and safety.
NOTE: The width of the alley is subject to
special regulations and ordinances.
A private alley opened to the use of the general
public falls within the provision of Art. 672.
Where easement of direct view had been
acquired (NCC, Art. 673)
Whenever the easement of direct view has been
acquired by any such title, there is created a
true easement. The owner of the servient estate
cannot build thereon at less than a distance of
three meters from the boundary line.
NOTE: The title used in Art. 673 refers to any
modes of acquiring easements:
1. Contract;
2. Will;
3. Donation; or
4. Prescription.
The distance may be increased or decreased by
stipulation of the parties provided that in case
of decrease, the minimum distance of two
meters or sixty centimeters prescribed in Art.
670 must be observed, otherwise it is void. The
said distances involve considerations of public
policy and the general welfare; hence, they
should not be rendered ineffective by
stipulation.
EASEMENT OF DRAINAGE OF BUILDINGS
The owner of a building shall be obliged to
construct its roof or covering in such manner
that the rain water shall fall on his own land or
on a street or public place, and not on the land
of his neighbor, even though the adjacent land
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 Civil Law
may belong to two or more persons, one of
whom is the owner of the roof. Even if it should
fall on his own land, the owner shall be obliged
to collect the water in such a way as not to
cause damage to the adjacent land or tenement.
(NCC, Art. 674)
NOTE: Art. 674 does not establish servitude but
merely regulates the use of one's property.
Easement to receive falling rain waters
(NCC, Art. 675)
The owner of a tenement or a piece of land,
subject to the easement of receiving water
falling from roofs, may build in such manner as
to receive the water upon his own roof or give it
another outlet in accordance with local
ordinances or customs, and in such a way as not
to cause any nuisance or damage whatever to
the dominant estate.
Easement giving outlet to rainwater where
house surrounded by other houses
Requisites:
1. There must be no adequate outlet to the
rainwater because the yard or court of a
house is surrounded by other houses;
2. The outlet to the water must be at the point
where egress is easiest, and establishing a
conduit for drainage; and
3. There must be payment of proper
indemnity. (NCC, Art. 676)
Ownership of Rainwater
Pursuant to the provision of the Water Code of
the Philippines, the, rain waters falling on
private lands shall belong to the State.
INTERMEDIATE DISTANCES AND WORKS
FOR CERTAIN CONSTRUCTIONS AND
PLANTINGS
No constructions can be built, or plantings made
near fortified places or fortresses without
compliance with the conditions required in
special laws, ordinances, and regulations
relating thereto. (NCC, Art. 677)
NOTE: Art. 677 establishes an easement in
favor of the State. The general prohibition is
dictated by the demands of national security.
Construction of aqueduct, well, sewer, etc.
277
No person shall build any aqueduct, well, sewer,
furnace, forge, chimney, stable, depository of
corrosive substances, machinery, or factory
which by reason of its nature or products is
dangerous or noxious, without observing the
distances prescribed by the regulations and
customs of the place, and without making the
necessary protective works, subject, in regard
to the manner thereof, to the conditions
prescribed by such regulations. These
prohibitions cannot be altered or renounced by
stipulation on the part of the adjoining
proprietors. (NCC, Art. 678)
NOTE: The owner must take necessary
protective works or other neighboring estates.
Planting of trees
Art. 679 establishes a negative easement. It
provides the minimum distances of trees and
shrubs from the boundary line. They shall be
regulated by the local ordinances and in the
absence thereof, by the customs of the place,
and in default thereof, by Art. 679.
Distance in Planting of Trees under Article
679 of the New Civil Code.
1. The distance authorized by local ordinances
or customs of the place, if any; or
2. If there are no ordinance or custom:
a. At least two (2) meters from the
dividing line of the estate in case of tall
trees; and
b. At a distance of at least 50 centimeters
in case of shrubs or small trees.
Remedy In Case Of Violation
In case of violation of the law, ordinances, or
customs, and the neighboring landowners can
demand the removal of the trees illegally
planted. This remedy also applies to trees
which have grown spontaneously, that is,
without any thought of planting them in the
tenement of the servient owner.
Intrusions of branches or roots into
neighboring estate
Q: Can the adjoining estate cut the roots and
the branches without the consent of the
owner of the tree?
 Property
A: Right to cut roots can be exercised without
notice to the owner of the trees. BUT as to the
branches, it is necessary to ask that they be cut,
and if the owner of the tree does not do so
voluntarily, the court may authorize the
neighboring owner to cut them.
Q: Does this right prescribe?
A: The right to cut does not prescribe so long as
the owner tolerates the branches and roots
invading his tenement. BUT the moment the
owner of the tenement demanded that the
branches be cut off and the owner of the tree
refuses to do so, the prescription starts to run.
Fruits naturally falling upon adjacent land
Q: Who owns the fruits which fall from the
adjacent land?
A: Such fruits belong to the owner of the
adjacent land to compensate him for the
inconvenience causes by the branches of trees
extending over his land. Note however that for
the adjacent owner to be entitled to the fruits
they must not only fall upon his land but the
falling must occur naturally.
NOTE: If the fruits fall on public property, the
owner of the tree retains ownership.
EASEMENT AGAINST NUISANCE
Easement against nuisance is a negative
easement because the proprietor or possessor
is prohibited to do something which he could
lawfully do were it not for the existence of the
easement. However, a nuisance involves any act
or omission which is unlawful.
NOTE: The easement against nuisance is not an
easement at all but a restriction upon the
ownership and not every limitation on the right
of ownership is an easement.
LATERAL AND SUBJACENT SUPPORT
Proprietor prohibited from making
dangerous excavations
No proprietor shall make such excavations
upon his land as to deprive any adjacent land or
building of sufficient lateral or subjacent
support. (NCC, Art. 684)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
General Rule; Exception
The owner of a parcel of land is the owner of its
surface and everything under it. As such, he has
the right to construct any works thereon or
make any plantations and excavations which he
may deem proper. (Art. 437)
As limitation, he cannot do so to the detriment
of servitudes. Further, he must observe the
requirements of special laws and ordinances.
Lateral Support
This is the support on the vertical side of a land,
the removal of which may cause the land to
crumble or slide.
Subjacent Support
This is the horizontal support underneath a
land or building the removal of which may
cause the sinking or crumbling of the land or
building.
‘ Lateral’ Distinguished from ‘Subjacent’
The support is lateral when both the land being
supported and the supporting land are on the
SAME PLANE; when the supported land is
ABOVE the supporting land, the support is
subjacent. (Paras, 2008)
Remedies for violation of Art. 684
1. Claim for damages for injuries sustained; or
2. Injunction.
NOTE: Any stipulation or testamentary
provision allowing excavations that cause
danger to an adjacent land or building shall be
void. (NCC, Art. 685)
Notice to owners of adjacent lands
Any proprietor intending to make any
excavation contemplated in Articles 684-686
shall notify all owners of adjacent lands.
The notice is mandatory except where there is
actual knowledge of the proposed excavation.
NOTE: The legal easement of lateral and
subjacent support are NOT only applicable for
buildings already constructed at the time of the
excavations but also to future buildings that
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 Civil Law
may be constructed on the adjoining lands.
VOLUNTARY EASEMENT
An easement is voluntary when it is established
by the will of the owners.
Persons who may constitute voluntary
easement
Voluntary easements may be constituted by the
owner possessing capacity to encumber
property. If there are various owners, all must
consent; but consent once given is not
revocable.
NOTE: Third persons are not bound by a
voluntary easement unless the same is duly
recorded with the proper authorities.
Q: For whose favor are voluntary easements
established?
A:
1. Predial servitudes:
a. For the owner of the dominant estate;
and
b. For any other person having any
juridical relation with the dominant
estate, if the owner ratifies it.
2. Personal servitudes:
a. For anyone capacitated to accept.
Q: How are voluntary easements created and
what are the governing rules for such?
A:
1. If created by title (contract, will, etc.), the
title governs; and
2. If acquired by prescription, it is governed
by the manner or form of possession.
NOTE: In both cases, the Civil Code will only
apply suppletorily.
When consent is necessary
The owner of a property in usufruct may create
easements thereon without the consent of the
usufructuary provided the rights of the latter
are not impaired. (NCC, Art. 689)
NOTE: Consent of both the naked owner and
the beneficial owner is necessary for the
creation of perpetual voluntary easement. (NCC,
279
Art. 690)
Expenses for work required for use and
preservation of the easement.
If the owner of the servient estate has bound
himself to pay for the cost of the work needed
for the use and preservation of the easement,
and wants to free himself from such obligations,
he may simply renounce or abandon his
property in favor of the owner of the dominant
state.
Q: 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 construction, he built three pumps
on the mortgaged property to supply water
to the condominium. After one 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 an easement
before the Regional Trial Court (RTC) of
Pasig City and prayed that the easement be
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? (2014 BAR)
A: NO, the action will not prosper. The essence
of a mortgage is that it immediately subjects the
property upon which it is imposed, and
whoever the possessor may be, to the
fulfillment of the obligation for whose security
it was constituted. There was no voluntary
easement in this case because at the time the
water pumps were constructed, the subject lot
where the water pumps were constructed and
 Property
the condominium belong to the same person. There is a
No one can have an easement over his own continuing
property. Even of the assumption that an harm being
Act
easement was created in favor of FMI that alone suffered by
complained of
will not defeat the right of the mortgagee to the aggrieved
Condition is already done
enforce the security if the debtor defaults. party by the
of the act which caused
(Bogo- Medellin v. CA, G.R. No. 124699, July 31, maintenance
the injury to
2003) of the act or
plaintiff
thing which
NUISANCE constitutes
the nuisance.
A nuisance is any act, omission, establishment, Abatement
Abatement is
business, condition of property, or anything without
not available
else which: judicial
as a remedy.
Abatement proceedings is
The remedy is
1. Injures or endangers the health or safety of allowed to
action for
others; suppress the
damages.
2. Annoys or offends the senses; nuisance.
3. Shocks, defies or disregards decency or
morality; NOTE: Nuisance is wrongful in itself due to the
4. Obstructs or interferes with the free injury caused, regardless of the presence or
passage of any public highway or street, or absence of care, while negligence creates
any body of water; or liability due to want of proper care resulting to
5. Hinders or impairs the use of property. another’s injury. (Pineda, 2009)
(NCC, Art. 694) (2005, 2006 BBAR)
Kinds of Nuisance
Nuisance vs. Trespass
1. As to the number of persons affected:
NUISANCE TRESPASS (2005 BAR)
Use of one’s own property
which causes injury to a. Public (or common) – One that affects a
another the property, right Direct community or neighborhood or any
or interest of another, and infringement of considerable number of persons
generally results from the another’s right although the extent of the annoyance,
commission of an act or property. danger or damage upon individuals
beyond the limits of the may be unequal (Suarez, 2011); and
property affected.
Injury is direct b. Private – one which affects an
Injury is consequential. individual or few persons only.
and immediate.

NOTE: An encroachment upon the space of 2. Other classification:

another’s land, but not upon the land itself is
considered a nuisance, and not trespass. a. Nuisance per se – That kind of nuisance
which is always a nuisance. By its
Nuisance vs. Negligence nature, it is always a nuisance all the
time under any circumstances
NEGLIGENCE NUISANCE regardless of location or surroundings
Liability It is an act, occupation, or structure
attaches which unquestionably is a nuisance at
Liability is regardless of all times and under any circumstances,
based on lack the degree of regardless of its location or
Basis surroundings
of proper care care or skill
or diligence. exercised to
avoid the b. Nuisance per accidens – That kind of
injury nuisance by reason of location,
surrounding or in a manner it is

UNIVERSITY OF SANTO TOMAS 280

2021 GOLDEN NOTES
 Civil Law
conducted or managed It is an act,
occupation, or structure that may
become a nuisance by reason of
circumstances, location, or
surroundings;
c. Temporary – That kind which if
properly attended does not constitute
a nuisance;
d. Permanent – That kind which by
nature of structure creates a
permanent inconvenience;
e. Continuing – That kind which by its
nature will continue to exist
indefinitely unless abated;
f. Intermittent – That kind which recurs
off and on and may be discontinued
anytime;
g. Attractive Nuisance – One who
maintains on his premises
dangerous instrumentalities
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, is liable to a child of
tender years who is injured thereby,
even if the child is technically a
trespasser in the premises.
Nuisance per se vs. Nuisance per accidens
PER SE PER ACCIDENS
As a matter of
As a matter of fact.
law.
Depends upon its location
Need only be
and surroundings, the
proved in any
manner of its conduct or
locality.
other circumstances.
May be May be abated only with
summarily reasonable notice to the
abated under person alleged to be
the law of maintaining or doing such
necessity. nuisance.
NOTE: The abatement of a 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 or property. Hence, it cannot be closed
down or transferred summarily to another
location. (Parayno v. Jovellanos, G.R. No. 148408,
July 14, 2006)
Q: Boracay West Cove, applied for a zoning
compliance covering the construction of a
three-storey hotel over a parcel of land in
Malay. The Zoning Administrator denied the
application on the ground that the proposed
construction site was within the “no build
zone”. The Office of the Mayor issued EO 10,
ordering the closure and demolition of
Boracay West Cove’s hotel. Boracay West
Cove countered that the hotel cannot
summarily be abated because it is not a
nuisance per se. Is the hotel classified as a
nuisance per se?
A: NO. The litmus test in determining if it’s a
nuisance is the property’s nature and
conditions. The hotel cannot be considered as a
nuisance per se since this type of nuisance is
generally defined as an act, occupation, or
structure, which is a nuisance at all times and
under any circumstances, regardless of location
or surrounding. Here, it is merely the hotel’s
or particular incident––its location––and not its
inherent qualities that rendered it a nuisance.
Otherwise stated, had it not been constructed in
the no build zone, Boracay West Cove could
have secured the necessary permits without
issue. (Aquino v. Mun.of Malay Aklan, G.R. No.
211356, September 29, 2014)
ATTRACTIVE NUISANCE
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, is
liable to a child of tender years who is injured
thereby, even if the child is technically a
trespasser in the premises. (Jarco Marketing
Corp. v. CA, G.R. No. 129792, December 21, 1999)
Basis for liability
The attractiveness is an invitation to children.
Safeguards to prevent danger must therefore be
set up.
Elements of attractive nuisance
1. It must be attractive; and
2. Dangerous to children of tender years.
Q: Is a swimming pool an attractive
281
 Property
nuisance?
A:
GR: A swimming pool or water tank is not an
attractive nuisance, for while it is attractive, it is
merely an imitation of the work of nature.
Hence, if small children are drowned in an
attractive water tank of another, the owner is
not liable even if there be no guards in the
premises. (Hidalgo Enterprises v. Balandan, et.
al, G.R. No. L-3422 June 13, 1952)
XPN: Swimming pool with dangerous slide
characteristics
NOTE: The doctrine of attractive nuisance does
not generally apply 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.
PUBLIC NUISANCE AND PRIVATE NUISANCE
Remedies against public nuisances
1. Prosecution under the RPC or any local
ordinance;
2. Civil action; or
3. Abatement, summarily and without judicial
proceeding. (NCC, Art. 699)
NOTE: A private person may file for a civil
action against a public nuisance if the latter is
injurious to him. Thus, insofar as he is
concerned, the nuisance becomes a private
nuisance which affects him in a special way,
different from that sustained by the public in
general.
Remedies against private nuisances
1. Civil action; or
2. Abatement, summarily and without judicial
proceedings. (NCC, Art. 705)
NOTE: Any person injured by a private
nuisance may abate it by removing, or if
necessary, by destroying the thing which
constitutes the nuisance, without committing a
breach of the peace or doing unnecessary
injury.
However, it is indispensable that the procedure
for extra-judicial abatement of a public
nuisance by a private person be followed. (NCC,
Art. 706)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Every successive owner or possessor of
property who fails or refuses to abate a
nuisance in that property started by a former
owner or possessor is liable therefor in the
same manner as the one who created it. (NCC,
Art. 696)
Extra-judicial abatement (2002 BAR)
Requisites of extra-judicial abatement (BAR
VID)
1. The nuisance must be especially Injurious
to the person affected;
2. No Breach of peace or unnecessary injury
must be committed;
3. Demand must first be made upon the
owner or possessor of the property to abate
the nuisance;
4. Demand is Rejected;
5. Abatement is Approved by the district
health officer and executed with the
assistance of the local police; and
6. Value of the destruction does not exceed
P3,000
NOTE: Abatement is the exercise of police
power which includes the right to destroy
property regarded as a public health or safety,
and there is no obligation to give compensation.
An extra-judicial abatement can only be applied
for if what is abated is a nuisance per se and not
nuisance per accidens.
Liability for damages in case of extrajudicial
abatement of nuisance
The private person or a public official
extrajudicially abating a nuisance is liable for
damages to the owner othe thing abated, if he
causes unnecessary injury or if an alleged
nuisance is later declared by courts to be not a
real nuisance. (NCC, Art. 707)
NOTE: The right to question the existence of a
nuisance does not prescribe; it is
imprescriptible.
Q: Respondent Ernesto Lardizabal (Ernesto)
filed a complaint for demolition, before the
City Engineer's Office of Baguio City (City
Engineer's Office), questioning the ongoing
construction of a residential structure and
garage extension by petitioners on a parcel
of land. Upon investigation, the City
282
 Civil Law
Engineer's Office found out that the 1. Occupation;
construction had no building permit. 2. Law;
Consequently, the City Mayor issued 3. Donation;
Demolition Order No. 5. Aggrieved, 4. Tradition;
petitioners moved for a reconsideration of 5. Intellectual creation;
DO No. 05, but was denied by the City Mayor. 6. Prescription; or
Thus, they were prompted to file a 7. Succession;
complaint for injunction and prohibition
with the RTC. Should DO No. 5 be enjoined? NOTE: Registration of a property does is not a
mode of acquiring ownership. It merely
A: YES. The following shall be subject for confirms the existence of one’s ownership over
summary Eviction: (1) New squatter families a property with notice to the whole world.
whose structures were built after the affectivity (Bautista v Dy Bun Chin, 49 O.G. 179)
of RA 7279; and (2) Squatter families identified
by the LGU in cooperation with the Presidential Classification of modes of acquiring
Commission of the Urban Poor (PCUP), ownership
Philippine National Police (PNP) and accredited
Urban Poor Organization (UPO) as professional 1. Original – Those which do not arise or
squatters or members of squatting syndicates depend upon any pre-existing right or title
as defined in the Act. In this case, petitioners of another person:
cannot be considered as new squatters, since,
although their structures were built after March a. Occupation (NCC, Art. 713);
28, 1992, they or their predecessors-in-interest b. Intellectual Creation (NCC, Art. 721);
had occupied, and were claimants of the subject and
property long before the said date. Neither have c. Acquisitive Prescription. (NCC, Art.
they been identified by the LGU as professional 1106)
squatters nor members of a squatting syndicate.
Thus, since petitioners do not fall under the 2. Derivative – Are those which arise or
coverage of the said IRR, the issuance of DO No. depend upon a pre-existing or preceding
05 had no legal basis at the onset. right or title of another person:

MODES OF ACQUIRING OWNERSHIP a. Law; e.g. hidden treasure (NCC, Art.

438), improvements on the land of
Mode v. Title another (NCC, Art. 445), alluvium (NCC,
Art. 457), abandoned riverbeds (NCC,
MODE TITLE Art. 461), falling fruits into the
Directly and Serves merely to give tenement of another (NCC, Art. 681)
immediately produces the occasion for its b. Donation (Art. 725)
a real right. acquisition or c. Succession mortis causa (NCC, Art.
existence. 774); and
Cause Means d. “Tradition (delivery) as a consequence
of certain contracts” like sale, agency,
Proximate cause Remote cause
partnership, mutuum, assignment
Essence of the right Means whereby that
barter. Pure tradition does not transfer
which is to be created essence is transmitted.
ownership such as in deposit or
or transmitted.
commodatum. (Pineda, 2009)
Mode – it is a way or process of acquiring or
transferring ownership. The process may either TRADITION
be original or derivative.
It is defined as legal delivery. It has a cause
Title – is a jural act or deed which is not which is the title by reason of which the
sufficient by itself to transfer ownership. delivery was made. It always produces an effect
– the acquisition of ownership by the person to
Modes of acquiring ownership (OLD TIPS) whom the delivery is made.
(2007 BAR)
Classes of Tradition

283
 Property
1. Real Or Actual Tradition – This
contemplates the actual delivery of the
thing from the hand of the grantor to the
hand of the grantee if the thing is a
personality. If it is a realty, it is manifested
by certain possessory acts executed by the
grantee with the consent of the grantor
such as by taking over the property; by
entering it and occupying it.
2. Constructive Tradition – The delivery of the
thing is not actual but representative or
symbolical in essence. But must be the
intention to deliver the ownership.
succession where inheritance is
transferred upon death of the
decedent.
g. Quasi-Tradition – It consists in the
delivery of incorporeal property like
rights and credits done through the (a)
placing titles of ownership in the
hands of the grantee or his
representative; or (b) by allowing the
grantee to make use of the rights with
the consent of the grantor
OCCUPATION

a. Traditio symbolica – it consists in the Occupation is the acquisition of ownership by

delivery of certain symbols or things seizing corporeal thing that have no owner,
representing the thing being delivered made with the intention of acquiring them, and
such as keys or titles accomplished according to legal rules. (Paras,
2008) (1997, 2007 BAR)
b. Traditio Instrumental – It consists in
the delivery of the instrument of Requisites of occupation
conveyance to the grantee by the
grantor 1. There must be Seizure of a thing;
2. Which must be a Corporeal personal
c. Traditio Longa Manu – It consists in property;
the pointing of the thing (movable 3. Which must be Susceptible of appropriation
property) within sight, by the grantor by nature;
to the grantee but which at the time of 4. The thing must be Without an owner; and
the transaction, the thing could not be 5. There must be an Intention to acquire
placed yet in the possession of the ownership.
grantee.
Occupation vs. Possession
d. Traditio Brevi Manu – It consists in the
grantee’s continuation of his BASIS OCCUPATION POSSESSION
possession over the thing delivered Merely raises
but now under a title of ownership. the
This is exemplified in the case of a presumption
lessee who had purchased the As regards Mode of
of ownership
property leased to him and thereafter acquisition acquiring
when
continues to possess it as the owner of ownership ownership.
exercised in
thereof the concept of
owner.
e. Traditio Constitutum Possessorium – It Involves only
consists in the owner’s continuous As to
corporeal Any kind of
possession of the property he had sold property
personal property.
to another person, and his present involved
property.
possession thereof is no longer that of
As regards Requires that
an owner but under another capacity The property
ownership of the object be
like a lessee, pledgee, depository, etc. may be owned
the thing by without an
It is the opposite of Tradicion Brevi by somebody.
another owner.
Manu.
There must be
As regards May be had in
an intent to
f. Tradicion By Operation of Law – It the intent to the concept of
acquire
consists in the delivery of the thing by acquire a mere holder.
ownership.
operation of law such as the intestate

UNIVERSITY OF SANTO TOMAS 284

2021 GOLDEN NOTES
 Civil Law
May not take escaped become res nullius again.
May exist
As regards place without
without
possession some form of Straying Domesticated Animals
occupation.
possession.
Generally, Domesticated animals, if they got strayed and
As to period Short duration.
longer. were caught by another, the owner may still
As to leading claim them from the captor within 20 days
Cannot lead to May lead to reckoned from the date of occupation by the
to another
another mode another mode- latter. Failure to do so, they shall belong to the
mode of
of acquisition. prescription.
acquisition captor who kept them.

Things susceptible of occupation Domesticated as distinguish from Domestic

Animals
1. Things that are without an owner – Res
nullius; abandoned; Domesticated animals are wild animals but
after capture had been tamed and become
NOTE: Stolen property cannot be subject of accustomed and friendly to people. On the other
occupation. hand, Domestic Animals or tame animals are
those born, bred and raised under the care of
2. Animals that are the object of hunting and men.
fishing (NCC, Art. 713);
Q: When can land be the object of
3. Hidden treasures – Only if the there is no occupation?
known owner thereof. This is possible only
if the treasure is found in places or things A: It depends.
without owners (NCC, Art 718);
1. If without an owner, it pertains to the State
4. Abandoned movables – A thing is (Regalian Doctrine).
abandoned when:
2. If abandoned and the property is private, it
a. The expectation to recover is gone can be the object of occupation.
(spes recuperandi); and
3. And if the land does not belong to anyone, it
b. The intent to return or have it is presumed to be public.
returned is given up (spes rivertandi).
Ownership of land cannot be acquired by
5. Swarm of bees that has escaped from its occupation
owner, under certain conditions (NCC, Art.
716); When the land is without owner, it pertains to
the State. The State need not acquire abandoned
6. Domesticated animals that have escaped lands by occupation because once the requisites
from their owners, under certain conditions of abandonment had been fulfilled;
(NCC, Art. 716); automatically, the reversion operates. (Pineda,
2009)
7. Transfer of pigeons to another breeding
place without fraud or artifice (NCC, Art. Abandoned land (one with an owner before)
717); and becomes patrimonial land of the State
susceptible of acquisition thru acquisitive
8. Transfer of fish to another breeding place prescription. (Paras, 2008)
without fraud or artifice. (NCC, Art. 717)
Prescription vs. Occupation
Acquisition of ownership over a wild animal
by occupation PRESCRIPTION OCCUPATION
Derivative mode – Original mode –
Wild animals are considered res nullius when somebody else was the no previous
not yet captured. After its capture, animals that owner. owner.

285
 Property
Longer period of
Shorter period.
possession is required.
DONATION
Donation is an act of pure liberality whereby a
person disposes gratuitously of a thing or right
in favor of another who accepts it. (NCC, Art.
725)
Requisites of donation (ACID)
1. Donor must have Capacity to make the
donation;
2. He must have donative Intent (animus
donandi);
3. There must be Delivery in certain cases; and
4. Donee must Accept or consent to the
donation during the lifetime of the donor
and of the donee in case of donation inter
vivos (NCC, Art. 746); whereas in case of
donation mortis causa, acceptance is made
after donor’s death because they partake of
a will. (NCC, Art. 728)
Essential features or elements of a true
donation
1. Alienation of property by the donor during
his lifetime, which is accepted;
2. Irrevocability by the donor of the donation;
3. Animus Donandi (donative intent); and
4. Consequent impoverishment of the donor
(diminution of his assets).
CHARACTERISTICS
EXTENT TO WHICH DONOR MAY
DONATE PROPERTY
It may comprehend all the present property of
the donor, or part thereof, provided he
reserves, in full ownership or in usufruct,
sufficient means for the support of himself, and
of all relatives who, at the time of the
acceptance of the donation, are by law entitled
to be supported by the donor. (NCC, Art. 750)
Future properties as subject of donation
(2003 BAR)
Future properties cannot be subject of
donations. Donations cannot comprehend
future properties.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: Future property means anything which
the donor cannot dispose of at the time of the
donation. (NCC, Art. 751) (2009 BAR)
XPN: In donation propter nuptias, however, the
Family Code allows a donation of future
property between future spouses.
Donation of future inheritance or the
inchoate right to inherit
Future inheritance or the inchoate right to
inherit cannot be donated because it is future
property.
Q: May a property, the acquisition of which
is subject to suspensive condition, be
donated?
A: YES, because once the condition is fulfilled, it
retroacts to the day the contract is constituted.
[NCC, Art. 1187(1)]
Donation of ownership and usufruct
Ownership and usufruct of a property may be
donated to different persons separately.
However, all the donees are required to be
living at the time of donation. (NCC, Art. 756)
Limitation on the amount that can be
donated
1. If the donor has forced heirs, he cannot give
or receive by donation more than what he
can give or receive by will;
2. If the donor has no forced heirs, donation
may include all present property provided
he reserves in full ownership or in usufruct:
a. The amount necessary to support him
and those relatives entitled to support
from him;
b. Property sufficient to pay the donor’s
debt contracted prior to the donation.
NOTE: The limitation applies only to simple,
remunerative, and modal donations but not to
onerous ones, which are governed by the law
on contracts. (De Leon, 2006)
RESERVATIONS AND REVERSIONS
Effect if the donor violates the requirement
for reservation under NCC, Art. 750
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 Civil Law
A donation where the donor did not reserve demandable debt.
property or assets for himself in full ownership Remuneratory (Second kind)
or in usufruct sufficient for his support and all 1. Consideration
relatives legally dependent upon him is not for future
void. It is merely reducible to the extent that the services; or
support to himself and his relatives is impaired 2. Donor imposes 1. Onerous – Same
or prejudiced. (Pineda, 1999) certain form of that of
conditions, contracts.
Reversion in donation limitations or 2. Gratuitous – Same
charges upon form of that of
It is a condition established in the deed of the donee, donations.
donation which has for its effect the restoration whose value is
or return of the property donated to the donor inferior to the
or his estate or in favor of other persons who donation given.
must be living at the time of the donation for Onerous
any cause or circumstances. (NCC, Art. 757) Imposes upon the
donee a reciprocal
NOTE: If the reversion is in favor of other obligation; Burdens,
persons who are not all living at the time of the Same as that of
charges or services
donation, the reversion stipulated shall be void, contracts.
are equal or greater
but the donation shall remain valid. in value to that of the
donation.
KINDS OF DONATION
Kinds of donation according to perfection or
1. According to motive or cause: extinguishment
a. Simple;
b. Remuneratory (1st kind); 1. Pure donation – It is one which is not
subject to any condition;
c. Remuneratory (2nd kind): Conditional
or Modal donations; or
2. Conditional –It is one wherein the donor
d. Onerous donations.
imposes on the donee a condition
dependent on the happening of a future
2. As to perfection or extinguishment:
event or past event unknown to the parties;
a. Pure;
and
b. With a condition; or
c. With a term.
3. With a Term – It is one wherein the donor
imposes on the donee a condition
3. According to effectivity:
dependent upon the happening of a future
a. Inter vivos (NCC, Art. 729);
and certain event.
b. Mortis causa (NCC, Art. 728); or
c. Propter nuptials.
Effect of illegal or impossible conditions
Kinds of donation according to motive or
Like in testamentary dispositions (Art. 873),
cause
only the illegal or impossible conditions are
disregarded. The donation itself remains valid.
PURPOSE FORM
Simple (2007 BAR)
DONATION INTER VIVOS
Same to that of forms
Pure liberality
in donations.
Remuneratory (First kind) (2007 BAR) It is a donation which takes effect during the
To reward past lifetime of the donor.
merits, services
rendered by the Same to that of forms Limitations imposed by law in making
donee to the donor in donations. donations inter vivos
provided the same do
not constitute a 1. Donor must Reserve sufficient means for
his support and for his relatives who are

287
 Property
entitled to be supported by him (NCC, Art.
750);
2. Donation cannot comprehend Future
property except donations between future
husband and wife (FC, Art. 84); and
3. No person may give by way of donation
More than he may give by will.
Some inter vivos donations
The following donations have been held to be
inter vivos:
1. A donation where the causes of revocation
have been specified;
2. A donation where the donor reserved for
himself a lifetime usufruct of the property,
for if he were still the owner, there would
be no need of said reservation;
3. A donation where the donor warrants the
title to the thing which he is donating —
there would be no need of warranty if he is
not transferring the title;
4. Where the donor immediately transferred
the ownership, possession and
administration of the property to the donee,
but stipulated that the right of the donee to
harvest and alienate the fruits would begin
only after the donor’s death. (But if what
had been transferred in the meantime was
only the administration of the property, the
donation is mortis causa);
5. Where the donor stated that while he is
alive, he would not dispose of the property
or take away the land “because I am
reserving it to him (the donee) upon my
death.” (The Court held this to be inter vivos
because in effect, he had already renounced
the right to dispose of his property); and
6. A donation where the donees “should not as
yet get the possession until our demise,” the
administration remaining with the donor
spouses, or either one surviving.
DONATION MORTIS CAUSA
These are donations which are to take effect
upon the death of the donor.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: It partakes of the nature of testamentary
provisions and governed by the rules on
succession. (NCC, Art. 728)
Donation mortis causa must comply with the
formalities prescribed by law for the validity
of wills
Donation mortis causa must comply with the
formalities prescribed by law for the validity of
wills, otherwise, the donation is void and would
produce no effect. That the requirements of
attestation and acknowledgment are embodied
in two separate provisions of the Civil Code
(Articles 805 and 806, respectively) indicate
that the law contemplates two distinct acts that
serve different purposes. An acknowledgment
is made by one executing a deed, declaring
before a competent officer or court that the
deed or act is his own. On the other hand, the
attestation of a will refers to the act of the
instrumental witnesses themselves who certify
to the execution of the instrument before them
and to the manner of its execution. (Echavez v.
DCDC, G.R. No. 192916, October 11, 2010)
Some mortis causa Donations
The following have been held to be mortis
causa:
1. Where the donor has reserved (expressly or
impliedly) the option to revoke the
donation at any time before death, even
without the consent of the donee;
2. Where the donation will be void if the
transferee dies ahead of the transferor.
3. If before the donor’s death, it is revocable at
his will;
4. If the donor retains full or naked ownership
and control over the property while he is
still alive;
5. If what was in the meantime transferred to
the done was merely the administration of
the property; and
6. If title will pass only after donor’s death.
Donation inter vivos vs. Donation mortis
causa
INTER MORTIS
BASIS
VIVOS CAUSA
Takes effect
Takes effect
As to when it during the
upon donor’s
takes effect lifetime of
death.
the donor,
288
 Civil Law
independentl the doubt should be resolved in favour of
y of his death. donation inter vivos, rather than mortis causa to
In avoid uncertainty as to the ownership of the
contemplatio property subject of the deed of donation.
n of donor’s
As to cause death ONEROUS DONATIONS (2007 BAR)
Cause is
or without
donor’s pure
consideratio intention to Onerous donation is a donation given for which
generosity.
n dispose of the donor received a valuable consideration
the thing in which is the equivalent of the property so
case of donated. (Pineda, 2009)
survival.
Valid if donor Samples of Onerous Donations
On Void if donor
survives the
predecease survives.
done. Where the condition is to take care of the
Always donor’s family in the future (Carlos v. Ramil,
Generally
revocable at G.R. No. 6736, September 5, 1911); or where the
irrevocable
any time and donee must take care of the donor’s funeral
On except for
for any expenses. Thus, even if real property is
revocability grounds
reason before involved, it is not essential to have a public
provided for
the donor’s instrument. (Manalo v. De Mesa, G.R. No. L-9449,
by law.
death. February 12, 1915)
Must comply Must comply
On with the with the Kinds of onerous donations
formalities formalities of formalities of
donations. a will. 1. Totally onerous – When the burden is equal
Acceptance to or greater than the value of the property
On when
during After donor’s donated; and
acceptance
donor’s death. 2. Partially onerous – When the burden is less
is made
lifetime. than the value of the donation (Pineda,
Property 1999).
On when Property
retained by
property is completely
the donor Laws that apply to onerous donations
conveyed to conveyed to
while he is
the done the done.
still alive. 1. Totally onerous – Rules on contracts.
On tax 2. Partially onerous
Donor’s tax Estate tax
payable a. Portion exceeding the value of the
burden – simple donations; and
Test in Determining Whether the Donation b. Portion equivalent to the burden – law
is Mortis Causa or Inter Vivos on contracts. (Pineda, 1999)

What is controlling is the nature of the act and
its effectivity. If the act is one of disposition, and
effective independently of the donor’s death, it
is a donation inter vivos. If it is one of
deposition, but its effectivity is dependent upon
the death of the donor, it is a mortis causa
donation.
NOTE: The title given to a deed of donation is
NOT a determinative factor which makes the
donation inter vivos or mortis causa what is
controlling is the provision stated in the deed
and must be read in its entirety.
If there is doubt on the nature of the donation,
Rules of contract govern the onerous portion of
donation; rules of donation only apply to the
excess, if any. Since the donation imposed on
the donee the burden of redeeming the
property for value, the donation was onerous.
As an endowment for a valuable consideration,
it partakes of the nature of an ordinary
contract; hence, the rules of contract will
govern and Art. 765 of the New Civil Code finds
no application with respect to the onerous
portion of the donation. Insofar as the value of
the land exceeds the redemption price paid for
by the donee, a donation exists, and the legal
provisions on donation apply. (Calanasan v. Sps.
Dolorito, G.R. No. 171937, November 15, 2013)

289
 Property
HOW MADE AND ACCEPTED
Persons who must accept the donation
The donee must accept the donation personally,
or through an authorized person with a special
power for the purpose, or with a general and
sufficient power, otherwise, the donation shall
be void. (NCC, Art. 745) (2010 BAR)
Reason for the need for an acceptance
Because the donee may not want to accept the
donor’s liberality or if donation is onerous, he
may not agree with the burden imposed.
Rule prior to knowledge of acceptance
Prior to learning of the acceptance, there is as
yet no perfected donation (no donation at all),
hence, the donor may give the property to
somebody else, for he has not really parted with
the disposition of the property.
When the donation and the acceptance are
in the same instrument
If the donation and the acceptance are in the
same instrument, containing the signatures of
both donor and donee, it is understood that
there is already knowledge of the acceptance,
hence, the donation is already perfected.
Donations made to incapacitated persons
Donations made to incapacitated persons shall
be void, though simulated under the guise of
another contract or through a person who is
interposed. (NCC, Art. 743)
Persons who must accept the donation made
in favor of a minor
If the donation is pure and simple and does not
require written acceptance, the minors can
accept the donation by themselves.
If the donation needs written acceptance, it may
be accepted by their guardian or legal
representatives. (NCC, 741)
PERFECTION OF DONATION
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Donation is perfected from the moment the
donor knows of the acceptance by the donee.
(NCC, Art. 734)
The donation is perfected, not from the time of
acceptance but from the time of knowledge by
the donor that the donee has accepted (the
knowledge may of course be actual or
constructive). If there is no acceptance, the
donation will be null and void.
FORMALITIES FOR DONATION OF
REAL/PERSONAL
Formalities required for donation
1. As regards movable property: (1998,
2000, 2007 BAR)
a. With simultaneous delivery of
property donated:
i. For P5,000 or less – May be
oral/written
ii. For more than P5,000 – Written
in public or private document
b. Without simultaneous delivery:
i. The donation and acceptance
must be written in a public or
private instrument (Statute of
Frauds), regardless of value.
Otherwise, donation is
unenforceable.
2. As regards immovable property: (1993,
2000, 2010 BAR)
a. Must be in a public instrument
specifying
i. The property donated; and
ii. The burdens assumed by the
done.
b. Acceptance may be made:
i. In the same instrument; or
ii. In another public instrument,
notified to the donor in authentic
form, and noted in both deeds.
Otherwise, donation is void.
Q: 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 Fr.
Damian. Before the deed could be notarized,
Don Mariano died. Is the donation valid?
(2014 BAR)
290
 Civil Law
A: The donation is VOID. The donation of an
immovable property must be in a public
instrument in order for it to be valid. In this
case, the donor died even before the
notarization of the deed of donation. Hence, it
does not satisfy the requirement of being in a
public instrument for the donation to be valid.
QUALIFICATIONS OF DONOR/DONEE
DONOR
Any person who has capacity to contract and
capacity to dispose of his property may make a
donation. (NCC, Art. 735) His capacity shall be
determined as of the time of the making of
donation. (NCC, Art. 737)
The term “person” who could make donations
refers to natural and artificial persons with
legal personalities. With respect to artificial
persons, they must be authorized by their
Articles to donate.
NOTE: “Making of donation” shall be construed
to mean perfection of the donation, otherwise if
“making” means “giving,” Art. 737 would in
some cases be inconsistent with Art. 734 which
states that “the donation is perfected from the
moment the donor knows of the acceptance by
the donee.” To avoid a contradiction, the rule
may be stated thus: “at the time the donation is
perfected, both the donor and the donee must
be capacitated.”
Status of a donation made by an
incapacitated person
Following the laws in contracts (which are of
suppletory application to simple donations)
said donations should be merely considered
voidable. The same answer should be given in
case there was vitiated consent (as in the case
of fraud or intimidation).
Q: May an emancipated minor by himself
make donation mortis causa?
A: YES, because at the age of 17, a person of
sound mind can already make a valid will.
Donation by a guardian or trustee
Guardians and trustees may of course donate
their own properties, unless they are otherwise
disqualified by the law, but not the property
291
entrusted to them, for the simple reason that
they are not the owners thereof.
Status of a donation of ward’s property by a
guardian
It is believed that such a donation, if made in
the guardian’s name is null and void. On the
other hand, if made by the guardian in the name
of, and with the consent of the ward, it would be
valid provided judicial permission is obtained.
This is particularly true if the donation benefits,
in some way, the ward.
NOTE: When the donation is clearly in the
interest of the beneficiaries, it would be
contrary to the spirit and intent of the law to
say it cannot be done.
DONEE
All those who are not specially disqualified by
law.
Q: May an unborn child be a donee or a
donor?
A: An unborn child may be a donee but not a
donor.
As a donee, donations made to conceived and
unborn children may be accepted by those
persons who would legally represent them if
they were already born. (NCC, Art. 742)
NOTE: If the conceived child did not become a
person, the donation is null and void. An
unborn child cannot be a donor because it is
essential for a person to be able to make a
donation, he must have full civil capacity.
When a person is “specially disqualified’’ to
accept a donation
“Specially disqualified’’ does not refer to those
incapacitated to contract like minors or those of
unsound mind, but to people such as those
mentioned in Art. 739 and husbands and wives
with respect to immoderate donations from
each other (donations of spouses inter se).
Natural and juridical persons may be donees
Since the law does not distinguish, both natural
and juridical persons may become donees. An
unregistered partnership may become a donee
 Property
because it is a juridical or artificial person
despite its non-registration. But the conjugal
partnership itself, not being natural or juridical,
cannot be a donee. Instead, the donation should
be given by the stranger to the husband and
wife, the share of the husband being credited to
his capital, and that of the wife being
considered part of her paraphernal property.
EFFECT OF DONATION/LIMITATIONS
IN GENERAL
Rights and actions the donee acquires
The donee is subrogated to the rights and
actions which in case of eviction would pertain
to the donor.
Liability of donors for eviction of hidden
defects
1. If the donation is simple or remunerative,
donor is not liable for eviction or hidden
defects because the donation is gratuitous,
unless the donor acted in bad faith; and
2. If the donation is onerous, the donor is
liable on his warranty against eviction and
hidden defects but only to the extent of the
burden.
Rules regarding the liability of the donee to
pay the debts of donor
1. Where donor imposes obligation upon the
donee, (NCC, Art. 758) the donee is liable:
a. To pay only debts previously
contracted; and
b. For debts subsequently contracted
only when there is an agreement to
that effect.
NOTE: But he is not liable for debts in
excess of the value of donation
received, unless the contrary is
intended.
2. Where there is no stipulation regarding the
payment of debts (NCC, Art. 759):
a. Donee is generally not liable to pay
donor’s debts;
b. Donee is responsible only if donation
has been made in fraud of creditors;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
and
NOTE: The presumption that the
donations was made in fraud of
creditors arises when the donor has
not left sufficient assets to pay his
debts, at the time of donation.
c. The donee shall not be liable beyond
the value of donation received.
DOUBLE DONATIONS
There is double donation when the same thing
has been donated to two or more persons.
The rule on double sale under Art. 1544 of NCC
shall be applicable.
Rule: First in time, stronger in right
1. If movable, one who first takes possession
in good faith.
2. If immovable, one who first recorded in the
registry of property in good faith.
If no inscription, one who first took possession in
good faith.
In absence thereof, one who can present oldest
title.
EXCESSIVE/INOFFICIOUS
Rule in case of an excessive or inofficious
donation
1. A donor may not donate more than what he
can give by will. If he donates more than
what he cannot give by will, the donation
will become excessive and to insist on it, the
legitime of the compulsory heirs will be
impaired. Legitime is reserved for the
compulsory heirs and the same cannot be
impaired or disposed of by the testator; and
2. The donee cannot receive by way of
donation more than what he may receive by
will. If the donee can receive by donation
(devise or legacy) more than what the
testator is allowed by law to give, the
donation is inofficious and it may be
suppressed totally or reduced as to its
excess.
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 Civil Law
IN FRAUD OF CREDITORS
Remedy in case of donations executed in
fraud of creditors
The creditors may rescind the donation to the
extent of their credits. The action is known as
accion pauliana. (NCC, Art. 1381)
NOTE: If the donor did not reserve enough
assets to pay his creditors whom he owed
before the donation, the donation is presumed
to be in fraud of creditors.
VOID DONATIONS
Donations prohibited by law (1990, 2000
BAR) (LAW SCRA POP)
Prohibition on donation inter vivos
1. By persons guilty of Adultery or
concubinage at the time of donation (NCC,
Art. 739);
The action for declaration of nullity may be
brought by the spouse of the donor or
donee; and the guilt of the donor and donee
may be proved by preponderance of
evidence. (NCC, Art. 739)
2. Those made between persons found guilty
of the same Criminal offense, in
consideration thereof (NCC, Art. 739);
NOTE: The phrase “found guilty of same
offense” does NOT refer only to
concubinage and adultery.
3. Those made to a public Officer or his wife,
descendants and ascendants, by reason of
his office;
Relative Incapacity to Succeed:
4. By individuals, associations or corporations
not permitted by Law to make donations
(NCC, Art. 1027);
5. By a Ward to the guardian before the
approval of accounts (NCC, Art. 1027);
6. By Spouses to each other during the
marriage or to persons of whom the other
spouse is a presumptive heir (FC, Art. 87);
7. To Relatives of such priest, etc. within the
fourth degree, or to the church to which
such priest belongs (NCC, Art. 1027);
293
8. To an Attesting witness to the execution of
donation, if there is any, or to the spouse,
parents or children or anyone claiming
under them (NCC, Art. 1027);
9. To the Priest who heard the confession of
the donor during the latter’s last illness, or
the minister of the gospel who extended
spiritual aid to him during the same period
(NCC, Art. 1027); or
10. To a Physician, surgeon, nurse, health
officer or druggist who took care of the
donor during his/her last illness. (NCC, Art.
1027)
REVOCATION OR REDUCTION
(1991, 2003, 2006 BAR)
GROUNDS FOR REVOCATION
AND REDUCTION
Grounds for revocation of donation
1. Under Art. 760
a. Birth of a donor’s child or children
(legitimate, legitimated, or
illegitimate) after the donation, even
though born after his death;
b. Appearance of a donor’s child who is
missing and thought to be dead by the
donor; or
c. Subsequent adoption by the donor of a
minor child.
2. Under Art. 764 – When the donee fails to
comply with any of the conditions which
the donor imposed upon the donee.
3. Under Art. 765 – By reason of ingratitude
a. If the donee should commit some
offense against the person, the honor
or the property of the donor, or of his
wife or children under his parental
authority;
b. If the donee imputes to the donor any
criminal offense, or any act involving
moral turpitude, even though he
should prove it, unless the crime or act
has been committed against the donee
himself, his wife or children under his
authority; or
c. If he unduly refuses him support when
the donee is legally or morally bound
 Property
to give support to the donor.
NOTE: The list of grounds for
revocation by reason of ingratitude
under Art. 765 is exclusive.
Grounds for reduction of donation
The same grounds for revocation under Art.
760. The donation shall be reduced insofar as it
exceeds the portion that may be freely disposed
of by will, taking into account the whole estate
of the donor at the time of the birth,
appearance, or adoption of a child. (NCC, Art.
761)
Revocation of perfected donations
Once a donation is perfected, it cannot be
revoked without the consent of the donee
except on grounds provided by law. (NCC,
Articles 760, 764 and 765)
Revocation or reduction is NOT automatic.
The emergence of the circumstances
enumerated in Art. 760 do not automatically
revoke or reduce the donation. The revocation
or reduction is authorized only if the amount or
value of the property donated exceeds the
disposable free portion.
Q: For purposes of prescription of action,
what is the rule in case of concurrence of
two or more grounds for revocation or
reduction?
A: In the event that two or more causes are
present, the earliest among them shall be the
starting point in the reckoning of the period of
prescription of the action. (Pineda, 2009)
Execution of a donation subject to a
condition
A donor may execute a donation subject to a
condition, the non-fulfilment of which
authorizes the donor to go to court to seek its
revocation (not reduction).
Revocation of donation in a conditional
donation
A donor cannot revoke a conditional donation
unilaterally, that is, without going to court, even
if the donee had breached any of the obligations
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
imposed in the donation. A judicial action is
essential if the donee refuses to return the
property, or pay its value to the donor, or to
latter’s heirs or assigns. However, the action
must be filed within the prescriptive period
fixed by law, otherwise, it will be barred. (De
Luna vs. Abrigo, GR No. L-57455, January
18,1990)
The breach of the condition in the donation
causes the automatic revocation. All the donor
has to do is to formally inform the donee of the
revocation. Judicial intervention only becomes
necessary if the donee questions the propriety of
the revocation. Even then, judicial intervention
is required to merely confirm and not order the
revocation. Hence, there can be no 10-year
prescriptive period to file an action to speak of.
When the donee does not contest the revocation,
no court action is necessary. (Province of
Camarines Sur vs Bodega Glassware, G.R. No.
194199, March 22,2017)
Q: Can the creditors of the deceased file an
action for reduction of inofficious donation?
A: NO. Only compulsory heirs or their heirs and
successors in interest may sue for reduction of
inofficious donations. The remedy of the
creditor is to sue, during the lifetime of the
donor, for the annulment of inofficious
donation made in fraud of creditors (NCC, Art.
1387); or they can go against the estate of the
deceased and not against the donees.
EFFECTS OF REVOCATION OR REDUCTION
OF DONATION
Obligations of the donee upon the revocation
or reduction of donation
1. Return the thing or the object of the
donation;
2. If the property had already been alienated
and could not be recovered anymore, its
value shall be paid to the donor. The value
shall be the price of the property estimated
at the time of the perfection of the donation;
and
3. If the property had been mortgaged, the
donor may pay the mortgage obligations,
subject to reimbursement by the donee.
(NCC, Art. 762)
Obligation of the donee to return the fruits
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 Civil Law
1. If due to non-compliance with any condition year prescriptive period?
imposed on the donation – Fruits acquired
after non-compliance shall be returned; and A: The right of action to revoke or reduce is
transmitted to his heirs. (Pineda, 1999)
2. If due to causes stated under Art. 760,
ingratitude, or inofficious donations – fruits Q: Jose, single, donated a house and lot to his
acquired from the time the complaint is only niece, Maria, who was of legal age and
filed shall be returned. (NCC, Art. 768) who accepted the donation. The donation
and Maria's acceptance thereof were
PRESCRIPTION evidenced by a Deed of Donation. Maria then
lived in the house and lot donated to her,
Period of prescription of action for religiously paying real estate taxes thereon.
revocation or reduction of donation Twelve years later, when Jose had already
passed away, a woman claiming to be an
BASIS PRESCRIP RECKONING illegitimate daughter of Jose filed a
TIVE PERIOD complaint against Maria. Claiming rights as
PERIOD an heir, the woman prayed that Maria be
Birth of Four years From the birth of the ordered to reconvey the house and lot to
child first child. Jose's estate. In her complaint she alleged
that the notary public who notarized the
Legitimati Four years From birth of the
Deed of Donation had an expired notarial
on legitimated child,
commission when the Deed of Donation was
not from the date of
executed by Jose. Can Maria be made to
marriage of the
reconvey the property? What can she put up
parents.
as a defense? (2015 BAR)
Recognitio Four years From the date the
n of an recognition of the
A: NO. Maria cannot be compelled to reconvey
illegitimat child by any means
the property. The Deed of Donation was void
e child enumerated in Art.
because it was not considered a public
712 of the Family
document. However, a void donation can trigger
Code.
acquisitive prescription. (Solis v. CA, G.R. Nos.
Adoption Four years From the date of
46753-54, August 25, 1989; Doliendo v. Biarnesa,
filing of the
G.R. No. 2765, December 27, 1906) The void
original petition
donation has a quality of titulo colorado enough
for adoption,
for acquisitive prescription especially since 12
provided a decree
years had lapsed from the deed of donation.
of adoption is
issued thereafter.
Maria can set up the defense that the action has
Appearan Four years From the date an
prescribed. An action for revocation of the
ce of a information was
donation on the ground that it impaired the
child received as to the
legitime of a compulsory heir may only be filed
believed to existence or survival
within ten (10) years from the time the cause of
be dead of the child believed
action accrues which is at the time of the death
to be dead
of Jose. The facts are not clear as to when Jose
Non- Four years From the non-
died, but on the assumption that he died ten
complianc compliance with the
years prior to the filing of the action, the same
e with any condition.
has clearly prescribed.
condition
imposed
INGRATITUDE
Act of One year From the time the
ingratitud donor had learned of
e the donee’s act of Q: Are there any other grounds for
ingratitude, it was revocation of donation by reason of
possible for him to ingratitude other than those enumerated
file an action. under Art. 765 of NCC?

Q: What if the donor dies within the four- A: NONE. The grounds under Art. 765 are

295
 Property
exclusive.

NOTE: The rationale behind the article is that a

person who has been favored with kindness
and generosity has the moral obligation to be
and remain grateful to the benefactor. It is a
matter of tradition that generosity must not be
reciprocated with ungratefulness.

Q: Suppose the husband of the donee had

maligned the donor, is there a ground for
revocation by reason of ingratitude?

A: None. The act must be imputable to the

donee himself and not to another. (Pineda,
1999)

Mortgages and alienations effected before

the notation of the action for revocation

If there are mortgages and alienations effected

before the notation of the complaint for
revocation in the Registry of Property, such
alienations and mortgages shall remain valid
and must be respected. (NCC, Art. 766)

NOTE: Alienations and mortgages after the

registration of the pendency of the complaint
shall be void.

Remedy of the donor

If the property is already transferred in the

name of the buyer or mortgagee, the remedy of
the donor is to recover the value of the property
determined as of the time of the donation. (NCC,
Art. 767)

Waiver of actions to revoke donations

The donor CANNOT make a renunciation of

actions to revoke in advance. Such waiver is
void. However, the donor may renounce an
action to revoke if the act of ingratitude had
already been done.

UNIVERSITY OF SANTO TOMAS 296

2021 GOLDEN NOTES
 Civil Law
PRESCRIPTION NOTE: The first two requisites apply to both
ordinary and extraordinary prescription, but the
Definition last two requisites vary for each kind.

It is the means of acquiring ownership and 2. Extinctive prescription or limitation of

other real rights or losing rights or action to
enforce such rights through lapse of time in the
manner and under the conditions laid down by
law.
NOTE: The applicability of prescription is a
question of fact. It is evidentiary and has to be
established by clear and convincing evidence.
actions – It involves loss of property rights
or actions through the possession by
another of a thing for the period provided by
law or failure to bring the necessary action
to enforce one’s right with in the period
fixed by law. Rights and actions are lost by
the lapse of time. (NCC, Articles 1106 and
1139)

Two concepts of prescription NOTE: It is also referred to as prescription of

actions, statute of limitations, and statute of
1. Acquisitive prescription/ Adverse Possession repose.
- It is the acquisition of ownership and
other real rights through possession of a
thing in the manner and under the
conditions provided for by law.

a. Ordinary acquisitive prescription-

requires possession of things in good
faith and with just title for the time
fixed by law which is 10 years; and

b. Extraordinary acquisitive prescription-

the acquisition of ownership and other
real rights without the need of title or
of good faith or any other condition
and would prescribe in 30 years. (De
Leon, 2011)

Requisites of prescription as a mode of

acquiring ownership

1. Capacity to acquire by prescription;

2. A thing capable of acquisition by
prescription;
3. Possession of the thing under certain
conditions; and
4. Lapse of time provided by law.

Mere possession with a juridical title, such as by

a usufructuary, a trustee, a lessee, an agent, or a
pledge, not being in the concept of an owner
cannot ripen into ownership by acquisitive
prescription unless the juridical relation is just
expressly repudiated as such repudiation has
been communicated to the other party.
(Esguerra v Manantan, G.R. No. 158328, February
23, 2007)

297
 Prescription
TIME OF FILING OF TRANSMISSIBILITY OF EXTENT OF RIGHTS TO THE
THE ACTION ACTION REDUCTION FRUITS
1. Failure of the donor to reserve sufficient means for support (Art. 750)

Any time by the Not transmissible. Donation reduced to Donee is entitled to the
donor or by relatives NOTE: the duty to give extent necessary to fruits as owner of the
entitled to support and right to receive provide support. (NCC, property donated.
during the donor’s support are personal. Art. 750) (NCC, Art. 441)
lifetime. (NCC, Art. (FC, Art. 195)
750)

2. Inofficiousness for being in excess of what the donor can give by will (NCC, Art. 750, 771)

Within five years Transmissible to Donation effective Donee appropriates

after the donor’s donor’s heirs as during the donor’s fruits. (NCC, Art. 441)
death. (NCC, Articles donation shall be lifetime subject to
771 and 1149) reduced as regards the reduction only upon his
excess at donor’s death. death with regard to the
(NCC, Art. 771) excess. (NCC, Art. 771)

3. Birth, appearance or adoption of a child (NCC, Art. 760)

[Same as in no.1 [Same as in no. 1 [Same as in no. 1 Donee appropriates

Revocation] Revocation] Reduction] fruits not affected by
Within four years To children & Donation reduced to reduction. (NCC, Art.
from birth of first descendants of donor extent necessary to 441) When donation is
child, legitimation upon his death. [NCC, provide support. (NCC, revoked for any of the
(recognition), Art. 763(2)] Art. 750) cause mentioned in Art.
adoption, judicial 760, the donee shall
declaration of not return the fruits
filiation or receipt of except from the filing of
info of existence of the complaint. (NCC,
the child believed to Art. 768)
be dead. (NCC, Art.
763)

4. Fraud against creditors (NCC, Art. 759)

Within four years To creditor’s heirs or Property returned for Fruits shall be returned
from perfection of successors-in-interest. the benefit of creditors in case donee acted in
donation or from (NCC, Art. 1178) subject to the rights of bad faith; if impossible
knowledge by the innocent third persons. to return, indemnify
creditor of the (NCC, Art. 1387) the donor’s creditor for
donation. (NCC, Art. damages. (NCC, Art.
1389) 1388)

Acquisitive prescription vs. Extinctive prescription

ACQUISITIVE PRESCRIPTION EXTINCTIVE PRESCRIPTION

Applicable to ownership and other
Applicability
real rights.
Expressly vests the property and
Legal effect
raises a new title in the occupant.
Applicable to all kinds of rights, whether real or
personal.
Produces extinction of rights or bars a right of
action. Results in the loss of a real or personal

UNIVERSITY OF SANTO TOMAS 298

2021 GOLDEN NOTES
 Civil Law
The relationship between the right or bars the cause of action to enforce said
occupant and the land in terms of right. One does not look to the act of the
possession is capable of producing possessor but to the neglect of the owner.
legal consequences. It is the
possessor who is the actor.
As to Possession of a claimant who is not Inaction by the owner or neglect of one with a
requisite the owner. right to bring his action.
Can be proven under the general
Should be affirmatively pleaded and proved to
As a defense issue withoutits being
bar the action or claim of the adverse party.
affirmatively pleaded.

Prescription vs. Laches

PRESCRIPTION LACHES
Concept

One acquires ownership and other real rights
through the lapse of time in the manner and under
the action laid down by law.
The failure or neglect, for an unreasonable and
unexplained length of time, to do that which by
exercising due diligence could or should have
been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting
a presumption that the party entitled to assert it
either has abandoned it or declined to assert it. It
applies even to imprescriptible actions e.g. an
action to annul a void contract may be barred by
laches.

As to creation

Prescription is purely statutory in origin and is
founded on ground of public policy. Time limit is
imposed for a party to enforce his claim so that
title to property and other rights will be stabilized.
It protects the person who is diligent and vigilant
in asserting his right, and conversely punishes the
person who sleeps on his right. (Fernandez v.
Cuerva, G.R. No. L- 21114 November 28, 1967)
A creation of equity which, as such, is applied not
really to penalize neglect or sleeping upon one's
right, but rather to avoid recognizing a right
when to do so would result in a clearly
inequitable situation. (Chavez v. Bonto-Perez, G.R.
No. 109808, March 1, 1995)

As a defense

GR: Evidentiary in nature and requires full blown Evidentiary in nature and cannot be established
trial. by mere allegations in the pleadings. The party
alleging laches must adduce in court evidence
XPNs: proving such allegation. (Apo v. Sps. Roberto, G.R.
1) When the plaintiff’s complaint on its face or No. 198356, April 20, 2015)
the evidence he presented shows clearly that
indeed the action has prescribed at the time
it was filed; or
2) If, before trial, a party has no means of
knowing that opponent’s claim has already
lapsed, prescription as a defense may be
pleaded later as soon as the true nature of
the claim is discovered. (De Leon, 2011)

The burden of proof rests on the part claiming it.

Failure to plead constitutes as a waiver of defense

299
 Prescription
and cannot be raised for the first time on trial or
appeal.
Who may acquire by prescription (PSM)
1. Persons who are capable of acquiring
property by other legal modes;
2. State; and
3. Minors – through guardians of personally.
Persons against whom prescription may run
1. Minors and other incapacitated persons
who have parents, guardians or other legal
representatives;
2. Absentees who have administrators, either
appointed by them before their
disappearance, or appointed by the courts;
3. Persons living abroad, who have managers
or administrators;
4. Juridical persons, except the State and its
subdivisions (NCC, Art. 1108); and
5. Prescription, acquisitive and extinctive,
runs in favor of, or against a married
woman. (NCC, Art. 1110) This presupposes
a situation where the parties involved are a
married woman and another person not her
husband.
Prescription may be in favor of or against the
married woman. Persons who are disqualified
from administering their property have a right
to claim damages from their legal
representatives whose negligence has been the
cause of prescription.
Things subject to prescription
All things within the commerce of men;
a. Private property; and
b. Patrimonial property of the State
NOTE: Patrimonial property of the State is the
property it owns but which is not devoted to
public use, public service, or the development
of national wealth. It is wealth owned by the
state in its private, as distinguished from its
public, capacity. (Paras, 2008)
Things not subject to prescription
1. Public domain;
2. Intransmissible rights;
3. Movables possessed through a crime; and
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
4. Registered land.
Rights not extinguished by prescription
1. Demand right of way;
2. Abate public /private nuisance;
3. To declare a contract void;
4. Recover property subject to expressed
trust;
5. Probate of a will; and
6. Quiet title.
ACQUISITIVE PRESCRIPTION
CHARACTERISTICS
Basis of acquisitive prescription
It is based on the assertion of a usurper of an
adverse right for such a long period of time,
uncontested by the true owner of the right, as
to give rise to the presumption that the latter
has given up such right in favour of the former.
(Tolentino, Civil Code of the Philippines, Vol. IV, p.
2)
Q: What are the basic requirements of
prescription as a mode of acquiring
ownership?
A:
1. Actual possession of a property, which is
susceptible of prescription;
2. Possession must be in the concept of an
owner and not that of a mere holder (NCC,
Art. 1118);
3. Possession must be public or open (NCC,
Art. 1118);
4. Possession must be peaceful (NCC, Art.
1118);
5. Possession must be continuous and not
interrupted (NCC, Art. 1118);
6. Possession must be adverse, that is,
exclusive and not merely tolerated; and
7. Possession must satisfy the full period
required by law. (Pineda, Succession and
Prescription, p. 606, 2009)
ORDINARY PRESCRIPTION
300
 Civil Law
It requires possession of things in good faith
and with just title for the time fixed by law.
Good faith
Q: When is a possessor in good faith?
A: If he is not aware of the existence of any flaw
or defect in his title or mode of acquisition
which invalidates it (NCC, Art. 526 in relation to
Art. 1128) and has reasonable belief that the
person from whom he received the thing was
the owner thereof, and could transmit his
ownership. (NCC, Art. 1127)
Q: When must good faith exist?
A: It must exist not only from the beginning but
throughout the entire period of possession
fixed by law. (Pineda Succession and
Prescription, p. 643, 2009 ed)
Just title
It means that the possessor obtained the
possession of the property through one of the
modes recognized by law for acquiring
ownership, but the transferor or grantor was
not the owner of the property or he has no
power to transmit the right. (NCC, Art. 1129)
NOTE: Just title is never presumed, it must be
proved. (NCC, Art. 1131) The title for
prescription must be true and valid. (NCC, Art.
1130)
True title
One which actually exists and is not just a
pretended one.
Note: An absolutely simulated or fictitious title
is void and cannot be a basis for ordinary
prescription. (Pineda Succession and
Prescription, p. 646, 2009)
Valid title
A title which is sufficient to transmit ownership
of the property or right being conveyed had the
transferor or grantor been the real owner
thereof.
EXTRAORDINARY PRESCRIPTION
Prescription where the possessor is in bad faith.
301
It does not require good faith or just title but
possession for a period longer than ordinary
acquisitive prescription. (Pineda Succession and
Prescription, p. 607, 2009)
Requisites of extraordinary prescription
(CLAS-G)
1. Capacity of the possessor to acquire by
prescription;
2. Susceptibility of object to prescription;
3. Adverse possession of the character
prescribed by law;
4. Lapse of time required by law; and
5. Good faith of possessor or proof of just title.
PERIOD
Q: What are the periods as regards
prescription as a mode of acquisition of
ownership?
A:
1. Movables
a. 4 years ‐ If in good faith; and
b. 8 years ‐ If in bad faith.
2. Immovables
a. 10 years ‐ If in good faith; and
b. 30 years ‐ If in bad faith.
Q: How does ownership of personal
property prescribe?
A: Through uninterrupted possession for 8
years, without need of any other condition.
(NCC, Art. 1132)
Q: How about ownership and other real
rights over immovables?
A: They prescribe through uninterrupted
adverse possession for 30 years, without need
of title or of good faith. (NCC, Art. 1137)
Q: What are the rules for the computation of
time necessary for prescription?
A:
1. The present possessor may complete the
period necessary for prescription by
tacking his possession to that of his grantor
or predecessor in interest;
2. It is presumed that the present possessor
who was also the possessor at a previous
 Prescription
time, has continued to be in possession
during the intervening time, unless there is
proof to the contrary; and
3. The first day shall be excluded and the last
day included. (NCC, Art 1138)
Q: Emilio died, leaving 8 children. In 1960,
His eldest child, Flores, took possession of
and cultivated the land, caused the
cancellation of the tax declaration in
Emilio’s name covering a parcel of land and
caused the issuance of another in his own
name. The co‐heirs of Flores discovered the
cancellation. Upon Flores’ death, the heirs of
his sisters together with his surviving sisters
filed a complaint in 1999 against the heirs of
Flores for partition of the lot and
declaration of nullity of the documents. Did
the heirs of Flores acquire ownership over
the lot by extraordinary acquisitive
prescription?
A: YES. While the action to demand partition of
a co‐owned property does not prescribe, a co‐
owner may acquire ownership thereof by
prescription, where there exists a clear
repudiation of the co‐ ownership, and the co‐
owners are apprised of the claim of adverse and
exclusive ownership. In this case, the
respondents never possessed the lot, much less
asserted their claim thereto until 1999 when
they filed the complaint for partition. In
contrast, Flores took possession of the lot after
Emilio’s death and exercised acts of dominion
thereon‐ tilling and cultivating the land,
introducing improvements, and enjoying the
produce thereof. The statutory period of
prescription commenced in 1960 when Flores,
who had neither title nor good faith, secured a
tax declaration in his name and may, therefore,
be said to have adversely claimed ownership of
the lot. On said date, respondents were also
deemed to have become aware of the adverse
claim. Flores’s possession thus ripened into
ownership through acquisitive prescription
after the lapse of 30 years. (Heirs of Restar v.
Heirs of Cichon, G.R. No. 161720, November. 22,
2005)
Q: Sixto, owner of a parcel of land, died. He
was survived by his wife and three children.
The subject land was donated by his wife to
Silverio, who immediately entered into
possession of the land, built a fence around
it, constructed a residential house, declared
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
it for tax purposes and paid the taxes
thereon, and resided there until his death.
After 45 years from the time of donation,
Soledad, one of Sixto’s children, filed a
complaint for recovery of ownership, and
possession against Silverio. Who is the
rightful owner of the land?
A: Silverio became the rightful owner of the
land by extraordinary acquisitive prescription.
In extraordinary prescription ownership and
other real rights over immovable property are
acquired through uninterrupted adverse
possession thereof for 30 years without need of
title or of good faith. When Soledad filed the
case, Silverio was in possession of the land for
45 years counted from the time of the donation.
This is more than the required 30 years of
uninterrupted adverse possession without just
title and good faith. Such possession was public,
adverse and in the concept of an owner. He
declared the land for taxation purposes and
religiously paid the realty taxes thereon.
Together with his actual possession of the land,
these tax declarations constitute strong
evidence of ownership of the land occupied by
him. (Calicdan v. Cendeña, G.R. No. 155080,
February. 5, 2004)
Q: Anthony bought a piece of untitled
agricultural land from Bert. Bert, in turn,
acquired the property by forging Carlo’s
signature in a deed of sale over the
property. Carlo had been in possession of
the property for eight years, declared it for
tax purposes, and religiously paid all taxes
due on the property. Anthony is not aware of
the defect in Bert’s title, but has been in
actual physical possession of the property
from the time he bought it from Bert, who
had never been in possession. Anthony has
since then been in possession of the
property for one year.
Can Anthony acquire ownership of the
property by acquisitive prescription? How
many more years does he have to possess it
to acquire ownership?
A: YES. Anthony can acquire ownership of the
property by ordinary acquisitive prescription
which requires just title and good faith (NCC,
Art. 1117). There was just title because a deed
of sale was issued in his favor even though it
was forged, which fact he was not aware of. He
needs to possess the land in good faith and in
302
 Civil Law
the concept of owner for a total of ten years in negligent in the assertion of his right.
order to acquire ownership. Since Anthony (Tolentino, Civil Code of the Philippines, Vol. IV, p.
possessed the land for only one year, he has not 2)
completed the ten‐year period. Even if Anthony
tacks the 8‐year period of possession by Carlo Requisites:
who in the deed of sale is supposed to be his
grantor or predecessor in interest [NCC, Art. 1. Capacity to acquire by prescription;
1138(1)], the period is still short of ten years. 2. A thing capable of acquisition by
prescription;
If Carlo is able to legally recover his 3. Possession of the thing under certain
property, can he require Anthony to account conditions; and
for all the fruits he has harvested from the 4. Lapse of time provided by law.
property while in possession?
PERIODS
A: Since Anthony is a possessor in good faith,
Anthony cannot be made to account for the Q: What are the periods as regards
fruits he gathered before he was served with prescription of actions to recover movables
summons. A possessor in good faith is entitled and immovables?
to the fruits received before the possession was
legally interrupted by the service of summons. A:
(NCC, Art. 544) After Anthony was served with 1. Movables
summons, he became a possessor in bad faith a. 4 years ‐ If in good faith; and
and a builder, planter, sower in bad faith. He b. 8 years ‐ If in bad faith. (NCC, Art. 1140
can also be made to account for the fruits but he in relation to Art. 1132)
may deduct expenses for the production 2. Immovables
gathering and preservation of the fruits. (NCC, a. 10 years ‐ If in good faith
Art. 443) b. 30 years ‐ If in bad faith

Q: If there are standing crops on the

INSTANCES WHEN PRESCRIPTION
property when Carlo recovers possession,
IS NOT ALLOWED
can Carlo appropriate them? (2008 BAR)

A: The value of the standing crops must be NO PRESCRIPTION

prorated depending upon the period of APPLICABLE
possession and the period of growing and
producing the fruits. Anthony is entitled to a When it is possessed through a
part of the net harvest and a part of the crime such as robbery, theft,
expenses of cultivation in proportion to his or estafa.
period of possession. However, Carlo may allow
Anthony to gather these growing fruits as an NOTE: The person who cannot
indemnity for the expenses of cultivation. If invoke the right of prescription
Anthony refuses to accept this concession, he is the offender or person who
shall lose the right to indemnity under Art. 443. By Offender committed the crime or offense,
(NCC, Art. 545, par. 3) not a subsequent transferee
who did not participate in the
crime or offense, unless the
EXTINCTIVE PRESCRIPTION
latter knew the criminal nature
of the acquisition of the
CHARACTERISTICS property by the transferor.
(NCC, Art. 1133; Pineda, 2009)
Basis of extinctive prescription

It based on the probability, born of experience, 1. An action to recover a

that the alleged right which accrued in the past Registered
registered land by the
never existed or has already been extinguished; Lands (P.D.
owner; and
or if it exists, the inconvenience caused by the 1529)
2. Right to petition for the
lapse of time should be borne by the party issuance for the issuance

303
 Prescription
of a Writ of Possession Prescription and laches cannot apply to
filed by the applicant for registered land covered by the Torrens system"
registered land. because "under the Property Registration
Decree, no title to registered land in derogation
NOTE: Similarly, an action to to that of the registered owner shall be
recover possession of a acquired by prescription or adverse
registered land never possession.” (Jakosalem vs. Barangan, G.R. No.
prescribes. 175025, February 15, 2012)

Prescription or Limitation of Actions

Action
legal to ACTIONS PRESCRIPTIVE PERIOD
demand a Eight years (good faith) or
right of Imprescriptible Four years (bad faith) from
way to Recover the time the possession is
abate a Movables lost. (NCC, Art. 1140, Pineda
nuisance Succession and Prescription,
p. 666, 2009)
30 years (Recover
Action to ownership). (NCC, Art.
quiet title if 1141)
Imprescriptible
plaintiff in Recover 10 years (Recover real right
possession Immovables of possession). (NCC, Art.
555(4); and Pineda
Succession and Prescription,
Applies to both action and p. 667, 2009)
defense. Mortgage 10 years from default of
Void Action mortgagor. (NCC, Art. 1142)
contracts NOTE: However, an action to
annul avoidable contract Based on
10 years
prescribes after four years. written
contract
NOTE: If contract is oral or
quasi, prescriptive period is
Action to
As long as the co‐ownership is six years (NCC, Art. 1145)
demand
recognized expressly or Based on
partition
impliedly. (NCC, Art. 494) obligation 10 years from the time the
created by right of action accrues
law
Right of reversion or 10 years from the day
reconveyance to the State of Based on
judgment became final and
the public properties judgment
executory (NCC, Art. 1144)
registered and which are not Based upon
capable of private an injury to
appropriation or private Four years
the rights of
acquisition does not prescribe. plaintiff
Property Based on
of public NOTE: In contrast, where Four years (NCC, Art. 1146)
quasi‐delicts
dominion private property is taken by the Forcible
Government for public use entry and One year
without first acquiring title detainer
thereto either through Defamation One year (NCC, Art. 1147)
expropriation or negotiated All other
sale, the owner’s action to actions not Five years (NCC, Art .1149)
recover the land or the value specified
thereof does not prescribe.

UNIVERSITY OF SANTO TOMAS 304

2021 GOLDEN NOTES
 Civil Law
INTERRUPTION
Q: What are the grounds for interruption of
prescriptive period?
A:
1. When they are filed before the court;
2. When there is a written extrajudicial
demand by the creditors; or
3. When there is any written acknowledgment
of the debt by the debtor. (NCC, Art. 1155)
Prescription where possession in Good Faith
is converted into possession in Bad Faith.
If the possession in good faith is later converted
in to bad faith the prescriptive period shall be
computed in the following manner:
Movables – The period of ordinary period is
four (4) years, while that of extraordinary
prescription is eight (8) years. Since the period
of extraordinary prescription is two (2) times
longer than the ordinary prescription, the
number of years in ordinary period will be
multiplied by 2 to get the period for
extraordinary prescription.
Eg. If after two (2) years of possession in good
faith of a movable property, the possession was
converted in bad faith. The 2 years would be
equivalent to 4 years possession in bad faith.
Immovable – The period for ordinary
prescription in good faith is 10 years and 30
years for extraordinary or in bad faith. Since the
extraordinary prescription is three (3) times
longer than the ordinary prescription it shall be
multiplied by 3.
E.g. If after six (6) years of possession in good
faith of a real property, the possession was
converted in bad faith, the six (6) years of
possession in good faith would be equivalent to
18 years possession in bad faith.
Q: Sometime in 1974, Simeon Piedad filed a
case for annulment of an absolute deed of
sale against Candelaria and Mariano Bobilles.
The case was docketed as Civil Case No. 435-
T. The trial court ruled in Piedad's favor and
declared the deed of sale as null and void for
being a forgery. On appeal, the Court of
Appeals dismissed the appeal and affirmed
the trial court ruling. The Court of Appeals
305
Decision became final and executory on
November 1, 1998. Judge Gaviola, upon
motion, then issued an order for the issuance
of a writ of demolition on October 22, 2001.
However, the writ of demolition was never
served on respondents due to their dilatory
tactics and the gross ignorance of the law and
undue delay caused by Judges Estrera and
Villarin. The case only began to gain traction
on July 12, 2010, when petitioners filed their
motion for the revival of judgment. But by
this time, almost 12 years had passed since
the Court of Appeals September 15, 1998
Decision became final and executory. This
led Branch 29, Regional Trial Court, Toledo
City, where the case was transferred from
Branch 9, Regional Trial Court, Cebu City, to
deny the motion in its Order dated May 15,
2012 for being the wrong remedy.
Whether or not the prescription had already
set in requiring the Piedads to file an action
for revival of judgment?
A: YES. Prescription had already set in.
However, a mere motion will suffice for reasons
of equity. In one jurisprudence, the Supreme
Court provides that if manifest wrong or
injustice would result with the strict adherence
to the statute of limitations or doctrine of laches,
it would be better for courts to rule under the
principle of equity. This Court, in a long line of
cases, has allowed for the execution of a final
and executory judgment even if prescription has
already set in, if the delay was caused by the
judgment obligor for his or her benefit or
advantage. (Simeon Trinidad Piedad (Deceased)
Survived and Assumed By His Heirs, Namely:
Eliseo Piedad (Deceased)*, Joel Piedad, Publio
Piedad, Jr., Gloria Piedad, Lot Piedad, Abel Piedad,
Ali Piedad, and Lee Piedad v. Candelaria Linehan
Bobilles and Mariano Bobilles, G.R. No. 208614,
November 27, 2017, as penned by J. Leonen)
 Succession
SUCCESSION
GENERAL PROVISIONS
Succession is 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.
(NCC, Art. 774; Heirs of Ciriaco Bayog-Ang v.
Florence Quinones, G.R. No. 205680, November 21,
Requisites of succession (DATE)
1. Death of decedent;
2. Acceptance of the inheritance by the
successor;
3. Transmissible estate; and
4. Existence and capacity of successor,
designated by decedent or law.
NOTE : The heir cannot be liable beyond the
inheritance received. Value to the extent of his
inheritance means that the heirs will only pay to
the extent of the value of his inheritance of the
debts of the decedent, and nothing more than
that.
A decedent is a person whose property is
transmitted through succession whether or not
he left a will. If the decedent left a will, he is also
called a testator. (NCC, Art. 775)
Inheritance includes all the property, rights and
obligations of a person which are not
extinguished by his death. (NCC, Art. 776)
The inheritance of a person includes not only the
property and the transmissible rights and
obligations existing at the time of his death, but
also those which have accrued thereto since the
opening of the succession. (NCC, Art. 781)
NOTE : The rights to a person’s succession are
transmitted from the moment of his death. In
addition, the inheritance of a person consists of
the property, and transmissible rights and
obligations existing at the time of his death (by
virtue of succession), as well as those which have
accrued thereto (by virue of ownership, by right
of accession) since the opening of the succession.
(Balus v. Balus, G.R. No. 168970, January 10,
2010)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Purely personal rights (intuitu personae) are
extinguished by death. Hence, they are not
transmitted to the heirs. Only patrimonial rights
may be transmitted to the heirs.
The heirs succeed not only to the rights of the
deceased but also to his obligations subject to
the following rules:
GR: Rights and obligations arising from
contracts are binding upon the heirs.
XPNs: When the rights and obligations arising
are not transmissible by:
1. Their nature
2. Stipulation
3. Provision of law. (NCC, Art. 1311)
INHERITANCE SUCCESSION
It is the objective element It is the legal
of succession, to the mass mode by which
or totality of the estate of a inheritance is
deceased person. transmitted.
Rules on properties acquired after the
execution of a will
GR: Property acquired during the period
between the execution of the will and the death
of the testator will not pass under the provisions
of the will but by the rules on legal succession.
Otherwise stated, the property will NOT form
part of the estate of the testator that will pass on
to his instituted heirs.
XPNs:
1. When a contrary intention expressly
appears in the will (NCC, Art. 793), in which
case the property will be included in that
portion of the estate that will pass to the
instituted heirs by way of testamentary
succession; and
2. If the property acquired after the execution
of the will is one which the testator has
disposed of under his will as a legacy or
device, i.e., the property did not belong to
the testator at the time he disposed of it as a
device or as a legacy and he only acquired
the same after making his will. (NCC, Art.
930) In this case, the legacy or device will be
given effect even if the will is silent with
regard to such an intention on the part of
the testator.
306
 Civil Law
Liability of the heirs for the obligations of the
decedent
The heirs CANNOT be held personally liable with
their own individual properties for the debts or
obligations left by the decedent. The
responsibility of the heirs for the debts of their
decedent cannot exceed the value of the
inheritance they receive from him. (Estate of K.H.
Hemady v. Luzon Surety Co., G.R. No. L-8437,
November 28, 1956) It is only after the debts are
paid that the residue of the estate is distributed
among the successors.
Q: Before his death, A borrowed from X P1,
000 as evidenced by a promissory note. A
died without paying the debt. A left no
property but he is survived by his son, B, who
is making good in the buy and sell business.
Subsequently, X brought an action against B
for the collection of P1,000 plus legal interest
thereon on the ground that, since B is the
only heir of A, he inherited from the latter
not only the latter’s property, but also all his
rights and obligations. Will the action
prosper? Reason.
A: NO. The heirs are not personally liable with
their own individual properties for the monetary
obligations/debts left by the decedent. As a rule,
the party’s contractual rights and obligations are
transmissible to the successors except when the
nature of the obligation, stipulation of the
parties, or by operation of law prevents
transmissibility. (Art. 1311 of Civil Code as
explained in the Estate of K.H. Hemady v. Luzon
Surety Co., G.R. No. L-8437, November 28, 1956)
A contract of guaranty is NOT extinguished
by death
It is not extinguished by death because a
contract of guaranty is not one of the exceptions
under Art. 1311 of NCC (Relativity of Contracts).
A guarantor’s obligation is basically to pay the
creditor if the principal debtor cannot pay.
Payment does not require any personal
qualifications. The personal qualifications
become relevant only at the time the obligation
is incurred but not so at the time of discharge or
fulfillment of the obligation. (Estate of K.H.
Hemady v. Luzon Surety Co., Inc., G.R. No. L-8437,
November 28, 1956)
307
NOTE: The rationale of Hemady is reiterated in
the case of Santos v. Lumbao, 519 SCRA 408
(2007). (Balane, 2016)
The death of a party does not excuse
nonperformance of a contract which involves a
property right and the rights and obligations
thereunder pass to the personal representatives
of the deceased. Similarly, nonperformance is
not excused by the death of the party when the
other party has a property interest in the subject
matter of the contract. (Spouses Santos v.
Spouses Lumbao, G.R. No. 169129, March 28,
2007)
Q: Fortunata died while her action for
quieting of title of parcels of land was
pending. Does her death result in the
extinguishment of the action or may her
heirs substitute her in the case?
A: Her heirs may substitute her because the
action is not extinguished by her death. Since the
rights to the succession are transmitted 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 thereto except by the methods provided
for by law. The right of the heirs to the property
of the deceased vests in them upon such death
even before judicial declaration of their being
heirs in the testate or intestate proceedings.
When she died, her claim or right to the parcels
of land in litigation was not extinguished by her
death but was transmitted to her heirs upon her
death. Her heirs have thus acquired interest in
the properties in litigation and became parties in
interest in the case. (Bonilla v. Barcena, et al., G.R.
No. L-41715, June 18, 1976; Heirs of Ernesto
Morales v. Astrid Morales Agustin, G.R. No.
224849, June 6, 2018)
Transmission by succession occurs at the precise
moment of death and therefore the heir, devisee,
or legatee is legally deemed to have acquired
ownership at that moment (even if, particularly
in the heir’s case, he will generally not know
how much he will be inheriting and what
properties he will ultimately be receiving), and
not at the time of declaration of heirs, or
partition, or distribution. (Balane, 2016)
Q: Can the heir enter into a contract of sale,
conveyance or any disposition pertaining to
 Succession
his interest in the inheritance even pending
the settlement of the estate?
A: YES, because his hereditary share/interest in
the decedent’s estate is transmitted or vested
immediately from the moment of decedent’s
death. This is, however, subject to the outcome
of the settlement proceedings to determine the
rights and definite portions of the estate
pertaining to the vendees, assignees, or
creditors.
Future inheritance
GR: No contract may be entered into upon future
inheritance. [NCC, Art. 1347, (2)]
XPNs:
1. Partition inter vivos (NCC, Art. 1080)
2. Donations propter nuptias by future spouses
to each other of future property
Requisites for the contract to be classified as
one upon future inheritance:
1. The succession has not yet been opened.
2. The object of the contract forms part of the
inheritance.
3. The promissory has an expectancy of a right
which is purely hereditary in nature with
respect to the object.
An heir CANNOT enter into a compromise
agreement to renounce his rights over a future
inheritance. (NCC, Art. 2035, par. 6)
Every renunciation or compromise as regards a
future legitime between the person owing it and
his compulsory heirs is void, and the latter may
claim the same upon the death of the former; but
they must bring to collation whatever they may
have received by virtue of the renunciation or
compromise. (NCC, Art. 905)
A future legitime is merely an expectancy, and
the heir does not acquire any right over the
same until the death of the testator. Hence,
juridically, there is nothing on which to
compromise. Furthermore, Art. 1347 of NCC
expressly provides that, “no contract may be
entered into upon future inheritance except in
cases expressly authorized by law.”
NOTE: An heir may only sell his ideal or
undivided share in the estate, not any specific
property therein. (Jose C. Lee And Alma Aggabao,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
In Their Capacities As President And Corporate
Secretary, Respectively, Of Philippines
Internationl Life Insurance Company, And Filipino
Loan Assistance Group v. RTC, G.R. NO. 146006.
February 23, 2004)
Actual delivery is NOT necessary for an heir
to acquire ownership over an inherited
property
The possession of hereditary property is deemed
transmitted to the heir without interruption and
from the moment of the death of the decedent, in
case the inheritance is transmitted.
Pending a proceeding determining the rightful
heirs, the prospective heirs can demand delivery
of their supposed inheritance because
ownership passes to the heir at the very moment
of death. The basis of the heirs’ rights to the
fruits is the Right of Accession.
SUCCESSION OCCURS AT THE
MOMENT OF DEATH
The rights to the succession are transmitted
from the moment of the death of the decedent.
(NCC, Art. 777) (2000 BAR)
The moment of death is the determining point
when the heirs acquire a definite right to the
inheritance, whether such right is pure or
conditional. The possession of hereditary
property is therefore deemed transmitted to the
heir without interruption and from the moment
of death of the decedent.
The right to inherit is vested at the moment of
death. Even if an heir did not know how much
she was going to inherit, she could still dispose
of her share in the inheritance. Said right to
share was hers from the moment of death, and
she could do whatever she wanted with it, even
sell it. (De Borja v. Vda. De Borja, 46 SCRA 577,
1972)
The interest of the heir over the inheritance
prior to the death of the decedent is merely
inchoate or a mere expectancy.
It is immaterial whether a short or long period of
time elapses between the death of the
predecessor and the entry in the possession of
the properties of the inheritance, because the
right is always deemed to retroact to the
moment of death.
308
 Civil Law
The law in force at the time of the decedent’s
death will determine who the heirs should be.
(Uson v. Del Rosario, G.R. No. L-4963, January 29,
1953; Hacbang v. Alo, G.R. No. 191031, October 5,
2015; Balane, 2016)
3.
Presumptive Death
The absentee shall not be presumed dead for the
purpose of opening his succession till after an 4.
absence of ten years. If he disappeared after the
age of seventy-five years, an absence of five
years shall be sufficient in order that his
succession may be opened. (NCC, Art. 390) Kinds of Heirs
The following shall be presumed dead for all 1.
purposes, including the division of the estate
among the heirs:
1. A person on board a vessel lost during a sea
voyage, or an aeroplane which is missing,
who has not been heard of for four years
since the loss of the vessel or aeroplane;
2. A person in the armed forces who has taken
part in war, and has been missing for four
years;
3. A person who has been in danger of death
under other circumstances and his existence
has not been known for four years. (NCC,
Art. 391)
NOTE: If there is a doubt, as between two or
more persons who are called to succeed each 2.
other, as to which of them died first, whoever
alleges the death of one prior to the other, shall
prove the same; in the absence of proof, it is
presumed that they died at the same time and
there shall be no transmission of rights from one
to the other. (NCC, Art. 43)
KINDS OF SUCCESSION AND SUCCESSORS 3.
Kinds of succession
1. Testamentary Succession - that which
results from the designation of an heir,
made in a will executed in the form
prescribed by law. (NCC, Art. 779) Distinctions
legatees/devisees
2. Legal or Intestate Succession - that which
takes place if a person dies without a will, or
with a void will, or one which has
subsequently lost its validity.
representat
Intestate succession can take place even if
there is a will, such as when the will does decedent’s
309
not dispose of all the disposable property of
the decedent. In such case, the will defaulted
pertains to the remaining property not
covered by it.
Mixed Succession - that effected partly by
will and partly by operation of law. (NCC,
Art. 780)
Compulsory Succession – succession to the
legitimes (this prevails over all other kinds).
(Balane, 2016)
Voluntary or Testamentary Heirs – called
to succeed by virtue of the will of the
testator:
a. Devisee - persons to whom gifts of real
property are given by virtue of a will
b. Legatee - persons to whom gifts of
personal property are given by virtue of
a will
NOTE: An heir is one who succeeds to the
whole (universal) or aliquot part of the
estate. Devisee or legatee is one who
succeeds to definite, specific, and
individualized properties.
Compulsory Heir – called by law to succeed
to a portion of the testator’s estate known as
legitime. They succeed by force of law to
some portion of the inheritance, in an
amount predetermined by law, of which
they cannot be deprived by the testator,
except by a valid disinheritance.
Legal or Intestate Heir – those who succeed
by operation of law through intestate
succession. Those who succeed to the estate
of the decedent who dies without a valid
will, or to the portion of such estate not
disposed of by will.
between heirs and
DEVISEES OR
BASIS HEIRS
LEGATEES
As to Represent the Never
juridical represent the
ion of personality of personality of
the deceased the deceased
 Succession
juridical and acquire no matter how The effect is:
person their rights, big the legacy a. to annul the institution of heirs insofar
with certain or the devise as it may prejudice the person
exceptions to is. disinherited,
his b. the devises and legacies and other
obligations. testamentary dispositions shall be valid
Inherit an to such extent as will not impair the
undetermined legitime.
quantity
whose exact TESTAMENTARY SUCCESSION
Are always
Determinat amount
given a
ion of cannot be A will is an act whereby a person is permitted,
determinate
amount of known, and with the formalities prescribed by law, to control
thing or a
inheritance which cannot to a certain degree the disposition of his estate,
fixed amount
be fixed until to take effect after his death. (NCC, Art. 783)
the
inheritance is A will has been defined as “a personal, solemn,
liquidated. revocable and free act by which a capacitated
Succeed to person disposes of his property and rights and
Only succeed
the declares or complies with duties to take effect
to the
remainder of after his death.” (Vitug v. Court of Appeals, G.R.
determinate
the properties No. 82027, March 29, 1990; Rabadilla v. CA, G.R.
Extent of thing or
after all the No. 113725, June 29, 2000)
succession quantity
debts and all
al right which is
the legacies Characteristics of a Will
mentioned in
and devices
the legacy or
have been 1. Purely personal act – the disposition of the
devise
paid or given property is soley dependent upon the
Can exist testator
whether the Only in
As to when
succession be testamentary 2. Free from vices of consent – it must be
they exist
testate or succession executed freely, knowingly and voluntarily;
intestate the testator’s consent should not be vitiated
by the causes mentioned in Art. 839,
Q: Suppose a person is named to succeed to paragraphs 2-6 (insanity, violence,
an entire estate. The estate, however, intimidation, fraud, mistake) (see NCC, Art.
consists of only one parcel of land. Is he an 839)
heir or a devisee?
3. Solemn and formal – the testator must
A: It depends on the manner of his designation comply with the provisions of the law
in the will. Here, because he is called to inherit establishing the formalities of a will
the entire estate, he is an heir. (expressed in NCC, Art. 783 )

Instances where the distinctions between NOTE: The requirements as to the form of
heirs and devisees/legatees become the will depends on whether it is attested or
significant holographic.

1. Preterition (NCC, Art. 854) Attested wills – Art. 805-808, 820, and 821;
The effect is:
a. to annul entirely the institution of heirs, Holographic wills – Art. 810-814; and
but
b. the legacies and devises shall be valid Both wills – Art. 804
insofar as they are not inofficious.
4. Revocable or ambulatory – this is because
2. Imperfect/defective disinheritance (NCC, Art. a will only takes effect upon the testator’s
918) death and no rights vest yet as long as the

UNIVERSITY OF SANTO TOMAS 310

2021 GOLDEN NOTES
 Civil Law
testator is alive, even if the will has already
been probated ante-mortem (see NCC, Art.
828)
5. Mortis Causa – expressed in Art. 783, and is
also a necessary consequence of Art. 774
and 777
6. Statutory right – will-making is purely a
statutory right and not a natural right (see
NCC, Art. 783)
7. Unilateral act – acceptance is not needed in
making a will; acceptance comes later, after
the decedent’s death (implied in NCC, Art.
783)
8. Individual – joint wills are prohibited in
Philippine jurisdiction (see NCC, Art. 818)
NOTE: Mutual wills – Separate wills
although containing reciprocal provisions
are not prohibited, subject to the rule on
disposicion captatoria.
9. Dispositive of property – disposition of the
testator’s estate mortis causa is the purpose
of will-making (NCC, Art. 783)
NOTE: Disposing of a property is NOT an
essential requirement of a valid will. If a will
does not dispose of a property, it is a hollow
will; it is s still valid but only as to form, and
not substance. (Balane, 2016)
Q: The document, a holographic one,
contained only a clause of disinheritance of
one of the testator’s son. Does the document
meet the definition of the will under Art. 783
of NCC although it does not contain any
disposition of the estate of the deceased?
A: The document, although it may initially come
across as mere disinheritance instrument,
conforms to the formalities of holographic will.
The disinheritance results in the disposition of
the property of the testator in favor of those who
would succeed in the absence of the disinherited
heir. (Seangio v. Reyes, G.R. Nos. 140371–72,
November 27, 2006)
PERSONAL ACT; NON-DELEGABILITY
OF WILL-MAKING
The making of a will is a strictly personal act; it
cannot be left in whole or in part to the
311
discretion of a third person, or accomplished
through the instrumentality of an agent or
attorney. (NCC, Art. 784)
Rule on non-delegability of will-making
The exercise of the disposing power is the act
that cannot be delegated. But the mere
mechanical act of drafting the will may be done
by a third person as it does not constitute a
delegation of the will or disposition.
Doctrine of Prohibited Designation
The following cannot be left to the discretion of a
third person:
1. Duration or efficacy of designation of heirs,
legatees, or devisees.
2. Determination of the portions which the
heirs, legatees or devisees are to receive
when referred to by name.
3. Determination as to whether or not a
disposition is to be operative. (NCC, Art. 785
and 787)
NOTE: It is not only the delegation which is void;
the testamentary disposition whose effectivity
will depend upon the determination of the third
person is the one that cannot be made. Hence,
the disposition itself is void.
The following, however, may be entrusted to
a third person
1. Distribution of specific property or sums of
money that the testator may leave in general
to specified classes or causes.
2. Designation of the persons, institutions or
establishments to which such property or
sums are to be given or applied. (NCC, Art.
786)
Reason: This constitutes an exception to the
rule of non-delegability of will-making. Without
this provision, the things allowed to be
delegated here would be non-delegable. (Balane,
2016)
NOTE: The testator must determine first the
class or cause to be benefited, and the specific
property or amount of money to be given before
the delegation to a third person is allowed.
 Succession
What is delegable is only the manner of
distribution of property and the designation of
who are to receive it within the class or cause.
If a third person whom the powers under Art.
786 were delegated to refuses to do his duty, the
court can compel him to do so; and if ever the
third persons dies, the court must appoint a
substitute.
Construction of a Will’s Provision
If a testamentary disposition admits of different
interpretations, in case of doubt, that
interpretation by which the disposition is to be
operative shall be preferred. (NCC, Art. 788)
Construing the provisions of a will, substance
rather than form must be regarded, and the
instrument should receive the most favorable
construction to accomplish the purpose
intended by the testator.
NOTE: The principles in construction and
interpretation of wills are based on the principle
that the intent of the testator is supreme.
(Balane, 2016)
The words of a will are to receive an
interpretation which will give to every
expression some effect, rather than one which
will render any of the expressions inoperative;
and of two modes of interpreting a will, that is to
be preferred which will prevent intestacy. (NCC,
Art. 791)
Reason: Testacy is preferred over intestacy
because testacy is the express will of the
decedent whereas intestacy is only his implied
will.
The invalidity of one of several dispositions
contained in a will does not result in the
invalidity of the other dispositions unless it is to
be presumed that the testator would not have
made such other dispositions if the first invalid
disposition had not been made. (NCC, Art. 792)
Every devise or legacy shall cover all the interest
which the testator could devise or bequeath in
the property disposed of, unless it clearly
appears from the will that he intended to convey
a less interest. (NCC, Art. 794)
Parol Evidence Rule in the interpretation of
wills
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. When there is an imperfect description, or
when no person or property exactly answers
the description – mistakes and omissions
must be corrected.
2. If the error appears from the context of the
will or from extrinsic evidence, excluding the
oral declarations of the testator as to his
intention; and when an uncertainty arises
upon the face of the will, as to the application
of any of its provisions.
The testator's intention is to be ascertained
from the words of the will, taking into
consideration the circumstances under
which it was made, excluding such oral
declarations. (NCC, Art.789)
Kinds of Ambiguities in a Will
1. Latent (Intrinsic) – Ambiguities which are
not apparent on the face of a will but to
circumstances outside the will at the time
the will was made. E.g. If it contains an
imperfect description of person or property.
No person or property exactly answers the
description.
Example: Testator gives a legacy “to my
cousin Anna” and it will turn out that the
testator has three cousins named “Anna”
2. Patent (Extrinsic) – when an uncertainty
arises upon the face of the will as to the
application of any of its provisions. (NCC,
Art. 789)
Example: Testator gives a devise “to some of
the eleven children of my only brother"
Steps in Resolving Ambiguities
1. Examine the will itself;
2. Refer to extrinsic evidence or the
surrounding circumstances, (except oral
declarations of the testator as to his
intention); and
3. In the case of patent ambiguities, the
extrinsic evidence acceptable is limited to
those pertaining to the circumstances under
which the will was executed.
Law governing the validity of wills
AS TO
BASIS AS TO PLACE
TIME
312
 Civil Law
The will can be Testamentary capacity refers to the ability as
executed in well as the power to make a will, and is
accordance with considered an extrinsic/formal requirement for
For Filipinos the formalities of the validity of a will. (2008 BAR; NCC, Art. 839)
and the testator’s
Foreigners: nationality c, In American law, testamentary capacity is
domicile, concerned with the ability of the testator while
The law in residence, the the testamentary power involves a privilege
force at the place where the under the law. Hence, although a person may
time of the will was have testamentary capacity, it does not
Extrinsic making of executed necessarily follow that he has testamentary
Validity – the will. (Art. depending on power.
refers to the 795) the place where
forms and it is executed In the Philippines, such distinction is lost
solemnities For and the altogether. The term testamentary power is
required by Foreigners: nationality of the sometimes understood to refer to the power of
law testator the testator to designate the person or persons
The the testator’s who are to succeed him in his property and
assumption citizenship, transmissible rights and obligations.
is that the domicile,
will is being residence, the Requisites of Testamentary Capacity
probated in place where the
the will was 1. All persons not expressly prohibited by law
Philippines. executed, or (NCC, Art. 796)
Philippine
Laws (NCC, Art. 2. At least 18 years of age (NCC, Art. 797); and
815-817)
The national NOTE: The provisions says, “under eighteen
law of the years of age cannot make a will”, this does
The law in
Intrinsic testator governs not necessarily mean he is a minor, because
force at the
Validity – the intrinsic prior to 1989, the age of majority was 21.
time of the
refers to the validity of the Thus, before such date, some minors (18-
decedent’s
legality of will regardless 21) can execute a will.
death. (NCC,
provisions of the place of
Art. 777 and
in the will execution. (NCC, 3. Of sound mind (NCC, Art. 798)
2263)
Art. 16, and
1039) NOTE: The ability as well as the power to
make a will must be present at the time of
PLACE OF APPLICABLE LAW the execution of the will.
BASIS
EXECUTION (as to form)
It is not necessary that the testator be in full
Philippines NCC possession of all his reasoning faculties or
Testator that his mind be wholly unbroken,
is a 1. Law of the place of unimpaired or unshattered by disease,
Foreign
Filipino country execution injury or other cause.
2. NCC
To be of sound mind, it shall be sufficient if
1. NCC; or
Philippines the testator was able at the time of making
2. National law
Testator the will to know the:
is an 1. National law;
alien Foreign 2. Law of the place of a. nature of the estate to be disposed
country residence; of;
3. NCC b. proper objects of his bounty; and
c. character of the testamentary act.
(NCC, Art. 799)
TESTAMENTARY CAPACITY AND INTENT

313
 Succession
The requirement that the testator be of
sound mind is essential only at the time of
the making of the will (or execution).
If he is not of sound mind at that time, the
will is invalid regardless of the state of
mind before or after such execution.
NOTE: If the testator was of sound mind at
the time of the making of the will, the will is
valid even if the testator should later on
become insane and die in that condition.
Supervening incapacity does not invalidate
an effective will, nor is the will of an
incapable validated by the supervening
capacity. (NCC, Art. 801)
GR: The law presumes that every person is
of sound mind, in the absence of proof to the
contrary. (NCC, Art. 800, par. 1)
XPNs: If the testator was:
1. Publicly known to be insane, one month
or less, before making his will; (NCC, Art.
800, par. 2)
2. Under guardianship at the time of the
making of the will. (Torres v. Lopez, G.R.
No. L-25966, November 1, 1926)
NOTE: Mere weakness of mind or partial
imbecility from disease of body or from age
does not necessarily render a person
incapable of making a will.
SOUNDNESS OF MIND
It is not necessary that the testator be in full
possession of all his reasoning faculties, or that
his mind be wholly unbroken, unimpaired, or
unshattered by disease, injury or other cause.
It is sufficient if the testator was able to know at
the time of making the will to know the ff.:
1. Nature of the estate to be disposed of;
2. Proper objects of his bounty; and
3. Character of testamentary act. (NCC, Art.
799)
A person suffering from civil interdiction is
qualified to make a will. He is deprived of the
power to dispose of his properties through acts
inter vivos but not through acts mortis causa.
(RPC, Art. 34)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
The burden of proving that the testator acted in
lucid interval lies on the person who maintains
the validity of the will. (NCC, Art. 800, par. 2)
Being forgetful does not necessarily make a
person mentally unsound so as to render him
unfit to execute a Will. Forgetfulness is not
equivalent to being of unsound mind. (Antonio
B. Baltazar, et. al. v. Lorenzo Laxa, G.R. No.
174489, April 07, 2012)
Married woman
A married woman may make a will without the
consent of her husband, and without the
authority of the court. (NCC, Art 802)
A married woman may dispose by will all her
separate property as well as her share of the
conjugal partnership or absolute community
property. (NCC, Art 803)
NOTE: Art. 803 has been superseded by Art. 97
of the FC. It provides that either spouse may
dispose by will, of his or her interest in the
community property since the ACP or CPG is
dissolved upon the death of either spouse.
(Banale, 2016; FC, Art. 99 and 126)
FORMAL VALIDITY OF WILLS
Kinds of Wills allowed under the NCC:
1. Ordinary or Notarial will - requires an
attestation clause, an acknowledgement
before a notary public;
2. Holographic will - must be entirely written,
dated and signed in the handwriting of the
testator.
Time criterion - law at the time of execution;
subsequent laws cannot apply retroactively.
Place criterion - Under Art 815-817 of NCC, five
(5) choices are available to the testator; the law
of:
1. The testator's citizenship;
2. Testator's domicile;
3. Place of execution;
4. Testator's residence; and
5. Philippines. (Balane, 2016)
The will of an alien who is abroad produces
effect in the Philippines if:
314
 Civil Law
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 those which the Civil
Code prescribes. (NCC, Art. 816) (1990,
1998, 2009 BAR)
A will made in the Philippines by a citizen or
subject of another country, which is executed
in accordance with the law of the country of
which he is a citizen or subject, and which might
be proved and allowed by the law of his own
country, shall have the same effect as if
executed according to the laws of the
Philippines. (NCC, Art. 817) (2002 BAR)
A joint will executed by Filipinos in a foreign
country shall not be valid in the Philippines,
even though authorized by the laws of the
country where they may have been executed.
(NCC, Art. 819) A joint will is against the public
policy of the Philippines particularly the policy
that the execution of a will is a strictly personal
act.
GOVERNING LAW AS TO
SUBSTANTIVE VALIDITY
Laws relating to family rights and duties, or to
the status, condition and legal capacity of
persons are binding upon citizens of the
Philippines even though living abroad. (NCC, Art.
15)
Matters pertaining to intestate and
testamentary successions which are
regulated by the national law of the
deceased: (CIAO)
1. Capacity to succeed
2. Intrinsic validity of testamentary provisions
3. Amount of successional rights
4. Order of succession. (NCC, Art. 16; NCC, Art.
1039)
Formal requirements common to both
Notarial and Holographic wills (2008 BAR)
1. Law governing extrinsic validity of wills;
2. In writing;
Noncupative wills are oral wills declared or
dictated by the testator and dependent
merely on oral testimony. Philippine laws do
315
not recognize the validity of “noncupative
wills.”
3. In a language or dialect known to the
testator.
The object of the solemnities surrounding
the execution of a will:
1. to close the door against bad faith and fraud,
2. to avoid substitution of wills and testaments
and
3. to guarantee their truth and authenticity.
NOTARIAL WILLS (1994, 2007, 2008 BAR)
Formalities in the Execution of a Notarial
Will (LaW-SPA2N2)
1. In Writing;
2. Executed in a language or dialect known to
the testator;
This rule is mandatory. Otherwise, the will
is void. (Suroza v. Honrado, Adm. Matter No.
2026-CFI, December 19, 1981) It is also
applicable even if the provisions of the will
are interpreted or explained to the testator.
The fact that the will was executed in a
language known to the testator NEED NOT
be stated in the attestation clause. This fact
can be established by extrinsic evidence or
evidence aliunde. (Lopez v. Liboro, G.R. No.
L-1787, August 27, 1948)
This rule does NOT apply to witnesses in a
notarial or attested will because the
witnesses do not need to know the contents
of the will. The attestation clause, on the
other hand, must be understood by the
witnesses even if it is in a language not
known to them. (Art. 805 of NCC states that
the attestation clause need not be in a
language known to the witnesses)
Presumption that the testator knew the
language in which the will was written is
present when:
a. the will must be in a language or dialect
generally spoken in the place of
execution
 Succession
b. the testator must be a native or resident
of said locality. (Abangan v. Abangan,
G.R. No. 13431, November 12, 1919)
3. Subscribed at the end thereof by the testator
himself or by the testator’s name written by
some other person in his presence, and by his
express direction;
The signature of the testator of the will must
be at the end of the will, which may be at the
logical end (last testamentary disposition)
or physical end (non-dispositive provisions).
NOTE: In notarial wills, subscription by
fingerprint is allowed as long as it is
voluntarily made (Matias v. Salud, G.R. No. L-
10751, June 23, 1958), but not in holographic
wills given the explicit requirement for a
holographic will to be entirely written,
dated and signed with the hand of the
testator.
Cross as signature
GR: A cross is not a sufficient signature
XPNs: The cross appearing on the will is:
a. the customary, habitual signature of the
testator; or
b. one of the ways the testator signs his
signature.
The one who alleges that it is the customary,
habitual or one of the ways he sign his
signature has the burden of proof. (Garcia v.
Lacuesta, G.R. No. L-4067, November 29,
1951)
Signing by an Agent of the testator
a. must sign in testator’s presence, and
b. by the testator’s express direction
The important thing is that it should clearly
appear that the name of the testator was
signed at his express direction, in the
presence of three witnesses, and in the
presence of the testator and of each other.
(Barut v. Cabacungan, G.R. No. 6285,
February 15, 1912)
4. Attested and subscribed by three or more
credible witnesses in the presence of the
testator and of one another;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Two Requirements:
a. Attesting – an act of witnessing
b. Subscribing – an act of signing their
names in the proper places of the will
Test for the Determination of the
Presence of Witnesses
In order that the witnesses be deemed
present at the time of the execution of the
will, it suffices that the witnesses were so
situated in a manner that they had the
opportunity to see the testator sign the will.
It is not necessary that they actually saw the
testator affix his/her signature on the will.
The true test of presence of the testator and
the witnesses in the execution of a will is not
whether they actually saw each other sign,
but whether they might have seen each
other sign had they chosen to do so
considering their mental and physical
condition and position with relation to each
other at the moment of inscription of each
signature.
The question whether the testator and the
subscribing witnesses to an alleged will sign
the instrument in the presence of each other
does not depend upon proof of the fact that
their eyes were actually cast upon the paper
at the moment of its subscription by each of
them, but whether at that moment existing
conditions and the position of the parties,
with relation to each other, were such that
by merely casting their eyes in the proper
direction they could have seen each other
sign. (Nera v. Rimando, G.R. No. L-5971,
February 27, 1911)
Actual seeing is not required, but the ability
to see each other by merely casting their
eyes in the proper direction and without any
physical obstruction to prevent his doing so.
(Jaboneta v. Gustilo, G.R. No. 1641, January
19, 1906)
An attestation must state all the details the
third paragraph of Article 805 of NCC
requires. In the absence of the required
avowal by the witnesses themselves, no
attestation clause can be deemed embodied
in the Acknowledgement of the Deed of
Donation Mortis Causa. (Echavez v. Dozen
Cons, G.R. No. 192916, October 11, 2010)
316
 Civil Law
The law is clear that the attestation must
state the number of pages used upon which
the will is written. The purpose of the law is
to safeguard against possible interpolation
or omission of one or some of its pages and
prevent any increase or decrease in the
pages. (Lopez v. Lopez, G.R. No. 189984,
November 12, 2012)
Q: Clara, thinking of her mortality,
drafted a will and asked Roberta,
Hannah, Luisa and Benjamin to be
witnesses. During the day of the signing
of the will, Clara fell down the stairs and
broke both her arms. Coming from the
hospital, Clara, insisted on signing her
will by thumbmark. Later Clara was run
over by a drunk driver while crossing the
street in Greenbelt. May the will of Clara
be admitted to probate? Give your reason
briefly. (2007 BAR)
A: YES. Clara’s thumbmark in this case has
all the hallmarks of a valid signature. Clara
clearly intended to use her thumbmark as
her signature and the circumstances
justified her use of her thumbmark. (Garcia
v. La Cuesta, G.R. No. L-4067, November 29,
1951)
5. The testator or the person requested by him
to write his name must also sign every page,
except the last, on the left margin in the
presence of the witnesses;
PURPOSE: to prevent the disappearance of
the pages.
a. Mandatory – the signing on every page
in the witnesses’ presence
b. Directory – the place of the signing (on
the left margin). The signature can be
affixed anywhere on the page. (Balane,
2016)
If the entire document consists only of two
sheets, the first containing the will and the
second, the attestation clause, there need
not be any marginal signatures at all.
(Abangan v. Abangan, G.R. No. 13431,
November 12, 1919)
A will was declared void which contained
the necessary signatures on the margin of
each leaf (folio), but not in the margin of
317
each page containing written matter. (In
the Matter of the Estate of Saguinsin, G.R. No.
L-15025, March 15, 1920)
The signatures on the left-hand corner of
every page signify, among others, that the
witnesses are aware that the page they are
signing forms part of the will. On the other
hand, the signatures to the attestation
clause establish that the witnesses are
referring to the statements contained in the
attestation clause itself. (Azuela v. CA, G.R.
No. 122880, April 12, 2006)
6. All the pages shall be Numbered correlatively
in letters on the upper part of each page;
a. Mandatory – pagination by means of a
conventional system purpose of which
is to prevent insertion or removal of
pages.
b. Directory – pagination in letters on the
upper part of each page. (Balane, 2010)
The pages may be expressed either in
words (e.g. “Page One of Seven”) or in
figures (e.g. “Page 1 of 7”)
7. Must contain an Attestation clause which
expressly states the following:
a. The number of pages used upon which
the will is written;
b. The fact that the testator signed the will
and every page thereof, or caused some
other person to write his name, under
his express direction, in the presence of
the instrumental witnesses;
c. The fact that the witnesses witnessed
and signed the will and all the pages
thereof in the presence of the testator
and of one another. (NCC, Art. 805, par.
3)
The signature of the witnesses must be at
the bottom of the attestation clause. An
unsigned attestation clause cannot be
considered as an act of the witnesses, since
the omission of their signatures at the
bottom thereof negatives their participation.
(Cagro v. Cagro, G.R. No. L-5826, April 29,
1953)
Inasmuch as the signatures of the three
witnesses to the will do not appear at the
bottom of the attestation clause, although
 Succession
the page containing the same is signed by
the witnesses on the left hand margin, the
will is fatally defective. The attestation
clause is "a memorandum of the facts
attending the execution of the will" required
by law to be made by the attesting
witnesses, and it must necessarily bear their
signatures.
The petitioner and appellee contend that
signatures of the three witnesses on the left
hand margin conform substantially to the
law and may be deemed as their signatures
to the attestation clause. This is untenable,
because said signatures are in compliance
with the legal mandate that the will be
signed on the left hand margin of all its
pages. If an attestation clause not signed
by the three witnesses at the bottom
thereof, be admitted as sufficient, it
would be easy to add such clause to a will
on a subsequent occasion and in the
absence of the testator and any or all of
the witnesses. (Cagro v. Cagro, GR. No. L-
5826 April 29, 1953)
NOTE: An attested will need not be dated,
but a holographic will must be dated. (NCC,
Art. 810)
8. Must be acknowledged before a Notary public
by the testator and the witnesses. (NCC, Art.
806) (2008 BAR)
The certification of acknowledgment need
not be signed by the notary public in the
presence of the testator and the witnesses.
(Javellana v. Ledesma, G.R. No. L-7179, June
30, 1955)
A jurat is insufficient as the law requires an
acknowledgment executed by the party
before a notary public, not a declaration of
the notary public.
The notary public before whom the will was
acknowledged cannot be considered as the
third instrumental witness since he cannot
acknowledge before himself having signed
the will. He cannot split his personality into
two so that one will appear before the other
to acknowledge his participation in the
making of the will. To permit such a
situation to obtain would be sanctioning a
sheer absurdity. (Cruz v. Villasor, G.R. No. L-
32213, November 26, 1973)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
An acknowledgment is the act of one who
has executed a deed in going before some
competent officer or court and declaring it
to be his act or deed. It involves an extra
step undertaken whereby the signatory
actually declares to the notary public that
the same is his or her own free act and deed.
The acknowledgment in a notarial will has a
two-fold purpose: (1) to safeguard the
testator’s wishes long after his demise and
(2) to assure that his estate is administered
in the manner that he intends it to be done.
(Lee v. Tambago, A.C. No. 5281, 12 February
2008)
The issue in this case is whether or not the
will “acknowledged” by the testatrix and the
instrumental witnesses before a notary
public acting outside the place of his
commission satisfies the requirement under
Article 806 of the NCC. Outside the place of
his commission, he is bereft of power to
perform any notarial act; he is not notary
public. Any notarial act outside the limits of
his jurisdiction has no force and effect.
(Guerrero v. Bihis, G.R. No. 174144, April 17,
2007)
The absence of the documentary stamp does
not affect the validity of the will. It merely
prevent it from being presented as evidence.
(Gabucan v. Manta, G.R. No. L-51546, January
28, 1980)
SPECIAL RULES FOR
HANDICAPPED TESTATORS
Rules if the Testator is Deaf or Mute
1. If the testator is able to read, he must
personally read the will; or
2. If the testator is unable to read, he must
designate two persons to read it and
communicate to him, in some practicable
manner, the contents thereof. (NCC, Art. 807)
Rules if the testator is blind
The will shall be read to him twice, once by one
of the subscribing witnesses, and another time
by the notary public before whom the will is
acknowledged. (NCC, Art. 808) (2008 BAR)
Purpose: The reading is mandatory for the
purpose of making known to the testator the
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 Civil Law
provision of the will so that he may object if it is
not in accordance with his wishes.
Art. 808 of the NCC applies not only to blind
testators but also to those who, for one reason
or another, are incapable of reading their wills,
either because of poor or defective eyesight or
because of illiteracy. (Garcia v. Vasquez, 32 SCRA
489M 1970)
SUBSTANTIAL COMPLIANCE
A will is not rendered invalid by reason of
defects or imperfections in the form of
attestation or in the language used therein. In
the absence of bad faith, forgery, or fraud, or
undue and improper pressure and influence,
defects and imperfections in the form of
attestation or in the language used therein shall
not render the will invalid if it is proved that the
will was in fact executed and attested in
substantial compliance with all the
requirements of Article 805. (NCC, Art 809)
In cases of omissions in the will, if it can be
supplied by an examination of the will itself,
without the need of resorting to extrinsic
evidence it will not be fatal and,
correspondingly, would be allowed for probate.
However, evidence aliunde are not allowed to fill
a void in any part of the document or supply
missing details that should appear in the will
itself. Those omissions which cannot be supplied
except by evidence aliunde would result in the
invalidation of the will itself. (Cañeda v. CA, G.R.
No. 103554, May 28, 1993)
WITNESSES
Qualifications of witnesses (S18-ABCD)
(2008 BAR)
1. Of Sound mind.
2. At least 18 years of age.
3. Able to read and write
4. Not Blind, deaf or dumb
NOTE: While a blind or deaf may not be a
witness, he could be a testator in a notarial
will
5. Not have been Convicted by final judgment
of falsification of a document, perjury or
false testimony.
6. Domiciled in the Philippines – his habitual
residence must be in the Philippines. (NCC,
Art. 50)
319
Determination of qualifications of witnesses
The presence of the qualifications of witnesses is
determined at the time of the attestation of
the will. If the witnesses attesting the execution
of a will are competent at the time of attesting,
their becoming subsequently incompetent shall
not prevent the allowance of the will.
Instrumental witness as beneficiary in a will
The fact that a person acts as a witness to a will
does not disqualify him to be a beneficiary.
However, it renders void any legacy or device
given under said will to such person or to his
spouse, or parent or child, unless there are
three other competent witnesses to the will.
(NCC, Art 823) (2010 BAR) Such person so
attesting shall be admitted as a witness as if such
devise or legacy had not been made or given.
Q: Stevie was born blind. He went to school
for the blind, and learned to read in Braille
language. He speaks English fluently. Can he:
a. Make a will?
b. Act as a witness to a will?
c. In either of the instances, must the will
be read to him? (2008 BAR)
A.
a. YES. Stevie may make a notarial will. A blind
man is not expressly prohibited from
executing a will. In fact, Art. 808 of NCC
provides for an additional formality when
the testator is blind. Stevie, however, may
not make a holographic will in Braille
because the writing in Braille is not
handwriting. A holographic will to be valid
must be entirely written, signed and dated
by the testator in his own handwriting.
b. NO. A blind man is disqualified by law to be
a witness to a notarial will.
c. In case Stevie executes a notarial will, it
has to be read to him twice. First by one of
the instrumental witnesses and second by
the notary public before whom the will was
acknowledged. (NCC, Art. 808)
The person signing the testator’s name must
NOT be one of the 3 instrumental witnesses
because he must sign in the presence of the
testator and of three other instrumental
witnesses.
 Succession
It is an established rule that “a testament may
not be disallowed just because the attesting
witness declare against its due execution;
neither does it have to be necessarily allowed
just because all the attesting witness declare in
favor of its legalisation; what is decisive is that
the court is convinced by evidence before it, not
necessarily from the attesting witnesses,
although they must testify, that the will was or
was not duly executed in the manner required
by law.” (Baltazar v. Laxa, G.R. No. 174489, April
11, 2012)
This Court has held in a number of occasions
that substantial compliance is acceptable where
the purpose of the law has been satisfied, the
reason being that the solemnities surrounding
the execution of a will are intended to protect
the testator from all kinds of fraud and trickery
but are never intended to be so rigid and
inflexible as to destroy the testamentary
privilege. (Alvarado v. Gaviola, Jr., G.R. No. 74695,
September 14, 1993)
HOLOGRAPHIC WILLS
A holographic will is one entirely written,
dated, and signed by the hand of the testator
himself. It is subject to no other form, and may
be made in or out of the Philippines, and need
not be witnessed. (NCC, Art. 810)
Formalities Required in the Execution of
Holographic Wills: (EDS)
1. Entirely handwritten by the testator
An illiterate cannot make a holographic will
because it is required to be in writing by the
testator. However, he can make an ordinary or
notarial will because the law allows a notarial
will to be written by someone else and in
certain cases, for the will to be read by
someone else not the testator.
NOTE: A will handwritten by a person other
than the testator is a not a valid holographic
will, but it may nonetheless be made valid by
complying with the requirements of a notarial
will.
Effects of Insertions or Interpolations
GR: When a number of erasures, corrections,
cancellation, or insertions are made by the
testator in the will but the same have not been
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
noted or authenticated with his full signature,
only the particular words erased, corrected,
altered will be invalidated, not the entirety of
the will.
XPNs:
a. Where the change affects the essence of
the will of the testator such as where
the alteration partakes the effect of
revoking a will;
NOTE: When the holographic will had
only one substantial provision, which
was altered by substituting the original
heir with another, and the same did not
carry the requisite full signature of the
testator, the entirety of the will is
voided or revoked.
Reason: What was cancelled here was
the very essence of the will; it amounted
to the revocation of the will. Therefore,
neither the altered text nor the original
unaltered text can be given effect.
(Kalaw v. Relova, G.R. No. L-40207,
September 28, 1984)
Thus, unless the unauthenticated
alterations, cancellations, or insertions
were made on the date of the
holographic will or on testator’s
signature, their presence does not
invalidate the will itself. The lack of
authentication will only result in
disallowance of such changes. (Ajero v.
CA, G.R. No. 106720, September 15, 1994)
b. Where the alteration affects the date of
the will or the signature of the testator,
the whole will is void.
c. If the words written by a 3rd person
were contemporaneous with the
execution of the will, even though
authenticated by the testator, the entire
will is void for violation of the requisite
that the holographic will must be
entirely in the testator’s handwriting.
2. Dated by the testator
GR: The "date" in a holographic will should
include the day, month, and year of its
execution.
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 Civil Law
XPN: When there is no appearance of fraud,
bad faith, undue influence and pressure and
the authenticity of the will is established and
the only issue is whether or not the date
appearing e.g., “FEB. ‘61” on the holographic
will is a valid compliance with Art. 810 of
NCC, probate of the holographic will should
be allowed under the principle of
substantial compliance. (Roxas v. De Jesus,
G.R. No. L-38338, January 28, 1985)
The law does not specify a particular
location where the date should be placed in
the will. The only requirements are the date
be in the will itself and executed in the hand
of the testator. (Labrador v. CA, G.R. Nos.
83843-44, April 5, 1990) Thus, it may be
placed either at the beginning, in the middle,
or at the end of the will.
3. Signed by the hand of the testator himself
In a holographic will, the signature must be
at the end of the will. This can be inferred
from Art. 812 of the NCC by the reference to
dispositions “written below his signature.”
This phrase implies that the signature is at
the end of the will, and any disposition
below it must further be signed and dated.
In a holographic will, the dispositions of the
testator written below his signature must be
dated and signed by him in order to make
them valid as testamentary dispositions.
(NCC, Art. 812) If one disposition below the
signature of the testator is not dated, even if
signed, that particular disposition is void,
without affecting the validity of the others
or of the will itself.
When a number of dispositions appearing in
a holographic will are signed without being
dated, and the last disposition has a
signature and a date, such date validates the
dispositions preceding it, whatever be the
time of prior dispositions. (NCC, Art. 813)
NOTE: It is not required that the will be
executed on a single day, at one time and in
the same ink. The unity of the act is not
required in holographic wills.
In case of several additional dispositions
where the additional ones before the last are
dated but not signed, only the last will be
valid, provided the last is signed and dated.
321
If the additional ones before the last are
neither signed nor dated, but the last is both
signed and dated, a distinction will have to
be made whether they were made:
a. on one occasion (in which case the
signature and date under the last
addtitional disposition validate all) or
b. on different occasions (in which case
the intermediate additions are void).
This distinction, though theoretically valid,
is almost worthless in practice because the
circumstances of the execution of
holographic wills are often difficult to prove.
(Balane, 2016)
Rules for the Probate of Holographic Wills
In the post mortem probate of holographic wills,
the following rules are to be observed as to the
number of witnesses to be presented:
1. If the will is not contested, it shall be
necessary that at least one witness who
knows the handwriting and signature of the
testator explicitly declares that the will and
the signature are in the handwriting of the
testator.
2. If the will is contested, at least three of such
witnesses shall be required to explicitly
declare that the signature in the will is the
genuine signature of the testator.
3. In the absence of any competent witness
and if the court deems it necessary, expert
testimony may be resorted to. (NCC, Art.
811)
Presentation of the will is necessary
The contents and due execution of a lost
holographic will CANNOT be established
merely through oral testimonies of witness
who allegedly seen the same. It may not be
proved by the bare testimony of witnesses who
have seen or read such will. The will itself must
be presented; otherwise, it shall produce no
effect. (Gan v. Yap, G.R. No. L-12190, August 30,
1958)
By its very nature, a holographic will can only be
proven authentic by establishing that the
handwriting in which it is written belongs to the
 Succession
testator himself and this can only be done
through an examination of the will.
A holographic will which was lost or could
not be found can be proved by means of a
photostatic copy (photocopy).
A photostatic copy or xerox copy of the
holographic will may be allowed because
comparison can be made with the standard
writings of the testator. (Rodelas v. Aranza, G.R.
No. L-58509, December 7, 1982)
REQUIREMENTS IN CASE OF ALTERATIONS
In case of insertion, cancellation, erasure or
alteration in a holographic will, the testator
must authenticate the same by his full
signature. (NCC, Art. 814)
Full signature refers to the testator’s habitual,
usual and customary signature.
GR: If not authenticated with the testator’s
full signature, it is considered as not made, but
the will is not invalidated. It does not affect the
validity of the will itself. The will is not thereby
invalidated as a whole, but at most only as
regards the particular words erased, corrected
or inserted. (Kalaw v. Relova, G.R. No. L-40207,
September 28, 1984 citing Velasco v. Lopez, G.R.
No. 905, February 12, 1903)
XPN: Unless the portion involved is an essential
part of the will, such as the date.
Crossing-out of name of heir
Where the testator himself crossed out the name
of the original heir, and substituted the name of
another, without proper authentication, it was
held that this did not result in making the person
whose name was crossed as heir. The
cancellation should not have also been given
effect. The Supreme Court, however, ruled that
neither the original heir nor the substituted heir
can receive the estate on the ground that it could
not ignore what appeared to be a change of
heart on the part of the testator. One way to
justify the ruling of the Supreme Court is to
consider the cancellation as tantamount to a
revocation of the will. It amounts to a revocation
even though the cancellation only pertained to
the name of the original heir because without
the said name, there remains no other
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
disposition in the will. (Kalaw v. Relova, G.R. No.
L-40207, September 28, 1984)
JOINT WILLS (2000, 2008 BAR)
Joint wills are NOT allowed in the
Philippines.
Two or more persons cannot make a will jointly,
or in the same instrument, either for their
reciprocal benefit or for the benefit of a third
person. (NCC, Art. 818)
Wills prohibited by Art. 818 of the NCC executed
by Filipinos in a foreign country shall not be
valid in the Philippines, even though authorized
by the laws of the country where they may have
been executed. (NCC, Art. 819) (2000 BAR)
Reason: Whether in the Philippines or in foreign
country, Filipino citizens are prohibited from
executing joint wills because it is a matter
against public policy. There is danger of undue
influence and of one testator killing the other.
(Dacanay v. Florendo, G.R. No. L-2071, September
19, 1950)
NOTE: Mutual wills – Separate wills although
containing reciprocal provisions are not
prohibited, subject to the rule on disposition
captatoria.
What the law expressly prohibits is the making
of joint wills either for the testator’s reciprocal
benefit or for the benefit of a third person. (NCC,
Art. 818) In the case at bench, the Cunanan
spouses executed separate wills. Since the two
wills contain essentially the same provisions and
pertain to properties which in all probability are
conjugal in nature, practical considerations
dictate their joint probate. (Vda. de Perez v.
Tolete, G.R. No. 76714, June 2, 1994)
NOTE: While the execution of joint wills is
absolutely prohibited under Philippine laws, the
filing of a joint petition for the probate of two or
more wills is allowed. Multiple wills may be
submitted for probate in a single proceeding.
Q: John and Paula, British citizens at birth,
acquired Philippine citizenship by
naturalization after their marriage. During
their marriage the couple acquired
substantial landholdings in London and in
Makati. Paula bore John three children,
Peter, Paul and Mary. In one of their trips to
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 Civil Law
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
Peter and Paul only but the two could not
dispose of nor divide the London estate as
long as they live. John and Paula died
tragically in the London Subway terrorist
attack in 2005. Peter and Paul filed a petition
for probate of their parents’ will before a
Makati Regional Trial Court.
a. Should the will be admitted to probate?
b. Are the testamentary dispositions valid?
c. Is the testamentary prohibition against
the division of the London estate valid?
(2008 BAR)
A:
a. NO, the will cannot be admitted to probate.
Joint wills are void under the Art. 818 of
NCC. Even if the joint will executed by
Filipinos abroad were valid where it was
executed, the joint will is still not valid in the
Philippines. (NCC, Art. 819)
b. If a will is void, all testamentary dispositions
contained therein are also void. Hence, all
testamentary provisions contained in the
void joint will are also void.
c. NO, the testamentary prohibition against
the division by Peter and Paul of the London
estate for as long as they live, is not valid.
Art. 494 of NCC provides that a donor or
testator may prohibit partition for a period
which shall not exceed twenty (20) years.
Q: Alden and Stela were both former Filipino
citizens. They were married in the
Philippines but they later migrated to the
United States where 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
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.
323
a. Was the joint will executed by Alden and
Stela who were both former Filipinos
valid? Explain with legal basis.
b. Can the joint will produce legal effect in
the Philippines with respect to the
properties and of Alden Stela found here?
If so, how?
c. Is the situation presented an example of
depecage? (2015 BAR)
A:
a. YES, the joint will of Alden and Stela is
considered valid. Being no longer Filipino
citizens at the time they executed their joint
will, the prohibition under our Civil Code on
joint wills will no longer apply to Alden and
Stela. For as long as their will was executed
in accordance with the law of the place
where they reside, or the law of the country
of which they are citizens or even in
accordance with the Civil Code, a will
executed by an alien is considered valid in
the Philippines. (NCC, Art. 816)
b. YES, the joint will of Alden and Stela can
take effect even with respect to the
properties located in the Philippines
because what governs the distribution of
their estate is no longer Philippine law but
their national law at the time of their
demise. Hence, the joint will produces legal
effect even with respect to the properties
situated in the Philippines.
c. NO, because depecage is a process of
applying rules of different states on the
basis of the precise issue involved. It is a
conflict of laws where different issues
within a case may be governed by the laws
of different states. In this case, no conflict of
laws will arise because Alden and Stela are
no longer Filipino citizens at the time of the
execution of their joint will and the place of
execution is not the Philippines.
CODICILS
A codicil is a supplement or addition to a will,
made after the execution of a will and annexed
to be taken as part thereof, by which any
disposition made in the original will is explained,
added to, or altered. (NCC, Art. 825)
The formalities which are required in the
execution of the codicil are the same as those
required in the execution of the will.
 Succession
SUBSEQUENT The documents or papers incorporated in a will
CODICIL
WILL be considered part of the will even though the
Forms a part of the It is a new or a separate same are not executed in the form of a will. The
original will. will. doctrine of incorporation by reference is not
Supplements the applicable in a holographic will unless, of course,
Makes dispositions the testator executes a holographic will and,
original will,
without reference to superfluously, had it witnessed. (Balane, 2010)
explaining, adding
and independent of the
to, or altering any of
original will.
its dispositions. REVOCATION OF WILLS (1997, 2003 BAR)
If it provides for a full
disposition of the A will may be revoked by the testator at any
testator’s estate, may time before his death. Any waiver or restriction
Does not, as a rule,
revoke the whole prior of this right is void. (NCC, Art. 828)
revoke entirely the
will by substituting a
prior will.
new and last The testator’s right to revoke during his lifetime
disposition for the is absolute because a will is ambulatory. It can
same. neither be waived nor restricted. As a matter of
A prior will and a fact, even if the will has already been admitted to
A will and a codicil,
subsequent will, being probate during the testator’s lifetime, it may still
being regarded as a
two separate wills, may be revoked. This necessarily follows from the
single instrument
be construed principle that “a testament is of force after men
are to be construed
independently of each are dead; otherwise it is of no strength at all
together.
other. while the testator lives.”

If the former will is a notarial will, it is not Governing Law in case of Revocation
required that the codicil be notarial in form as
well. The law only requires that a codicil be in 1. If the revocation takes place in the
the form of a will. It does not require that it be of Philippines, whether the testator is
the same kind as the will it is supplementing. domiciled in the Philippines or in some
What matters is that the codicil complies with other country – Philippine laws
the formalities required of a notarial will or
holographic will, as the case may be. 2. If the revocation takes place outside the
Philippines:
INCORPORATION BY REFERENCE
a. By a testator who is domiciled in the
Incorporation by reference is the Philippines – Philippine laws
incorporation of an extrinsic document or paper b. By a testator who is not domiciled in
into a will by reference so as to become a part this country:
thereof. - Laws of the place where the
will was made, or
Requisites of Incorporation by Reference - Laws of the place in which the
(EDIS) testator had his domicile at
the time of revocation. (NCC,
1. The document or paper referred to in the Art. 829)
will must be in Existence at the time of the
execution of the will; Revocation based on a false or illegal cause is
2. The will must clearly Describe and identify null and void
the same, stating among other things the
number of pages thereof; Requisites:
3. It must be Identified by clear and
satisfactory proof as the document or paper 1. The cause must be concrete, factual and not
referred to therein; and purely subjective.
4. It must be Signed by the testator and the 2. It must be false.
witnesses on each and every page, except in 3. The testator must not know of its falsity.
case of voluminous books of account or
inventories. (NCC, Art. 827)

UNIVERSITY OF SANTO TOMAS 324

2021 GOLDEN NOTES
 Civil Law
4. It must appear from the will that the testator
is revoking because of the cause which is
false.
If the revocation is based on a false or illegal
cause, it is null and void. (NCC, Art. 833)
Institution of heir based on false cause as a
general rule does not affect the validity or
efficacy of the institution and shall be considered
as not written, unless it appears from the will
that the testator would not have made such
institution if he had known the falsity of such
cause. (NCC, Art. 850)
Modes of Revoking a Will
1. By implication of law;
2. By some will, codicil, or other writing
executed as provided in case of wills; or
3. By physical destruction through burning,
cancelation or obliteration. (NCC, Art. 830)
Revocation by Implication of law
It takes place when certain acts or events take
place subsequent to the making of a will, which
nullify or render inoperative either the will itself
or some testamentary disposition therein.
Instances when revocation by implication of
law takes place
1. Upon the termination of the subsequent
marriage in Article 41 of the FC through the
filing of the affidavit of reappearance, the
spouse who contracted the marriage in bad
faith shall be disqualified to inherit from the
innocent spouse by testate and intestate
succession. Hence, any testamentary
disposition in the will of the innocent spouse
in favor of the guilty spouse shall be revoked
by implication of law. (FC, Art. 43, par. 5)
2. If both spouses of the subsequent marriage
referred in Art. 41 of the FC acted in bad
faith, testamentary dispositions by one in
favor of the other are revoked by operation
of law. (FC, Art. 44)
3. In case of annulment, the spouse who
contracted the marriage in bad faith shall be
disqualified to inherit from the innocent
spouse by testate and intestate succession.
Hence, any disposition in the will of the
innocent spouse in favor of the guilty spouse
325
shall be revoked by operation of law. [FC,
Art. 50 in relation to Art. 43(5)]
4. Upon issuance of the decree of legal
separation, provisions in favor of the
offending spouse made in the will of the
innocent spouse shall be revoked by
operation of law. [FC, Art. 63 (4)]
5. In case of preterition of compulsory heirs in
the direct line, whether living at the time of
the execution of the will or born after the
death of the testator. In such case, the
preterition shall annul the institution of
heir; but the devises and legacies shall be
valid insofar as they are not inofficious.
(NCC, Art. 854)
6. When the heir, devisee or legatee commits
any of the acts of unworthiness which by
express provision of law will incapacitate
him to succeed. In such case, any
testamentary disposition in favor of such
heir, devisee or legatee is revoked. (NCC, Art.
1032)
7. When in the testator’s will there is a legacy
of a credit against a third person or of the
remission of a debt of the legatee, and
subsequently, after the execution of the will,
the testator brings an action against the
debtor for the payment of his debt. In such
case, the legacy is revoked. (NCC, Art. 935
and 936)
8. When the testator (a) transforms the thing
bequeathed in such a manner that it does
not retain either the form or denomination
it had, or (b) when he alienates by any title
or for any cause the thing bequeathed or any
part thereof, or (c) when the thing
bequeathed is totally lost during the
testator’s lifetime or after his death without
the heir’s fault. In such cases, the legacy is
revoked. (NCC, Art. 957; Rabuya, 2009)
Requisites of Revocation by Subsequent will
or codicil
1. The subsequent instrument must comply
with the formal requirements of a will;
2. The testator must possess testamentary
capacity;
3. The subsequent instrument must either
contain a revocatory clause or be
 Succession
incompatible, totally or partially, with the
prior will; and
4. The revoking will must be admitted to
probate.
Ways of Making a Revocation by a 1.
Subsequent Will
1. Express - by providing for a revocatory
clause;
2. Implied - provisions are completely
inconsistent with previous will.
The will containing the revocatory clause must
itself be valid, and admitted to probate,
otherwise, there is no revocation.
Principle of Instanter
1. The express revocation of the 1st will renders
it void because the revocatory clause of the 2nd
will, not being testamentary in character,
operates to revoke the 1st will instantly upon the
execution of the will containing it.
2. In implied revocation, the first will is not
instantly revoked by the second will because the
inconsistent testamentary dispositions of the
latter do not take effect immediately but only
after the death of the testator.
The fact that the subsequent will is posterior and
incompatible with the first does not mean that
the first is entirely revoked because the
revocation may be total or partial. Therefore, it
is possible for a prior will to subsist with a
subsequent will even if they are incompatible.
NOTE: In case of inconsistent wills, the
subsequent will prevails over the prior will
because it is the latest expression of
testamentary intent of the testator.
A revocation made in a subsequent will shall
take effect even if the new will should become
inoperative by reason of the incapacity of the
heirs, devisees or legatees designated therein, or
by their renunciation. (NCC, Art. 832)
Ways of Revocation by Physically Destroying
a Will (BTCO)
1. Burning
2. Tearing
3. Cancelling
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
4. Obliterating
Requisites of Revocation by Physical Act of
Destruction (OTAP)
Overt act of physical destruction;
2. Testamentary capacity of the testator at the
time of performing the act of revocation;
3. Animus Revocandi - intention to revoke; and
4. Performed by testator himself or other
person in the presence and express
direction of the testator.
NOTE: It is not necessary that the will be totally
destroyed. It is sufficient if on the face of the will,
there is shown some sign of the physical act of
destruction. (Maloto v. CA, G.R. No. 76464,
February 29, 1988)
Revocation by physical destruction must be
coupled with animus revocandi.
The physical act of destruction of a will, like
burning, does not per se constitute an effective
revocation, unless the destruction is coupled
with animus revocandi on the part of the
testator. (Maloto v. CA, G.R. No. 76464, February
29, 1988)
The physical destruction NEED NOT be done
by the testator himself.
It may be performed by another person under
his express direction and in his presence. If the
destruction done by a person other than the
testator is made not in his presence or not upon
his express direction, there is no revocation.
Q: In 1919, Miguel executed a will. In the post
mortem probate, there was a testimony to
the effect that the will was in the testator’s
possession in 1919, but it can no longer be
found. Is the will revoked?
A: YES, the Doctrine of Presumed Revocation
applies. Where a will which cannot be found, is
shown to have been in the possession of the
testator when last seen, the presumption is, in
the absence of other competent evidence, that
the same was cancelled or destroyed. The same
presumption arises where it is shown that the
testator had ready access to the will and it
cannot be found after his death. (Gago v.
Mamuyac G.R. No. 26317, January 29, 1927)
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 Civil Law
NOTE: The presumption is not conclusive and
anyone may prove the contrary to rebut the
presumption.
Doctrine of Dependent Relative Revocation
Where the testator’s act of destruction is
connected with the making of another will, so as
fairly to raise the inference that the testator
meant the revocation of the old to depend upon
the efficacy of the new disposition, the
revocation will be conditional and dependent
upon the efficacy of the new disposition; and if,
for any reason, the new will intended to be made
as a substitute is inoperative, the revocation fails
and the original will remains in full force.
But a mere intent to make at some time a will in
place of that which is destroyed will not render
the destruction conditional. It must appear that
the revocation is dependent upon the valid
execution of a new will.
The theory on which this principle is predicated
is that the testator did not intend to die intestate.
And this intention is clearly manifest when he
executed two wills on two different occasions
and instituted his wife as his universal heir.
There can therefore be no mistake as to his
intention of dying testate. (Molo v. Molo, G.R. No.
L-2538, September 21, 1951)
NOTE: Failure of the new testamentary
disposition upon whose validity the revocation
depends is equivalent to the non-fulfillment of a
suspensive condition and thus prevents the
revocation of the original will.
Q: Mr. Reyes executed a will completely valid
as to form. A week later, however, he
executed another will which expressly
revoked his first will, upon which he tore his
first will to pieces. Upon the death of Mr.
Reyes, his second will was presented for
probate by his heirs, but it was denied due to
formal defects. Assuming that a copy of the
first will is available, may it now be admitted
to probate and given effect? Why? (2003
BAR)
A: YES. The first will may be admitted to probate
and given effect because the will that was
supposed to revoke the same was never
admitted to probate on account of formal
defects. Admission to probate of the subsequent
327
revoking will is one of the requisites for express
revocation to take place.
REPUBLICATION AND REVIVAL OF WILLS
Republication of wills is the re-execution or
the re-establishment by a testator of a will which
is void or a will which the testator had once
revoked.
Two ways of Republishing Wills
1. By Reproduction - the contents of a
previous will are reproduced in a
subsequent will (NCC, Art. 835)
2. By Execution of a Codicil - such codicil
referring to the previous will to be
republished (NCC, Art. 836)
NOTE: There can be NO republication by
execution of a codicil if the previous will is void
as to its form. If the previous will is void as to its
form, it can only be republished by reproducing
the provisions thereof in a subsequent will.
Revival of Wills is the process of renewing the
operative force of a will which had once been
revoked by the testator.
Rule on revival of wills
1. If there is an EXPRESS REVOCATION - If
after making a will, the testator makes a
second will expressly revoking the first,
the revocation of the second will does not
revive the first will, which can be revived
only by another will or codicil. (NCC, Art.
837)
2. If there is an IMPLIED REVOCATION - The
revocation of the second will which
impliedly revoked the first will revives
the latter.
ALLOWANCE AND DISALLOWANCE OF WILLS;
PROBATE REQUIREMENT
Probate is a special proceeding mandatorily
required for the purpose of establishing the
validity of a will.
No will shall pass either real or personal
property unless it is proved and allowed in
accordance with the Rules of Court. (NCC, Art.
838)
 Succession
NOTE: Probate determines the extrinsic or
formal validity of a will only.
Probate of a Holograhic Will
In the probate of a holographic will, it shall be
necessary that at least one witness who knows
the handwriting and signature of the testator
explicitly declare that the will and the signature
are in the handwriting of the testator. If the will
is contested, at least three of such witnesses
shall be required.
In the absence of any competent witness
referred to in the preceding paragraph, and if
the court deem it necessary, expert testimony
may be resorted to. (NCC, Art. 811)
Grounds for Disallowance of a Will (NCC, Art.
839)
The will shall be disallowed in any of the
following cases:
1. If the formalities required by law have not
been complied with;
2. If the testator was insane, or otherwise
mentally incapable of making a will, at the
time of its execution;
3. If it was executed through force or under
duress, or the influence of fear, or threats;
4. If it was procured by undue and improper
pressure and influence, on the part of the
beneficiary or of some other person;
5. If the signature of the testator was procured
by fraud; or
6. If the testator acted by mistake or did not
intend that the instrument he signed should
be his will at the time of affixing his
signature thereto.
INSTITUTION OF HEIRS
Institution of heirs is an act by virtue of which
a testator designates in his will the person or
persons who are to succeed him in his property
and transmissible rights and obligations. (NCC,
Art. 840)
Institution of heirs cannot be allowed to affect
the legitimes of the compulsory heirs.
There can be an instituted heir only in
testamentary succession.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
There can be a valid will even if it contains only a
provision for disinheritance or if only legacies
and devises are contained in the will even
though it does not contain an institution of heir,
or such institution should not comprise the
entire estate, and even though the person so
instituted should not accept the inheritance or
should be incapacitated to succeed. (NCC, Art.
841)
Requisites of a Valid Institution
1. The will must be extrinsically valid;
NOTE: The testator must have the
testamentary capacity to make the
institution.
2. The institution must be intrinsically valid;
and
NOTE: The legitime must not be impaired,
the person instituted must be identified or
identifiable, and there is no preterition.
3. The institution must be effective.
NOTE: No repudiation by the heir; testator
is not predeceased by the heir.
Three Principles in the Institution of Heirs
1. Equality – heirs who are instituted without
a designation of shares inherit in equal
parts.
NOTE: Applies only when the heirs are of
the same class or same juridical condition
and involves only the free portion.
As between a compulsory heir and a
voluntary heir and they are instituted
without any designation of shares, the
legitime must first be respected and the free
portion shall then be equally divided
between them.
2. Individuality – heirs collectively instituted
are deemed individually instituted unless
contrary intent is proven.
NOTE: Art. 847 of the NCC provides that
when the testator institutes some heirs
individually and others collectively as when
he says, “I designate my heirs A and B, and
the children or C,” those collectively
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 Civil Law
designated shall be considered as
individually instituted, unless it clearly
appears that the intention of the testator
was otherwise.
3. Simultaneity – when several heirs are
instituted, they are instituted
simultaneously and not successively, unless
the contrary is proved.
Designation of Heir
Generally, an heir must be designated by his
name and surname. This rule, however, is not
mandatory. Even when the name of the heir has
been omitted but the testator has designated the
heir in such a manner that there can be no doubt
as to who has been instituted, the institution is
valid.
If two or more persons have the same names,
the testator must indicate some circumstance by
which the instituted heir may be known.
If the testator fails to mention any circumstance
regarding the heir instituted and there appears
to be several persons bearing the same name,
there is latent ambiguity and extrinsic evidence
other than the oral declaration of the testator as
to his intention is admissible to resolve the
ambiguity.
A conceived child may be instituted, provided
the conditions in Arts. 40 and 41 of NCC are
present. (Conceptus pro nato habetur)
NOTE: A conceived child, although as yet
unborn, has a limited and provisional
personality. (Quimiguing v. Icao, G.R. No. 26795,
July 31, 1970) Its personality is essentially
limited because it is only for purposes favorable
to the child. (NCC, Art. 40) Its personality is
provisional because it depends upon the child
being born alive later under the following
conditions:
1. The child must be alive for at least 24 hours
from complete delivery, if it had an intra-
uterine life of less than 7 months.
2. If the child had an intra-uterine life of at
least 7 months, it is enough that the child is
alive upon delivery. (NCC, Art. 41)
Disposition in favor of an Unknown Person
329
GR: Every disposition in favor of an unknown
person shall be void.
XPNs :
1. If the identity can become certain by some
event or circumstance, the disposition is
valid. It is important, however, that the
event or circumstance must appear in the
will itself; it cannot be shown by extrinsic
evidence, either oral or documentary.
2. A disposition in favor of a definite class or
group of persons shall be valid.
Evidence aliunde CANNOT be presented to
identify the unknown person. The determinate
event or circumstance, sufficient to indicate with
certainty the person whom the testator wants to
favor, must appear in the will itself; it cannot be
shown by extrinsic evidence, either oral or
documentary.
If there is merely a latent ambiguity as to the
identity of the heir, extrinsic evidence other than
the oral declaration of the testator may be used,
but if his identity is unknown, extrinsic evidence
is not allowed.
Effect if the institution of heir is based on a
false cause
GR: The institution of heir is valid. The false
cause shall be considered simply as not written.
XPN: If from the will itself, it appears that the
testator would not have made the institution if
he had known the falsity of the cause, the
institution shall be void.
NOTE: The rule is, if the revocation is based on a
false or illegal cause, it is null and void (NCC, Art.
833) while institution of heir based on false
cause as a general rule does not affect the
validity or efficacy of the institution. (NCC, Art.
850)
Kinds of institution
1. With a condition;
2. With a term; and
3. For a certain purpose or cause (Modal
Institution)
Conditional Institution of heirs
 Succession
Condition is a future or uncertain event or a
past event unknown to the parties, upon which
the performance of an obligation depends.
Conditions, terms and modes are not presumed,
they must be clearly expressed in the will. The
condition must fairly appear from the language
of the will. Otherwise, it shall be considered
pure.
Kinds of Condition
RESOLUTORY SUSPENSIVE
CONDITION CONDITION
The disposition becomes
The effectivity of
effective upon the death
the disposition is
of the testator but is
suspended until the
extinguished upon the
fulfillment of the
happening of the
condition.
condition.
Effect of Impossible Condition on the
Testamentary Disposition
Impossible conditions and those contrary to law
or good customs shall be considered as not
imposed and shall in no manner prejudice the
heir, even if the testator should otherwise
provide. (NCC, Art. 873)
GR: The testator CANNOT impose any charge,
condition or substitution whatsoever upon the
legitimes. If a charge condition or substitution is
imposed, it shall be considered as not imposed.
XPN: Testator can validly impose a prohibition
against the partition of the legitimes for a period
not exceeding 20 years.
NOTE: The legitime passes by strict operation of
law, independently of the testator’s will. As such,
any condition, burden, or substitution upon the
same is merely considered by law as not
imposed. (NCC, Art. 872)
Conditions on the Prohibition to Marry
GR: An absolute condition not to contract a first
or subsequent marriage is not a valid condition
and shall be considered as not written. (NCC, Art.
874). However, the validity of the disposition
itself shall not be affected.
XPN: If such condition was imposed on the
widow or widower by the deceased spouse or by
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the latter’s ascendants or descendants, in which
case, the condition is valid. (NCC, Art. 874)
If the prohibition is relative with respect to
persons, time or place, such conditions is valid
and must be complied with unless the testator
renders it impossible for the heir to marry at all.
Disposition Captatoria is any disposition made
upon the condition that the heir shall make some
provision in his will in favor of the testator or of
any other person shall be void. (NCC, Art. 875)
Here, both the condition and the disposition are
void but the validity of the other provisions,
including the will itself, shall not be affected.
Reason for the prohibition: Disposition captatoria
is incompatible with good faith and with the
nature of testaments; it is immoral and contrary
to the freedom to make wills.
Effect of a Suspensive Condition
1. Heir, devisee, or legatee acquires no rights
until the condition is fulfilled.
2. If he dies before the condition is fulfilled, he
transmits no rights to his heirs, even though
he survived the testator.
3. Once the condition is fulfilled, its effects
retroact to the moment of the death of the
testator.
Reason: Capacity to succeed by the
conditional heir must be determined both at
the time of the death of the testator and at
the time of the fulfillment of the condition.
4. If the suspensive condition is not fulfilled,
the estate will be placed under
administration until:
a. The condition is fulfilled, in which case
the estate should be given to the
instituted heir;
b. It becomes obvious that it cannot be
fulfilled, in which case, the estate should
be given to the intestate heirs.
Negative potestative condition consists in the
non-performance of an act or not giving
something and he shall comply by giving a
security that he will not do or give that which
has been prohibited by the testator. (NCC, Art.
330
 Civil Law
879) In this case, the heir instituted has a right to heirs. The instituted heir does not have to
receive his share in the inheritance upon the file a bond.
death of the testator and loses his right only
when he violates the condition. A “Caucion Muciana” is a security or bond
required from the conditional heir in order to
Institution of heir with a term secure the rights of those who would succeed to
the property upon violation of the condition.
A term is any future and certain event upon the
arrival of which the validity or efficacy of a Instances when caucion muciana is needed
testamentary disposition subject to it depends.
1. Suspensive term - the legal heir shall be
A disposition with a suspensive term does not considered as called to the succession until the
prevent the instituted heir from acquiring his arrival of the period. But he shall not enter
rights and transmitting them to his heirs even into possession of the property until after
before the arrival of the term. having given sufficient security, with the
intervention of the instituted heir. [NCC, Art.
Reason: The right of the heir instituted subject 885 (2)]
to a term is vested at the time of the testator's
death - he will just wait for the term to expire. 2. Negative potestative condition - If the
potestative condition imposed upon the heir is
If the heir dies after the testator but before the negative, or consists in not doing or not giving
term expires, he transmits his rights to his own something, he shall comply by giving a
heirs because of the vested right. security that he will not do or give that which
has been prohibited by the testator, and that
SUSPENSIVE in case of contravention he will return
SUSPENSIVE TERM whatever he may have received, together with
CONDITION
The instituted heir does its fruits and interests. (NCC, Art. 879)
The right of the heir
not acquire any
instituted subject to NOTE: If the heirs do not post the required
successional right upon
a term is vested at bond in case of a suspensive term or a
the death of the testator
the time of the negative potestative condition, the estate shall
as long as the condition
testator’s death. be placed under administration. (NCC, Art.
is not yet fulfilled.
Hence, if he dies 880)
Hence, upon the death
after the testator
of the instituted heir,
but before the term
prior to the fulfillment 3. Mode - That which has been left in this
expires, he can manner may be claimed at once provided that
of the condition, no
transmit his rights the instituted heir or his heirs give security for
right is transmitted to
to his own heirs.
his heirs. compliance with the wishes of the testator and
for the return of anything he or they may
Q: When the disposition is subject to a term, receive, together with its fruits and interests, if
what should be done by the instituted heirs he or they should disregard this obligation.
or legal heirs so that they can enjoy (NCC, Art. 882) (2002 BAR)
possession of the property?
Modal Institution of heirs
A: If the disposition is subject to a:
A mode is an obligation imposed upon the heir
1. Suspensive term - The legal heirs can enjoy to do or to give something
possession of the property until the
expiration of the period, but they must put Modal institution – statement of:
up a bond (caucion muciana) in order to
protect the right of the instituted heir. 1. Object of the institution,
2. Application of the property left by the
2. Resolutory term - The legal heirs can enjoy testator,
possession of the property but when the 3. Charge imposed by him.
term arrives, he must give it to the legal
Modal disposition

331
 Succession
A “mode” imposes an obligation upon the heir,
devisee or legatee, but it does not affect the
efficacy of his rights to the succession. The
mode obligates but does not suspend.
Mode distinguished from a Condition
MODE CONDITION
Imposes an
obligation upon the The condition must
heir, devisee or happen or be fulfilled in
legatee, but it does order for the heir to be
not affect the entitled to succeed the
efficacy of his rights testator.
to the succession.
Obligates but does Suspends but does not
not suspend obligate
In case of doubt, the institution should be
considered as modal not conditional.
Q: The testatrix devised a parcel of land to
Dr. Rabadilla. It was provided that Dr.
Rabadilla will acquire the property subject to
the obligation, until he dies, to give Maria
100 piculs of sugar, and in the event of non-
fulfillment, the property will pass to the
nearest descendants of the testatrix.
When Dr. Rabadilla died, Maria filed a
complaint to reconvey the land alleging that
the heirs of Dr. Rabadilla violated the
condition. Is the institution of Dr. Rabadilla, a
modal institution?
A: YES. It it imposes a charge upon the instituted
heir without, however, affecting the efficacy of
such institution.
In a modal institution, the testator states the
object of the institution, the purpose or
application of the property left by the testator,
or the charge imposed by the testator upon the
heir. A mode imposes an obligation upon the
heir or legatee, but it does not affect the efficacy
of his rights to the succession. The condition
suspends but does not obligate; and the mode
obligates but does not suspend. (Rabadilla v. CA,
G.R. No. 113725, June 29, 2000)
PRETERITION
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Preterition is the omission in testator’s will of
one, some or all of the compulsory heirs in the
direct line, whether living at the time of
execution of the will or born after the death of
the testator. (NCC, Art. 854) (1999, 2000, 2001,
2008 BAR)
Meaning of “born after the death of the
testator”
It simply means that the omitted heir must have
already been conceived at the time of death of
the testator, but was born only after the death of
the testator.
Requisites of Preterition
1. There is a total omission in the inheritance;
2. The person omitted is a compulsory heir in
the direct line;
3. The omitted compulsory heir must survive
the testator, or in case the compulsory heir
predeceased the testator, there is a right of
representation; and
4. Nothing must have been received by the heir
by gratuitous title.
A spouse CANNOT be preterited. While a spouse
is a compulsory heir, he/she is not in the direct
line (ascending or descending).
NOTE: The surviving spouse shall only be
entitled to recover his legitime but the
institution of heirs shall not be annulled.
There is Total Omission when the heir:
1. Receives nothing under the will whether as
heir, legatee, or devisee;
NOTE: If a compulsory heir is given a share
in the inheritance, no matter how small,
there is no preterition.
However, if a compulsory heir gets less than
his legitime, while this is not a case of
preterition, he is entitled to a completion of
his legitime under Art. 906 of the NCC. His
remedy is found in Article 906 & 907of the
New Civil Code for the completion of his
legitime.
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 Civil Law
The testator cannot defeat the right of the
compulsory heirs to their legitime by the
simply expedient of giving them less than
what the law reserves as their legal share, or
by disposing of the estate in favor of others
to such an extent that the legitime of the
compulsory heirs would be diminished or
devalued. In such eventuality, the affected
compulsory heir may bring an action for the
completion of his legitime or for the
reduction of the disposition infringing upon
his rightful share in the estate of the
decedent. ( Paguirigan , 2017)
2. Has received nothing by way of donation
inter vivos or propter nuptias; and
NOTE: If a compulsory heir has already
received a donation from the testator, there
is no preterition.
Reason: A donation to a compulsory heir is
considered an advance of the inheritance.
3. The heir will receive nothing by way of
intestate succession. (e.g. if the heir is not
mentioned in the will nor a recipient of a
donation inter vivos and all of the estate is
disposed by will)
To constitute preterition, the omission must be
total and complete, such that nothing must be
given to the compulsory heir. (Aznar v. Duncan,
G.R. No. L-24365, June 30, 1966)
Effects of Preterition
1. Preterition annuls the institution of heirs;
2. Devices and legacies are valid insofar as
they are not inofficious;
3. If the omitted compulsory heir dies before
the testator, the institution shall be effectual,
without prejudice to the right of
representation.
Example: X has two legitimate children: A
and B. X makes a will which results in the
preterition of A. A predeceases X but leaves
a legitimate child A-1, who is himself
completely omitted from the inheritance (A-
1 being entitled to succeed X by
representation). There is preterition, not
because A was preterited but because A-1
was preterited. (Balane, 2010) In such case,
the descendant of A, A-1, can now file an
action to annul the institution of heirs.
333
Preterition annuls the institution of an heir and
annulment throws open to intestate succession
the entire inheritance. The only provisions
which do not result in intestacy are the legacies
and devises made in the will for they should
stand valid and respected, except insofar as the
legitimes are concerned. (Acain v. IAC, G.R. No.
72706, October 27, 1987)
Omission of an illegitimate child in a will
amounts to preterition
Art. 854 of the NCC do not distinguish. It is
immaterial whether the heir omitted in the
testator’s will is legitimate or illegitimate
provided that he is a compulsory heir in the
direct line.
Omission of an adopted child in a will also
amount to preterition
An adopted child is by legal fiction considered a
compulsory heir in the direct line. An adopted
person is given the same rights and duties as if
he is a legitimate child of the adopter and makes
the adopted person a legal heir of the adopter.
(Acain v. IAC, G.R. No. 72706, October 27, 1987)
Compulsory Heirs in the Direct Line
1. Legitimate children and descendants with
respect to their legitimate parents or
ascendants;
2. Legitimate parents of ascendants, with
respect to their legitimate children and
descendants;
3. Illegitimate children;
4. The father or mother of illegitimate children.
Where the deceased left no descendants,
legitimate or illegitimate, but she left forced
heirs in the direct ascending line— her
parents, and her holographic will does not
explicitly disinherit them but simply omits
their names altogether, the case is one of
preterition of the parents, not a case of
ineffective disinheritance. (Nuguid v. Nuguid, et
al., GR No. L-23445, June 23, 1966)
Exclusion of an Heir in the Extrajudicial
Settlement of Estate
Q: Virginia P. Viado died intestate in 1982.
Her part in the conjugal property was
transmitted to her heirs—her husband Julian
and their children Nilo Viado, Rebecca Viado,
 Succession
Leah Viado and Delia Viado. The inheritance, but only in so far as it heir receives nothing
which vested from the moment of death of prejudices the at all. There is total
the decedent, remained under a co- legitime of the person deprivation.
ownership regime among the heirs until disinherited.
partition. The heirs later on executed a deed
of extrajudicial settlement to the exclusion of Similarities
Delia Viado, alleged to be a retardate. Can
Delia Viado rescind the extrajudicial In both cases, the omitted heir and the
settlement among other heirs? imperfectly disinherited heir get at least their
legitimes.
A: NO. The exclusion of petitioner Delia Viado
Both legacies and devises remain valid insofar
from the deed of extrajudicial settlement verily
as the legitime has not been impaired.
has the effect of preterition. This kind of
preterition, however, in the absence of proof of
fraud and bad faith, does not justify a The mere fact that an heir was omitted in a
collateral attack on Transfer Certificate of will, does NOT automatically equate to
Title. The relief instead rests on Article 1104 of preterition.
the NCC to the effect that where the preterition
is not attended by bad faith and fraud, the One must distinguish whether the omission of a
partition shall not be rescinded but the forced heir in the will of the testator is by
preterited heir shall be paid the value of the mistake or in advertence or voluntary or
share pertaining to her. (Non v. Court of intentional:
Appeals, G.R. No. 137287, February 15, 2000)
1. If by mistake or inadvertence, there is true
Preterition and Defective Disinheritance preterition and total intestacy results.
2. If the omission is intentional, the effect
would be a defective disinheritance covered
DEFECTIVE
PRETERITION by Art. 918 of the NCC in which case the
DISINHERITANCE
institution of heir is not wholly void but only
Distinctions in so far as it prejudices the legitime of the
person disinherited.
A testamentary
disposition depriving Omission in the Effect of Preterition on the Will Itself
any compulsory heir testator’s will of the
of his share in the forced heirs or any of GR: The effect of annulling the institution of
legitime for a cause them. heirs will be, necessarily, the opening of a total
authorized by law. intestacy except that proper legacies and devises
must be respected. Here, the will is not
The institution of
The institution abrogated.
heirs is completely
remains valid, but
annulled. Hence, the
must be reduced XPN: If the will contains a universal institution
annulment is in toto,
insofar as the legitime of heirs to the entire inheritance of the testator,
unless there are in
has been impaired. the will is totally abrogated.
addition,
Such nullity of
testamentary
institution is limited Reason: The nullification of such institution of
dispositions in the
only to that portion of the universal heirs without any other
form of legacies and
which, the testamentary disposition in the will amounts to
devices which shall
disinherited heir has a declaration that nothing at all was written.
remain valid so long
been unlawfully
as they are not
deprived of. PREDECEASE, INCAPACITY, AND
inofficious.
REPUDIATION
The omission is By mere mistake or
intentional in which inadvertence Effect if the Heir Predeceases the Testator
case the institution of resulting in the fact
heir is not wholly void that the compulsory If the heir who predeceases the testator is a
voluntary heir, a devisee or a legatee, he shall

UNIVERSITY OF SANTO TOMAS 334

2021 GOLDEN NOTES
 Civil Law
transmit no right to his own heirs. Death
prevents him from acquiring any rights.
NOTE: The rule is absolute with respect to a
voluntary heir and a devisee or legatee.
Representation applies only to those acquired by
virtue of the law (legitime, intestate share, in
case of reserva troncal).
No representation in cases of repudiation.

Effect if the Heir Repudiated or Renounced Representation only occurs in the direct
his Inheritance descending line and never in the ascending.

An heir who renounced his inheritance, whether
as compulsory or as voluntary heir, does not
transmit any right to his own heirs.
NOTE: An heir who repudiated his inheritance,
may represent the person whose inheritance he
has renounced. (NCC, Art. 976)
In the direct collateral line, the right of
representation only takes place in favor of
children of brothers or sisters, whether full or
half-blood.
The representation obtains degree by degree,
and no jump is made.

The reason for this is found under Art. 971 of the Outline of Rules (Balane, 2016)
NCC: “the representative does not succeed the
person represented but the one whom the Disinh
Incapacit Renuncia
person represented would have succeeded. “ Death eritanc
y tion
e
RIGHT OF REPRESENTATION Compulsory Heir
1. TN 1. TN 1. TN 1. TN
Right of representation is the right created by 2. R 2. R 2. No R 2. R
fiction of law, by virtue of which, the Voluntary Heir
representative is raised to the place and degree Not
1. TN 1. TN 1. TN
of the person represented, and acquires the applica
2. No R 2. No R 2. No R
rights which the latter would have if he were ble
living or if he could have inherited. (NCC, Art. Legal Heir
970) Not
1. TN 1. TN 1. TN
applica
2. R 2. R 2. No R
The representative thereby steps into the shoes ble
of the person he represents and succeeds, not
from the latter, but from the person whose TN = Transmit Nothing
estate the person represented would have R = Representation
succeeded.
COMPLETION OF THE LEGITIME
The right of representation is allowed in
compulsory succession with respect to the Any compulsory heir to whom the testator has
legitime, in case the compulsory heir in the left by any title less than the legitime belonging
descending line dies before the testator or to him may demand that the same be fully
becomes incapacitated to succeed. satisfied. (NCC, Art. 906) (2001, 2010 BAR)

Heirs who repudiated their share MAY NOT be
represented. A voluntary heir MAY NOT also be
represented.
Rules in case of representation
NOTE: Testamentary dispositions that impair or
diminish the legitime of the compulsory heirs
shall be reduced on petition of the same, insofar
as they may be inofficious or excessive. (NCC,
Art. 907)

It shall take place in cases of: If the testator has instituted only one heir, and
the institution is limited to an aliquot part of the
a. Death inheritance - legal succession takes place with
b. Incapacity respect to the remainder of the estate. (NCC, Art.
c. Disinheritance 851)

335
 Succession
If the testator instituted several heirs as sole
heirs but allotted only an aliquot part of the
inheritance and together, they do not cover the
whole inheritance, or the whole free portion -
each part shall be increased proportionately.
(NCC, Art. 852)
If each of the instituted heirs has been given an
aliquot part of the inheritance and the parts
together exceed the whole inheritance, or the
whole free portion, as the case may be - each
part shall be reduced proportionately. (NCC, Art.
853)
SUBSTITUTION OF HEIRS
Substitution is the appointment of another heir
so that he may enter into the inheritance in
default of the heir originally instituted. (NCC, Art
8570) (2002 BAR)
The concept of substitution applies in cases if
the heir or heirs instituted should die before the
testator or should not wish, or should be
incapacitated to accept the inheritance.
If the Substitute Dies Ahead of the Testator
The substitute who dies ahead of the testator
prevents him from acquiring any rights, since
there is no substitution to speak of.
Kinds of substitution
1. Simple/common (2002 BAR) – takes place
when the heir instituted:
a. Predeceases the testator;
b. repudiates the inheritance; or
c. is incapacitated to succeed
NOTE: Simple substitution without a
statement of the causes, to which it refers,
shall comprise the 3 above mentioned
situations unless the testator has provided
otherwise.
2. Brief/compendious – when two or more
persons are substituted for one; and one
person for two or more heirs.
3. Reciprocal – one heir is designated as a
substitute for an instituted heir while the
latter is simultaneously instituted as a
substitute for the former.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
GR: The substitute shall be subject to the
same charges and conditions imposed upon
the instituted heir.
XPNs:
a. If the testator has expressly
provided the contrary
b. If the charges or conditions are
personally applicable only to the
heir instituted. (NCC, Art 862)
4. Fideicommissary Substitution (Indirect
Substitution)– It is a substitution by virtue of
which the fiduciary or first heir instituted is
entrusted with the obligation to preserve
and to transmit to a second heir the whole
or part of the inheritance. It shall be valid
provided such substitution does not go
beyond one degree from the heir originally
instituted, and provided further, that the
fiduciary or first heir and the second heir
are living at the time of the death of the
testator. (NCC, Art. 863) (2002, 2008 BAR)
Parties to a Fideicommissary Substitution
and their Obligations
PARTIES OBLIGATIONS
He has the obligation to
First heir or
preserve and transmit the
fiduciary
inheritance.
He eventually receives the
Second heir or
property from the
fideicommissary
fiduciary.
Elements of Fideicommissary Substitution
1. There must be a first heir or fiduciary who
takes the property upon the testator’s
death;
2. An absolute obligation is imposed upon the
fiduciary to preserve and to transmit to a
second heir the property at a given time;
3. There is a second heir who takes the
property subsequently from the fiduciary
and must be one degree from the first heir;
and
4. The first and second heir must both be
living and qualified at the time of the death
of the testator.
NOTE: It should be imposed on the free portion
and not on the legitime. Fideicommissary
336
 Civil Law
substitution can never burden the legitime.
(NCC, Art. 864)
Meaning of "One degree"
It refers to the degree of relationship; it means
“one generation”. As such, the fideicommissary
can only be either a parent or child of the first
heir. (Palacios v. Ramirez, G.R. No. L-27952,
February 15, 1982)
NOTE:
1. If the fiduciary registers the property in his
name without the fideicommissary
substitution, innocent parties are protected.
However, if the property is unregistered, the
buyer acquires only the seller’s right; i.e.,
subject to the fideicommissary substitution
2. The fideicommissary is a sort of naked
owner; ownership is consolidated in him
upon transmission of the property to him.

The relationship is always counted from the first Fiduciary’s Tenure

heir. However, fideicommissary substitutions
are also limited to one transmission. There can 1. Primary rule – the period indicated by the
only be one fideicommissary transmission such testator.
that after the first, there can be no second 2. Secondary rule – if the testator did not
fideicommissary substitution. indicate a period, then the fiduciary’s
lifetime.
Both the first and second heir must be living
and qualified at the time of the death of the Delivery of the property to the
testator fideicommissary heir

The fideicommissary inherits not from the first GR: The fiduciary should deliver the property
heir but from the testator, thus, the requirement intact and undiminished to the fideicommissary
that the fideicommissary be alive or at least heir upon arrival of the period.
conceived at the time of the testator’s death.
XPN: The only deductions allowed, in the
Effect if the fideicommissary predeceases the absence of a contrary provision in the will are:
fiduciary
1. Legitimate expenses
If the fideicommissary predeceases the fiduciary, 2. Credits
but survives the testator, his rights pass to his 3. Improvements
own heirs.
The coverage of legitimate expenses and
NOTE: The first heir receives property, either improvements are limited to necessary and
upon the death of the testator or upon the useful expenses, but not to ornamental expenses.
fulfillment of any suspensive condition imposed
by the will. Distinctions between a fiduciary in
fideicommissary substitution and a trustee in
The first heir is almost like a usufructuary with a trust
right to enjoy the property. Thus, like a
usufructuary, he cannot alienate the property. FIDUCIARY TRUSTEE
The first heir is also obliged to make an May be designated
inventory, but he is not required to furnish a either expressly by
bond. Can only be
acts inter vivos or
designated expressly
mortis causa or
by means of a will
Alienation of the property subject to the impliedly by
fideicommissary substitution by the first heir operation of law
Has no usufructuary
Entitled to all of the
Alienation of the property subject to the right over the
fideicommissary substitution by the first heir is rights of a
property which he
not valid. The fiduciary cannot alienate the usufructuary
holds in trust
property either by an act inter vivos or mortis May alienate his right
causa. He is bound to preserve the property and of usufruct but always Cannot alienate
transmit it to the second heir or subject to his anything whatsoever
fideicommissary. obligation of

337
 Succession
preserving and temporary one, beyond the limit fixed in Art.
transmitting the object 863 of the NCC (20 years). (NCC, Art.870)
to a second heir 3. Those which impose upon the heir the
Fiduciary carries out charge of paying to various persons
not another’s wishes successively, beyond the limit prescribed in
but his own and he Art. 863 of the NCC, a certain income or
Obligation is broader pension.
enjoys the use and the
because it extends
fruits unlike a trustee 4. Those which leave to a person the whole or
not only to the part of the hereditary property in order that
(he is like a
properties but also to he may apply or invest the same according
usufructuary). (Perez
the fruits
v. Gachitorena, G.R. No. to secret instructions communicated to him
L-31703, February 13, by the testator.
1930)
The nullity of the fideicommissary substitution
Express obligation to preserve and transmit DOES NOT prejudice the validity of the
the property institution of the heirs first designated; the
fideicommissary clause shall simply be
The obligation to preserve and transmit must be considered as not written. (NCC, Art. 868)
given clearly and expressly:
Q: Raymond, single, named his sister Ruffa in
1. by giving it a name “fideicommissary his will as a devisee of a parcel of land which
substitution” or he owned. The will imposed upon Ruffa the
obligation of preserving the land and
2. by imposing upon the first heir the absolute transferring it, upon her death, to her
obligation to preserve and deliver the illegitimate daughter Scarlet who was then
property to the second heir. only one year old. Raymond later died,
leaving behind his widowed mother, Ruffa
Remedy of the fideicommissary to protect and Scarlet.
himself against alienation to an innocent
third person a. Is the condition imposed upon Ruffa to
preserve the property and to transmit it
If the first heir was able to register the property upon her death to Scarlet, valid?
in his name, the fideicommissary should annotate b. If Scarlet predeceases Ruffa, who inherits
his claim on the land on the title to protect the property?
himself against any alienation in favor of c. If Ruffa predeceases Raymond, can Scarlet
innocent third parties. inherit the property directly from
Raymond? (2008 BAR)
When the property passes to the
fideicommissary, there is no more prohibition to A:
alienate. a. When an obligation to preserve and
transmit the property to Scarlet was
If the testator gives the usufruct to different imposed on Ruffa, the testator Raymond
persons successively, the provisions on intended to create a fideicommissary
fideicommissary substitution also apply. substitution where Ruffa is the fiduciary
and Scarlet is the fideicommissary. Having
Different dispositions related or analogous to complied with the requirements of Art. 863
fideicommissary substitutions which the law and 869 of the NCC, the fideicommissary
considers as void (NCC, Art. 867) substitution is valid.

1. Fideicommissary substitutions which are b. If Scarlet predeceases Ruffa, the latter as

not made in an express manner, either by
giving them this name, or imposing upon the
fiduciary the absolute obligation to deliver
the property to a second heir.
2. Provisions which contain a perpetual
prohibition to alienate and even a
the former’s heir, will be entitled to the
property. But since it is also Ruffa’s death
which will trigger the fideicommissary
substitution, the practical effect of her
death would be to allow her (Ruffa’s)
mother to inherit the property as Ruffa’s

UNIVERSITY OF SANTO TOMAS 338

2021 GOLDEN NOTES
 Civil Law
heir. The transfer of the property from
Scarlet to Ruffa (as Scarlet’s heir) is what
allows Ruffa’s mother to inherit the
property which she would otherwise be
disqualified to inherit under Article 992 of
the NCC.
c. One requirement of a valid
fideicommissary substitution is that both
heirs should be alive at the time of the
testator’s death. Ruffa predeceasing
Raymond means that the fideicommissary
substitution is no longer valid. In this
regard, the only way by which Scarlet can
inherit the property directly from
Raymond is by legal succession. Her right
to do so, however, is negated by (1) the
presence of Raymond and Ruffa’s mother
who necessarily excludes her; and (2) the
provisions of Art. 992 of the NCC. (NO.
Scarlet cannot inherit the property directly
from Raymond by way of fideicommissary
substitution. Under the law, one of the
requisites of a valid fideicommissary
substitution is that both heirs must be
living and qualified to succeed at the time
of the testator’s death. However, Scarlet
can inherit the property from Raymond by
way of compulsory succession.)
LEGITIME
Legitime is that part of the testator's property
which he cannot dispose of because the law has
reserved it for certain heirs who are, therefore,
called compulsory heirs. (NCC, Art. 886) (2003
BAR)
It is mandatory on the part of the testator to
reserve that part of the estate to the legitime.
Determination of the Legitime
To determine the legitime, the value of the
property left at the death of the testator shall be
considered, deducting all debts and charges,
which shall not include those imposed in the
will.
Donations given to children shall be charged to
the legitime. (NCC, Art. 908)
Kinds of Legitime
1. Fixed – If the amount (fractional part) does
not vary or change regardless of whether
339
there are concurring compulsory heirs or
not.
a. legitimate children and descendants
(legitimate children’s legitime is always ½)
(2003, 2005, 2010 BAR)
b. legitimate parents and ascendants
(when there are no legitimate children and
descendants). [NCC, Art. 887 (1)]
2. Variable – If the amount changes or varies
in accordance with whom the compulsory
heir concur.
After the legitime has been determined in
accordance with Articles 908 to 910 of the
NCC, the reduction shall be made as follows:
1. Donations shall be respected as long as the
legitime can be covered, reducing or
annulling, if necessary, the devises or
legacies made in the will. (NCC, Art. 911 par.
2)
2. The reduction of the devises or legacies
shall be pro rata, without any distinction
whatever. (NCC, Art. 911 par. 3)
If the testator has directed that a certain
devise or legacy be paid in preference to
others, it shall not suffer any reduction until
the latter have been applied in full to the
payment of the legitime. (NCC, Art. 911 par.
4)
3. If the devise or legacy consists of a usufruct
or life annuity, whose value may be
considered greater than that of the
disposable portion, the compulsory heirs
may choose between complying with the
testamentary provision and delivering to the
devisee or legatee the part of the inheritance
of which the testator could freely dispose.
(NCC, Art. 911 par. 5)
4. If the devise subject to reduction should
consist of real property, which cannot be
conveniently divided, it shall go to the
devisee if the reduction does not absorb
one-half of its value; and in a contrary case,
to the compulsory heirs; but the former and
the latter shall reimburse each other in cash
for what respectively belongs to them. (NCC,
Art. 912 par. 1)
 Succession
The devisee entitled to a legitime may retain
the entire property, provided its value does
not exceed that of the disposable portion
and of the share pertaining to him as
legitime. (NCC, Art. 912 par. 2)
NOTE: If the heirs or devisees do not choose
to avail themselves of the right granted by
the preceding article, any heir or devisee
who did not have such right may exercise it;
should the latter not make use of it, the
property shall be sold at public auction at
the instance of any one of the interested
parties. (NCC, Art. 913)
The testator may devise and bequeath the free
portion as he may deem fit. (NCC, Art. 914)
RULES ON LEGITIME
There is no obligation on the compulsory heirs
to accept their legitimes.
GR: The testator cannot deprive the compulsory
heirs of their legitimes.
XPN:
1. When the testator validly disinherited his
heir. (NCC, Art. 915)
2. When the partition of the hereditary estate
for a period not exceeding twenty (20) years
is expressly forbidden by the testator. (NCC,
Art. 1083)
NOTE: Only the legitime is reserved. The free
portion may be disposed of by will.
Q: Crispin died testate and was survived by
Alex and Josine, his children from his first
wife; Rene and Ruby, his children 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,
sampung apo at kaapuapuhan ko sa habang
panahon, ay may tutuluyan kung magnanais
na mag-aral sa Maynila o sa kalapit na mga
lungsod." Is the provision valid? (2008, 2014
BAR)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A: NO, the provision is not valid. At first glance,
the provision may appear valid as it provides for
the transfer of title in favor of Alex and Rene
over the parcel of land. A legacy or devise is to
be construed as a donation effective mortis
causa, and it is intended to transfer ownership to
the legatee or devisee. Since the ownership is
legally transferred to the Alex and Rene, they
cannot be prohibited by the testator from
alienating or partitioning the same perpetually.
The dispositions of the testator declaring all or
part of the estate inalienable for more than
twenty years are void. (NCC, Art. 870)
Rules governing succession in the direct
descending line
1. Rule on preference between lines–
descending line is preferred over the
ascending line;
2. Rule on proximity– the nearer excludes the
more remote;
3. Right on representation, in case of
predecease, incapacity and disinheritance;
4. If all the legitimate children repudiate their
legitimes, the next generation of legitimate
descendants, succeed in their own right.
Rules governing succession in the ascending
line
1. Rule of proximity– the nearer excludes the
more remote
2. Division by line
3. Equal division within the line
Limitations on the Testator’s Rights of
Ownership
The testator CANNOT make donations inter
vivos which upon the legitime or which are
inofficious.
NOTE: The prohibition does not cover an
onerous disposition (sale) because this involves
an exchange of values.
Rules on the donations made by the testator
in favor of his children, legitimate and
illegitimate, and strangers and those which
are inofficious:
1. Donations given to children shall be charged
to their legitimes. (NCC, Art. 909 par. 1)
2. Donations made to strangers shall be
charged to that part of the estate of which
340
 Civil Law
the testator could have disposed by his last WHEN SURVIVING SPOUSE ALONE
will. (NCC, Art. 909 par. 2)
3. Insofar as they may be inofficious or may ½ of the hereditary estate (Free portion = ½)
exceed the disposable portion, they shall be
reduced according to the rules established Surviving spouse where the
by this Code. (NCC, Art. 909 par. 3) marriage was solemnized under
4. Donations which an illegitimate child may articulo mortis and the deceased 1/3 of the
have received during the lifetime of his died within 3 months from the hereditary
father or mother shall be charged to his time of marriage. estate
legitime.
NOTE: The deceased was the (Free portion
Should they exceed the portion that can be spouse who was at the point of =2/3)
freely disposed of, they shall be reduced in death at the time of marriage
the manner prescribed by this Code. (NCC, (Tolentino, Civil Code, 1992 ed.)
Art. 910)
Surviving spouse where the
marriage was solemnized under
Remedies of a compulsory heir whose ½ of the
articulo mortis and the deceased
legitime has been impaired hereditary
died within 3 months from the
estate
time of marriage, but the
1. In case of preterition – annulment of
parties have been living as
institution of heir and reduction of devises (Free portion
husband and wife for more
and legacies = ½)
than 5 years prior to the
2. In case of partial impairment – completion of
marriage.
legitime
3. In case of inofficious donation – collation
WHEN LEGITIMATE CHILD/CHILDREN ALONE
The renunciation or compromise of future
legitime is prohibited and considered null and
void. Legitimate ½ of the hereditary estate (Free
children portion = ½). (Balane, 2016)
Reason: Prior the predecessor’s death, the
heir’s right is simply inchoate. (Balane, 2016) PRIMARY HEIRS CONCUR WITH CONCURRING
COMPULSORY HEIRS (2005, 2010 BAR)
The prohibition applies only to transactions of Legitimate child
compromise or renunciation between the = ½ of the hereditary estate
predecessor and the prospective compulsory One
heir. Any property which the compulsory heir legitimate
Surviving spouse
may have gratuitously received from his child and the
= ¼ of the hereditary estate
predecessor by virtue of the renunciation or surviving
compromise will be considered an advance on spouse
Free portion
his legitime and must be duly credited. (Balane, =¼
2016)
Legitimate children
= ½ of the hereditary estate in
Effect of Donations to the Inheritance of an equal portions
Heir Two or more
legitimate Surviving spouse
Donations given to children shall be charged to children and = a share equal to that of each
their legitimes. (NCC, Art. 909) (2000 BAR) the surviving child
spouse
Reason: Donations to the compulsory heirs are Free portion
advances to the legitimes. = whatever remains
NOTE: Donations inter vivos to strangers shall be One Legitimate child
charged to the free portion. legitimate = ½ of the hereditary estate (if
child and there are several, they shall
TABLE OF LEGITIMES illegitimate divide the ½ share in equal

341
 Succession
children portions) themselves.

Illegitimate children
= ½ of the share of each CONCURRENCE AMONG CONCURRING
legitimate child (if the free COMPULSORY HEIRS
portion is insufficient, the
illegitimate children shall Surviving spouse
divide the free portion equally Surviving = 1/3 of the hereditary estate
among themselves) spouse and
illegitimate Illegitimate children
Free portion children = 1/3 of the hereditary estate.
= whatever remains (Rabuya, 2009)
Legitimate child
= ½ of the hereditary estate SECONDARY HEIRS CONCUR WITH
COMPULSORY HEIRS
Surviving spouse
Legitimate parents
= ¼ of the hereditary estate
= ½ of the hereditary estate.
Legitimate
Illegitimate children parents and
Surviving spouse
= ½ of the share of each surviving
One = ¼ of the hereditary estate
legitimate child spouse (1999
legitimate
BAR)
child, the Free portion
Free portion
surviving =¼
= whatever remains
spouse, and
illegitimate Legitimate parents
NOTE: The share of the = ½ of the hereditary estate
children
surviving spouse shall have
preference over those of the Legitimate
Illegitimate children
illegitimate children whose parents and
= ¼ of the hereditary estate
share may suffer reduction pro illegitimate
in equal shares
rata because there is no children
preference as among Free portion
themselves. =¼

Legitimate children Legitimate parents

= ½ of the hereditary estate in = ½ of the hereditary estate
equal portions
Illegitimate children
Legitimate
Surviving spouse = ¼ of the hereditary estate
parents,
= a share equal to that of each in equal shares
surviving
legitimate child
spouse, and
Surviving spouse
Two or more illegitimate
Illegitimate children = 1/8 of the hereditary
legitimate children
= ½ of the share of each estate
children,
legitimate child
surviving
Free portion
spouse and
Free portion = 1/8
illegitimate
= whatever remains
children Parents
NOTE: The share of the = excluded
surviving spouse shall have Parents and
preference over those of the children of the Children
illegitimate children whose Illegitimate = ½ if legitimate and ½ of the
share may suffer reduction pro Decedent share of each legitimate child
rata because there is no if illegitimate children
preference as among

UNIVERSITY OF SANTO TOMAS 342

2021 GOLDEN NOTES
 Civil Law
Free portion
= whatever remains
Parents
= ¼ of the hereditary estate
Parents and
surviving
Surviving spouse
spouse of the
= ¼ of the hereditary estate
Illegitimate
Decedent
Free portion
=½
Legitime of Illegitimate Children
The legitime of each illegitimate child shall
consist of one-half of the legitime of a legitimate
child. (FC, Art. 176, 2nd sentence)
The legitime of the illegitimate children shall be
taken from the portion of the estate at the free
disposal of the testator, provided:
1. The total legitime of the illegitimate children
shall not exceed the free portion.
2. The legitime of the surviving spouse must be
first fully satisfied. (NCC, Art. 895)
COLLATION
Collation is the process of adding the value of
the thing donated to the net value of hereditary
estate. To collate is to bring back or return to the
hereditary mass, in fact or fiction, property
which came from the estate of the decedent,
during his lifetime, but which the law considers
as an advance from the inheritance. Collation is
applicable to both donations to compulsory
heirs and donations to strangers.
GR: Compulsory heirs are obliged to collate.
XPNs:
1. When testator should have so expressly
provided;
2. When compulsory heir repudiates his
inheritance
Properties that are to be collated
343
1. Any property/right received by gratuitous
title during testator’s lifetime.
2. All that may have been received from
decedent during his lifetime.
3. All that their parents have brought to
collation if alive.
Properties not subject to collation
1. Absolutely no collation – expenses for
support, education (elementary and
secondary only), medical attendance, even
in extra-ordinary illness, apprenticeship,
ordinary equipment or customary gifts.
2. Generally not imputed to legitime:
a. Expenses incurred by parents in giving
their children professional, vocational,
or other career unless the parents so
provide, or unless they impair the
legitimes.
b. Wedding gifts by parents and
ascendants consisting of jewelry,
clothing and outfit except when they
exceed 1/10 of the sum disposable by
will.
NOTE: Only the value of the thing donated shall
be brought to collation. This value must be the
value of the thing at the time of the donation.
Property left by will (legacy or devise) is not
deemed subject to collation if the testator has
not otherwise provided, but the legitime shall
remain unimpaired. The legacy or devise should
be imputed to the free portion, not to the
legitime.
Steps in Determining the Legitime of
Compulsory Heirs
1. Determination of the gross value of the
estate at the time of the death of the
testator.
2. Deduct all the debts and charges which are
chargeable against the estate.
3. Collate or add the value of all donations
inter vivos to arrive at the net hereditary
estate which will serve as the basis of
determining the legitime.
4. Impute all the value of donations inter vivos
made to compulsory heirs against their
legitime and of the value of all donations
inter vivos made to strangers against the
disposable free portion.
 Succession
5. If the legitime is impaired, the following
reductions shall be made:
a. First, reduce pro rata the non-preferred
legacies and devices, and the
testamentary dispositions.
b. Second, reduce pro rata the preferred
legacies and devises.
c. Third, reduce the donations inter vivos
according to the inverse order of their
dates.
Order of preference in reducing
testamentary dispositions and
donations
1. Reduce pro rata the non-
preferred legacies and devises
(NCC, Art.911, par.2), and the
testamentary dispositions that
impairs or diminish the
legitime of the compulsory
heirs. (NCC, Art. 907) Among
these legacies, devises, and
testamentary dispositions,
there is no preference.
NOTE: Preferred legacies and
devises are those directed by
testator to be preferred than
the others.
2. Reduce pro rata the preferred
legacies and devises. (NCC, Art.
911, last par.)
3. Reduce the donations inter
vivos according to the inverse
order of their dates (i.e., the
oldest is the most preferred).
(NCC, Art. 773)
NOTE: These reductions shall
be to the extent required to
complete the legitimes, even if
in the process the disposition is
reduced to nothing.
6. If there are remaining portion of the estate,
it shall be distributed to the devisees and
legatees, if there are any, and according to
the provisions of the will.
COMPULSORY HEIRS
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
The following are Compulsory Heirs (2003,
2005, 2006, 2008 BAR)
1. Legitimate children and descendants, with
respect to their legitimate parents and
ascendants;
2. In default of the foregoing, legitimate
parents and ascendants, with respect to
their legitimate children and descendants;
3. The widow or widower;
4. Acknowledged natural children, and natural
children by legal fiction;
5. Other illegitimate children referred to in
Article 287.
Compulsory heirs mentioned in Nos. 3, 4, and 5
are not excluded by those in Nos. 1 and 2;
neither do they exclude one another. In all cases
of illegitimate children, their filiation must be
duly proved. The father or mother of illegitimate
children of the three classes mentioned shall
inherit from them in the manner and to the
extent established by this Code. (NCC, Art. 887)
Classifications of Compulsory Heirs
1. Primary – They are not excluded by the
presence of other compulsory heirs and
have precedence over and exclude other
compulsory heirs. E.g. legitimate children
and / or descendants.
2. Secondary – Those who succeed only in
default of the primary compulsory heirs.
E.g. legitimate parents and/ or legitimate
ascendants; illegitimate parents.
3. Concurring – Those who succeed together
with the primary or secondary compulsory
heirs. E.g. Surviving spouse and illegitimate
children and descendants.
Table of Compulsory Heirs
PRIMARY SECONDARY
COMPULSORY HEIRS COMPULSORY HEIRS
(1) Legitimate and (4) Legitimate parents
their descendants; and ascendants;
(2) Surviving Spouse
(Legitimate); NOTE: Inherit only in
(3) Illegitimate default of No. (1).
Children and their
descendants; (5) Illegitimate Parents
(no other
descendants).
NOTE: Nos. 2 and 3
344
 Civil Law
are concurring NOTE: They inherit
compulsory heirs. only in default of Nos.
(1) and (3)
Compulsory Heirs Inherit Either
1. In their own right; or
2. By right of representation.
Adopted Child is a Compulsory Heir
Legitimate children include adopted children
and legitimated children. Under R.A. 8552 or
the Domestic Adoption Law, adopted
children have the same rights granted to the
legitimate children. Adopted children, for all
intents and purposes are considered as
legitimate children. The relationship, however,
does not extend to other relatives of the adopter,
thus, disqualifying the adopted from directly
inheriting from the adopter’s ascendants. Since
the adopted child enjoys successional rights as a
legitimate child, then he excludes the adopter’s
parents and ascendants.
Formal or judicial adoption is necessary
before the adopted child can inherit from the
adopter because adoption is a juridical act, a
proceeding in rem, which creates between two
persons a relationship similar to that which
results from legitimate paternity and filiation.
Without the benefit of formal (judicial) adoption,
the adopted child is neither a compulsory nor a
legal heir. Hence, he is not entitled to inherit.
Rule on Legitimated Children
Prior to the marriage of the parents of the child,
he is an illegitimate child since he is born outside
a valid marriage.
Legitimation takes place upon the marriage of
the child’s parents, the marriage being valid or at
least voidable, the child is automatically raised
to the status of legitimacy, without need of any
additional act on the part of either the child or
the parents. Children conceived and born
outside of wedlock of parents who, at the time of
the conception of the former, were not
disqualified by any impediment to marry each
other, or were so disqualified only because
either or both of them were below eighteen (18)
years of age, may be legitimated. (FC, Art. 177 as
amended by R.A. 9858) For purposes of
succession, the opening of succession must
345
happen after the effectivity of R.A. 9858;
otherwise, the child will be considered as
illegitimate.
NOTE: Under the Family Code, there is no more
distinction between acknowledged natural
children and illegitimate children. They are all
considered as illegitimate.
Compulsory Heirs of a Person Who is
Illegitimate
1. Legitimate children and descendants;
2. Illegitimate children and descendants;
3. In default of the foregoing, parents only;
4. Surviving spouse.
Parents and ascendants are secondary
compulsory heirs. They inherit in default of
legitimate children and descendants.
GR: The presence of the illegitimate children of
the decedent DOES NOT exclude parents and
ascendants. Parents and ascendants concur with
the illegitimate children of the decedent.
XPN: If the decedent is illegitimate, his
illegitimate children exclude the illegitimate
parents and ascendants.
Common law spouse NOT a compulsory heir
A common law spouse CANNOT be a compulsory
heir. There must be a valid marriage between
the decedent and the surviving spouse. If the
marriage is null and void, the surviving spouse
cannot inherit.
Surviving spouse NOT a compulsory heir of
her parent-in-law
Neither is a widow (surviving spouse) a
compulsory heir of her parent-in-law in
accordance with the provisions of Article 887 of
the Civil Code. The aforesaid provision of law
refers to the estate of the deceased spouse in
which case the surviving spouse (widow or
widower) is a compulsory heir. It does not apply
to the estate of a parent in law. Indeed, the
surviving spouse is considered a third person as
regards the estate of the parent-in-law. (Rosales
v. Rosales, GR No. L-40789 February 27, 1987)
Q: Ramon Mayaman died intestate, leaving a
net estate of P10, 000, 000.00. Determine
 Succession
how much each heir will receive from the
estate:
(a) If Ramon is survived by his wife, three
full-blood brothers, two half-brothers,
and one nephew (the son of a deceased
full-blooad brother)? Explain.
A: Having died intestate, the estate of Ramon
shall be inherited by his wife and his full and half
blood siblings or their respective
representatives. In intestacy, if the wife concurs
with no one but the sibling of the husband, all of
them are the intestate heirs of the deceased
husband. The wife will receive half of the
intestate estate, while the siblings or their
respective representatives, will inherit the other
half to be divided among them equally. If some
siblings are of the full-blood and the others of
the half-blood, a half blood sibling will receive
half of the share of a full-blood sibling.
1. The wife of Ramon will, therefore, receive
one half of the estate or the amount of P5,
000, 000.00;
2. The three (3) full-blood brothers, will,
therefore, receive P1, 000, 000.00 each;
3. The nephew will receive P1, 000, 000.00 by
right of representation;
4. The two (2) half-brothers will receive P500,
000.00 each.
(b) If Ramon is survived by his wife, a half-
sister, and three nephews (sons of a
deceased full-blood brother)? Explain.
(2009 BAR)
A : The wife will receive one half of the estate or
P5, 000, 000.00. The other half shall be inherited
by (1) the full-blood brother, represented by his
3 children, and (2) the half-sister. They will
divide that other half between them such that
the share of the half-sister is just half of the
share of the full-blood brother. The share of the
full-blood brother shall in turn be inherited by
the three (3) nephews in equal shares by right of
representation. Therefore, the three (3)
nephews will receive P1, 111, 111.10 each and
the half-sister will receive the sum of P1, 666,
666.60. (UPLC p. 39)
Q: Emil, the testator, has three legitimate
children: Tom, Henry, and Warlito; a wife
named Adette; parents named Pepe and
Pilar; an illegitimate child, Ramon; brother,
Mark; and a sister, Nanette. Since his wife
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Adette is well-off, he wants to leave to his
illegitimate child as much of his estate as he
can legally do. His estate has an aggregate net
amount of P1, 200, 000.00, and all the above-
named relatives are still living. Emil now
comes to you for advice in making a will. How
will you distribute his estate according to his
wishes without violating the law on
testamentary succession? (2005 BAR)
A: In his will, Emil should give his compulsory
heirs just their respective legitimes and give all
of the free portion to his illegitimate child in
addition to the said child’s legitime. He should
divide his estate in his will as follows :
Tom – P200, 000 (legitime)
Henry – P200, 000 (legitime)
Warlito – P200, 000 (legitime)
Adette – P200, 000 (legitime)
Ramon – P400, 000 (P100, 000 as
legitime and P300, 000 as free portion).
(UPLC, p. 139)
Q: Andres and Pedro are the owners Lot
2535. Pedro sold to Faustina his portion of
the subject land as evidenced by a notarized
Deed of Sale. After the death of Faustina and
her husband, their heirs executed a
notarized Extra-Judicial Declaration of Heirs
and Deed of Absolute Sale. Lot 2535
consisting of "1,000 square meters, more or
less," was conveyed to one of their heirs,
Alejandra. Alejandra sold the land through a
Deed of Absolute Sale to Edith N. Deen, who
in turn sold it to Atty. Eddy A. Deen. Upon
Atty. Deen's death, an extra-judicial
settlement of estate, which did not include
Lot 2535, was executed by his heirs. Later,
they executed an Additional Extra-Judicial
Settlement with Absolute Deed of Sale, which
sold the land to Norberto, who took
possession of and built a house on it.
Norberto then died without a will and was
succeeded by his niece and only heir, Lolita.
Subsequently, Lolita learned that a Transfer
Certificate of Title was issued in the names of
Andres and Pedro on the basis of a
reconstituted Deed of Conveyance. Lolita
sought to register her portion in Lot 2535 but
was denied by the Register of Deeds, citing
the need for a court order. Lolita then filed a
for the cancellation of the titles. After trial,
the Regional Trial Court ruled in favor of
Lolita. On appeal, the Court of Appeals
reversed the Regional Trial Court Decision
346
 Civil Law
and dismissed the complaint. According to
the Court of Appeals, Lolita must first be
declared as the sole heir to the estate of
Norberto in a proper special proceeding. Is a
prior judicial declaration necessary in order
that Lolita may assert her right to the
property of her predecessor?
A: NO. This Court has stated that no judicial
declaration of heirship is necessary in order that
an heir may assert his or her right to the
property of the deceased. In Marabilles v. Quito:
The right to assert a cause of action as an heir,
although he has not been judicially declared to be
so, if duly proven, is well settled in this
jurisdiction. This is upon the theory that the
property of a deceased person, both real and
personal, becomes the property of the heir by the
mere fact of death of his predecessor in interest,
and as such he can deal with it in precisely the
same way in which the deceased could have dealt,
subject only to the limitations which by law or by
contract may be imposed upon the deceased
himself. Thus, it has been held that "[t]here is no
legal precept or established rule which imposes
the necessity of a previous legal declaration
regarding their status as heirs to an intestate on
those who, being of age and with legal capacity,
consider themselves the legal heirs of a person,
in order that they may maintain an action arising
out of a right which belonged to their ancestor."
(Lolita Bas Capablanca v. Heirs of Pedro Bas, G.R.
No. 224144, June 28, 2017, as penned by J.
Leonen)
RESERVA TRONCAL
Reserva Troncal
The ascendant who inherits from his descendant
any property which the latter may have acquired
by gratuitous title from another ascendant, or a
brother or sister, is obliged to reserve such
property as he may have acquired by operation
of law for the benefit of relatives who are within
the third degree and who belong to the line from
which said property came. (NCC, Art. 891)
Purposes
1. To prevent persons who are outsiders to the
family from acquiring, by chance or
accident, property which otherwise would
have remained with the said family.
2. To put back the property to the line from
347
which it originally came.
3. To keep the property within the family to
which such property belongs. (Velayo
Bernardo v. Siojo, G.R. No. L-36078, March 11,
1933)
Requisites that must exist in order that a
property may be impressed with a
reservable character
1. That the property was acquired by a
descendant (called “praepositus” or
prepositus) from an ascendant or from a
brother or sister by gratuitous title when the
recipient does not give anything in return;
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”). (NCC, Art. 891; Chua v. CFI of
Negros Occidental, G.R. No. L-29901, August
31, 1977; Rabuya, 2017)
Graphical Example of Art. 891 of NCC
Before his death in 1950, GF donated a parcel of
land to his grandson, P, the only child of his
deceased son, F. P died intestate in 1960 without
any heir in the direct descending line, as a
consequence of which the land passed to his
mother, M, in accordance with the laws of
intestate succession.
Is the property reservable? It is evident that the
property in this particular case is reservable,
because all of the requisites for reservation are
present. In the first place, M, who is the
ascendant reservista, had acquired the property
by operation of law from her descendant, P; in
the second place, P, who is the descendant-
 Succession
prepositus, had previously acquired the property 3. Accidental Loss of all the reservable
by gratuitous title from another ascendant, his properties
grandfather, GF, who is the origin of the said 4. Renunciation or waiver by all the
property; and in the third place, the descendant reservatarios provided that no other
had died without any legitimate issue in the reservatario is born subsequently
direct descending line who could inherit from 5. Registration under Act 496 without the
him. Consequently, from the time of the death of reservable character being annotated if it
the descendant-prepositus, P, in 1960, the falls into the hands of a buyer in good faith
ascendant, M, who acquired the property, is for value
obliged to reserve it for the benefit of relatives of 6. By Prescription – reservista seeks to acquire
the prepositus who are within the third degree (30 years – immovable; 8 years- movable)
and who belong to the line from which the said 7. Confusion or merger of rights, as when the
property came. reservatarios acquire the reservista’s right
by a contract inter vivos.
This reservable character of the property will, as
a rule, terminate upon the death of the Reserva Minima vs. Reserva Maxima
ascendant-reservista. Thus, if we extend the
example by presupposing that M died in 1977, A RESERVA MINIMA RESERVA MAXIMA
and B, uncles of the prepositus, P, in the paternal
line, can claim the property as their own in All of the properties
accordance with the provision of Art. 891 of the which the descendant
Code. (Jurado, 2009) All of the properties
had previously
which the descendant
acquired by gratuitous
Prelimary Rules in Reserva Troncal had previously
title from another
acquired by gratuitous
ascendant or from a
1. No inquiry should be made beyond the title from another
brother or sister must
ascendant or from a
Mediate Source or the Origin. He is the first be considered as
party in the scheme of the Reserva Troncal. brother or sister must
passing to the
2. All of the relationships must be legitimate be included in the
ascendant- reservista
becuase of the rationale behind Reserva ascendants legitime
partly by operation of
Troncal. insofar as such
law and partly by force
legitime can contain.
of the descendant’s
Process in Reserva Troncal will.

First Transfer – by gratuitous title from the

Origin to the Prepositus
Second Transfer – by operation of law from the
Prepositus to the Reservista. Once the 2 transfers
happen, Reserva Troncal is born. Without these 2
transfers, there can be no Reserva Troncal.
Third Transfer – from the Reservista to the
Reservetarios.
NOTE: Reserva troncal DOES NOT exist in an
illegitimate or adoptive relationship. It only
exists in the legitimate family. (Centeno v.
Centeno, G.R. No. 28265, November 5, 1928)
Causes for the extinguishment of the reserva
(LD2R2 PC)
1. Death of the reservista
2. Death of all the relatives within the third
degree prior to the death of the reservista
Q: A son received from his mother P200,000
by virtue of a will. The son had properties of
his own amounting to P400,000. When the
son died without issue, he left a will giving all
his estate to his father. How much is the
reservable property?
A: Since the father’s legitime is only ½, he
received the P600,000 in two capacities:
P300,000 as a compulsory heir – and which was
received therefore as a legitime or by operation
of law and P300,000 as a voluntary heir.
According to the theory of reserva minima, the
reservable property is only P 100,000 on the
theory that half of the P200,000 received from
the origin (mother in this case) was given to the
father as his legitime or by operation of law.
Therefore, the reservable property is only
P100,000. (Paras, 2008)
NOTE: According to Manresa, in view of the
silence of the law on the matter, the principle of

UNIVERSITY OF SANTO TOMAS 348

2021 GOLDEN NOTES
 Civil Law
reserva minima should be followed. This seems
also the opinion of Scaevola. (Paras, 2008)
Q: 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. 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?
(2014 BAR)
A: NO, the contention is not valid. The property
adjudicated to Jun from the estate of his parents
which he in turn left to Anita and Cesar is not
subject to reservation in favor of Edith and
Philip. In Mendoza et. al. v. Policarpio, et. al., (G.R.
No. 176422, March 20, 2013) the court ruled that
lineal character of the reservable property is
reckoned from the ascendant from whom the
prepositus received the property by gratuitous
title. The ownership should be reckoned only
from Jun, as he is the ascendant from where the
first transmission occurred or from whom Cesar
inherited the properties. Moreover, Article 891
provides that the person obliged to reserve the
property should be an ascendant. Peachy is not
Cesar’s ascendant but a mere collateral relative.
On the assumption that the property is
reservable, Edith and Philip being first cousins of
Cesar who is the prepositus are disqualified to be
reservatarios as they are not a third-degree
relative of Cesar.
Parties in Reserva Troncal
1. Origin
The origin of the property must be an
ascendant, brother or sister of the
prepositus. The transmission from the origin
to the prepositus must be by gratuitous title.
NOTE: The origin must be a legitimate
relative because reserva troncal exists only
in the legitimate family.
349
The origin can alienate the property. While
the origin owns the property, there is no
reserva yet, and therefore, he has the perfect
right to dispose of it, in any way he wants,
subject, however to the rule on inofficious
donations.
2. Prepositus
The prepositus must be a legitimate
descendant or half-brother/sister of the
origin of the property.
NOTE: To give rise to reserva troncal, the
prepositus must not have any legitimate
child; otherwise, the reservable property
will be inherited by the latter.
The presence of illegitimate children of the
prepositus will not prevent his legitimate
parents or ascendants from inheriting the
reserved property.
The prepositus is the descendant whose
death gives rise to the reserva troncal, and
from whom therefore the third degree is
counted. The prepositus can alienate the
property. While prepositus is still alive, there
is no reserva yet, therefore, he is the
absolute owner of the property, with full
freedom to alienate or dispose or encumber.
NOTE: The prepositus is referred to as the
“arbiter of the reserva.”
3. Reservista
The reservista is the ascendant who inherits
from the prepositus by operation of law. He
has the obligation to reserve.
NOTE:
The relationship between the reservista and
the prepositus must be legitimate.
If he inherited the property from the
prepositus, not by legal succession or by
virtue of legitime, there is no obligation to
reserve.
The reservista owns the reservable property.
The reservista is an absolute or full owner,
subject to a resolutory condition. If the
resolutory condition is fulfilled, the
 Succession
reservista’s ownership of the property is
terminated.
Resolutory condition: If at the time of the
reservista’s death, there still exist relatives
within the third degree (reservatarios) of the
prepositus and belonging to the line from
which the property came.
NOTE: The reservable property is not part
of the estate of the reservista.
The reservista can alienate the property.
Unlike in fideicommissary substitution
where the fiduciary heir cannot alienate the
property because he is merely considered a
usufruct, the reservista can alienate the
property being the owner thereof but
subject to the reservation.
GR: The reservista is required to furnish a
bond, security or mortgage to guarantee the
safe delivery later on to the reservatarios of
the properties concerned, in the proper
cases.
XPN: The bond, security or mortgage is not
needed when the property has been
registered or annotated in the certificate of
title as subject to reserva troncal.
NOTE: Upon the reservista’s death the
ownership of the reserved properties is
automatically vested to the reservatarios
who are alive. Hence, the reservista cannot
dispose the reserved property by will if
there are reservatarios existing at the time of
his death.
4. Reservatario
The reservatarios are relatives within the
third degree of the prepositus, who belong to
the same line from which the property
originally came from who will become the
full owners of the property the moment the
reservista dies, because by such death, the
reserva is extinguished.
NOTE: It is further required that the
reservatario should be related by blood not
only from the prepositus but also to the
other descendant, or brother, or sister, from
whom the property came. Only then can he
be considered as belonging to the “line from
which the property came.”
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Rights and Obligation of Parties
1. To inventory the reserved properties
2. To annotate the reserved character when it
comes to movable in the Registry of
Property within 90 days from the
acceptance of the Reservista.
3. To appraise movables
4. To secure by means of mortgage :
a. Indemnity for any deterioiration or
damage to the property by the
Reservista’s fault or negligence
b. Payment of the value of such
reserved movables that may have
been alienated by the Reservista
Persons Qualified as Reservatarios
1. First degree relatives — This can only
refer to the legitimate father or mother of
the descendant-prepositus, since it is evident
that when an ascendant inherits from a
descendant either as a compulsory heir or as
an intestate heir, it is because the
descendant has no legitimate descendants of
his own, or, if he has, they cannot inherit
from him because of disinheritance,
incapacity or repudiation.
2. Second degree relatives — This can only
refer to the grandparents as well as to the
brothers and sisters of the full or half- blood
of the descendant-prepositus belonging to
the line from which the reservable property
came.
3. Third degree relatives – This can only
refer to the great-grandparents, uncles or
aunts (brothers and sisters of the full or
half-blood of the prepositus’ father or
mother), and nephews or nieces (children of
the prepositus’ brothers or sisters of the full
or half-blood) belonging to the line from
which the reservable property came.
(Jurado, 2009)
Q: Does the reserva mentioned in Art. 891 of
the Civil Code apply in favor of all the
relatives within the 3rd degree belonging to
the line from which the property came,
whether they be legitimate or illegitimate ?
A: The reserva favors only the legitimate
relatives. (Nieva v Alcala, G.R. No. L-
13386, October 27, 1920) and even then,
preference is given to the direct line as against
350
 Civil Law
the collateral lines and the rule of nearer
excludes farther also applies. (Florentino v.
Florentino, G.R. No. L-14856, November 15, 1919)
Relatives within the third degree from the
prepositus
1. Parents;
2. Grandparents;
3. Full and half-blood brothers and sisters;
4. Great- grandparents,
5. Nephews and nieces.
Q: Placido and Dominga had four children:
Antonio, Exequiel, married to Leonor,
Apolonio and Valentin. Herein petitioners
are children of Antonio, Apolonio and
Valentin. Petitioners alleged that the
properties in dispute were part of Placido
and Dominga’s properties that were subject
of an oral partition and subsequently
adjudicated to Exequiel. After Exequiel’s
death, it passed on to his spouse Leonor and
only daughter, Gregoria. After Leonor’s
death, her share went to Gregoria. In 1992,
Gregoria died intestate and without issue.
They claimed that after Gregoria’s death,
respondent Julia, who is Leonor’s sister,
adjudicated unto herself all these properties
as the sole surviving heir of Leonor and
Gregoria. Hence, petitioners claim that the
properties should have been reserved by
respondent in their behalf and must now
revert back to them, applying Article 891 of
the Civil Code on reserva troncal. Decide.
A: The properties are not reservable in favour of
the petitioners. Reserva troncal does not apply
in this case. It should be pointed out that the
ownership of the properties should be reckoned
only from Exequiel’s as he is the ascendant from
where the first transmission occurred, or from
whom Gregoria inherited the properties in
dispute. The law does not go farther than such
ascendant/brother/sister in determining the
lineal character of the property. Gregoria, on the
other hand, is the descendant who received the
properties from Exequiel by gratuitous title. It
must further be emphasized that Leonor, the
mother of Gregoria, predeceased the latter.
In reserva troncal, the reservista must be an
ascendant. In this case, the property in dispute
was adjudicated to Julia who is a collateral
relative within the 3rd degree of relationship
from Gregoria. Furthermore, even assuming that
351
the properties are reservable, it cannot be
reserved in favour of the petitioners because
they are not qualified reservatarios.
Petitioners are not relatives within the third
degree of Gregoria from whom the properties
came. The person from whom the degree should
be reckoned is the descendant/prepositus — the
one at the end of the line from which the
property came and upon whom the property last
revolved by descent. It is Gregoria in this case.
Petitioners are Gregoria’s fourth degree
relatives, being her first cousins. First cousins
of the prepositus are fourth degree relatives
and are not reservees or reservatarios.
(Mendoza v. Delos Santos, G.R. No. 176422 March
20, 2013)
Property Subject to Reservation
The reservation established in Art. 891of the
NCC must be the same property which the
ascendant-reservista had acquired by operation
of law from the descendant-prepositus upon the
death of the latter and which the latter, in turn,
had acquired by gratuitous title during his
lifetime from another ascendant or from a
brother or sister. Consequently, the ascendant-
reservista cannot substitute another property for
that which he is obliged by law to reserve. This
consequence is deducible not only from the
object and purpose of the reserva, but also from
the obligations imposed upon the reservista,
such as the obligation to make an inventory of all
reservable property and the obligation to
annotate in the Registry of Property the
reservable character of all reservable immovable
property. (Jurado, 2009)
XPN: There would have to be substitution of the
reservable property through unavoidable
necessity, such as when the property is fungible,
or when it is lost or destroyed through the fault
of the reservista, or when it has deteriorated
through the same cause, or when it has been
alienated. In such cases, the remedy of the
reservatarios or persons entitled to the
reservable property would be to recover the
value of the property or to seek the ownership
and return thereof depending upon the
circumstances of each particular case. These
remedies are available regardless of whether or
not the required inventory has been made and
the mortgage has been constituted, although
undoubtedly, restitution or recovery would be
rendered much more difficult or even impossible
 Succession
if these requirements are not complied with.
(Jurado, 2009)
NOTE: If the reservista has no cash when he dies,
and the reservable property is money the
reserves can either:
1. Select equivalent property from the estate;
or
2. Demand the sale of sufficient property so
that cash may be obtained. (Paras, 2016)
Requisites for passing of title to the
reservatarios
1. Death of the reservista; and
2. The fact that the reservatarios survived the
reservista.
The reservatario acquires the right over the
reservable property upon the death of the
reservista. The reservatario nearest the decedent
prepositus becomes, automatically and by
operation of law, the absolute owner of the
reservable property. (Cano v. Director of Lands,
G.R. No. L-10701, January 16, 1959)
There is right of representation in reserva
troncal but the representative must also be
within the third degree from the prepositus.
(Florentino v. Florentino, G.R. No. 14856,
November 15, 1919)
NOTE: The reservatarios inherit the property
from the prepositus, not from the reservista.
Reserva troncal is governed by the following
rules on intestate succession: (Applicable when
there are concurring relatives within the third
degree)
1. Proximity - “The nearer excludes the
farther.”
2. “The direct line is preferred over the
collateral line.”
3. “The descending line is preferred over the
ascending line.”
DISINHERITANCE
Disinheritance is the process or act, thru a
testamentary disposition of depriving a
compulsory heir of his legitime for causes
expressly stated by law. (NCC, Art. 915)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
The only way in which a compulsory heir can be
deprived of his legitime is through valid
disinheritance. It can be effected only through a
will wherein the legal cause therefor shall be
specified. (NCC, Art. 916)
Disinheritance is not automatic
There must be evidence presented to
substantiate the disinheritance and must be for a
valid and sound cause.
Burden of Proof
The burden of proving the truth of the cause for
disinheritance shall rest upon the other heirs of
the testator, if the disinherited heir should deny
it. (NCC, Art. 917)
Effect of disinheritance
Total exclusion to the inheritance, means loss of
the legitime, right to intestate succession and of
any disposition in a prior will. Disinheritance,
however, is without prejudice to the right of
representation of the children and descendants
of the person disinherited. But the disinherited
parent shall not have the usufruct or
administration of the property which constitutes
the legitime.
NOTE: Parents no longer enjoy the right of
usufruct over the properties of their children
under the Family Code.
Requisites of a Valid Disinheritance
1. It must be made in a valid will;
2. It must be for a cause specified by law;
3. The will must specify the cause
4. It must be unconditional
5. It must be total
6. The cause must be true
7. If the truth is denied, it must be proved by
the proponent.
Grounds for Disinheritance – the following
enumeration are exclusive. Only the grounds
enumerated can serve as grounds for
disinheritance.
1. Common causes for disinheritance of children
or descendants, parents or ascendants, and
spouse:
352
 Civil Law
a. When the heir has been found guilty of
an attempt against the life of the
testator, his/her descendants or
ascendants, and spouse, in case of
children or parents.
b. When the heir by fraud, violence,
intimidation, or undue influence causes
the testator to make a will or to change
one already made.
c. When the heir has accused the testator
of a crime for which the law prescribes
imprisonment of six years or more, if
the accusation has been found
groundless.
d. Refusal without justifiable cause to
support the testator who disinherits
such heir.
e. Maltreatment of the testator by word or
deed, by the child or the descendant;
f. When a child or descendant leads a
dishonorable or disgraceful life.
g. Conviction of a crime which carries with
it the penalty of civil interdiction.
h. When a child or descendant has been
convicted of adultery or concubinage
with the spouse of the testator.
2. Peculiar Causes for Disinheritance
a. Children and Descendants:
i. Conviction of a crime which carries
with it a penalty of civil
interdiction;
ii. Maltreatment of the testator by
word or deed by the children or
descendant;
iii. When the children or descendant
has been convicted of adultery or
concubinage with the spouse of the
testator; or
iv. When the children or descendant
leads a dishonorable or disgraceful
life.
b. Parents or Ascendants:
i. When the parent or ascendant has
been convicted of adultery or
concubinage with the spouse of the
testator;
ii. When the parents have abandoned
their children or induced their
daughters to live a corrupt or
immoral life, or attempted against
their virtue;
353
iii. Loss of parental authority for
causes specified in the Code;
iv. Attempt by one of the parents
against the life of the other, unless
there has been reconciliation
between them;
v. When the parent or ascendant has
accused the testator of a crime for
which the law prescribes
imprisonment for 6 years or more;
vi. When the parent or ascendant by
fraud, violence, intimidation or
undue influence causes the testator
to make a will or to change one
already made; or
vii. The refusal to support the children
or descendants without justifiable
cause
c. Spouse:
i. When the spouse has given cause for
legal separation; or
ii. When the spouse has given grounds
for the loss of parental authority
NOTE: Reconciliation exists when two persons
who are at odds decide to set aside their
differences and to resume their relations. They
need not go back to their old relation. In order to
be effective, the testator must pardon the
disinherited heir. The pardon whether express
or tacit, must refer specifically to the heir
disinherited and to the acts he has committed,
and must be accepted by such heir. In
disinheritance, reconciliation need not be in
writing.
Right of representation in case of
disinheritance
The causes of disinheritance are personal to the
disinherited heir. Hence, in case of valid
disinheritance, only the disinherited heir is
deprived of his right to the legitime. But the
children or descendants of the disinherited heir
can take his place and preserve the disinherited
heir’s share to the legitime.
Effect of Disinheritance without cause
Disinheritance without a specification of the
cause, or for a cause the truth of which, if
contradicted, is not proved, or which is not one
of those set forth in this Code, shall annul the
institution of heirs insofar as it may prejudice
 Succession
the person disinherited; but the devises and
legacies and other testamentary dispositions
shall be valid to such extent as will not impair
the legitime. (NCC, Art. 918)
Reconciliation
Reconciliation exists when two persons who are
at odds decide to set aside their differences and
to resume their relations. They need not go back
to their old relation. In order to be effective, the
testator must pardon the disinherited heir. The
pardon whether express or tacit, must refer
specifically to the heir disinherited and to the
acts he has committed, and must be accepted by
such heir. In disinheritance, reconciliation need
not be in writing.
Reason: Nemo dat quod non habet. You
cannot give what you don’t have.
XPN: If subsequent to the making of the
disposition, the thing is acquire by the
testator onerously or gratuitously, such
disposition is validated.
2. The testator knows that he does not own but
ordered its acquisition
If the thing given as devise or legacy is not
owned by the testator at the time he made
the will but he orders his estate to acquire it,
it is a valid legacy or devise. The testator
knew that he did not own it. There is no
mistake.

Effect of Reconciliation GR : If the thing already belonged to the

legatee/devisee at the time of the execution of
1. occurs before the disinheritance was made – the will, the legacy/devise is void. It is not
right to inherit is extinguished validated by an alienation by the legatee/devisee
2. occurs after the disinheritance was made – subsequent to the making of the will.
disinheritance is set aside.
XPN : Unless the acquirer is the testator himself.
Effect of setting aside of the disinheritance
1. The disinherited heir is restored to the APPLICABILITY APPLICABILITY OF
legitime; OF ART. 911 ART. 950
2. If the disinheriting will did not dispose of Art. 950 will apply if
the disposable portion, the disinherited heir the reason for the
is entitled to his proportionate share if any Art. 911 will apply
reduction is not the
of the disposable portion; if reductions have
impairment of
3. If the disinheriting will or any subsequent to be made because
legitimes ; e.g., there
will disposed of the disposable portion in the legitimes have
are no legitimes
favor of testamentary heairs, legatees, or been impaired; i.e.,
because there are no
devisees, such dispositions remain valid. if the
compulsory heirs or
legacies/devises
the legitimes have
have exceeded the
LEGACIES AND DEVISES already been satisfied
disposable portion.
through donations
All things and rights which are within the inter vivos.
commerce of man may be bequeathed or
devised. (NCC, Art. 924) Suppose the legatee or devisee acquired the
property after the will has been executed
Testator can bequeath or devise a thing or
property belonging to someone else 1. If he acquired it by gratuitous title, then the
legacy or devise is void.
It occurs when:
Reason: The purpose of the testator that the
1. The testator thought that he owned it property would go to the devisee or legatee
has already been accomplished with no
GR: A legacy or devise of a thing belonging expense to the legatee or devisee.
to someone else when the testator thought
that he owned it is a void legacy or devise 2. If he acquired it by onerous title, the legacy
because it is vitiated by mistake. or devise is valid and the estate may be
required to reimburse the amount.

UNIVERSITY OF SANTO TOMAS 354

2021 GOLDEN NOTES
 Civil Law
Suppose the property bequeathed or devised NOTE: The order of preference mentioned above
has been pledged or mortgaged is applicable when:

GR: The pledge or mortgage must be paid by the
estate. (NCC, Art. 934)
XPN: If the testator provides otherwise.
However, any other charge such as easements
and usufruct, with which the thing bequeathed is
burdened, shall be respected by the legatee or
devisee. (NCC. Art 934, par. 3 & Art. 946)
1. The estate is insufficient to cover all devises
or legacies ; and
2. When the reason for the reduction is not the
impairment of legitimes. (e.g., there are no
legitimes because there are no compulsory
heirs or the legitimes have already been
satisfied through donations inter vivos).
(Balane, 2016)

A legacy of credit takes place when the testator Distinction between Art. 911 and Art. 950
bequeaths to another a credit against a third
person. In effect, it is a novation of the credit by ART. 911, NCC ART. 950, NCC
the subrogation of the legatee in the place of the ORDER OF PREFERENCE
original creditor. 1. Remuneratory
legacies or
A legacy of remission is a testamentary LDPO: devises;
disposition of a debt in favor of the debtor. The 1. Legitime of 2. Preferential
legacy is valid only to the extent of the amount of compulsory legacies or
the credit existing at the time of the testator's heirs; devises;
death. In effect, the debt is extinguished. 2. Donations inter 3. Legacy for
vivos; support;
A legacy of credit or remission: 3. Preferential 4. Legacy for
legacies or education;
1. Applies only to amount still unpaid at the devises; 5. Legacies or
time of the testator’s death (NCC. Art. 935); 4. All Other devises of a
legacies or specific,
2. Revoked if the testator subsequently sues devises pro determinate thing
the debtor for collection (NCC, Art. 936) rata which forms a
3. If generic, applies only to those existing at part of the estate;
the time of the execution of the will, unless 6. All others pro
otherwise provided. (NCC, Art. 793 & 937) rata
(Balane, 2016) WHEN APPLIED
Article 911 will
GR: A legacy or devise to a creditor shall not be Article 950 will apply
apply if the
applied to his credit. (NCC, Art. 938) if the reason for
reductions have to
reduction is not the
be made because
XPN: It will be imputed to the debt if the testator impairment of
the legitimes have
so provides. In such case, if the debt exceeds the legitimes.
been impaired
legacy or devise, the excess may be demanded as
an obligation of the estate. (Ibid.) NOTE: Article 911 will apply if the reductions
have to be made because the legitimes have
Order of Payment of Legacies and Devises been impaired. Article 950 will apply if the
reason for reduction is not the impairment of
1. Remuneratory legacies or devises legitimes.
2. Legacies or devises declared by testator to
be preferential Grounds for the revocation of legacy or
3. Legacies for support devise
4. Legacies for education
5. Legacies or devises of a specific determinate 1. Transformation of the thing in such a
thing which forms part of the estate manner that it does not retain either the
6. All others pro rata (NCC, Art. 950) form or the denomination it had;

355
 Succession
2. Alienation of the thing bequeathed or any 1. Institution of an heir (bequest, in case of
part thereof. In the latter case, the legacy or legacies or devises)
devise shall be without effect only with 2. Substitution, if proper
respect to the part alienated. (NCC, Art. 957) 3. Representation, if applicable
4. Accretion, if applicable
GR: The alienation revokes the 5. Intestacy, if all of the above are not
legacy/devise, even if for any reason, the applicable
thing reverts to the testator.
Legal or Intestate succession takes place
XPN: when:
a. If the reversion is caused by the
annulment of the alienation and the 1. There is no will, the will is void, or the will is
cause for the annulment was vitiation of revoked;
consent on the grantor’s part, either by 2. The will does not institute an heir to, or
reason of incapacity or of duress. dispose of all the property of the testator
(Fernandez v. Dimagiba, G.R. No. L- (partial intestacy);
23638, October 12, 1967) 3. The suspensive condition attached to the
b. If the reversion is by virtue of inheritance does not happen or is not
redemption in a sale with pacto de fulfilled;
retro. (NCC, Art. 957) 4. The heir predeceased the testator or
repudiates the inheritance, and no
3. Total loss of the thing bequeathed. (Ibid.) substitution and no right of accretion take
place.
This will be a cause for revocation only if it 5. The heir instituted is incapacitated to
takes place before the testator’s death. A succeed.
fortuitous loss after the testator’s death will
simply be an instance of “res perit domino” NOTE: The enumeration is not exclusive; there
and will be borne by the legatee/devisee. are other causes for intestacy which are not
included in the enumeration.
Reason: The loss shall be borne by the
legatee/devisee because the transmission of Example:
ownership retroacts to the time of the death
of the testator. 1. Preterition;
2. Arrival of the resolutory term or period;
4. If the legacy is a credit against a third person 3. Fulfillment of a resolutory condition
or the remission of a debt, and the testator, attached to the inheritance;
subsequent to the making of the will, brings 4. Non-compliance or impossibility of
an action against the debtor for payment. complying with the will of the testator.
(NCC, Art. 936)
Rules on Exclusion and Concurrence in
LEGAL OR INTESTATE SUCCESSION Intestate Succession (Balane, 2016)

Legal or intestate succession is that which is 1. Legitimate children

effected by operation of law in default of a valid
will. a. Exclude parents, collaterals and State
b. Concur with surviving spouse and
It is legal because it takes place by operation of illegitimate children
law; it is intestate because it takes place in the c. Excluded by no one
absence or in default of a last will of the
decedent. 2. Illegitimate children

Application of inheritance a. Exclude illegitimate parents, collaterals

and State
The following are applied successively (ISRAI): b. Concur with surviving spouse,
legitimate children, and legitimate
parents

UNIVERSITY OF SANTO TOMAS 356

2021 GOLDEN NOTES
 Civil Law
c. Excluded by no one ORDER OF PREFERENCE BETWEEN LINES IN
LEGAL OR INTESTATE SUCCESSION
3. Legitimate parents
FIRST, succession takes place in the direct
a. Exclude collaterals and the State descending line;
b. Concur with illegitimate children and
surviving spouse SECOND, in the direct ascending line; and
c. Excluded by legitimate children
FINALLY, in the collateral line.
4. Illegitimate parents
ORDER OF INTESTATE SUCCESSION TO A
a. Exclude collaterals and State LEGITIMATE CHILD
b. Concur with surviving spouse
c. Excluded by legitimate children and In general, and without prejudice to the
illegitimate children concurrent right of other heirs in proper cases,
the order of intestate succession to a legitimate
5. Surviving spouse child is as follows:

a. Excludes collaterals other than 1. legitimate children and descendants;

brothers, sister, nephews and nieces, 2. legitimate parents and ascendants;
and State 3. illegitimate children;
b. Concurs with legitimate children, 4. illegitimate parents
illegitimate children, legitimate parents, 5. the surviving spouse;
illegitimate parents, brothers, sisters, 6. brothers, sisters, nephews, nieces
nephews and nieces 7. other collaterals up to the fifth degree; and
c. Excluded by no one 8. State. (Rabuya, 2009 ; Balane, 2016)

6. Brothers and Sister, nephews and nieces ORDER OF INTESTATE SUCCESSION TO AN

ILLEGITIMATE CHILD
a. Exclude all other collaterals and the
State 1. The legitimate children and descendants of a
b. Concur with surviving spouse person who is an illegitimate child are
c. Excluded by legitimate children, preferred over other intestate heirs, without
illegitimate children, legitimate parents prejudice to the right of concurrence of
and illegitimate parents illegitimate children and the surviving
spouse.
7. Other collaterals
2. In the absence of legitimate children and
a. Exclude collaterals in remoter degrees descendants, the illegitimate children (of the
and the State illegitimate child) and their descendants
b. Concur with collaterals in the same succeed to the entire estate, without
degree prejudice to the concurrent right of the
c. Excluded by legitimate children, surviving spouse.
illegitimate children, legitimate parents,
illegitimate parents, surviving spouse, 3. In the absence of children and descendants,
brothers and sisters, and nephews and whether legitimate or illegitimate, the third
nieces in the order of succession to the estate of the
illegitimate child is his illegitimate parents.
8. State If both parents survive and are entitled to
succeed, they divide the estate share and
a. Excludes no one share alike. Although the law is silent, if the
b. Concurs with no one surviving spouse of the illegitimate child
c. Excluded by everyone concurs with the illegitimate parents, the
surviving spouse shall be entitled to one-half
ORDER OF INTESTATE SUCCESSION of the estate while the illegitimate parents
get the other half.

357
 Succession
NOTE: In the ascending line, only the Legitimate
illegitimate parents are entitled to inherit children The whole estate, each
from the illegitimate child; the other and illegitimate child getting ½
illegitimate descendants are not so entitled. Illegitimate share of one legitimate child
children
4. In default of children or descendants, Legitimate
The whole estate, divided
legitimate or illegitimate, and illegitimate children
equally (the surviving spouse
parents, the surviving spouse shall inherit and
counted as one legitimate
the entire estate. But if the surviving spouse surviving
child)
should survive with brothers and sisters, spouse
nephews and nieces, the surviving spouse Legitimate The whole estate, the
shall inherit one-half of the estate, and the Children, surviving spouse being
latter the other half. The brothers and surviving counted as one legitimate
sisters must be by illegitimate filiation; spouse and child and each illegitimate
otherwise, the Iron Curtain Rule shall apply. illegitimate child getting ½ share of one
children legitimate child
5. Although the law is silent, illegitimate Legitimate
brothers and sisters who survive alone shall The whole estate, divided
parents
get the entire inheritance. The legitimate equally
alone
children of the illegitimate parents are not Legitimate
entitled to inherit from the illegitimate child ascendants The whole estate, observing in
by virtue of Article 992 of the NCC. (other than proper cases, the rule of
parents) division by line
6. The State. (Id. at 691-692) alone
Legitimate Legitimate parents
Q: Bert and Joe, both male and single, lived parents = ½ of the estate
together as common law spouses and agreed and
to raise a son of Bert's living brother as their illegitimate Illegitimate children
child without legally adopting him. Bert children = ½ of the estate
worked while Joe took care of their home and Legitimate Legitimate parents
the boy. In their 20 years of cohabitation they parents = ½ of the estate
were able to acquire real estate assets and
registered in their names as co-owners. surviving Surviving spouse
Unfortunately, Bert died of cardiac arrest, spouse = ½ of the estate
leaving no will. Bert was survived by his Legitimate parents
biological siblings, Joe, and the boy. What are Legitimate = ½ of the estate
the successional rights of the boy Bert Joe parents,
and raised as their son? (2015 BAR) surviving Surviving spouse
spouse and = ¼ of the estate
A : Neither of the two will inherit from Bert. Joe illegitimate
cannot inherit because the law does not children Illegitimate children
recognize the right of a stranger to inherit from = ¼ of the estate
the decedent in the absence of a will. Their Illegitimate
cohabitation will not vest Joe the right to inherit The whole estate, divided
children
from Bert. The child will likewise not inherit equally
alone
from Bert because of the lack of formal adoption Illegitimate Illegitimate children
of the child. A mere ward or “ampon” has no children = ½ of the estate
right to inherit from the adopting parents. and
(Manuel v. Ferrer, G.R. No. 117246, August 21, surviving Surviving spouse
1995) spouse = ½ of the estate
TABLE OF INTESTATE SHARES Surviving
The whole estate
spouse
Legitimate alone
The whole estate divided
Children Surviving No article governing, but Art.
equally
alone spouse and 997 may be applied by

UNIVERSITY OF SANTO TOMAS 358

2021 GOLDEN NOTES
 Civil Law
illegitimate analogy, thus: The whole estate, observing
Legitimate
parents the 2:1 proportion of full and
brothers
Surviving spouse half-blood fraternity and the
and sisters,
= ½ of the estate nephews and nieces inheriting
nephews
by representation in the
and nieces
Illegitimate parents proper cases
= ½ of the estate Uncles and Aunts
Surviving spouse Nephews = excluded
Surviving = ½ of the estate and nieces
spouse and with Nephews and nieces
legitimate Legitimate brothers, sisters, Uncles and = whole estate per capita, but
brothers nephews, nieces aunts observing the 2:1 proportion
and sisters, = ½ of the estate (the nephews for the full and half blood
nephews and nieces inheriting by Illegitimate
The whole estate, observing
and nieces representation in proper brothers
the 2:1 proportion of full and
cases) and sisters
half-blood fraternity
Surviving spouse alone
= ½ of the estate Illegitimate
No article governing, but Arts.
brothers,
1005 and 1008 may be applied
Illegitimate brothers, sisters, sisters,
by analogy, hence, they
nephews and nieces nephews
acquire the whole estate
= ½ of the estate (the nephews and nieces
and nieces inheriting by The whole estate per capita,
Surviving representation in proper Nephews
but observing the 2:1
and nieces
spouse and cases) proportion for the full and half
illegitimate alone
blood
brothers NOTE: When the law speaks of The whole estate, per capita,
and sisters, brothers and sisters, nephews Other
the nearer in degree excluding
nephews and nieces as legal heirs of an collaterals
the more remote
and nieces illegitimate child, it refers to The whole estate.
illegitimate brothers and
sisters as well as to the Assignment/Disposition:
children, whether legitimate 1. If decedent was a resident of
or illegitimate, of such the Philippines at any time:
brothers and sisters. (Manuel a. Personal property – to
v. Ferrer, G.R. No. 117246, municipality of last
August 21, 1995) residence
Illegitimate b. Real property – where
parents The whole estate situated
alone 2. If decedent was never a
Illegitimate parents =excluded resident of the Philippines
Personal and real property –
Children State where respectively situated
Illegitimate a. Child alone (legitimate or
parents illegitimate) How property is to be used:
and = whole estate 1. For the benefit of public
children of educational and charitable
any kind b. Legitimate and illegitimate institutions in the respective
children municipalities/cities
= each illegitimate gets ½ 2. Alternatively, at the instance
share of one legitimate child of an interested party, or
The whole estate, with a motu propio, court may
Legitimate
brother/sister of the half- order creation of a
brothers
blood inheriting ½ the share permanent trust for the
and sister
of a brother/sister of the full benefit of the institutions
alone
blood concerned

359
 Succession
RIGHT OF REPRESENTATION
Representation is a right created by fiction of
law, by virtue of which the representative is
raised to the place and degree of the person
represented, and acquires the rights which the
latter would have if he were living or could have
inherited. (NCC, Art. 970)
In order that representation may take place, it is
necessary that the representative himself be
capable of succeeding the decedent. (NCC, Art.
973)
Effect of Representation
Whenever there is succession by representation,
the division of the estate shall be made per
stirpes, in such manner that the representative
or representatives shall not inherit more than
what the person they represent would inherit, if
he were living or could inherit. (NCC, Art. 974)
NOTE: Per stirpes means inheritance by group,
all those within the group inheriting in equal
shares.
Right of representation arise because of
1. Predecease ;
2. Incapacity or unworthiness; or
3. Disinheritance.
When Right of Representation is NOT
AVAILABLE:
1. As to compulsory heirs: In case of
repudiation, the one who repudiates his
inheritance cannot be represented. Their
own heirs inherit in their own right.
2. As to voluntary heirs: Voluntary heirs,
legatees and devisees who either:
a. Predecease the testator, or
b. Renounce the inheritance cannot be
represented by their own heirs, with respect
to their supposed inheritance.
In representation, the representative does NOT
inherit from the person represented but from
the decedent.
The right of representation takes place in the
direct descending line, but never in the
ascending.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
In the collateral line, it takes place only in favor
of the children of brothers or sisters, whether
they are full or half blood. (NCC, Art. 972)
NOTE: This rule applies only when the decedent
does not have descendants. Also, an illegitimate
child can represent his father, provided that the
father was also illegitimate.
An illegitimate sibling of the decedent can be
represented. An illegitimate brother or sister of
the deceased can be represented by his children,
without prejudice to the application of the Iron
Curtain Rule. (Tolentino, Civil Code, 1992 ed.)
The right of representation does NOT apply to
adopted children. The right of representation
cannot be invoked by adopted children because
they cannot represent their adopting parents to
the inheritance of the latter’s parents.
Reason: The right of representation cannot be
invoked by adopted children because the legal
relationship created by adoption is strictly
between the adopter and the adopted. It does
not extend to the relatives of either party.
NOTE: Under R.A. No. 8552 or the Domestic
Adoption Law, the adopted child and the
adopting parents have reciprocal successional
rights.
Rule on Equal Division of Lines
GR: Intestate heirs equal in degree inherit in
equal shares. (NCC, Art. 962)
XPNs:
a. In the ascending line, the rule of division by
line is ½ to the maternal line and ½ to the
paternal line, and within each line, the
division is per capita. (NCC, Art. 987)
b. In the collateral line, the full-blood
brothers/sisters will get double that of the
half-blood. (NCC, Art. 1006)
c. The division in representation, where
division is per stirpes – the representative
divide only the share pertaining to the
person represented.
NOTE: Compulsory heirs shall, in no case, inherit
ab intestato less than their legitimes as provided
in testamentary succession.
360
 Civil Law
When Children of One or More Brothers or
Sisters of the Deceased Survived
1. When children of one or more brothers
or sisters of the deceased survive, they
shall inherit from the latter by
representation, if they survive with their
uncles or aunts.
2. But if they alone survive, they shall inherit
in equal portions (division not per stirpes).
(NCC, Art. 975)
Reason: Between the legitimate family and the
illegitimate family there is presumed to be an
intervening antagonism and incompatibility.
(Diaz, et al., v. Intermediate Appellate Court, G.R.
No. L-66574, February 21, 1990)
Application of iron curtain rule and right of
representation distinguished
RIGHT OF
IRON CURTAIN RULE
REPRESENTATION

IRON CURTAIN RULE Prohibits absolutely a

succession ab intestato Right created by fiction
An illegitimate child has no right to inherit ab between the of law where the
intestato from the legitimate children and illegitimate child and representative is
relatives of his father or mother; nor shall such the legitimate children raised to the place and
children or relatives inherit in the same manner and relatives of the degree of the person
from the illegitimate child. (NCC, Art. 992) father or mother of represented, and
said illegitimate child. acquires the rights
Reason: There is a barrier recognized by law which the latter would
between the legitimate relatives and the NOTE: Iron curtain have if he were living
illegitimate child so that one cannot inherit from rule imposes a or could have
the other. (Corpus v Administrator, 85 SCRA 567, limitation on right of inherited.
1978) representation.

Applies to both
The following are also not allowed to have the Applies only in
intestate and testate
right to inherit ab intestato: intestate succession
succession
1. where the illegitimate child had half-
brothers who were legitimate, the latter had
no right to the former’s inheritance;
2. the legitimate collateral relatives of the
mother cannot succeed from her illegitimate
child;
3. a natural child cannot represent his natural
father in the succession to the estate of the
legitimate grandparent;
4. the natural daughter cannot succeed to the
estate of her deceased uncle who is a
legitimate brother of her natural father; and
5. an illegitimate child has no right to inherit
ab intestato from the legitimate children and
relatives of his father. (Manuel v. Ferrer, G.R.
No. 117246, August 21, 1995)

Jurisprudence has consistently held that Art. 992

of the Civil Code bars the illegitimate child from
inheriting ab intestato from the legitimate
children and relatives of his father or mother.
(Suntay v. Cojuangco-Suntay, G.R. No. 183053,
June 15, 2010)

NOTE: The iron curtain rule only applies in

intestate succession.

361
 Succession

Iron Curtain Rule and Right of Representation

UNIVERSITY OF SANTO TOMAS 362

2021 GOLDEN NOTES
 Civil Law
The right of representation is not available to
illegitimate descendants of legitimate children in
the inheritance of a legitimate grandparent.
Petitioners argued that the illegitimate
descendant of a legitimate child is entitled to
represent by virtue of the provisions of Article
982, which provides that “the grandchildren and
other descendants shall inherit by right of
representation.” Such a conclusion is erroneous.
It would allow intestate succession by an
illegitimate child to the legitimate parent of his
father or mother, a situation which would set at
naught the provisions of Article 992 of the NCC.
Article 982 of the NCC is inapplicable to instant
case because Article 992 prohibits absolutely a
succession ab intestato between the illegitimate
child and the legitimate children and relatives of
the father or mother. It may not be amiss to state
that Article 982 is the general rule and Article
992 the exception. (Diaz v. Intermediate
Appellate Court, G.R. No. L-66574 June 17, 1987)
Law on succession is animated by a uniform
general intent, and no part should be rendered
inoperative by, but must be construed in relation
to, any other part as to produce a harmonious
whole.
The rule in Art. 992 of the NCC has consistently
been applied by the Court in several other cases.
Thus, it has ruled that :
a. where the illegitimate child had half
brothers who were legitimate, the latter
had no right to the former’s inheritance;
b. the legitimate collateral relatives of the
mother cannot succeed from her
illegitimate child;
c. a natural child cannot represent his
natural father in the succession to the
estate of the legitimate grandparent;
d. the natural daughter cannot succeed to
the estate of her deceased uncle who is
a legitimate brother of her natural
father; and
e. an illegitimate child has no right to
inherit ab intestato from the legitimate
children and relatives of his father.
(Manuel v. Ferrer, G.R. No. 117246
August 21, 1995)
PROVISIONS COMMON TO TESTATE AND
INTESTATE SUCCESSION
RIGHT OF ACCRETION
361
Accretion is a right by virtue of which, when
two or more persons are called to the same
inheritance, devise or legacy, the part assigned
to the one who renounces or cannot receive his
share, or who died before the testator, is added
or incorporated to that of his co-heir, co-
devisees, or co-legatees. (NCC, Art. 1015)
Basis: Accretion is a right based on the
presumed will of the deceased that he prefers to
give certain properties to certain individuals
rather than to his legal heirs. Accretion is
preferred over intestacy.
Requisites of Accretion
In order that the right of accretion may take
place in a testamentary succession, it shall be
necessary:
1. That two or more persons be called to the
same inheritance, or to the same portion
thereof, pro indiviso; and
2. That one of the persons thus called die before
the testator, or renounce the inheritance, or
be incapacitated to receive it. (NCC, Art.
1016)
In testamentary succession, accretion takes
place in case of:
1. Predecease;
2. Incapacity;
3. Renunciation;
4. Non-fulfillment of the suspensive condition
imposed upon instituted heir; and
5. Ineffective testamentary disposition
In intestate succession, accretion takes place
in case of:
1. Predecease of legal heir;
2. Incapacity or unworthiness of legal heir; and
3. Repudiation or renunciation by legal heir
NOTE: Accretion takes place only if there is no
representation. In renunciation, there is always
accretion.
Reason: No representation in renunciation.
Substitution, representation and accretion in
testate and intestate succession
distinguished
TESTAMENTARY INTESTATE
 Succession
SUCCESSION SUCCESSION cannot take place with
In case of predecease and incapacity respect to legitime.
1. If the right of
representation takes With respect to the FREE PORTION in case of
With respect to the
place, then the predecease, incapacity or renunciation
legitime:
representative 1. Substitution shall take
succeeds to the place if provided for by
1. If the right of
vacant portion. the testator
representation takes
place, then the
NOTE: 2. If no substitution is
representative succeeds
Representation takes provided, the vacant
to the vacant portion.
place in case of share shall go to the co-
predecease and heir by right of accretion
2. If representation is
incapacity with if the requisites are
not available, then the
respect to present and the testator
co-heirs of the same
inheritance has not provided the
degree shall succeed to it
conferred by law. contrary
in their own right and
Hence, it takes place
not by accretion since
in legal or intestate 3. If the requisites of
there is no accretion
succession. accretion are not
with respect to the
present or when the
legitime.
2. If representation testator provides that no
is not available, then accretion shall take
3. In default of the
the vacant portion place, the vacant portion
above, the vacant
shall go to the co- shall pass to the legal
portion shall go to the
heirs in their own heirs if no substitute has
other secondary and/or
right. been designated. (NCC,
other compulsory heirs.
Art. 1022)
In default thereof,
NOTE: Substitution
then the vacant NOTE: In testamentary
cannot take place with
share shall go to the succession,
respect to legitime.
heirs in the next representation takes
order of intestacy. place only with respect
In case of repudiation to the legitime; it does
With respect to the not take place with
legitime: The vacant portion respect to what is
shall go to the other voluntarily given by will.
1. The other co-heirs co-heirs by right of (NCC, Art. 856)
shall succeed to it in accretion. In legal
their own right and not succession, the share
by right of accretion of the person who CAPACITY TO SUCCEED BY WILL OR
since there is no repudiates the INTESTACY
accretion with respect to inheritance always
legitime. accrues to his co- Persons not incapacitated by law may succeed
heirs. by will or ab intestate. The provisions relating to
2. In default thereof, the In default thereof, incapacity by will are equally applicable to
vacant portion shall go the vacant share intestate succession. (NCC, Art. 1024)
to the other secondary shall go to the heirs
and/or compulsory of next degree in In order to be capacitated to inherit, the heir,
heirs. their own right. devisee or legatee must be living at the moment
the succession opens, except in case of
NOTE: Representation In default thereof, it representation, when it is proper.
does not take place in shall go to the heirs
repudiation. in the next order of A child already conceived at the time of the
intestacy. death of the decedent is capable of succeeding
NOTE: Substitution provided it be born later under the conditions

UNIVERSITY OF SANTO TOMAS 362

2021 GOLDEN NOTES
 Civil Law
prescribed in Article 41 of the NCC. (NCC, Art.
1025) (2007 BAR)
PERSONS INCAPABLE OF SUCCEEDING
Absolute incapacity to succeed means that the
person is incapacitated to succeed in any form,
whether by testate or intestate succession.
Persons who are absolutely incapacitated to
succeed:
1. Those not living at the time of death of the
testator
2. Those who cannot be identified. (NCC, Art.
845)
3. Those who are not permitted by law to
inherit. (NCC, Art. 1027)
Determination of the Capacity to Succeed
GR: In order to judge the capacity of the heir,
devisee, or legatee, his qualification at the time
of the death of the decedent shall be the
criterion.
XPN: If the institution, devise or legacy should
be conditional (suspensive condition), the
capacity is to be determined not only at the time
of the death of the decedent but also at the time
of the fulfillment of the condition.
NOTE : If the institution is subject to a
suspensive term, the requirement of being alive
applies only at the moment of the decedent’s
death; the successor need not be alive when the
term arrives. (Balane, 2016; in relation to NCC,
Art. 878)
NOTE : In case of representation, the
representative must at least already be
conceived when the decedent dies.
The governing law in determining the capacity
to succeed of the heir, devisee, legatee is the law
of the nation of the decedent. (1998, 2004 BAR)
RELATIVE INCAPACITY TO SUCCEED
Relative incapacity to succeed means the
person is incapacitated to succeed because of
some special relation to the testator.
Grounds for Relative Incapacity to Succeed
(UMA)
363
4. Undue influence or interest (NCC, Art. 1027)
5. Morality or public policy (NCC, Art. 739)
6. Acts of unworthiness (NCC, Art. 1032)
The following are incapacitated to succeed
based on undue influence or interest (PRG-
WPI)
1. The Priest who heard the confession of the
testator during his last illness, or the
minister of the gospel who extended
spiritual aid to him during the same period;
2. The Relatives of such priest or minister of
the gospel within the fourth degree, the
church, order, chapter, community,
organization, or institution to which such
priest or minister may belong;
3. A Guardian with respect to testamentary
dispositions given by a ward in his favor
before the final accounts of the guardianship
have been approved, even if the testator
should die after the approval thereof;
nevertheless, any provision made by the
ward in favor of the guardian when the
latter is his ascendants, descendant, brother,
sister, or spouse, shall be valid;
4. Any attesting Witness to the execution of a
will, the spouse, parents, or children, or
anyone claiming under such witness,
spouse, parents, or children;
NOTE: Numbers 1 to 4 do not apply to
legitimes.
5. Any Physician, surgeon, nurse, health officer
or druggist who took care of the testator
during his last illness;
NOTE: Number 5 is an absolute
disqualification.
6. Individuals, associations and corporations
not permitted by law to inherit. (NCC, Art.
1027)
Requisites for a priest to be disqualified from
inheriting
1. The will must be made during the last illness
of the testator;
2. The spiritual ministration must have been
extended during the last illness;
 Succession
3. The will must be executed during or after or before it is terminated when the guardian is
the spiritual ministration. an: ADBS2

Q: If the confession was made before the will 1. Ascendant

was made, can the priest inherit upon the 2. Descendant
death of the sick person, if: 3. Brother
4. Sister
a. The priest is the son of the sick person? 5. Spouse
b. The priest was the sick person’s brother?
NOTE: Paragraph 4 nullifies not just legacies and
A: devises, but all testamentary dispositions made
in the witness’ favor.
a. YES. He can get the legitime.
The discrepancy between paragraph 4 and
NOTE: A priest is incapacitated to succeed when Article 832, which allows for an exception; i.e., if
the confession is made prior to or simultaneously there are three other competent witnesses. That
with the making of a will. exception should be read into this paragraph.
(Balane, 2016)
The disqualification applies only to testamentary
dispositions. Requisites for the disqualification of
physician
b. YES. He can inherit by intestacy.
1. The will was made during the last illness
NOTE: Despite this apparent restriction to 2. The sick person must have been taken cared
Christian ministers, this applies to all spiritual of during his last illness
ministers, e.g., Buddhist monks. 3. Medical attendance was made
4. The will was executed during or after he was
NOTE: Despite the seemingly restrictive terms being cared of.
of this disqualification, it applies also to all
individuals belonging to other religions, sects, or The following are incapacitated to succeed
cults, whose office or function is to extend the based on morality or public policy (ACO)
peculiar spiritual ministrations of their creed.
(Balane, 2016) 1. Persons guilty of Adultery or concubinage
with the testator at the time of the making of
Reason: It is conclusively presumed that the the will
spiritual minister used his moral influence to 2. Persons guilty of the same Criminal offense,
induce or influence the sick person to make a in consideration thereof
testamentary disposition in his favor. 3. A public officer or his wife, descendants and
ascendants, by reason of his Office. (Art.
Purpose of disqualification in par. 2: to 1028 in relation to Art. 739 of NCC) (2000
prevent indirect violations or circumventions. BAR)
This disqualification applies also to the spouse of
the minister. The following are incapacitated to succeed by
reason of unworthiness (P-CAV-AFP-F)
Q: When is a guardian disqualified from
inheriting by testate succession? 1. Parents who have abandoned their children
or induced their daughters to lead a corrupt
A: or immoral life, or attempted against their
virtues;
GR: The disqualification applies when the 2. Persons Convicted of an attempt against the
disposition is made before the approval of final life of the testator, his or her spouse,
accounts or lifting of guardianship. descendants or ascendants;
3. Persons who Accused the testator of a crime
XPN: It does not apply even when the for which the law prescribes imprisonment
disposition is made after the guardianship began for six years or more, if the accusation has
been found to be groundless;

UNIVERSITY OF SANTO TOMAS 364

2021 GOLDEN NOTES
 Civil Law
4. Heir of full age who, having knowledge of party deprives the cause of
the Violent death of the testator, should fail the latter of the unworthiness
to report it to an officer of the law within a right to shall be
month unless the authorities have already disinherit and without effect.
taken action; renders
ineffectual any
NOTE: This prohibition shall not apply to disinheritance
cases wherein, according to law, there is no that may have
obligation to make an accusation. been made.
Manner of Express or Written
5. Person convicted of Adultery or reconciliati implied condonation
concubinage with the spouse of the testator; on or Either an or execution
6. Persons who by Fraud, violence, pardon express pardon by the
intimidation, or undue influence should or unequivocal offended party
cause the testator to make a will or to conduct of the of a will with
change one already made; testator. knowledge of
7. Persons who by the same means Prevent (Balane, 2016) the cause of
another from making a will, or from unworthiness.
revoking one already made, or who (NCC. Art.
supplant, conceal, or alter the latter's will ; 1033)
and Grounds There are grounds for
8. Persons who Falsify or forge a supposed will disinheritance which are also
of the decedent. (NCC, Art. 1032) causes for incapacity by reason
of unworthiness.
NOTE: Grounds 1, 2, 3, 5 and 6 are the same Effect of The moment the testator uses
grounds as in disinheritance. Numbers 6, 7 and 8 subsequent one of the causes for
cover six (6) acts which relate to wills: reconciliati unworthiness as a ground for
on if disinheritance, he thereby
1. Causing the testator to make a will disinherita submits it to the rule on
2. Causing the testator to change an nce has disinheritance. (Rabuya, 2009)
existing will already
3. Preventing the decedent from making a been made
will on any of
4. Preventing the testator from revoking the grounds
his will which are
5. Supplanting, concealing, or altering the also causes
testator's will. for
6. Falsifying or forging a supposed will of unworthine
the decedent. ss

ACCEPTANCE AND REPUDIATION OF THE

UNWORTHINESS vs. DISINHERITANCE INHERITANCE

BASIS DISINHERITA UNWORTHIN The acceptance or repudiation of the inheritance

NCE ESS is a purely voluntary and free act. (NCC, Art.
Effects on Deprivation of Exclusion from 1041)
the a compulsory the entire
inheritance heir of his inheritance. Principal characteristics of acceptance and
legitime. However, repudiation
donations
inter vivos are 1. It is voluntary and free
not affected. 2. It is retroactive
Effects of Reconciliation If the testator —retroacts to the moment of death of the
pardon or between the pardons the decedent (NCC, Art. 1042)
reconciliati offender and act of 3. Once made, it is irrevocable
on the offended unworthiness,

365
 Succession
Inheritance is deemed accepted
1. When the heir sells, donates, or assigns his
rights to a stranger, to his co-heirs, or to
any of them;
2. When the heir renounces it, even though
gratuitously, for the benefit of one or more
heirs;
3. When renunciation is in favor of all heirs
indiscriminately for a consideration (NCC,
Art. 1050); or
4. Other tacit acts of acceptance:
a. Heir demands partition of the
inheritance
b. Heir alienates some objects of the
inheritance
c. Acts of preservation or administration
if, through such acts, the title or capacity
of the heir has been assumed
d. Under Art. 1057 of the NCC, failure to
signify acceptance or repudiation within
30 days after an order of distribution by
the probate court.
Ways by which the repudiation of the
inheritance, legacy or devise may be made
1. By means of a public instrument
2. By means of an authentic instrument
3. By means of a petition presented to the
court having jurisdiction over the
testamentary or intestate proceedings.
(filed in the settlement proceedings)
Effect of repudiation if an heir is both a
testate and legal heir
If an heir is both a testate and legal heir and he
repudiated the inheritance as a testate heir, he is
understood to have repudiated in both
capacities. However, should he repudiate as a
legal heir, without knowledge of being a testate
heir, he may still accept the inheritance as a
testate heir. (NCC. Art. 1055)
Remedy if the heir repudiates the
inheritance to the prejudice of his creditors
If the heir repudiates the inheritance to the
prejudice of his own creditors, the latter may
petition the court to authorize them to accept it
in the name of the heir. The acceptance shall
benefit the creditors only to an extent sufficient
to cover the amount of their credits. (NCC, Art.
1052)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
This is an instance of accion pauliana, which is
the right given to creditors to impugn or set
aside contracts, transactions or dispositions of
their debtors which will prejudice or defraud
them. (Balane, 2016)
Requisites
1. The heir who repudiated his inheritance
must have been indebted at the time when
the repudiation is made.
2. The heir-debtor must have repudiated his
inheritance according to the formalities
prescribed by law.
3. Such act of repudiation must be prejudicial
to the creditor or creditors.
4. There must be judicial authorization. (NCC,
Art. 1052)
PARTITION AND DISTRIBUTION OF ESTATE
Partition, in general, is the separation, division
and assignment of a thing held in common
among those to whom it may belong. The thing
itself may be divided or its value. (NCC, Art.
1079) Every act which is intended to put an end
to indivision among co-heirs and legatees or
devisees is deemed to be a partition, although it
should purport to be a sale, an exchange, a
compromise, or any other transaction. (NCC, Art.
1082)
The partition may be effected either
1. By the decedent himself during his lifetime;
2. Inter vivos or by will;
3. By a third person designated by the
decedent or by the heirs themselves; or
4. By a competent court in accordance with the
New Rules of Court
Partition may be demanded by:
1. Compulsory heir
2. Voluntary heir
3. Legatee or devisee
4. Person who has acquired an interest in the
estate
Partition cannot be demanded when (PAPU)
1. Expressly Prohibited by testator for a period
not exceeding 20 years—this enforced co-
ownership may cover even legitimes
366
 Civil Law
XPN: Despite this imposed indivision,
partition may be demanded:
a. When any of the causes for which
partnership is dissolved takes place
b. When the court finds compelling
reasons for partition. (NCC, Art. 1083)
2. Co-heirs Agreed that estate not be divided
for a period not exceeding 10 years,
renewable for another 10 years. (NCC, Art.
494, par.2)
3. Prohibited by law.
4. To partition estate would render it
Unserviceable for use for which it was
intended.
NOTE: An estate can be partitioned inter vivos.
Such partition shall be respected, insofar as it
does not prejudice the legitime of compulsory
heirs. (See Art. 1080)
Effects of the Inclusion of an Intruder in
Partition
1. Between a true heir and several mistaken
heirs – partition is void.
2. Between several true heirs and a mistaken
heir – transmission to mistaken heir is void.
3. Through the error or mistake; share of true
heir is allotted to mistaken heir – partition
shall not be rescinded unless there is bad
faith or fraud on the part of the other
persons interested, but the latter shall be
proportionately obliged to pay the true heir
of his share.
In the partition of the estate, equality shall be
observed as far as possible, dividing the
property into lots, or assigning to each of the co-
heirs things of the same nature, quality and kind.
(NCC, Art. 1085)
Indivisible thing
Should a thing be indivisible, or would be much
impaired by its being divided, it may be
adjudicated to one of the heirs, provided he shall
pay the others the excess in case. Nevertheless, if
any of the heirs should demand that the thing be
sold at public auction and that strangers be
allowed to bid, this must be done. (NCC, Art.
1086)
Heir selling his hereditary rights to a
stranger
367
Should any of the heirs sell his hereditary rights
to a stranger before the partition, any or all of
the co-heirs may be subrogated to the rights of
the purchaser by reimbursing him for the price
of the sale, provided they do so within the period
of one (1) month from the time they were
notified in writing of the sale by the vendor.
(NCC, Art. 1088)
The right of an heir to convey his share vests
upon the decedent’s death. (Balane, 2016)
The right of redemption may be exercised only
before partition, not after. (Luz Caro v. Honorable
Court Of Appeals and Basilia Lahorra Vda. De
Benito, As Administratrix of the Intestate Estate of
Mario Benito, G.R. No. L-46001 March 25, 1982)
Rescission and Nullity of Partition
A partition may be rescinded or annulled for the
same causes as contracts. (NCC, Art. 1097) It may
also be rescinded on account of lesion, when any
one of the co-heirs received things whose value
is less, by at least 1/4, than the share to which he
is entitled, considering the value of the things at
the time they were adjudicated. (NCC, Art. 1098)
The partition made by the testator cannot be
impugned even on the ground of lesion, except :
1. when the legitimes of the compulsory heirs
are thereby prejudiced, or
2. when it appears or may reasonably be
presumed, that the intention of the testator
was otherwise. (NCC, Art. 1099)
Prescriptive Period
The action for rescission on account of lesion
shall prescribe after 4 years from the time the
partition was made. (NCC, Art. 1100)
 Obligations
OBLIGATIONS The following are the elements of an obligation
(JAPO):
GENERAL PRINCIPLES
1. Juridical tie or vinculum juris or efficient
cause - the efficient cause by virtue of which
An obligation is a juridical necessity to give, to
the debtor becomes bound to perform the
do, or not to do. (Art. 1156)
prestation. (Pineda, 2000)
It is a juridical relation or necessity that allows
NOTE: The vinculum juris is established by:
one person (creditor) to demand the observance
a. Law;
of determinative conduct (i.e. giving, doing, or
b. Bilateral acts;
not doing) from another (debtor), and in case of
c. Unilateral act. (Tolentino, 2002)
breach, the former can demand satisfaction from
the assets of the latter. (Makati Stock Exchange v.
2. Active subject [creditor (CR) or obligee] -
Campos, G.R. No. 138814, April 16, 2009)
The person demanding the performance of
the obligation. It is he in whose favor the
It is a juridical necessity because in case of non-
obligation is constituted, established, or
compliance, the courts of justice may be called
created. (Pineda, 2000)
upon by the aggrieved party to enforce its
fulfillment or, in default thereof, the economic
3. Passive subject [debtor (DR) or obligor] - The
value that it represents.
person bound to perform the prestation to
give, to do, or not to do. (Pineda, 2000)
Art. 1156 refers only to civil obligations that are
enforceable in court when breached. It does not
4. Object or prestation - The subject matter of
cover natural obligations (Arts. 1423 -1430)
the obligation which has a corresponding
because the latter are obligations that cannot be
economic value or susceptible of pecuniary
enforced in court on equity and natural law and
substitution in case of noncompliance. It is a
not on positive law. (Pineda, 2000)
conduct that may consist of giving, doing, or
not doing something. (Pineda, 2000)
When there is a right, there is a corresponding
obligation. Right is the active aspect while
NOTE: In order to be valid, the object or
obligation is the passive aspect. Thus, the
prestation must be:
concepts of credit and debt are two distinct
aspects of a unitary concept of obligation.
a. Licit or lawful;
(Pineda, 2000)
b. Possible, physically, & judicially;
c. Determinate or determinable; and
GR: The law does not require any form in
d. Pecuniary value or possible equivalent
obligations arising from contracts for their
in money.
validity or binding force. (Art. 1356)
The absence of any of the first three makes the
XPNs:
object void.
1. When the form is essential to the validity of
NOTE: Some writers add a fifth one: the form in
the contract as required by law. (Art. 1346)
which the obligation is manifested. This element,
2. When the contract is unenforceable. Unless
however, cannot be considered as essential.
it is in a certain form, such as those under
There is no particular form required to make
the Statute of Frauds as formulated in Art.
obligations binding, except in certain rare cases.
1403.
(Tolentino, 1991)
Obligations arising from other sources (i.e. Art.
1157) do not have any form at all. (De Leon, DIFFERENT KINDS OF PRESTATION
2010)
OBLIGATI OBLIGATI
OBLIGATI
ELEMENTS OF AN OBLIGATION BASIS ON TO ON NOT
ON TO DO
GIVE TO DO
As to Consists in Covers the Refraining
what the rendering from

UNIVERSITY OF SANTO TOMAS 368

2021 GOLDEN NOTES
 Civil Law
the delivery of of works doing NOTE : A bilateral obligation may be
obligati a thing to or certain reciprocal or non-reciprocal. Reciprocal
on the services, acts obligations arise from the same cause,
consists creditor whether wherein each party is a debtor and a
of physical creditor of the other, such that the
or mental performance of one is conditioned upon
Contract the simultaneous fulfillment of the
for Negative other.
Sale,
profession easement,
deposit,
al services restrainin 6. Existence of burden or condition
Exampl pledge,
like g order, or
es donation,
painting, injunction. a. Pure – not burdened with any condition
antichresi
modeling, (Pineda, or term. It is immediately demandable
s
singing, 2000) (Art. 1179);
etc. b. Conditional – subject to a condition
which may be suspensive (i.e.
CLASSIFICATION OF OBLIGATIONS satisfaction of the condition gives rise to
the obligation) or resolutory
From the viewpoint of: (satisfaction of the condition terminates
the obligation). (NCC. 1181)
1. Creation
7. Character of responsibility or liability
a. Legal – imposed by law (Art. 1158);
b. Conventional – established by the a. Joint – each debtor is liable only for a
agreement of the parties (e.g. part of the whole liability and to each
Contracts). creditor shall belong only a part of the
correlative rights (8 Manresa 194 ; NCC.
2. Nature 1207);
b. Solidary – debtor is answerable for the
whole of the obligation without
a. Personal – to do; not to do;
prejudice to his right to collect from his
b. Real – to give.
co-debtors the latter’s shares in the
obligation. (NCC. 1207)
3. Object
8. Susceptibility of partial fulfillment
a. Determinate / specific - particularly
designated or physically segregated
a. Divisible – obligation is susceptible of
from all others of the same class;
partial performance (NCC. 1223; and
b. Generic – designated merely by its class
1224);
or genus;
c. Limited generic – generic objects b. Indivisible – obligation is not susceptible
of partial performance. (NCC. 1225)
confined to a particular class or source
(e.g. an obligation to deliver one of my
horses). (Tolentino, 2002) 9. Right to choose and substitution

4. Performance a. Alternative – obligor may choose to

completely perform one out of the
several prestations
a. Positive - to give; to do;
(NCC. 1199);
b. Negative – not to do (ex. an obligation
b. Facultative – only one prestation has
not to run for an elective post).
been agreed upon, but the obligor may
render one in substitution of the first
5. Person obliged
one. (NCC. 1206)
a. Unilateral – only one party is bound;
10. Imposition of penalty
b. Bilateral – both parties are bound.

369
 Obligations
a. Simple – there is no penalty imposed for
violation of the terms (NCC. 1226);
b. Obligations with a penal clause –
obligation which imposes a penalty for
violation of the terms. (NCC. 1226;
Pineda, 2000)
11. Sanction
a. Civil – gives a right of action to compel
their performance;
b. Natural– not based on positive law, but
on equity and natural law; does not
grant a right of action to enforce their
performance, but after voluntary
fulfillment by the obligor, they authorize
retention of what has been delivered
rendered by reason thereof.
c. Moral – cannot be enforced by action
but are binding on the party who makes
it in conscience and natural law.
SOURCES OF OBLIGATIONS
1. Law;
2. Contracts;
2. Quasi-contracts;
3. Delict;
4. Quasi-delict.
This enumeration is exclusive. No obligation
exists if its source is not one of those
enumerated in Art.1157 of the NCC. (Navales v.
Rias, G.R. No. L-3489, September 7, 1907)
NOTE: Actually, there are only two sources (i.e.,
law and contracts) because obligations arising
from quasi-contracts, delicts, and quasi-delicts
are imposed by law. (Leung Ben v. O’Brien, 38
Phil. 182).
Time of perfection
GR:
1. Law – from the time designated by the law
creating or regulating them;
2. Contracts –from the time of the perfection of
the contract. (e.g., meeting of the minds)
XPNs:
a. When the parties made a stipulation on
the right of the creditor to the fruits of
the thing;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
b. When the obligation is subject to a
suspensive condition, from which it
arises upon fulfillment of the condition;
c. When the obligation is with a period;
there is already an existing obligation,
but it is only demandable when the
period expires or becomes due.
3. Quasi Contracts, delicts, quasi-delicts – from
the time designated by the law creating or
regulating them.
OBLIGATION EX LEGE
Obligations derived from law are not presumed.
Only those expressly determined in the Code or
in special laws are demandable and shall be
regulated by the precepts of the law that
establishes them and as to what has not been
foreseen by the provisions of Book IV of NCC.
(NCC, Art. 1158)
NOTE: If there is conflict between the NCC and a
special law, the latter prevails unless the
contrary has been expressly stipulated in the
NCC. (NCC, Art. 18; Paras, 2008)
Characteristics of a legal obligation
1. Does not need the consent of the obligor;
2. Must be expressly set forth in the law creating
it and not merely presumed; and
3. In order for the law to be a source of
obligation, it should be the creator of the
obligation itself. (NCC, Art. 1158)
Determining whether an obligation arises
from law or from some other source
1. Arises from law if it establishes obligation;
2. Arises from the act itself if the law merely
recognizes the existence of an obligation
generated by an act. (Manresa)
e.g.
1. According to Art. 2014 of the NCC, a loser in
a game of chance may recover his loss from
the winner, with legal interest from the time
he paid the amount lost (Leung Ben v.
O’Brien, G.R. No. L-13602, April 6, 1918);
2. The obligation of the spouses to support
each other;
3. The obligation of the employers under the
Worker’s Compensation Act;
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 Civil Law
4. The obligations of the owners of the
dominant and servient estates in legal
easements and others scattered in the NCC
and in special laws (Jurado, 2009);
5. The obligation to pay taxes. (Rabuya, 2017)
OBLIGATION EX CONTRACTU
Requisites of a contractual obligation
1. It must contain all the essential requisites of a
contract (NCC, Art. 1318); and
2. It must not be contrary to law, morals, good
customs, public order, and public policy.
(NCC, Art. 1306)
Rules governing the obligations arising from
contracts
GR: These obligations arising from contracts
shall be governed primarily by the stipulations,
clauses, terms, and conditions of the parties’
agreements.
XPN: Contracts with prestations that are
unconscionable or unreasonable. (Pineda, 2009)
Binding force of obligation ex contractu
Obligations arising from contracts have the force
of law between the parties and should be
complied with in good faith. (NCC, Art. 1159)
This is known as the “principle of obligatory
force of contracts.” (Rabuya, 2017)
Good faith is a performance in accordance with
the stipulation, clauses, terms, and conditions of
the contract. (Pineda, 2000)
GR: Neither party may unilaterally evade his
obligation in the contract.
XPNs: Unilateral evasion is allowed when the:
1. Contract authorizes such evasion; or
2. Other party assents thereto.
Q: FBDC entered into a Trade Contract with
MS Maxco Company, Inc. (MS Maxco) for the
execution of the structural and partial
architectural works of one of its
condominium projects. The Trade Contract
likewise provided that MS Maxco is
prohibited from assigning or transferring
any of its rights, obligations, or liabilities
under the said Contract without the written
consent of FBDC. FBDC received a letter from
371
Fong’s counsel, informing it that MS Maxco
had already assigned its receivables from
FBDC to him. Despite Fong’s repeated
requests, FBDC refused to deliver to Fong the
amount assigned by MS Maxco. Is FBDC
bound by the assignment between MS Maxco
and Fong?
A: NO. Obligations arising from contracts have
the force of law between the contracting parties
and should be complied with in good faith. The
Court finds that MS Maxco, as the Trade
Contractor, cannot assign or transfer any of its
rights, obligations, or liabilities under the Trade
Contract without the written consent of FBDC.
(Fort Bonifacio Development Corporation vs.
Valentin L. Fong, G.R. No. 209370, March 25,
2015)
Q: Metro Bottled Water and Andrada
Construction entered into a Construction
Agreement for the construction of a
reinforced concrete manufacturing plant in
Gateway Business Park, General Trias, Cavite
for the contract price of ₱45,570,237.90. The
Construction Agreement covered all
materials, labor, equipment, and tools,
including any other works required. It
provided: 8. Change Order Without
invalidating this Agreement, the OWNER
may, at any time, order additions, deletions,
or revisions in the Work by means of a
Change Order. The CONTRACTOR shall
determine whether the Change Order causes
a decrease or increase in the Purchase Price
or shortening or extension of the Contract
Period. Within three (3) days from receipt of
the Change Order, CONTRACTOR shall give
written notice to the OWNER of the value of
the works required under the Change Order,
increasing the Contract Price and the
extension in the Contract Period necessary to
complete such works.
On the other hand, if the Change Order
involves deletions of some works required in
the original Contract Documents, the value of
the works deleted shall be deducted from the
Contract Price and the Contract Period
shortened accordingly. In either case, any
addition or reduction in the Contract Price or
extension or shortening of the Contract
Period shall be mutually agreed in writing by
the OWNER and the CONTRACTOR prior to
the execution of the works covered by the
Change Order. The project was to be
 Obligations
completed within 150 calendar days or by
October 10, 1995, to be reckoned from
Andrada Construction's posting of a
Performance Bond to answer for liquidated
damages, costs to complete the project, and
third party claims. Is there Unjust
Enrichment?
A: NONE. Article 1724. The contractor who
undertakes to build a structure or any other
work for a stipulated price, in conformity with
plans and specifications agreed upon with the
land- owner, can neither withdraw from the
contract nor demand an increase in the price on
account of the higher cost of labor or materials,
save when there has been a change in the plans
and specifications, provided: (1) Such change
has been authorized by the proprietor in
writing; and (2) The additional price to be paid
to the contractor has been determined in writing
by both parties. It is settled that the contract is
the law between the parties. Without any
ambiguity in Item No. 8 of the Construction
Agreement, there was no need to resort to other
aids in interpretation, such as Article 1724 of the
Civil Code, to resolve the issue. (Metro Bottled
Water Corporation v. Andrada Construction &
Development Corporation, Inc., G.R. No. 202430,
MARCH 6, 2019, as penned by J. Leonen)
Q: In 1995, Metro Bottled Water and Andrada
Construction entered into a Construction
agreement to construct a reinforced concrete
manufacturing plant in Gateway Business
Park in Cavite for the contract price of
₱45,570,237.90. The project was to be
completed within 150 days or by October 10,
1995. On May 10, 1995, however, the Metro
Bottled Water extended the period of
completion to November 30, 1995, upon
Andrada Construction’s request, due to the
movement of 1 bay of the plant building,
weather conditions, and change orders. In
November 1995, Metro Bottled Water’s
consultant recommended the forfeiture of
the Andrada Construction’s performance
bond as well as liquidated damages for delay.
Andrada Construction opposed the claim for
lack of legal and factual basis. Soon after,
Andrada Construction sent letters to Metro
Bottled Water requesting for the payment of
unpaid work accomplishments. The latter
refused to pay. The CA upheld the findings of
the Arbitration Commission and ruled that
Andrada Construction was entitled to
compensation. Accordingly, to deny the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
payment would be to permit unjust
enrichment at Andrada Construction’s
expense. Is there unjust enrichment?
A: YES. Here, services were rendered for which
compensation was demanded. The contract
between the parties, however, inadequately
provides for the mechanism by which
compensation may be due. The fair and
expeditious resolution of the issue requires the
arbitral tribunal to instead apply equitable
principles to arrive at a just conclusion. (Metro
Bottled Water Corporation v. Andrada
Construction & Development Corporation, Inc.,
G.R. No. 202430, MARCH 6, 2019, as penned by J.
Leonen)
OBLIGATION EX QUASI – CONTRACT
Quasi-contract
A juridical relation arising from lawful,
voluntary, and unilateral acts based on the
principle that no one shall be unjustly enriched
or benefited at the expense of another. (NCC, Art.
2142)
Distinguished from “implied contracts”
An implied contract, in the proper sense, is a
contract which arises when the intention of the
parties is not expressed, but an agreement in
fact, creating an obligation, is implied or
presumed from their acts, or where there are
circumstances which show a mutual intent to
contract.
An implied contract requires consent, while a
quasi-contract, being a unilateral contract, does
not. The basis of an implied contract is the will of
the parties, while the basis of a quasi-contract is
law, to the end that there be no unjust
enrichment. (Rabuya, 2017)
Characteristics of a quasi-contract (LUV)
1. It must be Lawful;
2. It must be Unilateral; and
3. It must be Voluntary. (Pineda, 2000)
Presumptive consent
Since a quasi-contract is a unilateral contract
created by the sole act(s) of the gestor, there is
no express consent given by the other party. The
372
 Civil Law
consent needed in a contract is provided by law
through presumption. (Pineda, 2000)
Principal forms of quasi-contracts
1. Negotiorum gestio (inofficious manager) –
Arises when a person voluntarily takes charge of
the management of the business or property of
another without any power from the latter (NCC,
Art. 2144);
2. Solutio indebiti (unjust enrichment) – Takes
place when a person received something from
another, without any right to demand for it, and
the thing was unduly delivered to him through
mistake. (NCC, Art. 2154)
NOTE: The delivery must not be through
liberality or some other cause.
Solutio indebiti (SI) v. Accion in rem verso
(AIRV)
1. Mistake is an essential element in SI which is
not necessary for AIRV;
2. An AIRV is merely an auxiliary action,
available only when there is no other remedy on
contract, quasi-contract, crime, or quasi-delict.
(Rabuya, 2017)
Rule in case of excess of payment of interest
If the borrower pays interest when there has
been no stipulation therefor, the provisions of
the Code concerning solutio indebiti, or natural
obligations, shall be applied, as the case may be.
If the payment of interest is made out of mistake,
solutio indebiti applies; hence, the amount must
be returned to the debtor. If the payment was
made after the obligation to pay interest has
already prescribed, natural obligation applies;
hence, the creditor is authorized to retain the
amount paid.
Contract v. Quasi-contract
CONTRACT QUASI-CONTRACT
There is a meeting of
There is no consent,
the minds or consent;
but the same is
the parties must have
supplied by fiction of
deliberately entered
law to prevent
into a formal
injustice.
agreement.
373
*For further discussion on quasi-contracts, please
see the discussion of quasi-contracts on Credit
Transactions.
OBLIGATIONS EX DELICTO
Delict
An act or omission punishable under the law.
Basis
GR: Art. 100 of the RPC provides: “Every person
criminally liable for a felony is also civilly liable.”
XPNs: Crimes of treason, rebellion, espionage,
contempt, and others wherein no civil liability
arises on the part of the offender either because
there are no damages to be compensated or
there is no private person injured by the crime.
(Reyes, 2008)
Implied institution of the civil action in a
criminal case
GR: When a criminal action is instituted, the civil
action for the recovery of the civil liability
arising from the offense charged shall be
deemed instituted with the criminal action. (Sec.
1, Rule 111, Rules of Court)
XPNs: When the offended party:
1. Waives the civil action;
2. Reserves the right to institute it separately;
and
3. Institutes the civil action prior to the
criminal action. (Rule 111, Sec. 1, Rules of
Court)
Scope of civil liability (IRR)
1. Restitution;
2. Reparation for damage caused; and
3. Indemnity for consequential damages. (Art.
104, RPC)
Acquittal in criminal case
GR: The acquittal of the accused in criminal case
on the ground of reasonable doubt does not
preclude the filing of a subsequent civil action,
and only preponderance of evidence is required
to prove the latter.
XPNs: When the acquittal is on the basis that:
 Obligations
1. The accused did not commit the crime
charged; or
2. There is a declaration in the decision of
acquittal that no negligence can be
attributed to the accused, and that the fact
from which the civil action might arise did
not exist. (NCC, Art. 29)
Q: Petitioner was charged with estafa.
Respondent averred that on February 20,
1996, she entrusted merchandise worth
P35,300.00 to petitioner as evidenced by an
acknowledgment receipt. However,
petitioner was only able to remit the amount
of P3,300.00 and thereafter, failed to make
further remittances and ignored
respondent's demands to remit the proceeds
or return the goods. As a defense, petitioner
admitted having previous business dealings
with respondent not as an agent but as a
client who used to buy purchase order cards
(POCs) and gift checks (GCs) from
respondent on installment basis.
The RTC acquitted petitioner of the charge
of estafa but held her civilly liable to pay
respondent the amount of P32,000.00, with
interest from the filing of the Information on
March 11, 1999 until fully paid, and to pay
the costs. The RTC convicted the petitioner
holding him civilly liable, "having admitted
that she received the [GCs] in the amount of
P32,000.00." In this relation, it further
considered the relationship of respondent
and petitioner as in the nature of a principal-
agent, which renders the agent civilly liable
only for damages which the principal may
suffer due to the non-performance of his duty
under the agency. CA upheld the petitioner's
civil liability. Should the petitioner be held
civilly liable? If yes, what is the rate of
interest?
A: YES. Respondent was able to prove by
preponderance of evidence the fact of the
transaction, as well as petitioner's failure to
remit the proceeds of the sale of the
merchandise worth P32,000.00, or to return the
same to the respondent in case such
merchandise was not sold. This was established
by presenting the acknowledgment
receipt which, as the document's name connotes,
shows that petitioner acknowledged receipt
from respondent of the listed items with their
corresponding values, and assumed that the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
obligation to return the same on March 20, 1996
if not sold.
With the amendment introduced by the Bangko
Sentral ng Pilipinas Monetary Board in BSP-MB
Circular No. 799, series of 2013, there is a need
to partially modify the same in that the interest
accruing from the time of the finality of this
Decision should be imposed at the lower rate of
six percent (6%) p.a., and not twelve percent
(12%) p.a. as imposed by the CA. (Dolores Diaz v.
People, GR No. 208113, December 2, 2015)
OBLIGATIONS EX QUASI – DELICTO
Quasi-delict or tort
An act or omission arising from fault or
negligence which causes damage to another,
there being no pre-existing contractual relations
between the parties. (NCC, Art. 2176)
NOTE: A single act or omission may give rise to
two or more causes of action. Thus, an act or
omission may give rise to an action based on
delict, quasi-delict, or contract.
In negligence cases, prior conduct should be
examined, that is, conduct prior to the injury that
resulted, or in the proper case, the aggravation
thereof.
Elements of a quasi-delict
1. Negligent or wrongful act or omission;
2. Damage or injury caused to another;
3. Causal relation between such negligence or
fault and damage; and
4. No pre-existing contractual relationship
between the parties. (NCC, Art. 2176)
Instances when Art. 2176 is inapplicable
1. When there was a pre-existing contractual
relation because the breach of contract is the
source of the obligation (Robles v. Yap Wing,
41 SCRA 267, G.R. No. L-20442, October 4,
1971);
NOTE: However, if the act that breaches the
contract is tortuous, the pre-existing
contractual relation will not bar the
recovery of damages (Singson v. BPI, G.R. No.
L-24837, June 27, 1968);
374
 Civil Law
2. When the fault or negligence is punished by criminal responsibility in negligence cases, the
law as a crime, Art. 100 of RPC shall be offended party has the option between an action
applicable; for enforcement of civil liability based on culpa
criminal under Art. 100 of the RPC and an action
3. If the action for quasi-delict is instituted for recovery of damages based on culpa
after four years, it is deemed prescribed aquiliana under NCC, Art. 2177.
(Afialda v. Hisole, G.R. No. L-2075, November
29, 1949); NATURE AND EFFECTS OF OBLIGATIONS

4. When the injury suffered by a person is the Types of real obligations

result of a fortuitous event without human
intervention; 1. Determinate/specific – Particularly
designated or physically segregated from all
5. If there is no damage or injury caused to others of the same class;
another. (Walter A. Smith & Co., Inc. v. 2. Indeterminate/Generic – Is designated
Cadwallader Gibson Lumber Company, G.R. merely by its class or genus;
No. L-32640, December 29, 1930) 3. Delimited generic – Generic objects confined
to a particular class (e.g., An obligation to
Delict v.Quasi-delict deliver one of my horses). (Tolentino, 2002)

BASIS QUASI- Obligations of a debtor in an obligation to

DELICT deliver
DELICT

Presence of The obligations of the debtor (in an obligation to

criminal or deliver) depends upon the kind thing involved:
As to the kind
malicious Only
of intent
intent or negligence BASIS SPECIFIC GENERIC
present
criminal Deliver the
negligence. thing which is
neither of
As to the
superior nor
whether Deliver the
Concerned Concerned What the inferior quality,
private or thing agreed
with public with private obligation if quality and
public upon. (NCC, Art.
interest. interest. consists of circumstances
interest is 1165)
have not been
concerned
stated by the
Generally, the parties.
act or (NCC, Art. 1246)
The act or Take care of the
As to the kind omission gives
omission gives thing with the
of liability rise to two
rise only to proper
arises liabilities:
civil liability. diligence of a If the object is
criminal and
civil liability. good father of a generic, but the
Required family unless source is
Criminal diligence the law specified or
As to The civil
liability is not to be requires or delimited, the
availability of liability can be
subject to a observed parties obligation is to
a compromise compromised.
compromise. stipulate preserve the
another source.
Guilt must be standard of
As to the Guilt may be
proved care. (NCC, Art.
quantum of proved by
beyond 1163)
evidence is preponderance
reasonable
required of evidence. What Deliver all Delivery of
doubt. delivery accessions, another thing
comprises accessories, and within the same
NOTE: In as much as civil liability co-exists with of fruits of the genus as the

375
 Obligations
thing even thing promised, Right of the creditor to the fruits
though they if such thing is
may not have damaged due to The creditor has a right to the fruits of the thing
been lack of care or a from the time the obligation to deliver it arises.
mentioned. general breach However, he shall acquire no real right over it
(NCC, Art. 1166) is committed. until the same has been delivered to him. (NCC,
Pay damages in Pay damages in Art. 1164)
case of breach case of breach
of obligation by of obligation by SOURCE OF WHEN OBLIGATION
reason of delay, reason of delay, OBLIGATION ARISES
Effect of
fraud, fraud, Law, quasi-delict, Based on specific
breach of
negligence, negligence, quasi-contract, or provisions of applicable
obligation
contravention contravention crime. law.
of the tenor of the tenor Subject to a
thereof. (NCC, thereof. (NCC, From the happening of
suspensive
Art. 1170) Art. 1170) the condition.
condition.
Obligation is Subject to a From the constitution,
not suspensive creation or perfection of
Fortuitous
Effect of extinguished term/period. obligation.
event
fortuitous (genus From the constitution,
extinguishes
event nunquam peruit Pure creation or perfection of
the obligation.
– genus never the obligation.
perishes).
Nature of the right of the creditor with
Remedies of the creditor in case of failure to respect to fruits
deliver the thing due
1. Before delivery – Personal right;
The following are the remedies of the creditor in 2. After delivery – Real right.
case of failure to deliver the thing due. (Pineda,
2000) Personal right vs. Real right

SPECIFIC GENERIC PERSONAL RIGHT REAL RIGHT

Specific performance The right or power of a The right or interest of
Specific (delivery of anything person (creditor) to a person over a
performance belonging to the same demand from another specific thing (i.e.
species) (debtor), as a definite ownership,
Ask that the obligation be passive subject, the possession, mortgage),
Rescission (action
complied with at the fulfillment of the without a definite
to rescind under
debtor’s expense with a latter’s obligation to subject against whom
NCC, Art. 1380)
right to recover damages. give, to do, or not to the right may be
Resolution (action Resolution or specific do. personally enforced.
for cancellation performance, with There is a definite
There is only a definite
under damages in either case active subject and a
active subject without
NCC, Art. 1191) (NCC, Art. 1191) definite passive
any passive subject.
Damages, in both cases (NCC, Art. 1170) subject.
Binding and
NOTE: May be exclusive or in addition to the enforceable only Directed against the
above-mentioned remedies against a particular whole world.
person.
NOTE: In an obligation to deliver a specific thing,
the creditor has the right to demand the Principle of “balancing of equities” in actions
preservation of the thing, accessions, for specific performance
accessories, and fruits. The creditor is entitled to
the fruits and interests from the time the In decreeing specific performance, equity
obligation to deliver the thing arises. requires not only that the contract be just and
equitable in its provisions, but that the

UNIVERSITY OF SANTO TOMAS 376

2021 GOLDEN NOTES
 Civil Law
consequences of specific performance likewise
be just and equitable. The general rule is that
this equitable relief will not be granted if, under
the circumstances of the case, the result of the
specific performance of the contract would be
harsh, inequitable, and oppressive or result in an
unconscionable advantage to the plaintiff.
(Agcaoili v. GSIS, G.R. No. 30056, August 30, 1988)
Types of personal obligations
1. Positive - To do;
2. Negative - Not to do.
Remedies in personal obligations
1. Positive personal obligations
a. Not purely personal act – To have
obligation executed at debtor's expense
plus damages;
b. Purely personal act - Damages only.
When positive personal obligations
considered breached:
a. If the debtor fails to perform the
obligation; or
b. Even in the case of performance
but the same is done either in a
poor manner or in contravention of
the tenor of the obligation. (NCC,
Art. 1167)
2. Negative personal obligation – To have the
prohibited thing undone at the expense of
the debtor plus damages. However, if thing
cannot be physically or legally undone, only
damages may be demanded. (8 Manresa 58)
Specific performance is not a remedy in
positive personal obligations
If specific performance is allowed, it will amount
to involuntary servitude, which is prohibited by
the Constitution. (Pineda, 2000)
BREACHES OF OBLIGATIONS
Degree of diligence required
1. That agreed upon;
2. In the absence of such, that which is
required by the law;
377
3. GR: In the absence of the foregoing,
diligence of a good father of a family
XPNs:
a. Common carriers requiring
extraordinary diligence (NCC, Arts.
1998-2002);
b. Banks require the highest degree of
deligence, being imbued with public
interest.
Q: Great Harvest hired Tan to transport 430
bags of soya beans from Tacoma to Selecta
Feeds. At Selecta Feeds, however, the
shipment was rejected. The truck and its
shipment never reached Great Harvest's
warehouse. Great Harvest asked Tan about
the missing delivery but to no avail. Is Anita
Tan liable for the lost bags of soya beans?
A: YES, Annie Tan should be liable. Common
carriers are mandated to internalize or shoulder
the costs under the contracts of carriage. This is
so because a contract of carriage is structured so
that passengers or shippers surrender total
control over their persons or goods to common
carriers, fully trusting that the latter will safely
and timely deliver them to their destination.
Here, the petitioner is a common carrier
obligated to exercise extraordinary diligence over
the goods entrusted to her. Her responsibility
began from the time she received the soya beans
from the respondent's broker and would only
cease after she has delivered them to the
consignee or any person with the right to receive
them. (Annie Tan v. Great Harvest Enterprises, Inc.,
G.R. No. 220400, March 20, 2019, as penned By J.
Leonen)
Q: Eliza is a condo unit owner and delivered a
check to Sison, who will be paying in behalf
of Eliza, however, Sison did not receive the
package. Later, it was found out that the
check was delivered to Sison’s neighbor, but
there was no signed receipt. Hence, Eliza sent
a demand letter to FedEx, the delivery
courier, for payment of damages since the
check was supposed to be used to pay the
balance for the condo unit, which was
foreclosed since it was unpaid. FedEx
refused, and thus Eliza filed a complaint for
damages with the Regional Trial Court.
Is FedEx liable?
 Obligations
A: YES. The Civil Code mandates common
carriers to observe extraordinary diligence in
caring for the goods they are transporting.
Common carriers must ascertain the identity of
the recipient. Failing to deliver shipment to the
designated recipient amounts to a failure to
deliver. The shipment shall then be considered
lost, and liability for this loss ensues. FedEx is
unable to prove that it exercised extraordinary
diligence in ensuring delivery of the package to
its designated consignee. It claimed to have
made a delivery but it even admits that it was
not to the designated consignee. (Federal Express
Corporation v. Luwalhati R. Antonino and Eliza
Bettina Ricasa Antonino, G.R. No. 199455, June 27,
2018, as penned by J. Leonen)
Q: Lorenzo Musni filed before the Regional
Trial Court of Tarlac City a complaint for
reconveyance of land and cancellation of TCT
No. 333352 against Spouses Nenita Sonza
Santos and Ireneo Santos, Eduardo Sonza,
and Land Bank of the Philippines. Musni
alleged that Nenita Sonza Santos falsified a
Deed of Sale, and caused the transfer of title
of the lot in her and her brother Eduardo's
names. He claimed that the Spouses Santos
and Eduardo mortgaged the lot to Land Bank
as security for their loan. Musni said that he
was dispossessed of the lot when Land Bank
foreclosed the property upon Nenita and
Eduardo's failure to pay their loan. Musni
also claimed that Nenita and Eduardo were
convicted for falsification of a public
document which he filed against them before
the MTC of Tarlac.
In defense, the Spouses Santos alleged that
they, together with Eduardo, ran a lending
business. As security for their loan, Musni
and his wife executed a Deed of Sale over the
lot in favor of the Spouses Santos. The title of
the lot was then transferred to Nenita and
Eduardo. The lot was then mortgaged to Land
Bank, and was foreclosed later. Land Bank
countered that its transaction with the
Spouses Santos and Eduardo was legitimate,
and that it verified the authenticity of the
title with the Register of Deeds. Further, the
bank loan was secured by another lot owned
by the Spouses Santos, and not solely by the
lot being claimed by Musni. Is Land Bank a
mortgagee in good faith and an innocent
purchaser for value?
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A: NO. Land Bank is neither a mortgagee in good
faith nor an innocent purchaser for value. Land
Bank's defense that it could not have known the
criminal action since it was not a party to the
case and that there was no notice of lis
pendens filed by Musni, is unavailing. The rule on
"innocent purchasers or mortgagees for value" is
applied more strictly when the purchaser or the
mortgagee is a bank. Banks are expected to
exercise higher degree of diligence in their
dealings, including those involving lands. Banks
may not rely simply on the face of the certificate
of title. Had Land Bank exercised the degree of
diligence required of banks, it would have
ascertained the ownership of one of the
properties mortgaged to it. (Land Bank of the
Philippines vs. Lorenzo Musni, G.R. No. 206343,
February 22, 2017, as penned by J. Leonen)
Diligence of a good father of a family
That reasonable diligence which an ordinary
prudent person would have done under the
same circumstances.
Forms of breach of obligations
1. Voluntary – Debtor is liable for damages if
he is guilty of:
a. Default (mora)
b. Fraud (dolo)
c. Negligence (culpa)
d. Breach through contravention of the
tenor thereof. (NCC, Art. 1170)
2. Involuntary – Debtor is unable to perform
the obligation due to fortuitous event, thus
not liable for damages.
Effects of breach of obligation
If a person obliged to do something fails to do it,
or if he does it in contravention of the tenor of
the obligation or it is poorly done, the same shall
be undone at his expense. (NCC, Art. 1167)
When the obligation consists in not doing, and
the obligor does what has been forbidden him, it
shall also be undone at his expense. (NCC,
Art.1168)
Instances where the remedy under Art. 1168
is not available
378
 Civil Law
1. Where the effects of the act which is
forbidden are definite in character – Even if it
is possible for the creditor to ask that the act
be undone at the expense of the debtor,
consequences contrary to the object of the
obligation will have been produced which
are permanent in character.
2. Where it would be physically or legally
impossible to undo what has been undone –
Because of:
1. The very nature of the act itself;
2. A provision of law; or
3. Conflicting rights of third persons.
NOTE: In either case, the remedy is to seek
recovery for damages. (NCC, Art. 1168)
DELAY (MORA) OR DEBTOR’S DEFAULT
Those obliged to deliver or to do something
incur in delay from the time the obligee
(creditor) judicially or extrajudicially demands
from them the fulfillment of their obligation.
In reciprocal obligations, neither party incurs in
delay if the other does not comply or is not
ready to comply in a proper manner with what is
incumbent upon him. From the moment one of
the parties fulfills his obligations, delay by the
other begins. (NCC, Art. 1169)
Kinds of delay
1. Ordinary delay – This is the mere failure to
perform an obligation at the stipulated time.
2. Extraordinary delay or legal delay – This
delay already equates to non-fulfillment of
the obligation and arises after the
extrajudicial or judicial demand has been
made upon the debtor. (Pineda, 2000)
Kinds of legal delay or default
1 Mora solvendi – Default on the part of the
debtor/obligor
Ex re – Default in real
obligations (to give);
Ex personae – Default in
personal obligations (to do);
2. Mora accipiendi – Default on the part of the
creditor/oblige;
379
Compensatio morae – Default on the part
of both the debtor and creditor in reciprocal
obligations.
Causes of cessation of the effects of mora
1. Renunciation (express/implied); or
2. Prescription.
Q: American Express Card (AMEX) failed to
approve Pantaleon’s credit card purchases,
which urged the latter to commence a
complaint for moral and exemplary damages
against AMEX. He said that he and his family
experienced inconvenience and humiliation
due to the delays in credit authorization
during his vacation trip in Amsterdam and in
the United States. Did AMEX commit a breach
of its obligations to Pantaleon?
A: YES. Generally, the relationship between a
credit card provider and its cardholders is that
of creditor-debtor, with the card company as the
creditor extending loans and credit to the
cardholder, who as debtor is obliged to repay
the creditor. One hour appears to be patently
unreasonable length of time to approve or
disapprove a credit card purchase. The culpable
failure of AMEX herein is not the failure to timely
approve petitioner’s purchase, but the more
elemental failure to timely act on the same,
whether favorably or unfavorably. (Pantaleon v.
American Express International, Inc., G.R. No.
174269, May 8, 2009)
Elements of default
Q: Gotesco obtained from Solidbank a term
loan of ₱300 million. To secure the loan,
Gotesco was required to execute a Mortgage
Trust Indenture naming Solidbank-Trust
Division as Trustee. The Indenture obliged
Gotesco to mortgage several parcels of land
in favor of Solidbank. When the loan was
about to mature, Gotesco found it difficult to
meet its obligation because of the 1997 Asian
Financial Crisis. Solidbank sent a demand
letter to Gotesco as the loan became due.
Despite having received this demand letter,
Gotesco failed to pay the outstanding
obligation. Solidbank then filed a Petition for
the Extrajudicial Foreclosure of the lot.
Gotesco filed a complaint before the RTC for
Annulment of Foreclosure Proceedings,
Specific Performance, and Damages against
Solidbank. Gotesco assailed the validity of
 Obligations
the foreclosure proceeding, claiming that it
was premature and without legal basis. Was
the foreclosure premature?
A: NO. Petitioner defaulted in its obligation.
Thus, respondent was within its rights to
foreclose the property. Under the Civil Code,
there is default when a party obliged to deliver
something fails to do so. In Social Security System
v. Moonwalk Development & Housing Corp. this
Court enumerated the elements of default:
In order that the debtor may be in default, it is
necessary that the following requisites be
present: (1) that the obligation be demandable
and already liquidated; (2) that the debtor
delays performance; and (3) that the creditor
requires the performance judicially and
extrajudicially. Default generally begins from the
moment the creditor demands the performance
of the obligation. (Gotesco Properties, Inc. v. Solid
Bank Corporation (Now Metropolitan Bank And
Trust Company), G.R. No. 209452, July 26, 2017,
as penned by J. Leonen)
MORA SOLVENDI
Requisites (PDF-MJ)
1. Obligation Pertains to the debtor;
2. Obligation is Determinate, due and
demandable, and liquidated;
3. Obligation has not been performed on its
Maturity date;
4. There is Judicial or extrajudicial demand by
the creditor; and
5. Failure of the debtor to comply with such
demand.
Non-applicability of mora solvendi
Mora solvendi does not apply in natural
obligations because performance is optional or
voluntary on the debtor’s part. One can never be
late in not giving or doing something.
Instances when demand by the creditor is
not necessary in order that delay may exist
GR: No demand = no default. (NCC, Art. 1169 par.
2)
XPNs: Demand by the creditor shall not be
necessary in order that delay may exist when:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. The obligation or the law expressly so
declares; or
2. From the nature and the circumstances of
the obligation it appears that, the
designation of time when the thing is to be
delivered or the service is to be rendered,
was a controlling motive for the
establishment of the contract; or
3. Demand would be useless, as when the
obligor has rendered it beyond his power to
perform. (Art. 1169 par. 2)
Q: “A” borrowed P2,000 from “B” on
December 1, 1956. He executed a promissory
note promising to pay the indebtedness on
December 1, 1958. Upon the arrival of the
designated date for payment, is demand
necessary in order that “A” shall incur delay?
A: YES. For the first exception provided for in
Art. 1169 of the NCC to apply, it is indispensable
that the obligation or the law should expressly
add that the obligor shall incur delay if he fails to
fulfill the obligation upon the arrival of the
designated date or that upon the arrival of such
date, demand shall not be necessary. (Bayla, et
al. v. Silang Traffic Co., G.R. Nos. L-48195 and
48196, May 1, 1942)
Effects of mora solvendi
1. Debtor may be liable for damages (NCC, Art.
1155) or interests;
NOTE: The interest begins to run from the
filing of the complaint when there is no
extrajudicial demand.
2. When the obligation has for its object a
determinate thing, the debtor may bear the
risk of loss of the thing even if the loss is due
to fortuitous event; and
3. Rescission or resolution.
Debtor’s liability may be mitigated even if he
is guilty of delay
If the debtor can prove that loss would
nevertheless transpire even if he had not been in
default, the court may equitably mitigate his
liability. [NCC, Art. 2215(4); Pineda, 2000]
If the debtor can prove that loss would
nevertheless transpire even if he had not been in
380
 Civil Law
default, the court may equitably mitigate his
liability. (NCC, Art. 2215 par. 4; Pineda, 2000)
MORA ACCIPIENDI
Requisites
1. Offer of Performance by a capacitated
debtor;
2. Offer must be to Comply with the prestation
as it should be performed; and
3. Refusal of the creditor without just cause.
(Pantaleon v. Amex, supra)
Effects of mora accipiendi
1. Responsibility of debtor is limited to fraud
and gross negligence;
2. Debtor is exempted from risk of loss of
thing; creditor bears risk of loss;
3. Expenses by debtor for preservation of thing
after delay is chargeable to creditor;
4. If the obligation bears interest, debtor does
not have to pay it from time of delay;
5. Creditor liable for damages; and
6. Debtor may relieve himself of obligation by
consigning the thing.
COMPENSATIO MORAE
Reciprocal obligations
Reciprocal obligations are those which arise
from the same cause, wherein each party is a
debtor and a creditor of the other, such that
performance of one is conditioned upon the
simultaneous fulfillment of the other from the
moment one of the parties fulfills his obligation,
delay by the other party begins. (ASJ Corporation
v. Evangelista, G.R. No. 158086, February 14,
2008)
Q: Camp John Hay Development entered into
a Contractor's Agreement with Charter
Chemical. Although the Contractor's
Agreement contained no date of the units'
turnover, it allowed Charter Chemical to
choose the units for offsetting under an
offsetting scheme against the 2 Units chosen
by Charter Chemical.
The contract price was P13,239,734.16, for
which Camp John Hay Development paid
P7,339,734.16. The balance of P5,900,000.00
was ought to be settled by offsetting the price
of the two (2) studio units. Camp John Hay
381
Development had initially estimated that the
construction would be completed by 2006.
Because of its failure to follow this timetable,
the Camp John Hay Suites was estimated to
be completed by 2012.
Due to the subsisting construction delay,
Charter Chemical, through counsel, wrote
Camp John Hay Development, demanding
that it transfer the units or pay the value of
these units in the sum of P6,996,517.48.
Charter Chemical filed before the
Construction Industry Arbitration
Commission a Request for Arbitration. The
arbitral tribunal ruled that Charter Chemical
was entitled to its claim for the value of the
two (2) units because Camp John Hay
Development failed to deliver the units
within the targeted completion date. Is the
remedy of rescission proper?
A: YES. Rescission on account of breach of
reciprocal obligations is provided under Article
1191 of the Civil Code. The injured party may
choose between the fulfillment and the
rescission of the obligation, with the payment of
damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if
the latter should become impossible. (Camp John
Hay Development Corporation v. Charter
Chemical and Coating Corporation, G.R. No.
19884, August 07, 2019, as penned by J. Leonen)
Q: On May 16, 1998, Wellex and U-Land
entered into a Memorandum of Agreement
(First Memorandum of Agreement) to
expand their respective airline operations in
Asia. The First Memorandum of Agreement
stated that within 40 days from its execution
date, Wellex and U-Land would execute a
share purchase agreement covering U-Land’s
acquisition of the shares of stock of both
APIC (APIC shares) and PEC (PEC shares).
In this share purchase agreement, U-Land
would purchase from Wellex its APIC shares
and PEC shares. Both parties agreed that the
purchase price of APIC shares and PEC shares
would be paid upon the execution of the
share purchase agreement and Wellex’s
delivery of the stock certificates covering the
shares of stock. The transfer of APIC shares
and PEC shares to U-Land was conditioned on
the full remittance of the final purchase price
as reflected in the share purchase agreement.
 Obligations
Further, the transfer was conditioned on the Airlines, Co., Ltd., G.R. No. 167519, January 14,
approval of the Securities and Exchange 2015, as penned by J. Leonen)
Commission of the issuance of the shares of
stock, and the approval by the Taiwanese Delay in reciprocal obligations
government of U-Land’s acquisition of these
shares of stock. Wellex and U-Land agreed One party incurs in delay from the moment the
that if they were unable to agree on the other party fulfills his obligation, while he,
terms of the share purchase agreement and himself does not comply or is not ready to
the joint development agreement within 40 comply in a proper manner with what is
days from signing, then the First incumbent upon him.
Memorandum of Agreement would cease to
be effective. Demand is only necessary in order for a party to
incur delay when the respective obligations are
The 40-day period lapsed on June 25, 1998. to be performed on separate dates.
Wellex and U-Land were unable to enter into
any share purchase agreement although Effect of non-compliance of both parties in
drafts were exchanged between the two. reciprocal obligations
Whether or not the rescission of the First
Memorandum of Agreement can be subject of If neither party complies with his prestation, the
rescission? default of one compensates for the default of the
other.
A: YES, Respondent U-Land is praying for the
rescission or resolution under Article 1191 Rules on compensatio morae
and not rescission under Art. 1381. The failure
of one of the parties to comply with the UNILATERAL RECIPROCAL
reciprocal obligation allows the wronged OBLIGATIONS OBLIGATIONS
party to seek the remedy of Article 1191. The Default or delay
wronged party is entitled to rescission under begins from
Article 1191 and even the payment of Delay by the
extrajudicial or
damages. It is a principal action precisely other party
Time judicial demand –
because it is a violation of the original begins from the
of mere expiration of
prestation. moment one of
delay the period fixed is
the parties fulfills
Article 1381 and Article 1383 pertains to not enough in order
his obligation.
rescission where creditors or even 3rd persons that debtor may
not privy to the contract can file an action due incur delay.
to lesion or damage as a result of the contract. a) The obligation or
the law expressly
Rescission or resolution under Art. 1191, so dictates;
therefore, is a principal action due to lesion or b) Time is of the
damage as a result of the contract, and it is a essence;
principal action that is immediately available When different
c) Demand would
to the party at the time that the reciprocal dates for the
be useless, as
prestation was breached. Article 1383 XPNs performance of
debtor has
mandating that rescission be deemed a obligation is fixed
rendered it beyond
subsidiary action cannot be applicable to by the parties.
his power to
rescission or resolution under Article 1191. perform; or
Thus, respondent U-Land correctly sought the d) Debtor has
principal relief of rescission or resolution acknowledged that
under Article 1191. The obligations of the he is in default.
parties gave rise to reciprocal prestations,
which arose from the same cause: the desire of FRAUD (Deceit or Dolo)
both parties to enter into a share purchase
agreement that would allow both parties to It is an intentional evasion of the faithful
expand their respective airline operations in performance of the obligation. (8 Manresa 72)
the Philippines and other neighboring
countries. (The Wellex Group, Inc. v. U-Land Kinds of fraud

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 Civil Law
FRAUD IN It is incidental fraud or fraud in the performance
THE FRAUD IN THE of the obligation and not the fraud in the
BASIS
PERFORMANC PERFECTION execution of the contract or causal fraud. It is the
E intentional evasion of the normal fulfillment of
It occurs after the obligation. (Pineda, 2000)
the valid
execution of It occurs before Waiver of action arising from future fraud
Time of the contract. It or simultaneous
occurrenc is employed in with the creation With respect to fraud that has already been
e the or perfection of committed (past fraud), the law does not
performance of the obligation. prohibit renunciation of the action for damages
a pre-existing based on the same since such can be deemed an
obligation. act of generosity. What is renounced is the effect
Consent is of fraud, particularly the right to indemnity.
vitiated by
Consent is free
serious However, the law prohibits any waiver of an
Consent and not
deception or action for future fraud since the same is contrary
vitiated.
misrepresentatio to law and public policy. Waiver for future fraud
n. is void. (NCC, Art. 1171)
It is not a
It is a ground for
ground for Remedies of the defrauded party
Effect annulment of the
annulment of
contract.
the contract. 1. Specific performance (NCC, Art. 1233); or
Action for 2. Resolution of the contract (Art. 1191); and
Action for 3. Damages, in either case.
Remedy annulment with
damages only.
damages.
CULPA OR NEGLIGENCE
Dolo causante vs. Dolo incidente
The fault or negligence of the obligor consists of
DOLO the omission of that diligence which is required
DOLO INCIDENTE
CAUSANTE by the nature of the obligation, and corresponds
BASIS (INCIDENTAL
(CAUSAL with the circumstances of the persons, of the
FRAUD)
FRAUD) time and the place.
This is the This is the kind of
essential fraud that is not the When negligence shows bad faith, the provisions
cause of the efficient cause for of Art. 1171 and 2201, paragraph 2, shall apply.
consent, the giving of consent If the law or contract does not state the diligence
without to the contract, as it which is to be observed in the performance, that
which the refers merely to an which expected of a good father of a family shall
Nature party would incident therein and, be required. (NCC, Art. 1173)
not have which even if not
agreed to present, the Test of negligence
enter into the contracting party
contract. would have still Did the defendant in doing the alleged negligent
(NCC, Art. agreed to the act use the reasonable care and caution which an
1338) contract. ordinarily prudent person would have used in
It renders the It does not affect the the same situation? If not, then he is guilty of
Effect contract validity of the negligence. (Picart v. Smith, G.R. No. L-12219,
voidable. contract. March 15, 1918)
Contract remains
Annulment valid. The Remedy is Fraud vs. Negligence
Remedy
with damages. a claim for damages
only. BASIS FRAUD NEGLIGENCE
As to the There is There is no
Fraud as mentioned in Art. 1171 intention to deliberate deliberate
cause intention to intention to cause

383
 Obligations
damage cause damage or injury resulted in damage to both vehicles, the
damage. even if the act was subsequent death of the truck driver,
done voluntarily. Amancio Asumbrado, and serious physical
As to the Liability injuries to bus driver Salvaña.
Liability may be
mitigation cannot be
mitigated.
of liability mitigated. A complaint for quasi-delict was filed against
GR: Waiver for Salvaña for negligently driving the bus
future negligence causing it to collide with the dump truck.
may be allowed in Respondents denied liability, claiming that
certain cases. prior to the collision, the bus was running
As to the out of control because of a problem in the
Waiver for steering wheel system, which could not have
waiver of XPN: Nature of the
future fraud been avoided despite their maintenance
future obligation or
is void. efforts. Instead, they claimed that
fraud public policy
requires Asumbrado had the last clear chance to avoid
extraordinary the collision had he not driven the dump
diligence. (e.g. truck at a very fast speed. Was Salvaña
common carrier). grossly negligent?

NOTE: When negligence is so gross that it
amounts to wanton attitude on the part of the
debtor or such negligence shows bad faith, the
laws in case of fraud shall apply.
Effect of good faith or bad faith of the obligor
If the obligor acted in good faith, he is
responsible for the natural and probable
consequences of the breach of contract and
which the parties have reasonably foreseen at
the time of the constitution of the obligation.
If the obligor is guilty of fraud, bad faith, malice
or wanton attitude, he shall be responsible for
all damages which may be reasonably attributed
to the non-performance of the obligation.
Contributory negligence of the creditor
GR: It reduces or mitigates the damages which
he can recover.
XPN: If the negligent act or omission of the
creditor is the proximate cause of the event,
which led to the damage or injury complained of,
he cannot recover.
Q: Wenifredo Salvaña was driving the bus
owned by Bachelor Express, Inc./Ceres Liner,
Inc. along the national highway when he
overtook a PUJ jeepney while negotiating a
blind curve in a descending road causing him
to intrude into the opposite lane and bump
the 10-wheeler Hino dump truck of
petitioner Cresencio Baño running uphill
from the opposite direction. The collision
A: YES. When bus driver Salvaña overtook the
jeepney in front of him, he was rounding a blind
curve along a descending road. Considering the
road condition and that there was only one lane
on each side of the center line for the movement
of traffic in opposite directions, it would have
been more prudent for him to confine his bus to
its proper place. Having thus encroached on the
opposite lane in the process of overtaking the
jeepney, without ascertaining that it was clear of
oncoming traffic that resulted in the collision
with the approaching dump truck driven by
deceased Asumbrado, Salvaña was grossly
negligent in driving his bus. He was remiss in his
duty to determine that the road was clear and
not to proceed if he could not do so in safety.
(Cresencio Baño v. Bachelor Express, GR No.
191703, March 12, 2012)
Kinds of negligence or culpa
1. Culpa contractual (contractual negligence) -
Negligence which results from the breach of
contract;
2. Culpa aquiliana (civil negligence or tort or
quasi-delict) Acts or omissions that cause
damage to another, there being no
contractual relation between the parties
(NCC, Art. 2176); and
3. Culpa criminal (criminal negligence) – Those
which results in the commission of a crime
or a delict.
CULPA CULPA CULPA
BASIS
CONTRAC AQUILIAN CRIMIN

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 Civil Law
TUAL A/ CULPA AL defense defense. defense.
(CONTRAC EXTRA- (DELICT though it The
T) CONTRAC ) may employe
TUAL mitigate e’s guilt
(QUASI- damages. is
DELICT) Respondea automati
Negligence t superior cally the
Negligence Negligen
is merely or employer
Existen is ce is
an incident command ’s civil
ce of substantiv substanti
in the responsibil guilt, if
neglige e and ve and
performan ity or the the
nce independe independ
ce of an master and former is
nt. ent.
obligation. servant insolvent
There is There is rule. .
GR: There
Contrac always a no pre- Proof of
is no pre-
tual pre- existing Preponder Preponder guilt
existing Proof
relation existing contract ance of ance of beyond
contractual needed
s contractual ual evidence. evidence. reasonab
relation.
relation. relation. le doubt.
The source
of CONTRAVENTION OF TENOR OF OBLIGATION
obligation The source The (VIOLATIO)
of the of source of
Source defendant obligation obligatio The act of contravening the tenor or terms or
of to pay is the n is an conditions of the contract is also known as
obligati damages is defendant’ act or “violatio,” i.e. failure of common carrier to safely
on the breach s omission take its passenger to their destination. (Pineda,
or non- negligence punishab 2000)
fulfillment itself. le by law.
of the The phrase “in any manner contravene the
contract. tenor” of the obligation includes any illicit act
Proof of which impairs the strict and faithful fulfillment
the Accused of the obligation, or every kind of defective
existence shall be performance. Such violation of the terms of
of the presume contract is excused in proper cases by fortuitous
The
contract d events. (NCC, Art. 1170)
negligence
Proof of and of its innocent
of the
neglige breach or until the FORTUITOUS EVENT / CASO FORTUITO
defendant
nce non- contrary
must be
fulfillment is proved
proved. An occurrence or happening which could not be
is sufficient beyond
foreseen, or even if foreseen, is inevitable. (NCC,
prima facie reasonab
Art. 1174) (2002, 2008 Bar)
to warrant le doubt.
recovery.
Requisites: (CODE)
Defense of Defense of Defense
“good “good of “good
1. Cause of breach is independent of the will of
father of a father of a father of
the debtor;
family” in family” in a family”
the the in the
Defense 2. The Event is unforeseeable or unavoidable;
selection & selection & selection
availabl
supervisio supervisio &
e 3. Occurrence renders it absolutely impossible
n of the n of the supervisi
employees employees on of the for the debtor to fulfill his obligation in a
is not a is a proper employe normal manner - impossibility must be
proper and es is not absolute not partial, otherwise not force
complete complete a proper majeure; and

385
 Obligations
4. Debtor is free from any participation in the Fortuitous event Force majeure
aggravation of the injury to the creditor.
Event caused by the
Event which is
NOTE: The fortuitous event must not only be the legitimate or
proximate cause, but it must also be the only and absolutely
illegitimate acts of
sole cause. Contributory negligence of the debtor independent of human
persons other than the
renders him liable despite the fortuitous event. intervention
obligor
(Pineda, 2000)
e.g. Earthquakes, e.g. Armed invasion,
If the negligence was the proximate cause, the storms, floods, robbery, war. (Pineda,
obligation is not extinguished. It is converted epidemics 2000)
into a monetary obligation for damages.
NOTE: There is no essential difference between
Difficulty to foresee fortuitous event and force majeuere; they both
refer to causes independent of the will of the
The mere difficulty to foresee the happening is obligor. (Tolentino, 2002)
not impossibility to foresee the same. (Republic
v. Luzon Stevedoring Corp., G.R. No. L-21749, Q: MIAA entered into a compromise
September 29, 1967) agreement with ALA. MIAA failed to pay
within the period stipulated. Thus, ALA filed
Liability for loss due to fortuitous event a motion for execution to enforce its claim.
MIAA filed a comment and attributed the
GR: There is no liability for loss in case of delays to it being a government agency and
fortuitous event. to the Christmas rush. Is the delay of
payment a fortuitous event?
XPNs: (LaNS-PC-BaG)
A: NO. The act-of-God doctrine requires all
1. Law; human agencies to be excluded from creating
the cause of the mischief. Such doctrine cannot
2. Nature of the obligation requires the be invoked to protect a person who has failed to
assumption of risk; take steps to forestall the possible adverse
consequences of loss or injury. Since the delay in
3. Stipulation; payment in the present case was partly a result
of human participation - whether from active
4. The debtor is guilty of dolo, malice or bad intervention or neglect - the whole occurrence
faith has Promised the same thing to two or was humanized and was therefore outside the
more persons, who does not have the same ambit of a caso fortuito.
interest (NCC, Art. 1165);
First, processing claims against the government
5. The debtor Contributed to the loss (Tan v. are certainly not only foreseeable and
Inchausti & Co., G.R. No. 6092, March 8, expectable, but also dependent upon the human
1912); will. Second, the Christmas season is not a caso
fortuito, but a regularly occurring event. Third,
6. The possessor is in Bad faith (NCC, Art. 552); the occurrence of the Christmas season did not
or at all render impossible the normal fulfillment of
the obligation. Fourth, MIAA cannot argue that it
7. The obligor is Guilty of fraud, negligence or is free from any participation in the delay. It
delay or if he contravened the tenor of the should have laid out on the compromise table
obligation. (Juan Nakpil v. United the problems that would be caused by a deadline
Construction Co., Inc. v. CA, G.R. No. L-47851, falling during the Christmas season.
April 15, 1988) Furthermore, it should have explained to ALA
the process involved in the payment of ALA’s
Act of God vs. Act of Man claim. (MIAA v. Ala Industries Corp., G.R. No.
147349, February 13, 2004)
ACT OF GOD ACT OF MAN
Effects of fortuitous events

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1. On determinate obligation – The obligation
is extinguished.
2. On generic obligation – The obligation is not
extinguished (genus nun quam peruit –
genus never perishes).
Q: Kristina brought her diamond ring for
cleaning to a jewelry shop that failed to fulfill
its promise to return such ring in February 1,
1999. Kristina went back to the shop on
February 6, 1999, but she was informed that
the ring was stolen by a thief the night
before. Kristina filed an action for damages
against the jewelry shop, which put up the
defense of force majeure. Will the action
prosper or not? (2000 Bar)
A: YES. The action will prosper. Since the
defendant was already in default for not having
delivered the ring when delivery was demanded
by plaintiff at its due date, the defendant is liable
for the loss of the thing and even when the loss
was due to force majeure.
The defendant, who is obliged to deliver
incurred delay from the time the plaintiff
extrajudicially demands the fulfillment of the
obligation. (NCC, Art. 1169) The defendant shall
be held liable for the loss of the thing even if it
was due to fortuitous event.
Q: AB Corp entered into a contract with XY
Corp for the construction of the research and
laboratory facilities of the XY Corp. XY Corp
paid 50% of the 10M contract price on the
other hand AB agreed to complete the work
for 18 months. After 17 months, work was
only 45% completed as AB Corp experienced
work slippage due to labor unrest.
(a) Can the labor unrest be considered a
fortuitous event?
(b) Can XY Corp. unilaterally and
immediately cancel the contract?
(c) Must AB Corp. return the 50% down
payment? (2008 Bar)
A:
(a) NO. Labor unrest is not a fortuitous event
that will excuse AB Corp. from complying with
its obligation of constructing the research and
laboratory facilities of XY Corp. The labor unrest,
which may even be attributed largely to AB
Corp. itself, is not the direct cause of non-
387
compliance by AB Corp. It is independent of its
obligation. It is similar to the failure of a DBP
borrower to pay her loan just because her
plantation suffered losses due to the cadang-
cadang disease. It does not excuse compliance
with the obligation. (DBP v. Vda. De Moll, G.R. No.
L-25802, January 31, 1972) AB Corp. could have
anticipated the labor unrest caused by delays in
paying the laborer’s wages. The company could
have hired additional laborers to make up for
the work slowdown.
(b) YES. XY Corp. may unilaterally cancel the
obligation, but this is subject to the risk that the
cancellation of the reciprocal obligation being
challenged in court and if AB Corp. succeeds,
then XY Corp. will be declared in default and be
liable for damages.
(c) NO. Under the principle of quantum meruit,
AB Corp. had the right to retain payment
corresponding to his percentage of
accomplishment less the amount of damages
suffered by XY Corp. because of the delay or
default.
Q: X, a dressmaker, accepted clothing
materials from Karla to make two dresses for
her. On the day X was supposed to deliver
Karla’s dresses, X had an urgent matter to
attend to and told Karla to deliver those the
next day. That night, however, a robber
broke into her shop and took everything,
including Karla’s dresses. X claims she is not
liable to deliver Karla’s dresses nor pay for
the clothing materials considering she,
herself, was a victim of the robbery, which
was a fortuitous event, and over which she
had no control. Do you agree? Why? (2015
Bar)
A: NO. The law provides that except when it is
otherwise declared by stipulation, or when the
law expressly provides, or when the nature of
the obligation requires the assumption of risk,
no person shall be liable for those events which
could not be foreseen or which though foreseen
were inevitable. (NCC, Art. 1174)
In this case, X cannot invoke fortuitous event as
a defense because she had already incurred
delay at the time of the occurrence of the loss.
(NCC, Art. 1165)
REMEDIES
 Obligations
In case of breach of obligation, the following are were entered into to defraud the latter’s
the remedies available: creditors. Thus, it prayed for the rescission of
the chattel mortgaged executed by SSC in
1. Specific performance, or substituted favor of IEB. Will the action to rescind the
performance by a third person in case of an mortgage prosper?
obligation to deliver a generic thing, and in
obligations to do, unless it is a purely A: NO. Jurisprudence is clear that the following
personal act; successive measures must be taken by a creditor
2. Rescission (or resolution in reciprocal before he may bring an action for rescission of
obligations); an allegedly fraudulent contract: (1) exhaust the
3. Damages, in any case; or properties of the debtor through levying by
4. Subsidiary remedies of creditors: attachment and execution upon all the property
a. Accion subrogatoria of the debtor, except such as are exempt by law
b. Accion pauliana from execution; (2) exercise all the rights and
c. Accion directa actions of the debtor, save those personal to him
(acción subrogatoria); and (3) seek rescission of
SPECIFIC PERFORMANCE the contracts executed by the debtor in fraud of
their rights (acción pauliana). It is thus, apparent
Remedies in connection with specific that an action to rescind, or an acción
performance pauliana, must be of last resort, availed of only
after the creditor has exhausted all the
1. Exhaustion of the properties of the debtor properties of the debtor not exempt from
(not exempt from attachment under the execution or after all other legal remedies have
law); been exhausted and have been proven futile.
(Metropolitan Bank and Trust Company v.
2. Accion subrogatoria (subrogatory action) – International Exchange Bank, G.R. No. 176008,
An indirect action brought in the name of August 10, 2011)
the debtor by the creditor to enforce the
former’s rights except: Q: Jebson entered into a Joint Venture
Agreement (JVA) with Sps. Salonga obligated
a. Personal rights of the debtor; the former to construct ten (10) residential
b. Rights inherent in the person of the units on the latter’s three parcels of land. Out
debtor; of the ten (10) units, seven (7) units will
c. Properties exempt from execution. belong to Jebson. It was also allowed to sell
its allocated units under such terms as it may
e.g. family home deem fit, subject to the condition that the
price agreed upon was with the conformity of
3. Accion pauliana (rescissory action) – An Sps. Salonga. Thereafter, Jebson entered into
action to impugn or assail the acts done or a Contract to Sell with Buenviaje over one of
contracts entered into by the debtor in fraud its units without the conformity of Sps.
of his creditor. Salonga. Buenviaje was able to fully pay for
Jebson’s unit through a swapping
arrangement, which allows the vendee to
NOTE: Resort to the remedies must be in the
order stated above. (NCC, Art. 1177) convey certain properties as consideration
for the sale. Despite this full payment, Jebson
was unable to complete said unit.
Q: Sacramento Steel Corporation (SSC)
executed five separate deeds of chattel
mortgage constituted over various This prompted Buenviaje to demand the
unit’s immediate completion and delivery.
equipment for International Exchange Bank
(IEB) which subsequently, SSC defaulted in Jebson, having failed to comply with the
demand, Buenviaje filed an action before the
the payment of its obligations. IEB’s demand
HLURB against Jebson and Sps. Salonga for
for payment went unheeded. Meanwhile,
Metropolitan Bank and Trust Company specific performance praying for the unit’s
completion and delivery and rescission in the
(Metro Bank) filed a motion for intervention
alternative. Jebson, in its defense, claimed
as a creditor of SSC. Which it contends that
the mortgage contracts between IEB and SSC that they were not able to secure the

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 Civil Law
necessary permits because Sps. Salonga
stubbornly refused to cause the
consolidation and partition of the parcels of
land. Sps. Salonga averred that they were not
liable to the complainants since there was no
privity of contract between them, adding that
the contracts to sell were unenforceable
against them as they were entered into by
Jebson without their conformity, in violation
of the JVA. HLURB rescinded the Contract to
Sell and held Sps. Salonga Solidarily liable
with Jebson. HLURB-BOC reversed the former
ruling and instead rescinded the swapping
arrangement and maintaining the validity of
the Contract to Sell, thereby granting specific
performance instead. Is the grant of the
remedy of specific performance in
Buenviaje's favor proper?
A: YES. As between the two remedies made
available to him, Buenviaje, had, chosen the
remedy of specific performance and, therefore,
ought to be bound by the choice he had made. To
add, the fundamental rule is that reliefs granted
a litigant are limited to those specifically prayed
for in the complaint. Buenviaje's alternative
prayer for resolution is textually consistent with
that portion of Article 1191 of the Civil Code
provides that an injured party "may also seek
rescission, even after he has chosen fulfillment if
the latter should become impossible."
Nevertheless, the impossibility of fulfillment was
not sufficiently demonstrated in the proceedings
conducted in this case.
Besides, mutual restitution is the proper
consequence of the remedy of resolution. It
cannot arise - as it is, in fact, theoretically
incompatible - with the remedy of specific
performance, which is the relief prayed for and
consequently, granted to the injured party
herein. (Dr. Restituto C. Buenviaje vs. Spouses
Jovito R. & Lydia B. Salonga, GR No. 216023,
October 05, 2016)
Q: While the case was pending, Felix donated
his parcels of land in favor of his children.
Judgment was rendered against Felix. Four
years after the said donation, the sheriff
sought to enforce the alias writ of execution
and discovered that Felix no longer had any
property and had conveyed the subject
properties to his children. Thus, Philam filed
an accion pauliana for rescission of the
donations. Felix countered that an action for
rescission of the donation had already
389
prescribed since the time of prescription has
to run from the date of registration. Has the
action filed by Philam prescribed?
A: NO. Philam only learned about the unlawful
conveyances made by Felix more than four years
after the donations were effected, when its
counsel accompanied the sheriff to Butuan City
to attach the properties. There they found that
he no longer had any properties in his name. It
was only then that Philam's action for rescission
of the deeds of donation accrued because then it
could be said that Philam had exhausted all legal
means to satisfy the trial court's judgment in its
favor. Since Philam filed its complaint for accion
pauliana against petitioners barely a month
from its discovery that Felix had no other
property to satisfy the judgment award against
him, its action for rescission of the subject deeds
clearly had not yet prescribed. (Khe Hong Cheng
v. CA, G.R. No. 144169, March 28, 2001)
NOTE: The debtor is liable with all his property,
present and future, for the fulfillment of his
obligations, subject to the exemptions provided
by law. (De Leon, 2003)
Substitute performance
It is a remedy of the creditor in case of non-
performance by the debtor where another party
performs the obligation or the same is
performed at the expense of the debtor.
Applicability of substitute performance
1. Positive personal obligation:
If not purely personal –
Substitute performance; the obligation
shall be executed at debtor’s cost if he
fails to do it. (NCC, Art. 1167)
Purely personal – No substitute
performance may be demanded because
of the personal qualifications taken into
consideration. The only remedy is
damages.
2. Real obligation:
a. Generic thing – Substitute performance;
delivery may be made by a person other
than the debtor since the object is
merely designated by its class or genus.
The creditor may ask that the obligation
 Obligations
be complied with at the expense of the
debtor. (NCC, Art. 1165)
b. Specific thing – Specific performance
may be demanded, that is, the creditor
may compel the debtor to make the
delivery.
RESCISSION (RESOLUTION) (NCC, ART. 1191)
It refers to the cancellation of the contract or
reciprocal obligation in case of breach on the
part of one, which breach is violative of the
reciprocity between the parties. This is properly
called resolution. (2005, 2008 Bar)
NOTE: The rescission under Art. 1380 is
rescission based on lesion or fraud upon
creditors.
Applicability
Rescission or resolution is applicable in
reciprocal obligations, since it is implied therein.
Characteristics of the right to rescind
1. Can be demanded only if plaintiff is ready,
willing, and able to comply with his own
obligation and defendant is not;
2. Not absolute;
2. Needs judicial approval in the absence of a
stipulation allowing for extra-judicial
rescission, in cases of non-reciprocal
obligations;
3. Subject to judicial review if availed of
extrajudicially;
4. May be waived, expressly or impliedly; and
5. Implied to exist in reciprocal obligations,
therefore, need not be expressly stipulated
upon.
Fulfillment or rescission of the obligation
GR: The injured party can only choose either
fulfillment or rescission of the obligation, and
not both.
XPN: If fulfillment has become impossible, Art.
1191 allows the injured party to seek rescission
even after he has chosen fulfillment. (Ayson-
Simon v. Adamos and Feria, G.R. No. L-39378,
August 28, 1984)
Q: Pikian Mining Company (PMI) entered into
an Operating Agreement (OA) with Golden
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Valley Exploration, Inc. (GVEI), granting the
latter "full, exclusive and irrevocable
possession, use, occupancy, and control over
the mining claims and the processing and
marketing of the products for a period of 25
years.” Later, PMC extra-judicially rescinded
the OA upon GVEI’s violation of Section 5.01,
Article V thereof. GVEI contested PMC’s extra-
judicial rescission of the OA, averring therein
that its obligation to pay royalties to PMC
arises only when the mining claims are
placed in commercial production, which
condition has not yet taken place. PMC no
longer responded to GVEI’s letter. Is the
rescission of the Operating Agreement valid?
A: YES. The rescission is valid. As a general rule,
the power to rescind an obligation must be
invoked judicially and cannot be exercised solely
on a party’s own judgment that the other has
committed a breach of the obligation. This is so
because rescission of a contract will not be
permitted for a slight or casual breach, but only
for such substantial and fundamental violations
as would defeat the very object of the parties in
making the agreement. As a well-established
exception, however, an injured party need not
resort to court action in order to rescind a
contract when the contract itself provides that it
may be revoked or canceled upon violation of its
terms and conditions. PMC’s unilateral
rescission of the Operating Agreement (OA) due
to GVEI’s non-payment of royalties considering
the parties’ express stipulation in the OA that
said agreement may be canceled on such
ground. (Golden Valley Exploration, Inc. v. Pinkian
Mining Company, G.R. No. 190080, June 11, 2014)
Q: Vermen and Seneca entered into an
"offsetting agreement," where Seneca is
obliged to deliver construction materials to
Vermen, who is obliged to pay Seneca and to
deliver possession of 2 condominium units to
Seneca upon its completion. Seneca filed a
complaint for rescission of the offsetting
against Vermen, alleging that the latter had
stopped issuing purchase orders of
construction materials without a valid
reason, thus resulting in the stoppage of
deliveries of construction materials on its
part, in violation of the Offsetting Agreement.
Can the agreement be rescinded?
A: YES, because the provisions of the offsetting
agreement are reciprocal in nature. Art. 1191 of
the Civil Code provides the remedy of rescission
390
 Civil Law
(more appropriately, the term is "resolution") in
case of reciprocal obligations, where one of the
obligors fails to comply with that is incumbent
upon him. (Vermen Realty Development Corp. v.
CA and Seneca Hardware Co., Inc., G.R. No.
101762, July 6, 1993)
Q: Ong and spouses Robles executed an
"agreement of purchase and sale" of two
parcels of land. Ong partially paid the
spouses by depositing sums of money with
the BPI in accordance with their stipulation
that Ong pay the loan of the spouse with BPI.
To answer for Ong’s balance, he issued four
post-dated checks which were dishonored.
Ong failed to replace the checks and to pay
the loan in full. Can the contract entered into
by Ong and the spouses be rescinded?
A: NO. The agreement of the parties, in this case,
may be set aside, but not because of a breach on
the part of Ong for failure to complete payment
of the purchase price. Rather, his failure to do so
brought about a situation that prevented the
obligation of the spouses to convey title from
acquiring an obligatory force.
The agreement of purchase and sale shows that
it is in the nature of a contract to sell. Ong’s
failure to complete payment of the purchase
price is a non-fulfillment of the condition of full
payment which rendered the contract to sell
ineffective and without force and effect. The
breach contemplated in Art. 1191 is the obligor’s
failure to comply with an obligation. In this case,
Ong’s failure to pay is not even a breach but
merely an event that prevents the vendor’s
obligation to convey title from acquiring binding
force. (Jaime G. Ong vs. The Honorable Court of
Appeals, Spouses Miguel K. Robles and Alejandro
M. Robles, G.R. No. 97347, July 6, 1999)
Q: Petitioners and respondents entered into
a Contract to Sell (subject contract) over the
subject land. The subject contract
provides, inter alia, that: (a) the
consideration for the sale is P33,155,000.00
payable as follows: down payment in the
amount of P11,604,250.00 inclusive of the
amount of P2,000,000.00 previously paid by
respondents as earnest money/reservation
fee, and the remaining balance of
P21,550,750.00 payable in 36 monthly
installments, each in the amount of
P598,632.00 through post-dated checks; (b)
in case any of the checks is dishonored, the
391
amounts already paid shall be forfeited in
petitioners' favor, and the latter shall be
entitled to cancel the subject contract
without judicial recourse in addition to other
appropriate legal action; (c) respondents are
not entitled to possess the subject land until
full payment of the purchase price; (d)
petitioners shall transfer the title over the
subject land from a certain Edilberta N.
Santos to petitioners' names, and, should
they fail to do so, respondents may cause the
said transfer and charge the costs incurred
against the monthly amortizations; and (e)
upon full payment of the purchase price,
petitioners shall transfer title over the
subject land to respondents. However,
respondents sent petitioners a letter seeking
to rescind the subject contract on the ground
of financial difficulties. They also sought the
return of the amount they had paid.
As their letter went unheeded, respondents
filed a complaint for rescission. Petitioners
countered that respondents' act is a
unilateral cancellation of the subject contract
as the former did not consent to it. Moreover,
the ground of financial difficulties is not a
ground to effect a valid rescission. The RTC
ruled in favor of respondents and,
accordingly, ordered the rescission of the
subject contract; and the return of the
amounts already paid as well as the
remaining post-dated checks issued by
respondent representing the remaining
monthly amortizations. The CA affirmed. Is
the CA correct?
A: NO. It cannot be said that petitioners' failure
to undertake their obligation under paragraph 7
(to cause the transfer of the property to their
names from one Edilberta N. Santos within 90
days from the execution of the said contract
defeats the object of the parties in entering into
the subject contract, considering that the same
paragraph provides respondents contractual
recourse in the event of petitioners' non-
performance of the aforesaid obligation, that is,
to cause such transfer themselves in behalf and
at the expense of petitioners. Indubitably, there
is no substantial breach of paragraph 7 on the
part of petitioners that would necessitate a
rescission (or resolution) of the subject
contract.
Notwithstanding the foregoing facts, the Court
cannot grant petitioners' prayer to order the
 Obligations
cancellation of the subject contract and the Kinds of damages (MENTAL)
forfeiture of the amounts already paid by
respondents on account of the latter's failure to 1. Moral;
pay its monthly amortizations, simply because 2. Exemplary;
petitioners neither prayed for this specific relief 3. Nominal;
nor argued that they were entitled to the same. 4. Temperate;
Worse, petitioners were declared "as in default" 5. Actual;
for failure to file the required pre-trial brief and, 6. Liquidated.
thus, failed to present any evidence in support of
their defense. (Rogelio S. Nolasco v. Celerino S. SUBSIDIARY REMEDIES
Cuerpo, GR No. 210215, December 9, 2015)
ACCION SUBROGATORIA
NOTE: In a contract to sell, the payment of the
purchase price is a positive suspensive An action whereby the creditor, whose claim has
condition, the failure of which is not a breach, not been fully satisfied, may go after the
casual or serious, but a situation that prevents defendant debtor’s debtor (third person). (NCC,
the obligation of the vendor to convey title from Art. 1177)
acquiring an obligatory force. (Ong v. CA, G.R. No.
97347, July 6, 1999) Accion subrogatoria is different and distinct from
active subjective subrogation governed by
Q: Can a contract be rescinded extrajudicially Articles 1300 to 1304. In the latter, there is
despite the absence of a special contractual change of creditors, whereas in the former there
obligation therefore? is no change of creditors; the creditor merely
acts in the name and for the account of the
A: YES. An extrajudicial rescission based on debtor after exhausting the assets of the latter
grounds not specified in the contract would not but not enough to satisfy the claims of the
preclude a party to treat the same as rescinded. creditor.
The rescinding party, however, by such course of
action, subjects himself to the risk of being held Requisites (IPIN)
liable for damages when the extrajudicial
rescission is questioned by the opposing party in 1. The debtor’s assets must be Insufficient to
court. In other words, the party who deems the satisfy claims against him;
contract violated may consider it resolved or 2. The creditor must have Pursued all
rescinded, and accordingly, without previous properties of the debtor subject to
court action, but it proceeds at its own risk. For execution;
it is only the final judgment of the corresponding 3. The right of action must Not be purely
court that will conclusively and finally settle personal; and
whether the action taken was or was not correct 4. The debtor whose right of action is
in law. (Nissan Car Lease Phils, Inc., v. LICA exercised must be Indebted to the creditor.
Management and Proton Pilipinas, Inc., G.R. No.
176986, January 13, 2016) Effects of subrogatory action

DAMAGES 1. The creditor may exercise the subrogatory

action on behalf of the debtor not only up to
Liability for damages the amount of his credit but in its totality.

Those liable under Art. 1170 shall pay damages NOTE: The excess (if any) must be returned to
only if aside from the breach of contract, the debtor.
prejudice or damage was caused. (Berg v. Teus,
G.R. No. L-6450, October 30, 1954) 2. The bringing of action does not entitle the
creditor to preference.
NOTE: If action is brought for specific
performance, damages sought must be asked in 3. The defendant (the debtor of the debtor)
the same action; otherwise, the damages are may avail himself of all defenses available
deemed waived. (Daywalt v. La Corporacion, G.R. against the creditor.
No. L-13505, February 4, 1919)

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NOTE: In order to exercise action subrogatoria, a
previous approval of the court is not necessary.
(Tolentino, 1991)
ACCION PAULIANA
Accion pauliana
An action where the creditor files in court for the
rescission of acts or contracts entered into by
the debtor designed to defraud the former. (NCC,
Art. 1177)
NOTE: When the creditor could not collect in
any manner, accion pauliana may be resorted by
him to rescind a fraudulent alienation of
property. (Regalado, v. Luchsinger and Co., 5 Phil
625, GR L-2250, February 17, 1906)
Requisites (PAPIL)
1. Defendant must be Indebted to plaintiff;
2. The fraudulent act performed by the debtor
subsequent to the contract gives Advantage
to another;
3. The creditor is Prejudiced by such act;
4. The creditor must have Pursued all
properties of the debtor subject to
execution; and
5. The creditor has no other Legal remedy.
e.g. Alienations of property, payment of debts
which are not due, renunciation of rights such as
the right of usufruct or an inheritance,
assignment of credit, and remission of debts.
ACCION DIRECTA
Accion directa
The right of a person to go directly against
another who is not privy to the contract. (NCC,
Articles 1652, 1608, 1729 and 1893)
NOTE:
1. Subsidiary liability of sublessee for the rent
(NCC, Art. 1652);
2. Right of sellers a retro to redeem the
property from persons other than the buyer
a retro (NCC, Art. 1608);
3. Subsidiary liability of owners to laborers
and material men (NCC, Art. 1729); and
4. The principal may sue the substitute of the
agent with respect to the obligations which
393
the substitute has contracted under the
substitution. (NCC, Art. 1893)
KINDS OF CIVIL OBLIGATIONS
PURE AND CONDITIONAL OBLIGATION
Pure obligation
An obligation whose performance does not
depend upon a future or uncertain event, or
upon a past event or upon a past event unknown
to the parties, demandable at once. (NCC, Art.
1179)
NOTE: Other obligations which are demandable
at once are:
1. Obligations with a resolutory condition; and
2. Obligations with a resolutory term or
period. [NCC, Arts. 1179 (2) and 1193 (2)]
The most distinctive characteristic of a pure
obligation is its immediate demandability. This
quality, however, must not be understood in
such a way as to lead to absurd interpretations
which would literally require the obligor or
debtor to comply immediately with his
obligation. A distinction must be made between:
1. The immediate demandability of the
obligation; and
2. Its performance or fulfillment by the obligor
or debtor. Although the obligee or creditor
can demand the performance of the
obligation immediately, the quality of
immediate demandability is not infringed or
violated when a reasonable period is
granted for performance. (Jurado, 2009)
Conditional obligation
An obligation subject to a condition and the
effectivity of which is subordinated to the
fulfillment or non-fulfillment of a future and
uncertain event or a past event unknown to the
parties. (Pineda, 2000)
Condition
A condition is an event that is future and
uncertain, upon which the efficacy or
extinguishment of an obligation depends.
 Obligations
It has two requisites: first, futurity, and second, the parties.
uncertainty. It will happen
at an
Uncertain but past event as a condition exact date or
As to May or may
at an indefinite
fulfillment not happen.
An uncertain but past event itself can never time but is
constitute a condition because, in order to be definite to
classified as a condition, the requisites of arrive.
futurity and uncertainty are required. Neither Futurity and Futurity and
Characteristic
can it constitute a term or period because, in certainty. uncertainty.
order to be classified as a term or period, the May give rise
requisites of futurity and certainty are required. to an
However, the proof or ascertainment of the fact No effect upon
obligation
or event, as distinguished from the fact or event The effect of the existence
(suspensive)
itself, may either constitute a condition or a term its happening of the
or the
depending upon the circumstances of each case. to the obligation but
cessation of
(Jurado, 2009) obligation only in its
one already
demandability.
existing
Constructive fulfillment of a condition (resolutory).
Valid. But the
The condition shall be deemed fulfilled when the If fulfillment is
court is
obligor voluntarily prevents its fulfillment. (NCC, dependent
empowered to
Art. 1186) upon the sole Annulled
fix the
will of the
duration of the
Q: Ramon, the judicial administrator of the debtor
period.
estate of Juan, found out that Rodriguez had The moment
enlarged the area of the land which he the condition
purchased from Juan before his death. Thus, is fulfilled, the
Ramon demanded Rodriguez to vacate the No effects will
portion allegedly encroached by him. Retroactivity
retroactivity. retroact on the
Rodriguez refused and contested there was day of the
indeed a conditional sale with the balance of constitution of
the purchase price payable within five years the obligation.
from the execution of the deed of sale. Ramon
then filed an action for recovery of Suspensive condition
possession of the disputed lot. Is the contract
of sale a conditional one? A condition the fulfillment of which will give rise
to the acquisition of a right. While the condition
A: NO. The stipulation that the "payment of the has not arrived yet, in the meantime, the rights
full consideration based on a survey shall be due and obligations of the parties are suspended.
and payable in five years from the execution of a
formal deed of sale" is not a condition that NOTE: In suspensive condition or condition
affects the efficacy of the contract of sale. It precedent, the efficacy or the obligatory force is
merely provides the manner by which the full subordinated to the happening of a “future and
consideration is to be computed and the time uncertain event”; if the suspensive condition
within which the same is to be paid. But it does does not take place, the parties would stand as if
not affect in any manner the effectivity of the the conditional obligation never existed. (Cheng
contract. (Heirs of San Andres v. Rodriguez, G.R. v. Genato, 300 SCRA 722, GR 129760, December
No. 135634, May 31, 2000) 29, 1998; Pineda, 2000)

Period v. Condition Effects of fulfillment of the suspensive

condition (1999 Bar)
BASIS PERIOD CONDITION
May refer to 1. Real obligations
Refers to the
As to time past event
future.
unknown to

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 Civil Law
GR: Retroacts to the day of the constitution choose borne by
of the obligation. between creditor.
rescission of
XPNs: There is no retroactive effect with obligation or
respect to the fruits and interest: fulfillment
(with
1. In reciprocal obligations, the fruits and indemnity for
interests shall be deemed to have been damages in
mutually compensated; and either case).
2. In unilateral obligations, the debtor By the thing’s nature or through
appropriates the fruits and interest time – Inure to the benefit of
received before the fulfillment of the the creditor;
Improvement
condition unless contrary to the At the debtor’s expense – Debtor
intention of the parties. (NCC, Art. 1187) shall have no right other than
that granted to a usufructuary.
2. Personal obligations – the court determines
the retroactive effect of the condition NOTE: The abovementioned do not apply to
fulfilled. (NCC, Art. 1187) indeterminate or generic things on the basis of
the maxim “genus nun quam peruit” (genus
Rights of the parties before the fulfillment of never perishes). It will only apply when the
the condition object or thing to be given is specific.

1. Creditor – May bring the appropriate actions Requisites for the application of Art. 1189
for the preservation of his right (NCC, Art. (SuRF LIDS)
1188), such as:
1. Must be a Real obligation;
a. Action for prohibition/restraining the 2. Object of the obligation is a Specific thing;
alienation of the thing pending the 3. Obligation is subject to a Suspensive
happening of the suspensive condition; condition.
b. Petition for the annotation of the 4. The condition is Fulfilled; and
creditor’s right with the proper registry; 5. There is Loss, Deterioration or
c. Action to demand security if the debtor Improvement of the thing during the
has become insolvent; pendency of the happening of the
d. Action to set aside alienations made by condition.
the debtor in fraud of creditors; or
e. Action against adverse possessors to NOTE: The same conditions apply to an obligor
interrupt the running of prescriptive in obligations subject to a resolutory condition.
period. In such cases, the third requisite must read,
“subject to a resolutory condition.”
2. Debtor – May recover what, during the same
time, he has paid by mistake in case of a Positive suspensive condition
suspensive condition. (NCC, Art. 1188)
A condition which requires a positive act on the
Effect of loss, deterioration and improvement part of the obligor that gives rise to the
in an obligation to deliver a determinate acquisition of rights.
thing subject to a suspensive condition
In case of a contract to sell, the obligation to
WITH WITHOUT deliver the subject properties becomes
BASIS DEBTOR’S DEBTOR’S demandable only upon the happening of the
FAULT FAULT positive suspensive condition (payment of full
Obligation is purchase price). Without full payment, there can
not be no breach of contract to speak of because the
Obligation
Loss extinguished. seller has no obligation yet to turn over the title.
extinguished.
Debtor pays (Reyes v. Tuparan, G.R. No. 188064, June 1, 2011)
damages.
Deterioration Creditor may Impairment Resolutory condition (1999 Bar)

395
 Obligations
A condition where the rights already acquired conditions of the donation. Are the
are lost upon fulfillment of the condition. It is conditions imposed resolutory or
also known as condition subsequent. suspensive?

Effects of fulfillment of resolutory condition A: Under Art. 1181 of the CC, on conditional
obligations, the acquisition of rights, as well as
1. Real obligations: the extinguishment or loss of those already
acquired, shall depend upon the happening of
a. The parties shall return to each other the event which constitutes the condition. Thus,
what they have received (mutual when a person donates land to another on the
restitution); condition that the latter would build upon the
b. Obligation is extinguished; land a school, the condition imposed was not a
c. In case of loss, deterioration or condition precedent or a suspensive condition
improvement of the thing, NCC, Art. but resolutory. It is not correct to say that the
1189, with respect to the debtor, shall school house (or the establishment and use of a
be applied to the party who is bound to medical college in this case) had to be
return. (NCC, Art. 1190) constructed before the donation became
effective, that is, before the donee could become
2. Personal obligations – The courts shall the owner of the land, otherwise, it would be
determine, in each case, the retroactive invading the property rights of the donor. The
effect of the condition that has been donation had to be valid before the fulfillment of
complied with. (NCC, Art. 1187; NCC, Art. the condition. If there was no fulfillment or
1190) compliance with the condition, the donation may
now be revoked and all rights which the donee
Suspensive conditionv. Resolutory condition may have acquired under it shall be deemed lost
and extinguished. (Central Philippine University
SUSPENSIVE RESOLUTORY v. CA, G.R. No. 112127, July 17, 1995)
BASIS
CONDITION CONDITION
Obligation Negative resolutory condition
arises or
Effect of Obligation is An act, which if not done, would give rise to a
becomes
fulfillment extinguished. cause of action against the obligor. It
effective.
contemplates a situation where rights are
If not fulfilled, If not fulfilled, already acquired but subject to an obligation, the
Effect of non-fulfillment of which does not affect the
no juridical juridical
non- rights already acquired but merely gives a cause
relation is relation is
fulfillment of action in favor of the other party. In a contract
created. consolidated.
Rights are not of sale, the buyer’s non-payment of the price is a
yet acquired, Rights are negative resolutory condition. In such case, the
but there is already vested, seller has lost and cannot recover the ownership
When of the property, unless he takes action to set
hope or but subject to
rights are aside the contract of sale. (Heirs of Atienza v.
expectancy the threat or
acquired Espidol, G.R. No. 180665, August 11, 2010)
that they will danger of
soon be extinction.
acquired. Potestative Condition (1997, 2000, 2003 Bar)

Q: The late Don Lopez, Sr., who was then a
member of the Board of Trustees of CPU,
executed a deed of donation in favor of the
latter involving a parcel of land subject to the
condition that it shall be utilized for the
establishment and use of a medical college.
However, the heirs of Don Lopez, Sr., filed an
action for annulment of the donation,
reconveyance, and damages against CPU,
alleging that CPU did not comply with the
A condition that depends upon the will of one of
the contracting parties. (NCC, Art. 1182)
Effects of potestative conditions upon the
obligation
If the condition is potestative in the sense that
its fulfillment depends exclusively upon the
will of the debtor, and the same is suspensive,
both the condition and obligation are VOID.

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However, if the condition is a pre-existing one or XPNs:
the condition is resolutory, only the condition is
void, leaving the obligation itself valid because 1. Pre-existing obligation;
what is left to the sole will of the debtor is not 2. Obligation is divisible;
the existence or the fulfillment of the obligation 3. In simple or remuneratory donations;
but merely its extinguishment. 4. In case of conditions not to do an impossible
thing; and
If the condition is potestative in the sense that 5. In testamentary dispositions.
its fulfillment depends exclusively upon the will
of the creditor, the obligation shall be valid. This NOTE: In the foregoing, the obligations remain
is so because the provision of the first sentence valid; only the condition is void and deemed to
of Art. 1182 extends only to conditions which have not been imposed. It is applicable only to
are potestative to the obligor or debtor. Besides, obligations, not to do, and gratuitous
the creditor is naturally interested in the obligations.
fulfillment of the condition since it is only by
such fulfillment that the obligation arises or Other types of conditions
becomes effective. (Jurado, 2009 citing NCC, Art.
1181 and Manresa) 1. Positive – It involves the doing of an act;
2. Negative –It involves the omission of an act;
Causal condition 3. Divisible – It is susceptible of partial
performance;
It is the performance or the fulfillment of the 4. Indivisible – It is not susceptible of partial
condition which depends upon chance and/or performance;
the will of a third person. 5. Conjunctive – There are several conditions in
an obligation all of which must be
Mixed condition performed;
6. Alternative – There are several conditions in
It is the performance or fulfillment of the an obligation but only one must be
condition which depends partly upon the will of performed;
a party to the obligation and partly upon chance 7. Possible – It is capable of fulfillment
and/or the will of a third person. according to the nature, law, public policy,
or good customs; and
NOTE: Casual and mixed conditions are valid, 8. Impossible – It is not capable of fulfillment
unlike purely potestative conditions. according to nature, law, public policy, or
good customs. (NCC, Art. 1183)
Q: Suppose that the debtor executed a
promissory note promising to pay his OBLIGATIONS WITH A PERIOD
obligation to the creditor as soon as he has
received funds derived from the sale of his Obligation with a period or a term
property in a certain place, is the condition
potestative or mixed? Obligations for whose fulfillment a day certain
has been fixed, shall be demandable only when
A: The condition is mixed because its fulfillment that day comes. (NCC, Art. 1193)
depends not only upon the will of the debtor but
also upon the concurrence of other factors, such Term or period
as the acceptability of the price and other
conditions of the sale, as well as the presence of A certain length of time which determines the
a buyer, ready, able, and willing to purchase the effectivity or the extinguishment of the
property. (Hermosa v. Longara, G.R. L-5267, obligations.
October 27, 1953)
Requisites of a valid period or term
Impossible conditions (1997, 2007 Bar)
1. Future;
GR: Impossible conditions annul the obligation 2. Certain; and
which depends upon the parties but not of a 3. Possible, legally, and physically. (Paras,
third person. 2008)

397
 Obligations
“Day certain”
It is understood to be that which must
necessarily come, although it may not be known
when.
Kinds of terms or periods
1. Ex die – This is a term or period with
suspensive effect. The obligation begins
only from a day certain, in other words,
upon the arrival of the period.
2. In diem – A period or term with a resolutory
effect. Up to a certain extent, the obligation
remains valid, but upon the arrival of said
period, the obligation terminates.
3. Legal – A period granted under the
provisions of the law.
4. Conventional or voluntary – The period
agreed upon or stipulated by the parties.
5. Judicial – The period or term fixed by the
courts for the performance of an obligation
or for its termination.
6. Definite – The exact date or time is known
and given.
7. Indefinite – It is something that will surely
happen, but the date of happening is
unknown.
e.g. “I will pay when my means permit me to
do so.”
When the debtor binds himself to pay when his
means permit him to do so, the obligation is
deemed with a period. (NCC, Art. 1180) This is
valid because it is not the payment itself that is
dependent upon the will of the debtor but the
moment of payment.
As the time of payment is not fixed, the court
must fix the same before any action for
collection may be entertained, unless the prior
action of fixing the term or period will only be a
formality and will serve no purpose but delay.
(Tiglao v. Manila Railroad Co., 98 Phil. 181, GR. L-
7900, January 12, 1956)
Benefit of the period
GR: Whenever in an obligation a period is
designated, it is presumed to have been
established for the benefit of both the creditor
and the debtor
XPN: When it appears from the tenor of the
period or other circumstances that it was
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
established for the benefit of one of the parties.
(NCC, Art.1196)
Effect of the term or period
1. When it is for the benefit of the creditor –
Creditor may demand the performance of
the obligation at any time, but the debtor
cannot compel him to accept payment
before the expiration of the period.
e.g. “on demand”
2. When it is for the benefit of the debtor –
Debtor may oppose any premature
demand on the part of the creditor for
performance of the obligation, or if he so
desires, he may renounce the benefit of the
period by performing his obligation in
advance.
Effect of a fortuitous event to an obligation
with a period
It only relieves the contracting parties from the
fulfillment of their respective obligation during
the term or period.
Instances where the court may fix the period
(1991, 1997, 2003 Bar)
1. If the obligation does not fix a period, but
from its nature and circumstances it can be
inferred that a period was intended by the
parties;
2. If the duration of the period depends upon
the will of the debtor (1997, 2003 Bar);
3. In case of reciprocal obligations, when there
is a just cause for fixing the period; or
4. If the debtor binds himself when his means
permit him to do so.
NOTE: Once fixed by the courts, the period
cannot be changed by the parties. (NCC, Art.
1197)
Instances where the debtor loses his right to
make use of the period
1. When after the obligation has been
contracted, he becomes insolvent, unless he
gives a guaranty or security for the debt;
2. When he does not furnish to the creditor the
guaranties or securities which he has
promised;
398
 Civil Law
3. When by his own acts he has impaired said XPN: Expressly
guaranties or securities after their granted to
establishment; creditor or a
4. When through a fortuitous event they third person.
disappear, unless he immediately gives new
ones or equally satisfactory; Fortuitous loss Fortuitous loss
5. When the debtor violates any undertaking, Effect of extinguishes of all
in consideration of which the creditor fortuitous the obligation. prestations
agreed to the period; and loss will extinguish
6. When the debtor attempts to abscond. (NCC, the obligation.
Art. 1198)
Culpable loss Culpable loss
ALTERNATIVE, FACULTATIVE, CONJUNCTIVE obliges the of any object
OBLIGATIONS debtor to due will give
deliver a rise to liability
Effect of
substitute to the debtor.
Alternative obligation culpable loss
prestation
without
It is an obligation where the debtor is
liability to the
alternatively bound by different prestations, but
debtor.
the complete performance of one is sufficient to
extinguish the obligation. When The creditor
substitution shall have the
Facultative obligation has been made right of
and indemnity for
It is an obligation where the debtor, who has a communicated damages when,
reserved right to choose another prestation or to the creditor, solely through
thing, is bound to perform one of the several the obligor is the fault of the
prestations due or to deliver a thing as a liable for the debtor, all
substitute for the principal. loss of the thing things which
Liability of
on account of are
Conjunctive obligation the debtor
delay, alternatively
negligence, or the object of
An obligation where the debtor has to perform fraud. the obligation
several prestations; it is extinguished only by the have been lost,
performance of all of them. or the
compliance of
Facultative obligations v. Alternative the obligation
obligations has become
impossible.
BASIS FACULTATIVE ALTERNATIVE
If the principal If one
OBLIGATIONS OBLIGATIONS obligation is prestation is
Number of Only one object Several objects void, the void, the
prestation is due. are due. creditor cannot others that are
Void compel free from any
May be May be prestation delivery of the vices of
complied with complied with substitute. consent
Manner of by substitution by fulfilling preserve the
compliance of one that is any of those validity of the
due. alternately obligation.
due.
If there is If some
Choice pertains GR: Choice impossibility to prestations are
Impossibility
Right to only to debtor. pertains to perform or to impossible to
of prestation
choose debtor. deliver the perform or to
principal thing deliver except

399
 Obligations

or prestation, for one - this The choice made takes effect only upon its
the obligation one must be communication to the other party, and from
is extinguished, delivered. such time, the obligation ceases to be alternative.
even if the (NCC, Art. 1201; NCC, Art. 1205)
substitute If all
obligation is prestations are NOTE: The notice of selection or choice may be
valid. impossible to in any form provided it is sufficient to make the
perform, the other party know that the election has been
obligation is made. (Tolentino,2002)
extinguished.
When alternative obligation becomes a
Loss of the When the simple obligation
substitute choice is given
before the to the creditor, 1. When the debtor has communicated the
substitution is the loss of the choice to the creditor;
Loss of made through alternative
substitute the fault of the through the 2. When debtor loses the right of choice among
debtor doesn’t fault of the the prestations whereby the debtor is
make him debtor renders alternatively bound, only one is practicable.
liable. him liable for (NCC, Art. 1202)
damages.
NOTE: The choice made by the debtor does not
Right to choose prestation in an alternative require the concurrence of the creditor.
obligation Otherwise, it would destroy the very nature of
the right to select given to the debtor.
GR: The right of choice belongs to the debtor.
Impossibility of choice due to creditor’s acts
XPN: Unless it has been expressly given to the
creditor. (NCC, Art. 1200) When choice the choice is rendered impossible
through the creditor’s fault, the debtor may
Limitations on debtor’s right to choose bring an action to rescind the contract with
damages. (NCC, Art. 1203
1. The debtor must absolutely perform the
Plurality of parties
chosen prestation. He cannot compel the
creditor to receive part of one and part of
the other undertaking; When there are various debtors or creditors, and
2. The debtor shall have no right to choose the obligation is joint, the consent of all is
those prestations which are impossible, necessary to make the selection effective
unlawful, or which could not have been the because none of them can extinguish the entire
object of the obligation (NCC, Art. 1200); obligation.
3. The debtor shall lose the right of choice
when among the prestation whereby he is If the obligation is solidary and there is no
alternatively bound, only one is stipulation to the contrary, the choice by one will
practicable (NCC, Art. 1202); be binding personally upon him; the choice of
4. The selection made by the debtor (or the one will be personally binding to him, but not as
creditor when it has been expressly to the others.
granted to him) cannot be subjected by
him to a condition or a term unless the Thus, if A and B solidarily bind themselves to
creditor (or debtor in case the choice is deliver a horse or a carabao to C, the selection of
with the creditor) consents thereto. A of the horse, when communicated to C, will
(Tolentino, 2002) bind him, and he cannot, later on, deliver the
carabao. It is, however, not binding on B, who
Effectivity of the choice in alternative may extinguish the obligation by delivering the
obligations carabao. (Tolentino, 2002)

UNIVERSITY OF SANTO TOMAS 400

2021 GOLDEN NOTES
 Civil Law
Effects of loss of objects in alternative One where the credit or debt shall be presumed
obligations to be divided into as many equal shares as there
are creditors or debtors, the credits or debts
DUE TO DUE TO being considered distinct from one another.
FORTUITOUS DEBTOR’S (NCC, Art. 1208) Each debtor is liable only for a
EVENT FAULT proportionate part of the debt and each creditor
Choice Belongs to Debtor to his proportionate share to the credit.
Creditor shall
have the right to Other terms for joint obligations are:
be indemnified
for damages a. joint simply;
Debtor is based on the b. mancomunada; or
All are c. pro rata.
released from value of the last
lost
the obligation. thing which
disappeared or Solidary obligations
last service
which became It is where each of the debtors obliges to pay the
impossible. entire obligation, while each one of the creditors
Debtor shall has the right to demand from any of the debtors,
Debtor shall the payment or fulfillment of the entire
deliver that
deliver that obligation. (NCC, Art. 1207; Pineda, 2000)
Some which he shall
which he shall
but not choose from
choose from Other terms for solidary obligations are:
all are among the
among the
lost remainder
remainder. a. Joint solidarily;
without
damages. b. Jointly and severally; or
Only one c. In solidum.
Deliver that which remains.
remains
Choice Belongs to Creditor Joint obligation v. Solidary obligation
Creditor may
claim the price or JOINT SOLIDARY
Debtor is OBLIGATION OBLIGATION
All are value of any of
released from Not presumed.
lost them with
the obligation. Must be
indemnity for
damages. expressly
Creditor may stipulated by
claim any of the parties, or
those subsisting Presumed by when the law
Creditor may Presumption
OR he may law. (NCC, Art. or the nature
choose from by law
Some choose any of 1208) of the
among the obligation
but not those which
remainder or requires
all are were lost, but it
that which solidarity.
lost is the price or
remains if only (NCC, Art.
value of with
one subsists. 1207)
right to damages
that can be Proportionate Obliged to pay
Liability of
claimed. part of the the entire
each debtor
Deliver that which remains. In case entire debt. obligation.
Only one Each creditor, Each creditor
of fault of debtor, creditor has a right
remains Right of the if there are has the right
to indemnity for damages.
creditor to several, is to demand
JOINT AND SOLIDARY OBLIGATIONS the entitled only from any of
(1992, 2001, 2008 BAR) fulfillment of to a the debtors,
the proportionate the payment
Joint obligations obligation part of the or fulfillment
credit. of the entire

401
 Obligations
obligation.
(Tolentino,
1999)
Character of an obligation
GR: When two or more creditors or two or more
debtors concur in one and the same obligation,
the presumption is that the obligation is joint.
XPNs: The obligation shall only be solidary
when: (LEN-CJ)
1. Law requires solidarity;
2. Expressly stipulated that there is solidarity;
3. Nature of the obligation requires solidarity;
e.g. Civil liability arising from crime.
4. Charge or condition is imposed upon heirs
or legatees and the will expressly makes the
charge or condition in solidum (Manresa); or
5. Solidary responsibility is imputed by a final
Judgment upon several defendants.
(Gutierrez v. Gutierrez, 56 Phil 177, GR
34840, September 23, 1931)
Q: Chua bought and imported to the
Philippines dicalcium phosphate. When the
cargo arrived at the Port of Manila, it was
discovered that some were in apparent bad
condition. Thus, Chua filed with Smith Bell
and Co., Inc. (claiming agent of First
Insurance Co.) a formal statement of claim
for the loss. No settlement of the claim having
been made, Chua then filed an action. Is
Smith, Bell, and Co., solidarily liable upon a
marine insurance policy with its disclosed
foreign principal?
A: NO. Art. 1207 of the Civil Code clearly
provides that "there is a solidary liability only
when the obligation expressly so states, or when
the law or the nature of the obligation requires
solidarity." The well-entrenched rule is that
solidary obligation cannot lightly be inferred. It
must be positively and clearly expressed. (Smith,
Bell & Co., Inc. v. CA, G.R. No. 110668, February 6,
1997)
Q: The labor arbiter rendered a decision, the
fallo of which states the following
respondents as liable, namely: FCMC, Sicat,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Gonzales, Chiu Chin Gin, Lo Kuan Chin, and
INIMACO. INIMACO questions the execution,
alleging that the alias writ of execution
altered and changed the tenor of the decision
by changing their liability from joint to
solidary, by the insertion of the words
"AND/OR.” Is the liability of INIMACO
pursuant to the decision of the labor arbiter
solidary or not?
A: INIMACO's liability is not solidary but
merely joint. Well-entrenched is the rule that
solidary obligation cannot lightly be inferred.
There is a solidary liability only when the
obligation expressly so states, when the law so
provides or when the nature of the obligation so
requires.
In the dispositive portion of the labor arbiter,
the word "solidary" does not appear. The said
fallo expressly states the following respondents
therein as liable, namely: Filipinas Carbon
Mining Corporation, Sicat, Gonzales, Chiu Chin
Gin, Lo Kuan Chin, and INIMACO. Nor can it be
inferred therefrom that the liability of the six
respondents in the case below is solidary; thus,
their liability should merely be joint. (INIMACO v.
NLRC, G.R. No. 101723, May 11, 2000)
Q: Mactan Rock Industries, through its
President and Chief Executive Officer
Tompar, entered into a Technical
Consultancy Agreement (TCA) with Germo,
whereby the parties agreed, inter
alia, that: (a) Germo shall stand as MRII's
marketing consultant who shall take charge
of negotiating, perfecting sales, orders,
contracts, or services of MRII, but there shall
be no employer-employee relationship
between them; and (b) Germo shall be paid
on a purely commission basis, including a
monthly allowance of P5,000.00. During the
effectivity of the TCA, Germo successfully
negotiated and closed with International
Container Terminal Services, Inc. (ICTSI) a
supply contract of 700 cubic meters of
purified water per day. Accordingly, MRII
commenced supplying water to ICTSI on
February 22, 2007, and in turn, the latter
religiously paid MRII the corresponding
monthly fees. Despite the foregoing, MRII
allegedly never paid Germo his rightful
commissions amounting to P2,225,969.56 as
of December 2009, inclusive of interest.
Initially, Germo filed a complaint before the
National Labor Relations Commission
402
 Civil Law
(NLRC), but the same was dismissed for lack
of jurisdiction due to the absence of
employer-employee relationship between
him and MRII. Germo filed the instant
complaint praying that MRII and Tompar pay
him for unpaid commissions with legal
interest from the time they were due until
fully paid, moral damages, exemplary
damages, and the costs of suit.
MRII and Tompar averred, among others,
that: (a) there was no employer-employee
relationship between MRII and Germo as the
latter was hired as a mere
consultant; (b) Germo failed to prove that the
ICTSI account materialized through his
efforts as he did not submit the required
periodic reports of his negotiations with
prospective clients; and (c) ICTSI became
MRII's client through the efforts of a certain
Ed Fornes. Are MRII and Tompar, as the CEO
and President, solidarily liable to pay
Germo?
A: NO. It is a basic rule that a corporation is a
juridical entity vested with legal and personality
separate and distinct from those acting for and
on behalf of, and from the people comprising it.
As a general rule, directors, officers, or
employees of a corporation cannot be held
personally liable for the obligations incurred by
the corporation unless it can be shown that such
director/officer/employee is guilty of negligence
or bad faith and that the same was clearly and
convincingly proven.
Before a director or officer of a corporation can
be held personally liable for corporate
obligations, the following requisites must
concur: (1) the complainant must allege in the
complaint that the director or officer assented to
patently unlawful acts of the corporation, or that
the officer was guilty of gross negligence or bad
faith; and (2) the complainant must clearly and
convincingly prove such unlawful acts,
negligence or bad faith. In this case, Tompar's
assent to the patently unlawful acts of the MRII
or that his acts were tainted by gross negligence
or bad faith was not alleged in Germo's
complaint, much less proven during the course
of the trial. Therefore, the deletion of Tompar's
solidary liability with MRII is in order. (Mactan
Rock Industries v. Benfrei S. Germo, G.R. No.
228799, January 10, 2018)
Consequences of a joint obligation
403
1. Each debtor is liable only for a
proportionate part of the entire debt;
2. Each creditor, if there are several, is entitled
only to a proportionate part of the credit;
2. The demand made by one creditor upon one
debtor, produces effects of default only as
between them;
3. Interruption of prescription caused by the
demand made by one creditor upon one
debtor, will NOT benefit the co-creditors or
the co-debtors;
4. Insolvency of a debtor will not increase the
liability of his co-debtor;
5. Vices of each obligation emanating from a
particular debtor or creditor will not affect
the others;
6. In indivisible or joint obligation, the defense
of res judicata of one does not extend to the
others (8 Manresa, 200-201);
7. The delay on the part of only one of the joint
debtors does not produce effects with
respect to the others, and if the delay is
produced through the acts of only one of the
joint creditors, the others cannot take
advantage thereof.
JOINT INDIVISIBLE OBLIGATIONS
The obligation is joint because the parties are
merely proportionately liable. It is indivisible
because the object or subject matter is not
physically divisible into different parts. In other
words, it is joint as to liabilities of the debtors or
rights of the creditors but indivisible as to
compliance. This obligation also constitutes the
middle ground between a joint obligation and a
solidary obligation. (De Leon, 2010)
A joint indivisible obligation gives rise to
indemnity for damages from the time any one of
the debtors does not comply with his
undertaking. The debtors who may have been
ready to fulfill their promises shall not
contribute to the indemnity beyond the
corresponding portion of the price of the thing
or of the value of the service in which the
obligation consists. (NCC, Art. 1224)
Characteristics
1. Obligation is joint, but since it is indivisible,
creditor must proceed against all the joint
debtors ;
2. Demand must be to all debtors ;
3. In case of insolvency of one debtor, others
are not liable for his share ;
 Obligations
4. If there are joint creditors, delivery must be
made to all unless authorized by others ;
5. Each joint creditor may renounce his share.
Effects of different permutations of joint
indivisible obligations
1. If there are two or more debtors, compliance
with the obligation requires the concurrence
of all the debtors, although each for his own
share. The obligation can be enforced only
by preceding against all of the debtors;
2. If there are two or more creditors, the
concurrence or collective act of all the
creditors, although each of his own shares, is
also necessary for the enforcement of the
obligation;
3. Each credit is distinct from one another;
therefore, a joint debtor cannot be required
to pay for the share of another with debtor,
although he may pay if he wants to.
In case of insolvency of one of the debtors, the
others shall not be liable for his shares. To hold
otherwise would destroy the joint character of
the obligation. (NCC, Art. 1209)
Effect of breach of a joint indivisible
obligation by one debtor
If one of the joint debtors fails to comply with his
undertaking and the obligation can no longer be
fulfilled or performed, it will then be converted
into one of indemnity for damages. Innocent
joint debtor shall not contribute to the
indemnity beyond his corresponding share of
the obligation.
SOLIDARY OBLIGATIONS
Each of the debtors is obliged to pay the entire
obligation, and each one of the creditors has the
right to demand from any of the debtors the
payment or fulfillment of the entire obligation.
Kinds of solidary obligation
1. Passive – Solidarity on the part of the
debtors.
2. Active – Solidarity on the part of the
creditors.
3. Mixed – Solidarity on both sides.
4. Conventional – agreed by the parties.
5. Legal – imposed by law.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
JUDICIAL EFFECTS OF ACTIVE AND PASSIVE
SOLIDARITY (TOLENTINO, 2002)
Active solidarity
The essence of active solidarity consists in the
authority of each creditor to claim and enforce
the rights of all, with the resulting obligation of
paying everyone what belongs to him; there is
no merger, much less a renunciation of rights,
but only mutual representation. It is thus
essentially a mutual agency. Its juridical effects
may be summarized as follows:
1. Since it is a reciprocal agency, the death of a
solidary creditor does not transmit the
solidarity to each of his heirs but to all of
them taken together;
2. Each creditor represents the others in the
act of receiving payment and in all other acts
which tend to secure the credit or make it
more advantageous. Hence, if he receives
only a partial payment, he must divide it
among the other creditors. He can interrupt
the period of prescription or render the
debtor in default, for the benefit of all other
creditors;
3. One creditor, however, does not represent
the others in such acts as novation (even if
the credit becomes more advantageous),
compensation and remission. In these cases,
even if the debtor is released, the other
creditors can still enforce their rights
against the creditor who made the novation,
compensation, or remission;
4. The creditor and its benefits are divided
equally among the creditors, unless there is
an agreement among them to divide
differently. Hence, once the credit is
collected, an accounting and a distribution
of the amount collected should follow ;
5. The debtor may pay to any solidary creditor,
but if a judicial demand is made on him, he
must pay only to the plaintiff; and
6. Each creditor may renounce his right even
against the will of the debtor, and the latter
need not thereafter pay the obligation to the
former.
Passive solidarity
404
 Civil Law
In passive solidarity, the essence is that each
debtor can be made to answer for the others, Refers to the
with the right on the part of the debtor-payor to As to the vinculum Refers to the
recover from the others their respective shares. kind of existing prestation or
In so far as the payment is concerned, this kind unity it between the object of the
of solidarity is similar to a mutual guaranty. Its refers to subjects or contract.
effects are as follows: parties.

1. Each debtor can be required to pay the

entire obligation, but after the payment, he As to the
Does not
can recover from the co-debtors their requiremen Requires the
require
respective shares; t of plurality of
plurality of
plurality of parties or
subjects or
2. The debtor who is required to pay may set parties or subjects.
parties.
up by way of compensation his own claim subjects
against the creditor. In this case, the effect is In case of
the same as that of payment; breach, it is
In case of
converted to
3. The total remission of a debt in favor of a breach, the
one of
debtor releases all the debtors; but when liability of the
indemnity for
this remission affects only the share of one solidary
damages and
debtor, the other debtors are still liable for debtors
As to the the
the balance of the obligation; although
effect of indivisibility of
converted into
breach the obligation
4. All the debtors are liable for the loss of the one of the
is terminated
thing due, even if such loss is caused by only indemnity for
and so each
one of them, or by fortuitous event after one damages
debtor is liable
of the debtors has incurred in delay; remains
only for his part
solidary.
of the
5. The interruption of prescription as to one indemnity.
debtor affects all the others; but the Death of
renunciation by one debtor of the solidary
prescription already had does not prejudice debtor Heirs of the
the others, because the extinguishment of As to the terminates the debtor remain
the obligation by prescription extinguishes effect of solidarity, the bound to
also the mutual representation among the death of a tie, or perform the
solidary debtors; and party vinculum same
being prestation.
6. The interest due by reason of the delay by intransmissibl
one of the debtors is borne by all of them. e to the heirs.
NOTE: Example of words that connote solidary Rules in solidary obligations (1998, 2003
obligation: a) joint and several; b) in solidum; c) Bar)
individually and collectively; d) each will pay the
whole value; e) “I promise to pay” and there are 1. Anyone of the solidary creditors may collect
two or more signatures; and f) juntos o or demand payment of the whole obligation;
separadamente. there is mutual agency among solidary
debtors (NCC, Arts. 1214 and 1215) ;
Solidarity vs. Indivisibility
2. Any of the solidary debtor may be required
INDIVISIBILIT to pay the whole obligation; there is mutual
BASIS SOLIDARITY
Y guaranty among solidary debtors (NCC,
Articles 1216, 1217 & 1222);

3. Each one of solidary creditors may do

whatever may be useful to the others, but

405
 Obligations
not anything prejudicial to them (NCC,
Article. 1212); however, any novation,
compensation, confusion, or remission of
debt made by any solidary creditors or with
any of the solidary debtors shall extinguish
the obligation without prejudice to his
liability for the shares of other solidary
creditors. (NCC, Articles. 1215 and 1219)
Q: Joey, Jovy, and Jojo are solidary debtors
under a loan obligation of P300,000.00 which
has fallen due. The creditor has, however,
condoned Jojo's entire share in the debt.
Since Jovy has become insolvent, the creditor
makes a demand on Joey to pay the debt.
a. How much, if any, may Joey be compelled
to pay?
b. To what extent, if at all, can Jojo be
compelled by Joey to contribute to such
payment? (1998 BAR)
A:
a. Joey can be compelled to pay only the
remaining balance of P200,000, in view of
the remission of Jojo’s share by the creditor.
(NCC, Art. 1219)
b. Jojo can be compelled by Joey to contribute
P50,000. When one of the solidary debtors
cannot, because of his insolvency, reimburse
his share to the debtor paying the obligation,
such share shall be borne by all his co-
debtors, in proportion to the debt of each.
[NCC, Art. 1217(3)]
Since the insolvent debtor's share, which
Joey paid was P100,000, and there are only
two remaining debtors - namely Joey and
Jojo - these two shall share equally the
burden of reimbursement. Jojo may thus be
compelled by Joey to contribute P50,000.
Q: Iya and Betty owed Jun P500,000 for
advancing their equity in a corporation they
joined as incorporators. Iya and Betty bound
themselves solidarily liable for the debt.
Later, Iya and Jun became sweethearts, so
Jun condoned the debt of P500,000. May Iya
demand from Betty P250,000 as her share in
the debt? Explain with legal basis? (2015
Bar)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A: NO. Iya may not demand the P250,000 from
Betty because the entire obligation has been
condoned by the creditor Jun. In a solidary
obligation, the remission of the whole obligation
obtained by one of the solidary debtors does not
entitle him to reimbursement from his co-
debtors. (NCC, Art. 1220)
Q: Juancho, Don, and Pedro borrowed
P150,000 from their friend Cita to put up an
internet café, orally promising to pay her the
full amount after one year. Because of their
lack of business know-how, their business
collapsed. Juancho and Don ended up
penniless, but Pedro was able to borrow
money and put up a restaurant which did
well. Can Cita demand that Pedro pay the
entire obligation since he, together with the
two others, promised to pay the full amount
after one year? Defend your answer. (2015
BAR)
A: NO. The obligation in this case is presumed to
be joint. The concurrence of two or more
creditors or two or more debtors in one and the
same obligation does not imply that each one of
the former has the right to demand, or that each
one of the latter is bound to render the entire
compliance of the prestation. (NCC, Art. 1207) In
a joint obligation, there is no mutual agency
among the joint debtors such that if one of them
is insolvent the others shall not be liable for his
share.
To whom payment should be made in a
solidary obligation
GR: To any of the solidary creditors.
XPN: If demand, judicial or extra-judicial, has
been made by one of the creditors, payment
should be made to him. (NCC, Art. 1214)
In cases of solidary creditors, one may act for
all
Each one of the solidary creditors may execute
acts that may be useful or beneficial to the
others, but he may not do anything which may
be prejudicial to them. (NCC, Art. 1212)
NOTE: Prejudicial acts may still have valid legal
effects, but the performing creditor shall be
liable to his co-creditors. (Pineda, 2000)
406
 Civil Law
Effects of assignment of rights in a solidary
obligation
GR: A solidary creditor cannot assign his right
because it is predicated upon mutual confidence,
meaning the personal qualification of each
creditor had been taken into consideration when
the obligation was constituted. (NCC, Art. 1213)
XPNs:
1. Assignment to co-creditor; or
2. Assignment is with the consent of co-
creditor.
DIVISIBLE AND INDIVISIBLE OBLIGATIONS
Divisible obligations
Those which have as their object a prestation
which is susceptible of partial performance with
the essence of the obligation being changed. An
obligation the object of which, in its delivery or
performance, is capable of partial performance.
Indivisible obligations
Those which have as their object a prestation
which is not susceptible of partial performance,
because otherwise the essence of the obligation
will be changed. The obligation is clearly
indivisible because the performance of the
contract cannot be done in parts; otherwise, the
value of what is transferred is diminished.
(Nazareno v. CA, G.R. No. 138842, October 18,
2000) Those where the prestation cannot be
performed by parts without altering its essence.
Kinds of Indivisibility
1. By operation of law
2. By will of the parties
3. By the nature of the obligation
Divisible v. Indivisible obligations
DIVISIBLE INDIVISIBLE
Susceptibility of an Non-susceptibility to
obligation to be be performed partially.
performed partially. Partial performance is
tantamount to non-
performance.
407
NOTE: The divisibility of the object does not
necessarily determine the divisibility of the
obligation; while the indivisibility of the object
carries with it the indivisibility of the obligation.
Test of divisibility
Whether or not the prestation is susceptible of
partial performance, not in the sense of
performance in separate or divided parts, but in
the sense of the possibility of realizing the
purpose which the obligation seeks to obtain. It
is indivisible if a thing which could be divided
into parts and as divided, its value is impaired
disproportionately. (Pineda, 2000)
Obligations that are deemed indivisible
1. Obligations to give definite things;
2. Those which are not susceptible of partial
performance;
3. Even the object or service may be physically
divisible, an obligation is indivisible if so
provided (i) by law or (ii) intended by the
parties. (NCC, Art. 1225)
NOTE: A pledge or mortgage is one and
indivisible by provision of law, and the rules
apply even if the obligation is joint and not
solidary. (NCC, Art. 2089)
Obligations that are deemed divisible
When the object of the obligation involves:
1. Certain number of days of work;
2. Accomplishment of work by metrical unit;
3. Analogous things which are by their nature
susceptible of partial performance. (NCC,
Art. 1225)
Factors to determine whether an obligation
is divisible of indivisible
1. The will or intention of the parties (express
or implied);
2. The objective or purpose of the stipulated
prestation;
3. The nature of the thing; and
 Obligations
4. The provisions of law affecting the also be any other thing stipulated by the parties,
prestation. including an act or abstention.

OBLIGATIONS OBLIGATIONS Double functions:

TO GIVE TO DO
In obligations to do, 1. To provide for liquidated damages; and
In obligations to give,
indivisibility is also
those for the delivery
presumed, and it is only 2. To strengthen the coercive force of the
of certain objects
when they are under the obligation by the threat of greater
such as an animal or
exceptional cases responsibility in case of breach.
a chair are
mentioned in NCC, Art.
indivisible. [NCC,
1225(2) that they are Kinds of penalties
1225 (1)]
divisible.
1. As to origin
Effect of illegality of a part of a contract
1. Legal - it is legal when it is constituted
1. Divisible contract – the illegal part is void by law.
and unenforceable, meanwhile, the legal 2. Conventional - it is constituted by
part is valid and enforceable. (NCC, Art. agreement of the parties.
1420)
2. As to purpose
2. Indivisible contract – the entire contract is
void and unenforceable. a. Compensatory - it is compensatory when
it is established for the purpose of
Partial performance in indivisible obligation indemnifying the damages suffered by
the obligee or creditor in case of breach
GR : In indivisible obligations, partial of the obligation.
performance is equivalent to non-performance. b. Punitive - it is punitive when it is
established for the purpose of punishing
XPNs : (NCC, Articles 1234 and 1235). the obligor or debtor in case of breach
of the obligation.
1. Where the obligation has been substantially
performed in good faith, the debtor may 3. As to effect
recover as if there had been complete
performance, minus the damages suffered a. Subsidiary - it is subsidiary when only
by the creditor; and the penalty may be demanded in case of
breach of the obligation;
2. Where the creditor accepts performance b. Joint - it is joint when the injured party
knowing its incompleteness and without may demand the enforcement of both
protest, the obligation is deemed fully the penalty and the principal obligation.
performed.
Q: Can the debtor just choose penalty over
OBLIGATIONS WITH A PENAL CLAUSE non-fulfillment?

An obligation with a penal clause is one with an A:

accessory undertaking by virtue of which the
obligor assumes a greater liability in case of
breach of the obligations. (Jurado, 2009)
Penal clause
A coercive means to obtain from debtor
compliance. It is an accessory undertaking to
assume greater liability in case of breach. The
penalty is generally a sum of money. But it can
GR: The debtor cannot exempt himself from the
performance of the obligation by paying the
penalty. (NCC, Art. 1227)
XPN: When the right has been expressly
reserved to the debtor. (NCC, Art. 1227)
Creditor cannot demand both the fulfillment
of the principal obligation and the penalty

UNIVERSITY OF SANTO TOMAS 408

2021 GOLDEN NOTES
 Civil Law
GR: The creditor cannot demand the fulfillment case, it assumes the form of a guaranty which
of the obligation and the satisfaction of the is valid, under Art. 2052 of the NCC; and
penalty at the same time. (NCC, Art. 1227)
2. When the nullity of the principal obligation
XPNs: itself gives rise to the liability of the debtor
for damages.
1. When the right has been clearly granted to
him; Instances where penalty may be reduced by
2. If the creditor has decided to require the the courts (PIU)
fulfillment of the obligation, the
performance thereof should become 1. Partial performance of the obligation;
impossible without his fault, the penalty
may be enforced. (NCC, Art. 1227) 2. Irregular performance of the obligation;

NOTE: The creditor need not present proof of
actual damages suffered by him in order that the
penalty may be demanded. (NCC, Art. 1228) In
this jurisdiction, there is no difference between a
penalty and liquidated damages, so far as the
results are concerned. Whatever differences
exist between them, as a matter of language,
they are legally treated the same. (Rabuya, 2017)
Effect of incorporating a penal clause in an
obligation
GR: The penalty fixed by the parties is
compensation or substitute for damages in case
of breach.
3. Penalty is Unconscionable even if there has
been no performance.
Q: When can the creditor demand the
enforcement of the penalty?
A: Only when the non-performance is due to the
fault or fraud of the debtor. But the creditor does
not have to prove that there was fault or fraud of
the debtor. The non-performance gives rise to
the presumption of fault; and in order to avoid
the payment of penalty, the debtor has the
burden of proving an excuse – either that the
failure of the performance was due to force
majeure or to the acts of the creditor himself.

XPNs: Damages shall still be paid even if there is NOTE: When there are several debtors in an
a penal clause if: obligation with a penal clause, the divisibility of
the principal obligation among the debtors does
1. There is a stipulation to the contrary; not necessarily carry with it the divisibility of
2. The debtor refuses to pay the agreed the penalty among them.
penalty; or
3. The debtor is guilty of fraud in the EXTINGUISHMENT OF OBLIGATIONS
fulfillment of the obligation. (NCC, Art. 1126)
Modes of extinguishment of an obligation
NOTE: The nullity of the penal clause does not
carry with it that of the principal obligation. For Principal modes (PaLoCo3N)
example, the penal clause may be void because it
is contrary to law, morals, good custom, public 1. Payment or performance;
order, or public policy. In such case, the principal 2. Loss of the thing due;
obligation subsists if valid. 3. Condonation or remission of debt;
4. Confusion or merger;
GR: The nullity of the principal obligation carries 5. Compensation;
with it that of the penal clause. (NCC, Art. 1230) 6. Novation (NCC, Art. 1231).
XPNs: The penal clause subsists even if the Other Modes (PARF)
principal obligation cannot be enforced:
7. Annulment;
1. When the penalty is undertaken by a third 8. Rescission;
person precisely for an obligation which is 9. Fulfillment of a resolutory condition;
unenforceable, voidable, or natural, in which 10. Prescription. (NCC, Art. 1231)

409
 Obligations
NOTE: The enumeration is not exclusive.
Other causes not expressly mentioned,
(Rabuya, 2017)
11. Death – in obligations which are of purely
personal character;
12. Arrival of resolutory period;
13. Mutual dissent;
14. Change of civil status;
15. Happening of unforseen events
Mutual desistance as another mode of
extinguishing obligations
It is a concept derived from the principle that
since mutual agreement can create a contract,
mutual disagreement by the parties can likewise
cause its extinguishment. (Saura v. Development
Bank of the Phils., G.R. No. L-24968, April 27,
1972)
PAYMENT OR PERFORMANCE
Payment is the fulfillment of the obligation by
the realization of the purposes for which it was
constituted. (Jurado, 2010) (1998, 2009 Bar)
Payment is defined as not only the delivery of
money but also the performance, in any other
manner, of an obligation. It is the satisfaction or
fulfillment of a prestation that is due, resulting in
the extinguishment of the obligation of the
debtor. (Pineda)
Payment may consist not only in the delivery of
money but also the giving of a thing (other than
money), the doing of an act, or not doing of an
act. (NCC, Art. 1232)
Characteristics of payment
Integrity – The payment of the
obligation must be completely made;
Identity – The payment of the obligation
must consist in the performance of the very
thing due;
Indivisibility – The payment of the
obligation must be in its entirety.
Integrity
GR: Payment or performance must be complete.
(NCC, Art. 1233)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
XPNs:
1. Substantial performance performed in good
faith (NCC, Art. 1234);
2. When the obligee accepts the performance,
knowing its incompleteness or irregularity
and without expressing any protest or
objection (NCC, Art. 1235); or
3. Debt is partly liquidated and partly
unliquidated, but the liquidated part of the
debt must be paid in full.
Substantial Performance Doctrine
It provides the rule that if a good faith attempt to
perform does not precisely meet the terms of an
agreement or statutory requirements, the
performance will still be considered complete if
the essential purpose is accomplished. (Black’s
Law Dictionary, 2009)
Requisites
1. Attempt in good faith to comply with
obligation;
2. Slight deviation from the obligation; and the
omission or defect of the performance is
technical and unimportant; and does not
pervade the whole, or is not material that
the object which the parties intended to
accomplish is not attained. (Tolentino, 2002)
Identity of the thing
GR: Thing paid must be the very thing due and
cannot be another thing even if of the same or
more quality and value.
XPNs:
1. Dation in payment;
2. Novation of the obligation; and
3. Obligation is facultative.
NOTE: In an obligation to do or not to do, an act
or forbearance cannot be substituted by another
act or forbearance against the obligee’s will.
Indivisibility
GR: Debtor cannot be compelled by the creditor
to perform obligation in parts and neither can
the debtor compel the creditor to accept
obligation in parts.
410
 Civil Law
XPNs : When:
1. Partial performance has been agreed upon;
2. Part of the obligation is liquidated and part
is unliquidated; or
3. To require the debtor to perform in full is
impractical.
Acceptance by a creditor of a partial payment
NOT an abandonment of its demand for full
payment
When creditors receive partial payment, they
are not ipso facto deemed to have abandoned
their prior demand for full payment.
To imply that creditors accept partial payment
as complete performance of their obligation,
their acceptance must be made under
circumstances that indicate their intention to
consider the performance complete and to
renounce their claim arising from the defect.
NOTE: While Art. 1248 of the Civil Code states
that creditors cannot be compelled to accept
partial payments, it does not prohibit them from
accepting such payments. (Selegna Management
and Development Corp. v. UCPB, G.R. No. 165662,
May 3, 2006)
Requisites of a valid payment
1. The person who pays the debt must be the
debtor;
2. The person to whom payment is made must
be the creditor;
3. The thing to be paid or to be delivered must
be the precise thing or the thing required to
be delivered by the creditor;
4. The manner (if expressly agreed upon),
time, and place of payment, etc.; and
5. Acceptance by the creditor.
Kinds of payment
1. Normal - When the debtor voluntarily
performs the prestation stipulated;
2. Abnormal - When he is forced by means of a
judicial proceeding, either to comply with the
prestation or to pay the indemnity.
(Tolentino, 1991)
Person who pays
The following persons may effect payment and
compel the creditor to accept the payment:
1. Debtor himself;
2. His heirs and assigns;
3. His agents and representatives; or
4. Third persons who have a material interest
in the fulfillment of the obligation. ([NCC,
Art. 1236 (1)]
PAYMENT MADE BY THIRD PERSONS
GR: The creditor is not bound to accept payment
or performance by a third person.
XPNs:
1. When made by a third person who has
interest in the fulfillment of the obligation;
and
2. Contrary stipulation. (NCC, Art. 1236)
NOTE: The rules on payment by a third person
(NCC, Article. 1236 to 1238) cannot be applied to
the case of a third person who pays the
redemption price in sales with right of
repurchase. This is so because the vendor a retro
is not a debtor within the meaning of the law.
(Jurado, 2010)
Rights of a third person who made the
payment
1. If the payment was made with knowledge and
consent of the debtor:
a. Can recover the entire amount paid
(absolute reimbursement); or
b. Can be subrogated to all rights of the
creditor.
2. If the payment was made without the
knowledge or against the will of the debtor –
Can recover only insofar as payment has
been beneficial to the debtor (right of
conditional reimbursement).
NOTE: Payment made by a third person who
does not intend to be reimbursed by the debtor
is deemed to be a donation, which requires the
debtor's consent. But the payment is in any case
valid as to the creditor who has accepted it.
(NCC, Art. 1238)
Person to whom payment is made
Persons entitled to receive the payment:

411
 Obligations
1. The person in whose favor the obligation
has been constituted;
2. His successor in interest; or
3. Any person authorized to receive it. (NCC,
Art. 1240)
NOTE: Payment made to one having apparent
authority to receive the money will, as a rule, be
treated as though actual authority had been
given for its receipt. Likewise, if payment is
made to one who by law is authorized to act for
the creditor, it will work as a discharge. (Sps.
Miniano v. Concepcion, G.R. No. 172825, October
11, 2012)
Payment to an unauthorized person
GR: Payment to an unauthorized person is not a
valid payment (NCC, Art. 1241).
XPNs:
1. Payment to an incapacitated person if:
a. He kept the thing delivered; or
b. It has been beneficial to him (NCC, Art.
1241);
2. Payment to a third person insofar as it
redounded to the benefit of the creditor;
and
Benefit to the creditor need not be proved:
(RRE)
a. If after the payment, the third person
acquires the creditor’s Rights;
b. If the creditor Ratifies the payment to
the third person; or
c. If by the creditor’s conduct, the debtor
has been led to believe that the third
person had authority to receive the
payment (Estoppel). (NCC, Art. 1241)
3. Payment in good faith to the possessor of
credit. (NCC, Art. 1242)
NOTE : Payment made to the creditor by the
debtor after the latter has been judicially
ordered to retain the debt shall not be valid.
(NCC, Art. 1243)
SPECIAL FORMS OF PAYMENT
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Dation in Payment
Alienation by the debtor of a particular property
in favor of his creditor, with the latter’s consent,
for the satisfaction of the former’s money
obligation to the latter, with the effect of
extinguishing the said money obligation.
Application of Payment
Designation of the particular debt being paid by
the debtor who has two or more debts or
obligations of the same kind in favor of the same
creditor to whom the payment is made.
Payment by Cession
Debtor cedes his property to his creditors so the
latter may sell the same and the proceeds
realized applied to the debts of the debtor.
Tender of Payment
Voluntary act of the debtor whereby he offers to
the creditor for acceptance the immediate
performance of the former’s obligation to the
latter.
Consignation
Act of depositing the object of the obligation
with the court or competent authority after the
creditor has unjustifiably refused to accept the
same or is not in a position to accept it due to
certain reasons or circumstances.
DATION IN PAYMENT (dacion en pago)
The delivery and transmission of ownership of a
thing by the debtor to the creditor as an
accepted equivalent of the performance of the
obligation. The property given may consist not
only of a thing but also of a real right. (Tolentino,
2002) (2009 BAR)
NOTE: The undertaking partakes of the nature
of sale; that is, the creditor is really buying the
thing or property of the debtor, payment for
which is to be charged against the debtor’s debt.
As such, the essential elements of a contract of
sale, namely, consent, object certain, and cause
or consideration, must be present.
The requisites for dacion en pago are:
1. There must be a performance of the
prestation in lieu of payment (animo
solvendi), which may consist in the delivery
412
 Civil Law
of a corporeal thing or a real right or a credit
against the third person;
2. There must be some difference between the
prestation due and that which is given in
substitution (aliud pro alio); and
3. There must be an agreement between the
creditor and debtor that the obligation is
immediately extinguished by reason of the
performance of a prestation different from
that due. (Caltex Philippines, Inc. v. IAC, G.R.
No. 72703, November 13, 1992)
Q: Lopez obtained a loan in the amount of
P20,000.00 from the Prudential Bank. He
executed a surety bond in which he, as
principal, and PHILAMGEN as surety, bound
themselves jointly and severally for the
payment of the sum. He also executed a deed
of assignment of 4,000 shares of the Baguio
Military Institution in favor of PHILAMGEN.
Is the stock assignment made by Lopez
dation in payment or pledge?
A: The stock assignment constitutes a pledge
and not a dacion en pago. Dation in payment is
the delivery and transmission of ownership of a
thing by the debtor to the creditor as an
accepted equivalent of the performance of the
obligation. Lopez’s loan has not yet matured
when he "alienated" his 4,000 shares of stock to
PHILAMGEN. Lopez's obligation would only
arise when he defaults in the payment of the
principal obligation which is the loan, and
Philamgen had to pay for it. Since it is contrary
to the nature and concept of dation in payment,
the same could not have been constituted when
the stock assignment was executed. In case of
doubt as to whether a transaction is a pledge or
a dation in payment, the presumption is in favor
of pledge, the latter being the lesser
transmission of rights and interests. (Lopez v. CA,
G.R. No. L-33157, June 29, 1982)
Q: Cebu Asiancars Inc., with the conformity of
the lessor, used the leased premises as
collateral to secure payment of a loan which
Asiancars may obtain from any bank,
provided that the proceeds of the loan shall
be used solely for the construction of a
building which, upon the termination of the
lease or the voluntary surrender of the
leased premises before the expiration of the
contract, shall automatically become the
property of the lessor. Meeting financial
413
difficulties and incurring an outstanding
balance on the loan, Asiancars conveyed
ownership of the building on the leased
premises to MBTC, by way of "dacion en
pago."Is the dacion en pago by Asiancars in
favor of MBTC valid?
A: YES. MBTC was a purchaser in good faith.
MBTC had no knowledge of the stipulation in the
lease contract. Although the same lease was
registered and duly annotated, MBTC was
charged with constructive knowledge only of the
fact of the lease of the land and not of the
specific provision stipulating transfer of
ownership of the building to the Jaymes upon
termination of the lease. While the alienation
was in violation of the stipulation in the lease
contract between the Jaymes and Asiancars,
MBTC’s own rights could not be prejudiced by
Asiancars’ actions unknown to MBTC. Thus, the
transfer of the building in favor of MBTC was
valid and binding. (Jayme v. CA, G.R. No. 128669,
October 4, 2002)
Assignment of credit
An agreement by virtue of which the owner of a
credit, known as the assignor, by a legal cause,
such as sale, dation in payment, exchange or
donation, and without the consent of the debtor,
transfers his credit and accessory rights to
another, known as the assignee. The assignee
acquires the power to enforce it to the same
extent as the assignor could enforce it against
the debtor. It may be in the form of a sale, but at
times it may constitute a dation in payment, such
as when a debtor, in order to obtain a release
from his debt, assigns to his creditor a credit he
has against a third person. As a dation in
payment, the assignment of credit operates as a
mode of extinguishing the obligation; the
delivery and transmission of ownership of a
thing (in this case, the credit due from a third
person) by the debtor to the creditor is accepted
as the equivalent of the performance of the
obligation.
Q: G & P Builders obtained a loan from
Metrobank and mortgaged parcels of land as
collateral. The parties executed a
Memorandum of Agreement where they
agreed that some parcels of the land
mortgaged would be released and sold. The
proceeds amounting to P15,000,000.00 were
deposited with Metrobank. Elite Union and
Metrobank entered into a Loan Sale and
 Obligations
Purchase Agreement where the latter sold G
& P’s loan account to Elite Union. Metrobank
claims that it is still entitled to the
P15,000,000.00 proceeds despite the sale of
G & P’s loan account to Elite Union.
Is Metrobank entitled to the P15,000,000.00
deposit?
A: NO. Through the assignment of credit, the
new creditor is entitled to the rights and
remedies available to the previous creditor.
Moreover, under Article 1627 of the Civil Code,
"the assignment of a credit includes all the
accessory rights, such as a guaranty, mortgage,
pledge, or preference." The Loan Sale and
Purchase Agreement entitled Elite Union to all
the rights and interests that petitioner had as a
creditor of respondent G & P, including the
securities of the loan account. What was sold to
Elite Union under the Loan Sale and Purchase
Agreement was respondent G & P's total loan
obligation inclusive of the remaining securities
and proceeds from the sale of some of the
securities as stated in the first MOA.
(Metropolitan Bank & Trust Company v. G & P
Builders, Incorporated, Spouses Elpidio, and Rose
Violet Paras, Spouses Jesus and Ma. Consuelo
Paras and Victoria Paras, G.R. No. 189509,
November 23, 2015, as penned by J. Leonen)
FORM OF PAYMENT
1. Payment in cash – all monetary obligations
shall be settled in Philippine currency.
However, the parties may agree that the
obligation be settled in another currency at
the time of payment. (R.A. 8183, Sec. 1)
2. Payment in check or other negotiable
instrument – not considered payment, they
are not considered legal tender and may be
refused by the creditor except when:
a. the document has been encashed; or
b. it has been impaired through the fault of
the creditor. (NCC, Art. 1249)
PAYMENT IN CASH (2008 BAR)
Legal tender
Legal tender means such currency which in a
given jurisdiction can be used for the payment of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
debts, public and private, and which cannot be
refused by the creditor. (Tolentino, 2002)
The legal tender covers all notes and coins
issued by the Bangko Sentral ng Pilipinas and
guaranteed by the Republic of the Philippines.
The amount of coins that may be accepted as
legal tender are:
1. One-Peso, Five-Pesos, 10-Pesos coins in
amount not exceeding P1,000.00
2. 25 centavos or less – in an amount not
exceeding P100. 00. (BSP Circular No. 537,
Series of 2006, July 18, 2006)
Q: Northwest Airlines, through its Japan
Branch, entered into an International
Passenger Sales Agency Agreement with CF
Sharp, authorizing the latter to sell its air
transport tickets. CF Sharp failed to remit the
proceeds of the ticket sales, thus, Northwest
Airlines filed a collection suit before the
Tokyo District Court which rendered
judgment ordering CF Sharp to pay
83,158,195 Yen and damages for the delay at
the rate of 6% per annum. Unable to execute
the decision in Japan, Northwest Airlines
filed a case to enforce said foreign judgment
with the RTC of Manila. What is the rate of
exchange that should be applied for the
payment of the amount?
A: The repeal of R.A. 529 by R.A. 8183 has the
effect of removing the prohibition on the
stipulation of currency other than Philippine
currency, such that obligations or transactions
may now be paid in the currency agreed upon by
the parties. Just like R.A. 529, however, the new
law does not provide for the applicable rate of
exchange for the conversion of foreign currency-
incurred obligations in their peso equivalent. It
follows, therefore, that the jurisprudence
established in R.A. 529 regarding the rate of
conversion remains applicable. Thus, in Asia
World Recruitment, Inc. v. National Labor
Relations Commissio (GR 113363, August 24,
1999), the SC, applying RA 8183, sustained the
ruling of the NLRC that obligations in foreign
currency may be discharged in Philippine
currency based on the prevailing rate at the time
of payment. It is just and fair to preserve the real
value of the foreign exchange-incurred
obligation to the date of its payment. (C.F. Sharp
& Cp., Inc. v. Northwest Airlines, Inc., G.R. No.
133498, April 18, 2002).
414
 Civil Law
PAYMENT BY NEGOTIABLE INSTRUMENT
(2008 BAR)
Rule on tender payment as to checks
Q: When does payment by a negotiable
instrument produce the effect of payment?
A: (1) Only when it is encashed, or (2) when
through the fault of the creditor, they have been
impaired. [NCC, Art. 1249 (2)]
A check does not constitute as a legal tender,
thus a creditor may validly refuse it. However,
this does not prevent a creditor from accepting a
check as payment – the creditor has the option
and the discretion of refusing or accepting it.
(Far East Bank & Trust Company v. Diaz Realty,
Inc., G.R. No. 138588, August 23, 2001)
NOTE: While it is true that the delivery of a
check produces the effect of payment only when
it is encashed, pursuant to Art. 1249 of the CC,
the rule is otherwise if the debtor is prejudiced
by the creditor's unreasonable delay in
presentment. The payee of a check would be a
creditor under this provision, and if its non-
payment is caused by his negligence, payment
will be deemed effected, and the obligation for
which the check was given as conditional
payment will be discharged. (Papa v. Valencia &
Co., Inc., G.R. No. 105188, January 23, 1998)
Q: Diaz & Company obtained a loan from
Pacific Banking Corp which was secured by a
real estate mortgage. ABC rented an office
space in the building constructed on the
properties covered by the mortgage contract.
The parties then agreed that the monthly
rentals shall be paid directly to the
mortgagee for the lessor's account.
Thereafter, FEBTC purchased the credit of
Diaz & Company in favor of PaBC, but it was
only after two years that Diaz was informed
about it. Diaz asked the FEBTC to make an
accounting of the monthly rental payments
made by Allied Bank. Diaz tendered to FEBTC
the amount of P1, 450, 000. 00 through an
Interbank check, in order to prevent the
imposition of additional interests, penalties
and surcharges on its loan but FEBTC did not
accept it as payment, instead, Diaz was asked
to deposit the amount with the FEBTC’s
Davao City Branch Office. Was there a valid
tender of payment?
415
A: YES, there was a valid tender of payment.
Jurisprudence holds that, generally, a check does
not constitute legal tender and that a creditor
may validly refuse it. It must be emphasized,
however, that this dictum does not prevent a
creditor from accepting a check as payment. In
other words, the creditor has the option and the
discretion of refusing or accepting it. (FEBTC v.
Diaz Realty Inc., G.R. No. 138588, August 23,
2001)
Burden of proving payment in an action for
sum of money
The party who pleads payment as a defense has
the burden of proving that such payment has, in
fact, been made.
EXTRAORDINARY INFLATION OR DEFLATION
(2001 BAR)
Extraordinary inflation
Extraordinary inflation exists when there is a
decrease or increase in the purchasing power of
the Philippine currency which is unusual or
beyond the common fluctuation in the value of
said currency, and such decrease or increase
could not have been reasonably foreseen or was
manifestly beyond the contemplation of the
parties at the time of the establishment of the
obligation. (Tolentino, 2002)
In case an extraordinary inflation or deflation of
the currency stipulated should supervene, the
value of the currency at the time of the
establishment of the obligation shall be the basis
of payment unless there is an agreement to the
contrary. (NCC, Art. 1250)
The doctrine of unforeseen risks can be applied
when the currency is devaluated in terms
beyond what could have been reasonably
foreseen by the parties, and the effects of the
devaluation should not be borne by the creditor
alone. The revaluation of the credit in such cases
must be made according to the principles of
good faith and in view of the circumstances of
each particular case, recognizing the real value
of the credit as in consonance with the intent of
the parties.
NOTE: Requisites for application of Art. 1250,
NCC. (Rabuya, 2017)
 Obligations
1. That there was an official declaration of extra-
ordinary inflation or deflation from the BSP;
2. That the obligation was contractual in nature;
and
3. That the parties expressly agreed to consider
the effects of the extraordinary inflation or
deflation.
PLACE OF PAYMENT
GR: Payment must be made in the place
designated in the obligation. (NCC, Art. 1251)
XPN: If there is no express designation or
stipulation in the obligation:
1. At the place where the thing might be at the
time the obligation was constituted – If the
obligation is to deliver a determinate thing;
2. At the domicile of the debtor – In any other
case. (NCC, Art. 1251)
NOTE: Governs only unilateral obligations since
reciprocal obligations are governed by special
rules. (Jurado, 2010)
Moreover, if the debtor changes his domicile in
bad faith or after he has incurred in delay, the
additional expenses shall be borne by him.
The foregoing are without prejudice, however, to
the venue under the Rules of Court.
APPLICATION OF PAYMENTS
It is the designation of the debt to which the
payment must be applied when the debtor has
several obligations of the same kind in favor of
the same creditor. (NCC, Art. 1252)
Requisites:
1. There is only one debtor and creditor;
2. The debtor owes the creditor two or more
debts;
3. Debts are of the same kind or identical
nature;
e.g. both debts are money obligations
obtained on different dates;
4. All debts are due and demandable, except:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
a. When there is mutual agreement
between the parties (Tolentino, 2002);
b. The application is made by the party
for whose benefit the term has been
constituted. (NCC, Art. 1252(1])
5. The payment made is not sufficient to cover
all obligations. Right of the debtor in the
application of payments.
GR: The law grants the debtor a preferential
right to choose the debt to which his payment is
to be applied. But the right of the debtor is not
absolute; he cannot impair the rights granted by
law to the creditor. (Tolentino, 2002)
XPN: Debtor’s failure to ascertain which debt his
payment is to be applied. – The right of the
debtor to choose to which debt his payment will
be applied against may be transferred to the
creditor when he fails to make the application,
and subsequently, he accepts a receipt from the
creditor evidencing the latter’s choice of
application. Under this circumstance, the debtor
cannot complain of the application made by the
creditor unless there be a cause for invalidating
such act.
As far as the debtor is concerned, the right to
make an application of payment must be
exercised at the time payment is made.
(Bachrach Garage and Taxicab Co., v. Golingco,
G.R. No. 13761, July 12, 1919)
Limitation upon right to apply payment
If the debt produces interests, payment of the
principal shall not be deemed to have been made
until the interest has been covered. (NCC, Art.
1253)
NOTE: This applies only in the absence of a
verbal or written agreement to the contrary; in
other words, it is merely directory and not
mandatory. (Magdalena Estates, Inc. v. Rodriguez,
G.R. No. L-18411, December 17, 1966)
Legal application of payment
If both the creditor and the debtor failed to
exercise the right of application of payment or
legal application of payment will now be
governed.
Rules on legal application of payment
416
 Civil Law
The payment should be applied to the more Circumstances evidencing payment by
onerous debts: cession

1. When a person is bound as principal in one Debtor abandons all of his property for the
obligation and as surety in another, the benefit of his creditors in order that from the
former is more onerous. proceeds thereof, the latter may obtain payment
2. When there are various debts, the oldest of credits.
ones are more burdensome.
3. Where one bears interest and the other does Requisites:
not, even if the latter is the older obligation,
the former is considered more onerous. 1. Plurality of debts;
4. Where there is an encumbrance, the debt 2. Partial or relative insolvency of the debtor;
with a guaranty is more onerous than that and
without security. 3. Acceptance of the cession by the creditors.
5. With respect to indemnity for damages, the
debt which is subject to the general rules on
damages is less burdensome than that in Dation in payment vs. Payment in cession
which there is a penal clause.
6. The liquidated debt is more burdensome
DATION IN PAYMENT PAYMENT IN CESSION
than the unliquidated one.
7. An obligation in which the debtor is in Number of creditors
default is more onerous than one in which Maybe one creditor. Plurality of creditors.
he is not. (Tolentino, 2002) Financial condition of the debtor
Not necessarily in
Debtor must be partially
NOTE: The payment shall be applied state of financial
or relatively insolvent.
proportionately if it happens that the debt is difficulty.
of the same nature and burden. Object
Thing delivered is
Universality or property
Effect of creditor’s refusal considered as the
of debtor is what is
equivalent of
ceded.
If the debtor makes a proper application of performance.
payment, but the creditor refuses to accept it Extent of the extinguishment
because he wants to apply it to another debt, Payment
such creditor will incur in delay. (Tolentino, extinguishes
1991) obligation to the Merely releases debtor
extent of the value of for net proceeds of
PAYMENT BY CESSION the thing delivered as things ceded or
agreed upon, proved, assigned, unless there is
Cession or implied from the contrary intention.
conduct of the
Assignment or cession is the abandonment of creditor.
the universality of the property of the debtor for Ownership
the benefit of his creditors in order that such Ownership is
Ownership is not
property may be applied to the payment of the transferred to CR
transferred.
credits. upon delivery.
Novation
The initiative comes from the debtor, but it must An act of novation. Not an act of novation.
be accepted by the creditors in order to become Presumption of insolvency
effective. A voluntary assignment cannot be Does not presuppose
Presupposes insolvency.
imposed upon a creditor who is not willing to insolvency.
accept it.
Tender of payment
If the offer is not accepted by the creditors, the
same end may be attained by a proceeding in The definitive act of offering to the creditor what
insolvency instituted in accordance with is due to him together with the demand that the
Insolvency Law.

417
 Obligations
creditor accepts the same. (FEBTC v. Diaz Realty
Inc., G.R. No. 138588, August 23, 2001)
Tender of payment is the manifestation by
debtors of their desire to comply with or to pay
their obligation. (Sps. Benos v. Sps. Lawilao, G.R.
No. 172259, December 5, 2006)
NOTE: If the creditor refuses the tender of
payment without just cause, the debtors are
discharged from the obligation by the
consignation of the sum due. (Sps. Benos v. Sps.
Lawilao, G.R. No. 172259, December 5, 2006)
There must be a fusion of intent, ability, and
capability to make good such offer, which must
be absolute and must cover the amount due.
(FEBTC v. Diaz RealtyInc., G.R. No. 138588, August
23, 2001)
Tender of payment is a preparatory act which
precedes consignation. The tender of payment
by itself does not cause the extinguishment of
the obligation unless completed by consignation.
(Tolentino, 1991)
Consignation
Act of depositing the object of the obligation
with the court or competent authority after the
creditor has unjustifiably refused to accept the
same or is not in a position to accept it due to
certain reasons or circumstances. (Pineda, 2000)
NOTE: Once the consignation has been duly
made, the debtor may ask the judge to order the
cancellation of the obligation. (NCC, Art. 1260)
Requisites of consignation
1. There was a debt due;
2. The consignation of due obligation was
made because of some legal cause provided
under NCC, Art. 1256;
3. The previous notice of the consignation had
been given to the person interested in the
performance of the obligation;
4. The amount or thing due was placed at the
disposal of the court; and
5. That after the consignation had been made,
the persons interested were notified thereof.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: Requirement No. 5 may be complied
with by the service of summons upon the
defendant creditor together with a copy of
the complaint.
6. After this notice, the creditor may:
(a) Accept the thing or amount
deposited, in which case the matter of
the payment is terminated;
(b) Refuse to accept the thing or
amount, in which case a trial must be
held to determine the validity of
consignation.
7. The creditor may neither accept nor refuse
in which case the debtor may ask the court
to cancel the obligation after showing that
the requisites of consignation have been
complied with. (NCC, Art. 1260)
NOTE: Tender of payment must be valid and
unconditional. (Sps. Rayos v. Reyes, G.R. No.
150913, February 20, 2003)
Substantial compliance is not enough. The giving
of notice to the persons interested in the
performance of the obligation is mandatory.
Failure to notify the persons interested in the
performance of the obligation will render the
consignation void. (Dalton v. FGR Realty and
Development Corp., G.R. No. 172577, January 19,
2011)
Consignation is necessarily judicial. Art. 1258 of
the CC specifically provides that consignation
shall be made by depositing the thing or things
due at the disposal of judicial authority. The said
provision clearly precludes consignation in
venues other than the courts. (Sps. Oscar and
Thelma Cacayorin v. Armed Forces and Police
Mutual Benefit Association, Inc., G.R. No. 171298,
April 15, 2013)
Consignation and tender of payment must not be
encumbered by conditions. (Sps. Rayos v. Reyes,
G.R. No. 150913, February 20, 2003)
Q: Dorotea leased portions of her 2,000 sq. m.
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
418
 Civil Law
from all the lessees because they wanted to
terminate the lease contracts. Due to the
refusal to accept rental payments, the
lessees, Ruth, et al., filed a complaint for
consignation of the rentals before the RTC of
Manila without notifying Dorotea. Is the
consignation valid? (2014 BAR)
A: NO, the consignation is not valid. Art. 1257
of the Civil Code provides that in order for the
consignation of the thing due may release the
obligor, it must first be announced to the
persons interested in the fulfillment of the
obligation. Moreover, Art. 1258 of the same code
provides that consignation having been made,
the interested parties shall also be notified
thereof. In this case, Dorotea, an interested
party, was not notified of the consignation. The
consignation is therefore not valid for non-
compliance with NCC, Art. 1257.
Effectivity of consignation as payment
GR: Consignation shall produce effects of
payment only if there is a valid tender of
payment.
XPNs: It shall, however, not produce the same
effect in the following cases. When: (ARTIT)
1. Creditor is Absent or unknown, or doesn’t
appear at the place of payment;
2. Creditor Refuses to issue a receipt without
just cause;
3. Title of the obligation has been lost;
4. Creditor is Incapacitated to
receive payment at the time it is due; or
5. Two or more persons claim the right to
collect. (NCC, Art. 1256)
NOTE: The expenses of consignation, when
properly made, shall be charged against the
creditor. (NCC, Art. 1259)
Right of the debtor to withdraw the thing
deposited
Before the creditor has accepted the
consignation, or before a judicial declaration
that the consignation has been properly made,
the debtor may withdraw the thing or the sum
deposited, allowing the obligation to remain in
force. (NCC, Art.1260)
NOTE: If the consignation having been made, the
creditor should authorize the debtor to
419
withdraw the same, he shall lose every
preference which he may have over the thing.
The co-debtors, guarantors, and sureties shall be
released. (NCC, Art. 1261)
Tender of Payment v. Consignation
TENDER OF
CONSIGNATION
PAYMENT
Nature
Antecedent of Principal or
consignation or consummating act for
preliminary act to the extinguishment of
consignation. the obligation.
Effect
It does not by itself It extinguishes the
extinguish the obligation when
obligation. declared valid.
Character
Judicial for it requires
Extrajudicial. the filing of a complaint
in court. (Pineda, 2000)
Q: In an ejectment case, X refused to vacate
the land, alleging that Y had sold to him the
additional area, the payment of which would
be effected five years after the execution of a
formal deed of sale. However, the parties
failed to execute a deed of sale. During the
pendency of the action, X deposited the
payment for the additional area with the
court. Is there a valid consignation?
A: NO, there is no valid consignation. Under
Art. 1257 of the CC, consignation is proper only
in cases where an existing obligation is due. In
this case, the contracting parties agreed that full
payment of purchase price shall be due and
payable within five years from the execution of a
formal deed of sale. At the time Rodriguez
deposited the amount in court, no formal deed of
sale had yet been executed by the parties, and,
therefore, the five-year period during which the
purchase price should be paid had not
commenced. In short, the purchase price was not
yet due and payable. (Heirs of San Andres v.
Rodriguez, G.R. No. 135634, May 31, 2000)
Q: Under a pacto de retro sale, X sold to Y his
lot and the building erected thereon. They
agreed that half of the consideration shall be
paid to the bank to pay off the loan of X. After
paying the first installment, Y, instead of
paying the loan to the bank, restructured it
twice. Eventually, the loan became due and
demandable. Thus, X paid the bank. On the
 Obligations
same day, Y also went to the bank and b. The thing lost is without fault of the
offered to pay the loan, but the bank refused debtor; and
to accept the payment. Y then filed an action c. The thing is lost before the debtor has
for consignation without notifying X. Is there incurred delay. (NCC, Art. 1262)
a valid consignation by Y of the balance of the
contract price? GR: The obligation is extinguished when the
object of the obligation is lost or destroyed.
A: NO, there is no valid consignation by Y of (NCC, Art. 1262)
the balance of the contract price. Y filed the
petition for consignation against the bank XPNs: (LAS-CD-PCG)
without notifying X, resulting to the former’s
failure to prove the payment of the balance of a. Law provides otherwise (NCC, Art.
the purchase price and consignation. In fact, 1262);
even before the filing of the consignation case, Y b. Nature of the obligation requires the
never notified X of their offer to pay. (Sps. Benos Assumption of risk;
v. Sps. Lawilao, G.R. No. 172259, December 5, c. Stipulation to the contrary;
2006) d. Debtor Contributed to the loss;
e. Loss the of the thing occurs after the
LOSS OF THE THING DUE debtor incurred in Delay;
f. When debtor Promised to deliver the
Loss here is not contemplated in its strict and same thing to two or more persons who
legal meaning and is not limited to obligations to do not have the same interest (NCC, Art.
give, but extends to those which are personal, 1165);
embracing, therefore, all causes which may g. When the debt of a certain and
render impossible the performance of the determinate thing proceeds from a
prestation. In some Codes, this is designated as Criminal offense (NCC, Art. 1268); and
impossibility of performance. h. When the obligation is Generic. (NCC,
Art. 1263)
NOTE: The impossibility of performance must
be subsequent to the execution of the contract in 2. Generic obligation to give:
order to extinguish the obligation; if the
impossibility already existed when the contract GR: The obligation is not extinguished
was made, the result is not extinguishment but because a generic thing never perishes
inefficacy of the obligation under NCC, Articles (genus nun guam perit). (NCC, Art. 1263)
1348 and 1493.
XPNs:
When a thing is considered lost (DOPE)
a. In case of generic obligations whose
1. It Disappears in such a way that its existence object is a particular class or group with
is unknown; specific or determinate qualities
2. It goes Out of commerce; (delimited generic obligation);
3. It Perishes; or b. In case the generic thing has already
4. Its Existence is unknown or if known, it been segregated or set aside, in which
cannot be recovered. case, it has become specific.

Effect of loss of the thing/object of the 3. An obligation to do – The obligation is

obligation extinguished when the prestation becomes
legally or physically impossible without the
If the obligation is a: fault of the obligor. (NCC, Art. 1266)

1. Determinate obligation to give: Types of impossibility to perform an

obligation to do
Requisites
1. Legal impossibility – Act stipulated to be
a. The thing lost must be determinate; performed is subsequently prohibited by
law.

UNIVERSITY OF SANTO TOMAS 420

2021 GOLDEN NOTES
 Civil Law
2. Physical impossibility – Act stipulated could
not be physically performed by the obligor
due to reasons subsequent to the execution
of the contract. (Pineda, 2000)
NOTE: The impossibility must be after the
constitution of the obligation. If it was
before, there is nothing to extinguish.
Effect of partial loss
1. Due to the fault or negligence of the debtor –
Creditor has the right to demand the
rescission of the obligation or to demand
specific performance, plus damages, in
either case.
2. Due to fortuitous event:
a. Substantial loss – Obligation is
extinguished.
b. Unsubstantial loss – The debtor shall
deliver the thing promised in its
impaired condition. (NCC, Art. 1264)
Effect when the thing is lost in the possession
of the debtor
GR: It is presumed that loss is due to debtor’s
fault. The obligation is not extinguished.
XPN: Presumption shall not apply in case loss is
due to earthquake, flood, storm, or other natural
calamity. (NCC, Art. 1262)
XPN to the XPN: Debtor still liable even if
loss is due to fortuitous event when:
1. Debtor incurred in delay; or
2. Debtor promised to deliver the thing to
two or more persons with different
interests. [NCC, Art. 1165(3)]
Effect of unforeseen difficulty of fulfilment
When the service has become so difficult as to be
manifestly beyond the contemplation of the
parties, the obligor may also be released
therefrom, in whole or in part. (NCC, Art. 1267)
The impossibility of performance of an
obligation to do shall release the obligor.
Rebus sic stantibus
A principle in international law which means
that an agreement is valid only if the same
421
conditions prevailing at the time of contracting
continues to exist at the time of performance. It
is the basis of the principle of unforeseen
difficulty of service. (NCC, Art. 1267)
NOTE: Principle of unforeseen events applies
when the service has become so difficult as to be
manifestly beyond the contemplation of the
parties, the obligor may also be released
therefrom in whole or in part. (NCC, Art. 1267)
However, this principle cannot be applied
absolutely in contractual relations since parties
are presumed to have assumed the risk of
unfavorable developments. (Pineda, 2000) This
rule also does not apply to obligations for the
payment of a sum of money when there is a
change in the value of the stipulated currency. In
such case, Art. 1250 will apply. (Tolentino, 2002)
Requisites in order to relieve the debtor
from his obligation, in whole or in part, based
on unforeseen difficulty of fulfillment
1. Event or change in circumstance could not
have been foreseen at the time of the
execution of the contract;
2. Such event makes the performance
extremely difficult but not impossible;
3. The event must not be due to the act of any
of the parties; and
4. The contract is for a future prestation.
(Tolentino, 2002)
Q: The parties entered into a lease
agreement whereby Santos Car Check Center
agreed to lease a property to Comglasco
Corp. for five (5) years. However, a year after,
Comglasco advised Santos Car Check Center
that it will be pre-terminating the contract, to
which the latter refused. Despite refusal,
Comglasco vacated the property and stopped
paying rentals. Santos Car Check then filed a
suit for breach of contract. Comglasco relied
on the provision of the lease contract
whereby pre-termination is allowed with
cause in the first three years. Citing business
reverses which it ascribed to the 1997 Asian
Financial Crisis, Comglasco insists that under
Article 1267 of the NCC, it is exempted from
its obligation, because its business setback is
the “cause” contemplated in their lease. Is
Comglasco correct?
A: NO, Comglasco is not correct. The payment
of lease rentals does not involve a prestation “to
do” envisaged in Articles 1266 and 1267. Art.
 Obligations
1267 speaks of a prestation involving service
which has been rendered difficult by unforeseen
subsequent events as to be manifestly beyond
the contemplation of the parties. Additionally,
the Asian Currency Crisis befell from July 1997
and for some time thereafter, but Comglasco
cannot be permitted to blame its difficulties on
the said regional economic phenomenon
because it entered into the subject lease only on
August 2000, more than three years after it
began, and by then Comglasco had known what
business risks it assumed when it opened a new
shop in Iloilo City. (Comglasco Corp. v. Santos Car
Check Center Corp., G.R. No. 202989, March 25,
2015)
Debt which proceeds from a criminal offense
GR: Debtor shall not be exempted from the
payment of his obligation regardless of the cause
of the loss.
XPN: The thing having been offered by debtor to
the person who should receive it, the latter
refused without justification to accept it. (NCC,
Art. 1268)
NOTE: Offer referred in Art. 1268 is different
from consignation; the former refers to the
extinguishment of obligation through loss, while
the latter refers to the payment of the obligation.
Creditor’s right of action
The obligation, having been extinguished by
the loss of the thing, the creditor shall have all
the rights of action which the debtor may have
against third persons by reason of the loss. (NCC,
Art. 1269)
This refers not only the rights and actions which
the debtor may have against third persons, but
also to any indemnity which the debtor may
have already received.
CONDONATION OR REMISSION OF DEBT
(2000 BAR)
An act of liberality by virtue of which the
creditor, without receiving any price or
equivalent, renounces the enforcement of the
obligation, as a result of which it is extinguished
in its entirety or in that part or aspect of the
same to which the condonation or remission
refers. (Pineda, 2000)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Requisites of condonation (GAIDE)
1. Must be Gratuitous;
2. Acceptance by the debtor;
3. Must not be Inofficious;
4. Formalities provided by law on Donations
must be complied with if condonation is
express; and
5. An Existing demandable debt at the time the
remission is made.
NOTE: Remission or condonation of a debt is in
reality a donation. (Jurado, 2010)
Form of express remission
It must comply with the forms of donation. (NCC,
Art. 1270)
Form of implied remission
The Code is silent with respect to the form of
implied remission. There must be acceptance by
the obligor or debtor. (Jurado, 2010)
Manner and kinds of remission:
1. Total – Refers to the remission of the whole
of the obligation;
2. Partial – Remission of the part of the
obligation: to the amount of indebtedness or
to an accessory obligation only (such as
pledge or interest), or to some other aspect
of the obligation (such as solidary);
3. Inter vivos - Effective during the lifetime of
the creditor;
4. Mortis causa - Effective upon death of the
creditor. In this case, the remission must be
contained in a will or testament (Tolentino,
1991);
5. Express – When it is made formally, it
should be in accordance with the forms of
ordinary donations with regard to
acceptance, amount, and revocation; and
6. Implied – When it can be inferred from the
acts of the parties
Effect of delivery of evidence of credit to
debtor
If the creditor voluntarily delivers the private
document evidencing the credit to the debtor,
there is a presumption that he renounces his
right of action against the latter for the collection
of the said credit. (Jurado, 2010)
422
 Civil Law
NOTE: The presumption here is only prima facie
and may be overcome by contrary evidence.
(Tolentino, 1991)
Requisites
1. The document evidencing the credit must
have been delivered by the creditor to the
debtor;
2. The document must be a private document;
and
3. The delivery must be voluntary. (NCC, Art.
1271)
NOTE: If the document is public, the
presumption does not arise considering the
fact that the public character of the document
would always protect the interest of the
creditor. (Jurado, 2010)
Effect of remission in general
It extinguishes the obligation in its entirety or in
the part or aspect thereof to which the remission
refers. (Jurado, 2010)
Effect of the remission of the principal debt
with respect to the accessory obligation and
vice versa
The renunciation of the principal debt shall
extinguish the accessory, but the waiver of the
latter shall leave the former in force. (NCC, Art.
1273)
NOTE: It is presumed that the accessory
obligation of pledge has been remitted when the
thing pledged, after its delivery to the creditor, is
found in the possession of the debtor, or of a
third person who owns the thing. (NCC, Art.
1274)
Effect of inofficious condonation
It may be totally revoked or reduced depending
on whether or not it is totally or only partly
inofficious. (Pineda, 2000)
The obligation remitted is considered inofficious
if it impairs the legitime of the compulsory heirs.
(NCC, Art. 752)
Acceptance by the debtor
The acceptance by the debtor is required. There
can be no unilateral condonation. This is because
423
condonation or remission is an act of liberality.
It is a donation of an existing credit, considered a
property right, in favor of the debtor, it is
required that the debtor gives his consent
thereto by making an acceptance. If there is no
acceptance, there is no condonation. (Pineda,
2009)
CONFUSION OR MERGER OF RIGHTS
There is confusion when there is a meeting in
one person of the qualities of a creditor and
debtor of the same obligation. (4 Sanchez Roman
421)
Requisites of confusion or merger of rights
1. It must take place between the creditor and
the principal debtor (NCC, Art. 1276);
2. The very same obligation must be involved
(for if the debtor acquires rights from the
creditor, but not the particular obligation in
question, there will be no merger);
3. The confusion must be total or as regards
with the entire obligation.
Effect of confusion or merger of rights
The creditor and debtor become the same
person involving the same obligation. Hence, the
obligation is extinguished. (NCC, Art. 1275)
There can be partial confusion
It will be definite and complete up to the extent
of the concurrent amount or value, but the
remaining obligation subsists. (Pineda, 2000)
Effect of confusion or merger in relation to
the guarantors
1. Merger which takes place in the person of
the principal debtor or principal creditor
benefits the guarantors. The contract of
guaranty is extinguished;
2. Confusion which takes place in the person of
any of the guarantors does not extinguish
the obligation. (NCC, Art. 1276)
Effect of confusion or merger in one debtor
or creditor in a joint obligation
 Obligations
GR: Joint obligation is not extinguished since
confusion is not definite and complete with
regard to the entire obligation. A part of the
obligation still remains outstanding.
XPN: Obligation is extinguished with respect
only to the share corresponding to the debtor or
creditor concerned. In effect, there is only partial
extinguishment of the entire obligation. (NCC,
Art. 1277; Pineda, 2000)
Effect of confusion or merger in one debtor
or creditor in a solidary obligation
If a solidary debtor had paid the entire
obligation, the obligation is totally extinguished
without prejudice to the rights of the solidary
debtor who paid, to proceed against his solidary
co-debtors for the latter’s individual
contribution or liability. (NCC, Art. 1215)
Revocation of confusion or merger of rights
If the act which created the confusion is revoked
for some causes such as rescission of contracts
or nullity of the will or contract, the confusion or
merger is also revoked. The subject obligation is
revived in the same condition as it was before
the confusion.
NOTE: During such interregnum, the running of
the period of prescription of the obligation is
suspended. (Pineda, 2000)
COMPENSATION
It is a mode of extinguishing obligations that
take place when two persons, in their own right,
are creditors and debtors of each other. (NCC,
Art. 1278)
It is the offsetting of the respective obligation of
two persons who stand as principal creditors
and debtors of each other, with the effect of
extinguishing their obligations to their
concurrent amount.
Requisites of compensation (1998, 2002,
2008, 2009 BAR)
For the compensation to be proper, it is
necessary that (NCC, Art. 1279):
1. Each one of the obligors must be bound
principally, and that he be at the same time a
principal creditor of the other except
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
guarantor who may set up compensation as
regards what the creditor may owe the
principal (NCC, Articles. 1279-1280);
2. Both debts consist in 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. Both debts are due;
4. Both debts are liquidated and demandable;
5. Neither debt must be retained in a
controversy commenced by third person
and communicated in due time to the debtor
(neither debt is garnished) (NCC, Art. 1279);
and
6. Compensation must not be prohibited by
law. (NCC, Art. 1290)
NOTE: When all the requisites mentioned in Art.
1279 of the CC are present, compensation takes
effect by operation of law, and extinguishes both
debts to the concurrent amount, even though the
creditors and debtors are not aware of the
compensation. (NCC, Art. 1290)
Effects of compensation:
1. Both debts are extinguished;
2. Interests stop accruing on the extinguished
obligation or the part extinguished;
3. The period of prescription stops with
respect to the obligation or part
extinguished; and
4. All accessory obligations of the principal
obligation which has been extinguished are
also extinguished. (4 Salvat 353)
Q: Team Image and Solar Team both
breached each other’s duties in their
compromise agreement. As a result, both
owe each other 2,000,000. Is compensation
proper?
A: YES. In order that 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. (Team Image Entertainment, Inc., And
Felix S. Co. v. Solar Team Entertainment, Inc., G.R.
424
 Civil Law
No. 191652, September 13, 2017; Solar Team
Entertainment, Inc. v. Team Image Entertainment,
Inc., And Felix S. Co, G.R. No. 191658, September
13, 2017, as penned by J. Leonen)
Q: X, who has a savings deposit with Y Bank
in the sum of P1,000,000.00, incurs a loan
obligation with the said bank in the sum of
P800,000.00 which has become due. When X
tried to withdraw his deposit, Y Bank
allowed only P200,000.00 to be withdrawn,
less service charges, claiming that
compensation has extinguished its obligation
under the savings account to the concurrent
amount of X's debt. X contends that
compensation is improper when one of the
debts, as here, arises from a contract of
deposit. Assuming that the promissory note
signed by X to evidence the loan does not
provide for compensation between said loan
and his savings deposit, who is correct?
(1998 Bar)
A: Y Bank is correct. All the requisites of Art.
1279, Civil Code are present. Compensation shall
take place when two persons are reciprocally
creditor and debtor of each other. In this
connection, it has been held that the relation
existing between a depositor and a bank is that
of creditor and debtor. As a general rule, a bank
has a right of set off of the deposits in its hands
for the payment of any indebtedness to it on the
part of a depositor. (Gullas v. PNB, G.R. No. L-
43191, November 13, 1935) Hence, compensation
took place between the mutual obligations of X
and Y Bank.
Q: Foodmasters, Inc. (FI) had outstanding
loan obligations to both Union Bank’s
predecessor-in-interest, Bancom
Development Corporation (Bancom), and to
DBP. On May 21, 1979, FI and DBP, among
others, entered into a Deed of Cession of
Property in Payment of Debt (dacion en
pago) whereby the former ceded in favor of
the latter certain properties (including a
processing plant in Marilao, Bulacan
[processing plant]) in consideration of the
following: (a) the full and complete
satisfaction of FI’s loan obligations to DBP;
and (b) the direct assumption by DBP of FI’s
obligations to Bancom in the amount of
₱17,000,000.00 (assumed obligations).
On the same day, DBP, as the new owner of
the processing plant, leased back for 20 years
425
the said property to FI (Lease Agreement)
which was, in turn, obliged to pay monthly
rentals to be shared by DBP and Bancom.
DBP also entered into a separate agreement
with Bancom (Assumption Agreement)
whereby the former: (a) confirmed its
assumption of FI’s obligations to Bancom;
and (b) undertook to remit up to 30% of any
and all rentals due from FI to Bancom
(subject rentals) which would serve as
payment of the assumed obligations, to be
paid in monthly installments.
Claiming that the subject rentals have not
been duly remitted despite its repeated
demands, Union Bank filed, on June 20, 1984,
a collection case against DBP before the RTC,
docketed as Civil Case No. 7648. In
opposition, DBP countered, among others,
that the obligations it assumed were payable
only out of the rental payments made by FI.
Thus, since FI had yet to pay the same, DBP’s
obligation to Union Bank had not arisen. In
addition, DBP sought to implead FW as third
party-defendant in its capacity as FI’s
assignee and, thus, should be held liable to
Union Bank. Was there legal compensation?
A: There was NO legal compensation. The rule
on legal compensation is stated in Article 1290
of the Civil Code which provides that "when all
the requisites mentioned in Article 1279 are
present, compensation takes effect by operation
of law, and extinguishes both debts to the
concurrent amount, even though the creditors
and debtors are not aware of the compensation."
Therefore, compensation could not have taken
place between these debts for the apparent
reason that requisites 3 and 4 under Article
1279 of the Civil Code are not present. Since
DBP’s assumed obligations to Union Bank for
remittance of the lease payments are – in the
Court’s words – “contingent on the prior
payment thereof by FW to DBP," it cannot be
said that both debts are due. (3rd requisite of
Article 1279 of the Civil Code)
Also, the Court observed that any deficiency that
DBP had to make up for the full satisfaction of
the assumed obligations, "cannot be determined
until after the satisfaction of FW’s obligation to
DBP." In this regard, it cannot be concluded that
the same debt had already been liquidated, and
thereby became demandable. (4th requisite of
Article 1279 of the Civil Code) Thus, CA correctly
upheld the denial of Union Bank’s motion to
 Obligations
affirm legal compensation. (Union Bank Of The parties Reason: paid; and
Philippines vs. Development Bank Of The Compensatio
Philippines, G.R. No. 191555, January 20, 2014) n operates by Creditor
law, not by must have
Q: May the parties agree upon the the act of the capacity to
compensation of debts which are not due? parties. receive
payment.
A: YES. Under Art. 1282, conventional or The
voluntary compensation is not limited to performance
As the There can be
obligations which are not yet due. The parties must be
susceptibilit partial
may compensate by agreement any obligations, complete and
y of partial extinguishme
in which the objective requisites provided for indivisible
extinguishm nt of the
legal compensation are not present. It is unless waived
ent obligation.
necessary, however, that the parties should have by the
the capacity to dispose of credits which they creditor.
compensate, because the extinguishment of the Legal
Takes effect
obligations in this case arise from their wills and As to the compensation
by the act of
not from law. operation of takes place by
the parties
extinguishin operation of
and involves
Q: May rescissible or voidable debts which g the law without
delivery or
are already compensated be rescinded or obligation simultaneous
action.
annulled? What are its effects? delivery.
It is not
A: YES. Although a rescissible or voidable debt necessary
Parties must
can be compensated before it is rescinded or As to the that the
annulled, the degree of rescission or annulment be mutually
relationship parties be
debtors and
is retroactive, and the compensation must be of the mutually
creditors of
considered as cancelled. And as rescission or parties debtors and
each other.
annulment requires mutual restitution, the party creditors of
whose obligation is annulled or rescinded can each other.
thus recover to the extent that his credit was
extinguished by the compensation; because to Compensation v. Confusion
that extent, he is deemed to have made a
payment. COMPENSATION CONFUSION
(NCC, Articles. 1278- (NCC, Articles.
Compensation v. Payment 1279) 1275-1277)
One person where
COMPENSAT Two persons who are
BASIS PAYMENT qualities of debtor
ION mutual debtors and
and creditor are
A mode of creditors of each other.
merged.
extinguishing At least two obligations. One obligation.
to the
Payment
concurrent Compensation v. Counterclaim or Set-off
means not
amount, the
only delivery
obligations of COUNTERCLAIM/
of money but COMPENSATION
Definition those persons SET-OFF
also
who in their Need not to be
performance
own right are pleaded; and
of an
reciprocally
obligation.
debtors and Takes place by
creditors of operation of law and It must be pleaded to
each other. extinguishes be effectual.
As to the Capacity of Debtor must reciprocally the two
necessity of parties not have capacity debts as soon as they
the capacity necessary. to dispose of exist simultaneously,
of the the thing to the amount of their

UNIVERSITY OF SANTO TOMAS 426

2021 GOLDEN NOTES
 Civil Law
respective sums. A: Under Art. 1287, compensation shall not be
Generally, both debts Does not require that proper when one of the debts arises from a
must be liquidated. debts are liquidated. depositum or from the obligations of a
Judicial compensation depositary or of a bailee in commodatum.
provided that the Neither can compensation be set up against a
Legal or conventional creditor who has a claim for support due by
requirements of Rules
compensation gratuitous title without prejudice to the
of Court, particularly
governed by the Civil provisions of Art. 301 (2).
on Counterclaims
Code.
and/or Cross-claims
are observed. NOTE: Only the depositary and the borrower in
commodatum cannot set up compensation. The
Debts or obligations not subject to depositor can set up his deposit against the
compensation depositary, and the lender can set up his loan
against a credit of the borrower.
1. Debts or obligations arising from contracts
of depositum (NCC, Art. 1287); Neither shall there be compensation if one of the
2. Debts arising from obligations of a debts consists in civil liability arising from a
depositary; penal offense.
3. Debts arising from obligations of a bailee in
commodatum; NOTE: The person who has the civil liability
4. Claims for support due by gratuitous title; arising from crime is the only party who cannot
5. Obligations arising from criminal offenses set up the compensation; but the offended party
(NCC, Art. 1288); and is entitled to indemnity can set up his claim in
6. Certain obligations in favor of government. compensation of his debt.

e.g. Taxes, fees, duties, and others of a KINDS OF COMPENSATION

similar in nature.
There can be no off-setting of taxes against the
claims that the taxpayer may have against the
government. A person cannot refuse to pay a tax
on the ground that the government owes him an
amount equal to or greater than the tax being
collected. Internal revenue taxes cannot be the
subject of compensation because government
and taxpayer are not mutually creditors and
debtors of each other. Taxes are not in the
nature of contracts between parties. (Francia v.
IAC, G.R. No. L-67649, June 28, 1988)
NOTE: Compensation takes place by operation
of law, even though the debts may be payable at
different places, but there shall be an indemnity
for expenses of exchange or transportation to
the place of payment. (NCC, Art. 1286)
If all the requisites under Art. 1279 are present,
compensation takes place by operation of law.
The parties need not to notify each other that
they intend to have thier debts compensated.
(Sta. Maria, 2017)
1. Legal compensation – by operation of law;
2. Conventional – by agreement of the parties;
3. Judicial (set-off) – by judgment of the court
when there is a counterclaim duly pleaded,
and the compensation decreed; and
4. Facultative – may be claimed or opposed by
one of the parties.
Q: De Leon sold and delivered to Silahis
various merchandise. Due to Silahis' default,
De Leon filed a complaint for the collection of
said accounts. Silahis asserts, as affirmative
defense, a debit memo as unrealized profit
for a supposed commission that Silahis
should have received from De Leon from the
sale made directly to DOLE Philippines, Inc.
(DOLE). Was there legal compensation?
A: NONE. Silahis admits the validity of his
outstanding accounts with De Leon. But whether
De Leon is liable to pay Silahis a commission on
the subject sale to DOLE is disputed. This
circumstance prevents legal compensation from
taking place. (Silahis Marketing Corp. v. IAC, G. R.
No. L-74027, December 7, 1989)

Q: When is compensation not proper? NOTE: Compensation is not proper where the
claim of the person asserting the set-off against
the other is not clear or liquidated;

427
 Obligations
compensation cannot extend to unliquidated,
disputed claim existing from breach of contract.
(Silahis Marketing Corp. v. IAC, G.R. No. L-74027,
December 7, 1989)
Q: Atty. Laquihon, in behalf of Pacweld, filed a
pleading addressed to MPCC titled “motion to
direct payment of attorney's fee”, invoking a
decision wherein MPCC was adjudged to pay
Pacweld the sum of P10, 000. 00 as attorney's
fees. MPCC filed an opposition stating that
the said amount is set-off by a like sum of
P10, 000. 00, collectible in its favor from
Pacweld also by way of attorney's fees which
MPCC recovered from the same CFI of Manila
in another civil case. Was there legal
compensation?
A: YES. MPCC and Pacweld were creditors and
debtors of each other, their debts to each other
consisting in final and executory judgments of
the CFI in two separate cases. The two
obligations, therefore, respectively offset each
other, compensation having taken effect by
operation of law and extinguished both debts to
the concurrent amount of P10,000.00, pursuant
to the provisions of Articles 1278, 1279 and
1290 of the Civil Code, since all the requisites
provided in Art. 1279 of the said Code for
automatic compensation "even though the
creditors and debtors are not aware of the
compensation" were present. (Mindanao
Portland Cement Corp. v. CA, G.R. No. L-62169,
February 28, 1983)
Conventional compensation
It is one that takes place by agreement of the
parties.
Effectivity of conventional compensation
For compensation to become effective:
GR: The mutual debts must be both due. (NCC,
Art. 1279)
XPN: The parties may agree that their mutual
debts be compensated even if the same are not
yet due. (NCC, Art. 1282)
Judicial compensation
If one of the parties to a suit over an obligation
has a claim for damages against the other, the
former may set it off by proving his right to said
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
damages and the amount thereof (NCC, Art.
1283).
NOTE : For judicial set-off to apply, the amount
of damages or the claim sought to be
compensated must be duly proven. (Fermin Ong
v. CA, G.R. No. 75819, September 8, 1989)
All the requisites mentioned in Art. 1279 must
be present, except that at the time of filing the
pleading, the claim need not be liquidated. The
liquidation must be made in the proceedings.
Facultative compensation
One of the parties has a choice of claiming or
opposing the compensation but waives his
objection thereto such as an obligation of such
party is with a period for his benefit alone and
he renounces the period to make the obligation
become due.
Facultative compensation is unilateral and does
not require mutual agreement; voluntary or
conventional compensation requires mutual
consent.
e.g. X owes Y P100,000 demandable and due on
April 1, 2012. Y owes X P100, 000 demandable
and due on or before April 15, 2012. Y, who was
given the benefit of the term, may claim
compensation on April 1, 2012. On the other
hand, X, who demands compensation, can be
properly opposed by Y because Y could not be
made to pay until April 15, 2012.
NOTE: Compensation can be renounced either at
the time an obligation is contracted or
afterwards. (Tolentino, 1991) It can be
renounced expressly or impliedly.
Examples of implied renunciation:
1. By not setting it up in the litigation;
2. By consenting to the assignment of credit
under NCC, Art. 1285; or
3. By paying debt voluntarily, with knowledge
that it has been extinguished by
compensation. (Tolentino, 1991)
Q: Eduardo was granted a loan by XYZ Bank
for the purpose of improving a building
which XYZ leased from him. Eduardo
executed the promissory note in favor of the
bank, with his friend Ricardo as cosignatory.
In the PN, they both acknowledged that they
428
 Civil Law
are “individually and collectively” liable and
waived the need for prior demand. To secure
the PN, Ricardo executed a real estate
mortgage on his own property. When
Eduardo defaulted on the PN, XYZ stopped
payment of rentals on the building on the
ground that legal compensation had set in.
Since there was still a balance due on the PN
after applying the rentals, XYZ foreclosed the
real estate mortgage over Ricardo’s property.
Ricardo opposed the foreclosure on the
ground that he is only a co-signatory; that no
demand was made upon him for payment,
and assuming he is liable, his liability should
not go beyond half of the balance of the loan.
Further, Ricardo said that when the bank
invoked compensation between the rentals
and the amount of the loan, it amounted to a
new contract or novation, and had the effect
of extinguishing the security since he did not
give his consent (as owner of the property
under the real estate mortgage) thereto.
a. Can XYZ Bank validly assert legal
compensation?
b. Can Ricardo’s property be foreclosed to
pay the full balance of the loan?
c. Does Ricardo have basis under the Civil
Code for claiming that the original
contract was novated? (2008 Bar)
A:
a. NO. XYZ Bank may validly assert the partial
compensation of both debts, but it should be
facultative compensation because not all of
the five requisites of legal compensation are
present (NCC, Art. 1279). The payment of the
rentals by XYZ Bank is not yet due, but the
principal obligation of loan where both
Eduardo and Ricardo are bound solidarily
and therefore any of them is bound
principally to pay the entire loan, is due and
demandable without need of demand. XYZ
Bank may declare its obligation to pay
rentals as already due and demand payment
from any of the two debtors.
b. NO, because there was no prior demand on
Ricardo, depriving him of the right to
reasonably block the foreclosure by
payment. The waiver of prior demand in the
PN is against public policy and violates the
right to due process. Without demand, there
is no default and the foreclosure is null and
void. Since the mortgage, insofar as Ricardo
429
is concerned is not violated, a requirement
under Art. 3135 for a valid foreclosure of
real estate mortgage is absent.
In the case of DBP v. Licuanan (G.R. No.
150097, February 26, 2007), it was held that:
“the issue of whether demand was made
before the foreclosure was effected is
essential. If demand was made and duly
received by the respondents and the latter
still did not pay, then they were already in
default and foreclosure was proper.
However, if demand was not made, then the
loans had not yet become due and
demandable. This meant that the
respondents had not defaulted in their
payment and the foreclosure was
premature.”
c. NO. Since none of the three kinds of
novation is applicable. There is no objective
novation, whether express or implied,
because there is no change in the object or
principal conditions of the obligation. There
is no substitution of debtors, either.
Compensation is considered as abbreviated
or simplified payment and since Ricardo
bound himself solidarily with Eduardo, any
facultative compensation which occurs does
not result in partial legal subrogation.
Neither Eduardo nor Ricardo is a third
person interested in the obligation under
NCC, Art. 1302.
Obligations subject to facultative
compensation
When one of the debts arises from:
1. Depositum;
2. Obligations of a depositary;
3. Obligations in commodatum;
4. Support; and
GR: Claim of support due to gratuitous title
XPN: Future support.
5. Civil liability from a crime.
NOTE: NCC, Art. 1288 prohibits compensation if
one of the debts consists in civil liability arising
from a penal offense. However, the victim is
allowed to claim compensation.
 Obligations
If one or both debts are rescissible or
voidable
When one or both debts are rescissible or
voidable, they may be compensated against each
other before they are judicially rescinded or
avoided. (NCC, Art. 1284) If the prescriptive
period had already lapsed, there is automatic
compensation and the same will not be
disturbed anymore. Whereas, if the debt is
rescinded or annulled, compensation shall be
restitution of what each party had received
before the rescission or annulment.
Effects of assignment on compensation of
debts
1. After the compensation took place
GR: Ineffectual; useless act since there is
nothing more to assign
XPN: When the assignment was made with
the consent of the debtor.
NOTE: Such consent operates as a waiver of
the rights to compensation.
XPN to the XPN: At the time he gave his
consent, he reserved his right to the
compensation.
2. Before compensation took place
a. With the consent of the debtor –
Compensation cannot be set up except
when the right to compensation is
reserved.
b. With the knowledge but without consent
of the debtor – Compensation can be set
up regarding debts previous to the
cession or assignment but not
subsequent ones.
c. Without the knowledge of debtor - Can
set up compensation as a defense for
all debts maturing prior to his
knowledge of the assignment.
Renunciation of compensation
Compensation can be renounced expressly or
impliedly. It can also be renounced either at the
time an obligation is contracted or afterwards. It
rests upon a potestative right, and a unilateral
declaration of the debtor would be sufficient
renunciation.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOVATION (1994, 2008 Bar)
It is the substitution or change of an obligation
by another, resulting in its extinguishment or
modification, either by changing the object or
principal conditions, or by substituting another
in the place of the debtor or by subrogating a
third person to the rights of the creditor.
(Pineda, 2000)
Requisites of novation (OIC –SN)
1. Valid Old obligation;
XPNs:
a. When the annulment may be claimed only
by the debtor and he consented to the
novation; and
b. When ratification validates acts which are
voidable.
2. Intent to extinguish or to modify the old
obligation;
3. Capacity and consent of all the parties to the
new obligation (except in case of
expromission where the old debtor does not
participate);
4. Substantial difference of the old and new
obligation – on every point incompatible
with each other (implied novation); and
5. Valid New obligation.
NOTE: Subsequent Void Obligation – A
subsequent void obligation intended to novate
an old one has no legal effect and is considered
as if the parties have not agreed upon it in the
first place. The original obligation shall subsist.
HOWEVER, if in coming up with the new but
void obligations, parties agree that it shall in any
event extinguish the old obligation, such old
obligation will not be revived. (NCC, Art. 1297)
Presumption of novation
Novation is never presumed; it must be proven
as a fact either by:
1. Explicit declaration – If it be so declared in
unequivocal terms; or
2. Material incompatibility – That the old and
the new obligations be on every point
incompatible with each other. (NCC, Art.
1292)
430
 Civil Law
Express novation i. Substituting the person of the
debtor (passive novation) – may be
Takes place only when the intention to effect a made without the knowledge of or
novation clearly results from the terms of the against the will of the latter, but not
agreement or is shown by a full discharge of the without the consent of the creditor.
original debt. (Jurado, 2010)
a. Delegacion – The substitution
Implied novation is initiated by the old debtor
himself (delegante) by
It is imperative that the old and new obligations convincing another person
must be incompatible with each other. The test (delegado) to take his place
of incompatibility between the old and the new and to pay his obligation to
obligations is to determine whether or not both the creditor. (1996, 2001
of them can stand together, each having its own Bar)
independence. If they can stand together, there b. Expromission – The
is no incompatibility; consequently, there is no substitution of the old debtor
novation. If they cannot stand together, there is by a new debtor is upon the
incompatibility; consequently, there is novation. initiative or proposal of a
(Borja v. Mariano, G.R. No. L-44041, October 28, third person. (1996, 2001
1938) Bar)

NOTE: Novation is never presumed and the NOTE: If it is the creditor who
animus novandi (intent to make a new initiated the change of debtor, it is
obligation) whether totally or partially, must considered expromission.
appear by express agreement of the parties or by
their acts that are too clear and unequivocal to 2. Subrogating a third person to the
be mistaken. rights of the creditor (active
novation).
Two-fold functions of novation
c. Mixed – Combination of the objective
1. It extinguishes the old obligation; and and subjective novation.
2. Creates a new obligation in lieu of the old
one. 3. As to form of their constitution

Kinds of novation a. Express – The parties declared in

unequivocal terms that the obligation is
1. As to essence extinguished by the new obligation.

a. Objective or real novation – Changing the b. Implied – No express declaration that

object or principal conditions of the
obligation. (NCC, Art. 1291)
NOTE: In payment of sum of money, the
first obligation is not novated by a
second obligation that:
the old obligation is extinguished by the
new one. The old and new obligations
are incompatible on every material
point. (NCC, Art. 1292)
4. As to extent of their effects

1. Expressly recognizes the first a. Total or extinctive – Obligation is

obligation; originally extinguished.
2. Changes only the terms of payment;
3. Adds other obligation not NOTE: Four requisites of extinctive
incompatible with the old ones; or novation:
4. Merely supplements the first one.
1. A previous valid obligation;
b. Subjective or personal novation – Change 2. An agreement of all parties
of the parties. concerned to a new contract;

431
 Obligations
3. The extinguishment of the old
obligation; and
4. The birth of a valid new obligation.
(Iloilo Traders Finance, Inc., v. Heirs
of Soriano, G.R. No. 149683, June 16,
2003)
The extinctive novation would thus have
the twin effects of first, extinguishing an
existing obligation and second, creating
a new one in its stead.
b. Partial or modificatory – Original
obligation is not extinguished but
merely modified.
5. As to their origin
a. Legal novation – By operation of law.
(NCC, Art. 1300 & 1302)
b. Conventional novation – By agreement
of the parties. (NCC, Arts. 1300-1301)
6. As to presence of absence of condition
a. Pure – New obligation is not subject to a
condition.
b. Conditional – When the creation of the
new obligation is subject to a condition.
Rights of the new debtor
1. With the debtor’s consent – Right of
reimbursement and subrogation.
2. Without the consent of the old debtor or
against his will – Right to beneficial
reimbursement.
Novation by substitution of debtor
The consent of the creditor is mandatory both in
delegacion and expromission. (NCC, Art. 1293) It
may be expressed or implied from his acts but
not from his mere acceptance of payment by a
third party, for there is no true transfer of debt.
NOTE: Creditor’s consent or acceptance of the
substitution of the old debtor by a new one may
be given at any time and in any form while the
agreement of the debtor subsists. (Asia Banking
Corp. v. Elser, G.R. No. L-30266, March 25, 1929)
Requisites of delegacion
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Substitution is upon the initiative or
proposal of the old debtor himself by
proposing to the creditor the entry of
another (third person) as the new debtor
who will replace him in payment of the
obligation;
2. The creditor accepts and the new debtor
agrees to the proposal of the old debtor; and
3. The old debtor is released from the
obligation with the consent of the creditor.
Insolvency of the new debtor in delegacion
GR: Insolvency of the new debtor (delegado),
who has been proposed by the original debtor
(delegante) and accepted by the creditor
(delegatario), shall not revive the action of the
latter against the original obligor. (NCC, Art.
1295)
XPNs: Original debtor shall be held liable; if:
1. Insolvency was already existing and of
public knowledge, or known to the debtor
(NCC, Art. 1295); or
2. Insolvency of the new debtor was already
existing and known to the original debtor at
the time of the delegation of the debt to the
new debtor. (NCC, Art. 1295)
NOTE : In both cases, the creditor must NOT
know that the new debtor is insolvent ;
otherwise, the creditor would be considered
estopped.
In both cases, the insolvency must have existed
at the time the old debtor delegated his debt.
(Sta. Maria, 2017)
Requisites of expromission
1. Substitution is upon the initiative or
proposal of a third person who will step into
the shoes of the debtor;
2. Creditor must give his consent to the
proposal of the third person; and
3. Old debtor must be released from the
obligation with the consent of the creditor.
Insolvency of the new debtor in expromission
If substitution is without the knowledge or
against the will of the debtor, the new debtor’s
insolvency or non-fulfillment of the obligation
shall not give rise to any liability on the part of
the original debtor. (NCC, Art. 1294)
432
 Civil Law
NOTE: If the old debtor gave his consent and the
new debtor could not fulfill the obligation, the
old debtor should be liable for the payment of
his original obligation.
Q: The Arco and Lim allegedly agreed that
Arco would either pay Lim the value of the
raw materials or deliver to him their finished
products of equivalent value. Lim alleged
that when he delivered the raw materials,
Arco issued a post-dated check as partial
payment. When he deposited the check,
however, it was dishonored for being drawn
against a closed account. Thereafter, Arco
and Sy executed a memorandum of
agreement where Arco bound themselves to
deliver their finished products to Megapack
Container Corporation owned by Sy.
According to the memorandum, the raw
materials would be supplied by Lim. Was the
obligation between Arco and Lim novated
because of the agreement entered into by
Arco and Sy?
A: NO. Novation must be stated in clear and
unequivocal terms to extinguish an obligation. It
cannot be presumed and may be implied only if
the old and new contracts are incompatible on
every point. In this case, Lim was not privy to the
memorandum of agreement, thus, his conformity
to the contract need not be secured. If the
memorandum of agreement was intended to
novate the original agreement between the
parties, Lim must have first agreed to the
substitution of Sy as his new debtor. The
memorandum of agreement must also state in
clear and unequivocal terms that it has replaced
the original obligation of petitioner Arco to Lim.
Neither of these circumstances is present in this
case. Since there was no novation, petitioner
Arco’s obligation to respondent remains valid
and existing. Petitioner Arco Pulp and Paper,
therefore, must still pay respondent the full
amount. (Arco Pulp and Paper Co., Inc. And
Candida A. Santos v. Dan T. Lim, Doing Business
Under The Name and Style Of Quality Papers &
Plastic Products Enterprises, G.R. NO. 206806,
June 25, 2014 , as penned by J. Leonen)
Q: DBP guaranteed Galleon’s foreign loans. In
return, Galleon undertook to secure a first
mortgage on its five new vessels and two
second-hand vessels. Pursuant to Letter of
Instructions No. 1155, Galleon's stockholders
and NDC entered into a Memorandum of
Agreement, where NDC and Galleon
433
undertook to prepare and sign a share
purchase agreement covering 100% of
Galleon's equity for P46,740,755.00. The
share purchase agreement also provided for
the release of Sta. Ines, Cuenca, Tinio and
Construction Development Corporation of
the Philippines from the personal counter-
guarantees they issued in DBP's favor under
the Deed of Undertaking. Sta. Ines, Cuenca,
Tinio, Cuenca Investment, and Universal
Holdings claimed that DBP can no longer go
after them for any deficiency judgment since
NDC had been subrogated in their place as
borrowers, hence the Deed of Undertaking
between Sta. Ines, Cuenca Investment,
Universal Holdings, Cuenca, and Tinio and
DBP had been extinguished and novated."
Did the Memorandum of Agreement novated
the Deed of Undertaking executed between
DBP and Sta. Ines, Cuenca Investment,
Universal Holdings, Cuenca, and Tinio?
A: NO. It should be noted that in order to give
novation its legal effect, the law requires that the
creditor should consent to the substitution of a
new debtor. The general rule is that, “in the
absence of an authority from the board of
directors, no person, not even the officers of the
corporation, can validly bind the corporation.”
Aside from Ongpin being the concurrent head of
DBP and NDC at the time the Memorandum of
Agreement was executed, there was no proof
presented that Ongpin was duly authorized by
the DBP to give consent to the substitution by
NDC as a co-guarantor of Galleon’s debts. Ongpin
is not DBP, therefore, it is wrong to assume that
DBP impliedly gave its consent to the
substitution simply by virtue of the personality
of its Governor. Novation is never presumed.
The animus novandi, whether partial or total,
“must appear by express agreement of the
parties, or by their acts which are too clear and
unequivocal to be mistaken.” There was no
such animus novandi in the case at bar between
DBP and respondents, thus, respondents have
not been discharged as Galleon’s co-guarantors
under the Deed of Undertaking and they remain
liable to DBP. (Development Bank of the
Philippines vs. Sta. Ines Melale Forest Products
Corp., G.R. No. 193068, February 1, 2017, as
penned by J. Leonen)
SUMMARY
EXPROMISSIO
DELEGACION
N
 Obligations
Person who debtor was old debtor or
initiated the Old debtor Third person already against his will
substitution existing and – the new
It may be express or implied known to the debtor’s
Consent of from his acts but not from his original insolvency or
the creditor mere acceptance of payment by debtor at the non-
a third party. time of the fulfillment of
With or delegation of the obligation
With the the debt to the shall not give
without the
consent of the new debtor. rise to any
Consent of knowledge of
old debtor liability on the
the old the debtor or
(since he
debtor against the part of the
initiated the original
will of the old
substitution). debtor.
debtor.
Consent is
needed but it Q: Metro Corporation obtained a loan from
Consent of need not be Consent is Allied Bank covered by promissory notes,
third person given needed. letters of credit, and trust receipts. By way of
simultaneousl security, Metro’s officers individually
y. executed a continuing guaranty in favor of
Intention of Released from the obligation Allied Bank. Metro’s officers failed to settle
substitution with the consent of the creditor. their obligations prompting Allied Bank to
demand for payment to no avail. In order to
With the settle their debts, they offered the sale of
debtor’s Metro’s remaining assets (machines and
consent – right equipment) to the Bank which the latter
of refused. Meanwhile, Starpeak Corporation,
With the acting through Allied Bank’s counsel, entered
reimbursemen
debtor’s into an agreement with Metro to buy the
t and
consent – right machines that were reduced to mere scraps
Rights of the subrogation.
of of metals. Starpeak, unfortunately, reneged
new debtor Without the
reimburseme on its obligation to Metro. In this regard,
consent of the
nt and Metro asseverates that their failure to pay
old debtor or
subrogation. their outstanding loan obligations to Allied
against his will
– right to Bank must be considered as force majeure,
beneficial and since Allied Bank was the party, through
reimbursemen their counsel, that accepted the terms and
t. conditions of payment proposed by Starpeak,
Shall not With the petitioners must therefore be deemed to
revive the debtor’s have settled their obligations to Allied Bank.
action of the consent - If the Were the loan obligations under the
latter against old debtor promissory notes, letters of credit, and trust
the original gave his receipts have already been extinguished?
obligor. consent and
Insolvency or Original the new A: NO. Article 1231 of the New Civil Code states
nonfulfillme debtor shall debtor could that obligations are extinguished either by
nt of the be held liable: not fulfill the payment or performance, the loss of the thing
obligation of Insolvency obligation, the due, the condonation or remission of the debt,
the new was already old debtor the confusion or merger of the rights of creditor
debtor existing and of should be and debtor, compensation or novation. Starpeak
public liable for the and Metro’s agreement is a sale of assets
knowledge, or payment of his contract, while Metro’s obligations to Allied
known to the original Bank arose from various loan transactions.
debtor. obligation. Absent any showing that the terms and
Insolvency of Without the conditions of the latter transactions have been,
the new consent of the in any way, modified or novated by the terms

UNIVERSITY OF SANTO TOMAS 434

2021 GOLDEN NOTES
 Civil Law
and conditions in the Starpeak-Metro
agreement, said contracts should be treated
separately and distinctly from each other, such
that the existence, performance or breach of one
would not depend on the existence, performance
or breach of the other. The performance or
breach of the agreement bears no relation to the
performance or breach of the subject loan
transactions, they being separate and distinct
sources of obligations. Metro’s loan obligations
to Allied Bank remain subsisting for the basic
reason that the former has not been able to
prove that the same had already been paid or, in
any way, extinguished. (Metro Concast Steel
Corporation, Spouses Jose S. Dychiao And Tiuoh
Yan, Spouses Guillermo And Mercedes Dychiao,
And Spouses Vicente And Filomena Dychiao vs.
Allied Bank Corporation, G.R. No. 177921,
December 4, 2013)
Q: SDIC issued to Danilo a Diners Card (credit
card) with Jeannete as his surety. Danilo
used this card and initially paid his
obligations to SDIC. Thereafter, Danilo wrote
SDIC a letter requesting it to upgrade his
Regular Diners Club Card to a Diamond
(Edition) one. As a requirement of SDIC,
Danilo secured from Jeanette her approval
and the latter obliged. Danilo's request was
granted and he was issued a Diamond
(Edition) Diners Club Card. Danilo had
incurred credit charged plus appropriate
interest and service charge. However, he
defaulted in the payment of this obligation.
Was the upgrading a novation of the original
agreement governing the use of Danilo Alto's
first credit card, as to extinguish that
obligation?
A: YES. Novation, as a mode of extinguishing
obligations, may be done in two ways: by explicit
declaration, or by material incompatibility.
There is no doubt that the upgrading was a
novation of the original agreement covering the
first credit card issued to Danilo Alto, basically
since it was committed with the intent of
cancelling and replacing the said card. However,
the novation did not serve to release Jeanette
from her surety obligations because in the
surety undertaking she expressly waived
discharge in case of change or novation in the
agreement governing the use of the first credit
card. (Molino v. Security Diners International
Corp., G.R. No. 136780, August 16, 2001)
435
Q: J.C. Construction bought steel bars from
Matibay Steel Industries (MSI) which is
owned by Buddy Batungbacal. J.C. failed to
pay the purchased materials worth P500,000
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 P50,000. After 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
JC to MSI extinguished by novation? Why?
(2014 Bar)
A: NO. Under Art. 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 declared in unequivocal terms, or that the
old and the new obligations be on every point be
incompatible with each other. Novation by
substitution of the debtor requires the consent
of the creditor as provided in Art. 1293. This
requirement is not present in this case.
It was ruled that the mere fact that the creditor
received payment from a third person does not
constitute novation and does not extinguish the
obligation of the original debtor. Thus, the
obligation of JC to MSI subsists. (Magdalena
Estates Inc., v. Rodriguez, G.R. No. L-18411,
December 17, 1966)
Effects of novation
1. Extinguishment of principal also
extinguishes the accessory, except:
a. Mortgagor, pledgor, surety or guarantor
agrees to be bound by the new
obligation (Tolentino, 1999); or
b. Stipulation made in favor of a third
person such as stipulation pour atrui
(NCC, Art. 1311) unless beneficiary
consents to the novation. (NCC, Art.
1296)
2. If old obligation is:
 Obligations
a. Void – Novation is void. (NCC, Art. 1298)
b. Voidable – Novation is valid provided
that the annulment may be claimed only
by the debtor or when ratification
validates acts. (NCC, Art. 1298)
c. If the old obligation was subject to a
suspensive or resolutory condition, the
new obligation shall be under the same
condition, unless it is otherwise
stipulated. (NCC, Art. 1299)
3. If old obligation is conditional and the new
obligation is pure:
a. If resolutory and it occurred – Old
obligation already extinguished; no new
obligation since nothing to novate.
b. If suspensive and it did not occur – It is as
if there is no obligation; thus, there is
nothing to novate.
4. If the new obligation is:
a. Void – Original one shall subsist, unless
the parties intended that the former
relation should be extinguished in any
event. (NCC, Art. 1297)
b. Voidable – Novation can take place,
except when such new obligation is
annulled. In such case, old obligation
shall subsist.
c. Pure obligation – Conditions of old
obligation deemed attached to the new,
unless otherwise stipulated. (Tolentino,
1999)
d. Conditional Obligation:
i. If resolutory – Valid until the
happening of the condition. (NCC,
Art. 1181)
ii. If suspensive and did not materialize
– No novation, old obligation is
enforced. (NCC, Art. 1181)
NOTE: Novation does not extinguish criminal
liability. (PNB v. Soriano, G.R. No. 164051,
October 3, 2012)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Q: Will a contract of suretyship, which is
secondary to a principal obligation, be
extinguished when novation occurs?
A: IT DEPENDS. A surety is released from its
obligation when there is a material alteration of
the principal contract in connection with which
the bond is given, such as a change which
imposes a new obligation on the promising
party, or which takes away some obligation
already imposed, or one which changes the legal
effect of the original contract and not merely its
form. (Philippine Charter Insurance Corporation
v. Petroleum Distributors & Service Corporation,
G.R. No. 180898, April 18, 2012)
Furthermore, a surety is not released by a
change in the contract, which does not have the
effect of making its obligation more onerous.
(Stronghold Insurance Company, Inc. v. Tokyu
Construction Company, G.R. Nos. 158820-21, June
5, 2009) As such, a contract is only extinguished
by novation when there is a material alteration
in the principal contract or if it has the effect of
making the obligation more onerous.
Subrogation
It is the active subjective novation characterized
by the transfer to a third person of all rights
appertaining to the creditor in the transaction
concerned including the right to proceed against
the guarantors or possessors of mortgages and
similar others subject to any applicable legal
provision or any stipulation agreed upon by the
parties in conventional subrogation.
NOTE: Whoever pays on behalf of the debtor
without the knowledge or against the will of the
latter cannot compel the creditor to subrogate
him in his rights, such as those arising from a
mortgage, guaranty, or penalty. (NCC, Art. 1237)
Kinds of subrogation
1. As to their creation
a. Legal subrogation – Constituted by
virtue of a law and does not proceed
from an agreement of the parties (NCC,
Articles 1300 and 1302);
b. Voluntary or conventional subrogation –
Created by the parties by their
voluntary agreement (NCC, Art. 1300);
436
 Civil Law
NOTE: In legal subrogation, the law g law 1304 1627
which forms the basis of the The transfer of
subrogation must be clearly identified the credit or
and invoked to enforce the rights right does not
pertinent thereto. (Sta. Maria, 2017) It extinguishes extinguish or
the original modify the
c. Conventional subrogation of a third Effect obligation and obligation. The
person requires the consent of the creates a new transferee
original parties and of the third person. one. becomes the
(NCC, Art. 1301) new creditor
for the same
2. As to their extent obligation.
The consent of
a. Total subrogation – Credits or rights of the debtor is
the creditor in the transaction are The consent of not necessary.
totally transferred to the third person. Need for the debtor is Notification is
consent necessary. enough for the
b. Partial subrogation – Only part of the of debtor (NCC, Art. validity of the
credit or rights of the creditor in the 1301) assignment.
transaction are transferred to the third (NCC, Art.
person. 1626)
Begins from Begins from
NOTE: A creditor, to whom partial payment Effectivity the moment of notification of
has been made, may exercise his right for subrogation. the debtor.
the remainder and he shall be preferred to The defect in The defect in
the person who has been subrogated in his the old the credit or
place in virtue of the partial payment of the Curability obligation may rights is not
same credit. (NCC, Art. 1304) of defect be cured such cured by its
or vice that the new mere
Presumption of legal subrogation obligation assignment to
becomes valid. a third person.
GR: Legal subrogation is not presumed. (NCC, Debtor cannot
Art. 1300) set up a
The debtor can
defense
still set up the
XPN: In cases expressly mentioned in the law: against the
defense
new creditor
(available
1. When a creditor pays another creditor who Defense which he
against the old
is preferred, even without the debtor’s could have
creditor)
knowledge; availed
against the
2. When a third person, not interested in the himself of
new creditor.
obligation, pays with the express or tacit against the old
approval of the debtor; creditor.
3. When, even without the knowledge of the
debtor, a person interested in the fulfillment NOTE: In the law of subrogation, active
of the obligation pays, without prejudice to subjective novation is stricter than passive
the effects of confusion as to the latter’s subjective novation. In the latter, the consent of
share. (NCC, Art. 1302) the old debtor is not even required in
expromission.
Conventional Subrogation vs. Assignment of
Credits Presumption of legal subrogation

CONVENTION GR: Legal subrogation is not presumed. (NCC,

ASSIGNMENT
AL Art. 1300)
BASIS OF CREDITS
SUBROGATIO
OR RIGHTS
N XPN: In cases expressly mentioned in the law:
Governin Article 1300- Article 1624-

437
 Obligations
1. When a creditor pays another creditor who
is preferred, even without the debtor’s
knowledge;
2. When a third person, not interested in the
obligation, pays with the express or tacit
approval of the debtor;
3. When, even without the knowledge of the
debtor, a person interested in the fulfillment
of the obligation pays, without prejudice to
the effects of confusion as to the latter’s
share. (NCC, Art. 1302)

UNIVERSITY OF SANTO TOMAS 438

2021 GOLDEN NOTES
 Civil Law
CONTRACTS
GENERAL PPROVISIONS
A contract is a meeting of minds between two
persons whereby one binds himself, with
respect to the other, to give something or to
render some service. (NCC, Art. 1305)
A contract is a meeting of the minds between
two or more parties, whereby one party binds
himself with respect to the other, or where both
parties bind themselves reciprocally, in favor of
one another, to fulfill a prestation to give, to do
or not to do. (Pineda, 2009)
Meeting of the minds
Speaks of the intention of the parties in entering
into the contract respecting the subject matter
and the consideration thereof. As a rule
therefore, a contract is perfected by mere
consent. It does not require any special form, as
a rule, and is binding from the moment that the
essential requisites are present. Thus, the
meeting of the minds between the parties rise to
the binding contract althought they have not
affixed their signature to its written form.
(Rabuya, 2017)
Obligation v. Contract
While a contract is one of the sources of
obligations, an obligation is the legal tie or
relations itself that exists after a contract has
been entered into.
Hence, there can be no contract if there is no
obligation. But an obligation may exist without a
contract. (De Leon, 2010)
Duty of courts in interpreting contracts
It is not the province of the court to alter a
contract by construction or to make a new
contract for the parties. Its duty is confined to
the interpretation of the one which they have
made for themselves without regard to its
wisdom or folly as the court cannot supply
material stipulations or red into the contract
words which it does not contain. (Cuizon v. CA,
G.R. No. 102096, August 22, 1996)
STAGES IN THE MAKING OF A CONTRACT
439
Three stages in the making of a contract (CPC) :
1. Conception or Generation – the first stage
where the parties begin their initial negotiation
and bargaining for the formation of the contract
ending at the moment of agreement of the
parties.
2. Perfection or Birth – Here, the parties had
a meeting of minds as to the object, cause or
consideration and other terms and conditions of
the contract.
3. Consumation or fulfillment – This the last
stage which consists in their performance or
fulfillment by the parties of their obligations
under the term of the perfected contract.
CHARACTERISTICS OF A CONTRACT
The following are the characteristics of a
contract (AMOR):
1. Autonomy (NCC, Art. 1306);
2. Mutuality (NCC, Art. 1308);
3. Obligatoriness and consensuality (NCC, Art.
1315);
4. Relativity (NCC, Art. 1311) ;
5. Consensuality (NCC, Art. 1315).
RELATIVITY OF CONTRACTS
(1991, 1996, 2002 BAR)
Principle of relativity or Principle of limited
effectivity of contracts (2011 BAR)
GR: Contracts take effect only between the
parties or their assigns and heirs.
Res inter alios acta aliis neque nocit prodest (a
thing done between others does not harm or
benefit others) – a contract can only obligate the
parties who entered into it, or their successors
who assumed their personalities, and that,
concomitantly, a contract can neither favor nor
prejudice third persons. (Vitug, 2006)
NOTE: With respect to the heir, he shall not be
liable beyond the value of the property he
received from the decedent. (NCC, Art. 1311)
XPNs:
1. Rights and obligations that are not
transmissible by their nature, or by the
 Contracts
stipulation or by provisions of law (NCC,
Art. 1311);
NOTE : Determine whether a contract
terminates upon the death of one of the
parties
2. Stipulation pour autrui (stipulation in
favor of a third person) – benefits
clearly and deliberately conferred by
parties to a contract upon third persons
(NCC, Art. 1311) and which stipulation is
merely part of a contract entered into
by the parties, neither of whom acted as
agents of the third person and which
favor can be demanded by the third
person if duly accepted by him before it
could be revoked;
Requisites of stipulation pour atrui:
a. Stipulation in favor of a third
person;
b. Stipulation is just part and not the
whole obligations of the contract;
c. Contracting parties must have
clearly and deliberately conferred a
favor upon a third person;
d. Favor or benefit conferred is not
just an incidental benefit or
interest;
e. Third person must have
communicated his acceptance; and
f. Neither of the contracting parties
bears the legal representation or
authorization of the third person.
(Young v. Court of Appeals, G.R. No.
79518, January 13, 1989)
NOTE: The fairest test to determine
whether the interest of third person in a
contract is a stipulation pour autrui or
merely an incidental interest, is to rely
upon the intention of the parties as
disclosed by their contract. In applying
this test, it matters not whether the
stipulation is in the nature of a gift or
whether there is an obligation owing
from the promise to the third person.
(Rabuya, 2017)
3. Third persons coming into possession of the
object of the contract creating real rights
subject to the provisions of Mortgage Law
and the Land Registration Law (NCC, Art.
1312);
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
4. Contracts entered into in fraud of creditors;
(NCC, Art. 1313);
5. When a third person induces a party to
violate the contract. (NCC, Art. 1314) (1991,
1998 BAR)
NOTE: This tort or wrongful conduct is
known as “interference with contractual
relations.”
Requisites:
a. Existence of a valid contract;
b. Third person has knowledge of such
contract;
c. Third person interferes without legal
justification or excuse. (De Leon, 2010)
It is based on quasi-delict and their liability is
solidary.
Thus, the unwarranted interference by a
stranger in the contractual relations of a
contracting party justifies a claim for damages
against the former. It is based on tort or quasi-
delict and their liability is solidary. (NCC, Art.
2194)
NOTE: A third person can be held liable for tort
interference even if he does not know the
identity of one of the contracting parties. The
interference with lawful contracts by strangers
thereto gives rise to an action for damage in
favor of the injured person. The law does not
require that the responsible person shall have
known the identity of the injured person.
(Rabuya, 2017)
Q: PCGG filed a complaint for reconveyance,
reversion, accounting, restitution, and
damages before the Sandigan Bayan against
Ferdinand and Imelda Marcos, and several of
their cronies including Benedicto and Africa.
PCGG, through its Chairman, David M. Castro,
entered into a Compromise Agreement with
Benedicto where the latter undertook to cede
to the government properties listed in the
agreement and transfer to the government
whatever rights he may have in the assets of
the corporations listed in the same
agreement. The SB dismissed the case
against Africa and ruled that since that act
being complained of constituted a quasi-
delict or tort and the obligation of the
defendants were solidary therefore the
440
 Civil Law
obligation of Africa has been extinguished by
the Compromise Agreement. Did the
Compromise Agreement between PCGG and
Benedicto extinguish the liability of Africa?
A: NO. A stipulation pour autrui to be
appreciated, it is indispensable that there be a
stipulation deliberately conferring a benefit or
favor to a third person. The requisites of a
stipulation pour autrui are the following:
1. There is a stipulation in favor of a third
person;
2. The stipulation is a part, not the whole, of
the contract;
3. The contracting parties clearly and
deliberately conferred a favor to the third
person — the favor is not an incidental
benefit;
4. The favor is unconditional and
uncompensated;
5. The third person communicated his or her
acceptance of the favor before its
revocation; and
6. The contracting parties do not represent, or
are not authorized by, the third party.
The Compromise Agreement executed between
Benedicto and PCGG does not contain any
express stipulation that confers the benefit of
absolute immunity to Africa. Absent any express
stipulation in favor of a third person, the rule on
relativity of contract must be applied i.e., that
the contract only takes effect between the
parties, their assigns or heirs. (Republic of the
Philippines v. Legal Heirs of Jose L. Africa, G.R. No.
205722, August 19, 2015)
Q: Fieldmen's Insurance issued, in favor of
MYT, a common carrier, accident insurance
policy. 50% of the premium was paid by the
driver. The policy indicated that the
Company will indemnify the driver of the
vehicle or his representatives upon his death.
While the policy was in force, the taxicab
driven by Carlito, met with an accident.
Carlito died. MYT and Carlito's parents filed a
complaint against the company to collect the
proceeds of the policy. Fieldmen’s admitted
the existence thereof, but pleaded lack of
cause of action on the part of the parents.
Decide.
A: Carlito’s parents who, admittedly, are his
sole heirs have a direct cause of action
against the Company. This is so because
441
pursuant to the stipulations, the Company will
also indemnify third parties. The policy under
consideration is typical of contracts pour autrui,
this character being made more manifest by the
fact that the deceased driver paid 50% of the
premiums. (Coquia v. Fieldmen’s Insurance Co.,
Inc., G.R. No. L-23276, November 29, 1968)
OBLIGATORY FORCE OF CONTRACTS
Contracts shall be obligatory, in whatever form
they may have been entered into, provided all
the essential requisites for validity are present.
(NCC, Art. 1356)
Obligations arising from contracts have the force
of law between the contracting parties and
should be complied with in good faith. (NCC, Art.
1159)
This provision must fall within the other
characteristic of a contract.
Requisites for the application of the principle
Before a contract may be considered obligatory,
it is necessary that:
1. It is perfected;
2. It is valid; and
3. It is enforceable. (Rabuya, 2017)
Q: Villamor borrowed a large amount from
Borromeo, for which he mortgaged his
property but subsequently defaulted.
Borromeo pressed him for settlement. The
latter instead offered to execute a
promissory note containing a promise to pay
his debt as soon as he is able, even after 10
years and that he waives his right to
prescription. What are the effects of the said
stipulation to the action for collection filed
by Borromeo?
A: NONE. The rule is that a lawful promise made
for a lawful consideration is not invalid merely
because an unlawful promise was made at the
same time and for the same consideration. This
rule applies although the invalidity is due to
violation of a statutory provision, unless the
statute expressly or by necessary implication
declares the entire contract void. Thus, even
with such waiver of prescription, considering
that it was the intention of the parties to
effectuate the terms of the promissory note,
there is no legal obstacle to the action for
 Contracts
collection filed by Borromeo. (Borromeo v. CA,
G.R. No. L-22962, September 28, 1972)
NOTE: Where an agreement founded on a legal
consideration contains several promises, or a
promise to do several things, and a part only of
the things to be done are illegal, the promises
which can be separated, or the promise, so far as
it can be separated, from the illegality, may be
valid. (Borromeo v. CA, G.R. No. L-22962,
September 28, 1972)
MUTUALITY OF CONTRACTS
The contract must bind both contracting parties
and its validity or compliance cannot be left to
the will of one of them. (NCC, Art. 1308) (2001,
2004, 2008 BAR)
If a party alleges defects in the contract so that it
could be set aside, he must prove conclusively
the existence of the defects because the validity
and fulfillment of the contract cannot be left to
the will of one of the contracting parties. (Pineda,
2009)
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.
(Sps. Juico vs. China Banking Corp., G.R. 187678,
April 10, 2013)
NOTE: A contract containing a condition whose
efficacy or fulfillment is dependent solely on the
uncontrolled will of one of the parties is void.
(Garcia v. Rita, G.R. No. L-20175, October 30,
1967; PNB v. CA, G.R. No. 88880, April 30, 1991)
However, the termination of the contract does
not necessarily require mutuality, and it can
even be validly left to one party by agreement or
under a resolutory facultative condition. (Vitug,
2006; see also PNB v. CA, 1994)
Q: The consortium of ALSONS Power
Holdings Corporation and TOMEN
Corporation entered into an Energy
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Conversion Agreement with NAPOCOR for a
50-megawatt bunker- C fired diesel-
generating power project in General Santos
City. Southern Philippines Power
Corporation assumed the obligations of the
consortium to the Energy Conversion
Agreement through the Accession
Undertaking. The cooperation period
between Southern Philippines Power
Corporation and the National Power
Corporation started when the Power Station
was declared completed.
Southern Philippines Power Corporation
requested payment in the amount of
P45,840,673.22, attributable to the
additional 10% capacity made available to
the National Power Corporation since 2005.
NAPOCOR refused to pay. Does the Petitioner
have the right to collect payment from the
project?
A: NO. Section 3.1 of the Agreement's First
Schedule, which provides for the construction of
a five (5)-engine Power Station, cannot be
construed alone. Various stipulations of a
contract must be interpreted or read together to
arrive at its true meaning. The legal effect of a
contract is not determined by any particular
provision alone, disconnected from all others,
but from the language used and gathered from
the whole instrument.
Specifically, respondent is given the right to "do
all other things necessary or desirable for the
completion of the Power Station" under the
specifications set forth in the First Schedule, as
well as to "do all other things necessary or
desirable for the running of the Power Station
within the Operating Parameters."
Although it is clear that respondent is given an
allowance of five (5)- megawatt contracted
capacity or up to a maximum of 55 megawatts, it
is not specified in the Agreement that the
additional five (5)-megawatt contracted capacity
must be produced only from the original five (5)
generating units. This omission in the
Agreement binds petitioner. (National Power
Corporation, v. Southern Philippines Power
Corporation, G.R. No. 219627, July 4,2016, as
penned by J. Leonen)
Q: DPWH and a Joint Venture entered into a
construction contract. However, during the
construction, the joint venture’s equipment
442
 Civil Law
were set on fire. Joint venture made a
demand for payment from DPWH but DPWH
could not pay them all. Hence, they decided
to mutually terminate the contract. Is the
court intervention then rendered moot and
academic?
A: NO. There is a practical use or value to decide
on the issues raised by the parties despite the
mutual termination of the Contract between
them. These issues include the determination of
amounts payable to respondent by virtue of the
time extensions, respondent's entitlement to
price adjustments due to the delay of the
issuance of the Notice to Proceed, additional
costs, actual damages, and interest on its claims.
(Department Of Public Works And Highways v.
Cmc/Monark/Pacific/Hi-Tri Joint Venture, G.R.
No. 179732, September 13, 2017, as penned by J.
Leonen)
Q: In view of a complaint for damages filed
by 1,843 Filipino claimants against the
foreign corporations—Chiquita Brands, Inc.,
Chiquita Brands International, Inc.
(collectively, Chiquita), Dow Chemical
Company, Occidental Chemical Corporation,
Shell Oil Company, Del Monte Fresh Produce,
N.A., and Del Monte Tropical Fruit Co.
(collectively, Del Monte)—the parties
entered into a worldwide settlement in the
United States with all the banana plantation
workers. The parties executed a document
denominated as the "Compromise
Settlement, Indemnity, and Hold Harmless
Agreement".
The Compromise Agreement provided,
among others, that the settlement amount
should be deposited in an escrow account,
which should be administered by a mediator.
After the claimants execute individual
releases, the mediator shall give the checks
representing the settlement amounts to the
claimants' counsel, who shall then distribute
the checks to each claimant. The Compromise
Agreement also provided that the laws of
Texas, United States should govern its
interpretation.
The Regional Trial Court approved the
Compromise Agreement by way of judgment
on compromise. Accordingly, it dismissed
Civil Case No. 95-45 in the Omnibus Order.
Shortly after the dismissal of Civil Case No.
95-45, several claimants moved for the
443
execution of the judgment on compromise.
Petitioners opposed the execution on the
ground of mootness. They argued that they
had already complied with their obligation
under the Compromise Agreement by
depositing the settlement amounts into an
escrow account, which was administered by
the designated mediator. Hence, there was
nothing left for the court to execute.
The Regional Trial Court eventually granted
the Motion for Execution because there was
no proof that the settlement amounts had
been withdrawn and delivered to each
individual claimant. Accordingly, a Writ of
Execution was issued. Is the Writ of
Execution ordering the collection of the
settlement amount directly for petitioner
valid?
A: NO. A judgment on compromise may be
executed just like any other final judgment in the
manner provided in the Rules of Court. The writ
of execution derives its validity from the
judgment it seeks to enforce and must
essentially conform to the judgment's terms. It
can neither be wider in scope nor exceed the
judgment that gives it life. Otherwise, it has no
validity. Thus, in issuing writs of execution,
courts must look at the terms of the judgment
sought to be enforced.
Under the judicially approved Compromise
Agreement, petitioners are obliged to deposit
the settlement amount in escrow within 10
business days after they receive a signed
Compromise Agreement from the counsel of the
claimants. There was nothing in the
Compromise Agreement that required
petitioners to ensure the distribution of the
settlement amount to each claimant. Petitioners'
obligation under the Compromise Agreement
was limited to depositing the settlement amount
in escrow. On the other hand, the actual
distribution of the settlement amounts was
delegated to the chosen mediator, Mr. Mills. To
require proof that the settlement amounts have
been withdrawn and delivered to each claimant
would enlarge the obligation of petitioners
under the Compromise Agreement. (Chiquita
Brands, Inc. and Chiquita Brands International,
Inc., vs. Hon. George E. Omelio, et.al., G.R. No.
189102, June 7, 2017, as penned by J. Leonen)
Contract of Adhesion (2018 BAR)
 Contracts
It is a contract in which one of the parties
prepares the stipulations in the form of a ready-
made contract, which the other party must
accept or reject, but not modify, by affixing his
signature or his “adhesion” thereto; leaving no
room for negotiation and depriving the latter of
the opportunity to bargain on equal footing.
(Norton Resources and Development Corporation
v. All Asia Bank Corporation, G.R. No. 162523,
November 25, 2009)
NOTE: Generally, contracts of adhesion are valid,
except when they are highly inequitable. The
courts will not hesitate to rule out blind
adherence to terms where facts and
circumstances will show that it is one-sided.
(Sta. Maria, 2017)
Validity of contract of adhesion
It is not entirely prohibited since the one who
adheres to the contract is, in reality, free to
reject it entirely, and if he adheres, he gives his
consent. (Premiere Development Bank v. Central
Surety & Insurance Company, Inc., G.R. No.
176246, February 13, 2009) However, it is void
when the weaker party is imposed upon in
dealing with the dominant bargaining party, and
its option is reduced to the alternative of “taking
or leaving it,” completely depriving such party of
the opportunity to bargain on equal footing.
(Keppel Cebu Shipyard, Inc. v. Pioneer Insurance
and Surety Corporation, G.R. Nos. 180880-81,
September 25, 2009)
Note: Such contracts are not void in themselves.
They are as binding as ordinary
contracts. Parties who enter into such contracts
are free to reject the stipulations entirely.
(Ermitao vs. CA, G.R. No. 127246, April 21, 1999)
Interpretation of contract of adhesion
In interpreting such contracts, however, courts
are expected to observe greater vigilance in
order to shield the unwary or weaker party from
deceptive schemes contained in ready-made
covenants. (Premiere Development Bank v.
Central Surety Insurance Company, Inc., G.R. No.
176246, February 13, 2009) In case of doubt,
which will cause a great imbalance of rights
against one of the parties, the contract shall be
construed against the party who drafted the
same. (Magis Young Achiever’s Learning Center v.
Manalo, G.R. No. 178835, February 13, 2009)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Third person may determine the
performance of a contract
The determination of the performance may be
left to a third person. However, his decision shall
not be binding until it has been known to both
the contracting parties. (NCC, Art. 1309)
Moreover, the determination made shall not be
obligatory if it is evidently inequitable. In such
case, the courts shall decide what is equitable
under the circumstances. (NCC, Art. 1310)
Unilateral increase of interest rate
Even assuming that the loan agreement between
the creditor and the debtor gave the former a
license to increase the interest rate at will during
the term of the loan, that license would have
been null and void for being violative of the
principle of mutuality essential in contracts.
(Rabuya, 2017)
AUTONOMY OF CONTRACTS / LIBERTY OF
CONTRACTS (1996, 2004 BAR)
It is the freedom of the parties to contract and to
stipulate provided the stipulations are not
contrary to law, morals, good customs, public
order or public policy. (NCC, Art. 1306)
It is the freedom of the parties to create or
establish stipulations, clauses, terms, and
conditions as they may deem convenient,
provided the stipulations are not contrary to
law, morals, good customs, public order or
public policy. (NCC, Art. 1306)
NOTE: Courts cannot make for the parties better
or more equitable agreements than they
themselves have been satisfied to make, or
rewrite contracts because they operate harshly
or inequitably as to one of the parties, or alter
them for the benefit of one party and to the
detriment of the other, or by construction,
relieve one of the parties from terms which he
voluntarily consented to, or impose on him those
which he did not. (Angel Bautista v. Court of
Appeals, G.R. No. 123655, January 19, 2000)
Courts are not authorized to extricate parties to
the consequences of their acts, and the fact that
the contractual obligations may turn out to be
financially disadvantageous will not relieve the
latter of their obligations.
444
 Civil Law
An agreement to pay unconscionable interests 2. By stipulation; or
on a loan is against morals. (Medel, et al. vs. Ca, 3. By provision of law. (NCC, Art. 1311)
299 SCRA 481)
Requisites in order that a third person may
PERFECTION BY MERE CONSENT demand the fulfillment of the contract

Contracts are perfected by mere consent, and
from that moment the parties are bound not
only to the fulfillment of what has been
expressly stipulated but also to all the
consequences which, according to their nature,
may be in keeping with good faith, usage and
law. (NCC, Art. 1315)
Note: This refers to consensual contracts.
However, real contracts are perfected by
delivery and formal contracts are perfected
upon compliance.
EFFECT OF CONTRACTS
Contracts take effect only between the parties,
and their assigns and heirs, the latter being
liable only to the extent of the property received
from the decedent. (NCC, Art. 1311)
Persons affected by a contract
GR:
1. The contracting parties must have clearly
and deliberately conferred a favor upon the
third person;
2. The third person’s interest or benefit in such
fulfillment must not be merely incidental;
and
3. Such third person communicated his
acceptance to the obligor before the
stipulations in his favor are revoked.
ESSENTIAL REQUISITES OF A CONTRACT
ELEMENTS OF A CONTRACT
1. Natural Elements – Those which are derived
from the very nature of the contract, and as
a consequence, ordinarily accompany the
same.
2. Essential Elements – Those without which
there can be no contract.
3. Accidental Elements – those which exist only
when the contracting parties expressly
provide for them. (De Leon, 2010)

1. Parties to the contract; and ESSENTIAL REQUISITES OF A CONTRACT

2. Their corresponding successors. (2005 BAR)

XPNs: The following are the essential requisites of

1. Contracts containing a stipulation in favor
of a third person (pour autrui) [NCC, Art.
1311 (2)];
2. Contracts containing real rights (NCC, Art.
1312);
3. Contracts entered into to defraud
creditors (NCC, Art. 1313);
4. Contracts which have been violated at the
inducement of 3rd persons (NCC, Art.
1314);
5. Quasi-contract of negotiorum gestio. (NCC,
Art. 2150)
Liability of heirs for the obligation
contracted by the decedent
The heirs are liable for the obligation contracted
by the decedent when the rights and obligations
arising from the contract are transmissible:
1. By their nature;
contracts (COC):
1. Consent;
2. Object certain or subject matter; and
3. Cause or consideration. (NCC, Art 1318) (See
Cathay Pacific v. Vasquez, 2003)
NOTE: These three requisites are, therefore, the
essential elements of a consensual contract. In
real contracts, however, in addition to the above,
the delivery of the object of the contract is
required as a further requisite. Solemn or formal
contracts require compliance with the
formalities provided by law.
Q: MRT thru Parsons Inc., had invited
Gammon Philippines to bid on the
construction of the Podium structure of the
MRT 3 and it later won the bidding. Then the
2 parties signed the contract where it stated
that there would be three notices that would

445
 Contracts
be sent to Gammon for the project to
proceed. But later on Parsons informed
Gammon that MRT was temporarily
rescinding the Third Notice to Proceed,
noting that it remained unaccepted by
Gammon. On June 19, 1998, Gammon
qualifiedly accepted the Fourth Notice to
Proceed. MRT treated Gammon's qualified
acceptance as a new offer. In a Letter dated
June 22, 1998, MRT rejected Gammon's
qualified acceptance and informed Gammon
that the contract would be awarded instead
to Filsystems if Gammon would not accept
the Fourth Notice to Proceed within five (5)
days. In a Letter dated July 8, 1998, Gammon
wrote MRT, acknowledging the latter's intent
to grant the Fourth Notice to Proceed to
another party despite having granted the
First Notice to Proceed to Gammon. Thus, it
notified MRT of its claims for reimbursement
for costs, losses, charges, damages, and
expenses it had incurred due to the rapid
mobilization program in response to MRT's
additional work instructions, suspension
order, ongoing discussions, and the
consequences of its award to another party.
In a letter dated July 15, 1998, MRT
expressed its disagreement with Gammon
and its amenability to discussing claims for
reimbursement. Whether or not there is a
perfected contract between MRT and
Gammon Philippines?
A: YES, there is a perfected contract between
MRT and Gammon. MRT has already awarded
the contract to Gammon, and Gammon's
acceptance of the award was communicated to
MRT before MRT rescinded the contract. The
first Letter shows that Gammon fully consented
to the contents and accepted the prestations of
the First Notice to Proceed. Gammon's
acceptance is also manifested in its undertakings
to mobilize resources, to prepare the
Performance and Advance Payment Bonds, and
to procure materials necessary for the Project.
All that remained was the formality of returning
the contract documents and the Letter of
Comfort, which eventually was complied with by
Gammon. Thus, there is already mutual consent
on the object of the contract and its
consideration, and an absolute acceptance of the
offer. (Metro Rail Transit Development
Corporation v. Gammon Philippines Inc., G.R. NO.
200401, JANUARY 17, 2018, as penned by J.
Leonen)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
CONSENT (2005 BAR)
Consent is manifested by the meeting of the offer
and the acceptance upon the thing and the cause
which are to constitute the contract. The offer
must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter-offer.
(NCC, Art. 1319)
It is the concurrence of the wills of the
contracting parties with respect to the object
and cause, which shall constitute the contract.
(De Leon, 2010)
NOTE: Consent is essential to the existence of a
contract; and where it is wanting, the contract is
non-existent.
Requisites of consent (LM-CR)
1. Legal capacity of the contracting parties;
NOTE: The parties must have full civil
capacity. Hence, if any one party to a
supposed contract was already dead at the
time of its execution, such contract is
undoubtedly simulated and false and,
therefore, null and void by reason of its
having been made after the death of the
party who appears as one of the contracting
parties therein. The death of a person
terminates contractual capacity. (Milagros
De Belen Vda. De Cabalu, et. al. v. Sps. Renato
Dolores Tabu and Laxamana, G.R. No.
188417, September 24, 2012)
2. Manifestation of the conformity of the
contracting parties;
Note: Manifestation may be in writing
bearing the signature or marks of the
parties, or it may be implied from the
conduct of the parties like the acceptance of
payment.
3. Parties’ Conformity to the object, cause,
terms and condition of the contract must be
intelligent, spontaneous and free from all
vices of consent; and
NOTE: Intelligence in consent is vitiated by
error; freedom by violence, intimidation or
undue influence; and spontaneity by fraud.
4. The conformity must be Real.
446
 Civil Law
The conformity must be Real and not
simulated or fictitious.
Offer
An offer is defined as an expression of
willingness to contract on certain terms, made
with the intention that it shall become binding as
soon as it is accepted by the person to whom it is
addressed. (Rabuya, 2017 citing G. H. Treitel, The
Law of Contract, 10th Ed., p.8)
NOTE: The offerer will not be bound by an
acceptance made by the acceptor in any other
manner than that specified by the offerer, unless
the offerer acquiesces in the change. (Sta. Maria,
2017)
Elements of a valid offer and acceptance
1. Definite – unequivocal
2. Intentional
3. Complete – unconditional
NOTE: It must be so complete that its absolute
acceptance will form an agreement containing
all the terms necessary and intended by the
parties. (Sta. Maria, 2017)
We follow the cognitive theory and NOT the
mailbox theory. Under our Civil Law, the offer
and acceptance concur only when the
acceptance has reached the knowledge of the
offeror (actual knowledge), and not at the time
of sending the acceptance.
Requisites of an effective offer
1. The one offering must have a serious
intention to become bound by his offer;
2. The terms of the offer must be reasonably
certain, definite and complete, so that the
parties and the court can ascertain the terms
of the offer; and
3. The offer must be communicated by the
offeror to the offeree, resulting in the
offeree’s knowledge of the offer. (Rabuya,
2017)
Q: The husband assumed sole administration
of the family’s mango plantation since his
wife worked abroad. Subsequently, without
his wife’s knowledge, the husband entered
into an antichretic transaction with a
company, giving it possession and
management of the plantation with power to
447
harvest and sell the fruits and to apply the
proceeds to the payment of a loan he got.
What is the standing of the contract? (2011
BAR)
A: It is considered a continuing offer by the
parties; perfected only upon the wife’s
acceptance or the court’s authorization.
NOTE: The person making the offer may fix the
time, place and manner of acceptance, all of
which must be complied with. (NCC, Art. 1321)
Rules on complex offer
1. Offers are interrelated – contract is
perfected if all the offers are accepted
2. Offers are not interrelated – single
acceptance of each offer results in a
perfected contract unless the offeror has
made it clear that one is dependent upon
the other and acceptance of both is
necessary.
Rules on advertisements as offers
1. Business advertisements – not a definite
offer, but mere invitation to make an offer,
unless it appears otherwise. (NCC, Art. 1325)
NOTE: If the advertisement contains all the
necessary date need in a contract, its a
definite offer for the sale of the thing
advertised. Otherwise, it is not a definite
offer, it is a mere invitation to make offer.
2. Advertisement for bidders – simply invitation
to make proposals and advertiser is not
bound to accept the highest or lowest
bidder, unless the contrary appears. (NCC,
Art. 1326)
Grounds that would render the offer
ineffective
1. Death, civil interdiction, insanity or
insolvency of either party before acceptance
is conveyed (NCC, Art. 1323);
2. Express or implied revocation of the offer by
the offeree;
3. Qualified or conditional acceptance of the
offer, which becomes counter-offer;
4. Subject matter becomes illegal or impossible
before acceptance is communicated;
 Contracts
5. Period given to the offeree to signify his
acceptance has already lapsed.
Requisites of a valid acceptance
1. Must be absolute; a qualified acceptance
constitutes a counter-offer (NCC, Art. 1319);
2. No specified form but when the offeror
specifies a particular form, such must be
complied with.
NOTE: Offer or acceptance, or both, expressed in
electronic form, is valid, unless otherwise agreed
by the parties (electronic contracts).
Acceptance not made in a manner as directed by
the offeror constitutes a counter-proposal which
extinguishes the offer and this may not be
accepted by the original offeror. (Pineda, 2009)
A conditional acceptance is a counter-offer
which extinguishes the offer. If not accepted by
the offeror, there is no contract.
An acceptance may be express or implied. (NCC,
Art. 1320)
Mirror Image Rule in law on contracts
This is a common law concept which states that
in order for there to be an acceptance, the
offeree must accept the terms as stated in the
offer. Our courts also adhere to the “mirror-
image rule.” Thus, it has been ruled that
acceptance must be identical in all respects with
that of the offer so as to produce consent of
meeting of the minds. (Rabuya, 2017 citing ABS-
CBN v. CA. 301 SCRA 592-593, 1999)
Period for acceptance
1. Stated fixed period in the offer
a. Must be made within the period given
by the offeror.
b. As to withdrawal of the offer:
GR: It can be made by communicating
such withdrawal at any time before the
acceptance is made
XPN: When the option is founded upon
a consideration (something paid or
promised since partial payment of the
purchase price is considered as proof of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the perfection of the contract). (NCC, Art
1324)
2. No stated period
a. Offer is made to a person present –
acceptance must be made immediately.
b. Offer is made to a person absent –
acceptance may be made within such
time that, under normal circumstances,
an answer can be expected from him.
NOTE: If there was an acceptance already, the
offeror cannot just withdraw his offer
unilaterally. He will be liable for damages.
(Pineda, 2009)
Option contract
It is a contract between the offeror and the
offeree whereby the former grants the latter, for
a valuable consideration, the privilege to buy or
not to buy certain objects at anytime within a
specified period and for a fixed price.
Note: The privilege granted to the offeree must
be supported by a consideration, the option is
just considered an “offer to sell” to the offeree
which is not binding until accepted. (Pineda,2009
citing Sanchez vs. Rigos, 45 scra 368)
Earnest Money
It is the payment made to a seller by the buyer to
show his good faith. It will constitute as part of
the purchase price, if the sale is finally
consummated. If the sale is not concluded, the
earnest money shall be returned to the would-
be-buyer unless there is a contrary stipulation.
Persons incapacitated to give consent (DIM)
1. Deaf-mutes who do not know how to read
and write (illiterates);
2. Insane or demented persons, unless the
contract was entered into during a lucid
interval;
3. Minors (NCC, Art. 1327) except:
a. Contracts for necessaries (NCC, Art.
1489);
b. Contracts by guardians or legal
representatives and the court having
jurisdiction had approved the same;
448
 Civil Law
c. When there is active misrepresentation
on the part of the minor (minor is
estopped);
d. Contracts of deposit with the Postal
Savings Bank provided that the minor
is over 7 years of age;
e. Contract of an insurance for life, health
and the accident on the minor’s life.
f. Upon reaching age of majority – they
ratify the same.
NOTE: Because the law incapacitates them to
give their consent to a contract, the only way by
which any one of those enumerated above can
enter into a contract is to act through a parent or
guardian. If this requirement is not complied
with, the result is a defective contract. If only
one of the contracting parties is incapacitated to
give his consent, the contract is voidable. If both
of them are incapacitated to give their consent,
the contract is unenforceable. [NCC, Art. 1390(1),
NCC, Art. 1403(3)]
Vices of consent (MI-VUF)
1. Mistake
2. Intimidation
3. Violence
4. Undue influence
5. Fraud
NOTE: A threat to enforce a just or legal claim
through a competent authority does not amount
to intimidation nor vitiate consent. (NCC, Art.
1335)
Mistake
GR: Mistake as a vice of consent refers to
mistake of facts and not of law, thus rendering
the contract voidable. (Jurado, 2010)
XPN: When mistake of law involves mutual error
as to the legal effect of an agreement when the
real purpose of the parties is frustrated. (NCC,
Art. 1334)
Mistake Distinguished from Ignorance
Mistake is a false impression on something,
while Ignorance is absence of any notion or
impression about a particular thing.
Requisites:
449
1. Mistake must be with respect to the legal
effect of the agreement;
2. It must be mutual; and
3. Real purpose of the parties must have been
frustrated.
Kinds of mistakes of fact which vitiate
consent
1. Mistake as to the nature of the contract ;
2. 2 Mistake as to object of the contract ;
3. Mistake as to the quality or principal
conditions of the thing ;
4. Mistake or error in quantity ;
5. Mistake as to identy of the person ;
6. Mistake as to the identity or qualifications of
one of the parties will vitiate consent only
when such identity or qualifications have
been the principal cause of the contract.
For mistake (as to the qualification of one of the
parties) to vitiate consent, two requisites must
concur:
a. The mistake must be either with regard to
the identity or with regard to the
qualification of one of the contracting
parties; and
b. The identity or qualification must have
been the principal consideration for the
celebration of the contract. (The Roman
Catholic Church v. Regino Pante, G.R. No.
174118, April 11, 2012)
Q: Leonardo is the only legitimate child of the
late spouses Tomasina and Balbino. She only
finished Grade three and did not understand
English. The Sebastians, on the other hand,
are illegitimate children. She filed an action
to declare the nullity of the extrajudicial
settlement of the estate of her parents, which
she was made to sign without the contents
thereof, which were in English, explained to
her. She claims that her consent was vitiated
because she was deceived into signing the
extrajudicial settlement. Is the extra-judicial
settlement of estate of Tomasina valid?
A: NO. When one of the parties is unable to read,
or if the contract is in a language not understood
by him, and mistake or fraud is alleged, the
person enforcing the contract must show that
the terms thereof have been fully explained to
the former. (Art. 1332) Leonardo was not in a
position to give her free, voluntary and
spontaneous consent without having the
 Contracts
document, which was in English, explained to
her. Therefore, the consent of Leonardo was
invalidated by a substantial mistake or error,
rendering the agreement voidable. The
extrajudicial partition between the Sebastians
and Leonardo should be annulled and set aside
on the ground of mistake. (Leonardo v. CA, G.R.
No. 125485, September 13, 2004)
NOTE : Burden rests upon the party who seeks
to enforce the contract to show that the other
party fully understood the contents of the
document. (Mayor vs. Belen, 430 SCRA 561)
Mutual Error
Mutual Error as to the legal effect of an
agreement when the real purpose of the parties
is frustrated, may vititate consent. (NCC,
Art. 1334)
Legal effect refers to the rights of the parties as
stated in legal provisions.
Intimidation
There is intimidation when one of the
contracting parties is compelled by a reasonable
and well-grounded fear of an imminent and
grave evil upon his person or property, or upon
the person or property of his spouse,
descendants or ascendants, to give his consent.
[NCC, Art. 1335(2)]
Requisites of intimidation (CICU)
1. One of the parties is compelled to give his
Consent by a reasonable and well-grounded
fear of an evil;
2. The evil must be Imminent and grave;
3. It must be Unjust; and
4. The evil must be the determining Cause for
the party upon whom it is employed in
entering into the contract. (NCC, Art. 1335)
NOTE: To determine the degree of the
intimidation, the age, sex and condition of the
person shall be borne in mind. (NCC, Art. 1335)
A threat to enforce one’s claim through
competent authority, if the claim is just or legal,
does not vitiate consent. (Sta. Maria, 2017)
Validity of a contract if consent is reluctant
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A contract is valid even though one of the parties
entered into it against his wishes and desires or
even against his better judgment. Contracts are
also valid even though they are entered into by
one of the parties without hope of advantage or
profit. (Martinez v. Hongkong and Shanghai
Banking Corp., G.R. No. L-5496, February 19,
1910)
Violence
There is violence when in order to wrest
consent, serious or irresistible force is
employed. (Art. 1335)
Requisites of violence
1. Physical force employed must be serious or
irresistible; and
2. The determining cause for the party upon
whom it is employed in entering into the
contract.
A threat to enforce one’s claim through
competent authority, if the claim is just or legal,
does not vitiate consent. [NCC, Art. 1335(4)]
NOTE: Violence or intimidation shall annul the
obligation, although it may have been employed
by a third person who did not take part in the
contract. (NCC, Art. 1336)
The contracting party who is not the subject of
the violence or the intimidation may not even
know that the other party has been coerced.
(Sta. Maria, 2017)
Undue influence
There is undue influence when a person takes
improper advantage of his power over the will of
another, depriving the latter of a reasonable
freedom of choice. (NCC, Art. 1337)
It must in some measure destroy the free agency
if a party and interfere with the exercise of that
independent discretion. (4 Tolentino 501)
Circumstances to be considered for the
existence of undue influence
1. Confidential, family, spiritual and other
relations between the parties;
2. Mental weakness;
3. Ignorance;
4. Financial distress. (NCC, Art. 1337)
450
 Civil Law
NOTE: The enumeration is NOT exclusive. Moral
dependence, indigence, mental weakness, tender
age or other handicap are some of the
circumstances to consider undue influence.
Determination of undue influence
1. When a legal or equitable duty is imposed
upon the dominant party to reveal certain
facts material to the transaction; and
2. When there is a confidential relationship
between the parties. (Sta. Maria, 2017)

The test to determine whether or not there is Requisites of Fraud to vitiate consent (In the
undue influence which will invalidate a contract sense of Dolo Causante)
is to determine whether or not the influence
exerted has so overpowered and subjugated the 1. It was applied or utilized by one contracting
mind of the contracting party as to destroy his party upon the other.
free agency, making him express the will of 2. It must be serious deception.
another rather than his own. (Jurado, 2011) 3. It must have induced the victim to enter the
contract without which he would not have
Due influence does not vitiate consent agreed to.
4. It must have induced the victim to enter into
When influence consists in persuasive the contract, which he would not have
arguments or in appeals to the affections which agreed to, absent the employment of such
are not prohibited by law or morals, the consent fraud.
is not vitiated at all. (Pineda, 2009) 5. It must have resulted in damage or injury.

Influence obtained by persuasion or argument Kinds of Fraud

or by appeals to the affections is not prohibited
either by law or morals and is not obnoxious
even in courts of equity. Such may be termed
“due influence.” (Martinez v. Hongkong and
Shanghai Bank, 15 Phil. 252, 270)
Reverential Fear
The fear of displeasing persons to whom respect
and obedience are due does not vitiate consent.
Fraud
There is fraud when through the insidious words
or machinations of one of the contracting
parties, the other is induced to enter into a
contract which, without them, he would not have
agreed to. (NCC, Art. 1338)
NOTE: The term “insidious words” refers to a
deceitful scheme or plot with an evil design, or a
fraudulent purpose. (Pineda, 2000)
1. Fraud in the perfection of the contract
a. Causal fraud (dolo causante) - It is
employed by one party prior to or
simultaneous with the creation or
perfection of the contract to secure
the consent of the other.
b. Incidental fraud (dolo incidente) - It
is the fraud committed in the in the
performance of an obligation, and
its existence merely results in
breach of an already existing
contract, which entitles the injured
party to damages. (NCC, Art. 1170)
2. Fraud in the performance of an obligation.
(NCC, Art. 1170)
Fraud in the Performance v. Fraud in the
Perfection (Pineda, 2009)

Failure to disclose facts, when there is a duty to FRAUD IN

FRAUD IN THE
reveal them, as when the parties are bound by BASIS PERFORMANC
PERFECTION
confidential relations, constitutes fraud. (NCC, E
Art. 1339) It occurs after
the valid It occurs before
NOTE: There is fraud, under the special and Time of execution of or simultaneous
particular circumstances of the following: Occurrenc the contract. It with the creation
e is employed in or perfection of
the the obligation.
performance

451
 Contracts
of a pre- for damages against Santos for fraud and bad
existing faith, claiming that the misrepresentation
obligation. induced him to purchase the store and the
leasehold right. Decide.
Consent is
vitiated by A: Santos was not neither guilty of fraud nor bad
Consent is free
serious faith in claiming that there was implied renewal
Consent and not
deception or of his contract of lease with his lessor. The letter
vitiated.
misrepresentatio given by the lessor led Santos to believe and
n. conclude that his lease contract was impliedly
It is not a renewed, and that the formal renewal thereof
It is a ground for would be made upon the arrival of Tanya
Effect ground for
annulment of the Madrigal. Thus, from the start, it was known to
annulment of
contract. both parties that, insofar as the agreement
the contract.
Action for regarding the transfer of Santos’ leasehold right
Remedy Action for to Samson was concerned, the object thereof
annulment with
damages only. relates to a future right. It is a conditional
damages.
contract, the efficacy of which depends upon an
Dolo Causante vs. Dolo Incidente expectancy of the formal renewal of the lease
contract between Santos and lessor. The efficacy
of the contract between the parties was thus
DOLO DOLO made dependent upon the happening of this
BASIS CAUSANTE INCIDENTE suspensive condition. (Samson v. CA, G.R. No.
(ART. 1338) (ART. 1344) 108245, November 25, 1994)

Acts considered not fraudulent

Gravity of Serious in
Not serious
Fraud character 1. The usual exaggerations in trade and when
Efficient cause the other party had an opportunity to know
which induces the facts are not in themselves fraudulent
Efficient Not the (NCC, Art. 1340. Principle of Tolerated
the party to
Cause efficient cause Fraud);
enter into a
contract 2. A mere expression of an opinion does not
Effect on signify fraud, unless made by an expert and
Renders the Does not affect the other party has relied on the former’s
the Status
contract the validity of special knowledge (NCC, Art. 1341. Expert
of the
voidable the contract Opinion);
Contract
3. Misrepresentation by a third person does
Contract
not vitiate consent, unless such
remains valid.
Annulment misrepresentation has created substantial
Remedies Remedy is
with damages mistake and the same is mutual (NCC, Art.
claim for
1342);
damages.
4. Misrepresentation made in good faith is not
fraudulent but may constitute error. (NCC,
Q: Santos’ lease contract was about to expire
Art. 1343)
but it was extended and he continued to
occupy the leased premises beyond the
NOTE:
extended term. Samson offered to buy
Santos’ store and his right to the lease. Santos
The contract just the same is voidable, not
stated that the lease contract between him
because of the misrepresentation but because of
and the lessor was impliedly renewed, and
substantial error.
that the formal renewal thereof would be
made upon the arrival of a certain Tanya
Madrigal, based on the letter to him given by In order that fraud may make a contract
voidable, it should be serious, and should not
the lessor. When Samson occupied the
gave have been employer employed by both
premises, he was forced to vacate for Santos’
contracting parties.) (NCC, Art 1344)
failure to renew his lease. He filed an action

UNIVERSITY OF SANTO TOMAS 452

2021 GOLDEN NOTES
 Civil Law
Q: Alejandro filed several Complaints against
respondents to have the promissory note he
executed in favor of Sterling Shipping Lines,
Inc. to be declared as null and void and that
he be absolved from any liability. According
to him, Ruperto exercised deceit and fraud in
causing him to bind himself jointly and
severally to pay DBP the amount of the
mortgage loan. Additionally, when he was
made director and stockholder of SSL, he was
invited to attend the board meeting only
once and he was never compensated.
Furthermore, none of the conditions he set
were complied with. Can the promissory note
be declared null and void on the grounds of
deceit and fraud?
A: NO, the promissory note Alejandro executed
cannot be declared null and void as only
incidental fraud exists in this case. There was
no dolo causante or fraud used to obtain the
petitioner's consent to enter into the contract.
Petitioner had the opportunity to become aware
of the facts that attended the signing of the
promissory note. He even admitted that he has a
lawyer-son who the petitioner had hoped would
assist him in the administration of Sterling
Shipping Lines, Inc. The totality of the facts on
record belies petitioner's claim that fraud was
used to obtain his consent to the contract given
his personal circumstances and the applicable
law. However, in refusing to allow petitioner to
participate in the management of the business,
respondent Ruperto V. Tankeh was liable for the
commission of incidental fraud. In Geraldez, this
Court defined incidental fraud as "those which
are not serious in character and without which
the other party would still have entered into the
contract." Although there was no fraud that had
been undertaken to obtain petitioner's consent,
there was fraud in the performance of the
contract. The records showed that petitioner
had been unjustly excluded from participating in
the management of the affairs of the
corporation. This exclusion from the
management in the affairs of Sterling Shipping
Lines, Inc. constituted fraud incidental to the
performance of the obligation.
Simulation of contract
It is the declaration of a fictitious will,
deliberately made by agreement of the parties,
in order to produce, for the purpose of
deception, the appearance of a juridical act
453
which does not exist or is different from that
which was executed. (Tolentino, 2002)
Kinds of simulation of contract
1. Absolute (simulados) – The contracting
parties do not intend to be bound by the
contract at all, thus the contract is void.
(NCC, Arts. 1345-1346) In absolute
simulation, there is a colorable contract but
it has no substance as the parties have no
intention to be bound by it. The main
characteristic of an absolute simulation is
that the apparent contract is not really
desired or intended to produce legal effect
or in any way alter the juridical situation of
the parties. As a result, an absolutely
simulated or fictitious contract is void, and
the parties may recover from each other
what they may have given under the
contract. (Heirs of Dr. Mario S. Intac and
Angelina Mendoza-Intac v. CA, G.R. No.
173211, October 11, 2012)
Absolutely simulated contracts lack the
element of true consent.
2. Relative (disimulados) – The contracting
parties conceal their true agreement (NCC,
Art. 1345); and the parties are bound by
their real agreement when it does not
prejudice third persons or is not intended
for any purpose contrary to law, morals,
good customs, public order or public policy.
(NCC, Art. 1346) If the concealed contract is
lawful, it is absolutely enforceable, provided
it has all the essential requisites: consent,
object, and cause. (NCC, Arts. 1345-1346)
As to third persons without notice, the
apparent contract is valid for purposes
beneficial to them. As to third persons with
notice of the simulation, they acquire no
better right to the simulated contract than
the original parties to the same.
The primary consideration in determining the
true nature of a contract is the intention of the
parties. Such intention is determined from the
express terms of their agreement as well as from
their contemporaneous and subsequent acts.
(Tating v. Tating Marcella, et al., G.R. No. 155208,
March 27, 2007)
NOTE: If the parties state a false cause in the
contract to conceal their real agreement, the
 Contracts
contract is only relatively simulated, and the
parties are still bound by their real agreement.
Hence, where the essential requisites of a
contract are present and the simulation refers
only to the content or terms of the contract, the
agreement is absolutely binding and enforceable
between the parties and their successors in
interest.
May the owner-simulator recover?
If the absolutely simulated contract does not
have any illegal purpose, the interested party
may prove the simulation to recover whatever
he might have given under the fictitious
contract. In the event intended it is intended for
an illegal purpose, the contract is void and the
parties have no cause of action. (Pineda, 2009)
Q: Tiro is a holder of an ordinary timber
license issued by the Bureau of Forestry. He
executed a deed of assignment in favor of the
Javiers. At the time the said deed of
assignment was executed, Tiro had a pending
application for an additional forest
concession. Hence, they entered into another
agreement. Afterwards, the Javiers, now
acting as timber license holders by virtue of
the deed of assignment, entered into a forest
consolidation agreement with other ordinary
timber license holders. For failure of the
Javiers to pay the balance due under the two
deeds of assignment, Tiro filed an action
against them. Are the deeds of assignment
null and void for total absence of
consideration and non-fulfillment of the
conditions?
A: NO, they are not null and void per se. The
parties are to be bound by their real agreement.
The true cause or consideration of said deed was
the transfer of the forest concession of private
respondent to petitioners for P120,000.00. This
finding is supported by the following
considerations, viz:
1. Both parties, at the time of the execution of
the deed of assignment knew that the
Timberwealth Corporation stated therein was
non-existent;
2. In their subsequent agreement, private
respondent conveyed to petitioners his inchoate
right over a forest concession covering an
additional area for his existing forest concession,
which area he had applied for, and his
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
application was then pending in the Bureau of
Forestry for approval;
3. Petitioners, after the execution of the deed of
assignment, assumed the operation of the
logging concessions of private respondent;
4. The statement of advances to respondent
prepared by petitioners stated: "P55,186.39
advances to L.A. Tiro be applied to succeeding
shipments. Based on the agreement, we pay
P10,000.00 every after (sic) shipment. We had
only 2 shipments;” and
5. Petitioners entered into a Forest
Consolidation Agreement with other holders of
forest concessions on the strength of the
questioned deed of assignment.
The contemporaneous and subsequent acts of
Tiro and the Javiers reveal that the cause stated
in the first deed of assignment is false. It is
settled that the previous, simultaneous and
subsequent acts of the parties are properly
cognizable indicia of their true intention. Where
the parties to a contract have given it a practical
construction by their conduct as by acts in
partial performance, such construction may be
considered by the court in construing the
contract, determining its meaning and
ascertaining the mutual intention of the parties
at the time of contracting. The first deed of
assignment is a relatively simulated contract
which states a false cause or consideration, or
one where the parties conceal their true
agreement. A contract with a false consideration
is not null and void per se. Under Article 1346 of
the Civil Code, a relatively simulated contract,
when it does not prejudice a third person and is
not intended for any purpose contrary to law,
morals, good customs, public order or public
policy binds the parties to their real agreement.
(Javier v. CA, G.R. No. L-48194, March 15, 1990)
Q: On 02 July 1990, by virtue of an Order of
Branch 62 of the RTC of Makati City, a notice
of levy on attachment of real property and a
writ of attachment were inscribed on TCTs
No. 31444 (452448) and No. 45926
(452452). Edmundo alleged that as early as
11 September 1989, the properties, subject
matter of the case, were already sold to him
by Ricardo, Sr. As such, these properties
could not be levied upon on 02 July 1990 to
answer for the debt of Ricardo, Sr., who was
no longer the owner thereof. TMBC alleged,
454
 Civil Law
among other things, that the sale in favor of
Edmundo was void for being an absolutely
simulated contract, therefore, the properties
levied upon were still owned by Ricardo, Sr.
Discuss the nature of an absolutely simulated
contract.
A: An absolutely simulated contract, under
Article 1346 of the Civil Code, is void. It takes
place when the parties do not intend to be
bound at all. The characteristic of simulation is
the fact that the apparent contract is not really
desired or intended to produce legal effects or in
any way alter the juridical situation of the
parties. Thus, where a person, in order to place
his property beyond the reach of his creditors,
simulates a transfer of it to another, he does not
really intend to divest himself of his title and
control of the property; hence, the deed of
transfer is but a sham. Lacking, therefore, in a
fictitious and simulated contract is consent
which is essential to a valid and enforceable
contract. (The Manila Banking Corporation v.
Edmundo Silverio, G.R. No. 132887, August 11,
2005).
OBJECTS, CAUSE AND FORM OF CONTRACTS
OBJECT
It is the subject matter of the contract. It can be a
thing, right or service arising from a contract.
NOTE: Only rights which are not intransmissible
can be the object of the contract. (NCC, Art. 1347)
Requisites of an object (DELiCT)
1. Determinate as to kind (even if not
determinate, provided it is possible to
determine the same without the need of a
new contract);
NOTE: To qualify as an object for purposes of a
contract to exist, the object must at least be
generic.
2. Existing or the potentiality to exist
subsequent to the contract;
3. Must be Licit;
4. Within the Commerce of man; and
5. Transmissible.
NOTE: The most evident and fundamental
requisite in order that a thing, right or service
may be the object of a contract, is that it should
455
be in existence at the moment of the celebration
of the contract, or at least, it can exist
subsequently or in the future. (De Leon, 2010)
Future inheritance cannot be the object of a
contract because its extent, amount and quantity
cannot be determined. (Sta. Maria, 2017)
Object of contracts
GR: All things or services may be the object of
contracts.
XPNs:
1. Things outside the commerce of men (NCC,
Art. 1347);
2. Intransmissible rights;
3. Future inheritance, except in cases
expressly authorized by law;
4. Services which are contrary to law, morals,
good customs, public order or public
policy;
5. Impossible things or services; and
6. Objects which are not possible of
determination as to their kind.
Exceptions to the rule that no person can
enter into a contract with regard to future
inheritance
1. Under Art. 130 of the Family Code, which
allows the future spouses to give or donate
to each other in their marriage settlement
their future property to take effect upon the
death of the donor and to the extent laid
down by the provisions of the NCC relating
to testamentary succession; and
2. Under Art. 1080 of the Code, which allows a
person to make a partition of his estate
among his heirs by an act inter vivos,
provided that the legitime of the compulsory
heirs is not prejudiced. (Jurado, 2009; De
Leon 2010).
NOTE: Except in cases authorized by law, future
inheritance cannot be an object of contract
because its extent, amount or quantity is not
determinable. (Sta. Maria, 2003)
CAUSE
Cause is the essential or more proximate
purpose which moves the contracting parties to
enter into the contract. It is the immediate and
 Contracts
direct which justifies the creation of an the contract contract
obligation through the will of the contracting Legality or
Legality or
parties. illegality of
As to the illegality of
motive does not
legal effect cause affects
Requisites of a cause: affect the
to the the existence
existence or
contract or validity of
It must: validity of
the contract.
contract.
1. Exist; Cause is
Motive differs
2. Be true; and always the
As to the for each
3. Be licit. same for each
parties contracting
contracting
party.
NOTE: Although the cause is not stated in the party.
contract, it is presumed that it exists and is As to its Always May be known
lawful unless the debtor proves the contrary. knowability known to the other.
(NCC, Art. 1354)
NOTE: The motive may be regarded as the cause
Kinds of cause when the realization of such motive or particular
purpose has been made a condition upon which
1. Cause of onerous contracts – the cause is the contract is made to depend. (Phil. National
understood to be for each contracting party, Construction Corp. v. CA, 272 SCRA 183, 1997)
the prestation or promise of a thing or
service by the other. False Cause

e.g., Contract of Sale GR: A false cause in a contract makes the

contract void.
2. Cause of remuneratory contracts– the service
or benefit remunerated. XPN: If it is proven that the false cause were
founded upon another cause which is true and
e.g., Donation in consideration of a past lawful. (NCC, Art. 1353)
service which does not constitute a
demandable debt e.g. When a contract, through stating a false
consideration, has in fact a real consideration,
3. Cause of gratuitous contracts – the mere the contract is not void, and is considered valid.
liberality of the donor or benefactor; it does
not involve any material thing but rather it Rules relating to cause on contracts
involves only the generosity of the
benefactor. 1. Absence of cause – confers no right and
produces no legal effect.
4. Accessory – identical with cause of principal 2. Failure of cause – does not render the
contract, from which the accessory derived contract void.
its life and existence. 3. Illegality of cause – contract is null and void.
4. Falsity of cause – contract is void; unless the
e.g., mortgage or pledge parties show that there is another cause
which is true and lawful.
Cause vs. Motive 5. Lesion or inadequacy of cause – does not
invalidate the contract, unless:
BASIS CAUSE MOTIVE
Direct and a. there is fraud, mistake, or undue
As to
most influence;
proximate Indirect or
proximate b. when the parties intended a donation or
reason in a remote reason
reason of a some other contract; or
contract
contract c. in cases specified by law
As to the Objective and Psychological
kind of juridical or purely e.g., contracts entered by guardian with
reason in reason of a personal reason court approval, when the ward suffers

UNIVERSITY OF SANTO TOMAS 456

2021 GOLDEN NOTES
 Civil Law
lesion of more than 25%. If there is no
court approval, the contract is void
regardless of the amount of lesion.
Q: May a moral obligation constitute a
sufficient cause to support an onerous
contract?
A: Where the moral obligation arises wholly
from ethical considerations, unconnected with
any civil obligation, and as such is demandable
only in conscience, and not in law, it cannot
constitute a cause to support an onerous
contract. Where such moral obligation, however,
is based upon a previous civil obligation which
has already been barred by the statute of
limitations at the time when the contract is
entered into, it constitutes a sufficient cause or
consideration to support said contract. (Villaroel
v. Estrada, 71 Phil. 14, GR L-47362, December 19,
1940)
FORMALITY
Rules on the form of contracts
GR: Form is not required in consensual
contracts. (Provided, all the essential requisites
for their validity are present.)
XPNs: When the law requires a contract be in
writing for its:
1. Validity (formal contracts);
2. Enforceability (under Statute of Frauds); or
3. For the convenience of the parties.
NOTE: The parties may compel each other to
reduce the verbal agreement into writing. (2006
BAR)
The parties may be required to observe the
form required for their convenience
The contracting parties may compel each other
to observe the required form once the contract
has been perfected and is enforceable under the
statute of frauds. This is one of the rights of the
creditor.
The right to demand the execution of the
document required under Art.1358 is not
imprescriptible. It is subject to prescription. It
must be pursued within the period prescribed
by law, which is five (5) years. (Pineda, 2009)
457
NOTEs: The right must be exercised once the
contract has been perfected, otherwise, the
exercise will be considered as premature.
Formalities required in specific contracts
1. Donations
a. Personal property – if the value exceeds
5,000, the donation and acceptance
must both be written. (NCC, Art. 748)
b. Real property:
i. Donation must be in a public
instrument, specifying therein the
property donated and value of
charges which donee must satisfy.
ii. Acceptance must be written, either in
the same deed of donation or in a
separate instrument.
iii. Acceptance may either be in the same
deed of donation, or in a separate
public instrument, but it shall not take
effect unless it is done during the
lifetime of the donor.
iv. If acceptance is in a separate
instrument, the donor shall be
notified thereof in an authentic form,
and this step shall be noted in both
instruments. (NCC, Art. 749)
2. Partnership where real property
contributed
a. There must be a public instrument
regarding the partnership;
b. The inventory of the realty must be
made, signed by the parties, and
attached to the public instrument.
(NCC, Art. 1773)
3. Antichresis - the amount of the principal
and interest must be in writing. (NCC, Art.
2134)
4. Agency to sell real property or an
interest therein - authority of the agent
must be in writing; otherwise, the sale shall
be void. (NCC, Art. 1874)
5. Stipulation to charge interest - interest
must be stipulated in writing. (NCC, Art.
1956)
6. Stipulation limiting common carrier's
duty of extraordinary diligence to
ordinary diligence:
 Contracts
a. Must be in writing, signed by shipper
or owner;
b. Supported by valuable consideration
other than the service rendered by
the common carrier;
c. Reasonable, just and not contrary to
public policy. (NCC, Art. 1744)
7. Chattel mortgage - personal property
must be recorded in the Chattel Mortgage
Register. (NCC, Art. 2140)
Contracts which must be in writing to be
valid
1. Donation of personal property whose value
exceeds five thousand pesos. (NCC, Art. 748)
– the donation and acceptance must be in
writing.
2. Sale of a piece of land or any interest therein
through an agent. (NCC, Art. 1874) – the
authority of the agent shall appear in
writing.
3. Agreements regarding payment of interest
in contracts of loan. (NCC, Art. 1956)
4. Antichresis – the amount of the principal
and the interest shall be specified in writing.
(NCC, Art. 2134; Jurado, 2011)
Contracts which must appear in a public
document
1. Donation of real properties (NCC, Art. 719
749);
2. Partnership where immovable property or
real rights are contributed to the common
fund (NCC, Arts. 1171 1771 & 1773);
3. Acts and contracts which have for their
object the creation, transmission,
modification or extinguishment of real
rights over immovable property; sale of real
property or of an interest therein is
governed by Arts. 1403, No. 2, and 1405
[NCC, Art. 1358(1)];
4. The cession, repudiation or renunciation of
hereditary rights or of those of the conjugal
partnership of gains [NCC, Art. 1358(2)];
5. The power to administer property or any
other power which has for its object an act
appearing or which should appear in a
public document or should prejudice a third
person; [NCC, Art. 1358(3)]; and
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
6. The cession of actions or rights proceeding
from an act appearing in a public document.
[NCC, Art. 1358(4)]
NOTE : Article 1358 of the Civil Code which
requires the embodiment of certain contracts in
a public instrument is only for convenience, and
the registration of the instrument only
adversely, affects third parties. Formal
requirements are, therefore, for the benefit of
third parties. Non-compliance therewith does
not adversely affect the validity of the contract
nor the contractual rights and obligations of the
parties. (Fule vs. CA, 286 CRA 700)
Contracts that must be registered
1. Chattel mortgages. (NCC, Art. 2140)
NOTE: In accordance with Article 2125 of
the Civil Code, an unregistered chattel
mortgage is binding between the parties
because registration is necessary only for
the purpose of binding third persons.
(Filipinas Marble Corporation v. Intermediate
Appellate Court, G.R. No. L-68010, May 30,
1986)
2. Sale or transfer of large cattle. (Cattle
Registration Act)
ELECTRONIC COMMERCE ACT OF 2000
(RA No. 8792)
Legal Recognition of Electronic Documents
Under Section 7 of the Act, electronic documents
shall have the legal effect, validity or
enforceability as any other document or legal
writing, and —
1. Where the law requires a document to be in
writing, that requirement is met by an
electronic document if the said electronic
document maintains its integrity and
reliability, and can be authenticated so as to
be usable for subsequent reference, in that;
a. The electronic document has
remained complete and unaltered,
apart from the addition of any
endorsement and any authorized
change, or any change which arises in
the normal course of communication,
storage and display; and
458
 Civil Law
b. The electronic document is reliable in
the light of the purpose for which it
was generated and in the light of all
relevant circumstances.
2. Paragraph (a) applies whether the
requirement therein is in the form of an
obligation or whether the law simply
provides consequences for the document
not being presented or retained in its
original form.
3. Where the law requires that a document be
presented or retained in its original form,
that requirement is met by an electronic
document if —
a. There exists a reliable assurance as to
the integrity of the document from the
time when it was first generated in its
final form; and
b. That document is capable of being
displayed to the person to whom it is
to be presented, provided that no
provision of the Act shall apply to
vary any and all requirements of
existing laws on formalities required
in the execution of documents for
their validity.
KINDS OF CONTRACTS
According to perfection or formation:
1. Consensual contracts which are perfected by
the mere meeting of the minds of the
parties. (NCC, Art. 1305) (2005 BAR)
e.g., Sale, Lease.
2. Real contracts are those which require for
their perfection both the consent of the
parties, and the delivery of the object by one
party to the other.
e.g., creation of real rights over immovable
property must be written, deposit and
pledge.
3. Solemn contracts – contracts for which the
law requires that they be in some particular
form (e.g., those that must appear in
writing):
459
a. Donations of real estate or of movables
if the value exceeds P5,000;
b. Partnership to which immovables are
contributed;
c. Contract of antichresis – requires that
the amount of principal and interest be
specified;
d. Sale of piece of land or interest therein
is through an agent;
e. Stipulation to charge interest;
f. Stipulation limiting common carrier's
duty of extraordinary diligence to
ordinary diligence;
g. Chattel mortgage; or
h. Transfer of large cattle. (Sec. 22, Act No.
1147; NCC, Art. 1581)
According to the degree of dependence:
1. Principal – that which can exist
independently of other contracts;
e. g., contract of loan.
2. Accessory – that which cannot exist without
a valid principal contract;
e. g., guaranty, surety, pledge, mortgage.
3. Preparatory – that which is not the end by
itself, but only a means for the execution of
another contract.
e. g., contract of agency, as agency does not
stop with the agency because the purpose is
to enter into other contracts (Rabuya, 2017).
According to their relation to other
contracts:
1. Preparatory Contracts – are those which have
for their object the establishment of a
condition in law which is necessary as a
preliminary step towards the celebration of
another subsequent contract. They are only a
means for the execution of another contract.
e.g., Partnership, Agency.
2. Principal Contracts – are those which can
subsist and exist independently from other
contracts.
e.g., Sale, Lease.
 Contracts
3. Accessory Contracts – those which can exist 3. Remuneratory
only as a consequence of, or in relation with
another prior valid contract. According to the risks involved:

e.g., Pledge, Mortgage. 1. Commutative Contracts – are those where

each of the parties acquire an equivalent of
According to their form: his prestation and such equivalent is
pecuniarily appreciable and already
1. Common or Informal Contracts – are those determined from the moment of the
which require no particular form. perfection of the contract.

e.g., Loan. e.g., Lease.

2. Special or Formal Contracts – are those 2. Aleatory Contracts – are those which are
which require a particular form. dependent upon the happening of an
uncertain event, thus, charging the parties
e.g., Donations, Chattel Mortgage. with the risk of loss or gain.

According to their purpose: e.g., Insurance.

1. Transfer of Ownership According to their names or norms

regulating them:
e.g., Sale.
1. Nominate Contracts – are those which have
2. Conveyance of Use their own name and individuality, and are
regulated by provisions of law.
e.g., Usufruct, Commodatum.
e.g., Sale (2003 BAR).
3. Rendition of Services
2. Innominate Contracts – are those which lack
e.g., Agency. name or individuality, and are not regulated
by special provisions of law.
According to the nature of the vinculum
which they produce: Q: The Bank of the Philippine Islands issued
Rainier a pre-approved credit card. The Yulo
1. Unilateral Contracts – are those which give Spouses regularly settled their accounts with
rise to an obligation only to one of the the Bank of the Philippine Islands at first, but
parties. started to be delinquent with their payments.
They also alleged that the Bank of the
e.g., Commodatum. Philippine Islands did not fully disclose to
them the Terms and Conditions on their use
2. Bilateral Contracts – are those which give of the issued credit cards. Are the Yulo
rise to reciprocal obligations for both Spouses liable?
parties.
A: YES. When petitioners accepted respondent's
e.g., Sale. credit card by using it to purchase goods and
services, a contractual relationship was created
According to their cause: between them, "governed by the Terms and
Conditions found in the card membership
1. Onerous agreement. When the credit card provider failed
to prove its client's consent, even if the latter did
e.g., Sale. not deny availing of the credit card by charging
purchases on it, the credit card client may only
2. Gratuitous be charged with legal interest. (Spouses Rainier
Jose M. Yulo And Juliet L. Yulo v. Bank of The
e.g., Commodatum Philippine Islands, G.R. No. 217044, January 16,

UNIVERSITY OF SANTO TOMAS 460

2021 GOLDEN NOTES
 Civil Law
2019, as penned by J. Leonen) parties as to the object is vitiated.
and cause of the
REFORMATION OF INSTRUMENTS contract.
The meeting of the
It is a remedy to conform to the real intention of The instrument failed minds was prevented
the parties due to mistake, fraud, inequitable to express the true by reason of mistake,
conduct, accident. (NCC, Art. 1359) intention of the parties fraud, inequitable
due to mistake, fraud, conduct or accident
It is a remedy of amending or rectifying the inequitable conduct or perpetrated by one
instrument which purports to be the agreement accident. party against the
of the parties, so as to express their real other.
intention, when the same is not expressed The purpose of
The purpose of
therein by reason of mistake, fraud, inequitable reformation is to
annulment is to
conduct or accident. establish the true
render inefficacious
agreement of the
the contract in
Reformation is a remedy in equity by means of parties, and not to
question.
which a written instrument is made or create a new one.
construed so as to express or confirm the real
intention of the parties when some error or NOTE: When there is no meeting of the minds,
mistake is committed. (Pineda, 2009) the proper remedy is annulment, and not
reformation. (Pineda, 2000)
Rationale: It would be unjust and inequitable to
allow the enforcement of a written instrument The fundamental distinction between
which does not reflect or disclose the real reformation of an instrument and annulment of a
meeting of the minds of the parties. contract is that the first presupposes a perfectly
valid contract in which there has been a valid
Requisites in reformation of instruments meeting of the minds of the contracting parties,
while the second is based on a defective contract
1. There is meeting of the minds of the parties in which there has been no meeting of the minds
to the contract; because the consent is vitiated. (Jurado, 2010)

2. The parties’ true intention is not expressed Q: Multi-Realty Development Corporation

in the instrument; (Multi-Realty) built Makati Tuscany, a 26-
storey condominium building located at the
3. Such failure of the instrument to express the corner of Ayala Avenue and Fonda Street,
parties’ intention is by reason of: (MARFI) Makati City. Makati Tuscany had a total of
160 units, with 156 ordinary units from the
a. Mistake; 2nd to the 25th floors and four (4) penthouse
b. Accident; units on the 26th floor. It also had 270
c. Relative simulation; parking slots which were apportioned as
d. Fraud; or follows: one (1) parking slot for each
e. Inequitable conduct ordinary unit; two (2) parking slots for each
penthouse unit; and the balance of 106
4. The facts upon which relief by way of parking slots were allocated as common
reformation of the instrument is sought are areas.
put in issue by the pleadings; and
Pursuant to Republic Act No. 4726, or the
5. There is strong, clear and convincing proof Condominium Act, Multi-Realty created and
of MARFI. incorporated Makati Tuscany Condominium
Corporation (MATUSCO) to hold title over
Distinction between Reformation and and manage Makati Tuscany's common
Annulment areas. That same year, Multi-Realty executed
a Deed of Transfer of ownership of Makati
REFORMATION ANNULMENT Tuscany's common areas to MATUSCO. Multi-
There is meeting of the There is no meeting Realty filed a complaint for damages and/or
minds between the of the minds. Consent reformation of instrument with prayer for

461
 Contracts
temporary restraining order and/or
preliminary injunction against MATUSCO.
Multi-Realty alleged in its complaint that of
the 106 parking slots designated in the
Master Deed as part of the common areas,
only eight (8) slots were actually intended to
be guest parking slots; thus, it retained
ownership of the remaining 98 parking slots.
Multi-Realty claimed that its ownership over
the 98 parking slots was mistakenly not
reflected in the Master Deed "since the
documentation and the terms and conditions
therein were all of first impression,"
considering that Makati Tuscany was one of
the first condominium developments in the
Philippines. Is there is a need to reform the
Master Deed and the Deed of Transfer?
A: NO. Reformation of an instrument is a remedy
in equity where a valid existing contract is
allowed by law to be revised to express the true
intentions of the contracting parties. The
rationale is that it would be unjust to enforce a
written instrument which does not truly reflect
the real agreement of the parties. In reforming
an instrument, no new contract is created for the
parties, rather, the reformed instrument
establishes the real agreement between the
parties as intended, but for some reason, was
not embodied in the original instrument.
MATUSCO does not deny that it stayed silent
when Multi-Realty sold the parking slots on
several occasions or that it offered to buy the
parking slots from Multi-Realty on at least two
(2) occasions. It excuses itself by saying that just
like Multi-Realty, it "also labored under a
mistaken appreciation of the nature and
ownership of the ninety-eight (98) parking slots
in question."
Both parties recognized Multi-Realty's
ownership of the parking slots. MATUSCO
initially respected Multi-Realty's ownership
despite the Master Deed's and Deed of Transfer's
stipulations. It was MATUSCO that changed its
position decades after it acted as if it accepted
Multi-Realty's ownership. (Makati Tuscany
Condominium Corporation v. Multi-Realty
Development Corporation, G.R. 185530, April 18,
2018, as penned by J. Leonen)
Operation and effect of reformation
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
It relates back to, and takes effect from the time
of its original execution, especially as between
the parties. (Tolentino, 2002)
Reformation of instruments may be availed of
judicially or extrajudicially.
Basis and nature of the remedy of
reformation of instrument
The remedy of reformation of an instrument is
based on the principle of equity where, to
express the true intention of the contracting
parties, an instrument already executed is
allowed by law to be reformed. The right of
reformation is necessarily an invasion or
limitation of the parol evidence rule, since, when
a writing is reformed, the result is that an oral
agreement is by court decree, made legally
effective. The remedy, being an extraordinary
one, must be subject to the limitations as may be
provided by law. A suit for reformation of an
instrument must be brought within the period
prescribed by law, otherwise, it will be barred by
the mere lapse of time. (Bentir v. Leanda, G.R.
128991, April 12, 2000)
Reformation of instruments; when allowed
1. Mutual mistake. – When the mutual mistake
of the parties causes the failure of the
instrument to disclose their agreement
(NCC, Art. 1361);
Requisites:
a. The mistake should be of fact;
b. The same should be proved by clear
and convincing evidence;
c. The mistake should be common to both
parties to the instrument; and
d. The mistake must cause the failure of
the instrument to express their true
intention. (BPI v. Fidelity Surety, Co. 51
Phil 57, 1927)
2. Mistake on one party and fraud on the other.
– In such a way that the instrument does not
show their true intention, the party
mistaken or defrauded may ask for the
reformation of the instrument (NCC, Art.
1362);
3. Mistake on one party and concealment on the
other. – When one party was mistaken and
the other knew or believed that the
462
 Civil Law
instrument did not state their real
agreement, but concealed that fact from the
former (NCC, Art. 1363);
4. Ignorance, lack of skill, negligence or bad
faith. – When through the ignorance, lack of
skill, negligence or bad faith on the part of
the person drafting the instrument or of the
clerk or typist, the instrument does not
express the true intention of the parties
(NCC, Art. 1364);
5. Right of repurchase. – If the parties agree
upon the mortgage or pledge of real or
personal property, but the instrument states
that the property is sold absolutely or with a
right of repurchase. (NCC, Art. 1365)
Reformation of instruments; when not
allowed
1. Simple, unconditional donations inter vivos;
2. Wills;
3. When the agreement is void (NCC, Art.
1366);
4. When an action to enforce the instrument is
filed (by doctrine of estoppel);
5. If mistake, fraud, inequitable conduct, or
accident has prevented a meeting of the
minds of the parties;
NOTE: The remedy here is annulment of
contract.
6. When the contract is unenforceable because
of failure to comply with the statute of
frauds.
Prescriptive period in reformation of
instruments
Within 10 years from the date of the execution of
the instrument, since the suit is based on a
written document.
NOTE: The prescriptive period within which to
bring an action to set aside or reform a
simulated or fictitious written deed of pacto de
retro sale starts only when the alleged vendees
made known their intention by overt acts not to
abide by the true agreement, and not from the
date of execution of contract. (Conde v. Cuenca,
G.R. No. L-643, 1956)
Persons who can ask for the reformation of
the instrument
463
It may be ordered at the instance of:
1. If the mistake is mutual: either party or his
successor-in-interest may file an action.
2. If the cause of reformation is on some
other ground (such as vitiated consent or
fraud): the injured party or his heirs and
assigns are the only person given legal
standing to sue.
NOTE: In reformation of contracts, what is
reformed is not the contract itself, but the
instrument embodying the contract. It follows
that whether the contract is disadvantageous or
not, is irrelevant to reformation and therefore,
cannot be an element in the determination of the
period for prescription of the action to reform.
(Pineda, 2000)
Action for Declaratory Relief under Rule 63
of the New Rules of Court
The special civil action for reformation. The
purpose is to secure an authoritative statement
of the rights and obligations of the parties for
their guidance in the enforcement thereof, or
compliance therewith.
INTERPRETATION OF CONTRACTS
If the terms of a contract are clear and leave no
doubt upon the intention of the contracting
parties, the literal meaning of its stipulations
shall control.
If the words appear to be contrary to the evident
intention of the parties, the latter shall prevail
over the former. (NCC, Art. 1370)
In order to judge the intention of the contracting
parties, their contemporaneous and subsequent
acts shall be principally considered. (NCC, Art.
1371)
However general the terms of a contract may be,
they shall not be understood to comprehend
things that are distinct and cases that are
different from those upon which the parties
intended to agree. (NCC, Art. 1372)
If some stipulation of any contract should admit
of several meanings, it shall be understood as
bearing that import which is most adequate to
render it effectual. (NCC, Art. 1373)
 Contracts
Disfavor of Interpretation Leading to Loss of
Rights
The construction of the terms of a contract
leading to the impairment or loss of the right is
not favored.
Principle of effectiveness in contract
interpretation
Pursuant to this principle, where two
interpretations of the same contract language
are possible, one interpretation having the effect
of rendering the contract meaningless, while the
other would give effect to the contract as a
whole, the latter interpretation must be adopted.
(PNB v. Utility Assurance & Surety, Co., Inc., 177
SCRA 393, 1989)
The various stipulations of a contract shall be
interpreted together, attributing to the doubtful
ones that sense which may result from all of
them taken jointly. (NCC, Art. 1374)
The various stipulations in a contract must be
read together to give effect to all. (North Negros
Sugar Co. v. Compania Gen. De Tabacos, G.R No. L-
9277, 1957)
Complementary-contracts-construed-
together doctrine
The various stipulations of a contract shall be
interpreted together, attributing to the doubtful
ones that sense which may result from all of
them taken jointly. (NCC, Art. 1374)
When there are several provisions in a contract,
the construction to be adopted should be that
one which will give effect to all provisions. A
contract must be read in its entirety. (Bank of P.I.
vs. Ty Canco Sabrino, 57 Phil. 804) Piecemeal
interpratation must be avoided.
If one contract is incorporated into another,
Complementary Contracts must of course be
construed together so as to give effect as much
as possible to the provisions of both agreements.
(Shell Co. v. Firemen’s Ins., etc., et al., G.R. No. L-
8169, 1957)
Under this doctrine, an accessory contract must
be read in its entirety and together with the
principal agreement. (Rabuya, 2017) Thus, a
promissory note and a deed of chattel mortgage
must be contrued together (Rigor v. Consolidated
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Orix Leasing and Finance Corp., 387 SCRA 270,
2002); and the surety contract, being an
accessory contract, must be interpreted with its
principal contract, for instance, a loan
agreement. (Rabuya, 2017)
Words which may have different significations
shall be understood in that which is most in
keeping with the nature and object of the
contract. (NCC, Art. 1375)
The usage or custom of the place shall be borne
in mind in the interpretation of the ambiguities
of a contract, and shall fill the omission of
stipulations which are ordinarily established.
(NCC, Art. 1376)
The interpretation of obscure words or
stipulations in a contract shall not favor the
party who caused the obscurity. (NCC, Art. 1377)
When it is absolutely impossible to settle doubts
by the rules established in the preceding articles,
and the doubts refer to incidental circumstances
of a gratuitous contract, the least transmission of
rights and interest shall prevail. If the contract is
onerous, the doubt shall be settled in favor of the
greatest reciprocity of interests.
If the doubts are cast upon the principal object
of the contract in such a way that it cannot be
known what may have been the intention or will
of the parties, the contract shall be null and void.
(NCC, Art. 1378)
The principles of interpretation stated in Rule
123 of the Rules of Court shall likewise be
observed in the construction of contracts. (NCC,
Art. 1378)
NOTE: The provisions of Rule 123 of the Rules of
Court referred to are Secs. 58-67, now Secs. 8-
17, Rule 130, New Rules of Court.
Q: In response to Araneta Center Inc.’s
(“ACI”) invitation to bid on the design and
construction of the Gateway Mall under a
lump-sum, fixed price arrangement, CE
Construction Corporation (“CECON”)
submitted its proposal on 30 August 2002,
which bid was made valid for acceptance
only for ninety days. However, ACI informed
CECON that the contract was being awarded
to it only at such time that the bid had
already expired, and instructed it to proceed
with excavation work. While no formal
464
 Civil Law
documents were prepared for the contract acts shall be principally considered. It should be
although construction was already mentioned that ACI had drastically changed the
underway, ACI introduced major changes in scope and character of the agreement. To tie
the plans and specifications, changing it into down CECON to the unit prices for the proposal
a straight construction contract from a for a different scope of work would be grossly
former design-and-construct scheme. ACI unfair. Reference to prevailing industry
decided to change and take over the design, practices in the valuation of the project cost was
such as the change from concrete to also warranted and necessary because of the
structural steel framing, and took out certain absence of definitive governing instruments.
equipment from the scope of the contract. Under Articles 1375 and 1376 of the NCC, the
nature and object of the contract as well as the
Meanwhile, the price levels of cement and usage or custom of the place shall be borne in
steel products had increased, of which CECON mind in the interpretation of the ambiguities of
notified ACI, with a stern warning that the contract, and shall fill the omission of
further delays in the formal award of the stipulations which are ordinarily established.
contract might affect the contract sum. It was (CE Construction Corporation vs Araneta Center,
only on 2 June 2003 that ACI finally wrote a Inc., G.R. 192735, August 9, 2017, as penned by
letter to CECON, indicating its acceptance of Justice Leonen)
the latter’s 30 August 2002 tender, but still
no formal contracts were executed. With the
many changes to the project coupled with
ACI’s delays in delivering drawings and
specifications, CECON increasingly found
itself unable to complete the project on time,
noting that it had to file a total of 15 requests
for time extension, all of which ACI failed to
timely act on. Exasperated, CECON filed with
the Construction Industry Arbitration
Commission (“CIAC”) its request for
adjudication, praying for project cost
adjustment. In the meantime, CECON
completed the project and turned over
Gateway Mall to ACI, which had its blessing
on 26 November 2004. Could ACI insist on
the initial bid price of CECON under the
supposed lump-sum fixed price arrangement
of the construction contract?

A: NO. CECON and ACI should not be bound by

the supposed lump-sum fixed price
arrangement. There was never a meeting of
minds on the contract price, and the contention
of ACI with regard to supposed immutability of
the stipulated contract sum should fall.
Advertisements for bidders are simply
invitations to make proposals, and the
advertiser is not bound to accept the highest or
lowest bidder, unless the contrary appears. The
exchanges of offers between CECON and ACI
failed to satisfy the requirement of absolute and
unqualified acceptance as to comply with the
essential requisite of consent in the perfection of
a contract.

In order to judge the intention of the contracting

parties, their contemporaneous and subsequent

465
 Contracts
DEFECTIVE CONTRACTS
VOID
BASIS RESCISSIBLE VOIDABLE UNENFORCEABLE
/INEXISTENT

Entered without Illegality (void) or

Economic damage Incapacity of
authority or in excess absence of any of
or lesion to either one of parties
Origin of the thereof; non-compliance essential
one of the parties to give consent
defect with Statute of Frauds; requisites of a
or to 3rd persons; or vitiated
incapacity of both parties contract
declaration by law. consent.
to give consent. (inexistent).

Suffered by – As to the other

Necessity of
either one of contracting
Damage/ Not necessary Not necessary
parties or 3rd party - not
prejudice
person. necessary.

Curable by
Curable Curable Not curable Not Curable
Prescription

Valid & legally Valid & legally Inoperative until ratified;

enforceable until enforceable not enforceable in court
Legal effect None
judicially until judicially without proper
rescinded. annulled. ratification.

Rescission or Annulment of Declaration of

Remedy Only personal defense
rescissory action. contract. nullity of contract.

Can be attacked
Nature of Must be a direct Direct action
Indirect attack allowed directly or
action action. needed.
indirectly.

GR: Contracting 3rd persons cannot

Who can file party; Contracting file unless their
Contracting party
the action XPN: Defrauded party interest are
Creditors directly affected.

Susceptible but
Susceptibility
not of ratification Susceptible Susceptible Not Susceptible
of ratification
proper.

Action for recovery; Action for

Action for Action for specific performance or declaration of
Susceptibility rescission annulment damages prescribes nullity or putting
prescription prescribes after 4 prescribes (10 years if based on a of defense of
years. after 4 years. written contract; 6 years if nullity does not
unwritten). prescribe.

UNIVERSITY OF SANTO TOMAS 466

2021 GOLDEN NOTES
 Civil Law
DEFECTIVE CONTRACTS
RESCISSIBLE CONTRACTS
Requisites for Rescission
1. There must be at the beginning either a
valid or voidable one
2. There is an economic or financial prejudice
to someone.
3. Requires mutual restitution. (J. Paras, Civil
code of the Philippines Annotated :
Prescription ; Obligations and Contracts,
2016)
Two Kinds of Rescission
1. The rescission mentioned in Art. 1380 of the
New Civil Code
2. The rescssion mentioned in Art. 1391 of the
New Civil Code as the new Code used the
term "resolution." (J.Paras, Civil code of the
Philippines Annotated : Prescription ;
Obligations and Contracts, 2016)
These are contracts validly constituted but
nevertheless maybe set aside due to a particular
economic damage or lesion caused to either to
one of the parties or to a third person. It may be
set aside in whole or in part, or up to the extent
of the damage caused. (NCC, Art. 1381)
Contracts that may be rescinded
1. Under Art. 1381, those
a. Entered into by guardians whenever the
wards whom they represent suffer
lesion by more than ¼ of value of the
property [NCC, Art. 1381(1)];
If a guardian alienates properties of the
ward without judicial approval, the
contract is ”unenforceable” for lack of
authority. (NCC, Art. 1403,par. 1)
b. Agreed upon in representation of
absentees, if absentee suffers lesion by
more than ¼ of value of property [NCC,
Art. 1381(2)];
c. Contracts where rescission is based on
fraud committed on creditor and cannot
collect the claim due (accion pauliana)
[NCC, Art. 1381(3)];
467
NOTE: Contracts which are rescissible
under the third paragraph of Art. 1381
are valid contracts, although
undertaken in fraud of creditors. If the
contract is ‘‘absolutely simulated’’, the
contract is not merely rescissible but
inexistent, although undertaken as well
in fraud of creditors. (MBC v. Silverio,
466 SCRA 438, August 11, 2005) In the
former, the remedy is rescission; in the
latter, the remedy is an action to declare
the contract inexistent which action is
imprescriptible. (Rabuya, 2017)
d. Contracts where the object involved is
the subject of litigation; contract
entered into by defendant without
knowledge or approval of litigants or
judicial authority [NCC, Art. 1381(4)];
e. Payment by an insolvent – on debts
which are not yet due; prejudices the
claim of others (NCC, Art. 1382);
f. Provided for by law. (NCC, Arts. 1526,
1534, 1538, 1539, 1542, 1556, 1560,
1567 & 1659)
NOTE: C, D and E are contracts which
are not necessarily entered into by
persons exercising fiduciary capacity. In
Art. 1381 (1 & 2), the contract must be
of administration and representation.
2. Payments made in state of insolvency (NCC,
Art. 1382):
a. Plaintiff has no other means to maintain
reparation;
b. Plaintiff must be able to return
whatever he may be obliged to return
due to rescission;
c. The things must not have been passed
to third persons in good faith;
d. It must be made within 4 years. (NCC,
Art 1382)
Characteristics of rescissible contract
1. It has all the elements of a valid contract.
2. It has a defect consisting of an injury
(generally in the form of economic damage
or lesion, fraud, and alienation of the
property) to one of the contracting parties
or to a third person.
3. It is valid and effective until rescinded.
 Contracts
4. It can be attacked only directly.
5. It is susceptible of convalidation only by
prescription. (De Leon, 2010)
Nature of an action for rescission
The action for rescission is subsidiary. It cannot
be instituted except when the party suffering
damage has no other legal means to obtain
reparation for the same. (NCC, Art. 1383) Hence,
it must be availed of as the last resort, availed
only after all legal remedies have been
exhausted and proven futile. (Khe Hong Cheng v.
CA, G.R. No. 144169, March 28, 2001)
Rationale: In order not to disturb other
contracts and to comply with the principle of
relativity of contracts.
However, if it can be proven that the property
alienated was the only property of the debtor at
the time of the transaction, the action for
rescission is certainly maintainable because it is
clear that the creditor has no other remedy
under the circumstances. (Pineda, 2009 citing
Regalado vs. Luchsinger, 5 Phil. 625)
NOTE: Rescission shall be only to the extent
necessary to cover the damages. (NCC, Art. 1384)
Persons who may institute an action for the
rescission of a rescissible contract
The action for rescission may be instituted by
the following:
1. Injured party;
2. Contracts entered into by guardians – by
ward, or by guardian ad litem of ward
during the latter’s incapacity in an action
against the original guardian;
3. Contracts in representation of absentees –
by the absentee;
4. Contracts defrauding creditors – by the
creditors;
5. Contracts referring to things in litigation –
by the party litigant;
6. Their representatives;
7. Their heirs;
8. Their creditors by virtue of subrogatory
action defined in Art. 1177, NCC. (Jurado,
2009)
Prescriptive period of action for rescission
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Under Art. 1381, no.1 – within 4 years from
the time the termination of the incapacity of
the ward;
2. Under Art. 1381, no. 2- within 4 years from
the time the domicile of the absentee is
known; or
3. Under Art. 1381, nos. 3 & 4 & Art. 1382 –
within 4 years from the time of the
discovery of fraud.
Requisites that must concur before a contract
may be rescinded on the ground of lesion
Whether the contract is entered into by a
guardian in behalf of his ward or by a legal
representative in behalf of an absentee, before it
can be rescinded on the ground of lesion, it is
indispensable that the following requisites must
concur:
1. The contract must be entered into by the
guardian in behalf of his ward or by the legal
representative in behalf of an absentee.
2. The ward or absentee suffered lesion of
more than 1/4 of the value of the property
which is object of the contract.
3. The contract must be entered into without
judicial approval.
4. There must be no other legal means for
obtaining reparation for the lesion.
5. The person bringing the action must be able
to return whatever he may be obliged to
restore.
6. The object of the contract must not be
legally in the possession of a third person
who did not act in bad faith.
Statutory presumptions of Fraud in Article
1387
1. Alienation by gratuitous title.
When a debtor donates his property
without reserving sufficient property to
pay all his pre-existing debts, the law
presumes that the gratuitous dispositions
are made in fraud of creditors.
2. Alienation by onerous title.
The contract is presumed fraudulent if at
the time of alienation, some judgement has
been rendered against him, whether it is on
appeal or has already become final and
468
 Civil Law
executory; or some writ of attachment has
been issued against him in any case.
NOTE: The decision or writ of attachment need
not refer to the very property subject of
alienation. The person who obtained the
judgement or writ of attachment need not be the
same person seeking the rescission.
These presumptions are rebuttable, which
means, they may be overcome by clear, strong
and convincing evidence.
An alienation made during the pendency of a suit
is not enough. There must be a decision or a writ
of attachment.
Requisites before a contract entered into in
fraud of the creditors may be rescinded
1. There must be a credit existing prior to the
constitution of the said fraudulent contract;
2. There must be fraud, or at least, the intent to
commit fraud to the prejudice of the creditor
seeking rescission;
3. The creditor cannot in any legal manner
collect his credit (subsidiary character of
rescission);
4. The object of the contract must not be legally
in possession of a third person in good faith.
Badges of fraud
1. Consideration for the conveyance of the
property is inadequate or fictitious;
2. Transfer was made by the debtor after a suit
has commenced and during its pending
against him;
3. Sale upon credit by an insolvent debtor;
4. The presence of evidence of large
indebtedness or complete insolvency of the
debtor;
5. Transfer of all his property by a debtor when
he is financially embarrassed or insolvent;
6. Transfer is made between father and son,
where there are present some or any of the
above circumstances; and
7. Failure of the vendee to take exclusive
possession of the property. (Oria v.
McMicking, 21 Phil. 243, G. R. No. 7003,
January 18, 1912)
Fictitious Contracts cannot be Rescinded
Rescission is not the proper remedy because
while the contract here is fictitious and,
therefore, null and void, rescission presupposes
a valid contract. (Onglengco v. Ozaeta and
Hernandez, 70 Phil. 43)
Resolution v. Rescission

NOTE: If the object of the contract is legally in RESOLUTION RESCISSION

the possession of a third person who did not act (NCC, ART. 1191) (NCC, ART. 1381)
in bad faith, the remedy available to the creditor Both presuppose contracts validly entered into
is to proceed against the person causing the loss and subsisting and both require mutual
for damages. Such person is solidarily liable with restitution when proper.
that of transferring creditor as both of them are Nature
guilty of fraud. Principal action;
Subsidiary remedy
Retaliatory in character
The action to rescind contracts in fraud of Grounds
creditors is known as accion pauliana. For this 5 grounds under Art.
action to prosper, the following requisites must Non-performance of 1381. (lesions or
be present: obligation (only fraud of creditors);
ground) Non-performance is
1. The plaintiff asking for rescission has a not important
credit prior to the alienation; Applicability
2. The debtor has made a subsequent contract Applies to both
conveying a patrimonial benefit to a third Only to reciprocal
unilateral and
person; obligations
reciprocal obligations
3. The creditor has no other legal remedy to Prescriptive Period
satisfy his claim; 10 years from accrual
4. The act being impugned is fraudulent; of right of action for
5. The third person who received the property written contracts; 4 years (NCC, Art.
conveyed, if it is by onerous title, has been 6 years for verbal 1389)
an accomplice in fraud. (Siguan vs Lim, G.R. contracts [NCC, Arts.
No. 134685, November 19, 1999) 1144 (2) and 1145 (1)]

469
 Contracts
Person who can Initiate the Action Q: Reyes (seller) and Lim (buyer) entered
Even third persons into a contract to sell a parcel of land.
Only the injured party
prejudiced by the Harrison Lumber occupied the property as
to the contract lessee. Reyes offered to return the P10
contract
Fixing of Period by the Court million downpayment to Lim because Reyes
Court may fix a period was having problems in removing the lessee
or grant extension of from the property. Lim rejected Reyes’ offer.
time for the fulfillment Lim learned that Reyes had already sold the
Court cannot grant property to another.
of the obligation when
extension of time
there is sufficient
reason to justify such Both Reyes and Lim are now seeking
extension rescission of the contract to sell. However,
Purpose Reyes does not want to deposit the 10M to
Reparation for the court because according to him, he has
damage or injury, the “right to use, possess and enjoy” of the
Cancellation of the money as its owner before the contract to sell
allowing partial
contract is rescinded. Is Reyes’ contention correct?
rescission of contract.
(Pineda, 2000)
A: NO. There is also no plausible or justifiable
NOTE: While Article 1191 uses the term reason for Reyes to object to the deposit of the
“rescission,” the original term which was used in P10 million down payment in court. The
the old Civil Code, from which the article was contract to sell can no longer be enforced
based, was “resolution.” (Ong v. CA, G.R. No. because Reyes himself subsequently sold the
97347, July 6, 1999) property. Both Lim and Reyes are seeking for
rescission of the contract. By seeking rescission,
Effect of Rescission a seller necessarily offers to return what he has
received from the buyer. Such a seller may not
1. Obligation of mutual restitution (but not take back his offer if the court deems it
absolute); equitable, to prevent unjust enrichment and
2. Abrogation of contract (Absolute); ensure restitution, to put the money in judicial
3. Obligation of third person to restore (if third deposit.
person has nothing to restore, Article does
not apply). (De Leon, 2016) NOTE: In this case, it was just, equitable and
proper for the trial court to order the deposit of
Mutual Restitution the down payment to prevent unjust enrichment
by Reyes at the expense of Lim. Depositing the
Rescission of contract creates an obligation of down payment in court ensure its restitution to
mutual restitution of the objects of the contract, its rightful owner. Lim, on the other hand, has
their fruits, and the price with interest. nothing to refund, as he has not received
anything under the contract to sell. (Reyes v. Lim,
NOTE: Rescission is possible only when the Keng and Harrison Lumber, Inc., G.R. No. 134241,
person demanding rescission can return August 11, 2003)
whatever he may be obliged to restore. A court
of equity will not rescind a contract unless there Q: Goldenrod offered to buy a mortgaged
is restitution, that is, the parties are restored to property owned by Barreto Realty to which it
the status quo ante. (NCC, Art. 1385) paid an earnest money amounting to P1
million. It was agreed upon that Goldenrod
Mutual restitution is not applicable when: would pay the outstanding obligations of
Barreto Realty with UCPB. However,
1. Creditor did not receive anything from Goldenrod did not pay UCPB because of the
contract; or bank’s denial of its request for the extension
2. Thing already in possession of third to pay the obligation. Thereafter, Goldenrod,
persons in good faith; subject to indemnity through its broker, informed Barreto Realty
only, if there are two or more alienations – that it could not go through with the
liability of first infractor. purchase of the property and also demanded
the refund of the earnest money it paid. In

UNIVERSITY OF SANTO TOMAS 470

2021 GOLDEN NOTES
 Civil Law
the absence of a specific stipulation, may the
seller of real estate unilaterally rescind the
contract and as a consequence keep the
earnest money to answer for damages in the
event the sale fails due to the fault of the
prospective buyer?
A: NO. Goldenrod and Barretto Realty did not
intend that the earnest money or advance
payment would be forfeited when the buyer
should fail to pay the balance of the price,
especially in the absence of a clear and express
agreement thereon.
Moreover, Goldenrod resorted to extrajudicial
rescission of its agreement with Barretto Realty.
Under Article 1385, rescission creates the
obligation to return the things which were the
object of the contract together with their fruits
and interest. Therefore, by virtue of the
extrajudicial rescission of the contract to sell by
Goldenrod without opposition from Barretto
Realty, which in turn, sold the property to other
persons, Barretto Realty, had the obligation to
return the earnest money which formed part of
the purchase price plus legal interest from the
date it received notice of rescission. It would be
most inequitable if Barretto Realty would be
allowed to retain the money at the same time
appropriate the proceeds of the second sale
made to another. (Goldenrod, Inc. v. CA, G.R. No.
126812, November 24, 1998)
VOIDABLE CONTRACTS (BAR 2004)
Voidable contracts are those where consent is
vitiated either by the incapacity of one of the
contracting parties or by mistake, violence,
intimidation, undue influence or fraud. These
contracts are binding, unless they are annulled
by a proper action in court. It is susceptible of
ratification. (NCC, Art. 1390)
NOTE: Annulment may be had even if there be
no damage to the contracting parties.
Characteristics of a voidable contract
1. Effective until set aside;
2. Can be ratified;
3. Can be assailed only by the party whose
consent was defective or his heirs or
assigns.
471
NOTE: Third persons may assail if they are
prejudiced. (Development Bank vs. CA, 96
SCRA 342)
4. A voidable contract, unlike unenforceable
and void contracts may be attacked
indirectly or collaterally, by way of defense
to an action under the contract by way of a
counterclaim. (De Leon, 2016)
Classes of voidable contracts
1. Those where one of the parties is incapable
of giving consent; and
NOTE: If both parties are incapacitated to
give consent, the contract is unenforceable
and not merely voidable.
2. Those where the consent is vitiated by
mistake, violence, intimidation, undue
influence or fraud. (NCC, Art. 1390)
Q: Sometime in March 2001, Poole-Blunden
came across an advertisement of Unit 2-C of
T-Tower Condominium. The Unit was
advertised to have an area of 95 square
meters. Thinking that it was sufficient and
spacious enough for his residential needs,
Poole-Blunden won the bid and entered into
a Contract to Sell with UnionBank. Poole-
Blunden started occupying. Thereafter, he
decided to construct two (2) additional
bedrooms in the Unit. Upon examining it, he
noticed apparent problems in its dimensions.
He took rough measurements of the Unit,
which indicated that its floor area was just
about 70 square meters, not 95 square
meters, as advertised by UnionBank. Poole-
Blunden wrote to UnionBank, informing it of
the discrepancy. He asked for a rescission of
the Contract to Sell, along with a refund of
the amounts he had paid, in the event that it
was conclusively established that the area of
the unit was less than 95 square meters
which was denied by the UnionBank.
Aggrieved, he filed an action for rescission of
the Contract to Sell under Article 1390 of the
Civil Code.
Will the action prosper?
A: YES. Article 1390 of the Civil Code stipulates
that a contract is voidable or annullable even if
there is no damage to the contracting parties
where "consent is vitiated by mistake, violence,
 Contracts
intimidation, undue influence or fraud." Under
Article 1338 of the Civil Code "[t]here is fraud
when, through insidious words or machinations
of one of the contracting parties, the other is
induced to enter into a contract which, without
them, he would not have agreed to."
The fraud required to annul or avoid a contract
"must be so material that had it not been
present, the defrauded party would not have
entered into the contract." Poole-Blunden's
contention on how crucial the dimensions and
area of the Unit are to his decision to proceed
with the purchase is well-taken. As he
emphasized, he opted to register for and
participate in the auction for the Unit only after
determining that its advertised area was
spacious enough for his residential needs.
Therefore, there is fraud for the reason that had
Poole-Blunden was informed by the UnionBank
that the floor area was actually less than the
stipulated, he would not have entered the
Contract to Sell. (Joseph Harry Walter Poole-
Blunden v. Union Bank Of The Philippines,
Respondent, G.R. No. 205838, November 29, 2017,
as penned by J. Leonen)
Who may institute an action for annulment
1. Real party in interest. – All who are
principally or subsidiarily liable ; and
2. One not responsible for the defect of the
contract.
NOTE: An action for annulment may be
instituted by all who are thereby obliged
principally or subsidiarily. He who has capacity
to contract may not invoke the incapacity of the
party with whom he has contracted nor can
those who exerted intimidation, violence or
undue influence or employed fraud or caused
mistake base their action upon these flaws of the
contract.
Effects of annulment of a contract
1. If contract not yet consummated – parties
shall be released from the obligations
arising therefrom.
2. If contract has already been consummated –
rules provided in Arts. 1398-1402 shall
govern.
a. Restitution
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
GR: Mutual restitution. – the contracting
parties shall restore to each other things
which have been the subject matter of
the contract, with their fruits and the
price with its interest except in case
provided by law. In an obligation to
render services, the value thereof shall
be the basis for damages. (NCC, Art.
1398)
NOTE: No restitution. – The party
incapacitated is not obliged to make any
restitution except insofar as he has been
benefited by the thing or the price
received by him. (NCC, Art. 1399)
XPN : If and when the application of
mutual restitution will result in unjust
enrichment of one party at the expense
of another. (4 Tolentino, 607, [1991])
b. Whenever the person obliged by the
decree of annulment to return the thing
cannot do so because it has been lost
through his fault, he shall return the
fruits received and the value of the thing
at the time of the loss, with interest from
the same date. (NCC, Art. 1400)
Causes of extinction of action to annul
1. Prescription – the action for annulment must
be commenced within 4 years depending on
the ground stated.
NOTE: If the action has prescribed, the
contract can no longer be set aside.
(Villanueva v. Villanueva, 91 Phil 43)
2. Ratification – cleanses the contract of its
defects from the moment it was constituted.
(NCC, Art. 1396)
3. By loss of the thing which is the object of the
contract through fraud or fault of the person
who is entitled to annul the contract. (NCC,
Art. 1401)
4. If the minor is guilty of active
misrepresentation of his age. (Braganza v.
De Villa Abrille, 1959)
NOTE: If the right of action is based upon the
incapacity of any one of the contracting parties,
the loss of the thing shall not be an obstacle to
the success of the action, unless it took place
through the fraud or fault of the plaintiff. (NCC,
Art. 1401)
472
 Civil Law
Prescriptive period for an annulment of a
voidable contract
The action for annulment shall be brought
within 4 years, reckoned from:
1. In cases of intimidation, violence or undue
influence, from the time the defect of the
consent ceases;
2. In case of mistake or fraud, from the time of
the discovery of the same;
3. And when the action refers to contracts
entered into by minors or other
incapacitated persons, from the time the
guardianship ceases. (NCC, Art. 1391)
Ratification
It is the act or means by virtue of which, efficacy
is given to a contract which suffers from a vice of
curable nullity. (Manresa)
NOTE: Ratification extinguishes the action to
annul a voidable contract. (NCC, Art. 1392)
Requisites of ratification
1. The contract involved must be voidable;
2. Person ratifying must know the reason for
the voidability;
3. The cause for the voidability must
immediately cease after the ratification; and
4. Ratification must be express or through an
act implying a waiver of the action to annul;
NOTE: Ratification entered into by the
incapacitated person may be effected by the
guardian of the incapacitated person. (NCC,
Art. 1394) However, this rule does not
pertain to a rescissible contract entered into
by the guardian in behalf of his ward.
The right to ratify is transmitted to the heirs of
the party entitled to such right. (Tolentino, 2002)
Party who may ratify
1. In contracts entered into by incapacitated
persons.
(a) guardian ;
(b) injured party himself, provided he is
already capacitated.
473
2. In contracts voidable on the ground of
mistake. – party whose consent was vitiated.
(De Leon, 2016)
Kinds of ratification
1. Express –the desire of the innocent party to
convalidate the contract, or his waiver or
renunciation of his right to annul the
contract is clearly manifested verbally or
formally in writing. (Pineda, 2000)
2. Implied (tacit) – it is the knowledge of the
reason which renders the contract voidable
and such reason having ceased, the person
who has a right to invoke it should execute
an act which necessarily implies an
intention to waive his right. (NCC, Art. 1393)
Effects of ratification
Ratification cleanses the contract from all its
defects from the moment it was constituted,
thereby extinguishing the action to annul a
voidable contract. It results therefore that after a
contract is validly ratified, no action to annul the
same can be maintained based upon defects
relating to its original validity. (Rabuya, 2017)
Retroactivity in ratification of contracts
GR: Retroactivity applies in ratification of
contracts.
XPN: When the rights of innocent third persons
will be prejudiced, ratification will not take
effect.
NOTE: Ratification does not require the
conformity of the contracting party who has no
right to bring the action for annulment.
Q: The Senior Vice President of TERP
Construction Corp., Escalona, made a
commitment to Banco Filipino Savings and
Mortgage Bank that TERP Corp. would pay
interest differentials to the same. However,
after TERP Corp. subsequently paid the
interests as agreed upon, it thereafter
refused to pay its unpaid balance because it
argues that Escalona was not authorized to
make such commitment. Is act of Escalona, as
Senior Vice President of TERP Corp. binding
upon it?
A: YES. A corporation exercises its corporate
 Contracts
powers through its board of directors. This third person
power may be validly delegated to its officers, makes the
committees, or agencies. The authority of the contract
board of directors to delegate its corporate rescissible.
powers may either be: (1) actual; or (2) As to the Damage /
apparent. Actual authority may be express or Damage is
necessity of prejudice is
implied. Express actual authority refers to the immaterial
damage material
corporate powers expressly delegated by the
Rescissibility
board of directors. Implied actual authority, on Annulability
As to the of the
the other hand, can be measured by his or her of the
source of contract is
prior acts which have been ratified by the contract is
remedy based on
corporation or whose benefits have been based on law
equity
accepted by the corporation.
As to the kind Public Private
Here, TERP Corp.'s subsequent act of twice of interest the interest interest
paying the additional interest Escalona predominates predominates predominates
committed to Banco Filipino Bank is considered
As to the Not
a ratification of Escalona's acts. Moreover, Susceptible of
susceptibility susceptible of
Escalona likewise had apparent authority to ratification
of ratification ratification
transact on behalf of petitioner. Here, Banco
Filipino Bank relied on Escalona’s apparent As to whether
It is a
authority to promise interest payments, a sanction or It is a remedy
sanction
considering that Escalona was TERP Corp.’s then a remedy
senior vice president. His apparent authority Only parties Third persons
As to who can
was further demonstrated by TERP Corp. paying to the who are
avail the
Banco Filipino Bank after Escalona promised it. contract can affected may
remedies
(Terp Construction Corporation v. Banco Filipino assail it file the action
Savings and Mortgage bank, G.R. No. 221771, It is a It is a
September 18, 2019, as penned by J. Leonen) As to the kind
principal subsidiary
of action
action action
Confirmation v. Recognition
UNENFORCEABLE CONTRACTS
CONFIRMATION RECOGNITION
It is an act whereby a
Those contracts which cannot be enforced by
defect of proof is cured
action or complaint, unless they have been
such as when an oral
It is an act by ratified by the party or parties who did not give
contract is put into writing
which a voidable consent thereto. (Jurado, 2009)
or when a private
contract is cured of
instrument is converted
its vice or defect. Characteristics of unenforceable contract
into a public instrument.
(Luna v. Linatoc, G.R. No. L-
1. It cannot be enforced by a proper action in
48403, October 28, 1942)
court;
2. It may be ratified;
Voidable contract v. Rescissible contract
3. It cannot be assailed by third person; and
4. May only be assailed as a way of defense, not
BASIS VOIDABLE RESCISSIBLE by direct action.
As to the kind 5. The defect of an unenforceable contract is of
Defect is Defect is
of defect a permanent nature and it will exist as long
intrinsic external
present as the contract is not duly ratified. The mere
The damage lapse of time cannot give efficacy to the
Vitiated contract. (Rabuya, 2017)
or prejudice
As to the consent
suffered by
source of makes the NOTE: An unenforceable contract is valid
one of the
defect contract although it produces no legal effect. (Tolentino,
contracting
voidable 2002)
parties or a

UNIVERSITY OF SANTO TOMAS 474

2021 GOLDEN NOTES
 Civil Law
Kinds of unenforceable contracts Characteristics of Void Contracts

The following contracts are unenforceable
unless they are ratified:
1. Those entered into the name of another
person by one who has been given no
authority/legal representation or acted
beyond his powers; “Unauthorized
contracts”;
NOTE: A contract of sale over a piece of land
entered by an agent whose authority is not
in writing, even if he acted beyond the scope
of his authority is void, not merely
unenforceable. (NCC, Art. 1874)
2. Those that do not comply with the Statute of
Frauds; and
3. Those where both parties are incapable of
giving consent to a contract. (NCC, Art. 1403)
VOID/INEXISTENT CONTRACTS
A void or inexistent contract is one which has no
force and effect from the very beginning, as if it
had never been entered into, and which cannot
be validated by either by time or ratification.
This definision includes not only those contracts
in which one of the essential requisites is totally
wanting, but also those which are declared by
positive provision of law or statute. A void or
inexistent contract is equivalent to nothing; it is
absolutely wanting in civil effects. (Tolentino,
2002)
1. The contract produces no effect whatsoever
either against or in favor of anyone; hence it
does not create, modify, or extinguish the
juridical relation to which it refers;
2. No action for annulment is necessary,
because the nullity exists ipso jure; a
judgment of nullity would merely be
declaratory;
3. It cannot be confirmed or ratified; and
4. If it has been performed, the restoration of
what has been given is in order. (Tolentino,
2002)
NOTE: The defect of inexistense of a contract is
permanent. It cannot be cured by ratification nor
prescription.
Parties affected
Any person may invoke the inexistence of the
contract whenever juridical effects founded
thereon are asserted against him. (Tolentino,
2002)

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 contemplate an impossible
service;
6. Those where the intention of the parties
relative to the principal object of the
contract cannot be ascertained;
7. Those expressly prohibited or declared void
by law.

475
 Natural Obligations
NATURAL OBLIGATIONS
Natural obligations, not being based on positive
law but on equity and natural law, do not grant
a right of action to enforce their performance,
but after voluntary fulfillment by the obligor,
they authorize the retention of what has been
delivered or rendered by reason thereof. (NCC,
Art. 1423)
Rationale of natural obligations (1947 Code
Commission)
1. On the part of the payor – It gives rise to a
moral, rather than a legal duty to pay or
perform, but the person performing feels
that in good conscience he should comply
with his undertaking, which is based on
moral grounds.
2. On the part of the payee – The payee is
obliged to return the amount received by
him because the payor was not legally
bound to make the payment
NOTE: The foundation of nautral law are equity,
morality and natural justice. (Sta. Maria, 2017)
Examples of Natural Obligations
1. Paying despite extinctive prescription
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. (NCC, Art. 1424)
e.g. The prescriptive period to file a case
based on a written agreement is 10 years
from the time the right of the action
accrues. If the creditor does not collect the
amount of the loan after 10 years from the
time it should be paid, such creditor can no
longer collect from the debtor.
If the debtor, despite the lapse of th period
and knowing that the debt has already
prescribed, pays the creditor, such debtor
can no longer recover the payment. (Sta.
Maria, 2017)
2. 3rd person paying against the will of the
debtor
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
When without the knowledge or against the
will of the debtor, a 3rd person pays a debt
which the obligor is not legally bound to
pay because the action thereon has
prescribed, but the debtor later voluntarily
reimburses the 3rd person, such debtor can
no longer recover such payment. (NCC, Art.
1424)
3. Contract made by a minor (NCC, Arts. 1426
and 1427)
An incapacitated person is not obliged to
make any restitution except insofar as he
has been benefited by the thing or price
received by him.
NOTE: A person who is between 18 and 21
years of age is not a minor. In present time,
the age of majority is 18 (RA 6809)
However, if the law is applicable, the minor
who voluntarily makes payment or
restitution of what he has obtained by
contract even though he has no legal
obligation to make any payment or
restitution, can no longer recover what he
has returned. (Sta. Maria, 2017)
4. Performance by winning party
When, after an action to enforce a civil
obligation has failed the defendant
voluntarily performs the obligation, he
cannot demand return of what he has
delivered or the payment of the value of the
service he has rendered. (NCC, Art. 1428)
5. Voluntary payment of an heir in excess of
inherited property (NCC, Art. 1429)
E.g. A is indebted to B for P10,000.00. A
later on dies, with C as his heir who is
entitled only to P5,000.00 from the estate
of A. If C voluntarily pays B P10,000.00, C
can no longer recover such amount. (Sta.
Maria, 2017)
6. Payment of a void legacy (NCC, Art. 1430)
NOTE: Examples of natural obligations under
Title III are NOT exclusive. (Sta. Maria, 2017)
ESTOPPEL
An admission or representation is rendered
476
 Civil Law
conclusive upon the person making it, and
cannot be denied or disproved as against the
person relying thereon. (NCC, Art. 1431)

Estoppel cannot be sustained by mere

argument or doubtful inference; it must be
clearly proved in all its essential elements by
clear, convincing and satisfactory evidence.

NOTE: Estoppel is not applicable in the

following cases:

1. When a law or public policy has been

violated;

2. Against the government suing in its

capacity as sovereign or asserting
governmental rights;

3. Against the government owing to the

mistakes or erros of its officers or agents;
and

NOTE: The government is never estopped

by mistakes on the part of its agents.
(Republic v. Go Bon Lee, G.R. No. L-11499,
April 29, 1961)

4. To questions of law.

Estoppel applies only to questions of fact. If

an act, conduct or misrepresentation of the
party sought to be estopped is due to the
ignorance founded on innocent mistake,
then estopple whill not arise. (Sta. Maria,
2017)

Parties bound

Estoppel is applied only as between

1. Parties thereto; or

2. Their successors-in-interest (NCC, Art.

1439)

477
 Special Contracts - Sales
SPECIAL CONTRACTS
SALES
GENERAL PRINCIPLES
Sale
Sale is a contract where one party (seller or
vendor) obligates himself to transfer the
ownership of and to deliver a determinate thing,
while the other party (buyer or vendee)
obligates himself to pay for said thing a price
certain in money or its equivalent. (NCC, Art.
1458; 2001 BAR)
The primary consideration in determining the
true nature of a contract is the intention of the
parties. If the words of a contract appear to
contravene the evident intention of the parties,
the latter shall prevail. Such intention is
determined not only from the express terms of
their agreement, but also from the
contemporaneous and subsequent acts of the
parties. (Heirs of Dela Rosa v. Batongbacal, et al.,
G.R. No. 179205, July 30, 2014)
ELEMENTS OF A CONTRACT OF SALE
1. Essential elements – for validity:
a. Consent – meeting of the minds to
transfer ownership in exchange for the
price;
b. Determinate subject matter –
determinate thing which is the object of
the contract; and
c. Consideration – price certain in money
or its equivalent.
2. Natural elements –inherent in the contract,
and are deemed to exist in the contract in
the absence of any contrary provision.
Examples:
a. Warranty against eviction; and
b. Warranty against hidden defects.
3. Accidental elements – dependent on parties’
stipulations;
Examples:
a. Conditions;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
b. Payment of Interest;
c. Time and Place of Payment; and
d. Penalty.
Effect of absence of any of the essential
elements
The contract of sale is void. Absent proof of the
concurrence of all the essential elements of a
contract of sale, the giving of earnest money
cannot establish the existence of a perfected
contract of sale. (Manila Metal Container Corp. v.
PNB, G.R. No. 166862, December 20, 2006)
Valid sale against the will of the owner of the
property
1. When the property is subjected to
expropriation (NCC, Arts. 435 and 1488);
2. In case of ordinary execution sale conducted
under Section 15, Rule 39 of the Revised
Rules of Civil Procedure;
3. In case of judicial foreclosure sale under
Rule 68; and
4. In case of extra-judicial foreclosure sale
under Act 3135, as amended. (Pineda, 2010)
Effect of Reluctant Consent
Consent when reluctantly given is not vitiated
consent. There is no difference in law where a
person gives his consent reluctantly and even
against his good sense and judgment as when he
acts voluntarily and freely.
STAGES OF A CONTRACT OF SALE
1. Negotiation or Policitaion Stage – begins
from the time the prospective contracting
parties manifest their interest in the
contract and ends at the moment of
agreement of the parties. A negotiation is
formally initiated by an offer, which must be
certain;
To convert the offer into a contract, the
acceptance must be absolute and must not
qualify the terms of the offer; it must be
plain, unequivocal, unconditional and
without variance of any sort form the
proposal. (Manila Metal Container Corp. v.
PNB, G.R. No. 166862, December 20, 2006)
It is important to consider that at this stage,
there is freedom to contract, which
signifies the right to choose with whom to
478
 Civil Law
contract and what to contract. Thus, an
owner of a property is free to offer the
duty bound to sell the same to the occupant
thereof, absent any prior agreement vesting
the occupants the right of first priority to
buy. (Villanueva, 2018)
2. Perfection or birth – takes place when the
parties agree upon the essential elements of
the contract; and
NOTE: From the point of perfection, parties
may reciprocally demand performance,
subject to the provisions of the law
governing the form of contracts.
Not all contracts of sale becomes
automatically and immediately effective
upon perfection. A suspensive condition or
period suspends the demandability of the
obligation, but the contract is still perfected.
(Villanueva, 2018)
3. Consummation – occurs when the parties
fulfill or perform the terms agreed upon in
the contract culminating in the
extinguishment thereof. (SM Investments
Corp. v. Posadas, citing Swedish Match v. CA,
G.R. No. 200901, December 7, 2015)
CHARACTERISTICS OF A CONTRACT OF SALE
1. Consensual – A sale is perfected by mere
consent, which is manifested by the meeting
of the minds as to the offer and acceptance
thereof on the subject matter, price and
terms of payment.
NOTE: Delivery of the thing bought or
payment of the price is not necessary for the
protection of the contract; and failure of the
vendee to pay the price after the execution
of the contract does not make the sale null
and void for lack of consideration but results
at most in default on the part of the vendee,
for which the vendor may exercise his legal
remedies. (Rabuya, 2017)
2. Bilateral – The seller will deliver and
transfer a determinate thing to the buyer
and the latter will pay an ascertained price
(or its equivalent). It imposes obligations on
both the seller and buyer. The obligations of
each party is the cause for the obligation of
the other.
479
subject property for sale to any interested
person, and is not
Each party is simultaneously a debtor and
creditor of the other. (Villanueva, 2018)
3. GR: Commutative – The thing sold is
considered the equivalent of the price paid
and the price paid is the equivalent of the
thing sold.
NOTE: There is no requirement that the
price should be equal to the exact value of
the subject-matter of the sale. All that is
required is that the parties believed that
they will receive good value in exchange for
what they will give. (Villanueva, 2018)
XPN: Aleatory – The consideration is not
equivalent of what has been received in the
case of purchase of a lotto ticket. If the ticket
wins, the prize is much more than the price
of the ticket.
4. Principal – Its existence does not depend
upon the existence and validity of another
contract.
5. Onerous – The thing sold is conveyed in
consideration of the purchase price, and vice
versa.
6. Nominate – It has a specific name given by
law. (Pineda, 2010)
7. Title, not a mode – The contract of sale is
not a mode, but merely a title. The sale itself
does not transfer or affect ownership, what
it does is to create the obligation to transfer
ownership.
NATURE AND FORM OF CONTRACT
(2002, 2006 BAR)
The contract of sale is perfected at the moment
there is a meeting of minds upon the thing which
is the object of the contract and upon the price.
From that moment, parties may reciprocally
demand performance, subject to the provisions
of the law governing the forms of contracts.
Formal requirement for the validity of a
contract of sale
GR: A contract of sale may be made in writing, or
by word of mouth, or partly in writing and partly
 Special Contracts - Sales
by word of mouth, or may be inferred from the
conduct of the parties. (NCC, Art. 1483) Contracts
shall be obligatory, in whatever form they have
been entered into, provided all the essential
requisites for their validity are present. (NCC,
Art. 1356)
XPNs:
1. If the law requires a document or other
special form, the contracting parties may
compel each other to observe that form.
(NCC, Art. 1357)
2. Under Statute of Frauds, the following
contracts must be in writing; otherwise,
they shall be unenforceable:
a. Sale of personal property at a price
not less than P500;
b. Sale of a real property or an interest
therein;
c. Sale of property not to be
performed within a year from the
date thereof; or
d. When an applicable statute requires
that the contract of sale be in a
certain form. [NCC, Art. 1403(2)]
3. Sale of large cattle which requires that the
same be recorded with the city/municipal
treasurer and that a certificate of transfer be
issued. Otherwise, the sale is not valid. (NCC,
Art. 1581)
NOTE: The contract of sale of REAL
PROPERTIES even if not complete in form, so
long as the essential requisites of consent of the
contracting parties, object, and cause of the
obligation concur and they were clearly
established to be present, is valid and effective
between the parties.
Under Art. 1357 of the NCC, its enforceability is
recognized as each contracting party is granted
the right to compel the other to execute the
proper public instrument so that the valid
contract of sale of registered land can be truly
registered and can bind third persons. (Rabuya,
2017)
Q: On 2 August 2002, Dee Hwa Liong
Foundation Medical Center (“DHLFMC”)
entered into a contract to purchase a
GammaMed Plus Brachytheraphy machine
and a Gammacell Ellan 3000 blood irradiator
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
from Asiamed Supplies and Equipment
Corporation (“Asiamed”) at a total price of
P31,000,000.00. The machines were
delivered on 20 May 2003 and on 17 July
2003, whereupon two delivery invoices that
provided for a 12% annual interest and 25%
attorney’s fees charge on overdue accounts,
were signed by petitioner Anthony Dee
(“Dee”) and DHFLMC Vice President for
Administration.
After the demand for the collection of the
unpaid remaining balance of P25,700,000.00
went unheeded, Asiamed was constrained to
file a complaint for sum of money against the
DHLFMC and Dee before the Regional Trial
Court (“RTC”). Should DHLFMC be held liable
for 12% interest and 25% attorney’s fees
stipulated in the delivery invoices?
A: YES. DHLFMC should be held liable for the
interest and attorney’s fees stipulated in the
delivery invoices, although the attorney’s fees
should properly be reduced to 10%. These
delivery invoices formed part of the Contract of
Sale, given that a contract need not be contained
in a single writing but may be collected from
several different writings which do not conflict
with each other and which, when connected,
show the consent of the parties, subject matter,
terms and consideration, as in contracts entered
into by correspondence.
A contract may be encompassed in several
instruments even though every instrument is
not signed by the parties, since it is sufficient if
the unsigned instruments are clearly identified
or referred to and made part of the signed
instrument or instruments. Similarly, a written
agreement of which there are two copies, one
signed by each of the parties, is binding on both
to the same extent as though there had been
only one copy of the agreement and both had
signed it. (DHLFMC, et al. v. Asiamed, G.R. No.
205638, August 3, 2017, as penned by J. Leonen)
Instances where the Statute of Frauds is not
essential for the enforceability of a contract
of sale
1. When there is a note or memorandum in
writing and subscribed to by the party or his
agent (contains essential terms of the
contract);
480
 Civil Law
2. When there has been partial e. Void.
performance/execution (seller delivers with
the intent to transfer title/receives price); 5. Legality of the object:

3. When there has been failure to object to a. Licit object; and

presentation of evidence aliunde as to the b. Illicit object.
existence of a contract without being in
writing and which is covered by the Statute 6. Presence or absence of conditions:
of Frauds; or
a. Absolute; and
4. When sales are effected through electronic b. Conditional.
commerce. (Villanueva, 2014)
7. Wholesale or retail:
NOTE: Rules on forms, and of validity and
enforceability of contracts of sale, are strictly a. Wholesale; or
kept within the contractual relationship of the b. Retail.
seller and buyer pursuant to the characteristic of
relativity of every contract, and do not 8. Proximate inducement for the sale:
necessarily apply to third parties whose rights
may be affected by the terms of a sale. a. Sale by description;
b. Sale by sample; and
KINDS OF CONTRACT OF SALE c. Sale by description and sample.

As to: 9. When the price is tendered:

1. Nature of the subject matter: a. Cash sale; and

b. Sale on installment plan.
a. Sale of real property; and
b. Sale of personal property. A contract of sale may be absolute or
conditional.
2. Value of the things exchanged:
Absolute Sale
a. Commutative sale; and
b. Aleatory sale. A sale is absolute when no condition is imposed
and ownership passes to the vendee upon
3. Tangibility of the object: delivery of the thing subject of the sale. (NCC,
Art. 1497)
a. Sale of property (tangible or
corporeal); A contract of sale is absolute when the title to
the property passes to the vendee upon delivery
NOTE: A tangible object is also called of the thing sold. (Rabuya, 2017)
chose in possession.
Instance when a deed of sale considered
b. Sale of a right (assignment of a right, or absolute in nature
a credit or other intangibles such as
copyright, trademark, or good will); A deed of sale is considered absolute in nature
where there is neither a stipulation in the deed
NOTE: An intangible object is a chose that title to the property sold is reserved in the
in action. seller until the full payment of the price, nor one
giving the vendor the right to unilaterally
4. Validity or defect of the transaction: resolve the contract the moment the buyer fails
to pay within a fixed period.
a. Valid;
b. Rescissible; Conditional Sale
c. Voidable;
d. Unenforceable; and It is conditional where the sale contemplates a

481
 Special Contracts - Sales
contingency, and in general, where the contract 3. Olivarez Realty undertook to pay the
is subject to certain conditions, usually in the legitimate tenants of the land disturbance
case of the vendee, the full payment of the compensation, while Castillo undertook to
agreed purchase price, and in the case of the clear the land of the tenants within 6 months
vendor, the fulfillment of certain warranties. (De from the signing of the deed. Should Castillo
Leon, 2013) fail to clear the land within 6 months,
Olivarez Realty may suspend its monthly
The full payment of the purchase price partakes down payment until the tenants vacate the
of a suspensive condition, and non-fulfillment of property.
the condition prevents the obligation to sell from
arising. (Nuñez v. Moises-Palma citing Sps. Ramos 4. The parties agreed that Olivarez Realty
v. Sps. Heruela, G.R. No. 224466, March 27, 2019) Corporation may immediately occupy the
property upon signing of the deed. Should
Conditional Sale vs. Absolute Sale (2001 BAR) the contract be cancelled, Olivarez Realty
Corporation agreed to return the property’s
possession to Castillo and forfeit all the
CONDITIONAL SALE ABSOLUTE SALE improvements it may have introduced on the
property.
The seller is granted the The title to the
Olivarez Realty failed to comply with the
right to unilaterally property is not
conditions. Can Castillo rescind the contract?
rescind the contract reserved to the seller
predicated on the or if the seller is not
A: NO. Article 1191 of the Civil Code on the right
fulfillment or non- granted the right to
to rescind reciprocal obligations does not apply
fulfillment, as the case rescind the contract
to contracts to sell. Failure to fully pay the
may be, of the prescribed based on the
purchase price in contracts to sell is not the
condition. fulfillment or non-
breach of contract under Art. 1191.
fulfillment, as the
case may be, of the
Failure to fully pay the purchase price is merely
prescribed condition.
an event which prevents the seller’s obligation
to convey title from acquiring binding force. This
is because there can be no rescission of an
Q: Castillo was the owner of a parcel of land
obligation that is still nonexistent, the
covered by TCT 19972. The Philippine
suspensive condition (the condition of having
Tourism Authority allegedly claimed
the buyer pay the full purchase price) having not
ownership of the same parcel of land based
happened. (Olivarez Realty Corporation and Dr.
on TCT 18493. Castillo and Olivarez Realty
Pablo R. Olivarez v. Benjamin Castillo, G.R. No.
Corporation, represented by Dr. Pablo
196251, July 9, 2014 as penned by J. Leonen)
Olivarez, entered into a contract of
conditional sale over the property. The
Effect of the non-performance of the
details were as follows:
condition or if the condition did not take
place
1. Castillo agreed to sell his property to
Olivarez Realty; with Olivarez Realty
Where the obligation of either party to a
delivering the down payment and the rest to
contract of sale is subject to any condition which
be paid in 30 equal monthly installments
is not performed, such party may:
every 8th of the month beginning in the
month that the parties would receive a
1. Refuse to proceed with the contract; or
decision voiding the PTA’s title to the
2. Waive performance of the condition.
property.
Unlike in a non-fulfillment of a warranty which
2. Olivarez Realty will file the action against
would constitute a breach of the contract, the
PTA with full assistance of Castillo; and
non-happening of the condition, although it may
should the petition be denied, Castillo shall
extinguish the obligation upon which it is based,
reimburse all the amounts paid by Olivarez
generally does not amount to a breach of a
Realty.
contract of sale.

UNIVERSITY OF SANTO TOMAS 482

2021 GOLDEN NOTES
 Civil Law
NOTE: While failure to comply with the
condition imposed on the perfection of the
contract results in the failure of the contract,
failure to comply with the condition imposed on
the performance of an obligation merely gives
the other party the option either to refuse to
proceed with the sale or waive the condition.
(Catungal v. Rodriguez, G.R. No. 146839, March
23, 2011)
Instance when a conditional sale considered
an absolute sale
A deed of sale is absolute in nature although
denominated a “conditional sale” absent such
stipulations reserving title to the vendor until
full payment of the purchase price, nor any
stipulation giving them the right to unilaterally
rescind the contract in case of non-payment.
Q: A contract of sale of a lot stipulates that
the “payment of the full consideration based
on a survey shall be due and payable in 5
years from the execution of a formal deed of
sale.” Is this a conditional contract of sale?
A: NO, it is not. The stipulation is not a condition
which affects the efficacy of the contract of sale.
It merely provides the manner by which the full
consideration is to be computed and the time
within which the same is to be paid. But it does
not affect in any manner the effectivity of the
contract. (Heirs of San Andres v. Rodriguez, G.R.
No. 135634, May 31, 2000)
Q: MTCL sent a letter-proposal for the
delivery and sale of the machines to be
installed at various offices of ACE Company to
which the latter agreed for a purchase price
of ₱5,000,000.
Thereafter, it delivered several machineries
at ACE Company’s premises and installed the
same. MTCL Company demanded payment
from ACE Company. However, they have sent
a letter to MTCL Company stating that they
have been returning the machines to them
thru one of their sales representatives who
has agreed to pull the machines out but failed
to do so.
ACE Company filed a complaint against MTCL
Company praying that the latter pull out
from its premises the subject machines. In
defense, MTCL Company posits that ACE
Company refused to pay the purchase price
483
therefor despite the latter’s use of the
machines. As such, MTCL Company prays that
ACE Company be compelled to pay the
purchase price. Should ACE Company pay
MTCL for the purchase price of the machines?
A: YES. Considering its consensual nature, a
contract of sale had been perfected at the precise
moment ACE Company accepted the latter’s
proposal to sell the machines in consideration of
the purchase price of ₱5,000,000.
From that point in time, the reciprocal
obligations of the parties – i.e., on the one hand,
of MTCL to deliver the said machines to ACE
Company, and, on the other hand, of ACE
Company to pay the purchase price therefor
after delivery – already arose and consequently
may be demanded. From that moment, the
parties may reciprocally demand performance,
subject to the provisions of the law governing
the form of contracts. (Ace Foods, Inc. v. Micro
Pacific Technologies, G.R. No. 200602, December
11, 2013)
DISTINCTIONS OF THE CONTRACT OF SALE
WITH OTHER CONTRACTS
1. Sale vs. Donation
SALE DONATION
Generally
Onerous Gratuitous/onerous
(see NCC, Art. 726)
Consensual Formal contract
Law on Sales Law on Donation
NOTE: It is important to know the distinction
when the consideration for the transfer is not
clear.
When the price of sale is simulated, the sale is
void, but the act may be shown to be a donation
or some other act, other than NCC, Art. 1471
(relative simulation)
Relative simulation – that the contract may be
called a sale, but it may turn out to be really a
donation and will govern as such. (Villanueva,
2018)
2. Sale vs. Barter
BASIS SALE BARTER
 Special Contracts - Sales
NOTE: To differentiate Sale and Agency to sell,
A thing is given A thing is the essential clauses of the whole instrument
in exchange of given in shall be considered. (NCC, Art. 1466)
Nature a price certain exchange of
in money or its another 4. Sale vs. Dacion en Pago
equivalent. thing.
BASIS SALE DACION EN
PAGO
Contract where
The transaction is property is
characterized by the manifest No pre-
Existence of alienated to
intention of the parties. existing
Credit extinguish pre-
credit.
If consideration existing
is partly in If intention is credit/debt.
If intention is Novates
money and not clear,
not clear, and creditor-debtor
partly in and the value Buyer-seller
the value of relationship
another thing of thing is Relationship relationship.
thing is equal into seller-
more than
or less than buyer.
amount of
amount of Obligations
money = Obligations are
money = Sale Obligation are created.
Barter extinguished.
Both are governed by law on On the part of
Applicable Law
sales. the debtor:
On the part Extinguishment
of the seller: of the debt;
3. Sale vs. Agency to Sell
Price; On the part of
Consideration On the part the creditor:
BASIS SALE AGENCY TO
of the buyer: The acquisition
SELL
Acquisition of the object
of the object. offered in lieu of
Agent not
the original
obliged to pay
Obligation as Buyer pays credit.
for price; must
Regards the for price of Determination Greater Limited
account for the
Price object. of the Price freedom. freedom.
proceeds of the
The debtor
sale.
Buyer still receives the
Payment of
has to pay payment before
Principal Price
Buyer the price. the contract is
remains the
Transfer of becomes perfected.
owner even if the
Ownership owner of
object delivered
thing. 5. Sale vs. Lease
to agent.
Agent assumes
SALE LEASE
no personal
Seller
liability as long Use of thing is for
Warranty warrants. Obligation to
as within specified period only
authority given. absolutely transfer
with obligation to
Not May be revoked ownership of thing.
return.
unilaterally unilaterally even
Revocability
revocable. without ground.
Consideration is the Consideration is the
Seller
Agent is not price. rental.
As to profit receives
allowed to profit.
profit.
Personal
As to Contract Real contract
contract

UNIVERSITY OF SANTO TOMAS 484

2021 GOLDEN NOTES
 Civil Law
a. If manufactured especially for the
Seller needs to be customer and upon his special order,
owner of thing to and not for the general market. (NCC,
transfer ownership. Art. 1467);
Lessor need not be b. It involves lease of service; and
NOTE: Lease with c. The obligation of seller is personal or
owner.
option to buy – really a obligation to do.
contract of sale but
designated as lease in NOTE: Distinction is important when it comes to
name. the remedy needed in case of non-performance.
In a Sale (real obligation), action for specific
performance is applicable since what is involved
6. Sale vs. Contract for piece-of-work is the obligation to give a determinate thing.
While in a contract for Piece-of-work (personal
BASIS SALE CONTRACT obligation), an action for specific performance is
FOR PIECE-OF- not applicable since what is involved is an
WORK obligation to do. (Villanueva, 2018)
Manufacturing Manufacturing
CONTRACT TO SELL
in the ordinary upon special
Existence
course of order of a
A bilateral contract whereby the prospective
business. customer.
seller, while expressly reserving the ownership
of the subject property despite delivery thereof
Not for the to the prospective buyer, binds himself to sell
general market, the said property exclusively to the prospective
To Whom For the general
but especially buyer upon fulfillment of the condition agreed
Made market.
for the upon, that is, full payment of the purchase price.
customer. (Solid Homes, Inc. v. Spouses Jurado, citing
Coronel v. CA, G.R. No. 219673, September 2,
Applicability Governed by Not within the 2019)
of Statute of the Statute of Statute of
Frauds Frauds. Frauds. NOTE: In a contract to sell, the payment of the
purchase price is a positive suspensive condition
Borne by the that gives rise to the prospective seller's
worker or obligation to convey title. However, non-
Borne by the payment is not a breach of contract but “an
Risk of Loss contractor, not
buyer. event that prevents the obligation of the vendor
by the
employer. to convey title from becoming effective.” The
contract would be deemed terminated or
cancelled, and the parties stand “as if the
Rules in determining if the contract is one of conditional obligation had never existed.”
sale or a piece of work (Racelis v. Spouses Javier, G.R. No. 189609,
January 29, 2018, as penned by J. Leonen)
1. Sale
Q: Dolores Ventura entered into a Contract to
a. If ordered or manufactured in the Sell with Spouses Eustacio and Trinidad
ordinary course of business. (NCC, Art. Endaya for the purchase of two parcels of
1467); land located in Marian Road II, Marian Park,
b. It involves the sale of a thing or right; Parañaque City. The contract to sell provides
and that the purchase price of P347,760.00 shall
c. The obligation of seller is a real be paid by Dolores through: (a) down
obligation or an obligation to give. payment of P103,284.00 upon execution of
the contract; and (b) the balance of
2. Piece of work P244,476.00 within a 15-year period, plus
12% interest per annum on the outstanding
balance and 12% interest per annum on

485
 Special Contracts - Sales
arrearages. 3. Stipulation that deed of sale and
corresponding certificate of sale would be
Dolores’ children, Frederick Ventura, Marites issued only after full payment. (Sps. David v.
Ventura-Roxas, and Philip Ventura filed a Sps. Tiongson, G.R. No. 108169, August 25,
Complaint and, thereafter, an Amended 1999)
Complaint for specific performance, seeking
to compel Sps. Endaya to execute a deed of Contract to Sell vs. Conditional Contract of
sale over the subject properties. They argued Sale
that their parents’ close friendship with Sps.
Endaya, allowed widowed Dolores to pay the BASIS CONTRACT CONDITIONAL
down payment stated in the contract to sell TO SELL CONTRACT OF
and, instead, allowed her to pay amounts as SALE
her means would permit.
The prospective
The total payments made by Dolores and seller does not
petitioners amounted to P952,152.00, more as yet agree or
than the agreed purchase price of consent to
P347,760.00, including the 12% interest p.a. transfer
thereon computed on the outstanding ownership of
balance. the property
subject of the
When Dolores’ children demanded the contract to sell
execution of the corresponding deed of sale, until the The first element
Sps. Endaya refused. Should Sps. Endaya happening of an of consent is
execute a deed of sale over the subject As to event, which present, although
properties in favor of Dolores’ children? consent may be the full it is conditioned
payment of the upon the
A: NO. Spouses Endaya had no obligation to purchase price. happening of a
petitioners to execute a deed of sale over the What the seller contingent event,
subject properties. A contract to sell is defined as agrees or which may or
a bilateral contract whereby the prospective obliges himself may not occur.
seller, while expressly reserving the ownership to do is to fulfill
of the subject property despite delivery thereof his promise to
to the prospective buyer, binds himself to sell sell the subject
the said property exclusively to the latter upon property when
his fulfillment of the conditions agreed upon, i.e., the entire
the full payment of the purchase price and/or amount of the
compliance with the other obligations stated in purchase price
the contract to sell. is delivered to
him.
Given its contingent nature, the failure of the
prospective buyer to make full payment and/or Upon the If the suspensive
abide by his commitments stated in the contract fulfillment of condition is
to sell prevents the obligation of the prospective the suspensive fulfilled, the
seller to execute the corresponding deed of sale condition, contract of sale is
to effect the transfer of ownership to the buyer which is the full thereby
As to effect
from arising. (Ventura v. Heirs of Sps. Endaya, payment of the perfected, such
of
G.R. No. 190016, October 2, 2013) purchase price, that if there had
fulfillment
ownership will already been
of
Instances when a contract to sell may be not previous delivery
suspensive
resorted to: automatically of the property
condition
transfer to the subject of the sale
1. Where subject matter is indeterminate (NCC, buyer although to the buyer,
Arts. 1458 & 1460); the property ownership
2. Sale of future goods except future may have been thereto
inheritance (NCC, Art. 1462); previously automatically

UNIVERSITY OF SANTO TOMAS 486

2021 GOLDEN NOTES
 Civil Law
delivered to transfers to the BASIS CONTRACT OF CONTRACT TO
him. The buyer by SALE SELL
prospective operation of law Ownership is
seller still has to without any transferred to
Ownership is
convey title to further act having the buyer upon
transferred upon
the prospective to be performed delivery of the
full payment of
buyer by by the seller. object to him.
the purchase
entering into a
As regards price.
contract of NOTE: Vendor
transfer of
absolute sale. has lost and
ownership NOTE: Prior to
cannot recover
full payment,
Upon the ownership until
ownership is
There being no fulfillment of the and unless the
retained by the
previous sale of suspensive contract is
seller.
the property, a condition, the resolved or
third person sale becomes rescinded.
buying such absolute and this There are two
property will definitely contracts:
despite the affect the seller’s 1. The contract
fulfillment of title thereto. The to sell, i.e.,
the suspensive second buyer of Preparatory
condition such the property who There is only sale
as the full may have had As to one contract 2. The deed of
payment of the actual or numbers of executed absolute sale
purchase price, constructive contracts between the
cannot be knowledge of involved seller and the NOTE: The
deemed a buyer such defect in the buyer. principal
As to effect
in bad seller’s title, or at contract is
of sale of
faith. There is least was charged executed after
property
no double sale with the full payment of
to third
in such obligation to the purchase
persons
case. Title to the discover such price.
property will defect, cannot be Full payment of
transfer to the a registrant in the purchase
buyer after good faith. Such price is a positive
registration second buyer suspensive
because there is cannot defeat the condition that
no defect in the first buyer’s gives rise to the
owner-seller’s title. In case a title prospective
title per se, but is issued to the Non-payment of
seller’s
the latter, of second buyer, the the purchase
obligation to
price is a
course, may be first buyer may convey title.
sued for seek Payment resolutory
damages by the reconveyance of as a condition that
NOTE: Failure to
intending the property condition entitles the
fully pay the
buyer. subject of the seller to rescind
price is not a
sale. the sale.
breach but an
event that
prevents the
(Villamil v. Spouses Erguiza, G.R. No. 195999, June obligation of the
20, 2018; Reyes v. Tuparan, G.R. No. 188064, June vendor to convey
1, 2011; Coronel v. CA, G.R. No. 103577, October 7, title from
1996) becoming
effective.
Contract of sale vs. Contract to sell (2001 Remedies 1. Specific 1. Rescission; or
BAR, 2017 BAR) available Performance 2. Damages

487
 Special Contracts - Sales
2. Rescission; or
3. Damages
Q: Project Movers Realty and Development
Corporation (PMRDC) was indebted to
Keppel Bank for P200M. To pay the debt,
PMRDC conveyed to the bank 25 properties.
Adao occupies one of the properties
conveyed. The bank demanded Adao to
vacate the property but he refused. Hence, an
ejectment case was filed against Adao. In his
defense, Adao assailed that he had a Contract
to Sell entered between PMRDC and Adao. To
prove full payment of the property, he
presented an affidavit. Is Keppel bank bound
by the contract to sell between PMRDC and
Adao?
A: NO. The contract to sell does not by itself give
Adao the right to possess the property. Unlike in
a contract of sale, here in a contract to sell, there
is yet no actual sale nor any transfer of title, until
and unless, full payment is made. The payment
of the purchase price is a positive suspensive
condition. Adao’s lone affidavit is self-serving,
and cannot be considered as substantial
evidence to prove that there was full payment
made. (Keppel Bank Phils. Inc., v. Adao, G.R. No.
158227, October 19, 2005)
Q: Spouses Roque and the original owners of
an unregistered lot executed a 1997 Deed of
Conditional Sale over a portion of a lot for
P30,775.00. After the deed’s execution,
Spouses Roque took possession and
introduced improvements on the subject
portion which they utilized as a balut factory.
Sabug, Jr, applied for a free patent over the
entire lot and was eventually issued an OCT
in his name. Sabug, Jr., through the
1999 Deed of Absolute Sale, sold the lot
to Aguado for P2,500,000.00, who, in turn,
caused the cancellation of the OCT and the
issuance of a TCT. Aguado obtained an
P8,000,000.00 loan from the Land Bank
secured by a mortgage over the lot. When she
failed to pay her loan obligation, Land Bank
commenced extra-judicial foreclosure
proceedings and eventually tendered the
highest bid in the auction sale.
Upon Aguado’s failure to redeem the subject
property, Land Bank consolidated its
ownership and a TCT was issued in its name.
Spouses Roque then filed an action for
reconveyance before the RTC. Will the action
for reconveyance prosper?
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A: NO. This case involves a contract to sell. The
Court held that where the seller promises to
execute a deed of absolute sale upon the
completion by the buyer of the payment of the
purchase price, the contract is only a contract to
sell even if their agreement is denominated as
a Deed of Conditional Sale, as in this case. In a
contract to sell, there being no previous sale of
the property, a third person buying such
property despite the fulfillment of the
suspensive condition such as the full payment of
the purchase price, for instance, cannot be
deemed a buyer in bad faith and the prospective
buyer cannot seek the relief of reconveyance of
the property. The action for reconveyance shall
fail. (Roque v. Aguado, G.R. No. 193787, April 7,
2014)
PARTIES TO A CONTRACT OF SALE
PARTIES
1. Seller – one who sells and transfers the thing
and ownership to the buyer; and
2. Buyer – one who buys the thing upon
payment of the consideration agreed upon.
CAPACITY OF PARTIES
Persons who may enter into a contract of sale
GR: All persons, whether natural or juridical,
who can bind themselves, have legal capacity to
buy and sell. [NCC, Art. 1489(1)]
XPNs:
1. Minors, insane and demented persons and
deaf-mutes who do not know how to write;
2. Persons under a state of drunkenness or
during hypnotic spell;
3. Persons who are senile (NCC, Art. 24 in
realation to Art. 1332; Paragas v. Heirs of
Balacano, G.R. No. 168220, August 31, 2005)
GR: A senile person may enter into
contracts, he is not incompetent merely
because of his advanced years, or by reason
of his physical infirmities.
XPN: When such age or infirmity have
impaired his mental faculties so as to
prevent him from properly, intelligently, and
firmly protecting his rights, then he is
undeniably incapacitated.
488
 Civil Law
The sale is void, and not mere voidable. The The nullity of such prohibited contracts is
essence is that there was never any meeting definite and permanent and cannot be cured
of the minds, and no real consideration. by ratification. The public interest and public
(Villanueva, 2018) policy remain paramount and do not permit
of compromise or ratification.
4. Husband and wife – sale by and between
spouses. 9. Sale of property in litigation [NCC, Art.
1491(5)]
Rationale for the prohibition:
Nullity is permanent. Prohibition applies only
a. To prevent a spouse from defrauding to a sale or assignment to the lawyer by a
his creditors by transferring his client of the property which is the object of
properties to the other spouse; litigation. (Rabuya, 2017)
b. To avoid a situation where the
dominant spouse would unduly take ABSOLUTE INCAPACITY
advantage of the weaker spouse;
c. To avoid an indirect violation of the Persons who are absolutely incapacitated to
prohibition against donations enter into a contract of sale (NCC, Art. 1327)
between spouses under Article 133
of the Civil Code. (Medina v. Collector 1. Unemancipated minors; and
of Internal Revenue, G.R. No. L-15113,
January 28, 1961) 2. Insane or demented persons, and deaf-
mutes who do not know how to write.
5. Sale between guardians and wards – the
contract is void and not merely voidable.
RELATIVE INCAPACITY
The prohibition exists only when the
guardianship exists.
Persons who are relatively incapacitated to
enter into a contract of sale
6. Sale between agents and principals with
respect to property under administration
[NCC, Art. 1491 (2)] 1. Spouses (NCC, Art. 1490);
2. Agents, Guardians, Executors and
XPN: The prohibition does not apply if the Administrators;
principal consents to the sale of the 3. Public Officers and Employees;
4. Court Officers and Employees,; and
property in the hands of the agent or
administrator. 5. Others specially disqualified by law. (NCC,
Art. 1491)
After the termination of the affairs of the
agency, the prohibition no longer applies. RELATIVEL
Neither is the agent prohibited from buying Y PROPERT STATUS
RATIFICA
properties of the principal which are not INCAPACIT Y OF
TION
included among the properties of which he ATED TO INVOLVED SALE
was commissioned to sell. The transaction BUY
may be ratified by way of a new contract Property Can be
which will become valid only from its entrusted ratified
execution and will not retroact to the date of to them for after the
the first contract. administra inhibition
tion or has ceased.
7. Sale between executors and administrators sale. Un-
of estate of the deceased [NCC, Art. 1491 (3)] Agents enforce Reason:
XPN: able the only
XPN: Hereditary rights are not included in When wrong that
the prohibition. principal subsists is
gave his the private
consent. wrong to
8. Sale involving property of the government
the ward,
[NCC, Art. 1491(4)]

489
 Special Contracts - Sales
Property principal by law
of the or estate; Property
ward and can be of the State
Public
during condoned entrusted
Guardian officers and
period of by the to them for
employees
guardiansh private administra
ip parties tion.
themselves
. NOTE: The prohibitions are based upon public
NOTE: policy and morality. The law believes that human
Contracts nature would not be strong enough to resist the
entered by temptations likely to arise of antagonism
guardian in between the interest of the seller and the buyer.
behalf of (Jurado, 2019)
ward are
rescissible The permanent disqualification of public and
if ward judicial officers and lawyers grounded on public
suffers policy differs from the first three cases of
lesion by guardians, agents and administrators (NCC, Art
Voidabl
more than 1491), as to whose transactions it had been
e
¼ of value opined that they may be “ratified” by means of
Property
of and in “the form of a new contact, in which cases
Executors of the
property. its validity shall be determined only by the
and estate
Sale by circumstances at the time the execution of such
administrato under
guardian of new contract.” The causes of nullity which have
rs administra
property ceased to exist cannot impair the validity of the
tion.
belonging new contract. (Jurado, 2019, citing Rubias v.
to a ward Batiller, G.R. No. L-35702, May 29, 1973)
without
Court NOTE: Prohibitions are applicable to sales in
approval is legal redemption, compromises and
void renunciations.
regardless
of the Status of the following contracts of sale
lesion,
hence, 1. Sale entered into by minors
cannot be
ratified. GR: It is voidable, subject to annulment or
ratification.
Property
and rights XPN: Where necessaries are sold and
in delivered to a minor or other person
Cannot be
litigation without capacity to act, he must pay a
ratified.
or levied reasonable price. [NCC, Art. 1489(2)]
upon on
Court Reason: It
execution 2. Sale by & between spouses (NCC, Art.
officers and is not only
before the 1490)
employees Void a private
court
wrong, but
under a. Status of prohibited sales between
also a
their spouses:
public
jurisdictio
wrong.
n GR: Null and void
(Villanueva,
2014)
Others XPN: In case of sale between spouses:
specially
disqualified

UNIVERSITY OF SANTO TOMAS 490

2021 GOLDEN NOTES
 Civil Law
1. When a separation of property was
agreed upon in the marriage
settlements; or
2. When there has been a judicial
separation of property agreed upon
between them under Article 191 of
the Family Code.
b. Contract of sale with 3rd parties:
GR: Under the law on sales, it would seem
that a spouse may, without the consent of
the other spouse, enter into sales
transactions in the regular or normal
pursuit of their profession, vocation or
trade. (in relation to Art. 73, Family Code)
XPN: Even when the property regime
prevailing was the conjugal partnership of
gains, the Supreme Court held the sale by
the husband of a conjugal property
without the consent of the wife is void,
not merely voidable under Art. 124 of the
Family Code since the resulting contract
lacks one of the essential elements of full
consent. (Sps. Guiang v. CA, G.R. No.
125172, June 26, 1998)
XPN to the XPN: The following are valid
even though they involve conjugal
property and are made without the
consent of the other spouse:
1. If there is a court order; and
2. If such sale of the conjugal property is
necessary to answer for the conjugal
liabilities mentioned in art. 161 and
162 of the FC.
c. Between common law spouses – also
null and void.
Sale between common law spouses is
null and void to prevent the exercise of
undue influence by one spouse over the
other. The prohibition also applies to a
couple living as husband and wife
without the benefit of marriage.
A contract of sale made by a husband to
a concubine was null and void for being
contrary to morals and public policy.
The sale was subversive of the stability
of the family, a basic social institution,
491
which public policy cherishes and
protects. (Calimlim-Canullas v. Fortun, et
al., G.R. No. L-57499, June 22, 1984)
Reason: The condition of those who
incurred guilt would turn out to be better
than those in legal union. To render it
applicable would put common-law
relationships in a better position than those
legally married. (Villanueva, 2018)
Persons who has (have)the right to assail the
validity of the transaction between spouses
The following are the only persons who can
question the sale between spouses:
1. The heirs of either of the spouses who have
been prejudiced;
2. Prior creditors; and
3. The State when it comes to the payment of
the proper taxes due on the transaction.
Status of the contract entered into by a
person who has no capacity to act
1. If only one of the parties has no capacity:
VOIDABLE
2. If both parties have no capacity:
UNENFORCEABLE
3. If the incapacity is Senility: VOID
(Villanueva, 2018)
NOTE: An incapacitated person is NOT obligated
to make restitution, except insofar as he has
been benefited by the thing/price.
Q: The stipulation between the lawyer and
counsel is as follows, “the attorney’s fees of
the Atty. X will be ½ of whatever the client
might recover from his share in the property
subject of the litigation.” Is the stipulation
valid?
A: YES. The stipulation made is one of a
contingent fee which is allowed by the CPE and
the CPR. It does not violate the prohibition of
acquisition of property subject of the litigation
by the lawyer provided for in the Civil Code
since the prohibition applies only to a sale or
assignment to the lawyer by his client during the
pendency of the litigation. The transfer actually
takes effect after the finality of the judgment and
not during the pendency of the case. As such it is
valid stipulation between the lawyer and client.
 Special Contracts - Sales
SPECIAL DISQUALIFICATIONS
Persons specially disqualified by law to enter
into contracts of sale (ALIEN-UnOS)
1. ALIENs who are disqualified to purchase
private agricultural lands (Art. XII, Secs. 3 &
7, 1987 Constitution);
2. Unpaid seller having a right of lien or
having stopped the goods in transitu is
prohibited from buying the goods either
directly or indirectly in the resale of the
same at public or private sale which he may
make or initiate [NCC, Art. 1533(5); Art.
1476(4)];
3. The Officer holding the execution or deputy
cannot become a purchaser or be interested
directly or indirectly on any purchase at an
execution (Sec. 21, Rule 39, Rules of Court);
4. In Sale by auction, seller cannot bid unless
notice has been given that such sale is
subject to a right to bid in behalf of the
seller (NCC, Art. 1476)
SALE BY A PERSON HAVING A VOIDABLE
TITLE
Effect of a sale made by the seller with
voidable title over the object
1. Perfection stage: valid – buyer acquires title
of goods.
2. Consummation stage: valid – If the title has
not yet been avoided at the time of sale and
the buyer must buy the goods under the
following conditions:
a. In good faith;
b. For value; and
c. Without notice of seller’s defect of
title. (NCC, Art. 1506)
NOTE: Art. 1506 is predicated on the principle
that where loss has happened which must fall on
one of two innocent persons, it should be borne
by him, who is the occasion of the loss. (De Leon,
2005)
SUBJECT MATTER
Requisites of proper objects of sale
1. THINGS
a. Determinate or determinable;
b. Lawful or licit; and
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
c. Should not be impossible (within
the commerce of men).
2. RIGHTS
GR: Must be transmissible.
e.g. right of redemption, right of usufruct,
assignment or sale of credit, right to
inheritance already acquired, etc.
XPNs:
a. FUTURE INHERITANCE – cannot
be the subject of sale;
Reason: The interest of the heir
over the inheritance prior to the
death of the decent is merely
inchoate or a mere expectancy.
This rule is in accord with a well-
known principle of law that one
cannot transmit or dispose of that
which he does not have — nemo
dat quod non-habet.
b. SERVICE
Reason: They are not determinate
things and no transfer of
ownership is available but it can be
the object of certain contracts such
as contract for a piece of work.
(Pineda, 2010)
The subject matter of sale must be
determinate or at least determinable.
A. When a thing is determinate
A thing is determinate when it is particularly
designated or physically segregated from all
others of the same class.
The requisite that a thing be determinate is
satisfied if at the time the contract is entered into,
the thing is capable of being made determinate
without the necessity of a new or further
agreement between the parties. (NCC, Art. 1460)
B. When a thing is determinable
Requisites:
1. If at perfection of the sale, the subject matter
is capable of being made determinate (the
492
 Civil Law
“capacity to segregate” test); and
2. Without the necessity of a new or further
agreement between the parties (the “no
further agreement” test).
Even if the subject matter of the sale was
generic, the performance of the seller’s
obligation would require necessarily its physical
segregation or particular designation, making
the subject matter determinate at the point of
performance.
The buyer does not assume the risk of loss of a
generic subject matter under a valid sale until
the object is made determinate, either by
physical segregation or particular designation.
(Villanueva, 2009)
NOTE: The thing may be existing or not at the
time of the perfection of the contract. So long as
it has the possibility of existence at some future
time. The law says things that having a potential
existence may be the object of the contract of
sale. [NCC, Art. 1461(1); Rabuya, 2017]
Sale for a lump sum
The boundaries of the land stated in the contract
determine the effects and scope of the sale, NOT
the area.
The vendors are obligated to deliver all the land
included within the boundaries, regardless of
whether the real area should be greater or
smaller than that recited in the deed. This is
particularly true where the area is described as
“humigit kumulang,” that is, more or less.
(Semira v. CA, G.R. No. 76031, March 2, 1994)
Q: Lino entered into a contract to sell with
Ramon, undertaking to convey to the latter
one of the five lots he owns, without
specifying which lot it was, for the price of P1
million. Later, the parties could not agree
which of five lots he owned Lino undertook
to sell to Ramon. What is the standing of the
contract? (2011 BAR)
A: It is a void contract since the particular lot
sold cannot be determined.
KINDS OF OBJECT OF SALE
1. Existing Goods – Owned or possessed by
seller at the time of perfection.
493
2. Future Goods – Goods to be manufactured,
raised, acquired by seller after perfection of
the contract or whose acquisition by seller
depends upon a contingency. (NCC, Art.
1462)
3. Sale of Undivided Interest or Share
a. Sole owner may sell an undivided
interest. (NCC, Art. 1463)
e.g. A fraction or percentage of such
property.
b. Sale of an undivided share in a specific
mass of fungible goods makes the buyer a
co-owner of the entire mass in
proportion to the amount he bought.
(NCC, Art. 1464)
NOTE: Each co-owner only possesses a
right to sell or alienate his ideal share
after partition. However, in case he
disposes his share before partition, such
disposition does not make the sale or
alienation null and void. What will be
affected on the sale is only his
proportionate share, subject to the
results of the partition. The co-owners
who did not give their consent to the sale
stand to be unaffected by the alienation.
(Torres, Jr. v. Lapinid, G.R. No. 187987,
November 26, 2014)
4. Sale of Things in Litigation
a. Sale of things under litigation is
rescissible if entered into by the
defendant, without the approval of the
litigants or the court. (NCC, Art. 1381)
NOTE: If the property involved belongs
to a ward and the guardian enters into a
contract involving such property
without court approval, the contract is
void, not merely rescissible.
b. No rescission is allowed where the thing
is legally in the possession of a 3 rd
person who did not act in bad faith.
5. Things subject to Resolutory Condition
e.g. Things acquired under legal or
conventional right of redemption, or subject
to reserva troncal. (NCC, Art. 1465)
 Special Contracts - Sales
6. Indeterminate Quantity of Subject Matter Sale with a future with a present
thing thing – the
NOTE: The fact that the quantity is not hope or
determinate shall not be an obstacle to the expectancy
existence of the contract, provided it is
possible to determine the same without Effectivity Sale is valid only Sale is valid
need of a new contract. (NCC, Art. 1349) if the expected even though
thing will exist. expected
Sale of things with Potential Existence So that if the thing does not
condition is not come into
The validity of sale of things with potential fulfilled, if the existence as
existence depends upon the intention of the thing does not long as the
parties: come into hope itself
existence, the validly existed
1. Emptio rei speratae – If the contract of sale contract cannot e.g., lotto.
is made dependent upon the existence of the have the effect
things such that if it did not come into for lack of an NOTE: Sale of
existence, the contract is not effective, and essential a vain hope or
the buyer will have no obligation to pay the requisite. expectancy
price. Although the however, is
vendee may have void. (NCC,
2. Emptio spei – If the contracting parties reserve his right Art. 1461)
intended the contract of sale to exist at all to claim
events. indemnity from
the vendor in the
Sale of a Mere Hope or Expectancy event that the
latter knew that
GR: The sale is valid even if the expected thing the thing could
did not materialize. not come into
existence.
XPNs: (Rabuya, 2017;
Jurado 2019)
1) The hope or expectancy is vain; or
2) The parties intended that if the hope or NOTE: If there is doubt, the presumption is in
expectancy will not materialize, the sale favor of emptio rei speratae.
is void.
SALE BY A PERSON WHO DOES NOT OWN
The efficacy of the sale of a mere hope or THE THING SOLD
expectancy is deemed subject to the condition
that the thing will come into existence. (NCC, Art. Ownership is not required at the time of
1461) perfection in order for the sale to be valid.
Ownership is material only at the time of
Emptio Rei Speratae vs. Emptio Spei delivery but only for the purpose of transferring
ownership and does not affect the validity of the
BASIS EMPTIO REI EMPTIO SPEI contract of sale.
SPERATAE
Definition Sale of thing Sale of mere Right to transfer ownership
having potential hope or
existence expectancy It is during the delivery that the law requires the
seller to have the right to transfer ownership of
Uncertainty Uncertainty is Uncertainty is the thing sold. In general, a perfected contract of
with regard to with regard to sale cannot be challenged on the ground of the
quantity & the existence seller’s non-ownership of the thing sold at the
quality of the thing time of the perfection of the contract.
(Alcantara-Daus v. Sps. De Leon, G.R. No.
Object of the Contract deals Contract deals 149750, June 16, 2003)

UNIVERSITY OF SANTO TOMAS 494

2021 GOLDEN NOTES
 Civil Law
This rule is in accord with a well-known
principle of law that one cannot transmit or
dispose of that which he does not have — nemo
dat quod non-habet.
NOTE: Future inheritance cannot be the subject
of sale.
Legal effect of sale by a non-owner
GR: The buyer acquires no better title to the
goods than the seller had; caveat emptor (buyer
beware).
XPNs:
1. Estoppel or when the owner of the goods is
by his conduct precluded from denying the
seller’s authority to sell;
2. When the contrary is provided for in
recording laws;
3. When the sale is made under statutory power
of sale or under the order of a court of
competent jurisdiction;
4. When the sale is made in a merchant’s store
in accordance with the Code of Commerce
and special laws;
5. When a person who is not the owner sells
and delivers a thing, and subsequently
acquired title thereto;
6. When the seller has a voidable title which has
not been avoided at the time of the sale;
7. Sale by co-owner of the whole property or a
definite portion thereof; or
8. Special rights of unpaid seller.
Q: Henry Ysaac leased out portions of the
property to several lessees. Juan Cabrera,
one of the lessees, leased a 95 sq. m. portion
of the land beginning in 1986. On May 6,
1990, Henry Ysaac needed money and
offered to sell the 95 sq. m. piece of land to
Juan Cabrera. He told Henry Ysaac that the
land was too small for his needs because
there was no parking space for his vehicle.
Juan Cabrera accepted the new offer. Henry
Ysaac and Juan Cabrera settled on the price
of ₱250.00 per square meter, but Juan
Cabrera stated that he could only pay in full
after his retirement on June 15, 1992. Henry
Ysaac agreed but demanded for an initial
payment of ₱1,500.00, which Juan Cabrera
paid. On June 15, 1992, Juan Cabrera tried to
pay the balance of the purchase price to
Henry Ysaac. However, at that time, Henry
Ysaac was in the United States. The only
495
person in Henry Ysaac’s residence was his
wife who refused to accept Juan Cabrera’s
payment.
On September 21, 1994, Henry Ysaac’s
counsel, Atty. Luis Ruben General, wrote a
letter addressed to Atty. Leoncio Clemente,
Juan Cabrera’s counsel, informing the latter
that his client is formally rescinding the
contract of sale because Juan Cabrera failed
to pay the balance of the purchase price of
the land between May 1990 and May 1992.
The letter also stated that Juan Cabrera’s
initial payment of ₱1,500.00 and the
subsequent payment of ₱6,100.00 were going
to be applied as payment for overdue rent of
the parcel of land Juan Cabrera was leasing
from Henry Ysaac. Due to Juan Cabrera’s
inability to enforce the contract of sale
between him and Henry Ysaac, he decided to
file a civil case for specific performance. Was
there a valid contract of sale between Ysaac
and Cabrera?
A: NO. There was no valid contract of sale
between petitioner and respondent as the
contract was null ab initio. The object of the
sales contract between petitioner and
respondent was a definite portion of a co-owned
parcel of land. At the time of the alleged sale
between petitioner and respondent, the entire
property was still held in common. The rules
allow respondent to sell his undivided interest in
the coownership. However, this was not the
object of the sale between him and petitioner.
The object of the sale was a definite portion.
Even if it was respondent who was benefiting
from the fruits of the lease contract to petitioner,
respondent has "no right to sell or alienate a
concrete, specific or determinate part of the
thing owned in common, because his right over
the thing is represented by quota or ideal
portion without any physical adjudication. Sale
of a portion of the property is considered an
alteration of the thing owned in common.
Under the Civil Code, such disposition requires
the unanimous consent of the other co-owners.
However, the rules also allow a co-owner to
alienate his or her part in the co-ownership.
These two rules are reconciled through
jurisprudence. If the alienation precedes the
partition, the co-owner cannot sell a definite
portion of the land without consent from his or
her co-owners. He or she could only sell the
undivided interest of the co-owned property. As
 Special Contracts - Sales
summarized in Lopez v. Ilustre, “if he is the
owner of an undivided half of a tract of land, he
has a right to sell and convey an undivided half,
but he has no right to divide the lot into two
parts, and convey the whole of one part by metes
and bounds.” (Juan P. Cabrera v. Henry Ysaac,
G.R. No. 166790, November 19, 2014, as penned
by J. Leonen)
Instances when the Civil Code recognizes sale
of things not actually or already owned by
the seller at the time of sale
1. Sale of a thing having potential existence
(NCC, Art. 1461);
2. Sale of future goods (NCC, Art. 1462); and
3. Contract for the delivery at a certain price of
an article, which the seller in the ordinary
course of business manufactures/ procures
for the general market, whether the same is
on hand at the time or not. (NCC, Art. 1467)
OBLIGATIONS OF THE VENDEE or BUYER
Obligations of the Buyer (PAE)
1. Payment of the price (NCC, Art. 1582)
GR: Seller is not bound to deliver unless the
purchase price is paid
XPN: A period of payment has been fixed
2. Accept delivery of thing sold (Art. 1582-1585)
Buyer is deemed to have accepted the goods
when he intimates to the seller that he has
accepted them, or when the goods have been
delivered to him, and he does any act in
relation to which is inconsistent with the
ownership of the seller, or when after a lapse
of a reasonable time, he retains the goods
without intimating to the seller that he has
rejected them. (Villanueva, 2018)
NOTE: A grace period granted the buyer in
case of failure to pay is a right not an
obligation. Non-payment would still
generally require judicial or extrajudicial
demand before default can arise.
Right to refuse - When goods are delivered to
the buyer and he refuses to accept them, having
the right to do so, he is not bound to return to
the goods to the seller, and it is sufficient that he
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
notifies the seller of his refusal, unless otherwise
stipulated.
No right to refuse – When the buyer’s refusal to
accept the goods is without just cause, the title
passes to him from the moment they are
placed at his disposal, unless otherwise
stipulated.
3. Bear expenses for the execution and
registration of the sale and putting the
goods in a deliverable state, if such is the
stipulation.
Other Obligations of the Buyer
1. To take care of the goods without the
obligation to return, where the goods are
delivered to the buyer and he rightfully
refuses to accept (NCC, Art. 1587);
NOTE: The goods in the buyer’s possession
are at the seller’s risk.
2. To be liable as a depositary if he voluntarily
constituted himself as such (NCC, Art.
1587); and
3. To pay interest for the period between
delivery of the thing and the payment of the
price in the following cases:
a. should it have been stipulated;
b. should the thing sold and delivered
produces fruits or income; or
c. should he be in default, from the time
of judicial or extra-judicial demand for
the payment of the price. (NCC, Art.
1589)
OBLIGATIONS OF THE VENDOR or SELLER
Obligations of the seller (DDTWTP)
1. Deliver the thing sold (NCC, Arts. 1458 &
1495);
2. Deliver fruits & accessions/accessories
accruing from perfection of sale (NCC, Arts.
1164, 1166, 1495 & 1537);
3. Transfer the ownership;
4. Warranties;
5. Take care of the thing, pending delivery,
with proper diligence;
6. Pay for the expenses of the deed of sale
unless there is a stipulation to the contrary
(NCC, Arts. 1487 & 1521); and
496
 Civil Law
7. Obligation of taking-out the Insurance
coverage (NCC, Art. 1523)
8.
Obligation of the seller in terms of the nature
of the subject matter of the sale
When the subject matter of the sale is a
DETERMINATE or SPECIFIC THING, the seller
must deliver the thing to the buyer when
compelled by the latter.
When the subject matter is an INDETERMINATE
OR GENERIC THING, the seller may be asked
that the obligation be complied with at his
expense. (NCC, Art. 1165)
Seller’s obligation in case of delay or promise
to deliver the thing to two or more persons
who do not have the same interest
The seller shall be responsible for any fortuitous
event that may occur until he has delivered the
thing. (NCC, Art. 1165 in relation to Art. 1174)
PRICE
The sum stipulated as the equivalent of the thing
sold and also every incident taken into
consideration for the fixing of the price put to
the debit of the buyer and agreed to by him.
(Villanueva, 2009)
NOTE: A definite agreement on the manner of
payment of the price is an essential element in
the formation of a binding and enforceable
contract of sale. (Bank of Commerce v. Manalo,
G.R. No. 158149, February 9, 2006)
Requisites for valid price
It must be:
1. Real, not fictitious;
2. Paid in money or its equivalent (i.e., valuable
consideration);
3. Certain or ascertainable at the time of the
perfection of the contract; and
4. In some cases, must not be grossly inferior to
the value of the thing sold.
NOTE: There is NO effect on the contract of sale
in case of breach in the agreed manner of
payment. Payment of the price has nothing to do
with the perfection of the contract. Payment of
the price goes into the performance of the
497
contract. (Pilipinas Shell Petroleum Corp. v.
Gobonseng, Jr., citing Buenaventura v. CA, G.R. No.
163562, July 21, 2006)
When price is certain
1. If there is a stipulation;
2. If it be with reference to another thing
certain;
3. If the determination of the price is left to the
judgment of specified person(s) (NCC, Art.
1469); or
4. By reference to certain facts as referred to in
Art. 1472.
NOTE: If the price is based on estimates, it is
uncertain.
Simulated Price
The price is simulated when neither party had
the intention that the amount will be paid.
(Villanueva, 2009, citing Yu Bun Guan v. Ong, G.R.
No. 144735, October 18, 2001)
Effect if price is simulated
GR: The sale is void.
XPN: If it can be shown to be a donation or
another contract. (NCC, Art. 1471)
When price of securities, grains, liquids and
things is considered certain
1. When the price fixed is that which the thing
would have on a definite day, or in a
particular exchange or market;
2. When the amount is fixed above or below the
price of such day, or in such exchange or
market, provided said amount be certain.
(NCC, Art. 1472);
3. When it is by reference to another certain
thing. (NCC, Art. 1469)
NOTE: Art. 1469 is not allowed for the
determination of the subject matter of the
sale.
Fixing of the price CANNOT be left to the
discretion of one of the contracting parties
GR: The price cannot be fixed unilaterally by one
of the contracting parties.
 Special Contracts - Sales
XPN: If the price fixed by one of the parties is
accepted by the other, the sale is perfected.
Effect when the price is unilaterally fixed by
one of the contracting parties without
consent of the other party
There is no meeting of the minds. The sale is
inefficacious. (Pineda, 2010)
Effect when the price is fixed by the third
person designated
GR: Price fixed by a third person designated by
the parties is binding upon them.
XPNs:
1. When the third person acts in bad faith
or by mistake; and
2. When the third person disregards the
specific instructions or the procedure
marked out by the parties.
Test of gross inadequacy of price
The price is grossly inadequate if a reasonable
man will not agree to dispose of his property at
that amount.
Effect of Gross Inadequacy of Price (NCC, Art.
1470)
GR: It does not affect the validity of the sale.
XPNs: (CoRDS)
1. If Consent is vitiated (may be annulled
or presumed to be equitable mortgage);
2. If the parties intended a Donation or
some other act/contract;
3. If the price is so low as to be “Shocking
to the conscience;” and
4. If in the event of Resale, a better price
can be obtained.
NOTE: When the law gives the owner the right
of redemption like in a sale made at public
auction, the sale is not necessarily affected even
if the price is low. The reason is that the lesser
the price, the easier it is for the owner to redeem
the property.
Annulment of sale NOT the remedy in a
simulated sale
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Where the deed of sale states that the purchase
price has been paid but in fact has never been
paid, the deed of sale is null and void ab initio for
lack of consideration. Moreover, Art. 1471 of the
Civil Code, provides that “if the price is
simulated, the sale is void.” (Catindig v. Vda. de
Meneses, Roxas v. CA, G.R. No. 165851
& 168875, February 2, 2011; Bacalso v. Aca-ac,
G.R. No. 172919, January 13, 2016)
WHEN NO PRICE IS AGREED UPON BY THE
PARTIES
Effect of failure to determine the price
1. Where contract is executory – ineffective.
2. Where the thing has been delivered to and
appropriated by the buyer – the buyer must
pay a reasonable price therefor.
Q: 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
P500,000, value to be paid and delivered to
me, and receipt of which shall be
acknowledged by me to the full satisfaction
of Monica, referred to as a 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
P100,000.00, Monica immediately took
possession of the property. Five months
after, Monica failed to pay the remaining
balance of the purchase price. Nante filed an
action for the recovery of the 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?
(2014 BAR)
A: NO. The deed itself states that for
consideration received, he sells, transfers, and
conveys the land to Monica and there was
delivery of the property to the latter. The
contract is clearly one of sale as there was no
reservation of ownership on the part of the
seller Nante. The non-payment of the price in a
498
 Civil Law
contract of sale would only entitle the seller to a. Contract is valid;
rescind the contract but it does not thereby b. Offeror cannot withdraw offer until
prevent the transfer of ownership particularly so after expiration of the option; and
as in this case, where there was already delivery c. Is subject to rescission and damages but
to the buyer. not specific performance.

OPTION CONTRACT (2002, 2005 BAR) 2. Without separate consideration:

An option contract is a continuing offer or a. The option contract is not deemed

contract by which the owner stipulates with perfected; and
another that the latter shall have the right to buy b. Offer may be withdrawn at any time
the property at a fixed price within a certain prior to acceptance.
time, or under, or in compliance with, certain
terms and conditions, or which gives to the NOTE: Even though the option was not
owner of the property the right to sell or supported by a consideration, the moment it was
demand a sale. (Villanueva, 2009) accepted, contract of sale is perfected. (NCC, Art.
1324)
Nature of an option contract
An option imposes no binding obligation on the
An option contract is a separate and distinct person holding the option aside from the
contract from a contract of sale. It is a consideration for the offer. Until accepted, it is
preparatory contract in which one party grants not treated as a sale. (Tayag v. Lacson, G.R. No.
to another, for a fixed period and at a 134971, March 25, 2004)
determined price, the privilege to buy or sell, or
to decide whether or not to enter into a principal Contract of Sale v. Option Contract
contract.
BASIS CONTRACT OF OPTION
NOTE: If the option is perfected, it does not SALE CONTRACT
result in the perfection or consummation of the Must be a price May be
sale. It is binding upon the promissor if the Consideration certain in anything of
promise is supported by a consideration distinct money value
from the price. Bilateral/ Bilateral Unilateral
Unilateral Contract Contract
Period within which to exercise the option The “option to
Subject matter
purchase” is
Subject Matter if the contract
1. Within the term stipulated; and the subject
of sale itself
2. If there is no stipulation, the court may fix matter.
the term.
Elements of a Valid Option Contract
Exercise of an option
1. Consent;
In an option to buy, the party who has an option
may validly and effectively exercise his right by 1. Subject Matter – An option right to an
merely notifying the owner of the former’s unaccepted unilateral offer to sell/ accepted
decision to buy and expressing his readiness to unilateral promise to sell or an unaccepted
pay the stipulated price. (De Leon, 2011) unilateral offer to buy/ accepted unilateral
promise to buy a determinate or
A notice of acceptance must be communicated to determinable object for a price certain
offeror even without actual payment as long as including the manner of payment; and
payment is delivered in the consummation stage
provided it still within the period provided. 2. Prestation – A consideration separate and
distinct from the purchase price for the
Effect of the presence and absence of a option given. (Villanueva, 2009)
separate consideration in an option contract
Obligations of the offeror
1. With separate consideration:

499
 Special Contracts - Sales
1. Not to offer to any third party the sale of the
object of the option during the option period;
2. Not to withdraw the offer or option during
the option period; and
3. To hold the subject matter for sale to the
offeree in the event that the latter exercises
his option during the option period.
Effect of acceptance and withdrawal of the
offer
If the offer had already been accepted and such
acceptance has been communicated before the
withdrawal is communicated, the acceptance
creates a perfected contract, even if no
consideration was as yet paid for the option. In
which case, if the offeror does not perform his
obligations under the perfected contract, he
shall be liable for all consequences arising from
the breach thereof based on any of the available
remedies such as specific performance, or
rescission with damages in both cases.
Right of first refusal
It is a contractual grant, not of the sale of a
property, but of the first priority to buy the
property in the event the owner sells the same.
(Villegas v. Court of Appeals, G.R. Nos. 111495 &
122404, August 18, 2006)
NOTE: Where a time is stated in an offer for its
acceptance, the offer is terminated at the
expiration of the time given for its acceptance.
(Pineda, 2010)
Basis of the right of first refusal
It is based on the current offer to sell of the
seller or offer to purchase of any prospective
buyer. Only after the optionee fails to exercise its
right of first priority under the same terms and
within the period contemplated could the owner
validly offer to sell the property to a third
person, again, under the same terms as offered
to the optionee. (Tanay Recreation Center &
Development Corp. v. Fausto citing Parañaque
Kings Enterprises, Inc. v. CA, G.R. No. 140182, April
12, 2005)
Effect of sale of a property in violation of the
right of first refusal
The resulting contract is RESCISSIBLE by the
person in whose favor the right of first refusal
was given and even though no particular price is
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
stated in the covenant granting the right of first
refusal, the same price by which the third-party
buyer bought the property shall be deemed to be
the price by which the right of first refusal shall
therefore be exercisable. (Equatorial Realty
Development, Inc. v. Mayfair Theater, Inc., G.R. No.
106063, November 21, 1996)
Q: Dux leased his house to Iris for a period of
2 years, at the rate of P25,000.00 monthly,
payable annually in advance. The contract
stipulated that it may be renewed for
another 2-year period upon mutual
agreement of the parties. The contract also
granted Iris the right of first refusal to
purchase the property at any time during the
lease, if Dux decides to sell the property at
the same price that the property is offered
for sale to a third party. 23 months after
execution of the lease contract, Dux sold the
house. Dux said there was no breach because
the property was sold to his mother who is
not a third party. Iris filed an action to
rescind the sale and to compel Dux to sell the
property to her at the same price.
Alternatively, she asked the court to extend
the lease for another 2 years on the same
terms. Can Iris seek rescission of the sale of
the property to Dux’s mother? (2008 BAR)
A: YES. The right of first refusal is included in
the contract signed by the parties. Only if the
lessee failed to exercise the right of first refusal
could the lessor lawfully sell the subject
property to others, under no less than the same
terms and conditions previously offered to the
lessee. Granting that the mother is not a third
party, this would make her privy to the
agreement of Dux and Iris, aware of the right of
first refusal. This makes the mother a buyer in
bad faith, hence giving more ground for
rescission of the sale to her. (Equatorial Realty
Development, Inc. v. Mayfair Theater, Inc., G.R. No.
106063, November 21, 1996)
Option contract v. Right of first refusal
BASIS OPTION RIGHT OF
CONTRACT FIRST
REFUSAL
Principal Accessory;
Nature contract; stands cannot stand
on its own on its own
Does not need
Needs separate
Consideration separate
consideration
consideration
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 Civil Law
There must be procedure in the grant of government contracts.
Subject Subject matter subject (PSALM Corp., v. Pozzolanic, G.R. No. 183789,
matter and and price must matter but August 24, 2011)
price be valid. price not
important. Right of first refusal may be waived
Condition Not conditional Conditional
There is no offer Like other rights, the right of first refusal may be
to sell, but only waived or when a party entered into a
an opportunity There is an compromise agreement. Waiver of the right of
Offer to sell
for the buyer to offer to sell. first refusal must be supported by competent
enter into a and credible evidence. (Spouses Valderama v.
contract of sale. Macalde, G.R. No. 165005, September 16, 2005)
Subjectivity to Not subject to Subject to
Specific specific specific Availment of sublessee of the right of first
Performance performance performance refusal of the lessee

Right of first refusal must be contained in a
written contract
The right of first refusal be embodied in a
written contract and the grant of such right must
be clear and express.
NOTE: It is applicable only to executory
contracts and not to contracts which are totally
or partially performed.
Q: Pozzolanic entered into a long-term
contract with the National Power
Corporation (NPC) for the purchase of all fly
ash to be produced by the latter’s future
power plants. In the contract, NPC granted
Pozzolanic a right of first refusal to purchase
the fly ash that may be generated in the
future. When NPC’s two new power plants
started operation, it published an invitation
to interested buyers for the purchase of the
fly ash. Pozzolanic sent letters to NPC
reminding its right of first refusal. NPC
deferred its public bidding with the first
power plant’s fly ash but it nevertheless
continued with the bidding of the second
power plant’s fly ash. Pozzolanic filed a
complaint, but during the pendency of the
case, NPC decided to likewise dispose the fly
ash from the first power plant without
allowing Pozzolanic to exercise its right of
first refusal. Can Pozzolanic exercise its right
of first refusal?
GR: The sublessee is a stranger to the lessor who
is bound to respect the right of first refusal in
favor of the lessee only.
XPN: When the contract of lease granted the
lessee the right to assign the lease, the assignee
would be entitled to exercise such right as he
steps into the shoes of the original assignee.
(Villanueva, 2009)
Q: Tess leased her 1,500 sq. m. lot in Antipolo
City to Ruth for a period of three (3) years to
February 2013. On March 19, 2011, Tess sent
a letter to Ruth, part of which read as follows:
“I am offering you to buy the property you
are presently leasing at P5,000.00 per sq. m.
or for a total of P7,500,00.00. You can pay the
contract price by installment for two (2)
years without interest. I will give you a
period of one (1) year from the receipt of this
letter to decide whether you will buy the
property.”
After the expiration of the lease contract,
Tess sold the property to her niece for a total
consideration of P4 Million. Ruth filed a
complaint for the annulment of the sale,
reconveyance and damages against Tess and
her niece. Ruth alleged that the sale of the
leased property violated her right to buy
under the principle of right of first refusal. Is
the allegation of Ruth tenable? (2014 BAR)

A: NO. The right of first refusal granted in favor
of Pozzolanic is invalid for being contrary to
public policy as the same violates the
requirement of competitive public bidding in the
award of government contracts. In this
jurisdiction, public bidding is the established
A: NO, the allegation of Ruth is not tenable. The
letter written by Tess did not grant a right of
first refusal to Ruth. At most, it is to be construed
as an option contract whereby Ruth was given
the right to buy or not to buy the leased
property. An option is itself not a purchase, but it

501
 Special Contracts - Sales
merely secures the privilege to buy. However, When the seller seeks to rescind the sale, he is
the option is not valid because it was not obliged to return the thing which was the object
supported by cause or consideration distinct of the contract along with fruits and interest.
from the price of the property. (NCC, Art. 1479) (NCC, Art. 1385)
Also, Ruth does not appear to have exercised her
option before the offer was withdrawn by the Option money v. Earnest money
subsequent sale of the property to the niece of
Tess. OPTION EARNEST
BASIS
MONEY MONEY
OPTION MONEY vis-à-vis EARNEST MONEY
Money given as
Option money distinct Forms part of
As to Money
consideration the purchase
Given
It is the distinct consideration in case of an for an option price.
option contract. It does not form part of the contract.
purchase price hence, it cannot be recovered if
the buyer did not continue with the sale. (NCC, Applies to a Given only
Art. 1479) As to
sale not yet when there is
Perfection
perfected. already a sale.
NOTE: Option contract’s distinguishing
characteristic is that it imposes no binding Obligation of Prospective When given,
obligation on the person holding the option, the buyer upon buyer is not the buyer is
aside from the consideration for the offer. payment of required to bound to pay
(Limson v. CA, G.R. No. 135929, April 20, 2001) consideration buy. the balance.
If sale did not
Consideration of payment as option money
materialize, it
If buyer does
must be
Payment is considered option money when it is not decide to
As to Recovery returned.
given as a separate and distinct consideration buy, it cannot
(Villanueva,
from the purchase price. be recovered.
2014; Pineda,
2010)
Earnest money or “arras” (2002 BAR)
Ownership is
Title passes to
reserved to the
This is the money given to the seller by the the buyer
As to Transfer seller and is
prospective buyer to show that the latter is truly upon delivery
of Ownership not to pass
interested in buying the property, and its aim is of the thing
until full
to bind the bargain (Pineda, 2010). It is actually a sold.
payment.
partial payment of the purchase price and is
considered as proof of the perfection of the Specific
Effect of Non- Specific performance
contract. (De Leon, 2011)
payment performance. and
rescission.
NOTE: Option money may become earnest
money if the parties agree. (De Leon, 2011)
Remedy when seller refuses to complete the
Significance of giving an earnest money sale transaction despite down payment of the
buyer
It is considered as:
The action for specific performance will lie.
There is a perfected contract of sale because
1. Part of the purchase price – earnest money
is deducted from the total price; and there was a binding agreement of sale, not just
an option contract. The sale was perfected upon
2. Proof of perfection of the contract. (NCC, Art.
1482) acceptance by the seller of the down payment
from the buyer.
Effect of rescission on earnest money
Seller’s refusal to proceed with the sale
received
despite down payment of buyer on the

UNIVERSITY OF SANTO TOMAS 502

2021 GOLDEN NOTES
 Civil Law
ground that the transaction is condition by virtue of law or stipulation.
disadvantageous to him (seller)
The buyer is deemed to have accepted the
Seller cannot justify his refusal to proceed with goods
the sale by the fact that the deal is financially
disadvantageous to him. Having made a bad 1. When he communicates to the seller that he
bargain is not a legal ground for pulling out of a has accepted them;
binding contract of sale, in the absence of some 2. When the goods have been delivered and
actionable wrong by the other party. (Legaspi y he does any act inconsistent with the
Navera v. People citing Vales v. Villa, G.R. Nos. ownership of the seller; and
225753 & 225799, October 15, 2018) 3. When, after the lapse of reasonable time, he
retains the goods without intimating to the
FORMATION OF CONTRACT OF SALE seller that he rejected them. (NCC, Art.
1585)
Rules in the conception stage about the offer
Rule on refusal to accept the goods by the
buyer
RULE
Prior to acceptance, may be The buyer is not bound to return the goods to
Offer is
withdrawn at will by offeror but the seller and it is sufficient that he notifies the
floated
no authority to modify it. seller of his refusal in the absence of a contrary
stipulation. (NCC, Art. 1587)
Must be accepted within the
period, otherwise, extinguished at NOTE: If the refusal is without just cause, the
With a the end of period and may be title passes to the buyer from the moment the
period withdrawn at will by offeror but goods are placed at his disposal. (NCC, Art. 1588)
must not be arbitrary, otherwise,
liable for damages.
Effect of a qualified acceptance
With a Extinguished by happening/ non-
condition happening of condition. It constitutes merely a counter-offer which must
in turn be accepted to give rise to a valid and
Without Continues to be valid depending binding contract. (Villanueva, 2009)
period/ upon circumstances of time, place
condition and person.
Q: Licup, through a letter, offered to buy
With a Original offer is extinguished. parcels of land to The Holy See and
counter- Philippine Realty Corporation (PRC). He
offer enclosed a check for P100,000.00 to “close
the transaction” and accepted the
responsibility of removing informal settlers.
PERFECTION OF CONTRACT OF SALE
Msgr. Cirilos, representative of the Holy See
and PRC signed the conforme portion of the
GR: It is deemed perfected at the moment there letter and accepted the check. A stop-
is meeting of minds upon the thing which is the payment order was issued by Licup and the
object of the contract and upon the price. [NCC, latter requested that the titles to the land
Art. 1475(1); 2002, 2006 BAR instead be given to SSE. Msgr. Cirilos wrote
SSE requesting to remove the informal
NOTE: The acceptance of the offer must be settlers, otherwise, the P100,000.00 would
absolute. It must be plain, unequivocal, be returned. SSE replied with an “updated
unconditional and without variance of any sort proposal” that they will comply provided that
from the proposal. the purchase price is lowered. The proposal
was rejected. The parcel of land was sold to
Upon the perfection of the contract, the parties another third person. Is there a perfected
may reciprocally demand performance. (Rabuya, contract of sale between the two parties?
2017)
A: NO. When Msgr. Cirilos affixed his signature
XPN: When the sale is subject to a suspensive on that letter, he expressed his conformity to the

503
 Special Contracts - Sales
terms of Licup’s offer appearing on it. There was the buyer in any of the ways specified by law or
meeting of the minds as to the object and in any manner agreed upon by the parties.
consideration of the contract. But when Licup
ordered a stop-payment on his deposit and PERFECTION CONSUMMATION
proposed in his April 26, 1988 letter to Msgr. From the moment From the time of
Cirilos that the property be instead transferred there is a MEETING OF MUTUAL DELIVERY by
to SSE, a subjective novation took place. The MINDS upon the things the contracting parties
proposed substitution of Licup by SSE opened promised by each party of the things promised
the negotiation stage for a new contract of sale in consideration of the
as between SSE and the owners. (Starbright other
Sales v. Phil. Realty Corp., et al., G.R. No. 177936,
January 18, 2012) TRANSFER OF OWNERSHIP

Q: Spouses Biong and Linda wanted to sell Q: When is ownership deemed transferred?
their house. They found a prospective buyer,
Ray. Linda negotiated with Ray for the sale of
A: The thing shall be understood as delivered
the property. They agreed on a fair price of
when it is placed in the control and possession of
P2 Million. Ray sent Linda a letter confirming
the vendee.
his intention to buy the property. Later,
another couple, Bernie and Elena, offered a
NOTE: The most that a sale does is to create the
similar house at a lower price of P1.5 Million.
obligation to transfer ownership. It is only the
But Ray insisted on buying the house of Biong
title while the mode of transferring ownership is
and Linda for sentimental reasons. Ray
delivery.
prepared a deed of sale to be signed by the
couple and a manager’s check for P2 Million.
Effect of Delivery
After receiving the P2 Million, Biong signed
the deed of sale. However, Linda was not able
GR: Title/ownership is transferred.
to sign it because she was abroad. On her
return, she refused to sign the document
XPN: When the contrary is stipulated as in the
saying she changed her mind. Linda filed suit
case of:
for nullification of the deed of sale and for
moral and exemplary damages against Ray.
1. Pactum reservatii in domini – Agreement
Will the suit prosper? (2006 BAR)
that ownership will remain with seller
until full payment of price (contract to
A: NO, the suit will not prosper. The contract of
sell);
sale was perfected when Linda and Ray agreed
2. Sale on acceptance/approval;
on the object of the sale and the price. (NCC, Art.
3. Sale on return; or
1475) There is therefore consent on her part as
4. There is implied reservation of
the consent need not be given in any specific
ownership.
form. Hence, her consent may be given by
implication, especially since she was aware of,
NOTE: Seller bears expenses of delivery.
and participated in the sale of the property.
(Pelayo v. Perez, G.R. No. 141323, June 8, 2005)
Her action for moral and exemplary damages Kinds of Delivery
will also not prosper because the case does not
fall under any of those mentioned in Arts. 2219 1. ACTUAL or REAL – Thing sold is placed
and 2232 of the Civil Code. under the control and possession of
buyer/agent;
CONSUMMATION STAGE IN A CONTRACT OF
2. CONSTRUCTIVE or LEGAL – Does not
SALE
confer physical possession of the thing, but
by construction of law, is equivalent to acts
Consummation stage in a contract of sale takes of real delivery.
place by the delivery of the thing together with
the payment of the price. Requisites:
NOTE: The ownership of the thing is acquired by

UNIVERSITY OF SANTO TOMAS 504

2021 GOLDEN NOTES
 Civil Law
a. The seller must have control over
the thing;
b. The buyer must be put under
control; and
c. There must be intention to deliver
the thing for purposes of
ownership.
i. Traditio Symbolica – XPNs:
delivery of certain symbols
representing the thing;
ii. Traditio Instrumental –
delivery of the instrument
of conveyance;
iii. Traditio Longa Manu –
Delivery of thing by mere
agreement; when seller
points to the property
without need of actually
delivering;
NOTE: The thing to be
transferred must be within
sight at that time. (Rabuya,
2017)
iv. Traditio Brevi Manu – the
buyer, being already in
possession of the thing sold
due to some other cause,
merely remains in
possession after the sale is
effected, but now in the
concept of owner., e.g.,
from lessee to becoming an
owner;
v. Traditio Constitutum
Possessorium – the seller
remains in possession of
the property in a different
capacity., e.g., from owner
to lessee
3. QUASI-TRADITIO – delivery of rights,
credits or incorporeal property, made by:
a. Placing titles of ownership in the
hands of the buyer; or
b. Allowing buyer to make use of the
rights. (Paras, 2016)
505
4. TRADITION BY OPERATION OF LAW –
Execution of a public instrument is
equivalent to delivery. But to be effective, it
is necessary that the seller have such control
over the thing sold that, at the moment of
sale, its material delivery could have been
made.
GR: There is presumption of delivery.
a. Contrary stipulation;
b. When at the time of execution,
subject matter was not subject to
the control of seller;
c. Seller has no capacity to deliver at
time of execution; and
d. Such capacity should subsist for a
reasonable time after execution of
instrument.
Delivery deemed effective
Delivery should be coupled with intention of
delivering the thing, and acceptance on the part
of the buyer to give legal effect of the act.
Without such intention, there is no such
tradition.
Delivery of incorporeal property
1. By execution of a public instrument (NCC,
Art. 1498);
2. By placing the titles of ownership in the
possession of the buyer; or
3. By the vendee’s use of his rights as owner
with the consent of the vendor. (NCC, Art.
1501)
Sale made through a public instrument
Article 1498 of the Civil Code provides that
when the sale is made through a public
instrument, the execution thereof shall be
equivalent to the delivery of the thing which is
the object of the contract, if from the deed the
contrary does not appear or cannot clearly be
inferred. In the absence of stipulation to the
contrary, the ownership of the property sold
passes to the vendee upon the actual or
constructive delivery thereof. (Boy v. CA, et al.,
G.R. No. 125088, April 14, 2004)
Kinds of delivery through carrier
 Special Contracts - Sales
1. FAS (Free along Side) – when goods are
delivered alongside the ship, there is already
delivery to the buyer. The seller pays all
charges and is subject to risk until the goods
are placed alongside the vessel. (Villanueva,
2009)
2. FOB (Free on Board) – when goods are
delivered at the point of shipment, delivery
to carrier by placing the goods on vessel is
delivery to buyer. The seller shall bear all
expenses until the goods are delivered,
depending on whether the goods are to be
delivered “f.o.b.” at the point of shipment or
at the point of destination. (Villanueva,
2009)
3. CIF (Cost, Insurance, and Freight) – where
the buyer pays a fixed price for which the
seller furnishes the goods, pays the freight
and insurance to the point of delivery, and
all risks while the goods are in transit are for
the account of the buyer
4. COD (Collect on Delivery) – the carrier acts
for the seller in collecting the purchase
price, which the buyer must pay to obtain
possession of the goods.
Seller’s duties after delivery to the carrier
1. To enter on behalf of the buyer into such
contract reasonable under the
circumstances; and
2. To give notice to the buyer regarding
necessity of insuring the goods.
Effect of delivery through a carrier
GR: If the seller is authorized, delivery to carrier
is considered delivery to the buyer. The premise
being that the carrier acts as an agent of the
buyer. (Villanueva, 2009)
NOTE: Here, the carrier is deemed the bailee of
the buyer and the seller is deemed the agent of
the buyer in employing the carrier. (Rabuya,
2017)
XPNs:
1. When the seller reserves his right of
ownership over the goods;
2. When the delivery is directed by the seller
to the place of destination, to himself or his
agent;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
3. When the bill of lading is deliverable to the
buyer, but the seller retains possession of
the bill of lading (NCC, Art. 1503); and
4. When the parties have a different intention
as when the parties did not intend to have
the goods delivered to the buyer through the
carrier. (Pineda, 2010, citing Smith Bell & Co.,
Inc. v. Jimenez, G.R. No. L-17617, June 29,
1963)
When the object should be delivered:
1. Stipulated time; or
2. If there is none, at a reasonable hour.
Place of delivery (NCC, Art. 1521 in relation to
Art. 1582)
The place of delivery shall be: (AUBRI)
1. That place agreed upon, if any stipulation
has been made;
2. Place determined by usage of trade;
3. Seller’s place of business;
4. Seller’s residence; or
5. In case of specific goods, where they can be
found.
NOTE: If specific goods are involved in the sale,
the place where they are found shall be the place
of delivery, in the absence of any agreement or
applicable usage of trade.
Effects of a sale of goods on installment
1. Goods must be delivered in full except when
stipulated; and
2. When not examined by the buyer – it is not
accepted until examined or at least had
reasonable time to examine
Seller not bound to deliver the thing sold
1. If the buyer has not paid the price;
2. No period for payment has been fixed in the
contract; and
3. A period for payment has been fixed in the
contract but the buyer has lost the right to
make use of the time.
Suspension of payment by the buyer (NCC,
Art. 1590)
GR:
506
 Civil Law
1. If he is disturbed in the possession or
ownership of the thing bought; or
2. If he has well-grounded fear that his
possession or ownership would be
disturbed by a vindicatory action or
foreclosure of mortgage.
XPNs:
1. Seller gives security for the return of the
price in a proper case;
2. A stipulation that notwithstanding any such
contingency, the buyer must make payment;
3. Disturbance or danger is caused by the
seller;
4. If the disturbance is a mere act of trespass;
or
5. Upon full payment of the price.
XPN to the XPN: If the trespass is in law which
takes place when a third person, by judicial or
extra-judicial acts, questions the right of the
buyer and/or seller, and claims possession or
ownership, suspension of payment is authorized.
Necessity of payment of the purchase price to
transfer ownership
GR: Ownership of the thing sold shall be
transferred to the vendee upon the actual or
constructive delivery.
XPN: Unless the contract contains a stipulation
that ownership of the thing sold shall not pass to
the purchaser until he has fully paid the price.
Acceptance of delivery by the buyer of the
thing sold
1. Express – he communicates or intimates to
the seller that he has accepted. (NCC, Art.
1585)
2. Implied (NCC, Art. 1585)
a. Buyer does not act inconsistently with
ownership of seller after delivery; and
b. Retains the thing without
communicating to seller that he has
rejected.
Effect if the buyer refuses to accept despite
delivery of the object of the sale
Delivery is completed. Since delivery of the
subject matter of the sale is an obligation on the
507
part of the seller, the acceptance thereof by the
buyer is not a condition for the completeness of
the delivery. Thus, even with such refusal of
acceptance, delivery (actual/constructive), will
produce its legal effects (e.g., transferring the
risk of loss of the subject matter to the buyer
who has become the owner thereof). Under Art.
1588 of the Civil Code, when the buyer’s refusal
to accept the goods is without just cause, the title
thereto passes to him from the moment they are
placed at his disposal. (Villanueva, 2009)
WHEN DELIVERY DOES NOT TRANSFER
TITLE
1. Sale on TRIAL, APPROVAL, OR
SATISFACTION (NCC, Art. 1502);
2. When there is an EXPRESS RESERVATION;
a. If it was stipulated that ownership shall
not pass to the purchaser until he has
fully paid the price (NCC, Art. 1478)
3. When there is an IMPLIED RESERVATION;
a. When goods are shipped, but the bill of
lading states that goods are deliverable
to the seller or his agent, or to the order
of the seller or his agent (NCC, Art. 1503)
b. When the bill of lading is retained by the
seller or his agent (NCC, Art. 1503)
c. When the seller of the goods draws on
the buyer for the price and transmits
the bill of exchange and the bill of lading
to the buyer, and the latter does not
honor the bill of exchange by returning
the bill of lading to the sell (NCC, Art.
1503)
4. When sale is NOT VALID;
5. When the seller is NOT THE OWNER of the
goods subject to the exceptions in Art. 1505
of NCC
6. GR: When goods are HELD BY A THIRD
PARTY
XPN: Third person acknowledges to the
buyer that he holds the goods in behalf of
the buyer. (NCC, Art. 1521)
7. ON SALE or RETURN – The ownership
passes to buyer upon delivery, but he may
revest ownership in the seller by returning
 Special Contracts - Sales
or tendering the goods within the time fixed
in the contract or within reasonable time.
(NCC, Art. 1502)
Sale on trial, approval or satisfaction
1. 2 or more sales transactions must constitute
valid sales transactions;
2. 2 or more sales transactions must pertain to
exactly the same subject matter;

Requisites: 3. 2 or more buyers at odds over the rightful

ownership of the subject matter must each
1. When buyer signifies approval or represent conflicting interests; and
acceptance to the seller or does any act
adopting the transaction; 4. 2 or more buyers at odds over the rightful
2. If buyer did not signify approval or ownership of the subject matter must have
acceptance, but retains the goods without bought from the very same seller. (Rabuya,
giving notice of rejection after the 2017, citing Cheng v. Genato, G.R. No. 129760,
expiration of the period fixed or of December 29, 1998)
reasonable time. (NCC, Art. 1502)
Rules on preference (NCC, Art. 1544)
Rules in case of sale on trial, approval or
satisfaction 1. MOVABLE – Owner who is first to possess in
good faith;
TITLE WHO BEARS THE LOSS
GR: Borne by seller 2. IMMOVABLE –
XPNs:
1. Buyer is at fault a. First to register in good faith
Risk of Loss
2. Buyer expressly b. No registration – first to possess in good
agreed to bear the faith
loss c. No registration & no possession in good
GR: Buyer must give faith – person who presents oldest title
goods a trial in good faith.
XPN: Buyer need not do
As to trial
so if it is evident that it NOTE: Article 1544 of the Civil Code has no
cannot perform the application to lands not registered with the
work. Torrens system. If the sale is not registered, it is
It runs only when all binding only as between the seller and the
When period within the parts essential for buyer; it does not affect innocent third persons.
which buyer must the operation of the (De Leon, 2011)
signify his acceptance object has been
runs delivered. Villanueva (2009) proffers that The rules on
double sales for immovables under Article 1544
Validity of are applicable to unregistered land, but only
stipulation that a 3rd insofar as they do not undermine specific rules
Valid, provided the 3rd and legislations that have a higher hierarchical
person must satisfy
person is in good faith. enforcement value, such as the “without
approval or
satisfaction prejudice to a better right” provision under Act
If the sale is made to Generally, it cannot be No. 3344, now Section 113 of the Property
a buyer who is an considered a sale on Registration Decree. (Villanueva, 2009)
expert on the object approval, trial, or
purchased satisfaction. Purchaser in good faith

DOUBLE SALE (2001, 2004, 2008 BAR)
There is double sale when the same object of the
sale is sold to different vendees. (NCC, Art. 1544)
Requisites of Double Sales (NCC, Art. 1544)
1. Buys the property without notice that some
other person has a right to, or interest in
such property; and
2. Pays a full and fair price for the same at the
time of such purchase, or before he has
notice of the claim or interest of some other
person in the property. (Uy v. Fule, citing

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2021 GOLDEN NOTES
 Civil Law
Agricultural and Home Extension
Development Group v. CA, G.R. No. 164961,
June 30, 2014)
NOTE: Partial payment is not enough. Full
payment is a requirement for purposes of
acquiring right over the rules of double sale.
NOTE: This principle applies in a situation
where not all the requisites are present which
would warrant the application of Art. 1544 of
NCC. The only requisite of this rule is priority in
time. In other words, the only one who can
invoke this is the first vendee. Undisputedly, he
is a purchaser in good faith because at the time
he brought the real property, there was still no
sale to a second vendee. (Rabuya, 2017)
Principle of prius tempore, potior jure – first
in time, stronger in right
Knowledge gained by the first buyer of the
second sale cannot defeat the first buyer’s rights
except only as provided by the NCC and that is
where the second buyer first registers in good
faith the second sale ahead of the first. (Jurado,
2019) Conversely, knowledge gained by the
second buyer of the first sale defeats his rights
even if he is first to register, since such
knowledge taints his registration with bad faith
to merit the protection of Art. 1544 (2 nd par.) of
NCC, the second realty buyer must act in good
faith in registering his deed of sale.
NOTE: Where one sale is absolute and the other
is a pacto de retro transaction where the period
to redeem has not yet expired, Art. 1544 of NCC
will not apply. (Pineda, 2010)
Q: Does prior registration by the second
buyer of a property subject of a double sale
confer ownership or preferred right in his
favor over that of the first buyer?
A: Principle of caveat emptor – buyer beware
It literally means, ‘Let the buyer beware’. The
rule requires the purchaser to be aware of the
supposed title of the vendor and one who buys
without checking the vendor’s title takes all the
risks and losses consequent to such failure.
(Agcaoili, 2015)
Application of caveat emptor in particular
sale transactions
509
1. Sales of animals (NCC, Art. 1574);
2. Double sales (NCC, Art. 1544);
3. In sheriff’s sales; and
4. Tax sales.
NOTE: In the above sales, there is no warranty of
title or quality on the part of the seller. The
purchaser who buys without checking the title of
the vendor is assuming all risks of eviction.
In sheriff’s sales, the sheriff does not guarantee
the title to real property and it is not incumbent
upon him to place the buyer in possession of
such property. (Pineda, 2010)
Caveat emptor NOT applicable in sales of
registered land
The purchaser of a registered land under the
Torrens system is merely charged with notice of
the burdens and claims on the property which
are inscribed on the face of certificate of title.
(Pineda, 2010)
Application of caveat emptor in judicial sales
Caveat emptor is applicable in judicial sales. The
purchaser in a judicial sale acquires no higher or
better title or right than that of the judgment
debtor. If it happens that the judgment debtor
has no right, interest, or lien on and to the
property sold, the purchaser acquires none.
(Pineda, 2010)
Effect of subsequent foreclosure to a prior
purchaser in good faith (2008 BAR)
The purchaser in good faith has better title to
the property sold even if subsequently
foreclosed by a mortgagor. Under the Torrens
System, a buyer of registered lands is not
required by law to inquire further than what the
Torrens certificate indicates on its face. If a
person proceeds to buy it relying on the title,
that person is considered a buyer in good faith.
EFFECTS OF THE CONTRACT WHEN THE
THING SOLD HAS BEEN LOST
RISK OF LOSS
RISK OF LOSS
A thing is considered as lost
GR: It is understood that the thing is lost when
 Special Contracts - Sales
it:
1. Perishes;
2. Goes out of commerce; or
3. Disappears in such a way that its existence is
unknown or cannot be recovered. [NCC, Art.
1189(2)]
XPN: In an obligation to deliver a generic thing,
the loss or destruction of anything of the same
kind does not extinguish the obligation. (NCC,
Art. 1263)
Effect when the loss occurred before
perfection
GR: The thing perishes with the owner – Res
perit domino (NCC, Art. 1504; 1999 BAR)
XPNs:
1. Where the delivery has been made either to
the buyer or to the bailee for the buyer, but
ownership in the goods has been retained
by the seller merely to secure performance
by the buyer of his obligations under the
contract [NCC, Art. 1504 (1)];)
2. Where actual delivery has been delayed
through the fault of either the buyer or
seller, the goods are at the risk of the party
at fault [NCC, Art. 1504 (2)]; and
3. Where goods are sent by the seller to the
buyer under circumstances in which the
seller knows or ought to know that it is
usual to insure, the seller must give such
notice to the buyer as may enable him to
insure them during their transit, and, if the
seller fails to do so, the goods shall be
deemed to be at his risk during such transit.
[NCC, Art. 1523(3)])
NOTE: The seller still owns the thing because
there is no delivery or transfer of ownership yet.
Hence, the seller bears the risk of loss.
(Villanueva, 2004)
Effect when the loss occurred at the time of
perfection of the contract of sale
GR: Contract is considered void or inexistent
because the object did not exist at the time of the
transaction. (Pineda, 2010)
XPN: In case of partial loss, the buyer may
choose between withdrawing from the contract
and demanding the remaining part. If he chooses
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the latter, he shall pay the remaining part’s
corresponding price in proportion to the total
sum agreed upon. (NCC, Art. 1493)
Options of the buyer with regard to the sale
in the total or partial loss or deterioration of
a mass of specific goods without the
knowledge of the seller
1. He may treat the sale as avoided or
cancelled; or
2. He may continue with the sale with respect
to the available or remaining goods. (NCC,
Art. 1494)
Effect if the buyer chooses to continue with
the sale of the remaining goods
The remaining goods shall pass in ownership to
the buyer but subject to proportionate reduction
of the price. But this is applicable only if the
goods are divisible or capable of being divided.
(Pineda, 2010) If indivisible, the only option
available is the avoidance of the sale.
Effect when the loss occurred after perfection
but before delivery
GR: Who bears the risk of loss is governed by the
stipulations in the contract.
In the absence of stipulation: there are two
conflicting views:
First view: Res perit creditori or buyer bears the
risk of loss. (Paras, Vitug, Padilla, and De Leon)
Article 1504 of the Civil Code, which embodies
res perit domino, only covers goods. The
obligation to pay on the part of the buyer is not
extinguished. (Villanueva, 2009)
NOTE: Pursuant to Article 1537 of the Civil
Code, the vendee must also bear the resulting
disadvantages before the delivery but after the
contract has been perfected. This theory is an
exception to the rule of res perit domino. On the
other hand, pursuant to Article 1262 of the Civil
Code, if the thing is lost or destroyed without the
fault of the seller, the obligation to deliver is
extinguished but the obligation to pay subsist.
(Pineda, 2010)
Second view: Res perit domino or seller bears
the risk of loss. (Tolentino, Jurado, Baviera, and
Villanueva)
510
 Civil Law
In reciprocal obligations, the extinguishment of
the obligation due to loss of the thing affects
both debtor and creditor; the entire juridical
relation is extinguished. Under this view, the
rule on loss under Article 1189 of the Civil Code
would be different from the rule on
deterioration – the loss would be for the account
of the seller, while deterioration would be for
the account of the buyer. (Tolentino, 2002)
This view would make Articles 1480 and 1538 of
the Civil Code consistent with the provisions of
Article 1504 of the Civil Code. (Villanueva, 2009)
Ownership is transferred only after delivery,
further, the contract is reciprocal. If the vendee
cannot have the thing, it is illogical and unjust to
make him pay the price. (Pineda, 2010)
Effect when loss occurred after delivery
GR: Res perit domino applies – the buyer is now
the owner; hence, the buyer bears the risk of
loss. (NCC, Art. 1504)
XPNs:
1. Where the delivery has been made either to
the buyer or to the bailee for the buyer, but
ownership in the goods has been retained
by the seller merely to secure performance
by the buyer of his obligations under the
contract; and
2. Where actual delivery has been delayed
through the fault of either the buyer or
seller, the goods are at the risk of the party
at fault. [NCC, Art. 1504 (1), (2)]
Person who bears the risk of loss or
deterioration
SELLER is the owner so
Before Perfection seller bears risk of loss.
Contract shall be
without any effect – the
SELLER bears the loss
At Perfection since the buyer is
relieved of his
obligation under the
contract.
2 CONFLICTING VIEWS
After Perfection but Deterioration & fruits –
Before Delivery Buyer bears loss.
(Tolentino, 2002)
511
Buyer becomes the
owner so BUYER bears
risk of loss.
Delivery extinguish
After Delivery
ownership vis-à-vis the
seller & creates a new
one in favor of the
buyer.
BREACH OF CONTRACT OF SALE
REMEDIES OF THE SELLER
INSTALLMENT SALES LAW or “RECTO LAW”
(1999, 2000 BAR)
Installment Sales Law
Act No. 4122 was passed by the Philippine
Legislature on December 9, 1939, otherwise
known as the “Installment Sales Law” or the
“Recto Law.” It is embodied in Art. 1484 of the
NCC, which provides for the remedies of a seller
in the contracts of sale of personal property by
installments.
Application of Recto Law
This law covers contracts of sale of personal
property by installment. (Act No. 4122) It is also
applied to contracts purporting to be leases of
personal property with option to buy, when the
lessor has deprived the lessee of the possession
or enjoyment of the thing. (PCI Leasing and
Finance, Inc. v. Giraffe-X Creative Imaging, Inc.,
G.R. No. 142618, July 12, 2007)
NOTE: Recto Law applies only to sale payable in
installments and not to a sale where there is an
initial payment and the balance is payable in the
future, because such is a straight sale, not a sale
by installments.
Requisites of Recto Law:
1. Valid contract of sale;
2. Subject matter is personal property;
3. Payable in installments; and
4. In the case of the second and third remedies,
that there has been a failure to pay two or
more installments. (NCC, Art. 1484)
 Special Contracts - Sales
Alternative remedies in case of sale of
personal property in installments
1. Specific Performance: Exact fulfillment
should the buyer fail to pay
GR: If availed of, the unpaid seller cannot
anymore choose other remedies.
XPN: If after choosing specific performance,
it has become impossible to perform it,
rescission may be pursued.
NOTE: If vendor elected fulfillment or
specific performance
a. The filing of collection suit barred the
foreclosure of the mortgage. A mortgagee
who files a suit for collection abandons the
remedy of foreclosure of the chattel
mortgage constituted over the personal
properties or security for the debt or value
of the promissory note which he seeks to
recover in the said suit.
b. Filing of B.P. Blg. 22 does not bar
foreclosure of mortgage. (Spouses Torres v.
Medina, G.R. No. 166730, March 10, 2010)
However, in Chieng v. Spouses Santos (G.R.
No. 169647, August 31, 2007), it was held
that the filing of the B.P. Blg. 22 case is
equivalent to the filing of a collection suit for
the recovery of the mortgage-loan. The
Court explained that the civil action for the
recovery of the amount of the dishonored
checks is impliedly instituted in the criminal
action. Hence, the impliedly instituted civil
action in the criminal case for violation of
B.P. Blg. 22 is, in effect, a collection suit or
suit for recovery of mortgage debt.
c. Action for recovery of possession with
replevin as provisional remedy preparatory
to extrajudicial foreclosure is not an action
for collection much less for foreclosure.
But if the action for replevin culminated in
the foreclosure of the chattel mortgage and
the sale of the personal property at the
public auction, then Article 1484 now
applies. (Rabuya, 2017)
2. Rescission: Cancel the sale if buyer fails to
pay 2 or more installments. Deemed chosen
when:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
a. Notice of rescission is sent;
b. Takes possession of subject
matter of sale; and
c. Files action for rescission.
NOTE: The stipulation that the installments
or rents already paid shall not be returned
to the vendee shall be valid insofar as the
same may not be unconscionable under the
circumstances.
3. Foreclosure: Foreclose on chattel
mortgage if buyer fails to pay two (2) or
more installments. He shall have no
further action against the purchaser to
recover any unpaid balance of the price.
Any agreement to the contrary shall be
void.
NOTE: Of the three remedies, only this third
remedy bars the recovery of unpaid balance.
Moreover, payment of damages, and
attorney’s fees are also barred.
GR: Actual foreclosure is necessary to bar
recovery of balance.
XPN: Mortgagor refuses to deliver property
to effect foreclosure; expenses incurred in
attorney’s fees in obtaining the property
may be recovered by the vendor.
The remedies are alternative, not
cumulative.
GR: The election of one remedy is a waiver of the
right to resort to the other remedies.
XPN: If the remedy first chosen was not
completed or not fully exercised as when there
was voluntary desistance, the vendor may still
avail himself of another remedy.
NOTE: In ordinary alternative obligations, a
mere choice categorically and unequivocally
made and then communicated by the person
entitled to exercise his option concludes the
parties. The creditor may not thereafter exercise
any other option unless the chosen alternative
proves to be ineffectual or unavailing due to no
fault on his part. (Rabuya, 2017)
Rationale of Recto Law
To remedy the abuses committed in connection
with the foreclosure of chattel mortgages and to
512
 Civil Law
prevent mortgagees from seizing the mortgaged
property, buying it at a foreclosure sale for a low
price and then bringing suit against the
mortgagor for a deficiency judgment.
(Villanueva, 2009)
Effect of filing an action for specific
performance in case of default in the
payment of an installment sale secured by a
chattel mortgage on the subject of the sale
The seller can collect from the buyer for the sum
of money the buyer failed to pay. In case the sum
collected is insufficient, the court can still order
for the levy of the property subject of the sale
transaction to cover the balance. Moreover, if the
action instituted is for specific performance and
the mortgaged property is subsequently
attached and sold, the sale thereof does not
amount to a foreclosure of the mortgage. Hence,
the seller-creditor is entitled to a deficiency
judgment. (Industrial Finance Corporation v.
Ramirez, G.R. No. L-43821, May 26, 1977)
Q: A mortgaged a diamond ring to M as a
security for a loan which was to be paid 2
years thereafter. Since A failed to pay M, she
then foreclosed the mortgaged property.
However, it turned out that the proceeds of
the sale were insufficient, thus, M filed an
action for specific performance. A contends
that this is a violation of the Recto law since
the foreclosure of the chattel bars
subsequent recovery. Is this correct?
A: NO. A is not correct in invoking the Recto law
since it is only applicable in case of sale of
personal property through installment. In the
given case, the amount being claimed by A was
to be paid 2 years thereafter as a lump sum, not
through installments. Moreover, the transaction
is a loan not a sale.
Recto Law does NOT cover a contract to sell
of movables
There will be nothing to rescind if the
suspensive condition (payment of full purchase
price) upon which the contract is based fails to
materialize. (Villanueva, 2009)
Q: Palces purchased a Hyundai Starex
through a loan granted by Equitable Savings
Bank (ESB). In connection therewith, Palces
executed a Promissory Note with Chattel
Mortgage in favor of the ESB. Eventually,
513
Palces failed to pay the monthly installments
prompting ESB to demand for the payment of
the entire balance which remained
unheeded. Thus, ESB filed a case for Recovery
of Possession with Replevin with Alternative
Prayer for Sum of Money.
In order to update her installment payments,
Palces paid ESB P70,000 on March 8, 2007
and P33,000 on March 20, 2007 (March 2007
payments). Despite the aforesaid payments,
ESB filed the instant complaint, resulting in
the sheriff taking possession of the subject
vehicle. The RTC ruled in favor of ESB. The CA
affirmed the RTC ruling; however, it ordered
ESB to return the amounts paid on March
2007 by Palces. It ruled that, under Article
1484 of the Civil Code, ESB had already
waived its right to recover any unpaid
installments when it sought a writ of replevin
in order to regain possession of the subject
vehicle. As such, petitioner is no longer
entitled to receive respondent’s late partial
payments. Is the CA’s ruling correct?
A: NO. In this case, there was no vendor-vendee
relationship between respondent and petitioner.
A judicious perusal of the records would reveal
that respondent never bought the subject
vehicle from petitioner but from a third party,
and merely sought financing from petitioner for
its full purchase price. Indubitably, a loan
contract with the accessory chattel mortgage
contract - and not a contract of sale of personal
property in installments - was entered into by
the parties with respondent standing as the
debtor-mortgagor and petitioner as the creditor-
mortgagee.
Thus, ESB is justified in filing his Complaint
before the RTC seeking for either the recovery of
possession of the subject vehicle so that it can
exercise its rights as a mortgagee, i.e., to conduct
foreclosure proceedings over said vehicle; or in
the event that the subject vehicle cannot be
recovered, to compel respondent to pay the
outstanding balance of her loan. Since it is
undisputed that ESB had regained possession of
the subject vehicle, it is only appropriate that
foreclosure proceedings be commenced in
accordance with the provisions of “The Chattel
Mortgage Law,” as intended. Otherwise, Palces
will be placed in an unjust position where she is
deprived of possession of the subject vehicle
while her outstanding debt remains unpaid,
either in full or in part, all to the undue
 Special Contracts - Sales
advantage of petitioner – a situation which law
and equity will never permit. (Equitable Savings
Bank v. Palces, G.R. No. 214752, March 9, 2016)
REALTY INSTALLMENT BUYER ACT or
“MACEDA LAW” (2000, 2002 BAR)
Realty Installment Buyer Act
Commonly known as the “MACEDA LAW.” It is
embodied in R.A. No. 6552. The law declares as
“public policy to protect buyers of real estate on
installment payments against onerous and
oppressive conditions.”
Transactions/sale covered by the Maceda
Law
The law involves the sale of immovables on
installment.
Coverage: Residential Real Estate (Villanueva,
2009)
Excluded:
1. Industrial lots;
2. Commercial buildings (and commercial
lots by implication);
3. Sale to tenants under agrarian laws; and
4. Sale of lands payable in straight terms.
(Sec. 3, R.A. No. 6552)
NOTE: The list is not exclusive. (Villanueva,
2009)
Q: What are the so-called “Maceda” and
“Recto” laws in connection with sales on
installments? Give the most important
features on each law. (1999 BAR)
A: The Maceda Law is applicable to sales of
immovable property on installments. The most
important features are:
1. After having paid installments for at least
two years, the buyer is entitled to a
mandatory grace period of one month for
every year of installment payments made, to
pay the unpaid installments without
interest.
If the contract is cancelled, the seller shall
refund to the buyer the cash surrender value
equivalent to fifty percent (50%) of the total
payments made, and after five years of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
installments, an additional five percent (5%)
every year but not to exceed ninety percent
(90%) of the total payments made.
NOTE: This requires a notarial act of rescission
and the refund to the buyer of the full payment
of the cash surrender value of the payments on
the property. Failure to comply with the
mandatory twin requirement shall result into
the contract remaining to be valid and
subsisting. (Rabuya, 2017)
2. In case the installments paid were less than
2 years, the seller shall give the buyer a
grace period of not less than 60 days. If the
buyer fails to pay the installments due at the
expiration of the grace period, the seller may
cancel the contract after 30 days from
receipt by the buyer of the notice of
cancellation or demand for rescission by
notarial act. (Optimum Development Bank v.
Spouses Jovellanos, citing Rillo v. CA, G.R. No.
189145, December 4, 2013)
NOTE: According to the Supreme Court, the
vendor could go to the court and demand
judicial rescission in lieu of a notarial act of
rescission. An action for annulment of contract
which is a kindred concept of rescission by
notarial act will also suffice. (Rabuya, 2017)
Q: Orbe purchased a land from Filinvest. She
paid a total of P608,648.20 for the past two
years and later on failed to pay the balance.
She claims that she is entitled to get 50% of
her payments because she paid for at least 2
years. However, Filinvest denied her claim
alleging that what she paid did not really
amount to two years worth of payments. Is
Orber allowed to get the 50%?
A: NO. When Republic Act No. 6552 or the
Maceda Law speaks of paying “at least two years
of installments” in order for the benefits under
its Section 3 to become available, it refers to the
buyer's payment of two (2) years’ worth of the
stipulated fractional, periodic payments due to
the seller. (Priscilla Zafra Orbe v. Filinvest Land,
Inc., G.R. No. 208185, September 06, 2017 J.
Leonen)
Other rights granted to a buyer under the
Maceda Law
1. Sell or assign rights to another;
514
 Civil Law
2. Reinstate contract by updating within 30
days before and cancellation;
3. Deed of Sale to be done by notarial act;
4. Pay full installment in advance the balance
of price anytime without interest; and
5. Have full payment annotated in certificate of
title.
NOTE: Applies to contracts even before the law
was enacted. Stipulation to the contrary is void.
Q: Spouses Dakila entered into a contract to
sell with Honorio Cruz over a parcel of
industrial land in Valenzuela, Bulacan for a
price of P3,500,000.00. The spouses would
give a down payment of P500,000.00 upon
the signing of the contract, while the balance
would be paid for the next 3 consecutive
months in the amount of P1,000,000.00 per
month. The spouses paid the first 2
installments but not the last installment.
After one year, the spouses offered to pay the
unpaid balance which Honorio refused to
accept. The spouses filed a complaint for
specific performance against Honorio
invoking the application of the Maceda Law.
If you are the judge, how will you decide the
case? (2014 BAR)
A: I will rule in favor of Honorio. The invocation
of the Maceda Law is misplaced. The law applies
only to sale or financing of realty on installment
payments including residential units or
residential condominium apartments and does
not apply to sales of industrial units or industrial
lands like in the case presented.
The sale to the Spouses Dakila is not a sale on
installment but more of a straight sale where a
down payment is to be made and the balance to
be paid in a relatively short period of three
months.
Q: Priscilla purchased a condominium unit in
Makati City from the Citiland Corporation for
a price of P10 million, payable P3 million
down and the balance with interest thereon
at 14% per annum payable in 60 equal
monthly installments of P198,333.33.
They executed a Deed of Conditional Sale in
which it is stipulated that should the
vendee fail to pay three successive
installments, the sale shall be deemed
automatically rescinded without the
necessity of judicial action and all
515
payments made by the vendee shall be
forfeited in favor of the vendor by way of
rental for the use and occupancy of the unit
and as liquidated damages.
For 46 months, Priscilla paid the monthly
installments religiously, but on the 47th and
48th months, she failed to pay. On the 49th
month, she tried to pay the installments due
but the vendor refused to receive the
payments tendered by her.
The following month, the vendor sent her a
notice that it was rescinding the Deed of
Conditional Sale pursuant to the stipulation
for automatic rescission, and demanded that
she vacate the premises. She replied that the
contract cannot be rescinded without
judicial demand or notarial act pursuant to
Article 1592 of the Civil Code. (2000, 2014
BAR)
1. Is Article 1592 applicable?
2. Can the vendor rescind the contract?
A:
1. NO. Article 1592 of the NCC does not apply
to a conditional sale. Article1592 applies
only to a contract of sale and not to a
Deed of Conditional Sale where the seller
has reserved title to the property until full
payment of the purchase price. The law
applicable is the Maceda Law. (Jurado, 2019,
citing Valarao v. CA, G.R. No. 130347, March
3, 1999)
2. NO, the vendor cannot rescind the contract
under the circumstances. Under the
Maceda Law, which is the law applicable,
the seller on installment may not rescind
the contract till after the lapse of the
mandatory grace period of 30 days for
every one year of installment payments,
and only after 30 days from notice of
cancellation or demand for rescission by a
notarial act. In this case, the refusal of the
seller to accept payment from the buyer on
the 49th month was not justified because
the buyer was entitled to 60 days grace
period and the payment was tendered
within that period. Moreover, the notice of
rescission served by the seller on the buyer
was not effective because the notice was not
by a notarial act. Besides, the seller may still
 Special Contracts - Sales
pay within 30 days from such notarial notice
before rescission may be effected. All these
requirements for a valid rescission were
not complied with by the seller. Hence,
the rescission is invalid.
Q: Spouses Jovellanos entered into a
Contract to Sell with Palmera Homes for the
purchase of a residential house and lot
payable for a period of 10 years. Later,
Palmera Homes assigned all its rights, title,
and interest in favor of Optimum Bank.
After some time, Optimum issued a Notice
of Delinquency and Cancellation of the
Contract to Sell on April 10, 2006 for the
spouses’ failure to pay their monthly
payments. Thereafter, a final Demand
Letter dated May 25, 2006 was issued by
Optimum requesting the Sps. Jovellanos to
vacate and deliver the properties which,
however, remained unheeded. This
prompted Optimum to file an unlawful
detainer case against the spouses. Was the
cancellation of the contract to sell valid?
A: YES. The Maceda Law, R.A. No. 6552,
recognizes in conditional sales of all kinds of
real estate (industrial, commercial, residential)
the right of the seller to cancel the contract
upon non-payment of an installment by the
buyer, which is simply an event that prevents
the obligation of the vendor to convey title
from acquiring binding force. It also provides
the right of the buyer on installments in case
he defaults in the payment of succeeding
installments.
Three (3) requisites before the seller may
actually cancel the contract must exist: 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 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.
It was only after the expiration of the thirty-
day (30) period did Optimum treat the
contract to sell as effectively cancelled –
making as it did a final demand upon Sps.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Jovellanos to vacate the subject property only
on May 25, 2006. Thus, based on the foregoing,
there was a valid and effective cancellation of
the Contract to Sell and since Sps. Jovellanos
had already lost their right to retain
possession of the subject property as a
consequence of such cancellation, their refusal
to vacate and turn over possession to
Optimum makes out a valid case for unlawful
detainer. (Optimum Development Bank v.
Jovellanos, G.R. No. 189145, December 4, 2013)
REMEDIES OF AN UNPAID SELLER
Unpaid Seller
One is considered as unpaid seller when:
1. The whole of the price has not been paid or
tendered; or
2. A bill of exchange or other negotiable
instrument has been received as conditional
payment, and the condition on which it was
received has been broken by reason of the
dishonor of the instrument, the insolvency
of the buyer, or otherwise. (NCC, Art. 1525)
NOTE: The mere delivery of a negotiable
instrument does not ipso facto extinguish
the obligation of the buyer to pay because
the instrument which has been delivered
may be dishonored. In which case, the seller
is still an unpaid seller. (US v. Bedoya, G.R.
No. 5100, November 3, 1909)
Moreover, bills of exchange or mercantile
documents shall produce the effect of
payment only when they have been cashed
or when through the fault of the creditor,
they have been impaired.
The term “seller” includes any person who is in
the position of the seller, such as (a) an agent of
the seller to whom the bill of lading has been
indorsed; or (b) a consignor or agent who has
himself paid, or is directly responsible for the
price. (Jurado, 2019)
Q: When is a seller considered unpaid
despite the title of the goods passing to the
buyer?
A: Whenever the seller was only paid partially,
he remains an unpaid seller. (Pineda, 2010)
516
 Civil Law
Remedies of an Unpaid Seller
I. Ordinary
1. Action for Price (NCC, Art. 1595)
Exercised when:
a. Ownership has passed to buyer;
b. Price is payable on a day
certain; or
c. Goods cannot readily be resold
for reasonable price and Art.
1596 of NCC is inapplicable.
2. Action for Damages (NCC, Art. 1596) –
In case of wrongful neglect or refusal by
the buyer to accept or pay for the thing
sold.
NOTE: The measure of damages is the
estimated loss directly and naturally
resulting in the ordinary course of
events from the buyer’s breach of
contract.
Where there is an available market
for the goods in question, the
measure of damages is, in the absence
of special circumstances showing
proximate damage of a different
amount, the difference between the
contract price and the market or
current price at the time or times
when the goods ought to have been
accepted, or, if no time was fixed for
acceptance, then at the time of the
refusal to accept.
II. Special (NCC, Art. 1526)
1. Possessory Lien (NCC, Art. 1527) –
seller not bound to deliver the object of
the contract of sale if buyer has not paid
him the price. This remedy presupposes
that the sale is on credit. It is exercisable
only in following circumstances:
a. Where the goods have been
sold without any stipulation as
to credit;
517
b. Where the goods have been
sold on credit, but term of
credit has expired; or
c. Where the buyer becomes
insolvent.
NOTE: When part of goods delivered,
may still exercise right on goods
undelivered.
Moreover, when title to the property
has passed to the buyer, but possession
remains in the hands of the seller, the
latter is necessarily holding the goods
for the buyer. For his protection, the
seller is entitled to possess the same
until he has been fully paid, or a tender
of the price has been made.
A lien based on a writ of attachment is
inferior to that of the unpaid seller’s
right of preference under Article 2241.
2. Loss of Lien (NCC, Art. 1529)
a. When he delivers the goods to
the carrier or other bailee for
purpose of transmission to the
buyer without reserving the
ownership in the goods or the
right to the possession thereof;
b. When the buyer or his agent
lawfully obtains possession of
the goods; or
c. By waiver thereof.
NOTE: Seller loses lien when he
parts with good (but still, stoppage
in transitu can be exercised).
3. Right of Stoppage in Transitu (NCC,
Art. 1530)
Requisites: (I-SCENT-U)
a. Insolvent buyer;
b. The sale of goods must be on
Credit;
c. Seller must Surrender the
negotiable document of title, if
any;
d. Seller must bear the Expenses
of delivery of the goods after
the exercise of the right;
 Special Contracts - Sales
e. Seller must either actually take
possession of the goods sold or
give Notice of his claim to the
carrier or other person in
possession;
f. Goods must be in Transit; and
g. Unpaid seller.
NOTE: Buyer’s insolvency need not be
judicially declared. A person is
insolvent who either has ceased to pay
his debts in the ordinary course of
business or cannot pay his debts as
they become due, whether insolvency
proceedings have been commenced or
not. [NCC, Art. 1636(2)]
If the buyer, beforehand, knew of the
insolvency of the buyer, he cannot
exercise the right of stoppage in
transitu because he is under estoppel.
However, the right is not impaired
even if the insolvency of the buyer has
been existing at the time of the
perfection of the sale as long as the
seller was not aware of it.
4. Special Right to Resell the Goods (NCC,
Art. 1533)
Exercised when:
a. Goods are perishable in nature,
b. The seller has expressly
reserved the right of resale in
case of default; or
c. The buyer has been in default in
payment for an unreasonable
time.
NOTE: It is essential before the resale
can be made that the unpaid seller
should have a right of lien or should
have stopped the goods in transitu.
(Jurado, 2019)
5. Special Right to Rescind (NCC, Art.
1597)
Requisites:
a. Goods have not been delivered
to the buyer;
b. Buyer has repudiated the
contract of sale;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
c. Has manifested his inability to
perform his obligations
thereunder; or
d. Has committed a breach
thereof, which must be
substantial.
NOTE: Here, the seller may thereafter
totally rescind the contract of sale by
giving notice of his election to do so to
the buyer.
Q: 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
P500,000.00, value to be paid and delivered
to me, and receipt of which shall be
acknowledged 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
P100,000.00, 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? (2014 BAR)
A: NO. The contention of Nante is not tenable.
The deed itself states that for consideration
received, he sells, transfers, and conveys the
land to Monica and there was delivery of the
property to the latter. The contract is clearly one
of sale as there was no reservation of ownership
on the part of the seller Nante. The non-payment
of the price in a contract of sale would only
entitle the seller to rescind the contract but it
does not thereby prevent the transfer of
ownership particularly so as in this case, where
there was already delivery to the buyer.
Right of stoppage in transitu
The unpaid seller may resume possession of the
goods at any time while they are in transit, and
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 Civil Law
he will then become entitled to the same rights
in regard to the goods as he would have had if he
had never parted with the possession. (NCC, Art.
1530)
Thereafter, the seller may exercise the following
rights:
1. Right of lien (NCC, Art. 1527);
2. Right to resell (NCC, Art. 1533); and
3. Right to rescind the transfer of title. (NCC,
Art. 1534)
Goods considered to be in transit
1. From the time they have been delivered to a
carrier or other bailee and before the buyer
or his agent has taken possession of them;
2. If the goods are rejected by the buyer, and
the carrier or other bailee continues in
possession of them, even if the seller has
refused to receive them back. [NCC, Art.
1531(1)]
Goods deemed to be no longer in transit
After delivery to the buyer or his agent;
1. If the buyer or his agent obtains possession
of the goods at a point before the destination
originally fixed;
2. If the carrier or the bailee acknowledges
that he holds the goods in behalf of the
buyer or his agent; and
If the carrier or bailee wrongfully refuses to
deliver the goods to the buyer or his agent.
(Villanueva, 2009)
NOTE: If part delivery of the goods had been
made to the buyer or his agent in that behalf, the
remainder of the goods may be stopped in
transitu, unless such part delivery has been
made under such circumstances as to show an
agreement with the buyer to give up possession
of the whole of the goods. [NCC, Art. 1532 (4)]
Enforcement of Right of stoppage in transitu
The unpaid seller may:
Obtain actual possession of the goods; or
Give notice of his claim to the carrier or other
bailee who is in possession of the goods.
(NCC, Art. 1532)
Effect of the exercise of this right
519
1. The goods are no longer in transit;
2. Contract of carriage ends. The carrier now
becomes a mere bailee, and will be liable as
such;
3. The carrier should not deliver anymore to
the buyer or the latter’s agent; otherwise, he
will be clearly be liable for damages;
4. The carrier must redeliver to, or according
to the directions of, the seller; [NCC, Art.
1532 (2)]; and
5. Seller would have the same rights to the
goods as if he had never parted possession
with it. (NCC, Arts. 1530 & 1531)
Duty of the carrier or other bailee
GR: When duly and properly notified, it becomes
the duty of the carrier or other bailee in
possession of the goods to redeliver them
according to the directions or instructions of the
seller.
XPN: If the carrier or other bailee has issued a
negotiable document of title, he is not obliged to
make any redelivery unless said document is
first surrendered to him for cancellation. [NCC,
Art. 1532 (2)]
Seller’s knowledge of the buyer’s insolvency
The seller cannot exercise the right to stoppage
in transitu because he is under estoppel. He
assumed the risk.
Effect of exercising the special right of resale
The unpaid seller shall not be liable to the
original buyer upon the sale or for any profit
made by such resale, but may recover from the
buyer damages for any loss occasioned by the
breach of the sale. (NCC, Art. 1533)
NOTE: The seller cannot, however, directly or
indirectly buy the goods.
Notice to the defaulting buyer
GR: Notice to the defaulting buyer NOT required
in the resale of goods
XPN: Where the right to resell is not based on
the perishable nature of the goods or upon an
express provision of the sale.
NOTE: Notice of time and place of resale is not
essential to the validity of such resale. (NCC, Art.
 Special Contracts - Sales
1533)
Effect of exercising the special right to
rescind
When there is rescission, the unpaid seller
resumes his ownership over the goods.
The unpaid seller shall not be liable to the buyer
upon the sale, but may recover from the buyer
damages for any loss occasioned by the breach
of the sale. (NCC, Art. 1534)
Cases in which it is allowed:
1. Where the seller has expressly reserved the
right to rescind in case the buyer should
make default; or
2. Where the buyer has been in default in the
payment of the price for unreasonable
length of time. [NCC, Art. 1534(1)]
REMEDIES OF THE BUYER
I. Immovables in general
1. Disturbed in possession or with
reasonable grounds to fear disturbance
– Suspend payment until the seller has
caused the disturbance or danger to
cease.
3. In case of subdivision or condominium
projects – If real estate developer fails to
comply with obligation according to
approved plan:
a. Rescind; or
b. Suspend payment until seller
complies. (PD 957, Secs. 23 &24)
II. Movables
1. Failure of seller to deliver – Action for
specific performance without giving the
seller the option of retaining the goods
on payments of damages.
2. Breach of seller’s warranty – The buyer
may, at his election, avail of the
following remedies:
a. Accept goods & set up breach of
warranty by way of recoupment in
diminution or extinction of the
price;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
b. Accept goods & maintain action
against seller for damages;
c. Refuse to accept goods & maintain
action against seller for damages;
d. Rescind contract of sale & refuse to
receive goods/return them when
already received and recover the
price or any part which has been
paid.
3. Disturbed in possession or with
reasonable grounds to fear disturbance
(anticipatory breach) – Suspend
payment until the seller has caused the
disturbance or danger to cease.
NOTE: When the buyer has claimed and
been granted a remedy in any of these ways,
no other remedy can thereafter be granted,
without prejudice to the buyer’s right to
rescind, even if previously he has chosen
specific performance when fulfillment has
become impossible. [Villanueva, 2011; in
relation to NCC, Art. 1191(2)]
PORMANCE OF CONTRACT
Rule when the seller delivers goods lesser
than what he has contracted to sell
1. The buyer may reject the goods delivered
and he shall have no liability;
2. The buyer may accept the goods delivered,
but he will pay the contract rate, if he has
knowledge that the seller is not going to
deliver all the goods contracted for; or
3. If, however, the buyer has used or disposed
of the goods delivered before he knows that
the seller is not going to perform his
contract in full, the buyer shall not be liable
for more than the fair value to him of the
goods so received. (NCC, Art. 1522)
Rule when the seller delivers goods greater
than what he has contracted to sell
1. The buyer may accept only the goods which
were included in the contract and reject the
excess; or
2. The buyer may accept the entire goods
delivered and he shall pay for them at the
contract rate. (NCC, Art. 1522)
Rule when the seller delivers goods which
are mixed with other goods of different
description not included in the contract
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 Civil Law
1. The buyer may accept the goods which are
in accordance with the contract and reject
the rest (NCC, Art. 1522); or
2. The buyer may also accept them all if he so
desires, but he must pay for them all.
Rule if the subject matter is indivisible
The buyer may reject the whole of the goods.
(NCC, Art. 1522)
Duty of the seller with regard to accessions
and accessories
The seller has the duty to preserve the thing and
its accessions and accessories from the time of
the perfection of the contract of sale. (NCC, Art.
1537)
But all the fruits shall pertain to the vendee from
the day on which the contract was perfected.
NOTE: In case of loss or deterioration, the seller
is liable for damages or the buyer may seek
rescission with damages. However, if loss or
deterioration is due to a fortuitous event, the
seller is not liable. (NCC, Art. 1538)
In accordance with Article 1480, if the thing is
lost after perfection but before its delivery (i.e.,
before the ownership of the thing is transferred
to the vendee), the risk of loss is shifted to the
vendee as an exception to the general rule of res
perit domino.
Rule when the sale of immovable is by unit of
measure or number
GR: The seller must deliver all that may have
been stated in the contract.
XPN: If impossible to deliver all, the buyer may
choose between:
a. Proportional reduction of the price; or
b. Rescission of the contract, provided that the
deficiency is not less than 1/10 of the area
stated in the contract. (NCC, Art. 1539)
NOTE: The buyer is entitled to rescind the
contract in the following cases:
1. The lack in area is at least 1/10th than that
stated or stipulated in the contract;
521
2. The deficiency in the quality specified in the
contract exceeds 1/10th of the price agreed
upon; and
3. The buyer would not have bought the
immovable had he known of its smaller area
or inferior quality irrespective of the extent
of the lack in area or quality. (De Leon, 2011;
in relation to NCC, Art. 1539)
Prescriptive period for the action of
rescission of contract
Six (6) months from the day of delivery (NCC,
Art. 1543)
How payment is made by the buyer
Price is paid at the time and place stipulated in
the contract. It is made to the person in whose
favor the obligation has been constituted or his
successor in interest, or any person authorized
to receive. (Villanueva, 2009)
DOCUMENTS OF TITLE
“Documents of title to goods” includes any bill of
lading, dock warrant, “quedan”, or warehouse
receipt or order for the delivery of goods, or any
other document used in the ordinary course of
business in the sale or transfer of goods, as proof
of the possession or control of the goods, or
authorizing or purporting to authorize the
possessor of the document to transfer or receive,
either by endorsement or by delivery, goods
represented by such documents.
“Goods” include all chattels personal but not
things in action or money of legal tender in the
Philippines. The term includes growing fruits or
crops. [NCC, Art. 1636 (1)]
Types of documents of title
1. Negotiable – A document of title which
states that the goods referred to therein are
deliverable to bearer, or to order of any
person named in such document.
2. Non-negotiable – A document of title which
does not state that the goods referred to
therein are deliverable to neither bearer nor
to the order of any person named therein.
NEGOTIABLE DOCUMENTS OF TITLE
Negotiated by (NCC, Arts. 1508 & 1509)
 Special Contracts - Sales
1. Delivery alone, in the following cases:
a. Bearer document – the main
purpose is to deliver the goods to
the bearer
b. Endorsed in blank or to bearer –
when the DT was originally issued
to order, but such person or a
subsequent endorsee of the DT has
endorsed it in blank or to the bearer
NOTE: In the cases mentioned above, any holder
may endorse the same to himself or to any
specified person. In which case, the document
shall thereafter be negotiated only by the
endorsement of the endorsee.
2. Endorsement and delivery
Negotiable document of title may be negotiated
only be endorsement of the person to whose
order the goods are by the terms of the
documents deliverable, which must be coupled
with delivery thereof. The endorsement may be
either in blank, to bearer, or to a specific person.
May be negotiated by (NCC, Art. 1512)
1. The owner; or
2. Any person to whom the custody or
possession of the DT has been entrusted by
the owner.
Effects of negotiation (NCC, Art. 1513)
The person to whom the negotiable DT has been
duly negotiated acquires the following:
1. The title to the goods as the person to whose
order the goods were delivered had, or had
ability to convey;
2. The title to the goods as the person who
negotiated the document to him had, or had
the ability to convey; and
3. Has the direct obligation of the bailee who
issued the document to hold possession of
the goods, for him according to the terms of
the document fully, as if such bailee had
contracted directly with him.
NOTE: By dealing with the negotiable DT, it is as
if the parties to the sale were dealing directly
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
with the goods covered thereby.
NON-NEGOTIABLE DOCUMENTS OF TITLE
How is non-negotiable DT transferred or
assigned (NCC, Art. 1514)
1. The endorsement of DT gives the transferee
no additional right;
2. The DT may be transferred by the holder
through delivery to a purchaser, or a donee;
3. The sale of a DT constitutes an assignment,
which under Art. 1624, NCC, is perfected by
mere consent. However, under Art. 1625, it
is required to be in a public instrument to
produce effects as against third persons.
NOTE: A non-negotiable DT constitutes an
incorporeal right.
Effects of transfer (NCC, Art. 1514)
A transferee acquires, against the transferor the
following:
1. Has the right to notify the bailee who issued
the document of the transfer thereof;
2. Has the direct obligation of such bailee to
hold possession of the goods for him, to the
terms of the document; and
NOTE: There is no legal relationship
between the assignee and the bailee until
the latter is informed by the former of the
assignment of the DT.
Has the title to the goods which must be subject
to the terms of agreement with the
transferor, if any. (Villanueva, 2018)
WARRANTIES
Warranty
A statement or representation made by the
seller of goods, as part of the contract of sale,
having reference to the character, quality, or
title, of the goods, and by which he promises or
undertakes to insure that certain facts are or
shall be as he then represents. (De Leon, 2011)
Effect of a breach of warranty
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 Civil Law
Buyer may: XPN: If the seller is an expert and his opinion
was relied upon by the buyer.
1. Refuse to proceed with the contract; or
2. Proceed with the contract and waive the Implied warranties
condition.
Warranties deemed included in all contracts of
NOTE: If the condition is in the nature of a sale by operation of law. (NCC, Art. 1547)
promise that it should happen or be performed,
the non-performance may be treated as a breach 1. Warranty that seller has right to sell – refers
of warranty. to consummation stage, at which time the
ownership is to pass. Not applicable to a
Kinds of warranties sheriff, auctioneer, mortgagee, pledgee or
any other person professing to sell by virtue
1. Express; or of authority in fact or in law, for the sale of a
2. Implied thing in which a third person has legal or
equitable interest (NCC, Art. 1547);
NOTE: Prescriptive period of actions based on
express warranty: 2. Warranty against eviction (NCC, Art. 1548)

a. That specified in the contract and in Requisites: (JPENS)

the absence thereof; or
b. Four (4) years. (Rabuya, 2017) a. Buyer is Evicted in whole or in part
from the subject matter of sale;
Express warranties b. Final Judgment;
c. Eviction is by Final Judgment;
Any affirmation of fact or any promise by the d. Basis of eviction is a right Prior to sale
seller relating to the thing if the natural or act imputable to seller;
tendency of such affirmation or promise is to e. Seller has been Summoned in the suit
induce the buyer to purchase the same, and if for eviction at the instance of buyer, or
the buyer purchases the thing relying thereon. made by a third-party defendant
(NCC, Art. 1546) through a third-party complaint
brought by the buyer; and
Requisites: (AIR) f. There is No waiver of warranty on the
part of the buyer.
1. It must be an Affirmation of fact or any
promise by the seller relating to the subject NOTE: For eviction – disturbance in law is
matter of sale; required and not just trespass in fact.
2. The natural tendency of such affirmation or
promise is to Induce buyer to purchase the 3. GR: Warranty against non-apparent burden
subject matter; and or servitude (NCC, Art. 1560)
3. The buyer purchases the subject matter
Relying on such affirmation or promise Requisites:
thereon.
a. Immovable sold is encumbered
Liability of the seller for breach of express with non-apparent burden or
warranties servitude not mentioned in the
agreement; and
The seller is liable for damages. (Villanueva, b. Nature of non-apparent servitude
2009) or burden is such that it must be
presumed that the buyer would not
Effect of expression of opinion have acquired, it had he been aware
thereof.
GR: A mere expression of opinion, no matter
how positively asserted, does not import a XPN: Warranty not applicable when the
warranty. (De Leon, 2011) servitude is mentioned in the agreement, or
when the non-apparent burden or servitude

523
 Special Contracts - Sales
is recorded in the Registry of Property –
unless there is an express warranty that the
thing is free from all burdens and
encumbrances.
(XPN: Warranty is not applicable:
a. When the burden or servitude is
apparent;
b. When the buyer had knowledge of the
encumbrance, whether registered or
not; or
c. When the non-apparent burden or
servitude is registered in the Registry of
Property. (De Leon, 2011))
XPN TO XPN: There is an express warranty
that the thing is free from all burdens and
encumbrances.)
4. Warranty against Hidden Defects (NCC, Art.
1561)
Requisites: SHAWNE
a. Defect is important or Serious;
i. The thing sold is rendered unfit
for the use which it is intended;
and
ii. Diminishes its fitness for such
use to such an extent that the
buyer would not have acquired
it, had he been aware thereof,
or would have at least given a
lower price for it.
b. Defect is Hidden;
c. Defect Exists at the time of the sale;
d. Buyer gives Notice of the defect to the
seller within a reasonable time;
e. Action for rescission or reduction of the
price is brought within the proper
period;
i. Within six (6) months from
delivery of the thing sold (NCC,
Art. 1571); and
ii. Within 40 days from delivery,
in the case of a redhibitory
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
action on the sale of defective
animals. (NCC, Art. 1577)
f. There must be no Waiver of warranty on
the part of the buyer.
NOTE: Hidden faults or defects pertain only to
those that make the object of sale unfit for the
use for which it was intended at the time of the
sale, or those which considerably decrease such
fitness.
Non-applicability of implied warranty (ASAP)
1. “As is and where is” sale;
2. Sale of second hand articles;
3. Sale by virtue of authority in fact or law; and
4. Sale at public auction for tax delinquency.
Where the cause of action is to hold the seller
of a vehicle for breach of implied warranty
Under Article 1599 of the Civil Code, once an
express warranty is breached, the buyer can
accept or keep the goods, and maintain an action
against the seller for damages. In the absence of
an existing express warranty, a complaint for
damages may be anchored on the enforcement
of an implied warranty against hidden defects.
However, this right must be exercised within six
(6) months from the delivery of the thing sold, or
else his cause of action had become time-
barred. (De Guzman v. Toyota Cubao, G.R. No.
141480, November 29, 2006)
Effects of waiver of an implied warranty
1. Seller is in bad faith and there is waiver
against eviction – the waiver is void.
2. When the buyer who is without knowledge
of a particular risk, made a general
renunciation of warranty – is not a waiver
but merely limits liability of seller in case of
eviction.
3. When the buyer with knowledge of risk of
eviction assumed its consequences and
made a waiver – seller is not liable
(applicable only to waiver of warranty
against eviction).
WARRANTY AGAINST EVICTION
In a contract of sale, unless a contrary intention
appears, there is an implied warranty on the
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 Civil Law
part of the seller that he has the right to sell the
thing at the time when the ownership is to pass,
and that the buyer shall from that time have and
enjoy the legal and peaceful possession of the
thing. [NCC, Art. 1547(1)]
Kinds of waiver of eviction by the buyer
1. Consciente – waiver voluntarily made by the
buyer without the knowledge and
assumption of the risks of eviction; and
2. Intencionada – waiver made by the buyer
with knowledge of the risks of eviction and
assumption of its consequences. (NCC, Art.
1554)
NOTE: Every waiver is presumed to be
consciente unless the contrary is proven.
Coverage of a warranty against eviction
It covers eviction by a final judgment based on a
right prior to the sale, or an act imputable to the
vendor, whereby the vendee is deprived of the
whole or of a part of the thing purchased.
The vendor shall answer for the eviction even
though nothing has been said in the contract on
the subject.
NOTE: The contracting parties, however, may
increase, diminish, or suppress this legal
obligation of the vendor. (NCC, Art. 1548)
Effect of a breach of warranty against
eviction
The buyer shall have the right to demand the R-
I-C-E with damages from seller:
1. The Return of the value which the thing sold
had at the time of the eviction, be it greater
or lesser than the price of the sale;
2. The Income or fruits, if he has been ordered
to deliver them to the party who won the
suit against him;
3. The Costs of suit which caused the eviction,
and, in a proper case, those of suit brought
against the vendor for the warranty;
4. The Expenses of contract if buyer has paid
them; and
5. The damages, interests and ornamental
expenses if sale was made in bad faith. (NCC,
Art. 1555)
525
NOTE: Vendor is liable for any hidden defect
even if he is not aware thereof (Caveat Venditor).
Purchaser must be aware of the title of the
vendor (Caveat Emptor).
Rights of buyer in case of partial eviction
1. Restitution (with obligation to return the
thing without other encumbrances than
those which it had when he acquired it);
2. Rescission of the contract if the part lost by
eviction is of such importance, in relation to
the whole, that the buyer would not have
bought it without said part, provided that he
returns the thing without other
encumbrances than those which it had when
he acquired it; or
3. Enforcement of the vendor’s warranty
against eviction. (Paras, 2013; NCC, Art.
1556)
Inapplicability of rescission
GR: Rescission is not a remedy in case of total
eviction because rescission contemplates that
the one demanding it is able to return whatever
he has received under the contract. Since the
vendee can no longer restore the subject matter
of the sale to the vendor, rescission cannot be
carried out. (NCC, Art. 1385)
XPN: The buyer may demand rescission in case
of partial eviction, because there still remains a
portion of the thing sold. (De Leon, 2009)
WARRANTY AGAINST HIDDEN DEFECT
Hidden defect (NCC, Art. 1561)
One which is unknown or could not have been
known to the buyer. (Diaz, 2006)
NOTE: Seller does not warrant patent defects, or
those which are visible, or even for those which
are not visible if the buyer is an expert or should
have known them.
Reason: Caveat emptor (buyer beware).
Application
The seller shall be responsible for warranty
against “hidden defect” only when:
 Special Contracts - Sales
1. The nature of the hidden defect is such that
it should render the subject matter unfit for
the use for which it is intended; or
2. Should diminish its fitness for such use to
such an extent that, had the buyer been
aware thereof, he would not have acquired it
or would have given a lower price for it.
Redhibitory defect
It is an imperfection or defect in the article sold
against which defect the seller is bound to
warrant. The vice must constitute an
imperfection, a defect in its nature, which is of
certain importance; and thus, a minor defect
does not give rise to redhibition. (De Leon, 2011)
Redhibitory defect on animals (NCC, Art.
1576)
If the hidden defect of animals, even in case a
professional inspection has been made, should
be of such a nature that expert knowledge is not
sufficient to discover it, the defect shall be
considered as redhibitory.
NOTE: The warranty against hidden defects
shall not apply to animals sold at fairs or at
public auctions, or of livestock sold as
condemned. (NCC, Art. 1574)
Void sale of animal (NCC, Art. 1575)
The sale is void if the animal is:
1. Suffering from contagious diseases; or
2. Unfit for the use or service for which they
were purchased, as indicated in the contract.
Responsibility of a vendor for hidden defects
If the hidden defects which the thing sold may
have:
1. Render it unfit for the use for which it is
intended; or
2. Diminish its fitness for such use to such an
extent that had the vendee been aware
thereof, he would not have acquired it or
would have given a lower price for it. (NCC,
Art. 1561)
Extent of warranty by the seller against
hidden defects
The seller is responsible to the vendee for any
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
hidden faults or defects in the thing sold, even
though he was not aware thereof.
When the seller is not answerable for the
defects of the thing sold
1. For patent defects or those which are
visible;
2. Even for those which are not visible if the
buyer is an expert who, by reason of his
trade or profession, should have known
them (NCC, Art. 1561); or
3. If the contrary has been stipulated, and the
vendor was not aware of the hidden faults
or defects in the thing sold. (NCC, Art. 1566)
Effect of a breach of warranty against hidden
defects
It would depend on whether the seller had
knowledge of such defect, and whether there has
been a waiver of the warranty.
1. If the thing should be lost in consequence of
the hidden faults, and seller was aware of
them – he shall:
a. bear the loss;
b. return the price; and
c. refund the expenses of the contract,
with damages.
2. If the thing is lost and the seller was not
aware of the hidden faults – he shall:
a. return the price and interest
thereon; and
b. reimburse the expenses of the
contract which the buyer might
have paid, but not for damages.
(Villanueva, 2009)
3. If the thing sold had any hidden fault at the
time of sale, and should thereafter be lost
through a fortuitous event or through the
fault of the buyer:
a. If the seller was not aware of the hidden
of the hidden defects, he shall be liable
to return the price paid less the value of
the thing at the time of the loss;
b. If there was bad faith, the seller shall
also pay damages to the buyer.
Prescriptive period
526
 Civil Law
Six (6) months from date of the delivery of the
thing sold. (NCC, Art. 1571)
Remedies of the buyer in case of sale of
things with hidden defects (NCC, Art. 1567)
The vendee may elect between:
1. Withdrawing from the contract, with a claim
for damages; or
2. Demanding a proportionate reduction of the
price, with a claim for damages.
Waiver of warranty against eviction hidden
defects
There is waiver of warranty against eviction
hidden defects when the lessee has inspected
the premises and decides to consummate the
contract based on such inspection. Under Arts.
1561 and 1653 of the Civil Code, the lessor is
responsible for warranty against hidden defects,
but he is not answerable for patent defects or
those, which are visible, and which can be seen
upon inspection. (Jon and Marissa De Ysasi v.
Arturo and Estela Arceo, G.R. No. 136586,
November 22, 2001)
Specific implied warranties in sale of goods
(NCC, Art. 1562)
1. Warranty of fitness for the purpose
That goods are suitable for the special
purpose of the buyer which will not be
satisfied by mere fitness for general
purposes.
GR: No implied warranty
XPNs:
a. Buyer expressly or impliedly manifests
to the seller the particular purpose for
which the goods are required acquired;
and
b. Buyer relies upon the seller’s skill or
judgment. (De Leon, 2011)
2. Warranty of merchantability
That goods are reasonably fit for the general
purpose for which they are sold.
There is an implied warranty that the goods
shall be of merchantable quality when they
527
are bought by description from a sealer who
seals goods of such description.
REMEDIES IN CASE OF BREACH OF
WARRANTY
1. Accept goods and set up against the seller,
the breach of warranty by way of
recoupment in diminution or extinction of
the price;
2. Accept goods and maintain action against
seller for damages;
3. Refuse to accept goods and maintain action
against seller for damages; or
4. Rescind contract of sale, refuse to receive
goods/return them when already received,
and recover the price paid.
Remedies of the buyer in case of breach of
warranty NOT absolute
The vendee's remedies against a vendor with
respect to the warranties against hidden defects
or encumbrances upon the thing sold, in the case
of Arts. 1561, 1562, 1564, 1565 and 1566 of the
Civil Code, may either be to withdraw from the
contract or demand a proportionate reduction of
the price, with damages in either case.
The vendee may also ask for the annulment of
the contract upon proof of error or fraud, in
which case the ordinary rule on obligations shall
be applicable. Responsibility arising from fraud
is demandable in all obligations and any waiver
of an action for future fraud is void.
Responsibility arising from negligence is also
demandable in any obligation, but such liability
may be regulated by the courts, according to the
circumstances.
The vendor could likewise be liable for quasi-
delict under Article 2176 of the Civil Code, and
an action based thereon may be brought by the
vendee. (Coca-Cola Bottlers Philippines, Inc. v. CA,
G.R. No. 110295, October 18, 1993)
Instances when the buyer cannot rescind the
sale in case there is a breach of warranty
1. If he knew of the breach of warranty at the
time that he accepted the goods without
protest;
2. If he fails to return or offer to return goods
to seller in substantially as good condition
as they were at the time the ownership was
transferred to the buyer; or
 Special Contracts - Sales
3. If he fails to notify the seller within a 2. If imposed on the performance of an
reasonable time of his election to rescind. obligation, the other injured party may:

Q: Goodyear Philippines sold a car to a. Refuse to proceed with the contract; or

Anthony Sy. Later on, Sy sold the car to Jose b. Proceed with the contract, waiving the
Lee. When Lee tried to register the car in his performance of the condition.
name, he failed to have it registered because
it turned out that the car was stolen before, Condition v. Warranty
and was only subsequently recovered by
Goodyear. However, PNP did not lift the alert CONDITION WARRANTY
alarm over the said car. Due to this, the car As to nature
was impounded and Lee was sued by PNP. Pertains to the
This problem was relayed by Lee to Sy. It led Pertains to the
performance of the
to Sy filing a case against Goodyear for existence or perfection
obligation.
breach of warranty. It is Sy’s argument that it of the obligation.
is Goodyear’s duty to convey the vehicle to As to the need for stipulation
Sy, free from all liens, encumbrances and
legal impediments. Was there a breach of Need not be stipulated;
Must be stipulated to
warranty by Goodyear? may form part of the
form part of the
obligation by provision
obligation.
A: NO. Upon the execution of the Deed of Sale, of law.
Goodyear did transfer ownership of, and deliver As to subject matter
the vehicle to Sy. The impoundment of the May attach itself to the Relates to the subject
vehicle and the failure to register it were clearly obligation of seller to matter itself or to
acts that were not deliberately caused by deliver possession and obligation of the seller
Goodyear, but that resulted solely from the transfer. as to the subject matter
failure of the PNP to lift the latter’s own alarm of the sale.
over the vehicle. Assuming there was a breach of
the implied warranty against hidden EXTINGUISHMENT OF SALE
encumbrances, notice of breach was not given to
the Goodyear within a reasonable time. Article Causes for extinguishment of sale
1586 of the Civil Code requires that notice be
given after the breach, of which Sy ought to have A contract of sale is extinguished by:
known. (Goodyear Philippines, Inc. v. Sy and Lee,
G.R. No. 154554, November 9, 2005) 1. Same causes as how an obligation is
extinguished, namely:
CONDITION vis-à-vis WARRANTY
a. Payment or performance;
Condition b. Loss of the thing due;
c. Condonation or remission of the
An uncertain event or contingency upon the debt;
happening of which the obligation or right of the d. Confusion or merger of the rights of
contract depends. In such case, the obligation of creditor and debtor;
the contract does not attach until the condition e. Compensation;
is performed. (De Leon, 2011) f. Novation;
g. Annulment;
NOTE: There may be a contract of sale of goods, h. Rescission;
whose acquisition by the seller depends upon a i. Fulfillment of resolutory condition;
contingency, which may or may not happen. or
[NCC, Art. 1462(2)] j. Prescription

Effect of non-fulfillment of a conditioning 2. Conventional Redemption

1. If imposed on the perfection of contract – it 3. Legal redemption

prevents the juridical relation itself from
coming into existence. Redemption

UNIVERSITY OF SANTO TOMAS 528

2021 GOLDEN NOTES
 Civil Law
It is a mode of extinguishment wherein the seller The right to repurchase is reserved by a
has the right to redeem or repurchase the thing stipulation to that effect in the contract of sale.
sold upon return of the price paid. Because it is not a right granted to the vendor by
the vendee, but is a right reserved by the vendor.
Kinds of redemption
Reservation CANNOT be made in an instrument
1. Legal; and different from that of the contract of sale. Once
2. Conventional the instrument of absolute sale is executed, any
right thereafter granted the vendor in a separate
Incorporation of right to redeem in every instrument cannot be a right of repurchase but
contract of sale some other right like the option to buy.
(Villanueva, 2009)
The right of the vendor to redeem/repurchase
must appear in the same instrument. However, Parole evidence in proving right of
parties may stipulate on the right of repurchase repurchase
in a separate document but in this case, it is valid
only between the parties and not against third The right of repurchase may be proved by parol
persons. (Pineda, 2010) evidence when the contract of sale has been
reduced in writing, or when no objection to such
Pre-emption v. Redemption parol evidence was made during trial. (Mactan
Cebu International Airport Authority v. CA, G.R.
PRE-EMPTION REDEMPTION No. 121506, October 30, 1996)
As to when it arises
Effect on the reserved right to repurchase if
Arises before sale Arises after sale
the principal contract of sale is void
As to availability of rescission
Rescission is There can be rescission Since the underlying contract of sale was
inapplicable. of original sale.
inoperative and consequently void, then the
As to whom the action is directed reserved right of repurchase would also be void.
Action is directed (Villanueva, 2009)
Action is directed
against prospective
against buyer.
seller.
EQUITABLE MORTGAGE
CONVENTIONAL REDEMPTION
One which lacks the proper formalities, form or
words or other requisites prescribed by law for
Seller reserves the right to repurchase thing sold a mortgage, but shows the intention of the
coupled with the obligation to return the parties to make the property subject of the
purchase price of the sale, expenses incurred contract as security for a debt and contains
under the contract, other legitimate payments nothing impossible or contrary to law. (Cachola
made by reason of the sale as well as the v. CA, G.R. No. 97822, May 7, 1992; NCC, Art. 1602)
necessary & useful expenses made on the thing
sold. (NCC, Art. 1601 in relation to Art. 1616) Essential requisites of equitable mortgage
Other person can exercise the right to 1. Parties entered into a contract denominated
repurchase as one of sale; and
2. Their intention was to secure an existing
The right to repurchase may be exercised by any debt by way of a mortgage.
person to whom the right of repurchase may be
transferred, or in case of legal redemption, by Presumption of an equitable mortgage (2005
the person so entitled by law. (Villanueva, 2009) BAR)

NOTE: Right to repurchase must be reserved at A sale with conventional redemption is deemed
the time of perfection of sale. (Pineda, 2010) to be an equitable mortgage in any of the
following cases. (NCC, Art. 1602) (AIR-STAR)
Reservation of right to repurchase

529
 Special Contracts - Sales
1. Price of the sale with right to repurchase is
unusually Inadequate;
2. Seller Remains in possession as lessee or
otherwise;
3. Upon or after the expiration of the right to
repurchase, Another instrument extending
the period of redemption or granting a new
period is executed;
4. Purchaser Retains for himself a part of the
purchase price;
5. Seller binds himself to pay the Taxes on the
thing sold;
6. In any other case where the real intention of
the parties is that the transaction shall
Secure the payment of a debt or the
performance of any other obligation; or
7. Art. 1602 shall also apply to a contract
purporting to be an Absolute sale. (NCC, Art.
1604; 2005 BAR)
NOTE: In case of doubt in determining whether
it is equitable mortgage or sale a retro (with
right of repurchase); it shall be construed as
equitable mortgage. The remedy is reformation.
Inadequacy of price and Equitable Mortgage
Inadequacy of price does NOT constitute proof
sufficient to declare a contract as one of
equitable mortgage. Mere inadequacy of the
price is not sufficient. The price must be grossly
inadequate, or purely shocking to the
conscience. (Diaz, 2010)
The decisive factor in evaluating whether or
not a deed of sale absolute in form is a
mortgage
The intention of the parties, as manifested in the
relative situation of the parties at that time, the
attitude acts, conduct, 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, is the
decisive factor in evaluation if the deed is a
mortgage. (Sps. Raymundo, et al. v. Sps. Bandong,
G.R. No. 171250, July 4, 2007)
Effects when sale is adjudged as an equitable
mortgage
1. The apparent seller may ask for the
reformation of the instrument (NCC, Art.
1605; 2005 BAR);
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2. Money, fruit or other benefit to be received
by the buyer as rent or otherwise shall be
considered as interest (NCC, Art. 1602);
3. The court may decree that “vendor” pay his
outstanding loan to the “vendee” (Banga v.
Bello, G.R. No. 156705, September 30, 2005);
and
4. A remand of the case to the trial court where
the latter did not pass upon the mortgagor’s
claim that he had paid his mortgage
obligation, only for the purpose of the
determining whether said obligation has
been paid, and if not, how much should still
be paid. (Banga v. Bello, G.R. No. 156705,
September 30, 2005)
Pactum Commissorium
A stipulation for automatic vesting of title over
the security in the creditor in case of debtor’s
default. (Villanueva, 2009)
The creditor cannot appropriate the things given
by way of pledge or mortgage or dispose of
them, otherwise that would result in pactum
commissorium.
Article 2088 of NCC prohibits the creditor from
appropriating the things given by way of pledge
or mortgage, or from disposing of them; any
stipulation to the contrary is null and void.
NOTE: Articles 2088 and 2141 of Republic Act
No. 386, otherwise known as the “Civil Code of
the Philippines,” was repealed by Republic Act
No. 11057, otherwise known as the “Personal
Property Security Act.” Previously, the creditor
has no right to appropriate to himself the things
given by way of pledge or mortgage or dispose of
them because he or she is permitted only to
recover credit from the proceeds of the sale of
the property at a public auction through a public
officer in the manner prescribed in Sec. 14 of Act
No. 1508.
REDEMPTION v. OPTION TO BUY
REDEMPTION OPTION TO BUY
As to nature
530
 Civil Law
Forms part of the Principal and 4. When period has expired & seller allowed
contract of sale. preparatory contract. the period of redemption to expire – seller is
The right must be May exist prior to or at fault for not having exercised his rights so
imbedded in a contract after the perfection of he should not be granted a new period. (i.e.,
of sale upon its the sale, or be if the issue before the court is one whether
perfection. imbedded in another the contract is an absolute sale or a sale a
contract upon that retro)
contract’s perfection.
NOTE: Tender of payment is sufficient, but it is
As to necessity of separate consideration not in itself a payment that relieves the seller
Does not need a A separate from his liability to pay the redemption price.
separate consideration consideration is
to be valid and needed for it to be Running of period of legal redemption
effective. valid and effective.
As to period 1. Right of legal pre-emption or redemption
Redemption period Period for an option shall be exercised within 30 days from
cannot exceed 10 right may exceed 10 written notice by the vendor or the
years. years. prospective vendor – deed of sale not to be
As to requirement of notice recorded in Registry of Property unless
Notice is required for Only notice for the accompanied by affidavit of the vendor that
its exercise, exercise is required. he has given notice to all possible
accompanied with by a redemptioners; or
tender of 2. When there is actual knowledge, no need to
payment/consignment give written notice; and the doctrine of
. laches may apply, or when the redemptioner
As to effect acted as a middleman or intermediary to
Its exercise Its exercise results effect the sale to a third party, the period of
extinguishes an into the perfection of a redemption begins to run from actual
existing contract of contract of sale. knowledge.
sale. (Villanueva, 2009)
Q: The subject property was mortgaged to
NOTE: Once the instrument of absolute sale is Dura Tire and Rubber Industries, Inc. as
executed, the seller can no longer reserve the security for credit purchases to be made by
right of repurchase, and any right thereafter Move Overland Venture and Exploring, Inc.
granted the seller by the buyer cannot be a right Under the mortgage agreement, Dura Tire
of repurchase but some other rights, like that of was given the express authority to
an option to buy. extrajudicially foreclose the property should
Move Overland fail to pay its credit
PERIOD OF REDEMPTION purchases.

1. No period agreed upon – Four (4) years
from date of contract;
2. When there is agreement – should not
exceed 10 years; but if it exceeded, valid
only for the first 10 years (NCC, Art. 1606);
3. When period to redeem has expired & there
has been a previous suit on the nature of the
contract – seller still has 30 days from final
judgment on the basis that contract was a
sale with pacto de retro; and
Rationale: No redemption due to erroneous
belief that it is equitable mortgage which
can be extinguished by paying the loan.
On June 5, 1992, A&A Swiss sold the property
to Mahinay. In the Deed of Absolute Sale,
Mahinay acknowledged that the property
had been previously mortgaged by A&A
Swiss to Dura Tire, holding himself liable for
any claims that Dura Tire may have against
Move Overland. Therafter, Mahinay sought to
pay Move Overland's obligation to release
the property from the mortgage. Dura Tire,
however, ignored Mahinay's request.
For Move Overland's failure to pay its credit
purchases, Dura Tire applied for
extrajudicial foreclosure of the property.
Mahinay protested the impending sale and
filed a third-party claim before the Office of

531
 Special Contracts - Sales
the Provincial Sheriff of Cebu. Despite the
protest, Sheriff Romeo Laurel proceeded
with the sale and issued a Certificate of Sale
in favor of Dura Tire, the highest bidder at
the sale. The property was purchased at
₱950,000.00, and the Certificate of Sale was
registered on February 20, 1995.
Relying on the Court of Appeals’ finding that
he was a “substitute mortgagor,” Mahinay
filed a Complaint for judicial declaration of
right to redeem. In the Judgment on the
Pleadings, the Regional Trial Court dismissed
Mahinay’s Complaint for judicial declaration
of right to redeem. On a pure question of law,
Mahinay directly filed a Petition for Review
on Certiorari before this Court. Was the one
(1)-year period of redemption tolled when
Mahinay filed his Complaint for annulment of
foreclosure sale?
A: NO. The right of redemption being
statutory, the mortgagor may compel the
purchaser to sell back the property within the
one (1)-year period under Act No. 3135. If the
purchaser refuses to sell back the property, the
mortgagor may tender payment to the Sheriff
who conducted the foreclosure sale. Here,
Mahinay should have tendered payment to
Sheriff Laurel instead of insisting on directly
paying Move Overland's unpaid credit purchases
to Dura Tire. Since the period of redemption is
fixed, it cannot be tolled or interrupted by the
filing of cases to annul the foreclosure sale or to
enforce the right of redemption. “To rule
otherwise ... would constitute a dangerous
precedent. A likely offshoot of such a ruling is
the institution of frivolous suits for annulment of
mortgage intended merely to give the mortgagor
more time to redeem the mortgaged property.”
With Mahinay failing to redeem the property
within the one (1)-year period of redemption,
his right to redeem had already lapsed. As
discussed, the pendency of an action to annul the
foreclosure sale or to enforce the right to
redeem does not toll the running of the period of
redemption. The trial court correctly dismissed
the Complaint for judicial declaration of right to
redeem. (Makilito Mahinay vs. Dura Tire &
Rubber Industries, Inc., G.R. No. 194152, June 5,
2017, J. Leonen)
Extension of the time to redeem
Parties may extend the period to redeem as long
as the total period shall not exceed ten years.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
However, such extension can only be granted
when the original period has not yet expired.
Otherwise, there exists only a promise to sell on
the buyer’s part. (Pineda, 2010)
EXERCISE OF THE RIGHT TO REDEEM
Obligations the vendor a retro if he desires to
redeem (NCC, Art. 1616)
The vendor a retro must pay or reimburse the
vendee a retro the following:
1. Price of the sale;
2. Expenses of the contract;
3. Other legitimate expenses made by reason
of the sale; and
4. Necessary and useful expenses made on the
thing sold. (Pineda, 2010)
Written notice mandatory for the right of
redemption to commence
Written notice is mandatory for the right of
redemption to commence and the notice must be
in writing stating the execution of the sale and
its particulars. It may be made in a private or
public document. (Pineda, 2010)
Conversely, the filing of the suit for ejectment or
collection of rentals against a co-owner actually
dispenses with the need for a written notice, and
must be construed as commencing the running
of the period to exercise the right of redemption,
since the filing of the suit amounted to actual
knowledge of the sale from which the 30-day
period of redemption commences to run.
(Villanueva, 2016)
Prescribed form for an offer to redeem
There is no prescribed form for an offer to
redeem to be properly effected. Hence, it can
either be through a formal tender with
consignation of the redemption price within the
prescribed period. What is paramount is the
availment of the fixed and definite period within
which to exercise the right of legal redemption.
NOTE: Art. 1623 of the Civil Code does not
prescribe any distinctive method for notifying
the possible redemptioner.
Tender of payment NOT necessary for
redemption to take effect
532
 Civil Law
Tender of payment is not necessary and offer to
redeem is enough only when the amount of 1. Both the land of the one exercising the right
repurchase is uncertain and depends upon an of redemption and the land sought to be
accounting of the vendee who has not yet made redeemed must be rural;
such accounting. (Tolentino, 1999) 2. The lands must be adjacent;
3. There must be an alienation
Effect of failure to redeem 4. The piece of rural land alienated must not
exceed one (1) hectare;
There must be judicial order before ownership 5. The grantee or vendee must already own
of real property is consolidated to the buyer a any other rural land; and
retro. 6. The rural land sold must not be separated
by brooks, drains, ravines, roads, and other
Vendor a retro CANNOT be compelled to apparent servitudes from the adjoining
redeem lands.

There is no obligation on the part of the vendor NOTE: In case two or more adjacent owners
a retro to repurchase. He may or may not desire to exercise the right of redemption, the
exercise the right to repurchase. (Pineda, 2010) following rules on preference is applied:

LEGAL REDEMPTION 1. When the lands have different land area

– the owner of the adjoining land of
It is the right to be subrogated upon the same smaller area.
terms and conditions stipulated in the contract, 2. When the lands have similar land area –
in the place of one who acquires the thing by the owner who first requested the
purchase or by dacion en pago or by other redemption. (De Leon, 2011)
transaction whereby ownership is transmitted
by onerous title. (NCC, Art. 1619) Right of pre-emption and legal redemption of
adjacent owners of urban lands
Instances of legal redemption
Requisites:
1. Sale of a co-owner of his share to a stranger
1. The one exercising the right must be an
(NCC, Art. 1620; 2000, 2002 BAR);
adjacent owner;
2. When a credit or other incorporeal right in
2. The piece of land sold must be so small
litigation is sold (NCC, Art. 1634);
and so situation that a major portion
3. Sale of an heir of his hereditary rights to a
thereof cannot be used for any practical
stranger (NCC, Art. 1088);
purpose within a reasonable time; and
4. Sale of adjacent rural lands not exceeding 1
3. Such urban land was bought by its
hectare (NCC, Art. 1621); and
owner merely for speculation
5. Sale of adjacent small urban lands bought
merely for speculation. (NCC, Art. 1622)
NOTE: In case two or more adjoining owners
desire to exercise the right of legal redemption,
Right of legal redemption of co-owner
the law prefers the owner whose intended use of
the land appears best justified.
Requisites:

1. There must be co-ownership of a thing; Other instances when the right of legal
redemption is also granted
2. There must be alienation of all or of any of
the shares of the other co-owners;
3. The sale must be to a third person or 1. Redemption of homesteads;
stranger; and 2. Redemption in tax auction sales;
4. The sale must be before partition 3. Redemption by judgment debtors;
4. Redemption in extrajudicial foreclosure;
Right of legal redemption of adjacent owners 5. Redemption in judicial foreclosure of
of rural lands mortgage;
6. Foreclosures by banking institutions;
Requisites: 7. Foreclosures by rural banks; and

533
 Special Contracts - Sales
8. Redemption under the Agrarian Reform
Code.
Basis of legal redemption
It is created partly for reason of public policy
and partly for the benefit and convenience of the
redemptioner to afford him a way out of what
might be a disagreeable or inconvenient
association into which he has been in trust. It is
intended to minimize co-ownership. (Pineda,
2010)
Running of period of legal redemption
The right of legal redemption shall not be
exercised except within 30 days from the notice
in writing by the prospective seller, or seller, as
the case may be. The deed of sale shall not be
recorded in the Registry of Property unless
accompanied by an affidavit of the seller that he
has given written notice thereof to all possible
redemptioners. (NCC, Art. 1623)
Written notice indispensable
The right of legal pre-emption or redemption
shall not be exercised except within 30 days
from the notice in writing by the prospective
vendor, or by the vendor, as the case may be.
(NCC, Art. 1623; 2001, 2002 BAR)
NOTE: Knowledge is insufficient – the mere fact
that the redemptioner – the person who has the
right to redeem – is already aware of the
existence of the sale will not excuse the written
notice. Mere knowledge does not satisfy the
requirement; there must still be written notice
despite such knowledge. (Barcellano v. Banas, et
al., G.R. No. 165287, September 14, 2011)
The right of redemption of co-owners excludes
that of adjoining owners. (NCC, Art. 1623) This
means that co-owners are preferred if the
property is to be redeemed by a co-owner and
an adjoining owner.
Pre-emption
Redemption presupposes that the property was
already sold or transferred to another. In pre-
emption, the right is present before the sale;
there is a right to purchase ahead of or before it
can be sold or transferred to other persons.
E.g., whenever a piece of urban land which is so
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
small and so situated that a major portion
thereof cannot be used for any practical purpose
within a reasonable time, having been bought
merely for speculation, is about to be re-sold, the
owner of any adjoining land has a right of pre-
emption at a reasonable price. (NCC, Art. 1620)
ASSIGNMENT OF CREDITS
Assignment is the process of transferring
gratuitously or onerously the right of the
assignor to the assignee, who would then be
allowed to proceed against the debtor. (Paras,
2008)
The assignment involves no transfer of
ownership but merely effects the transfer of
rights which the assignor has at the time to the
assignee.
It is an agreement by virtue of which the owner
of a credit, known as the assignor, by a legal
cause, such as sale, dacion en pago, exchange or
donation, and without the consent of the debtor,
transfers his credit and accessory rights to
another, known as the assignee, who acquires
the power to enforce it to the same extent as the
assignor could enforce it against the debtor.
(South City Homes, Inc. v. BA Finance Corp, G.R.
No. 135462, December 7, 2001)
NOTE: In assignments, a consideration is not
always a requisite, unlike in sale. Thus, an
assignee may maintain an action based on his
title and it is immaterial whether or not he paid
any consideration therefor. Furthermore, in an
assignment, title is transferred but possession
need not be delivered.
Perfection of contract for assignment of
credit
The contract for the assignment or transfer of
credit and other incorporeal rights is perfected
from the moment the parties agree upon the
credit or right assigned and upon the price even
if neither has been delivered. (NCC, Art. 1475)
However, the assignee will acquire ownership
only upon delivery. (De Leon, 2011)
Effects of Assignment
1. Transfers the right to collect the full value of
the credit, even if the assignee paid a price
less than such value;
2. Transfers all accessory rights; and
534
 Civil Law
3. Debtor can set up against the assignee all
the defenses he could have set up against
the assignor.
Effectivity against Third Persons
1. If personal property is involved – a public
instrument is necessary to make the
assignment effective against third persons.
2. If real property is involved – registration in
the Registry of Property is required.
NOTE: The assignee merely steps into the shoes
of the assignor, the former acquiring the credit
subject to defenses (e.g., fraud, prescription, etc.)
available to the debtor against the assignor. The
assignee is deemed subrogated to the rights as
well as to the obligations of the seller. He cannot
acquire greater rights than those pertaining to
the assignor. (De Leon, 2011)
Accessory Rights included in the Assignment
of a Credit (NCC, Art. 1627)
1. Guaranty;
2. Mortgage;
3. Pledge; and
4. Preference.
Effect of Assignment of Credit on Debtor
The “meeting of the minds” in assignment
contemplates that between the assignor of the
credit and his assignee, there being no necessity
for the consent of the debtor. It is sufficient that
the assignment be brought to the debtor’s
knowledge in order to be binding upon him.
(C&C Commercial Corp. v. Philippine National
Bank, G.R. No. L-42449 July 5, 1989)
Effect of payment by the debtor after
assignment of credit
1. Before Notice
Payment to the original creditor is valid and
debtor shall be released from his obligation.
NOTE: Assignment is effective as to the
debtor only from the time he has knowledge
of it.
2. After Notice
Payment to the original creditor is not valid
535
as against the assignee. The debtor can be
made to pay again by the assignee.
Warranties
In assignment, the assignor shall be responsible
for the existence and legality of the credit at the
time of sale, unless it has been expressly sold as
a doubtful account, in which case the assignee
takes the credit at his own risk. Consequently,
the invalidity of the credit assigned makes the
assignor-vendor liable for breach of such
warranty.
In addition, assignment does not make the
assignor warrant the solvency of the debtor to
the credit, unless:
1. There is a stipulation to that effect; or
2. The insolvency of the debtor was prior to
the assignment and of common knowledge.
But even when the assignor warrants the
solvency of the debtor, the warranty, in the
absence of contrary stipulation, should last for
one year only from the time of the assignment if
the credit is already due. If the credit should be
payable within a term or period which has not
yet expired, the warranty shall cease one year
after the maturity of the credit. (NCC, Art. 1629)
Reason: First, to prevent fraud which may be
committed by feigning the solvency of the debtor
at the time of the assignment when in fact he is
insolvent. Second, to oblige the assignee to exert
efforts in the recovery of the credit and thereby
avoid that by his oversight, the assignor may
suffer. (De Leon, 2011)
If the assignor in good faith is liable for a
warranty, he is liable only for the expenses of the
contract, and any other legitimate payments
made by reason of the assignment. On the other
hand, an assignor in bad faith who breaches such
warranties, shall in addition be liable to pay for
the necessary and useful expenses, plus
damages. (NCC, Art. 1628)
Liabilities of the assignor of credit
The liability of the vendor (assignor) in good
faith is limited only to the price received and to
the expenses of the contract, and any other
legitimate payments by reason of the
assignment. [NCC, Art. 1616 (1)]
 Special Contracts - Sales
The assignor in bad faith is liable not only for the
payment of the price and all expenses, but also
for damages. An assignor in bad faith is one who
has knowledge of any of the circumstances.
(Paras, 2011)
implementation of its provisions and the
enforcement of contractual rights with respect
to said category of real estate may take recourse.
(Arranza v. B.F. Homes, Inc., G.R. No. 131683, June
19, 2000)

Legal Redemption in Sale or Credit or other The regulatory functions of the NHA are now
incorporeal right in litigation (NCC, Art. 1634) transferred to the Housing and Land Use
Regulatory Board (HLURB).
Requisites:
NOTE: Under E.O. No. 648 of 1981, the
1. There must be a sale or assignment of implementation of P.D. No. 957 was transferred
credit; from the National Housing Authority (NHA) to
the Housing and Land Regulatory Board
2. There must be a pending litigation at the (HLURB).
time of the assignment;
The law recognized that subdivision and
3. The debtor must pay the assignee: condominium development involves public
interest and welfare, and should be brought to a
a. price paid by him; body, like the HLURB, that has technical
b. judicial cost incurred by him; and expertise. In the exercise of its powers, the
c. interest on the price from the date of HLURB is empowered to interpret and apply
payment; and contracts, and determine the rights of private
parties under these contracts. This ancillary
4. The right must be exercised by the debtor power, generally judicial, is now no longer with
within 30 days from the date the assignee the regular courts to the extent that the
demands (judicially or extra-judicially) pertinent HLURB laws provide. (Chua v. Ang, G.R.
payment from him. No. 156164, September 4, 2009)

GR: Debtor has the right of legal redemption in NOTE: Not every case involving buyers and
sale of credit or incorporeal rights in litigation. sellers of real estate may be filed with the
HLURB. Its jurisdiction is limited to those cases
XPNs: filed by the buyer or owner of a subdivision or
condominium, and based on any of the causes of
1. Sale to a co-heir or co-owner; action enumerated under Section 1 of P.D. No.
2. Sale to a co-owner; and 1344, and which jurisdictional facts must be
3. Sale to the possessor of property in clearly alleged in the complaint. (Delos Santos v.
question Sarmiento, G.R. No. 154877, March 27, 2007)

THE SUBDIVISION AND CONDOMINIUM Quasi-judicial authority (exclusive

BUYER’S PROTECTIVE DECREE (P.D. 957) jurisdiction) of HLURB (Sec. 1, P.D. 1344)
(URS)
Date of Approval: July 12, 1976
1. Unsound real estate business practices;
The purpose is to afford its inhabitants the
requirements of a decent human settlement and 2. Claims involving refund and any other claims
to provide them with ample opportunities for filed by subdivision lot or condominium unit
improving their quality of life. (De Leon, 2011) buyer against the project owner, developer,
dealer, broker, or salesman; and
P.D. NO. 957
3. Cases involving specific performance of
contractual and statutory obligations filed by
P.D. No. 957 was promulgated to encompass all
questions regarding subdivisions and buyers of subdivision lots or condominium
units against the owner, developer, dealer,
condominiums. It is aimed at providing for an
appropriate government agency, the HLURB, to broker or salesman.
which all parties aggrieved in the

UNIVERSITY OF SANTO TOMAS 536

2021 GOLDEN NOTES
 Civil Law
HLURB has no jurisdiction to impose NOTE: It shall include all residential,
criminal penalties commercial, industrial and recreational areas as
well as open spaces and other community and
What the Decree provides is the authority of the public areas in the project.
HLURB to impose administrative fines under
Section 38, as implemented by the Rules Subdivision lot
Implementing the Subdivision and
Condominium Buyer’s Protective Decree. (Chua Any of the lots, whether residential, commercial,
v. Ang, G.R. No. 156164, September 4, 2009) industrial, or recreational, in a subdivision
project.
“Sale” or “Sell” defined under the Decree
Complex subdivision plan
It shall include:
A subdivision plan of a registered land wherein a
1. Every disposition, or attempt to dispose, for street, passageway or open space is delineated
a valuable consideration, of a subdivision on the plan.
lot, including the building and other
improvements thereof, if any, in a Condominium project
subdivision project or a condominium unit
in a condominium project; The entire parcel of real property divided or to
2. Contract to sell; be divided primarily for residential purposes
3. Contract of purchase and sale; into condominium units, including all structures
4. Exchange; thereon.
5. Attempt to sell;
6. Option of sale or purchase; Condominium unit
7. Solicitation of a sale;
8. Offer to sell, directly or by an agent, or by a A part of the condominium project intended for
circular, letter, advertisement or otherwise; any type of independent use or ownership,
and including one or more rooms or spaces located
9. a) A privilege given to a member of a in one or more floors (or part of parts of floors)
cooperative, corporation, partnership, or any in a building or buildings and such accessories as
association; and/or may be appended thereto.
b) The issuance of a certificate or receipt
evidencing or giving the right of participation Definition of Terms
in, or right to, any land in consideration of
payment of the membership fee or dues 1. Owner – registered owner of the land
(Deemed sale). subject of a subdivision or a condominium
project.
“Buy” and “purchase” defined under the
Decree 2. Developer – person who develops or
improves the subdivision project or
It shall include any contract to buy, purchase, or condominium project for and in behalf of the
otherwise acquire for a valuable consideration a owner thereof.
subdivision lot, including the building and other
improvements, if any, in a subdivision project or 3. Dealer – any person directly engaged as
a condominium unit in a condominium project. principal in the business of buying, selling or
exchanging real estate, whether on a full-
Subdivision project time or part-time basis.

A tract or a parcel of land registered under Act
No. 496 which is partitioned primarily for
residential purposes into individual lots with or
without improvements thereon, and offered to
the public for sale, in cash or in installment
terms.
4. Broker – any person who, for commission
or other compensation, undertakes to sell or
negotiate the sale of a real estate belonging
to another.

537
 Special Contracts - Sales
5. Salesman – person regularly employed by a
broker to perform, for and in his behalf, any
or all functions of a real estate broker.
Procedure for converting of a parcel of land
into a subdivision or condominium project
by the Registered Owner
He shall:
1. Submit his subdivision plan to the HLURB
which shall act upon and approve the same,
upon a finding that the plan complies with
the Subdivision Standards and Regulations
enforceable at the time the plan is
submitted;
2. If the conversion desired involves a
condominium project, the same procedure
shall be followed except that, in addition, the
HLURB shall act upon and approve the plan
with respect to the building or buildings
included in the condominium project in
accordance with the National Building Code
(R.A. No. 6541);
3. The subdivision plan, as so approved, shall
then be submitted to the Director of Lands
for approval;
4. In case of complex subdivision plans, court
approval shall no longer be required; and
5. The condominium plan as likewise so
approved, shall be submitted to the Register
of Deeds of the province or city in which the
property lies and the same shall be acted
upon subject to the conditions and in
accordance with the procedure prescribed
in Section 4 of the Condominium Act. (R.A.
No. 4726)
Requirements for registration
The owner or real estate dealer interested in the
sale of lots or units in the subdivision or
condominium project, shall submit to the HLURB
a sworn registration statement, containing the
following information:
1. Name of the owner;
2. The location of the owner's principal
business office, and if the owner is a non-
resident Filipino, the name and address of
his agent or representative in the
Philippines who is authorized to receive
notice;
3. The names and addresses of all the directors
and officers of the business firm, if the
owner be a corporation, association, trust,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
or other entity, and of all the partners, if it
be a partnership;
4. The general character of the business
actually transacted or to be transacted by
the owner; and
5. A statement of the capitalization of the
owner, including the authorized and
outstanding amounts of its capital stock, and
the proportion thereof which is paid-up.
Q: When is a subdivision or condominium
project deemed to be registered?
A: Upon completion of the publication
requirement. The Authority shall cause to be
published a notice of the filing of the registration
statement at the expense of the applicant-owner
or dealer, in two newspapers of general
circulation, one published in English and
another in Filipino, once a week for two
consecutive weeks, reciting that a registration
statement for the sale of subdivision lots or
condominium units has been filed in the
National Housing Authority
NOTE: The fact of such registration shall be
evidenced by a registration certificate to be
issued to the applicant-owner or dealer.
Q: Part of the required documentary
attachments to the application is a certificate
of title to the property which is free from all
liens and encumbrances. Does this bar an
owner of mortgaged property from engaging
in subdivision or condominium project while
the mortgage is in force?
A: NO. In case any subdivision lot or
condominium unit is mortgaged, it is sufficient if
the instrument of mortgage contains a
stipulation that the mortgagee shall release the
mortgage on any subdivision lot or
condominium unit as soon as the full purchase
price for the same is paid by the buyer.
Q: After issuance of the registration
certificate, may the owner or dealer already
sell subdivision lots or condominium units?
A: NO. He must first obtain a license to sell the
project within two weeks from the registration
of such project.
Issuance of license to sell
If after an examination of the registration
538
 Civil Law
statement filed by said owner or dealer and all
the pertinent documents attached thereto, the
HLURB is convinced that the owner or dealer is
of good repute, that his business is financially
stable, and that the proposed sale of the
subdivision lots or condominium units to the
public would not be fraudulent, a license to sell
the project shall be issued by the HLURB.
Purpose of the requirement of posting of a
performance bonds before a license to sell
may be issued
It is to guarantee the construction and
maintenance of the roads, gutters, drainage,
sewerage, water system, lighting systems, and
full development of the subdivision project or
the condominium project and the compliance by
the owner or dealer with the applicable laws and
rules and regulations.
The performance bond shall be executed in
favor of the Republic of the Philippines and
shall authorize the HLURB to use the
proceeds for the purposes of its undertaking
in case of forfeiture.
Exempt transactions
1. Sale of a subdivision lot resulting from the
partition of land among co-owners and co-
heirs;
2. Sale or transfer of a subdivision lot by the
original purchaser thereof and any
subsequent sale of the same lot; and
3. Sale of a subdivision lot or a condominium
unit by or for the account of a mortgagee in
the ordinary course of business when
necessary to liquidate a bona fide debt.
Suspension of a license to sell
1. Upon verified complaint by a buyer of a
subdivision lot or a condominium unit in
any interested party, the HLURB may, in its
discretion, immediately suspend the
owner's or dealer's license to sell pending
investigation and hearing of the case.
2. The HLURB may motu proprio suspend the
license to sell if, in its opinion, any
information in the registration statement
filed by the owner or dealer is or has
become misleading, incorrect, inadequate or
incomplete or the sale or offering for a sale
of the subdivision or condominium project
539
may work or tend to work a fraud upon
prospective buyers.
Revocation of license to sell or registration of
a subdivision or condominium project
The HLURB may, motu proprio or upon verified
complaint filed by a buyer of a subdivision lot or
condominium unit, revoke the registration and
the license to sell by issuing an order to this
effect, with findings in respect thereto, if upon
examination into the affairs of the owner or
dealer during a hearing, it shall appear that
there is satisfactory evidence that the said
owner or dealer:
1. Is insolvent; or
2. Has violated any of the provisions of this
Decree or any applicable rule or regulation
of the HLURB, or any undertaking of his/its
performance bond; or
3. Has been or is engaged or is about to engage
in fraudulent transactions; or
4. Has made any misrepresentation in any
prospectus, brochure, circular or other
literature about the subdivision project or
condominium project that has been
distributed to prospective buyers; or
5. Is of bad business repute; or
6. Does not conduct his business in accordance
with law or sound business principles.
NOTE: Where the owner or dealer is a
partnership or corporation or an
unincorporated association, it shall be sufficient
cause for cancellation of its registration
certificate and its license to sell, if any member
of such partnership or any officer or director of
such corporation or association has been guilty
of any act or omission which would be cause for
refusing or revoking the registration of an
individual dealer, broker or salesman.
Registration needed after the execution of a
contract to sell relevant to the sale or
conveyance of subdivision lots and
condominium units
All contracts to sell, deeds of sale and other
similar instruments relative to the sale or
conveyance of the subdivision lots and
condominium units, whether or not the purchase
price is paid in full, shall be registered by the
seller in the Office of the Register of Deeds of the
province or city where the property is situated.
 Special Contracts - Sales
Mortgage CANNOT be made by the owner or
developer without permission
There must be prior written approval of the
HLURB.
When approval by the HLURB is given
When it is shown that the proceeds of the
mortgage loan shall be used for the development
of the condominium or subdivision project and
effective measures have been provided to ensure
such utilization.
Rule if the owner desires to make alterations
in the approved subdivision plan
GR: No owner or developer shall change or alter
the roads, open spaces, infrastructures, facilities
for public use and/or other form of subdivision
development as contained in the approved
subdivision plan and/or represented in its
advertisements.
XPN: If he has obtained the permission of the
HLURB and the written conformity or consent of
the duly organized homeowners association, or
in the absence of the latter, by the majority of
the lot buyers in the subdivision.
Q: May payment made by a buyer be forfeited
in favor of the owner or developer in case the
buyer desists from further payment due to
the failure of the owner or developer to
develop the subdivision or condominium
project according to the approved plan
within the time limit provided for such?
What is the buyer’s remedy in this case?
A: NO, such forfeiture is not allowed. Such buyer
may, at his option, be reimbursed the total
amount paid including amortization interests
but excluding delinquency interests, with
interest thereon at the legal rate.
NOTE: Sections 23 and 24 of Presidential Decree
957, provide that no installment payments made
by the buyer in a subdivision or condominium
project for the lot or unit he contracts to buy
shall be forfeited in favor of the owner or
developer when the buyer, after due notice to
the owner or developer desists from further
payment due to the failure of the owner or
developer to develop the subdivision or
condominium project according to the approved
plans and within the time limit for complying
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
with the same. The sections also grant to the
buyer the option to be reimbursed the total
amount paid. (Villanueva, 2009)
Defaulting buyers have rights under the
Decree
The rights of the buyer in the event of this failure
to pay the installments due for reasons other
than the failure of the owner or developer to
develop the project shall be governed by R.A. No.
6552 or the Maceda Law. Where the transaction
or contract was entered into prior to the
effectivity of R.A. No. 6552 on August 26, 1972,
the defaulting buyer shall be entitled to the
corresponding refund based on the installments
paid after the effectivity of the law in the
absence of any provision in the contract to the
contrary.
Owner or developer’s obligation in case the
lot bought and fully-paid by the buyer is
mortgaged
In the event a mortgage over the lot or unit is
outstanding at the time of the issuance of the
title to the buyer, the owner or developer shall
redeem the mortgage or the corresponding
portion thereof within six months from such
issuance in order that the title over any fully
paid lot or unit may be secured and delivered to
the buyer in accordance herewith.
Parties CANNOT waive compliance with the
decree
Any condition, stipulation, or provision in
contract of sale whereby any person waives
compliance with any provision of the Decree or
of any rule or regulation issued thereunder shall
be void.
Notice NOT required in the demand of refund
Section 23 of P.D. 957 does not require that a
notice be given first by the buyer to the seller
before a demand for refund can be made as the
notice and demand can be made in the same
letter or communication. (Villanueva, 2009)
Q: Ernesto Marcelo sold the lot where the
water tank of the subdivision, Happy Glen
Loop, is located for almost 30 years to
Hermogenes Liwag, president of the
Homeowner’s association of the said
subdivision. Is the sale of the lot where the
540
 Civil Law
water tank was located valid?
A: NO. Taking into consideration the intention of
the law to create and maintain a healthy
environment in human settlements, the location
of the water facility in the Subdivision must form
part of the area reserved for open space.
The law expressly provides that open spaces in
subdivisions are reserved for public use and are
beyond the commerce of man. As such, these
open spaces are not susceptible of private
ownership and appropriation. The sale of the
subject parcel of land by the subdivision owner
or developer to Hermogenes was contrary to
law. (Liwag v. Happy Glen Loop Homeowners
Association, Inc., G.R. No. 189755, July 4, 2012)
THE CONDOMINIUM ACT (R.A. NO. 4726)
Date of Approval: June 18, 1966
Condominium
It is an interest in real property consisting of
separate interest in a unit in a residential,
industrial or commercial building and an
undivided interest in common, directly or
indirectly, in the land on which it is located and
in other common areas of the building.
It may include, in addition, a separate interest in
other portions of such real property. (Sec. 2, R.A.
No. 4726)
Q: When is ownership acquired?
A: A purchaser of a unit who has not paid the full
purchase price thereof is not the owner of the
unit and consequently is not a shareholder of the
Condominium Corporation.
“Separate Interest”
The ownership of a condominium unit is the
“separate interest” of the owner which makes
him automatically a shareholder in the
condominium. Nobody can be a shareholder
unless he is the owner of a unit and when he
ceases to be the owner, he also ceases
automatically to be a shareholder. (Sunset View
Condominium Corporation v. Campos, Jr., G.R. No.
L-52361, April 27, 1981)
Nature of ownership in condominium
projects
541
As to the condominium unit – the same is
owned separately and individually by the unit
owner.
As to the land and to the common areas in the
condominium project – there are two situations
contemplated in Sections 2 and 5 of the
Condominium Act:
1. Where the land and other common areas in
the condominium project are held by the
owners of separate units as co-owners
thereof; or
In such a situation, there is co-ownership
among the unit owners, with respect to the
undivided interest in the land and common
areas.
2. Where the land and other common areas are
to be held by the condominium corporation.
In which case, the owners of the individual
units are automatically considered members
or shareholders of the corporation. Under
the provisions of the Condominium Act, the
undivided interest in the common areas or
the shareholding in the common areas is
inseparable from the unit to which it is only
an appurtenant. (Rabuya, 2017)
Restrictions as regards ownership of
condominium units
1. Where the common areas in the
condominium project are owned by the
owners of separates units as co-owners
thereof
No condominium unit shall be conveyed or
transferred to the persons other than:
a. Filipino citizens; or
b. Corporations at least 60% of capital
stock of which belong to Filipino
citizens.
XPN: In cases of hereditary succession.
2. Where the common areas in a condominium
project are held by a condominium
corporation
No transfer or conveyance of a unit shall be
valid if the concomitant transfer of the
appurtenant membership or stockholding in
 Special Contracts - Sales
the corporation will cause the alien interest
in such corporation to exceed the limits
imposed by existing laws.
NOTE: The law provides that no condominium
unit can be sold without at the same time selling
the corresponding amount of rights, shares or
other interests in the condominium
management body, the Condominium
Corporation; and no one can buy shares in a
Condominium Corporation without at the same
time buying a condominium unit.
It expressly allows foreigners to acquire
condominium units and shares in condominium
corporations up to not more than 40% of the
total and outstanding capital stock of a Filipino-
owned or controlled corporation. Under this set
up, the ownership of the land is legally separated
from the unit itself. The land is owned by a
Condominium Corporation and the unit owner is
simply a member in this Condominium
Corporation. As long as 60% of the members of
this Condominium Corporation are Filipino, the
remaining members can be foreigners. (Hulst v.
PR Builders, Inc., G.R. No. 156364, September 25,
2008)
Incidents of Condominium Grant (Sec. 6, R.A.
No. 4726)
Unless otherwise provided in the enabling law
or master deed or the declaration of restrictions:
1. The boundaries of the unit granted are the
interior surfaces of the perimeter walls,
floors, ceilings, windows and doors;
2. There shall pass with the unit, as an
appurtenance, an exclusive easement for the
use of the air space encompassed by the
boundaries of the unit as it exists at any
particular time and as the unit may lawfully
be altered or reconstructed from time to
time;
NOTE: Such easement shall be
automatically terminated in any air space
upon destruction of the unit as to render it
untenable.
3. Unless otherwise, provided, the common
areas are held in common by the holders of
units, in equal shares, one for each unit;
4. A non-exclusive easement for ingress,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
egress and support through the common
areas is appurtenant to each unit and the
common areas are subject to such
easements.
Rights of Condominium Owner [Sec. 6 (e), (f),
(g), R.A. No. 4726]
1. Exclusive right to paint, repaint, tile, wax,
paper or otherwise refinish and decorate
the inner surfaces of the walls, ceilings,
floors, windows and doors bounding his
own unit;
2. Exclusive right to mortgage, pledge or
encumber his condominium and to have the
same appraised independently of the other
condominiums;
NOTE: Any obligation incurred by such
condominium owner is personal to him.
3. Absolute right to sell or dispose of his
condominium.
XPN: Unless the master deed contains a
requirement that the property be first
offered to the condominium owners within
a reasonable period of time before the same
is offered to outside parties.
Partition (Sec. 7, R.A. No. 4726)
GR: Common areas shall remain undivided, and
there shall be no judicial partition thereof.
XPN: Where several persons own
condominiums in a condominium project, an
action may be brought by one or more such
persons for partition thereof by sale of the entire
project, as if the owners of all of the
condominiums in such project were co-owners
of the entire project in the same proportion as
their interests in the common areas:
NOTE: However, a partition shall be made only
upon a showing that:
1. Three (3) years after damage or destruction
to the project which renders material part
thereof unfit for its use prior thereto, the
project has not been rebuilt or repaired
substantially to its state prior to its damage
or destruction; or
542
 Civil Law
2. Damage or destruction to the project has
rendered one-half or more of the units
therein untenable and that condominium
owners holding in aggregate more than
thirty percent interest in the common areas
are opposed to repair or restoration of the
project; or
3. The project has been in existence in excess
of fifty (50) years, that it is obsolete and
uneconomic, and that condominium owners
holding in aggregate more than fifty percent
(50%) interest in the common areas are
opposed to repair or restoration or
remodeling or modernizing of the project;
4. The project or a material part thereof has
been condemned or expropriated and that
the project is no longer viable, or that the
condominium owners holding in aggregate
more than seventy percent interest in the
common areas are opposed to continuation
of the condominium regime after
expropriation or condemnation of a material
portion thereof; or
5. The conditions for such partition by sale set
forth in the declaration of restrictions, duly
registered in accordance with the terms of
the Act, have been met.
Registration of declaration of restrictions
and its effect
The owner of a project shall, prior to the
conveyance of any condominium therein,
register a declaration of restrictions relating to
such project.
Such restrictions shall constitute a lien upon
each condominium in the project, and shall
insure to and bind all condominium owners in
the project.
NOTE: Such liens, unless otherwise provided,
may be enforced by any condominium owner in
the project or by the management body of such
project.
Q: May the management body acquire and
hold, for the benefit of the condominium
owners, tangible and intangible personal
property and dispose of the same by sale or
otherwise?
A: YES, unless otherwise provided for by the
543
declaration of restrictions.
NOTE: The beneficial interest in such personal
property shall be owned by the condominium
owners in the same proportion as their
respective interests in the common areas.
A transfer of a condominium shall transfer to the
transferee ownership of the transferor's
beneficial interest in such personal property.
Condominium Corporation
A corporation specially formed for the purpose
of holding title to the common areas, in which
corporation the holders of separate interest
shall automatically be members or shareholders,
to the exclusion of others, in proportion to the
appurtenant interest of their respective units in
the common areas.
NOTE: As regards title to the common areas,
including the land, or the appurtenant interests
in such areas, these may be held by a
condominium corporation.
Term of a condominium corporation
Co-terminus with the duration of the
condominium project, the provisions of the
Corporation Law to the contrary
notwithstanding.
Q: May a condominium corporation sell,
exchange, lease or otherwise dispose of the
common areas owned or held by it in the
condominium project?
A:
GR: During its existence, it cannot do so,
especially when the master deed contains a
requirement that the property should first be
offered to the other condominium owners
within a reasonable time before offering it to
third parties, then it may not.
XPN: If authorized by the affirmative vote of a
simple majority of the register owners, subject
to prior notifications to all registered owners
and only upon the final approval of the Housing
and Land Use Regulatory Board. (Sec. 2, R.A. No.
7899)
Assessment as lien upon unit (Sec. 20, R.A. No.
4726)
 Special Contracts - Sales
An assessment upon any condominium made in
accordance with a duly registered declaration of
restrictions shall be an obligation of the owner
thereof at the time the assessment is made. The
amount of any such assessment plus any other
charges thereon, such as interests, cost
(including attorney’s fees) and penalties, as such
as may be provided for in the declaration of
restrictions, shall be and become a lien upon the
condominium assessed when the management
body causes a notice of assessment to be
registered with the Registered of Deeds of the
city or province where such condominium
project is located. Such lien shall be superior to
all other liens registered subsequent to the
registration of said notice of assessment except
real property tax liens and may be enforced in
the same manner provided for by law for the
judicial or extra-judicial foreclosure of
mortgages of real property. (Rabuya, 2017)

Rule as regards enforcement of the lien

Such liens may be enforced in the same manner

provided for by law for the judicial or extra-
judicial foreclosure of mortgages of real
property.

Q: Can the management body bid in the

foreclosure sale based on the lien for unpaid
assessments?

A: GR: YES, the management body shall have

power to bid at foreclosure sale. (Sec. 20, par. 3,
R.A. No. 4726)

XPN: Unless otherwise provided for in the

declaration of restrictions.

NOTE: The condominium owner shall have the

same right of redemption as in cases of judicial
or extra-judicial foreclosure of mortgages.

UNIVERSITY OF SANTO TOMAS 544

2021 GOLDEN NOTES
 Civil Law
TRUST The beneficiary of a trust Must comply with
may demand the legal
DEFINITION performance of the requirements in
obligation without having accepting donations.
formally accepted the
It is the legal relationship between one person
trust in a public
having an equitable ownership in a certain
document, upon mere
property and another person owning the legal
acquiescence in the
title to such property. (Jurado, 2019)
formation of the trust
and acceptance under
NOTE: Trust is founded in equity and can never
Art. 1132(2) of the Civil
result from acts violative of law. (Deluao v.
Code.
Casteel, G.R. No. L-32166 October 18, 1977)
(De Leon, 2019)
Three persons involved in the creation of a TRUST v. CONTRACT
trust TRUST CONTRACT
A trust always involves an Legal obligation
1. Trustor – the person who establishes the ownership, embracing a based on an
trust. set of rights and duties undertaking
2. Trustee – one in whom confidence is fiduciary in character supported by a
reposed as regards property for the benefit which may be created by consideration, which
of another person. a declaration without a obligation may or
3. Beneficiary or cestui que trust – person for consideration. (De Leon, may not be fiduciary
whose benefit the trust has been created. 2019) in character. (De
(NCC, Art. 1440) Leon, 2019)
A trust always involves an Legal obligation
Trust property ownership, embracing a based on an
set of rights and duties undertaking
The subject-matter of trust may be any fiduciary in character supported by a
property of value – real, personal, funds or which may be created by consideration, which
money, or choses in action. (De Leon, 2019) a declaration without a obligation may or
consideration. (De Leon, may not be fiduciary
TRUST DISTINGUISHED FROM OTHER 2019) in character. (De
RELATIONS Leon, 2019)
TRUST v. DEBT
TRUST v. DONATION TRUST DEBT
TRUST DONATION A debt implies merely an A duty to deal with a
An existing legal Transfer of property obligation to pay a certain specific property for
relationship and involves which involves a sum of money. the benefit of
separation of legal and disposition of both another. A creditor
equitable title. legal and equitable has merely a
ownership except personal claim
gift in trust. against the debtor.
There is a fiduciary There is no fiduciary
relation between a relation between a
trustee and a beneficiary. debtor and creditor.
The beneficiary of a trust A creditor has
has a beneficial interest in merely a personal
the trust property. (De claim against the
Leon, 2019) debtor. (De Leon,
2019)
TRUST v. BAILMENT
TRUST BAILMENT
A delivery of a property The bailee has
in trust necessarily possession of
involves a transfer of without legal title to

545
 Special Contracts - Trust
legal title, or at least a the property subject the trust.
separation of legal title to the bailment. (De
and equitable interest, Leon, 2019) NOTE: Whether a trust is revocable or
with the legal title in the irrevocable depends on the wordings or
trustee. (De Leon, 2019) language used in the creation of the trust. It will
be presumed revocable unless the creator has
CLASSIFICATION OF TRUST expressed a contrary intention in the trust deed.
(De Leon, 2019)
1. As to Creation – From the viewpoint of the
creative force bringing them into existence, KINDS OF TRUST
they may be either:
Express trust v. Implied trust
a. Express trust (NCC, Arts. 1443-1446) or
one which can come into existence BASIS EXPRESS IMPLIED TRUST
only by the execution of an intention TRUST
to create it by the trustor or the Definition Created by the Comes into being
parties (De Leon, 2019); or (NCC, Art. intention of the by operation of
1441) trustor or of law. It may be
b. Implied trust, or which comes into the parties. either resulting
being by operation of law (NCC, Arts. or constructive.
1447-1457; De Leon, 2014); this latter
trust being either: Manner of Created by the Those which,
creation direct and without being
1. Resulting trust positive acts of expressed, are
2. Constructive trust the parties, by deducible from
some writing the nature of the
2. As to Effectivity – From the viewpoint of or deed or will transaction by
whether they become effective after the or by words operation of law
death of the trustor or during his life, they evidencing an as matters of
may be either (De Leon, 2019): intention to equity,
create a trust. independently of
a. Testamentary Trust – one which is to the particular
take effect upon the trustor’s death. It is intention of the
usually included as part of the will and parties.
does not have a separate trust deed. (De
Leon, 2019) Parole An express An implied trust
evidence trust concerning an
b. Inter Vivos trust or “Living Trust” – one concerning an immovable or
established effective during the owner’s immovable or any interest
life. The grantor executes a “trust deed,” any interest therein may be
and once the trust is created, legal title to therein cannot proved by parole
the trust property passes to the named be proved by evidence. (NCC,
trustee with duty to administer the parole Art. 1457)
property for the benefit of the beneficiary. evidence. (NCC,
(De Leon, 2019) Art. 1443)

3. As to Revocability – From the viewpoint of Laches or An action to An action to

whether they may be revoked by the trustor, extinctive enforce an enforce an
they may be either: prescription express trust, implied trust
so long as there even when there
a. Revocable trust – one which can be is no express is no express
revoked or cancelled by the trustor or repudiation of repudiation of
another individual given the power; or the trust by the the trust by the
trustee and trustee and
b. Irrevocable trust – one which may not be made known to made known to
terminated during the specified term of the beneficiary, the beneficiary,

UNIVERSITY OF SANTO TOMAS 546

2021 GOLDEN NOTES
 Civil Law
cannot be may be barred
barred by by laches or by
laches or extinctive
extinctive prescription.
prescription.
EXPRESS TRUST
One which come into existence only by the
execution of an intention to create it by the
trustor or the parties. (De Leon, 2019)
Elements of express trust
1. A competent trustor and trustee;
2. An ascertainable trust res; and
3. Sufficiently certain beneficiaries
NOTE: All of the above elements are required to
be established. (De Leon, 2019)
Evidence to prove express trust
No express trust concerning an immovable or
any interest therein may be proved by parol
evidence. (NCC, Art. 1443)
NOTE: The defense that express trusts cannot be
proved by parol evidence may be waived, either
by failure to interpose timely objections against
presentation of oral evidence not admissible
under the law or by cross- examining the
adverse party and his witnesses along the
prohibited lines. (Philippines v. Cojuangco G.R.
No. 139930, June 26, 2012)
An express trust over personal property or any
interest therein, and an implied trust, whether
the property subject to the trust is real or
personal, may be proved by oral evidence. (NCC.,
Art. 1457)
NOTE: The general rule is that the burden of
proving the existence of a trust is on the party
alleging its existence; and to discharge the
burden, it is generally required that his proof be
clear and satisfactory and convincing. (Heirs of
Donata Ortiz Briones v. Heirs of Maximino R.
Briones s, G.R. No. 150175, March 10, 2006)
NOTE: To affect third persons, a trust
concerning an immovable or any interest therein
must be embodied in a public instrument and
registered in the Registry of Property. (De Leon,
2019)
547
Creation of express trust
Express trust are those trust voluntarily and
intentionally, created by direct and positive act
of the trustor, by some writing, deed, will, or
oral declaration evincing an intention to create
trust. (NCC, Art. 1444; De Leon, 2019)
NOTE: Technical or particular form of words or
phrases are not essential to the manifestation of
an intention to create a trust. It is possible to
create a trust without using the word “trust” or
“trustee.” (De Leon, 2019)
No trust shall fail because the trustee appointed
declines the designation, unless the contrary
should appear in the instrument constituting the
trust. (NCC, Art. 1445)
Acceptance by the beneficiary is necessary.
Nevertheless, if the trust imposes no onerous
condition upon the beneficiary, his acceptance
shall be presumed, if there is no proof to the
contrary. (NCC, Art. 1446)
Kinds of express trust
1. Eleemosynary or Charitable trust – one
designed for the benefit of a segment of the
public or of the public in general. Created for
charitable, educational, social, religious, or
scientific purposes, or for the general benefit
of the humanity. (De Leon, 2019)
2. Accumulation trust – one that will
accumulate income to be reinvested by the
trustee in the trust for the period of time
specified. (De Leon, 2019)
3. Spendthrift trust – one established when the
beneficiary needs to be protected because of
his inexperience or immaturity from his
imprudent, spending habits or simply
because the beneficiary is spendthrift. (De
Leon, 2019)
4. Sprinkling trust – one that gives the trustee
the right to determine the income of the
beneficiaries who should receive income
each year and the amount thereof. (De Leon,
2019)
Termination of express trust
1. Destruction of the corpus;
2. Revocation by the trustor;
3. Achievement of the objective, or happening
of the condition, provided for in the trust
instrument;
 Special Contracts - Trust
4. Death or legal incapacity of the trustee;
5. Confusion or merger of legal title and
beneficial title in the same person; and
6. Breach of trust.
Requisites for acquisition of property by
trustee through prescription
1. The trustee must expressly repudiate the
right of the beneficiary;
2. Such act of repudiation must be brought to
the knowledge of the beneficiary;
3. The evidence thereon must be clear and
conclusive; and
4. Expiration of the period prescribed by law.
(Heirs of Donata Ortiz Briones v. Heirs of
Maximino R. Briones, G.R. No. 150175, March
10, 2006)
IMPLIED TRUST
Those which, without being express, are
deducible from the nature of the transaction as
matters of intent, or which are superinduced on
the transaction by operation of law, as matters
of equity, independently of the particular
intention of the parties. (Tong v. Kun, G.R. No.
196023, April 21, 2014)
Kinds of implied trust
1. Resulting trust – broadly defined as a trust
which is raised or created by the act or
construction of law, but in its more
restricted sense, it is a trust raised by
implication of law and presumed always to
have been contemplated by the parties, the
intention as to which is to be found in the
nature of their transaction, but not
expressed in the deed or instrument of
conveyance. (Heirs of Donata Ortiz Briones v.
Heirs of Maximino R. Briones, G.R. No. 150175,
March 10, 2006)
Examples of resulting trust:
a. There is an implied trust when property is
sold, and the legal estate is granted to one
party but the price is by another for the
purpose of having the beneficial interest of
the property. The former is the trustee,
while the latter is the beneficiary. However,
if the person to whom the title is conveyed
is a child, legitimate or illegitimate, of the
one paying the price of the sale, no trust is
implied by law, it being disputably
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
presumed that there is a gift in favor of the
child. (NCC, Art. 1448)
b. There is also an implied trust when a
donation is made to a person but it appears
that although the legal estate is transmitted
to the done, he nevertheless is either to
have no beneficial interest or only a part
thereof. (NCC, Art. 1449)
c. If the price of a sale of property is loaned or
paid by one person for the benefit of
another and the conveyance is made to the
lender or payor to secure the payment of
the debt, a trust arises by operation of law
in favor of the person to whom the money
is loaned or for whom it is paid. The latter
may redeem the property and compel a
conveyance thereof to him. (NCC, Art. 1450)
Q: “X” being unable to pay the purchase
price of a house and lot for his residence has
requested “Y,” and “Y” agreed to lend him
the money under one condition, that the
Certificate of Title be transferred to him, in
Y’s own name for his protection and as
security of the loan. Later on, “Y” mortgaged
the property to the bank without the
knowledge of “X.” When the mortgage
became due, “Y” did not redeem the
mortgage and the property was advertised
for sale. “X” retained you as his lawyer. What
advise would you give your client and what
legal ground provided by the Code would
you assert to defend his rights? Give
reasons. (1959 BAR)
A: It is clear that in the instant problem, the
provision of Art. 1450 of the Civil Code is
applicable. It must be observed, however, that
the mortgage of the property by “Y” to the bank
is perfectly valid inasmuch as the bank was not
aware of any flaw or defect in the title or mode
of acquisition by “Y” since the right of “X” has
not been annotated in the Certificate of Title.
Consequently, the only way by which I would be
able to help “X” would be to advice him to
redeem the mortgaged property from the bank.
After this is done, “X” can then institute an
action to compel “Y’” to reconvey the property
to him pursuant to Art. 1450 of the Civil Code. In
this action for reconveyance, the amount paid
by “X” to the bank in redeeming the property
can then be applied to the payment of his debt to
“Y.” If there is an excess, he can recover the
amount from “Y.” (Jurado, 2019)
548
 Civil Law
d. If two or more persons agree to purchase
property and by common consent the legal
title is taken in the name of one of them for
the benefit of all, a trust is created by force
of law in favor of the others in proportion to
the interest of each. (NCC, Art. 1452)
e. 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 whose benefit contemplated. (NCC.
Art. 1453)
2. Constructive trust – a trust raised by
construction of law or arising by operation
of law. It is a trust not created by any words,
either expressly or impliedly evincing a
direct intention to create a trust, but by the
construction of equity in order to satisfy the
demands of justice. It does not arise by
agreement or intention but by operation of
law. (Ramos v. Ramos, G.R. No. L-19872
December 3, 1974)
NOTE: A constructive trust is not a trust in a
technical sense. (Heirs of Donata Ortiz Briones v.
Heirs of Maximino R. Briones, G.R. No. 150175,
March 10, 2006) It is substantially an equitable
remedy against unjust enrichment. (Tong v.
Kun, G.R. No. 196023, April 21, 2014)
NOTE: It is otherwise known in American law as
a trust ex maleficio, trust ex delicto, and de son
tort. (Tong v. Kun, G.R. No. 196023, April 21,
2014)
Q: Explain the following concepts and
doctrines and give an example of each:
a. Concept of trust de son tort (Constructive
trust) (2007 BAR)
A: A constructive trust 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 constructed 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. (Cañezo v. Rojas, G.R.
No. 148788, November 23, 2007)
549
The following are examples of constructive
trust:
1. When land passes by succession to any
person and he causes the legal title to be put
in the name of another, a trust is established
by implication of law for the benefit of the
true owner. (NCC, Art. 1451)
2. If an absolute conveyance of property is
made in order to secure the performance of
an obligation of the grantor toward the
grantee, a trust by virtue of law is
established. If the fulfillment of the
obligation is offered by the grantor when it
becomes due, he may demand the
reconveyance of the property to him. (NCC,
Art. 1454)
3. When any trustee, guardian or other person
holding a fiduciary relationship uses trust
funds for the purchase of property and
causes the conveyance to be made to him or
to a third person, a trust is established by
operation of law in favor of the person to
whom the funds belong. (NCC, Art. 1455)
4. If property is acquired through mistake or
fraud, the person obtaining it is, by force of
law considered a trustee of an implied trust
for the benefit of the person from whom the
property comes. (NCC, Art. 1456)
Prescriptibility of actions to enforce trust
under Art. 1456
An action for reconveyance of real property
based upon a constructive or implied trust,
resulting from fraud, may be barred by the
statute of limitations. An action may be filed
from the discovery of the fraud. In some cases,
the discovery is deemed to have taken place
when new certificates of title were issued
exclusively in the name of another person. (Uy
v. CA, September 16, 2015, G.R. No. 173186)
Period of prescription
BASIS PRESCRIPTIVE
PERIOD
Annulment of voidable
Four (4) years from the
contract based on
discovery of the fraud.
fraudulent registration
[Art. 1391 (4), Civil
of the subject property.
Code]
Declaration of nullity Imprescriptible. (Art.
 Special Contracts - Trust
or inexistence of a void 1410, Civil Code)
or inexistent contract
based on fraudulent
registration of the
subject property.
Based on fraudulent
registration of the Ten (10) years from
subject property but the discovery of the
the action does not fraud. [Art. 1144(2),
involve annulment of Civil Code]
contract.
If the legitimate owner
of the subject property An action to quiet title.,
which was fraudulently therefore,
registered in the name imprescriptible. (Heirs
of another had always of Tappa v. Heirs of
been in possession Malupeg, G.R. No.
thereof. 187633, April 4, 2016)

Laches may bar action

The express trusts disable the trustee from

acquiring for his own benefit the property
committed to his management or custody, at
least while he does not openly repudiate the
trust and make such repudiation known to the
beneficiary. But in constructive trusts, the rule
is that laches constitutes a bar to actions to
enforce the trust, and repudiation is not
required, unless there is a concealment of the
facts giving rise to the trust. (Guaranteed
Homes, Inc. v. Heirs of Valdez, G.R. No. 171531
January 30, 2009)

Acquisition of property by trustee through

prescription in implied trusts

Express repudiation of the trust by the trustee

is not required. All that is required is that he
must set up a title which is adverse to that of the
beneficiary. In other words, the normal
requisites for extraordinary acquisitive
prescription must be present. (Jurado, 2019)

Conversion of implied trust to express trust

An implied trust may be converted to an

express trust through recognition by the
implied trustee of the right to the property of
the owner.

UNIVERSITY OF SANTO TOMAS 550

2021 GOLDEN NOTES
 Civil Law
PARTNERSHIP
Note: The Contract of Partnership (Articles
1767-1867) is now transferred to the 2020
Golden Notes for Commercial Law per the
2020 Bar Syllabus. This subject is, however,
still included herein for educational
purposes and future references.
Partnership
It is a contract whereby two or more persons
bind themselves to contribute money, property,
or industry to a common fund, with the
intention of dividing the profits among
themselves. (NCC, Art. 1767)
NOTE: Two or more persons may also form a
partnership for the exercise of a profession.
(NCC, Art. 1767)
Essential elements of partnership
1. Agreement to contribute money, property
or industry to a common fund (mutual
contribution to a common stock); and
2. Intention to divide the profits among the
contracting parties (joint interest in the
profits). (Jarantilla Jr. v. Jarantilla et al., G.R.
No. 154486, December 1, 2010)
Characteristics of partnership
1. Bilateral – It is entered into by two or
more persons and the rights and
obligations arising therefrom are always
reciprocal;
2. Onerous – Each of the parties aspires to
procure for himself a benefit through the
giving of something;
3. Nominate – It has a special name or
designation in our law;
4. Consensual – Perfected by mere consent,
upon the express or implied agreement of
two or more persons;
5. Commutative – The undertaking of each of
the partners is considered as the equivalent
of that of the others;
6. Principal – It does not depend for its
existence or validity upon some other
contracts;
7. Preparatory – Because it is entered into as
a means to an end, i.e. to engage in business
551
or specific venture for the realization of
profits with the view of dividing them
among the contracting parties; and
8. Profit-oriented. (NCC, Art. 1770)
Typical incidents of partnership
1. The partners share in profits and losses
(NCC, Arts. 1767, 1797-98);
2. The partnership has a juridical personality
separate and distinct from that of each of
the partners. Such juridical personality
shall be automatically acquired despite the
failure to register in the SEC (NCC, Art.
1768);
3. Partners have equal rights in the
management and conduct of the
partnership business (NCC, Art. 1803);
4. Every partner is an agent of the
partnership, and entitled to bind the other
partners by his acts, for the purpose of its
business. (NCC, Art. 1818) He may also be
liable for the entire partnership obligations;
5. All partners are personally liable for the
debts of the partnership with their separate
property (NCC, Arts. 1816, 1822-24) except
limited partners are not bound beyond the
amount of their investment (NCC, Art.
1843);
6. A fiduciary relation exists between the
partners (NCC, Art. 1807); and
7. On dissolution, the partnership is not
terminated, but continues until the winding
up of partnership is completed. (NCC, Art.
1829)
NOTE: These incidents may be modified by
stipulation of the partners subject to the rights
of third persons dealing with the partnership.
Q: TRUE or FALSE. An oral partnership is
valid. (2009 BAR)
A: TRUE. An oral contract of partnership is
valid even though not in writing. However, if it
involves contribution of an immovable property
or a real right, an oral contract of partnership is
void. In such a case, the contract of partnership
to be valid, must be in a public instrument (NCC,
Art. 1771), and the inventory of said property
signed by the parties must be attached to said
public instrument. (NCC, Art. 1773; Litonjua, Jr.
v. Litonjua, Sr., G.R. Nos. 166299-300, December
13, 2005)
 Special Contracts - Partnership
Partnership, Co-ownership and Corporation

CO-
BASIS PARTNERSHIP CORPORATION
OWNERSHIP
Generally created by
By contract or by mere law and can exist
Creation By law.
agreement of the parties. without a contract.
(Albano, 2013)

Has separate and distinct Has separate and

No separate and
juridical personality distinct juridical
Juridical Personality distinct juridical
from that of each personality from that of
personality.
partner. each corporator.

Common enjoyment Depends on the Articles

Purpose Realization of profits.
of a thing or right. of Incorporation (AOI).
A corporation shall
have perpetual
existence unless its
10 years maximum
articles of incorporation
Duration/ Term of (May be extended
No limitation. provides otherwise.
Existence by new agreement).
(Section 11 of R.A. No.
(NCC, Art. 494)
11232 or the Revised
Corporation Code of the
Philippines)
GR: Minimum of one
person (Section 10 of
Minimum of two Minimum of two
Number of Incorporators R.A. No. 11232 or the
persons. persons.
Revised Corporation
Code of the Philippines)
From the date of
From the moment of Not applicable; no
Commencement of issuance of the
execution of the contract juridical
Juridical Personality certificate of
of partnership. personality.
incorporation.

Partner may not dispose Stockholder has a right

Co-owner may
Disposal/Transferability of his individual interest to transfer shares
freely do so. (NCC,
of Interest unless agreed upon by without prior consent
Art. 495)
all partners. of other stockholders.

In the absence of
stipulation to contrary, a
partner may bind
partnership. Each
partner is agent of
partnership. Co-owner cannot
Power to Act with 3rd represent the co- Management is vested
Persons NOTE: Except as ownership. (NCC, with the BOD.
provided by Art. 1825, Art. 491-492)
persons who are not
partners as to each other
are not partners as to
third persons. [NCC, Art.
1769(1); Albano, 2013]

UNIVERSITY OF SANTO TOMAS 552

2021 GOLDEN NOTES
 Civil Law

Death of co-owner
Death of a partner Death of stockholder
does not necessarily
Effect of Death results in dissolution of does not dissolve the
dissolve co-
partnership. corporation.
ownership.

May be dissolved at any

time by the will of any or
all of the partners.
May be dissolved
Can only be dissolved
NOTE: If an unlawful anytime by the will
Dissolution with the consent of the
partnership is dissolved of any or all of the
State.
by a judicial decree, the co-owners.
profits shall be
confiscated in favor of
the State.

In case of a general
GR: The obligation to
partner, his separate and
third persons is limited
personal property shall
to the assets of the
also be liable if the assets
Liability corporation.
of the partnership is not
sufficient to satisfy the
XPN: Partner binds
obligation to third
himself solidarily liable
persons.

Partnership vs. Joint Venture (2015 BAR)

BASIS PARTNERSHIP JOINT VENTURE

Contemplates the undertaking of Ordinarily limited to a single

Coverage a general and continuous transaction and not intended to
business of a particular kind pursue a continuous business

Required to operate under a firm

Firm name Has no firm name
name.

The property used becomes the The property used remains

Transfer of property property of the business entity undivided property of its
and hence of all the partners. contributor.

A partner acting in pursuance of

the firm business, binds not only None of the co-venturers can
Power himself as a principal, but as bind the joint venture or his co-
their agent as well, also the venturers.
partnership and the partners.

A partnership acquires
personality after following the
requisites required by law.
A joint venture has no legal
Firm Name and Liabilities
NOTE: SEC registration is not personality.
required before a partnership
acquires legal personality. (NCC,
Art. 1768)

553
 Special Contracts - Partnership
Joint venture GR: Any person capacitated to contract may
enter into a contract of partnership.
It is an association of persons or companies
jointly undertaking some commercial XPNs:
enterprise. Generally, all contribute assets and
share risks. It requires a community of interest 1. Persons who are prohibited from giving
in the performance of the subject matter, a right each other any donation or advantage
to direct and govern the policy in connection cannot enter into a universal partnership
therewith, and a duty which may be altered by (NCC, Art. 1782; 1994 BAR);
agreement to share both in profits and losses.
(Aurbach v. Sanitary Wares Manufacturing NOTE: A husband and wife, however, may
Corp.,180 SCRA 130, December 15, 1989; Del Mar enter into a particular partnership or be
v. PAGCOR et al., G.R. Nos..138298 & 138982, June members thereof. (De Leon, 2014)
19,2001)
2. Persons suffering from civil interdiction;
NOTE: Section 36(h) of R.A. No. 11232 or the and
Revised Corporation Code of the Philippines
provides for the power of a corporation, “to 3. Persons who cannot give consent to a
enter into a partnership, joint venture, contract:
merger, consolidation or other commercial
agreement with natural or juridical a. Minors
persons.” b. Insane persons
c. Deaf-mutes who do not know how
ESSENTIAL FEATURES OF PARTNERSHIP to write

1. There must be a valid contract; Kinds of partners

2. The parties (two or more persons) must
have legal capacity to enter into the 1. As to the extent of liability
contract;
3. There must be a mutual contribution of a. Capitalist – contributes either
money, property, or industry to a common money or property to the common
fund; fund; he can also contribute an
4. The object must be lawful; and intangible like credit, such as
5. The primary purpose must be to obtain promissory note or other evidence
profits and to divide the same among the of obligation, or even a goodwill
parties. (De Leon, 2014) (Rabuya, 2017); and
b. Industrial – contributes only his
Valid contract industry

Partnership is a voluntary relation created by 2. As to the time of entry

agreement of the parties. It excludes from its
concept all other associations which do not a. Original – one who became a
have their origin in a contract, express or partner at the time of the
implied. (De Leon, 2014) constitution of the partnership
b. Incoming – one who became a
Legal capacity of the parties to contract partner as a new member of an
existing partnership.
Before there can be a valid contract of
partnership, it is essential that the contracting 3. Other kinds
parties have the necessary legal capacity to
enter into the contract. Consequently, any a. Managing – one entrusted with the
person who cannot give consent to a contract management of the partnership.
cannot be a partner. (NCC, Arts. 1800 and 1801)
b. Liquidating – one who takes charge
Persons qualified to be a partner of the liquidation and winding up
of the partnership affairs. (NCC,

UNIVERSITY OF SANTO TOMAS 554

2021 GOLDEN NOTES
 Civil Law
Art. 1836)
c. Retiring – those who cease to be
part of the partnership
d. Continuing – one who continues the
business of a partnership after it
has been dissolved by reason of the
admission of a new partner, or the
retirement, death, or expulsion of
one or more partners
e. Dormant, Silent, Secret – one whose
connection to the partnership is
concealed and who does not take
any active part in it
f. Partner by Estoppel – although not
an actual partner, he has made
himself liable as such by holding
himself out as a partner of allowing
himself to be so held out. (NCC, Art.
1815)
NOTE: A corporation cannot become a member
of a partnership in the absence of express
authorization by statute or charter. This
doctrine is based on the following
considerations: (1) Mutual agency between the
partners and, (2) Such arrangement would
improperly allow corporate property to become
subject to risks not contemplated by the
stockholders when they originally invested in
the corporation. (Mendiola v. CA, GR. No.
159333, July 31, 2006)
Principle of delectus personae
No one can become a member of the
partnership association without the consent of
all the partners. This rule is inherent in every
partnership.
RATIO: This is because of the mutual trust
among the partners and that this is a case of
subjective novation. There is subjective
novation when there is a change in the parties to
a contract. Their consent thereto is necessary in
order to bind them. (Albano, 2013)
NOTE: Even if a partner will associate another
person in his share in the partnership, the
associate shall not be admitted into the
partnership without the consent of all the
partners, even if the partner having an associate
should be a manager. (NCC, Art. 1804) This
element of delectus personae, however, is true
only in the case of a general partner, but not as
regards a limited partner.
555
A partnership may be formed even if the
common fund is comprised entirely of
borrowed or loaned money
A partnership may be deemed to exist among
parties who agree to borrow money to pursue a
business and to divide the profits or losses that
may arise therefrom, even if it is shown that
they have not contributed any capital of their
own to a “common fund.” Their contribution
may be in the form of credit or industry, not
necessarily cash or fixed assets. Being partners,
they are all liable for debts incurred by or on
behalf of the partnership. (Lim Tong Lim v.
Philippine Fishing Gear Industries, Inc., G.R. No.
136448, November 3, 1999)
Consequences of a partnership formed for
an unlawful purpose
1. The contract is void ab initio and the
partnership never existed in the eyes of the
law;
2. The profits shall be confiscated in favor of
the government;
3. The instruments or tools and proceeds of
the crime shall also be forfeited in favor of
the government; and
4. The contributions of the partners shall not
be confiscated unless they fall under No. 3.
(De Leon, 2014)
Necessity of judicial decree to dissolve an
unlawful partnership
Judicial decree is not necessary to dissolve an
unlawful partnership; however, it may
sometimes be advisable that a judicial decree of
dissolution be secured for the convenience and
peace of mind of the parties. (De Leon, 2014)
Intention to divide the profits
The sharing in profits is merely presumptive
and not conclusive evidence of partnership.
There are numerous instances of parties who
have a common interest in the profits and
losses of an enterprise but who are not
partners. Thus, if the division of profits is
merely used as a guide to determine the
compensation due to one of the parties, such is
not a partner. (De Leon, 2014)
Q: To form a lending business, it was
verbally agreed that Noynoy would act as
financier while Cory and Kris would take
 Special Contracts - Partnership
charge of solicitation of members and
collection of loan payments. The parties
executed the “Articles of Agreement” where
Noynoy would receive 70% of the profits
while Cory and Kris would earn 15% each.
Later, Noynoy filed a complaint against Cory
and Kris for misappropriation of funds
allegedly in their capacities as Noynoy’s
employees. In their answer, Cory and Kris
asserted that they were partners and not
mere employees of Noynoy. What kind of
relationship existed between the parties?
A: A partnership was formed among the parties.
The “Articles of Agreement” stipulated that the
signatories shall share in the profits of the
business in a 70-15-15 manner, with Noynoy
getting the lion's share. This stipulation clearly
proved the establishment of a partnership.
(Santos v. Spouses Reyes, G.R. No. 135813,
October 25, 2001)
Distribution of losses
Agreeing upon a system of sharing losses is not
necessary for the obligation is implied in the
partnership relation. If only the share of each
partner in the profits has been agreed upon, the
share of each in the losses shall be in the same
proportion.
The definition of partnership under Art. 1767
refers to “profits” only and is silent as to “losses.”
The reason is that the object of partnership is
primarily the sharing of profits, while the
distribution of losses is but a “consequence of
the same.” The right to share in the profits
carries with it the duty to contribute to the
losses, of any.
NOTE: The partnership relation is not the
contract itself, but the result of the contract. The
relation is evidenced by the terms of the
contract which may be oral or written, express
or implied from the acts and declarations of the
parties, subject to the provisions of Articles
1771-1773 and to the Statute of Frauds. (De
Leon, 2014)
FORMATION OF PARTNERSHIP
It is created by agreement of the parties
(consensual). There is no such thing as a
partnership created by law or by operation or
implication of law alone. (De Leon, 2014)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Articles of partnership
While partnership relation may be informally
created and its existence proved by
manifestations of the parties, it is customary to
embody the terms of the association in a
written document known as “Articles of
Partnership” stating the name, nature or
purpose and location of the firm, and defining,
among others, the powers, rights, duties, and
liabilities of the partners among themselves,
their contributions, the manner by which the
profits and losses are to be shared, and the
procedure for dissolving the partnership. (De
Leon, 2014)
Commencement of contract of partnership
A partnership begins from the moment of the
execution of the contract, unless it is otherwise
stipulated. (NCC, Art. 1784) If there is no
contrary stipulation as to the date of effectivity
of the same, its registration in the Securities and
Exchange Commission is not essential to give it
juridical personality. (De Leon, 2014)
Formalities needed for the creation of a
partnership
GR: No special form is required for its validity
or existence. (NCC, Art. 1771) The contract may
be made orally or in writing regardless of the
value of the contributions. (2009 BAR)
NOTE: An agreement to enter in a partnership
at a future time, which “by its terms is not
performed within a year from the making
thereof” is covered by the Statute of Frauds.
[NCC, Art. 1403(2)(a)] Such agreement is
unenforceable unless the same be in writing or
at least evidenced by some note or
memorandum thereof subscribed by the
parties. (De Leon, 2014)
XPN: If property or real rights have been
contributed to the partnership:
1. Personal property
a. Less than P3,000 – may be oral
b. P 3,000 or more – must be:
i. In a public instrument;
and
ii. Registered with Securities
and Exchange Commission
(NCC, Art. 1772)
556
 Civil Law
2. Real property or real rights – must be:
a. In a public instrument (NCC, Art.
1771; (2009 BAR)
b. With an inventory of said property
i. Signed by the parties
ii. Attached to the public
instrument (NCC, Art.
1773)
iii. Registered in the Registry
of Property of the province,
where the real property is
found to bind third
persons.
3. Limited partnership – Must be registered as
such with the SEC, otherwise, it is not valid
as a limited partnership but may still be
considered a general partnership with
juridical personality. (Paras, 1969)
Where capital of the partnership consists of
money or personal property amounting to
Php 3000 or more
The failure to register the contract of
partnership does not invalidate the same as
among the partners, so long as the contract has
the essential requisites, because the main
purpose of registration is to give notice to third
parties, and it can be assumed that the members
themselves knew of the contents of their
contract. Non-compliance with this directory
provision of the law will not invalidate the
partnership.
Registration is merely for administration and
licensing purposes; hence, it shall not affect the
liability of the partnership and the members
thereof to third persons. [NCC, Art. 1772(2)]
A void partnership under Art. 1773, in relation
to Art. 1771, may still be considered by the
courts as an ordinary contract as regards the
parties thereto from which rights and
obligations to each other may be inferred and
enforced. (Torres v. CA, G.R. No. 134559,
December 9, 1999)
Q: A and B are co-owners of an inherited
property. They agreed to use the said
common properties and the income derived
therefrom as a common fund with the
intention to produce profits for them in
557
proportion to their respective shares in the
inheritance as determined in a project of
partition. What is the effect of such
agreement on the existing co-ownership?
A: The co-ownership is automatically converted
into a partnership. From the moment of
partition, A and B, as heirs, are entitled already
to their respective definite shares of the estate
and the income thereof, for each of them to
manage and dispose of as exclusively his own
without the intervention of the other heirs, and,
accordingly, he becomes liable individually for
all the taxes in connection therewith.
If, after such partition, an heir allows his shares
to be held in common with his co-heirs under a
single management to be used with the intent of
making profit thereby in proportion to his
share, there can be no doubt that, even if no
document or instrument were executed for the
purpose, for tax purposes, at least, an
unregistered partnership is formed. (Oña v.
Commissioner of Internal Revenue, G.R. No. L-
19342, May 25, 1972)
Future partnership
It is a kind of partnership where the partners
may stipulate some other date for the
commencement of the partnership. Persons
who enter into a future partnership do not
become partners until or unless the agreed time
has arrived, or the contingency has happened.
(De Leon, 2014)
As long as the agreement for a partnership
remains inchoate or unperformed, the
partnership is not consummated. (De Leon,
2014)
RULES TO DETERMINE EXISTENCE OF
PARTNERSHIP
1. Except as provided by Art. 1825 of the NCC
(partnership by estoppel), persons who are
not partners as to each other are not
partners as to third persons;
2. Co-ownership or co-possession does not of
itself establish a partnership, whether such
co-owners or co-possessors do or do not
share any profits made by the use of the
property;
3. The sharing of gross returns does not of
 Special Contracts - Partnership
itself establish a partnership, whether or
not the persons sharing them have a joint
or common right or interest in any
property from which the returns are
derived;
4. The receipt by a person of a share of the
profits of a business is prima facie evidence
that he is a partner in the business, but no
such inference shall be drawn if such profits
were received in payment:
a. As a debt by installments or
otherwise;
b. As wages of an employee or rent to
a landlord;
c. As an annuity to a widow or
representative of a deceased
partner;
d. As interest on a loan, though the
amount of payment varies with the
profits of the business;
e. As the consideration for the sale
for the sale of a goodwill of a
business or other property by
installments or otherwise. (NCC,
Art. 1769)
NOTE: In sub-paragraphs a–e, the profits in the
business are not shared as profits of a partner
as a partner, but in some other respects or for
some other purpose.
Burden of proving the existence of a
partnership
Whoever alleges the existence of a partner or
partnership by estoppel has the burden of
proof. The existence of a partnership must be
proved and will not be presumed. However,
when a partnership is shown to exist, the
presumption is that it continues in the absence
of evidence to the contrary, and the burden of
proof is on the person asserting its termination.
(De Leon, 2014)
CLASSIFICATIONS OF PARTNERSHIP
1. Object
a. Universal partnership
i. Of all present property (NCC, Art.
1778) – The partners contribute all
the property which actually belongs
to them to a common fund, with the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
intention of dividing the same among
themselves, as well as all profits they
may acquire therewith. The following
become the common fund of all the
partners:
1. Property which belonged to each
of the partners at the time of the
constitution of the partnership
2. Profits which they may acquire
from all property contributed
ii. Of all profits (NCC, Art. 1780) –
Comprises all that the partners may
acquire by their industry or work
during the existence of the
partnership as well as the usufruct of
all movable or immovable property
which each of the partner may
possess at the time of the celebration
of the contract of partnership.
b. Particular partnership – It is one
which has for its object,
determinate things, their use and
fruits, or a specific undertaking or
the exercise of a profession or a
vocation. (NCC, Art. 1783)
2. Liability of partners
a. General partnership – One where all
partners are general partners who are
liable even with respect to their
individual properties, after the assets
of the partnership have been
exhausted. (Pineda, 2006)
b. Limited partnership – One formed by
two or more persons having as
members one or more general partners
and one or more limited partners, the
latter not being personally liable for the
obligations of the partnership. (NCC,
Art. 1843)
3. Duration
a. Partnership at will – the partnership has
an indefinite term and it would be
dissolved only when an act or cause of
dissolution happens or arises.
b. Partnership with a fixed period or
Partnership for a Particular
Undertaking – the partnerships are
automatically dissolved upon the
558
 Civil Law
expiration of the stipulated term or the not known to many but only as to its
achievement of the particular partners.
undertaking stipulated in the contract b. Notorious or open partnership – It is
of partnership. known not only to the partners, but to
the public as well.
NOTE: When a partnership for a fixed term or
particular undertaking is continued after it has 7. Purpose
terminated without any express agreement,
partnership then become one at will (NCC, Art. a. Commercial or trading – One formed for
1785), and the rights and duties of the partners the transaction of business.
remain the same as they were at such b. Professional or non-trading – One
termination. formed for the exercise of a profession.
(De Leon, 2014)
The presence of a period, duration or statement
of a particular purpose for its creation may not UNIVERSAL v. PARTICULAR
prevent the dissolution of any partnership by
an act or will of a partner. The “mutual agency” Classes of universal partnership
and the “doctrine of delectus personae” allows
them to dissolve the partnership. However, an ALL PRESENT
unjustified dissolution by a partner can subject ALL PROFITS
PROPERTY
him to a possible action for damages. (Ortega v. What constitutes common property
Court of Appeals, 245 SCRA 529, 1995; Realubit v.
Only usufruct of the All properties
Sps. Jaso, G.R. No. 178782, September 21, 2011)
properties of the actually belonging
partners become to the partners
4. Legality of existence
common property. are contributed –
they become
a. De jure partnership – One which has common property
complied with all the requirements for (owned by all of
its establishment. the partners and
b. De facto partnership – One which has the partnership).
failed to comply with all the legal
requirements for its establishment. As to profits as common property
All profits acquired by As to profits from
5. Representation to others the industry of the other sources:
partners become GR: Aside from
a. Ordinary or real partnership – One common property the contributed
which actually exists among the (whether or not they properties, the
partners and also as to third person. were obtained profits of said
b. Ostensible or partnership by estoppel – through the usufruct property become
When two or more persons attempt to contributed) common property.
create a partnership but fail to comply
with the legal personalities essential XPN: Profits from
for juridical personality, the law other sources may
considers them as partners, and the become common
association is a partnership insofar as it if there is a
is favorable to third persons, by reason stipulation to such
of the equitable principle of estoppel. effect.
(MacDonald et. al. v. Nat’l. City Bank of As to properties
New York, G.R. No. L-7991, May 21, subsequently
1956; Atwel v. Concepcion Progressive acquired:
Association, G.R. No. 169370, April 14, GR: Properties
2008) subsequently
acquired by
6. Publicity inheritance,
legacy or
a. Secret partnership – Partnership that is donation, cannot

559
 Special Contracts - Partnership
be included in the
stipulation
XPN: Only fruits
thereof can be
included in the
stipulation. (NCC,
Art. 1779)
Presumption of universal partnership of
profits
When the Articles of Universal Partnership fail
to specify whether it is one of all present
property or of profits, it only constitutes a
universal partnership of profits (NCC, Art. 1781),
because it imposes lesser obligations on the
partners since they preserve the ownership of
their separate property.
Persons disqualified from entering into
universal partnership
1. Legally married spouses. (Family Code, Art.
87) However, they can enter into particular
partnership.
2. Common law spouses.
3. Parties guilty of adultery or concubinage.
4. Criminals convicted for the same offense in
consideration of the same. [NCC, Art. 739
(2)]
5. A person and a public officer (or his wife,
ascendant or descendants) by reason of his
office. [NCC, Art. 739 (3)]
Contribution of future properties
As a general rule, future properties cannot be
contributed. The very essence of the contract of
partnership that the properties contributed be
included in the partnership requires the
contribution of things determinate. (De Leon,
2014)
Particular partnership
It is one which has for its object determinate
things, their use or fruits, or a specific
undertaking, or the exercise of a profession or
vocation. (NCC, Art. 1783)
The fundamental difference between a
universal partnership and a particular
partnership lies in the scope of their subject
matter or object. In the former, the object is
vague and indefinite, contemplating a general
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
business with some degree of continuity, while
in the latter, it is limited and well-defined, being
confined to an undertaking of a single,
temporary, or ad hoc nature. (De Leon, 2014)
Q: J, P and B formed a limited partnership
called Suter Co., with P as the general
partner and J and B as limited partners. J
and B contributed Php 18,000 and Php
20,000 respectively. Later, J and B got
married and P sold his share of the
partnership to the spouses which was
recorded in the SEC. Has the limited
partnership been dissolved by reason of the
marriage between the limited partners?
A: NO. The partnership is not a universal but a
particular one. A universal partnership requires
either that the object of the association must be
all present property of the partners as
contributed by them to a common fund, or all
else that the partners may acquire by their
industry or work. Here, the contributions were
fixed sums of money and neither one of them
were industrial partners. Thus, the firm is not a
partnership which the spouses are forbidden to
enter into. The subsequent marriage cannot
operate to dissolve it because it is not one of the
causes provided by law. The capital
contributions were owned separately by them
before their marriage and shall remain to be
separate under the Spanish Civil Code. Their
individual interest did not become common
property after their marriage. (Commissioner of
Internal Revenue v. Suter, G.R. No. L-25532,
February 28, 1969; Heirs of Tang Eng Kee v. CA,
G.R. No. 126881, October 3, 2000)
GENERAL vs. LIMITED
General partnership
It is a partnership where all partners are
general partners who are liable even with
respect to their individual properties, after the
assets of the partnership have been exhausted.
(Paras, 2016)
General or real partner
He is a partner whose liability to third persons
extends to his separate property; he may be
either a capitalist or an industrial partner. (De
Leon, 2014)
560
 Civil Law
General vs. Limited Partner/Partnership

BASIS GENERAL LIMITED

Personally liable for partnership
Liability Liability extends only to his capital contributions
obligations.
When manner of management has
Right in not been agreed upon, all general
No participation in management.
Management partners have an equal right in the
management of the business.
Contribution Money, property or industry. Cash or property only, not services.
Not proper party to proceedings by/against
If Proper Party partnership, unless:
to Proceedings Proper party to proceedings1. (1) He is also a general partner; or
By or Against by/against partnership. 2. (2) Where the object of the proceeding is to
Partnership enforce a limited partner’s right or liability to
the partnership.
Assignment of Interest is not assignable without
Interest is freely assignable.
Interest consent of other partners.
It must also operate under a firm name, followed
by the word “Limited.”

GR: The surname of a limited partner shall not

appear in the partnership name.
It must operate under a firm name,
which may or may not include the
XPNs:
name of one or more of the partners.
1. (1) It is also the surname of a general partner; or
2. (2) Prior to the time when the limited partner
Firm Name NOTE: Those, who, not being
became such, the business had been carried on
members of the partnership, include
under a name in which his surname appeared.
their names in the firm name, shall
be subject to the liability of a partner.
NOTE: A limited partner whose surname
(NCC, Art. 1815)
appears in a partnership name is liable as a
general partner to partnership creditors who
extend credit to the partnership without actual
knowledge that he is not a general partner.
(NCC, Art. 1846)
The capitalist partner cannot engage
for their own account in any
operation which is of the kind of
Prohibition to business in which the partnership is
Engage in Other engaged, unless there is a No prohibition against engaging in business.
Business stipulation to the contrary.

If he is an industrial partner - in any

business for himself.
Effect of
Death, Retirement, death, insolvency,
Does not have same effect; rights are transferred
Insolvency, insanity of general partner dissolves
to legal representative.
Retirement, partnership.
Insanity
As a rule, it maybe constituted in Created by the members after substantial
Creation any form, by contract or conduct of compliance in good faith of the requirements set
the parties. forth by law.
Composition/ Composed of at least one general partner and
Composed only of general partners.
Membership one limited partner.

561
 Special Contracts - Partnership
PARTNERSHIP WITH A FIXED TERM VS.
PARTNERSHIP AT WILL
Partnership with a fixed term
It is one in which the term of its existence has
been agreed upon by the partners either:
1. Expressly – There is a definite period.
2. Impliedly – A particular enterprise or
transaction is undertaken.
The mere expectation that the business would
be successful and that the partners would be
able to recoup their investment is not sufficient
to create a partnership for a term.
Fixing the term of the partnership contract
The partners may fix in their contract any term
and they shall be bound to remain under such a
relation for the duration of the term.
Expiration of the partnership contract
The expiration of the term fixed or the
accomplishment of the particular undertaking
specified will cause the automatic dissolution of
the partnership.
Partnership at will
One in which no fixed term is specified and is
not formed for a particular undertaking or
venture which may be terminated anytime by
mutual agreement of the partners, or by the will
of any one partner alone; or one for a fixed term
or particular undertaking which is continued by
the partners after the termination of such term
or particular undertaking without express
agreement. (De Leon, 2014)
Termination or dissolution of partnership at
will
A partnership at will may be lawfully
terminated or dissolved at any time by the
express will of all or any of the partners.
The partner who wants the partnership
dissolved must do so in good faith, not that the
attendance of bad faith can prevent the
dissolution of the partnership, but to avoid the
liability for damages to other partners.
Q: A, B, and C entered into a partnership to
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
operate a restaurant business. When the
restaurant had gone past break-even stage
and started to garner considerable profits, C
died. A and B continued the business
without dissolving the partnership. They in
fact opened a branch of the restaurant,
incurring obligations in the process.
Creditors started demanding for the
payment of their obligations.
a. Who are liable for the settlement of the
partnership’s obligations? Explain.
b. What are the creditors’ recourse/s?
Explain. (2010 BAR)
A:
a. The two remaining partners, A and B, are
liable. When any partner dies and the
business is continued without any
settlement of accounts as between him or
his estate, the surviving partners are held
liable for continuing the business despite
the death of C. (NCC, Arts. 1841, 1785(2) &
1833)
b. Creditors can file the appropriate actions,
for instance, an action for the collection of
sum of money against the “partnership at
will” and if there are no sufficient funds, the
creditors may go after the private
properties of A and B. (NCC, Art. 816)
Creditors may also sue the estate of C. The
estate is not excused from the liabilities of
the partnership even if C is dead already but
only up to the time that he remained a
partner. [NCC, Arts. 1829, 1835(2)]
However, the liability of C’s individual
property shall be subject first to the
payment of his separate debts. (NCC, Art.
1835)
PARTNERSHIP BY ESTOPPEL
It is one who, by words or conduct does any of
the following:
1. Directly represents himself to anyone as a
partner in an existing partnership or in a
non-existing partnership.
2. Indirectly represents himself by consenting
to another representing him as a partner in
an existing partnership or in a non-existing
partnership.
562
 Civil Law
Elements before a partner can be held liable the custody of the partnership.
on the ground of estoppel
NOTE: Partners are solidarily liable with the
1. Defendant represented himself as partnership for any penalty or damage arising
partner or is represented by others as from a partnership tort.
such, and did not deny/refute such
representation. PROFESSIONAL PARTNERSHIP
2. Plaintiff relied on such representation.
3. Statement of defendant is not refuted. It is a partnership formed by persons for the
sole purpose of exercising their common
Liabilities in case of estoppel profession, no part of the income of which is
derived from engaging in any trade or business.
When Partnership is
Liable In a professional partnership, it is the individual
If all actual partners consented to the partners who are deemed engaged in the
representation, then the liability of the person practice of profession and not the partnership.
who represented himself to be a partner or who Thus, they are responsible for their own acts.
consented to such representation and the
actual partner is considered a partnership Prohibition in the formation of a
liability. (De Leon, 2014) professional partnership
When Liability is PRO
RATA Partnership between lawyers and members of
When there is no existing partnership and all other profession or non-professional persons
those represented as partners consented to the should not be formed or permitted where any
representation, then the liability of the person part of the partnership’s employment consists
who represented himself to be a partner, and of the practice of law. (Canon 9, Code of
all who made and consented to such Professional Responsibility)
representation, is joint or pro- rata. (De Leon,
2014) Prohibition in the firm name of a
When Liability is partnership for the practice of law
SEPARATE
When there is no existing partnership and not In the selection and use of firm name, no false,
all but only some of those represented as misleading, assumed, or trade names should be
partners consented to the representation, or used. (Canon 3, Code of Professional
none of the partnership in an existing Responsibility)
partnership consented to such representation,
then the liability will be separate. (De Leon, MANAGEMENT OF THE PARTNERSHIP
2014)
Modes of appointment of a manager
Partnership Tort
Appointment through Appointment other
There is a partnership tort where: the Articles of than in the Articles
Partnership
1. By any wrongful act or omission of any Power is irrevocable Power to act is
partner, acting in the ordinary course of
without just or revocable anytime,
business of the partnership or with
lawful cause. with or without
authority of his co-partners, loss or injury is cause (should be
caused to any person, not being a partner in
NOTE: Vote required done by the
the partnership;
for removal of controlling interest).
2. One partner, acting within the scope of his
manager:
apparent authority, receives money or
1. For just cause –
property from a third person, and Vote of the
misapplies it; or
controlling
3. The partnership, in the course of its
partners
business, receives money or property, and (controlling
it is misapplied by any partner while it is in

563
 Special Contracts - Partnership
financial
interest). GR: Unanimous consent of all the managing
2. Without cause or partners shall be necessary for the validity of
for unjust cause the acts and absence or inability of any
– Unanimous managing partner cannot be alleged.
vote.
Extent of Power XPN: Where there is an imminent danger of
1. If he acts in good As long as he is a grave or irreparable injury to the partnership.
faith, he may do manager, he can
all acts of perform all acts of
Rule when the manner of management has
administration administration (if
not been agreed upon
(despite others oppose, he
opposition of his can be removed).
1. All partners shall be considered agents and
partners);
whatever any one of them may do alone
2. If he acts in bad
shall bind the partnership, without
faith, he cannot.
prejudice to the provisions of Art. 1801 of
the NCC. This right is not dependent on the
Scope of the power of a managing partner
amount or size of the partner’s capital
contribution or services to the business.
As a general rule, a partner appointed as
manager has all the powers of a general agent
NOTE: If two or more partners have been
as well as all the incidental powers necessary to
entrusted with the management of the
carry out the object of the partnership in the
partnership without specification of their
transaction of its business. The exception is
respective duties, or without a stipulation
when the powers of the manager are
that one of them shall not act without the
specifically restricted. (De Leon, 2014)
consent of all the others, each one may
separately execute all acts of
Rule where there are two or more managers
administration, but if any of them should
oppose the acts of the others, the decision
Without specification of their respective of the majority shall prevail. In case of a tie,
duties and without stipulation requiring the matter shall be decided by the partners
unanimity of owning the controlling interest. (NCC, Art.
action 1801; 1992 BAR)
GR: Each may separately execute all acts of 2. None of the partners may, without the
administration (unlimited power to consent of the others, make any important
administer). alteration in the immovable property even
if it may be useful to the partnership. (NCC,
XPN: If any of the managers opposes, decision Art. 1802-1803)
of the majority prevails.
Rule in case where unanimity of action is
NOTE: In case of tie – Decision of the controlling stipulated
interest (who are also managers) shall prevail.
NOTE: If refusal of partner is manifestly
prejudicial to the interest of partnership, the
With stipulation that none of the managing court’s intervention may be sought.
partners shall act without the consent of the
others COMPENSATION

GR: In the absence of an agreement to the

contrary, each member of the partnership
assumes the duty to give his time, attention, and
skill to the management of its affairs, so far, at
least, as may be reasonably necessary to the
success of the common enterprise; and for this

UNIVERSITY OF SANTO TOMAS 564

2021 GOLDEN NOTES
 Civil Law
service a share of the profits is his only himself (NCC, Art. 1789);
compensation. 4. Contribute additional capital (NCC, Art.
1791);
XPNs: 5. Managing partner who collects debt (NCC,
Art. 1792);
1. A partner engaged by his co-partners to 6. Partner who receives share of partnership
perform services not required of him in credit (NCC, Art. 1793);
fulfillment of the duties which the 7. Damages to partnership (NCC, Art. 1794);
partnership relation imposes and in a 8. Keep the partnership books (NCC, Art.
capacity other than that of a partner; 1805);
2. A contract for compensation may be 9. Render information (NCC, Art. 1806); and
implied if there is extraordinary neglect on 10. Accountable as fiduciary. (NCC, Art. 1807)
the part of one partner to perform his
duties toward the firm’s business, thereby Withdrawal or disposal of money or
imposing the entire burden on the property by a contributing partner
remaining partner;
3. One partner may employ his co-partner to Money or property contributed by a partner
do work for him outside of and cannot be withdrawn or disposed of by the
independent of the co- partnership, and contributing partner without the consent or
become personally liable therefor; approval of the partnership or of the other
4. Where the services rendered are extra- partners because the money or property
ordinary; and contributed by a partner becomes the property
5. Where one partner is entrusted with the of the partnership. (De Leon, 2014)
management of the partnership business
and devotes his whole time and attention Q: Who bears the risk of loss of things
thereto, at the instance of the other contributed?
partners who are attending to their
individual business and giving no time or A:
attention to the business of the firm. (De
Leon, 2014) WHO BEARS
KIND OF PROPERTY / THING
THE RISK?
RIGHTS AND OBLIGATIONS OF Specific and determinate
PARTNERSHIP things which are not fungible Partners
where only the use is
1. Refund the amounts disbursed by partner in contributed
behalf of the partnership plus
corresponding interest from the time the Specific and determinate
expenses are made, not from the date of things the ownership of which
demand (e.g. loans and advances made by a is transferred to the Partnership
partner to the partnership aside from partnership
capital contribution); Fungible things (Consumable)
2. Answer for obligations the partner may
have contracted in good faith in the interest Things brought and appraised
of the partnership business; and in the inventory
3. Answer for risks in consequence of its
management. (NCC, Art. 1796) Effects if a partner fails to contribute the
property which he promised to deliver to
RIGHTS AND OBLIGATIONS OF PARTNERS the partnership
AMONG THEMSELVES
1. Partner becomes ipso jure a debtor of the
Obligations of partners among themselves partnership even in the absence of any
demand. (NCC, Art. 1786)
1. Contribution of property (NCC, Art. 1786); 2. Remedy of the other partner is not
2. Contribution of money and money rescission but specific performance with
converted to personal use (NCC, Art. 1788); damages and interest from defaulting
3. Prohibition in engaging in business for partner from the time he should have

565
 Special Contracts - Partnership
complied with his obligation.
When the capital or a part hereof which a
partner is bound to contribute consists of goods,
their appraisal must be made in the manner
prescribed in the contract of partnership, and
in the absence of stipulation, it shall be current
prices, the subsequent changes thereof being
for the account of the partnership. (NCC, Art.
1787)
Rules regarding contribution of money to
the partnership
1. To contribute on the date fixed the amount
the partner has undertaken to contribute to
the partnership;
2. To reimburse any amount the partner may
have taken from the partnership coffers
and converted to his own use;
3. To indemnify the partnership for the
damages caused to it by delay in the
contribution or conversion of any sum for
the partner’s personal benefit;
4. To pay the agreed or legal interest, if the
partner fails to pay his contribution on time
or in case he takes any amount from the
common fund and converts it to his own
use.
Rule regarding obligation to contribute to
partnership capital
Unless there is a stipulation to the contrary, the
partners shall contribute equal shares to the
capital of the partnership. (NCC, Art. 1790) It is
not applicable to an industrial partner unless,
besides his services, he has contributed capital
pursuant to an agreement.
Liability of a capitalist partner to contribute
additional capital
GR: A capitalist partner is not bound to
contribute to the partnership more than what
he agreed to contribute.
XPNs:
1. In case of imminent loss of the business;
and
2. There is no agreement to the contrary.
He is under obligation to contribute an
additional share to save the venture. If he
refuses to contribute, he shall be obliged to sell
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
his interest to the other partners.
Requisites before capitalist partners are
compelled to contribute additional capital
1. Imminent loss of the business of the
partnership;
2. Majority of the capitalist partners are of the
opinion that an additional contribution to
the common fund would save the business;
3. Capitalist partner refuses deliberately to
contribute (not due to financial inability);
and
4. There is no agreement to the contrary.
NOTE: The refusal of the partner to contribute
his additional share reflects his lack of interest
in the continuance of the partnership. (De Leon,
2014) It shall be obliged to sell his interest to
the other partners except if there is an
agreement to the contrary. (NCC, Art. 1791)
It is to be noted that the industrial partner is
exempted from the requirement to contribute
an additional share. Having contributed his
entire industry, he can do nothing further. (De
Leon, 2014)
Obligations of managing partners who
collect his personal receivable from a
person who also owes the partnership
1. Apply sum collected to 2 credits in
proportion to their amounts
2. If he received it for the account of
partnership, the whole sum shall be applied
to partnership credit
Requisites:
At least 2 debts, one where the collecting
partner is creditor and the other, where the
partnership is the creditor:
1. Both debts are demandable; and
2. Partner who collects is authorized to
manage and actually manages the
partnership.
NOTE: The debtor is given the right to prefer
payment of the credit of the partner if it should
be more onerous to him in accordance with his
right to application of payment. (NCC, Art. 1252;
566
 Civil Law
behalf of an unincorporated association or
INDUSTRIAL CAPITALIST ostensible corporation may lie in a person who
PARTNER PARTNER may not have directly transacted on its behalf,
Prohibition but reaped benefits from that contract. (Lim
Absolute: Cannot Relative: Cannot Tong Lim v. Philippine Fishing Gear Industries
engage in business for engage in business Inc., G.R. No. 136448, November 3, 1999)
himself unless the (with same kind of
partnership expressly business with the Rules regarding the prohibition to engage in
permits him to do so. partnership) for his another business
own account, unless
there is a stipulation Q: Joe and Rudy formed a partnership to
to the contrary. operate a car repair shop in Quezon City. Joe
Remedy provided the capital while Rudy contributed
Capitalist partners Capitalist partner, who his labor and industry. On one side of their
may: violated shall: shop, Joe opened and operated a coffee shop,
1. Exclude him from 1. Bring to the while on the other side, Rudy put up a car
the firm; or common fund any accessories store. May they engage in such
2. Avail themselves profits accruing to separate businesses? Why? (2001 BAR)
of the benefits him from said
which he may transaction; and A: Joe, the capitalist partner, may engage in the
have obtained; 2. Personally bears restaurant business because it is not the same
Damages, in either all losses. (NCC, kind of business the partnership is engaged in.
case. (NCC, Art. Art. 1808; 2001 On the other hand, Rudy may not engage in any
1789; 2001 BAR) BAR) other business unless their partnership
De Leon, 2014) expressly permits him to do so because as an
industrial partner, he has to devote his full time
Reason for applying payment to partnership to the business of the partnership. (NCC, Art.
credit 1789)

The law safeguards the interests of the
partnership by preventing the possibility of
their being subordinated by the managing
partner to his own interest to the prejudice of
the other partners. (De Leon, 2014)
Obligation of a partner who receives share
of partnership credit
To bring to the partnership capital what he has
received even though he may have given receipt
for his share only.
Requisites:
1. A partner has received in whole or in part,
his share of the partnership credit;
2. Other partners have not collected their
shares; and
3. Partnership debtor has become insolvent.
Liability of a person who has not directly
transacted in behalf of an unincorporated
association for a contract entered into by
such association
The liability for a contract entered into on
Rule with regard to the obligation of a
partner as to damages suffered by the
partnership through his fault
GR: Every partner is responsible to the
partnership for damages suffered by it through
his fault and he cannot compensate them with
the profits and benefits which he may have
earned for the partnership by his industry.
XPN: The courts may equitably lessen this
responsibility if through the partner’s
extraordinary efforts in other activities of the
partnership, unusual profit has been realized.
(NCC, Art. 1794)
Set-off of damages caused by a partner
GR: The damages caused by a partner to the
partnership cannot be offset by the profits of
benefits which he may have earned for the
partnership by his industry.
Ratio: The partner has the obligation to secure
benefits for the partnership. Hence, the profits
which he may have earned pertain as a matter
of law or right, to the partnership

567
 Special Contracts - Partnership
XPN: If unusual profits are realized through the
extraordinary efforts of the partner at fault, the
courts may equitably mitigate or lessen his
liability for damages. This rule rests on equity.
Note that even in this case, the partner at fault
is not allowed to compensate such damages
with the profits earned. The law does not
specify as to when profits may be considered
“unusual.” The question depends upon the
circumstances of the particular case.
Duty of the partners with respect to keeping
the partnership books
The partnership books shall be kept, subject to
any agreement between partners, at the
principal place of business of the partnership.
(NCC, Art. 1805)
Duty to keep partnership book belongs to
managing or active partner
The duty to keep true and correct books
showing the firm’s accounts, such books being
at all times open to inspection of all members of
the firm, primarily rests on the managing or
active partner or the particular partner given
record-keeping duties. (NCC, Art. 1805; De Leon,
2014)
Duty of the partners with respect to
information affecting the partnership
Partners shall render on demand true and full
information of all things affecting the
partnership to:
1. Any partner; or
2. Legal representative of any deceased or any
partner under legal disability. (NCC, Art.
1806)
NOTE: Under the same principle of mutual trust
and confidence among partners, there must be
no concealment between them in all matters
affecting the partnership. The information, to be
sure, must be used only for a partnership
purpose. (De Leon, 2014)
Accountability of partners to each other as
fiduciary
Every partner must account to the partnership
for any benefit, and hold as trustee for it any
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
profits derived by him without the consent of
the other partners from any transaction
connected with the formation, conduct, or
liquidation of the partnership or from any use
by him of its property. (NCC, Art. 1807)
Duty of a partner to act with utmost good
faith towards co-partners continues even
after dissolution
The duty of a partner to act with utmost good
faith towards his co-partners continues
throughout the entire life of the partnership
even after dissolution for whatever reason or
whatever means, until the relationship is
terminated, i.e., the winding up of partnership
affairs is completed. (De Leon, 2014)
Failure to disclose facts, when there is a duty to
reveal them, as when parties are bound by
confidential relations, constitutes fraud. (NCC,
Art. 1339)
RIGHTS OF PARTNERS
1. Right to reimbursement for amounts
advanced to the partnership and to
indemnification for risks in consequence of
management (NCC, Art. 1796);
2. Right on the distribution of profits and
losses (NCC, Art. 1797);
3. Right to associate another person with him
in his share without the consent of the other
partners (NCC, Art. 1804);
NOTE: Such partnership formed between a
member of a partnership and a third person
for a division of the profits coming to him
from the partnership enterprise is termed
sub-partnership. (De Leon, 2014)
4. Right to free access and to inspect and copy
at any reasonable hour the partnership
books (NCC, Art. 1805);
5. Right to formal account as to partnership
affairs:
a. If he is wrongfully excluded from
the partnership business or
possession of its property by his
co-partners;
b. If the right exist under the terms of
any agreement;
568
 Civil Law
c. Duty to account as provided by Art.
1807;
d. Whenever there are circumstances
render it just and reasonable;
6. Right to have the partnership dissolved;
and
7. Property rights of a partner. (NCC, Art.
1810)
Rule as to formal accounting during the
existence of the partnership
GR: During the existence of the partnership, a
partner is not entitled to a formal account of
partnership affairs.
XPN: However, in special and unusual situations
enumerated under Art. 1809, the justification
for a formal accounting even before dissolution
of the partnership cannot be doubted. An
example under No. (4) of Art. 1809 is where a
partner has been assigned abroad for a long
period of time in connection with the
partnership business and the partnership books
during such period being in the possession of
the other partners.
Partners’ inspection rights
The partners’ inspection rights are not absolute.
He can be restrained from using the information
gathered for other than partnership purpose.
“Any reasonable hour”
The rights of the partners with respect to
partnership books can be exercised at “any
reasonable hour.” (NCC, Art. 1805) This phrase
has been interpreted to mean reasonable hours
on business days throughout the year and not
merely during some arbitrary period of a few
days chosen by the managing partners.
Action for accounting
An action for accounting, asking that the assets
of the partnership be accounted for, sold and
distributed according to the agreement of the
partners is a personal action which under the
Rules of Court, may be commenced and tried
where the defendant resides or may be found or
where the plaintiffs reside, at the election of the
latter.
569
NOTE: The fact that some of the assets of the
partnership are real property does not
materially change the nature of the action. It is
an action in personam because it is an action
against a person for the performance of a
personal duty on his part, and not an action in
rem where the action is against the thing itself.
It is only incidental that part of the assets of the
partnership subject to accounting or under
liquidation happen to be real property. (Emnace
v. CA, G.R. No. 126334, November 23, 2001)
Rules regarding distribution of profits and
losses
a. Distribution of Profits
i. The partners share in the profits
according to their agreement.
ii. In the absence of such:
a. Capitalist partner – in
proportion to his contribution
b. Industrial partner – what is just
and equitable under the
circumstances
NOTE: If the industrial partner has contributed
capital other than his services, he shall also
receive a share in the profits in proportion to his
capital.
b. Distribution of Losses
i. The partners share in the losses
according to their agreement.
ii. In the absence of such, according to
their agreement as to profits.
iii. In the absence of profit agreement,
in proportion to his capital
contribution.
Q: “X” used his savings from his salaries
amounting to a little more than P2,000 as
capital in establishing a restaurant. “Y” gave
the amount of P4,000 to “X” as “financial
assistance” with the understanding that “Y”
would be entitled to 22% of the annual
profits derived from the operation of the
restaurant. After the lapse of 22 years, “Y”
filed a case demanding his share in the said
profits. “X” denied that there was a
partnership and raised the issue of
prescription as “Y” did not assert his rights
anytime within ten (10) years from the start
of the operation of the restaurant. Is “Y” a
 Special Contracts - Partnership
partner of “X” in the business? Why? What is
the nature of the right to demand one’s
share in the profits of a partnership? Does
this right prescribe? (1989 BAR)
A: YES, because there is an agreement to
contribute to a common fund and intent to
divide profits. It is founded upon an express
trust. It is imprescriptible unless repudiated.
Rule regarding a stipulation excluding a
partner in the sharing of profits and losses
GR: Such stipulation is void. (NCC, Art. 1799)
XPN: Industrial partner is not liable for losses.
[NCC, Art. 1797(2)] However, he is not
exempted from liability insofar as third persons
are concerned.
NOTE: Loss is different from liability.
Property rights of a partner
1. Right in specific partnership property;
2. Interest in the partnership (share in the
profits and surplus); and
3. Right to participate in the management.
(NCC, Art. 1803)
Related rights to the property rights of a
partner
1. Right to the partnership and to
indemnification for risks in consequence of
management (NCC, Art. 1796);
2. The right of access and inspection of
partnership books (NCC, Art. 1805);
3. The right to true and full information of all
things affecting the partnership (NCC, Art.
1806);
4. The right to a formal account of partnership
affairs under certain circumstances (NCC,
Art. 1809); and
5. The right to have the partnership dissolved
also under certain conditions. (NCC Arts.
1830-1831; De Leon, 2014)
Nature of a partner’s right in specific
partnership property
1. Equal right to possession for partnership
purposes;
2. Right is not assignable, except in
connection with assignment of rights of all
partners in the same property;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
3. Right is limited to his share of what
remains after partnership debts have been
paid;
4. Right is not subject to attachment or
execution except on a claim against the
partnership; and
5. Right is not subject to legal support
Effects of assignment of partner’s whole
interest in the partnership
1. Rights withheld from the assignee: Such
assignment does not grant the assignee the
right to:
a. To interfere in the management;
b. To require any information or
account; and
c. To inspect partnership books.
2. Rights of assignee on partner’s interest:
a. To receive in accordance with his
contract the profits accruing to the
assigning partner;
b. To avail himself of the usual
remedies provided by law in the
event of fraud in the management;
c. To receive the assignor’s interest in
case of dissolution; and
d. To require an account of
partnership affairs, but only in case
the partnership is dissolved, and
such account shall cover the period
from the date only of the last
account agreed to by all the
partners.
Q: Rosa received money from Jois, with the
express obligation to act as Jois’ agent in
purchasing local cigarettes, to resell them to
several stores, and to give Jois the
commission corresponding to the profits
received. However, Rosa misappropriated
and converted the said amount due to Jois to
her personal use and benefit. Jois filed a case
of estafa against Rosa. Can Rosa deny
liability on the ground that a partnership
was formed between her and Rosa?
A: NO. Even assuming that a contract of
partnership was indeed entered into by and
between the parties, when a partner receives
any money or property for a specific purpose
(such as that obtaining in the instant case) and
he later misappropriates the same, he is guilty
570
 Civil Law
of estafa. (Liwanag v. CA, G.R. No. 114398,
October 24, 1997)
OBLIGATIONS OF PARTNERSHIP/ PARTNERS
TO THIRD PERSONS
1. Every partnership shall operate under a
firm name. (NCC, Art. 1815)
2. All partners shall be liable for contractual
obligations of the partnership with their
property, after all partnership assets have
been exhausted:
a. Pro rata
b. Subsidiary (NCC, Art. 1816; 1993,
2010 BAR)
XPN: All partners shall be liable
solidarily with the partnership for
everything chargeable to the
partnership under Art. 1822 and 1823.
(NCC, Art. 1824)
NOTE: Any stipulation against the
liability laid down in Art. 1816 shall be
void except as among the partners.
(NCC, Art. 1817)
3. Partner as an agent of the partnership.
(NCC, Art. 1818; 1994 BAR)
4. Conveyance of real property belonging to
the partnership. (NCC, Art. 1819)
5. Admission or representation made by any
partner concerning partnership affairs
within the scope of his authority is evidence
against the partnership. (NCC, Art. 1820)
6. Notice to partner of any matter relating to
partnership affairs operates as notice to
partnership except in case of fraud:
a. Knowledge of partner acting in the
particular matter acquired while a
partner
b. Knowledge of the partner acting in
the particular matter then present
to his mind
c. Knowledge of any other partner
who reasonably could and should
have communicated it to the acting
partner. (NCC, Art. 1821)
7. Partners and the partnership are solidarily
571
liable to 3rd persons for the partner's tort or
breach of trus.t (NCC, Art. 1822-24)
8. Liability of incoming partner is limited to:
a. His share in the partnership
property for existing obligations
b. His separate property for
subsequent obligations. (NCC, Art.
1826)
9. Creditors of partnership are preferred in
partnership property & may attach
partner's share in partnership assets. (NCC,
Art. 1827)
NOTE: On solidary liability, Art. 1816 should be
construed together with Art. 1824. (in
connection with Arts. 1822 & 1823) While the
liability of the partners is merely joint in
transactions entered into by the partnership, a
third person who transacted with said
partnership may hold the partners solidarily
liable for the whole obligation if the case of the
third person falls under Articles 1822 and 1823.
(Guy v. Gacott, G.R. No. 206147, January 13,
2016)
Q: A, B and C formed a partnership for the
purpose of contracting with the Government
in the construction of one of its bridges. On
June 30, 1992, after completion of the
project, the bridge was turned over by the
partners to the Government. On August 30,
1992, D, a supplier of materials used in the
project sued A for collection of the
indebtedness to him. A moved to dismiss the
complaint against him on the ground that it
was the ABC partnership that is liable for the
debt. D replied that ABC partnership was
dissolved upon completion of the project for
which purpose the partnership was formed.
Will you dismiss the complaint against B if
you were the judge? (1993 BAR)
A: NO. As Judge, I would not dismiss the
complaint against A because A is still liable as a
general partner for his pro rata share of 1/3.
(NCC, Art. 1816) Dissolution of a partnership
caused by the termination of the particular
undertaking specified in the agreement does
not extinguish obligations, which must be
liquidated during the “winding up" of the
partnership affairs. [NCC, Art. 1829 & 1830
(1)(a)]
 Special Contracts - Partnership
Importance of having a firm name
A partnership must have a firm name under
which it will operate. It is necessary to
distinguish the partnership which has a distinct
and separate juridical personality from the
individuals composing the partnership and from
other partnerships and entities. (De Leon, 2014)
Liability for the inclusion of name in the firm
name
Remedies available to the creditors of a
partner
1. Separate or individual creditors should first
secure a judgment on their credit; and
2. Apply to the proper court for a charging an
order subjecting the interest of the debtor-
partner in the partnership for the payment
of the unsatisfied amount of the judgment
debt with interest thereon. (De Leon, 2014)

Persons who, not being partners, include their
names in the firm name do not acquire the
rights of a partner but under Art. 1815, they
shall be subject to the liability of a partner (NCC,
Art. 1816) insofar as third persons without
notice are concerned. (De Leon, 2014)
NOTE: The court may resort to other courses of
action provided in Art. 1814 of the NCC, (i.e.,
appointment of receiver, sale of the interest, etc.)
if the judgment debt remains unsatisfied,
notwithstanding the issuance of charging order.
(De Leon, 2014)

Effects of the acts of partners acting as an agent of the partnership

ACTS OF A PARTNER EFFECT

With binding effect except:

1. When the partner so acting has in fact no

Acts for apparently carrying on in the usual
way the business of the partnership
2.
authority to act for the partnership in the
particular matter, and
The person with whom he is dealing has knowledge
of the fact that he has no such authority. [NCC, Art.
1818(1)]

Do not bind partnership unless authorized by other

Acts not in the ordinary course of business
partners. [NCC, Art. 1818(2)]

Acts of strict dominion or ownership:

1. Assigning partnership property in trust for

creditors;
GR: One or more but less than all the partners have no
2. Disposing of goodwill of business;
authority.
3. Doing an act which would make it
impossible to carry on the ordinary
XPNs:
business of partnership;
1. Authorized by the other partners; or
4. Confessing a judgment;
2. Partners have abandoned the business. [NCC, Art.
5. Entering into a compromise concerning a
1818(3)]
partnership claim or liability;
6. Submitting partnership claim or liability to
arbitration;
7. Renouncing claim of partnership.

Acts in contravention of a restriction on

Partnership is not liable to 3rd persons having actual or
authority
presumptive knowledge of the restriction. [NCC, Art.

UNIVERSITY OF SANTO TOMAS 572

2021 GOLDEN NOTES
 Civil Law
Effect of conveyance of a real property
TYPE OF CONVEYANCE
Title in the partnership’s name;
Conveyance in partnership name
Title in the partnership’s name;
Conveyance in partner’s name
Title in the name of one (1) or more
partners, and the record does not disclose
the right of the partnership; Conveyance in
name of partner/s in whose name title
stands
Title in name of one (1) or more or all
partners or 3rd person in trust for
partnership; Conveyance executed in
partnership name or in name of partners
Title in the names of all the partners;
Conveyance executed by all the partners
1818(4)]
EFFECT
Conveyance passes title but partnership can recover
unless:
1. Conveyance was done in the usual way of business,
and
the partner so acting has the authority to act for the
partnership; or
2. The property which has been conveyed by the
grantee or a person claiming through such grantee to
a holder for value without knowledge that the
partner, in making the conveyance, has exceeded his
authority. (De Leon, 2014)
Conveyance does not pass title but only equitable
interest, provided:
a. Conveyance was done in the usual way of business,
or
b. The partner so acting has the authority to act for the
partnership. (De Leon, 2014)
Conveyance passes title but the partnership may
recover such property if the partners’ act does not bind
the partnership:
1. The partner so acting has no authority to act for the
partnership, and
2. The person with whom he is dealing has knowledge
of the fact unless the purchaser of his assignee, is a
holder for value, without knowledge. (De Leon,
2014)
Conveyance will only pass equitable interest, provided:
1. The act is one within the authority of the partner,
and
2. Conveyance was done in the usual way of the
business. (De Leon, 2014)
Conveyance will pass all the rights in such property. (De
Leon, 2014)
573
 Special Contracts - Partnership
DISSOLUTION AND WINDING UP c. Express will of all partners (except
those who have assigned their
DISSOLUTION (2010 BAR) interests or suffered them to be
charged for their separate debts)
either before or after the
Final stages of partnership termination of any specified term
or particular undertaking
1. Dissolution; d. Expulsion of any partner in good
2. Winding up; and faith of a member;
3. Termination.
2. Violating the agreement;
Dissolution, winding-up, and termination 3. Unlawfulness of the business;
4. Loss;
Dissolution Winding Termination a. Specific thing promised as
contribution is lost or perished
up before delivery
b. Loss of a specific thing contributed
before or after delivery, if only the
A change in Settling the Point in time use of such is contributed
the relation of partnership when all
the partners business or partnership NOTE: The partnership shall not be
caused by any affairs after affairs are dissolved by the loss of the thing when
partner dissolution. completely it occurs after the partnership has
ceasing to be wound up or acquired the ownership thereof.
associated in completed;
carrying on the end of the 5. Death of any of the partners;
the business. partnership 6. Insolvency of any partner or of the
life. partnership;
7. Civil interdiction of any partner; and
8. By decree of court under Art. 1831
Partners It is the final It signifies the
cease to carry step after end of the a. A partner has been declared insane
on the dissolution in partnership or of unsound mind
business the life. It takes b. A partner becomes in any other
together. It termination of place after way incapable of performing his
represents the the both part of the partnership contract
demise of a partnership. dissolution c. A partner has been guilty of such
partnership. and winding conduct as tends to affect
Thus, any up have prejudicially the carrying on of the
time a partner occurred. business
leaves the d. A partner willfully or persistently
business, the commits a breach of the
partnership is partnership agreement
dissolved. e. The business of the partnership
can only be carried on at a loss
f. Other circumstances render a
Causes of dissolution (NCC, Art. 1830) dissolution equitable.

1. Without violating the agreement: Effects of dissolution (2010 BAR)

a. Termination of the definite term or 1. Partnership is not terminated;

specific undertaking 2. Partnership continues for a limited
b. Express will of any partner in good purpose;
faith, when there is no definite 3. Transaction of new business is prohibited.
term and no specified undertaking (De Leon, 2014)

UNIVERSITY OF SANTO TOMAS 574

2021 GOLDEN NOTES
 Civil Law
As to previous obligations, the dissolution of
partnership does not mean that the partners
can evade previous obligations entered into.
(Realubit v. Jaso, G.R. No. 178782, September 21,
2011)
As to new obligations, the dissolution spares
the former partners from new obligations
entered into by the partnership without their
consent, implied or express, unless the
obligation are essential for the winding up of
partnership affairs. (Ibid.)
NOTE: The dissolution of a partnership must
not be understood in the absolute and strict
sense so that at the termination of the object for
which it was created the partnership is
extinguished, pending the winding up of some
incidents and obligations of the partnership, but
in such case, the partnership will be reputed as
existing until the juridical relations arising out
of the contract are dissolved. (Realubit v. Jaso,
G.R. No. 178782, September 21, 2011)
Dissolution does not automatically result in the
termination of the legal personality of the
partnership, nor the relations of the partners
among themselves who remain as co-partners
until the partnership is terminated. (De Leon,
2014)
A partner cannot be expelled from the
partnership without agreement thereto.
In the absence of an express agreement to that
effect, there exists no right or power of any
member, or even a majority of the members, to
expel all other members of the firm at will. Nor
can they at will forfeit the share or interest of a
member or members and compel him or them
to quit the firm, even paying what is due him.
The expulsion has the effect of decreasing the
number of the partners, hence, the dissolution.
The expulsion must be made in good faith. The
partner expelled in bad faith can claim
damages. (De Leon, 2014)
Effect of dissolution on the authority of a
partner
GR: The partnership ceases to be a going
concern.
XPN: The partner’s power of representation is
confined only to acts incident to winding up or
575
completing transactions begun but not then
finished. (NCC, Art. 1832)
NOTE: Subject to the qualifications set forth in
Articles 1833 and 1834 in relation to Article
1832:
1. In so far as the partners themselves are
concerned – The authority of any partner to
bind the partnership by a new contract is
immediately terminated when the
dissolution is not by the act, insolvency, or
death of a partner.
2. When the dissolution is by the act,
insolvency, or death, the termination of
authority depends upon whether or not the
partner had knowledge or notice of
dissolution. (NCC, Art. 1833; 2010 BAR)
Q: Tomas, Rene and Jose entered into a
partnership under the firm name “Manila
Lumber.” Subsequently, upon mutual
agreement, Tomas withdrew from the
partnership and the partnership was
dissolved. However, the remaining partners,
Rene and Jose, did not terminate the
business of “Manila Lumber.” Instead of
winding up the business of the partnership
and liquidating its assets, Rene and Jose
continued the business in the name of
“Manila Lumber” apparently without
objection from Tomas. The withdrawal of
Tomas from the partnership was not
published in the newspapers. Could Tomas
be held liable for any obligation or
indebtedness Rene and Jose might incur
while doing business in the name of “Manila
Lumber” after his withdrawal from the
partnership? Explain. (1987 BAR)
A: YES. Tomas can be held liable under the
doctrine of estoppel. But as regards the parties
among themselves, only Rene and Jose are
liable. Tomas cannot be held liable since there
was no proper notification or publication. In the
event that Tomas is made to pay the liability to
third person, he has the right to seek
reimbursement from Rene and Jose.
Q: The articles of co-partnership provide
that in case of death of one partner, the
partnership shall not be dissolved but shall
be continued by the deceased partner’s
heirs. When H, a partner, died, his wife, W,
took over the management of some of the
 Special Contracts - Partnership
real properties with permission of the
surviving partner, X, but her name was not
included in the partnership name. She
eventually sold these real properties after a
few years. X now claims that W did not have
the authority to manage and sell those
properties as she was not a partner. Is the
sale valid?
A: YES. The widow was not a mere agent,
because she had become a partner upon her
husband's death, as expressly provided by the
articles of co-partnership, and by authorizing
the widow to manage partnership property, X
recognized her as a general partner with
authority to administer and alienate
partnership property. It is immaterial that W's
name was not included in the firm name, since
no conversion of status is involved, and the
articles of co-partnership expressly
contemplated the admission of the partner's
heirs into the partnership. (Goquiolay v. Sycip,
G.R. No. L-11840, December 16, 1963)
Liability of a partner where the dissolution
is caused by the act, death or insolvency of a
partner
GR: Each partner is liable to his co-partners for
his share of any liability created by any partner
for the partnership, as if the partnership had
not been dissolved.
XPNs: Partners shall not be liable when:
1. The dissolution, being by act of any partner,
the partner acting for the partnership had
knowledge of the dissolution; or
2. The dissolution, being by the death or
insolvency of a partner, the partner acting
for the partnership had knowledge or
notice of the death or insolvency. (NCC, Art.
1833; 2010 BAR)
Q: After the dissolution of a partnership, can
a partner still bind the partnership?
A:
GR: A partner continues to bind partnership
even after dissolution in the following cases:
1. Transactions to wind up partnership affairs
or to complete transactions unfinished at
dissolution;
2. Transactions which would bind partnership
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
if dissolution had not taken place, provided
the other party/obligee:
a. Had extended credit to partnership
prior to dissolution; and had no
knowledge/notice of dissolution; or
b. Did not extend credit to partnership;
Had known of the partnership prior
to dissolution; AND Had no
knowledge/notice of dissolution/fact
of dissolution not advertised in a
newspaper of general circulation in
the place where partnership is
regularly carried on. [NCC, Art. 1834
(1) & (2)]
XPNs: Partner cannot bind the partnership
anymore after dissolution:
1. Where dissolution is due to unlawfulness to
carry on the business; or
2. Where the partner has become insolvent;
or
3. Act is not appropriate for winding up or for
completing unfinished transactions; or
4. Partner is unauthorized to wind up
partnership affairs, except by transaction
with one who:
a. Had extended credit to partnership
prior to dissolution; AND Had no
knowledge or notice of dissolution;
or
b. Did not extend credit to partnership
prior to dissolution; Had known
partnership prior to dissolution;
AND Had no knowledge/notice of
dissolution/fact of dissolution not
advertised in a newspaper of
general circulation in the place
where partnership is regularly
carried on [Art. 1834(3)]; or
5. Completely new transactions which would
bind the partnership if dissolution had not
taken place with third persons in bad faith.
Q: Does the dissolution of a partnership
discharge existing liability of a partner?
A:
GR: Dissolution does not discharge the existing
liability of a partner. [Art. 1835(1)]
XPN: Said liability is discharged when there is
576
 Civil Law
an agreement between:
1. Partner himself;
2. Person/s continuing the business; and
3. Partnership creditors. [NCC, Art.
1835(2)]
Liability of the estate of a deceased partner
In accordance with Article 1816, the individual
property of a deceased partner shall be liable
for all obligations of the partnership incurred
while he was a partner. Note that the individual
creditors of the deceased partner are to be
preferred over partnership creditors with
respect to the separate property of said
deceased partner. (De Leon, 2014)
Order of priority in the distribution of assets
during the dissolution of a limited
partnership
In setting accounts after dissolution, the
liabilities of the partnership shall be entitled to
payment in the following order:
1. Those to creditors, in the order of priority
as provided by law, except those to limited
partners on account of their contributions,
and to general partners;
2. Those to limited partners in respect to their
share of the profits and other compensation
by way of income on their contributions;
3. Those to limited partners in respect to the
capital of their contributions;
4. Those to general partners other than for
capital and profits;
5. Those to general partners in respect to
profits;
6. Those to general partners in respect to
capital. (NCC, Art. 1863)
NOTE: Subject to any statement in the
certificate or to subsequent agreement, limited
partners share in the
partnership assets in respect to their claims for
capital, and in respect to their claims for profits
or for compensation by way of income on their
contribution respectively, in proportion to the
respective amounts of such claims. (NCC, Art.
1863)
WINDING UP OF THE PARTNERSHIP
It is during this time after dissolution that
577
partnership business or affairs are being
settled. (De Leon, 2014)
Ways of winding up
The winding up of the dissolved partnership
may be done either:
1. Judicially, under the control and direction of
the proper court upon cause shown by any
partner, his legal representative, or his
assignee; or
2. Extrajudicially, by the partners themselves
without intervention of the court. (De Leon,
2014)
Action for liquidation
An action for the liquidation of a partnership is a
personal one; hence, it may be brought in the
place of residence of either the plaintiff or the
defendant. (De Leon, 2014)
Persons authorized to wind up
1. Partners designated by the agreement;
2. In the absence of such, all partners who
have not wrongfully dissolved the
partnership; and
3. Legal representative of last surviving
partner who is not insolvent. (De Leon,
2014)
NOTE: The court may, in its discretion, after
considering all the facts and circumstances of
the particular case, appoint a receiver to wind
up the partnership affairs where such step is
shown to be to the best interests of all persons
concerned.
An insolvent partner does not have the right to
wind up partnership affairs. (De Leon, 2014)
Powers of liquidating partner
1. Make new contracts;
2. Raise money to pay partnership debts;
3. Incur obligations to complete existing
contracts or preserve partnership assets;
and
4. Incur expenses necessary in the conduct of
litigation. (De Leon, 2014)
Order of payment in winding up
a. In a general partnership:
 Special Contracts - Partnership
1. Those owing to creditors other than
partners
2. Those owing to partners other than for
capital or profits
3. Those owing to partners in respect of
capital
4. Those owing to partners in respect to
profits. [NCC, Art. 1839(2)]
b. In a limited partnership:
1. Those to creditors, in the order of
priority as provided by law, except
those to limited partners on account of
their contributions, and to general
partners.
2. Those to limited partners in respect to
their share of the profits and other
compensation by way of income on
their contributions.
3. Those to limited partners in respect to
the capital of their contributions.
4. Those to general partners other than
for capital and profits.
5. Those to general partners in respect to
profits.
6. Those to general partners in respect to
capital. (NCC, Art. 1863)
“Doctrine of marshalling of assets”
The doctrine of marshalling of assets provides
that:
1. Partnership creditors have preference in
partnership assets.
2. Separate or individual creditors have
preference in separate or individual
properties.
3. Anything left from either goes to the other.
NOTE: The doctrine of marshalling of assets
involves the ranking of assets in a certain order
toward the payment of outstanding debts. (De
Leon, 2014)
Rights of a partner where dissolution is not
in contravention of the agreement
Unless otherwise agreed, the rights of each
partner are as follows:
1. To have the partnership property applied
to discharge the liabilities of partnership;
and
2. To have the surplus, if any, applied, to pay in
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
cash the net amount owing to the
respective partners. (De Leon, 2014)
Rights of a partner where dissolution is in
contravention of the agreement
The rights of a partner vary depending upon
whether he is the innocent or guilty partner.
1. Rights of partner who has not caused the
dissolution wrongfully:
a. To have partnership property applied
for the payment of its liabilities and to
receive in cash his share of the surplus
b. To be indemnified for the damages
caused by the partner guilty of
wrongful dissolution
c. To continue the business in the same
name during the agreed term of the
partnership, by themselves or jointly
with others
d. To possess partnership property
should they decide to continue the
business
2. Rights of partner who has wrongfully
caused the dissolution:
a. If the business is not continued by the
other partners, to have the partnership
property applied to discharge its
liabilities and to receive in cash his
share of the surplus less damages
caused by his wrongful dissolution
b. If the business is continued:
i. To have the value of his interest in
the partnership at the time of the
dissolution, less any damage
caused by the dissolution to his co-
partners, ascertained and paid in
cash, or secured by bond approved
by the court; and
ii. To be released from all existing
and future liabilities of the
partnership. (De Leon, 2014)
Rights of injured partner where partnership
contract is rescinded
1. Right of a lien on, or retention of, the surplus
of partnership property after satisfying
partnership liabilities for any sum of money
paid or contributed by him;
578
 Civil Law
2. Right of subrogation in place of partnership
creditors after payment of partnership
liabilities; and
3. Right of indemnification by the guilty
partner against all debts and liabilities of
the partnership. (De Leon, 2014)
Settlement of accounts between partners
1. Assets of the partnership include:
a. Partnership property (including
goodwill)
b. Contributions of the partners
2. Order of application of the assets:
a. First, those owing to partnership
creditors
b. Second, those owing to partners
other than for capital and profits
such as loans given by the partners
or advances for business expenses
c. Third, those owing for the return of
the capital contributed by the
partners
d. Fourth, the share of the profits, if
any, due to each partner. (De Leon,
2014)
Q: A partnership was formed with Magdusa
as the manager. During the existence of the
partnership, two partners expressed their
desire to withdraw from the firm. Magdusa
determined the value of the partners share
which were embodied in the document
drawn in the handwriting of Magdusa but
was not signed by all of the partners. Later,
the withdrawing partners demanded for
payment but were refused. Considering that
not all partners intervened in the
distribution of all or part of the partnership
assets, should the action prosper?
A: NO. A partner’s share cannot be returned
without first dissolving and liquidating the
partnership, for the return is dependent on the
discharge of creditors, whose claims enjoy
preference over those of the partner, and it is
self- evident that all members of the partnership
are interested in its assets and business, and are
entitled to be heard in the matter of the firm’s
liquidation and distribution of its property. The
liquidation prepared by Magdusa not signed by
the other partners is not binding on them.
(Magdusa v. Albaran, G.R. No. L-17526, June 30,
579
1962)
Since the capital was contributed to the
partnership, not to partners, it is the
partnership that must refund the equity of the
retiring partners. Since it is the partnership, as
a separate and distinct entity that must refund
the shares of the partners, the amount to be
refunded is necessarily limited to its total
resources. In other words, it can only pay out
what it has in its coffers, which consists of all its
assets. (Villareal v. Ramirez, G.R. No. 144214, July
14, 2003)
Partner’s lien
It is the right of every partner to have the
partnership property applied, to discharge
partnership liabilities and surplus assets, if any,
distributed in cash to the respective partners,
after deducting what may be due to the
partnership from them as partners.
Effects when the business of a dissolved
partnership is continued
1. Creditors of old partnership are also
creditors of the new partnership who
continues the business of the old one
without liquidation of the partnership
affairs.
2. Creditors have an equitable lien on the
consideration paid to the retiring/deceased
partner by the purchaser when
retiring/deceased partner sold his interest
without final settlement with creditors.
3. Rights of retiring/estate of deceased
partner:
a. To have the value of his interest
ascertained as of the date of
dissolution; and
b. To receive as ordinary creditor the
value of his share in the dissolved
partnership with interest or profits
attributable to use of his right, at
his option.
NOTE: The right to demand on accounting of
the value of his interest accrues to any partner
or his legal representative after dissolution in
the absence of an agreement to the contrary.
Continuation of partnership by a
 Special Contracts - Partnership
corporation
If a corporation is formed consisted of the
members of the partnership, whose business
and properties are transferred to the
corporation for continuing its business, in
payment of which corporate capital stock was
issued, such corporation is presumed to have
assumed the partnership debts and is prima
facie liable therefor. The rationale of the rule is
that members of the partnership may be said to
have simply put on new coat or taken a
corporate cloak and the corporation is a mere
continuation of the partnership. (Laguna
Transportation Co., Inc. v. SSS, G.R. No. L-14606,
April 28, 1960)
Persons that are required to render an
account
1. Winding up partner;
2. Surviving partner; and
3. Person or partnership continuing the
business.
Q: Emnace and Tabanao decided to dissolve
their partnership in 1986. Emnace failed to
submit the statement of assets and liabilities
of the partnership, and to render an
accounting of the partnership's finances.
Tabanao’s heirs filed against Emnace an
action for accounting, etc. Emnace counters,
contending that prescription has set in.
Decide.
A: Prescription has not yet set in. Prescription
of the said right starts to run only upon the
dissolution of the partnership when the final
accounting is done. Contrary to Emnace’s
protestations, prescription had not even begun
to run in the absence of a final accounting. The
right to demand an accounting accrues at the
date of dissolution in the absence of any
agreement to the contrary. When a final
accounting is made, it is only then that
prescription begins to run. (Emnace v. CA, G.R.
No. 126334, November 23, 2001)
LIMITED PARTNERSHIP
It is one formed by two or more persons having
as members one or more general partners and
one or more limited partners, the latter not
being personally liable for partnership debts.
(NCC, Art. 1843)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Characteristics of limited partnership
1. It is formed by compliance with the
statutory requirements.
2. One or more general partners control the
business and are personally liable to
creditors.
3. One or more limited partners contribute to
the capital and share in the profits but do
not participate in the management of the
business and are not personally liable for
partnership obligations beyond their
capital contributions.
4. The limited partners may ask for the return
of their capital contributions under
conditions prescribed by law.
5. Partnership debts are paid out of common
fund and the individual properties of
general partners. (De Leon, 2014)
Consequences of separate personality of
limited partnership
The personality of a limited partnership being
different from that of its members, it must, on
general principle, answer for, and suffer, the
consequence of its acts as such an entity capable
of being the subject of rights and obligations. If
the limited partnership failed to pay its
obligations, this partnership must suffer the
consequences of such a failure, and must be
adjudged insolvent. (Saludo Jr. v. PNB, G.R. No.
193138, August 20, 2018)
FORMATION AND AMENDMENT OF LIMITED
PARTNERSHIP
Essential requirements for the formation of
limited partnership
1. Certificate or articles of limited partnership
which states the matters enumerated in
Art. 1844, must be signed and sworn; and
NOTE: Among the contents of the
Certificate of Articles of Partnership should
be the name of the partnership, adding
thereto the word “limited.”
2. Certificate must be filed for record in the
office of the SEC. (De Leon, 2014)
NOTE: Strict compliance with legal
requirements is not necessary. It is sufficient
that there is substantial compliance in good
faith. If there is no substantial compliance, the
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 Civil Law
partnership becomes general partnership as far
as third persons are concerned, in which the
member are liable as general partners
Cancellation of certificate or articles of
limited partnership
1. When the partnership is dissolved
2. When all the limited partners ceased to be
such. (NCC, Art. 1864)
Instances when a certificate or articles of
limited partnership can be amended
1. It must fall under the following changes and
conditions:
a. There is a change in the name of the
partnership or in the amount or
character of the contribution of any
limited partner;
b. A person is substituted as a limited
partner;
c. An additional limited partner is
admitted;
d. A person is admitted as a general
partner;
e. A general partner retires, dies,
becomes insolvent or insane, or is
sentenced to civil interdiction and the
business is continued under Article
1860;
f. There is a change in the character of
the business of the partnership;
g. There is a false or erroneous statement
in the certificate;
h. There is a change in the time as stated
in the certificate for the dissolution of
the partnership or for the return of a
contribution;
i. A time is fixed for the dissolution of the
partnership, or the return of a
contribution, no time having been
specified in the certificate;
j. The members desire to make a change
in any other statement in the certificate
in order that it shall accurately
represent the agreement among them.
(NCC, Art. 1864)
2. Must be signed and sworn to by all of the
members including the new members if
some added; in case of substitution, the
assigning limited partner must also sign.
3. Must be recorded in the SEC.
581
Instances when a general partner needs
consent or ratification of all the limited
partners
When he:
1. Does any act in contravention of the
certificate;
2. Does any act which would make it
impossible to carry on the ordinary
business of the partnership;
3. Confesses judgment against partnership;
4. Possesses partnership property/ assigns
rights in specific partnership property
other than for partnership purpose;
5. Admits person as general partner;
6. Admits person as limited partner – unless
authorized in certificate; or
7. Continues business with partnership
property on death, retirement, civil
interdiction, insanity or insolvency of
general partner unless authorized in the
certificate. (NCC, Art. 1850)
Effective date of amendment or cancellation
As a general rule, a certificate is deemed
amended or cancelled when the amended
certificate or the certified copy of the court
order in case of judicial cancellation or
amendment is filed for record in the SEC.
LIMITED PARTNER
Contribution of a limited partner
The contribution of a limited partner may be
cash or other property, but not services. (NCC,
Art. 1845)
Otherwise, he shall be considered an industrial
and general partner, in which case, he shall not
be exempted from personal liability. (De Leon,
2014)
NOTE: A partner may be a general partner and
a limited partner in the same partnership at the
same time, provided that it shall be stated in the
certificate provided for in Article 1844. (NCC,
Art. 1854)
Time contribution shall be made
The contribution of each limited partner must
be paid before the formation of the limited
partnership, although with respect to the
 Special Contracts - Partnership
additional contributions, they may be paid after
the limited partnership has been formed.
Firm name
GR: The surname of a limited partnership shall
not appear in the partnership name.
XPNs:
1. Limited partner and general partner have
similar surnames; or
2. Prior to the time when the limited partner
became such, the business had been carried
on under a name in which his surname
appeared. (NCC, Art. 1846)
NOTE: A limited partner whose surname
appears in a partnership name is liable as a
general partner to partnership creditors who
extend credit to the partnership without actual
knowledge that he is not a general partner
Admission of additional limited partners
After a limited partnership had been formed,
additional limited partners may be admitted,
provided:
1. There is proper amendment to the
certificate which must be signed and sworn
to by all of the partners, including the new
limited partners; and
2. It is filed with the Securities and Exchange
Commission.
RIGHTS AND OBLIGATIONS OF A LIMITED
PARTNER
Rights of a limited partner (NCC, Art. 1851)
1. To require partnership books kept at
principal place of business;
2. To inspect or copy books at reasonable
hours;
3. To demand true and full information of all
things affecting partnership;
4. To demand formal account of partnership
affairs whenever circumstances render it
just and reasonable;
5. To ask for dissolution and winding up by
decree of court;
6. To receive share of profits or other
compensation by way of income; and
7. To receive return of contributions provided
the partnership assets are in excess of all its
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
liabilities. (De Leon, 2014)
Transactions allowed or prohibited in a
limited partnership
1. Allowed
a. Granting loans to partnership
b. Transacting business with
partnership
c. Receiving pro rata share of
partnership assets with general
creditors if he is not also a general
partner
2. Prohibited
a. Receiving/holding partnership
property as collateral security
b. Receiving any payment,
conveyance, release from liability if
it will prejudice right of 3rd persons
NOTE: The prohibition is not absolute because
there is no prohibition if the partnership assets
are sufficient to discharge partnership liabilities
to persons not claiming as general or limited
partners.
Substituted limited partner
It is a person admitted to all the rights of a
limited partner who has died or assigned his
interest in the partnership.
Rights and liabilities of a substituted limited
partner (NCC, Art. 1859)
GR: He has all the rights and powers and is
subject to all the restrictions and liabilities of
his assignor.
XPN: Those liabilities which he was ignorant of
at the time that he became a limited partner and
which could not be ascertained from the
certificate
Requirements for the admission of a
substituted limited partner
1. All the members must consent to the
assignee becoming a substituted limited
partner or the limited partner, being
empowered by the certificate must give the
assignee the right to become a limited
partner;
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 Civil Law
2. The certificate must be amended in
accordance with Art. 1865 of the NCC; and
The certificate as amended must be registered
in the SEC.
Basis of preference given to limited partners
over other limited partners
Priority or preference may be given to some
limited partners over other limited partners as
to the:
1. Return of their contributions;
2. Their compensation by way of income; or
3. Any other matter.
NOTE: In the absence of such statement in the
certificate, even if there is an agreement, all
limited partners shall stand on equal footing in
respect of these matters.
Requisites for return of contribution of a
limited partner (NCC, Art. 1857)
1. All liabilities of the partnership have been
paid or if they have not yet been paid, the
assets of the partnership are sufficient to
pay such liabilities;
2. The consent of all the members (general
and limited partners) has been obtained
except when the return may be rightfully
demanded; and
3. The certificate of limited partnership is
cancelled or amended.
When return of contribution is a matter of
right
When all liabilities of the partnership, except
liabilities to general partners and to limited
partners on account of their contributions, have
been paid or there remains property of the
partnership sufficient to pay them and the
certificate is cancelled or so amended as to set
forth the withdrawal or reduction:
1. On the dissolution of the partnership;
2. Upon the arrival of the date specified in
the certificate for the return; or
3. After the expiration of six (6)-month
notice in writing given by him to the
other partners if no time is fixed in the
certificate for the return of the
contribution or for the dissolution of
the partnership.
583
NOTE: Even if a limited partner has contributed
property, he has only the right to demand and
receive cash for his contribution. The exceptions
are:
1. When there is stipulation to the
contrary in the certificate; or
2. When all the partners (general and
limited partners) consent to the return
other than in the form of cash. (De Leon
2014)
Liabilities of a limited partner
1. To the partnership
Since limited partners are not principals in
the transaction of a partnership, their
liability as a rule, is to the partnership, not
to the creditors of the partnership. The
general partners cannot however waive any
liability of the limited partners to the
prejudice of such creditors.
2. To the partnership creditors and other
partners
a. A limited partner is liable for
partnership obligations when he
contributed services instead of only
money or property to the partnership;
b. When he allows his surname to appear
in the firm name;
c. When he fails to have a false statement
in the certificate corrected, knowing it
to be false;
d. When he takes part in the control of the
business;
e. When he receives partnership property
as collateral security, payment,
conveyance, or release in fraud of
partnership creditors;
f. When there is failure to substantially
comply with the legal requirements
governing the formation of limited
partnerships.
3. To separate creditors
As in a general partnership, the creditor of a
limited partner may, in addition to other
remedies allowed under existing laws, apply to
the proper court for a charging order subjecting
the interest in the partnership of the debtor
partner for the payment of his obligation. (De
Leon, 2014)
 Special Contracts - Partnership
Requisites for waiver or compromise of
liabilities
The waiver or compromise shall:
1. Be made with the consent of all partners;
and
2. Not prejudice partnership creditors who
extended credit or whose claims arose
before the cancellation or amendment of
the certificate.
When may a limited partner have the
partnership dissolved
1. When his demand for the return of his
contribution is denied although he has a
right to such return; or
2. When his contribution is not paid although
he is entitled to its return because the other
liabilities of the partnership have not been
paid or the partnership property is
insufficient for their payment.
Effect of retirement, death, civil interdiction,
insanity or insolvency of a partner
1. General partner – The partnership is
dissolved (NCC, Art. 1860) unless the
business is continued by the remaining
general partners:
a. Under the right stated in the
certificate; or
b. With the consent of all the partners.
2. Limited partner – The partnership is not
dissolved except all limited partners cease
to be such.
Rights of the executor/administrator on the
death of the limited partner
1. All the rights of a limited partner for the
purpose of settling his estate
2. To have the same power as the deceased
had to constitute his assignee as
substituted limited partner.
In setting accounts after dissolution, the
liabilities of the partnership shall be entitled
to payment in the following order
1. Those to creditors, in the order of priority
as provided by law, except those to limited
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
partners on account of their contributions,
and to general partners
2. Those to limited partners in respect to their
share of the profits and other compensation
by way of income on their contributions
3. Those to limited partners in respect to the
capital of their contributions
4. Those to general partners other than for
capital and profits
5. Those to general partners in respect to
profits
6. Those to general partners in respect to
capital. (NCC, Art. 1863)
NOTE: Subject to any statement in the
certificate or to subsequent agreement, limited
partners share in the partnership assets in
respect to their claims for capital, and in respect
to their claims for profits or for compensation
by way of income on their contribution
respectively, in proportion to the respective
amounts of such claims.
GR: A limited partner is not a proper party to
proceedings:
1. By a partnership; or
2. Against a partnership.
XPNs:
1. If he is also a general partner.
2. Where the object is to enforce a limited
partner’s right against or liability to the
partnership. (NCC, Art. 1866)
SUMMARY OF RIGHTS AND OBLIGATIONS OF
PARTNERS
GENERAL PARTNER
Rights
1. Right in specific partnership property.
2. Interest in the partnership (share in the
profits and surplus).
3. Right to participate in the management.
4. Right to associate another person with him
in his share without the consent of other
partners (sub- partnership).
5. Right to inspect and copy partnership
books at any reasonable hour.
584
 Civil Law
6. Right to a formal account as to partnership a. Knowledge of partner acting in the
affairs (even during existence of particular matter acquired while a
partnership): partner.
b. Knowledge of the partner acting in
a. If he is wrongfully excluded from the particular matter then present
partnership business or to his mind.
possession of its property by his c. Knowledge of any other partner
co-partners. who reasonably could and should
b. If right exists under the terms of have communicated it to the acting
any agreement. partner.
c. As provided in Art. 1807 of the
NCC. 5. Partners and the partnership are solidarily
d. Whenever the circumstances liable to 3rd persons for the partner's tort or
render it just and reasonable. breach of trust.
Obligations
6. Liability of incoming partner is limited to:
Obligations of partners among themselves
a. His share in the partnership
1. Contribution of property. property for existing obligations.
2. Contribution of money and money b. His separate property for
converted to personal use. subsequent obligations.
3. Prohibition in engaging in business for
himself. 7. Creditors of partnership are preferred in
4. Contribute additional capital. partnership property & may attach
5. Managing partner who collects debt. partner's share in partnership assets.
6. Partner who receives share of partnership
credit.
7. Damages to partnership. Other obligations
8. Render information.
9. Accountable as fiduciary. 1. Duty to render on demand true and full
information affecting partnership to any
Obligations of partners to 3rd persons partner or legal representative of any
deceased partner or of any partner under
1. Every partnership shall operate under a legal disability.
firm name. Persons who include their
names in the partnership name even if they 2. Duty to account to the partnership as
are not members shall be liable as a fiduciary.
partner.
LIMITED PARTNER
2. All partners shall be liable for contractual Rights
obligations of the partnership with their
property, after all partnership assets have
been exhausted: 1. To have partnership books kept at principal
place of business.
a. Pro rata
b. Subsidiary 2. To inspect/copy books at reasonable hours.

3. Admission or representation made by any 3. To have on demand true and full

partner concerning partnership affairs information of all things affecting
within the scope of his authority is partnership.
evidence against the partnership.
4. To have formal account of partnership
4. Notice to partner of any matter relating to affairs whenever circumstances render it
partnership affairs operates as notice to just and reasonable.
partnership except in case of fraud:
5. To ask for dissolution and winding up by

585
 Special Contracts - Partnership
decree of court.
6. To receive share of profits/other
compensation by way of income.
subjecting the interest in the partnership of the
debtor partner for the payment of his
obligation.

7. To receive return of contributions,

provided the partnership assets are in
excess of all its liabilities.

Obligations

To the partnership

Since limited partners are not principals in the

transaction of a partnership, their liability as a
rule, is to the partnership, not to the creditors
of the partnership. The general partners
cannot, however waive any liability of the
limited partners to the prejudice of such
creditors.

To the partnership creditors and other

partners

1. A limited partner is liable for partnership

obligations when he contributed services
instead of only money or property to the
partnership.

2. When he allows his surname to appear in

the firm name.

3. When he fails to have a false statement in

the certificate corrected, knowing it to be
false.

4. When he takes part in the control of the

business

5. When he receives partnership property as

collateral security, payment, conveyance,
or release in fraud of partnership creditors.

6. When there is failure to substantially

comply with the legal requirements
governing the formation of limited
partnerships.

To separate creditors

As in a general partnership, the creditor of a

limited partner may, in addition to other
remedies allowed under existing laws, apply to
the proper court for a charging order

UNIVERSITY OF SANTO TOMAS 586

2021 GOLDEN NOTES
 Civil Law
AGENCY latter. Neither the principal nor the agent can
be legally made to remain in the relationship
DEFINITION OF AGENCY when they choose to have it terminated.

Classifications of Agency
Contract of agency (2000, 2003 BAR)
1. As to manner of creation
By the contract of agency, a person binds himself
to render some service or to do something in
a. Express – Agent has been actually
representation or on behalf of another, with the
authorized by the principal, either
consent or authority of the latter. (NCC, Art. 1868)
orally or in writing. (NCC, Art. 1869)
NOTE: The essence of agency is representation.
b. Implied – Agency is implied from the
For a Contract of Agency to exist, it is essential that
acts of the principal, from his silence
the principal consents that the agent shall act on
or lack of action, or his failure to
the former’s behalf and the agent consents so as
repudiate the agency, knowing that
to act. (Rabuya, 2017)
another person is acting on his
behalf without authority. (NCC, Art.
One factor which most clearly distinguishes
1869), or from the acts of the agent
agency from other legal concepts is control; one
which carry out the agency, or from
person – the agent – agrees to act under the
his silence or inaction according to
control or direction of another – the principal.
the circumstances. (NCC, Art. 1870)
Indeed, the very word “agency” has come to
connote control by the principal. (Victorias
2. As to character
Milling Co., Inc. v. Court of Appeals, G.R. No.
117356, June 19, 2000)
a. Gratuitous – Agent receives no
compensation for his services. (NCC,
NATURE, FORMS AND KINDS OF AGENCY Art. 1875)

Characteristics of a contract of agency b. Onerous or Compensated – Agent

receives compensation for his
1. Bilateral – If it is for compensation, it gives services. (NCC, Art. 1875)
rise to reciprocal rights and obligations.
2. Unilateral – If gratuitous, it creates 3. As to extent of business of the principal
obligations for only one of the parties.
3. Nominate – It has its own name. a. General – Agency comprises all the
4. Consensual – It is perfected by mere consent. business of the principal. (NCC, Art.
5. Principal – It can stand by itself without 1876)
need of another contract.
6. Preparatory and Progressive – It is entered b. Special – Agency comprises one or
into as a means for other purposes that deal more specific transactions. (NCC, Art.
with the public in a particular manner: for 1876)
the agent to enter into juridical acts with the
public in the name of the principal. 4. As to authority conferred
(Villanueva and Villanueva-Tiansay, 2015)
7. Generally onerous a. Couched in general terms – Agency is
8. Representative relation – The agent acts for created in general terms and is
and on behalf of the principal on matters deemed to comprise only acts of
within the scope of his authority and said administration. (NCC, Art. 1877)
acts have the same legal effect as if they were
personally executed by the principal. b. Couched in specific terms – Agency
(Rabuya, 2017) authorizing only the performance of
9. Fiduciary and Revocable – For the creation a specific act or acts. (NCC, Art. 1876)
of legal relationship of representation by the
agent on behalf of the principal, the powers 5. As to nature and effects
of the former are essentially derived from the

587
 Special Contracts - Agency
a. Ostensible or Representative – Agent
acts in the name and representation
of the principal. (NCC, Art. 1868)
b. Simple or Commission – Agent acts in
his own name but for the account of
the principal. (De Leon, 2014)
Parties to a contract of agency
1. Principal (Mandante) – One whom the agent
represents and from whom he derives his
authority; he is the person represented.
2. Agent (Mandatario) – One who acts for and
represents another; he is the person acting in
a representative capacity. The agent has
derivative authority in carrying out the
principal’s business. (De Leon, 2014)
Essential elements of an agency
1. Consent (express or implied) of the parties to
establish the relationship.
NOTE: A person may express his consent:
a. by contract (NCC, Art. 1868), orally
or in writing;
b. by conduct (NCC, Art. 1869);
c. by ratification (NCC, Art. 1910); or
d. the consent may arise by
presumption or operation of law. (De
Leon, 2014)
2. The object is the execution of a juridical act in
relation to third persons.;
3. The agent acts as a representative and not for
himself.; and
4. The agent acts within the scope of his
authority. (International Exchange Bank v.
Spouses Briones, et al., G.R. No. 205657, March
29, 2017, as penned by J. Leonen)
Appointment of an agent
GR: There are no formal requirements governing
the appointment of an agent.
XPN: When the law requires a specific form, i.e.
when sale of land or any interest therein is
through an agent, the authority of the latter must
be in writing; otherwise, the sale shall be void.
(NCC, Art. 1874; Yoshizaki v. Joy Training Center of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Aurora, Inc., G.R. No. 174978, July 21, 2013) (2010
BAR)
Rules on implied acceptance of agency
1. Between persons who are present – The
acceptance of the agency may also be implied
if the principal delivers his power of attorney
to the agent and the latter receives it without
any objection. (NCC, Art. 1871)
2. Between persons who are absent – The
acceptance of the agency cannot be implied
from the silence of the agent except:
a. When the principal transmits his
power of attorney to the agent, who
receives it without any objection;
b. When the principal entrusts to him
by letter or telegram a power of
attorney with respect to the business
in which he is habitually engaged as
an agent and he did not reply to the
letter or telegram. (NCC, Art. 1872)
NOTE: Acceptance by the agent may also be
express or implied from his acts which carry out
the agency, or from his silence or inaction
according to the circumstances. (NCC, Art. 1870)
Communication of existence of agency
Ways of giving notice of agency:
1. By special information – The person
appointed as agent is considered such with
respect to the person to whom it was given.
2. By public advertisement – The agent is
considered as such with regard to any
person.
Nature of the relationship between principal
and agent
It is fiduciary in nature that is based on trust and
confidence. The agent is estopped from asserting
or acquiring an interest adverse to that of his
principal. (De Leon, 2014)
Qualifications of a Principal
1. Natural or juridical person; and
2. Must have capacity to act.
NOTE: If a person is capacitated to act for himself
588
 Civil Law
or his own right, he can act through an agent.
Insofar as third persons are concerned, it is
enough that the principal is capacitated. But
insofar as his obligations to his principal are
concerned, the agent must be able to bind
himself.
Kinds of principal
1. Disclosed principal – At the time of the
transaction contracted by the agent, the
other party knows that the agent is acting for
a principal and of the principal’s identity.
2. Partially disclosed principal – The other party
knows or has reason to know that the agent
is or may be acting for a principal but is
unaware of the principal’s identity.
3. Undisclosed principal – The party has no
notice of the fact that the agent is acting as
such for a principal. (De Leon, 2014)
Joint principals
Two or more persons appoint an agent for a
common transaction or undertaking. (NCC, Art.
1915)
Requisites for solidary liability of joint
principals
1. There are two or more principals;
2. They have all concurred in the appointment
of the same agent; and
3. Agent is appointed for a common transaction
or undertaking. (De Leon, 2014)
Theory of imputed knowledge
The importance of the duty to give information of
material facts becomes readily apparent when it
is borne in mind that knowledge of the agent is
imputed to the principal even though the agent
never communicated such knowledge to the
principal. (De Leon, 2010)
Exceptions to the theory of imputed
knowledge
1. The agent’s interests are adverse to those of
the principal;
2. The agent’s duty is not to disclose the
information, as where he is informed by way
of confidential information; and
3. The person claiming the benefit of the rule
colludes with the agent to defraud the
589
principal. (De Leon, 2014)
NOTE: The theory of imputed knowledge
ascribes the knowledge of the agent to the
principal, not the other way around. The
knowledge of the principal cannot be imputed to
his agent. (Sunace International Management
Services, Inc. v. NLRC, G.R. No. 161757, January 25,
2006)
Kinds of agents
1. Universal agent – employed to do all acts
which the principal may personally do, and
which he can lawfully delegate to another the
power of doing.
2. General agent – employed to transact all
business of the principal, or all the business
of a particular kind or in a particular place, or
in other words, to do all acts connected with
a particular trade, business or employment.
3. Special or particular agent – authorized to act
in one or more specific transactions, or to do
one or more specific acts, or to act upon a
particular occasion. (De Leon, 2014)
Rule with regard to the execution of the
agency
GR: The agent is bound by his acceptance to carry
out the agency, in accordance with the instruction
of the principal and is liable for damages which,
through his non-performance, the principal may
suffer. (NCC, Arts. 1884 and 1887)
XPN: If its execution could manifestly result in
loss or damage to the principal. (NCC, Art. 1888)
Responsibility of two or more agents
appointed simultaneously
GR: They are jointly liable.
XPN: Solidarity has been expressly stipulated.
Each of the agents becomes solidarily liable for:
1. The non-fulfillment of the agency
2. Fault or negligence of his fellow agent
XPNs to the XPN:
1. When one of the other agents acts beyond the
scope of his authority – innocent agent is not
liable.
2. When the fault or negligence of his fellow
agents was done beyond the scope of their
 Special Contracts - Agency
authority – innocent agent is not liable. (NCC,
Art. 1895)
Instances when the agent may incur personal
liability
1. Agent expressly bound himself;
2. Agent exceeded his authority;
3. Acts of the agent prevented the performance
on the part of the principal;
4. When a person acted as agent without
authority or without a principal; and
5. When a person acted as an agent of an
incapacitated principal unless the third
person was aware of the incapacity at the
time of the making of the contract. (De Leon,
2010)
Q: Spouses Briones took out a loan of
₱3,789,216.00 from iBank to purchase a
BMW Z4 Roadster. The monthly amortization
for two (2) years was ₱78,942.00. They
executed a promissory note with chattel
mortgage that required them to take out an
insurance policy on the vehicle. In the
promissory note, the Spouses Briones
constituted iBank as their attorney-in-fact
with full power and authority for the purpose
of filing claims with the insurance company
as may be necessary to prove the claim and
to collect from the latter the proceeds of
insurance in case of loss or damage to the
vehicle. The mortgaged BMW Z4 Roadster
was carnapped in Tandang Sora, Quezon City.
Spouses Briones declared the loss to iBank,
which instructed them to continue paying the
next three (3) monthly installments “as a
sign of good faith.” When the Spouses Briones
finished paying the three (3)-month
installment, iBank sent them a letter
demanding full payment of the lost vehicle.
The Spouses Briones submitted a notice of
claim with their insurance company, but the
latter denied the claim due to the delayed
reporting of the lost vehicle.
Thereafter, iBank filed a complaint for the
default of the Spouses to pay monthly
amortizations. RTC ruled that as the duly
constituted attorney-in-fact of the Spouses
Briones, iBank had the obligation to facilitate
the filing of the notice of claim and then to
pursue the release of the insurance proceeds.
The CA also dismissed the complaint. Did an
agency relationship exist between the parties
which obligated iBank to facilitate the filing
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
of the claim against the insurance company?
A: YES. All the elements of agency exist in this
case, namely (1) there is consent, express or
implied, of the parties to establish the
relationship of agency; (2) the object is the
execution of a juridical act in relation to a third
person; (3) the agent acts as a representative
and not for himself; and (4) the agent acts within
the scope of his authority.
Under the promissory note with chattel
mortgage, Spouses Briones appointed iBank as
their attorney-in-fact, authorizing it to file a
claim with the insurance company if the
mortgaged vehicle was lost or damaged. iBank
was also authorized to collect the insurance
proceeds as the beneficiary of the insurance
policy. Article 1370 of the Civil Code is
categorical that when “the terms of a contract
are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of
its stipulations shall control. (International
Exchange Bank Now Union Bank of the
Philippines v. Spouses Jerome and Quinnie
Briones, and John Doe, G.R. No. 205657, March 29,
2017, as penned by J. Leonen)
Presumption of contract of agency
GR: Agency is not presumed.
The relation between principal and agent must
exist as a fact. Thus, it is held that where the
relation of agency is dependent upon the acts of
the parties, the law makes no presumption of
agency, and it is always a fact to be proved, with
the burden of proof resting upon the person
alleging the agency to show, not only the fact of
its existence, but also its nature and extent.
(Victorias Milling Co., Inc. v. Consolidated Sugar
Corporation, G.R. No. 117356, June 19, 2000)
XPNs:
1. Operation of law; and
2. To prevent unjust enrichment. (De Leon,
2010)
Agency by necessity
Agency cannot be created by necessity. What is
created instead is additional authority in an agent
appointed and authorized before the emergency
arose. By virtue of the existence of an emergency,
the authority of an agent is correspondingly
590
 Civil Law
enlarged in order to cope with the exigencies or Mere representation of an alleged agent is not
the necessities of the moment. (De Leon, 2010) sufficient to prove the existence of a principal-
agent relationship. The declarations of the agent
Requisites for the additional authority of alone are generally insufficient to establish the
agent in cases of necessity fact or extent of agency. It is a settled rule that the
persons dealing with the assumed agent are
1. Real existence of emergency; bound at their peril, if they would hold the
2. Inability of the agent to communicate with principals liable, to ascertain not only the fact of
the principal; agency but also the nature and extent of
3. Exercise of additional authority is for the authority, and in case either is controverted, the
principal’s protection; and burden of proof is upon them to establish it. (Sps.
4. Adoption of fairly reasonable means, Yu v. Pan American World Airways, Inc., G.R. No.
premises duly considered. 123560, March 27, 2000)

Rule regarding double agency Q: A foreign manufacturer of computers and a

Philippine distributor entered into a contract
GR: Disapproved by law for being against public whereby the distributor agreed to order
policy and sound morality. 1,000 units of the manufacturer's computers
every month and to resell them in the
XPN: Where the agent acted with full knowledge Philippines at the manufacturer's suggested
and consent of the principals. prices plus 10%. All unsold units at the end of
the year shall be bought back by the
Acts that a principal may delegate to his agent manufacturer at the same price they were
ordered. The manufacturer shall hold the
GR: What a man may do in person, he may do distributor free and harmless from any claim
thru another. for defects in the units. Is the agreement one
for sale or agency? (2000 BAR)
XPNs:
A: The contract is one of agency not sale. The
1. Personal acts; and notion of sale is negated by the following indicia:
2. Criminal acts or acts not allowed by law. (1) the price is fixed by the manufacturer with
(De Leon, 2014) the 10% mark-up constituting the commission;
(2) the manufacturer reacquires the unsold units
Q: A granted B the exclusive right to sell his at exactly the same price; and (3) warranty for the
brand of Maong pants in Isabela, the price for units was borne by the manufacturer. The
his merchandise payable within 60 days from foregoing indicia negate sale because they
delivery, and promising B a commission of indicate that ownership over the units was never
20% on all sales. After the delivery of the intended to transfer to the distributor.
merchandise to B but before he could sell any
of them, B’s store in Isabela was completely Agency vs. Guardianship
burned without his fault, together with all of
A's pants. Must B pay A for the lost pants? BASIS AGENCY GUARDIANSHIP
Why? (1999 BAR) Agent Guardian
As to who
represents a represents an
they
A: YES. B must pay A for the lost pants. The contract capacitated incapacitated
represent
between A and B is a sale not an agency to sell person. person.
because the price is payable by B upon 60 days Agent derives
from delivery even if B is unable to resell it. If B authority
were an agent, he is not bound to pay the price if from the
he is unable to resell it. As a buyer, however, principal and Guardian
As to the
ownership passed to B upon delivery and, under his authority derives
source of
Art. 1504, the thing perishes for the owner. may at any authority from
authority
Hence, B must still pay the price. time be the court.
abrogated or
Proving the existence of principal-agent modified by
relationship through mere representation the principal.

591
 Special Contracts - Agency
Agent is representation represents lessor of
Guardian is
As to the appointed by by the agent the principal. services
appointed by
appointin the principal or worker does not
the court, and
g and can be represent
stands in loco
authority removed by his
parentis.
the latter. employer.
As to being Guardian is not
subject to Agent is subject to the Relationship
Generally,
the subject to directions of the can be
relationship
person directions of ward, but must As to terminated
can be
they the principal. act for the termination of at the will of
terminated
represent ward’s benefit. relationship either
only at the
principal or
Agent can Guardian has no will of both.
agent.
make the power to
As to
principal impose personal The lessor
liability
personally liability on the Agent ordinarily
liable. ward. As to the kind
exercises performs
of function he
discretionary only
Agency vs. Judicial Administration exercises
powers. ministerial
functions.
JUDICIAL
BASIS AGENCY ADMINISTRA Agency vs. Partnership
TION
Judicial BASIS AGENCY PARTNERSHIP
As to the Agent is A partner acts
administrator
source of appointed by not only for his
is appointed
authority the principal Agent acts in co-partners and
by the court As to his
the name of the partnership
Represents actions
the principal. but also as
not only the principal of
As to
Represents court but also himself.
whom they
the principal the heirs and A partner’s
represent
creditors of power to bind
the estate. An agent
his co-partner is
Judicial must submit
As to the not subject to
Administrator, to the
control by the co-partner’s
As to the Agent does before principal’s
the principal right to control,
requireme not file a entering into right to
unless there is
nt of bond bond. his duties, is control.
an agreement to
required to file that effect.
a bond The ordinary
The acts of an agent A partner acting
As to administrator assumes no as agent for the
Agent is personal partnership
control of are subject to
controlled by As to liability liability binds not only
the specific
the principal where he acts the firm
Agent/Ad provisions of
through the within the members but
ministrato law and
agreement. scope of his himself as well.
r orders from
the court. authority.
The alleged The profits
owner or belong to all the
Agency vs. Lease of Services
As to sharing partner takes parties as
of profits his agreed common
LEASE OF
BASIS AGENCY share of proprietors in
SERVICES profits, not as agreed
As to Agent Worker or

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 Civil Law
owner but as proportions. 2. Specific terms – It is necessary to perform any
an agreed act of strict ownership. (De Leon, 2014)
measure of
compensation Scope of authority of an agent
for his
services or The agent must act within the scope of his
the like. authority. He may do such acts as may be
conducive to the accomplishment of the purpose
Agency vs. Trust of the agency. (NCC, Art 1881)

BASIS AGENCY TRUST However, the limits of the agent’s authority shall
As to the Agent not be considered exceeded should it have been
Trustee may performed in a manner more advantageous to the
capacity to usually
hold legal title principal than that specified by him. (NCC, Art.
hold title overholds no
to the property. 1882)
the property title at all.
Agent
usually Instances when the act of an agent is binding
Trustee may act to the principal
As to his acts in the
in his own
actions name of
name. 1. When the agent acts as such without
the
principal. expressly binding himself or does not exceed
Agency Trust usually the limits of his authority. (NCC, Art. 1897)
As to the usually ends by the 2. If principal ratifies the act of the agent which
termination may be accomplishment exceeded his authority. (NCC, Art. 1898)
of the terminated of the purposes 3. Circumstances where the principal himself
relationship or revoked for which it was was, or ought to have been aware. (NCC, Art.
any time. formed. 1899)
Agency 4. If such act is within the terms of the power of
As to the attorney, as written. (NCC, Arts. 1900 & 1902)
may not be Trust involves
scope of 5. Principal has ratified, or has signified his
connected control over
authority willingness to ratify the agent’s act. (NCC, Art.
at all with property.
over property 1901)
property.
Agent has
As to the authority Trustee does Effects of the acts of an agent
binding effect to make not necessarily
of the contracts or even possess 1. With authority
contracts which will such authority
entered by be binding to bind the a. In principal’s name – Valid
them on his trustor. b. In his own name – Not binding on the
principal. principal; agent and stranger are the
Trust may be only parties, except regarding things
Agency is belonging to the principal or when
the result of a
As to its really a the principal ratifies the contract or
contract; it may
creation contractual derives benefit therefrom.
also be created
relation.
by law.
2. Without authority
POWERS
a. In principal’s name – Unenforceable
Kinds of agency as to the extent of powers but may be ratified, in which case,
conferred may be validated retroactively from
the beginning.
An agency may be couched in: b. In his own name – Valid on the agent,
but not on the principal.
1. General terms – It is one which is created in
general terms and is deemed to comprise Rule as to when the principal is not bound by
only acts of administration. (NCC, Art. 1877) the act of the agent

593
 Special Contracts - Agency
1. GR: When the act is without or beyond the
scope of his authority in the principal’s name.
XPNs:
a. Where the acts of the principal have
contributed to deceive a 3rd person
in good faith;
b. Where the limitations upon the
power created by the principal could
not have been known by the 3rd
person;
c. Where the principal has placed in
the hands of the agent instruments
signed by him in blank; and
d. Where the principal has ratified the
acts of the agent.
2. GR: When the act is within the scope of the
agent’s authority but in his own name.
XPN: When the transaction involves things
belonging to the principal. (NCC, Art. 1883)
NOTE: The limits of the agent’s authority shall not
be considered exceeded should it have been
performed in a manner more advantageous to the
principal than that specified by him. (NCC, Art.
1882)
RIGHTS OF AGENTS
Right of agent to retain in pledge object of
agency (Legal Pledge) (2015 BAR)
The agent may retain in pledge the things which
are the object of the agency until the principal
effects the reimbursement and pays the
indemnity:
1. If principal fails to reimburse the agent the
necessary sums, including interest, which the
latter advanced for the execution of the
agency. (NCC, Art. 1912)
2. If principal fails to indemnify the agent for all
damages which the execution of the agency
may have caused the latter, without fault or
negligence on his part. (NCC, Art. 1913)
Rule where two persons deal separately with
the agent and the principal
If the two contracts are incompatible with each
other, the one of prior date shall be preferred.
This is subject however to the rule on double sale
under Art. 1544 of the NCC. (NCC, Art. 1916)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: Rules of preference in double sale
1. Personal property – possessor in good faith
2. Real property
a. Registrant in good faith;
b. In the absence of inscription, possessor in
good faith;
c. In the absence of possession, person with
the oldest title in good faith. (NCC, Art.
1544)
If agent acted in good faith, the principal shall be
liable for damages to the third person whose
contract must be rejected. If agent is in bad faith,
he alone shall be liable. (NCC, Art. 1917)
A person acting as an agent cannot escape
criminal liability by virtue of the contract of
agency
The law on agency has no application in criminal
cases. When a person participates in the
commission of a crime, he cannot escape
punishment on the ground that he simply acted
as an agent of another party. (Ong v. CA, G.R. No.
119858, April 29, 2003)
An agent cannot maintain an action against
persons with whom they contracted on behalf
of his principal.
Agents are not a party with respect to that
contract between his principal and third persons.
As agents, they only render some service or do
something in representation or on behalf of their
principals. The rendering of such service did not
make them parties to the contracts of sale
executed in behalf of the latter.
The fact that an agent who makes a contract for
his principal will gain or suffer loss by the
performance or non-performance of the contract
by the principal or by the other party thereto does
not entitle him to maintain an action on his own
behalf against the other party for its breach.
An agent entitled to receive a commission from
his principal upon the performance of a contract
which he has made on his principal's account
does not, from this fact alone, have any claim
against the other party for breach of the contract,
either in an action on the contract or otherwise.
An agent who is not a promisee cannot maintain
594
 Civil Law
an action at law against a purchaser merely
because he is entitled to have his compensation
or advances paid out of the purchase price before
payment to the principal. (Uy v. CA, G.R. No.
120465, September 9, 1999)
OBLIGATIONS OF THE AGENT
RESPONSIBILITIES AND OBLIGATIONS OF AN
AGENT
Specific obligations of an agent to the
principal
1. Carry out the agency (NCC, Art. 1884);
2. Answer for damages which, through his non-
performance, the principal may suffer (Ibid.);
3. Finish the business already begun on the
death of the principal, should delay entail any
danger (Ibid.);
NOTE: The agency shall also remain in full
force even after the death of the principal if it
has been constituted in the common interest
of the latter and of the agent, or in the
interest of a third person who has accepted
the stipulation in his favor. (NCC, Art. 1930)
4. Observe the diligence of a good father of a
family in the custody and preservation of the
goods forwarded to him by the owner in case
he declines an agency, until an agent is
appointed. (NCC, Art. 1885);
NOTE: The owner shall as soon as
practicable either appoint an agent or take
charge of the goods.
5. Advance the necessary funds should there be
a stipulation to do so except when the
principal is insolvent (NCC, Art. 1886);
6. Act in accordance with the instructions of the
principal and in default thereof, do all that a
good father of a family would do (NCC, Art.
1887);
7. Not to carry out the agency if its execution
would manifestly result in loss or damage to
the principal (NCC, Art. 1888);
8. Answer for damages if there being a conflict
between his interests and those of the
principal, he should prefer his own (NCC, Art.
1889);
595
9. Not to loan to himself without the consent of
the principal if he has been authorized to
lend money at interest (NCC, Art. 1890);
10. Render an account of his transactions and to
deliver to the principal whatever he may
have received by virtue of the agency, even
though it may not be owing to the principal
(NCC, Art. 1891);
NOTE: Every stipulation exempting the agent
from the obligation to render an account
shall be void. [NCC, Art. 1891(2])
11. Distinguish goods by countermarks and
designate the merchandise respectively
belonging to each principal, in the case of a
commission agent who handles goods of the
same kind and mark, which belong to
different owners (NCC, Art. 1904);
12. Be responsible in certain cases for the acts of
the substitute appointed by him (NCC, Art.
1892); (1999 BAR)
13. Pay interest on funds he has applied to his
own use (NCC, Art. 1896);
14. Inform the principal, where an authorized
sale of credit has been made, of such sale
(NCC, Art. 1906);
15. Bear the risk of collection and pay the
principal the proceeds of the sale on the
same terms agreed upon with the purchaser,
should he receive also on sale, a guarantee
commission (NCC, Art. 1907); (2004 BAR)
16. Indemnify the principal for damages for his
failure to collect the credits of his principal at
the time that they become due (NCC, Art.
1908);
17. Be responsible for fraud or negligence. (NCC,
Art. 1909; De Leon, 2014)
NOTE: The court shall judge with more or less
rigor, the fault or negligence of the agent,
according to whether the agency was or was not
for compensation. (NCC, Art. 1909)
Instructions
Private directions which the principal may give
the agent in regard to the manner of performing
his duties as such agent but of which a third party
 Special Contracts - Agency
is ignorant are said to be secret if the principal
intended them not to be made known to such
party. (De Leon, 2014)
Obligation of a person who declines an
agency
A person who declines an agency is still bound to
observe the diligence of a good father of the
family in the custody and preservation of goods
forwarded to him by the owner. This is based on
equity. (De Leon, 2014)
apparent scope of the authority with which he
has been clothed, it matters not that it is directly
contrary to the instructions of the principal. The
principal will, nevertheless, be liable unless the
third person with whom the agent dealt knew
that he was exceeding his authority or violating
his instructions.
Third persons dealing with an agent do so at their
peril and are bound to inquire as to the extent of
his authority but they are not required to
investigate the instructions of the principal.

Authority v. Principal’s instructions Breach of loyalty of the agent

BASIS AUTHORITY INSTRUCTIONS In case of breach of loyalty, the agent is NOT

entitled to commission. The forfeiture of the
Contemplates commission will take place regardless of whether
Sum total of only a private the principal suffers any injury by reason of such
the powers rule of guidance breach of loyalty. It does not even matter if the
As to the agency is for a gratuitous one, or that the
committed to to the agent;
scope principal obtained better results, or that usage
the agent by independent
the principal and distinct in and customs allow a receipt of such a bonus.
character
NOTE: An agent has an absolute duty to make a
full disclosure or accounting to his principal of all
Refers to the his transactions and material facts that may have
Relates to the
manner or some relevance with the agency. (Switzerland
subject/
mode of agent’s General Insurance Company, Ltd. v. Ramirez, G.R.
business or
As to the action with No. L-48264, February 21, 1980)
transactions
relationship respect to
with which
to the agent matters within When the obligation to account not applicable
the agent is
the scope of
empowered
permitted 1. If the agent acted only as a middleman with
to deal or act
action the task of merely bringing together the
vendor and vendees.
Limitations of 2. If the agent informed the principal of the
Without
authority are gift/bonus/profit he received from the
significance as
operative as purchaser and his principal did not object
against those
against those thereto.
As to third dealing with the
who have or 3. Where a right of lien exists in favor of the
persons agent with
are charged agent. (De Leon, 2014)
neither
with
knowledge nor
knowledge of Sub-Agent
notice of them
them
A sub-agent is a person employed or appointed
by an agent as his agent, to assist him in the
Contemplated Not expected to performance of an act for the principal which the
to be made be made known agent has been empowered to perform.
As to known to to those with
purpose third persons whom the agent Unless prohibited by the principal, the agent may
dealing with deals (De Leon, appoint a sub-agent or substitute. However, an
the agent 2014) agent may not delegate to a sub-agent where the
work entrusted to him by the principal to carry
out requires special knowledge, skill or
NOTE: If an act done by an agent is within the competence unless he has been authorized to do

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2021 GOLDEN NOTES
 Civil Law
so by the principal. comply with the agency.

Effects of Substitution

1. When substitution is prohibited – All acts of

the substitute shall be void. [NCC, Art.
1892(2)]
Within the scope of the written power of
attorney but agent has actually exceeded his
2. When substitution is authorized
authority according to an understanding
between him and the principal
a. The principal did not designate any
particular person – The substitution
has the effect of releasing the agent 1. Insofar as 3rd persons are concerned (they
from his responsibility unless the are not required to inquire further than the
person appointed is notoriously terms of the written power), agent acted
incompetent or insolvent. [NCC, Art. within scope of his authority;
1892(2)] 2. Principal is estopped.
b. The principal designated the
substitute – Results in the absolute With improper motives
exemption of the agent.
Motive is immaterial; as long as within the scope
3. When substitution not authorized, but not of authority, valid.
prohibited – Valid if the substitution is
beneficial to the principal but if the With misrepresentations by the agent
substitution has occasioned damage to the
principal, the agent shall be primarily
responsible for the act of the substitute. 1. Authorized – principal still liable
2. Beyond the scope of the agent’s authority
SUMMARY OF RULES: ACTS OF AN AGENT
GR: Principal is not liable.
In behalf of the principal, within the scope of
authority XPN: Principal takes advantage of a contract or
receives benefits made under false
1. Binds principal;
representation of his agent.
2. Agent not personally liable.
Without or beyond scope of authority
Mismanagement of the business by the agent
Contract is unenforceable as against the principal 1. Principal still responsible for the acts
but binds the agent to the third person.
contracted by the agent with respect to 3rd
Binding on the principal when: persons;
2. Principal, however, may seek recourse from
1. Ratified; or
the agent.
2. The principal allowed the agent to act as
though he had full powers. Tort committed by the agent

Within the scope of authority but in the Principal civilly liable so long as the tort is
agent’s name committed by the agent while performing his
duties in furtherance of the principal’s business.
1. Not binding on the principal;
2. Principal has no cause of action against the Agent in good faith but prejudices 3rd parties
3rd parties and vice versa Principal is liable for damages.

NOTE: When the transaction involves things

belonging to the principal, his remedy is to sue EXPRESS vs. IMPLIED AGENCY
the agent for damages because of failure to

597
 Special Contracts - Agency
BASIS EXPRESS IMPLIED Q: When is a third person required to inquire
AGENCY AGENCY into the authority of the agent?
Agent has Implied from
been actually the acts of A:
authorized the principal
As to
by the 1. Where authority is not in writing – Every
definition
principal, person dealing with an assumed agent is put
either orally upon an inquiry and must discover upon his
or in writing peril, if he would hold the principal liable, not
Directly Incidental to only the fact of the agency but the nature and
conferred by the extent of the authority of the agent. (Safic
words transaction Alcan & CIE v. Imperial Vegetable Oil Co., Inc.,
or reasonably G.R. No. 126751, March 28, 2001) If he does
necessary to not make an inquiry, he is chargeable with
accomplish knowledge of the agent’s authority, and his
the purpose ignorance of that authority will not be an
of the agency, excuse.
and
As to therefore, the 2. Where authority is in writing – 3rd person is
authority principal is not required to inquire further than the
deemed to terms of the written power of attorney.
have actually
intended the NOTE: A third person with whom the agent
agent to wishes to contract on behalf of the principal may
possess the require the presentation of the power of attorney
necessary or the instructions as regards the agency. (NCC,
authority to Art. 1902)
act on his
behalf Q: When may the actual or apparent authority
of the agent bind the principal?
Third party’s liabilities toward agent
A: The principal is bound by the acts of the agent
GR: A third party’s liability on agent’s contracts is on his behalf, whether or not the third person
to the principal, not to the agent. dealing with the agent believes that the agent has
actual authority, so long as the agent has actual
XPNs: A third party subjects himself to liability at authority, express or implied.
the hands of the agent where the:
Doctrine of Apparent Authority
1. Agent contracts in his own name for an
undisclosed principal; The doctrine provides that even if no actual
2. Agent possesses a beneficial interest in the authority has been conferred on an agent, his or
subject matter of the agency; her acts, as long as they are within his or her
3. Agent pays money of his principal to a third apparent scope of authority, bind the principal.
party by mistake under a contract which (Calubad v. Ricarcen Development Corporation,
proves subsequently to be illegal, the agent G.R. No. 202364, August 30, 2017, as penned by J.
being ignorant of the illegality; and Leonen)
4. Third party commits a tort against the agent.
The existence of apparent authority may be
Scope of the agent’s authority as to third ascertained through:
persons
1. The general manner in which the principal
It includes not only the actual authorization holds out an agent as having the power to act,
conferred upon the agent by his principal but also with which it clothes him; or
that which is apparent or impliedly delegated to
him. (De Leon, 2014) 2. The acquiescence of the principal in the
agent’s acts of a particular nature, with actual

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 Civil Law
or constructive knowledge thereof, within or Resolution and Secretary’s Certificates, later
beyond the scope of his authorities. (Sargasso alleged to be falsified. Due to Ricarcen’s
Construction & Development Corp. v. failure to pay its loan, the mortgage was
Philippine Ports Authority, G.R. No. 170530, foreclosed, eventually resulting to the
July 5, 2010) issuance of a Certificate of Sale in favour of
Calubad as the highest bidder, and thus, the
The principal is liable only as to third persons issuance of a certificate of title in his name.
who have been led reasonably to believe by the
conduct of the principal that such actual When Ricarcen discovered these
authority exists, although none has been given. transactions of Marilyn, it filed before the
(Banate, et al. v. Philippine Countryside Rural Regional Trial Court (“RTC”) a complaint for
Bank, Inc., G.R. No. 163825, July 13, 2010) Annulment of Real Estate Mortgage and
Extrajudicial Foreclosure of Mortgage and
Apparent Authority v. Authority by Estoppel Sale, with Damages against Marilyn and
Calubad. Should Ricarcen be bound by the
BASIS Apparent Authority by allegedly representative acts of Marilyn?
Authority Estoppel
As to the Though not Arises when A: YES. Ricarcen should be bound by the acts of
knowledge of actually the principal, Marilyn, whom it had clothed with apparent
the principal granted, the by his authority. The doctrine of apparent authority
of the principal culpable that is based on the principle of estoppel, in
authority of knowingly negligence, accordance with Articles 1431 and 1869 of the
the agent permits the permits his New Civil Code, provides that even if no actual
agent to agent to authority has been conferred on an agent, his or
exercise or exercise her acts, as long as they are within his or her
holds him out powers not apparent scope of authority, bind the principal.
as possessing granted to
him, even In the case at bar, it was within Marilyn’s scope
though the of authority as president to act for and enter into
principal may contracts in Ricarcen’s behalf. This could be seen
have no with how the corporate secretary entrusted her
notice or with blank yet signed sheets of paper to be used
knowledge of at her discretion, which apparently caused the
the agent’s execution of the allegedly falsified secretary
conduct certificates. It reasonably appeared that
As to the Founded in Founded on Ricarcen’s officers knew of the mortgage
establishment conscious the principal’s contracts entered into by Marilyn in Ricarcen’s
of the permission of negligence in behalf as proved by the checks drawn and issued
authority acts beyond failing by Ricarcen as payments to Calubad for the
the powers properly to monthly interest and principal loans. Calubad, as
granted supervise the an innocent third party dealing in good faith
affairs of the with Marilyn, should not be made to suffer
agent because of Ricarcen's negligence in conducting
its own business affairs. If a private corporation
Q: Marilyn R. Soliman (“Marilyn”), allegedly intentionally or negligently clothes its officers or
acting on behalf of Ricarcen Development agents with apparent power to perform acts for
Corporation (“Ricarcen”) of which she was it, the corporation will be estopped to deny that
president, took out a total of P 7,000,000.00 such apparent authority is real, as to innocent
loan from Arturo C. Calubad (“Calubad”) at a third persons dealing in good faith with such
compounded monthly interest rate, which officers or agents. (Calubad vs. Ricarcen
was secured by a real estate mortgage over Development Corporation, G.R. No. 202364,
Ricarcen’s real property in Quezon City. August 30, 2017, as penned by Justice Leonen)

To prove her authority to execute the three Q: Performance Forex Corp. is a corporation
mortgage contracts on Ricarcen’s behalf, operating as a financial broker/agent
Marilyn presented Calubad with a Board between market participants in foreign

599
 Special Contracts - Agency
exchange transactions. Cancio and
Pampolina accepted the invitation of
Performance Forex Corp.’s agent, Hipol, to
open a joint account with Performance Forex
Corp. Hipol was authorized by Performance
Forex Corp. to follow and execute the trade
orders of Cancio and Pampolina.
However, it was later found out that Hipol
did not execute the orders of Cancio and
Pampolina and instead made unauthorized
transactions resulting into the loss of all of
their money. Hence, Cancio and Pampolina
filed a complaint for damages against both
Performance Forex Corp. and its agent, Hipol
for what happened. Is Performance Forex
Corp. solidarily liable to Cancio and
Pampolina for Hipol’s acts?
A: NO. A principal who gives broad and
unbridled authorization to his or her agent
cannot later hold third persons who relied on
that authorization liable for damages that may
arise from the agent's fraudulent acts. Hipol was
not employed with Performance Forex Corp. He
was categorized as an independent broker for
commission. Cancio and Pampolina conferred
trading authority to Hipol and thus made him
their agent. Performance Forex Corp. was not
privy to how Cancio and Pampolina instructed
Hipol to carry out their orders.
Thus, since the acts of Hipol were the direct
cause of the injury, there is no reason to hold
Performance Forex Corp. liable for actual and
moral damages. If there was any fault, the fault
remains with Hipol and him alone. (Belina
Cancio and Jeremy Pampolina v. Performance
Foreign Exchange Corporation, G.R. No. 182307,
June 6, 2018, as penned by J. Leonen)
AGENCY BY ESTOPPEL
It is when one leads another to believe that a
certain person is his agent, when as a matter of
fact such is not true, and the latter acts on such
misrepresentation, the former cannot disclaim
liability, for he has created an agency by estoppel.
(Paras, 1969)
Requisites of Agency by Estoppel
1. The principal manifested a representation of
the agent’s authority or knowingly allowed
the agent to assume such authority;
2. The third person, in good faith, relied upon
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2021 GOLDEN NOTES
such representation; and
3. Relying upon such representation, such third
person has changed his position to his
detriment. (Country Bankers Insurance Corp.
v. Keppel Cebu Shipyard, et al., G.R. No.
166044, June 18, 2012)
Rules regarding estoppel in agency
1. Estoppel of agent – One professing to act as
agent for another may be estopped to deny
his agency both as against his asserted
principal and the third persons interested in
the transaction in which he engaged.
2. Estoppel of principal
a. As to agent – One who knows that
another is acting as his agent and
fails to repudiate his acts, or accepts
the benefits, will be estopped to deny
the agency as against the other.
b. As to sub-agent – To estop the
principal from denying his liability to
a third person, he must have known
or be charged with knowledge of the
fact of the transaction and the terms
of the agreement between the agent
and sub-agent.
c. As to third persons – One who
knows that another is acting as his
agent or permitted another to
appear as his agent, to the injury of
third persons who have dealt with
the apparent agent as such in good
faith and in the exercise of
reasonable prudence, is estopped to
deny the agency.
3. Estoppel of third persons – A third person,
having dealt with one as agent may be
estopped to deny the agency as against the
principal, agent, or third persons in interest.
4. Estoppel of the government – The government
is not estopped by the mistake or error on
the part of its agents. (Republic v. Bacas, et al.,
G.R. No. 182913, November 20, 2013)
Q: In an expropriation case between RP and
several property owners in Mandaluyong for
construction of the EDSA-Shaw Boulevard
Overpass Project, decision was rendered
against the RP. The RP through the OSG
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 Civil Law
received the decision on October 7, 2002 but
it was only October 20, 2003 that RP filed a
petition for certiorari. It resorted to an
independent civil action because it failed to
file within the 15-day reglementary period. Is
the Republic bound and put in estoppel by the
gross negligence/mistake of its agent/former
counsel?
A: While the Republic or the government is
usually not estopped by the mistake or error on
the part of its officials or agents, the Republic
cannot now take refuge in the rule as it does not
afford a blanket or absolute immunity. The
pronouncement in Republic v. CA is instructive:
the Solicitor-General may not be excused from its
shortcomings by invoking the doctrine as if it
were some magic incantation that could benignly,
if arbitrarily, condone and erase its errors.
The rule on non-estoppel of the government is
not designed to perpetrate an injustice. In
general, the rules on appeal are created and
enforced to ensure the orderly administration of
justice. The judicial machinery would run
aground if late petitions, like the present one, are
allowed on the flimsy excuse that the attending
lawyer was grossly lacking in vigilance. (Leca
Realty Corp. v. Republic, G.R. Nos. 155605 &
160179, September 27, 2006)
Implied Agency v. Agency by Estoppel
selling for a principal of personal property, which
for this purpose has to be placed in his
possession and at his disposal. (Jurado, 2019)
Broker
He is a middleman or intermediary who, in behalf
of others, and for a commission or fee, negotiates
contracts or transactions relative to real or
personal property.
NOTE: Distinguished from an agent: An agent is
authorized to enter into judicial acts in behalf of
the principal but a true broker is merely an
intermediary between the parties and he has no
power to enter into a contract in behalf of any of
the parties. (Pacific Commercial Co. v. Yatco, 68
Phil. 398, July 20, 1939)
Rules
1. Efficient and procuring cause – a principle in
the law on agency whereby the broker, to be
entitled to compensation, must be the
efficient agent or procuring cause of the sale;
2. Ready-willing-and-able Rule – a principle
which states that for a broker to be entitled
to commission, he must provide a person
who is ready, willing and able both to accept
and live up to the terms offered by his
principal. (Albano, 2013)

BASIS IMPLIED AGENCY BY 3. Procuring Cause - Procuring cause is meant to

AGENCY ESTOPPEL be the proximate cause. The term procuring
As to Agent is a If caused by the cause, in describing a broker’s activity, refers
liability true agent, “agent,” he is not to a cause originating a series of events
between with rights considered a true which, without break in their continuity,
principal and duties of agent, hence, he has result in accomplishment of prime objective
and agent an agent. no rights as such. of the employment of the broker producing a
1. If caused by the purchaser ready, willing and able to buy real
principal, he is estate on the owner’s terms. A broker will be
liable, but only regarded as the procuring cause of a sale, so
The principal as to be entitled to commission, if his efforts
is always if the 3rd
As to person acted on are the foundation on which the negotiations
liable; resulting in a sale are begun. The broker must
liability the
The agent is be the efficient agent or the procuring cause
to third misrepresentat
never of the sale. The means employed by him and
persons ion;
personally his efforts must result in the sale. He must
liable. 2. If caused by the
agent alone, find the purchaser, and the sale must proceed
only the agent from his efforts acting as broker. (Medrano, et
is liable. al. v. CA, et al., G.R. No. 150678, February 18,
2005)
Factor or Commission agent
Factorage
One who is engaged in the business of buying and

601
 Special Contracts - Agency
It is the compensation of a factor or commission
agent.
Ordinary commission
It is the fee or compensation for the sale of goods
which are placed in the agent’s possession and at
his disposal.
Guarantee commission or del credere
commission (2004 BAR)
It is the additional fee or compensation which is
given in return for the risk that the agent has to
bear in the collection of credits.
Should the commission agent receive on sale, in
addition to the ordinary commission, a guarantee
commission shall (i) bear the risk of collection
and (ii) pay the principal the proceeds of the sale
on the same terms agreed upon with the
purchaser. (NCC, Art. 1907)
The purpose of the guarantee commission is to
compensate the agent for the risks he will have to
bear in the collection of the credit due the
principal. (De, Leon, 2014)
Del credere agent
He is the agent who guarantees payment of the
customer’s account in consideration of the higher
commission. A del credere agent may sue in his
name for the purchase price in the event of non-
performance by the buyer. (De Leon, 2014)
AGENCY COUCHED IN GENERAL TERMS (1992
BAR)
It is created in general terms and is deemed to
comprise only acts of administration even if the
principal should state:
1. That he withholds no power;
2. That the agent may execute such acts as he
may consider appropriate; or
3. That the agency should authorize a general
and unlimited management. (NCC, Art. 1877)
Acts of administration
Refers to those acts which do not imply the
authority to alienate for the exercise of which an
express power is necessary. (De Leon, 2014)
Unless the contrary appears, the authority of an
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2021 GOLDEN NOTES
agent is presumed to include all the necessary
and usual means to carry out the agency into
effect.
NOTE: Payment is an act of administration when
it is made in the ordinary course of management.
(NCC, Art. 1878; De Leon, 2014)
The making of customary gifts for charity, or
those made to employees in the business
managed by the agent are considered acts of
administration. (NCC, Art. 1878; De Leon, 2014)
Q: P granted to A a special power to mortgage
the former’s real estate. By virtue of said
power, A secured a loan from C secured by a
mortgage on said real estate. Is P personally
liable for said loan?
A: NO. A special power to mortgage property is
limited to such authority to mortgage and does
not bind the grantor personally to other
obligations contracted by the grantee in the
absence of any ratification or other similar act
that would estoppe the grantor from questioning
or disowning such other obligations contracted
by the grantee.
AGENCY REQUIRING SPECIAL POWER OF
ATTORNEY
Special power of attorney (SPA)
It is an instrument in writing by which one
person, as principal, appoints another as his
agent and confers upon him the authority to
perform certain specified acts or kinds of acts on
behalf of the principal with a primary purpose to
evidence agent’s authority to third parties with
whom the agent deals. (De Leon, 2014)
NOTE: The requirement of a special power of
attorney refers to the nature of the authorization
and not to is form. If the SPA is not written, then
it must be duly established by evidence. Gozun v.
Mercado, G.R. No. 167812, December 19, 2006)
Intervention of a notary public in the validity
of an SPA
GR: A power of attorney is valid although no
notary public intervened in its execution.
(Barretto v. Tuason, G.R. Nos. L-36811, 36827,
36840, 36872, March 31, 1934; Angeles v.
Philippine National Railway, G.R. No. 150128,
August 31, 2006)
602
 Civil Law
XPN: When SPA is executed in a foreign country,
it must be certified and authenticated in
accordance with Sec. 24, Rule 132, Rules of Court.
(Sps. Alcantara, et al. v. Nido, G.R. No. 165133,
April 19, 2010)
NOTE: The failure to have the special power of
attorney (executed in a foreign country)
authenticated is not merely a technicality – it is a
question of jurisdiction. Jurisdiction over the
person of the real party-in-interest was never
acquired by the courts. (Heirs of Medina v.
Natividad, G.R. No. 177505, November 27, 2008)
A special power of attorney is required (1992,
2004 BAR)
1. To create or convey real rights over
immovable property;
2. To enter into any contract by which the
ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
consideration;
3. To loan or borrow money, unless the latter
act be urgent and indispensable for the
preservation of the things which are under
administration;
4. To lease any real property to another person
for more than one year;
5. To make such payments as are not usually
considered as acts of administration;
6. To obligate principal as guarantor or surety;
7. To bind the principal to render some service
without compensation;
8. To bind the principal in a contract of
partnership;
9. To ratify obligations contracted before the
agency;
10. To accept or repudiate an inheritance;
11. To effect novation which put an end to
obligations already in existence at the time
the agency was constituted;
12. To make gifts, except customary ones for
charity or those made to employees in the
business managed by the agent;
13. To compromise, to submit questions to
arbitration, to renounce the right to appeal
from a judgment, to waive objections to the
venue of an action or to abandon a
prescription already acquired;
14. Any other act of strict dominion; and
15. To waive an obligation gratuitously. (NCC,
Art. 1878)
Limitations to a special power of attorney
603
1. A special power to sell excludes the power to
mortgage (NCC, Art. 1879);
2. A special power to mortgage does not include
the power to sell (Ibid.); and
3. A special power to compromise does not
authorize submission to arbitration. (NCC,
Art. 1880)
NOTE: The scope of the agent’s authority is what
appears in the written terms of the power of
attorney. While third persons are bound to
inquire into the extent or scope of the agent’s
authority, they are not required to go beyond the
terms of the written power of attorney. Third
persons cannot be adversely affected by an
understanding between the principal and his
agent as to the limit of the latter’s authority. In
the same way, third persons need not concern
themselves with instruction given by the
principal to his agent outside of the written
power of attorney. (Siredy Enterprises, Inc. v. CA,
G.R. No. 129039, September 27, 2002)
Construction of Powers of Attorney
Powers of attorney are generally construed
strictly, and courts will not infer or presume
broad powers from deeds which do not
sufficiently include property or subject under
which the agent is to deal. However, the rule is
not absolute and should not be applied to the
extent of destroying the very purpose of the
power. (De Leon, 2014)
Q: X was the owner of an unregistered parcel
of land in Cabanatuan City. As she was abroad,
she advised her sister Y via overseas call to
sell the land and sign a contract of sale on her
behalf.
Y thus sold the land to B1 on March 31, 2001
and executed a deed of absolute sale on behalf
of X. B1 fully paid the purchase price. B2,
unaware of the sale of the land to B1, signified
to Y his interest to buy it but asked Y for her
authority from X.
Without informing X that she had sold the
land to B1, Y sought X for a written authority
to sell. X e-mailed Y an authority to sell the
land. Y thereafter sold the land on May 1,
2001 to B2 on monthly installment basis for
two years, the first installment to be paid at
the end of May 2001. Who between B1 and B2
has a better right over the land? Explain.
(2010 BAR)
 Special Contracts - Agency
A: B-2 has a better title. This not a case of double
sale since the first sale was void. The law
provides that when a sale of a piece of land or any
interest therein is through an agent, the authority
of the latter shall be in writing; otherwise, the
sale shall be void. (NCC, Art. 1874)
The property was sold by Y to B1 without any
written authority from the owner X. Hence, the
sale to B1 was void.
AGENCY BY OPERATION OF LAW
Instances where an agency is created by
operation of law
When the agent withdraws from the agency for a
valid reason, he must continue to act until the
principal has had a reasonable opportunity to
take the necessary steps like the appointment of a
new agent to remedy the situation caused by the
withdrawal (NCC, Art. 1929); and
In case a person declines an agency, he is bound
to observe the diligence of good father of the
family in the custody and preservation of the
goods forwarded to him by the owner until the
latter should appoint an agent. (NCC, Art. 1885)
NOTE: The law reconciles the interests of the
agent with those of the principal, and if it permits
the withdrawal of the agent, it is on the condition
that no damage results to the principal, and if the
agent desires to be relieved of the obligation of
making reparation when he withdraws for a just
cause, he must continue to act so that no injury
may be caused to the principal. (De Leon, 2014)
OBLIGATIONS OF THE PRINCIPAL
RIGHTS AND OBLIGATIONS OF THE
PRINCIPAL (2004 BAR)
Specific obligations of the principal to the
agent
1. Comply with all obligations which the agent
may have contracted within the scope of his
authority [NCC, Art. 1910(1)] and in the name
of the principal;
2. Advance to the agent, should the latter so
request, the sums necessary for the execution
of the agency. (NCC, Art. 1912);
3. Reimburse the agent for all advances made
by him, even if the business or undertaking
was not successful, provided the agent is free
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2021 GOLDEN NOTES
from fault. (Ibid.);
4. Indemnify the agent for all damages which
the execution of the agency may have caused
the latter without fault or negligence on his
part. (NCC, Art. 1913); and
5. Pay the agent the compensation agreed upon,
or if no compensation was specified, the
reasonable value of the agent’s services.
(NCC, Arts. 1875 and 1306)
Liability for the expenses incurred by the
agent
GR: Principal is liable for the expenses incurred
by the agents.
XPNs:
1. If the agent acted in contravention of the
principal’s instructions, unless principal
should wish to avail himself of the benefits
derived from the contract;
2. When the expenses were due to the fault of
the agent;
3. When the agent incurred them with
knowledge that an unfavorable result would
ensue, if the principal was not aware thereof;
or
4. When it was stipulated that the expenses
would be borne by the agent, or that the
latter would be allowed only a certain sum.
(NCC, Art. 1918)
Liability for the contracts entered by the
agent
GR: The principal must comply with all the
obligations which the agent may have contracted
within the scope of his authority.
XPN: Where the agent exceeded his authority.
XPN to the XPN: When the principal ratifies it
expressly or tacitly. (NCC, Art. 1910)
NOTE: Based on the principle of estoppel, the
principal becomes solidarily liable with the agent
if the former allowed the latter to act as though
he had full powers even if the agent has exceeded
his authority. (NCC, Art. 1911)
Liability for tort committed by the agent
GR: Where the fault or crime committed by the
agent is not in the performance of an obligation of
the principal, the latter is not bound by the illicit
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 Civil Law
acts of the agent, even if it is done in connection
with the agency.
XPNs:
1. Where the tort was committed by the agent
because of defective instructions from the
principal or due to lack of necessary vigilance
or supervision on his part; or
2. When the tort consists in the performance of
an act which is within the powers of an agent
but becomes criminal only because of the
manner in which the agent has performed it;
the principal is civilly liable to 3rd persons
who acted in good faith.
Q: CX executed a special power of attorney
authorizing DY to secure a loan from any bank
and to mortgage his property covered by the
owner’s certificate of title. In securing a loan
from bank, DY did not specify that he was
acting for CX in the transaction with said
bank. Is CX liable for the bank loan? Why or
why not? Justify your answer. (2004 BAR)
A: While as a general rule the principal is not
liable for the contract entered into by his agent in
case the agent acted in his own name without
disclosing his principal, such rule does not apply
if the contract involves a thing belonging to the
principal. In such case, the principal is liable
under Article 1883 of the Civil Code. The contract
is deemed made on his behalf. (Sy-Juco v. Sy-Juco,
G.R. No. L-13471, January 12, 1920)
Ratification
In agency, ratification is the adoption or
confirmation by one person of an act performed
on his behalf by another without authority. The
substance of ratification is the confirmation after
the act, amounting to a substitute for a prior
authority. (Prieto v. Court of Appeals, G.R. No.
158597, June 18, 2012; see also NCC, Art, 1393)
Conditions for Ratification
1. The principal must have the capacity and
power to ratify;
2. He must have had knowledge or had reason
to know of material or essential facts about
the transaction;
3. He must ratify the acts in its entirety;
4. The act must be capable of ratification; and
5. The act must be done in behalf of the
605
principal.
Acts that May be Ratified
1. Void acts
2. Voidable acts
3. Unrevoked acts – a principal must ratify his
agent’s unauthorized contact before it is
revoked by the other contracting party
4. Criminal acts
5. Tortious acts
Effects of ratification by principal
The relation of the principal and agent is created
since ratification by a principal is equivalent to
prior authority.
Ratification relieved the agent from liability to
the third party to the unauthorized transaction,
and to his principal for acting without authority.
The principal thereby assumes responsibility for
the unauthorized act.
Retroactive effect of ratification
GR: Ratification operates upon an unauthorized
act to have retroactive effect.
XPNs:
1. Where to do so would defeat the rights of
third parties which have accrued between
the time of the making of the unauthorized
contract and the time of the ratification;
2. Where to do so would render wrongful an
otherwise rightful act or omission;
3. Where to do so would allow the
circumvention of a rule of law formulated in
the interest of public policy; and
4. If the third party has withdrawn from the
contract.
MODES OF EXTINGUISHMENT
1. By its revocation;
2. By the withdrawal of the agent;
3. By the death, civil interdiction, insanity or
insolvency of the principal or of the agent;
4. By the dissolution of the firm or corporation
which entrusted or accepted the agency;
5. By the accomplishment of the object or
purpose of the agency;
6. By the expiration of the period for which the
agency was constituted. (NCC, Art. 1919)
(1997 BAR)
 Special Contracts - Agency
NOTE: The list is not exclusive. Agency may also
be extinguished by the modes of extinguishment
of obligations in general whenever they are
applicable, like loss of the thing and novation.
Agency may be terminated:
1. by agreement (Nos. 5 and 6);
2. by the subsequent acts of the parties which
may be either:
a. by the act of both parties or by
mutual consent; or
b. by unilateral act of one of them (Nos.
1 and 2);
3. by operation of law (Nos. 3 and 4). (De Leon,
2014)
Kinds of revocation
Revocation may either be express or implied.
(NCC, Art. 1920) (2014 BAR)
REVOCATION OF AGENCY BY THE PRINCIPAL
GR: Agency is revocable at will by the principal.
(NCC, Art. 1920)
XPNs: An agency is irrevocable:
1. If a bilateral contract depends upon it.
2. If it is the means of fulfilling an obligation
already contracted.
3. If partner is appointed manager and his
removal from the management is
unjustifiable (NCC, Art 1927); (2010, 2015
BAR)
4. If it has been constituted in the common
interest of the principal and the agent (NCC,
Art. 1930); or
5. If it has been constituted in the interest of a
third person who has accepted the
stipulation in his favor i.e., stipulation pour
autrui. (NCC, Art. 1930; Art. 1311)
XPN to the XPN: When the agent acts to defraud
the principal.
Q: 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 P3
Million. Since the client owed the lawyer P1
Million in attorney's fees in a prior case he
handled, the client agreed that if the property
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2021 GOLDEN NOTES
is sold, the lawyer was entitled to get 5%
agent's fee plus P1 Million 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? (2015
BAR)
A: NO, the agency in the case presented is one
which is coupled with an interest. As a rule,
agency is revocable at will except if it was
established for the common benefit of the agent
and the principal. In this case, the interest of the
lawyer is not merely limited to his commission
for the sale of the property but extends to his
right to collect his unpaid professional fees.
Hence, it is not revocable at will. (NCC, Art.1927)
A contract of agency is impliedly revoked
when the principal:
1. Appoints a new agent for the same business
or transaction provided there is
incompatibility (NCC, Art. 1923);
2. Directly manages the business entrusted to
the agent (NCC, Art. 1924); or
3. After granting general power of attorney to
an agent, grants a special one to another agent
which results in the revocation of the former
as regards the special matter involved in the
latter. (NCC, Art. 1926)
NOTE: A special power of attorney is not revoked
by a subsequent general power of attorney given
to another agent, unless that the latter refers also
to the act authorized under the special power.
(Tolentino, 1992)
Revocation of agency when the agent is
appointed by two or more principals
When two or more principals have granted a
power of attorney for a common transaction, any
one of them may revoke the same without the
consent of the others. (NCC, Art. 1925)
Necessity of notice of revocation
1. As to the agent – Express notice is not
always necessary; sufficient notice if the
party to be notified actually knows, or has
reason to know, a fact indicating that his
authority has been terminated or
606
 Civil Law
suspended. Revocation without notice to the
agent will not render invalid an act done in
pursuance of the authority. (De Leon, 2014)
2. As to 3rd persons – Express notice is
necessary.
a. As to former customers – Actual
notice must be given to them
because they always assume the
continuance of the agency
relationship. (NCC, Art. 1873)
b. As to other persons – Notice by
publication is enough. (NCC, Art.
1922)
NOTE: There is implied revocation of the previous
agency when the principal appoints a new agent
for the same business or transaction, provided
there is incompatibility. But the revocation does
not become effective as between the principal
and the agent until it is in some way
communicated to the latter.
Effect of the direct management by the
principal
GR: The agency is revoked for there would no
longer be any basis for the representation
previously conferred. But the principal must act
in good faith and not merely to avoid his
obligation to the agent.
XPN: The only desire of the principal is for him
and the agent to manage the business together.
Q: Richard sold a large parcel of land in Cebu
to Leo for P100 million payable in annual
installments over a period of ten years, but
title will remain with Richard until the
purchase price is fully paid. To enable Leo to
pay the price, Richard gave him a power-of-
attorney authorizing him to subdivide the
land, sell the individual lots, and deliver the
proceeds to Richard, to be applied to the
purchase price. Five years later, Richard
revoked the power of attorney and took over
the sale of the subdivision lots himself. Is the
revocation valid or not? Why? (2001 BAR)
A: The revocation is not valid. The power of
attorney given to the buyer is irrevocable because
it is coupled with an interest – the agency is the
means of fulfilling the obligation of the buyer to
pay the price of the land. (NCC, Art. 1927) In other
words, a bilateral contract (contract to buy and
607
sell the land) is dependent on the agency.
Q: Eduardo executed a SPA authorizing
Zenaida to participate in the pre-qualification
and bidding of a NIA project and to represent
him in all transactions related thereto. It was
granted to them. Zenaida leased Manuel’s
heavy equipment to be used for the NIA
project. Manuel interposed no objection to
Zenaida’s actuations. Eduardo later revoked
the SPA alleging that Zenaida acted beyond
her authority in contracting with Manuel
under the SPA. Records show that Eduardo
and Zenaida entered into a partnership in
regard to the NIA project. Decide.
A: Under Art. 1818 of the NCC, every partner is an
agent of the partnership for the purpose of its
business and each one may separately execute all
acts of administration, unless, under Art. 1801, a
specification of their respective duties has been
agreed upon, or else it is stipulated that any one
of them shall not act without the consent of all the
others. As such, even granting that Zenaida
exceeded the authority granted by the SPA, being
a partner in the constituted partnership between
her and Eduardo, she can still execute acts of
administration absent any agreement that one
cannot act without the consent of all others.
(Mendoza v. Paule, G.R. No. 175885, February 13,
2009)
WITHDRAWAL OR RENUNCIATION OF THE
AGENCY BY THE AGENT
When the agent can withdraw from the
agency
The agent may renounce or withdraw from the
agency at any time, without the consent of the
principal, even in violation of the latter’s
contractual rights; subject to liability for breach
of contract or for tort. (NCC, Art. 1928; De Leon,
2014)
Duties and responsibilities of the
withdrawing agent:
1. If the principal should suffer any damage by
reason of the withdrawal by the agent, the
latter must indemnify the principal therefor,
unless the agent should base his withdrawal
upon the impossibility of continuing the
performance of the agency without grave
detriment to himself. (NCC, Art. 1928)
 Special Contracts - Agency
2. The agent must continue to act until the
principal has had reasonable opportunity to
take the necessary steps to meet the
situation, even if he should withdraw from
the agency. (NCC, Art. 1929)
Kinds of withdrawal by the agent
1. Without just cause – The law imposes upon
the agent the duty to give due notice to the
principal and to indemnify the principal
should the latter suffer damage by reason of
such withdrawal. (NCC, Art. 1928)
2. With just cause – If the agent withdraws from
the agency for a valid reason (NCC, Art. 1929)
as when the withdrawal is based on the
impossibility of continuing with the agency
without grave detriment to himself (NCC,
Art. 1928) or is due to a fortuitous event
(NCC, Art. 1174), the agent cannot be held
liable. (De Leon, 2014)
Effect of Death of Principal to the contract of
agency
GR: The agency is terminated by the death of the
principal even if the agency is for a definite
period. (Lopez v. Court of Appeals, G.R. No. 163959,
August 1, 2018; NCC, Art. 1919)
XPN:
1. If it has been constituted in common interest
of the principal and the agent.
2. If it has been constituted in the interest of a
third person who accepted the stipulation in
his favor. (NCC, Arts. 1911 and 1930).
3. Anything done by the agent, without the
knowledge of the death of the principal or on
any other cause which extinguishes the
agency is valid and shall be fully effective
with respect to third persons who may have
contracted with him in good faith. (NCC, Art.
1931)
NOTE: The death of the principal
extinguishes the agency; but in the same
way that revocation of the agency does not
prejudice third persons who have dealt
with the agent in good faith without notice
of the revocation (NCC, Arts. 1921 & 1922)
such third persons are protected where it is
not shown that the agent had knowledge of
the termination of the agency because of
the death of the principal or of any other
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
cause which extinguishes the agency.
(Hererra v. Luy Kim Guan, G.R. No. L-17043,
January 31, 1961)
4. The agent is bound by his acceptance to carry
out the agency and is liable for the damages
which, through his non-performance, the
principal may suffer. He must also finish the
business already began on the death of the
principal, should delay entail any danger.
(NCC, Art. 1884)
Duty of Agent’s Heirs Upon the Death of Agent
If the agent dies, his heirs must notify the
principal thereof, and in the meantime adopt
such measures as the circumstances may demand
in the interest of the latter. (NCC, Art. 1932)
Heirs continuing the contract of agency
GR: Heirs cannot continue the contract of agency.
The rights and obligations of the agent arising
from the contract are not transmissible to his
heirs.
Ratio: The agency calls for personal services on
the part of the agent since it is founded on a
fiduciary relationship.
XPNs:
1. Agency by operation of law, or a presumed or
tacit agency; and
2. Agency is coupled with an interest in the
subject matter of the agency (e.g. power of
sale in a mortgage).
Q: Is the sale of the land by the agent after the
death of the principal valid?
A: Article 1931 provides that an act done by the
agent after the death of the principal is valid and
effective if these two requisites concur:
1. That the agent acted without the
knowledge of the death of the principal;
and
2. That the third person who contracted with
the agent himself acted in good faith.
Good faith here means that the third person was
not aware of the death of the principal at the time
that he contracted with said agent. (Rallos v. Felix
Go Chan, G.R. No. L-24332, January 31, 1978)
608
 Civil Law
OTHER MODES OF EXTINGUISHING AN
AGENCY

War

During the existence of a state of war, a contract

of agency is inoperative if the agent or the
principal is an enemy alien.

Loss or destruction of subject matter

GR: The loss or destruction of the subject matter

of agency or the termination of the principal’s
interest therein terminates the agent’s authority.

XPNs:

1. If substitution is possible without substantial

detriment to either party;
2. If the destroyed subject matter was not in
fact essential to the contract.

Change of circumstance surrounding the

transaction

GR: The authority of the agent is terminated.

XPNs:

1. If the original circumstances are restored

within a reasonable period of time, the
agent's authority may be revived;
2. Where the agent has reasonable doubts as to
whether the principal would desire him to
act, his authority will not be terminated if he
acts reasonably; or
3. Where the principal and agent are in close
daily contact, the agent's authority to act will
not terminate upon a change of
circumstances if the agent knows the
principal is aware of the change and does not
give him new instructions. (De Leon, 2014)

609
 Special Contracts - Lease
2. Object of subject matter; and
LEASE
3. Rent. (Rabuya, 2017)
GENERAL PRINCIPLES
Kinds of Lease according to subject matter
Lease
1. Lease of things – whether real or personal,
involving an obligation on the part of the
The contract of lease may be of things, or of
lessor to deliver the thing, which is the
work and service. A lease of a thing is a contract
object thereof, and the correlative right of
where one of the parties binds himself to give to
the lessee to the peaceful and adequate
another the enjoyment or use of a thing for a
enjoyment thereof for a price certain (NCC,
certain price and for a period which may be
Art. 1654); or
definite or indefinite, but not longer than 99
years. (NCC, Art. 1643; 1997 BAR)
2. Lease of work – which refers to a contract
for a piece of work, involving an obligation
It is a consensual, bilateral, onerous and
on the part of the contractor (lessor) to
commutative contract by which the owner
execute a piece of work for the employer
temporarily grants the use of his property or the
(lessee) in consideration of a certain price or
rendering of some service to another who
compensation. (NCC, Art. 1713)
undertakes to pay some rent, compensation or
price. (Rabuya, 2017)
NOTE: Duties of a contractor who furnishes
work and materials:
NOTE: The lessor’s right of use is impaired,
therein. He may even be ejected by the lessee if
To deliver;
the lessor uses the leased realty. Therefore, lease
To transfer ownership and warrant
is a burden on the land; it is an encumbrance on
title; and
the land. (Roxas v. Court of Appeals, G.R. No.
To warrant against eviction and hidden
92245, June 26, 1991)
defects.
Essential Elements of Lease
3. Lease of service – involving an obligation
on the part of the housekeeper, laborer or
1. Consent
employee, or common carrier to do or
perform a service for the head of a family, or
a. On part of owner – nobody can force an
master, employer, or passenger or shipper
owner to lease out his property if he is
of goods, respectively, in consideration of
not willing.
compensation.
b. On part of lessee
NOTE: Since lease is consensual and is not
GR: No person can be compelled to become
imposed by law, only the lessor has the right
a lessee against his will.
to fix the rents, to which the lessee may or
may not agree. However, the increasing of
XPN: In the case of industrial accession
the rent is not an absolute right on the part
where both the landowner, and the builder,
of the lessor.
planter and sower acted in good faith, the
builder or planter can be compelled to pay
Characteristics or Requisites for Lease of
reasonable rent if they cannot be obliged by
Things
the landowner to buy the land because its
value is considerably more than that of the
1. Consensual;
building or trees. In case of the sower, he
2. Principal;
can also be compelled by the landowner to
3. Nominate;
pay the proper rent. Here, the parties shall
4. Purpose is to allow enjoyment or use of a
agree upon the terms of the lease and in
thing;
case of disagreement, the court shall fix the
NOTE: The person to enjoy is the lessee
terms thereof. (NCC, Art. 448)
while the person allowing the enjoyment by
another is the lessor.

UNIVERSITY OF SANTO TOMAS 610

2021 GOLDEN NOTES
 Civil Law
5. Purpose to which the thing will be devoted in no case shall the lessor be allowed to increase
should not be immoral; the rental when the term has not yet expired,
6. Onerous; unless the tenant consents. (Paras, 2008)

NOTE: There must be rent or price certain. Form of Lease Contract

7. Period is Temporary; GR: Lease may be made orally.

NOTE: Not perpetual; hence, the longest XPN: If the lease of real property is made for
period is 99 years. more than one year, it must be in writing, in
compliance with the Statute of Frauds. [NCC, Art.
8. Period is either definite or indefinite: 1403 (2)(e)]

a. If no term is fixed, we should apply Lease vs. Sale

Art. 1682 of NCC (for rural leases),
and Art. 1687 of NCC (for urban LEASE SALE
leases). Only the enjoyment or
b. If the term is fixed but indefinite, use is transferred.
the court will fix the term under the
law of obligations and contracts; NOTE: In lease of
and things, the transfer
which one of the Ownership is
9. Lessor need not be the owner. parties obligates transferred.
himself to make is not
NOTE: A usufructuary may thus lease out the one of ownership over
premises in favor of a stranger, such lease to end the thing, but merely
at the time that the usufruct itself ends. the enjoyment or use
thereof. (Rabuya, 2017)
Consideration of Lease Transfer is permanent,
Transfer is temporary. unless subject to a
The cause of a contract of lease of things must be resolutory condition.
a price certain, generally called “rent” in money The seller must be the
or its equivalent, or some other prestation which owner or at least
the lessee binds himself to undertake. The authorized by the
The lessor need not be
important thing is that what is given by the owner to transfer
lessee has value. (De Leon, 2005) the owner.
ownership, of the thing
sold at the time it is
Rent delivered.
The price of the subject
The price of the thing is
The compensation either in money, provisions, matter is usually not
usually fixed in the
chattels, or labor, received by the lessor from the mentioned, being
contract.
lessee. (Tolentino and Manio v. Gonzalez Sy immaterial.
Chiam, G.R. No. 26085, August 12, 1927)
NOTE: A lease of personal property with option
Rent under Rent Control Act of 2009 (RA to buy (at a nominal amount) (NCC, Art. 1485) at
9653) the end of the lease can be considered a sale.
(Elisco Tool Manufacturing Corporation v. CA, et
It is the amount paid for the use or occupancy of al, G.R No. 109966, May 31, 1999)
a residential unit, whether payment is made on a
monthly or other basis. (Sec. (3), R.A. No. 9653, Lease v. Usufruct
Rent Control Act)
LEASE USUFRUCT
Owner has the right to fix the rent because the Real right only in the
contract is consensual and not imposed by law, case of the lease of real Always a real right.
but increasing the rent is not an absolute right of property where the
the lessor. The new rate must be reasonable and lease is registered.

611
 Special Contracts - Lease
A lease of real property Real contract, as it is
becomes a real right perfected only upon
and thereby binds third Consensual contract.
delivery of the object
persons when the lease thereof.
is registered in the
Both contracts consist in the transmission of the
Registry of property.
enjoyment or use of a thing to another.
However, even if not
registered, a lease is a
real right if the term is Lease of Work vs. Lease of Service
for more than one year.
The creator of the right LEASE OF WORK LEASE OF SERVICE
The lessor may or may It is the performance of
must be the owner or The object is the
not be the owner. some service or an
one duly authorized by execution of a piece of
him. employer by a
work for an employer
The lessor has the househelper or laborer
The owner has the by an independent
active obligation to or for a passenger or
passive duty to allow contractor.
maintain the lessee in owner of goods by
the usufructuary to common carrier.
the enjoyment or use of
enjoy or use the same. In both kinds of lease, the employer or
the property.
The usufructuary pays passenger or owner of goods binds himself to
The lessee generally pay some remuneration or compensation in
the annual charges and
pays no taxes. favor of the independent contractor, employee,
taxes on the fruits.
The usufructuary is or common carrier, and the relation of principal
The lessee generally obliged to make the and agent does not exist between the parties.
has no obligation to ordinary repairs
pay for repairs. needed by the thing Lease of Services vs. Contract for a Piece of
given in usufruct. Work
The lessee cannot The usufructuary may
constitute a usufruct on lease the thing in LEASE OF SERVICES CONTRACT FOR A
the property. usufruct to another. (Locatio Operatum PIECE OF WORK
May be created by law, Operarum) (Locatio Operas
As a rule, may be Operis)
contract, last will and
created only by
testament or
contract. The object of the
prescription. The object of the
contract is the work
Generally covers As a rule covers all contract is the labor or
done (the result of the
particular uses limited possible uses of the service itself
labor) without
by the contract. property. performed by the
considering the labor
lessor.
that produced it.
Lease vs. Commodatum The result is generally The result is generally
not important, hence important; the price is
LEASE COMMODATUM the laborer is entitled not payable until the
Onerous contract, to be paid even if there work is completed, and
although the rent is destruction of the said price cannot be
Essentially gratuitous. work through lawfully demanded if
may subsequently be
condoned or fortuitous event or the the work is destroyed
remitted. result intended not before it is finished and
attained. accepted.
Not essentially Purely personal in There is a price certain (compensation).
personal in character, and The relation of principal and agent does not exist
character and, consequently, the death of between the lessor and lessee.
therefore, the right either the bailor or the
may be transmitted bailee extinguishes the
to the heirs. contract. Lease of Services or Work vs. Agency

LEASE OF SERVICES AGENCY

OR WORK

UNIVERSITY OF SANTO TOMAS 612

2021 GOLDEN NOTES
 Civil Law
The basis is service has been rendered, there is still a lease of
It is representation.
employment. service although it has become gratuitous.
The lessor performs a
material act for the The agent executes a 2. Where the agreement may be implied
benefit of his employer juridical act for and in
without representation behalf of his principal. One who performs work or service in favor of
of the latter. another who impliedly consents thereto and
The work or service It is presumed for a who benefits thereby, is entitled to
must be for a price or compensation. compensation by virtue of an innominate
compensation. contract of facio ut des (I do that you may give)
The will of both parties or of the case of services tacitly contracted, in
The will of one is which case the courts will fix the reasonable
is necessary for the
sufficient. worth of the services rendered.
extinguishment of the
relationship.
Three persons: the 3. Where no rate or amount is fixed in the
Only two persons are contract
principal, the agent and
involved: the lessor and
the third person with
lessee. The contract is nevertheless valid if the amount
whom the agent has
contracted. can be ascertained in the light of the customs
The risk of loss before and usages of the place, or by findings of fact on
The risk is borne by the the basis of evidence submitted in case of
delivery is borne by the
principal since the disagreement.
independent
agent acts merely as his
contractor, esp. in the
representative. NOTE: A price certain exists when the same can
lease of work for a
fixed price. be ascertained according to the customs and
The agent is not liable, usages of the place.
In the lease of work,
unless he expressly
the independent Lease of Consumable Goods
binds himself or
contractor is personally
exceeds the limits of his
liable for his contracts GR: Consumable goods cannot be the subject
authority.
with third persons. matter of a contract of lease of things. (NCC, Art.
In the lease of service, 1645)
The agent exercises
the lessor ordinarily
discretionary powers. Reason: To use or enjoy them, they will have to
performs only
ministerial duties. be consumed. This cannot be done by the lessee
since ownership over them is NOT transferred to
Lease of Things v. Lease of Services him by the contract of lease.

LEASE OF THINGS LEASE OF SERVICES XPNs: They may be leased:

Object of contract is a Object is some work or
thing. service.
Lessor has to deliver Lessor has to perform
the thing leased. some work or service.
In case of breach, there In case of breach, no
can be an action for action for specific
specific performance. performance may lie.
a. If they are merely to be exhibited as for
display purposes; (lease ad pompan et
ostentationem); and
b. If they are accessory to the lease of an
industrial establishment (e.g., oil in an
industrial firm)

Compensation in lease of work or service Persons Disqualified to Be Lessees

1. When there is an agreement 1. Husband and wife cannot lease to each

other their separate properties except:
The lessee must be compelled to pay the agreed
price unless it is found to be iniquitous or If a separation of property was agreed
unreasonable, in which case the courts may fix a upon in the marriage settlement; or
reasonable and just remuneration. Where the
compensation is renounced or waived after the

613
 Special Contracts - Lease
If there has been a judicial separation
under Art. 135 of the Family Code.
(NCC, Art. 1490);
Reasons for the disqualification:
i. To prevent prejudice to
creditors;
ii. To prevent the stronger
spouse from influencing
unduly the weaker spouse.
NOTE: The prohibition applies
even to common law spouses;
otherwise, said spouses would
be placed in a better position
than legitimate spouses
2. Persons referred to under Art. 1491 of NCC
are disqualified because of fiduciary
relationships.
NOTE: While foreigners in general cannot
buy rural or urban lands, they are not
completely excluded by the Constitution
from use of lands for residential purposes.
Since their residence in the Philippines is
temporary, they may be granted temporary
rights such as a lease contract which is not
forbidden by the Constitution. However, if
an alien is given not only a lease of, but also
an option to buy a piece of land, by virtue of
which the Filipino owner cannot sell or
otherwise dispose of his property (e.g., for
fifty years), then it becomes clear that the
arrangement is a virtual transfer of
ownership. If this can be done, then the
Constitutional ban against alien landholding
in the Philippines, is indeed in grave peril.
(Fullido v. Grilli, G.R. No. 215014, February
29, 2016)
Hence, foreigners may lease land from
others. (NCC, Art. 1643)
Lease of private lands by foreigners
a. Foreigner investing in the
Philippines
Any foreigner investing in the Philippines is
allowed to lease private lands, provided that
the lease contract shall be for a period not
exceeding 50 years renewable once for a
period of not more than 25 years, and the
lease area shall be used solely for the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
purpose of investment upon the mutual
agreement of the parties. (Sec. 4, R.A. No.
7652)
NOTE: “Investing in the Philippines”
means making an equity investment in the
Philippines through actual remittance of
foreign exchange or transfer of assets,
whether in the form of capital goods,
patents, formulae, or other technological
rights or processes, upon registration with
the SEC.
b. Foreigner not investing in the
Philippines
Allowed to lease private lands in the
Philippines but for a maximum period of 25
years, renewable for another 25 years upon
mutual agreement of both parties. (Sec. 1,
P.D. No. 471)
Estoppel against lessee
A lessee is estopped from asserting title to the
thing leased as against the lessor (NCC, Art.
1436), or to deny the lessor’s title, or to assert a
better title not only in himself, but also in some
third person, including the State while he
remains in possession of the leased property and
until he surrenders possession to the lessor.
(VSC Commercial Enterprises, Inc. v. CA, G.R. No.
121159, December 16, 2002)
This estoppel applies even though the lessor had
no title at the time the relation of lessor and
lessee was created. It may be asserted not only
by the original lessor, but also by those who
succeed to his title. (Geminiano v. CA, G.R. No.
120303, July 24, 1996)
Q: Fred sold to Juan a parcel of land,
belonging to his minor son, Lino, then under
his guardianship, without judicial approval.
After the sale, Juan immediately took
possession of the land, built a house and
religiously paid the taxes thereon. Nine years
thereafter, Lino, no longer a minor, rented
the ground floor of the house built by Juan.
Lino paid the rent for the first month, then
stopped paying. Two years thereafter, when
pressed for payment of the accrued rent, Lino
refused, claiming ownership over the
property, alleging that the sale of the
property to Juan while he was a minor
without the approval of the guardianship
614
 Civil Law
court rendered the sale null and void. Is the
claim of Lino valid and meritorious? Explain.
(1987 BAR)
A: NO. Lino’s claim is not valid and not
meritorious because Lino is in estoppel. A lessee
cannot assail the right and title of the lessor and
cannot claim ownership as against the lessor.
The fact that the sale was made while Lino was a
minor is of no moment because he recognized
and ratified the contract Juan’s ownership after
he was already of majority age.
Purpose in Recording a Lease
A lease DOES NOT have to be recorded in the
Registry of Property to be binding between the
parties.
Registration is useful only for the purposes of
notifying strangers to the transaction. (NCC, Art.
1648) Registration is not essential for the
validity of the contract but is needed to make it
effective regarding third persons. (Rabuya, 2017)
Proper Authority Required
If a lease is to be recorded, the following persons
must have special power of attorney to
constitute the lease:
1. Husband – with respect to the paraphernal
real estate of the wife;
2. Father or guardian – with respect to the
property of the minor or the ward;
3. Manager or administrator – with respect
to the property under his administration.
NOTE: The “manager” here may be:
a. The administrator of conjugal property
(Rodriguez v. Borromeo, G.R. No. L-
17772, June 9, 1922);
b. The administrator of a co-ownership
(Melencio v. Dy Tiao Lay, G.R. No. L-
32047, November 1, 1930); or
c. The administrator of state patrimonial
property. (Tipton v. Andueza Chua-
Chingco, G.R. No. L-2220, April 4, 1906)
Q: A husband was properly given by his wife
the authority to administer her paraphernal
real property. Does this necessarily mean
that just because the husband is now the
administrator, he can lease said property
without any further authority?
615
A: It depends.
1. If the lease will be for one year or less, no
other authority is required;
2. If the lease on the real property will be for
more than a year, then a special power of
attorney (aside from the public instrument
transferring administration) is required
[NCC, Art. 1878 (8)]; or
3. Whether it be a) or b), if the lease is to be
recorded, there must be a special power of
attorney. (NCC, Art. 1647)
NOTE: If it is the wife who is administering her
paraphernal real property, the husband has no
authority whatsoever, to lease, in any way, or
administer the property.
Q: If a father, who is administering the real
estate of his minor son, wants to record the
lease, should he ask for judicial permission?
A: YES. A father who is administering the real
estate of his minor son should ask for judicial
permission if he wants to record the lease. (NCC,
Art. 1647) But even if no judicial authorization is
asked, such defect cannot be invoked by a lessee
who has dealt with him. (Summers v. Mahinay,
[CA] 40 O.G. [11th S] No. 18) Only the son or his
own heirs may question the validity of the
transaction.
Q: Is lease a real or a personal right?
A: Generally, it is a personal right. But it
partakes of the nature of a real right if:
a. the lease of real property is for more
than one year; or
b. the lease of real property is registered
regardless of duration.
NOTE: In both cases a special power of
attorney is required to constitute
thereon a lease by representation and
record the same with the Property
Registry, because these are acts of strict
dominion, and not merely of
administration. [NCC, Arts. 1647 &
1878(8)]
Effects if the lease of real property is not
registered
 Special Contracts - Lease
1. The lease is not binding on innocent third
persons such as a purchaser. (Salonga, et al.
v. Acuña, CA, 54 O.G. 2943)
2. Naturally, such an innocent third person is
allowed to terminate the lease in case he
buys the property from the owner-lessor,
unless there is a stipulation to the contrary
in the contract of sale. (NCC, Art. 1676; 2009
BAR)
3. When a third person already knows of the
existence and duration of the lease, he is
bound by such lease even if it has not been
recorded. The reason is simple: actual
knowledge is, for this purpose, equivalent to
registration. (Soriano v. CA, et al, G.R. No.
78975, September 7, 1989)
NOTE: But if the sale is fictitious and was
only resorted to for the purpose of
extinguishing the lease, the supposed
vendee cannot terminate the lease. The sale
is presumed fictitious if at that time the
supposed vendee demands the termination
of the lease, the sale is not recorded in the
Registry of Property. [NCC, Art. 1676(3)]
4. If the stranger knows of the existence of the
lease, but has been led to believe that the
lease would expire very soon, or before the
new lease in favor of him begins (when in
fact this was not true), the stranger can still
be considered innocent. (Quimson v. Suarez,
G.R. No. L-21381, April 5, 1924)
Rules on lease of things when lessee is an
alien
1. Personal property – 99-year limit applies;
2. Aliens cannot lease public lands, and cannot
acquire private lands except through
succession;
3. If lease of real property (private lands),
maximum of 25 years renewable for another
25 years (P.D. No. 713); and
4. Under the Investor’s Lease Act of 1995 (ILA),
the 25-year period was extended to 50 years
provided the following conditions are met:
a. Lessee must make investments;
b. Lease is approved by DTI; and
c. If terms are violated, DTI can terminate
it.
NOTE: The Investor’s Lease Act of 1995 (ILA)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
did not do away with P.D. No. 713, but under ILA
the consent of DTI is required, while in P.D. No.
713 no consent is required.
Right of a purchaser of a leased property
GR: Purchaser of thing leased can terminate the
lease.
XPNs:
1. Lease is recorded in Registry of Property;
2. There is a stipulation in the contract of sale
that the purchaser shall respect the lease;
3. Purchaser knows the existence of the lease;
4. Sale is fictitious; or
5. Sale is made with a right of repurchase.
Term of lease contract
GR: The law does not allow perpetual lease.
There must be a period which may either be
definite or indefinite.
When no period is fixed:
1. In case of lease of rural lands – it is
understood to have been made for all the
time necessary for the gathering of the fruits
which the whole estate leased may yield in
one year, or which it may yield once,
although two or more years may have to
elapse for the purpose (NCC, Art. 1682);
2. In case of lease of urban lands - from year to
year if rent agreed upon is annual; week to
week if weekly; or day to day if daily.
However, the court may fix a longer term, if
the lessee has occupied the premises for a
long period of time. (NCC, Art. 1687); or
3. A lease of things during the lifetime of one of
the parties is valid, which is considered one
for life, ending upon the death of the party
who could have terminated the contract.
(Rabuya, 2017)
4. If based on the agreement of the parties, the
term of the lease is made to depend upon
the will of one of the contracting parties
(e.g., as the lessee shall deem fit), the term
shall be fixed by the courts. (Eleizegui v.
Lawn Tennis Club, G.R. No. 967, May 19,
1903)
ASSIGNMENT OF LEASE
(1990, 1994, 2005 BAR)
Assignment of lease by lessee
616
 Civil Law
Lessee cannot assign the lease contract without
the consent of the lessor, unless there is a
stipulation to the contrary. (NCC, Art. 1649)
In an assignment of lease, the personality of the
lessee (assignor/debtor) disappears. The lessee
makes an absolute transfer of his lease, involving
not only his rights but also obligations as such
lessee and thus, dissociates himself from the
original contract of lease. There arises the new
juridical relation between the lessor and the
assignee who is converted into a new lessee.
There is in effect, a novation by substituting the
person of the debtor [NCC, Art. 1291 (2)], and
novation cannot take place without the consent
of the creditor. (NCC, Art. 1293) Hence, the lessee
cannot assign the lease without the consent of
the lessor (creditor), unless there is a stipulation
granting him that right.
Objective: To protect the lessor or owner of the
leased property. An assignment of lease without
the consent of the lessor is a ground for
rescission of the lease.
SUBLEASE
It is a separate and distinct contract of lease
wherein the original lessee becomes a sublessor
to a sublessee of the thing, in whole or in part,
without prejudice to his responsibility for the
performance of the contract toward the lessor.
(NCC, Art. 1650)
The lessee may sublet the thing leased, in whole
or in part, unless expressly prohibited in the
contract of lease. (NCC, Art. 1650)
Nature of Sublease
It is a separate and distinct contract of lease
wherein the original lessee becomes a sublessor
to a sublessee. The reason why assignment is
generally prohibited while subleasing is
generally allowed is because the assignment of
the lease contract is a novation where the
personality of the lessee disappears. In sublease,
on the other hand, the lessee remains to be a
party to the lease contract and he remains liable
to the lessor. (Rabuya, 2017)
Right of Lessee to Sublease (1990, 1999,
2005 BAR)
Unlike in assignment, a lessee may generally
sublease the property in the absence of express
617
prohibition because he (the) lessee remains a
party to the lease even if he has already created
a sublease thereon. Hence, for example, he still
must pay rents to the lessor. (Paras, 2008)
Note: Art. 1650 of NCC says “express
prohibition.” Hence, if the prohibition is merely
implied, a sublease will still be allowed. (Susana
Realty v. Hernandez, et al., CA, 54 O.G. 2206)
In sublease, the lessee remains a party to the
contract.
There are two leases and two distinct juridical
relations:
1. Between the lessor and the lessee, and
2. Between the sublessor (lessee) and the
sublessee.
The lessee is still responsible for the
performance of his obligations toward the
lessor.
A judgment of eviction against the lessee affects
the sublessee even if the latter is not sued in the
ejectment case.
Reason: The sublessee (lessee) can invoke no
right superior to that of the sublessor from
which his own right is derived, and from the
moment the sublessor is duly ousted from the
premises, the sublessee has no leg to stand on.
Parties to a Sublease
1. Lessor;
2. Sublessor (original lessee in the contract of
lease); and
3. Sublessee
Juridical relationships in a sublease
arrangement
1. Principal lease; and
2. Sublease
These relationships co-exist and are intimately
related to each other but are distinct from one
another. (Albano, 2013)
Q: Alfonso was the owner of a building being
leased to Beatriz. The contract allowed
subleasing of the building, thus, Beatriz
subleased it to Charlie. Charlie directly paid
his rent to Alfonso after the lease expired.
 Special Contracts - Lease
Was Charlie correct?
A: NO. There are two (2) distinct leases
involved, the principal lease and the sublease. In
such agreement, the personality of the lessee
does not pass on to or is acquired by the
sublessee. Thus, the payment to the lessor was
not payment to the sublessor. Alfonso was a
stranger to the sublease agreement. (Blas v. CA,
G.R. No. 82813, December 14, 1989)
Sublease v. Assignment (1990, 1994, 2005
BAR)
between the lessor and the lessee or with the
nature of the property. It is not necessary that
the sublessor be joined as a defendant. (NCC, Art.
1651)
This is true, notwithstanding the fact that the
sublessee is not a party to the lease contract.
(Paras, 2008)
Subsidiary liability of sublessee to lessor
(1999 BAR)
1. Remedy to collect rents from the sublessee

SUBLEASE ASSIGNMENT The law grants the lessor the right to demand
The lessee makes an payment from the sublessee the rents which
The lessee retains an absolute transfer of his the sublessor failed to pay the lessor. The
interest in the lease; he interest as lessee; thus, demand to pay rents made by the lessor on the
remains a party to the he dissociates himself sublessee does not exempt the latter from his
contract. from the original obligation to pay the sublessor the rents which
contract of lease. said sublessee failed to pay the lessor.
The sublessee does not The assignee has a
have any direct action direct action against Purpose: To prevent a situation where the
against the lessor. the lessor. lessee collects rents from the sublessee but
Can be done even does not pay his rents to the lessor.
without the permission
Cannot be done unless 2. Amount of rent recoverable
of the lessor unless
the lessor consents.
there be an express
prohibition. The liability of the sublessee is limited to the
amount of rent due from him to the sublessor
Liability of Sublessee towards Lessor (1999, under the terms of the sublease at the time of
2000 BAR) the extrajudicial demand by the lessor. Future
rents cannot be recovered. He is liable to the
Although the sublessee is not a party to the lessor only for rents the lessee failed to pay
contract of lease, the sublessee is still directly the lessor.
liable to the lessor for acts appertaining to the
use and preservation of the property. This is of NOTE: The liability of the sublessee is
course in addition to the sublessee’s obligation subsidiary.
to the sublessor. (Paras, 2008)
3. Liability for rents paid in advance
Note also that the subsidiary liability of the
sublessee for rent due to the original lessor is The sublessee continues to be subsidiarily
decreed under Art. 1652 of NCC, but only to the liable to the lessor for any rent unpaid by the
extent of the rent still due from him in lessee, although the sublessee may have made
accordance with the terms of the sublease. advance rent payments to the lessee. The rule
Payments of rent in advance by the sublessee is to avoid collusion between the lessee and
shall be deemed not to have been made, so far as the sublessee.
the lessor’s claim is concerned, unless said
payments were effected in virtue of the customs Warranty of the lessor
of the place.
1. That he has a right to lease the thing;
Direct Action by the Lessor (Accion Directa) 2. That the lessee shall enjoy the legal and
peaceful possession of the thing;
The lessor may bring an action directly against 3. That the thing is fit for the use for which it is
the sublessee if he does not use and preserve the intended; and
thing leased in accordance with the agreement

UNIVERSITY OF SANTO TOMAS 618

2021 GOLDEN NOTES
 Civil Law
4. That the thing is free from any hidden fault
or defect. (De Leon, 2005)
In case of eviction of the lessee, and the return of
the rents paid is required, a reduction shall be
made taking into account the period during
which the lessee enjoyed the thing.
The lessee has also the right of proportionate
reduction of the rents agreed upon where the
area or number of the object of the lease is less
than that stated in the contract. (NCC, Art. 1542)
2.
Lessor’s warranty is distinct from his liability
for damages
Liability for the warranty is not equivalent to
liability in damages, as the latter is an obligation
distinct from the former.
The lessor’s obligation to warrant the thing
leased, whether or not he knew of the existence
therein of defects that rendered it unsuitable for
the use for which the lessee intended it, is
distinct from his liability for damages, which
only attaches when he knew about such defects
and failed to reveal them to the lessee or
concealed them, in which case fraud and bad
faith may be presumed on his part. (Yap Kim
Chuan v. Tiaoqui, G.R. No. 10006, September 18,
1915)
RIGHTS AND OBLIGATIONS OF
THE LESSOR AND THE LESSEE
Rights and obligations arising from lease
contract are transmissible to the heirs
1. A lease contract is not essentially personal
in character;
2. The rights and obligations are transmissible
to the heirs; and
3. The death of the party does not excuse
nonperformance of contract which involves
a property right, and the rights and
obligations pass to the successors or
representatives of the deceased.
OBLIGATIONS OF THE LESSOR
(1996, 2010 BAR)
3.
1. Delivery of the property
a. The thing leased must be delivered, in
619
such conditions as to render it fit for in
the use intended, in order that the
lessee may enjoy or use the same. [NCC,
Art. 1654(1)] Delivery may, of course, be
actual or constructive. [NCC, Art.
1496(1)]
b. The thing must be delivered, for without
delivery, there could be no lease because
delivery goes to the essence of the
contract. Delivery cannot be waived.
Making of necessary repairs
a. Includes all the repairs needed, whether
the damage be caused by nature,
fortuitous event or lapse of time, but not
those brought about by the fault of the
lessee himself or by his privies or his
servants, whether the defect was caused
prior to or after the delivery of the
object. (Rabuya, 2017)
b. Article 1654 of NCC speaks of necessary
repairs to keep the thing leased suitable
for the use to which it has been devoted
unless there is a stipulation to the
contrary. In default of a special
stipulation, the custom of the place shall
be observed as to the kind of repairs on
urban property. (NCC, Art. 1686) In case,
the lessor fails in the performance of
this duty, the lessee may suspend the
payment of rent (NCC, Art. 1658) or avail
himself of the other remedies provided
in the law. The lessor is not liable for
repairs for damages or deterioration
caused by the lessee himself.
NOTE: The word “repairs” implies the
putting back of something in the
condition in which it was originally,
while an “improvement’’ is the adding of
something new thereto; hence, the
filling of a vacant lot is not a repair
[Albano v. Villanueva, 7 Phil. 277 (1906)]
(Coca-Cola Bottlers Philippines, Inc. v. CA,
et al, G.R. No. 100957, January 27, 1994)
nor is the construction of a house.
[Valencia v. Ayala de Roxas, 13 Phil. 45
(1909)] (Parilla, et al v. Pilar, G.R. No.
167680, November 30, 2006)
Duty of the lessee to notify lessor (NCC, Art.
1663)
 Special Contracts - Lease
a. Peaceful and adequate enjoyment refers
to legal, not physical possession. Hence,
a lessor is not, for instance, liable for
physical disturbances in the
neighborhood, but is liable if the lessee
is evicted due to non-payment of taxes
by the lessor. (Paras, 2008)
b. The lessor’s obligation to maintain the
lessee arises when acts termed “legal
trespass” disturb, dispute, or place
difficulties in the lessee’s peaceful and
adequate enjoyment of the leased
premises that in some manner or other
cast doubt upon the right of the lessor to
execute the lease. The lessor must
answer for such legal trespass. (Nakpil v.
Manila Towers Development
Corporation, G.R. No. 160867, September
20, 2006)
c. There is mere act of trespass when a
third person claims no right
whatsoever. In trespass in law, the third
person claims a legal right to enjoy the
premises. (Rabuya, 2017)
NOTE: When it is merely trespass in fact,
the lessor cannot be faulted for any breach.
The lessee can file a direct action against
the trespasser such as forcible entry or
illegal detainer.
4. Duty not to Alter Form
The lessor has also the duty not to alter the
form of the thing leased as to impair the use
of the said thing to which it is devoted under
the terms of the lease. (NCC, Art. 1661)
Rules if urgent repairs are necessary (NCC,
Art. 1662)
1. If repairs last for NOT MORE THAN 40
days
Lessee is obligated to tolerate the work,
although it may be annoying to him and
although during the same time, he may be
deprived of a part of the premise.
2. If repairs last for more than 40 DAYS
Lessee can ask for reduction of the rent in
proportion to the time (including the first 40
days and the part of the property of which he is
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
deprived).
NOTE: In either case, rescission may be
availed of if the main purpose of the lease is
to provide a dwelling place and the property
becomes uninhabitable.
Effects if the lessor fails to make urgent
repairs
The lessee may:
1. Order repairs at the lessor’s cost;
2. Sue for damages;
3. Suspend the payment of the rent; or
4. Ask for rescission, in case of substantial
damage to him.
If the contract of lease is silent as to who will
pay for repair expenses
Major repairs – Shouldered by the lessor; and
Minor repairs – Shouldered by the lessee.
Remedy of the lessee if the lessor fails to
make major or necessary repairs
Lessee may ask for:
1. Rescission of contract and indemnification
for damages; or
2. Indemnification only, while the contract
remains in force. (NCC, Art. 1659)
Effect of destruction of thing leased by
fortuitous event (1993 BAR)
Total destruction
1. The lease is extinguished if the thing is
totally destroyed;
2. The lessee cannot compel the lessor to
reconstruct the destroyed property;
3. The lessee of the lot and building which has
been totally destroyed by fortuitous event
cannot be considered as lessee of the land
after the building had been totally destroyed
by the fortuitous event (Roces v. Rickards,
[CA] 45 O.G. [Supp.] 97); and
4. While the land has not been affected,
consideration should be taken of the fact
that generally the land was leased only as an
incident to the lease of the building. (Rohde
620
 Civil Law
Shotwell v. Manila Motors Co., Inc., G.R. No. L-
7637, December 29, 1956)
Partial Destruction
Lease is not extinguished. The lessee is given the
option to choose between a proportionate
reduction of the rent and rescission of the lease.
Once the choice of the lessee has been
communicated to the lessor, the former cannot
change it. (NCC, Art. 1201)
If reduction of rent is chosen, the same shall be
retroactive to the date when the partial
destruction occurred. In case of rescission, the
general rule is that it will not be granted for
slight or trivial causes. The partial destruction,
under the circumstances, should be important or
substantial as to defeat the purpose of the lessee
in entering into the contract of lease.
NOTE: The choice is on the LESSEE, and not on
the lessor.
When lessee may suspend payment of rent
1. When lessor fails to undertake necessary
repairs; and
2. When lessor fails to maintain the lessee in
peaceful and adequate enjoyment of the
property leased.
Effectivity of the suspension
1. In the case of repairs, from the time he made
the demand for said repairs, and the
demand went unheeded; or
2. In the case of eviction, from the time the final
judgment for eviction becomes effective.
OBLIGATIONS OF THE LESSEE
Principal Obligations of the Lessee (NCC, Art.
1657)
1. Payment of agreed price of lease
The obligation of the lessee to pay the rent
agreed upon arises only when the thing leased
has been delivered to the lessee for the purposes
stipulated in the contract.
2. Proper use of the thing leased
The lessee must exercise the diligence of a good
father of a family in the use of the thing leased.
621
He must devote the thing to the use stipulated,
and if none was stipulated, to that which may be
inferred from the nature of the thing leased,
according to the custom of the place.
NOTE: The use of the thing for an illegal purpose
entitles the lessor to terminate the contract.
3. Payment of expenses for deed of lease
In lease, the law imposes upon the lessee the
obligation to pay the expenses for the deed of
lease. By agreement, the obligation may be
assumed by the lessor.
Other Obligations of the Lessee
1. To tolerate the urgent repairs upon the
thing leased even if annoying to him, and
although during the same, he may be
deprived of a part of the premises [NCC, Art.
1662(1)];
2. To notify the lessor of every usurpation by a
third person or persons on the property and
of the urgent repairs needed (NCC, Art.
1663); and
NOTE: If the lessee fails to comply, he would be
liable for damages which the lessor would suffer
and which could have been avoided by lessee’s
diligence.
3. To return the property leased upon
termination of the lease in the same
condition as he received it, save what has
been lost or impaired by:
a. Lapse of time
b. Ordinary wear and tear; or
c. Inevitable cause/fortuitous event.
(NCC, Art. 1665)
Responsibility for deterioration or loss of the
thing leased
GR: The presumption is that the lessee is
responsible for the deterioration or loss of the
thing leased unless he proves that it took place
without his fault. Such liability also extends to
deterioration caused by the members of his
household and by guests and visitors.
XPN: When destruction is due to earthquake,
flood, storm or other natural calamity. (Rabuya,
2017)
 Special Contracts - Lease
Q: Jude owned a building which he had leased
out to several tenants. Without informing his
tenants, Jude sold the building to Ildefonso.
Thereafter, the latter notified all the tenants
that he is the new owner of the building.
Ildefonso ordered the tenants to vacate the
premises within thirty (30) days from notice
because he had other plans for the building.
The tenants refused to vacate, insisting that
they will only do so when the term of their
lease shall have expired. Is Ildefonso bound
to respect the lease contracts between Jude
and his tenant? Explain your answer. (2009
BAR)
A: YES. Ildefonso must respect the lease
contracts between Jude and his tenants. While it
is true that the said lease contracts were not
registered and annotated on the title to the
property, Ildefonso is still not an innocent
purchaser for value. He ought to know the
existence of the lease because the building was
already occupied by the tenants at the time he
bought it. Applying the principle of caveat
emptor, he should have checked and known the
status of the occupants or their right to occupy
the building before buying it.
REMEDIES
Accion Directa
A direct action which the lessor may bring
against a sublessee who misuses the subleased
property or for unpaid rents otherwise due from
the original lessee (sublessor).
Alternative remedies of aggrieved party
1. Rescission of the contract with damages
Failure of lessor to place the lessee in
possession of the premises leased is a case
of lessor’s non-compliance with his
obligation. (1999, 2001 BAR)
Restrictions to Rescission
a. Requires judicial action;
b. Can be brought only by the aggrieved
party; and
c. Must be substantial, not slight or minor
breach.
2. Action for damages only, allowing the lease
to remain subsisting.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Q: Under a written contract dated December
1, 1989, Victor leased out his land to Joel for
a period of five (5) years at a monthly rental
of P1,000.00, to be increased to P1,200.00
and P1,500.00 on the third and fifth year,
respectively. On January 1, 1991, Joel
subleased the land to Conrad for a period of 2
years at a monthly rental of P1,500.00. On
December 31, 1992, Joel assigned the lease to
his compadre, Ernie, who acted on the belief
that Joel was the rightful owner and
possessor of the said lot. Joel has been
faithfully paying the stipulated rentals to
Victor. When Victor learned on May 15, 1992
about the sublease and assignment, he sued
Joel, Conrad and Ernie for rescission of the
contract of lease and for damages.
1. Will the action prosper? If so, against
whom? Explain.
2. In case of rescission, discuss the rights and
obligations of the parties. (2005 BAR)
A:
1. YES, the action for rescission of the lease will
prosper because Joel cannot assign the lease to
Ernie without the consent of Victor. (NCC, Art.
1649) But Joel may sublet to Conrad because
there is no express prohibition therefor. (NCC,
Art. 1650; Alipio v. CA, G.R. No. 134100,
September 29, 2000)
Victor can rescind the contract of lease with
Joel, and the assignment of the lease to Ernie,
on the ground of violation of law and of
contract. The sub-lease to Conrad remained
valid for 2 years from January 1, 1991, and had
not yet lapsed when the action was filed on
May 15, 1992.
2. In case of rescission, the rights and obligations
of the parties should be as follows: At the time
that Victor filed suit on May 15, 1992, the
assignment had not yet lapsed. It would lapse
on December 1, 1994, the very same date that
the 5-year basic lease would expire. Since the
assignment is void, Victor can get the property
back because of the violation of the lease. Both
Joel and Ernie have to surrender possession
and are liable for damages. But Conrad has not
yet incurred any liability on the sublease
which still subsisted at the time of the filing of
the action on May 15, 1992.
622
 Civil Law
Ernie can file a cross-claim against Joel for
damages on account of the rescission of the
contract of assignment. Conrad can file a
counter-claim against Victor for damages for
lack of causes of action at the time of the filing
of the suit.
Q: A is the owner of a lot on which he
constructed a building in the total cost of
P10, 000,000. Of that amount, B contributed
P5,000,000 provided that the building as a
whole would be leased to him (B) for a
period of ten years from January 1, 1985 to
December 31, 19954 at a rental of P100,000
a year. To such condition, A agreed. On
December 20, 1990, the building was totally
burned. Soon thereafter, A’s workers cleared
the debris and started construction of a new
building. B then served notice upon A that he
would occupy the building being constructed
upon completion, for the unexpired portion
of the lease term, explaining that he had
spent partly for the construction of the
building that was burned. A rejected B’s
demand. Did A do right in rejecting B’s
demand? (1993 BAR)
A: YES. A was correct in rejecting the demand of
B. As a result of the total destruction of the
building by fortuitous event, the lease was
extinguished. (NCC, Art. 1655)
Grounds for judicial ejectment under the
Rental Reform Act of 2002
1. Assignment of lease or subleasing of
residential units in whole or in part,
including the acceptance of boarders or
bedspacers, without the written consent of
the lessor; or
2. Rental payment in arrears for 3 months;
Provided, that in case of refusal by the lessor
to accept the payment of the rent, the lessee
may deposit the amount in court or with the
city or municipal treasurer, as the case may
be, or in the bank in the name of and with
notice to the lessor, within one month after
the refusal of the lessor to accept payment.
Q: Jane leased a truck to Ed for two (2) years.
After one (1) year from delivery, the truck
was destroyed by a strong typhoon. What is
the effect of the destruction of the truck with
respect to the lease?
623
A: It depends. If the thing leased is totally
destroyed by a fortuitous event, the lease is
extinguished. If the destruction is partial, the
lessee may choose between: proportional
reduction of rent or, rescission of lease. (NCC,
Art. 1655)
NOTE: On the part of the lessor, instead of
rescinding the contract, he may directly file an
action for ejectment against the lessee.
If the aggrieved party has chosen the option of
rescission under Art. 1659 of NCC, the court has
no discretion to grant the fixing of a period in an
ordinary obligation under Art. 1191 of NCC.
Q: What are the damages recoverable in
ejectment cases?
A: Only the rents or the fair rental value of the
premises.
The following cannot be successfully claimed:
1. Profits plaintiff could have earned were it
not for the forcible entry or unlawful
detainer;
2. Material injury to the premises; and
3. Actual, moral, or exemplary damages. (Baens
v. CA, G.R. No. L-57091, November 23, 1983)
When lessee may immediately terminate the
lease (NCC, Art. 1660)
By notice to the lessor in case the dwelling place
or building is unfit for human habitation and is
dangerous to life or health.
Even if at the time the contract was perfected,
the lessee KNEW of the dangerous condition or
WAIVED the right to rescind.
Reason: Public safety cannot be stipulated
against.
Two Kinds of trespass with Respect to the
Property Leased
1. Mere act of trespass (disturbance in fact)
The physical enjoyment is reduced and may take
place in a case of forcible entry. The third person
claims no right whatever. (Paras, 2008)
NOTE: If the leased premises are expropriated
and the tenant is evicted from the premises, the
 Special Contracts - Lease
lessor is not liable for damages. The lessee must
look to the expropriator for his compensation.
(Sayo v. Manila Railroad Co., G.R. No. 17357, June
21, 1922)
2. Trespass in law (disturbance in law)
A third person claims a LEGAL right to enjoy the
premises. The lessor is responsible for trespass
in law. (Paras, 2008)
Lessee is presumed at fault in case of loss or
deterioration of the property
This presumption is rebuttable. The burden of
proof is on the LESSEE to show that the loss or
deterioration is not due to his own fault, such as
when the deterioration resulted from lapse of
time, ordinary wear and tear, or from inevitable
cause. (NCC, Art. 1665)
Non-applicability of presumption when the loss
or destruction is due to:
1. Earthquake;
2. Flood;
3. Storm; and
4. Other natural calamities.
Reason: It is unjust to impose upon the lessee
the burden of proving due diligence. It is more
probable that in such cases, he was not
negligent.
NOTE: Ordinarily, fire is NOT a natural calamity.
But if the tenant can prove that he had no fault in
the case of fire, and that it was impossible for
him to stop its spread, he will not be liable.
(Lizares v. Hernaez and Alunan, G.R. No. 14977,
March 30, 1920)
Deterioration caused by others
Although the deterioration was not caused by
the lessee himself, he is still liable under the law
if the deterioration was made by his household,
guests and visitors. (NCC, Art. 1668) His liability
is akin to civil liability in quasi-delict. (NCC, Art.
2180)
DURATION AND TERMINATION OF LEASE
When lease is supposed to end
1. When the lease was made for a
DETERMINATE TIME, the lease ends on the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
DAY FIXED, without need of a demand (NCC,
Art. 1669); or
2. If the understanding between the parties as
to the term of the lease was vague and
uncertain, it cannot be said that a definite
period was agreed upon; hence the proper
Article to apply would be Art. 1687 of NCC.
(Guitarte v. Sabaco, et al., G.R. No. L-13688-
91, March 28, 1960)
NOTE: Under Article 1687 of NCC, if the period
for the lease has not been fixed, it is understood
to be from year to year, if the rent agreed upon is
annual; from month to month, if it is monthly;
from week to week, if the rent is weekly; and
from day to day, if the rent is to be paid daily.
Q: May the courts fix a different period for
the lease?
A: YES. Even though a monthly rent is paid, and
no period for the lease has been set, the courts
may fix a longer term for the lease after the
lessee has occupied the premises for over one
year. If the rent is weekly, the courts may
likewise determine a longer period after the
lessee has been in possession for over six
months. In case of daily rent, the courts may also
fix a longer period after the lessee has stayed in
the place for over one month. (NCC, Art. 1687)
When demand is necessary as a procedural
requirement
For purposes of an action for unlawful detainer
on the ground of the lessee’s failure to pay rents
or violation of the terms of the lease, Rule 70
(Rules of Court) requires that demand be made
upon the lessee giving him 5 days (in case of
buildings) and 15 days (in case of land), within
which to pay the unpaid rentals and to vacate
the premises.
The demand to vacate must be definite and must
not provide an alternative.
The demand required under Rule 70 is only a
procedural requirement and does not, if not
complied with, change the fact that the lease
contract has ended upon the termination of the
period fixed for its existence. (Paras, 2008)
When demand to vacate is unnecessary
When the action is to terminate the lease,
624
 Civil Law
demand is not necessary. The expiration of the
term of the lease immediately gives rise to a
cause of action for unlawful detainer in which
case, demand to vacate is no longer necessary.
(Paras, 2008)
Extinguishment of Lease
1. By the expiration of the period (NCC, Art.
1673);
2. Total loss or destruction of the thing leased
(NCC, Art. 1655);
3. Rescission due to non-performance of the
obligations of a party;
4. Mutual agreement to terminate the lease
contract;
5. By action of the purchaser or transferee of
the property leased in good faith against the
lessee whose lease contract is not duly
recorded;
6. In case the dwelling place or any other
building is unfit for human habitation and is
dangerous to life or health (NCC, Art. 1660);
7. By resolution of the right of the lessor; or
8. By will of the purchaser or transferee of the
thing. (Rabuya, 2017)
Extension or renewal of lease
1. Authority of Court
When the parties have stipulated on the
period of the lease, upon its expiration, the
Court cannot extend the period since it has
no authority to do so.
2. Lease not to be deemed extended or
renewed by implication
Where a lease contract expressly stipulates
that the lease shall not be deemed extended
or renewed by implication beyond the
contractual period for any cause or reason
whatsoever but only by negotiations, the
mere fact that the lessee was willing to pay
what he claimed to be a reasonable rent –
which was less than that demanded by the
lessor – did not operate in any sense to
extend the lease.
3. Lease extendible for a similar period
A stipulation that a lease is “extendible” for a
further similar period is to be understood as
giving the lessee the right to the additional
period or to quit upon the expiration of the
625
first term.
4. Lease renewable at the option of both
parties
A stipulation that the lease of a parcel of
land will be “renewable for another 10 years
at the option of both parties under such
terms, conditions and rentals reasonable at
the time,” means that there should be
mutual agreement as to the renewal of the
lease.
5. Option to renew given to lessor
If the option is given to the lessor, the lessee
cannot renew the lease against the former’s
refusal. The lease is deemed terminated.
6. Extension exclusively for the benefit of the
lessor
The stipulation in a lease contract extending
the lease term beyond that originally agreed
upon, in order to save the lessor the trouble
of reimbursing the lessee in cash for the
expenses incurred on the leased premises
was exclusively for the benefit of the lessor;
hence, the latter has the right to terminate
the lease upon the expiration of the original
period, or at any other time thereafter, by
tendering to the lessee, or consigning to the
court, the outstanding balance of his
expenditures.
The lessor should be given the option to
either reimburse the balance of the
expenditures or demand that the lessee
should account for and credit the lessor for
the fruits of the properties since the
expiration of the lease against the balance
due to the lessee, turning over any excess to
the lessor.
7. Option to renew given to lessee
Where a lessee is given the option to
continue or renew the contract of lease and
is silent upon the rentals, the old terms are
to be followed in the renewed lease.
Implied New Lease or Tacita Reconduccion
(1990, 1999, 2001 BAR)
Tacita Reconduccion refers to the right of the
lessee to continue enjoying the material or de
 Special Contracts - Lease
facto possession of the thing leased within a no longer consents to the continued occupation
period of time fixed by law. (Rabuya, 2017) by the lessee of the leased property. (Tagbilaran
Integrated Settlers Assoc. v. CA, G.R. No. 148562,
Arises if at the end of the contract, the lessee November 25, 2004)
should continue enjoying the thing leased for at
least 15 DAYS with the acquiescence of the Instances when implied renewal NOT
lessor — unless of course a notice to the applicable
contrary had previously been given by EITHER
PARTY. 1. Stipulation against implied renewal;
2. Invalidity of original lease;
Effects of the implied new lease 3. Acceptance of rentals beyond original term;
4. Acceptance of rentals less than amounts
1. The period of the new lease is not that stipulated; and
stated in the original contract, but the time 5. Non-payment of rentals.
in Arts. 1682 and 1687 of NCC (month to
month, year to year, etc.); and Rule if lessor objects to lessee’s continued
possession
2. Other terms of the original contract are
revived. (Paras, 2008) Note that under Art. 1671 of NCC, there are
three requisites:
Terms which are revived
1. The contract has expired;
The original terms of the original contract which 2. The lessee continues enjoying the thing; and
are revived are only those which are germane to 3. The lessor has objected to this enjoyment.
the lessee’s right of continued enjoyment of the
property leased or related to such possession, If the three requisites are present, the lessee
such as the amount of rental, the date when it shall be considered a possessor in BAD FAITH.
must be paid, the care of the property, and the
responsibility for repairs. If the lessee still makes a construction after he
has become a possessor in bad faith, he may be
NOTE: No such presumption may be indulged in compelled:
with respect to special agreements which by
their nature are foreign to the right of 1. To forfeit the construction without
occupation or enjoyment inherent in a contract indemnity;
of lease. 2. To buy the land regardless of whether or not
its value is considerably more than the value
e.g., preferential right given to the lessee to of the construction; or
purchase the leased property. 3. To demolish the construction at his expense.

Requisites for an implied renewal of lease:
1. The term of the original contract of lease
must have already expired;
2. The lessee continues enjoying the thing
leased for at least 15 days;
3. The continuation of the occupation by the
lessee is with the acquiescence of the lessor;
and
4. The lessor or lessee has not previously given
a notice to vacate.
NOTE: The notice required under Article 1670 is
the one given after the expiration of the lease
period for the purpose of aborting an implied
renewal of lease. The notice to vacate constitutes
an express act on the part of the lessor that he
NOTE: In any of the 3 cases hereinabove
referred to, he will still be subject to the
payment of damages. (NCC, Arts. 449-451)
Judicial Grounds for Ejectment of Lessees
(1994, 2004 BAR) (ENVI)
1. Expiration of period of the lease
The period of the lease contract may be:
a. Conventional – when the period is by
agreement of the parties; or
b. Legal – when the period is fixed by law
under Arts. 1682 and 1687 of NCC;

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2021 GOLDEN NOTES
 Civil Law
GR: Upon the expiration of the period, the
lease contract is terminated. If a determinate
time was stipulated, the lease ceases without
need of a demand. (NCC, Art. 1669)
XPN: In case of implied new lease. After
termination of the lease, the lessor is free to
dispose of the property in favor of another
lessee. The payment of all rents then due will
be immaterial. As long as the period has
expired, the lessee can be ejected.
2. Non-payment of the rentals agreed upon
One of the principal obligations of the lessee
is to pay the rentals agreed upon. [NCC, Art.
1657(1)] It is the cause or consideration for
the use and enjoyment of the property leased.
Non-payment of the rentals after a demand
therefor is a justifiable ground for the lessor
to rescind the contract and eject the lessee.
3. Violation of any condition
Any violation of the terms and conditions of a
contract of lease, whether it is essential or
accidental in nature, will constitute a
violation of the lease contract and will justify
the filing of an ejectment case against the
lessee.
The theory that a lease could continue for an
indefinite term as long as the lessee pays the
rentals had already been rejected by the SC
because the validity or compliance of
contracts cannot be left to the will of one of
the parties. (NCC, Art. 1308)
Where the contract of lease prohibits the
lessee from introducing improvements and
making repairs and the lessee did so, he
violated this condition. This violation is a
basis for ejectment.
4. Improper use or enjoyment of the
property leased
The lessee is obliged to use the thing leased
as a diligent good father of a family. If due to
improper use of the property, the same is
lost, destroyed or deteriorated, the lessor
may immediately file a suit for restitution or
ejectment. He need not wait for the
expiration of the period of the lease.
Q: Cruz is the owner of property in San Juan
627
which she inherited from her late mother.
She alleged that Christensen had been
occupying the property during her mother’s
lifetime, as they had a verbal agreement.
Cruz claimed that ever since she inherited
the property, she tolerated Susan’s
occupancy of the property. However, due to
Susan's failure and refusal to pay rentals of
P1,000.00 per month, she was constrained to
demand that Susan vacate the property and
pay all unpaid rentals. The matter was
referred to barangay conciliation, but the
parties was not able to enter into a
compromise. Three years later, Cruz, through
counsel, sent Susan a final demand letter,
demanding her to pay unpaid rentals.
Cruz filed an unlawful detainer case in MTC.
Cruz alleged that despite Susan receiving the
final demand refused to vacate and pay.
Susan, in her Answer, contends that they had
only month to month lease and continuously
paying rent until sometime, Cruz refused to
accept payment for the accrued rents. Also,
she claims that she did not receive the final
demand letter. Whether final demand letter
is necessary in an unlawful detainer case due
to expiration of lease contract.
A: NO. Although the demand letter in this case
contains only demand to pay unpaid rentals and
as such, the case would have been enough to
categorize the complaint for unlawful detainer
as one for non-payment of rentals, this case is
still considered as unlawful detainer case for
expiration of lease and therefore, final demand
letter is not necessary. SC ruled that the month-
month lease contract between Cruz and
Christensen had long been expired when Cruz
refused to receive the rent in the past as
Christensen admitted in her Answer. Also,
Christensen cannot feign ignorance of
petitioner’s demand to vacate since the matter
was brought to barangay conciliation
proceedings. The demand letter would have
been unnecessary since respondents’ continued
refusal to vacate despite the expiration of their
verbal lease was sufficient ground to bring the
action. (Velia Cruz v. Sps. Christensen, G.R. No.
205539, October 4, 2017, J. Leonen)
Preliminary mandatory injunction to restore
possession pending appeal (NCC, Art. 1674)
The LESSOR is entitled to a writ of preliminary
injunction to restore him in his possession in
 Special Contracts - Lease
case the higher court is satisfied that the lessee’s
appeal is frivolous or dilatory (i.e., without
merit) or the lessor’s appeal is prima facie
meritorious.
Reason: The remedy is intended “to put an end
to the present state of the law which unjustly
allows the lessee to continue in possession
during an appeal.” (Report of the Code
Commission)
Use by lessee of legal period
The lessee is entitled to periods agreed upon in
the lease contract (conventional) or those
established in Articles 1682 and 1687 of NCC
(implied new lease).
However, these rights are restricted if there are
grounds or causes for the ejectment of the lessee
under Art. 1673 of NCC. To enjoy peace, the
lessee must be faithful to his obligations as such.
When the lessee is guilty of a cause of ejectment
under Art. 1673 of NCC, he is also deprived of
the right to enjoy the period of grace under Art.
1687 of NCC.
Effect of Sale of Leased Property on the Lease
Contract
1. The purchaser shall respect the lease in the
following situations:
a. When the lease is registered with the
proper Register of Deeds;
b. When the deed of sale provides for the
recognition and respect of the lease by the
purchaser until termination of the period;
c. When the purchaser has actual knowledge
of the existence of the lease; or
d. The lease cannot also be terminated by
the purchaser in a fictitious sale, and by
the purchaser in a sale with pacto de retro
until the expiration of the period to
redeem. Only a purchaser in good faith of
the leased property is granted protection
by the law.
2. In any other case, the purchaser is not
obliged to respect the lease contract. He has
the option to continue or discontinue the
lease.
The sale of a leased property places the
vendee into the shoes of the original lessor
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
to whom the lessee bound himself to pay.
Right of lessee if new owner terminates the
unrecorded lease
The lessee may demand that he be allowed to
gather the fruits of the harvest which
corresponds to the current agricultural year and
that the vendor indemnify him for damages
suffered. [NCC, Art. 1676 (2)]
Fictitious sale of leased property
1. If at the time the supposed buyer demands
the termination of the lease, the deed of sale
is not yet registered in the appropriate
Registry of Property. [NCC, Art. 1676 (3)]
2. If it is a simulated sale intended merely to
extinguish the existing lease. In the eyes of
the law, it does not exist. (NCC, Art. 1409)
Effect: The false “vendee” cannot terminate the
lease even if the same is unrecorded.
Reason: To discourage the practice which has
developed in recent years of fictitiously selling
the premises in order to oust the lessee before
the termination of the lease.
Rights of the lessee who introduced
improvements (1990, 1996 BAR)
Introduction of valuable improvement on the
leased premises does not give the lessee the
right of retention and reimbursement which
rightfully belongs to the builder in good faith.
Otherwise, such a situation would allow the
lessee to easily “improve” the lessor out of its
property. (Rabuya, 2017)
The lessor shall pay the lessee one-half of the
value of the improvements computed at the time
of the termination of the lease if the following
conditions are fulfilled:
1. That the lessee should have made the
useful improvements in good faith;
2. The improvements are suitable to the
purpose or use for which the lease is
intended; and
3. That the form and substance of the thing
leased are not altered or modified. (NCC,
Art. 1678)
These requisites will prevent the lessee from
628
 Civil Law
making such valuable improvements that the
lessor may never recover the property leased. It
is the lessor who has the option to appropriate
the useful improvements and reimburse the
lessee therefor. It is discretionary with the lessor
to retain the useful improvements by paying
one-half of their value. The lessee cannot compel
the lessor to appropriate and reimburse him for
the improvements.

A lessee who builds on the property leased is not

a possessor in good faith, thus, he has no right of
retention until reimbursed for the value of the
improvement.

The lessor and lessee may stipulate that all

improvements introduced by the lessee shall
pertain to the lessor. However, if the value of the
improvement is considerably more than the
value of the leased premises, merely creating
prejudice to the lessee instead of enforcing the
contract literally, Art. 1678 of the Civil Code may
be applied.

Ornamental Expenses

Expenses incurred which cater only to the

personal comfort, convenience or enjoyment of a
person.

The lessee has no right of reimbursement for

ornamental expenses. He may remove them
provided he does not cause any damage to the
thing leased. The lessor, if he so desires, may
retain them after paying their value to the lessee
at the time the lease is extinguished.

629
 Special Contracts – Credit Transactions
CREDIT TRANSACTIONS the present, with a promise to pay or deliver in
the future.
Note: Per the 2020 Bar Syllabus, the rules
governing Articles 2047-2092; 2124-2131; Kinds of credit transactions
and 2140-2141; and Concurrence and
Preference of Credits (Articles 2236-2251) 1. As contracts of security
are now transferred to the 2020 Golden
Notes for Commercial Law. Nonetheless, the a. Contracts of real security – These
succeeding discussions may include some of are contracts supported by
the foregoing topics for educational purposes collateral/s or burdened by an
and future references.
encumbrance on property such as
mortgage and pledge; and
Note: R.A. No. 11057, or the Personal
Property Security Act, took effect on
b. Contracts of personal security –
December 3, 2019 expressly repealing,
These are contracts where
amending and/or modifying the Civil Code
performance by the principal
provisions on mortgage and pledge,
debtor is not supported by
particularly, Articles 2085-2123, 2127, 2140-
collateral/s, but only by a promise
2141, 2241, 2243 and 2246-2247; Sections 1-
to pay or by the personal
16 of the Chattel Mortgage Law (Act No.
undertaking or commitment of
1508); and Sections 114-116 of the Property
another person such as in surety or
Registration Decree (P.D. No. 1529), among
guaranty.
others. Section 68 of said law, however, states
that notwithstanding the entry into force of
2. As to their existence
this Act under Section 67, the implementation
of the Act shall be conditioned upon the
a. Principal contracts – those that can exist
Registry being established and operational
alone. Its existence does not depend on
under Section 26.
the existence of another contract (e.g.
commodatum and mutuum); and
GENERAL PRINCIPLES
b. Accessory contracts – those the
Credit existence of which depend on another
contract. These accessory contracts
It is a person’s ability to borrow money or things depend on the existence of a principal
by virtue of confidence or trust reposed in him contract of loan (e.g. guaranty proper,
by the lender that he will pay what he may suretyship, pledge, mortgage and
promise. (People v. Concepcion, G.R. No. L-19190, antichresis).
November 29, 1922)
3. As to their consideration
Significance of Credit
a. Onerous – a contract where there is
By virtue of the use of credit, more exchanges consideration or burden imposed like
are possible: persons are able to enjoy a thing interest; and
today but pay it for later, and through the
banking system, the transfer of actual money is b. Gratuitous – a contract where there is
eliminated by cancellation of debts and credits. no stipulation to pay any consideration
(De Leon et. al., 2016) or no burden imposed (e.g.
commodatum).
Credit transaction
Security
It refers to an agreement based on trust or belief
of someone on the ability of another person to It is something given, deposited, or serving as a
comply with his obligations. means to ensure the fulfillment or enforcement
of an obligation or of protecting some interest in
It includes all transactions involving the the property.
purchase or loan of goods, service, or money in

UNIVERSITY OF SANTO TOMAS 630

2021 GOLDEN NOTES
 Civil Law
Bailment
It signifies a situation in which one person holds
personal property, the ownership of which is in
another. The person who has possession is
under the obligation to return the same goods,
either in the same or in altered form to the
owner, or dispose of them for his benefit when
the purpose of the bailment shall have been
Generally, no fiduciary relationship is created by
bailment. No trustee-beneficiary relationship is
created.
Parties in a contract of bailment
1. Bailor – The giver; the party who delivers
the possession or custody of the thing
bailed; and
2. Bailee – The recipient; the party who
receives the possession or custody of the
thing thus delivered.
Kinds of contractual bailment
1. Ordinary bailments:
a. For the sole benefit of the bailor;
b. For the sole benefit of the bailee;
c. For the benefit of both parties (mutual-
benefit bailments) – deposit for
compensation; and
d. Fortuitous bailments – miserable
deposit.
2. Extra-ordinary bailments – these cover
businesses that peculiarly serve the public.
Bailments for Hire
They arise when goods are left with the bailee
for some use or service by him, in exchange for
compensation.
Kinds
1. Hire of things (location rei) – where goods
are delivered for the temporary use of the
hirer (lease)
2. Hire for service (location operas faciendi) –
where goods are delivered for some work or
labor upon it by the bailee (contract of piece
of work)
3. Hire for carriage of goods (location operas
mercium vehendarum) – where goods are
delivered either to a common carrier or to a
631
private person for the purpose of being
carried from place to place
4. Hire for custody (location custodiae) –
where goods are delivered for storage
LOAN
GENERAL PROVISIONS
Art. 1933. By the contract of loan, one of the
parties delivers to another, either
something not consumable so that the latter
may use the same for a certain time and
return it, in which case the contract is called
a commodatum; or money or other
consumable thing, upon the condition that
the same amount of the same kind and
quality shall be paid, in which case the
contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a
stipulation to pay interest.
In commodatum the bailor retains the
ownership of the thing loaned, while in
simple loan, ownership passes to the
borrower.
Loan
It is a contract where one of the parties delivers
to another, either something not consumable so
that the latter may use the same for a certain
time and return it, in which case is called a
commodatum; or money or other consumable
things, upon the condition that the same amount
of the same kind and quality shall be paid, in
which case the contract is simply called a loan or
mutuum. (NCC, Art. 1933) (1993, 2004, 2005
Bar)
Kinds of loan
1. Commodatum – where the bailor (lender)
delivers to the bailee (borrower) a non-
consumable thing so that the latter may use
it for a given time and return the identical
thing;
2. Mutuum or Simple Loan – where the lender
delivers to the borrower money or other
consumable thing upon the condition that
the latter shall pay same amount of the same
kind and quality.
 Special Contracts – Credit Transactions
Commodatum is a loan of use (because there is a
transfer of the use of the thing borrowed) while
mutuum is a loan of consumption (because there
is a transfer of the ownership of the thing, which
is generally received for consumption).
Cause or Consideration in a contract of loan
1. As to the borrower, the acquisition of the
thing; and
2. As to the lender, the right to demand its
return or its equivalent.
Object of a contract of loan
1. Commodatum – The object is generally not
consumable; and
2. Mutuum – The object is consumable.
Consumable things and Non-consumable
things
A thing is consumable when it cannot be used in
a manner appropriate to its nature without being
consumed. (NCC, Art. 418)
On the other hand, a non-consumable thing is a
movable thing which can be used in a manner
appropriate to its nature without it being
consumed. (NCC, Art. 418)
Fungible and non-fungible things
1. Fungible thing is one where the parties have
agreed to allow the substitution of the thing
given or delivered with an equivalent thing.
(3 Manresa 58)
2. Non-fungible thing is one where the parties
have the intention of having the same
identical thing returned after the intended
use. (Ibid.)
NOTE: As to whether a thing is consumable or
not, it depends upon the nature of the thing. As
to whether it is fungible or not, it depends upon
the intention of the parties.
Fungibles are usually determined by number,
weight, or measure.
Irreplaceability of non-fungible thing
GR: Non-fungible things are irreplaceable. They
must be returned to the lender after the purpose
of the loan had been accomplished.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
XPN: Non-fungible things may be replaced by
agreement of the parties. In such case, the
contract is barter and not loan.
Delivery essential to perfection of loan
Delivery is necessary in view of the purpose of
the contract which is to transfer either the use or
ownership of the thing loaned.
An accepted promise to deliver something by
way of commodatum or simple loan is binding
upon the parties, but the commodatum or simple
loan itself shall not be perfected until the
delivery of the object of the contract. (NCC, Art.
1934)
Perfection of contract of loan
An accepted promise to deliver something by
way of mutuum or simple loan is binding upon
the parties, but the mutuum or simple loan itself
shall not be perfected until the delivery of the
object of the contract. (NCC, Art. 1934)
Unlawful purpose of the contract of loan
If the loan is executed for illegal or immoral or
unlawful purpose or use, the contract is void.
The bailor may immediately recover the thing
before any illegal act is committed, and provided
he is innocent or in good faith. (NCC, Articles.
1411 and 1412)
Action of the creditor against the debtor
GR: In an action of the creditor against the
debtor, only the principal debtor should be sued
alone.
XPN: If the benefit of excussion is not available,
the guarantor can be sued jointly with the
debtor.
The guarantor entitled to be notified of the
complaint against the debtor. If the guarantor
desires to set up defenses as are granted him by
law, he may have the opportunity to do so. (NCC,
Art. 2062)
NOTE: A debtor and a guarantor can be sued
together in one complaint, as permitted by the
Rules of Court on permissive joinder. However, if
the creditor obtains favorable judgment, the
latter is entitled to the deferment of judgment,
before a writ of execution can be implemented
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 Civil Law
against a guarantor, the creditor must first
establish that the debtor cannot pay.
The consequences of the guarantor’s appearance
or non- appearance in the case against the
debtor:
1. If he does not appear and judgment is
rendered against the debtor, he cannot set
up defenses which he could have set up had
he appeared. Moreover, he cannot question
the decision anymore;
2. If he appears such as by filing an answer in
intervention, he may lose or may win the
case. If he losses, he is still entitled to the
benefit of excussion; and
3. There is no waiver of his benefit of
excussion by his appearance in the case.
Compromise agreement between the
creditor and the principal debtor
Compromise is a contract whereby the parties,
by making reciprocal concessions, avoid
litigation or put an end to one already
commenced.
A compromise between the creditor and the
principal debtor is valid if the compromise is
beneficial to the guarantor; otherwise, it is not
binding upon him. (NCC, first sentence, Art. 2063)
In a compromise between the creditor and the
guarantor to the principal debtor, if compromise
is beneficial to the principal debtor, it is valid;
otherwise, it is not binding upon him. (NCC,
second sentence, Art. 2063) To be binding, it must
benefit both the guarantor and the debtor.
Right of indemnity and reimbursement of the
guarantor who paid the debt
GR: The guarantor who pays for a debtor must
be indemnified by the latter.
The guarantor is entitled to be reimbursed by
debtor for:
1. Total amount of the debt paid;
2. Legal interest from the time payment was
made known to the debtor (even though it
did not earn interest for the creditor);
3. Expenses incurred after notifying debtor
that demand to pay was made upon him;
and
4. Damages in accordance with law, if they are
633
due. (NCC, Art. 2066)
XPNs:
1. Guaranty is constituted without the
knowledge or against the will of the debtor
Effect: Guarantor may only recover so much
as was beneficial to the debtor. If payment
has not benefitted the debtor at all, the
guarantor does not acquire any claim for
reimbursement.
The remedy of the guarantor would be to go
against the creditor for the amount paid, if
there is still a legal basis for the claim. If the
guarantors suffer, it is due to his own fault.
2. Payment by third persons who does not
intend to be reimbursed; and
Effect: It is deemed a donation and as such
requires the consent of debtor.
3. If the guarantor has paid without notifying
the debtor and the latter not being aware of
the payment, repeats it, the guarantor has
no remedy whatever against the debtor, but
only against the creditor. (NCC, Art. 2076)
XPN:
a. In case of gratuitous guaranty;
b. If the guarantor was prevented by the
fortuitous event from advising the debtor
of the payment; and
c. The creditor becomes insolvent, the
debtor shall reimburse the guarantor for
the amount paid.
Right of subrogation
The guarantor has the right of subrogation after
the payment of the debt is made to the creditor.
The guarantor is subrogated to all the rights
which the creditor had against the debtor. [NCC,
Art. 2067(1)]
If the guarantor pays without notice to the
debtor, the debtor may interpose against the
guarantor defenses available to the debtor as
against the creditor at the time payment was
made.
Notification of payment made by the
guarantor
 Special Contracts – Credit Transactions
GR: Guarantor must first notify the debtor
before paying, otherwise, if the debtor pays
again, the guarantor can only collect from the
creditor and the guarantor will have no cause of
action against the debtor even if the creditor
becomes insolvent. (NCC, Art. 2070)
XPN: Guarantor may still recover from debtor if
the following circumstances concur:
1. Guaranty is gratuitous;
2. Guarantor was prevented by fortuitous
event from notifying the debtor of the
payment; and
3. Creditor becomes insolvent.
Payment of the guarantor before maturity
GR: The guarantor cannot seek reimbursement
from the debtor until expiration of the period
stipulated. The guarantor must wait. For being
subsidiary in character, the guaranty is not
enforceable until the debt has become due. (NCC,
Art. 2069)
NOTE: A guarantor cannot exercise the right of
subrogation until the principal obligation has
been fully extinguished. (Rabuya, 2017)
XPN: If the premature payment was ratified by
the debtor, he can now be compelled to
reimburse.
Right of the guarantor to proceed against
debtor before payment
GR: Guarantor cannot proceed against the
principal debtor even before having paid the
creditor.
XPNs:
1. When he is sued for payment;
2. In case of insolvency of the principal debtor;
3. When the debtor has bound himself to
relieve him from the guaranty within a
specified period, and this period has expired.
4. When the debt has become demandable by
reason of the expiration of the period of
payment;
5. After the lapse of ten years, 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 ten years;
6. If there are reasonable grounds to fear that
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the principal debtor intends to abscond; or
7. If the principal debtor is in imminent danger
of becoming insolvent.
NOTE: In all these cases, the cause of action of the
guarantor is either to obtain release from the
guaranty, or to demand a security that shall
protect him from any proceedings by the creditor
and from the danger of insolvency of the debtor.
(NCC, Art. 2071)
Purpose of the right of guarantor to proceed
against debtor before payment
The purpose of this right is to enable the
guarantor to take measures for the protection of
his interest in view of the probability that he
would be called upon to pay the debt. (De Leon,
2013)
NOTE: The guarantor cannot demand
reimbursement or indemnify because he has not
paid the obligation. The proper remedy is to
obtain release from the guaranty or to demand a
security.
Remedy of a guarantor of a third person at
request of another
The remedy of a person who becomes a
guarantor at the request of another for the debt
of a third person who is not present is the option
of suing either the principal debtor or the
requesting party. (NCC, Art. 2072)
NOTE: The provision applies when the
guarantor has actually paid the debt.
SUB-GUARANTY
Double or sub-guaranty is one constituted to
guarantee the obligation of the guarantor.
NOTE: In case of insolvency of the guarantor for
whom he bound himself, he is responsible to the
co-guarantors in the same terms as the
guarantors. (NCC, Art. 2075)
Entitlement to right of excussion
A sub-guarantor is entitled to the right of
excussion both with respect to the guarantor
and to the principal debtor. (NCC, Art. 2064)
CONTINUING GUARANTY
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 Civil Law
A continuing guaranty or suretyship is one
which covers all transactions, including those
arising in the future, which are within the
description or contemplation of the contract of
guaranty until the expiration or termination
thereof.
A guaranty may be given to secure even future
debts, the amount of which may not be known at
the time the guaranty is executed. This is the
basis for contracts denominated as continuing
guaranty or suretyship. It is one which covers all
transactions, including those arising in the
future, which are within the description or
contemplation of the contract of guaranty, until
the expiration or termination thereof. (Dino v.
CA, G.R. No. 89775, November 26, 1995)
Guaranty of Future Debts
Future debts, even if the amount is no (not) yet
known, may be secured by a guarantee.
However, there can be no claim against the
guarantor until the amount of the debt is
ascertained or fixed and demandable. The
reason is that a contract of guaranty is
subsidiary. (De Leon, 2016)
GR: It is not limited to a single transaction but
contemplates a future course of dealings,
covering a series of transactions generally for an
indefinite time or until revoked.
XPN: While a pledge, real estate mortgage, or
antichresis may exceptionally secure after-
incurred obligations so long as these future
debts are accurately described, a chattel
mortgage, however, can only cover obligations
existing at the time the mortgage is constituted.
(Marquez vs. Elisan Credit Corporation, G.R. No.
194642, April 6, 2015)
Note: Although a promise expressed in a chattel
mortgage to include debts that are yet to be
contracted can be binding commitment that can
be compelled upon, the security itself, however,
does not come into existence or arise until after
a chattel mortgage agreement covering the
newly contracted debt is executed either by
concluding a fresh chattel mortgage or by
amending the old contract conformably with the
form prescribed by the Chattel Mortgage Law.
(Ibid.)
XPN to the XPN: In case of stocks in department
stores, drug stores, etc.
635
Note: R.A. No. 11057, otherwise known as the
“Personal Property Security Act” (PPSA), which
was enacted on August 17, 2018, repealed
Sections 1 to 16 of Act No. 1508, otherwise
known as “The Chattel Mortgage Law.”
The PPSA is, however, not explicit as to whether
a “security interest” may secure the after-
incurred obligations of the debtor/grantor to the
secured creditor. Nevertheless, Section 10(c) of
said law provides that any stipulation limiting
the grantor’s right to create a security interest
shall be void.
Q: PAGRICO submitted a Surety Bond issued
by R&B Surety to secure an increase in its
credit line with PNB. For consideration of the
Surety Bond, Cochingyan and Villanueva
entered into an Indemnity Agreement with
R&B Surety and bound themselves jointly
and severally to the terms and conditions of
the Surety Bond. When PAGRICO defaulted,
PNB demanded payment to R&B Surety; R&B
Surety, in turn, demanded payment to
Cochingyan and Villanueva. R&B sued them.
Villanueva argued that the complaint was
premature because PNB had not yet
proceeded against R&B Surety to enforce the
latter's liability under the Surety Bond. Is the
contention correct?
A: NO. Indemnity Agreements are contracts of
indemnification not only against actual loss but
against liability as well. While in a contract of
indemnity against loss an indemnitor will not be
liable until the person to be indemnified makes
payment or sustains loss, in a contract of
indemnity against liability, as in this case, the
indemnitor's liability arises as soon as the
liability of the person to be indemnified has
arisen without regard to whether or not he has
suffered actual loss.
Accordingly, R & B Surety was entitled to
proceed against petitioners not only for the
partial payments already made but for the full
amount owed by PAGRICO to the PNB.
(Cochingyan, Jr. v. R&B Surety and Ins. Co., G.R.
No. L-47369, June 30, 1987)
EXTINGUISHMENT OF GUARANTY
Two causes for extinguishment of the
guaranty
1. Direct - when the guaranty itself is
 Special Contracts – Credit Transactions
extinguished, independently of the principal
obligation; or
2. Indirect - when the principal obligation
ends, the accessory obligation of guaranty
naturally ends. (Manresa) (Shannon v. Phil.
Lumber & Trans. Co., 61 Phil. 876)
Grounds for extinguishing a contract of
guaranty
1. Principal obligation is extinguished;
2. Same causes as all other obligations;
a. Payment or performance;
b. Loss of the thing due;
c. By condonation or remission of the
debt;
d. By confusion or merger of the rights of
the creditor and debtor;
e. By compensation;
f. By novation;
g. Other causes such as annulment,
rescission, fulfillment of a resolutory
condition and prescription.
3. Release by acceptance of property by the
creditor;
If the creditor accepts payment in form of
immovable or immovable property, there is
a novation on the subject matter.
NOTE: Eviction revives the principal
obligation, but not the guaranty, for the
creditor here took the risk. (Paras, 2008)
4. Release in favor of one of the guarantors,
without consent of the others, benefits all to
the extent of the share of the guarantor to
whom it has been granted (NCC, Art. 2078);
5. Extension granted to debtor by creditor
without consent of guarantor (NCC, Art.
2079); or
6. When the guarantors through some act of
the creditor cannot be subrogated to the
rights, mortgages and preferences of the
latter.
Q: Doctors of New Millennium Holdings, Inc
entered into a construction and development
agreement with Million State Development
Corporation for the construction of a 200-
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
bed capacity hospital in Cainta, Rizal. Million
State Development submitted a surety bond
to Doctors of New Millennium issued by
People’s Trans-East Asia Insurance
Corporation, now known as People’s General
Insurance Corporation. Million State
Development, however, failed to comply with
its obligation and so Doctors of New
Millennium filed a complaint for breach of
contract with damages with prayer for the
issuance of preliminary attachment against
Million State Development and People’s
General Insurance with the Regional Trial
Court of Pasig City. Can a surety bond which
guarantees initial payment be impliedly
novated by an insertion of a clause in the
principal contract waiving the conditions for
the initial payment’s release?
A: NO. The obligations of the surety to the
principal under the surety bond are different
from the obligations of the contractor to the
client under the principal contract. The surety
guarantees the performance of the contractor’s
obligations upon the contractor’s default, its
client may demand against the surety bond even
if there was no privity of contract between them
and this is the essence of a surety agreement.
(People's Trans-East Asia Insurance Corporation,
A.K.A. People's General Insurance Corporation v.
Doctors of New Millennium Holdings, Inc., G.R. No.
172404, AUGUST 13, 2014, as penned by J.
Leonen)
Q: Enriquez filed a replevin case against
Asuten for the recovery of the Toyota Hi-Ace
van valued at P300,000.00. She applied for a
bond in the amount of P600,000.00 with The
Mercantile Insurance Company, Inc.
(Mercantile Insurance) in Asuten's favor. The
Regional Trial Court (RTC) approved the
bond and ordered the sheriff to recover the
van from Asuten and to deliver it to
petitioner. While the van was in petitioner's
custody, the RTC dismissed the case without
prejudice for failure to prosecute. Thus, it
ordered the sheriff to restore the van to
Asuten. When petitioner failed to produce
the van, the RTC directed Mercantile
Insurance to pay Asuten the amount of the
bond. Is Enriquez liable for the replevin bond
despite her failure to return the van,
considering that its effectivity has lapsed
without any renewal?
A: YES. A surety bond remains effective until the
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 Civil Law
action or proceeding is finally decided, resolved,
or terminated. This a rare instance where the
writ of seizure is dissolved due to the dismissal
without prejudice, but the bond stands because
the case has yet to be finally terminated by the
Regional Trial Court.
Forfeiture of the replevin bond requires first, a
judgment on the merits in the defendant's favor,
and second, an application by the defendant for
damages. Neither circumstance appears in this
case. When petitioner failed to produce the van,
equity demanded that Asuten be awarded only
an amount equal to the value of the van. The RTC
would have erred in ordering the forfeiture of
the entire bond in Asuten's favor, considering
that there was no trial on the merits or an
application by Asuten for damages. This
judgment could have been reversed had
petitioner appealed the RTC's Order.
Unfortunately, she did not. Respondent was,
thus, constrained to follow the RTC's directive to
pay Asuten the full amount of the bond.
(Milagros P. Enriquez v. The Mercantile Insurance
Co., Inc., G.R. No. 210950, AUGUST 15, 2018, as
penned by J. Leonen)
MATERIAL ALTERATION OF CONTACT
An alteration is considered material when there
is a change which imposes an obligation or
added burden on the party promising or which
takes away some obligation already imposed,
changing the legal effect of the original contract
and not merely the form thereof.
NOTE:
1. The increase in the interest rates without
the guarantor’s consent does not release the
guarantor where the creditor is demanding
only the original and not the increased rate
of interest rate;
2. Assignment of the creditor without the
knowledge or consent of surety is not
material alteration of the contract; and
3. Change in the technical specifications of the
items to be purchased but their amount,
length, and quality remained unchanged,
and the period for payment and the amount
of liability of principal debtor and surety
were untouched is not material.
Effect of material alteration of contract
Any agreement between the creditor and the
637
principal debtor which essentially varies the
terms of the principal contract without the
consent of the surety will release the surety
from liability. Material alteration would
constitute a novation or change of the principal
contract and which is consequently
extinguished.
LEGAL AND JUDICIAL BONDS
Bond
A bond, when required by law, is commonly
understood to mean an undertaking that is
sufficiently secured, and not cash or currency.
(Comm. of Customs v. Alikpula, G.R. No. L- 32542,
November 26, 1970)
Bondsman
A bondsman is a surety offered in virtue of a
provision of law or a judicial order. He must have
the qualifications required of a guarantor (NCC,
Art. 2056) and in special laws like the Rules of
Court. (Rules of Court, Sec. 12- 13, Rule 114; De
Leon, 2013)
The necessary qualifications of sureties to a
property bond shall be as follows:
1. Each of them must be a resident owner of
real estate within the Philippines;
2. Where there is only one surety, his real
estate must be worth at least the amount of
the undertaking; and
3. In case there are two or more sureties, they
may justify severally in amounts less than
that expressed in the undertaking, if the
entire sum justified is equivalent to the
whole amount of bail demanded. (Rules of
Court, Sec. 12, Rule d. 114)
Nature of bond
All bonds including “judicial bonds” are
contractual in nature. Bonds exist only in
consequence of a meeting of minds under the
conditions essential to a contract.
Judicial bond
Judicial bonds constitute merely as a special
class of contracts of guaranty, characterized by
the fact that they are given in virtue of a judicial
order. (Gerardo v. Plaridel Surety and Ins., Co.,
G.R. No. L-7807, October 31, 1956)
 Special Contracts – Credit Transactions
E.g. A bond to stay execution of an appealed
judgment of a lower court is a judicial bond.
Liability of the surety if the creditor was
negligent in collecting the debt
A surety is still liable even if the creditor was
negligent in collecting from the debtor. The
contract of suretyship is not about the obligee
seeing to it that the principal pays the debt or
fulfills the contract, but that the surety will see
that the principal pays or performs. (PNB v.
Manila Surety & Fidelity Co., Inc., G.R. No. L-
20567, July 30, 1965)
Violation by the creditor of the terms of the
surety agreement
A violation by the creditor of the terms of the
surety entitles the surety to be released
therefrom. (Associated Ins. & Surety Co. v.
Bacolod Murcia Milling Co., G.R. No. L-12334, May
22, 1959)
When the performance of a bond is rendered
impossible
If the performance of a bond is rendered
impossible, it is the surety’s duty to inform the
court of the happening of the event so that it
may take action or decree in the discharge of the
surety when the performance of the bond is
rendered impossible by an act of God, or the
obligee, or the law. (People v. Otiak Omal & Luzon
Co., Inc., G.R. No. L-14457, June 30, 1961)
Remedy if unable to give a bond
A pledgee or mortgage considered sufficient to
cover his obligation shall be admitted in case a
person bound to give a legal or judicial bond
should not be able to do so.
NOTE: A judicial bondsman cannot demand the
exhaustion of the property of the principal
debtor. This is to ensure that the fulfillment of
the obligation by the guarantor be not delayed
or hindered. (Rabuya, 2017)
Q: Spouses Floro and Eufema Roxas
(“Spouses”) entered into a Contract of
Building Construction dated 22 May 1979
with Rosendo P. Dominguez, Jr.
(“Dominguez”), who undertook to be the
building contractor of a housing project
known as “Vista Del Mar Executive Houses.”
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Philtrust Bank (“Philtrust”) would finance
the cost of materials and supplies to the
extent of P 900,000.00, while the Spouses
would shoulder the labor cost of P
300,000.00. Paragraph 7 or the “whereas
clause” of the said project contract provided,
however, that whether or not the Spouses
could provide the funds for the labor costs,
Dominguez would bind himself to finish the
project within 150 working days.
Furthermore, a clause for liquidated
damages amounting to P 1,000.00 per day
was stipulated against Dominguez in case of
breach.
On 24 May 1979, Dominguez secured a
performance bond from FGU Insurance
Corporation (“FGU”) wherein they both
agreed to jointly and severally pay Floro
Roxas (“Floro”) and Philtrust the amount of P
450,000.00 in the event of Dominguez’s non-
performance of his obligation under the
contract.
However, the Spouses borrowed P 73,136.75
of the project-allocated funds from
Dominguez and they also failed to make the
promised payments for the labor cost; hence,
Dominguez refused further work on the
project. Thus, a complaint was filed against
Spouses and Philtrust before the Court of
First Instance of Manila (“CFI”).
a. Should FGU be liable for the full amount
of P 450,000 under the performance
bond?
b. Should the liabilities of the Spouses to
Dominguez be set off against any
liability of FGU under the performance
bond?
c. Should the Spouses be entitled to
liquidated damages under the contract
for building construction?
A:
a. YES. FGU should be liable for the full amount
of P 450,000.00 solidarily with Dominguez.
A performance bond is a kind of suretyship
agreement that is designed to afford the
project owner security that the contractor
will faithfully comply with the requirements
of the contract and make good on the
damages sustained by the project owner in
case of the contractor’s failure to so
perform. As a surety, FGU’S liability is direct,
primary, absolute, and solidary with the
principal debtor, and is determined strictly
638
 Civil Law
in accordance with the actual terms of the
performance bond it issued. The FGU Surety
Bond was conditioned upon the full and
faithful performance by Dominguez of his
obligations, wherein FGU guaranteed to
solidarily pay the amount of P 450,000.00 in
case of Dominguez’ default. The terms of the
bond were clear; hence, the literal meaning
of its stipulation should control.
If it were true that FGU’s intention was to
limit its liability to the cost overrun or
additional cost to the Spouses to complete
the project up to a maximum cap of P
450,000.00, then it should have included in
the Surety Bond specific words indicating
this intention. Its failure to do so must be
construed against it, given the fact that a
suretyship agreement is a contract of
adhesion ordinarily prepared by the surety
or insurance company; thus, calling for a
liberal construction in favor of the insured
and strict application against the insurer,
which insurer as the drafter, had the
opportunity to state plainly the terms of its
obligation. (FGU Insurance vs Spouses Roxas,
G.R. 189526, August 9, 2017, as penned by
Justice Leonen)
b. YES. The liabilities of the Spouses to
Dominguez could be set off against any
liability of FGU under the performance bond.
Under Article 1280 of the NCC, a guarantor
may set up compensation as regards what
the creditor may owe the principal debtor.
While this provision specifically speaks of a
guarantor, it nevertheless applies to a surety
as well. Contracts of guaranty and surety
are closely related in the sense that in both,
there is a promise to answer for the debt or
default of another. The difference lies in that
a guarantor is the insurer of the solvency of
the debtor and thus binds himself to pay if
the principal is unable to pay, while a surety
is the insurer of the debt and he obligates
himself to pay if the principal does not pay.
Hence, FGU could offset its liability under
the Surety Bond against Dominguez’
collectibles from the Spouses. (FGU
Insurance vs Spouses Roxas, G.R. 189526,
August 9, 2017, as penned by Justice
Leonen)
c. YES. The Spouses should be entitled to
liquidated damages under the contract for
639
building construction. The parties agreed
and articulated on the payment of liquidated
damages in case of breach; hence, the
deciding factor for the recovery of liquidated
damages in this case would be the fact of
delay in the completion of the works. A
clause on liquidated damages is normally
added to construction contracts not only to
provide indemnity for damages but also to
ensure performance of the contractor by the
threat of greater responsibility in the event
of breach. Here, it was clearly provided that
liquidated damages would be recoverable
for delay in the completion of the project;
hence, there should be more reason in case
of non-completion. To hold otherwise would
be to diminish or disregard the coercive
force of this stipulation. (FGU Insurance vs
Spouses Roxas, G.R. 189526, August 9, 2017,
as penned by Justice Leonen)
Q: Doctors of New Millenium Holdings, Inc.
(DNMH) is a domestic corporation and
entered into a construction and development
agreement with the Million State
Development Corporation (MSD), a
contractor for the construction of a 200-bed
capacity hospital in Cainta, Rizal. DNMH
obliged to pay 10M to MSD and MSD was to
shoulder 95% of the project cost and
committed itself to secure 385k within 25
banking days from DNMH’s initial payment.
Thus, MSD submitted a surety bond of 10M to
DNMH, which was issued by People’s Trans-
East Asia Insurance Corporation, now
People’s General insurance corporation.
Upon failure of MSD to comply, DNMH opted
for payment of the surety bond from
Philippine General Insurance, which
however denied liability on the ground that
its liability was limited by the contract and
that the contract was novated upon
execution of an additional clause in the
agreement. Is the surety liable in this case?
A: YES. The liabilities of an insurer under the
surety bond are not extinguished when the
modifications in the principal contract do not
substantially. The surety is jointly and severally
liable with its principal when the latter defaults
from its obligations under the principal contract.
(People’s Trans-Eat Insurance Corporation v.
Doctors of New Millenium Holdings, G.R. No.
172404, August 13, 2014, penned by J.Leonen)
 Special Contracts – Credit Transactions
PLEDGE
An accessory contract
whereby a debtor delivers
to the creditor or a third
person a movable or
personal property, or
document evidencing
incorporeal rights, to
secure the fulfillment of a
principal obligation with
the condition that when the
obligation is satisfied, the
thing delivered shall be
returned to the pledgor
with all its fruits and
accessions, if any.
Note: The Civil Code
provisions governing
pledge are now superseded
by R.A. No. 11057 or the
Personal Property Security
Act (PPSA) which
denominates a contract
whereby personal property
is used to secure payment
or other performance of an
obligation as a “security
agreement.”
PLEDGE, MORTGAGE, AND ANTICHRES
CHATTEL MORTGAGE
Definition
Chattel mortgage is a
contract by virtue of
which a personal property
is recorded in the Chattel
Mortgage Register as a
security for the
performance of an
obligation.
Note: The chattel
mortgage under Act No.
1508 is now superseded
by R.A. No. 11057 or the
Personal Property
Security Act (PPSA) which
denominates a contract
whereby personal
property is used to secure
payment or other
performance of an
obligation as a “security
agreement.”
REAL ESTATE
ANTICHRESIS
MORTGAGE
It is a contract A contract whereby the
whereby the debtor creditor acquires the
secures to the right to receive the
creditor the fruits of an immovable
fulfillment of a of the debtor, with the
principal obligation, obligation to apply
specially subjecting them to the payment of
to such security, interest, if owing, and
immovable property thereafter to the
or real rights over principal of his credit.
immovable
property, in case the
principal obligation
is not paid or
complied with at the
time stipulated.

Object of the contract

Movable or personal
property, or document
evidencing incorporeal
rights.
Movable properties which
are within the commerce of
men provided it is
susceptible of possession.
And incorporeal rights
evidenced by proper
documents may be pledged.
Note: The object of a
security agreement under
the PPSA is personal
property.
The object of a security Immovable Fruits of an
agreement under the property or real immovable.
PPSA is personal rights over
property. immovable
property.
Note: Under the former
Chattel Mortgage Act, a
real property may be a
subject of chattel
mortgage as long as the
parties to the contract so
agree and no innocent
third party will be
prejudiced thereby.
(Makati Leasing and
Finance Corporation v.
Weaver Textile Mills, Inc.
G.R. No. L-58469, May 17,
1983)
Necessity of delivery

UNIVERSITY OF SANTO TOMAS 640

2021 GOLDEN NOTES
 Civil Law

Delivery is not necessary.

Property must be delivered.
Note: Under the PPSA,
Note: Under the PPSA,
delivery of the personal
delivery of the personal
property to and
property to and possession Delivery is not Property is delivered
possession thereof by the
thereof by the secured necessary to the creditor.
secured creditor is one of
creditor is one of the means
the means whereby a
whereby a security interest
security interest may be
may be perfected. (Sec.
perfected. (Sec. 12(b), R.A.
12(b), R.A. No. 11057)
No. 11057)

641
 Special Contracts – Credit Transactions
NOTE: The pledgor can sell the thing pledged
with the consent of the pledgee (NCC, Art. 2097),
while the mortgagor can sell the property
mortgaged even without the consent of the
mortgagee. (NCC, Art. 2130)
Similarities of pledge and mortgage
Limited liability of a third person as a
pledgor or mortgagor
GR: A third person who pledged and mortgaged
his property is not liable for any deficiency.
XPN: If the third party pledgor or mortgagor
expressly agreed to be bound solidarily with the
principal debtor.

1. Both are constituted to secure a principal Property acquirable in the future cannot be
obligation; they are only accessory contracts mortgaged
(NCC, Arts. 2086, 2052);
2. Both pledgor and mortgagor must be the Where the mortgagor mortgaged a property and
absolute owner of the property (NCC, Arts. under the contract, he agreed to mortgage
2085, par. 2); additional properties which he may acquire in
3. Both pledgor and mortgagor must have the free the future, there was no valid mortgage as to the
disposal of their property or be authorized to latter because he was not yet the owner of the
do so; and properties at the time of the mortgage. (Dilag v.
4. In both, the thing proffered as security may be Heirs of Ressurrecion, G.R. No. 48941, May 6,
sold at public auction, when the principal 1946)
obligation becomes due and no payment is
made by the debtor. Mortgage constituted to secure future
advances
Indivisibility of pledge, mortgage and
antichresis Mortgage constituted to secure future advances
is valid. It is a continuing security and not
GR: A pledge, mortgage or antichresis is discharged by repayment of the amount named
indivisible. in the mortgage, until the full amount of the
advances is paid. However, a chattel mortgage
NOTE: The mortgage is indivisible even if the can only cover obligations existing at the time
obligation of the debtor is joint and not solidary. the mortgage is constituted and not to
Generally, the divisibility of the principal obligations subsequent to the execution of the
obligation is not affected by the indivisibility of mortgage.
the pledge or mortgage. (NCC, Art. 2089)
Mortgage constituted to secure future
XPNs: advances

1. Where each one of several things guarantees Mortgage constituted to secure future advances
determinate portion of the credit (NCC, Art. is valid. It is a continuing security and not
2089); discharged by repayment of the amount named
2. Where only a portion of the loan was in the mortgage, until the full amount of the
released; or advances is paid. However, a chattel mortgage
3. Where there was failure of consideration. can only cover obligations existing at the time
the mortgage is constituted and not to
obligations subsequent to the execution of the
mortgage.
Obligations that can be secured by pledge,
mortgage and antichresis Nature of an assignment of rights to
guarantee an obligation of a debtor
1. Valid obligations;
2. Voidable obligations; An assignment of rights to guarantee an
3. Unenforceable obligations; obligation of a debtor is in effect a mortgage and
4. Natural obligations; and not an absolute conveyance of title which
5. Conditional obligations. confers ownership on the assignee. (Manila
Banking Corp. v. Teodoro, Jr., G.R. No. 53955,

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2021 GOLDEN NOTES
 Civil Law
January 13, 1989)
ACCOMMODATION MORTGAGE
An accommodation mortgagor is a third person
who is not a party to a principal obligation and
secures the latter by mortgaging or pledging his
own property. (NCC, Art. 2085)
The liability of an accommodation mortgagor
extends up to the loan value of their mortgaged
property and not to the entire loan itself. Should
there be any deficiency, the creditor has
recourse on the principal debtor, not against
accommodation mortgage. (Rabuya, 2017)
The liability of an accommodation mortgagor
extends up to the loan value of their mortgaged
property and not to the entire loan itself. Should
there be any deficiency, the creditor has
recourse on the principal debtor, not against
accommodation mortgage. (Rabuya, 2017)
NOTE: Accommodation is also applicable to
pledge since the law provides that “third parties
who are not parties to the principal obligation
may secure the latter by pledging or mortgaging
their own property.” (NCC, Art. 2085) It is also
applicable to antichresis since Art. 2139 of the
New Civil Code states that the last paragraph of
Art. 2085 shall be applicable to a contract of
antichresis.
PACTUM COMMISSORIUM
(1999, 2001, 2004, 2009 BAR)
Pactum commissorium is a stipulation whereby
the thing pledged or mortgaged or subject of
antichresis shall automatically become the
property of the creditor in the event of non-
payment of the debt within the term fixed. Such
stipulation is null and void. (NCC, Art. 2085)
Elements of pactum commissorium
1. There is a pledge, mortgage or antichresis of
a property by way of security; and
2. There is an express stipulation for the
automatic appropriation by the creditor of
the property in case of non- payment.
NOTE: What are prohibited are those
stipulations executed or made simultaneously
with the original contract, and not those
subsequently entered into.
643
Pactum Commissorium when allowed
The law on pledge allows an exception to the
prohibition against pactum commissorium.
Under Article 2112, If at the first auction, the
thing is not sold, there will be another setting for
the second auction following the same
formalities. If there is still no sale effected, the
pledgee is now allowed to appropriate the thing
pledge. The act of appropriation ipso jure
transfers ownership of the thing to the pledgee.
(Pineda)
This is not against the law, since what the law
prohibits is only the acquisition by the creditor
of the property mortgaged after non-payment of
debt, and the above stated article simply
authorizes him to sell it with the aforesaid
conditions, which authorization is inherent in
the ownership and not against morals and public
order. (Paras)
Q: ABC loaned to MNO P40,000 for which the
latter pledged 400 shares of stock in XYZ Inc.
It was agreed that if the pledgor failed to pay
the loan with 10% yearly interest within four
years, the pledgee is authorized to foreclose
on the shares of stock. As required, MNO
delivered possession of the shares to ABC
with the understanding that the shares
would be returned to MNO upon the payment
of the loan. However, the loan was not paid
on time. A month after 4 years, may the
shares of stock pledged be deemed owned by
ABC or not? Reason. (2004 BBAR)
A: The shares of stock cannot be deemed owned
by ABC upon default of MNO. They have to be
foreclosed. Under Article 2088, NCC, the creditor
cannot appropriate the things given by way of
pledge. And even if the parties have stipulated
that
ABC becomes the owner of the shares in case
MNO defaults on the loan, such stipulation is
void for being a pactum commissorium.
Q: X borrowed money from Y and gave a
piece of land as security by way of mortgage.
It was expressly agreed between the parties
in the mortgage contract that upon
nonpayment of the debt on time by X, the
mortgaged land would already belong to Y. If
X defaulted in paying, would Y now become
the owner of the mortgaged land? Why?
 Special Contracts – Credit Transactions
A: NO, Y would not become the owner of the
If the property
land. The stipulation is in the nature of Pactum If the
is sold, the
commissorium which is prohibited by law. The property is
debtor is not
property should be sold at public auction and the foreclosed,
Excess entitled to the
proceeds thereof applied to the indebtedness. the excess
excess unless
Any excess shall be given to the mortgagor. goes to the
otherwise
debtor.
agreed.
Q: Suppose in the preceding question, the
agreement between X and Y was that if X The
failed to pay the mortgage debt on time, the creditor is
debt shall be paid with the land mortgaged entitled to
by X to Y. Would your answer be the same as recover the
The creditor is deficiency
in the preceding question? Explain. (1999 not entitled to from the
BAR) recover the debtor
Recovery of
deficiency except if
the
A: NO, the answer would not be the same. This is notwithstandin the chattel
deficiency
a valid stipulation and does not constitute g any mortgage is
pactum commissorium. In pactum commissorium, stipulation to a security
the acquisition is automatic without need of any the contrary. for the
further action. In the instant problem another purchase of
act is required to be performed, namely, the property in
conveyance of the property as payment (dacion installment
en pago). s.
Possession Possession
PLEDGE Possession remains with is vested in
the creditor. the debtor.
Pledge is a contract whereby the debtor delivers
Formal
to a creditor or third person a movable or Contract Real contact
contract
document evidencing incorporeal right for the
purpose of securing fulfillment of a principal Must be in a
obligation with the understanding that when the public
obligation is fulfilled, the thing delivered shall be Must be
instrument
returned with all its fruits and accessions, recorded in
containing
a public
Registratio description of
Pledge vs. Chattel Mortgage instrument
n the thing
to bind
pledged and
BASIS PLEDGE CHATTEL third
the date
persons.
MORTGAGE thereof to bind
third persons.
Delivery is
Delivery is
Delivery not Not valid
necessary.
necessary. against
Not valid
third
unless a
Procedure persons
Validity description of
for the sale unless
against the thing and
of the thing registered
third the date of
given as (although
Governing persons pledge appear
NCC, Art. 2112 security is binding
Law in a public
governed between
instrument
by Act No. the
1508, Sec. parties).
14.

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2021 GOLDEN NOTES
 Civil Law
Pledge vs. Real Estate Mortgage NOTE: A promise to constitute a pledge or
mortgage, if accepted, gives rise only to a
personal right binding upon the parties and
BASIS PLEDGE REAL
creates no real right in the property. (NCC, Art.
ESTATE
2092)
MORTGAGE
Real contract Consensual
Contract What exists is only a right of action to compel
contract
the fulfillment of the promise but there is no
Subject Subject
pledge yet.
Kind of matter is matter is
Property personal real
Characteristics
property. property.
Property Not
1. Real Contract – It is perfected by delivery of
delivered to necessary
the thing pledged;
Delivery pledgee or by 2. Accessory Contract – it has no independent
consent to a
existence of its own; cannot exist without a
third person. valid contract;
Possession of Possession 3. Unilateral Contract – The obligation is solely
the thing of the on the part of the creditor to return the thing
Possession of
pledged is thing pledged upon fulfillment of obligation;
thing
vested in the mortgaged 4. Subsidiary Contract – The obligation
pledged or
creditor. remains incurred does not arise until the fulfillment
mortgaged
with the of the principal obligation.
debtor.
Pledgee has Mortgagee Kinds of pledge
the right to does not
receive the possess 1. Conventional - By agreement of parties;
fruits of the such right. 2. Legal - By operation of law. (NCC, Arts. 546,
thing 612, 1731, 1914 & 2004)
pledged, with
Right to the obligation NOTE: A thing lawfully pledged to one creditor,
receive the of applying cannot be pledged to another as long as the first
fruits the same to pledge subsists. (Mission de San Vicente v. Reyes,
the interest G.R. No. 5508, August 14, 1911)
of the debt, if
owing, and Requisites of a contract of pledge (1991,
the balance, if 1994, 1996, 1999, 2001 BAR)
any, to the
principal. 1. Constituted to secure the fulfillment of a
Pledgor can Mortgagor principal obligation (NCC, Art. 2085);
sell the thing can sell the 2. Pledgor is the absolute owner of the thing
pledgedonly property pledged; (NCC, Art. 2085);
with the mortgaged 3. Persons constituting the pledge have the
Authority to consent of even free disposal of their property, and in the
sell the pledgee. without absence thereof, that they be legally
the authorized for the purpose (NCC, Art. 2085);
consent of and
the 4. That the thing pledged be placed in the
mortgagee. possession of the creditor, or of a third
person by common agreement. (NCC, Art.
Nature of pledge 2093)

It is a real contract which are not perfected until NOTE: If Art. 2093 is not complied with, the
delivery of the object of the obligation. (NCC, Art. pledge is void.
1316)
Continuous possession is required in pledge

645
 Special Contracts – Credit Transactions
The mere taking of the property is not enough in
pledge. There must be continuous possession of
the thing. However, the pledgee is allowed to
temporarily entrust the physical possession of
the thing pledged to the pledgor without
invalidating the contract. But here, the pledgor
would be in possession as a mere trustee and his
possession is subject to the order of the pledgee.
When possession or delivery of the thing
pledged was not made
An agreement to constitute a pledge only gives
rise to a personal action between the contracting
parties. Unless the movable given as a security
by way of pledge be delivered to and placed in
the possession of the creditor or of a third
person designated by common agreement, the
creditor acquires no right to the property
because pledge is merely a lien and possession is
indispensable to the right of a lien.
When the pledge fails to take the property
pledged into his possession
If a pledgee fails or neglects to take the property
pledged into his possession, he is presumed to
have waived the right granted him by the
contract. (U.S. v. Terrel, G.R. No. 1227, May 13,
1903)
Pledge must be embodied in a public
instrument to affect third persons
The requisite in Art. 2096 that the pledge must
be in a public instrument does not affect its
validity. It is still valid between the parties, but it
will not bind third person if the said provision is
not complied with. It is still valid between the
parties, but it will not bind third person if the
said provision is not complied with.
Requisites to bind third persons in a contract
of pledge
The following must appear in the public
instrument in order to affect third persons:
1. A description of the thing pledged; and
2. Statement of date when the pledge was
executed. (NCC, Art. 2096)
Effect if no public instrument is made
When the contract of pledge is not recorded in a
public instrument, it is void as against third
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
person; the buyer of the thing pledged is a third
person within the meaning of this article.
Q: Juniat, et al. executed a Chattel Mortgage
over several motorized sewing machines and
other equipment in favor of Union Bank to
secure its obligation but the loan remains
unpaid so the bank filed before the RTC the
issuance of writs of preliminary attachment
and replevin. Nonwoven, the possessor of the
mortgaged properties, contends that the
unnotarized Chattel Mortgage executed has
no binding effect on it and it has a better title
over the properties because these were
assigned/pledged by Juniat pursuant to their
Agreement. Thereafter, Union Bank sold the
mortgaged properties. Both the Chattel
Mortgage in favor of Union Bank and the
Agreement in favor of Nonwoven were not
notarized. Can Nonwoven claim that it has the
better right over the proceeds of the sale of
the subject properties?
A: NO. Nonwoven is not entitled to the proceeds
of the sale of the attached properties because it
failed to show that it has a better title over the
same. Under Article 2096 of the Civil Code, a
pledge shall not take effect against third persons
if a description of the thing pledged and the date
of the pledge do not appear in a public
instrument. Hence, just like the chattel mortgage
executed in favor of Union Bank, the pledge
executed by Juniat in favor of Nonwoven cannot
bind Union Bank. However, since the Chattel
Mortgage in favor of Union Bank was executed
earlier, it has a better right over the motorized
sewing machines and equipment under the
doctrine of "first in time, stronger in right" (prius
tempore, potior jure). (Union Bank of the
Philippines v. Alain, G.R. No. 171569, August 1,
2011)
Effect of undated instrument of pledge
An undated instrument of pledge cannot ripen
into a valid pledge. (Betita v. Ganzon, G.R. No. L-
24137, March 29, 1926)
Constructive or symbolic delivery in a
contract of pledge
GR: Constructive or symbolic delivery of the
thing is not sufficient to constitute pledge.
XPN: If the pledge consists of goods stored in a
warehouse for purposes, of showing the
646
 Civil Law
pledgee’s control over the goods, the delivery to
him of the keys to the warehouse is sufficient
delivery of possession (constructive or symbolic
delivery).
The type of delivery will depend upon the nature
and peculiar circumstances of each case.
(Yuliongsiu v. PNB, G.R. No. L- 19227, February
17, 1968)
Pledge of incorporeal rights
Incorporeal rights evidenced by proper
document can be pledged. It is, however,
required that the actual instrument be delivered
to the pledgee. More, if the instrument is a
negotiable document, it must be endorsed. (NCC,
Art. 2095)
A pledge certificate by itself is not a negotiable
instrument, and therefore even if delivered and
endorsed to an assignee, he would have no right
to redeem the property, unless the creditor-
pledgee consents.
Q: Pablo owns a tractor which he left with his
son Mike for safekeeping. Mike then offered
the said tractor to Calibo as security for the
payment of his debt. When Pablo came back
and learned that the tractor was in the
custody of Calibo, he demanded its return.
Calibo, however, refused. Calibo alleged that
the tractor was pledged to him, and in the
alternative, the tractor was left with him in
the concept of deposit and he may validly
hold on to it until Mike pays his obligation. Is
Calibo correct?
A: NO. There is no valid pledge because Mike is
not the absolute owner of the property pledged.
He who is not the owner or proprietor of the
property pledged or mortgaged to guarantee the
fulfillment of a principal obligation, cannot
legally constitute such a guaranty as may validly
bind the property in favor of his creditor, and the
pledgee or mortgagee in such a case acquires no
right whatsoever in the property pledged or
mortgaged. There is likewise no valid deposit, in
this case, where the principal purpose for
receiving the object is not safekeeping. (Calibo Jr.
v. CA, G.R. No. 120528, January 29, 2001)
Right of an owner of personal property
pledged without authority
An owner of personal property pledged without
647
authority may invoke Art. 559 of the New Civil
Code. The defense that pawnshop owner
acquired ownership of the thing in good faith is
not available.
Art. 559 reads:
“The possession of movable property acquired in
good faith is equivalent to a title. Nevertheless,
one who has lost any movable or has been
unlawfully deprived thereof, may recover it from
the person in possession of the same.
If the possessor of a movable lost or of which the
owner has been unlawfully deprived, has acquired
it in good faith at a public sale, the owner cannot
obtain its return without reimbursing the price
paid therefore”
NOTE: A pledge or mortgage executed by one
who is not the owner of the property pledged or
mortgaged is without legal existence and
registration cannot validate it. (Philippine
National Bank v. Rocha G.R. No. L-32260,
December 29, 1930)
When two or more things are pledged
When two or more things are pledged, the
pledgee may choose which he will cause to be
sold, unless there is a stipulation to the contrary.
(NCC, first sentence, Art. 2119)
The restriction on the right of the pledgee under
the 1st sentence of Art. 2119 is that he may only
demand the sale of only as many of the things as
are necessary for the payment of the debt. (NCC,
second sentence, Art. 2119)
Prohibition on double pledge
A property already pledged cannot be pledged
again while the first pledge is still subsisting.
(Mission de San Vicente v. Reyes, G.R. No. L-5508,
August 14, 1911)
NOTE: A property which has been lawfully
pledge to a creditor cannot be pledge to another
so long as the first one subsists, because the
thing pledged cannot be delivered to the second
creditor since it will remain in the possession of
the first creditor.
Q: Donna pledged a set of diamond ring and
earrings to Jane for P200,000.00 She was
made to sign an agreement that if she cannot
 Special Contracts – Credit Transactions
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
P300,000.00.
a. Was the agreement which Donna signed
with Jane valid? Explain with legal basis.
b. Can Donna redeem the jewelry set from
Juana by paying the amount she owed
Jane to Juana? Explain with legal basis.
c. Give an example of a pledge created by
operation of law.
A:
a. NO. To appropriate the jewelry upon default
of Donna is considered Pactum
commissorium and it is considered void by
law. (NCC, Art. 2088)
b. NO, Donna cannot redeem it from Juana
because the pledge contract is between her
and Jane. Juana is not a party to the pledge
contract. (NCC, Art. 1311)
c. One example of a pledge created by
operation of law is the right of the
depositary to retain the thing deposited
until the depositor shall have paid him
whatever may be due to the depositary by
reason of the deposit. Another is the right of
the agent to retain the thing which is the
object of the agency until the principal
reimburses him the expenses incurred in the
execution of the agency. (NCC, Art. 1914)
RIGHTS AND OBLIGATIONS OF PLEDGOR AND
PLEDGEE
Parties in a contract of pledge
1. Pledgor – The debtor; the one who delivers
the thing pledged to the creditor; and
2. Pledgee – The creditor; the one who receives
the thing pledged.
Rights of a pledgee
1. To retain the thing until debt is paid (NCC,
Art. 2098);
2. To possess the thing (NCC, Art. 2098);
3. To be reimbursed for the expenses made for
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the preservation of the thing pledged (NCC,
Art. 2099);
4. To apply fruits, interests, or earnings of the
pledge to the interest, if any then to the
principal of the credit [NCC, Art. 2102(2)];
5. To bring any action pertaining to the
pledgor in order to recover it from or defend
it against a third person (legal subrogation)
(NCC, Art. 2103);
6. To sell at public auction in case of reasonable
grounds to fear destruction or impairment of
the thing without his fault (NCC, Art. 2108);
7. Option to demand replacement or
immediate payment of debt in case of
deception as to substance and quality (NCC,
Art. 2109);
8. To appropriate the thing in case of failure of
second public auction (NCC, Art. 2112);
(2009 BAR)
NOTE: This is an exception to Pactum
commissorium.
9. To bid at public auction, unless he is only the
bidder (NCC, Art. 2113);
10. To collect and receive amount due on credit
pledged (NCC, Art. 2118);
11. To choose which of several things pledged
will be sold (NCC, Art. 2119);
12. To retain excess value in the public sale;
13. To retain thing until after full payment of the
debt; and
14. To object the alienation of the thing.
NOTE: The pledgee cannot deposit the thing
pledged with a third person unless there is a
stipulation authorizing him to do so. If deposit
with a third person is allowed, the pledgee is
liable for the loss if he deposited the thing with a
person who is manifestly careless or unfit. The
pledgee is also responsible for the acts of his
agents or employees with respect to the thing
pledged. (Rabuya, 2017)
Obligations of a pledgee
1. Take care of the thing pledged with the
diligence of a good father of a family (NCC,
Art. 2099);
NOTE: The pledgee is liable for the loss or
deterioration of the thing by reason of
fraud, negligence, delay, or violation of the
terms of the contract.
GR: The pledgee cannot deposit the thing
648
 Civil Law
pledged to a third person.
XPN: Unless there is stipulation to the
contract. (NCC, Art. 2100)
NOTE: Pledgee is liable for the loss or
deterioration of the thing pledged caused
by the acts or negligence of the agents or
employees of the pledgee.
2. Apply the fruits, income, dividends, or
interests produced or earned by the
property, to interests or expenses first, then
to the principal (NCC, Art. 2102);
GR: Cannot use the thing pledged without
authority (NCC, Art. 2104);
XPNs:
a. If the pledgor had given him authority
or permission to use it; or
b. If the use of the thing is necessary for
its preservation but only for that
purpose
c. To advise pledgor of the result of the
public auction (NCC, Art. 2116);
d. Return the thing pledged upon
payment of debt; and
e. Advise pledgor of danger to the thing.
When the thing pledged is expropriated by
the State
The debtor is no longer the owner of the thing in
case the same is expropriated by the State as
ownership is transferred to the expropriating
authority. The price paid for the expropriated
property shall be applied to the payment of the
principal obligation, the interests and other
expenses due to the pledgee. If there is any
excess, the same shall be delivered to the
pledgor.
Legal Subrogation – The pledgee is under the
obligation to protect the thing pledge thus the
pledgee may bring actions pertaining to the
owner of the thing pledged in order to recover it
from, or defend it against a third person. (NCC,
Art. 2103)
Return of the pledge, when demandable
GR: A debtor cannot ask for the return of the
649
thing pledged against the will of the creditor.
(NCC, Art. 2105)
XPNs:
1. If the debtor has paid the debt and its
interest, with expenses in a proper case
(NCC, Art. 2105); and
2. If there are reasonable grounds to fear the
destruction or impairment of the thing
pledged, without the fault of the pledgee, the
pledgor may demand the return of the thing,
upon offering another thing in pledge,
provided the latter is of the same kind as the
former and not of inferior quality, and
without prejudice to the right of the pledgee
under the provisions of the following article.
The pledgee is bound to advise the pledgor,
without delay, of any danger to the thing
pledged. (NCC, Art. 2107)
NOTE: If the obligation is with a term, there can
be no demand of the property until after the
term had arrived. The prescriptive period for the
recovery of the property begins from the time the
debt is extinguished by payment and demand for
return of the property is made. (Sarmiento v.
Javellana, G.R. No. L-18500, October 2, 1922)
When the pledgee may cause the sale of the
thing even if the obligation is not yet due
If, without the fault of the pledgee, there is a
danger of destruction, impairment, or
diminution in value of the thing pledged, he may
cause the same to be sold at public auction. The
proceeds of the auction shall be security for the
principal obligation in the same manner as the
thing originally pledged. (NCC, Art. 2108)
NOTE: The sale contemplated in this article is a
“public sale”
Rights of the creditor who is deceived on the
substance or quality of the thing pledged
1. To demand:
2. From the pledgor an acceptable substitute of
the thing; or
3. The immediate payment of the principal
obligation. (NCC, Art. 2109)
NOTE: The remedies are alternative and not
cumulative. Only one may be chosen. The law
 Special Contracts – Credit Transactions
used the conjunctive “or”. Either one is more
convenient than annulment.
Return of the thing pledged
The return of the thing pledged to the pledgor by
the pledgee shall extinguish the pledge. Any
stipulation to the contrary shall be void. (NCC,
Art. 2110)
Presumption of return to the pledgor/owner
by the pledgee
There is a prima facie presumption that the thing
pledged has been returned by the pledgee to the
pledgor or owner, in any of the following
circumstances:
1. If the thing is found in the possession of the
pledgor or owner after the pledge had been
perfected; or
2. If the thing is found in the possession of a
third person who received it from the
pledgor or owner after the perfection of the
pledge. [NCC, Art. 2110(2)]
NOTE: It is presumed that the accessory
obligation of pledge has been remitted when the
thing pledged, after its delivery to the creditor, is
found in the possession of the debtor, or of a
third person who owns the thing. (NCC, Art.
1274)
Renunciation of the pledge by the pledgee
The renunciation or abandonment of the pledge
by the pledgee requires a statement in writing to
that effect. (NCC, first sentence, Art. 2111)
An oral waiver is not sufficient. But if the pledgee
orally renounces the pledge, and return the thing
pledged to the pledgor, the pledge is thereby
extinguished not because of Article 2111, but
because of Article 2110, first paragraph.
NOTE: The renunciation of the pledge is not
contrary to law, public order, public policy,
morals or good customs. Further, Art. 1356 of
the NCC, which speaks of the form of contracts,
must be complied with.
Necessity of acceptance in renunciation
Acceptance or return of the thing is not
necessary for the validity of the renunciation
under Art. 2111 of the NCC. It is not a case of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
donation where acceptance is necessary to make
the donation valid.
Necessity of return in extinguishment of
pledge
Even if the thing was not returned, as long as
there is an effective renunciation, abandonment
or waiver, the pledge is already extinguished
even if the thing is not returned. The pledgor will
be considered as a depositor and the pledgee
shall become a depositary of the thing.
Accordingly, the law on deposit will apply.
Q: Santos made time deposits with OBM. IRC,
through its president Santos, applied for a
loan with PNB. To secure the loan, Santos
executed a Deed of Assignment of the time
deposits in favor of PNB. When PNB tried to
collect from OBM, the latter did not pay the
CTDs. PNB then demanded payment from
Santos and IRC, but the latter refused
payment alleging that the obligation was
deemed paid with the irrevocable
assignment of the CTDs.
a. Is the liability of IRC deemed paid by
virtue of the deed of assignment?
b. Is OBM liable for damages?
A:
a. NO. For all intents and purposes, the deed of
assignment in this case is actually a pledge.
Where a CTD in a bank, payable at a future
time, was handed over by a debtor to his
creditor, it was not payment, unless there
was an express agreement on the part of the
creditor to receive it as such.
b. YES. While it is true that no interest shall be
due unless it has been expressly stipulated
in writing, this applies only to interest for
the use of money. It does not comprehend
interest paid as damages. Santos has the
right to recover damages resulting from the
default of OBM and the measure of such
damages is interest at the legal rate of 6%
per annum on the amounts due and unpaid
at the expiration of the periods respectively
provided in the contracts. (Integrated Realty
Corp. v. PNB, G.R. No. 60705, June 28, 1989)
Rights of the pledgor
1. Right to dispose the thing pledged, provided
650
 Civil Law
there is consent of the pledgee (NCC, Art.
2097);
NOTE: The pledge, however, shall continue
in possession.
2. Right to ask that the thing pledged be
deposited in one of the following instances:
a. If the creditor uses the thing without
authority (NCC, Art. 2104);
b. Misuses the thing, he may deposit the
thing judicially or extrajudicially (NCC,
Art. 2104); or
c. If the thing is in danger of being lost or
impaired because of negligence or willful
act of the pledge, he may deposit the
thing with a third person. (NCC, Art.
2106)
3. Right to demand the return of the thing
pledged in case of reasonable grounds to fear
destruction or impairment of the thing
without the pledgee’s fault, subject to the
duty of replacement (NCC, Art. 2107);
Requisites for the application of Art. 2107
1. The pledgor has reasonable grounds to fear
the destruction or impairment of the thing
pledged;
2. There is no fault on the part of the pledgee;
3. The pledgee is offering in place of the thing,
another thing in pledge which is of the same
kind and quality as the former; and
4. The pledgee does not choose to exercise his
right to cause the thing pledged to be sold at
public auction.
5. To bid and be preferred at the public
auction. (NCC, Art. 2113)
Obligations of pledgor
1. To advise the pledge of the flaws of the thing
(NCC, Arts. 2101 and 1951);
2. Not to demand the return of the thing until
after full payment of the debt, including
interest due thereon and expenses incurred
for its preservation. (NCC, Art. 2105)
NOTE: Pledgor may be allowed to substitute the
thing pledged which is in danger of destruction
or impairment with another thing of the same
kind and quality, subject to provisions of NCC,
651
Art. 2107.
FORECLOSURE OF THE THING PLEDGED
Foreclosure of the thing pledged
A pledgee can foreclose the thing pledged when
there is no payment of the debt on time, the
object of the pledge may be alienated for the
purpose of satisfying the claims of the pledgee.
XPNS:
1. If a credit which has been pledged becomes
due before it is redeemed, the pledgee may
collect and receive the amount due. He shall
apply the same to the payment of his claim,
and deliver the surplus, should there be any,
to the pledgor (NCC, Art. 2118); or
2. In Yau Chu v CA, the collateral was money or
an exchange of “peso for peso.” In such case,
all that has to be done to convert the
pledgor’s time deposit certificates into cash
is to present them to the bank for
encashment after due notice to the debtor.
(Rabuya, 2017)
Right of the pledge or mortgagor to foreclose
If the debtor failed to pay on maturity date, the
thing pledged or mortgaged may be sold at
public auction as provided by law so that the
proceeds may be used for payment of the
obligation.
Options of an unpaid creditor
1. Foreclose the thing pledged; or
2. Abandon the pledge and file a claim for
collection. (NCC, Art. 2087)
Procedure for the public sale of a thing
pledged
1. The obligation must be due and unpaid;
2. The sale of the thing pledged must be at
public auction;
3. There must be notice to the pledgor and
owner, stating the amount for which the sale
is to be held; and
4. The sale must be conducted by Notary
Public. (De Leon, 2013)
Who can bid in a public auction
 Special Contracts – Credit Transactions
The following can bid in the public auction:
1. The public;
2. Pledgor/owner/debtor – They shall be
preferred if same terms as the highest
bidder is offered; and
3. Pledgee/creditor – He must not be the only
bidder, otherwise, his bid is invalid and void.
Nature of the bids at the public auction
All bids at the public auction shall offer to pay the
purchase price at once. If any other bid is
accepted, the pledgee is deemed to have been
received the purchase price, as far as the pledgor
or owner is concerned. (NCC, Art. 2114)
The bids must be for CASH for the said bids
“shall offer to pay the purchase price at once”.
Checks cannot be accepted as payment for the
purchase price because they are not legal
tenders. They produce the effect of payment
ONLY after they have been encashed.
Third person paying pledgor’s debt
Any third person who has any right in or to the
thing pledged may satisfy the principal
obligation as soon as the latter becomes due and
demandable. (NCC, Art. 2117)
Effect of sale of the thing pledged
1. It extinguishes the principal obligation;
NOTE: The extinction is automatic
regardless of whether or not the proceeds
realized from the public auction sale are
more or less than the amounts of the
principal obligation and other incidental
expenses.
2. If the price of the sale is more than the
amount of the debt, the excess will go the
pledgee; and
NOTE: This is to compensate him for the
eventuality where the purchase price is
lesser than the amount of the debt, wherein
he cannot retrieve any deficiency unless
there is a contrary agreement.
3. If the price of the sale is less than the
amount of the debt, the pledgee is not
entitled to recover the deficiency in all cases
even if there is a stipulation to that effect.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
(NCC, Art. 2115)
NOTE: By electing to sell the thing pledged
instead of suing on the principal obligation,
the creditor waives any other remedy and
must abide by the results of the sale.
Effect when the thing pledged was not sold at
the first public auction
When the property was not sold at the first
auction (such as when there are no participating
bidders), there will be another setting for the
second auction following the same formalities.
If no sale was effected in the second public
auction, the pledge is allowed to appropriate the
thing pledged.
NOTE: This is an exception to the prohibition
against Pactum commissorium.
Deed of acquittance
A deed of acquittance is a document of the
release or discharge of the pledgor from the
entire obligation including interests and
expenses. This shall be executed by the pledgee
after appropriating the thing in case a no sale
was made in a second auction.
Application of the proceeds of the sale
The pledgee may collect and receive the amount
due when what has been pledged is a “credit.”
He shall apply the same to the payment of his
claim, and deliver the surplus, should there be
any, to the pledgor. (NCC, Art. 2118)
Extinguishment of pledge
1. The same cause of extinguishment of all
other obligation;
2. If the thing pledged is returned by the
pledgee to the pledgor or owner, the pledge
is extinguished (NCC, Art. 2110);
NOTE: If subsequent to the perfection of the
pledge, the thing is in the possession of the
pledgor or owner, there is a prima facie
presumption that the same has been
returned by the pledgee. This same
presumption exists if the thing pledged is in
the possession of a third person who has
received it from the pledgor or owner after
652
 Civil Law
the constitution of the pledge (NCC, Art. into the hotel, until his hotel bills had been
2110, par. 2); paid.

3. A statement in writing by the pledgee that
he renounces or abandons the pledge (NCC,
Art. 2111);
NOTE: Renunciation or the abandonment
must be in writing. An oral waiver is not
sufficient. But if the pledgee orally
renounces the pledge, and returns the thing
pledged to the pledgor, the pledge is thereby
extinguished, not because of Art. 2111 but
because of Art. 2110, first paragraph. (Paras,
2008) The renunciation of the principal debt
shall extinguish the accessory obligations
but the waiver of the latter shall leave the
former in force. (NCC, Art. 1273)
Sale of the thing pledged in legal pledge
A thing under a pledge by operation of law may
be sold only after demand of the amount for
which the thing is retained. The public auction
shall take place within one month after such
demand.
NOTE: If, without just grounds, the creditor does
not cause the public sale to be held within such
period, the debtor may require the return of the
thing. (NCC, Art. 2122)
The remainder of the price of sale shall be
delivered to the obligor. (NCC, Art. 2121)

4. Payment of the debt; or Loan distinguished from credit, discount,

rent, barter and deposit
5. Sale of thing pledge at public auction (NCC,
Art. 2112); or CREDIT LOAN
Ability to borrow
6. Appropriation of the thing in case of failure money by virtue of
of second public auction. (NCC, Art. 2112) the confidence
reposed by the
Delivery by one
PLEDGE BY OPERATION OF LAW lender unto him that
party and the
he will pay what he
receipt by the other
Legal pledge has promised.
party of a given sum
of money, upon an
Pledge by operation of law or legal pledges are The concession of
agreement,
those constituted or created by operation of law. “credit” necessarily
expressed or
In this case, the right of retention exists. involves the granting
implied, to repay
of “loans” up to the
the sum loaned,
Instances of legal pledges where there is time limit of the
with or without
right of retention amount fixed in the
interest.
“credit.” (People v.
1. Art. 546 – Right of the possessor in good Concepcion, G.R. No.
faith to retain the thing until refunded of L- 18535, August 15,
necessary expenses; 1922)
2. Art. 1707 – Lien on the goods manufactured DISCOUNT LOAN
or work done by a laborer until his wages Interest is taken at
Interest is deducted
had been paid; the expiration of a
in advance.
3. Art. 1731 – Right to retain of a worker who credit.
executed work upon a movable until he is Always on double- Generally, on a
paid; name paper. single- name paper.
4. Art. 1914 – Right of an agent to retain the RENT LOAN
thing subject of the agency until reimbursed The owner of
of his advances and damages (NCC, Arts. property does not
The thing loaned
1912 and 1913); lose the ownership;
becomes the
5. Art. 1994 – Right of retention of a depositary he loses his control
property of the
until full payment of what is due him by over the property
obligor.
reason of the deposit; and rented during the
6. Art. 2004 – Right of the hotel-keeper to period of contract.
retain things of the guest which are brought

653
 Special Contracts – Credit Transactions

Landlord-tenant Obligor-obligee for a certain time and thereafter return the

relationship. relationship. identical thing.
BARTER LOAN Elements of commodatum
Subject matter is
Subject matter are
money or other 1. There must be a bailor and bailee;
non- fungible things.
fungible things. 2. The bailee acquires the use of the thing; and
May be gratuitous 3. It must be gratuitous.
Always onerous.
or onerous.
There is a mutual In mutuum, there is Purpose: It must be the temporary use of the
sale resulting in the transfer of thing loaned. If the bailee is not entitled to the use
transfer of ownership ownership, there is of the property, the contract may be a deposit.
on both sides. no sale. (NCC, Art. 1962)
In commodatum,
The parties do not
the bailee returns Subject matter of the contract of
return the things
the thing after the commodatum
subject of the
expiration of the
exchange.
period agreed upon. 1. Non-consumable;
DEPOSIT LOAN 2. Consumable – only if the purpose is merely
Safekeeping of the for exhibition;
thing deposited. 3. Movable; or
Lender grants the
Generally, the 4. Immovable. (NCC, Arts. 1936 & 1937)
borrower the use of
depositary cannot
the thing learned.
use the thing Note: In Producers Bank of the Philippines vs. CA,
deposited. the loan involving money was classified as
Lender cannot commodatum instead of mutuum because the
Depositor can demand the thing lender agreed to deposit his money in the
demand the return of loaned at will but savings account of the borrower especially for
the thing deposited at must await for the the purpose of making it appear that the latter
will. expiration of the had sufficient capitalization for incorporation,
period stipulated. with the promise that the amount shall not be
Compensation not removed and shall be returned within a specific
applicable to things period. (Rabuya, 2017)
Compensation of
deposited. (except by
credits applicable.
mutual agreement). Kinds of commodatum
(Paras, 2008)
Both movable and Only money and 1. Ordinary commodatum – The bailor cannot
immovable property any other fungible just demand the return of the thing at will,
may be the object. thing. but only after the period agreed upon by the
Relationship is one parties.
Relationship is one of
of lender and
depositor and 2. Precarium – One whereby the bailor may
borrower; or
depositary. demand the thing loaned at will:
creditor and debtor.

COMMODATUM a. If the duration of the contract had not

been stipulated;
b. If the use to which the thing loaned
Art. 1935. The bailee in commodatum
should be devoted had not been
acquires the use of the thing loaned but not
stipulated; or
its fruits; if any compensation is to be paid
c. If the use of the thing is merely by
by him who acquires the use, the contract
tolerance of the owner. (NCC, Art. 1947)
ceases to be a commodatum.
NOTE: An essential feature of
It is a contract where one of the parties (bailor) commondatum is that it is gratuitous, while
delivers to another (bailee) something not another feature is that the use of the thing
consumable so that the latter may use the same belonging to another is for a certain period.

UNIVERSITY OF SANTO TOMAS 654

2021 GOLDEN NOTES
 Civil Law
If the use of the thing is merely tolerated by
the bailor, he can demand the return of the
thing at will, in which case the contractual
relation is called precarium, which is a kind
of commodatum. (Pajuyo v. Court of Appeals,
GR No. 146364, June 3,2004)
3.
NOTE: The word “owner” in Art. 1947(2) is not
proper because the bailor need not be the owner
of the thing. (Pineda, 2006; NCC, Art. 1938)
same residence including the household
helpers.
XPN to the XPN: Contrary stipulation; or
when the nature of the thing forbids such use.
As to right of retention
GR: The bailee cannot exercise the right of
retention against the bailor. (NCC, Art. 1944)

Reason of the law: The contract
commodatum does not transfer ownership.
Characteristics of a contract of commodatum
1. Real contract – The delivery of the thing
loaned is necessary for the perfection of the
contract;
2. Unilateral contract – once subject matter is
delivered, it creates obligations on the part
of only one of the parties (the borrower);
3. Essentially gratuitous; otherwise, it is a
contract of lease;
4. Principal contract;
5. Informal contract;
6. Nominate contract; and
7. Purely personal contract.
of XPN: However, he can exercise the right of
retention on the account of damages suffered
by the bailee because of flaws that the bailor
knew of but did not disclose to the bailee.
(NCC, Art. 1944; Art. 1951)
Use of fruits of the property by the bailee
GR: The bailee in commodatum acquires only the
use of the thing loaned but not its fruits. (NCC,
Art. 1935)
XPN: A stipulation that the bailee may make use
of the fruits of the thing loaned is valid, provided
that the enjoyment of the fruits must only be
incidental to the use of the thing itself. (NCC, Art.
1940)

Consequence of purely personal character of The stipulation that the bailee may make use of
commodatum (2006, 2007 BAR) the fruits of the thing loaned will not impair the
essence of commodatum because the actual
1. As to death of a party cause or consideration therefore is still the
liberality of the bailor or lender.
GR: Commodatum is purely personal in
character hence death of either bailor or bailee Commodatum v. Contract of Lease
extinguishes the contract. (NCC, Art. 1939)
COMMODATUM LEASE
XPN: By stipulation, the commodatum is Real Contract Consensual
transmitted to the heirs of either or both Object is a non- Object may even be
parties. consumable and non- work or service
fungible thing
2. As to Lease of the thing subject of Essentially gratuitous Onerous
commodatum If the bailor is not Provisions governing
aware of the flaws, he warranty are made
GR: The bailee can neither lend nor lease the is not liable for the applicable.
object of the contract to a third person. (NCC, resulting danger
Art. 1939) caused by such.

XPN: Members of the bailee’s household may Parties to a commodatum

make use of the thing loaned because
members of the bailee’s household are not
considered as third persons.
NOTE: Household members are those
permanently living or residing within the
1. Bailor/Comodatario/Commodans – The
giver/ lender – the party who delivers the
possession or custody of the thing bailed;
and

655
 Special Contracts – Credit Transactions
2. Bailee/Comodante/Commodatarius – The
recipient/ borrower; the party who receives
the possession or custody of the thing thus
delivered.
Note: The bailor need not be the owner of the
thing since the contract of commodatum does
not transfer ownership. (Pineda, 2006, NCC, Art.
1938)
Liability when there are two or more bailees
When there are two or more bailees to whom a
thing is loaned in the same contract, they are
liable solidarily. (NCC, Art. 1945) Their liability is
solidary in order to protect the bailor’s rights
over the thing loaned. The law presumes that the
bailor takes into account the personal integrity
and responsibility of all the bailees, therefore, he
could not have constituted commodatum if there
was only one bailee.
Q: Following the principle of autonomy of
contracts, may the parties to a contract of
commodatum validly stipulate that the
liability of the bailees shall be joint?
A: NO. Article 1245 of the New Civil Code
expressly provides that in a contract of
commodatum, when there are two or more
bailees to whom a thing is loaned in the same
contract, they are liable solidarily. It constitutes
as an exception to the general rule of “joint
obligations” where there are two or more
debtors, who concur in one and same obligation
under Articles 1207 and 1208. Solidarity is
provided to safeguard effectively the rights of
the bailor over the thing loaned.
Art. 1936. Consumable goods may be the
subject of commodatum if the purpose of the
contract is not the consumption of the object,
as when it is merely for exhibition.
Subject matter of commodatum
GR: Under Art. 1933 of the New Civil Code, the
subject matter of commodatum must be non-
consumable because the thing must be returned.
XPN: Consumable goods may be the subject of
commodatum if the purpose is not to consume
them such as for exhibition purposes.
NOTE: If the consumable goods are loaned for
the purposes of exhibition, or when the intention
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
of the parties is to lend consumable goods and
have the very same goods returned at the end of
the period agreed upon, the loan is commodatum
and not muttum. (Producers Bank v. Court of
Appeals, G.R. No. 115324, February 19,2003)
Art. 1937. Movable or immovable property
may be the object of commodatum.
Object of commodatum
Both movable and immovable property may be
the object of commodatum. (NCC, Art. 1937)
Example of commodatum involving land
A borrowed B’s land so that he can erect thereon
a small barong-barong to be used for the time
that A works in B’s province. If there is no rental
this is a case of commodatum, but if rental is
paid, this would be a lease. (Paras, 2008)
NOTE: In Producers Bank of the Philippines vs.
CA, the loan involving money was classified as
commodatum instead of mutuum because the
lender agreed to deposit his money in the
savings account of the borrower especially for
the purpose of making it appear that the latter
had sufficient capitalization for incorporation,
with the promise that the amount shall not be
removed and shall be returned within a specific
period. (Rabuya, 2017)
Contracts must be interpreted by their
constitutive elements as defined and
denominated by the law and not by the name
given by the parties. (Mina v. Pascual G.R. No. L-
8321, October 14, 1913)
Art. 1938. The bailor in commodatum need
not be the owner of the thing loaned.
Art. 1939. Commodatum is purely personal in
character. Consequently:
The death of either the bailor or the
bailee extinguishes the contract;
The bailee can neither lend nor lease the
object of the contract to a third person.
However, the members of the bailee's
household may make use of the thing
loaned, unless there is a stipulation to the
contrary, or unless the nature of the
thing forbids such use.
656
 Civil Law
Rights of bailee to lend thing loaned to third
persons
GR: Being personal to the borrower or bailee,
the use of the object cannot be ceded to a third
person, in absence of some understanding or
agreement to that effect.
XPN: Members of the household of the bailee
subject to the following conditions:
1. There is no agreement or stipulation to the
contrary, and
2. The nature of the object does not forbid
such use.
XPN to the XPN:
a. There is a stipulation to the contrary; or
b. The nature of the thing forbids such use.
Art. 1940. A stipulation that the bailee may
make use of the fruits of the thing loaned is
valid.
GR: The bailee is not entitled to the use or
enjoyment of the fruits of the thing loaned. The
fruits belong to the owner.
XPN: If there is a stipulation to that effect, the
bailee may make use of the fruits of the thing.
NOTE: Enjoyment of the fruits must only be
incidental to the use of the thing and must not be
the main cause. In the latter case, the contract
ceases to be a commodatum and becomes a
usufruct. (Pineda, 2006)
OBLIGATIONS OF THE BAILOR
1. To allow the bailee the use of the thing
loaned for the duration of the period
stipulated or until the accomplishment of
the purpose (NCC, Art. 1946);
2. To refund the extraordinary expenses the
bailee incurred for the preservation of the
thing;
GR: The bailee must bring to the knowledge
of the bailor such expenses before incurring
the same.
XPN: In case there is urgency and delay
would cause imminent danger.
If the extraordinary expenses arise on the
657
occasion of the actual use of the thing
loaned by the bailee, the expenses shall be
borne by the bailor and bailee equally, even
though the bailee is without fault. (NCC, Art.
1949)
3. To be liable for damages for known hidden
defects (NCC, Art 1951); and
4. Cannot exempt himself from payment of
expenses or damages by abandonment of the
thing to bailee. (NCC, Art. 1952)
Liability of the bailor for hidden defects
Requisites:
1. There was a flaw or defect in the thing
loaned;
2. The flaw or defect is hidden;
3. The bailor is aware thereof;
4. He does not advise the bailee of the same;
and
5. The bailee suffers damages by reason of said
flaw or defect. (NCC, Art. 1951)
NOTE: If the bailor is not aware of such flaws,
then he is not liable. If the defect is known to the
bailee or the same is patent and obvious, the
bailor is not liable. (Rabuya, 2017)
The obligation of the gratuitous lender goes no
further than this, and he cannot be made liable
for not communicating anything which he did
not know, whether he ought to have known it or
not.
Cause of action against bailor who did not
disclose flaw or defect
The cause of action against the bailor who did not
disclose the flaw or defect is action for recovery
of damages on the ground of quasi-delict because
of negligence or bad faith.
Q: Before he left for Riyadh to work, Pedro
left his Adventure van to Tito, with the
understanding that the latter could use it for
one year for his own use while Pedro works
in Riyadh. He did not tell Tito that the brakes
of the van were faulty. Tito had the van tuned
up and the brakes repaired spending a total
amount of P15,000.00. Tito later discovered
that the van consumed too much fuel. To
make up for the expenses, he leased it to
Annabelle. Two months later, Pedro returned
 Special Contracts – Credit Transactions
to the Philippines and asked Tito to return the
van. Unfortunately, while being driven by
Tito, the van was accidentally damaged by a
cargo truck without his fault.
Who shall bear the P15,000.00 spent for the
repair of the van? (Bar 2005)
A: Tito must bear the P15,000.00 expenses for
the van. Generally, extraordinary expenses for
the preservation of the thing loaned are paid by
the bailor, he being the owner of the thing
loaned. In this case however, Tito should bear
the expenses because he incurred the expenses
without first informing Pedro about it. Neither
was the repair shown to be urgent. Under Art.
1949, bailor generally bears the extraordinary
expenses for the preservation of the thing and
should refund the said expenses if made by the
bailee, provided, the bailee brings the same to
the attention of the bailor before incurring them,
except only if the repair is urgent that reply
cannot be awaited.
Effect if both parties know the defect
The effect if both parties are aware of the flaws
or defects is that the bailee is deemed to have
assumed a risk. The bailor is not liable for the
damages suffered by the bailee by reason
thereof.
RIGHTS OF THE BAILOR
Demand the return of the thing loaned (2005
Bar)
GR: The return of the thing loaned may be
demanded by the bailor only (1) after the
expiration of the period stipulated or (2) after
the accomplishment of the use for which it is
constituted.
XPNs:
1. In case of urgent need by the bailor;
2. In case of precarium – the bailor may
demand the thing at will, and the contractual
relation is called a precarium, in the
following cases:
a. If neither the duration of the contract
nor the use to which the thing loaned
should be devoted, has been stipulated;
or
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
b. If the use of the thing is merely tolerated
by the owner (NCC, Art. 1947); and
3. If the bailee commits an act of ingratitude
specified in Article 765 to the bailor (NCC,
Art. 1948), to wit:
a. If the bailee should commit some
offense against the person, honor or the
property of the bailor, or his wife or
children under his parental authority;
b. If the bailee imputes to the bailor any
criminal offense, or any act involving
moral turpitude, even though he should
prove it, unless the crime or the act has
been committed against the bailee, his
wife or children under his authority; or
c. If the bailee unduly refuses the bailor
support when the bailee is legally or
morally bound to give support to the
bailor.
NOTE: The rationale for the application of Art.
765 of the New Civil Code which refers to
donations is the fact that commodatum, like
donation, is gratuitous in nature. The bailee who
commits any of the acts of ingratitude makes
himself unworthy of the trust reposed upon him
by the bailor.
Q: If the contract of commodatum is a
precarium, will Art. 1942 (1) and (2) of the
New Civil Code still apply?
A: IT DEPENDS. If there has been a demand on
the part of the bailor before the loss of the thing
under the circumstances set forth under Article
1942 (1) and (2) and the bailee did not return
the thing, then the latter is liable. However, if
there has been no demand on the part of the
bailor and the thing was lost, the bailor is
estopped and cannot hold the bailee liable for
under a contract of precarium, the use of the
thing by the bailee depends on the pleasure of
the bailor and no time is fixed for such use.
Hence, demand on the part of the bailor is
needed for the return of the thing. Without such,
loss of the thing on the hands of the bailee will
not make him liable.
Bailor and ownership of the thing loaned
The bailor in commodatum need not be the
owner of the thing loaned. It is sufficient that he
has possessory interest over subject matter. (Art.
1938) All that is required is that the bailor has
658
 Civil Law
the right to the use of the property which he is
lending, and that be allowed to alienate this right 5. There is deviation from
to use. The rationale for this is the fact that the purpose. (NCC, Art.
commodatum does not involve transmission of 1942)
ownership. (Rabuya, 2017)
Reason: Bailee acts in bad
NOTE: A mere lessee or usufructuary may faith.
gratuitously give the use of the thing leased or in
usufruct, provided there is no prohibition Bailee is not liable for the
against such. deterioration of the thing
loaned caused by the
As to the
OBLIGATIONS OF THE BAILEE ordinary wear and tear of
deterioration
the same. (NCC, Art. 1943)
of the thing
loaned
Pay for the ordinary NOTE: When there are two
As to
expenses for the use and or more bailees, their
ordinary
preservation of the thing. liability is solidary.
expenses
(NCC, Art. 1941)

RIGHTS OF A BAILEE
Liable for loss even through
fortuitous event when: 1. Use of the thing;
(2000 Bar) 2. Make use of the fruits of the thing when such
right is stipulated in the contract;
1. When being able to 3. Not answerable for the deterioration of the
save either of the thing thing loaned due to the use thereof and
borrowed or his own without his fault; and
thing, he chose to save 4. Right of retention for damages due to hidden
the latter; defects or flaws of the thing of which he was
not advised by the bailor.
Reason: bailee’s ingratitude.
Art. 1943. The bailee does not answer for the
2. He keeps it longer than deterioration of the thing loaned due only to
the period stipulated,
the use thereof and without his fault.
or after the
accomplishment of its
In absence of an agreement to the contrary, the
use (in default);
depreciation caused by the reasonable and
natural use of the thing is borne by the bailor.
As to the loss Reason: Bailee incurs delay.
of the thing (NCC, Art. 1169)
in case of Q: Art. 1178 of the NCC provides that all
fortuitous 3. The thing loaned has rights acquired by virtue of an obligation are
event been delivered with transmissible. Is the right to use the thing by
appraisal of its value; virtue of a contract of commodatum
transmissible?
Reason: Otherwise, the
parties would not have A: NO, it is not transmissible for two reasons:
appraised the thing.
1. Art. 1178 of the New Civil Code provides
4. When he lends or leases that the transmissibility of said acquired
it to third persons who rights are either subject to the laws or to a
are not members of his contrary stipulation; and
household;
2. Art. 1939 of the New Civil Code provides
Reason: Commodatum is a that a contract of commodatum is purely
purely personal contract. personal in character.

659
 Special Contracts – Credit Transactions
To rule otherwise would be to run counter to the bailee. (NCC, Art. 1944)
purely personal character of the commodatum
and to the proviso that transmissibility is subject XPN: The bailee has the right of retention for
to the law governing such obligations. claims of damages which the bailee incurred or
suffered by reason of the hidden defects or flaws
Commodatum v. Lease of the thing loaned, of which he was not
informed or advised by the bailor. (NCC, Art.
COMMODATUM LEASE 1951)
Real Contract Consensual
Object is a non- The reason for the general rule that there is no
Object may even be right of retention is that “bailment implies a
consumable and non-
work or service trust that as soon as the time has expired or the
fungible thing
Essentially gratuitous Onerous purpose accomplished, the bailed property must
If the bailor is not be returned to the bailor”. Also, Art. 1287
aware of the flaws, he Provisions governing provides that compensation shall not be proper
is not liable for the warranty are made when one of the debts arises from the
resulting danger applicable. obligations of a bailee in commodatum.
caused by such.
Q: Suppose during the said retention of the
Liability of the bailee for the loss of the thing bailee by reason of hidden defects, the thing
is lost due to a fortuitous event. Can the
Even should there be fortuitous event: bailor hold the bailee liable for said loss
based on Art. 1942(2) of the New Civil Code?
1. If he devotes the thing to any purpose
different from that for which it has been A: NO. The bailee cannot be held liable for the
loaned; loss. Art. 1942(2) of the NCC contemplates
2. If he keeps it longer than the period wrongful retention or a situation where the
stipulated, or after the accomplishment of bailee is not entitled to retain the thing loaned.
the use for which the commodatum has been
constituted; NOTE: Article 1942(2) of the NCC provides that
3. If the thing loaned has been delivered with the bailee is liable for the loss of the thing, even
appraisal of its value, unless there is a if it should be through a fortuitous event if he
stipulation exempting the bailee from keeps it longer than the period stipulated, or
responsibility in case of a fortuitous event; after the accomplishment of the use for which
4. If he lends or leases the thing to a third the commodatum has been constituted.
person, who is not a member of his
household; Art. 1945. When there are two or more
5. If being able to save either that thing bailees to whom a thing is loaned in the same
borrowed or his own thing, he chose to save contract, they are liable solidarily.
the latter. (NCC, Art. 1942)
Solidary Obligation
Deterioration
Each one of the debtors is obliged to pay the
The lowering of the value or character of a thing. entire obligation, and where each one of the
It normally occurs by reason of ordinary wear creditors has the right to demand from any of
and tear. the debtors, the payment or fulfillment of the
entire obligation. (NCC, Art. 1207)
The bailee does not answer for the deterioration
of the thing loaned due only to the use thereof Kinds of Solidary Obligation
and without his fault. (NCC, Art. 1943)
1. Passive Obligation – which is the solidarity
Right of retention in commodatum on the part of the debtors;

GR: There is no right of retention in 2. Active Solidarity – which is the solidarity

commodatum. The bailee cannot retain the thing on the part of the creditors
loaned on the ground that the bailor owes the

UNIVERSITY OF SANTO TOMAS 660

2021 GOLDEN NOTES
 Civil Law
EXPENSES
Rules on who shall pay ordinary,
extraordinary expenses and other expenses
1. Ordinary expenses – For both the use and
preservation of the thing, it shall be paid or
shouldered by the bailee. (NCC, Art. 1941)
(2005 Bar)
2. Extraordinary expenses (2005 Bar)
Preservation – The bailor, provided the
bailee brings the same to the knowledge
of the bailor before incurring them,
except when they are so urgent that the
reply to the notification cannot be
awaited without danger. (NCC, Art.
1949)
Incurred during actual use –
GR: Borne equally by the bailor and bailee.
XPN: Stipulation to the contrary. (NCC, Art.
1949)
3. Other expenses – The bailee, because they
are not necessary for the preservation of the
thing. (NCC, Art. 1950)
Q: What if the bailee is entitled to payment or
reimbursement of expenses incurred or
damages suffered and the bailor offers the
thing loaned as payment for said expenses or
damages, would such offer be valid or not, in
view of the prohibition under Art. 1952
which states that the bailor cannot exempt
himself from the payment of expenses or
damages by abandoning the thing to the
bailee?
A: The offer is not valid. It may be considered
as dation in payment. In this case, the
abandonment done by the bailor was made in
favor of the bailee for the payment of the
expenses incurred by the latter, hence, a
violation of what the law has expressly
prohibited under Art. 1952 of the NCC.
Entitlement for reimbursement
The bailee is not entitled to reimbursement for
the expenses he incurred if, for the purpose of
making use and preservation of the thing, the
bailee incurs expenses other than those ordinary
661
and extraordinary expenses. (NCC, Art. 1950)
MUTUUM
It is a contract whereby one of the parties called
the “lender” delivers to another called the
“borrower”, money or other consumable thing
subject to the condition that the same amount of
the same kind and quantity shall be paid. (NCC,
Art. 1933)
It involves the return of the equivalent only and
not the identical thing because the borrower
acquires ownership thereof. A loan of money,
however, may be payable in kind. (De Leon,
2013)
Characteristics of a contract of mutuum
1. Borrower acquires ownership of the thing
(NCC, Art 1953);
2. If the thing loaned is money, payment must
be made in the currency stipulated, and if it
is not possible to deliver such currency, then
in the currency which is legal tender in the
Philippines. (NCC, Art. 1249)
Note: In case of extraordinary deflation or
inflation, the basis of payment shall be the
value of the currency at the time of the
creation of the obligation (NCC, 1250); and
3. If fungible thing other than money was
loaned, the borrower is obliged to pay the
lender another thing of the same kind,
quality and quantity even if it should change
in value. (NCC, Art. 1955[2])
Nature of a contract of mutuum
1. The purpose of the contract is consumption;
2. The subject-matter is either money or
consumable;
3. Ownership passes to the borrower;
4. It is a real contract;
5. It may be gratuitous or with stipulation to
pay interest; and
6. It is a unilateral contract. (Rabuya, 2017)
Perfection of the contract of mutuum
Real contracts, such as deposit, pledge and
commodatum, are not perfected until the
delivery of the object of the obligation. (NCC, Art.
1316) While mutuum or simple loan is not
 Special Contracts – Credit Transactions
mentioned, it has the same character as
commodatum. Hence, mutuum is also a real
contract which cannot be perfected until the
delivery of the object.
An accepted promise to make a future loan is a
consensual contract and therefore, binding upon
the parties but it is only after delivery, will the
real contract of loan arise.
Mere issuance of checks does not perfect the
contract of loan. It is only after the checks have
been encashed that the contact may be deemed
perfected.
Consideration in a simple loan
1. As to the borrower – The acquisition of
money or any other fungible thing; and
2. As to the lender – the right to demand the
return of the money or any other fungible
thing or its equivalent.
of the loan. (NCC, Art. 1955)
Q: Can estafa be committed by a person who
refuses to pay his debt or denies its
existence?
A: NO, because the debtor in mutuum becomes
the owner of the thing delivered to him. If he
consumed or disposed of the thing, the act which
is an act of ownership is not misappropriation.
Hence, there is no basis for a criminal
prosecution. (See Flores, Jr. vs. Enrile, G.R. No. L-
38440, July 20, 1982)
Destruction of the thing loaned
The destruction of the thing loaned does not
extinguish one’s obligation in a simple loan
because his obligation is not to return the thing
loaned but to pay a generic thing.
Commodatum v. Mutuum (1996, 2004 Bar)

Object of mutuum BASIS COMMODATUM MUTUUM

Non-consumable Money or
Its object is money or fungible and consumable Object and Non- consumable
things. fungible. thing.
Gratuitous, May or may
Governing rules on payment of loan Cause otherwise it is a not be
lease. gratuitous.
If the object of loan is: Use or
temporary
1. Money – Governed by Articles 1249 and possession of
1250. (NCC) the thing
loaned.
GR: Payment shall be made in the currency
stipulated. GR: Not its
fruit because
XPN: If not, that currency which is legal the bailor
tender in the Philippines. remains the
owner.
Purpose Consumption
In case of extraordinary inflation – payment
shall be made at the value of the currency at XPNs:
the time of the creation of the obligation, Use of the fruits
unless there is an agreement to the is stipulated;
contrary. (NCC, Art. 1250) enjoyment of the
fruits is
Loan of money can be payable in kind if stipulated; or
there is an agreement between the parties. enjoyment of the
fruits is
2. Consumable or fungible thing – Debtor or incidental to its
borrower shall pay another thing of the same use.
kind, quality and quantity even if it should Real or
change in value. If cannot be done, the value Subject personal Only personal
of the thing at the time of its perfection Matter property. property.
(delivery) shall be the basis of the payment Generally non-

UNIVERSITY OF SANTO TOMAS 662

2021 GOLDEN NOTES
 Civil Law
consumable sides.
things but may
cover
The money or The parties do not
consumables if
consumable thing return the things
the purpose of
loaned is not subject of the
the contract is for
returned but the exchange.
exhibition.
same amount of
Ownership the same kind and
Retained by the Passes to the
of the quantity shall be
bailor. debtor.
thing paid.
Equal amount
Thing to
Exact thing of the same
be INTEREST AND THE SUSPENSION OF USURY
loaned kind and
returned LAW
quality.
Who bears
Bailor Debtor Interest
risk of loss
In case of urgent
need even before It is the compensation to be paid by the
the expiration of Only after the borrower for the use of the money lent to him by
When to the lender. It is paid either as compensation for
term (the expiration of
return the use of money (monetary interest) or as
contract is in the the term.
meantime damages (compensatory interest). (Andreas vs.
suspended). Bank of the Philippine Islands, G.R. No. 23836,
Contract of September 9, 1925; Asian Terminals, Inc., vs.
Contract Contract of use Padoson Stainless Steel Corporation, G.R. No.
consumption
211876, June 25, 2018)
Mutuum v. Lease and Barter
Classes of interest
MUTUUM LEASE
1. Simple/Monetary – The interest which is
Object may be any
paid for the use or forbearance of the
Object is money or any thing, whether
money, at a certain rate stipulated in writing
consumable (fungible) movable or
by the parties (NCC, Art. 2209; Odiamar vs.
thing. immovable, fungible or
Valencia, G.R. No. 213582, September 12,
non-fungible.
2018);
There is transfer of No transfer of
ownership. ownership.
2. Compound – The interest which is imposed
Creditor-debtor Lessor-lessee upon accrued interest, that is, the interest
relationship. relationship. due and unpaid (NCC, Arts. 1959 and 2212);
Unilateral Bilateral
The money or 3. Legal – That interest which the law directs
consumable thing to be paid in the absence of any agreement
loaned is not returned The debtor returns the as to the rate (NCC, Art. 2209); and
but the same amount thing/s leased.
of the same kind and 4. Compensatory – The interest paid by virtue
quantity shall be paid. of damages for delay or failure to pay
principal loan on which interest is
MUTUUM BARTER demanded. (Odiamar vs. Valencia, G.R. No.
Subject matter is Subject matter are 213582, September 12, 2018)
money or other non- fungible things.
fungible things. Note: Finance Charges – Are not merely a specie
May be gratuitous Always onerous. of interest, but these include interest, fees,
or onerous. service charges, discounts, and such other
While in mutuum, There is a mutual charges incident to the extension of credit under
there is transfer of sale resulting in the R.A. No. 3765, or the Truth in Lending Act. Not
ownership, there transfer of disclosing the true finance charges in connection
is no sale. ownership on both

663
 Special Contracts – Credit Transactions
with the extensions of credit is a form of
deception which the Court cannot countenance.
It is against the policy of the State as stated in
the Truth in Lending Act – to protect its citizens
from a lack of awareness of the true cost of
credit to the user by assuring a full disclosure of
such cost with a view of preventing the
uninformed use of credit to the detriment of the
national economy. (Sec. 2, R.A. No. 3765; United
Coconut Planters Bank vs. Beluso, G.R. No. 159912,
August 17, 2007)
Requisites for recovery of interest
1. The payment of interest must be expressly
stipulated (Tan v. Valdehueza, 66 SCRA 61;
Jardenil v. Salas, 73 Phil. 636);
2. The agreement to pay interest must be in
writing (NCC, Art. 1956); and
3. The interest must be lawful.
Rules on interest
GR: No interest shall be due unless it is
stipulated in writing. (NCC, Art. 1956) (2004
Bar)
XPN:
1. In case of interest on damages or indemnity
for damages, it need not be in writing (NCC,
Art. 2209); or
2. Interest accruing from unpaid interest. (NCC,
Art. 2212)
NOTE: Art. 1956 applies only to interest for the
use of money and not to interest imposed as
items of damages.
Stipulation of a particular interest rate
If a particular rate of interest has been expressly
stipulated by the parties, that interest, not the
legal rate of interest shall be applied. (Casa
Filipina Development Corporation v. Deputy
Executive Secretary, G.R. No. 96494, May 28,
1992)
Liability for interest even in the absence of
stipulation (exceptions to Art. 1956, NCC)
1. Indemnity for damages — The debtor in delay
is liable to pay legal interest as indemnity for
damages even in the absence of stipulation
for the payment of interest. (De Leon, 2013)
The “obligation consisting of the payment of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
a sum of money’’ referred to in Article 2209
is not confined to a loan or forbearance of
money. It has also been applied by the
Supreme Court in cases involving default in
the payment of price or consideration under
a contract of sale and an action or damages
for injury to persons and loss of property
and an action for damages arising from
unpaid insurance claims. (Castelo vs. Court of
Appeals, G.R. No. 96372, May 22, 1995)
Interest as indemnity for damages is payable
only in case of default or non- performance
of the contract. As they are distinct claims,
they may be demanded separately. (Sentinel
Insurance Co. Inc. vs. Court of Appeals, G.R.
No. L-52482, February 23, 1990)
2. Interest accruing from unpaid interest —
Interest due shall earn interest from the time
it is judicially demanded although the
obligation may be silent upon this point.
(NCC, Art. 2212; see Sec. 5, Usury Law) Both
Art. 2212 of the Civil Code and Sec. 5 of the
Usury Law are applicable only where
interest has been stipulated by the parties.
Art. 1212 contemplates the presence of
stipulated or conventional interest which
has accrued when demand was judicially
made. In cases where no interest had been
stipulated by the parties, no accrued
conventional interest could further earn
interest upon judicial demand. (Isla vs.
Estorga, G.R. No. 233974, July 2, 2018)
NOTE: Where the court’s judgment which did
not provide for the payment of interest has
already become final, no interest may be
awarded. (Santuban vs. Fule, G.R. No. L-59664,
December 26, 1984; Ruiz vs. Caneba, G.R. No.
84884, December 3, 1990; Solidbank Corporation
vs. Court of Appeals, G.R. No. 138131, March 12,
2002)
Q: Province of Cebu was chosen by former
President Gloria Macapagal-Arroyo to host
the 12th ASEAN Summit. To cater to the
event, it decided to construct the Cebu
International Convention Center (CICC or the
project) which would serve as venue for the
ASEAN Summit. Province of Cebu conducted a
public bidding for the project and WTCI
emerged as the winning bidder for the
construction of Phase I. After completing
Phase I, WTCI again won the bidding for
Phase II of the project involving the adjacent
works on CICC. As Phase II neared
664
 Civil Law
completion, the Province of Cebu caused
WTCI to perform additional works on the
project, WTCI agreed to perform the
additional works notwithstanding the lack of
public bidding. Weeks before the scheduled
ASEAN Summit, WTCI completed the project,
including the additional works and,
accordingly, demanded payment therefor.
WTCI demanded for payment but the
Province of Cebu still refused to pay. Thus,
it filed a complaint for collection of sum of
money before the RTC. RTC ruled in favor of
WTCI. CA affirmed the RTC's Order but
reduced the interest rate to 6% per annum.
What is the nature of Province of Cebu’s
liability?
A: The liability of the Province of Cebu to WTCI
is not in the nature of a forbearance of money as
it does not involve an acquiescence to the
temporary use of WTCI's money, goods or
credits. Rather, this case involves WTCI's
performance of a particular service, i.e., the
performance of additional works on CICC,
consisting of site development, additional
structural, architectural, plumbing, and electrical
works thereon.
Verily, the Court has repeatedly recognized that
liabilities arising from construction contracts do
not partake of loans or forbearance of money but
are in the nature of contracts of service.
When an obligation, not constituting a loan or
forbearance of money, is breached, an interest
on the amount of damages awarded may be
imposed at the discretion of the court at the rate
of 6% per annum. (WT Construction, Inc. v. The
Province of Cebu, G.R. No. 208984, September 16,
2015)
The Court, therefore, sustains the CA's ruling
that the rate of legal interest imposable on the
liability of the Province of Cebu to WTCI is 6%
per annum. (WT Construction, Inc. v. The
Province of Cebu, G.R. No. 208984, September 16,
2015)
Q: Petitioners Isla obtained a loan in the
amount of P100,000.00 from respondent,
payable anytime from six (6) months to one
(1) year and subject to interest at the rate of
ten percent (10%) per month, payable on or
before the end of each month. When
petitioners failed to pay the said loan,
respondent sought assistance from the
665
barangay, and consequently, a Kasulatan ng
Pautang dated December 8, 2005 was
executed. Petitioners, however, failed to
comply with its terms, prompting respondent
to send a demand letter dated November 16,
2006. Once more, petitioners failed to
comply with the demand, causing respondent
to file a Petition for Judicial Foreclosure
against them before the RTC. Petitioners
maintained that the stipulated interest of ten
percent (10%) per month was exorbitant and
grossly unconscionable. The RTC directed
petitioners to pay respondent the amounts of
P100,000.00 with twelve percent (12%)
interest per annum from December 2007
until fully paid and P20,000.00 as attorney's
fees. Is the 12% interest imposed by the
Court valid?
A: YES. Anent monetary interest, the parties are
free to stipulate their preferred rate. However,
courts are allowed to equitably temper interest
rates that are found to be excessive, iniquitous,
unconscionable, and/or exorbitant, such as
stipulated interest rates of three percent (3%)
per month or higher. In such instances, it is well
to clarify that only the unconscionable interest
rate is nullified and deemed not written in the
contract; whereas the parties' agreement on the
payment of interest on the principal loan
obligation subsists. It is as if the parties failed to
specify the interest rate to be imposed on the
principal amount, in which case the legal rate of
interest prevailing at the time the agreement
was entered into is applied by the Court. This is
because, according to jurisprudence, the legal
rate of interest is the presumptive reasonable
compensation for borrowed money.
In this case, petitioners and respondent entered
into a loan obligation and clearly stipulated for
the payment of monetary interest. However, the
stipulated interest of ten percent (10%) per
month was found to be unconscionable, and
thus, the courts a quo struck down the same and
pegged a new monetary interest of twelve
percent (12%) per annum, which was the
prevailing legal rate of interest for loans and
forbearances of money at the time the loan was
contracted on December 6, 2004. (Catalina F.
Isla, Elizabeth Isla, and Gilbert F. Isla v. Genevira
P. Estorga, G.R. No. 233974, July 2, 2018)
Q: Santos owned three (3) parcels of
agricultural land devoted to corn. In 1984,
the subject lands were placed under the
 Special Contracts – Credit Transactions
government's Operation Land Transfer
Program, pursuant to Presidential Decree
(PD) No. 27, and distributed to the farmer-
beneficiaries who were issued the
corresponding Emancipation Patents. The
Department of Agrarian Reform (DAR) fixed
the just compensation using the formula
provided under Executive Order No. (EO)
228. The LBP allowed Santos to collect the
initial valuation for Land 3. It withheld the
release of the valuation for Lands 1 and 2
until the submission of the certificates of title.
Santos was then issued Agrarian Reform (AR)
Bonds representing the initial valuation of
Land 3 and the six percent (6%) increment.
Finding the valuation unreasonable, Santos
filed three (3) petitions for summary
administrative proceedings for the
determination of just compensation of the
subject lands before the Office of the
Provincial Adjudicator (PARAD). The LBP
also instituted two (2) separate complaints
for the determination of just compensation
before the RTC. The RTC adopted the LBP’s
uncontested valuation for Land 3 and also
awarded 12% interest reckoned from
January 1, 2010 until full payment since the
revaluation of Land 3 already included the
required six percent (6%) annual
incremental interest from the time of taking
until December 31, 2009. The CA affirmed. Is
the reckoning point of interest correct?
A: NO. In expropriation cases, interest is
imposed if there is delay in the payment of just
compensation to the landowner since the
obligation is deemed to be an effective
forbearance on the part of the State. Such
interest shall be pegged at the rate of 12% per
annum on the unpaid balance of the just
compensation, reckoned from the time of taking
or the time when the landowner was deprived
of the use and benefit of his property such as
when title is transferred to the Republic, or
emancipation patents are issued by the
government, until full payment. Accordingly, the
award of twelve percent (12%) annual interest
on the unpaid balance of the just compensation
for Land 3 should be computed from the time
of taking and not from January 1, 2010 as ruled
by the RTC and the CA, until full payment on
October 12, 2011. (Land Bank of the Philippines
v. Edgardo L. Santos, G.R. No. 213863, January 27,
2016)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Payment of interest when there is no
stipulation
1. A borrower borrowed money. No interest
was stipulated. If by mistake he pays, then
this will be a question of undue payment or
solutio indebiti. We should then apply the
rules on the subject.
2. If a borrower borrows money and orally
agrees to pay legal interest at 10% per
annum, there is really no obligation to pay
since the interest was not agreed upon in
writing. If he nevertheless pays because he
considers it his moral obligation to pay said
interest, he cannot recover the interest that
he has given voluntarily. This will now be a
natural obligation, and the provisions on
said subject should apply. (Paras, 2008)
Q: The court ordered petitioner Nympha S.
Odiamar to pay respondent the amount of
P1,010,049.00 representing the remaining
balance of petitioner's debt to the latter in
the original amount of P1,400,000.00. In said
motion, respondent prays for the imposition
of legal interest on the monetary award due
her. She likewise insists that petitioner's loan
obligation to her is not just P1,400,000.00 but
P2,100,000.00 and, as such, she should be
made to pay the latter amount. Whether a
prayer for the imposition of legal interest on
the monetary award due is proper?
A: YES. 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 judgments shall no longer be
twelve percent (12%) per annum but will now
be six percent (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 twelve
percent (12%) per annum legal interest shall
apply only until June 30, 2013. Come July 1, 2013
the new rate of six percent (6%) per annum shall
be the prevailing rate of interest when
applicable.
Applying the foregoing parameters to this case,
petitioner's loan obligation to respondent shall
be subjected to compensatory interest at the
legal rate of twelve percent (12%) per annum
from the date of judicial demand, i.e., August 20,
2003, until June 30, 2013, and thereafter at the
666
 Civil Law
legal rate of six percent (6%) per annum from
July 1, 2013 until finality of this ruling.
Moreover, all monetary awards due to
respondent shall earn legal interest of six
percent (6%) per annum from finality of this
ruling until fully paid. (Nympha S. Odiamar v.
Linda Odiamar Valencia, G.R. No. 213582,
September 12, 2018)
Basis of the right to interest
The basis of the right to interest is it only arises
by reason of the contract (stipulation in writing)
for the use of money or by reason of delay or
failure to pay principal on which interest is
demanded due to a breach of an obligation.
(Baretto v. Santa Marina, G.R. No. 11908,
February 4, 1918)
Equitable mortgage
Equitable mortgage is one which, although it
lacks the proper formalities or other requisites of
a mortgage required by law, nevertheless reveals
the intention of the parties to burden real
property as a security for a debt, and contains
nothing impossible or contrary to law.
Interest in equitable mortgage
There can be no interest to be collected in
equitable mortgage because the same is not
stipulated in writing. (Tan v. Valdehueza, G.R. No.
L-38745, August 6, 1975)
Recovery of unstipulated interest
A payment for unstipulated interest can be
recovered if paid by mistake, the debtor may
recover as in the case of solutio indebiti or undue
payment. However, if payment is made
voluntarily, no recovery can be made as in the
case of natural obligation. (NCC, Art. 1960)
Q: Siga-an granted a loan to Villanueva in the
amount of P540,000.00. 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 P1,200,000.00. Upon advice
of her lawyer, Villanueva demanded for the
return of the excess amount of P660,000.00
which was ignored by Siga-an.
a. Is the payment of interest valid?
667
b. Is solutio indebiti applicable?
Explain. (2012 Bar)
A:
a. NO. Payment of monetary interest is
allowed only if:
1. There was an express stipulation
for the payment of interest; and
2. The agreement for the payment of
interest was reduced in writing.
The concurrence of the two conditions is
required for the payment of monetary
interest. Thus, collection of interest without
any stipulation therefor in writing is
prohibited by law.
b. YES. The quasi-contract of solutio
indebiti harks back to the ancient
principle that no one shall enrich
himself unjustly at the expense of
another. The principle of solutio indebiti
applies where (1) a payment is made
when there exists no binding relation
between the payor, who has no duty to
pay, and the person who received the
payment; and (2) the payment is made
through mistake, and not through
liberality or some other cause. The
Supreme Court has held that the
principle of solutio indebiti applies in
case of erroneous payment of undue
interest. (Siga-an v. Villanueva, G.R. No.
173227, January 20, 2009)
Interest on unliquidated claims
GR: Interest may not be adjudged on
unliquidated claims or damages.
XPN: When or until the demand can be
established with reasonable certainty. (BPI vs.
Land Investors and Developers Corporation, G.R.
No. 198237, October 8, 2018)
Running of interest on unliquidated claims
Accordingly, where the demand is established
with reasonable certainty, the interest shall
begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil
Code), but when such certainty cannot be so
reasonably established at the time the demand is
made, the interest shall begin to run only from
 Special Contracts – Credit Transactions
the date the judgment of the court is made (at
which time the quantification of damages may
be deemed to have been reasonably
ascertained). (Ibid.)
The actual base for the computation of legal
interest shall, in any case, be on the amount
finally adjudged. (Ibid.)
Monetary interest and compensatory
interest
Monetary interest must be expressly stipulated
in writing and it must be lawful. (NCC, Art. 1956)
The ruling in Eastern Shipping Lines has now
been modified by Bangko Sentral ng Pilipinas
Monetary Board Circular No. 799 Series of
2013, providing that:
The rate of interest for the loan or forbearance
of any money, goods or credits and the rate
allowed in judgments, in the absence of an
express contract as to such rate of interest, shall
be six percent (6%) per annum. (BSP Circular No.
799, July 1, 2013)
Prospective application of BSP Circular No.
799
It should be noted, nonetheless, that the new
rate could only be applied prospectively and not
retroactively. Consequently, the twelve percent
(12%) per annum legal interest shall apply only
until June 30, 2013. Come July 1, 2013 the new
rate of six percent (6%) per annum shall be the
prevailing rate of interest when applicable.
(Nacar v. Gallery Frames, G.R. No. 189871, August
13, 2013)
The new guidelines on the application of
legal Interest
1. When an obligation, regardless of its source
(i.e.; law, contracts, quasi-contracts, delicts or
quasi-delicts) is breached, the contravenor
can be held liable for damages and the
provisions under Title XVIII on Damages of
the Civil Code govern in determining the
measure of recoverable damages; and
2. For the award of interest in the concept of
actual and compensatory damages, the rate
of interest and its accrual is imposed as
follows:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
a. For breach of obligations consisting of
loan or forbearance of money, interest
due shall be that stipulated in writing.
Interest due shall itself earn legal
interest from the time it is judicially
demanded;
b. In the absence of stipulation, the rate of
interest shall be 6% per annum,
computed from default (i.e. judicial or
extrajudicial demand) subject to
provisions of Art.1169 of the Civil Code;
c. When an obligation, not constituting a
loan or forbearance of money, is
breached, an interest on the amount of
damages awarded may be imposed at
the discretion of the court at the rate of
6% per annum. No interest, however,
shall be adjudged on unliquidated
claims or damages except when or until
the demand can be established with
reasonable certainty.
d. Where the demand is established with
reasonable certainty, the interest shall
begin to run from the time the claim is
made judicially or extrajudicially (NCC,
Art. 1169); and
e. When such certainty cannot be so
reasonably established at the time the
demand is made, the interest shall begin
to run only from the date the judgment
of the court is made (at which time the
quantification of damages may be
deemed to have been reasonably
ascertained). The actual base for the
computation of legal interest shall, in
any case, be on the amount finally
adjudged.
When the judgment of the court awarding a
sum of money becomes final and executory,
whether the case falls under under
paragraph (a) or (c) above, the rate shall be
6% per annum from such finality until its
satisfaction, this interim period being
deemed to be by then an equivalent to a
forbearance of credit. (Nacar v. Gallery
Frames, G.R. No. 189871, August 13, 2013)
NOTE: Judgments that have become final and
executory prior to July 1, 2013, shall not be
disturbed and shall continue to be implemented.
(Ibid)
668
 Civil Law
Authority of BSP Monetary Board to set
interest rates
The Supreme Court affirmed the authority of
BSP Monetary Board (BSP-MB) to prescribe the
maximum rate or rates of interest for all loans or
renewals thereof or the forbearance of any
money, goods or credits, including those for
loans of low priority such as consumer loans, as
well as such loans made by pawnshops, finance
companies and similar credit institutions.
(Advocates for Truth in Lending Inc. v. Bangko
Sentral Monetary Board, G.R. No. 192986, January
15, 2013)
Basis for the interest rate for compensatory
interest
1. Central Bank Circular No. 799 – 6% per
annum in cases of:
a. Loans;
b. Forbearance of money, goods and
credits; and
c. Judgment involving such loan or
forbearance
2. Art. 2209 – 6% per annum in cases of:
a. Other sources (i.e. sale);
b. Damages arising from injury from
person; and
c. Loss of property which does not involve
a loan.
3. Interest accruing from unpaid interest
(compound interest) – Interest due shall earn
interest from the time it is judicially
demanded although the obligation is silent
upon this point. (NCC, Art. 2212)
Forbearance
Forbearance signifies the contractual obligation
of the creditor to forbear during a given period of
time to require the debtor payment of an existing
debt then due and payable. Such forbearance of
giving time for the payment of a debt is, in
substance, a loan.
Compounding of interest
There must first be a stipulation of payment of
interest and this interest may earn interest only
when it is judicially demanded, although the
obligation is silent upon this point. (NCC, Art.
669
2212)
Rule on compounding of interest
GR: Accrued interest (interest due and unpaid)
shall not earn interest.
XPNS: When:
1. There is express stipulation made by the
parties - that the interest due and unpaid
shall be added to the principal obligation
and the resulting total amount shall earn
interest (Art. 1959); or
2. Judicial demand has been made upon the
borrower. (NCC, Art. 2212)
NOTE: Such accrued interest will bear interest at
the legal rate (NCC, Art. 2212) unless, a different
rate is stipulated. (Hodges v. Regalado, 69 Phil.
588)
Increase in Interest Rates
No increase in interest shall be due unless such
increase has also been expressly stipulated.
(Security Bank &Trust Co. v RTC, G.R. No. 113926,
October 23, 1996; Spouses Toring v. Ganzon-Olan
G.R. No. 168782, October 10, 2008)
The unilateral determination and imposition of
increased rates is violative of the principle of
mutuality of contracts ordained in Article 1308
of the Civil Code. One-sided impositions do not
have the force of law between the parties,
because such impositions are not based on the
parties’ essential equality. (NSBCI v. PNB, G.R. No.
148753, July 30, 2004)
Governing rule on usurious transactions
CB Circular No. 905 has expressly removed the
interest ceilings prescribed by Usury Law; thus,
the said law has become legally non-existent.
NOTE: It did not repeal or amend the usury law
but merely suspended its effectivity. (Security
Bank and Trust Company v. RTC of Makati, G.R.
No. 113926, October 23, 1996)
There is certainly nothing in said circular which
grants lenders carte blanche authority to raise
interest rates to levels which will either enslave
their borrowers or lead to a hemorrhaging of
their assets. Stipulations authorizing iniquitous
 Special Contracts – Credit Transactions
or unconscionable interests are contrary to
morals, if not against the law. (Rey vs. Anson, G.R.
No. 211206, November 7, 2018)
When Usury Law does not apply
1. A contract for the lease of property is not a
loan; hence, the rental paid is not governed
by the Usury Law (Tolentino v. Gonzales, 50
Phil. 5, G.R. No. 26085, August 12, 1927); or
2. The increase of the price of a thing sold on
credit over its cash sale price is not interest
within the purview of the Usury Law, if the
sale is made in good faith and not as a mere
pretext to cover a usurious loan. (Manila
Trading v. Tamaraw, G.R. No. L-22995,
February 28, 1925)
Such price is the selling price for a sale made
on the installment plan. Rationale behind the
invalidity of unconscionable interest rate in
a loan despite the suspension of the Usury
law.
Courts may simply reduce unreasonable
interests
Interest stipulated by the contracting parties is
valid however if the interest rate agreed upon is
iniquitous and unconscionable, the courts may
reduce the same as reason and equity demand.
(Imperial v. Jaucian, G.R No. 149004, April 14,
2004) (Macalinao v. Bank of the Philippine
Islands, G.R. No. 175490, September 17, 2009)
In the case of Medel v. CA, G.R. No. 131622,
November 27, 1998, the court ruled that while
stipulated interest of 5.5% per month on a loan
is usurious pursuant to CBC No. 905, the same
must be equitably reduced for being iniquitous,
unconscionable and exorbitant. It is contrary to
morals. It was reduced to 12% per annum in
consonant with justice and fair play.
Q: ERMA obtained credit facility from
Security Bank Co. by virtue of the Credit
Agreement they executed. They also executed
Suretyship Agreement whereby Ernesto
Marcelo, President, and Sergio Ortiz – Luiz, Jr,
Vice-President are bound by the Credit
Agreement and solidariliy liable with ERMA
for payment. Erma obtained various peso and
dollar denominated loans from Security Bank
evidenced by promissory notes. Under these
promisorry notes, the Interest on the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
principal at varying rates (7.5% per annum
for dollar obligation and 16.75% or 21% per
annum on peso obligation). In default of
payment, ERMA requested for restructuring
of the agreement and offered a certain
property as collateral. However, Security
Bank restructured only partially which ERMA
did not accept. Security Bank demanded
payment against ERMA and the sureties for
the loans inclusive of interest and penalty
charges with additional claim for Interest of
20% per annum on the peso obligation and
7.5% per annum on the dollar obligation
from November 1, 1994 until fully paid and
penalty charge of 2% per month of the total
outstanding principal and interest due and
unpaid. The RTC ruled in favor of SBC but did
not impose the additional claims.
a. Whether ERMA and sureties are liable for
the additional claim?
b. Whether there is novation which would
release the sureties from liability?
A:
a. NO. The Regional Trial Court denied
Security Bank's additional claims for
interests and penalty charges for being
iniquitous, and imposed instead a 12% legal
interest on the total outstanding obligation.
In making this ruling, the Regional Trial
Court took into account the partial payments
made by petitioners, their efforts to
settle/restructure their loan obligations and
the serious slump in their export business in
1993. The Regional Trial Court held that,
under those circumstances, it would be
"iniquitous, and tantamount to merciless
forfeiture of property" if the interests and
penalty charges would be continually
imposed.
b. NONE. The Regional Trial Court and the
Court of Appeals were in agreement that
while there were ongoing negotiations
between Erma and Security Bank for the
restructuring of the loan, the same did not
materialize. Erma offered to restructure its
entire outstanding obligation and delivered
TCT No. M-7021 as collateral, to which
Security Bank counter-offered a partial
restructuring or only up to P5,000,000. This
counteroffer was not accepted by Erma.
There was no new contract executed
between the parties evidencing the
670
 Civil Law
restructured loan. The nature and extent of
respondent Ortiz's liability are set out in
clear and unmistakable terms in the
Continuing Suretyship agreement. Under its
express terms, respondent Ortiz, as surety,
is "bound by all the terms and conditions of
the credit instruments." His liability is
solidary with the debtor and co-sureties;
and the surety contract remains in full force
and effect until full payment of Erma's
obligations to the Bank. (ERMA Industries,
Inc., Ernesto B. Marcelo and Flerida O.
Marcelo v. Bank Corporation and Sergio
Ortiz-Luis, Jr., G.R. No. 191274, December 06,
2017, as penned By J. Leonen)
Floating interest
Floating interest is the interest stipulated by
banks which is not fixed and made to depend
upon the prevailing market conditions,
considering the fluctuating economic conditions.
A stipulation for floating interest is not valid. A
stipulation for a floating rate of interest in a
letter of credit in which there is no reference
rate set either by it or by the Central Bank,
leaving the determination thereof to the sole will
and control of the lender bank is invalid. While it
may be acceptable for practical reasons given
the fluctuating economic conditions for banks to
stipulate that interest rates on a loan not be fixed
and instead be made dependent on prevailing
market conditions, there should be a reference
rate upon which to peg such variable interest
rates. Consolidated Bank and Trust Corp. (Solid
Bank) v. CA, G.R. No. 114672, April 19, 2001)
Q: Samuel borrowed P300,000.00 housing
loan from the bank at 18% per annum
interest. However, the promissory note
contained a proviso that the bank "reserves
the right to increase interest within the limits
allowed by law." By virtue of such proviso,
over the objections of Samuel, the bank
increased the interest rate periodically until
it reached 48% per annum. Finally, Samuel
filed an action questioning the right of the
bank to increase the interest rate up to 48%.
The bank raised the defense that the Central
Bank of the Philippines had already
suspended the Usury Law. Will the action
prosper or not? Why? (2001 Bar)
A: THE ACTION WILL PROSPER. While it is true
that the interest ceilings set by the Usury Law are
671
no longer in force, it has been held that P.D. No.
1684 and CB Circular No. 905 merely allow
contracting parties to stipulate freely on any
adjustment in the interest rate on a loan or
forbearance of money but do not authorize a
unilateral increase of the interest rate by one
party without the other's consent. (PNB v. CA, G.R.
No. 107569, November 8, 1994) To say otherwise
will violate the principle of mutuality of contracts
under Article 1308 of the Civil Code. To be valid,
therefore, any change of interest must be
mutually agreed upon by the parties. (Dizon v.
Magsaysay, G.R. No. L-23399, May 31, 1974) In
the present problem, the debtor not having
given his consent to the increase in interest, the
increase is void.
Escalation Clauses
Escalation clauses refer to stipulations allowing
an increase in the interest rate agreed upon by
the contracting parties. (Juico v. China Banking
Corporation, G.R. No. 187678, April 10, 2013)
Escalation Clause must have de-escalation
clause
Escalation clauses refer to stipulations allowing
an increase in the interest rate agreed upon by
the contraction parties. (Juico v. China Banking
Corporation, G.R. No. 187678, April 10, 2013)
An escalation clause can be valid only if it also
includes a de-escalation clause or a stipulation
that the rate of interest agreed upon shall be
reduced in the event that the maximum rate of
interest is reduced by law or by the Monetary
Board. (Philippine National Bank vs. Intermediate
Appellate Court, G.R. No. 75223, March 14, 1990)
The presence of escalation clause without the
corresponding de-escalation clause in the event
of a reduction of interest as ordered by law
makes the clause one-sided as to make it
unreasonable. Any increase in the interest rate
pursuant to an escalation clause must be the
result of an agreement between two parties.
Increases unilaterally imposed by a bank are in
violation of the principle of mutuality of
contracts. (PNB v. CA, G.R. No. 109563, July 9,
1996; Equitable PCI Bank v. Ng SheungNgor, G.R.
No. 171545, December 19, 2007)
 Special Contracts – Deposit
DEPOSIT 5. Informal – no particular form is required for
the contract.
Deposit is a contract whereby a person
(depositor) delivers a thing to another 6. It is gratuitous, unless there is a:
(depositary), for the principal purpose of
safekeeping it, with the obligation of returning it a. Contrary agreement;
when demanded. (Pineda, 2006) b. The depositary is engaged in the
business of storing goods, like a
A contract of deposit is constituted from the warehouseman (NCC, Art. 1965); or
moment a person receives a thing belonging to c. Where the property is saved from
another, with the obligation of safely keeping it destruction without knowledge of the
and returning the same upon demand. (NCC, Art. owner, the latter is bound to pay the
1962) other person just compensation (as in
case of involuntary deposit).
Its principal purpose is safekeeping and
returning the same. NOTE: Deposit shall be considered as a loan
if there is a stipulation for the payment of
When contract of deposit is perfected interest. (Aquino v. Deala, 63 Phil. 582,
October 21, 1936) The reason is that
A deposit, being a real contract, is perfected by interest can only arise from a contract of
delivery (NCC, Art. 1316), but an agreement to loan (mutuum).
constitute a deposit is merely consensual, and is
therefore binding upon mere consent. (NCC, Art. Q: Is there an instance where there is
1963) compensation even though the
depositary is not engaged in business of
Characteristics of contract of deposit storing goods or there is no agreement
as to compensation?
1. Real contract – it can only be perfected by the
delivery of the object of the contract. (NCC, A: YES. When during a fire, flood, storm, or
Art. 1316) or an agreement to constitute other calamity, property is saved from
deposit is binding but the deposit itself is destruction by another person without the
not perfected until the delivery of the thing. knowledge of the owner, the latter is bound
(NCC, Art. 1963) to pay the former just compensation. (NCC,
Art. 2168)
NOTE: There is no consensual contract of
deposit; there is only a consensual promise 7. The depositary cannot use the thing
to deliver which is binding if such is deposited, unless:
accepted.
a. Expressly permitted by the depositor;
2. Object of the contract must be a movable or
property. This rule applies only to extra- b. Preservation of the thing requires its
judicial deposit. Thus, in cases of judicial use, but only for said purpose. (NCC, Art.
deposit, the subject matter may be a real 1977)
property; or
Deposit v. Mutuum, Commodatum, Agency,
3. Purpose is for the safekeeping of the thing Lease and Sale
deposited. (NCC, Art. 1962) This must be the
principal purpose and not only secondary; DEPOSIT MUTUUM
Purpose
NOTE: If safekeeping is merely secondary, Safekeeping/custody Consumption
the contract is not a deposit but some other When to return
contract. Upon expiration of
Upon demand of the
the term granted to
4. Principal – its existence is not dependent on depositor.
the borrower.
another contract. Subject Matter

UNIVERSITY OF SANTO TOMAS 672

2021 GOLDEN NOTES
 Civil Law
Movable entitled to the thing entitled. (NCC, Art.
(extrajudicial) or Money or other 1968); or
may be immovable fungible thing.
(judicial). b. Necessary – Made in compliance with a
Relationship legal obligation, or on the occasion of any
Depositor- calamity, or by travelers in hotels and
Lender-borrower inns, or by travelers with common
depositary
Compensation carriers. (NCC, Art. 1996 and 1998)
Generally gratuitous.
May be gratuitous or EXTRA-
No compensation of BASIS JUDICIAL
with a stipulation to JUDICIAL
things deposited
pay interest. There
with each other Will of the
can be compensation
(except by mutual court; takes
of credits. place when
agreement).
an
DEPOSIT COMMODATUM attachment or
Principal Purpose seizure of
Will of the
property in
Transfer of use of Creation contracting
Safekeeping. litigation is
the thing. parties.
ordered, thus
Nature it is the court
order that
May be gratuitous Always gratuitous
gives rise to
or onerous. by its essence.
this kind of
Object deposit.
In extra-judicial Both movable and The
deposit, only immovable sequestrator
movables may be property may be possesses the
objects thereof. objects thereof. thing in
Demandability virtual
The
Return of the thing representatio
Depositor can depositary
cannot be n of the
demand the thing holds the
demanded until the As to person who
at will. thing by will
lapse of the period. Possessio by the
of the
n of Thing decision of
depositor.
DEPOSIT LEASE the court
(Rabuya,
Principal Purpose should turn
2017)
out to be its
Safekeeping. Use of the thing. owner and
When to return proprietor.
Upon termination (Rabuya,
Upon demand of 2017)
of the lease
the depositor. There is a
contract. Status No contract.
contract.
Kinds of deposit Security or to
ensure the
1. Judicial (sequestration) (NCC, Articles 1964 right of a
and 2005) – It takes place when an party to
Custody and
attachment or seizure of the property in Purpose property or to
safekeeping.
litigation is ordered. recover in
case of
2. Extra-judicial (NCC, Arts. 1968 and 2004) favorable
judgment.
a. Voluntary – The delivery is made by the Movables or
Subject Movables
will of the depositor or by two or more immovables
Matter only
persons each of whom believes himself but generally

673
 Special Contracts – Deposit
immovable. but are considered simple loans because they
earn interest. (NCC, Art. 1980) Bank deposits are
in the nature of irregular deposit but they are
Generally
really loans governed by the law on loans. (De
gratuitous
Always Leon, 2013) (1997, 1998, 2009 Bar)
Cause but may be
onerous
compensate
NOTE: An irregular deposit is a deposit in which
d
the depositary is not to return the specific
Upon order of
When money deposited, but he is to return an equal
the court or Upon
must the sum to the depositor.
when demand of
thing be
litigation is depositor.
returned Nature of advance payment in a contract of
ended.
sale
Person who
In whose Depositor or
has a right or
behalf it third person A so called deposit of an advance payment in the
in behalf of
is held designated. case of a sale is not the deposit contemplated
the winner.
under Art. 1962. It is that advance payment
upon which ownership is transferred to the
Ownership of the thing deposited in a
seller once it is given subject to the completion
contract of deposit of payment by the buyer under an agreement.
(Cruz v. Auditor General, G.R. No. L-12233, May
The depositor need not be the owner of the thing 30, 1959)
deposited because the purpose of the contract is
safekeeping and not transfer of ownership. (NCC, PARTIES TO A CONTRACT OF DEPOSIT
Art. 1984)
1. Depositary – to whom the thing is deposited;
NOTE: A deposit may also be made by two or and
more persons each of whom believes himself 2. Depositor – the one who deposits the thing.
entitled to the thing deposited with a third
person, who shall deliver it in a proper case to
Effects of incapacity of the depositary or
the one to whom it belongs.
depositor
Rent of safety deposit boxes
1. If the depositary is capacitated, he is subject
to all the obligations of a depositary whether
The rent of safety deposit boxes is an ordinary the depositor is capacitated or not (NCC, Art.
contract of lease of things and not a special kind
1970); and
of deposit because the General Banking Law of
2000 has excluded the renting out of safety
NOTE: Under the law, “persons who are capable
deposit box where the bank shall act as agent or
cannot allege the incapacity of those with whom
depositary with the obligation to keep the funds,
they contracted.” (NCC, Art. 1397)
securities and other effects which it receives duly
separate from the bank’s own assets and
2. If the depositary is incapacitated, he does not
liabilities.
incur the obligation of a depositary.
However, he is liable to:
The case of Sia v. CA (G.R. No. 102970, May 13,
1993) enunciating that a rent of a safety deposit
(1) return the thing deposited while still in
box is a special kind of deposit, was decided
his possession; or
under the former General Banking Act. However,
the Supreme Court has not yet decided a case
(2) pay the depositor the amount by which he
abandoning the ruling in Sia v. CA, making it
may have benefited himself with the thing or
conform with the General Banking Law of 2000.
its price subject to the right of any third
person who acquired the thing in good faith,
Fixed, savings and current deposits in banks
in which case the depositor may only bring
an action against him for its recovery. (NCC,
Fixed, savings and current deposits in banks and
Art. 1971)
other similar institutions are not true deposits

UNIVERSITY OF SANTO TOMAS 674

2021 GOLDEN NOTES
 Civil Law
As to depositor
He can exercise a reinvindicatory action at any
time either against the depositary, if the thing
deposited is still in the latter’s possession, or
against a third person who acquired the thing
provided that such third person acted in bad
faith.
If the thing can no longer be restored, the
depositor will have the right to demand payment
by which the depositary may have enriched
himself with the thing or its price.
A guardian is not a depositary of the ward’s
property
He is not holding the funds of the ward merely
for safekeeping exclusively, but also intended for
the latter’s maintenance and support. Losses, if
any, without the fault of the guardian shall be
deducted from the funds of the ward. (Philippine
Trust Co. v. Ballesteros, G.R. No. L-8261, April 20,
1956)
Obligations of the depositor
1. Payment for necessary expenses for
preservation:
- If the deposit is gratuitous – depositor
must reimburse depositary; and
- With compensation – no need for
reimbursement; expenses are borne by
depositary.
GR: Depositor must pay losses incurred by
depositary due to the character of the thing
deposited.
XPNs:
- When at the time of deposit, the
depositor was not aware of the
dangerous character of the thing or was
not expected to know it;
- When the depositor notified the
depositary; or
- When the depositary was aware of it
without advice from the depositor.
2. In case of an onerous deposit, to pay the
compensation agreed upon as consideration
for the deposit.
Diligence required in a contract of deposit
675
The diligence required of a depositary is that
agreed upon by the parties, who may limit or
expand the degree of diligence required. In the
absence of any stipulation, the degree of
diligence required is lower if the deposit is
gratuitous and higher if the deposit is with
compensation. (NCC, Art. 1972) Ordinarily, the
depositary must exercise over the thing
deposited the same diligence he would exercise
over his property.
Loss through force majeure or expropriation
If the depositary by force majeure or government
order loses the thing and receives money or
another thing in its place, he shall deliver the
sum or other thing to the depositor. (NCC, Art.
1990)
Manner of deposit
The depositary may change the manner of the
deposit if he may reasonably presume that the
depositor would consent to the change if the
latter knew of the facts of the situation.
However, before the depositary may make such
change, he shall notify the depositor thereof and
wait for his decision, unless delay would cause
danger. (NCC, Art. 1974)
Right of depositary to commingle
The depositary may commingle grain or other
articles of the same kind and quality, in which
case the various depositors shall own or have a
proportionate interest in the mass. (NCC, Art.
1976)
XPN: Depositary can only commingle if the
articles are:
4. Of the same quality; and
5. There is no contrary stipulation
DEPOSITARY’S RIGHT OF RETENTION
Right of the depositary to retain the thing in
pledge
The depositary has the right to retain the thing
in pledge until full payment of what may be due
him by reason of the deposit. (NCC, Art. 1994)
This is an example of pledge created by
operation of law. (NCC, Art. 2121)
Duty of the depositary’s heir who sold the
 Special Contracts – Deposit
thing deposited in good faith
The *depositor’s heir who in good faith may
have sold the thing he did not know was
deposited, shall only be bound to return the price
he may have received or to assign his right of
action against the buyer in case the price has not
been paid him. (NCC, Art. 1991)
The provision applies only when the depositary
has died and left heir/s who took possession of
the thing in the concept of an owner and sold it
in good faith to a third person.
NOTE: The word *“depositor’s” in this part
should be read as “depositary’s.” (De Leon,
2013) If the heir acted in bad faith, he is liable for
damages. The sale or appropriation of the thing
deposited constitutes estafa. [(RPC, Art. 315 (b)]
To whom it must be returned
1. The depositor, to his heirs and successors,
or to the person who may have been
designated in the contract (NCC, Art. 1972);
2. If the depositor was incapacitated at the time
of making the deposit, to his guardian or
administrator or to the depositor himself
should he acquire capacity (NCC, Art. 1970,);
3. Even if the depositor had capacity at the
time of making the deposit but he
subsequently loses his capacity during the
deposit, the thing must be returned to his
legal representative (NCC, Art. 1986); or
4. Two or more persons each claiming to be
entitled to a thing may deposit the same
with a third person. In such case, the third
person assumes the obligation to deliver to
the one to whom it belongs.
NOTE: The action to compel the depositors to
settle their conflicting claims among themselves
would be in the nature of an interpleader. (Sec. 1,
Rule 62, Rules of Court)
Proving the ownership of the thing deposited
GR: The depositary cannot demand that the
depositor should prove his ownership of the
thing deposited. (NCC, Art. 1984)
XPN: Should he discover that the thing has been
stolen and who its true owner is, he must advise
the latter of the deposit.
NOTE: If the depositary has reasonable grounds
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
to believe that the thing has not been lawfully
acquired by the depositor, the former may
return the same.
If the depositary knew the identity of the
owner of the thing deposited
The depositary may not return the thing to the
owner should he knew of the identity of the
latter. He is not authorized to return the thing
unceremoniously to the alleged owner without
the knowledge of the depositor. His duty is
merely to advise the owner of the deposit.
If the depositor insists on his ownership as
against the true owner, the depositary may file
an interpleader suit against both of them to avoid
responsibility. If the identity of the true owner
cannot be ascertained, the depositary may return
the thing to the depositor. (Pineda, 2006)
Where it must be returned
GR: The thing deposited must be returned at the
place agreed upon.
XPN: In the absence of stipulation, at the place
where the thing deposited might be, even if it
should not be the same place where the original
deposit was made provided the transfer was
accomplished without malice on the part of the
depositary. (NCC, Art. 1987)
When it must be returned
GR: The thing deposited should be returned
upon demand or at will, whether or not a period
has been stipulated.
XPNs:
1. The thing is judicially attached while in the
depositary’s possession;
2. The depositary was notified of the
opposition of a third person to the return or
the removal of the thing deposited (NCC, Art.
1988); or
3. In case of gratuitous deposit, if the
depositary has a justifiable reason for not
keeping the deposit. If the depositor refuses,
the depositary may secure its consignation
from the court. (NCC, Art. 1989)
VOLUNTARY DEPOSIT
It is a contract or judicial relation wherein a
676
 Civil Law
thing is delivered at the will of a person
(depositor) to another (depositary) for the
purpose of safekeeping by the latter coupled
with the obligation of returning it upon demand.
(Pineda, 2006)
A voluntary deposit is that wherein the delivery
is made by the will of the depositor. (NCC, Art.
1968)
A deposit may also be made by two or more
persons each of whom believes himself entitled
to the thing deposited with a third person, who
shall deliver it in a proper case to the one to
whom it belongs. (NCC, Art. 1968)
Form of contract of deposit
A contract of deposit may be entered into orally
or in writing. (NCC, Art. 1969)
NOTE: The above article follows the general rule
that contracts shall be obligatory in whatever
form they may have been entered into provided
all the essential requisites for their validity are
present. (NCC, Art. 1356) Thus, except for the
delivery of the thing, there are no formalities
required for the existence of the contract. (De
Leon, 2013)
Difference between voluntary and necessary
deposit
There is a freedom of action which is implied in
the phrase “delivery is made by the will of the
depositor,” unlike in the case of a necessary
deposit. In other words, the depositor in a
voluntary deposit is free to choose the
depositary.
Obligations of a depositary in voluntary
deposit
1. To keep the thing safely and return it (NCC,
Art. 1972);
2. Exercise same diligence as he would
exercise over his own property;
GR: Not to deposit the thing with a third
person.
XPNs:
a. When expressly authorized by
stipulation; and
677
b. When the preservation of the thing
requires its use. (NCC, Art. 1977)
NOTE: Depositary is liable for the loss if:
a. He deposits the thing to a third person
without authority, even though the loss
is due to fortuitous events; or
b. He deposits the thing to a third person
who is manifestly careless or unfit
although there is authority.
3. If the thing should earn interest:
a. Collect interest as it falls due; and
b. Take steps to preserve the value and
rights corresponding to it.
4. Not to commingle things if so stipulated;
5. GR: Not to make use of the thing deposited;
XPNs:
1. When preservation of thing deposited
requires its use;
2. When authorized by depositor.
NOTE:
GR: In such case, it is no longer a deposit but
a contract of loan or commodatum, as the
case may be.
XPN: If the principal reason for the contract
is still safekeeping, it is still deposit.
6. When the thing deposited is delivered
sealed and closed:
a. Return the thing in the same condition;
b. Pay damages if seal be broken through
his fault; and
c. Keep the secret of the deposit when seal
is broken with or without his fault.
(NCC, Art. 1981)
NOTE: However, the depositary is authorized
to open the seal or lock when:
a. There is presumed authority (i.e. the
key is delivered);
b. Out of necessity (NCC, Art. 1982);
c. When the instructions of the depositor
as regards the deposit cannot be
executed without opening the box or
 Special Contracts – Deposit
receptacle. (Rabuya, 2015)
7. GR: Pay for any loss or damage that may
arise due to his fault;
XPN: Liability of loss through fortuitous
event.
XPNs to XPN: Even in case of loss through
fortuitous event, still liable if:
a. If it is so stipulated;
b. He uses the thing without depositor’s
permission;
c. He delays its return; or
d. He allows others to use it (even if he
himself is authorized to use it). (NCC,
Art. 1979)
8. Return the thing deposited with all its fruits,
accessions, and accessories (NCC, Art. 1983);
and
9. Pay interest on sums converted to personal
use if the deposit consists of money.
Extinguishment of voluntary deposit
a. Loss or destruction of thing deposited;
b. In gratuitous deposit, upon death of either
depositor or depositary (NCC, Art. 1995); or
c. Other causes.
e.g. return of thing, novation, expiration of
the term, fulfillment of resolutory condition.
NECESSARY DEPOSIT (2007 BAR)
A necessary (involuntary) deposit is one
wherein the deposit is not made by the will of
the depositor but created by force of the law or
on occasion of a calamity.
When is deposit considered as necessary
1. When it is in compliance with a legal
obligation;
2. It takes place on the occasion of any calamity,
such as fire, storm, flood, pillage, shipwreck,
or other similar events (NCC, Art. 1996);
3. Made by passengers with common carriers;
or
4. Made by travelers in hotels or inns. (NCC,
Art. 1998)
Governing law in cases of necessary deposit
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. In compliance with a legal obligation –
Governed by the law establishing it, and in
case of deficiency, the rules on voluntary
deposit; and
2. On occasion of a calamity – Governed by the
provisions concerning voluntary deposit.
(NCC, Art. 1968–1971)
Keepers of hotels or inns
1. The keepers of hotels or inns shall be held
responsible for loss of thing in case of deposit
when both are present:
a. They have been previously informed by
guest about the effects the latter
brought in; and
b. The guest has taken precautions
prescribed for their safekeeping.
2. They are liable regardless of the degree of
care exercised when:
a. Loss or injury is caused by his
employees or even by strangers (NCC,
Art. 2000); or
b. Loss is caused by act of thief or robber
when there is no use of arms or
irresistible force. (NCC, Art. 2001)
3. The keepers of hotels or inns are not liable for
loss of thing in case of deposit when:
a. Loss or injury is caused by force
majeure (NCC, Art. 2000);
b. Loss due to the acts of guests, his family,
his employees, or visitors (NCC, Art.
2002); and
c. Loss arises from the character of the
goods. (NCC, Art. 2002)
NOTE: Liability by the hotel or innkeeper
commences as soon as there is evident intention
on the part of the travelers to avail himself of the
accommodations of the hotel or inn. It does not
matter whether compensation has already been
paid or not, whether the guest has already
partaken of food and drink or not. (Paras, 2008)
Posting of notice of exempt from liability
Hotel/Inn-keepers cannot escape or limit
liability by stipulation or the posting of notices.
Any stipulation between the hotel keeper and the
guest whereby the responsibility of the former
(NCC, Arts. 1998-2001) is suppressed or
678
 Civil Law
diminished shall be void. (NCC, Art. 2003) The
hotel or inn keepers are still liable regardless of
the posting of notices exempting themselves
from any liability.
Extent of liability of the hotel keepers in case
of loss
1. It covers liability in hotel rooms which
comes under the term “baggage” or articles
such as clothing as are ordinarily used by
travelers; and
2. It includes lost or damages in hotel’s
annexes such as vehicles in the hotel’s
garage.
Q: Venus was the owner of Suzuki Grand
Vitara which was insured with Pioneer
Insurance for loss and damage. When she
arrived and checked in at Heaven’s Hotel
before midnight, its parking attendant, John,
got the key to said Vitara. At about one in the
morning, Venus was awakened in her room
by a telephone call from the Hotel Chief
Security Officer who informed her that her
Vitara was carnapped while it was parked
unattended at the parking area of the bank
near the hotel. May the insurance company,
by right of subrogation, recover from the
hotel the damages it paid to Venus?
A: YES. The contract of necessary deposit
existed between the insured Venus and the
hotel. Article 1962, in relation to Article 1998, of
the Civil Code defines this contract. Plainly,
Venus deposited for safekeeping her vehicle
through the hotel’s employee. From Venus’
delivery, when she handed the keys to John, the
contract was perfected. Thus, there is the
obligation of safely keeping it and returning it.
Ultimately, the hotel is liable for the loss of
Venus’ vehicle. (Durban Apartments Corporation
v. Pioneer Insurance Surety Corporation, G.R. No.
179419, January 12, 2011)
Right to retain given to hotel-keeper or inn-
keeper
The hotel-keeper has a right to retain the things
brought into the hotel by the guest, as a security
for credits on account of lodging, and supplies
usually furnished to hotel guests. (NCC, Art.
2004)
Reason: The right is given to hotel-keepers to
compensate them for the liabilities imposed
679
upon them by law. (De Leon, 2013)
NOTE: This is in the nature of the pledge created
by operation of law. The act of obtaining food or
accommodation in a hotel or inn without paying
therefor constitutes estafa. [RPC, Art. 135, Sec.
(2)(e)]
A safety deposit box in a hotel is a contract of
necessary deposit. The existing relationship is
one of depositor and depositary. (YHT Realty
Corporation v. CA, G.R. No. 126780, February 17,
2005)
JUDICIAL DEPOSIT
Judicial deposit (sequestration) takes place
when an attachment or seizure of property in
litigation is ordered by a court. (NCC, Art. 2005)
It is auxiliary to a case pending in court. The
purpose is to maintain the status quo during the
pendency of the litigation or to insure the right
of the parties to the property in case of a
favorable judgment. (De Leon, 2013)
Object of judicial deposit
The object of judicial sequestration may be
movables or immovable. (NCC, Art. 2006)
Q: When will the properties sequestered
cease to be in custodia legis?
A: They cease to be in custodia legis when the
insolvency proceedings of a partnership
terminated because the assignee in insolvency
has returned the remaining assets to the firm,
said properties cease to be in custodia legis. (Ng
Cho Cio, et al. v. Ng Diong & Hodges, L-14832,
January 28, 1961)
Obligation of depositary of sequestered
property
The depositary of sequestered property is the
person appointed by the court. (NCC, Art. 2007)
He has the obligation to take care of the property
with the diligence of a good father of a family
(NCC, Art. 2008) and he may not be relieved of
his responsibility until the litigation is ended or
the court so orders. (NCC, Art. 2007; De Leon,
2013)
Applicable Law
 Special Contracts – Deposit
The law on judicial deposit is remedial or
procedural in nature. Hence, the Rules of Court
are applicable. The relevant provisions of the
Rules of Court are Rule 57 (Preliminary
Attachment), Rule 59 (Receivership), and Rule 60
(Replevin). Rule 127 provides for attachment in
criminal cases. (De Leon, 2013)
REAL MORTGAGE
Real estate mortgage (REM) is a contract
whereby the debtor secures to the creditor the
fulfillment of the principal obligation, specially
subjecting to such security immovable property
or real rights over immovable property in case
the principal obligation is not fulfilled at the time
stipulated. (12 Manresa 467)
Characteristics of real mortgage
1. It is a real right;
2. It is an accessory contract;
NOTE: If the principal obligation is
VOID, the mortgage is also VOID. (Reyes
v. Gonzales, [C.A.] 45 O.G. No. 2, p. 831)
But if a mortgage is void because it was
not made by the owner of the property,
the principal contract of loan may still
be valid. (PNB v. Rocha, G.R. No. L-32260,
December 29, 1930)
3. Unilateral; it creates only an obligation on
the part of the creditor who must free the
property from encumbrance once the
obligation is fulfilled.
4. It is indivisible;
5. It is inseparable;
NOTE: The mortgage adheres to the
property, regardless of who its owner
may subsequently be. (McCullough v.
Veloso, 46Phil.1)
6. It is real property;
7. It is subsidiary;
NOTE: Once the obligation has been paid or
satisfied, the property must be released
from the encumbrance imposed. The
mortgage is answerable only if the principal
obligation is not paid.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Laws that govern contract of real mortgage
1. NCC;
2. Mortgage Law;
3. Property Registration Decree (PD 1529);
4. Sec. 194, as amended by Act No. 3344,
Revised Administrative Code (Phil. Bank of
Commerce v. De Vera, G.R. No. L- 18816,
December 29, 1962); and
5. R.A. 4882 – law governing aliens who
become mortgagees.
Kinds of real mortgages
1. Voluntary or Conventional mortgage – It is
constituted voluntarily by the contracting
parties or by the will of the owner of the
property on which it was created;
2. Legal mortgage – It is required by law to be
executed in favor of certain persons (NCC,
Arts. 2125, par. 2; 2082 and 2083); and
3. Equitable mortgage – Although lacking the
formalities of a mortgage, shows the
intention of the parties to make the property
a security for debt.
Consideration in mortgage
Its consideration is the same as of the principal
contract from which it receives its life, and
without which it cannot exist as an independent
contract. (China Banking Corp. v. Lichauco, G.R.
No. L-22001, November 4, 1924)
Requisites for a valid constitution of a real
mortgage (1991, 1994, 1996, 1999, 2001
Bar)
The following requisites are essential to the
contract of a real estate mortgage:
1. That it be constituted to secure the
fulfillment of a principal obligation;
2. That the mortgagor be the absolute owner of
the thing mortgaged;
3. That the person constituting the mortgage
have the free disposal of their property, and
in the absence thereof, that they be legally
authorized for the purpose;
4. It must appear in a public instrument (NCC,
Art. 2125); and
5. Recording in the Registry of Property is
necessary to bind third persons.
680
 Civil Law
NOTE: A recorded Real Estate Mortgage is a loan. Despite having the opportunity to prove
right in rem, a lien on the property whoever its that the admission of Jesus is false, petitioners
owner maybe. (Rabuya, 2017) failed to present rebuttal evidence. They also
failed to present evidence to support their
Registration operates as a notice of the mortgage allegation that Eleanor received the loan
to others, but neither adds to its validity nor proceeds or that Eleanor's non-payment of her
converts an invalid mortgage into a valid one alleged personal loan with BAP caused the
between the parties. The person in whose favor foreclosure of the mortgage. What petitioners
the law establishes a mortgage has the right to presented were mere denials. (Luntao vs. BAP,
demand the execution and the recording of the G.R. 204412, September 20, 2017, as penned by J.
document in which the mortgage is formalized. Leonen)
[NCC, Art. 2152(2)]
Real estate mortgage v. Contract of sale with
Q: Vicente was the owner of a real property right of repurchase
in Davao City. He executed an SPA in favor of
his sister, Nanette. She entered into contract SALE
REAL
of loan with BAP and used Vincente’s WITH
BASIS ESTATE
property as collateral. However, she failed to RIGHT OF
MORTGAGE
pay the obligation to BAP when it fell due. REPURCHASE
Demand letters were sent but to no avail. Principal and
Nature of Accessory
BAP instituted an Extra-Judicial Foreclosure independent
of Vincente’s property. Vicente and Nanette Contract contract
contract.
filed a complaint for declaration of nullity of Redemption
real estate mortgage against BAP. In the Divisibility of can be partial.
complaint, Nanette alleges that she signed Indivisible
Contract (NCC, Articles
blank loan forms, she did not receive the 1612-1613)
proceeds of the loan, and another sister, Real and
named Eleonor, was included in the loan Subject Only to real
personal
documents when only Nanette is empowered Matter property.
property.
by Vincente to enter contract of loan. Thus, There is
they contend that since there is absence of There is no
transfer of title
consideration, the loan contract is void which transfer of
and possession
means its accessory contract, real mortgage, Transfer of title and
of the
is void as well. RTC ruled in favor of BAP and ownership possession
property,
dismissed the complaint finding that Vicente of the
although
and Nanette indeed applied for loan and property.
conditional.
received the proceeds through the account Creditor has
under the name of Holy Infant Medical The vendee a
no right to
Clinic/Nanette Luntao/Eleanor Luntao. Also, retro is
the fruits of
it relied heavily on the letter of Jesus Luntao entitled to the
Entitlement to the property
in court showing an admission of the fruits even
fruits during the
existence of the loan. CA denied the appeal. during the
pendency of
Whether the contract of loan entered by period of
the
Nanette is void thus nullifies the contract of redemption.
mortgage.
real mortgage being an accessory contract. If the debtor
As soon as
fails to pay
A: NO. As an accessory contract, a mortgage there is a
his debt, the
contract's validity depends on the loan consolidation
creditor
contract's validity. Thus, the contract of loan of title in the
Appropriation cannot
between petitioners and private respondent vendee a retro,
of Property appropriate
must be valid. The real mortgage contract he may
the property
remains valid because the main contract of loan dispose of it as
mortgaged
is found to be valid when it was proven during an absolute
nor dispose
trial that Vicente and Nanette received the owner.
of it.
proceeds of the loan and further supported by
the letter of Jesus Luntao of the existence of the Rights of mortagor

681
 Special Contracts – Deposit
To alienate the mortgaged property but the
mortgage shall remain attached to the property.
(NCC, Art. 2130)
Q: Bucton alleged that Concepcion borrowed
the title to her house and lot on the pretext
that she was going to show it to an interested
buyer. However, Concepcion, instead,
obtained a loan in the amount of P30,000.00
from Rural Bank of El Salvador (Rural Bank)
that as security for the loan, Concepcion
mortgaged Bucton’s house and lot to Rural
Bank in her personal capacity, using a forged
SPA.
Would Bucton be bound by such real estate
mortgage if the Rural Bank later on
forecloses the property, after Concepcion
defaults in payment?
A: NO. The mere fact that the agent was
authorized to mortgage the property is not
sufficient to bind the principal, unless the deed
was executed and signed by the agent for and on
behalf of his principal. The authorized agent
failed to indicate in the mortgage that she was
acting for and on behalf of her principal. The
Real Estate Mortgage, explicitly shows on its
face, that it was signed by Concepcion in her own
name and in her own personal capacity. Thus,
Bucton cannot be bound by the acts of
Concepcion. (Bucton v. Rural Bank of El Salvador,
G.R. No. 179625, February 24, 2014)
Rights of a mortgagee
To claim from a third person in possession of the
mortgaged property the payment of the part of
the credit secured by the property which said
third person possesses. (NCC, Art. 2129)
Prior demand must have been made on the
debtor and the latter failed to pay. (Bank of the
Philippine Islands v. V. Concepcion E. Hijos, G.R.
No. 27701, July 21, 1928)
Right to possession
The mortgagee has no right or claim to the
possession of the property. Such possession is
only a security for the payment of the sum
borrowed. The debtor merely subjects the
property to a lien but the ownership thereof is
not parted. (De Leon, 2013)
Registration of mortgage
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Registration of mortgage is a matter of right. By
executing the mortgage, the mortgagor is
understood to have given his consent to its
registration, and he cannot be permitted to
revoke it unilaterally. Registration operates as a
notice of the mortgage to others, but neither adds
to its validity nor converts an invalid mortgage
into a valid one between the parties.
Mortgage as a real and inseparable right
Mortgage is a real and inseparable right. The
mortgage directly and immediately subjects the
property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the
obligation for whose security it was constituted.
(NCC, Art. 2126)
Effect of registration as to better right of
third parties
A registered mortgage right over property
previously sold is inferior to the buyer’s
unregistered right.
Reason: If the original owner had sold the thing,
then he no longer had ownership and free
disposal of it so as to be able to mortgage it.
(State Investment House, Inc. v. CA, G.R. No.
115548, March 5, 1996)
Prohibition against encumbrance of
mortgaged land, without mortgagors’
consent
In this case, rights over the property, which
came into existence after the execution of the
deed, cannot be annotated as an adverse claim
on the title of the land over the mortgagee’s
opposition. (Rivera v. Peña, G.R. No. L-11781,
March 24, 1961)
Subsequent registration of an adverse claim
A prior registration of a lien creates a
preference. Hence, the subsequent annotation of
an adverse claim cannot defeat the rights of the
mortgagee or the purchaser at the auction sale
whose rights are derived from a prior mortgage
validly registered.
Q: Laguna West Multi-Purpose Cooperative is
a cooperative recognized under Republic Act
No. 6657 or the Comprehensive Agrarian
Reform Law. It allegedly entered into a joint
venture agreement with farmer-beneficiaries
682
 Civil Law
through Certificates of Land Ownership
Award (CLOA) in Silang, Cavite. While
respondent was negotiating with the farmer-
beneficiaries, petitioner Cathay Metal
Corporation entered into Irrevocable
Exclusive Right to Buy (IERB) contracts with
the same farmer-beneficiaries.
In 1996, respondent caused the annotation of
its adverse claim on the farmer-beneficiaries’
certificates of title. Petitioner and the
farmer-beneficiaries executed contracts of
sale of the properties. Transfer certificates of
title were also issued in the name of
petitioner in the same year. The annotations
in the original titles were copied to
petitioner’s titles. Respondent’s Vice-
President, Orlando dela Peña, sent two
letters to petitioner, informing it of
respondent’s claim to the properties.
Petitioner did not respond. On September 15,
2000, petitioner filed a consolidated petition
for cancellation of adverse claims on its
transfer certificates of title with the Regional
Trial Court of Tagaytay City. Does the
respondent had a claim over the property
under the Joint Venture Agreement?
A: NO. The purpose of annotations of adverse
claims on title is to apprise the whole world of
the controversy involving a property. These
annotations protect the adverse claimant's
rights before or during the pendency of a case
involving a property. It notifies third persons
that rights that may be acquired with respect to
a property are subject to the results of the case
involving it. Section 70 of Presidential Decree
No. 1529 or the Property Registration Decree
governs adverse claims. It describes an adverse
claim as a statement in writing setting forth a
subsequent right or interest claimed involving
the property, adverse to the registered owner. A
claim based on a future right does not ripen into
an adverse claim as defined in Section 70 of
Presidential Decree No. 1529. A right still subject
to negotiations cannot be enforced against a title
holder or against one that has a legitimate title
to the property based on possession, ownership,
lien or any valid deed of transfer. (Cathay Metal
Corporation v. Laguna West Multi-Purpose
Cooperative, Inc., G.R. No. 172204, July 2, 2014, as
penned by J. Leonen)
Extent of Mortgage
GR: Mortgage extends to the following:
683
1. Natural accessions;
2. Improvements;
3. Growing fruits;
4. Rents or income not yet received when
the obligation becomes due; and
5. Amount of indemnity granted or owing
to the proprietor from:
a. Insurance proceeds; or
b. Expropriation price. (NCC, Art.
2127)
Reason: Ownership of such accessions and
accessories and improvements subsequently
introduced also belongs to the mortgagor who is
the owner of the principal. (Castro, Jr. v. Court of
Appeals, G.R. No. 97401, December 6, 1995)
XPNS:
1. Express stipulation excluding them; or
2. Evidence sufficiently overthrowing the
presumption that the mortgagor owns
the mortgaged property.
Effects of Mortgage
1. It creates a real right; and
2. It creates merely an encumbrance.
Mortgagee in Good Faith
A mortgagee has a right to rely in good faith on
the certificate of title of the mortgagor of the
property given as security and in the absence of
any sign that might arouse suspicion, has no
obligation to undertake further investigation.
Hence, even if the mortgagor is not the rightful
owner of, or does not have a valid title to, the
mortgaged property, the mortgagee in good faith
is nonetheless entitled to protection.” (De Leon,
2013)
The doctrine does not apply to a situation where
the title is still in the name of the rightful owner
and the mortgagor is a different person
pretending to be the owner. In such a case, the
mortgagee is not an innocent mortgagee for
value and the registered owner will generally
not lose his title. (Ereña vs. Querrer-Kauffman,
G.R. No. 165853, June 22, 2006)
Alienation or assignment of mortgage credit
The mortgage credit may be alienated or
assigned to a third person, in whole or in part,
with the formalities required by law. (NCC, Art.
 Special Contracts – Deposit
2128)
NOTE: Even if the alienation is not registered, it
would still be valid as between the parties.
(Lopez v. Alvarez, GR No. L-3438, October 12,
1907) There is no need to obtain the consent of
the debtor/mortgagor.
Stipulations on mortgage contract
1. Including after-acquired properties
Status: Valid
Purpose: To maintain, to the extent of the
allowed by the circumstances, the original
value of the property given as a security.
Such stipulation is common where the
properties given as collateral are perishable
or subject of inevitable wear and tear.
2. Blanket or Dragnet Clause
Status: Valid
A dragnet clause is a mortgage provision
which is specifically phrased to subsume all
debts of past or future origin. It is a valid
and legal undertaking, and the amounts
specified as consideration in the contracts
do not limit the amount for which the
pledge or mortgage stands as security, if
from the four corners of the instrument, the
intent to secure future and other
indebtedness can be gathered. A pledge or
mortgage given to secure future
advancements is a continuing security and
is not discharged by the repayment of the
amount named in the mortgage until the full
amount of all advancements shall have
been paid. (Premiere Development Bank v.
Central Surety & Insurance, Inc., G.R. No.
176246, February 13, 2009)
A mortgage with a dragnet clause is an
“offer” by the mortgagor to the bank to
provide the security of the mortgage for
advances of and when they were made.
XPN: it can be said that the “offer” by the
mortgagor to the bank to provide the
security of the mortgage for advances of
and when they were made.
NOTE: It is a clause which operates as a
convenience and accommodation to the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
borrowers as it makes available additional
funds without their having to execute
additional security documents, thereby
saving time, travel, loan closing costs, costs
of extra legal services, recording fees. etc.
Statement of the amount in a mortgage
contract in a dragnet clause
The amount stated in the contract is not
controlling in case of mortgage securing
future advancements. The amount named
in the contract does not limit the amount
for which the mortgage stand as a security,
if, from the four corners of the instrument
the intent to secure future and other
indebtedness can be gathered.
Q: Petitioner obtained a loan of P20K
from defendant Rural Bank of Kawit.
The loan was secured by a REM over a
parcel of land. The mortgage contract
states that the mortgage will cover the
payment of the loan of P20K and such
other loans or other advances already
obtained or to be obtained by the
mortgagors from the bank. The loan of
P20k was fully paid. Thereafter they
again obtained a loan of P18K, secured
by the same mortgage. The spouses
defaulted. The bank extra-judicially
foreclosed the mortgage. Was the
foreclosure sale valid?
A: YES. It has long been settled that
mortgages given to secure future
advancements are valid and legal contracts;
that the amounts named as consideration in
said contract do not limit the amount for
which the mortgage may stand as security,
if from the four corners of the instrument
the intent to secure future and other
indebtedness can be gathered. A mortgage
given to secure advancement is a
continuing security and is not discharged
by repayment of the amount named in the
mortgage, until the full amount of the
advancements is paid. (Mojica v. CA, G.R. No.
94247, September 11, 1991)
3. Forbidding of alienation or assignment of
mortgage credit
Status: Void. (NCC, Art. 2130)
Reason: Such prohibition would be contrary
684
 Civil Law
to the public good inasmuch as the
transmission of property should not be
unduly impeded.
NOTE: In case of alienation, the transferee is
bound to respect the encumbrance because
being a real right, the property remains to
the fulfillment of the obligation for whose
guaranty it was constituted.
Assignment of credit, right or action shall be in
a public instrument in order to affect third
persons
An assignment of a credit, right or action shall
produce no effect as against third persons,
unless it appears in a public instrument, or
the instrument is recorded in the Registry of
Property in case the assignment involves real
property. (NCC, Art. 1625)
4. Stipulation requiring mortgagee’s consent
before alienation
Status: Void for violating Article 2130 of the
NCC. While such provision does not
absolutely prohibit the mortgagor from
selling his mortgaged property, what it does
not outrightly prohibit, it nevertheless
achieves. The mortgagee can simply
withhold its consent and thereby, preventing
the mortgagor from selling the property. (De
Leon, 2013)
NOTE: Such stipulation nonetheless
contravenes public policy, being an undue
impediment or interference on the
transmission of property.
5. Grant of first refusal
Status: Valid.
The consideration for the loan-mortgage
may be said to include the consideration for
the right of first refusal. The mortgagor has
the right to sell the mortgaged property
without securing the consent of the
mortgagee, but has the obligation under a
right of refusal provision to notify the
mortgagee of his intention to sell the
property, and give him the priority over
other buyers.
NOTE: A sale made in violation of the
mortgagee’s contractual right of first refusal
685
is rescissible.
The buyer is presumed to have been notified
thereof by the registration of the mortgage
deed containing such stipulation, which
equates to a notice to the whole world.
6. Acceleration Clause
Status: Valid. (Luzon Development Bank v.
Conquilla, G.R. No. 163338, September 21,
2005)
A stipulation stating that on the occasion of
the mortgagor’s default, the whole sum
remaining unpaid automatically becomes due
and payable.
7. Stipulation of Upset Price or TIPO
Status: Void. (property should be sold to the
highest bidder)
Upset Price or TIPO is the minimum price at
which the property shall be sold at a public
auction.
A stipulation in the mortgage of real property
providing an Upset Price or TIPO, to become
operative in the event of a foreclosure sale at
public auction, is null and void for property
must be sold to the highest bidder.
Possession by third person of the property
mortgaged
The creditor may claim from the third person in
possession of the mortgaged property, the
payment of the part of the credit secured by the
property which the third party possesses, in
terms and with the formalities which the law
establishes. (NCC, Art. 2129)
FORECLOSURE OF REAL ESTATE MORTGAGE
Foreclosure
Foreclosure is a remedy available to the
mortgagee by which he subjects the mortgaged
property to the satisfaction of the obligation. It is
a proceeding to terminate the rights of the
mortgagor of the property.
Causes of Action of Mortgage-Creditor
Mortgage-creditor has a single cause of action
 Special Contracts – Deposit
against the mortgage-debtor, which is to recover JUDICIAL FORECLOSURE
the debt, but he has the option to either:
Nature of judicial foreclosure
1. File a personal action for collection of sum of
money; or A judicial foreclosure is an action quasi in rem. It
2. Institute a real action to foreclose on the is based on a personal claim against a specific
mortgaged property. property of the defendant. (Ocampo v.
Domalanta, G.R. No. L-21011, August 30, 1967)
NOTE: If he elects to foreclose, he waives the
action for the collection of the unpaid debt, Steps in judicial foreclosure
except only for the recovery of whatever
deficiency may remain in the outstanding 1. Judicial action brought to the proper court
obligation of the debtor-mortgagor after having jurisdiction;
deducting the old price in the public auction sale.
The remedies are alternative, not cumulative, 2. Order by the court for mortgagor to pay
each remedy is complete by itself. mortgage debt if the court finds the
complaint to be well-founded, within a
Kinds of foreclosure period of not less than 90 days nor more
than 120 days from the entry of judgment;
1. Judicial – Governed by Rule 68, Rules of
Court; 3. Sale to the highest bidder at a public auction
2. Extrajudicial – The mortgagee is given a SPA if the mortgagor fails to pay at the time
to sell the mortgaged property. (Act No. directed in the court order;
3135)
4. Confirmation of the sale, which operates to
Judicial foreclosure v. Extrajudicial divest the rights of all parties to the action
foreclosure (1999 BAR) and vest their rights to the purchaser;

BASIS JUDICIAL EXTRAJUDICI Requirements:

FORECLOSU AL
RE FORECLOSUR a. Motion for confirmation is filed; and
E b. Notice of hearing of motion
Court
With court Without court
Interventi 5. Execution of judgment in the manner
intervention intervention
on provided by law on mortgages, the parties
Right of Decisions not not being authorized to change the
Appeal Decisions are appealable; procedure prescribed (Piano v. Cayanong,
appealable immediately G.R. No. L-18603, February 28, 1963);
executory
Cutting off Order of the Foreclosure NOTE: The proper remedy to seek reversal
of rights court cuts off does not cut of a judgment in an action for foreclosure is
all rights of off the rights an appeal from the judgment itself or from
the parties of all parties the order confirming the sale of the
impleaded involved foreclosed real estate. (Sps. Agbada v. Inter-
Right of GR: No right Urban Developers, Inc., G.R. No. 144029,
Redemptio of September 19, 2002)
n redemption
XPN: If 6. Application of the proceeds of the sale; and
There is right
mortgagee is
of redemption
a bank, a. Costs of sale;
quasi-bank, b. Amount due the mortgagee;
or trust c. Claims of junior encumbrancers or
entity persons holding subsequent mortgages
Equity of There is in the order of priority; and
No equity of d. The balance, if any, shall be paid to the
Redemptio equity of
redemption mortgagor, or his duly authorized agent,
n redemption

UNIVERSITY OF SANTO TOMAS 686

2021 GOLDEN NOTES
 Civil Law
or the person entitled to it.
NOTE: If the mortgagee retains the
balance, the mortgagor has a cause of
action to recover such surplus.
7. Execution of sheriff’s certificate.
NOTE: In the absence of a certificate of sale,
no title is passed by the foreclosure
proceedings to the vendee.
Action for foreclosure of mortgage survive
the death of mortgagor
An action for foreclosure of mortgage survives
the death of mortgagor because the claim is not
a pure money claim but an action to enforce a
mortgage lien. Being so, the judgment rendered
therein may be enforced by a writ of execution.
The action may be prosecuted by the interested
person against the executor or administrator
independently of the testate or intestate
proceedings of the settlement of the mortgagor’s
estate “for the reason that such claims cannot in
any just sense be considered claims against the
estate, but the right to subject specific property
to the claim arises from the contract of the
debtor whereby he has during life set aside
certain property for its payment, and such
property does not, except in so far as its value
may exceed the debt, belong to the estate.”
(Testamentaria de Don Amadeo Matute Olave v.
Canlas, G.R. No. L- 12709, February 28, 1962)
Remedies of the mortgagee in case of death
of the debtor
1. To waive the mortgage and claim the entire
debt from the estate of the mortgagor as an
ordinary claim;
2. To foreclose the mortgage judicially and
prove any deficiency as an ordinary claim;
or
3. To rely on the mortgage exclusively,
foreclosing the same at any time before it is
barred by prescription, without right to file
claim for any deficiency. (Maglaque v.
Planters Development Bank, G.R. No. 109472,
May 18, 1999)
Necessity for confirmation of court in
foreclosure sale (Judicial Foreclosure)
A foreclosure sale (in judicial foreclosure) is not
complete until it is confirmed and before such
687
confirmation, the court retains control of the
proceedings by exercising sound discretion in
regard to it either granting or withholding
confirmation as the rights and interests of the
parties and the ends of justice may require.
(Rural Bank of Oroquieta v. CA, G.R. No. L-53466,
November 10, 1980)
There can be no redemption of the property after
confirmation. Such confirmation retroacts to the
date of the auction sale. After the confirmation,
the previous owners lose any right they may have
had over the property, which rights in turn
vested on the Purchaser of the property.
(Lonzame v. Amores, G.R. No. L-53620, January
31, 1985)
Right to recover deficiency
GR: Mortgagee has the right to recover
deficiency by way of mere motion.
XPN: When the mortgage was executed by a
third person to secure the obligation of a debtor,
such third person not having assumed personal
liability for the payment of the debt, the extent of
recovery in the judgment foreclosure shall be
limited to the purchase price at the foreclosure
sale. The remedy of the mortgagee in such case
is to proceed against the debtor in an ordinary
action for sum of money to recover the balance
of debt due. (Rabuya, 2017)
EXTRAJUDICIAL FORECLOSURE
An extrajudicial foreclosure may only be effected
if in the mortgage contract covering a real estate,
a clause is incorporated therein giving the
mortgagee the power, upon default of the debtor,
to foreclose the mortgage by an extrajudicial sale
of the mortgage property. (Act No. 3135, Sec. 1,
as amended by Act No. 4148)
Authority to sell
The authority to sell may be done in a separate
document but annexed to the contract of
mortgage. The authority is not extinguished by
the death of the mortgagor or mortgagee as it is
an essential and inseparable part of a bilateral
agreement. (Perez v. PNB, G.R. No. L-21813, July
30, 1966)
Steps in extrajudicial foreclosure of real
estate mortgage (AM No. 99-10-05-0, January
15, 2000, further amended on August 7,
 Special Contracts – Deposit
2001)
1. Filing of an application before the Executive
Judge through the Clerk of Court;
In extrajudicial foreclosure of real
mortgages in different locations covering a
single indebtedness, only one filing fee
corresponding to such debt shall be
collected.
2. Clerk of court will examine whether the
following requirements of the law have been
complied with:
a. Posting of notice in not less than 20
days in at least three public places of the
municipality or city where the property
is situated. Notices are given to secure
bidders and to prevent a sacrifice of the
property. (Sps. Suico v. Philippine
National Bank, G.R. No. 170215, August
28, 2007)
b. Publication (if property is worth more
than P400.00) once a week for at least
three consecutive weeks in a newspaper
of general circulation in the city or
municipality. The notice shall be
published in a newspaper of general
circulation pursuant to Section 1, P.D.
1079.
3. The application shall be raffled among
different sheriffs;
4. An auction sale may be had even with just
one (1) participating bidder. The name/s of
the bidder/s shall be reported by the Sheriff
or the Notary Public, who conducted the sale
to the Clerk of Court before the issuance of
the certificate of sale (As amended by the
January 30, 2001 Resolution paragraph 5 of
A.M. No. 99-10-05-0; Sps. Certeza et.al. v. Phil.
Savings Bank, G.R. No. 190078, March 5,
2010);
The indivisibility of a real estate mortgage is
not violated by conducting two separate
proceedings on mortgaged properties
located in different cities or municipalities
as long as each parcel of land is answerable
for the entire debt. (Sps. Yu v. Philippine
Commercial International Bank, G.R. No.
147902, March 17, 2006)
No sale can be legally made outside the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
province in which the property sold is
situated, such sale shall be made in said
place or in the municipal building of the
municipality in which the property or part
thereof is situated. (Act No. 3135, Sec. 2)
5. The clerk of court shall issue a certificate of
payment indicating the amount of
indebtedness, the filing fees collected, the
mortgages sought to be foreclosed, the
description of the real estates and their
respective locations;
6. The certificate of sale must be approved by
the Executive Judge; and
7. After the redemption has expired, the clerk
of court shall archive the records.
NOTE: The law covers only real estate mortgages.
It is intended merely to regulate the extrajudicial
sale of the property mortgaged if and when the
mortgagee is given a special power or express
authority to do so in the deed itself or in a
document annexed thereto. (Luna v. Encarnacion,
G.R. No. L-4637, June 30, 1952; Ponce de Leon v.
Rehabilitation Finance Corp., G.R. No. L-24571,
December 18, 1970)
The authority to sell, is not extinguished by the
death of either mortgagor or mortgagee. It is an
essential and inseparable part of a bilateral
agreement. (Perez v. PNB, G.R. No. L-21813, July
30, 1996)
Q: The Development Bank of the Philippines
(DBP) and Clarges Realty Corporation
(Clarges) executed a Deed of Absolute Sale
for the property. The parties agreed that all
expenses to be incurred in connection with
the transfer of title to Clarges would be borne
by the DBP. Moreover, the DBP bound itself
under Clause 6 of the Deed of Absolute Sale
to deliver a title to the property "free from
any and all liens and encumbrances on or
before December 15, 1987." The DBP
succeeded in having the property registered
under its name. TCT No. S-16279 was
cancelled and, in its place, TCT No. 151178
was issued. However, TCT No. 151178
contained annotations from the former TCT
No. S-16279, specifically, the mortgage lien of
the Philippine National Bank and a tax lien
for unpaid taxes incurred by Marinduque
Mining and Industrial Corporation. DBP
delivered to Clarges the owner's duplicate
688
 Civil Law
copy of TCT No. 151178 with the mortgage
and tax liens still annotated on it. Clarges
demanded a clean title from the DBP, but the
bank failed to deliver a clean title. Thus,
Clarges Realty Corporation filed before the
RTC of Makati City a Complaint for Specific
Performance and Damages.
Clarges had already rested its case when the
DBP moved for leave of court to file a third-
party complaint. The DBP sought to implead
the Asset Privatization Trust as a third-party
defendant and maintained that the Asset
Privatization Trust had assumed the "direct
and personal" obligation to pay for
Marinduque Mining and Industrial
Corporation's tax liability and to have the
partially reduced tax lien cancelled. Clarges
opposed the Motion for Leave. Consequently,
the trial court denied the Motion for Leave.
Should the Motion for Leave to File Third-
Party Complaint be denied?
A: YES. A lien, until discharged, follows the
property. Hence, when petitioner acquired the
property, the bank also acquired the liabilities
attached to it, among them being the tax liability
to the Bureau of Internal Revenue. That the
unpaid taxes were incurred by the defunct
Marinduque Industrial and Mining Corporation
is immaterial. In acquiring the property,
petitioner assumed the obligation to pay for the
unpaid taxes. With petitioner capable of having
the tax lien cancelled, it cannot insist on the
admission of its third-party complaint against
the Asset Privatization Trust. The admission of a
third-party complaint requires leave of court;
the discretion is with the trial court. If leave is
denied, the proper remedy is to file a complaint
to be docketed as a separate case. There was no
grave abuse of discretion in denying leave to
admit the third-party complaint against the
Asset Privatization Trust. As the Court of
Appeals observed, the trial court would have
wasted time and effort had it admitted the third-
party complaint. Respondent, the original
plaintiff, had already rested its case when the
Motion for Leave was filed. The original case
would have dragged on with the addition of a
new party at a late stage of the trial.
(Development Bank of the Philippines vs. Clarges
Realty Corp., G.R. No. 170060, August 17, 2016, as
penned by J. Leonen)
Notes on posting and publication under Act
No. 3135:
689
1. Nature
They are imbued with public considerations
and any waiver thereon would be
inconsistent with the intent and letter of the
law.
Failure to comply with the statutory
requirements as to publication of notice of
auction sale constitutes a jurisdictional
defect which invalidates the sale. Lack of
republication
NOTE: The failure to post notice is not per
se a ground for invalidating a foreclosure
sale provided that the notice thereof is duly
published in a newspaper of general
circulation. (Development Bank of the
Philippines v. Aguirre, G.R. No. 144877,
September 7, 2007)
2. No requirement of personal notice
Sec 3 of Act No. 3135 does not require
personal notice or any particular notice on
the mortgagor much less on his successors-
in-interest where there is no contractual
stipulation therefor.
NOTE: Unless the parties stipulate, personal
notice to the mortgagor in extrajudicial
proceedings is not necessary because Sec. 3
of Act No. 3135 only requires the posting of
notice of the sale in three public places and
the publication of that notice in a newspaper
of general circulation. (Ramirez v. The
Manila Banking Corp., G.R. No. 198800,
December 11, 2013)
Requisites for a newspaper to be deemed of
general circulation
1. It must be published for the dissemination
of local news and general information;
2. It must have a bona fide subscription list of
paying subscribers;
3. It must be published at regular intervals;
4. It must be available to the public in general
and not just to a select few chosen by the
publisher, otherwise, the precise objective of
publication of notice of sale will not be
realized; and
5. It must not be devoted to the interests or
published for the entertainment of a
particular profession, trade, calling, race or
religion.
 Special Contracts – Deposit
Q: MBTC granted a loan to spouses Peñafiel,
who mortgaged their two parcels of land in
Mandaluyong. The spouses defaulted in the
payment. MBTC instituted an extrajudicial
foreclosure proceeding under Act No. 3135.
The Notice of Sale was published in
Maharlika Pilipinas, which has no business
permit in Mandaluyong and its list of
subscribers shows that there were no
subscribers from Mandaluyong. Did MBTC
comply with the publication requirement
under Section 3, Act No. 3135?
A: NO. Maharlika Pilipinas is not a newspaper of
general circulation in Mandaluyong where the
property is located. To be a newspaper of
general circulation, it is enough that it is
published for the dissemination of local news
and general information, that it has a bona fide
subscription list of paying subscribers, and that
it is published at regular intervals. The
newspaper must be available to the public in
general, and not just to a select few chosen by
the publisher. Otherwise, the precise objective of
publishing the notice of sale in the newspaper
will not be realized. (Metropolitan Bank and
Trust Company, Inc. v. Eugenio Peñafiel, G.R. No.
173976, February 27, 2009)
1. No certificate of posting is required
GR: A certificate of posting is not required,
much less considered indispensable for the
validity of a foreclosure sale under Act No.
3135.
XPN: Such certificate is significant only
when it becomes necessary to prove
compliance with the required notice of
posting.
The fact alone that there is no certificate of
posting attached to the sheriffs records is
not sufficient to prove lack of posting.
(Rabuya, 2017)
Burden of proving non-compliance with the
publication and posting requirements
2. Burden of proving non-compliance with the
publication and posting requirements
Foreclosure proceedings have in their favor
the presumption of regularity. (Union Bank
of the Philippines v. CA, G.R. No. 164910,
September 30, 2005)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Enjoining the implementation of writ
possession
As a rule, any question regarding the validity of
the mortgage or its foreclosure cannot be a legal
ground for refusing the issuance of a writ of
possession. Regardless of whether or not there is
a pending suit for annulment of the mortgage or
the foreclosure itself, the purchaser is entitled to
a writ of possession, without prejudice to the
outcome of the case. Hence, an injunction to
prohibit the issuance of writ of possession is
entirely out of place. Prohibition does not lie to
enjoin the implementation of a writ of
possession. Once the writ of possession has been
issued, the trial court has no alternative but to
enforce the writ without delay. (Sps. Ong v. CA,
G.R. No. 121494, June 8, 2000)
Effect of inadequacy of price in foreclosure
sale
GR: When there is a right to redeem, inadequacy
of price is immaterial because the judgment
debtor may reacquire the property easier at a
low price or sell his right to redeem. (PNB v. CA,
G.R. No. 121739, June 14, 1999)
XPN: When the price is so inadequate as to
shock the conscience of the court taking into
consideration the peculiarly circumstances
attendant thereto. (United Coconut Planters Bank
v. CA, G.R. No. 155912, August 17, 2007)
RECOVERY OF DEFICIENCY
Judicial foreclosure
The mortgagee is specifically given the right to
claim for the deficiency. (Rules of Court, Sec. 6,
Rule 68)
Extrajudicial Foreclosure
The plain result of adopting extrajudicial
foreclosure under Act No. 3135 is that the
creditor waives his right to recover any
deficiency. (Heirs of Sps. Flaviano v. Manila
Banking Corporation, G.R. No. 171206, September
23, 2013)
While Act No. 3135 governing extrajudicial
foreclosures of mortgage does not give a
mortgagee the right to recover deficiency after
the public auction sale, neither does it expressly
or impliedly prohibit such recovery.
690
 Civil Law
NOTE: In both judicial and extrajudicial
foreclosure, when a third person is the
mortgagor, he is not liable for any deficiency in
the absence of a contrary stipulation.
Action for recovery of deficiency
A mortgagee may recover any deficiency in the
mortgage account, which is not realized in a
foreclosure sale. An independent civil action
may for the recovery be filed even during the
period of redemption. (Tarnate v. CA, G.R. No.
100635, February 13, 1995)
If the deficiency is embodied in a judgment, it is
referred to as deficiency judgment.
NOTE: The action prescribes ten (10) years from
the time the right of action accrues. [NCC, Art.
1142(2)]
REDEMPTION OF MORTGAGE
Redemption is a transaction by which the
mortgagor reacquires or buys back the property
which may have passed under the mortgage or
divests the property of the lien which the
mortgage may have created.
Persons entitled to exercise right
redemption
1. Mortgagor or one in privity of title with the
mortgagor;
2. Successors-in-interest under Sec. 29, Rule
39, Rules of Court.
Kinds of redemption
1. Equity of redemption – Right of mortgagor to
redeem the mortgaged property after his
default in the performance of the conditions
of the mortgage but before the sale of the
mortgaged property or confirmation of the
sale by the court. The mortgagor pays the
secured debt within the period specified. To
extinguish the mortgage and retain
ownership of the property, the mortgagor
must pay the secured debt within the 90-day
period after judgement becomes final, or
even after foreclosure sale, but prior to its
confirmation.
Where applicable:
Judicial foreclosure of real estate mortgage
XPN: There is no right of redemption from a
judicial foreclosure sale after the
confirmation of the sale, except those
granted by banks and financial institution as
provided by the General Banking Act. (GSIS
v. CFI of Iloilo, G.R. No. 45322, July 5, 1989)
If the mortgagee is a bank, the mortgagor
may exercise a right of redemption and this
rule applies even if the foreclosure is judicial
in accordance with Rule 68 of the Rules of
Court.
Period to exercise: within 90-120 days from
the date of the service of the order of
foreclosure or even thereafter but before the
order of confirmation of the sale.
NOTE: The subsequent sale by the
purchaser to a third person of the
mortgaged property does not prevent the
court from granting the mortgagor a period
within which to redeem the property by
paying the judgment debt and the expenses
of the sale and costs.
Notice and hearing of a motion for
confirmation of sale are essential to the
validity of the order of confirmation. An
of order of confirmation which is void due to
lack of notice and hearing, may be set aside
anytime, and the mortgagor may still
redeem the mortgaged property.
2. Right of redemption – Right of the mortgagor
to redeem the mortgaged property within
one year from the date of registration of the
certificate of sale. It applies in case of
extrajudicial foreclosure.
Where applicable: Extrajudicial foreclosure
Period to exercise: within 1 year from the
date of registration of the certificate of sale.
(Rules of Court Sec. 6, Act No. 3135; Sec. 28,
Rule 39)
The right of redemption, as long as within
the period prescribed, may be exercised
regardless of whether or not the mortgagee
has subsequently conveyed the property to
some other party. (Sta. Ignacia Rural Bank v.
CA, G.R. No. 97872, March 1, 1994)
NOTE: Notwithstanding Act No 3135,
juridical persons whose property is being
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 Special Contracts – Deposit
sold pursuant to an extrajudicial
foreclosure, shall have the right to redeem
the property in accordance with Section 47
of the General Banking Act until, but not
after, the registration of the certificate of
sale with the applicable Register of Deeds
which in no case shall be more than three
(3) months after foreclosure, from the date
of the foreclosure sale, but not after the
registration of the certificate of foreclosure
sale, whichever is earlier. Owners of
property that has been sold in a foreclosure
sale prior to the effectivity of this General
Banking Act shall retain their redemption
rights until their expiration. (RA 8791, Sec.
47)
Q: X and Y, judgment creditors of A, obtained
the transfer of the title of the mortgaged
property in their names. Earlier, A executed a
mortgage over the same property in favor of
FGU Insurance. The latter mortgage was
registered. When A defaulted, FGU foreclosed
the property. A certificate of sale was
thereafter issued in FGU’s favor, which was
confirmed by the RTC. However, before the
new TCT could be issued, X and Y filed their
respective motion for intervention and to set
aside the judgment alleging that they are the
new owners of the property and the failure
of FGU to implead X and Y in the action for
foreclosure deprived the latter of due
process. Is the contention of X and Y correct?
A: NO. Subordinate lien holders acquire only a
lien upon the equity of redemption vested in the
mortgagor, and their rights are strictly
subordinate to the superior lien of the
mortgagee. Such equity of redemption does not
constitute a bar to the registration of the
property in the name of the mortgagee.
Registration may be granted in the name of the
mortgagee but subject to the subordinate lien
holders’ equity of redemption, which should be
exercised within ninety (90) days from the date
the decision becomes final. This registration is
merely a necessary consequence of the
execution of the final deed of sale in the
foreclosure proceedings. (Looyuko v. CA, G.R. No.
102696, July 12, 2001)
Requisites for valid right of redemption
1. Must be made within twelve (12) months
from the time of the registration of the sale
in the Office of the Registry of Property;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2. Payment of the purchase price of the
property plus 1% interest per month
together with the taxes thereon, if any, paid
by the purchaser with the same rate of
interest computed from the date of
registration of the sale;
3. Written notice of the redemption must be
served on the officer who made the sale and
a duplicate filed with the proper Register of
Deeds (Sps. Yap v. Sps. Dy, G.R. No. 171868,
June 27, 2011); and
4. Tender of payment within the prescribed
period to make the redemption for future
enforcement. (Sec. 26, Act No. 3135; Sec. 8,
Rule 39, Rules of Court)
NOTE: The filing of a court action to enforce
redemption, being equivalent to a formal offer to
redeem, would have the effect of “freezing” the
expiration of the one-year period. (Heirs of
Quisumbing v. PNB, G.R. No. 178242, January 20,
2009)
Summary of Redemption Period
1. Extrajudicial (Act No. 3135)
a. Natural Person- one (1) year from
registration of the certificate of sale
with the Registry of Deeds.
NOTE: The statutory period of
redemption is only directory and can be
extended by agreement of the parties
provided:
i. The agreement to extend is
voluntary; and
ii. The debtor commits to pay the
redemption price on a fixed date.
(Gojudo v. Traders Royal Bank, G.R.
No. 151098, March 21, 2006)
b. Juridical Person – same rule as natural
person.
c. Juridical Person (mortgagor) and
Bank (mortgagee) – three (3) months
after foreclosure or before registration
of certificate of foreclosure whichever is
earlier. (RA 8791, Sec. 47)
NOTE: By an amendment by the General
Banking Law of 2000, juridical mortgagors like
692
 Civil Law
partnerships and corporations are barred from
the right of redemption of mortgaged property
sold pursuant to an extrajudicial foreclosure,
after the registration of the certificate of
foreclosure with the applicable Register of
Deeds.
For purposes of reckoning the one-year
redemption period in case of individual
mortgagors, or the three-month reckoning
period for juridical persons/mortgagors the
same shall be reckoned from the date of
confirmation of the auction sale which is the
date when the certificate of title is issued. (BIR
RMC No. 15-2008, August 15, 2008)
2. Judicial – within the period of 90-120 days
from the date of the service of the order of
foreclosure or even thereafter but before the
order of the confirmation of the sale. (Rules
of Court, Secs. 2 &3, Rule 28)
NOTE: Allowing redemption after the lapse of
the statutory period, when the buyer at the
foreclosure sale does not object but even
consents to the redemption, will uphold the
policy of the law which is to aid rather than
defeat the right of redemption. (Ramirez v. CA,
G.R. No. 98147, March 5, 1993)
Payment of Redemption
To whom: The purchaser or redemptioner or for
him to the officer who made the sale. (Rules of
Court, Sec. 29, Rule 39)
Medium of Payment: In cash or in check
NOTE: In accepting a check, he undoubtedly
places himself in a position where he can be held
liable to the purchaser at a public auction if any
damage has been suffered by the latter as a
result of the medium by which payment was
made. (Co v. PNB, G.R. No. L-51767, June 29, 1982)
Amount of Redemption Price
1. When mortgagee is not a bank (Act 3135 in
relation to Rules of Court, Sec. 28, Rule 39)
a. Purchase price of the property;
b. 1% interest per month on the
purchase price from the date of
registration of the certificate up to the
time of redemption;
c. Necessary expenses incurred by the
693
purchase for the improvements made
by him to preserve the property during
the period of redemption; and,
d. Taxes paid and amount of purchaser’s
prior lien, if any, with the same rate of
interest computed from the date of
registration of sale, up to the time of
redemption.
2. When mortgagee is a bank (General Banking
Law, 2000):
a. Amount fixed by the court or amount
due under the mortgage deed;
b. Interest;
c. Cost and expenses.
3. Redemption price in this case is reduced by
the income received from the property.
Rentals received by the Purchaser
The purchaser or redemptioner shall not be
entitled to receive the rents, earnings and
income of the property sold on execution or the
value of the use and occupation thereof while the
property is in the possession of the tenant. It
shall belong to the judgment obligor until the
expiration of the period of redemption.
Rights of persons with subordinate interest
1. Mortgagor’s equity of redemption before
foreclosure – a second mortgagee acquires
only the equity of redemption vested in the
mortgagor and his rights are strictly
subordinate to the superior lien of the first
mortgagee (Sun Life Assurance Co. of Canada
v. Diez, G.R. No. L-29027, October 25, 1928);
2. Mortgagor’s right of redemption after
foreclosure – his remedy is limited to the
right to redeem by paying off the debt
secured by the first mortgage (Tizon v.
Valdez and Morales, G.R. No. L-24797, March
16, 1926);
3. The second mortgagee is entitled, under the
mortgage constituted in his favor to the
payment of his credit the excess of the
proceeds of the auction sale, after covering
the mortgagor’s obligations to the first
mortgagee;
4. To be made defendant in an action for
foreclosure of the mortgage; and,
NOTE: The effect of the failure of the
mortgagee to implead a subordinate lien-
holder or subsequent purchase or both is to
 Special Contracts – Deposit
render the foreclosure ineffective against
them.
5. To question the legality of the foreclosure
proceedings or the effect of the alleged lack
of notice to them of such foreclosure. (G.
Puyat & Sons v. PNC, G.R. No. L-16843, April
30, 1962)
Right to possession of third persons as
purchaser
The purchaser in an extra-judicial foreclosure
sale is entitled to the possession of the property
and can demand that he be placed in possession
of the same either during (with bond) or after
the expiration (without bond) of the redemption
period therefor. (Sps. Marquez v Sps. Alindog, G.R.
No. 184045, January 22, 2014)
A writ of possession is an order whereby a
sheriff is commanded to place in possession of
real or personal property, the person entitled
thereto such as when the property is
extrajudicially foreclosed.
NOTE: The right of the applicant or subsequent
purchaser for the issuance of a writ of
possession never prescribes. (Ching v. Family
Savings Bank, G.R. No. 167835, November 15,
2010)
1. Before expiration of redemption period –
possession can be availed of as long as an ex
parte motion under oath is filed and a bond
in accordance with Sec. 7 of Act No. 3135 is
posted. (Philippine Bank of Communications
v. Yeung, G.R. No. 179691, December 4, 2013)
2. After lapse of redemption period –
purchaser is not obliged to bring a separate
suit for possession. He must invoke the aid of
the courts and ask a writ of possession.
(Javelosa v. CA, G.R. No. 124292, December 10,
1996)
No bond is required of the purchaser after the
redemption period if the property is not
redeemed. Suspension of the implementation of
the writ of possession is not allowed after the
redemption period.
NOTE: After consolidation of title in the
purchaser’s name for failure of the mortgagor to
redeem the property, the purchaser’s right to
possession ripens into absolute right of a
confirmed owner.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
When writ of possession not available
1. Where mortgaged property under lease
previously registered in the Registry of
Property or despite non-registration, the
mortgagee has prior knowledge of the
existence and duration of the lease (Ibasco v.
Caguioa, G.R. No. L62619, August 19, 1986);
2. Where the mortgagor refuses to surrender
the property sold. The remedy is to file an
ordinary action for the recovery of
possession in order that the mortgagor may
be given opportunity to be heard; and
3. When third party is in actual possession
adverse to the judgment debtor. (Rules of
Court, Sec. 36, Rule 39; Act No. 3135, Sec. 6)
Period of redemption is not a prescriptive
period
The period of redemption is not a prescriptive
period, but a condition precedent provided by
law to restrict the right of the person exercising
redemption.
If a person exercising the right of redemption
has offered to redeem the property within the
period fixed, he is considered to have complied
with the condition precedent prescribed by law
and may thereafter bring an action to enforce
redemption.
On the other hand, if the period is allowed to
lapse before the right of redemption is exercised,
then the action to enforce redemption will not
prosper, even if the action is brought within the
ordinary prescriptive period.
Effect of Failure to Redeem
Act No. 3135 provides that if the mortgagor or
successors-in-interest fail to redeem within the
redemption period, the title over the property
consolidates in the purchaser.
The consolidation confirms the purchaser as the
owner entitled to the possession of the property.
The mortgagor, by failing to redeem loses all
interest in the property. (United Coconut Planters
Bank v. Lumbo, GR. No. 162757, December 11,
2013)
Q: D obtained a loan from C secured by a REM
over a parcel of land. When D defaulted, C
extrajudicially foreclosed the property. C was
declared the highest bidder in the auction.
694
 Civil Law
On October 29, 1993, C caused the
registration of the certificate of sale. On
November 9, 1994 D filed a complaint for
annulment of the extrajudicial foreclosure
and auction sale. Can D redeem the property
beyond the one-year redemption period?
A: NO. D lost any right or interest over the
subject property primarily because of his failure
to redeem the same in the manner and within
the period prescribed by law. His belated attempt
to question the legality and validity of the
foreclosure proceedings and public auction must
accordingly fail. (Sps. Landrito v. CA, G.R. No.
133079, August 9, 2005)
A mortgagor, whose property has been
extrajudicially foreclosed and sold, can validly
execute a mortgage contract over the same
property in favor of a third party during the
period of redemption. The purchaser at the
foreclosure sale merely acquires an inchoate
right to the property which could ripen into
ownership only upon the lapse of the
redemption period without his credit having
been discharged, it is illogical to hold that during
that same period of twelve months the mortgagor
was "divested" of his ownership, since the
absurd result would be that the land will
consequently be without an owner although it
remains registered in the name of the
mortgagor. Such mortgage does not involve a
transfer, cession or conveyance of the property
but only constitutes a lien thereon. (Medida v.
CA, G.R. No. 98334, May 8, 1992)
Q: DBP guaranteed LCD’s loan. When LCD
defaulted, DBP paid it and sought
reimbursement. LCD failed to reimburse
DBP, hence DBP extrajudicially foreclosed
the REM, where it was the highest bidder.
The Sheriff’s certificate of sale was annotated
in the certificate of titles on April 30, 1976.
La Campana failed to redeem the properties.
The court, among others, ordered LCD to pay
such sums of money unlawfully collected or
received by way of rentals and/or fruits from
the subject properties to DBP. When should
the period for the remittance of
collected/received rentals/fruits from the
properties, of LCD to DBP start?
A: In foreclosure proceedings, the buyer becomes
the absolute owner of the property purchased if
it is not redeemed during the prescribed period
of redemption, which is one year from the date
695
of registration of the sale. The Sheriff’s
certificate of sale was annotated in the certificate
of titles on April 30, 1976. DBP became the
absolute owner of the properties on May 1, 1977.
Thus, the period to be considered in determining
the amount of collection should start from May
1, 1997 up to the time when the possession of
the properties are actually and completely
surrendered to DBP. (La Campana Development
Corporation v. DBP, G.R. No. 146157, February 13,
2009)
Options in case of death of debtor
A secured creditor holding a real estate mortgage
has three distinct, independent, and mutually
exclusive remedies that can be alternatively
pursued in case the mortgagor dies:
1. To waive the mortgage and claim the entire
debt from the estate of the mortgagor as an
ordinary claim;
2. To foreclose the mortgage judicially and
prove any deficiency as an ordinary claim;
and
3. To rely on the mortgage exclusively,
foreclosing the same at any time before it is
barred by prescription without a right to file
a claim for any bank deficiency. (Perez v.
PNB, G.R. No. L-21813, July 30, 1966)
Petition for Annulment of Foreclosure
Proceedings
This petition contests the presumed right of
ownership of the buyer in a foreclosure sale and
puts in issue such presumed right of ownership,
while an ex parte petition for issuance of a writ
of possession is a non-litigious proceeding.
Filing of a petition for nullification of foreclosure
proceedings with motion for consolidation is not
allowed as it will render nugatory the presumed
right of ownership, as well as the right of
possession of a buyer in a foreclosure sale.
PERSONAL PROPERTY SECURITY ACT
Notes on provisions under Personal Property
Security Act (PPSA) or R.A. No. 11057
superseding the rules governing foreclosure of
chattel mortgage under The Chattel Mortgage
Law (Act No. 1508)
 Special Contracts – Deposit
This Act was enacted to promote economic intermediary;
activity by increasing access to least cost credit b. the grantor and the
by establishing a unified and modern legal secured creditor
framework for securing obligations with
personal property. (R.A. 11057, Section 2) according to which the
issuer or the
This Act shall apply to all transactions of any intermediary agrees to
form that secures an obligation with movable follow instructions from
collateral, except interests in aircrafts and in the secured creditor
ships. (R.A 11057, Section 4) with respect to the
security, without further
Interpretation consent from the
grantor.
If there is conflict between a provision of this Act An agreement in writing
and a provision of any other law, this Act shall among the:
govern unless the other law specially cites are
amends the conflicting provisions of this law. a. deposit-taking
institution,
This act repeals, among others, Sections 1 to 16 b. the grantor and
of Act No. 1508, otherwise known as "The c. the secured
Chattel Mortgage Law"; and Articles 2085-2123, creditor,
2127, 2140-2141, 2241, 2243, and 2246-2247 of
Republic Act No. 386, otherwise known as the Rights to Deposit according to which the
"Civil Code of the Philippines." Account deposit-taking
institution agrees to
The implementation of this Act shall be follow instructions from
conditioned upon the Registry being the secured creditor
established and operational. with respect to the
payment of funds
KINDS OF AGREEMENT credited to the deposit
account without further
1. Commodity Contract – consent from the
grantor.
A commodity futures contract, an option on a Means and agreement in
commodity futures contract, a commodity writing among:
option, or another contract if the contract or
option is: 1. the grantor,
2. secured creditor,
- Traded on or subject to the rules of and
board of trade, that has been designated 3. intermediary,
as a contract market for such a contract;
or according to which the
- Traded on a foreign commodity board of Commodity Contract commodity
trade, exchange or market, and is intermediary will apply
carried on the books of a commodity any value distributed on
intermediary for a commodity account of the
customer; commodity contract as
directed by the secured
2. Control agreement – creditor, without further
consent by the
commodity customer or
CONTROL
WITH RESPECT TO grantor.
AGREEMENT
An agreement in writing
among the:
Securities 3. Security interest - a property right in
a. issuer or the collateral that secures payment or other

UNIVERSITY OF SANTO TOMAS 696

2021 GOLDEN NOTES
 Civil Law
performance of an obligation regardless of
whether the parties have denominated it as a
security interest, and regardless of the type of
asset, the status of the grantor or secured
creditor or the nature of the secured obligation;
including the right of a buyer of accounts
receivable and a lessor under an operating lease
for not less than one (1) year.
PARTIES UNDER THIS ACT
1. Grantor
a. The person who grants a security
interest in collateral to secure its own
obligation or that of another person;
b. A buyer or other transferee of a
collateral that acquires its right subject
to security interest;
c. A transferor in an outright transfer of an
accounts receivable; or
d. A lessee of goods.
2. Secured creditor
A person that has a security interest.
NOTE: For the purposes of registration and
priority only, it includes:
1. A buyer of account receivable and
2. A lessor of goods under an operating
lease for not less than one (1) year.
CREATION OF SECURITY INTEREST
A security interest shall be created by a security
agreement.
Security Agreement
A security agreement must be contained in a
written contract signed by the parties. It may
consist of one or more writings that, taken
together, establish the intent of the parties to
create a security interest. (R.A. 11057, Section 6)
Description of Collateral
Description of collateral is required in the
security agreement. A description of collateral
shall be considered sufficient, whether it is
specific or general, if it reasonably identifies the
collateral.
697
NOTE: A security agreement may provide for the
creation of security interest in a future property,
but the security interest in that property is
created only when the grantor acquires rights in
it or the power to encumber it. (R.A. 11057,
Section 5)
Continuance of Security Interest
A security interest shall continue in collateral
notwithstanding sale, lease, license, exchange, or
other disposition of the collateral, except as
otherwise provided in Section 21 of this Act, or
agreed upon by the parties. (R.A. 11057, Section
9)
Any party who obtains in the ordinary course of
business, any movable property containing a
security interest shall take the same free of such
security interest provided he was in good faith.
No such good faith shall exist if the security
interest in the movable property was registered
prior to his obtaining the property. (R.A. 11057,
Section 21)
PERFECTION OF INTEREST
1. A security interest shall be perfected when it
has been created and the secured creditor
has taken one of the actions in accordance
with Section 12.
2. On perfection, a security interest becomes
effective against third parties.
Means of Perfection
A security interest may be perfected by:
a. Registration of a notice with the Registry;
b. Possession of the collateral by the secured
creditor; and
c. Control of investment property and deposit
account.
A security interest in any tangible asset may be
perfected by registration or possession. A
security interest in investment property and
deposit account may be perfected by registration
or control
Perfection of Security Interest in any
Tangible Assets, Investment and Deposit
account
Registratio Possessio Contr
n n ol
 Special Contracts – Deposit
Tangible Yes Yes No
assets
Investme Yes No Yes
nt
Deposit Yes No Yes
account
Perfection by Control
1. A security interest in a deposit account or
investment property may be perfected by
control through:
- The creation of the security interest in
favor of the deposit-taking institution or
the intermediary;
- The conclusion of a control agreement;
or
- For an investment property that is an
electronic security not held with an
intermediary, the notation of the
security interest in the books
maintained by or on behalf of the issuer
for the purpose of recording the name of
the holder of the securities.
2. Nothing in this Act shall require a deposit-
taking institution or an intermediary to
enter into a control agreement, even if the
grantor so requests. A deposit-taking
institution or an intermediary that has
entered into such an agreement shall not be
required to confirm the existence of the
agreement to another person unless
requested to do so by the grantor.
Perfection in Proceeds
a. Upon disposition of collateral, a security
interest shall extend to proceeds of the
collateral without further act and be
continuously perfected, if the proceeds are
in the form of money, accounts receivable,
negotiable instruments or deposit accounts.
b. Upon disposition of the collateral, if the
proceeds are in a form different from
money, accounts receivable, negotiable
instruments or deposit accounts, the
security interest in such proceeds must be
perfected by one of the means applicable to
the relevant type of collateral within fifteen
(15) days after the grantor receives such
proceeds; otherwise, the security interest in
such proceeds shall not be effective against
third parties.
Change in Means of Perfection
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A security interest shall remain perfected
despite a change in the means for achieving
perfection: Provided, that there was no time
when the security interest was not perfected.
Assignment of Security Interest
If a secured creditor assigns a perfected security
interest, an amendment notice may be
registered to reflect the assignment.
REGISTRATION OF NOTICE
Registry
The centralized and nationwide electronic
registry established in the Land Registration
Authority (LRA) where notice of a security
interest and a lien in personal property may be
registered.
This Act requires that the notice should be
sufficient at the time of registration. It provides
that:
1. An initial notice of security interest shall not
be rejected:
a. If it identifies the grantor by an
identification number, as further
prescribed in the regulations;
b. If it identifies the secured creditor or an
agent of the secured creditor by name;
c. If it provides an address for the grantor
and secured creditor or its agent;
d. If it describes the collateral; and
e. If the prescribed fee has been tendered,
or an arrangement has been made for
payment of fees by other means.
2. If the Registry rejects to register a notice, it
shall promptly communicate the fact of and
reason for its rejection to the person who
submitted the notice.
3. Each grantor must authorize the registration
of an initial notice by signing a security
agreement or otherwise om writing.
4. A notice may be registered before a security
agreement is concluded. Once a security
agreement is concluded, the date of
registration of the notice shall be reckoned
from the date the notice was registered.
698
 Civil Law
5. A notice of lien may be registered by lien
holder without the consent of the person
against whom the lien is sought to be
enforced.
6. Description of the collateral in a notice shall
be entered in English.
NOTE: The registration of a single notice may
relate to security interests created by the
grantor under one (1) or more than one security
agreement. (R.A. 11057, Section 29)
Effectiveness of Notice
A notice shall be effective at the time it is
discoverable on the records of the Registry and
for the duration of the term indicated in the
notice unless a continuation notice is registered
before the term lapses.
Substantial compliance of the requirements
would still give effectiveness to the notice unless
it is seriously misleading.
Amending of Notice
A notice may be amended by the registration of
an amendment notice that:
1. Identifies the initial notice by its
registration number; and
2. Provides the new information.
Termination of Effectiveness of a Notice
The effectiveness of a notice may be terminated
by registering a termination notice that:
a. Identifies the initial notice by its registration
number; and
b. Identifies each secured creditor who is
authorizes the registration of the
termination notice.
A termination notice terminates effectiveness of
the notice as to each authorizing secured
creditor. (R.A. 11057, Section 34)
Compulsory Amendment or Termination by
Court Order
The court may, on application by the grantor,
issue an order that the notice be terminated or
amended in accordance with the demand, which
order shall be conclusive and binding on the
699
LRA: Provided, That the secured creditor who
disagrees with the order may appeal the order.
The court may take any order it deems proper
for the purpose of giving effect to the order
made under the first paragraph.
The LRA shall amend or terminate a notice in
accordance with a court order as soon as
reasonably practicable after receiving the order.
(R.A. 11057, Section 42)
Security interest shall be perfected when it has
been created and the secured creditor has taken
one of the actions mentioned above. On
perfection, a security interest becomes effective
against third parties. (R.A. 11057, Section 11)
RIGHTS OF THE GRANTOR
The rights of the grantor are the following:
a. Right to disclosure of information from
secured creditor;
b. Right to Demand amendment or termination
of notice;
c. Right to notification to dispose from the
secured creditor; and
d. Right of Redemption.
Right to Disclosure of Information from
Secured Creditor
The secured creditor must provide to the
grantor at its request:
1. The current amount of the unpaid secured
obligation; and
2. A list of assets currently subject to a security
interest. [R.A. 11057, Section 37(a)]
Right to Demand Amendment or Termination
of Notice
A grantor may give a written demand to a
secured creditor to amend or terminate the
effectiveness of the notice if:
1. All the obligations under the security
agreement to which the registration relates
have been performed and there is no
commitment to make future advances;
2. The secured creditor has agreed to release
part of the collateral described in the notice:
3. The collateral described in the notice
includes an item or kind of property that is
 Special Contracts – Deposit
not a collateral under a security agreement
between the secured creditor and the
grantor;
4. No security agreement exists between the
parties; or
5. The security interest is extinguished in
accordance with this Act. (R.A. 11057,
Section 39)
Upon receipt of the demand submitted in
accordance with the above, the secured creditor
must register, within fifteen (15) working days,
an amendment or termination notice
terminating the registration in a case within
subsections (a), (d) or (e); or amending the
registration to release some property that is no
longer collateral under a security agreement
between the secured creditor and the grantor in
a case within subsection (c). (R.A. 11057, Section
40) If the secured creditor fails to comply with
the demand within fifteen (15) working days
after its receipt, the grantor may ask the proper
court to issue an order terminating or amending
the notice as appropriate. (R.A. 11057, Section
41)
Right to notification to dispose collateral
from the secured creditor
Not later than ten (10) days before disposition of
the collateral, the secured creditor shall notify
the grantor of the said action. However, the
grantor may waive the right such right.
Provided, the requirement to send a notification
shall not apply if the collateral is perishable or
threatens to decline speedily in value or is of
type customarily sold on a recognized market.
(R.A. 11057, Section 51)
Right of Redemption
A grantor is entitled to redeem the collateral by
paying or otherwise performing the secured
obligation in full, including the reasonable cost
of enforcement.
The right of redemption may be exercised,
unless:
a. The person entitled to redeem has not, after
the default, waived in writing the right to
redeem;
b. The collateral is sold or otherwise disposed
of acquires or collected by the secured
creditor or until the conclusion of an
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
agreement by the secured creditor for that
purpose; and
c. The secured creditors have retained the
collateral.
NOTE: Any person who is entitled to receive a
notification of disposition in accordance with
this Chapter 6 is entitled to exercise the right of
redemption.
RIGHTS OF THE SECURED CREDITOR
These are the following:
a. Right to require payment for a fee for a
request of disclosure of information from
the grantor;
b. Right to take over enforcement;
c. Right to expedite Repossession of the
Collateral;
d. Right to recover in special cases;
e. Right to Dispose of Collateral; and
f. Right to retain collateral.
Right to require payment for a fee for a
request of disclosure of information from the
grantor
The secured creditor may require payment of a
fee for each request made by the grantor, but the
grantor is entitled to a reply without charge once
every six (6) months. [R.A. 11057, Section 37(b)]
However, secured creditor shall not charge any
fee for compliance with a demand received
under Section 39. (R.A. 11057, Section 43)
ENFORCEMENT OF SECURITY INTEREST
SECURED CREDITOR'S RIGHTS
Right of Redemption
GR: Any person entitled to receive a notification
of disposition is entitled to redeem the collateral
by paying or otherwise performing the secured
obligation in full (including the reasonable cost
of enforcement. (PPSA, Section 45)
XPNs:
1. After default, the person entitled to redeem
has not waived in writing the right to
redeem;
2. The collateral is sold or otherwise disposed
of, acquired or collected by the secured
700
 Civil Law
creditor or until the conclusion of an
agreement by the secured creditor for that
purpose; and
3. The secured creditor has retained the
collateral. (Ibid)
Right of Higher-Ranking Secured Creditor to
Take Over Enforcement
A secured creditor whose security-interest has
priority over that of the enforcing secured
creditor or lien holder (even if another secured
creditor or a lien holder has commenced
enforcement) shall be entitled to take over the
enforcement process. (R.A. 11057, Section 46)
The right of higher-ranking secured creditor to
take over enforcement may be invoked at any
time before the collateral is sold or otherwise
disposed of, or retained by the secured creditor
or until the conclusion of an agreement by the
secured creditor for that purpose. This right
shall include the right to enforce the rights by
any method available to a secured creditor
under this Act. (Ibid)
Expedited Repossession of the Collateral
The secured creditor may take possession of the
collateral without judicial process if the security
agreement so stipulates, provided, that
possession can be taken without a breach of the
peace. (R.A. 11057, Section 47)
If the collateral is a fixture, the secured creditor,
who has priority over all owners and
mortgagees, may remove the fixture from the
real property to which it is affixed without
judicial process. The secured creditor shall
exercise due care in removing the fixture. (Ibid)
If, upon default, the secured creditor cannot take
possession of collateral without breach of the
peace, the secured creditor may proceed as
follows:
1. The secured creditor shall be entitled to an
expedited hearing upon application for an
order granting the secured creditor
possession of the collateral.
NOTE: Such application shall include a
statement by the secured creditor, under
oath, verifying the existence of the security
agreement attached to the application and
identifying at least one event of default by
701
the debtor under the security agreement.
2. The secured creditor shall provide the
debtor, grantor.
NOTE: If the collateral is a fixture, any real
estate mortgagee, a copy of the application,
including all supporting documents and
evidence for the order granting the secured
creditor possession of the collateral; and
3. The secured creditor is entitled to an order
granting possession of the collateral upon
the court finding that a default has occurred
under the security agreement and that the
secured creditor has a right to take
possession of the collateral.
The court may direct the grantor to take
such action as the court deems necessary
and appropriate so that the secured creditor
may take possession of the collateral,
provided, that breach of the peace shall
include entering the private residence of the
grantor without permission, resorting to
physical violence or intimidation, or being
accompanied by a law enforcement officer
when taking possession or confronting the
grantor. (Ibid)
Recovery in Special Cases
Upon default, the secured creditor may without
judicial process:
1. Instruct the account debtor to make
payment to the secured creditor and apply
such payment to the satisfaction of the
obligation secured by the security interest
after deducting the secured creditor’s
reasonable collection expenses;
2. On request of the account debtor, the
secured creditor shall provide evidence of
its security interest to the account debtor
when it delivers the instruction to the
account debtor;
3. In a negotiable document that is perfected
by possession, proceed as to the negotiable
document or goods covered by the
negotiable document;
4. In a deposit account maintained by the
secured creditor, apply the balance of the
deposit account to the obligation secured by
the deposit account; and
5. In other cases of security interest in a
deposit account perfected by control,
 Special Contracts – Deposit
instruct the deposit-taking institution to pay
the balance of the deposit account to the
secured creditor’s account. (R.A. 11057,
Section 48)
Right to Dispose of Collateral
1. After default, a secured creditor may sell or
otherwise dispose of the collateral, publicly
or privately, in its present condition or
following any commercially reasonable
preparation or processing.
2. The secured creditor may buy the collateral
at any public disposition, or at a private
disposition but only if the collateral is of a
kind that is customarily sold on a recognized
market or the subject of widely distributed
standard price quotations. (R.A. 11057,
Section 49)
Commercial Reasonableness
In disposing of collateral, the secured creditor
shall act in a commercially reasonable manner.
(R.A. 11057, Section 50)
A disposition is commercially reasonable if the
secured creditor disposes of the collateral in
conformity with commercial practices among
dealers in that type of property. (Ibid)
NOTE: A disposition is not commercially
unreasonable merely because a better price
could have been obtained by disposition at a
different time or by a different method from the
time and method selected by the secured
creditor. (Ibid)
If a method of disposition of collateral has been
approved in any legal proceeding, it is
conclusively commercially reasonable. (Ibid)
Notification of Disposition
Not later than ten (10) days before disposition of
the collateral, the secured creditor shall notify:
1. The grantor;
NOTE: The grantor may waive the right to
be notified.
2. Any other secured creditor or lien holder
who, five (5) days before the date
notification is sent to the grantor, held a
security interest or lien in the collateral that
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
was perfected by registration; and
3. Any other person from whom the secured
creditor received notification of a claim of
an interest in the collateral if the notification
was received before the secured creditor
gave notification of the proposed disposition
to the grantor. (R.A. 11057, Section 51)
A notification of disposition is sufficient if it
identifies the grantor and the secured creditor;
describes the collateral; states the method of
intended disposition; and states the time and
place of a public disposition or the time after
which other disposition is to be made. (Ibid)
The requirement to send a notification shall not
apply if the collateral is perishable or threatens
to decline speedily in value or is of a type
customarily sold on a recognized market. (Ibid)
Application of Proceeds
The proceeds of disposition shall be applied in
the following order:
1. The reasonable expenses of taking, holding,
preparing for disposition, and disposing of
the collateral, including reasonable
attorneys’ fees and legal expenses incurred
by the secured creditor;
2. The satisfaction of the obligation secured by
the security interest of the enforcing
secured creditor; and
3. The satisfaction of obligations secured by
any subordinate security interest or hen in
the collateral if a written demand and proof
of the interest are received before
distribution of the proceeds is completed.
(R.A. 11057, Section 52)
The secured creditor shall account to the grantor
for any surplus, and, unless otherwise agreed,
the debtor is liable for any deficiency. (Ibid)
Rights of Buyers and Other Third Parties
1. If a secured creditor sells the collateral (in
accordance with the discussion above)
The buyer shall acquire the grantor’s right in
the asset free of the rights of any secured
creditor or lien holder.
2. If a secured creditor leases or licenses the
collateral (in accordance with the discussion
702
 Civil Law
above)
The lessee or licensee shall be entitled to the
benefit of the lease or license during its
term.
3. If a secured creditor sells, leases or licenses
the collateral not in compliance with this
Chapter, the buyer, lessee or licensee of the
collateral shall acquire the rights or benefits
described in subsections (a) and (b) of this
section: Provided, That it had no knowledge
of a violation of this Chapter that materially
prejudiced the rights of the grantor or
another person. (R.A. 11057, Section 53)
Retention of Collateral by Secured Creditor
(Sec. 54)
1. After default, the secured creditor may
propose to the debtor and grantor to take all
or part of the collateral in total or partial
satisfaction of the secured obligation, and
shall send a proposal to:
a. The debtor and the grantor;
b. Any other secured creditor or lien
holder who, five (5) days before the
proposal is sent to the debtor and the
grantor, perfected its security interest
or lien by registration; and
2. Any other person with an interest in the
collateral who has given a written
notification to the secured creditor before
the proposal is sent to the debtor and the
grantor.The secured creditor may retain the
collateral in the case of:
a. A proposal for the acquisition of the
collateral in full satisfaction of the
secured obligation, unless the secured
creditor receives an objection in
writing from any person entitled to
receive such a proposal within twenty
(20) days after the proposal is sent to
that person; or
b. A proposal for the acquisition of the
collateral in partial satisfaction of the
secured obligation, only if the secured
creditor receives the affirmative
consent of each addressee of the
proposal in writing within twenty (20)
days after the proposal is sent to that
person.
703
TRANSITIONAL PROVISIONS
Prior Interest
A security interest created or provided for by an
agreement or other transaction that was made
or entered into before the effectivity of this Act
and that has not been terminated before the
effectivity of this Act, but excludes a security
interest that is renewed or extended by a
security agreement or other transaction made
entered into on or after the effectivity of this Act.
Existing Secured Creditor
A secured creditor with a prior security interest.
The creation of Prior interest shall be
determined by prior law. It remains effective
between the parties notwithstanding its creation
did not comply with the creation requirement of
this Act. Section 57 provides modes of perfecting
prior interest.
Enforcement of Prior Interest
If any step or action has been taken to enforce a
prior interest before the effectivity of this Act,
enforcement may continue under prior law or
may proceed under this Act.
ANTICHRESIS
Antichresis is a contract whereby the creditor
acquires the right to receive the fruits of an
immovable of the debtor, with the obligation to
apply them to the payment of interest, if owing,
and thereafter to the principal of his credit. (NCC,
Art. 2132) (1995, 1996, 2007 BAR)
Characteristics of Antichresis
1. Accessory contract;
2. Formal contract – the amount of the
principal and of the interest must both be in
writing, otherwise the contract of
antichresis is void (NCC, Art. 2134);
NOTE: Delivery of possession of the immovable
is not essential to the perfection of the contract
of antichresis so that this contract is classified as
consensual contract. Nevertheless, the creditor
takes and retains possession of the property
until payment of debt. (Rabuya, 2017)
3. It deals only with immovable property;
 Special Contracts – Deposit
4. It is a real right;
5. The creditor has the right to receive the
fruits of the immovable;
6. It can guarantee all kinds of valid obligations
(NCC, Arts. 2091 & 2139); and
7. Indivisible in nature. (NCC, Art. 2090)
NOTE: It is not essential that the loan should
earn interest in order that it can be guaranteed
with a contract of antichresis. Antichresis is
susceptible of guaranteeing all kinds of
obligations, pure or conditional. [Javier v. Valliser,
(CA) N. 2648-R, April 29, 1950; Sta. Rosa v. Noble,
35 O.G. 27241]
Stipulation authorizing for appropriation of
property upon non-payment of the debt
A stipulation authorizing the antichretic creditor
to appropriate the property upon the non-
payment of the debt within the period agreed
upon is void. (NCC, Art. 2088)
Form of a contract of antichresis and its
contents
1. Covers only the fruits of real property but
not the immovable itself;
NOTE: Art. 1306 of the Civil Code gives the
parties the freedom to stipulate otherwise.
The reduction of the amount of the fruits
available to the creditor does not vary the
nature of the contract.
2. Delivery of the immovable is necessary for
the creditor to receive the fruits and not that
the contract shall be binding; Amount of
principal and interest must be specified in
writing (NCC, Art. 2134); (1995, 2007 BAR)
3. Express agreement that debtor will give
possession to the creditor and that the
creditor will apply the fruits to the interest
and then to the principal. (NCC, Art. 2134)
NOTE: The fruits of the immovable which is
the object of the antichresis must be
appraised at their actual market value at the
time of the application. (NCC, Art. 2133) The
property delivered stands as a security for
the payment of the obligation of the debtor
in antichresis. Hence, the debtor cannot
demand its return until the debt is totally
paid.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Q: The spouses Adolfo were the original
registered owners of a lot. This property was
mortgaged to the then Rehabilitation Finance
Corporation (now Development Bank of the
Philippines or DBP) and upon default in the
payment of the loan obligation, was
foreclosed and ownership was consolidated
in DBP's name. Serafin Adolfo, Sr., however,
repurchased the same on December 1, 1971,
a year after his wife died in 1970. Sometime
in 1975, Adolfo allegedly mortgaged the
subject property for the sum of P12,500.00 to
Aniceto Bangis who immediately took
possession of the land. The said transaction
was, however, not reduced into writing.
When Adolfo died, his heirs executed a Deed
of Extrajudicial Partition covering the subject
property. The Heirs of Adolfo expressed their
intention to redeem the mortgaged property
from Bangis but the latter refused, claiming
that the transaction between him and Adolfo
was one of sale. The RTC and CA ruled that
the contract between the plaintiffs and
defendants as a mere mortgage or antichresis
and since the defendants have been in the
possession of the property in 1975 up to the
present time enjoying all its fruits or income.
Was the transaction one of sale, or a
mortgage or antichresis?
A: There was neither an antichresis nor sale.
For the contract of antichresis to be valid, Article
2134 of the Civil Code requires that "the amount
of the principal and of the interest shall be
specified in writing; otherwise the contract of
antichresis shall be void."
In this case, the Heirs of Adolfo were
indisputably unable to produce any document in
support of their claim that the contract between
Adolfo and Bangis was an antichresis, hence, the
CA properly held that no such relationship
existed between the parties. On the other hand,
the Heirs of Bangis presented an Extra-Judicial
Settlement with Absolute Deed of Sale to justify
their claimed ownership and possession of the
subject land. However, notwithstanding that the
subject of inquiry is the very contents of the said
document, only its photocopy was presented at
the trial without providing sufficient justification
for the production of secondary evidence, in
violation of the best evidence rule embodied
under Section 3 in relation to Section 5 of Rule
130 of the Rules of Court. In sum, the Heirs of
Bangis failed to establish the existence and due
execution of the subject deed on which their
704
 Civil Law
claim of ownership was founded. Consequently, (1) The person entitled to redeem has not,
the RTC and CA were correct in affording no after the default, waived in writing the right
probative value to the said document. (Aniceto to redeem;
Bangis Substituted by His Heirs v. Adolfo, GR No.
190875, June 13, 2012) (2) The collateral is sold or otherwise
disposed of, acquired or collected by the
Q: The respondent in this case borrowed secured creditor or until the conclusion of
money from the petitioner. By way of an agreement by the secured creditor for
security, the parties verbally agreed that that purpose; and
petitioner would take physical possession of
the property, cultivate it, then use the (3) The secured creditor has retained the
earnings from the cultivation to pay the loan collateral.
and realty taxes. It was further agreed that
upon full payment of the loan, the petitioner Note: Nevertheless, the PPSA did not repeal,
would return the property to the amend or modify the Civil Code provisions on
respondents. The petitioner however sold Antichresis.
the property to other people, thus, the
respondents filed before the Regional Trial Antichresis v. Real Estate Mortgage
Court for annulment of sale and transfers and
relied on the agreement (antichresis) they REAL
had with the petitioner. Petitioner argues BASIS ANTICHRESIS ESTATE
that the antichresis claim of the Revilla MORTGAGE
spouses was not reduced into writing, thus, it
is void under Article 2134 of the Civil Code. Is Delivery or Debtor
the contract of antichresis void in this case? non- Property is usually
delivery of delivered to retains
A: YES. The contract of antichresis is void in this the creditor. possession of
case. Well-settled is the rule that "conveyances property the property.
by virtue of a forged signature ... are void ab
initio as the absence of the essential requisites of
consent and cause or consideration in these
cases rendered the contract inexistent.” Further, Creditor acquires
similar to the prohibition against pactum only the right to Creditor has
commissorium since creditors cannot receive the fruits no right to
"appropriate the things given by way of pledge of the property; receive fruits,
Right to
or mortgage, or dispose of them," an antichretic does not produce but mortgage
fruits
creditor also cannot appropriate the real a real right creates real
property in his or her favor upon the non- unless registered right against
payment of the debt. Antichresis also requires in the Registry the property.
that the amount of the principal and the interest Property.
be in writing for the contract to be valid.
(Cotoner-Zacharias v. Spouses Alfredo, G.R. No.
190901, November 12, 2014, as penned by J. Creditor obliged
Leonen) to pay the taxes
Obligation Creditor has
and charges
to pay no such
Note: When it comes to pledge or agreements upon the estate
taxes obligation.
whereby a personal property is given as a unless stipulated
collateral to secure an obligation, R.A. No. 11057 otherwise.
(PPSA) technically repeals the prohibition on
pactum commissorium, viz.:

Section 45. Right of Redemption.

(b) The right of redemption may be exercised,

unless:

705
 Special Contracts – Deposit
There is an
express must be in
stipulation writing.
that the
There is no Effect in
Obligation creditor shall In antichresis, debtor loses
such the
to apply apply the control of the subject matter of
obligation on Debtor’s
fruits to fruits to the the contract.
the part of the Control
the interest payment of the
mortgagee
interest, if owing,
and thereafter to Determination of the amount paid in
the principal of antichresis
the debt.
Subject The amount of payment in antichresis is
Real Property determined the actual market value of the fruits
Matter
at the time of the application thereof to the
interest and the principal shall be the measure of
Antichresis v. Pledge
such application. (NCC, Art. 2133)
BASIS ANTICHRESI PLEDGE
Parties to a contract of antichresis
S (now
supersede
1. Antichretic creditor – one who receives the
d by the
fruits on the immovable property of the
PPSA)
debtor.
Kind of Refers to real Personal
Property property property 2. Antichretic debtor – one who pays his debt
through the application of the fruits of his
By delivery immovable property.
(Real)
Rights of antichretic creditor
Note:
Section 12 1. Right to fruits and income of the thing (NCC,
By mere of the PPSA Art. 2132);
Perfecte
consent provides
d
(Consensual) the means 2. Retain the thing until debt is paid (NCC, Art.
by which a 2136);
security
interest NOTE: The property delivered stands as
may be security for the payment of the obligation of
perfected. the debtor in antichresis. Hence, the debtor
Need not be cannot demand its return until
in writing, indebtedness is satisfied and the property
oral is redeemed. (Macapinlac v. Gutierrez
evidence Repide, G.R. No. 18574, September 20, 1992)
Principal and
may be
Necessit interest must 3. Have the thing sold upon non-payment at
allowed to
y of be specified maturity (NCC, Art. 2137);
prove the
Putting in writing,
same.
into otherwise NOTE: In this case, the Rules of Court on
Writing contract is the rules on foreclosure of mortgages shall
Note:
void. apply
Under the
PPSA, a
security 4. Preference to the proceeds of the sale of the
agreement thing; and

5. To be reimbursed for his expense for

machinery and other improvements on the

UNIVERSITY OF SANTO TOMAS 706

2021 GOLDEN NOTES
 Civil Law
land, and for the sums paid as land taxes.
Obligations of an antichretic creditor
1. Pay the taxes and charges assessable against
the property like real estate taxes and
others (NCC, Art. 2135);
NOTE: The creditor has to pay the taxes
even if the fruits be insufficient. If he does
not pay taxes, he is, by law, required to pay
indemnity for damages to the debtor.
(Pando v. Gimenez, G.R. No. 31816, February
15, 1930) Creditor may avoid such
obligation by compelling the debtor to
reacquire enjoyment of the property, unless
there is a stipulation to the contrary. [NCC,
Art. 2136(2)]
2. Bear the necessary expenses for the
preservation and repair of the property;
3. Apply the fruits received for payment of the
outstanding interests, if any, and thereafter
of the principal (NCC, Art. 2132); and
4. To render an account of the fruits to the
debtor. (Diaz v. De Mendezona, G.R. No. L-
24824, January 30, 1926)
Rule on the application of the fruit upon the
debt
The application of the fruit upon the debt must
be expressly agreed between the creditor and
the debtor that the former, having been given
possession of the properties given as security, is
to apply their fruits to the payment of interest, if
owing, and thereafter to the principal of his
credit. (NCC, Art. 2132)
Return of the property of the antichretic
debtor
The antichretic debtor can only demand the
return of the property after having fully paid his
obligations to the creditor. It is not fair for the
debtor to regain the possession of the property
when his debt has not been fully paid. Until there
is full payment of the obligation, the property
shall stand as security therefor. (Macapinlac v.
Gutierrez Repide, G.R. No. 18574, September 20,
1922)
Remedy of the creditor in case of
nonpayment of his credit
Creditor does not acquire ownership of the real
707
estate since what was transferred is not the
ownership but merely the right to receive fruits.
(NCC, Art. 2132 and 2137)
1. File an action for specific performance; or
2. File a petition for the public sale of the
property. (Barretto v. Barretto, G.R. No.
11933, December 1, 1917)
NOTE: Parties may agree on an extrajudicial
foreclosure in the same manner as they are
allowed in contracts of mortgage. (Tavera v. El
Hogar Filipino, Inc., G.R. No. L-45963, October 12,
1939)
A stipulation authorizing the antichretic creditor
to appropriate the property upon non-payment
of the debt within the period agreed upon is
void. (See NCC, Art. 2088, which, insofar as pledge
and mortgage are concerned, was technically
repealed by the PPSA as discussed above)
Availability of acquisitive prescription to the
antichretic creditor
The creditor in an antichresis and his successors-
in-interest cannot ordinarily acquire by
prescription the land given to him, hence, any
agreement to the contrary is void. (Valencia v.
Valencia, G.R. No. 16256, 42 Phil. 177, 1921)
Possession of the property is not in the concept
of an owner but that of a mere holder during the
existence of the contract. (Ramirez v. CA, G.R. No.
L-38185, September 24, 1986)
REDEMPTION UNDER SEC. 47 OF R.A. NO.
8791 or THE GENERAL BANKING ACT OF
2000
When applicable
In the event of foreclosure, judicial or
extrajudicial, of any mortgage on real estate
which is security for any loan or other credit
accommodation granted.
NOTE: Any petition in court to enjoin or restrain
the conduct of the foreclosure proceedings
instituted pursuant to Sec. 47 of the General
Banking Act shall be given due course only upon
the filing by petitioner of a bond in the amount
fixed by the court conditioned that he will pay all
damages which the bank may suffer by the
enjoining or the restraint of the foreclosure
proceeding.
 Special Contracts – Deposit
Who may exercise the right of redemption
The mortgagor or debtor whose real property
has been sold for the full or partial payment of
his obligation.
When redemption is made
It must be made within one year after the sale of
the real estate.
NOTE: Notwithstanding Act 3135, juridical
persons whose property is being sold pursuant
to an extrajudicial foreclosure, shall have the
right to redeem the property in accordance with
Sec. 47 of the General Banking Act until, but not
after, the registration of the certificate of
foreclosure sale with the applicable Register of
Deeds which in no case shall be more than three
months after foreclosure, whichever is earlier.
Owners of property that has been sold in a
foreclosure sale prior to the effectivity of the
General Banking Act shall retain their
redemption rights until their expiration.
How redemption is made
By paying the amount due under the mortgage
deed, with interest thereon at rate specified in
the mortgage, and all the costs and expenses
incurred by the bank or institution from the sale
and custody of said property less the income
derived therefrom.
Right of purchaser at the auction sale over
the foreclosed property
The purchaser at the auction sale concerned
whether in a judicial or extrajudicial foreclosure
shall have the right to enter upon and take
possession of such property immediately after
the date of the confirmation of the auction sale
and administer the same in accordance with law.
GUARANTY AND SURETYSHIP
Guaranty
Guaranty is a contract where a person called the
guarantor binds himself to the creditor to fulfill
the obligation of the principal debtor in case the
latter should fail to do so. (NCC, Art 2047)
Suretyship
Suretyship is a contract where a person binds
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
himself solidarily with principal debtor.
Q: Asia Paces Corporation (ASPAC) and Paces
Industrial Corporation (PICO) entered into a
sub-contracting agreement with the
Electrical Projects Company of Libya (ELPCO
for theconstruction and erection of a double
circuit bundle phase conductor transmission
line in the country of Libya. To finance its
working capital requirements, ASPAC
obtained loans from foreign banks Banque
Indosuez and PCI Capital (Hong Kong)
Limited (PCI Capital) which were secured by
several Letters of Guarantee issued by Trade
and Investment Development Corporation of
the Philippines (TIDCORP), then Philippine
Export and Foreign Loan Guarantee Corp.
Under the Letters of Guarantee, TIDCORP
irrevocably and unconditionally guaranteed
full payment of ASPAC’s loan obligations to
Banque Indosuez and PCI Capital in the event
of default by the latter.
As a condition precedent to the issuance by
TIDCORP of the Letters of Guarantee, ASPAC,
PICO, and ASPAC’s President, Nicolas C.
Balderrama (Balderrama) had to execute
several Deeds of Undertaking, binding
themselves to jointly and severally pay
TIDCORP for whatever damages or liabilities
it may incur under the aforementioned
letters. In the same light, ASPAC, as principal
debtor, entered into surety agreements
(Surety Bonds) with Paramount, Phoenix,
Mega Pacific and Fortune (bonding
companies), as sureties, also holding
themselves solidarily liable to TIDCORP, as
creditor, for whatever damages or
liabilities the latter may incur under the
Letters of Guarantee.
ASPAC eventually defaulted on its loan
obligations to Banque Indosuez and PCI
Capital. Demand letters to the bonding
companies were sent but to no avail. Taking
into account the moratorium request issued
by the Minister of Finance of the Republic of
the Philippines, TIDCORP and its various
creditor banks, such as Banque Indosuez and
PCI Capital, forged a Restructuring
Agreement extending the maturity dates of
the Letters of Guarantee. The bonding
companies were not privy to the
Restructuring Agreement and, hence, did not
give their consent to the payment extensions.
708
 Civil Law
Nevertheless, following new payment
schedules, TIDCORP fully settled its
obligations. Seeking payment for the
damages and liabilities it had incurred under
the Letters of Guarantee and with its
previous demands therefor left unheeded,
TIIDCORP filed a collection case against: (a)
ASPAC, PICO, and Balderrama on account of
their obligations under the deeds of
undertaking; and (b) the bonding companies
on account of their obligations under the
Surety Bonds. Whether or not the bonding
companies’ liabilities to TIDCORP under the
Surety Bonds have been extinguished by the
payment extensions granted by Banque
Indosuez and PCI Capital to TIDCORP under
the Restructuring Agreement.
A: NO. The Court finds that the payment
extensions granted by Banque Indosuez and PCI
Capital to TIDCORP under the Restructuring
Agreement did not have the effect of
extinguishing the bonding companies’
obligations to TIDCORP under the Surety Bonds,
notwithstanding the fact that said extensions
were made without their consent. This is
because Article 2079 of the Civil Code refers to a
payment extension granted by the creditor to
the principal debtor without the consent of the
guarantor or surety. In this case, the Surety Bonds
are suretyship contracts which secure the debt of
ASPAC, the principal debtor, under the Deeds of
Undertaking to pay TIDCORP, the creditor, the
damages and liabilities it may incur under the
Letters of Guarantee, within the bounds of the
bonds’ respective coverage periods and amounts.
No payment extension was, however, granted by
TIDCORP in favor of ASPAC in this regard; hence,
Article 2079 of the Civil Code should not be
applied with respect to the bonding companies’
liabilities to TIDCORP under the Surety Bonds.
(Trade and Investment Development Corporation
of the Philippines v. Asia Paces Corporation, G.R.
No. 187403, February 12, 2014)
Q: The instant petition originated from a
Complaint for Breach of Contract with
Damages and Prayer for Preliminary
Injunction and Temporary Restraining Order
filed by Nissan Specialist Sales Corporation
and its President and General Manager,
Reynaldo A. Orimaco, against herein
respondents Universal Motors Corporation
(UMC), Rodrigo T. Janeo, Jr., Gerardo Gelle,
Nissan Cagayan de Oro Distributors, Inc.,
Jefferson U. Rolida, and Peter Yap.
709
The temporary restraining order (TRO)
prayed for was eventually issued by the RTC
upon the posting by NSSC and Orimaco of a
P1,000,000.00 injunction bond issued by
their surety, CGAC. The TRO enjoined
respondents from selling, dealing, and
marketing all models of motor vehicles and
spare parts of Nissan, and from terminating
the dealer agreement between UMC and NSSC
and restrained UMC from supplying and
doing trading transactions with NCOD, which,
in turn, was enjoined from entering and
doing business on Nissan Products within the
dealership territory of NSSC as defined in the
Dealer Agreement. The TRO was eventually
converted into a writ of preliminary
injunction. Respondents filed a petition for
certiorari and prohibition before the CA and
assailed the issuance of the aforesaid
injunctive writ.
The CA rendered a Decision holding that the
RTC committed grave abuse of discretion in
issuing the writ absent a clear legal right
thereto on the part of NSSC and Orimaco.
Consequently, the Writ of Preliminary
Injunction issued by the RTC was ordered
dissolved. Respondents filed an application
for damages against the injunction bond
issued by CGAC in the amount of
P1,000,000.00. Is CGAC liable?
A. YES. That CGAC’s financial standing differs
from that of NSSC does not negate the order of
execution pending appeal. As the latter’s surety,
CGAC is considered by law as being the same
party as the debtor in relation to whatever is
adjudged touching the obligation of the latter,
and their liabilities are interwoven as to be
inseparable. Verily, in a contract of suretyship,
one lends his credit by joining in the principal
debtor’s obligation so as to render himself
directly and primarily responsible with him, and
without reference to the solvency of the
principal. Thus, execution pending appeal
against NSSC means that the same course of
action is warranted against its surety, CGAC. The
same reason stands for CGAC’s other principal,
Orimaco, who was determined to have
permanently left the country with his family to
evade execution of any judgment against him.
(Centennial Guaranty Corporation v. Universal
Motors Corporation, G.R. No. 189358, October 8,
2014)
Q: Doctors of New Millennium Holdings, Inc.
 Special Contracts – Deposit
is a domestic corporation comprised of about
80 doctors. On March 2, 1999, it entered into
a construction and development agreement
(signed agreement) with Million State
Development Corporation, a contractor, for
the construction of a 200-bed capacity
hospital in Cainta, Rizal. According to the
terms of the signed agreement, Doctors of
New Millennium obliged itself to pay
P10,000,000.00 to Million State Development
at the time of the signing of the agreement to
commence the construction of the hospital.
Million State Development was to shoulder
95% of the project cost and committed itself
to secure P385,000,000.00 within 25 banking
days from Doctors of New Millennium’s
initial payment, part of which was to be used
for the purchase of the lot where the hospital
was to be constructed. As part of the
conditions prior to the initial payment,
Million State Development submitted a
surety bond of P10,000,000.00 to Doctors of
New Millennium. The surety bond was
issued by People’s Trans-East Asia Insurance
Corporation, now known as People’s General
Insurance Corporation. Doctors of New
Millennium, on the other hand, made the
initial payment of P10,000,000.00.
Million State Development, however, failed to
comply with its obligation to secure
P385,000,000.00 within 25 banking days
from initial payment. Then Doctors of New
Millenium sent a demand letter from the
time remittance was due. When Million State
Development reneged on its obligations,
Doctors of New Millennium sent a demand
letter dated June 14, 1999 to People’s
General Insurance for the return of its initial
payment of P10,000,000.00, in accordance
with its surety bond. Whether or not the
surety bond guaranteeing respondent
Doctors of New Millennium’s initial payment
was impliedly novated by the insertion of a
clause in the principal contract, which
waived the conditions for the initial
payment’s release?
A: NO. In this case, the surety bond was executed
“to guarantee the repayment of the down
payment” and “to secure the full and faithful
performance” of Million State Development.
According to the terms of the bond, People’s
General Insurance bound itself to be liable in the
amount of P10,000,000.00 in the event that
Million State Development defaults in its
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
obligations. Petitioner, however, contends that
the inclusion of the clause “or the Project
Owner’s waiver” in Article XIII of the signed
agreement made its obligations more onerous
and, therefore, the surety must be released from
its bond.
A suretyship consists of two different contracts:
(1) the surety contract and (2) the principal
contract which it guarantees. Since the insurer’s
liability is strictly based only on the terms stated
in the surety contract in relation to the principal
contract, any change in the principal contract,
which materially alters the principal’s
obligations would, in effect, constitute an
implied novation of the surety contract. A surety
is released from its obligation when there is a
material alteration of the contract in connection
with which the bond is given, such as a change
which imposes a new obligation on the
promising party, or which takes away some
obligation already imposed, or one which
changes the legal effect of the original contract
and not merely its form. A surety, however, is
not released by a change in the contract which
does not have the effect of making its obligation
more onerous. Respondent was not privy to the
terms of the surety bond entered into by
petitioner and Million State Development. If
there were any changes in the contract that
petitioner should have been aware of, it was
Million State Development, as its principal,
which had the duty to inform them about the
changes.
On the basis of petitioner’s own admissions, the
principal contract of the suretyship is the signed
agreement. The surety, therefore, is presumed
to have acquiesced to the terms and conditions
embodied in the principal contract when it
issued its surety bond.
Accordingly, petitioner cannot argue that the
insertion of the clause in the signed agreement
constituted an implied novation of the obligation
which extinguished its obligations as a surety
since there was nothing to novate: In order that
an obligation may be extinguished by another
which substitutes the same, it is imperative that
it be so declared in unequivocal terms, or that
the old and new obligation be in every point
incompatible with each other. Novation of a
contract is never presumed. In the absence of an
express agreement, novation takes place only
when the old and the new obligations are
incompatible on every point (People’s General
710
 Civil Law
Insurance Corporation v. Doctor New Millenium agreement with MERALCO Financing Services
Holdings, G.R. NO. 172404, August 13, 2014, as Corporation and its having secured permits from
penned by J. Leonen) local government units, for the specific purpose
of putting up advertising banners and signages,
Q: City Advertising Ventures Corporation gave it the right to put up such banners and
entered into a lease agreement with the signages. Respondent had in its favor a property
MERALCO Financing Services Corporation for right, of which it cannot be deprived without due
the use of 5,000 of Manila Electric Company's process. This is respondent's right in esse, that
lampposts to display advertising is, an actual right. It is not merely a right in
banners. After the hit of Typhoon Milenyo, posse, or a potential right. At the point when the
President Gloria Macapagal-Arroyo issued RTC was confronted with respondent’s prayer
Administrative Order No. 160 "directing the for temporary relief, all that respondent needed
Department of Public Works and Highways was a right ostensibly in existence. Precisely, a
(DPWH) to conduct field investigations, writ of preliminary injunction is
evaluations and assessments of all billboards issued "before parties' claims can be thoroughly
and determine those that are hazardous and studied and adjudicated." (DPWH vs. City
pose imminent danger to life, health, safety Advertising Ventures Corp., G.R. No. 182944,
and property of the general public and to November 9, 2016, as penned by J. Leonen)
abate and dismantle the same.”
Guaranty v. Suretyship (1992, 1997, 2010
Thereafter, the DPWH was able to remove Bar)
250 of City Advertising Ventures
Corporation's lamppost banners and frames, GUARANTY SURETYSHIP
12 pedestrian overpass banners, 17 Liability depends
pedestrian overpass frames, and 36 halogen upon an
lamps. independent Surety assumes
agreement to pay liability as a regular
Aggrieved, the City Advertising Ventures the obligation of the party to the contract.
Corporation filed before the RTC of Makati principal if he fails to
City its Complaint for "Violation of do so.
Administrative Order No. 160, Tort, and
Guarantor is Surety is primarily
Injunction with Prayer for Temporary
secondarily liable. liable.
Restraining Order, Preliminary Injunction,
and Preliminary Mandatory Injunction.” The Guarantor binds Surety undertakes to
trial court granted City Advertising Ventures himself to pay if the pay if principal does
Corporation's prayer for a temporary principal cannot pay. not pay.
restraining order. It also issued a writ of
preliminary injunction. The DPWH and the Insurer of solvency
Insurer of the debt.
MMDA opposed this asserting that City of debtor.
Advertising Ventures Corporation failed to Guarantor can avail
show a clear legal right worthy of protection of the benefit of Surety cannot avail
and that it did not stand to suffer grave and excussion and of the benefit of
irreparable injury. They likewise asserted division in case excussion and
that the Regional Trial Court exceeded its creditor proceeds division.
authority in issuing a writ of preliminary against him.
injunction. Did the RTC erred in its issuance
of a writ of preliminary injunction? Similarity between guaranty and suretyship

A: NO. For a writ of preliminary injunction to be Both guarantor and surety promise or undertake
issued, the applicant must show, by prima facie to answer for the debt, default or miscarriage of
evidence, an existing right before trial, a material another person.
and substantial invasion of this right, and that a
writ of preliminary injunction is necessary to Guaranty v. Warranty
prevent irreparable injury. Respondent satisfied
the standards for the issuance of a writ of GUARANTY WARRANT
preliminary injunction. Respondent's lease

711
 Special Contracts – Deposit
A contract by which An undertaking that despite the absence of any direct consideration
a person is bound to the title, quality or received by the guarantor or surety, such
another for the quantity of the subject consideration need not pass directly to the
fulfillment of a matter of a contract is guarantor; a consideration moving to the
promise or what it is represented principal will suffice.
undertaking of a to be, and relates to
third person. some agreement made Kinds of guaranty
ordinarily by the party
who makes the 1. General classification
warranty.
a. Personal – A guaranty where an
NOTE: In case of guaranty, the guarantor must be individual personally assumes the
a person distinct from the debtor because a fulfillment of the principal obligation; or
person cannot be the personal guarantor of
himself. A person cannot be both the primary b. Real – The guaranty is property,
debtor and the guarantor of his own debt as this movable, or immovable.
is inconsistent with the very purpose of a
guarantee which is for the creditor to proceed 2. As to its origin
against a third person if the debtor defaults in his
obligation. a. Conventional – It is constituted by
agreement of the parties [NCC, Art.
Unilateral character of guaranty 2051(1)];

The contract of guaranty may be undertaken b. Legal – Imposed by virtue of a

without the knowledge of the principal debtor. It provision of law; or Judicial –
exists for the benefit of the creditor and not for Required by a court to guarantee
the benefit of the principal who is not a party to the eventual right of the parties in a
the contract of guaranty. The creditor has every case.
right to take all possible measures to secure the
payment of his credit. Hence, it can be 3. As to consideration
constituted without the knowledge and even
against the will of the principal debtor. (NCC, a. Gratuitous – The guarantor does not
Arts. 2050, 1236, and 1237) receive any price or remuneration
for acting as such (NCC, Art. 2048);
The contract is unilateral because what arises or
therefrom are solely obligations on the part of
the guarantor with relation to the creditor, b. Onerous – One where the guarantor
although its fulfillment or consummation gives receives valuable consideration for
rise to obligation on the part of the person his guaranty.
guaranteed with respect to the guarantor.
(Rabuya, 2017) 4. As to person

NOTE: A guarantor can recover from the debtor a. Single – It is constituted solely to
what the former had to pay the creditor, even if guarantee or secure performance by
the guaranty was without the debtor’s consent the debtor of the principal
or against his will, but the recovery will only be obligation (NCC, Art. 2051, par. 2);
to the extent that the debtor had been benefited. or
(NCC, Arts. 1236 and 1237; De Guzman v. Santos,
G.R. No. 45571; June 30, 1939) b. Double or sub-guaranty – It is
constituted to secure the fulfillment
Gratuitous character of guaranty of the obligation of a guarantor by a
sub- guarantor. (Ibid)
A guaranty is gratuitous, unless there is a
stipulation to the contrary. (NCC, Art. 2048) 5. As to scope and extent

Guaranty or surety agreement is regarded valid a. Definite – One where the guaranty is

UNIVERSITY OF SANTO TOMAS 712

2021 GOLDEN NOTES
 Civil Law
limited to the principal obligation
only, or to a specific portion thereof
(NCC, Art, 2055, par. 2); or
b. Indefinite or simple – One where the
guaranty included all the accessory
obligations of the principal, e.g.
costs, including judicial costs. (Ibid)
Obligations that may be secured in a contract
of guaranty
1. Valid obligations;
2. Voidable obligations, unless it is annulled by
proper action in court (NCC, Art. 1390);
3. Unenforceable obligations (NCC, Art. 1403);
4. Natural obligations – When the debtor
himself offers a guaranty for his natural
obligation, he impliedly recognizes his
liability, thereby transforming the obligation
from a natural into a civil one;
5. Conditional obligations – Only in case of
suspensive condition because upon its
happening, it gives rise to the principal and
hence, gives rise also to the accessory
obligation.
Guaranty for present and future debts
There can be a guaranty for:
1. Present debts; and
2. Future debts (NCC, Art. 2053), even if the
amount is not yet known.
Liquidated debt – a debt is liquidated when it is
for a price fixed in a contract for the delivery of
future goods and the seller is now ready to
deliver said goods within the period stipulated.
(Smith, Bell & Co. v. National Bank, G.R. No.
16482, February 1, 1922)
Validity of the principal contract
A valid principal obligation is necessary in
contract of guaranty since guaranty is an
accessory contract, it is an indispensable
condition for its existence that there must be a
principal obligation. Hence, if the principal
obligation is void, it is also void.
Absence of consideration to guarantor
A guaranty or surety agreement is regarded as
valid despite the absence of any direct
consideration received by the guarantor or
713
surety either from the principal debtor or from
the creditor; a consideration moving to the
principal alone will suffice. (Garcia Jr., v. CA, G.R.
No. 80201. November 20, 1990)
Absence of direct or personal interest of
guarantor
It is never necessary that he should receive any
part of benefit, if such there be, accruing to the
principal. (Willex Plastic Industries Corp v. CA,
G.R. No. 103066, April 25, 1996)
Statute of fraud in a contract of guaranty
A contract of guaranty must be expressed and in
writing [NCC, Art. 1403(2)]; otherwise, it is
unenforceable unless ratified. It need not be in a
public instrument.
NOTE: The statute of Frauds does not require
that the contract of guaranty itself be in writing.
What it requires to be in writing in order for the
contract of guaranty to be enforceable is the
undertelling or special promise of guarantor,
which must be signed by him. (Rabuya, 2017)
Acceptance of the creditor in a contract of
guaranty
GR: The acceptance of the creditor is not
essential in contract of guaranty.
XPN: When there is a mere offer of a guaranty or
a conditional guaranty wherein the obligation
does not become binding until it is accepted by
the creditor and notice of such acceptance is
given to the guarantor.
Construction of a contract of guaranty or
surety
GR: In case of doubt, a contract of guaranty or
surety should be strictly construed against the
creditor and liberally in favor of the guarantor or
surety; terms cannot be extended beyond the
stipulation.
XPN: In cases of compensated sureties.
Ratio: A contract of guaranty is unilateral
PARTIES TO A CONTRACT OF GUARANTY
1. Guarantor; and
2. Creditor.
 Special Contracts – Deposit
Guarantor
The guarantor is the person who is bound to
another for the fulfillment of a promise or
undertaking of a third person.
Qualifications of a guarantor
1. Possesses integrity;
2. Capacity to bind himself; and
3. Has sufficient property to answer for the
obligation which he guarantees.
NOTE: The qualifications need only be present at
the time of the perfection of the contract. The
creditor can naturally waive the requirements,
for rights in general are waivable) (Paras, 2008)
Loss of qualification of the guarantor
GR: The qualification of the guarantor is lost
through conviction of a crime involving
dishonesty or insolvency. In this case, the
creditor is given the right to demand
substitution of the guarantor.
XPN: When the guarantor had been selected by
the creditor. The supervening loss of required
qualifications will not generally end the
guaranty. (NCC, Art. 2057)
Married woman as a guarantor
GR: A married woman can be a guarantor
without the consent of her husband but binds
only her separate property. (FC, Art. 145 Art.
2049)
XPNs:
1. If with her husband’s consent, it binds the
community or conjugal partnership
property.
2. Without husband’s consent, in cases
provided for by law, such as when the
guaranty has redounded to the benefit of the
family.
Rights of a third person (guarantor or
surety) who pays for the debt guaranteed or
secured
1. If payment is made without the knowledge or
against the will of the debtor:
2. Guarantor can recover only insofar as the
payment has been beneficial to the debtor
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
(NCC, Art. 1236 par. 2); and
3. Guarantor cannot compel the creditor to
subrogate him in his rights. (NCC, Art. 1237)
4. If payment is made with the knowledge or
consent of the debtor – The guarantor is
subrogated to all the rights which creditor
had against the debtor.
Extent of guarantor’s liability
1. Where the guaranty is definite – It is limited
in whole or in part to the principal debt to
the exclusion of accessories; and
2. Where the guaranty is indefinite or simple –
It shall comprise not only the principal
obligation but also all its accessories,
including the judicial costs provided that the
guarantor shall only be liable for those costs
incurred after he has been judicially
required to pay.
Effect in case of death of a party
1. Guarantor’s death – His heirs will still liable
to the extent of the value of the inheritance
because the obligation is not purely
personal and is therefore transmissible.
(Estate of Hemady v. Luzon Surety & Ins. Co.,
G.R. No. L-8437, November 28, 1956)
NOTE: An action against a guarantor who dies
during pendency of the same, being one for the
recovery of money or debt, should be dismissed,
but may be instituted in the proceeding for the
settlement of his estate. (Villegas v. Zapanta and
Zorilla, G.R. No. L-11056, December 26, 1958)
2. Debtor’s death – his obligation will survive.
His estate will be answerable. If the estate
has no sufficient assets, the guarantor shall
be liable.
Jurisdiction in an action based on a contract of
guaranty
The guarantor shall be subject to the jurisdiction
of the court of the place where the obligation is
to be complied with.EFFECTS OF GUARANTY’S
BENEFIT OF EXCUSSION
Benefit of excussion
The benefit of excussion is a right by which the
guarantor cannot be compelled to pay the
creditor unless the latter has exhausted all the
714
 Civil Law
properties of the principal debtor and has
resorted to all legal remedies against such
debtor. (NCC, Art. 2058)
Requisites of benefit of exhaustion or
excussion
1. The guarantor must set up the right of
excussion against the creditor upon the
latter’s demand for payment from him; and
2. He must point out to the creditor the
available property of the debtor (not
exempted from execution) is found within
the Philippine territory. (NCC, Art. 2060)
LAND TITLES AND DEEDS
Note: The procedures for the foreclosure of
mortgages (real and personal) are now
transferred to the 2020 Golden Notes for
Remedial Law per the 2020 Bar Syllabus.
These are, however, still included herein for
educational purposes and future references.
GENERAL PRINCIPLES
REGALIAN DOCTRINE (jura regalia)
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. (Republic v.
Sin, G.R. No. 157485, March 26, 2014)(Leonidas v.
Vargas, G.R. No. 201301, December 14, 2017)
Jura regalia means that the State is the original
proprietor of all lands and the general source of
all private titles. All claims of private title to land,
save those acquired from native title, must be
traced from some grant, whether express or
implied, from the State. Absent a clear showing
that the land had been into private ownership
through the State’s imprimatur, such land is
presumed to belong to State. (Republic v. Santos,
G.R. No. 180027, July 18, 2012)
NOTE: To prove that the subject property is
alienable and disposable land of the public
domain, applicant must:
1. Present a Community Environment and
Natural Resources Office Certificate
(CENRO);
715
NOTE: Excussion may only be invoked after legal
remedies against principal debtor have been
expanded. The creditor must first obtain a
judgment against the principal debtor before
assuming to run after the alleged guarantor for
obviously, the exhaustion of the principal’s
property cannot even begin to take place before
judgment has been obtained. (Rabuya, 2017)
Effect of the creditor’s negligence in
exhausting the properties of the debtor
He shall suffer the loss to the extent of the value
of the pointed property which was not
exhausted by the creditor. (NCC, Art. 2061)
2. Prove that the DENR Secretary had
approved the land classification and
released the land of the public domain as
alienable and disposable; and
3. That the land subject of the application for
registration falls within the approved area
per verification through survey by the
PENRO or CENRO. In addition, the applicant
for land registration must present a copy of
the original classification approved by the
DENR Secretary and certified as a true copy
by the legal custodian of the official records.
(See Republic v. Malijan-Javier, G.R. No.
214367, April 4, 2018, as penned by J.
Leonen)
Exception to the Regalian Doctrine
NOTE: The Regalian Doctrine does not negate
native title to lands held in private ownership
since time immemorial. (Cruz v. Secretary of
Environment and Natural Resources, G.R. No.
135385, December 6, 2000)
When as far back as testimony or memory goes,
the land has been held by individuals under a
claim of private ownership, it will be presumed
to have been held in the same way before the
Spanish conquest, and never to have been public
land. (Cariño v. Insular Government, 212 U.S., 449;
53 Law Ed., 594)
Q: On March 1980, Cornelio filed an
application for land registration of a parcel of
agricultural land. During the trial, Cornelio
claimed that he and his predecessors-in-
interest had been in open, continuous,
uninterrupted, public and adverse
possession and occupation of the land for
more than 30 years. He likewise introduced a
certification, dated February 1981 citing a
 Land Titles and Deeds
presidential declaration that on June 1980,
the subject matter of the application was
declared alienable and disposable
agricultural land. If you are the judge, will
you grant the application for land
registration of Cornelio? (2014 Bar)
A: NO, I will not grant the application. To be
entitled to register the parcel of land, the
applicant must show that the land being applied
for is an alienable land. At the time of the filing
of the application, the land has not yet been
declared alienable by the state. (Republic v. CA,
G.R. No. 144057, January 17, 2005)
Q: Can Cornelio acquire said agricultural land
through acquisitive prescription, whether
ordinary or extraordinary? (2014 Bar)
A: Cornelio may acquire the land by acquisitive
prescription only after it was declared part of
alienable land by the state by possession for the
required number of years through ordinary
prescription, which requires ten years of
possession in good faith with just title; or
extraordinary prescription by possession for
thirty years without need of any other condition.
(NCC, Art. 1134)
Native title
Refers to pre-conquest rights to lands and
domains which, as far back as memory reaches,
have been held under a claim of private
ownership by Indigenous Cultural
Communities/Indigenous People (ICCs/IPs),
have never been public lands and are thus
indisputably presumed to have been held that
way since before the Spanish Conquest. [R.A.
8371, Sec. 3 (l)]
Time immemorial possession for native title
Refers to a period when as far back as memory
can go, certain ICCs/IPs are known to have
occupied, possessed in the concept of owner, and
utilized a defined territory devolved to them, by
operation of customary law or inherited from
their ancestors, in accordance with their
customs and traditions. [R.A. 8371, Sec. 3(p)]
Q: Socorro Orcullo was a grantee of a Free
Patent for a parcel of land in Cebu.
Subsequently, the subject lot was sold to
SAAD Agro-Industries, Inc. by one of Orcullo’s
heirs. Yet, the Solicitor General filed a
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
complaint for the annulment of the title and
reversion of the said lot on the ground that
the issuance of the free patent and title was
irregular and erroneous, following the
discovery that the lot is allegedly part of the
timberland and forest reserve. Decide on the
case.
A: In instances where a parcel of land considered
to be inalienable land of the public domain is
found under private ownership,
the Government is allowed by law to file an
action for reversion in which the ultimate relief
sought is to revert the land to the government
pursuant to the Regalian doctrine. Nevertheless,
in applying the Regalian Doctrine, the
paramount considerations of fairness and due
process must be observed in every claim of right
by the Government against one of its citizens.
Respondent Orcullo in this case failed to show
that the subject lot is part of timberland or forest
reserve it adverted to. (Saad Agro-Industries, Inc.
v. Republic of the Philippines, G.R. No. 152570,
September 27, 2006)
THE TORRENS SYSTEM OF REGISTRATION
In this system, title by registration takes the
place of "title by deeds" of the system under the
"general" law. A sale of land is effected by a
registered transfer, upon which a certificate of
title is issued. The certificate is guaranteed by
statute, and, with certain exceptions, constitutes
indefeasible title to the land mentioned therein.
(J. Agcaoli, Property Registration Decree &
Related Laws : Land Titles and Deeds, 2011)
The system generally means those systems of
registration of transactions with interest in land
whose declared object, under governmental
authority, to establish and certify to the
ownership of an absolute and indefeasible title
to realty, and simplify the transfer. (Ibid.)
Under the old system the same sale would be
effected by a conveyance, depending for its
validity, apart from intrinsic flaws, on the
correctness of a long series of prior deeds, wills,
etc. The object of the Torrens system, then, is to
do away with the delay, uncertainty, and
expense of the old conveyancing system. (Grey
Alba v. Dela Cruz citing Duffy & Eagleson on The
Transfer of Land Act, G.R. No. 5246, September 16,
1910)
716
 Civil Law
NOTE: Registration is not a mode of acquiring
ownership but is merely a procedure to establish
evidence of title over realty. It does not give the
holder any better title than what he actually has.
(Solid State Multi-Products Corp. v. Development
Bank of the Philippines, G.R. No. 83383, May 6,
1991)
However, a certificate of title cannot be used to
protect a usurper from the true owner or be
used as a shield for fraud. Registration merely
creates a prima facie presumption of the validity
of the registration and must give way to
evidence to the contrary. (Janrantilla v.
Jarantilla, G.R. No. 154586, December 1, 2010;
Vagilidad v. Vagilidad, G.R. No. 161136, November
16, 2006)
Purpose of registration
The following are the purpose of Registration
under Torrens System:
To quiet title to land;
To stop forever any question of legality of title;
The Torrens system aims to decree land titles
that shall be final, irrevocable, and
indisputable, and to relieve the land of the
burden of known and unknown claims. (J.
Agcaoli, Property Registration Decree &
Related Laws : Land Titles and Deeds, 2011)
1. To quiet title to land;
2. To establish and certify to the ownership of
an absolute and indefeasible title to realty,
and to simply its transfer;
3. To guarantee the integrity of land titles, and
to protect their indefeasibility once the
claim of owenership is estbalished and
recognized;
4. To put a stop forever to any question of the
legality of the title;
5. To minimize conflicting claims and sabilize
land ownership ;
6. To relieve the land of burden of known, as
well as unknown claims; and
7. To decree land titles that shall be final,
irrevocable, and indisputable. (J. Agcaoli,
Property Registration Decree & Related Laws
: Land Titles and Deeds, 2017)
NOTE: The government has adopted the Torrens
system due to its being the most effective
measure to guarantee the integrity of land titles
and to protect their indefeasibility once the
claim of ownership is established and
717
recognized. (Casimiro Development Corporation
v. Nato Mateo, G.R. No. 175485, July 27, 2011)
Advantages of Torrens System
1. Substituted security for insecurity;
2. Reduced the cost of conveyance;
3. It has exchanged brevity and clearness for
obscurity and verbiage;
4. Protection against fraud;
5. It has restored to their just value many
estates, held under good holding titles, but
depreciated in consequence of some blur or
technical defect, and has barred the
reoccurrence of any similar faults; and
6. It simplified ordinary dealings. (J. Agcaoli,
Property Registration Decree & Related Laws:
Land Titles and Deeds, 2011)
Nature land registration proceedings under
the Torrens System
The Torrens system is judicial in character and
not merely administrative. Judicial proceedings
for the registration of lands throughout the
Philippines shall be in rem and shall be based on
the generally accepted principles underlying the
Torrens system. (P.D. 1529, Sec. 2)
Registration being a proceeding in rem requires
constructive seizure of the res (land) as against
all persons inluding the State, through
publication, posting, and service of notice. (J.
Agcaoli, Property Registration Decree & Related
Laws : Land Titles and Deeds, 2017)
Accordingly, all other interested persons are
notified of the proceedings by publication of the
notice of initial hearing. They also and have the
right to appear in opposition to such application.
A decree of registration that has become final
shall be deemed conclusive not only on the
questions actually contested and determined but
also upon all matters that might be litigated or
decided in the land registration proceedings.
Constructive notice upon registration
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 for the province or city where
the land to which it relates lies, be constructive
 Land Titles and Deeds
notice to all persons from the time of such
registering, filing or entering. (P.D. 1529, Sec. 52)
Judicial and quasi-judicial bodies covering
land registration under the Torrens system
1. Courts;
GR: RTCs have plenary jurisdiction over land
registration cases. Regional Trial Courts have
exclusive jurisdiction over land registration
cases and all petitions after original
registration of title, with the power to hear
and determine all questions arising upon
such applications or petitions. (P.D. 1529, Sec.
2)
NOTE: The court can now hear and
decide not only non-controversial cases
but even contentious issues which
before were beyond its competence.
(Lopez v. Querubin, G.R. No. 155405,
March 18, 2015)
XPN: MeTCs, MTCCs, MTCs and MCTCs have
delegated jurisdiction to hear and determine
cadastral or land registration cases in the
following instances:
a. Where the lot sought to be registered is
not the subject of controversy or
opposition; or
b. Where the lot is contested but the value
thereof does not exceed P100,000.00,
(Republic v. Bantigue, G.R. No. 162322,
March 14, 2012) such value to be
ascertained by the affidavit of the
claimant or by the agreement of the
respective claimants, if there be more
than one, or from the corresponding tax
declaration of the real property. (Sec. 34,
B.P. 129, as amended by Sec. 4, R.A. No.
7691)
NOTE: Appeal is taken to the Court of Appeals.
2. Department of Environment and Natural
Resources (DENR);
3. Department of Justice (DOJ) through the
Land Registration Authority (LRA) and its
Register of Deeds;
4. Department of Land Reform (DLR); and
5. Department of Agriculture (DA)
ORIGINAL REGISTRATION
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Laws that govern land registration
1. Property Registration Decree (P.D. 1529, as
amended);
NOTE: P.D. 1529 amended and superseded
C.A. No. 496, otherwise known as the then
Land Registration Act.
2. Cadastral Act (Act 2259, as amended);
3. Public Land Act (C.A. No. 141, as amended);
4. Emancipation Decree (P.D. 27, as amended);
5. Comprehensive Agrarian Reform Law of
1988 (R.A. 6657); and
6. Indigenous Peoples Rights Act (R.A. 8371).
Original registration
A proceeding filed in the MTC where there is no
controversy or opposition, or contested lots
where the value of which does not exceed
P100,000.00 (Sec. 4, R.A. 7691) or in the RTC (as
a land registration court) when the value
exceeds P100,000 to determine title or
ownership of land on the basis of an application
for registration or answer/opposition by a
claimant in a cadastral registration.
Kinds of original registration
1. Judicial/Voluntary/Ordinary - filing with
the proper court an application by the
private individual himself; and
2. Administrative/Involuntary/Cadastral -
compulsory registration initiated by the
government, to adjudicate ownership of
land and involuntary on the part of the
claimants, but they are compelled to
substantiate their claim or interest through
an answer.
Who may apply for registration
1. 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 lands of the public domain under
a bona fide claim of ownership since June
12, 1945, or earlier. (OCENPO);
NOTE: Possession is:
open – when it is patent, visible, apparent,
notoripus and not clandestine;
718
 Civil Law
continuous – when uninterrupted,
unbroken and not intermittent or
occassional;
exclusive – when the adverse possessor can
show excluside dominion over the land and
an appropriation of it to his own use and
benefit; and
notorious – when it is so conspicuous that it
is generally known and talked of by the
public or the people in the nerighborhood.
(Bienvenido v. Gabriel, G.R. No. 175763, April
11, 2012)
2. Those who have acquired ownership over
private lands by prescription under the
provisions of existing laws;
NOTE: rule on prescription under the Civil
Code:
a. Ordinary prescription – 10 years in
good faith and with just title; and
b. Extraordinary prescription – 30 years
Only when such land has become
patriomonial can the prescriptive period for
the acquisition of the property begin to run.
(Malabanan v. Republic, G.R. No. 179987,
September 3, 2013
3. Those who have acquired ownership of
private lands or abandoned river beds by
right of accession or accretion under the
existing laws; and
Ownership of abandoned river beds by right
of accession
GR: River beds which are abandoned through
the natural change in the course of waters ipso
facto belong to the owners whose lands are
occupied by the new course in proportion to the
area lost.
XPN: The owners of the adjoining lands shall
have the right to acquire the same by paying the
value thereof, otherwise, the alluvial property
may be subject to acquisition through
presciption by third persons. (NCC, Art. 461; City
Mayor of Parañaque City v. Ebio, G.R. No. 178411,
June 23, 2010)
Ownership by right of accretion along river
banks
719
The owners of land adjoining the banks of rivers
blong the accretion which they gradually receive
from the effects of the current of the waters.
(NCC, Art. 457)
A riparian owner does not acquire the additions
to his land caused by special works designed to
bring about accretion.
4. Those who have acquired ownership of land
by any other manner provided for by law.
5. Where the land is owned in common, all the
co-owners shall file the application jointly.
(P.D. 1529, Sec. 14)
Q: Ortigas and Company Limited Partnership
is the owner of a parcel of land in Pasig City,
whose title was then inscribed with an
encumbrance that it was for road widening
and subject to Section 50 of Presidential
Decree No. 1529 or the Property Registration
Decree. After the C-5 Ortigas Avenue flyover
was completed, Ortigas filed a petition for
authority to sell to the government the
unutilized portion, which was granted by the
RTC. The Republic contends that Ortigas can
only donate the property to the government
in accordance with Section 50.
Is the Ortigas not allowed to sell the
unutilized portion of the property to the
government in accordance with Section 50 of
Presidential Decree No. 1529?
A: NO, Ortigas is still allowed to sell the
unutilized portion of the property. Section 50 of
Presidential Decree No. 1529 does not apply in a
case that is the proper subject of an
expropriation proceeding. Respondent Ortigas
may sell its property to the government. It must
be compensated because its property was taken
and utilized for public road purposes. Section 50
contemplates roads and streets in a subdivided
property, not public thoroughfares built on a
private property that was taken from an owner
for public purpose. A public thoroughfare is not
a subdivision road or street. More importantly,
when there is taking of private property for
some public purpose, the owner of the property
taken is entitled to be compensated. (Republic of
the Philippines, represented by the Department of
Public Works and Highway (DPWH) v. Ortigas
and Company Limited Partnership, G.R. NO.
171496, March 3, 2014, as penned by J. Leonen)
 Land Titles and Deeds
Object of Registration
Only real property or real rights may be the
object of registration under the existing land
registration laws.
Q: Rosario filed her application for land
registration of a rice land that she had
inherited, owning and possessing it openly,
publicly, uninterruptedly, adversely against
the whole world, and in the concept of owner
since then. This was opposed by the The
Republic opposed claiming that Rosario
failed to occupy and possess the land for at
least 30 years immediately preceding the
filing of the application; and that the land
applied for, being a portion of a river control
system, that could not be subject of
appropriation or land registration. Is the
land subject of application susceptible of
private acquisition?
A: NO. The land of the public domain, to be the
subject of appropriation, must be declared
alienable and disposable either by the President
or the Secretary of the DENR. Unless public land
is shown to have been reclassified or alienated
to a private person by the State, it remains part
of the inalienable public domain. Indeed,
occupation thereof in the concept of owner, no
matter how long, cannot ripen into ownership
and be registered as a title. (Republic vs. De Joson,
G.R. No. 163767, March 10, 2014)
Q: Mario applied for registration of his land.
He claims that he bought the land from
Eduardo who also claims that his great
grandfather owned the land. Mario
submitted a CENRO from DENR stating that
the land is alienable and disposable in 1982.
However, the Republic appealed claiming
that Mario did not adhere to the
requirements of time required by the law
and he failed to proof that the land is an
alienable and disposable land. The Court
ruled in favor of the Republic stating that the
possession of the land before it is declared
alienable and disposable cannot be included
in the computation of possession of the land,
thus, Mario did not adhere to the period
required by law. Can Mario register his land?
A: NO. Mario failed to present sufficient
evidence to establish that they and their
predecessors-in-interest had been in possession
of the land since June 12, 1945. Without
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
satisfying the requisite character and period of
possession—possession and occupation that is
open, continuous, exclusive, and notorious since
June 12, 1945, or earlier—the land cannot be
considered ipso jure converted to private
property even upon the subsequent declaration
of it as alienable and disposable. Prescription
never began to run against the State, such that
the land has remained ineligible for registration
under Sec. 14(1) of the Property Registration
Decree. Likewise, the land continues to be
ineligible for land registration under Sec. 14(2)
of the Property Registration Decree unless
Congress enacts a law or the President issues a
proclamation declaring the land as no longer
intended for public service or for the
development of the national wealth. (Malabanan
v. Republic, G.R. No. 179987, September 3, 2013)
(Bersamin, J.)
Q: The AFP-RSBS filed an application for
original registration of parcels of land
consisting of 48, 151 square meters in Silang,
Cavite. The parcels of land were allegedly
acquired from Narciso Ambrad, Alberto
Tibayan, and Restituto Tibayan on March 13,
1997. It was also alleged that their
predecessors-in-interest had been in
possession of the properties since June 12,
1945. Can the AFP-RSBS acquire the land
through acquisitive prescription?
A: YES. The period of possession prior to the
declaration that land is alienable and disposable
agricultural land is included in the computation
of possession for purposes of acquiring
registration rights over a property if the land has
already been declared as such at the time of the
application for registration. Petitioner’s right to
the original registration of title over the
property is, therefore, dependent on the
existence of: a) a declaration that the land is
alienable and disposable at the time of the
application for registration and b) open and
continuous possession in the concept of an
owner through itself or through its
predecessors-in-interest since June 12, 1945 or
earlier.
In this case, there is no dispute that the
properties were already declared alienable and
disposable land on March 15, 1982. Hence, the
property was already alienable and disposable at
the time of petitioner’s application for
registration on July 10, 1997. Further, the open,
continuous, exclusive, notorious possession of
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 Civil Law
the petitioner was proven by testimonies and
pieces of evidence. (AFP Retirement and
Separation Benefits System v. Republic of the
Philippines, G.R. No. 180086, July 2, 2014, as
penned by J. Leonen)
Persons qualified for registration in case the
land is subject to:
1. Pacto de retro sale
GR: Vendor a retro may apply for registration.
XPN: Vendee a retro should the period for
redemption expire during pendency of
registration proceedings and ownership to
property is consolidated in vendee a retro.
2. Trust
GR: Trustee may apply for registration.
XPN: Unless prohibited by the instrument
creating the trust.
NOTE: Trusteeship or trust is a fiduciary
relationship with respect to property which
involves the existence of equitable duties
imposed upon the holder of the title to the
property to deal with it for the benefit of
another.
3. Reserva troncal
Reservista has the right to apply for registration
but the reservable character of the property will
be annotated in the title.
NOTE: In reserva troncal, the ascendant who
inherits from his descendant any property which
the latter may have acquired by gratuitous title
from another ascendant, or a brother or sister, is
obliged to reserve such property as he may have
acquired by operation of law for the benefit of
relatives who are within the third degree and
who belong to the line from which said property
came.
Eligibility of private corporations to hold
alienable lands of the public domain
Private corporations may not hold alienable
lands of the public domain. The word “persons”
refer to natural persons who are citizens of the
Philippines. Juridical or artificial persons are
excluded. Sec. 3, Art. XII of the 1987
721
Constitution prohibits private corporations or
associations from holding alienable lands of the
public domain except by lease.
GR : Private corporations or associations may
not hold alienable lands of public domain except
by lease, for a period not exceeding 25 years,
renewable for not more than 25 years, and not
to exceed 1,000 hectares in area. (Sec. 3, Art. XII,
1987 Constitution)
XPN : Where at the time the corporation
acquired land, its predecessor-in-interest had
been in possession and occupation thereof in the
manner and for the period prescribed by law as
to entitle him to registration in his name, then
the proscription against corporation acquiring
alienable lands of the public domain except
through lease does not apply for the land was no
longer public land but private property. (See
Republic of the Philippines v. Iglesia ni Cristo. G.R.
No. 180067, June 30, 2009 ; infra.)
Q: Noynoy, Erap, Manny and Gibo are co-
owners of a parcel of land. May Manny seek
registration in his name of the land in its
entirety?
A: NO. Since a co-owner cannot be considered a
true owner of a specific portion until division or
partition is effected, he cannot file an application
for registration of the whole area without joining
the co-owners as applicants.
Q: In 1998, Iglesia ni Cristo filed its
application for Registration of Title before
the MCTC which the Republic opposed. The
cadastral court held that the essential
elements for judicial confirmation of an
imperfect title over the subject lot have been
complied with. The CA also held that the INC
has been in continuous, open, and peaceful
possession and occupation of the lot for more
than 40 years. Is the INC entitled to
registrable right over the subject lot?
A: YES. In Naguit, the Court held a less stringent
requirement in the application of Sec. 14(1) of
P.D. 1529 that the reckoning period for
possession is the actual possession of property
and it is sufficient that the property sought to be
registered is already alienable and disposable at
the time the application for registration of title is
filed.
 Land Titles and Deeds
The possession of INC has been established not
only from 1952 and 1959 when it purchased the
respective halves of the subject lot, but is also
tacked on to the possession of its predecessors-
in-interest. These possessions and occupation—
from Sabuco, including those of his parents, to
INC; and from Sabuco to Badanguio to INC—had
been in the concept of owners: open, continuous,
exclusive, and notorious possession and
occupation under a bona fide claim of acquisition
of property. These had not been disturbed as
attested to by respondent’s witnesses. (Republic
of the Philippines v. Iglesia ni Cristo, G.R. No.
180067, June 30, 2009)
Q: Laureana and Iden's application for
registration of land title over a parcel
situated in Barangay Tranca, Talisay,
Batangas filed in June 2009 before the
Municipal Circuit Trial Court of Talisay-
Laurel, Batangas. The land, regarded as Lot
No. 1591, Cad. 729, Talisay Cadastre, had an
area of 9,629 square meters. The application
of Laureana and Iden was docketed as Land
Registration Case No. 09-001 (LRA Record
No. N- 79691). On September 10, 2009,
Republic of the Philippines (Republic) filed
an Opposition to the application based on the
following grounds: (1) Ne[i]ther the
applicants nor their predecessors-in-interest
have been in open, continuous, exclusive and
notorious possession and occupation of the
land in question in the concept of an owner
since June 12, 1945 or earlier; (2) The tax
declarations relied upon by appellees do not
constitute competent and sufficient evidence
of a bona fide acquisition of the land by the
appellees; and (3) The parcel of land applied
for is a land of public domain and, as such,
not subject to private appropriation. And the
Republic further avers that a CENRO
Certification is not sufficient to prove the
land's classification as alienable and
disposable. The MTC and CA ruled in granting
the Application for registration. Whether or
Not Laureana is entitled for the registration
of the land in her name?
A: NO. In this case, although respondents were
able to present a CENRO certification, a DENR-
CENRO report with the testimony of the DENR
officer who made the report, and the survey plan
showing that the property is already considered
alienable and disposable, these pieces of
evidence are still not sufficient to prove that the
land sought to be registered is alienable and
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
disposable. Absent the DENR Secretary's
issuance declaring the land alienable and
disposable, the land remains part of the public
domain. Thus, even if respondents have shown,
through their testimonial evidence, that they and
their predecessors-in-interest have been in
open, continuous, exclusive, and notorious
possession and occupation of the property since
June 12, 1945, they still cannot register the land
for failing to establish that the land is alienable
and disposable. (Republic of The Philippines v.
Laureana Malijan Javier, GR NO. 214367, APRIL
4,2018, as penned by J. Leonen)
Q: The applicants sought the registration of
their titles over the subdivided portions of a
land. The applicants provided ample
evidence to their favor. However, the
Solicitor General opposed the application
using a pro forma opposition. Does the
Solicitor General have to produce evidence
that that the land is a public domain despite
the theory that all lands belong to the State?
A: YES. When the State has no effective
opposition, except for a pro forma opposition, to
controvert an applicant's convincing evidence of
possession and occupation, presumptions are
tilted to this applicant's favor. (Republic of The
Philippines v. Spouses Joel And Andrea Noval,
Ellen N. Delos Reyes, Dale Y. Noval, Winnie T. Refi,
Zenaida Lao, And Daisy N. Morales, G.R. No.
170316, September 18, 2017, as penned by J.
Leonen)
Adverse possession of land
Possession of land is adverse when it is open and
notorious. It is open when it is patent, visible,
and apparent and it is notorious when it is so
conspicuous that it is generally known and
talked of by public or the people in the
neighborhood.
Q: An Emancipation Patent OCT was issued in
Remy’s favor. However, Madarieta filed a
complaint for annulment and cancellation of
the OCT against Remy before the DARAB,
alleging that the Department of Agrarian
Reform mistakenly included her husband’s
lot as part of Luspo’s property where Remy’s
house was constructed. What is the nature of
Remy’s possession of the subject land?
A: Remy possessed the subject land in the
concept of an owner. No objection was
722
 Civil Law
interposed against his possession of the subject G.R. No. 186432, March 12, 2019, as penned by J.
land and Remy did not employ fraud in the Leonen)
issuance of the emancipation patent and title. In
fact, Madarieta faulted the DAR, not him. Sec. 14(1) v. Sec. 14(2) of P.D. 1529
(Rementizo v. Heirs of Vda. De Madarieta, G.R. No.
170318, January 15, 2009) In Malabanan v. Republic, the Court clarified the
difference between Sec. 14(1) and Sec. 14(2) of
NOTE: Jurisdiction over cases for P.D. 1529.
cancellation of registered emancipation
patents SEC. 14(1) SEC. 14(2)
Registration of title on Registration of
With the enactment of R.A. No. 9700 (An Act
the basis of property on the basis
Strengthening the Comprehensive Agrarian
possession. of prescription.
Reform Program), the exclusive and original
jurisdiction over cases for cancellation of Deals with possession Involves prescription
registered emancipation patents now belongs to and occupation in the as a mode of acquiring
the Department of Agrarian Reform Secretary. concept of an owner. ownership.
Extended under the
Available both by P.D.
In line with this, the Department of Agrarian aegis of the P.D. 1529
1529 and the Civil
Reform has issued Administrative Order No. 07- and the Public Land
Code.
14, which outlines in Article III the procedure for Act (PLA).
the cancellation of registered emancipation Under Sec. 48(b) of the
The 30-year period
patents, certificates of land ownership awards, PLA, as amended by
involves extraordinary
and other agrarian titles. The petition for R.A. 1472, the 30-year
prescription under the
cancellation shall be filed before the Office of the period is in relation to
Civil Code, particularly
Provincial Agrarian Reform Adjudicator, which possession without
Art. 1113 in relation to
would then undertake the case build-up before regard to the Civil
Art. 1137.
forwarding it to the Department of Agrarian Code.
Reform Secretary for decision.
ACQUISITION OF TITLE BY LAW
Thus, under Administrative Order No. 07-14, the
Complaint for cancellation of original certificates 1. Free patents based on Public Land Act (CA
of title and emancipation patents filed by 141);
respondents should be referred to the Office of 2. Title to accretion in river banks;
the Provincial Agrarian Reform Adjudicator for 3. Reclamation; or
case buildup. Then, the case shall be decided by 4. Title by escheat. (Rules of Court, Rule 91)
the Department of Agrarian Reform Secretary.
(The Honorable Secretary of the Department of
Agrarian Reform, et al., v. Heirs of Abucay, et al.,

723
 Land Titles and Deeds

PATENTS UNDER THE PUBLIC LAND ACT

KIND OF
TO WHOM GRANTED REQUIREMENTS
PATENT

Homestead To any Filipino Citizen 1) Does not own more than 24 hectares of land in the
Patent over the age of 18 years or Philippines or has not benefitted from any gratuitous
head of a famil allotment of more than 24 hectares;

2) Must have resided continuously for at least one year in

the municipality where the land is situated;

3) Must have cultivated at least 1/5 of the land applied

for.

Free Patent To any Natural Born 1) Does not own more than 12 hectares of land;
Citizen of the Philippines.
2) Has continuously occupied and cultivated, either by
himself or his predecessors-in-interest tract/s of
agricultural public land subject to disposition;

3) The continuous occupation and cultivation must be for

a period of at least 30 years before April 15, 1990, which
is the date of effectivity of Republic Act No. 6940 ; and

4) Payment of real estate taxes on the land while it has

not been occupied by other persons.

Sales Patent Citizens of the Philippines
of lawful age or such
citizens not of lawful age
who is head of a family may
purchase public
agricultural land of not
more than 12 hectares.
1) To have at least 1/5 of the land broken and cultivated
within five years from the date of the award; and
2) Shall have established actual occupancy, cultivation
and improvement of at least 1/5 of the land until the date
of such final payment.

Special Patent To non-Christian Filipinos Sec. of the DILG shall certify that the majority of the non-
under Sec. 84 of the Public Christian inhabitants of any given reservation have
Land Act. advanced sufficiently in civilization.

Acquisition of patents 2. By prescription – Possession of land for

1. By succession (testate or intestate)
a. By descent – Title is acquired when an
heir succeeds the deceased owner
whether by testate or intestate; and
b. By devise – Person acquires land from
one who may or may not be a relative, if
he is named in the deceased’s will as
devisee for such property.
required number of years and assertion of
ownership through an uninterrupted actual
possession of property within the period of
time prescribed by law. (Articles 712, 1134,
and 1137)
LAND PATENTS
Q: How are public lands suitable for
agricultural purposes disposed of?

A: Public lands suitable for agricultural purposes

are disposed as follows:

UNIVERSITY OF SANTO TOMAS 724

2021 GOLDEN NOTES
 Civil Law
1. Homestead settlement;
2. Sale;
3. Lease;
4. Confirmation of imperfect title or
incomplete titles either by judicial or
administrative legalization; or
5. Free title (a sub- category of administrative
legalization).
NOTE: There are four (4) modes of disposition
of agricultural lands under Section 11 of the
Public Land Act, namely : (1) for homestead
settlement; (2) by sale; (3) by lease; or (4) by
confirmation of imperfect or incomplete titles.
(Taar, et al., v. Lawan, et al., G.R. No. 190922,
October 11, 2017, as penned by J. Leonen)
The applicant of a homestead must be a "citizen
of the Philippines over the age of eighteen years,
or the head of a family[.]" The applicant must
prove compliance with the residency and
cultivation requirements under Chapter IV of
Public Land Act. Under the Constitution, only 12
hectares of agricultural land of the public
domain may be acquired through homestead.
Sales patents are governed by Chapter V of the
Public Land Act. The applicant must be a citizen
of the Philippines who is of legal age or a head of
the family. The land must first be appraised
before it can be sold through public bidding. As
an additional requirement, the purchaser must
"have not less than one fifth of the land broken
and cultivated within five years after the date of
the award.’’ The purchaser must also show
"actual occupancy, cultivation, and improvement
of at least one fifth of the land applied for until
the date on which final payment is made" before
the issuance of a sales patent. Only 12 hectares
of agricultural land of the public domain may be
acquired through a sales patent. The Public Land
Act authorized domestic corporations to apply
for sales patents over agricultural lands.
However, under the present Constitution,
private corporations and associations can only
lease agricultural lands.
The third mode of disposition of agricultural
lands of the public domain is through a lease.
The government can only award the right to
lease through an auction, the procedure of which
shall be the same as that prescribed for sales
patents. An inherent condition of the lease is
that the lessee should have cultivated 1/3 of the
land "within five years after the date of the
approval of the lease." Under the Constitution,
725
citizens may lease not more than 500 hectares of
agricultural lands of the public domain. For
private corporations and associations, they may
lease a maximum of 1,000 hectares of
agricultural lands for a period of 25 years,
renewable for another 25 years.
The last mode of disposition is by continuation
of imperfect or incomplete titles either through
judicial legalization or through administrative
legalization. The second sub-category refers to
the grant of free patents. (Ibid.)
Judicial legalization or judicial confirmation of
imperfect or incomplete titles is governed by
Section 48 of the Public Land Act, as amended by
Republic Act No. 3872 and Presidential Decree
No. 1073. (Ibid.)
On the other hand, the grant of free patents is
governed by Section 44, paragraph 1 of the
Public Land Act, as amended by Republic Act No.
6940. (Ibid. See also Heirs of Malabanan v.
Republic, G.R. No. 179887, September 3, 2013)
As evidence of ownership of land, a homestead
patent prevails over a land tax declaration. (Jose
Medina v. CA & The Heirs of the Late Abundio
Castaňares, G.R. No. 137582, August 29, 2012)
NOTE: When a free patent title is issued to an
applicant and the sea water moves toward the
estate of the title holder, the invaded property
becomes part of the foreshore land. The land
under the Torrens system reverts to the public
domain and the title is annulled.
After a free patent application is granted and the
corresponding certificate of title is issued, the
land ceased to be part of the public domain and
becomes private property over which the
Director of Lands had neither control nor
jurisdiction.
Q: Reynosa Valte (Valte) filed a free patent
application dated July 6, 1978 for a 7.2253-
hectare parcel of land in San Isidro, Lupao,
Nueva Ecija. The application listed Procopio
Vallega and Pedro Mendoza (Mendoza) as
witnesses who would testify to the truth of
the allegations in Valte's application. The
Director of Lands then issued the Notice of
Application for Free Patent stating that "all
adverse claims to the tract of land above-
described must be filed in the Bureau of
Lands on or before the 7th day of August
 Land Titles and Deeds
1978. Any claim not so filed will be forever
barred." The land was first occupied and
cultivated by Francis Maglaya, Nemesio
Jacala, and Laureano Pariñas, who sold all
their rights to the portions adjudicated to
them to Spouses Policarpio Valte and Miguela
dela Fuente in May 1941. The spouses
immediately took possession. Miguela dela
Fuente assumed the responsibilities over the
land after her husband died. When she aged,
she transferred all her rights to their only
daughter, Reynosa Valte, who was found in
actual possession of the land. The Bureau of
Lands approved Valte's application and
issued Free Patent No. 586435. The
Cabanatuan City Register of Deeds issued
OCT No. P-10119. Mendoza and Jose Gonzales
(Gonzales) filed a protest against Valte's
application, claiming to be "the lawful
owners and possessors since 1930 thru
predecessor-in-interest and who had been in
actual uninterrupted, open, peaceful,
exclusive, and adverse possession in the
concept of an owner of the above-described
property." Mendoza and Gonzales alleged
that Valte procured Free Patent No. 586435
by means of fraud, misrepresentation, and
connivance. Is there is fraud and
misrepresentation by respondent Reynosa
Valte in her free patent application?
A: NO. The burden of proving that respondent
employed fraud in her free patent application
falls on petitioners who made this assertion.
Petitioners failed to overcome this burden.
Different kinds of fraud exist, but the law
allowing fraud as a ground for a review or
reopening of a land registration decree
contemplates actual and extrinsic fraud. Actual
fraud "proceeds from an intentional deception
practiced by means of the misrepresentation or
concealment of a material fact." Extrinsic fraud
"is employed to deprive parties of their day in
court and thus prevent them from asserting
their right to the property registered in the
name of the applicant."
Petitioners did not allege nor show any
irregularity in the free patent application
proceedings conducted before the Director of
Lands. The presumption that official duty has
been regularly performed stands. In any event,
petitioners failed to overcome their burden to
prove fraud by respondent in her claim of
continuous occupation and cultivation of the
land. As observed by the Court of Appeals,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
petitioner Mendoza admitted against his interest
when he stated in his Joint Affidavit that
respondent "has continuously occupied and
cultivated the land." Elmirando Sabado's
testimony regarding petitioners' occupation of
the land in 1929 also lacks credibility as he was
only four years old in 1929. This court has
disregarded similar testimonies when it was
shown that the witness was then too young to
understand the concept of the possession of a
large tract of land. This court has ruled that an
applicant's failure to state in the free patent
application that other parties are also in
possession of the land applied for "clearly
constitutes a concealment of a material fact
amounting to fraud and misrepresentation
within the context of [Section 91 of
Commonwealth Act No. 141, as amended],
sufficient enough to cause ipso facto the
cancellation of their patent and title." (Pedro
Mendoza [Deceased], Substituted By His Heirs
Federico Mendoza And Delfin Mendoza, And Jose
Gonzales V. Reynosa Valte, G.R. 172961,
September 7, 2015, as penned by J. Leonen)
Q: A parcel of land located in Tarlac which
were inherited by Taar. CFI approved the
partition agreement of the subject property.
Based on the CFI’s decision, Taar et.al.
prepared a subdivision plan which was
approved later on. They then applied for free
patents over the property. Lawan et. al. filed
a verified protest alleging that their
predecessors-in-interests had been in actual,
physical, exclusive and notorious possession
and occupation of land. DENR Director ruled
that Lawan et. al. are the rightful owners of
the subject property and cancelled the
subdivision plan. It also denied the free
patent application. Title was issued in favor
of Lawan et. al. DENR under the legal affairs
conducted an investigation and concluded
that Taar et. al. is entitled for the property.
Secretary of DENR adopted the findings of the
investigating team and ordered cancellation
of free patents and the title issued in favor of
Lawan et. al. Office of the President reversed
the decision of Secretary of DENR. Whether
Lawan et. al. are barred by the principle of
res judicata from instituting free patent
applications over the Property claimed by
Taar et. al.
A: NO. In this case, only the first three (3)
elements of res judicata are present. The
principle of res judicata does not require
726
 Civil Law
absolute identity of parties. It requires, at the
very least, substantial identity of parties. There
is substantial identity of parties when there
exists a "community of interest between a party
in the first case and a party in the second case
even if the latter was not impleaded in the first
case." For instance, there is substantial identity
of parties when one intervenes as a party-
defendant and creates a common cause with the
original defendant.
The February 18, 1948 Decision of the Court of
First Instance involved an agreement between
petitioners' predecessors-in-interest, namely:
Alipio Duenas, Fortunata Duenas, Spouses
Primitivo T. Adaoag and Pilar Tandoc, Spouses
Ignacio Gragasin and Genoveva Adaoag,
Pantaleon Taar, Lucia Taar, Joaquina Taar,
Feliciano Taar, Paulino Taar, and Oscar Galo.
Clearly, private respondents were not parties to
the agreement. Moreover, there is no clear
showing that private respondents or their
predecessors-in-interest shared a common
interest with any of the parties to the agreement.
However, assuming that there is identity or
substantial identity of parties, there is no
identity of subject matter between the February
18, 1948 Decision of the Court of First Instance
and private respondents' free patent
applications. Although both relate to the same
Property, the February 18, 1948 Decision of the
Court of First Instance was simply an agreement
partitioning the bigger parcel of land, which
embraced the smaller portion claimed by
petitioners and private respondents. On the
other hand, private respondents' free patent
applications involved the establishment of their
rights as the purported occupants and
cultivators of the Property. Evidently, there is no
identity of subject matter. The principle of res
judicata does not apply.
In addition, the Court of First Instance did not
recognize, expressly or impliedly, that private
petitioners' predecessors-in-interest occupied
and cultivated the Property for more than 30
years since 1915. It also did not declare
petitioners' predecessors-in-interest as the ipso
jure owners of the same. Therefore, the February
18, 1948 Decision of the Court of First Instance
cannot bar the filing of a subsequent free patent
application over the Property. Likewise,
petitioners cannot rely solely on this Decision to
obtain free patents. Entitlement to agricultural
lands of the public domain requires compliance
727
with the provisions of Commonwealth Act No.
141, otherwise known as the Public Land Act.
(Taar v. Lawan et.al., G.R. 190922, October 11,
2017, as penned by J. Leonen)
Restrictions on alienation or encumbrance of
lands titled pursuant to patents
1. Lands acquired under free patent or
homestead patent are prohibited from being
alienated;
XPN : If in favor of the government, five
years from and after the issuance of the
patent or grant.
2. No alienation, transfer or conveyance of any
homestead after five years and before 25
years after the issuance of title shall be valid
without the approval of the Secretary of
DENR (C.A. No. 141 as amended by C.A. No.
458);
3. It cannot be alienated within five years after
approval of such patent application;
4. It cannot be liable for the satisfaction of debt
within five years after the approval of such
patent application;
5. It is subject to repurchase of the heirs within
five years after alienation when such is
already allowed; and
6. No private corporation, partnership or
association may lease such land unless it is
solely for commercial, industrial,
educational, religious or charitable
purposes, or right of way (subject to the
consent of the grantee and the approval of
the Secretary of the DENR) [The Public Land
Act]
Proper action in cases of improper or illegal
issuance of patents
Reversion suits
The objective of which is the cancellation of the
certificate of title and the consequent reversions
of the land covered thereby to the State.
Q: Respondents are the grantees of
agricultural public lands in General Santos
City through Homestead and Free patents
sometime in 1986 and 1991. Negotiations
were made by petitioner sometime in 1995
and eventually a Deed of Conditional Sale of
the properties in question was executed in
favor of petitioner Filinvest Land Inc. A few
 Land Titles and Deeds
days after the execution of the aforestated
deeds, respondents found that the sale was
null and void as it was done within the
prohibitory period and that the sale was not
approved by the secretary of DENR. Thus,
they filed a case for declaration of nullity of
the deeds of conditional and absolute sale of
the questioned properties. Will the action
prosper?
A: YES. The five-year prohibitory period
following the issuance of the homestead patent
is provided under Sec. 118 of the Public Land
Act. It bears stressing that the law was enacted
to give the homesteader or patentee every
chance to preserve for himself and his family the
land that the State had gratuitously given to him
as a reward for his labour in cleaning and
cultivating it.
In the present case, the negotiations for the
purchase of the properties covered by the
patents issued in 1991 were made in 1995 and,
eventually, an undated Deed of Conditional Sale
was executed. The prohibition does not
distinguish between consummated and
executory sale. The conditional sale entered into
by the parties is still a conveyance of the
homestead patent; that the formal deed of sale
was executed after the expiration of the said
period did not and could not legalize a contract
that was void from its inception. (Filinvest Land,
Inc., Efren C. Gutierre v. Abdul Backy, Abehera,
Baiya, Edris, et al. G.R. No. 174715. October 11,
2012)
To whom free patent may be issued
1. A natural-born citizen of the Philippines;
2. Is not the owner of more than 12 hectares of
land;
3. Has continuously occupied and cultivated,
either by himself or through his
predecessors-in-interest, a tract or tracts of
agricultural public land subject to
disposition, for at least 30 years prior to the
effectivity of Republic Act No. 6940; and
4. Has paid the real taxes thereon while the
same has not been occupied by any person.
(Taar, et al., v. Lawan, et al., G.R. No. 190922,
October 11, 2017, as penned by J. Leonen)
NOTE : Once a patent is registered and the
corresponding certificate of title is issued, the
land covered thereby ceases to be part of public
domain and becomes private property, and the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Torrens Title issued pursuant to the patent
becomes indefeasible upon the expiration of one
year from the date of such issuance.
XPN: A title emanating from a free patent which
was secured through fraud does not become
indefeasible.
Reason: The patent from whence the title
sprung is itself void and of no effect whatsoever.
The registration of a patent under the Torrens
System does not by itself vest title; it merely
confirms the registrant’s already existing one.
Verily, registration under the Torrens System is
not a mode of acquiring ownership.
NOTE: Nonetheless, a free patent that was
fraudulently acquired, and the certificate of title
issued pursuant to the same, may only be
assailed by the government in an action for
reversion pursuant to Sec. 101 of the Public
Land Act. (Nancy T. Lorzano v. Juan Tabayag, Jr.,
G.R. No. 189647, February 6, 2012)
Free patent issued over a private land
The settled rule is that a free patent issued over
a private land is null and void, and produces no
legal effect whatsoever. Private ownership of
land-as when there is a prima facie proof of
ownership like a duly registered possessory
information or a clear showing of open,
continuous, exclusive, and notorious possession,
by present or previous occupants is not affected
by the issuance of a free patent over the same
land, because the Public Land Law applies only
to lands of the public domain. (Heirs of Simplicio
Santiago v. Heirs of Mariano Santiago, G.R. No.
151440, June 17, 2003)
RECLAMATION
Reclamation is the act of filling up of parts of the
sea for conversion to land.
NOTE: It must be initially owned by the
government. It may be subsequently transferred
to private owners.
Q: Who may undertake reclamation projects?
A: Only the national government may engage in
reclamation projects.
Q: To whom does a reclaimed area belong?
728
 Civil Law
A: Under the Regalian Doctrine, the State owns 4. The application must be filed with the
all waters and lands of the public domain, proper court.
including those physically reclaimed.
Public land
NOTE: Pursuant to the Regalian Doctrine, all
lands of the public domain belong to the state. The term is uniformly used to describe so much
Thus, possession of lands of the public domain of the national domain under the legislative
will not ripen into ownership. (Republic of the power of the Congress as has not been subjected
Philippines v. Cortez, Sr., G.R. No. 197472, to private right or devoted to public use.
September 7, 2015)
Public lands v. Government lands
UNDER C.A. 141 (PUBLIC LAND ACT)
GOVERNMENT
BRIEF BACKGROUND OF CA 141 PUBLIC LANDS
LANDS

1. It is to govern the disposition of lands of the Includes not only the The government
public domain. government lands, but owns real estate,
2. It prescribed rules and regulations for the also other lands of the which is part of the
homesteading, selling, and leasing of government already “public lands,” and
portions of the public domain of the reserved or devoted to other real estate,
Philippine Islands. public use or subject to which is not a part
3. It prescribed the terms and conditions to private right. thereof.
enable persons to perfect their titles to
Equivalent to public
public lands in the Islands.
domain and does not, by
4. It worked on the assumption that the title to
public lands in the Philippines remained in any means, include all
lands of government
the government and goverment’s title to
ownership, but only so
public land came from the Treaty of Paris
much of said lands as are
and other relative treaties. (J. Agcaoli,
thrown open to private
Property Registration Decree & Related Laws:
Land Titles and Deeds, 2011) appropriation and
settlement by homestead
and other like general
Persons qualified for registration under
laws. (Montano v. Insular
Public Land Act or C.A. No. 141
Government, G.R. No. L-
3714, January 26, 1909)
Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive and notorious possession Patrimonial property v. Public land
and occupation of alienable and disposable
agricultural lands of the public domain, under a PATRIMONIAL
bona fide claim of acquisition or ownership, since PUBLIC LAND
PROPERTY
June 12, 1945, except when prevented by war or
force majeure. All other property of the Property for public
State which is not of the use of provinces and
Requisites: character of public towns.
dominion or not intended
1. The applicant must be a Filipino citizen; for public use, public
2. He must have, by himself or through his service, or for the
predecessors in-interest, possessed and development of national
occupied an alienable and disposable wealth.
agricultural portion of the public domain; Property of public
3. Such possession and occupation must have dominion, when no
been open, continuous, exclusive, notorious longer needed for public
and in the concept of owner, since June, 12, use, or for public service,
1945, except when prevented by war or shall form part of the
force majeure; and patrimonial property of

729
 Land Titles and Deeds

the State. Marcelina Azardon-Crisologo v. Raon, G.R. No.

171068, Sept. 5, 2007)

NOTE : Only lands of public domain Possession and occupation

subsequently classified or declared as no longer
intended for public use, or removed from the Q: Luzviminda A. Canlas applied for the
sphere of public dominion are considered original registration of title, under
controverted into patrimonial lands which may Presidential Decree No. 1529, of the 9,751-
be alienated or disposed of through any of the square-meter parcel of land located in Rizal
modes of acquisition. (Andres v. Sta. Lucia Realty and technically described as Cadastral Lot
& Development, Inc., G.R. No. 201405, August 24, No. 11566, Psu-04-006561. There was no
2015) opposition to Canlas’ application.
Respondent Republic of the Philippines
Means by which public lands may be (Republic) did not submit its comment or
disposed of opposition despite the opportunity given by
the trial court. The case was then submitted
1. For homestead settlement; for decision.
2. By sale;
3. By lease; and The Regional Trial Court granted Canlas’
4. By confirmation of imperfect or incomplete application. According to the trial court,
titles: Canlas complied with the procedural
a. By judicial legalization; or requirements and substantiated her
b. By administrative legalization (free application. She sufficiently proved that,
patent). through her predecessors-in-interest, she
has been in “open, continuous, exclusive and
A person is deemed to possess an imperfect notorious possession of an alienable and
title over property when: disposable parcel of land of the public
domain under a bona fide claim of ownership
The applicant for confirmation of imperfect title for more than 30 Years.
has shown possession and occupation that is:
The Republic of the Philippines, however,
1. Open; filed a notice of appeal. Acting on the
2. Continuous; Republic’s appeal, the Court of Appeals
3. Exclusive; reversed and set aside the decision of the
4. Notorious; and trial court. The Court of Appeals held that
5. In the concept of an Owner. Canlas was not able to prove open,
continuous, exclusive, and notorious
Factors to consider the applicant in an open, possession and occupation of the property.
continuous, exclusive and notorious According to the Court of Appeals, Canlas
possession in the concept of an owner failed to discharge the burden of proof
(OCENPO): placed on applicants for land registration.

OPEN - When it is patent, visible apparent
notorious and not clandestine;
CONTINUOUS - When uninterrupted, unbroken
and not intermittent or occasional;
EXCLUSIVE - When the adverse possessor can
show exclusive dominion over the land and an
appropriation of it to his own use and benefits;
and
NOTORIOUS - When it is so conspicuous that it
is generally known and talked of by the public or
the people in the neighborhood. (Heirs of
Canlas comes before this court, arguing that
she has duly overcome the burden of proof
by showing open, continuous, exclusive,
adverse, and notorious possession and
occupation of the property. Is Canlas in open,
continuous, exclusive, and notorious
possession and occupation of the land
described in plan Psu-04-006561?
A: YES. To qualify as open, continuous, exclusive,
and notorious possession and occupation, the
possession must be of the following character:
Possession is open when it is patent, visible,

UNIVERSITY OF SANTO TOMAS 730

2021 GOLDEN NOTES
 Civil Law
apparent, notorious and not clandestine. It is
continuous when uninterrupted, unbroken and
not intermittent or occasional; exclusive when
the adverse possessor can show exclusive
dominion over the land and an appropriation of
it to his own use and benefit; and notorious
when it is so conspicuous that it is generally
known and talked of by the public or the people
in the neighborhood.
This court puts more premium on the findings of
the trial court that petitioner has sufficiently
shown acts of dominion before 1945 and
throughout the years. It is settled that the trial
court’s appreciation of the evidence presented is
entitled to great respect since it is in a better
position to evaluate the testimonies of
witnesses.
Petitioner has sufficiently shown that she,
through her predecessors-in-interest, have been
in open, continuous, exclusive, and notorious
possession and occupation of the 9,751-square-
meter parcel of land located in Barrio Macamot,
Municipality of Binangonan, Province of Rizal,
since June 12, 1945 or earlier. Documentary
evidence to prove possession was presented and
substantiated by the witnesses’ testimonies.
There were sufficient pieces of evidence to show
that petitioner and her predecessors-in-interest
exercised specific acts of ownership such as:
farming activities; allowing the excavation of
land for “pulang lupa” to make clay pots; paying
realty taxes; declaring the property for tax
purposes; employing a caretaker; causing
corrections in entries in public documents with
regard to the land; and demanding unlawful
occupants to vacate the premises. (Luzviminda
Canlas v. Republic of the Philippines, G.R. No.
200894, November 10, 2014, as penned by J.
Leonen)
Effect of possession of an Imperfect title
When the conditions set by law are complied
with, the possessor of the land, by operation of
law, acquires a right to government grant,
without the necessity of a certificate of the title
being issued.
Q: RP opposed the application for
registration filed by Manna Properties under
Sec. 48(b), C.A. No. 141 arguing that, as a
private corporation, it is disqualified from
holding alienable lands of the public domain,
except by lease, citing Sec. 3, Art. XII, 1987
731
Constitution. On the other hand, Manna
Properties claims that the land in question
has been in the open and exclusive
possession of its predecessors-in-interest
since the 1940s, thus, the land was already
private land when Manna Properties
acquired it from its predecessors-in-interest.
Decide.
A: Lands that fall under Sec. 48, C.A. No. 141
are effectively segregated from the public
domain by virtue of acquisitive prescription.
Open, exclusive and undisputed possession of
alienable public land for the period prescribed
by C.A. No. 141 ipso jure converts such land into
private land. Judicial confirmation in such cases
is only a formality that merely confirms the
earlier conversion of the land into private land,
the conversion having occurred in law from the
moment the required period of possession
became complete.
Under C.A. No. 141, the reckoning point is June
12, 1945. If the predecessors-in-interest of
Manna Properties have been in possession of the
land in question since this date, or earlier,
Manna Properties may rightfully apply for
confirmation of title to the land. Manna
Properties, a private corporation, may apply for
judicial confirmation of the land without need of
a separate confirmation proceeding for its
predecessors-in-interest first. (Republic v.
Manna Properties Inc., G.R. No. 146527, January
31, 2005)
Q: Manuel was born on 12 March 1940 in a
1,000-square meter property where he grew
up helping his father, Michael, cultivate the
land. Michael has lived on the property since
the land was opened for settlement at about
the time of the Commonwealth government
in 1935, but for some reason never secured
any title to the property other than a tax
declaration in his name. He has held the
property through the years in the concept of
an owner and his stay was uncontested by
others. He has also conscientiously and
continuously paid the realty taxes on the
land.
Michael died in 2000 and Manuel-as
Michael’s only son and heir-now wants to
secure and register title to the land in his
own name. He consults you for legal advice as
he wants to perfect his title to the land and
secure its registration in his name.
 Land Titles and Deeds
a. What are the laws that you need to
consider in advising Manuel on how he
can perfect his title and register the land
in his name? Explain the relevance of
these laws to your projected course of
action.
b. What do you have to prove to secure
Manuel's objectives and what
documentation are necessary? (2013 Bar)
A:
(a) For purposes of confirmation of imperfect
title, I will consider the provisions of C.A. No.
141 as well as the Property Registration Decree
or P.D. 1529. C.A. No. 141 provides two
requisites for judicial confirmation of imperfect
title namely: (1) open and continuous, exclusive
and notorious possession and occupation of the
land by himself or through his predecessor in
interest under bona fide claim of ownership
since June 12, 1945; and (2) the classification of
the land as alienable and disposable land of the
public domain. (Secretary of DENR v. Yap, G.R. No.
167707, October 8, 2008)
The Property Registration Decree or P.D. 1529
provides that those who by themselves or their
predecessors-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. Since
Manuel’s father Michael had been in open,
continuous, exclusive and notorious possession
of the land since 1935, and that the land was
declared alienable in the same year, his
possession has ripened into ownership which
entitles him or his successor Manuel to file an
application for judicial confirmation of imperfect
title.
(b) I have to prove that the land was already
declared alienable at the time that Manuel or his
father Michael took possession of the land and
that their possession was open, continuous,
exclusive and notorious which started prior to
or on June 12, 1945 as required by C.A. No.
141. To prove the first requisite, the original
classification of the land as approved by the
DENR Secretary (Republic v. T.A.N. Properties,
Inc., G.R. No. 154953, June 26, 2008) or in lieu
thereof, a Certification by the DENR Regional
office attesting to the alienable and disposable
character of the land must have to be submitted.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
(Republic v. Serrano G.R. No. 183063, February
24, 2010) I also have to file together with the
application for registration all original
muniments of title or copies thereof and a
survey plan of the land approved by the Bureau
of Lands in accordance with Sec. 17 of P.D. 1529.
Manuel may also submit the tax declarations and
tax payment receipts which have been ruled to
be good indications of possession in the concept
of owner. (Republic v. Candy Maker, Inc., G.R. No.
163766, June 22, 2006)
Persons qualified for judicial confirmation
1. Filipino citizens who by themselves or
through their predecessors-in-interest have
been in open, continuous, exclusive and
notorious possession and occupation of
alienable and disposable lands of public
domain under a bona fide claim of
acquisition since June 12, 1945 or prior
thereto or since time immemorial ;
2. Filipino citizens who by themselves or their
predecessors-in-interest have been, prior to
the effectivity of P.D. 1073 on January 25,
1977, in open, continuous, exclusive and
notorious possession and occupation of
agricultural lands of the public domain
under a bona fide claim of acquisition or
ownership for at least 30 years, or at least
since January 24, 1947 ;
3. Private domestic corporations or
associations which had acquired lands from
Filipino citizens who had possessed the
same in the manner and for the length of
time indicated in paragraphs 1 & 2 above ;
or
4. Natural-born citizens of the Philippines who
have lost their citizenship and who has the
legal capacity to enter into a contract under
Philippine laws may be a transferee of
private land up to a maximum area of 5,000
sq.m., in case of urban land, or three
hectares in case of rural land to be used by
him for business or other purposes. For
residence purposes, the maximum area is
1,000 sq. m. in case of urban lands or one
hectare in case of rural lands.
NOTE: Aliens are disqualified from acquiring
public and private lands. (Hulst v. PR Builders,
Inc., G.R. No. 156364, September 3, 2007; Krivenko
v. Register of Deeds, G.R. No. L-630, November 15,
1947)
732
 Civil Law
NOTE: Extended period for filing of applications
for administrative legalization (free patent) and
judicial confirmation of imperfect and
incomplete titles to alienable and disposable
lands of the public domain. – Sec. 1, R.A. 9176
provides in part that, “The time to be fixed in the
entire archipelago for the filing of applications
shall not extend beyond December 31, 2020.
Provided that the period shall apply only when
the area applied for does not exceed 12
hectares.’’ (Section 1, R.A. No. 9176, amending
Section 45, Chapter VII of C.A. No. 141, as
amended, otherwise known as the Public Land
Act)
Q : Bracewell asserts that he has a right of
title to a parcel of land having been, by
himself and through his predecessors-in-
interest, in occupation under a bona fide
claim of ownership since 1908. Thus, he filed
an application for registration in 1963 but
the land has been classified as alienable or
disposable only on May 27, 1972. May his
application for confirmation of imperfect
title be granted ?
A : NO. The land was only classified as alienable
or disposable on May 27, 1972. Prior to said
date, when the subject parcels of land were
classified as inalienable or not disposable, the
same could not be the subject of confirmation of
imperfect title. There can be no imperfect title to
be confirmed over lands not yet classified as
disposable or alienable. In the absence of such
classification, the land remains unclassified
public land until released and opened to
disposition. Indeed, it has been held that the
rules on the confirmation of imperfect title do
not apply unless and until the land classified as
forest land is released in an official proclamation
to that effect so that it may form part of the
disposable agricultural lands of the public
domain. (Bracewell v. CA, G.R. No. 107427,
January 25, 2000)
Q : In an application for judicial confirmation
of imperfect title filed by Naguit, the OSG
argues that the property must first be
alienable. Since the subject land was
declared alienable only on 1980, Naguit
could not have maintained a bona fide claim
of ownership since June 12, 1945, as
required by Sec. 14 of the Property
Registration Decree, since prior to 1980, the
land was not alienable or disposable. Is it
necessary under Sec. 14(1) of the Property
733
Registration Decree (now Sec. 48(b) of the
Public Land Act) that the subject land be first
classified as alienable and disposable before
the applicant’s possession under a bona fide
claim of ownership could start?
A : NO. Sec. 14(1) merely requires the property
sought to be registered as already alienable and
disposable at the time the application for
registration of title is filed. If the State, at the
time the application is made, has not yet deemed
it proper to release the property for alienation
or disposition, the presumption is that the
government is still reserving the right to utilize
the property; hence, the need to preserve its
ownership in the State irrespective of the length
of adverse possession even if in good faith.
However, if the property has already been
classified as alienable and disposable, as it is in
this case, then there is already an intention on
the part of the State to abdicate its exclusive
prerogative over the property. (Republic v. CA
and Naguit, G.R. No. 144057, January 17, 2005)
NOTE: This case is distinguishable from
Bracewell v. CA, where the claimant had been in
possession of the land since 1908 and had filed
his application in 1963, or nine years before the
property was declared alienable and disposable
in 1972. Hence, registration was denied. The
Bracewell ruling will not apply in this case
because here, the application was made
years AFTER the property had been certified
as alienable and disposable.
A different rule obtains for forest lands, such as
those which form part of a reservation for
provincial park purposes, the possession of
which cannot ripen into ownership. It is
elementary in the law governing natural
resources that forest land cannot be owned by
private persons. As held in Palomo v. CA, forest
land is not registrable and possession thereof, no
matter how lengthy, cannot convert it into
private property, unless such lands are
reclassified and considered disposable and
alienable. In the case at bar, the property in
question was undisputedly classified as
disposable and alienable; hence, the ruling in
Palomo is inapplicable. (Palomo v. CA, G.R. No.
95608, January 21, 1997)
NOTE: The law does not require that the land
subject of registration should have been
alienable and disposable during the entire
period of possession, or since June 12, 1945. It is
 Land Titles and Deeds
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. (Malabanan
v. Republic, G.R. No. 179987, April 29, 2009) It
must be stressed, however, that the applicant for
land registration must have been in possession
of the land sought to be registered since June 12,
1945 or earlier.
REGISTRATION PROCESS AND
REQUIREMENTS
Modes of registering land titles
There are two modes:
1. Original registration proceedings under the
Property Registration Decree (P.D. 1529);
and
2. Confirmation of imperfect or incomplete title
under Sec. 48(b) of the Public Land Act, as
amended.
Requisites in ordinary registration
proceedings and judicial confirmation of
imperfect title
1. Survey of land by Bureau of Lands or any
duly licensed private surveyor;
2. Filing of application for registration by
applicant;
3. Setting of date for initial hearing by the
court;
4. Transmittal of application and date of initial
hearing with all documents or other pieces
of evidence attached thereto by clerk of
court to National Land Titles and Deeds
Registration Administration (NALTDRA);
5. Publication of notice of filing of application
and date and place of hearing;
6. Service of notice by sheriff upon contiguous
owners, occupants and those known to have
interest in the property;
7. Filing of answer or opposition to the
application by any person whether named in
the notice or not;
8. Hearing of case by court;
9. Promulgation of judgment by court;
10. Issuance of a decree by court declaring the
decision final, and instructing the NALDTRA
to issue a decree of confirmation and
registration;
11. Entry of decree of registration in NALDTRA;
12. Sending of copy of the decree of registration
to corresponding RD; and
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
13. Transcription of decree of registration in the
registration book and issuance of owner’s
duplicate original certificate of title (OCT) of
applicant by RD, upon payment of
prescribed fees. (Section 14-30, P.D. 1529)
NOTE: After judgment has become final and
executory, the issuance of decree and OCT is
ministerial on the part of LRA and RD.
Application of Rules of Court in land
registration proceedings
The Rules of Court could be applied in land
registration proceedings in a suppletory
character or whenever practicable or
convenient.
NOTE: Motion to intervene in a land registration
case is not allowed.
APPLICATION
Form of the application for registration or
judicial confirmation
1. In writing:
2. Signed by the applicant or person duly
authorized in his behalf;
3. Sworn to before an officer authorized to
administer oaths for the province or city
where the application was actually signed;
and
4. If there is more than one applicant, they
shall be signed and sworn to by and in
behalf of each.
Documents that must accompany the
application
All muniments of titles and copies thereof with
survey plan approved by Bureau of Lands must
accompany the application.
Muniments of title
They are instruments or written evidence which
the applicant holds/possesses to enable him to
substantiate and prove title to his estate.
Rule regarding application covering two or
more parcels
An application may include two or more parcels
of land belonging to the applicant/s provided
734
 Civil Law
they are situated within the same province or
city. (P.D. 1529, Sec. 18)
Jurisdiction and venue where the application
can be filed
If the application covers a single parcel of land
situated within:
1. Only one city or province:
RTC or MTC, as the case may be, of the
province or city where the land is situated.
2. Two or more provinces or cities:
a. When boundaries are not defined – In the
RTC or MTC of the place where it is
declared for taxation purposes.
b. When boundaries are defined – Separate
plan for each portion must be made by a
surveyor and a separate application for
each lot must be filed with the
appropriate RTC or MTC.
NOTE: MeTC, MCTC, and MTC has jurisdiction to
decide cadastral and land registration cases,
provided:
There is no controversy or opposition
(uncontested lots); or
Value of contested lots does not exceed
P100, 000. (R.A. 7691, Sec. 4)
In other cases, the RTC has jurisdiction.
NOTE: Appeal is taken to the Court of Appeals.
The value of the property is ascertained in three
ways:
1. By the affidavit of the claimant;
2. By agreement of the respective claimants, if
there are more than one; or
3. From the corresponding tax declaration of
the real property. (B.P. 129, Sec. 34)
Q: Bantigue Corp. filed with the RTC an
application for registration over a lot with an
assessed value of P14,920. However, the RTC
motu proprio remanded the case to the MTC
since the assessed value of the land is only
P14,920. After hearing, the MTC granted the
application. The Republic appealed arguing
that the MTC did not acquire jurisdiction
735
since the selling price of the property per
deed of sale attached to the application is
P160,000. Did the MTC acquire jurisdiction
over the case?
A: YES. The value of the land is determined, not
from the selling price, but from the tax
declaration which, in this case, stated that the
assessed value of the land is only P14,920, or
below the jurisdictional amount of P100,000
pertaining to first level courts. (Republic v.
Bantigue, G.R. No. 162322, March 14, 2012)
Q: Is there need for a formal
assignment/delegation by the SC before first
level courts may exercise jurisdiction?
A: NO. Bantigue stresses:
“The delegated jurisdiction of the MTC over
cadastral and land registration cases is indeed
set forth in the Judiciary Reorganization Act, x
xx”
“(T)he MTC has delegated jurisdiction in
cadastral and land registration cases in two
instances: first, where there is no controversy or
opposition; or, second, over contested lots, the
value of which does not exceed P100,000.”
Clearly, the law itself, Sec. 34 of B.P. Blg. 129,
already provides the specific instances when
first level courts may exercise their delegated
jurisdiction.
Q: Leonor Santos filed an application for
registration with the CFI of Rizal. The
Director of Lands opposed. Notices were
given and the case was set for hearing. Later,
the court issued an order dismissing the
application on the basis of a report from the
LRC that a “homestead patent was issued (to
Julio Delgado) by the Director of Lands
during the pendency of the registration
proceedings.” Was the court divested of its
jurisdiction by a subsequent administrative
act consisting in the issuance by the Director
of Lands of a homestead patent covering the
same land subject of the registration case?
A: NO. In her application for registration, Santos
alleged, among other matters, that she is the
owner in fee simple of the land. Since the
existence or non-existence of applicant’s
registrable title is decisive of the validity or
nullity of the homestead patent, the court’s
 Land Titles and Deeds
jurisdiction could not have been divested by the
homestead patent's issuance.
Proceedings for land registration are in rem,
whereas proceedings for acquisition of
homestead patent are not. A homestead patent,
therefore, does not finally dispose of the public
or private character of the land as far as courts
acting upon proceedings in rem are concerned.
(De los Angeles v. Santos, G.R. No. L-19615,
December 24, 1964)
Sec. 2, P.D. 1529 has eliminated the
distinction between the court’s general
jurisdiction and limited jurisdiction.
A regional trial court has the authority to hear
not only applications for original registration but
also all petitions filed after original registration
of title. The amendment aims to avoid
multiplicity of suits and simplify registration
proceedings. The court can now hear and decide
not only non-controversial cases but even
contentious issues which before were beyond its
competence. (Lozada v. Bracewell, G.R. No.
179155, April 2, 2014; Averia v. Caguioa, G.R. No.
L-65129, December 29, 1986)
PUBLICATION
Within five days from the filing of the application
for registration, the court shall issue an order
setting the date and hour of initial hearing which
shall not be earlier than 45 days nor later than
90 days from date of the order.
Manner of giving notice
1. Publication once in the Official Gazette and
once in a newspaper of general circulation;
2. Mailing of the notice to persons named in
the application for registration and also to
relevant government officials; and
3. Posting of the notice on a conspicuous place
on the land itself and on the bulletin board
of the city or municipality where the land is
situated. (P.D. No. 1529, Sec. 23)
NOTE: Publication in the Official Gazette shall be
sufficient to confer jurisdiction. (P.D. No. 1529,
Sec. 24)
However, publication of the notice in a
newspaper of general circulation remains an
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
indispensable requirement consistent with
procedural due process. (Roxas v. Court of
Appeals, G.R. No. 118436, March 21, 1997;
Director of Lands v. Court of Appeals and
Abistado, G.R. No. 102858, July 28, 1997)
NOTE: The requirement of mailing and posting
are mandatory.
New publication necessary to include
additional area
If amendment of the application is made to
include additional area, a new publication of the
amended application must be made, but not
when the amendment consists in the exclusion
of a portion form the area originally applied for.
(Benin v. Tuason, G.R. No. L-26127, June 28, 1974)
Purpose of the publication requirement
1. Confer jurisdiction upon the court over the
res; and
2. Apprise the whole world of the pending
registration case so that they may assert
their rights or interests in the land, if any,
and oppose the application.
NOTE: The settled rule is that once the
registration court had acquired jurisdiction over
a certain parcel, or parcels of land in the
registration proceedings by virtue of the
publication of the application, that jurisdiction
attaches to the land or lands mentioned and
described in the application.
Q : May publication of the notice of filing of
application and date and place of hearing be
dispensed with?
A : NO. Publication of the notice of filing of
application and date and place of hearing is
mandatory.
Q: Where must the said notice be published?
A:
1. Once in the Official Gazette (OG) – this
confers jurisdiction upon the court; and
2. Once in a newspaper of general circulation.
Publication in a newspaper is necessary to
accord with due process requirement
736
 Civil Law
Sec. 23 of P.D. 1529 clearly provides that
publication in the Official Gazette suffices to
confer jurisdiction upon the land registration
court. However, absent any publication of the
notice of initial hearing in a newspaper of
general circulation, the land registration court
cannot validly confirm and register the title of
the applicants. The rationale behind the
newspaper publication is due process and the
reality that the Official Gazette is not as widely
read and circulated as newspapers and is
oftentimes delayed in its circulation. This
requirement is mandatory. For non-compliance
with the requirement of publication, the
application may be dismissed, without prejudice
to reapplication in the future, after all the legal
requisites are complied with. (Director of Lands
v. CA and Abistado, G.R. 102858, July 28, 1997)
NOTE: Publication in the Official Gazette does
not dispense with the requirement of notice by
mailing and posting.
Lack of personal notice does not vitiate the
proceedings
Land registration proceedings are proceedings
in rem, not in personam, and therefore it is not
necessary to give personal notice to the owners
or claimants of the land sought to be registered,
in order to vest the courts power or authority
over the res. Notice of hearing by proper
publication in the Official Gazette is sufficient to
clothe the court with jurisdiction, and the mere
fact that a person purporting to have a
legitimate claim in the property did not receive
personal notice is not sufficient ground to
invalidate the proceedings. (Adez Realty Inc. v.
CA, G.R. No. 100643, December 12, 1995 ; Republic
v. Castro, G.R. No. 172848, December 10, 2008)
Defective publication
There is a defective publication if what has been
published in the Official Gazette is the
description of a bigger lot which includes the
lands subject of registration.
Reasons:
1. Sec. 15, P.D. 1529 requires that the
application for registration should contain
the description of the land subject of
registration and this is the description to be
published;
737
2. It is the publication of specific boundaries of
lands to be registered that would actually
put the interested parties on notice of the
registration proceedings and enable them, if
they have rights and interests in the
property, to show why the application for
registration should not be granted;
3. The adjoining owners of the bigger lot
would not be the same owners of the
smaller lots subject of registration. Hence,
notice to adjoining owners of the bigger lot
is not notice to those of the smaller lots.
4. Where the actual publication of the notice of
initial hearing was after the hearing itself.
Effect of a defective publication
It deprives the court of jurisdiction. Hence, the
proceeding will be void.
GR: If it is later shown that the decree of
registration had included land or lands not
included in the publication, then the registration
proceedings and the decree of registration must
be declared null and void–but only insofar–as the
land not included in the publication concerned.
But the proceedings and the decree of
registration, relating to the lands that were
included in the publication, are valid.
XPN: If the difference is not as substantial as
would affect the identity of the land, failure to
publish the bigger area (insubstantial inclusion)
does not perforce affect the court’s jurisdiction.
Q: When may an amendment of the
application be made?
A: Amendments to the application including
joinder, substitution, or discontinuance as to the
parties may be allowed by the court at any stage
of the proceedings upon just and reasonable
terms. (P.D. 1529, Sec. 19)
Necessity of publication and notice in the
amended application
GR: Publication and notice are necessary where
the amendment to the application consists in:
1. Substantial change in the boundaries;
2. Increase in the area of the land applied for;
and
3. The inclusion of additional land.
 Land Titles and Deeds
NOTE: Without such publication, the
registration court cannot acquire jurisdiction
over the area that is added.
Situations when publication and notice are
not necessary
1. If the amendment consists in the exclusion of
a portion of the area covered by the original
application and the original plan as
previously published, a new publication is
not necessary;
NOTE: In this case, the jurisdiction of the
court is not affected by the failure of filing a
new application.
2. If the amendments to the application
involves joinder, substitution or
discontinuance as to the parties; and
NOTE: This may be allowed by the court at
any stage of the proceedings upon just and
equitable terms.
3. If the amendment is due to change of name
of the applicant.
Q : Is dealing with land under controversy
allowed while there’s pending original
registration?
A : YES. Sec. 22 allows land subject of
registration to be dealt with after the filing of the
application and before issuance of decree. The
land may be sold or otherwise encumbered, but
whatever may be the nature of the transaction,
the interested party should submit to the court
the pertinent instruments evidencing the
transaction to be considered in the final
adjudication of the case.
Dealings or transactions entered into pending
registration do not require amendment of
application. (Mendoza v. CA, G.R. No. L-36637,
July 14, 1978)
The law does not require that the application for
registration be amended by substituting the
‘buyer’ or the ‘person to whom the property has
been conveyed’ for the applicant. Neither does it
require that the ‘buyer’ or the ‘person to whom
the property has been conveyed’ be a party to
the case. He may thus be a total stranger to the
land registration proceedings. (Ibid; See also
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Heirs of Lopez, Sr., v. Querubin, G.R. No. 155405,
March 18, 2015)
Requirements
1. That the instrument be presented to the
court by the interested party together with a
motion that the same be considered in relation
with the application; and
2. That prior notice be given to the parties to
the case. (Mendoza v. CA, G.R. No. L-36637, July
14, 1978)
OPPOSITION
Persons who may oppose the application for
registration
Any person claiming an interest, whether named
in the notice or not, may appear and file an
opposition on or before the date of initial
hearing, or within such further time as may be
allowed by the court.
Procedure to oppose the application
The opposition shall state all the objections to
the application and shall set forth the interest
claimed by the party filing the same and apply
for the remedy desired, and shall be signed and
sworn to by him or by some other duly
authorized person. (P.D. No. 1529, Sec. 25)
Requisites for a valid opposition
1. The oppositor must have an interest in the
land applied for;
2. He should state the grounds for his
objection as well as the nature of his claimed
interest;
3. He should indicate the desired relief;
4. The opposition should be signed and worn
to by him or his duly authorized
representative.
NOTE: The opposition partakes of the nature of
an answer with a counterclaim.
Persons who may oppose the application for
registration or judicial confirmation
Any person whether named in the notice or not,
provided, his claim of interest in the property
applied for is based on a right of dominion or
738
 Civil Law
some other real right independent of, and not
subordinate to, the rights of the government.
Persons who may oppose in specific cases
1. A homesteader who has not yet been issued
his title but who had fulfilled all the
conditions required by law to entitle him to
a patent;
2. A purchaser of friar land who is deemed to
have an equitable title to the land even
before the issuance of the patent;
3. Persons who claim to be in possession of a
tract of public land and have applied with
the Bureau of Lands for its purchase;
4. The Government relative to the right of
foreshore lessees of public land as the
latter’s right is not based on dominion or
real right independent of the right of the
government; or
5. An awardee in a sales application who, by
virtue of the award, is authorized to take
possession of the land to enable him to
comply with the requirements for the
issuance of patent. (De Castro v. Marcos, G.R.
No. L-26093, January 27, 1969)
NOTE: A private person may not oppose an
application for registration on the ground that
the land applied for is a property of the
government. (Roxas vs. Cuevas, GR. No. L-3637,
August 31, 1907)
The oppositor also need not show title in
himself; he should however appear to have
interest in the property.
absence of any opposition, deny the registration
of the land under the Torrens system, upon the
ground that the facts presented did not show
that the petitioner is the owner, in fee simple, of
the land which he is attempting to have
registered. (Director of Lands v. Agustin, G.R. No.
16179, October 6, 1921; See also Republic v.
Bacas, et al., G.R. no. 182913, November 20, 2013)
Declaration of default in land registration
proceedings
If no person appears and answers within the
time allowed, the court shall, upon motion of the
applicant, no reason to the contrary appearing,
order a default to be recorded and require the
applicant to present evidence. By the description
in the notice “To all Whom It May Concern, ” all
the world are made parties defendant and shall
be concluded by the default order.
Where an appearance has been entered and an
answer filed, a default order shall be entered
against persons who did not appear and answer.
(P.D. 1529, Sec. 26)
Difference between declaration of default in
ordinary civil cases and in land registration
proceedings
DEFAULT IN CIVIL DEFAULT IN LAND
CASES REGISTRATION
PROCEEDINGS
Section 3(b), Rule 9 of Section 22 of P.D. 1529
the 1997 Rules of Civil
Procedure

NOTE: The oppositor’s interest over the land is In civil cases, there is 2 Kinds :
immaterial whether his interest is in the only one kind of
character of legal owner or is of a purely default. 1. Order of general
equitable nature as where he is a beneficiary of a To lift the order of default - if no person
trust. default It must be appears and answers
shown that the person within the time
Absence of opposition by the government declared in default allowed ; by
does not justify outright registration must have a description in the
meritorious defense, notice “to whom it may
Notwithstanding the absence of opposition from along with the grounds concern”, all the world
the government, the applicant in land : are made parties
registration cases is not relieved of the burden of defendant and shall be
proving the imperfect right or title sought to be 1. Fraud ; concluded by the
confirmed. (Director, Lands Management Bureau 2. Accident ; default order.
v. CA, G.R. No. 112567, February 7, 2000) 3. Mistake ; and
4. Excusable 2. Order of special
Courts are not justified in registering property negligence default - when an
under the Torrens system, simply because there appearance has been
is no opposition offered. Courts may, even in the entered and answer

739
 Land Titles and Deeds
filed, default order
shall be entered upon
against persons who
did not appear and
answer.
Effect of an order of default in land
registration proceedings
It is binding “against the whole world.”
XPN: To parties who had appeared and filed
pleadings in the registration case.
Effect of the absence of an opposition as
regards allegations in the application
All allegations in the application are deemed
confessed on the part of the opponent.
Q: What if a certificate of title was issued
covering non-registrable lands without the
government opposing, is the government
estopped from questioning the same?
A: NO. The government cannot be barred from
questioning the validity of the certificates of title,
which were granted without opposition from the
government, pursuant to the principle that the
State is never barred by estoppel. The principle
of estoppel does not operate against the
government for the acts of its agents. (Republic v.
Aquino, 205 Phil. 141)
Q: If an order of general default is issued,
may the court automatically grant the
application?
A: NO. Even in the absence of an adverse claim,
the applicant still has to prove that he possesses
all the qualifications and none of the
disqualifications to obtain the title. If he fails to
do so, his application will not be granted.
Q: Can a party who has been declared in
default appeal from the judgment by default
without first filing a motion to set aside the
order of default?
A: YES. As held in the case of Martinez v.
Republic: “If it cannot be made any clearer, we
hold that a defendant party declared in default
retains the right to appeal from the judgment by
default on the ground that the plaintiff failed to
prove the material allegations of the complaint,
or that the decision is contrary to law, even
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
without need of the prior filing of a motion to set
aside the order of default. We reaffirm that
the Lim Toco doctrine, denying such right to
appeal unless the order of default has been set
aside, was no longer controlling in this
jurisdiction upon the effectivity of the 1964
Rules of Court, and up to this day.” (Martinez v.
Republic, G.R. No. 160895, October 30, 2006)
EVIDENCE REQUIRED IN LAND
REGISTRATION
Proof of:
1. Declassification – The land applied for has
been declassified from the forest or timber
zone and is a public agricultural land, is
alienable and disposable, or otherwise
capable of registration;
2. Identity of the land; and
3. Possession and occupation of the land for
the length of time and in the manner required
by law.
Q: Augusto Salas, Jr. (Salas) was the
registered owner of a vast tract of
agricultural land traversing five barangays in
Lipa City, Batangas while the respondents
Marciano Cabungcal, et al. were tenant
farmers thereof and agrarian reform
beneficiaries under the Comprehensive
Agrarian Reform Program. And Salas'
agricultural land was reclassified as a farm
lot subdivision for cultivation, livestock
production, or agro-forestry. On June 15,
1988, Republic Act No. 6657 came into effect
seeking to expand the coverage of the
government's agrarian reform program with
Salas' landholdings among those
contemplated for acquisition and
distribution to qualified farmer
beneficiaries.
On December 8, 1995, petitioners filed an
action for the cancellation of the Certificates
of Land Ownership Award, with a prayer for
the issuance of a temporary restraining
order to enjoin the distribution of their
landholdings to qualified farmer
beneficiaries before the Department of
Agrarian Reform Adjudication Board but was
denied. Teresita as the administrator, filed
an Application for Exemption/Exclusion from
the Comprehensive Agrarian Reform
740
 Civil Law
Program for the 17 lots before the
Department of Agrarian Reform but it was
allegedly not acted upon. On April 29, 2001,
the Estate of Salas again filed an application
for exemption from the coverage of the
Comprehensive Agrarian Reform Program
for the 17 parcels of land before the
Department of Agrarian Reform Center for
Land Use, Policy, Planning, and
Implementation II claiming that the property
had been reclassified as non-agricultural
prior to the effectivity of Republic Act No.
6657. Whether or not the reclassification of
petitioners' agricultural land as a farmlot
subdivision exempts the Estate of Salas from
the coverage of the Comprehensive Agrarian
Reform Program under Republic Act No.
6657?
A: YES. As a general rule, agricultural lands that
were reclassified as commercial, residential, or
industrial by the local government, as approved
by the HLURB, before June 15, 1988 are
excluded from the Comprehensive Agrarian
Reform Program. A farm lot is not included in
any of these categories as such, Salas'
landholdings were contemplated in the
definition of an agricultural land under Republic
Act No. 3844 which does not exclude a farmlot
subdivision from the definition of an agricultural
land. Petitioners never denied the continued
existence of agricultural activity within these
lots. (Heirs of Augusto Salas v. Marciano
Cabungcal et al., G.R. No. 191545, March 29, 2017,
as penned by J. Leonen)
Proof to establish declassification of land
1. Presidential proclamation;
2. Administrative Order issued by the Secretary
of Environment and Natural Resources;
3. Executive order;
4. Bureau of Forest Development (BFD) Land
Classification Map;
5. Certification by the Director of Forestry, and
reports of District Forester;
6. Investigation reports of Bureau of Lands
investigator; or
7. Legislative act, or by statute.
NOTE: The Court held that the CENRO/PENRO
certification is not sufficient evidence of the facts
stated therein. (Gaerlan v. Republic, G.R. No.
192717, March 12, 2014; See also Republic v.
Heirs of Tomasa Estacio and Eulolio Ocol, G.R. No.
208350, November 14, 2016)
741
“In Republic v. Hanover Worldwide Trading
Corporation, the Court declared that the CENRO
is not the official repository or legal custodian of
the issuances of the DENR Secretary declaring
the alienability and disposability of public lands.
Thus, the CENRO Certification should be
accompanied by an official publication of the
DENR Secretary's issuance declaring the land
alienable and disposable.” (Republic v. Aboitiz,
G.R. No. 174626, October 23, 2013)
NOTE: To prove that the land subject of an
application for registration is alienable, an
applicant must establish the existence of a
positive act of the government such as
presidential proclamation or an executive order,
an administrative action, investigation reports of
the Bureau of Lands investigators, and a
legislative act or statue. Mere annotations
appearing in survey plans are inadequate proof
of the covered properties’ alienable and
disposable character. (Republic of the Philippines
v. Dayaoen, G.R. No. 200773, July 8, 2015)
Q: The Cenizas applied for registration of
their title over a parcel of public land which
they inherited. Without presenting proof that
the land in question is classified as alienable
or disposable, the court granted the
application, holding that mere possession for
a period as provided for by law would
automatically entitle the possessor the right
to register public land in his name. Was the
court ruling correct?
A: NO. Mere possession for a period required by
law is not enough. The applicant has to establish
first the disposable and alienable character of
the public land, otherwise, public lands,
regardless of their classification, can be subject
of registration of private titles, as long as the
applicant shows that he meets the required
years of possession. The applicant must
establish the existence of a positive act of the
government, such as a presidential proclamation
or an executive order; administrative action;
reports of Bureau of Lands investigators and a
legislative act or a statute. (Republic v. Ceniza,
G.R. No. 127060, November 19, 2002)
Q: On August 26, 2006, respondents Spouses
Go applied for the registration and
confirmation of title over a parcel of land in
Batangas City covering an area of 1,000
square meters. The Spouses Go registered
the lot in their names for taxation purposes.
 Land Titles and Deeds
They had paid the real property taxes,
including the arrears, from 1997 to 2006.
They had also established a funeral parlor,
San Sebastian Funeral Homes, on the lot.
According to them, there were no other
claimants over the property. The Spouses Go
claimed to be in an open, continuous,
exclusive, notorious, and actual possession of
the property for seven (7) years since they
bought it. They also tacked their possession
through that of their predecessors-in-
interest. However, the Republic of the
Philippines opposed spouses’ application for
registration; it claimed that Lot No. 4699-B
was part of the public domain. Are the
spouses the rightful owner of the land?
A: Even assuming that there is sufficient
evidence to establish their claim of possession in
the concept of an owner since June 12, 1945, the
Spouses Go nevertheless failed to prove the
alienable and disposable character of the land.
The 1987 Constitution declares that the State
owns all public lands. Public lands are classified
into agricultural, mineral, timber or forest, and
national parks. Of these four (4) types of public
lands, only agricultural lands may be alienated.
Article XII, Sections 2 and 3 of the Constitution
provide:
Section 2. All lands of the public domain,
waters, minerals, 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 . . .
Section 3. 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 . . .
Thus, an applicant has the burden of proving
that the public land has been classified as
alienable and disposable. To do this, the
applicant must show a positive act from the
government declassifying the land from the
public domain and converting it into an alienable
and disposable land. (Republic of The Philippines
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
v. Spouses Danilo Go and Amorlina Go, G.R. No.
197297, August 02, 2017, as penned by J.
Leonen)
Q: In 1933, Daquer applied for a homestead
patent grant over a parcel of land in Palawan
for his "exclusive personal use and benefit."
In 1936, Director of the Bureau of Lands
approved Daquer's application and issued
him Homestead Patent. After registration of
the homestead patent in the Register of
Deeds, an Original Certificate of Title (OCT)
was issued in Daquer's name. Daquer passed
away and was survived by his children (Heirs
of Daquer).
Upon investigation by the Community
Environment and Natural Resource Office
(CENRO), it was discovered that the subject
land covered by Homestead Application and
OCT in Daquer's name fell within the zone of
unclassified public forest. Consequently, the
Republic filed a Complaint for Cancellation of
Free Patent, Original Certificate of Title and
Reversion of land to public domain in 2003.
a. Could the mere issuance of a homestead
patent classify an otherwise unclassified
public land into an alienable and
disposable agricultural land of the public
domain?
b. Will the action for reversion prosper?
Explain.
A:
a. NO. The issuance of the Homestead Patent
in favor of Daquer, pursuant to the Public
Land Act, did not, by itself, reclassify the
subject lot into alienable and disposable
public agricultural land.
In classifying lands of the public domain as
alienable and disposable, there must be a
positive act from the government declaring
them as open for alienation and disposition.
An act of the government may only be
considered as "express or positive if [it] is
exercised directly for the very purpose of
lifting land from public ownership."
In this case, the records are bereft of any
evidence showing that the land has been
classified as alienable and disposable. A
homestead patent is a gratuitous grant from
742
 Civil Law
the government "designed to distribute
disposable agricultural lots of the State to
land-destitute citizens for their home and
cultivation." Being a gratuitous grant, a
homestead patent applicant must strictly
comply with the requirements laid down by
the law.
b. YES. As a rule, a certificate of title issued
pursuant to a homestead patent partakes
the nature of a certificate of title issued
through a judicial proceeding and becomes
incontrovertible upon the expiration of one
(1) year. Nevertheless, the rule that "a
certificate of title issued pursuant to a
homestead patent becomes indefeasible
after one year, is subject to the proviso that
the land covered by said certificate is a
disposable public land within the
contemplation of the Public Land Law."
When the property covered by a homestead
patent is part of the inalienable land of the
public domain, the title issued pursuant to it
is null and void, and the rule on
indefeasibility of title will not apply. The
State may still file an action for reversion of
a homestead land that was granted in
violation of the law. The action is not barred
by the statute of limitations, especially
against the State. (Republic of the Philippines
v. Heirs of Ignacio Daquer and the Register of
Deeds, Province of Palawan, G.R. No. 193657,
September 04, 2018, as penned by J.
Leonen)
Q: On April 23, 1990, the Department of
Public Works and Highways initiated an
action for expropriation for the widening of
Dr. A. Santos Ave, which also known as Sucat
Road. This action was brought against 26
defendants, none of whom are respondents
in this case. On November 2, 1993, the
Commissioners appointed by the Regional
Trial Court in the expropriation case
submitted a resolution recommending that
just compensation for the expropriated areas
be set to P12, 000.00 per square meter.
After years of not obtaining a favorable
ruling, the Llamas Spouses filed a "Motion for
Issuance of an Order to Pay and/or Writ of
Execution dated May 14, 2002. In this Motion,
the Llamas Spouses faulted the Department
of Public Works and Highways for what was
supposedly its deliberate failure to comply
743
with the Regional Trial Court's previous
Orders and even with its own undertaking to
facilitate the payment of just compensation
to the Llamas Spouses. On October 8, 2007,
the Regional Trial Court issued the Order
directing the payment to the Llamas Spouses
of just compensation at P12,000.00 per
square meter for 41 square meters for the lot
covered by TCT No. 217267. It denied
payment for areas covered by TCT No.
179165 and noted that these were
subdivision road lots, which the Llamas
Spouses "no longer owned" and which
"belonged to the community for whom they
were made." In the Order dated May 19,
2008, the Regional Trial Court denied the
Llamas Spouses' Motion for Reconsideration.
WON the just compensation must be paid to
the subdivision roads?
A: YES. Delineated roads and streets, whether
part of a subdivision or segregated for public
use, remain private and will remain as such until
conveyed to the government by donation or
through expropriation proceedings. An owner
may not be forced to donate his or her property
even if it has been delineated as road lots
because that would partake of an illegal taking.
He or she may even choose to retain said
properties. Respondents have not made any
positive act enabling the City Government of
Parañaque to acquire dominion over the
disputed road lots. Therefore, they retain their
private character. Accordingly, just
compensation must be paid to respondents as
the government takes the road lots in the course
of a road widening project. (Republic of The
Philippines v. Spouses Francisco R. Llamas and
Carmelita C. Llamas, G.R. No. 194190, January 25,
2017, as penned by J. Leonen)
Proof to establish the identity of the land
sought to be registered
1. Survey plan in general;
2. Tracing cloth plan and blue print copies of
plan;
3. Technical description of the land applied for
duly signed by a Geodetic Engineer; and
4. Tax declarations.
Conflict between areas and boundaries
What defines a piece of land is not the area,
calculated with more or less certainty
mentioned in the description, but the
 Land Titles and Deeds
boundaries therein laid down, as enclosing the
land and indicating its limits. (Balantakbo v. CA,
G.R. No. 108515, October 16, 1995; See also Del
Prado v. Caballero, G.R. No. 148225, March 3,
2010)
GR: Boundaries prevail over area.
XPNs:
1. Boundaries relied upon do not identify land
beyond doubt; and
2. Boundaries given in the registration plan do
not coincide with outer boundaries of the
land covered and described in the
muniments of title.
Evidence of possession
It is not enough to simply declare one’s
possession and that of the applicant’s
predecessors-in-interest to have been “adverse,
continuous, open, public, peaceful and in concept
of owner” for the required number of years. The
applicant should present specific facts to show
such nature of possession because bare
allegations, without more, do not amount to
preponderant evidence that would shift the
burden to the oppositor. (Diaz v. Republic, G.R.
No. 141031, August 31, 2004; Wee v. Republic,
G.R. No. 177384, December 8, 2009)
Under Sec. 48(b) of C.A. No. 141 and Sec. 14(1)
of P.D. 1529, the reckoning point of possession is
June 12, 1945. It is only necessary that the land
is already classified as alienable and disposable
at the time of the filing of the application for
registration. (Malabanan v. Republic, G.R. No.
179987, April 29, 2009)
Possession must be under a claim of
ownership
Acts of a possessory character by one who holds
the property by mere tolerance of the owner is
not in the concept of owner, and do not start the
period of prescription.
Actual possession consists of acts of dominion of
such a nature as a party would naturally exercise
over his own property.
Occupation delimits the all-encompassing effect
of constructive possession.
Overt acts of possession
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Introducing valuable improvements on the
land like fruit-bearing trees;
2. Fencing the area;
3. Constructing a residential house thereon;
and
4. Declaring the land for taxation purposes.
Mere possession will not defeat the title of a
holder of registered land. (Eduarte v. CA, G.R. No.
121038, July 22, 1999)
NOTE: Evidence to be admissible must,
however, be credible, substantial and
satisfactory.
Q: Exequiel Ampil, as representative of heirs
of the late Albina Ampil, filed a complaint for
ejectment against Perfecto Manahan, et al.
Allegedly, Albina was the owner of two
adjoining residential lots located in Bulacan
as evidenced by tax declarations. They
asserted that Albina allowed Perfecto and his
family to occupy a portion of said properties
on the condition that they would vacate the
same should the need to use it arise. Despite
requests however, Perfecto and his family
refuse to vacate the property. Respondents
aver that they had been in peaceful and
continuous possession of the property in the
concept of an owner since time immemorial
and that Albina was never the owner of the
property. Who between the petitioners and
the respondents have the better right to the
physical possession of the disputed
property?
A: The petitioners have the better right to the
property in question. The bare allegation of
respondents that they had been in peaceful and
continuous possession of the lot in question
because their predecessor-in-interest had been
in possession thereof in the concept of an owner
from time immemorial, cannot prevail over the
tax declarations and other documentary
evidence presented by petitioners. In the
absence of any supporting evidence, that of the
petitioners deserves more probative value. A
perusal of the records shows that respondents’
occupation of the lot in question was by mere
tolerance. From the minutes of the meeting in
the Barangay Lupon, Perfecto admitted that
Albina permitted them to use the lots on the
condition that they would vacate the same
should Albina need it. (Heirs of Albina G. Ampil,
namely Precious A. Zavalla, Eduardo Ampil, et al.
744
 Civil Law
v. Teresa Manahan and Mario Manahan, G.R. No.
175990, October 11, 2012).
Q : Mauricio and Carmencita testified to
establish their claim over the subject lots.
When the application was granted, the OSG
appealed, arguing that weight should not be
given to the self-serving testimonies of the
two; that their tax declaration is not
sufficient proof that they and their parents
have been in possession of the property for
at least thirty years, said tax declaration
being only for the year 1994 and the
property tax receipts presented by them
were all of recent dates. Are the said pieces of
evidence sufficient to establish actual
possession of land for the period required by
law thus warranting the grant of the
application?
A: NO. Their bare assertions of possession and
occupation by their predecessors-in-interest are
hardly the “well-nigh incontrovertible” evidence
required in cases of this nature. Proof of specific
acts of ownership must be presented to
substantiate their claim. They cannot just offer
general statements which are mere conclusions
of law than factual evidence of possession.
Actual possession of a land consists in the
manifestation of acts of dominion over it of such
a nature as a party would naturally exercise over
his own property. (Republic v. Alconaba, G.R. No.
155012, April 14, 2004)
NOTE: “Well-nigh incontrovertible evidence”
refers to the degree of proof of registrable rights
required by law in registration proceedings.
Proof to establish private ownership of land
1. Spanish title;
NOTE: Spanish titles are no longer admissible
as proof of ownership in land registration
proceedings filed after August 16, 1976.
2. Tax declaration and tax payments;
Tax declarations and receipts are not
conclusive evidence of ownership. At most,
they constitute mere prima facie proofs of
ownership of the property for which taxes
have been paid. In the absence of actual,
public and adverse possession, the
declaration of the land for tax purposes does
745
not prove ownership. They may be good
supporting or collaborating evidence
together with other acts of possession and
ownership; but by themselves, tax
declarations are inadequate to establish
possession of the property in the nature and
for the period required by statute for
acquiring imperfect or incomplete title to the
land. (Tan v. Republic, G.R. No. 177797,
December 4, 2008; Bernas v. Estate of Felipe
Yu Han Yat, G.R. no. 195908, August 15, 2018)
NOTE: While tax declarations are not
conclusive proof of ownership, they
constitute good indicia of possession in the
concept of owner and a claim of title over the
subject property for no one in his right mind
would be paying taxes for a property that is
not in his actual or constructive possession.
(Charles L. Ong v. Republic of the Philippines,
G.R. No. 175746, March 12, 2008 and Republic
of the Philippines v. Teodoro P. Rizalvo, Jr. G.R.
No. 172011, March 7, 2011)
Delayed declaration of property for tax
purposes negates a claim of continuous,
exclusive, and interrupted possession in the
concept of an owner. (Regalado v. Republic,
G.R. No. 168155, February 15, 2007)
Mere failure of the owner of the land to pay
the realty tax does not warrant a conclusion
that there was abandonment of his right to
the property.
Q: Kawayan Hills Corp. filed an application
for confirmation and registration of Lot No.
2512's title in its name before the MCTC. It
claimed to have acquired the lot in 1995
through a Deed of Adjudication with Sale
executed by the successors-in-interest of
Andres Dafun (Andres). Andres had been Lot
No. 2512's real property tax declarant since
1931.
The Republic of the Philippines, through the
OSG, filed its Opposition to the application. It
asserted that Kawayan Hills failed to comply
with the requirements of Section 14(1) of
Presidential Decree No. 1529 for judicial
confirmation of imperfect title.
The MCTC ruled in favor of Kawayan Hills. On
appeal, the CA reversed the MCTC Decision. It
maintained that Kawayan Hills failed to
establish its or its predecessors-in-interest's
 Land Titles and Deeds
bona fide claim of ownership since June 12,
1945 or earlier, as to enable confirmation of
title under Section 14(1) of the Property
Registration Decree. It decried petitioner's
reliance on tax declarations, even if they
dated to as far back as 1931, as these
supposedly did not prove ownership:
Is Kawayan Hills Corporation entitled to have
title over Lot No. 2512 confirmed and
registered in its favor?
A: YES. The payment of real property taxes since
as far back as 1931 by petitioner Kawayan Hills'
predecessor-in interest, Andres, should not be
dismissed so easily. To the contrary, coupled
with evidence of continuous possession, it is a
strong indicator of possession in the concept of
owner.
Although tax declarations or realty tax payments
of property are not conclusive evidence of
ownership, nevertheless, they are good indicia of
possession in the concept of owner for no one in
his right mind would be paying taxes for a
property that is not in his actual or at least
constructive possession. They constitute at least
proof that the holder has a claim of title over the
property. The voluntary declaration of a piece of
property for taxation purposes manifests not
only one's sincere and honest desire to obtain
title to the property and announces his adverse
claim against the State and all other interested
parties, but also the intention to contribute
needed revenues to the Government. Such an act
strengthens one's bona fide claim of acquisition
of ownership.
When an applicant in the registration of
property proves his or her open, continuous,
exclusive, and notorious possession of a land for
the period required by law, he or she has
acquired an imperfect title that may be
confirmed by the State. The State may not, in the
absence of controverting evidence and in a pro
forma opposition, indiscriminately take a
property without violating due process.
(Kawayan Hills Corporation v. Court of Appeals, et
al., G.R. No. 203090, September 05, 2018, as
penned by J. Leonen)
3. Other kinds of proof
e.g. Testimonial evidence (i.e. accretion is on
a land adjacent to a river);
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: Any evidence that accretion was
formed through human intervention negates
the claim.
4. Presidential issuances and legislative acts.
NOTE: It is constitutive of a “fee simple” title
or absolute title in favor of the grantee.
Q: Agustin executed an Affidavit of Transfer
of Real Property where Ducat is to perform
all the necessary procedures for the
registration and acquisition of title over
several parcels of land possessed and
occupied by Agustin. Before Ducat was able
to accomplish his task, Agustin died and
Bernardo administered the properties. Ducat
then filed an Application for Free Patent over
the land, which was granted. The parcels of
land were registered in the names of Ducat
and Kiong. The heirs of Bernardo sought the
reconveyance of the land with damages but
did not question the authenticity of the
agreement. Who is the rightful owner of the
property?
A: The spouses Ducat and Kiong. The Affidavit
of Transfer of Real Property proved Ducat’s
ownership of the property. It stated that Ducat
bought the subject property from Cecilio and
Bernardo. The heirs did not question the
authenticity and due execution of said
document. It constitutes an admission against
interest made by Bernardo, petitioners'
predecessor-in-interest. Bernardo's admission
against his own interest is binding on his heirs.
The heirs' predecessor-in-interest recognized
Ducat and Kiong as the legal owner of the lot in
dispute. Thus, there is no proof that the titling of
the subject property was fraudulently obtained
by Ducat and Kiong in their names. (Heirs of
Bernardo Ulep v. Sps. Cristobal Ducat and Flora
Kiong, G.R. No. 159284, January 27, 2009)
Q: After due hearing for registration, what
will the court do?
A: If the court, after considering the evidence
and report of the LRA, finds that the applicant or
the oppositor has sufficient title proper for
registration, it shall render judgment confirming
the title of the applicant, or the oppositor, to the
land or portions thereof, as the case may be.
(P.D. 1529, Sec. 29)
JUDGMENT AND DECREE OF REGISTRATION
746
 Civil Law
The judgment confirms the title of the
applicant or the oppositor. Partial judgment
is proper where a subdivision plan is
submitted. (P.D. 1529, Sec. 28)
Judgment becomes final after 15 days from
receipt of notice of the judgment.
NOTE: The adjudication of land in a cadastral or
land registration proceeding does not become
final, in the sense of incontrovertibility until
after the expiration of one year after the entry of
the final decree of registration. The Court retains
jurisdiction over the case until after the
expiration of one year from the issuance of the
decree of registration. (Gomez v. CA, G.R. No.
77770, December 15, 1988; Republic v. Heirs of
Spouses Donato Sanchez and Juana Meneses, G.R.
No. 212388, December 10, 2014)
NOTE: The principle of res judicata applies to all
cases and proceedings, including land
registration and cadastral proceedings. (Aring v.
Original, G.R. No. L-18464, December 29, 1962;
G.R. No. 25660, February 23, 1990)
Contents of judgment in land registration
proceedings
When judgment is rendered in favor of the
plaintiff, the court shall order the entry of a new
certificate of title and the cancellation of the
original certificate and owner’s duplicate of the
former registered owner.
NOTE: A judgment in rem is binding upon the
whole world, such as a judgment in a land
registration case or probate of a will; and a
judgment in personam is binding upon the
parties and their successors-in-interest but not
upon strangers.
A judgment directing a party to deliver
possession of a property to another is in
personam.
An action for declaration of nullity of title and
recovery of ownership of real property, or
reconveyance, is a real action but it is an action
in personam, for it only binds the parties
impleaded although it concerns the right to a
tangible thing. (Muoz v. Yabut, G.R. No. 142676,
June 6, 2011)
Motion for execution of judgment not
required
747
Upon finality of judgment in land registration
cases, the winning party does not file a motion for
execution as in ordinary civil actions. Instead, he
files a petition with the land registration court
for the issuance of an order directing the Land
Registration Authority to issue a decree of
registration, a copy of which is then sent to the
Register of Deeds for inscription in the
registration book, and issuance of the original
certificate of title.
The LRA merely issues an order for the issuance
of a decree of registration and the corresponding
certificate of title in the name of such applicant.
(Top Management Programs Corp. v. Fajardo, G.R.
No.150462, June 15, 2011)
Execution pending appeal not required
Execution pending appeal is not applicable in a
land registration proceeding and the certificate
of title thereby issued is null and void.
A Torrens title issued on the basis of a judgment
that is not final is a nullity, as it is violative of the
explicit provisions of the Land Registration Act
which requires that a decree shall be issued only
after the decision adjudicating the title becomes
final and executory, and it is on the basis of said
decree that the Register of Deeds concerned
issues the corresponding certificate of title.
(Director of Lands v. Reyes, G.R. No. L-27594,
November 28, 1975; Top Management Programs
Corp. v. Fajardo, G.R. No. 150462, June 15, 2011)
No period within which decree may be issued
The fact that no decree has as yet been issued
cannot divest the applicant of his title to and
ownership of the land in question. There is
nothing in the law that limits the period within
which the court may issue a decree. The reason is
that the judgment is merely declaratory in
character and does not need to be enforced
against the adverse party. (Del Rosario v.
Limcaoco, G.R. No. 177392, November 26, 2012)
From another perspective, the judgment does
not have to be executed by motion or enforced by
action within the purview of Rule 39 of the 1997
Rules of Civil Procedure. (Republic v. Nillas, G.R.
No. 159595, January 23, 2007)
Decree of registration
 Land Titles and Deeds
It is a document prepared in the prescribed form
by the LRA Administrator, signed by him in the
name of the court, embodying the final
disposition of the land by the court and such
other data found in the record, including the
name and other personal circumstances of the
applicant, the technical description of the
property, liens and encumbrances affecting it,
and such other matters as determined by the
court in its judgment.
Q: In a land registration case, the court
rendered a decision granting Reyes’
application, hence the Director of Lands
appealed. Reyes moved for the issuance of a
decree of registration pending appeal. May
his motion be granted?
A: NO. Innocent purchasers may be misled into
purchasing real properties upon reliance on a
judgment which may be reversed on appeal. A
Torrens title issued on the basis of a judgment
that is not final is a nullity as it violates the
explicit provisions of the LRA, which requires
that a decree shall be issued only after the
decision adjudicating the title becomes final and
executory. (Director of Lands v. Reyes, G.R. No. L-
27594, November 28, 1975; Top Management
Programs Corp. v. Fajardo, supra.)
Scope of decree of registration
Only claimed property or a portion thereof can
be adjudicated. A land registration court has no
jurisdiction to adjudge a land to a person who
has never asserted any right of ownership
thereof.
A land registration court has no jurisdiction to
order the registration of land already decreed in
the name of another in an earlier land
registration case. A second decree for the same
land would be null and void, since the principle
behind the original registration is to register a
parcel of land only once. (Rodolfo V. Francisco v.
Emilliana M. Rojas, G.R. No. 167120, April 23,
2014)
Partial Judgment in land registration
proceedings
Where only a portion of the land, subject of
registration is contested, the court may render
partial judgment provided that a subdivision
plan showing the contested land and
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
uncontested portions approved by the Director
of Lands is previously submitted to the court.
Effect of a decree of registration
The decree of registration binds the land, quiets
title, subject only to such exceptions or liens as
may be provided by law. It is conclusive upon all
persons including the national government and
all branches thereof. Such conclusiveness does
not cease to exist when the title is transferred to
a successor.
Land becomes registered land only upon the
transcription of the decree in the original
registration book by the Register of Deeds, the
date and time of such transcription being set forth
in the process and certified to at the foot of each
entry or certificate of title, and not on the date of
the issuance of the decree. (Manotok v. CLT
Realty, G.R. No. 123346, November 29, 2005. See
also Id., G.R. No. 123346, December 14, 2007)
NOTE: Title once registered cannot be
impugned, altered, changed, modified, enlarged
or diminished, except in a direct proceeding
permitted by law. (Section 48, P.D. 1529; Paulino
v. CA, G.R. No. 205065, June 4, 2014)
Reopening of judgment or decree of
registration
The court has no jurisdiction or authority to
reopen the judgment or decree of registration,
nor impair the title or other interest of a
purchaser holding a certificate for value and in
good faith, or his heirs and assigns, without his
or their written consent.
Effects of the entry of the decree of
registration in the National Land Titles and
Deeds Registration Authority (NALTDRA)
1. This serves as the reckoning date to
determine the one year period from which
one can impugn the validity of the
registration;
2. One year after the date of entry, it becomes
incontrovertible, and amendments will not be
allowed except clerical errors. It is deemed
conclusive as to the whole world; and
3. Puts an end to litigation.
NOTE: An application for registration of a titled
land constitutes a collateral attack on the
existing title. (SM Prime Holdings v. Madayag,
748
 Civil Law
G.R. No. 164687, February 12, 2009)
WRIT OF POSSESSION
An order by which the sheriff is commanded to
place a person in possession of a real or personal
property. (Soliva v. Taleon, A.M. No. P-16-3511,
September 6, 2017)
The writ may be issued not only against the
person defeated in the registration case but also
against any one adversely occupying the land
during the proceedings up to the issuance of the
decree. (Vencilao v. Vano, G.R. No. L-25660,
February 23, 1990; Heirs of Lopez, Sr., v.
Querubin, G.R. No. 144405, March 18, 2015)
The writ does not lie against a person who
entered the land after the issuance of the decree
and who was not a party in the case. He may
only be proceeded against in a separate action
for ejectment or reivindicatory action. (Bernas v.
Nuevo, G.R. No. L-58438, January 31, 1984)
The writ is imprescriptible. A writ of demolition
is but a complement of the writ of possession.
(Gawaran v. Intermediate Appellate Court, G.R.
No. L-72721, June 16, 1988; Lucero v. Loot, G.R.
No. L-16995, October 28, 1968)
It may be issued by a special order of the court.
Mandamus is a proper remedy to compel the
issuance of a writ of possession. (Edralin v.
Philippine Veterans Bank, G.R. No. 168523, March
9, 2011)
Instances where a writ of possession may be
issued
1. In a land registration proceeding, which is a
proceeding in rem;
2. In an extrajudicial foreclosure of a realty
mortgage;
3. In a judicial foreclosure of mortgage, a quasi
in rem proceeding, provided that the
mortgagor is in possession of the mortgaged
realty and no third person, not a party to the
foreclosure suit had intervened; and
4. In execution sales.
Issuance of writ of possession not ministerial
where third party is in adverse possession or
is not a privy to the debtor
749
GR : A purchaser in a public auction sale of a
foreclosed property is entitled to a writ of
possession.
XPN : The possession of the property shall be
given to the purchaser or last redemptioner
unless a third party is actually holding the
property adverse to the judgment obligor. (Sec.
3, Rule 39, Rules of Court)
NOTE : The phrase ‘a third party who is actually
holding the property adversely to the judgment
obligor’ contemplates a situation in which a
third party holds the property by adverse title or
right, such as that of a co-owner, tenant or
usufructuary. The co-owner, agricultural tenant,
and usufructuary possess the property in their
own right, and they are not merely the successor
or transferee of the right of possession of
another co-owner or the owner of the property.
Notably, the property should not only be
possessed by a third party, but also held by the
third party adversely to the judgment obligor.
(Marquez v. Alindog, G.R. No 184045, January 22,
2014)
Q: How may possession of property be
obtained?
A: Possession of the property may be obtained
by filing an ex parte motion with the RTC court
of the province or place where the property is
situated. Upon filing of the motion and the
required bond, it becomes a ministerial duty of
the court to order the issuance of a writ of
possession in favor of the purchaser. After the
expiration of the one-year period without
redemption being effected by the property
owner, the right of the purchaser to the
possession of the foreclosed property becomes
absolute. (Laureano v. Bormaheco Inc., G.R. No.
137619, February 6, 2001)
Q: PNCB purchased a parcel of land in a
foreclosure sale and applied for a writ of
possession after the lapse of more than one
year. On appeal, however, it was held that the
writ of possession cannot be issued because
the foreclosure sale, upon which it is based,
was infirm. Is said ruling correct?
A: NO. Any question regarding the regularity
and validity of the sale, as well as the consequent
cancellation of the writ, is to be determined in a
subsequent proceeding as outlined in Sec. 8, Act
3135, as amended by Act 4118. Such question is
 Land Titles and Deeds
not to be raised as a justification for opposing the
issuance of the writ of possession, since, under the
Act, the proceeding is ex parte.As the purchaser
of the properties in the extra-judicial foreclosure
sale, PNCB is entitled to a writ of possession. The
basis of this right to possession is the
purchaser’s ownership of the property. Mere
filing of an ex parte motion for the issuance of
the writ of possession would suffice, and no
bond is required. (Sulit v. CA, G.R. No. 119247,
February 17, 1997; Agcaoili, 2008)
Q: If the court granted the registration, must
the applicant move for the issuance of a writ
of possession in case he is deprived of
possession over the land subject of the
registration proceedings?
confirm or adjudicate ownership over the
property covered by the reconstituted title
unlike in original land registration proceedings
wherein a writ of possession may be issued in
order to place the applicant-owner in
possession.
DECREE OF CONFIRMATION AND
REGISTRATION
It is issued by LRA after finality of judgment, and
contains technical description of the land. It is
subject only to an appeal. It is conclusive
evidence of the ownership of the land referred to
therein and becomes indefeasible and
incontrovertible after one year from the
issuance of the decree.

A: YES, if it is against: Decree of confirmation and registration v.

Decree of registration
1. The person who has been defeated in a
registration case; or
2. Any person adversely occupying the land or DECREE OF DECREE OF
any portion thereof during the land CONFIRMATION AND REGISTRATION OF
registration proceedings up to the issuance of REGISTRATION OF TITLE
the final decree. TITLE

Issued pursuant to the Issued pursuant to the

However, if it is against persons who took Public Land Act, where Property Registration
possession of the land AFTER final adjudication the presumption is that Decree, where there
of the same in a registration proceeding, in the land applied for already exists a title
which case, the remedy is to file a separate pertains to the State, which is confirmed by
action for: and the occupants and the court. (Limcoma
possessors only claim Multi-Purpose
1. Unlawful entry; an interest in the same Cooperative v.
2. Unlawful detainer; or by virtue of their Republic, G.R. No.
3. Reinvindicatory action, as the case may be, imperfect title or 167652, July 10, 2007)
and only after a favorable judgment can the continuous, open, and
prevailing party secure a writ of possession. notorious possession.
(Bernas v. Nuevo, G.R. No. L-58438, January 31,
1984)
Doctrine of non-collateral attack of a decree
Prescription of a writ of possession or title

GR: A petition for the issuance of a writ of
possession does not prescribe.
XPN: If a party has once made use of the benefit
of a writ of possession, he may not ask for it
again, if afterwards he loses possession of the
property obtained by virtue of the original writ.
A decree of registration or a registered title
cannot be impugned, enlarged, altered, modified,
or diminished either in collateral or direct
proceeding, after the lapse of one year from the
date of its entry.
XPN: Fake or non-existent titles.

Issuance of a writ of possession in a NOTE: An oppositor cannot simply invoke the

reconstitution case nullity of the title as a defense as it partakes the
nature of a collateral attack. The opponent
Issuance of a writ of possession cannot be issued claiming that the applicant’s OCT is fake must
in reconstitution case. Reconstitution does not

UNIVERSITY OF SANTO TOMAS 750

2021 GOLDEN NOTES
 Civil Law
file a counterclaim, and that such counterclaim
partakes the nature of a direct attack.
REASON: Fake titles do not enjoy indefeasibility.
Well-settled is the rule that the indefeasibility of
a title does not attach to titles secured by fraud
and misrepresentation. However, every
certificate of title is presumed to have been
validly issued. If an opponent claims that it is
fake, he has the burden of proving it.
EFFECT: It was as if no title was ever issued in
this case to the petitioner and therefore this is
hardly the occasion to talk of collateral attack
against a title. (Heirs of Leoncio C. Oliveros,
represented by Aurora B. Oliveros, et al. vs San
Miguel Corporation, et al., G.R. No. 173531,
February 1, 2012)
Q: In a case for recovery of possession based
on ownership, is a third-party complaint to
nullify the title of the third-party defendant
considered a direct attack on the title?
A: YES. If the object of the third-party complaint
is to nullify the title of the third-party defendant,
the third-party complaint constitutes a direct-
attack on the title because the same is in the
nature of an original complaint for cancellation
of title.
Q: If an attack is made thru a counterclaim,
should it be disregarded for being a
collateral attack?
A: NO. A counterclaim is also considered an
original complaint, and as such, the attack on the
title is direct and not collateral.
Q: Mr. and Mrs. Roman and Mr. and Mrs. Cruz
filed an application for registration of a
parcel of land which after due proceedings
was granted by the RTC acting as a land
registration court. However, before the
decree of registration could be issued, the
spouses Roman and the spouses Cruz sold
the lot to Juan. In the notarized deed of sale,
the sellers expressly undertook to submit the
deed of sale to the land registration court so
that the title to the property would be
directly issued in Juan's name.
a. Is such stipulation valid?
b. Distinguish a direct attack from a
collateral attack on a title.
c. If the title in (a) is issued in the names of
the original sellers, would a motion filed
751
by Juan in the same case to correct or
amend the title in order to reflect his
name as owner considered be collateral
attack? (2015 BAR)
A:
a. YES, because when one who is not the
owner of the property sells or alienates it
and later the seller or grantor acquires title,
such title passes by operation of law to the
buyer or grantee. (NCC, Art. 1434)
b. A direct attack on a title is one where the
action filed is precisely for the purpose of
pointing out the defects in the title with a
prayer that it be declared void. A collateral
attack is one where the action is not
instituted for the purpose of attacking the
title, but the nullity of the title is raised as a
defense in a different action.
c. NO, because Juan is not attacking the title
but merely invoking his right as transferee.
Hence, it does not involve a collateral attack
on the title.
Q: The Cascayan Heirs alleged that by virtue
of a free patent application, they were co-
owners of a parcel of land denominated as
Lot No. 20028. The Cascayan Heirs affirmed
that the Spouses Gumallaoi bought Lot No.
20029, an adjacent lot. The Spouses
Gumallaoi built a residential house on Lot No.
20029 which the Cascayan Heirs alleged
encroached on Lot No. 20028 after
renovations and improvements. The Spouses
Gumallaoi ignored the notifications that they
had encroached into Lot No. 20028. On May
31, 2001, the Spouses Gumallaoi applied for a
Building Permit. Due to renovations on their
residential house, they further encroached
on Lot No. 20028. Thus, the Cascayan Heirs
prayed that the Spouses Gumallaoi be
directed to vacate Lot No. 20028 and to
restore it to their possession. They likewise
prayed that the municipal engineer of Bangui
issue the necessary demolition permit as
well as cause the demolition of the portion of
the house that encroached on Lot No. 20028.
Finally, they prayed to be paid damages.
In response, and by way of counterclaim, the
Spouses Gumallaoi maintained that they
were the true owners of both Lot Nos. 20029
and 20028. They claimed that the Cascayan
 Land Titles and Deeds
Heirs secured a free patent to Lot No. 20028
through manipulation. They asserted that the
supporting affidavits for the Cascayan Heirs'
free patent application were obtained
through fraud and deception.
Were the Spouses Gumallaoi the legal owners
of Lot No. 20028?
A: YES. In this case, Spouses Gumallaoi
presented sufficient evidence to show that the
Heirs of Cascayan obtained their title through
fraud and misrepresentation. Moreover, the
evidence did not sufficiently prove the heirs'
claims of possession or ownership over Lot No.
20028. The only basis for their claim of
possession was tax declarations.
The spouses, on the other hand, sufficiently
identified Lot No. 20028 and proved their title
thereto. Hence, considering the foregoing, it is
proper to say that Spouses Gumallaoi are the
lawful owners of the subject property. (Heirs Of
Cayetano Cascayan, Represented By La Paz
Martinez v. Spouses Oliver And Evelyn Gumallaoi,
And The Municipal Engineer Of Bangui, Ilocos
Norte, G.R. No. 211947, July 03, 2017, as penned
by J. Leonen)
Q: Years after the issuance of TCT or CLOA to
Diopenes and Villanueva, Padillo filed before
the Agrarian Reform Regional Office a
Petition for Inclusion a Farmer-Beneficiary
over the subject lots. The Regional Director
granted the petition and declared Padillo a
qualified beneficiary. A Writ of Execution was
subsequently issued. Thus, Padillo filed a
Petition for Cancellation of Diopenes’ and
Villanueva’s Certificates of Land Ownership
Award before the Provincial Adjudicator. The
Department of Agrarian Reform Adjudication
Board ordered the cancellation of the TCT
and CLOA. It ruled that the Regional Director
had jurisdiction to order Padillo's inclusion
as farmer-beneficiary. On appeal, the CA
annulled the Decision on the ground of
indefeasibility of title.
Is the cancellation of the registered
Certificates of Land Ownership Award
(CLOA) or Transfer Certificates of Title (TCT)
four (4) years after their issuance proper?
A: NO, under Section 48 of Presidential Decree
No. 1529, a registered certificate of land
ownership award may be altered, modified, or
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
canceled only through an action for annulment
of the certificate itself. The petition incidentally
questioned the validity of the TCT issued in
Diopenes’ and Villanueva’s favor in an action
seeking a different relief—purportedly for
petitioner to be included as farmer-beneficiary
in the subject lots. This is a collateral attack on
the title, and as such, prohibited by law. Similar
to a certificate of title issued in registration
proceedings, the registration of a CLOA places
the subject land under the operation of the
Torrens system. Once under the Torrens system,
a CLOA becomes indefeasible and
incontrovertible upon the expiration of one year
from the date of registration with the Office of
the Registry of Deeds. It may only be attacked
through a direct proceeding before the court.
Moreover, Regional Director has no jurisdiction
in a Petition for Inclusion as farmer-beneficiary
over lots covered by the Certificates of Title or
registered Certificates of Land Ownership
Award. Thus, all subsequent proceedings are
void for lack of jurisdiction. Under Batas
Pambansa Blg. 129, or the Judiciary
Reorganization Act of 1980, an action for
annulment of a registered certificate of land
ownership award, like the annulment of a
certificate of title, involves title to or possession
of real property or any interest therein. This falls
under the exclusive original jurisdiction of either
the Regional Trial Court or the Municipal Trial
Court, depending on the assessed value. (Aurelio
Padillo v. Rolly Villanueva and Joseph Diopenes,
G.R. No. 209661, October 3, 2018, as penned by J.
Leonen)
REVIEW OF DECREE OF REGISTRATION
Available remedies to question the validity of
judgment in a registration case
1. New trial or reconsideration (Rule 37, Rules of
Court);
2. Appeal to the CA or SC in the manner as
ordinary actions (Section 33, PD 1529);
3. Relief of judgment (Rule 38, Rules of Court);
4. Annulment of judgment (Rule 37, Rules of
Court);
5. Claim under Assurance Fund (Section 95, PD
1529);
6. Review of Decree of Registration (Section 32,
PD 1529);
7. Reversion (Section 101, CA 141);
8. Action for reconveyance;
9. Cancellation of title;
752
 Civil Law
10. Quieting of Title; case.
11. Criminal prosecution under the Revised
Penal Code.
Fraud in the Not fraud in the
MOTION FOR NEW TRIAL procurement of procurement of
judgment. judgment.
Grounds:

1. (FAMEn) - extrinsic fraud, accident, mistake, Q: What kind of accident does the law
or excusable negligence; contemplate?

2. Newly discovered evidence, which he could A: It must appear that there was accident or
not, with reasonable diligence, have surprise which ordinary prudence could not
discovered, and produced at the trial, and have guarded against, and by reason of which
which if presented would probably alter the the party applying has probably been impaired
result; in his rights. Illness constitutes accident over
which a party has no control. Failure to attend
Affidavits of merit required to prove FAMEn trial for lack of advance notice justifies new trial.
(Agcaoili, 2015)
1. Affidavit setting forth the facts and
circumstances alleged to constitute such Q: What kind of mistake does the law
fraud, accident, mistake, or excusable contemplate?
negligence;
A: It is some unintentional act, omission, or
Reason: It is to enable the court to determine if error arising from ignorance, surprise,
the movant’s claim of fraud, etc. is not mere imposition or misplaced confidence. It may arise
conclusion but is indeed borne out by the either from unconsciousness, ignorance,
relevant facts. (Yap v. Tanada, G.R. No. L-32917, forgetfulness, impo- sition, or misplaced
July 19, 1988) confidence. Belief that there is no need to appear
during the trial because there was already a
2. Affidavit setting forth the facts claimed to compromise agreement is a ground for new trial.
constitute the movant’s meritorious cause of (Agcaoili, 2015)
action or defense.
Q: What kind of excusable neglect does the
Reason: It would be useless, a waste of time, to law contemplate?
set aside the judgment and reopen the case to
allow the movant to adduce evidence when he A: It means a failure to take the proper steps at
has no valid cause of action or meritorious the proper time, not in consequence of the
defense. (Yap v. Tanada, G.R. No. L-32917, July 19, party’s own carelessness, inattention, or willful
1988) disregard of the process of the court, but in
consequence of some unexpected or
EXTRINSIC FRAUD INTRINSIC FRAUD unavoidable hindrance or accident, or reliance
on the care and vigilance of his counsel or on
Refers to any Refers to acts of a promises made by the adverse party. (Agcaoili,
fraudulent act of the party in a litigation 2015)
successful party in a during the trial, such
litigation which is as the use of forged MOTION FOR RECONSIDERATION
committed outside the instruments or
trial of a case against perjured testimony, Grounds
the defeated party, or which did not affect
his agents, attorneys the presentation of 1. Damages awarded were excessive.
or witnesses, whereby the case, but did 2. Insufficiency of evidence to support the
said defeated party is prevent a fair and just decision;
prevented from determination of the 3. Final order or decision is contrary to law.
presenting fully and case.
fairly his side of the Similarities of New Trial and

753
 Land Titles and Deeds
Reconsideration
The period to file the motion must be within the
period to take an appeal.
No motion for extension of time shall be allowed.
Also, a pro forma motion for new trial or
reconsideration shall not toll the reglementary
period.
NOTE: A party who has filed a timely motion for
new trial cannot file a petition for relief after his
motion has been denied. These two remedies are
exclusive of each other. He should appeal from
the judgment and question such denial. Relief
will not be granted to a party who seeks to be
relieved from the effects of a judgment when the
loss of the remedy at law was due to his own
negligence, or a mistaken mode of procedure.
(Feria and Noche, Civil Procedure, Vol. I, 644)
APPEAL
Modes of appeal
1. Ordinary appeal — The appeal to the Court
of Appeals in cases decided by the Regional
Trial Court in the exercise of its original
jurisdiction shall be taken by filing a notice
of appeal with the court which rendered the
judgment or final order appealed from and
serving a copy thereof upon the adverse
party. No record on appeal shall be required
except in special proceedings and other
cases of multiple or separate appeals where
the law or the Rules so require. In such
cases, the record on appeal shall be filed and
served in like manner.
2. Petition for review — The appeal to the
Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its
appellate jurisdiction shall be by petition for
review in accordance with Rule 42.
3. Appeal by certiorari — In all cases where
only questions of law are raised or involved,
the appeal shall be to the Supreme Court by
petition for review on certiorari in
accordance with Rule 45. (Agcaoili, 2015)
Period to file an appeal
The appeal shall be taken within fifteen (15)
days from notice of the judgment or final order
appealed from. Where a record on appeal is
required, the appellant shall file a notice of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
appeal and a record on appeal within thirty (30)
days from notice of the judgment or final order.
NOTE: This is subject to the Fresh Period Rule
where the person who seeks an appeal shal
acquire a fresh period of 15 days from receipt of
the final order or the order dismissing their
motion for reconsideration or new trial. (Neypes
v. Court of Appeals, G.R. No.141524, September 14,
2005)
PETITION FOR RELIEF FROM JUDGMENT
Grounds: (FAMEn)
1. Fraud;
2. Accident;
3. Mistake; and
4. Excusable negligence.
Period to file
A petition for relief must be filed within sixty
(60) days after the petitioner learns of the
judgment, final order, or other proceeding to be
set aside, and not more than six (6) months after
entry of judgment. (Rule 38, Rules of Court)
Requirements for its validity
1. Accompanied with affidavits showing the
fraud, accident, mistake, or excusable
negligence relied upon;
2. The facts constituting the petitioner’s good
and substantial cause of action or defense,
as the case may be; and
3. Verification.
NOTE: The date of finality of the judgment or
final order shall be deemed to be the date of its
entry.
PETITION FOR ANNULMENT OF JUDGMENT
When available
The annulment by the Court of Appeals of
judgments or final orders and resolutions in civil
actions of Regional Trial Courts for which the
ordinary remedies of new trial, appeal, petition
for relief or other appropriate remedies are no
longer available through no fault of the
petitioner. (Section 1, Rule 47).
Grounds for annulment
754
 Civil Law
1. Extrinsic fraud; and
NOTE: This shall not be a valid ground if it was
availed of, or could have been availed of, in a
motion for new trial or petition for relief.
2. sLack of jurisdiction. (Section 2, Rule 47)
NOTE: If the ground for annulment is lack of
jurisdiction, another remedy is certiorari under
Rule 65, in which case, the Court of Appeals does
not have exclusive jurisdiction since the
Supreme Court also has such jurisdiction. (Feria
and Noche, Civil Procedure, Vol. I, 644)
Action by the court
Should the court find no substantial merit in the
petition, the same may be dismissed outright
with specific reasons for such dismissal.
Should prima facie merit be found in the
petition, the same shall be given due course and
summons shall be served on the respondent.
(Section 5, Rule 47)
Effect of judgment
A judgment of annulment shall set aside the
questioned judgment or final order or resolution
and render the same null and void, without
prejudice to the original action being refiled in
the proper court.
However, where the judgment or final order or
resolution is set aside on the ground of extrinsic
fraud, the court may on motion order the trial
court to try the case as if a timely motion for
new trial had been granted therein. (Section 7,
Rule 47)
CLAIM AGAINST THE ASSURANCE FUND
Purpose
Act No. 496 provides for an Assurance Fund to
pay for the loss or damage sustained by any
peron who, without negligence on his part, is
wrongfully deprived of any land or interest
therein on account of the bringing of the same
under the Act or registration of any other
persons as owner of the land. (Agcaoili, 2015)
The Assurance Fund is a long standing feature of
our property registration system which is
intended to relieve innocent persons from the
755
harshness of the doctrine that a certificate is
conclusive evidence of an indefeasible title to
land. (Spouses Esperanza, et al., v. The Register of
Deed, G.R. No. 224678, July 3, 2018; Bar 2019)
Requisites for recovery:
1. That a person sustains loss or damage, or is
deprived of any estate or interest in land;
2. On account of the bringing of land under the
operation of the Torrens system arising
after original registration;
3. Through fraud, error, omission, mistake,
misdescription in any certificate of title or in
any entry or memorandum in the
registration book;
4. Without negligence on his part; and
5. Is barred or precluded from bringing an
action for the recovery of such land or estate
or interest therein. (Section 95, Property
Registration Decree)
Who must file
It is a condition sine qua non that he be the
registered owner, and, as to holders of a TCT,
that they be innocent purchasers in good faith
and for value. Moreover, there must be a
showing that there is no negligence on the part
of the party sustaining the loss or damage or
deprivation of any land or interest therein. (La
Urbana v. Bernardo, G.R. No. 41915, January 8,
1936, as cited in Spouses Esperanza, et al., v. The
Register of Deed, G.R. No. 224678, July 3, 2018)
When may the action be properly brought
An action against the Assurance Fund on the
ground of “fraudulent registration under the
Torrens system after the land’s original
registration” may be brought only after the
claimant’s property is registered in the name of
an innocent purchaser for value. This is because
it is only after the registration of the innocent
purchaser for value’s title (and not the usurper’s
title which constitutes a breach of trust) can it be
said that the claimant effectively “sustains loss or
damage, or is deprived of land or any estate or
interest therein in consequence of the bringing of
the land under the operation of the Torrens
system.” The registration of the innocent
purchaser for value’s title is therefore a
condition sine qua non in order to properly claim
against the Assurance Fund. (Spouses Esperanza,
et al., v. The Register of Deed, G.R. No. 224678, July
3, 2018)
 Land Titles and Deeds
Against whom
1. The Register of Deeds of the province or city
where the land lies and the National Treasurer -
If the action is brought for the recovery of loss or
damage or for deprivation of land or of any
estate or interest therein arising through fraud,
negligence, omission, mistake or misfeasance of
the court personnel, the Register of Deeds or
other employees of the registry in the
performance of their duties.
2. The action shall be brought against the
Register of Deeds, the National Treasurer and
such other persons - If the action is brought for
the recovery of loss or damage or for
deprivation of land or of any estate or interest
therein arising through fraud, negligence,
omission, mistake or misfeasance of persons
other than the court personnel, the Register of
Deeds or other employees of the Registry.
(Section 96, P.D. 1529)
Limitation on the amount to be recovered
The plaintiff cannot recover as compensation
more than the fair market value of the land at
the time he suffered the loss, damage, or
deprivation thereof. (Sec. 99, Property
Registration Decree)
Amendment or cancellation of title
In the event the Assurance Fund is held liable on
account of the unlawful or erroneous issuance of
a certificate of title, the Register of Deeds, upon
authority of the LRA Administrator, shall file the
necessary action to amend or cancel the title or
perform any other act as may be directed by the
court. Such action may pre-empt any ac tion
against the Assurance Fund. (Agcaoili, 2015)
Prescriptive period
The action must be brought within 6 years from
the time the right to bring the action first
occured. (Sec. 102, Property Registration Decree)
NOTE: An action for compensation against the
Assurance Fund is separate and distinct remedy,
apart from review of decree of registration or
reconveyance of title, which can be availed of
when there is an unjust deprivation of property.
This is evidence from the various provisions of
Chapter VII of P.D. 1529 which provide for
specific parameters that govern the action.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
(Spouses Esperanza, et al., v. The Register of Deed,
G.R. No. 224678, July 3, 2018, supra.)
Q: Alfredo V. de Ocampo (de Ocampo) filed an
application before the Court of First Instance
of Negros Occidental to register two parcels
of prime sugar land, Lot No. 2509 of the
cadastral survey of Escalante and Lot No. 817
of the cadastral survey of Sagay. The
registration was contested by the Republic of
the Philippines' Bureau of Education (the
Republic). According to the Republic, the lots
de Ocampo sought to register were
bequeathed to the Bureau of Education by
the late Esteban Jalandoni. Due to the
donation, the Bureau of Education owned the
lots as evidenced by Transfer Certificate of
Title (TCT) No. 6014. While registration
proceedings were pending, de Ocampo
entered into an agreement with Oscar Anglo,
Sr. (Anglo, Sr.). Their agreement,
denominated as a Deed of Conditional Sale,
included an undertaking that de Ocampo
would cede, transfer, and convey Lot No.
2509 and part of Lot No. 817 under certain
conditions. Anglo, Sr. and Anglo Agricultural
Corporation filed a Complaint for Recovery of
Damages from the Assurance Fund against
the Register of Deeds of Negros Occidental
and the National Treasurer of the Republic of
the Philippines before the Regional Trial
Court of Bacolod City, Negros Occidental.
According to their Complaint, Anglo, Sr.
acquired the lots in good faith and for value
without any negligence on his part.
Considering that de Ocampo passed away
and left no property to his heirs before the
finality of the Court of Appeals' Decision, the
only available remedy for Anglo, Sr. and
Anglo Agricultural Corporation was to
recover the value of the lots from the
Assurance Fund as provided for under Act
No. 496 and Presidential Decree No. 1529.
Are the respondents Oscar Anglo, Sr. and
Anglo Agricultural Corporation entitled to an
award of damages from the Assurance Fund
under Section 95 of Presidential Decree No.
1529?
A: NO. The Torrens system is not infallible. It is
possible that through fraud or error, a person
who is not the owner acquires a certificate of
title over property. The law thus created an
Assurance Fund to address this possibility.
Under Presidential Decree No. 1529, for every
certificate of title issued to a registered owner of
756
 Civil Law
the property, building, or other improvements,
the registered owner contributes "one-fourth of
one per cent of the assessed value of the real
estate on the basis of the last assessment for
taxation purposes, as contribution to the
Assurance Fund." If the property has not yet
been assessed for taxation purposes, the
contribution will be based on the value
determined by two disinterested persons. These
collections are pooled together under the
custody of the National Treasurer. This court
further explained that "the Assurance Fund is
intended to relieve innocent persons from the
harshness of the doctrine that a certificate is
conclusive evidence of an indefeasible title to
land." An individual who relied on the validity of
a certificate of title should not be prejudiced by
fraud committed during the original registration,
nor should he or she be prejudiced by the error,
omission, mistake, or misdescription in the
certificate of title caused by court personnel or
the Register of Deeds, his or her deputy, or other
employees of the Registry. (The Register Of Deeds
Of Negros Occidental And The National Treasurer
Of The Republic Of The Philippines v. Oscar Anglo,
Sr., And Anglo Agricultural Corporation,
Represented By Oscar Anglo, Jr., G.R. 171804,
August 5, 2015, as penned by J. Leonen)
PETITION FOR REVIEW OF DECREE OF
REGISTRATION
The Torrens title becomes indefeasible and
incontrovertible one year from the issuance of
the final decree and is generally conclusive
evidence of the ownership of the land referred to
therein.
However, courts may reopen proceedings
already closed by final decision or decree when
application for review is filed by the party
aggrieved within one year from the issuance of
the decree of registration.
The one-year period stated in Section 32 of PD
No. 1529 within which a petition to reopen and
review the decree of registration refers to the
decree of registration which is prepared and
issued by the Land Registration Authority
pursuant to Section 31 of the Decree. (Agcaoili,
2015)
Period to file
The petition for review must be filed within one
year from entry of decree of registration. (Sec.
757
32, Property Registration Decree)
With respect to lands covered by patents, the
one-year period starts from the date of issuance
of the patent. (Sumail v. Judge of CFI of Cotabato,
G.R. No. L-8278, April 30, 1955)
Requisites
1. The petitioner must have an estate or
interest in the land;
2. He must show actual or extrinsic fraud in
the procurement of the decree of
registration;
3. The petition must be filed within one year
from the issuance of the decree by the Land
Registration Authority; and
4. The property has not yet passed to an
innocent purchaser for value.
PURCHASER IN GOOD FAITH AND FOR VALUE
A purchaser in good faith and for value is one
who buys property of another, without notice
that some other person has a right to, or interest
in, such property, and pays a full and fair price
for the same, at the time of such purchase, or
before he has notice of the claim or interest of
some other person in the property. Good faith is
the opposite of fraud and of bad faith, and its
non-existence must be established by competent
proof. Sans such proof, a buyer is deemed to be
in good faith and his interest in the subject
property will not be disturbed.
A purchaser of a registered property can rely on
the guarantee afforded by pertinent laws on
registration that he can take and hold it free
from any and all prior liens and claims except
those set forth in or preserved against the
certificate of title. [Philippine Charity
Sweepstakes Office (PCSO) v. New Dagupan Metro
Gas Corporation, et al.; G.R. No. 173171, July 11,
2012]
NOTE: An innocent purchaser for value includes
a lessee, mortgagee, or other encumbrances for
value.
Purchaser in good faith and for value is the same
as a purchaser for value.
Good Faith determination
Good faith, or the lack of it, is in its last analysis a
question of intention; but, in ascertaining the
 Land Titles and Deeds
intention by which one is actuated on a given
occasion, we are necessarily controlled by the
evidence as to the conduct and outward acts by
which alone the inward motive may, with safety,
be determined. So it is that “the honesty of
intention,” “the honest lawful intent,” which
constitutes good faith, implies freedom from
knowledge and circumstances which ought to
put a person on inquiry,” and so it is that proof
of such knowledge that overcomes the
presumption of good faith in which the courts
always indulge in the absence of proof to the
contrary.
It has been held that a purchaser in good
faith is one who buys the property of another
without notice that some other person has a
right to or interest on such property and pays a
full and fair price for the same at the time of
such purchase or before he has notice of the
claim or interest of some other person in the
property.
Q: Sindophil anchors its right to the Tramo
property on Transfer Certificate of Title,
which was purportedly issued by the
Register of Deeds of Pasay City. The Republic
alleged that the Tramo property was initially
registered under the name of Teodoro.
Despite the issuance of certificates of title
over the Tramo property, the Republic
claimed that the TCT in the name of Teodoro
was "spurious or of doubtful authenticity."
Sindophil countered that the Republic was
estopped from questioning the transfers
considering that it had allowed the series of
transfers and even accepted the "tremendous
amounts paid" as capital gains tax. Is
Sindophil a purchaser in good faith?
A: NO, Sandophil is not a purchaser in good
faith. The presumption of good faith and that a
holder of a title is an innocent purchaser for
value may be overcome by contrary evidence.
These annotations show that the Tramo
property is controversial and has been the
subject of several adverse claims, belying
Sindophil's contention that it acquired the
property in good faith. With Sindophil failing to
prove that it was a buyer in good faith, it cannot
recover damages. (Sindophil Inc. v. Republic of
the Philippines, G.R. No. 204594, November 07,
2018, as penned by J. Leonen)
A forged deed may be the root of a valid title
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
GR: A forged or fraudulent deed is a nullity and
conveys no title.
XPN: If the certificate of title has already been
transferred from the name of the true owner to
the name of the forger or the name indicated by
the forger, and while it remained that way, the
land was subsequently sold to an innocent
purchaser. (Muoz v. Yabut, G.R. No. 142676, June
6, 2011)
Q: If the land subject of the dispute was not
brought under the operation of the Torrens
system, will the concept of an innocent
purchaser for value apply?
A: NO. If the land in question was not brought
under the operation of Torrens system because
the original certificate of title is null and void ab
initio, the concept of an innocent purchaser for
value does not apply.
NOTE: Good faith and bad faith is immaterial in
case of unregistered land. One who purchases an
unregistered land does so at his peril. (Caldito v.
Obado, G.R. No. 181596, January 30, 2017)
Q: Nestor applied for and was granted a Free
Patent over a parcel of agricultural land in
General Santos City. He presented the Free
Patent to the Register of Deeds, and he was
issued a corresponding Original Certificate of
Title (OCT) No. 375. Subsequently, Nestor
sold the land to Eddie. The deed of sale was
submitted to the Register of Deeds and on the
basis thereof, OCT No. 375 was cancelled and
Transfer Certificate of Title (TCT) No. 4576
was issued in the name of Eddie. In 1986, the
Director of Lands filed a complaint for
annulment of OCT No. 375 and TCT No. 4576
on the ground that Nestor obtained the Free
Patent through fraud. Eddie filed a motion to
dismiss on the ground that he was an
innocent purchaser for value and in good
faith and as such, he has acquired a title to
the property which is valid, unassailable and
indefeasible. Decide the motion. (2000 Bar)
A: Nestor’s motion to dismiss the complaint for
annulment of OCT No. 375 and TCT No. 4576
should be denied for the following reasons:
1. Eddie cannot claim protection as an
innocent purchaser for value nor can he
interpose the defense of indefeasibility of
his title, because his TCT is rooted on a
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 Civil Law
void title. Under Sec. 91, C.A. No. 141, as
amended, otherwise known as the Public
Land Act, statements of material facts in
the applications for public land must be
under oath. Sec. 91 of the same act
provides that such statements shall be
considered as essential conditions and
parts of the concession, title, or permit
issued, any false statement therein, or
omission of facts shall ipso facto produce
the cancellation of the concession. The
patent issued to Nestor in this case is void
ab initio not only because it was obtained
by fraud but also because it covers 30
hectares which is far beyond the maximum
of 24 hectares provided by the free patent
law.
2. The government can seek annulment of the
original and transfer certificates of title
and the reversion of the land to the State.
Eddie's defense is untenable. The
protection afforded by the Torrens System
to an innocent purchaser for value can be
availed of only if the land has been titled
thru judicial proceedings where the issue
of fraud becomes academic after the lapse
of one year from the issuance of the decree
of registration. In public land grants, the
action of the government to annul a title
fraudulently obtained does not prescribe
such action and will not be barred by the
transfer of the title to an innocent
purchaser for value.
Q: Heirs of Kusop, filed for application of
sales patents for Lot X, a lot reserved for
recreation and health purposes under
Proclamation No. 168. The DENR approved
such application and conveyed 16 titles to
Kusop, who subsequently transferred it to
AFP-RSBS. Republic filed a complaint for
reversion, and annulment of AFP-RSBS’ titles
since the Lot X is classified as inalienable and
non-disposable public land. Is the Republic
correct?
A: YES. Certificates of title issued covering
inalienable and non-disposable public land, even
in the hands of an alleged innocent purchaser for
value, should be cancelled. The Heirs of Kusop
didn’t acquire any right to Lot X. The sales
patents over Lot X are null and void, for at the
time the sales patents were applied for and
granted, the land had lost its alienable and
disposable character. (Republic of the Philippines
759
v. AFP Retirement and Separation Benefits
System, G.R. No. 180463, January 16, 2013) (Del
Castillo, J.)
Q: Mahilum entrusted the owner’s duplicate
copy of her land to Perez, real estate broker,
who claimed that she can assist the latter in
obtaining a loan, with the title serving as
collateral. Mahilum demanded the return of
the title but Perez failed to produce the same
alleging that it was lost. Thereafter Mahilum
was informed by the RD that the title was not
lost but was presented by Sps. Ilano who
claimed that the property was sold to them
and showed Mahilum a notarized Agreement
and a Deed of Absolute Sale containing
Mahilum’s forged signature. However, the
spouses did not register the title in their
names. Mahilum then sought the annulment
of the Agreement and the Deed of Absolute
Sale. Spouses Ilano prayed for the dismissal
of the complaint arguing that Mahilum failed
to allege that they were purchasers in bad
faith and in the absence of such an allegation,
the presumption that respondents are
purchasers in good faith prevails. Can the
Spouses Ilano claim that they are purchasers
in good faith?
A: NO. Since the title of the property remained
with Mahilum, there is no new title to annul.
Indeed, if the agreement and deed of sale are
forgeries, then they are a nullity and convey no
title. The underlying principle is that no one can
give what one does not have. Moreover, in order
for the holder of a certificate for value issued by
virtue of the registration of a voluntary
instrument may be considered a holder in good
faith for value, the instrument registered should
not be forged. When the instrument presented is
forged, even if accompanied by the owner’s
duplicate certificate of title, the registered owner
does not thereby lose his title, and neither does
the assignee in the forged deed acquire any right
or title to the property. (Mahilum v. Spouses
Ilano, G.R. No. 197923, June 22, 2015)
Q: Spouses Rufloe acquired a parcel of land
located at Muntinlupa. However, in 1978
Delos Reyes forged the signatures of the
spouses in Deed of Sale to make it appear
that the disputed property was sold to her by
the former. On the basis of the said deed of
sale, Delos Reyes succeeded in obtaining title
in her name. Hence, the Rufloes filed a
complaint for damages against Delos Reyes
 Land Titles and Deeds
alleging that the Deed of Sale was falsified as
their signatures appearing thereon was
forged.
During the pendency of the case, Delos Reyes
sold the subject property to the Burgos
siblings who then sold the same to their aunt,
Leonarda Burgos. However, the sale in favor
of Leonarda was not registered. Thus, no title
was issued in her name. The subject property
remained in the name of the Burgos siblings
who also continued paying the real estate
taxes thereon.
a. Are the sales of the subject property by
Delos Reyes to the Burgos siblings and
the subsequent sale to Leonarda valid
and binding?
b. Are the respondents considered as
innocent purchasers in good faith and for
value despite the forged deed of sale of
their transferor Delos Reyes?
A:
a. The forged deed of sale was null and void
and conveyed no title. It is a well-settled
principle that no one can give what one does
not have, nemo dat quod non habet. One can
sell only what one owns or is authorized to
sell, and the buyer can acquire no more right
than what the seller can transfer legally. Due
to the forged deed of sale, Delos Reyes
acquired no right over the subject property
which she could convey to the Burgos
siblings. All the transactions subsequent to
the falsified sale between the spouses Rufloe
and Delos Reyes are likewise void, including
the sale made by the Burgos siblings to their
aunt, Leonarda.
b. The evidence shows that the Rufloe caused a
notice of adverse claim to be annotated on
the title of Delos Reyes as early as
November 5, 1979. The annotation of an
adverse claim is a measure designed to
protect the interest of a person over a piece
of real property, and serves as a notice and
warning to third parties dealing with said
property that someone is claiming an
interest on the same or may have a better
right than the registered owner
thereof. Despite the notice of adverse claim,
the Burgos siblings still purchased the
property in question. Equally significant is
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the fact that Delos Reyes was not in
possession of the subject property when she
sold the same to
the Burgos siblings. Leonarda cannot be
categorized as a purchaser in good
faith. Since it was the Rufloes who
continued to have actual possession of the
property, Leonarda should have
investigated the nature of their possession.
(Adoracion Rosales Rufloe, et al., v. Leonarda
Burgos et al., G.R. No. 143573, January 30,
2009)
Q: Cipriano, one of Pablo’s heirs, executed an
extrajudicial settlement of a sole heir and
confirmation of sales, declaring himself as
the only heir and confirmed the sales made
in favor of the spouses Rodolfo.
Consequently, a certificate of title was issued
in the name of the spouses, who then sold the
property to Guaranteed Homes. Pablo’s other
descendants seek reconveyance of the
property sold to the spouses alleging that the
extrajudicial settlement was forged. Who is
the rightful owner of the property?
A: Guaranteed Homes is the rightful owner,
even assuming that the extrajudicial settlement
was a forgery. Generally a forged or fraudulent
deed is a nullity and conveys no title. There are,
however, instances when such a fraudulent
document may become the root of a valid title.
One such instance is where the certificate of title
was already transferred from the name of the
true owner to the forger, and while it remained
that way, the land was subsequently sold to an
innocent purchaser. For then, the vendee had
the right to rely upon what appeared in the
certificate.
Also, the extrajudicial settlement was recorded
in the Register of Deeds. Registration in the
public registry is notice to the whole world.
(Guaranteed Homes, Inc. v. Heirs of Valdez, Heirs
of Tugade, Heirs of Gatmin, Hilaria Cobero and
Alfredo and Siony Tepol, G.R. No. 171531, January
30, 2009)
Q: Spouses X and Y mortgaged a piece of
registered land to A, delivering as well the
OCT to the latter, but they continued to
possess and cultivate the land, giving 1/2 of
each harvest to A in partial payment of their
loan to the latter. A however, without the
knowledge of X and Y, forged a deed of sale of
760
 Civil Law
the aforesaid land in favor of himself, got a
TCT in his name, and then sold the land to B.
B bought the land relying on A's title, and
thereafter got a TCT in his name. It was only
then that the spouses X and Y learned that
their land had been titled in B's name. May
said spouses file an action for reconveyance
of the land in question against B? Reason.
(1999 Bar)
A: The action of X and Y against B for
reconveyance of the land will not prosper
because B has acquired a clean title to the
property being an innocent purchaser for value.
A forged deed is an absolute nullity and conveys
no title. The fact that the forged deed was
registered and a certificate of title was issued in
his name, did not operate to vest upon A
ownership over the property of X and Y. The
registration of the forged deed will not cure the
infirmity. However, once the title to the land is
registered in the name of the forger and title to
the land thereafter falls into the hands of an
innocent purchaser for value, the latter acquires a
clean title thereto. A buyer of a registered land is
not required to explore beyond what the record
in the registry indicates on its face in quest for
any hidden defect or inchoate right which may
subsequently defeat his right thereto. This is the
"mirror principle" of the Torrens system which
makes it possible for a forged deed to be the root
of a good title.
Q: The Revilla spouses faced financial
difficulties in raising funds for Alfredo
Revilla’s travel to Saudi Arabia, so Paz
Castillo-Revilla borrowed money from
Amada Cotoner-Zacarias (Amada). By way of
security, the parties verbally agreed that
Amada would take physical possession of the
property, cultivate it, then use the earnings
from the cultivation to pay the loan and
realty taxes. Upon full payment of the loan,
Amada would return the property to the
Revilla spouses. Unknown to the Revilla
spouses, Amada presented a fictitious
document entitled "Kasulatan ng Bilihanng
Lupa" before the Provincial Assessor. This
document was executed on with the Revilla
spouses as sellers and Amada as buyer of the
property. Amada then sold the property. Was
there a valid transfer?
761
A: NO. Well-settled is the rule that "conveyances
by virtue of a forged signature are void ab initio
as the absence of the essential requisites of
consent and cause or consideration in these
cases rendered the contract inexistent. Doctrines
of equity such as laches apply only in the
absence of statutory law. The Civil Code clearly
provides that "the action or defense for the
declaration of the inexistence of a contract does
not prescribe." (Amada Zacarias v. Sps. Alfredo
and the Heirs Revilla of Paz Revilla, G.R. No.
190901, November 12, 2014, as penned by J.
Leonen)
Reliance on a title which appears valid on its
face
Q: The Spouses Victor and Filomena Andres
own a 4,634-square-meter parcel of land.
After Victor’s death, Filomena, and six of
their children — Onofre, Roman, Juana,
Guillermo, Felisa, and Maxima — agreed in
an extrajudicial partition with sale to
adjudicate one half of the land to each of
them pro indiviso. This document also
provides that, they all sold, transferred, and
conveyed to Roman Andres their respective
rights and participation to the one-half
portion of the property. This was annotated
on the title. Consequently, a new title was
issued in the name of Roman Andres and his
wife, Lydia Andres, under TCT No. NT-
57731. Spouses Roman and Lydia Andres
mortgaged the property to PNB for
3,000.00. PNB alleged that the Nueva Ecija
Regional Trial Court cancelled the
guardianship issued in favor of the Security
Bank and Trust Company and transferred
ownership of the properties of the deceased,
Spouses Roman and Lydia Andres, to their
only living heir, Reynaldo Andres.
TCT No. NT-57731 was consequently
cancelled, and title was transferred to the
Spouses Reynaldo Andres and Janette de
Leon on December 27, 1994. On September 4,
1995, the Spouses Reynaldo Andres and
Janette de Leon used this title and mortgaged
the property to PNB for a 1.2 million
loan. This was without the consent of Onofre
Andres.
Onofre Andres, claiming ownership over the
property, filed a complaint for cancellation of
title, reconveyance of property and damages,
with prayer for the issuance of a preliminary
 Land Titles and Deeds
injunction against his nephew Reynaldo
Andres and Reynaldo’s wife, Janette de Leon,
PNB, Lydia Andres, and the Register of Deeds
of Nueva Ecija. The complaint alleged that
Reynaldo Andres was in collusion with his
mother, Lydia Andres, in executing a falsified
document denominated as "Self-Adjudication
of Sole Heir."
PNB denied the material allegations in the
complaint. It argued that it conducted an
investigation on the property. The title
presented to PNB by Reynaldo Andres and
his wife was clear and free from adverse
claims. Is PNB an innocent mortgagee for
value and in good faith?
A: YES. A bank that accepts a mortgage based
upon a title which appears valid on its face and
after exercising the requisite care, prudence, and
diligence appropriate to the public interest
character of its business can be deemed a
mortgagee in good faith. The subsequent
consolidation of title in its name after a valid
foreclosure shall be respected notwithstanding
later proof showing that the title was based
upon a void transaction.
The standard operating practice for banks when
acting on a loan application is "to conduct an
ocular inspection of the property offered for
mortgage and to verify the genuineness of the
title to determine the real owner(s) thereof."
PNB complied with the standard operating
practice of banks, which met the requisite level
of diligence, when it sent Gerardo Pestano to
conduct an ocular inspection of the property and
verify the status of its ownership and title.
Consequently, PNB is a mortgagee in good faith.
The title resulting from the foreclosure sale,
therefore, is to be protected. The bank is an
innocent purchaser for value. (Onofre Andres,
Substituted By His Heirs, Namely: Ferdinand,
Rosalina, Eriberto, Froilan, Ma. Cleofe, Nelson,
German, Gloria, Alexander, May, Abraham, And
Africa, All Surnamed Andres V. Philippine
National Bank, G.R. No. 173548, October 15, 2014,
as penned by J. Leonen)
Q: Gregorio, Enrique, Simplicio and Severino
Lopez inherited a 2734-square-meter
property in Bustos, Bulacan originally owned
by their grandmother Gregoria Lopez, over
which a tax declaration was issued under the
name, “Heirs of Lopez.” On 29 November
1990, Enrique Lopez executed an affidavit of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
self-adjudication declaring himself to be the
sole heir of Gregoria, and sold the property
to Marietta Yabut (“Yabut”). In 1993, Yabut
obtained a loan from Development Bank of
the Philippines (“DBP”) and mortgaged the
property to DBP as security. At the time of
the loan, the property was covered by Tax
Declaration No. 18727 under Yabut’s name,
but subsequently on 26 July 1993, an original
certificate of title was issued in Yabut’s
favour and the mortgage was annotated
thereon.
Petitioners filed a complaint with the
Regional Trial Court (“RTC”) for the
annulment of Enrique’s affidavit of self-
adjudication, the deed of sale in favour of
Yabut, and the deed of real estate mortgage
in favour DBP, with a prayer for the re-
conveyance of their ¾ share in the property.
Meanwhile, foreclosure proceedings were
instituted by DBP upon Yabut’s default, and
there, DBP became the highest bidder,
eventually resulting in the title of the
property being consolidated in its favour.
Did Yabut and eventually, DBP acquire valid
title to the property under the doctrine of
innocent purchaser or mortgagee for value?
A: NO. Under Article 493 of the NCC, Enrique
had no right to sell the undivided portions
belonging to his siblings or their respective
heirs, and the sale to Yabut should be void with
respect to the shares of the other heirs who did
not consent thereto.
While as a rule, an ordinary buyer may rely on
the certificate of title issued in the name of the
seller, and need not look beyond what appears
on the face of the title, the ordinary buyer will
not be considered an innocent purchaser for
value if there is anything on the certificate of
title that arouses suspicion, and the buyer failed
to inquire or take steps to ensure that there is no
cloud on the title, right or ownership of the
property being sold.
Yabut could not be an innocent purchaser for
value, because there was no certificate of title to
rely on when she purchased the property from
Enrique, at which time the only available
document presented her was a tax declaration
under “Heirs of Lopez.” The defense of having
purchased the property in good faith may be
availed of only where registered land is involved
762
 Civil Law
and the buyer had relied in good faith on the Grounds
clear title of the registered owner. It does not
apply when the land is not yet registered with In all cases where lands of the public domain
the Registry of Deeds. and the improvements thereon and all lands are
held in violation of the Constitution.
Similarly, DBP could not be held to be a
mortgagee in good faith because at the time of NOTE: The State is not barred by res judicata
the mortgage, the mortgagor Yabut had yet to nor estoppel in instituting an action for
register the property under her name. The rule reversion.
on “innocent purchasers or mortagees for value”
is applied more strictly when the purchaser or RECONVEYANCE
mortgagee is a bank as banks are expected to
exercise higher degree of diligence in their Who institutes the action
dealings, including those involving lands. DBP
failed to exercise the degree of diligence It is granted to the rightful owner of land which
required of banks when it accepted the has been wrongfully or erroneously registered
unregistered property as security for Yabut’s in the name of another to compel the latter to
loan despite circumstances that should have transfer or reconvey the land to him.
aroused its suspicion. (Heirs of Gregorio Lopez v.
Development Bank of the Philippines, G.R. 193551, When to file
November 19, 2014, as penned by Justice
Leonen) A landowner whose property was wrongfully or
erroneously registered under the Torrens
NOTE: The maxim prior est tempore, potior est system may bring an action, after one year from
jure (he who is first in time is preferred in right) the issuance of the decree, for the reconveyance
is followed in land registration. When a of the subject property. Such an action does not
mortgagee relies upon what appears on the face aim or purport to re-open the registration
of a Torrens title and lends money in all good proceeding and set aside the decree of
faith based on the title in the name of the registration, but only to show that the person
mortgagor, his or her right or lien upon the land who secured the registration of the questioned
mortgaged must be respected and protected. property is not the real owner thereof. (Agcaoili,
(Mahinay v. Hon. Gako, Jr., G.R. No. 165338, 2015)
November 28, 2011)
ACTION FOR ACTION FOR
REVERSION REVERSION RECONVEYANCE
The State files the It is granted to the
Subject of Reversion action through the rightful owner of land
Solicitor General. which has been
Reversion connotes restoration of public land wrongfully or
fraudulently awarded or disposed of to the mass erroneously registered
of the public domain and may again be the in the name of another.
subject of disposition in the manner prescribed Public domain Registered property
by law to qualified applicants. It is instituted by The State is not barred Persons qualified to
the government, through the Solicitor General. by res judicata nor file an action for
But an action for cancellation, not reversion, is estoppel in instituting reconveyance can be
proper where private land had been an action for reversion. barred by res judicata
subsequently titled, and the party plaintiff in this and estoppel.
case is the prior rightful owner of the property.
(Sec. 35, Chapter XII, Title III, The Administrative Q: Lot No. 2835 originally belonged to the
Code of 1987) late Mariano Seno. Mariano executed a Deed
of Absolute Sale in favor of his son, Ciriaco
Who institutes the action Seno, over a 1.0120-hectare land in
Cebu. This property included two lots: Lot
It is instituted by the government, through the No. 2807 and the land subject of this case, Lot
Solicitor General. No. 2835. Ciriaco then sold the two lots to
Victoria Po. The parties executed a Deed of

763
 Land Titles and Deeds
Absolute Sale. Subsequently, Mariano died
and was survived by his five children
(Mariano Heirs).
In 1990, Peter Po (Peter) discovered that
Ciriaco "had executed a [q]uitclaim
renouncing [his] interest over Lot [No.] 2807
in favor of [petitioner] Roberto." In the
quitclaim, Ciriaco stated that he was "the
declared owner of Lot [Nos.] 2835 and 2807."
By way of remedy, Ciriaco and the Spouses Po
executed a Memorandum of Agreement in
which Ciriaco agreed to pay Peter the
difference between the amount paid by the
Spouses Po as consideration for the entire
property and the value of the land the
Spouses Po were left with after the
quitclaim.
However, Lot No. 2835 was also sold to
Roberto. The Mariano Heirs, including
Ciriaco, executed separate deeds of absolute
sale in favor of Roberto.
Thereafter, Roberto immediately developed
the lot as part of a subdivision called North
Town Homes. Eventually, Roberto filed an
application for original registration of Lot No.
2835 which was granted. The Spouses Po
then filed a complaint to recover the land.
The trial court ruled in favor of the Spouses
Po.
On appeal, the Court of Appeals, partially
affirmed the trial court decision, declaring
the Spouses Po as the rightful owner of the
land. However, it ruled that the titles issued
to respondents Jose, Ernesto, and Isabel
should be respected. Has the action of
Spouses Po prescribed?
A: NO. An action for reconveyance based on
implied or constructive trust prescribes in ten
years from the alleged fraudulent registration or
date of issuance of the certificate of title over the
property.
It is now well-settled that the prescriptive
period to recover property obtained by fraud or
mistake, giving rise to an implied trust under
Art. 1456 of the Civil Code, is 10 years pursuant
to Art. 1144. This ten-year prescriptive period
begins to run from the date the adverse party
repudiates the implied trust, which repudiation
takes place when the adverse party registers the
land.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Considering that the Spouses Po's complaint was
filed on November 19, 1996, less than three (3)
years from the issuance of the Torrens title over
the property on April 6, 1994, it is well within
the 10-year prescriptive period imposed on an
action for reconveyance. (Sps. Aboitiz vs. Sps. Po,
G.R. No. 208450, June 5, 2017, as penned by J.
Leonen)
QUIETING OF TITLE
Whenever there is a cloud on title to real
property or any interest therein, by reason of
any instrument, record, claim, encumbrance or
proceedings which is apparently valid or
effective but is in truth and in fact invalid,
ineffective, voidable, or unenforceable, and may
be prejudicial to said title, an action may be
brought to remove such cloud or to quiet the
title. An action may also be brought to prevent a
cloud from being cast upon title to real property
or any interest therein. (Art. 476, Civil Code)
Cloud on the title
A cloud on title is an outstanding claim or
encumbrance which, if valid, would affect or
impair the title of the owner of a particular
estate, and on its face has that effect, but can be
shown by extrinsic proof to be invalid or
inapplicable to the estate in question. The
remedy for removing a cloud on title is usually
the means of an action to quiet title. (Black’s Law
Dictionary, 6th Ed., 255)
Requisites :
1. The plaintiff or complainant has a legal or an
equitable title to or interest in the real
property subject of the action; and
2. 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.
(Spouses Caldito v. Obado, G.R. No. 181596,
January 30, 2017)
Who may file ?
GR : The registered owner of a property is the
proper party to bring an action to quiet title.
XPN : It has been held that this remedy may also
be availed of by a person other than the
registered owner because, in [Article 476 of the
764
 Civil Law
Civil Code], ‘title’ does not necessarily refer to
the original or transfer certificate of title. Thus,
lack of an actual certificate of title to a property
does not necessarily bar an action to quiet title.”
(Spouses Portic v. Cristobal, G.R. No. 156171, April
22, 2005)
Action for Quieting of Title as Declaratory
Relief
An action for quieting of title is a special
proceeding, specifically governed by Rule 63 of
the Rules of Court on declaratory relief and
similar remedies. Actions for declaratory relief
and other similar remedies are distinguished
from ordinary civil actions because in
declaratory relief, the subject-matter is a deed,
will, contract or other written instrument,
statute, executive order or regulation, or
ordinance. The issue is the validity or
construction of these documents.
The relief sought is the declaration of the
petitioner’s rights and duties
thereunder. (Republic v. Mangotara, G.R. Nos.
170375, 170505, 173355-56, 173401, 17356-64,
178779 & 178894, July 7, 2010)
CADASTRAL LAND REGISTRATION
It is a proceeding in rem, initiated by the filing of
a petition for registration by the government,
not by the persons claiming ownership of the
land subject thereof, and the latter are, on the
pain of losing their claim thereto, in effect
compelled to go to court to make known their
claim or interest therein, and to substantiate
such claim or interest.
Purpose of cadastral registration
Here, the government does not seek the
registration of land in its name. The objective of
the proceeding is the adjudication of title to the
lands or lots involved in said proceeding.
Furthermore, it is to serve public interest by
requiring that the titles to the lands be settled
and adjudicated. (Act. No. 2259, Sec. 1)
Extent of authority of cadastral courts
The cadastral court is not limited to merely
adjudication of ownership in favor of one or
more claimants. If there are no successful
claimants, the property is declared public land.
765
Cadastral courts do not have the power to
determine and adjudicate title to a lot already
covered by homestead patent to a person other
than a patentee.
Cadastral courts possess no authority to award
damages.
NOTE: A parcel of forest land is within the
exclusive jurisdiction of the Bureau of Forestry
and beyond the power and jurisdiction of the
cadastral court to register under the Torrens
system. (See Republic v. De Guzman, G.R. No.
137887, February 28, 2000)
Under CA 141, the Director of Lands, primarily,
and the DENR Secretary, ultimately, have the
authority to dispose of and manage public lands.
While the DENR’s jurisdiction over public lands
does not negate the authority of the courts to
resolve questions of possession, the DENR’s
decision would prevail with regard to the rights
of public land claimants. Thus, regular courts
have no jurisdiction to inquire into the validity
of the award of the public land. (Spouses Tabino
v. Tabino, G.R. No. 196219, July 30, 2014)
CERTIFICATE OF TITLE
It is the transcript of the decree of registration
made by the Register of Deeds in the registry. It
accumulates in one document a precise and
correct statement of the exact status of the fee
simple title which an owner possesses.
Registration is the operative act which gives
validity to the transfer or creates a lien upon the
land. A certificate of title serves as an evidence of
an indefeasible and incontrovertible title to the
property in favor of the person whose name
appears therein. (Spouses Vilbar v. Opinion, G.R.
No. 176043, January 15, 2014)
NOTE: A certificate of title is different from a
title. Title constitutes a just cause of exclusive
possession or the foundation of ownership of
property. A certificate of title is merely an
evidence of ownership and not the title to the
land itself. (Castillo v. Escutin, G.R. No. 171056,
March 13, 2009)
Evidentiary value of certificate of title
 Land Titles and Deeds
A certificate of title is conclusive evidence with registry. It accumulates alienated, mortgaged
respect to the ownership of the land described in one document a or assigned, or by
therein, and other matters which can be litigated precise and correct which title to any real
and decided in land registration proceedings. statement of the exact estate may be affected
status of the fee simple in law or equity.
Types of certificates of title title which an owner
possesses.
1. Original Certificate of Title (OCT) – The first
title issued in the name of the registered
owner by the Register of Deeds covering a Ownership as distinguished from title
parcel of land which had been registered
under the Torrens system by virtue of a OWNERSHIP TITLE
judicial or administrative proceeding. It
consists of one original copy filed in the An independent right The cause for
Register of Deeds, and the owner’s duplicate of exclusive enjoyment acquisition of
certificate delivered to the owner; and and control of the thing ownership
for the purpose of
2. Transfer Certificate of Title (TCT) – The title deriving therefrom all e.g. sale = title;
issued by the Register of Deeds in favor of a advantages required delivery = mode of
transferee to whom the ownership of a by the reasonable acquisition of
registered land has been transferred by any needs of the owner and ownership.
legal mode of conveyance. the promotion of the
general welfare but
Who has right to possess owner’s duplicate subject to the
certificate. restrictions imposed
by law and the rights of
The owner’s duplicate certificate shall be issued others. (NCC, Art. 427)
by the Register of Deeds in the name of the
person in whose favor the land was decreed, and NOTE: Registration under the Torrens system,
further disposes that said duplicate shall be not being a mode of acquiring ownership, does
delivered to the registered owner. (Sec. 41 of Act not create or vest title. The Torrens certificate of
No. 496, as amended by P.D. No. 1529) title is merely an evidence of ownership or title
in the particular property described therein. In
Difference between title over land, land title, that sense, the issuance of the certificate of title
certificate of title and deed to a particular person does not preclude the
possibility that persons not named in the
TITLE LAND TITLE certificate may be co-owners of the real property
therein described with the person named
A juridical act or deed The evidence of the therein, or that the registered owner may be
which is not sufficient owner’s right or extent holding the property in trust for another person.
by itself to transfer of interest, by which (Casimiro Development Corporation v. Renato
ownership but he can maintain Mateo, G.R. No. 175485, July 27, 2011)
provides only for a control, and as a rule,
juridical justification to assert right to Q: St. Jude’s Enterprise, Inc. is the registered
effect the acquisition exclusive possession owner of a parcel of land. It subdivided the
or transfer ownership. and enjoyment of said land which was later on found to have
property. expanded with an increase of 1,421 sqm. St.
Jude sold the lots to several individuals.
Thus, the Solicitor General filed an action
CERTIFICATE OF DEED seeking the annulment and cancellation of
TITLE the TCT issued in the name of St. Jude. Is the
The transcript of the The instrument in government estopped from questioning the
decree of registration writing, by which any approved subdivision plan which expanded
made by the Register real estate or interest the areas covered by the TCTs in question?
of Deeds in the therein is created,

UNIVERSITY OF SANTO TOMAS 766

2021 GOLDEN NOTES
 Civil Law
A: YES, estoppel against the public are less
favored. They should not be invoked except in
rare and unusual circumstances, nor if it would
operate to defeat the effective operation of a
policy adopted to protect the public. They must
be applied with circumspection and only in
those special cases where the interests of justice
clearly require it. In the case at bar, St. Jude
failed to correct and recover the alleged increase
in the land area for nearly 20 years. Its
prolonged inaction strongly militates against its
cause, as it is tantamount to laches.
Verily, all persons dealing with registered land
may safely rely on the correctness of the
certificate of title issued therefor, and the law or
the courts do not oblige them to go behind the
certificate in order to investigate again the true
condition of the property. (Republic of the
Philippines v. Court of Appeals and Spouses
Catalino Santos, et al., G.R. No. 116111, January
21, 1999)
6. Prescription; and
7. Succession.
NOTE: Registration of a piece of land under the
Torrens System does not create or vest title,
because it is not a mode of acquiring ownership.
Thus, notwithstanding the indefeasibility of the
Torrens title, the registered owner may still be
compelled to reconvey the registered property
to its true owners. (Heirs of Tanyag v. Gabriel, et.
al., G.R. No. 175763, April 11, 2012)
Possession v. Occupation
POSSESSION OCCUPATION
Applies to a property Applies only to a
with or without an property without an
owner. owner.
By itself does not confer Confers ownership by
ownership. itself.

Modes of acquiring title over land There can be possession There can be no
without ownership. occupation without
ownership.
1. By possession of land since time
immemorial;
Acquisition of land titles
2. By possession of alienable and disposable
public land; and 1. Public grant;
2. Emancipation patent or grant;
NOTE: Under the Public Land Act (C.A. No. 3. Reclamation;
141), citizens of the Philippines, who by 5. Adverse possession / acquisitive
themselves or through their predecessors- prescription;
in-interest have been in open, continuous, 6. Private grant or voluntary transfer;
exclusive and notorious possession and 7. Accretion;
occupation of alienable and disposable 8. Involuntary alienation; and
agricultural land of the public domain 9. Descent or devise.
under a bona fide claim of ownership
since June 12, 1945, or earlier, (except Torrens Title
when prevented by war or force majeure),
shall be conclusively presumed to have A certificate of ownership issued under the
performed all the conditions essential to a Torrens system of registration by the
government grant and shall be entitled to government, through the Register of Deeds (RD)
a certificate of title. naming and declaring the owner in fee simple of
the real property described therein, free from all
3. By sale, donation, and other modes of liens & encumbrances, except as may be
acquiring ownership. expressly noted there or otherwise reserved by
law.
Modes of acquiring ownership over land
Q: Filomena allegedly bought a parcel of
1. Occupation; unregistered land from Hipolito. When she
2. Law; had the property titled and declared for tax
3. Donation; purposes, she sold it. The Mapili’s question
4. Tradition; the transfer, saying that Filomena falsely
5. Intellectual creation; stated in her Affidavit that Hipolito sold it to

767
 Land Titles and Deeds
her in 1949, since by that time, he is already
dead. Filomena maintains that she is the
lawful owner of the land by virtue of the
issuance of the Torrens certificate and tax
declarations in her name. Is Filomena the
lawful owner of such property?
A: NO. A Torrens certificate does not create or
vest title, but is merely an evidence of an
indefeasible and incontrovertible title to the
property in favor of the person whose name
appears therein. Land registration under the
Torrens system was never intended to be a
means of acquiring ownership.
Neither does the existence of tax declarations
create or vest title. It is not a conclusive evidence
of ownership, but a proof that the holder has a
claim of title over the property. (Larena v. Mapili,
et. al., G.R. No. 146341, August 7, 2003)
NOTE: A Torrens title is not a conclusive
evidence of ownership when the land or a
portion covered thereof was illegally or
erroneously included thereto. The certificate of
title cannot be used to protect a usurper from
the true owner. (Spouses Valenzuela v. Spouses
Mano, G.R. No. 172611, July 9, 2010)
Torrens title not subject to prescription.
No title to registered land in derogation to that
of the registered owner shall be acquired by
prescription or adverse possession.
Torrens title not subject to collateral attack.
Torrens title can be attacked only for fraud,
within one year after the date of the issuance of
the decree of registration. Such attack must be
direct, and not by a collateral proceeding The
title represented by the certificate cannot be
changed, altered, modified, enlarged, or
diminished in a collateral proceeding.
Q: In 1929, an OCT covering the lot in
controversy was issued in the name of Maria
Ramos, Heirs of Maligaso’s aunt. In 1965,
Maria sold it to the Spouses Encinas which
led to the issuance of a TCT in favor of the
latter.
30 years from the time they purchased the
lot, Spouses Encinas issued two demand
letters to the Heirs of Maligaso asking them
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
to vacate the contested area but they refused
to leave. Hence, the Spouses Encinas filed a
complaint for unlawful detainer against
them. According to the Heirs, however, their
occupation remained undisturbed for more
than 30 years and the Spouses’ failure to
detail and specify the Heirs’ supposedly
tolerated possession suggest that they are
aware of their claim over the subject area.
Decide with reason.
A: The validity of Spouses’ certificate of title
cannot be attacked by the Heirs in this case for
ejectment. Under Sec. 48 of P.D. No. 1529, a
certificate of title shall not be subject to
collateral attack. It cannot be altered, modified
or cancelled, except in a direct proceeding for
that purpose in accordance with law. Whether or
not petitioner has the right to claim ownership
over the property is beyond the power of the
trial court to determine in an action for unlawful
detainer.
As ruled in Spouses Ragudo v. Fabella Estate
Tenants Association, Inc., laches does not operate
to deprive the registered owner of a parcel of
land of his right to recover possession thereof.
(Heirs of Jose Maligaso, Sr., etc. v. Sps. Simon D.
Encinas and Esperanza E. Encinas, G.R. No.
182716, June 20, 2012)
Probative value of a Torrens title
A Torrens title may be received as evidence in all
courts of the Philippines and shall be conclusive
as to all matters contained therein, principally as
to the identity of the land owner, except so far as
provided in the Land Registration Act (LRA).
A Torrens certificate is an evidence of
indefeasible title of property in favor of the
person whose name appears therein–such
holder is entitled to the possession of the
property until his title is nullified. (Heirs of
Mariano v. City of Naga, G.R. No. 197743, March
12, 2018)
Q: Hadji Serad filed an action to quiet title
with damages with the RTC. Accordingly,
Datu Kiram with several armed men, forcibly
and unlawfully entered his property and
destroyed the nursery buildings, cabbage
seedlings and other improvements. Datu
Kiram however denied the material
allegations of Hadji Serad, asserting that he
and his predecessors-in-interest are the ones
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 Civil Law
who had been in open, public, continuous,
and exclusive possession of the property in
dispute. He also alleged that he inherited the
land in 1952 from his father and had been in
adverse possession and ownership of the
subject lot, cultivating and planting trees and
plants. He also declared the land for taxation
purposes and paid real estate taxes. Who is
the rightful owner of the subject property?
A: Hadji Serad is the rightful owner.
The Torrens title is conclusive evidence with
respect to the ownership of the land described
therein, and other matters which can be litigated
and decided in land registration
proceedings. Tax declarations and tax receipts
cannot prevail over a certificate of title which is
an incontrovertible proof of ownership. An
original certificate of title issued by the Register
of Deeds under an administrative proceeding is
as indefeasible as a certificate of title issued
under judicial proceedings. Thus, Hadji Serad’s
Torrens title is a valid evidence of his ownership
of the land in dispute. (Datu Kiram Sampaco v.
Hadji Serad Mingca Lantud, G.R. No. 163551, July
18, 2011)
Q: Ruben filed a complaint against Spouses
Agustin alleging that he is the registered
owner of two parcels of land. Accordingly, his
father bought it from Elias and then allowed
spouses Agustin to occupy the subject
properties. Despite demand to vacate, the
Agustins refused to leave the premises.
Ruben alleged that he has better right to
possess the property having acquired the
same from his father through a Deed of
Quitclaim in 1971. Spouses Agustin however
contends that they are the rightful owners as
evidenced by a Deed of Absolute Sale in their
favor. Decide who between the parties has
the right to possession of the disputed
properties.
A: Ruben has the right to possession. A title
issued under the Torrens system is entitled to all
the attributes of property ownership, which
necessarily includes possession. Ruben is correct
that as a Torrens title holder over the subject
properties, he is the rightful owner and is
entitled to possession thereof. In this case, the
Quitclaim executed by the elder Corpuz in favor
of Ruben was executed made ahead of the Deed
of Sale of Spouses Agustin. Thus, the sale of the
subject properties by Ruben’s father to Spouses
769
cannot be considered as a prior interest at the
time Ruben came to know of the transaction.
(Ruben C. Corpuz v. Spouses Hilarion Agustin and
Justa Agustin, G.R. No. 183822, January 18, 2012)
Rules regarding the indefeasibility and
incontrovertibility of Torrens Title
1. The certificate of title serves as evidence of
an indefeasible title to the property in favor
of the person whose name appears therein;
2. After the expiration of the one year period
from the issuance of the decree of
registration upon which it is based, it
becomes incontrovertible; and
3. Decree of registration and the certificate of
title issued pursuant thereto may be
attacked on the ground of actual fraud
within one year from the date of its entry
and such an attack must be direct and not by
a collateral proceeding. The validity of the
certificate of title in this regard can be
threshed out only in an action expressly
filed for the purpose.
NOTE: The defense of indefeasibility of a
Torrens title does not extend to a transferee who
takes it with notice of a flaw in the title of his
transferor. To be effective, the inscription in the
registry must have been made in good faith. A
holder in bad faith of a certificate of title is not
entitled to the protection of the law, for the law
cannot be used as a shield for fraud. (Adoracion
Rosales Rufloe, et al., v. Leonarda Burgos et al.,
G.R. No. 143573, January 30, 2009; Mahilum v.
Ilano, G.R. No. 197923, June 22, 2015)
The principle that the earlier title prevails over a
subsequent one applies only when there are two
apparently valid titles over a single property.
Without a title, one cannot invoke the principle
of indefeasibility of Torrens titles nor can he
assert priority or presumptive conclusiveness.
(Oliveros v. San Miguel Corporation, G.R. No.
173531, February 1, 2012)
Q: There is no specific provision in the Public
Land Law (C.A. No. 141, as amended) or the
Land Registration Act (Act 496), now P.D.
1529, fixing the one year period within which
the public land patent is open to review on
the ground of actual fraud as in Sec. 38 of the
Land Registration Act, now Sec. 32 of P.D.
1529, and clothing a public land patent
certificate of title with indefeasibility. What
is the effect of such absence?
 Land Titles and Deeds
A: NONE. The rule on indefeasibility of
certificates of title was applied by the Court in
Public Land Patents because such application is
in consonance with the spirit and intent of
homestead laws.
The pertinent pronouncements in cases clearly
reveal that Sec. 38 of the Land Registration Act,
now Sec. 32 of P.D. 1529 was applied by
implication to the patent issued by the Director
of Lands duly approved by the Secretary of
Natural Resources, under the signature of the
President of the Philippines in accordance with
law.
The date of issuance of the patent, therefore,
corresponds to the date of the issuance of the
decree in ordinary registration cases because
the decree finally awards the land applied for
registration to the party entitled to it, and the
patent issued by the Director of Lands equally
and finally grants, awards, and conveys the land
applied for to the applicant.
NOTE: A certificate of title issued under an
administrative proceeding pursuant to a
homestead patent is as indefeasible as a
certificate of title issued under a judicial
registration proceeding, provided the land
covered by said certificate is a disposable public
land within the contemplation of the Public Land
Law.
Mirror doctrine
All persons dealing with a property covered by
Torrens certificate of title are not required to go
beyond what appears on the face of the title.
Where there is nothing on the certificate of title
to indicate any cloud or vice in the ownership of
the property, or any encumbrance thereon, the
purchaser is not required to explore further than
what the Torrens title upon its face indicates in
quest for any hidden defect or inchoate right
that may defeat his right thereto. (Chua v.
Soriano, GR.No. 150066, April 13, 2007; BPI v.
Sanchez, G.R. No. 179518, November 19, 2014)
Application of mirror doctrine
GR: Mirror Doctrine applies when title over a
land is registered under the Torrens system.
XPN: Mirror Doctrine cannot be invoked where:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. The purchaser or mortgagee is a
bank/financing institution;
2. The owner still holds a valid and existing
certificate of title covering the same
property, because the law protects the
lawful holder of a registered title over the
transfer of a vendor bereft of any
transmissible right;
3. The purchaser is in bad faith;
4. The purchaser purchases land with a
certificate of title containing a notice of lis
pendens;
5. There are sufficiently strong indications to
impel closer inquiry into the location,
boundaries and condition of the lot;
6. The purchaser had full knowledge of flaws
and defects in the title; or
7. A person buys land not from the registered
owner but from whose rights to the land has
been merely annotated on the certificate of
title.
Q: Cipriana Delgado was the registered
owner of the lot in controversy. She and her
husband sold the property to Cecilia where it
was agreed that the latter shall make partial
payments from time to time and pay the
balance when the Spouses are ready to
execute the deed of sale and transfer title to
her. After paying the total amount and being
ready to pay the balance, Cecilia demanded
the execution of the deed which was refused.
Cecilia learned of the sale of the property to
the Dys and its subsequent mortgage to
petitioner Philippine Banking Corporation
(Philbank). Thus, a complaint for annulment
of the Certificate of title and for specific
performance and/or reconveyance with
damages was filed against Spouses Delgado,
the Dys and Philbank. However, Philbank
contends that it is a mortgagee in good faith.
Is the bank’s contention correct?
A: NO. Primarily, it bears noting that the
doctrine of “mortgagee in good faith” is based on
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. In the case of banks and other
financial institutions, however, greater care and
due diligence are required since they are imbued
with public interest, failing which renders the
mortgagee in bad faith. Thus, before approving a
loan application, it is a standard operating
practice for these institutions to conduct an
ocular inspection of the property offered for
770
 Civil Law
mortgage and to verify the genuineness of the
title to determine the real owner(s) thereof. The
apparent purpose of an ocular inspection is to
protect the “true owner” of the property as well
as innocent third parties with a right, interest or
claim thereon from a usurper who may have
acquired a fraudulent certificate of title thereto.
(Philippine Banking Corporation v. Arturo Dy, et
al., G.R. No. 183774, November 14, 2012)
CLASSIFICATION OF LANDS
Primary classification
1. Agricultural;
2. Forest or timber;
3. Mineral lands; and
4. National parks. (Sec. 3, Art. XII, 1987
Constitution)
The classification of lands of the publc domain is
an exclusive prerogative of the executive
department and not of the courts. In the absence
of such classification, the lands remain as
unclassified until it is released therefrom and
rendered open to disposition. (Valiao v. Republic,
G.R. No. 170757, November 28, 2011)
NOTE: Pursuant to the Regalian Doctrine, all
lands of the public domain belong to the State.
Hence, "all lands not appearing to be clearly
under private ownership are presumed to
belong to the State. Also, public lands remain
part of the inalienable land of the public domain
unless the State is shown to have reclassified or
alienated them to private persons." To prove
that a land is alienable, the existence of a
positive act of the government, such as
presidential proclamation or an executive order;
an administrative action; investigation reports of
Bureau of Lands investigators; and a legislative
act or a statute declaring the land as alienable
and disposable must be established. (Republic v.
Cortez, G.R. No. 197472, September 7, 2015)
Alienable and disposable lands of the State fall
into two categories:
(a) Patrimonial lands of the State, or those
classified as lands of private ownership under
Art. 425 of the Civil Code, without limitation; and
(b) Lands of the public domain, or the public
lands as provided by the Constitution, but with
the limitation that the lands must only be
agricultural.
771
Consequently, lands classified as forest or
timber, mineral, or national parks are not
susceptible of alienation or disposition unless
they are reclassified as agricultural. (Malabanan
v. Republic, G.R. No. 179987, September 3, 2013).
Secondary classification
Agricultural lands of the public domain may be
further classified by law according to the uses
which they may be devoted. (Sec. 3, Art. XII, 1987
Constitution)
1. Agricultural;
2. Residential commercial industrial or for
similar productive purposes;
3. Educational, charitable, or other similar
purposes; and
4. Reservations for town sites and for public
and quasi-public uses. (C.A. 141, Sec. 9)
NOTE: “Public lands” is equivalent to “public
domain,” and does not by any means include all
lands of government ownership, but only so
much of said lands as are thrown open to private
appropriation and settlement by homestead and
other like general laws. Accordingly,
“government land” and “public land” are not
synonymous terms; the first includes not only
the second, but also other lands of the
government already reserved or devoted to
public use or subject to private right. (Montano v.
Insular Government, GR No. 3714, Jan. 26, 1909)
A private person has no personality to sue with
regard to a public land. (Meyr Enterprises
Corporation v. Cordero, G.R. No. 197336,
September 3, 2014)
CITIZENSHIP REQUIREMENT
Persons qualified to acquire private lands:
1. Filipino citizens;
NOTE: Naturalized Filipino citizens can
acquire private lands. They are considered
Filipino citizens under Art. IV of the 1987
Constitution.
2. Filipino corporations and associations as
defined in Sec. 2, Art. XII of the Constitution;
and by exception;
NOTE : Only Filipino citizens or
corporations at least 60% of its capital is
 Land Titles and Deeds
owned by Filipinos are qualified to acquire
or hold lands of the public domain.
3. Aliens but only by hereditary succession;
and
4. A natural-born citizen of the Philippines
who has lost citizenship may be a transferee
of private lands subject to the limitations
provided by law. (Sec. 8, Art. XII, 1987
Constitution)
Former Filipinos who became aliens may also
acquire private lands. It is provided under R.A.
no 9225 (Citizenship Retention and Re-
acquisition Act of 2003), which declares that
natural-born citizens of the Philippines who
have lost their Philippine citizenship by reason
of their naturalization as citizens of foreign
country are hereby deemed to have re-acquired
Philippine citizenship upon taking their oath of
allegiance to the Republic of the Philippines and
shall enjoy full civil and political rights and be
subject to all attendant liabilities and
responsibilities under existing laws of the
Philippines.
NOTE: Filipino citizens can both acquire or hold
lands of public domain.
The time to determine whether a person
acquiring land is qualified is at the time the right
to own is acquired and not the time to register
ownership. (Director of Lands v. IAC and Acme,
G.R. No. 73002, December 29, 1986)
Acquisition of private land by an alien
GR: An alien cannot acquire private lands.
XPN: By way of hereditary succession.
The Krivenko Doctrine
“Under section 1 of Article XIII [now Sec. 2, Art.
XII] of the Constitution, ‘natural resources, with
the exception of public agricultural land, shall
not be alienated,’ and with respect to public
agricultural lands, their alienation is limited to
Filipino citizens. But this constitutional purpose
conserving agricultural resources in the hands of
Filipino citizens may easily be defeated by the
Filipino citizens themselves who may alienate
their agricultural lands in favor of aliens. It is
partly to prevent this result that section 5 is
included in Article XIII, and it reads as follows:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
‘Sec. 5. Save in cases of hereditary succession, no
private agricultural land will be transferred or
assigned except to individuals, corporations or
associations qualified to acquire or hold lands of
the public domain in the Philippines.’
Aliens may not acquire private or public
agricultural lands and all acquisitions made in
contravention of the prohibitions since the
fundamental law became effective are null and
void per se and ab initio. The prohibition is a
declaration of imperative national policy.
(Krivenko v. Register of Deeds, G.R. No. L-630,
November 15, 1957)
The constitutional ban against foreigners apply
only to ownership of Philippine land and not to
the improvements built thereon. (Beumer v.
Amores, G.R. No. 195670, December 3, 2012)
NOTE: Under R.A. No. 4726, foreign nationals
can own Philippine real estate through the
purchase of condominium units or townhouses.
It expressly allows foreigners to acquire
condominium units and shares in condominium
corporations up to not more than 40% of the
total and outstanding capital stock of a Filipino
owned or controlled corporation. The land is
owned by the condominium corporation and the
unit owner is simply a member in this
condominium corporation.
NOTE : While aliens are disqualified from
acquiring lands of the public domain, they may
however lease private land. A lease to an alien
for a reasonable period is valid. So is an option
giving an alien the right to buy real property on
condition that he is granted Philippine
citizenship. Aliens are not completely excluded
by the Constitution from the use of lands for
residential purposes. (Llantino v. Co Liong Chong,
GR No. 29663, Aug. 20, 1990; Philippine Banking
Corp v. Lui She, GR No. L-17587, as cited by
Agcaoili, 2018)
Q: Spouses Pinoy and Pinay, both natural-
born Filipino citizens, purchased property in
the Philippines. However, they sought its
registration when they were already
naturalized as Canadian citizens. Should the
registration be denied on the ground that
they cannot do so being foreign nationals?
A: NO. For the purpose of transfer and/or
acquisition of a parcel of residential land, it is
not significant whether they are no longer
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 Civil Law
Filipino citizens at the time they purchased or
registered the parcels of land in question. What
is important is that they were formerly natural-
born citizens of the Philippines, and as
transferees of a private land, they could apply
for registration in accordance with the mandate
of Sec. 8, Art. XII of the Constitution which states
that notwithstanding the provisions of Sec. 7 of
this Article, a natural-born citizen of the
Philippines who has lost his Philippine
citizenship may be a transferee of private lands,
subject to limitations provided by law. (Republic
v. CA and Lapina, G.R. No. 108998, August 24,
1994)
Q: Joe, an alien, invalidly acquired a parcel of
land in the Philippines. He subsequently
transferred it to Jose, a Filipino citizen.
a. What is the status of the transfer?
b. If Joe had not transferred it to Jose but
he, himself, was later naturalized as a
Filipino citizen, will his acquisition
thereof remain invalid?
A:
a. If a land is invalidly transferred to an alien
who subsequently becomes a Filipino citizen
or transfers it to a Filipino, the flaw in the
original transaction is considered cured and
the title of the transferee is rendered valid.
(Barsobia v. Cuenco, 199 Phil. 26; Hererra v.
Guan, 1 SCRA 406) Since the ban on aliens is
intended to preserve the nation’s land for
future generations of Filipinos, that aim is
achieved by making lawful the acquisition of
real estate by aliens who became Filipino
citizens by naturalization, or those transfers
made by aliens to Filipino citizens. As the
property in dispute is already in the hands
of a qualified person, a Filipino citizen, there
would be no more public policy to be
protected. The objective of the
constitutional provision to keep our lands in
Filipino hands has been achieved.
b. NO. If a land is invalidly transferred to an
alien who subsequently becomes a Filipino
citizen, the flaw in the original transaction is
also considered cured and the title of the
transferee is rendered valid. (Borromeo v.
Descallar, G.R. No. 159310, February 24,
2009)
773
Maximum area that may be acquired by a
natural born citizen who has lost his
Philippine citizenship
A natural born citizen who has legal capacity to
enter into a contract under Philippine laws may
be a transferee of a private land up to the
following maximum areas:
1. For residence purposes: 1,000 sq. m. in the
case of urban lands or one hectare in the
case of rural lands. In the case of married
couples, one of them may avail of the
privilege herein granted, but if both shall
avail of the same, the total area acquired
shall not exceed the maximum area fixed.
(B.P. Blg. 185, Sec 2)
2. For business (investment) or other
purposes: 5,000 sq. m. if urban land, or three
hectares if rural land. (Sec. 10, R.A. No. 7042,
as amended by R.A. 8179)
Q: Does the area limitation under R.A. 9225,
as amended, apply to a natural-born Filipino
who has lost his citizenship but who re-
acquired the same under the terms of R.A.
9225?
A: The area limitation no longer applies since it
is the policy of the law “that all Philippine
citizens who become citizens of another country
shall be deemed not to have lost their Philippine
citizenship under this Act.“
R.A. 9225 expressly grants him the same right,
as any Filipino citizen to enjoy full civil and
political rights upon the re-acquisition of his
Filipino citizenship.
Acquisition of Lands by a Corporation Sole
A corporation sole consists of only one person. It
is vested with the right to purchase and hold real
estate and to register the same in trust for the
faithful or members of the religious society or
church for which the corporation was organized.
(Roman Catholic Apostolic Administrator of
Davao, Inc. v. Land Registration Commission, G.R.
No. L-8451, December 20, 1957)
It can acquire by purchase a parcel of private
agricultural land without violating the
constitutional prohibition since it has no
nationality.
 Land Titles and Deeds
Q: Why is citizenship not in question for a
corporation sole?
A: The framers of the constitution did not have
in mind the religious corporation sole when they
provided that 60 percentum of the capital
thereof be owned by Filipino citizens. A
corporation sole is not the owner of the
properties that he may acquire but merely the
administrator thereof. The properties pass, upon
his death, not to his personal heirs but to his
successor in office.
Acquisition of Private Lands by a Corporation
1. At least 60% of the capital is owned by
Filipino citizens (Sec. 2, Art. XII, 1987
Constitution) ;
2. Restricted as to extent reasonably necessary
to enable it to carry out purpose for which it
was created; and
3. If engaged in agriculture, it is restricted to
1,024 hectares.
Patrimonial property of the State (Sec. 3, Art.
XII, 1987 Constitution).
1. Lease (cannot own land of the public
domain) for 25 years renewable for another
25 years;
2. Limited to 1,000 hectares; and
3. .Applies to both Filipinos and foreign
corporations. Citizens of the Philippines may
lease not more than 500 hectares, or acquire
not more than 12 hecares thereof by
purchase, homstead, or grant.
NOTE : The 12-hectare limitation on the
acquisition of lands under Sec. 3, Art. XII of
the 1987 Constitution only applies to lands
of public domain. Thus the 12-hectare
limitation on the acquisition of lands has no
application to private lands. (Republic v.
Rovency Realty and Development Corp., G.R.
No. 190817, January 10, 2018)
Q: May a corporation apply for registration of
a parcel of land?
A: YES, through lease not exceeding 1,000
hectares. The lease shall not exceed 25 years and
is renewable for not more than 25 years. (Sec. 3,
Art. XII, 1987 Constitution)
NOTE : Determinative of this issue is the
character of the parcels of land–whether they
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
were still public or already private–when the
registration proceedings were commenced. If
they are already private lands, the constitutional
prohibition against acquisitions by a private
corporation would not apply.
SUBSEQUENT REGISTRATION
It is where incidental matters after original
registration may be brought before the land
registration court by way of motion or petition
filed by the registered owner or a party in
interest.
Q: After registering his land, what
conveyances may the registered owner do ?
A: An owner of registered land may convey,
mortgage, lease, charge or otherwise deal with
the same in accordance with existing laws. He
may use such forms of deeds, mortgages, leases
or other voluntary instruments as are sufficient
in law. (Section 51, P.D. 1529)
GR: Such deed, mortgage, lease, or other
voluntary instrument shall operate only as a
contract between the parties and as evidence of
authority to the Register of Deeds to make
registration. It is the act of registration which
shall operate to convey or affect the land insofar
as third persons are concerned, and in all cases,
the registration shall be made in the office of the
Register of Deeds for the province or city where
the land lies. The act of registration creates a
constructive notice to the whole world of such
voluntary or involuntary instrument or court
writ or process. (P.D. 1529, Sec. 52)
XPN: A will purporting to convey or affect
registered land shall take effect as a conveyance
or bind the land, not merely as a contract or
evidence of authority of the RD to make
registration. (P.D. 1529, Sec. 51)
VOLUNTARY DEALINGS
Mortgages and leases
GR: The mortgagor should be the absolute
owner of the property to be mortgaged;
otherwise, the mortgage is considered null and
void.
XPN: Doctrine of mortgagee in good faith. All
persons dealing with property covered by a
774
 Civil Law
Torrens Certificate of Title, as buyers or
mortgagees, are not required to go beyond what
appears on the face of the title. This is the same
rule that underlies the principle of innocent
purchasers for value. The prevailing
jurisprudence is that a mortgagee has a right to
rely in good faith on the certificate of title of the
mortgagor to the property given as security and
in the absence of any sign that might arouse
suspicion, has no obligation to undertake further
investigation. Hence, even if the mortgagor is not
the rightful owner of, or does not have a valid
title to, the mortgaged property, the mortgagee
in good faith is, nonetheless, entitled to
protection. (Duque-Rosario v. Banco Filipino
Savings and Mortgage Bank, G.R. No. 140528,
December 7, 2011)
NOTE : The subsequent nullification of the
mortgagor’s title will not nullify the mortgage.
(Gonzales v. IAC, G.R. No. L-69622, January 29,
1988)
Effect of registration of such voluntary
dealings
1. Creates a lien that attaches to the property
in favor of the mortgagee; and
2. Constitutes constructive notice of his
interest in the property to the whole world.
Rule on carry-over of encumbrances
Mortgage lien is a right in rem which follows the
property. If, at the time of any transfer,
subsisting encumbrances or annotations appear
in the registration book, they shall be carried
over and stated in the new certificate or
certificates; except so far as they may be
simultaneously released or discharged. (P.D.
1529, Sec. 59)
It is inseparable from the property mortgaged as
it is a right in rem — a lien on the property
whoever its owner may be. It subsists
notwithstanding a change in ownership; in
short, the personality of the owner is
disregarded. (Ligon v. Court of Appeals, GR No.
107751, June 1, 1995)
Q: If the property that was the subject of
mortgage was subsequently foreclosed, must
a new certificate of title be automatically
issued in favor of the purchaser?
A: The answer must be qualified.
775
1. No right of redemption – The certificate of
title of the mortgagor shall be canceled, and
a new certificate issued in the name of the
purchaser; and
2. There is right of redemption – The
certificate of title of the mortgagor shall
not be cancelled, but the certificate of sale
and the order confirming the sale shall be
registered by a brief memorandum
thereof made by the Register of Deeds upon
the certificate of title.
In the event the property is redeemed, the
certificate or deed of redemption shall be filed
with the Register of Deeds, and a brief
memorandum thereof shall be made by the
Register of Deeds on the certificate of title of the
mortgagor.
If the property is not redeemed, the final deed of
sale executed by the sheriff in favor of the
purchaser at a foreclosure sale shall be
registered with the Register of Deeds;
whereupon the title of the mortgagor shall be
canceled, and a new certificate issued in the
name of the purchaser. (P.D. 1529, Sec. 63)
Q: Does non-registration of property after
judicial foreclosure and sale have the effect
of invalidating the foreclosure proceedings,
such that ownership reverts to the original
owner?
A: NO. The effect of the failure to obtain the
judicial confirmation was only to prevent the
title to the property from being transferred. For
sure, such failure did not give rise to any right in
favor of the mortgagor or the respondents as his
successors-in-interest to take back the property
already validly sold through public auction. Nor
did such failure invalidate the foreclosure
proceedings. To maintain otherwise would
render nugatory the judicial foreclosure and
foreclosure sale, thus unduly disturbing judicial
stability. After all, under the applicable rule
earlier cited, the judicial confirmation operated
only “to divest the rights of all the parties to the
action and to vest their rights in the purchaser,
subject to such rights of redemption as may be
allowed by law.” (Robles vs. Yapcinco et. al., G.R.
No. 169569, October 22, 2014)
REMEDY IN CASE OF LOSS OR DESTRUCTION
OF CERTIFICATE OF TITLE
 Land Titles and Deeds
Remedy in case a person lost his certificate of
title
1. If what is lost is the OCT or TCT –
Reconstitution of certificate of title;
2. If, however, it is the duplicate of the OCT or
TCT – Replacement of lost duplicate
certificate of title.
Reconstitution of certificate of title
The restoration of the instrument which is
supposed to have been lost or destroyed in its
original form and condition, under the custody
of Register of Deeds.
Purpose of reconstitution of title
To have the same reproduced, after proper
proceedings, in the same form they were when
the loss or destruction occurred.
The reconstitution or reconstruction of a
certificate of title literally denoted restoration of
the instrument which is supposed to have been
lost or destroyed in its original form and
condition. It does not resolve or determine the
ownership of the land covered by the lost or
destroyed title. Restitution is proper only when
it is satisfactorily shown that the title sought to
be reconstituted is lost or no longer available.
Q: May a writ of possession be issued in a
petition for reconstitution?
A: NO. Reconstitution does not adjudicate
ownership over the property. A writ of
possession is issued to place the applicant-
owner in possession.
Requisites for the issuance of an order for
reconstitution
1. That the certificate of title had been lost or
destroyed;
2. That the documents presented by petitioner
are sufficient and proper to warrant
reconstitution of the lost or destroyed
certificate of title;
3. That the petitioner is the registered owner of
the property or had an interest therein;
4. That the certificate of title was in force at the
time it was lost or destroyed; and
5. That the description, area and boundaries of
the property are substantially the same as
those contained in the lost or destroyed
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
certificate of title. (Republic of the Philippines
v. Apolinaria Catarroja, et al., G.R. No. 171774,
February 12, 2010)
Jurisdictional requirements in petitions for
reconstitution of title
Notice thereof shall be:
1. Published twice in successive issues of the
Official Gazette;
2. Posted on the main entrance of the provincial
building and of the municipal building of the
municipality or city, where the land is
situated; and
3. Sent by registered mail to every person
named in said notice.
NOTE: The above requirements are mandatory
and jurisdictional.
NOTE : Where the owner’s duplicate certificate
of title is not in fact lost or destroyed, a petition
for the issuance of a new owner’s duplicate
certificate is unwarranted, as in fact the court
has no jurisdiction over the petition, and any
owner’s duplicate issued pursuant to said
petition is null and void. (New Durawood Co. v.
Court of Appeals, GR No. 111732, Feb. 20, 1996)
Kinds of reconstitution of title
1. Judicial – Partakes the nature of a land
registration proceeding in rem. The
registered owners, assigns, or any person
having an interest in the property may file a
petition for that purpose with RTC where
property is located. RD is not the proper
party to file the petition.
2. Administrative – May be availed of only in
case of:
a. Substantial loss or destruction of the
original land titles due to fire, flood, or
other force majeure as determined by the
Administrator of the Land Registration
Authority.
b. The number of certificates of title lost or
damaged should be at least 10% of the
total number in the possession of the
Office of the Register of Deeds
In no case shall the number of certificates
of title lost or damaged be less than 500.
c. Petitioner must have the duplicate copy of
the certificate of title.
776
 Civil Law
NOTE: The law provides for retroactive
application thereof to cases 15 years
immediately preceding 1989.
SOURCES WHERE A CERTIFICATE OF TITLE
MAY BE RECONSTITUTED
JUDICIAL RECONSTITUTION
Section 2 of RA No. 26 governs reconstitution of
original certificates of title while Section 3
governs petitions for reconstitution of transfer
certificates of title.
For OCT (in the following order):
1. Owner’s duplicate of the certificate of title;
2. Co-owner’s, mortgagee’s or lessee’s
duplicate of said certificate;
3. Certified copy of such certificate, previously
issued by the Register of Deeds;
4. Authenticated copy of the decree of
registration or patent, as the case may be,
which was the basis of the certificate of title;
5. Deed or mortgage, lease or encumbrance
containing description of property covered
by the certificate of title and on file with the
Registry of Deeds, or an authenticated copy
thereof; or
6. Any other document which, in the judgment
of the court, is sufficient and proper basis
for reconstitution.
For TCT (in the following order):
1. Owner’s duplicate of the certificate of title;
2. Co-owner’s, mortgagee’s or lessee’s
duplicate of said certificate;
3. Certified copy of such certificate, previously
issued by the Register of Deeds;
4. Deed of transfer of other document, on file
in the registry of deeds, or an authenticated
copy thereof, showing that its original had
been registered, and pursuant to which the
lost or destroyed transfer of certificate was
issued;
5. A document, on file with the Register of
deeds, by which the property, the
description of which is given in said
document, is mortgaged, leased or
encumbered, or an authenticated copy of
said document showing that its original had
been registered; and
6. Any other document which, in the judgment
of the court, is sufficient and proper basis
for reconstitution.
777
ADMINISTRATIVE RECONSTITUTION
1. Owner’s duplicate of the certificate of title;
and
2. Co-owner’s, mortgagee’s or lessee’s
duplicate of said certificate.
Q: Catarroja et al. filed a petition for
reconstitution of title covering two lots in
Cavite which they inherited from their
parents. Allegedly, the LRA issued a
certification confirming that the land
registration court issued a Decree covering
the lots. A copy of the decree however was no
longer available in the record. It was also
claimed that the owner’s duplicate copy of
the title had been lost while with their
parents. If you were the judge, will you grant
the petition for reconstitution of title?
A: In Republic v. Intermediate Appellate Court,
applied the principle of ejusdem generis in
interpreting Sec. 2(f) of R.A. 26. “Any other
document” refers to reliable documents of the
kind described in the preceding
enumerations. This Court is not convinced that
the following documents (Microfilm printouts of
Official Gazette. A certification by the LRA and
from the Register of Deeds, a Report of the LRA
and an Affidavit of Loss) of the Catarrojas fall in
the same class as those enumerated in
paragraphs (a) to (e). None of them proves that
a certificate of title had in fact been issued in the
name of their parents. Accordingly, the
documents must come from official sources
which recognize the ownership of the owner and
his predecessors-in-interest. None of the
documents presented in this case fit such
description. (Republic of the Philippines v.
Apolinaria Catarroja, et al., G.R. No. 171774,
February 12, 2010)
Where reconstituted title is a nullity, the
order for reconstitution may be attacked at
any time.
A reconstitution of Torrens title, whether
judicial or administrative, cannot proceed once
it is shown that another Torrens title has already
been issued to another person over the same
property. The reconstituting body or court has
no jurisdiction to issue another Torrens title
over the same property to the petitioner. The
existence of a prior title ipso facto nullifies the
reconstitution proceedings. The proper recourse
is to assail directly in a proceeding before the
 Land Titles and Deeds
regional trial court the validity of the Torrens Entry in the day An entry thereof in the day
title already issued to the other person. (Justice book is book is sufficient notice to
Carpio’s separate concurring opinion, Manotok v. insufficient all persons. (Garcia vs. Court
Barque, GR. No. 162335, December 18, 2008) of Appeals, G.R. Nos. L-48971
& 49011 January 22, 1980)
NOTE : Petition for reconstitution can be barred
by laches. Involuntary dealings that must be registered

Persons entitled to a Duplicate Certificate of 1. Attachment;

Title 2. Adverse claim; and
3. Notice of lis pendens.
1. Registered owner; and
2. Each co-owner.

Requirements for the replacement of lost

duplicate certificate of title
ADVERSE CLAIM NOTICE OF LIS
1. Due notice under oath shall be sent by the PENDENS
owner or by someone in his behalf to the Notice to third Literally means
Register of Deeds of the province or city persons that any pending suit. It
where the land lies as soon as the loss or transaction regarding operates as a notice to
theft is discovered; the disputed land is the whole world that a
2. Petition for replacement should be filed with subject to the outcome particular real
the RTC of the province or city where the of the dispute property is in
land lies; litigation. The
3. Notice to Solicitor General by petitioner is inscription serves as a
not imposed by law but it is the Register of warning that one who
Deeds who should request for acquires interest over
representation by the Solicitor General; and litigated property does
4. A proceeding where the certificate of title so at his own risk, or
was not in fact lost or destroyed is null and that he gambles on the
void for lack of jurisdiction and the newly result of the litigation
issued duplicate is null and void. over the property

INVOLUNTARY DEALINGS
Its purpose is to Its purpose is to
Necessity of registration of involuntary apprise third persons protect the rights of
dealings that there is a the party causing the
controversy over the registration of the lis
Involuntary dealings, unlike the voluntary ownership of the land pendens and to advise
dealings, requires the registration. It is the act of and to preserve and third persons who
registration which creates a constructive notice protect the right of the purchase or contract
to the whole world of such instrument or court adverse claimant on the subject
writ or process and is the operative act that during the pendency property that they do
conveys ownership or affects the land insofar as of the controversy. so at their peril and
third persons are concerned. subject to the result of
the pending litigation.
Difference between voluntary and
involuntary dealings
Writ of attachment
VOLUNTARY INVOLUNTARY DEALINGS
Attachment is the legal process of seizing
DEALINGS
another’s property in accordance with a writ or
Does not require Requires registration to
judicial order for the purpose of securing
registration create a constructive notice
satisfaction of a judgment yet to be rendered. It
to the whole world of such
is used primarily to seize the debtor’s property
instrument or court writ

UNIVERSITY OF SANTO TOMAS 778

2021 GOLDEN NOTES
 Civil Law
in order to secure the debt or claim of the
creditor in the event that a judgment is
rendered.
Effect of the non-recording of a writ of
attachment
An attachment levied on real state not duly
recorded in the Registry of Property is not an
encumbrance on the attached property, nor can
such attachment unrecorded in the registry,
serve as a ground for decreeing the annulment
of the sale of the property at the request of
another creditor.
Adverse claim
It is a notice to third persons that someone is
claiming an interest on the property or has a
better right than the registered owner thereof,
and that any transaction regarding the disputed
land is subject to the outcome of the dispute.
Purpose of annotating the adverse claim
The purpose of annotating the adverse claim on
the title of the disputed land is to apprise third
persons that there is a controversy over the
ownership of the land and to preserve and
protect the right of the adverse claimant during
the pendency of the controversy. It is a notice to
third persons that any transaction regarding the
disputed land is subject to the outcome of the
dispute. (Arrazola v. Bernas, GR No. L-29740, Nov.
10, 1978)
Instances when a claim of interest is adverse
1. Claimant’s right or interest in registered
land is adverse to the registered owner;
2. Such right or interest arose subsequent to
the date of original registration; or
3. No other provision is made in the decree for
the registration of such right or claim.
Formal requisites of an adverse claim for
purposes of registration
1. Adverse claimant must state the following in
writing:
a. His alleged right or interest;
b. How and under whom such alleged right
of interest is acquired;
c. Description of the land in which the
right or interest is claimed; and
779
d. Certificate of title number.
2. Such statement must be signed and sworn to
before a notary public or other officer
authorized to administer oath; and
3. Claimant shall state his residence or place to
which all notices may be served upon him.
Registration of adverse claim
By filing a sworn statement with the Register of
Deeds of the province where the property is
located, setting forth the basis of the claimed
right together with other data pertinent thereto.
The duty of the Register of Deeds to record the
same on the title is ministerial.
NOTE: Entry of the adverse claim filed on the
day book is sufficient without the same being
annotated at the back of the corresponding
certificate of title. (Director of Lands v. Reyes, G.R.
No. L-27594, November 28, 1975; See also Spouses
Esperanza, et al., v. The Register of Deeds, G.R. No.
224678, July 3, 2018, supra.)
Effect of the registration of an adverse claim
It renders the adverse claim effective and any
transaction regarding the disputed land shall be
subject to the outcome of the dispute.
Effect of non-registration of an adverse claim
The effect of non-registration or invalid
registration of an adverse claim renders it
ineffective for the purpose of protecting the
claimant’s right or interest on the disputed land,
and could not thus prejudice any right that may
have arisen thereafter in favor of third parties.
Limitations to the registration of an adverse
claim
1. No second adverse claim based on the same
ground may be registered by the same
claimant; and
2. A mere money claim cannot be registered as
an adverse claim.
Q: May an adverse claim exist concurrently
with a subsequent annotation of a notice of
lis pendens?
A: YES, an adverse claim may exist concurrently
with a subsequent annotation of a notice of lis
 Land Titles and Deeds
pendens. When an adverse claim exists
concurrently with a notice of lis pendens, the
notice of adverse claim may be validly cancelled
after the registration of such notice, since the
notice of lis pendens also serves the purpose of
the adverse claim.
Lifespan of a registered adverse claim
The adverse claim shall be effective for a period
of 30 days from the date of registration and it
may be cancelled.
Effect of the expiration of the period of
effectivity of an adverse claim
The expiration does not ipso facto terminate the
claim. The cancellation of the adverse claim is
still necessary to render it ineffective; otherwise,
the inscription will remain annotated and shall
continue as a lien to the property.
NOTE: It is not a lien or encumbrance under our
civil law. It is mere cautionary notice to
prospective buyers of certain property that said
property is under litigation. The annotation of a
notice of lis pendens at the back of the original
copy of the certificate of title on file with the
Register of Deeds is sufficient to constitute
constructive notice to purchasers or other
persons subsequently dealing with the same
property. One who deals with property subject
of a notice of lis pendens cannot invoke the right
of a purchaser in good faith neither can he
acquire better rights that those of his
predecessors-in-interest. (Tanchoco v. Aquino,
G.R. No. 30670, January 17, 1990; Mahinay v.
Gako, Jr., G.R. No. 165338, November 28, 2011)
Purposes of a notice of lis pendens
1. Protect the rights of the party causing the
registration of the lis pendens; and

Q: May the RD cancel an adverse claim? 2. Advise third persons who purchase or
contract on the subject property that they
A: NO. The RD cannot, on its own, automatically do so at their peril and subject to the result
cancel the adverse claim. of the pending litigation.

NOTE: Before the lapse of 30-day period, the NOTE : A notice of lis pendens may involve
claimant may file a sworn petition withdrawing actions that deal not only with title or
his adverse claim, or a petition for cancellation possession of a property, but also with the use or
of adverse claim may be filed in the proper occupation of a property. The litigation must
Regional Trial Court. directly involve a specific property which is
necessarily affected by the judgment. (Agcaoili,
Q: What must an interested party do if he 2018)
seeks the cancellation of a registered adverse
claim? Q: When may a notice of lis pendens be made
and when may it not be resorted to?
A: The interested party must file with the proper
court a petition for cancellation of adverse claim, A:
and a hearing must also first be conducted.
NOTICE OF LIS PENDENS
Notice of lis pendens
When applicable When Inapplicable
Lis pendens literally means a pending suit. The
doctrine of lis pendens refers to the jurisdiction, 1. Recover possession 1. Preliminary
power or control which a court acquires over of real estate; attachments;
property involved in a suit, pending the 2. Quieting of title; 2. Levy or
continuance of the action, and until final Remove clouds upon execution;
judgment. title; 3. Proceedings on
3. For partition; or probate or wills;
It merely creates a contingency and not a lien. It 4. Any other 4. Administration
does not produce any right or interest which proceeding of any of the real estate
may be exercised over the property of another. It kind in court directly of deceased
only protects the applicant’s rights which will be affecting title to the person; or
determined during trial. land or its use or 5. Proceedings for
occupation or the the recovery of

UNIVERSITY OF SANTO TOMAS 780

2021 GOLDEN NOTES
 Civil Law
building thereon. money
judgments.
Effects of the annotation of notice of lis
pendens
1. It keeps the subject matter of litigation
within the power of the court until the entry
of the final judgment to prevent the defeat of
the final judgment by successive alienation;
and
2. It binds a purchaser, bona fide or not, of the
land subject of the litigation to the judgment
or decree that the court will promulgate
subsequently.
However, the filing of a notice of lis pendens
does not create a right or lien that previously did
not exist. Without a notice of lis pendens, a third
party who acquires the property after relying
only on the certificate of title is a purchaser in
good faith. (Lopez v. Enriquez, GR No. 146262,
Jan. 21, 2005; Romero v. Court of Appeals, GR No.
142406, May 16, 2005)
Notice of lis pendens negates good faith
One who deals with property subject of a notice
of lis pendens cannot invoke the right of a
purchaser in good faith—neither can he acquire
better rights than those of his predecessor-in-
interest.
Q: When may a notice of lis pendens be
cancelled?
A: A notice of lis pendens may be cancelled in
the following cases before final judgment upon
order of the court:
1. When it is shown that the notice is for the
purpose of molesting the adverse party;
2. Where the evidence so far presented by the
plaintiff does not bear out the main
allegations of the complaint;
3. When it is shown that it is not necessary to
protect the right of the party who caused the
registration thereof;
4. Where the continuances of the trial are
unnecessarily delaying the determination of
the case to the prejudice of the defendant;
5. Upon verified petition of the party who
caused the registration thereof; or
6. It is deemed cancelled after final judgment
in favor of defendant, or other disposition of
781
the action, such as to terminate all rights of
the plaintiff to the property involved.
(Section 77, P.D. 1529; See also Valderama v.
Arguelles, G.R. No. 223660, April 2, 2018)
Q: When is a notice of lis pendens deemed
cancelled?
A: Under Sec. 77 of P.D. 1529, a notice of lis
pendens shall be deemed cancelled only upon the
registration of a certificate of the clerk of court
in which the action or proceeding was pending
stating the manner of disposal thereof if there
was a final judgment in favor of the defendant or
the action was disposed of terminating finally all
rights of the plaintiff over the property in
litigation. (Isabelita Cunanan et al., v. Jumping Jap
Trading Corporation et al., G.R. No. 173834, April
24, 2009; See also Valderama v. Arguelles, G.R. No.
223660, April 2, 2018)
DEALINGS WITH UNREGISTERED LANDS
No deed, conveyance, mortgage, lease, or other
voluntary instrument affecting land not
registered under the Torrens system shall be
valid, except as between the parties thereto,
unless such instrument shall have been recorded
in the manner herein prescribed in the office of
the Register of Deeds for the province or city
where the land lies. (Section 113, P.D. 1529)
NOTE: Where registered land has been the
subject of a transaction and this was recorded
under Act No. 3344, such recording does not
bind third persons since registration thereunder
refers to properties not registered under the
Land Registration Act, and, hence, not effective
for purposes of Article 1544 of the Civil Code on
double sales. Registration of instruments, in
order to affect and bind the land, must be done
in the proper registry. (Soriano v. Magali, GR No.
L-15133, July 31, 1953)
Purpose of registration
A transaction affecting unregistered lands
covered by an unrecorded contract may be valid
and binding on the parties themselves, but not
on third parties. In the case of third parties, it is
necessary for the contract to be registered.
(Agcaoli, 2018, citing Dadizon v. Court of Appeals,
G.R. No. 159116, September 30, 2009)
Section 113 contemplates instruments
created by agreement of the parties
 Land Titles and Deeds
The opening paragraph of Section 113 cannot be
interpreted to include conveyances made by
ministerial officers, such as sheriff’s deeds. It
contemplates only such instruments as may be
created by agreement of the parties. (Agcaoli,
2018)
Recording shall be without prejudice to a
third party with ‘better right’
Section 113(b) states that any recording made
thereunder shall be without prejudice to a third
party with a ‘better right’. Thus, a mortgage of
unregistered property which is recorded under
Act No. 3344 is valid as against everybody
except a third person having a better right right.
(Agcaoli, 2018, citing Mota v. Concepcion, G.R. No.
34581, March 31, 1932)
NOTE: Under Section 113(d), a tax sale,
attachment and levy, notice of lis pendens,
adverse claim and other instruments in the
nature of involuntary dealing with respect to
unregistered lands, if made in the form sufficient
in law, may be recorded.
Recording by Register of Deeds is ministerial
The Register of Deeds does not exercise a
judicial or quasi-judicial power in the
registration of sheriff’s deeds or certificates of
sale. His duty with respect to the notation or
recording of these instruments, so far at least as
relates to unregistered property, is ministerial
only’ and the registration of such instrument
adds nothing to their instrinsic effect.
Registration in such cases is required merely as
a means of notification of the purchaser’s rights
to the public. If the Register of Deeds refuses to
register the instrument, he shall advise the party
in interest in writing of the grounds for his
refusal, and the latter may elevate the matter to
the Administrator, Land Registration Authority,
en consulta pursuant to Section 117 of the
Property Registration Decree. (Agcaoli, 2018
citing Pua Hermanos v. Register of Deeds, G.R. No.
274349, September 10, 1927)
How recording is effected
Register of Deeds shall keep a Primary Entry
Book and a Registration Book. The Primary
Entry Book shall contain, among other
particulars, the entry number, the names of the
parties, the nature of the document, the date,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
hour and minute it was presented and received.
The recording of the deed and other instruments
relating to unregistered lands shall be effected
by any of annotation on the space provided
therefor in the Registration Book, after the same
shall have been entered in the Primary Entry
Book.
After recording, the Register of Deeds shall
endorse on the original of the instrument the file
number and the date as well as the hour and
minute when the instrument was received,
returning to the registrant the duplicate of the
instrument with a certification that he has
recorded the same. (Section 113, P.D. 1529;
Agcaoli, 2018)
NON-REGISTRABLE PROPERTIES
Non-registrable lands
These are properties of public dominion which,
under existing legislation, are not the subject of
private ownership and are reserved for public
purposes.
NOTE: The properties of public dominion are
not susceptible to acquisitive prescription and
only properties of the State that are no longer
earmarked for public use, otherwise known as
patrimonial, may be acquired by prescription. In
Heirs of Mario Malabanan v. Republic, the
Supreme Court, in observance of the foregoing,
clarified the import of Sec. 14(2) and made the
following declarations:
1. The prescriptive period for purposes of
acquiring an imperfect title over a property
of the State shall commence to run from the
date an official declaration is issued that
such property is no longer intended for
public service or the development of
national wealth; and
2. Prescription will not run as against the State
even if the property has been previously
classified as alienable and disposable as it is
that official declaration that converts the
property to patrimonial. (Republic of the
Philippines v. Metro Index Realty and
Development Corporation, G.R. No. 198585,
July 2, 2012)
Reason behind their non-registrability
Property of the public domain is beyond the
commerce of man and not susceptible of private
782
 Civil Law
appropriation and acquisitive prescription.
Occupation thereof in the concept of owner no
matter how long cannot ripen into ownership
and be registered as a title. (Valiao v. Republic,
G.R. No. 170757, November 28, 2011)
Non-Registrable Lands
1. Property of public domain or those intended
for public use, public service or
development of the national wealth;
2. Forest or timber lands;
3. Water sheds;
4. Mangrove swamps;
5. Mineral lands;
6. National parks and plazas;
NOTE: Where the certificate of title covers a
portion of land within the area reserved for
park purposes, the title should be annuled
with respect to that portion. (Palomo v.
Court of Appeals, 266 SCRA 392)
7. Military or naval reservations;
8. Foreshore lands;
9. Reclaimed lands;
10. Submerged areas;
11. River banks;
12. Lakes, rivers, creeks and lagoons;
NOTE: Areas beyond a lake’s natural bed, or
the ground covered by the waters at their
highest ordinary depth during the dry
season, may be registered. (Republic v. Court
of Appeals, 131 SCRA 532)
A dried up creek is property of public
dominion. (Fernando v. Acuña, G.R. No.
161030, September 14, 2011)
13. Reservations for public and semi-public
purposes;
14. Protected areas;
15. Resources within ancestral domains; and
16. Others of similar character.
Q: In 1913, Gov. Gen. Forbes reserved a
parcel of land for provincial park purposes.
Sometime thereafter, the court ordered said
land to be registered in Ignacio & Carmen
Palomo’s name. What is the effect of the act of
Gov. Gen Forbes in reserving the land for
provincial park purposes?
A: As part of the reservation for provincial park
purposes, they form part of the forest zone. It is
783
elementary in the law governing natural
resources that forest land cannot be owned by
private persons. It is not registrable and
possession thereof, no matter how lengthy,
cannot convert it into private property, unless
such lands are reclassified and considered
disposable and alienable. (Sps. Palomo, et. al. v.
CA, et. al., G.R. No. 95608, January 21, 1997)
Q: Does land classified as forest loses its
classification because it has been stripped of
it forest cover?
A: NO. A forested area classified as forest land of
the public domain does not lose such
classification simply because loggers or settlers
may have stripped it of its forest cover. Parcels
of land classified as forest land may actually be
covered with grass or planted with crops
by kaingin cultivators or other farmers. Forest
lands do not have to be on mountains or in out-
of-the-way places. The classification of land is
descriptive of its legal nature or status and does
not have to be descriptive of what the land
actually looks like. (Heirs of Jose Amunategui v.
Director of Forestry, G.R. No. L-27873, November
9, 1983)
Forest lands
It is defined as “a large tract of land covered with
a natural growth of trees and underbrush; a
large wood.” If the land forms part of the public
forest, possession thereof, however long, cannot
convert it into private property as it is within the
exclusive jurisdiction of the Bureau of Forest
Development and beyond the power and
jurisdiction of the registration court. (Republic v.
Court of Appeals and Lastimado, GR No. L-39473,
April 30, 1979; Director of Lands v. Abanzado, GR
No. L-21814, July 15, 1975, as cited by Agacaoili,
2018)
Unless the land is released as A and D, the rules
on confirmation of title do not apply.
(Amunategui v. Director of Forestry; G.R. No. L-
27873, November 29, 1983)
Foreshore land
A strip of land that lies between the high and low
water marks and is alternately wet and dry
according to the flow of tide. It is that part of the
land adjacent to the sea, which is alternately
covered by the ordinary flow of tides.
 Land Titles and Deeds
Foreshore lands are inalienable unless reclaimed
by the government and classified as agricultural
lands of the public domain. (Chavez v. Public
Estates Authority, G.R. No. 133250, November 11,
2003)
NOTE: Seashore, foreshore land, and/or
portions of the territorial waters and beaches,
cannot be registered. Even alluvial formation
along the seashore is part of the public domain
and, therefore, not open to acquisition by
adverse possession by private persons unless
subsequently declared as no longer needed for
public use.
Mangrove swamps
These are mud flats, alternately washed and
exposed by the tide, in which grows various
kindred plants which will not live except when
watered by the sea, extending their roots deep
into the mud and casting their seeds, which also
germinate there. These constitute the mangrove
flats of the tropics, which exist naturally, but
which are also, to some extent, cultivated by
man for the sake of the combustible wood of the
mangrove and like trees as well as for the useful
nipa palm propagated thereon. (Montano v.
Insular Government, G.R. No. L-3714, January 26,
1909; Director of Forestry vs. Villareal, G.R. No.
32266, February 27, 1989)
Q: Are mangrove swamps disposable?
A: NO. Mangrove swamps or manglares are
forestall and not alienable agricultural land.
Mangrove swamps form part of the public
forests and, therefore, not subject to disposition
until and unless they are first released as forest
land and classified as alienable agricultural land.
(Director of Forestry v. Villareal, G.R. No. L-32266,
February 27, 1989, supra.)
Mineral lands
Mineral land means any land where mineral
resources are found. Mineral resources, on the
other hand, mean any concentration of
mineral/rocks with potential economic value.
NOTE : Mineral resources are owned by the
State and the exploration, development, and
processing thereof shall be under its full control
and supervision. The State may directly
undertake such activities or it may enter into
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
mineral agreements with contractors. (RA No.
7942, Sec. 4)
NOTE : Possession of mineral land, no matter
how long, does not confer possessory rights.
Thus, a certificate of title is void when it covers
property of public domain classified as mineral
lands. Any title issued over non-disposable lots,
even in the hands of alleged innocent purchaser
for value, shall be cancelled. (Lepanto
Consolidated Mining Co. v. Dumyung, GR No. L-
31666, April 20, 1979)
NOTE : Ownership of land does not extend to
mineral underneath. The Regalian doctrine
reserves to the State all minerals that may be
found in public and even private lan devoted to
’’agricultural, industrial, commercial,
residential, or (for) any purpoes other than
mining.’’ (Republic v. CA & De la Rosa, GR No.
45859, Sept. 28, 1938, as cited in Agcaoili, 2018)
Q: Can land be partly mineral and partly
agricultural?
A: NO. The rights over the land are indivisible
and that the land itself cannot be half
agricultural and half mineral. The classification
of land must be categorical; the land must be
either completely mineral or completely
agricultural.
Watershed
It is a land area drained by a stream or fixed
body of water and its tributaries having a
common outlet for surface runoff.
Watershed reservation
It is a forest land reservation established to
protect or improve the conditions of the water
yield thereof or reduce sedimentation.
Q: Public Reclamation Authority (formerly
Philippine Estate Authority or PEA)
reclaimed several portions of the foreshore
and offshore areas of Manila Bay. In 2003,
the Parañaque City Treasurer issued
Warrants of Levy on PRA’s reclaimed
property. PRA filed a petition for prohibiton
with prayer for TRO but was denied by the
RTC on the ground that PRA was not exempt
from payment of real property taxes as it was
organized as a stock corporation. Is PRA
784
 Civil Law
exempted from the payment of real propery
tax for its reclamation project?

A: YES. The subject lands are reclaimed lands,

specifically portions of the foreshore and
offshore areas of Manila Bay. As such, these
lands remain public lands and form part of the
public domain. It is clear from Sec. 234 of the
LGC that real property owned by the Republic of
the Philippines is exempt from real property tax
unless the beneficial use thereof has been
granted to a taxable person. In the case of Chavez
v. Public Estates Authority and AMARI Coastal
Development Corporation, the Court held that the
fact that alienable lands of the public domain
were transferred to the PEA (now PRA) and
issued land patents or certificates of title in
PEA’s name did not automatically make such
lands private. Supreme Court also held therein
that reclaimed lands retained their inherent
potential as areas for public use or public
service. [Republic of the Philippines, represented
by the Philippine Reclamation Authority (PRA) v.
City of Parañaque; G.R. No. 191109, July 18, 2012]

785
 Torts
indemnify the latter for the same. (NCC, Art. 20)
TORTS
“Contrary to law” means that the act violated are
GENERAL PRINCIPLES provisions of both the Civil and Penal Codes.

Acts Against Good Morals (Contra Bonus

Abuse of Right
Every person must, in the exercise of his rights
and in the performance of his duties, act with
justice, give everyone his due, and observe
honesty and good faith. (NCC, Art. 19)
Mores)
Any person who willfully causes loss or injury to
another in a manner that is contrary to morals,
good customs or public policy shall compensate
the latter for damages. (NCC, Art. 21)

The concept of abuse of rights prescribes that a Elements

person should not use his right unjustly or in 1. There is a legal act;
bad faith; otherwise, he may be liable to another 2. which is contrary to morals, good customs,
who suffers injury. public order or public policy; and
3. it is done with the intent to injure.
Elements (Mendoza v. Sps. Gomez, G.R. No. 160110,
1. The existence of a legal right or duty; June 18, 2014)
2. which is exercised in bad faith; and
3. for the sole intent of prejudicing or injuring Distinctions between Art. 20 and Art. 21
another. (Far East Bank and Trust Co. v.
Pacilan, G.R. No. 157314, July 29, 2005) Article 20 Article 21
The act is illegal, and The act is legal,
NOTE: The law recognizes the primordial a law was violated, however, the act
limitation on all rights – that in the exercise of offended public
the rights, the standard under art. 19 must be morals, good customs
observed. (Sesbreño v. Court of Appeals, G.R. No. and public policy.
160689, March 26, 2014) The act was done The act was done
willfully or may have willfully.
Application of the principle of damnum been committed
absque injuria in relation to Abuse of rights negligently.
doctrine The intent of the The intent of the
offender is offender is
In order that a plaintiff may maintain an action immaterial in immaterial.
for the injuries of which he complains, he must determining liability.
establish that such injuries resulted from a
breach of duty which the defendant owed to the Unjust Enrichment (accion in rem verso)
plaintiff – a concurrence of injury to the plaintiff
and legal responsibility by the person causing it. Every person who through an act of
performance by another, or other means,
The underlying basis for the award of tort acquires or comes into possession of something
damages is the premise that the individual was at the expense of the latter without just or legal
injured in contemplation of law. Thus, there ground, shall return the same to him. (NCC, Art.
must be first a breach of some duty and the 22)
imposition of liability for that breach before
damages may be awarded; and the breach of Even when an act or event causing damage to
such duty should be the proximate cause of the another’s property was not due to the fault or
injury. (Far East Bank and Trust Co. v.Pacilan, negligence of the defendant, the latter shall be
G.R. No. 157314, July 29, 2005) liable for indemnity if through the act or event
he was benefited. (NCC, 23)
Acts Contrary to Law
Elements
Every person who, contrary to law, willfully or 1. The defendant has been enriched;
negligently causes damage to another, shall 2. The plaintiff has suffered a loss;

UNIVERSITY OF SANTO TOMAS 786

2021 GOLDEN NOTES
 Civil Law
3. The enrichment of the defendant is without
just or legal ground; and
4. The plaintiff has NO other action based on a
contract, quasi-contract, crime, quasi-delict,
or any other provision of law. (Grandteq
Industrial Steel Products, Inc. v. Margallo, G.R.
No. 181393, July 28, 2009)
Accion in rem verso is considered merely as an
auxiliary action, available only when there is no
other remedy on contract, quasi-contract, delict,
and quasi-delict. If there is an obtainable action
under any other institution of positive law, that
action must be resorted to, and an action based
on unjust enrichment will not lie.
Unjust enrichment claims do not lie simply
because one party benefits from the efforts or
obligations of others, but instead it must be
shown that a party was unjustly enriched in the
sense that the term unjustly could mean illegally
or unlawfully. (Aquino, 2016)
Tort
Tort
It is a civil wrong wherein one person’s conduct
causes a compensable injury to the person,
property or recognized interest of another, in
violation of a duty imposed by law.
It may either be a direct invasion of some legal
right of an individual; or, an act or omission of a
person which causes some injury or damage
directly or indirectly to another person. (Black’s
Law Dictionary, Sixth Ed., p. 1489)
A tort is a wrong, a tortious act, which has been
defined as the commission or omission of an act
by one, without right, whereby another receives
some injury, directly or indirectly, in person,
property, or reputation. (Vinzons-Chato v.
Fortune Tobaccco Corporation, G.R. No. 141309,
June 19, 2007)
A legal wrong committed upon the person or
property independent of a contract. It may be:
1. A direct invasion of some legal right of the
individual;
2. The infraction of some public duty which
special damage accrues to the individual; or
3. The violation of some private obligation by
which like damage accrues to the individual.
787
Tort v. Breach of Contract
Contract duties are created by the promises of
the parties, while tort duties are imposed as
rules of law. (De Leon, 2012)
Main functions of punishing tort
1. Compensation and Restitution – To
compensate persons sustaining loss or harm
as a result of another’s act or omission,
placing the cost of that compensation on
those who, in justice ought to bear it.
2. Prevention – To prevent future losses and
harm.
Civil liabilities which may arise due to an act
or omission of one, causing damage to
another
1. Civil liability ex delicto
NOTE: Every person criminally liable for a
felony is also civilly liable. (RPC, Art.100)
Q: Rafael Poblador engaged the service of
Manzano to look for the buyers of the Wack-
Wack share amounting to ₱18,000,00.00.
Manzano showed a computation for the sale
of the Wack-Wack Share to
petitioner, showing a final net amount of
₱l5,200,000.00. Manzano introduced
Moreland Realty Inc. who agreed to buy the
Wack-Wack share. The ₱l5,200,000.00 was
received by the party of Rafael and the
remaining ₱2,800,000.00 was given to
Manzano for the payment of the capital gains
tax, documentary stamp tax, and other
pertinent fees, as well as for her service fee.
However, the sale of Wack-Wack share was
annulled by the Probate Court. As such, the
party of Rafael Poblador returned the
₱18,000,00.00 which Moreland paid to for
the Wack-Wack share. Rafael demanded
Manzano to return the ₱2,800,000.00, but to
no avail. Rafael requested for the accounting
of the ₱2,800,000.00 which was responded
by Manzano by sending the Capital Gains Tax
Return dated September 23, 1996 indicating
the payment of Pl, 480,000.00 as capital
gains tax. Examining these documents, Rafael
and Torres allegedly noticed a discrepancy in
the faxed Capital Gains Tax Return: while the
typewritten portion of the Return indicated
Pl, 480,000.00 as the capital gains tax paid,
the machine validation imprint reflected
 Torts
only P80,000.00 as the amount paid. Rafael
filed a case for Estafa against Manzano.
However, the RTC dismissed the complaint
for Estafa for failure of the prosecution to
"prove all the elements of Estafa through
misappropriation. Rafael appealed the civil
aspect of the case. Will the civil aspect based
on ex delicto will prosper?
A: NO. In the fairly recent case of Dy v. People,
the Court discussed the concept of civil
liability ex delicto in Estafa cases under
paragraph 1 (b), Article 315 of the RPC (with
which Manzano was likewise charged), stating
that when the element of misappropriation
or conversion is absent, there can be
no Estafa and concomitantly, the civil
liability ex delicto does not exist. Whenever
the elements of Estafa are not established, and
that the delivery of any personal property was
made pursuant to a contract, any civil liability
arising from the Estafa cannot be awarded in the
criminal case. This is because the civil liability
arising from the contract is not civil liability ex
delicto, which arises from the same act or
omission constituting the crime. Civil liability ex
delicto is the liability sought to be recovered in a
civil action deemed instituted with the criminal
case." In this case, the Court agrees with the
findings of both the R TC and the CA that the
prosecution failed to prove all the elements
of Estafa through misappropriation as defined
in, and penalized under, paragraph 1 (b ),
[Article 315] of the [RPC]. (Estate Of Honorio
Poblador, Jr., Represented By Rafael A. Poblador
V. Rosario L. Manzano, G.R. No. 192391, June 19,
2017)
2. Independent civil liabilities, such as
those:
a. Not arising from an act or omission
complained of as a felony, e.g., culpa
contractual or obligations arising from
law under Article 31 of the New Civil Code
(such as breach of contract or tort),
intentional torts under Articles 32 and 34,
and culpa aquiliana under Article 2176 of
the New Civil Code.
b. Where the injured party is granted a right
to file an action independent and distinct
from the criminal action under Article 33
of the New Civil Code (in cases of
defamation, fraud and physical injuries).
NOTE: Either of these liabilities may be enforced
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
against the offender subject to the caveat under
Article 2177 of the New Civil Code that the
plaintiff cannot recover damages twice for the
same act or omission of the defendant. (Santos v.
Pizardo, G.R. No. 151452, July 29, 2005)
Tortious Act
It is a wrongful act. It is the commission or
omission of an act by one, without right,
whereby another receives, some direct or
indirect injury, in person, property, or
reputation. (De Leon, 2012)
GR: An action for damages can only be
maintained by the person directly injured, not
by one alleging the collateral injury.
XPN: There are instances where injury to one
may operate as an injury to another, e.g. a lone
parent cannot sue for the injury suffered by his
child, but may maintain an action in his own
right for any damages suffered as a result of the
injury.
Remedies for Torts (CPR):
1. Compensatory – actions for sum of money
for the damage suffered.
2. Preventive – prayer for injunction, a writ of
preliminary injunction, and a temporary
restraining order, enjoining the defendant
from continuing the doing of the tortious
conduct.
3. Restitution – to return gains that the
defendant wrongfully obtained by tort.
Elements
1. A legal Right in favor of a person
2. A correlative legal Obligation on the part of
the defendant to respect such right.
3. A Wrong, an act or omission in violation of
such right with consequent injury.
QUASI-DELICT
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 quasi-delict or
culpa aquilana. (Art. 2176, NCC)
Articles 2176 and 2180 of the Civil Code were
derived from Articles 1902 and 1903 of the
788
 Civil Law
Spanish Civil Code of 1889. Article 2176 defines
“quasi-delict” as the fault or negligence that
causes damage to another, there being no
preexisting contractual relations between the
parties. On the other hand, Article 2180
enumerates persons who are vicariously liable
for the fault or negligence of persons over whom
they exercise control, whether absolute or
limited. (Imperial vs. Heirs of Bayaban, G.R. No.
197626, October 3, 2018, as penned by J.
Leonen)
Elements of Quasi-Delict (1993, 1997, 2006,
2007, 2010 BAR)
1. Damage to the plaintiff;
NOTE: It is the loss, hurt or harm which results
from injury. It differs from damages which term
refers to the recompense or compensation
awarded for the damage suffered. (So Ping Bun v.
CA, G.R. No. 120554, September 21, 1999; Ferro
Chemicals, Inc. vs. Garcia, G.R. No. 168134,
October 5, 2016)
2. Negligence, by act or omission, of which
defendant, or some person for whose acts,
must respond, was guilty; and
3. Connection of cause and effect between such
negligence and damage. (Dra. Leila A. Llano
v. Rebecca Biong, G.R. No. 182356, December
4, 2013)
NOTE: Based on this provision of law, the
requisites of quasi-delict are the following:
a. there must be an act or omission;
b. such act or omission causes damage
to another;
c. such act or omission is caused by
fault or negligence; and
d. there is no pre-existing contractual
relation between the parties. (Chan,
Jr. v. Iglesia Ni Cristo, Inc., G.R. No.
160283, October 14, 2005)
NOTE: In civil cases, a party who alleges a fact
has the burden of proving it by preponderance
of evidence or greater weight of credible
evidence.
Coverage
The article covers all wrongful acts or omissions
as long as:
789
1. They are not constitutive of breach of
contract;
2. They are not punishable as offenses
(crimes) either under the Revised Penal
Code or special laws.
Prescription of an action based on quasi-
delict
An action based on quasi-delict must be
instituted within four (4) years. (NCC, Art. 1146)
Act
It is any bodily movement tending to produce
some effect in the external world, it being
unnecessary that the same be actually produced,
as the possibility of its production is sufficient.
(People v. Gonzales, G.R. No. 80762, March 19,
1990)
Fault
It is a condition where a person acts in a way or
manner contrary to what normally should have
been done. (Pineda, 2009)
Negligence
It consists in the omission of that diligence
which is required by the nature of the obligation
and corresponds with the circumstances of the
persons, of the time and of the place. (NCC, Art.
1173)
Negligence has been defined as “the failure to
observe for the protection of the interests of
another person that degree of care, precaution,
and vigilance which the circumstances justly
demand, whereby such other person suffers
injury.” (R Transport Corporation vs. Yu, G.R. No.
174161, February 18, 2015)
Foreseeability of harm (Foreseeability Test)
The test to determine the existence of negligence
is whether a prudent man could foresee harm as
a result of the course actually pursued. (Picart v.
Smith, Jr., G.R. No. L-12219, March 15, 1918)
Verily, foreseeability is the fundamental test of
negligence. It is the omission to do something
which a reasonable man, guided by those
considerations which ordinarily regulate the
conduct of human affairs, would do, or the doing
of something which a prudent and reasonable
 Torts
man would not do. (R Transport Corporation vs.
Yu, G.R. No. 174161, February 18, 2015, supra.)
NOTE: The existence of negligence in a given
case is not determined by reference to the
personal judgment of the actor in the situation
before him. The law considers what would be
reckless, blameworthy, or negligent in the man
of ordinary intelligence and prudence and
determines liability by that. (Picart v. Smith, Jr.,
G.R. No. L-12219, March 15, 1918, supra.)
Rule when negligence shows bad faith
When negligence shows bad faith, responsibility
arising from fraud is demandable in all
obligations. (NCC, Art. 1171) Furthermore, in
case of fraud, bad faith, malice or wanton
attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to
the non-performance of the obligation. (NCC, Art.
2201)
When is negligence excused
GR: Negligence is excused when events that
transpired were unforeseen or, which though
foreseen, were inevitable. (NCC, Art. 1174)
XPN:
1. In cases specified by law;
2. When declared by stipulation; or
3. When the nature of the obligation requires
the assumption of risk.
NOTE: A person or juridical entity is made liable
solidarily with a tortfeasor simply by reason of
his relationship with the latter.
Presumption of negligence on persons
indirectly responsible
The presumption of law is that there was
negligence on the part of the master or employer
either in the selection of the servant or
employee (culpa in eligendo) or in the
supervision over him after the selection (culpa
vigilando), or both.
NOTE: The presumption is juris tantum
(rebuttable), not juris et de jure (conclusive), and
can be rebutted only by showing proof of having
exercised and observed all the diligence of a
good father of a family (diligentissimi patris
familias). (Tamargo v. CA, G.R. No. 85044, June 3,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1992)
Nature of responsibility of Vicarious Obligor
Primary and direct, not subsidiary. He is
solidarily liable with the tortfeasor. His
responsibility is not conditioned upon the
insolvency of or prior recourse against the
negligent tortfeasor. (De Leon Brokerage v. CA,
G.R. 15247, February 28, 1962)
Persons Vicariously Liable (F-GOES-T)
1. Father, or in case of death or incapacity,
mother:
a. Damage caused by minor children
b. Living in their company
2. Guardians:
a. For minors or incapacitated persons
b. Under their authority
c. Living in their company
3. Owners and managers of establishments:
a. For their employees
b. In the service of the branches in which
they are employed; or
c. On the occasion of their functions
4. Employers:
a. Damages caused by employees and
household helpers
b. Acting within the scope of their
assigned tasks
c. Even if the employer is not engaged in
any business or industry
5. State – acting through a special agent and
not when the damage has been caused by
the official to whom the task done properly
pertains.
6. Teachers or heads of establishments:
a. Of arts and trades
NOTE: Article 2180 of the NCC is applicable to
all schools, whether it be academic or non-
academic. (Amadora v. CA, G.R. No. L-47745, April
15, 1988)
b. For damages caused by their pupils and
students or apprentices
c. So long as they remain in their custody.
(NCC, Art. 2180)
NOTE: As regards the principal, the Supreme
790
 Civil Law
Court held that he cannot be made responsible
for the death of the child Ylarde, he being the
head of an academic school and not a school of
arts and trades. Article 2180 of the Civil Code, it
is only the teacher and not the head of an
academic school who should be answerable for
torts committed by their students.
In a school of arts and trades, it is only the head
of the school who can be held liable. In other
words, teachers in general shall be liable for the
acts of their students except where the school is
technical in nature, in which case it is the head
thereof who shall be answerable. (Ylarde V.
Aquino, G.R. No. L-33722, July 29, 1988)
The actual tortfeasor is not exempted from
liability
The minor, ward, employee, special agent, pupil,
students and apprentices who actually
committed the delictual acts are not exempted
by the law from personal responsibility. They
may be sued and made liable alone as when the
person responsible for them or vicarious obligor
proves that he exercised the diligence of a good
father of a family or when the minor or insane
person has no parents or guardians. In the latter
instance, they are answerable with their own
property. (Pineda, 2009)
Common Defenses
The vicarious liability shall cease when the
defendants prove that they observed all the
diligence of a good father of a family to prevent
damage. (NCC, Art. 2180; Cuadra v. Monfort, G.R.
No. L-24101 September 30, 1970; Filcar
Transport Services vs. Espinas, G.R. No. 174156,
June 20, 2012)
Principle of Vicarious Liability or Law on
Imputed Negligence (2001-2006, 2009, 2010
BAR)
The obligation imposed by Article 2176 of the
NCC for quasi-delicts is demandable not only for
one's own acts or omissions, but also for those
persons for whom one is responsible. (NCC, Art.
2180)
THE TORTFEASOR
Persons liable for quasi-delict
Every person legally responsible is liable for a
791
tort committed by him provided it is the
proximate cause of an injury to another. (De
Leon, 2012)
Emergency Rule
An individual who suddenly finds himself in a
situation of danger and is required to act
without much time to consider the best means
that may be adopted to avoid the impending
danger, is not guilty of negligence if he fails to
undertake what subsequently and upon
reflection may appear to be a better solution,
unless the emergency was brought by his own
negligence. (Valenzuela v. CA, G.R. No. 115024,
February 7, 1996)
NOTE: Defendants in tort cases can either be
natural or artificial beings.
Pursuant to vicarious liability, a corporation may
be held directly and primary liable for tortious
acts of its officers or employees. (NCC, Art. 2180)
Joint Tortfeasors
Two or more persons who act together in
committing a wrong, or contribute to its
commission, or assist or participate therein
actively and with common intent, so that injury
results to a third person from the joint wrongful
act of the wrongdoers. (De Leon, 2012)
Test for Joint Tortfeasors
1. Whether the plaintiff has a single cause of
action against such tortfeasors; or
2. Whether he has only several causes of action
against each of them.
Liability of Joint Tortfeasors
The responsibility of two or more persons who
are liable for quasi-delict is solidary. (NCC, Art.
2194) Each are liable as principals, to the same
extent and in the same manner as if they had
performed the wrongful act themselves. (Ruks
Konsult and Construction v. Adworld Sign and
Advertising Corp., G.R. No. 204866, January 21,
2015)
Liability of the owner of a vehicle in case of
an accident (1996, 1998, 2002, 2009 BAR)
In motor vehicle mishaps, the owner is solidarily
liable with his driver, if the former, who was in
the vehicle, could have, by the use of the due
 Torts
diligence, prevented the misfortune. It is
disputably presumed that a driver was negligent,
if he had been found guilty or reckless driving or
violating traffic regulations at least twice within
the next preceding two months. (NCC, Art. 2184)
Q: Jesmariane Reyes was hit by a van owned
and registered by Caravan Travel and Tours
International, Inc. Bautista who was
employed as the driver of Caravan, was found
to be grossly negligent in driving the vehicle.
Reyes’ aunt, Abejar, presented a copy of the
Certification of Registration of the van which
attests to Caravan’s ownership thereof.
Caravan argues that it cannot be held liable
since Abejar offered no documentary or
testimonial evidence to prove that Bautista
acted within the scope of his assigned tasks
when the accident occurred.
Is Caravan liable as employer of Bautista?
A: YES. Article 2180 requires proof of two
things: first, an employment relationship
between the driver and the owner; and second,
that the driver acted within the scope of his or
her assigned tasks. The registered-owner rule
only requires the plaintiff to prove that the
defendant-employer is the registered owner of
the vehicle. In cases where both the registered-
owner rule and Article 2180 apply, the plaintiff
must first establish that the employer is the
registered owner of the vehicle in question. Once
the plaintiff successfully proves ownership,
there arises a disputable presumption that the
requirements of Article 2180 have been proven.
As a consequence, the burden of proof shifts to
the defendant to show that no liability under
Article 2180 has arisen. Here, respondent
presented a copy of the Certificate of
Registration of the van that hit Reyes. The
Certificate attests to petitioner's ownership of
the van. Petitioner itself did not dispute its
ownership of the van. Consistent with the rule, a
presumption that the requirements of Article
2180 have been satisfied arises. It is now up to
petitioner to establish that it incurred no liability
under Article 2180, which it failed to do.
(Caravan Travel And Tours International, Inc. V.
Ermilinda R. Abejar, G.R. No. 170631, February 10,
2016, as penned by J. Leonen)
Car owner not present in the vehicle
If the car owner is not present in the vehicle and
the driver was negligent, the injured party may
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
still sue the said owner under Article 2180 par.
(5) of the New Civil Code for imputed liability.
NOTE: Employers shall be liable for the damages
caused by their employees and household
helpers acting within the scope of their assigned
tasks, even though the former are not engaged in
any business or industry. (NCC, Article 2180 par.
5)
If no knowledge of owner of vehicle not liable
An owner of a vehicle cannot be held liable for
an accident involving the said vehicle if the same
was driven without his consent or knowledge,
and by a person not employed by him. (Duavit v.
CA, G.R. No. 82318, May 18, 1989)
Liability of proprietors of buildings
1. The proprietor of a building or structure is
responsible for the damages resulting from
its total or partial collapse, if it should be
due to the lack of necessary repairs. (NCC,
Art. 2190) (1990, 2007 BAR)
2. They shall also be responsible for damages
caused by emanations from tubes, canals,
sewers or deposits of infectious matter,
constructed without precautions suitable to
the place. (NCC, Art. 2191) (2002 BAR)
Rules on liability for collapse of a building
(NCC, Art. 1723)
1. The collapse of the building must be within
15 years from the completion of the
structure.
NOTE: The collapse is by reason of a defect
in the engineer or architect’s plans and
specifications, or due to the defects in the
ground.
2. The prescriptive period is 10 years
following the collapse.
3. The liability applies to collapse or ruin, not
to minor defects.
4. Even if payment has been made, an action is
still possible.
NOTE: Acceptance of the building, after
completion, does not imply waiver of any of
the cause of action by reason of any defect.
5. If the engineer or architect supervises the
construction, he shall be solidarily liable
792
 Civil Law
with the contractor.
NOTE: The contractor is likewise
responsible for the damages if the edifice
falls, within the same period, on account of
defects in the construction or the use of
materials of inferior quality furnished by
him, or due to any violation of the terms of
the contract.
When a building collapses during an
earthquake
GR: No one can be held liable in view of the
fortuitous event if the proximate cause of the
collapse of the building is an earthquake.
XPN: If the proximate cause is the defective
designing or construction, or directly
attributable to the use of inferior or unsafe
material, it is clear that liability exists. (NCC, Art.
1723; Juan F. Nakpil & Sons v. CA, G.R. No. L-
47851, October 3, 1986)
Concurrent Negligence of Two or More
Persons
Where the concurrent or successive negligent
acts or omissions of two or more persons,
although acting independently, are in
combination the direct and proximate cause of a
single injury to a third person. (Sabido v.
Custodio, G.R. No. L-21512, August 31, 1966)
Materiality of Intent
Liability in tort for injury is determined by
conduct, and can arise regardless of the mental
state or intent to commit an unlawful.
If several persons jointly commit a tort, the
plaintiff or person injured, has his election to sue
all or some of the parties jointly, or one of them
separately, because the tort is in its nature a
separate act of each individual. (Dean Worcester
v. Ocampo, G.R. No. 5932, February 27, 1912)
In case of injury to a passenger due to the
negligence of the driver of the bus on which he
was riding and of the driver of another vehicle,
the drivers as well as the owners of the two
vehicles are jointly and severally liable for
damages. (Tiu v. Arriesgado, G.R. No. 138060,
September 1, 2004)
ACT OR OMISSION AND ITS MODALITIES
793
Quasi-Delict
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 a quasi-
delict. (NCC, Art. 2176)
NOTE: While it may be true that the pre-existing
contract between the parties may, as a general
rule, bar the applicability of the law on quasi-
delict, the liability may itself be deemed to arise
from quasi-delict, i.e., the acts which breaks the
contract may also be a quasi-delict. (Coca-Cola
Bottlers Philippines, Inc. v. Court of Appeals, G.R.
No. 110295, 18 October 1993)
Act
It is any bodily movement tending to produce
some effect in the external world, it being
unnecessary that the same be actually produced,
as the possibility of its production is sufficient.
(People v. Gonzales, G.R. No. 80762, March 19,
1990)
Fault or Negligence
It consists in the omission of that diligence
which is required by the nature of the obligation
and corresponds with the circumstances of the
persons, of the time and of the place. (NCC, Art.
1173)
Accident (Caso Fortuito)
In invoking the exempting circumstance of caso
fortuito or accident, human agency must be
entirely excluded as the proximate cause or
contributory cause of the injury or loss. (Perla
Compania v. Sps. Sarangaya, G.R. No. 147746,
October 25, 2005)
PROXIMATE CAUSE
Proximate cause is that cause, which, in natural
and continuous sequence, unbroken by any
efficient intervening cause, produces the injury,
and without which the result would not have
occurred. (Ramos v. C.O.L. Realty, G.R. No. 184905,
August 28, 2009)
NOTE: Proximate cause is not necessarily the
immediate cause; it’s not necessarily the nearest
time, distance or space. (People v. Elizalde, 59 Off.
Gaz. 1241)
 Torts
Application of proximate cause It is the cause which, in natural
and continuous sequence,
The doctrine of proximate cause is applicable unbroken by any efficient
PROXIMATE
only in actions for quasi-delict, not in actions intervening cause, produces
CAUSE
involving breach of contract. the injury, and without which
the result would not have
The doctrine is a device for imputing liability to occurred.
a person where there is no relation between him One that destroys the causal
and another party. In such a case, the obligation connection between the
is created by law itself. But, where there is a pre- negligent act and injury and
existing contractual relation between the thereby negatives liability.
parties, it is the parties themselves who create INTERVENING
CAUSE
the obligation, and the function of the law is NOTE: Foreseeable
merely to regulate the relation thus created. Intervening causes cannot be
(Calalas v. CA, G.R. No. 122039. May 31, 2000) considered sufficient
intervening causes.
Principle of concurrent causes That cause which some
independent force merely took
Where the concurrent or successive negligent REMOTE
advantage of to accomplish
acts or omissions of two or more persons, CAUSE
something not the natural
although acting independently, are in effect thereof.
combination with the direct and proximate Causes brought about by the
cause of a single injury to a third person, and it is acts and omissions of third
impossible to determine what proportion each persons which makes the
contributed to the injury, either of them is CONCURRENT
defendant still liable. Here, the
responsible for the whole injury, even though his CAUSE
proximate cause is not
act alone might not have caused the entire necessarily the sole cause of
injury. (Sabido v. Custodio, G.R. No. L-21512, the accident.
August 31, 1966)
SPECIAL LIABILITY IN PARTICULAR
Efficient Intervening Cause (Novus Actus ACTIVITIES
Interviens)

An efficient intervening cause is one which OWNERS OR PROPRIETORS OF BUILDINGS,

destroys the causal connection between the STRUCTURES, OR THINGS
negligent act and the injury and thereby
negatives liability. (Morril v. Morril, 60 ALR 102, Duties of owners, proprietors, and
104 NJL 557) possessors of properties

When Efficient Intervening Cause is not
applicable
There is no efficient intervening cause if the
force created by the negligent act or omission
have either:
1. Remained active itself; or
2. Created another force which remained
active until it directly caused the result; or
3. Created a new active risk of being acted
upon by the active force that caused the
result. (57 Am. Jur. 2d 507)
Proximate, Intervening, Remote
Concurrent causes distinguished
GR: The owner has no duty to take reasonable
care towards a trespasser for his protection
from concealed danger. The trespasser come on
to the premises under his own risk. (Taylor v.
Manila Railroad Company, 16 Phil. 8)
XPN:
a. Visitors - owners owe a duty of care to
visitors. (Cabigao v. University of the
East, G.R. No. 33554)
b. Doctrine of Attractive Nuisance - one
who maintains on his premises
dangerous instrumentalities or
and appliances of a character likely to
attract children in play and fails to
prevent children from playing therewith

UNIVERSITY OF SANTO TOMAS 794

2021 GOLDEN NOTES
 Civil Law
is liable to a child of TENDER YEARS
who is injured thereby. Even if the child
is technically a trespasser in the
premises. (Hidalgo Enterprises, Inc. v.
Balandan, G.R. No. L-3422, June 13, 1952)
NOTE: The principal reason for the doctrine is
that that, although its danger is apparent to
those of age, is so enticing or alluring to children
of tender years as to include them to approach,
get on or use it, and this attractiveness is an
implied invitation to such children. (Jarco
Marketing v. Court of Appeals, G.R. No. 129792,
December 21, 1999)
c. Tolerated Possession - Owner is liable
if the plaintiff is inside his property by
tolerance or by implied permission.
(Aquino, Torts and Damages)
d. State of Necessity - A situation of
present danger to legally protected
interests, where the only remedy is
injuring another’s legally protected.
VICARIOUS LIABILITY: OWNERS AND
MANAGERS OF ESTABLISHMENTS AND
ENTERPRISES
The owners and managers of an establishment
or enterprise are likewise responsible for
damages caused by their employees in the
service of the branches in which the latter are
employed or on the occasion of their functions.
[NCC, Art. 2180(4)]
Employers shall be liable for the damages
caused by their employees and household
helpers acting within the scope of their assigned
tasks, even though the former are not engaged in
any business or industry. [Ibid. (5)] (2005 BAR)
Owners and managers
The terms “owners and managers” are used in
the sense of “employer” and do not include the
manager of a corporation who himself is just an
employee. (Phil. Rabbit Bus Lines v. Phil.
American Forwarders, Inc., G.R. No. L-25142,
March 25, 1975)
To make the employer liable under Art. 2180 of
the NCC, it must be established that the injurious
or tortious act was committed at the time the
employee was performing his functions.
(Marquez v. Castillo, G.R. No. 46237, September
795
27, 1939)
NOTE: However, a manager who is not an owner
but who assumes the responsibility of
supervision over the employees of the owner
may be held liable for the acts of the employees.
(Pineda, 2009)
One who hires an independent contractor but
controls the latter’s work is responsible also for
his negligence. (Cuison v. Norton and Harrison
co., G.R. No. L-32774)
Vicarious Liability of Owners and Managers
of the Establishment under Article 2180(5)
(1991, 2001 BAR)
GR: It is required that the employee must be
performing his assigned task at the time that the
injury is caused.
XPN: However, it is not necessary that the task
performed by the employee is his regular job or
that which was expressly given to him by the
employer. It is enough that the task is
indispensable to the business or beneficial to the
employer. (Filamer Christian Institute v. IAC, G.R.
No. 75112, August 7, 1992)
NOTE: It is not required that the employer is
engaged in some kind of industry or work.
(Castilex Industrial Corporation v. Vasquez, G.R.
No. 132266 December 21, 1999)
a. MANAGER
GR: A mere manager, who does not own the
business, is not to be considered as an employer
because as a manager, he is just a high-class
employee.
XPN: A manager who is not an owner but who
assumes the responsibility of supervision over
the employees of the owner may be held liable
for the acts of the employees.
NOTE: To be liable, the manager must be acting
as an employer of with the same authority as the
owner.
b. OWNER/EMPLOYER
To make the employer liable under Art 2180 (5
and 6), it must be established that the injurious
or tortuous act was committed at the time the
employee was performing his functions.
 Torts
NOTE: If there is deviation from the scope of
employment, the employer is not liable no
matter how short in time is the deviation.
When a criminal case is filed against the
offender, before the employer’s subsidiary
liability is exacted, there must be proof that:
1. They are indeed the employer of the
convicted employee;
2. The former are engaged in some kind of
industry;
3. The crime was committed by the employees
in the discharge of their duties; and
4. That the execution against the latter has not
been satisfied due to insolvency. (Philippine
Rabbit Bus Lines, Inc. v. People, G.R. No.
147703, April 14, 2004)
Presumption on the negligence of the
employer
The negligence of the employee is presumed to
be the negligence of the employer because the
employer is supposed to exercise supervision
over the work of the employees. This liability of
the employer is primary and direct. (Standard
Vacuum Oil Co. vs. Tan and Court of Appeals, G.R.
No. L-13048. February 27, 1960)
Once the employee’s fault is established, the
employer can then be made liable on the basis of
the presumption that the employer failed to
exercise diligentissimi patris familias (diligence
of a good father of a family) in the selection and
supervision of its employees. (LRTA v. Navidad,
G.R. No. 145804, February 6, 2003)

NOTE: The determination of these conditions Owners/Managers Employers (Par 5,

may be done in the same criminal action in (Par 4, Art. 2180, Art. 2180, NCC)
which the employee’s liability, criminal and civil, NCC)
has been pronounced, in a hearing set for that Requires engagement
precise purpose, with due notice to the in business on the part
employer, as part of the proceedings for the of the employers as the The employers need
execution of the judgment. [Rabuya (2017)], law speaks of not be engaged in
citing Calang v. People, 626 SCRA 679, 2010)] “establishment or business or industry.
enterprise.”
EMPLOYERS
Covers negligent acts
VICARIOUS LIABILITY: EMPLOYERS of employees
Covers negligent acts
committed either in
of employees acting
Employer the service of the
within the scope of
branches or in the
their assigned tasks.
An employer includes any person acting directly occasion of their
or indirectly in the interest of an employer in functions.
relation to an employee and shall include the
government and all its branches, subdivisions Q: A van and a tricycle figured in an accident
and instrumentalities, all government owned or along Sumulong Highway in Antipolo City.
controlled corporations and institutions, as well The van was owned and registered under
as non-profit private institutions, or Imperial's name, and was driven by Laraga.
organizations. (PD 442, Art. 97) The tricycle was driven by Mercado.

Requisites before an employer may be held
liable under Article 2180 (4) for the act of its
employees
1. The employee was chosen by the employer
personally or through another;
2. The service is to be rendered in accordance
with orders which the employer has the
authority to give all times; and
3. That the illicit act of the employee was on
the occasion or by reason of the functions
entrusted to him. (Jayme v. Apostol, G.R. No.
163609, November 27, 2008)
The Bayaban Spouses, who were on board
the tricycle, sustained injuries requiring
therapy and post-medical treatment. The
Bayaban Spouses demanded compensation
from Imperial, Laraga, and Mercado for the
hospital bills and loss of income that they
sustained while undergoing treatment. When
neither Imperial, Laraga, nor Mercado
heeded their demand, the Bayaban Spouses
filed a Complaint for damages.
The RTC ruled in favor of the Bayaban
Spouses. It found Laraga negligent and the

UNIVERSITY OF SANTO TOMAS 796

2021 GOLDEN NOTES
 Civil Law
proximate cause of the accident. On appeal,
the CA maintained Laraga’s liability, ruling
that "the registered owner of a motor vehicle
is primarily and directly responsible for the
consequences of its operation, including the
negligence of the driver, with respect to the
public and all third persons."
1. Does the burden of proof falls upon
Imperial to prove that his employee,
Laraga, was not acting within the scope of
his assigned tasks?
2. Should Imperial be vicariously liable for
the damages sustained by the Bayaban
Spouses?
A:
1. NO. The burden of proving the existence of
an employer-employee relationship and that
the employee was acting within the scope of
his or her assigned tasks rests with the
plaintiff under the Latin maxim "ei incumbit
probatio qui dicit, non qui negat" or "he who
asserts, not he who denies, must prove."
Therefore, it is not incumbent on the
employer to prove that the employee was
not acting within the scope of his assigned
tasks. Once the plaintiff establishes the
requisite facts, the presumption that the
employer was negligent in the selection and
supervision of the employee arises,
disputable with evidence that the employer
has observed all the diligence of a good
father of a family to prevent damage.
2. YES. Specifically, for employers, they are
deemed liable or morally responsible for the
fault or negligence of their employees but
only if the employees are acting within the
scope of their assigned tasks. An act is
deemed an assigned task if it is "done by an
employee, in furtherance of the interests of
the employer or for the account of the
employer at the time of the infliction of the
injury or damage."
Considering that petitioner failed to dispute
the presumption of negligence on his part,
he was correctly deemed liable for the
damages incurred by the Bayaban Spouses
when the tricycle they were riding collided
with the van driven by petitioner's
employee, Laraga. (Raul S. Imperia v. Heirs of
Neil Bayaban, And Mary Lou Bayaban, G.R.
No. 197626, October 03, 2018, as penned by
J. Leonen)
797
Remedies of the injured party in pursuing
the civil liability of the employer for the acts
of his employees
1. If he chooses to file a civil action for damages
based on quasi-delict under Article 2180 of
the New Civil Code and succeeds in proving
the negligence of the employee, the liability
of the employer is primary, direct and
solidary. It is not conditioned on the
insolvency of the employee. (Metro Manila
Transit Corp. v. CA, G.R. No. 118069,
November 16, 1998)
2. If he chooses to file a criminal case against
the offender and was found guilty beyond
reasonable doubt, the civil liability of the
employer is subsidiary. The employer cannot
use as a defense the exercise of the diligence
of a good father of a family.
NOTE: Once there is a conviction for a felony,
final in character, the employer under Article
103 of the RPC, is subsidiary liable, if it be shown
that the commission thereof was in the
discharge of the duties of the employee. A
previous dismissal of an action based on culpa
aquiliana could not be a bar to the enforcement
of the subsidiary liability required by Art. 103 of
the RPC. (Jocson, et al. v. Glorioso, G.R. No. L-
22686, January 30, 1968)
Vicarious Liability of Owners and Managers
of Establishment vs. Vicarious Liability of
Employers
Q: OJ was employed as a professional driver
of MM Transit bus owned by Mr. BT. In the
course of his work, OJ hit a pedestrian who
was seriously injured and later died in the
hospital as a result of the accident. The
victim’s heirs sued the driver and the owner
of the bus for damages. Is there a
presumption in this case, that Mr. BT, the
owner, had been negligent? If so, is the
presumption absolute or not? (2004 BAR)
A: YES, there is a presumption of negligence on
the part of the employer. However, such
presumption is rebuttable. The liability of the
employer shall cease when they prove that they
observed the diligence of a good father of a
family to prevent damage. (Art. 2180) When the
employee causes damage due to his own
negligence while performing his own duties,
there arises the juris tantum presumption that
 Torts
the employer is negligent, rebuttable only by
proof of observance of the diligence of a good
father of a family. (Delsan Transport Lines v. C &
A Construction, G.R. No. 156034, October 1, 2003)
Likewise, if the driver is charged and convicted
in a criminal case for criminal negligence, BT is
subsidiarily liable for the damages arising from
the criminal act.
Q: After working overtime up to midnight,
Alberto, an executive of an insurance
company drove a company vehicle to a
favorite Videoke bar where he had some
drinks and sang some songs with friends to
"unwind." At 2:00 a.m., he drove home, but in
doing so, he bumped a tricycle, resulting in
the death of its driver. May the insurance
company be held liable for the negligent act
of Alberto? Why? (2001 BAR)
A: NO. The insurance company is not liable
because when the accident occurred, Alberto
was not acting within the assigned tasks of his
employment.
It is true that under Art. 2180(5), employers are
liable for damages caused by their employees
who were acting within the scope of their
assigned tasks. However, the mere fact that
Alberto was using a service vehicle of the
employer at the time of the injurious accident
does not necessarily mean that he was operating
the vehicle within the scope of his employment.
In Castilex Industrial Corporation v. Vasquez, G.R.
No. 132266, December 21, 1999, the Supreme
Court held that notwithstanding the fact that the
employee did some overtime work for the
company, the former was, nevertheless, engaged
in his own affairs or carrying out a personal
purpose when he went to a restaurant at 2:00
a.m. after coming out from work. The time of the
accident (also 2:00 a.m.) was outside normal
working hours.
When the employee is considered to be
acting within the scope of employment
An employee who uses his employer’s vehicle in
going from his work to a place where he intends
to eat or in returning to work from a meal is not
ordinarily acting within the scope of his
employment in the absence of evidence of some
special business benefit to the employer.
(Castilex Industrial Corporation v. Vasquez, G.R.
No. 132266, December 21, 1999)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
However, evidence that by using the employer’s
vehicle to go to and from meals, an employee is
enabled to reduce his time-off and so devote
more time to the performance of his duties,
supports the finding that an employee is acting
within the scope of his employment while so
driving the vehicle. (Ibid.)
Defenses available to an employer
1. Exercise of due diligence in the selection and
supervision of its employees (except in
criminal action); and
NOTE: In the selection of prospective
employees, employers are required to
examine them as their qualifications,
experience, and service records. On the
other hand, with respect to the supervision
of employees, employers should formulate
standard operating procedures, monitor
their implementation, and impose
disciplinary measures for breaches thereof.
To establish these factors in a trial involving
the issue of vicarious liability, employees
must submit concrete proof, including
documentary evidence. (Metro Manila
Transit v. CA, G.R. No. 141089, August 1,
2002)
2. The act or omission was made outside
working hours and in violation of company’s
rules and regulations.
Q: Would the defense of due diligence in the
selection and supervision of the employee be
available to the employer in both instances?
(1997 BAR)
A: NO. The defense of diligence in the selection
and supervision of the employee under Article
2180 of the New Civil Code is available only to
those primarily liable thereunder, but not to
those subsidiary liable under Article 103 of the
Revised Penal Code. (Yumul v. Juliano, G.R. No.
47690, April 28, 1941)
Employer’s Liability under Art. 2180, NCC v.
Employer’s Liability under Art. 100, RPC
NEW CIVIL CODE RPC
Liability is direct,
primary, and solidary -
the employer may be Liability is subsidiary.
sued even without
suing the employee.
798
 Civil Law
Diligence of a good
Diligence of a good
father of a family is not
father of a family is a
a defense.
defense.
Petitioner must prove
Employer is liable
that the employer is
even if not engaged in
engaged in business.
business.
Proof of negligence is
Proof beyond
by mere
reasonable doubt is
preponderance of
required.
evidence.
Q: Arturo sold his Pajero to Benjamin for
P1M. Benjamin took the vehicle but did not
register the sale with the Land
Transportation Office. He allowed his son
Carlos, a minor who did not have a driver's
license, to drive the car to buy pan de sal in a
bakery. On the way, Carlos driving in a
reckless manner sideswiped Dennis, then
riding a bicycle. As a result, he suffered
serious physical injuries. Dennis filed a
criminal complaint against Carlos for
reckless imprudence resulting in serious
physical injuries.
1. Can Dennis file an independent civil
action against Carlos and his father
Benjamin for damages based on quasi-
delict?
2. Assuming Dennis' action is tenable; can
Benjamin raise the defense that he is not
liable because the vehicle is not
registered in his name? (2006 BAR)
A:
1. YES. Dennis can file an independent civil
action against Carlos and his father for
damages based on quasi-delict there being
an act or omission causing damage to
another without contractual obligation.
Under Section 1 of Rule 111 of the 2000
Rules on Criminal Procedure, what is
deemed instituted with the criminal action
is only the action to recover civil liability
arising from the act or omission punished by
law. An action based on quasi-delict is no
longer deemed instituted and may be filed
separately. (Sec. 3, Rule 111, Rules of Court)
2. NO, Benjamin cannot raise the defense that
the vehicle is not registered in his name. His
liability, vicarious in character, is based on
Article 2180 because he is the father of a
799
minor who caused damage due to
negligence. While the suit will prosper
against the registered owner, it is the actual
owner of the private vehicle who is
ultimately liable. (See Duavit v.CA, G.R. No. L-
29759, May 18, 1989) The purpose of car
registration is to reduce difficulty in
identifying the party liable in case of
accidents. (Villanueva v. Domingo, G.R. No.
144274, September 14, 2004)
Q: 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 P2 Million
in actual and moral damages to the parents
of the boy who was an honor student and had
a bright future. Without even trying to find
out if the driver had 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.
1. Will their action prosper?
2. 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 damages be satisfied?
(2015 BAR)
A:
1. YES, their action will prosper. The liability
of the employer in this case may be based on
quasi-delict and is included within the
coverage of independent civil actions. It is
not necessary to enforce the civil liability
based on culpa aquiliana that the driver or
employee be proven to be insolvent since
the liability of the employer for the quasi-
delict committed by their employees is
direct and primary subject to the defense of
due diligence on their part. (NCC, Art. 2176;
NCC, Art. 2180
2. YES, the parents of the boy can enforce the
subsidiary liability of the employer in the
criminal case against the driver. The
conviction of the driver is a condition sine
qua non for the subsidiary liability of the
employer to attach. Proof must be shown
that the driver is insolvent. (RPC, Art. 103)
 Torts
BANKS
Sec. 2 of the General Banking Law (RA 8791)
declares that the State recognizes the fiduciary
nature of banking that requires high standards of
integrity and performance.
Banking is a business that is impressed with
public interest. It affects economies and plays a
significant role in business and commerce. xxx
This is why the Court has recognized the
fiduciary nature of banks’ functions and attached
a special standard of diligence for the exercise of
their functions. (Philippine National Bank v.
Santos, G.R. No. 208293 & 208295, December 10,
2014)
Wrongful Acts of Bank’s Employees
Petitioner bank was remiss in its duty and
obligation to treat private respondent’s account
with the highest degree of care, considering the
fiduciary nature of their relationship. The bank
is under obligation to treat the accounts with
meticulous care X X X it must bear the blame for
failing to discover the mistake of its employee X
X X. (Metropolitan Bank v. CA, G.R. No. 112576,
October 26, 1994)
OWNERS OF MOTOR VEHICLES
The applicable law is Article 2184 of the NCC,
which provides that in motor vehicle mishaps,
the owner is solidarily liable with his driver, if
the former, who was in the vehicle, could have,
by the use of due diligence, prevented the
misfortune. It is disputably presumed that driver
was negligent, if he has been found guilty of
reckless driving or violating traffic regulations at
least twice within the next preceding two
months."
Under the foregoing provision, if the causative
factor was the driver's negligence, the owner of
the vehicle who was present is likewise held
liable if he could have prevented the mishap by
the exercise of due diligence. The rule is not new,
although formulated as law for the first time in
the new Civil Code.
It was expressed Chapman vs. Underwood (1914)
27 Phil. 374, where this Court held:
The same rule applies where the owner is
present, unless the negligent acts of the
driver are continued for such a length of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
time as to give the owner a reasonable
opportunity to observe them and to direct
his driver to desist therefrom. An owner
who sits in his automobile, or other vehicle,
and permits his driver to continue in a
violation of the law by the performance of
negligent acts, after he has had a reasonable
opportunity to observe them and to direct
that the driver cease therefrom, becomes
himself responsible for such acts.
On the other hand, if the driver, by a sudden
act of negligence, and without the owner
having a reasonable opportunity to prevent
the act or its continuance, injures a person
or violates the criminal law, the owner of the
automobile, although present therein at the
time the act was committed, is not
responsible, either civilly or criminally,
therefor. The act complained of must be
continued in the presence of the owner for
such a length of time that the owner, by his
acquiescence, makes his driver's act his
own.
The basis of the master's liability in civil law is
not respondent superior but rather the
relationship of pater familias. 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.
The test of imputed negligence under Article
2184 of the Civil Code is, to a great degree,
necessarily subjective. Car owners are not held
to a uniform and inflexible standard of diligence
as are professional drivers.
In many cases they refrain from driving their
own cars and instead hire other persons to drive
for them precisely because they are not trained
or endowed with sufficient discernment to know
the rules of traffic or to appreciate the relative
dangers posed by the different situations that
are continually encountered on the road. What
would be a negligent omission under aforesaid
Article on the part of a car owner who is in the
prime of age and knows how to handle a motor
vehicle is not necessarily so on the part, say, of
an old and infirm person who is not similarly
equipped.
The law does not require that a person must
possess a certain measure of skill or proficiency
800
 Civil Law
either in the mechanics of driving or in the
observance of traffic rules before he may own a
motor vehicle.
The test of his negligence, within the meaning of
Article 2184, is his omission to do that which the
evidence of his own senses tells him he should
do in order to avoid the accident. And as far as
perception is concerned, absent a minimum level
imposed by law, a maneuver that appears to be
fraught with danger to one passenger may
appear to be entirely safe and commonplace to
another. Were the law to require a uniform
standard of perceptiveness, employment of
professional drivers by car owners who, by their
very inadequacies, have real need of drivers'
services, would be effectively prescribed. (Caedo
v. Yu Khe Thai, G.R. No. L-20392, December 18,
1968, 135 PHIL 400-408)
COMMON CARRIERS
Common carriers are required to exercise
extraordinary diligence in the vigilance over
their passengers.
NOTE: The Supreme Court stated in a ruling that
the law concerning the liability of a common
carrier has now suffered a substantial
modification in view of the innovations
introduced by the new Civil Code. These
innovations are the ones embodied in Articles
1733, 1755 and 1756 in so far as the relation
between a common carrier and its passengers is
concerned, which, for ready reference, quote
hereunder:
ART. 1733. Common carriers, from the nature of
their business and for reasons of public policy,
are bound to observe extraordinary diligence
in the vigilance over the goods and for the
safety of the passengers transported by them
according to all the circumstances of each case.
Such extraordinary diligence in the vigilance
over the goods is further expressed in articles
1734, 1735, and 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the
passengers is further set forth in articles 1755
and 1756.
ART. 1755. A common carrier is bound to carry
the passengers safely as far as human care and
foresight can provide, using the utmost diligence
of very cautious persons, with a due regard for
all the circumstances.
801
ART. 1756. In case of death of or injuries to
passengers, common carriers are presumed to
have been at fault or to have acted negligently,
unless they prove that they observed
extraordinary diligence as prescribed in articles
1733 and 1755. (Isaac v. A.L. Ammen
Transporatation Co., Inc., G.R. No. L-9671, August
23, 1957)
DOCTORS
General Practitioner: The standard of the care
demanded is ordinary care and diligence in the
application of his knowledge.
Specialist: Generally considered to be that of an
average specialist and not of an average
physician. (Solis, Medical Jurisprudence 1998)
a. Captain of the Ship Doctrine
The head surgeon is made liable for everything
that goes wrong within the four corners of the
operating room. (AQUINO, Torts and Damages)
The fact that there is a trend in American
Jurisprudence to do away with the Captain of the
Ship Doctrine does not mean that this court will
ipso facto follow said trend. (Ramos v. CA, G.R.
124354)
b. Doctrine of Apparent Authority
When no employment relationship exists but it
is shown that the hospital holds out to the
patient that the doctor is its agent, it may be
vicariously liable under Art. 2176.
c. Doctrine of Corporate
Responsibility
A hospital has the duty to see that it meets the
standards of responsibilities for the care of
patients. Such duty includes the proper
supervision of members of its medical staff.
(Professional Services, Inc. v. Agana)
d. Doctrine of Informed Consent
Informed consent has evolved into a general
principle of law that a physician has a duty to
disclose what a reasonably prudent physician in
the medical community in the exercise of
reasonable care would disclose to his patient as
to whatever grave risks of injury might be
incurred from a proposed course of treatment,
 Torts
so that a patient, may intelligently exercise his
judgment by reasonably balancing the probable
risks against the probable risks against the
probable benefits. [Canterbury v. Spence
(464F.2d772)]
LAWYERS
An attorney is bound to exercise only a
reasonable degree of care and skill, having
reference to the business he undertakes. Prone
to err like any other human being, he is not
answerable for every error or mistake, and will
be protected as long as he acts honestly and in
good faith to the best of his skill and knowledge.
(Adarne v. Aldaba, A.M. No. 801, June 27, 1978)
HEAD OF THE FAMILY
VICARIOUS LIABILITY: PARENTS
Basis of vicarious liability of the parents
(2005 BAR); “Principal of Parental Liability”
This liability is made natural as a logical
consequence of the duties and responsibilities of
parents exercising parental authority which
includes controlling, disciplining and instructing
their children. In this jurisdiction the parent’s
liability is vested by law which assumes that
when a minor or unemancipated child living
with their parent, commits a tortious act, the
parents are presumed negligent in the
performance of their duty to supervise the
children under their custody. (Tamargo v. CA,
G.R. No. 85044, June 3, 1992)
Requisites of vicarious liability of the parents
(21-CL)
1. The child is below 21 years of age;
2. The child Committed a tortious act to the
damage and prejudice of another person;
and
3. The child Lives in the company of the parent
concerned whether single or married.
(Pineda, 2009)
Minors v. Incapacitated Persons
Incapacitated
Minor
Persons
Those who are below Persons beyond 21
21 years of age. years of age but are
incapacitated such as
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: R.A. 6809, An those who are insane
Act Lowering the Age or imbecile.
of Majority from
Twenty-One to
Eighteen Years, did not
amend Article 236 of
the Family Code with
regard to age.
“Nothing in this code shall be construed to
derogate from the duty or responsibility of
parents and guardians for children and wards
below 21 years of age mentioned in the second
and third paragraphs of Art. 2180 of the Civil
Code” (RA 6809).
Thus, under Article 221 of the Family Code,
there is no more alternative qualification as to
the civil liability of parents. The liability of both
father and mother is now primary and not
subsidiary. (Libi vs. IAC, G.R. No. 70890,
September 18, 1992) Otherwise stated, their
responsibility is now simultaneous, and no
longer alternative. (Rabuya, 2017)
NOTE: Under RA 9344 (Juvenile Justice and
Welfare Act of 2006) 15 years of age or younger
– age of absolute irresponsibility.
Liability of parents involving either crimes or
quasi-delicts of their minor children;
Primary NOT Subsidiary
Primary and Solidary Liability:
(a) Under Article 2180 of the NCC
The civil liability of parents for quasi-delicts of
their minor children, as contemplated in Article
2180 of the Civil Code, is primary and not
subsidiary. In fact, if we apply Article 2194 of the
said Code, which provides for solidary liability of
joint tortfeasors, the persons responsible for the
act or omission, in this case, the minor and the
father, and in case of his death or incapacity, the
mother, are solidarily liable. Accordingly, such
parental liability is primary and not subsidiary,
hence the last paragraph of Article 2180
provides that “the responsibility treated in this
article shall cease when the persons herein
mentioned proved that they observed all the
diligence of a good father of a family to prevent
damages. (Libi vs. IAC, G.R. No. 70890, September
18, 1992)
(b) Under Article 101 of the RPC
802
 Civil Law
The parents are, and should be, held primarily
liable for the civil liability arising from criminal
offenses committed by their minor children
under their legal authority or control, or who
live in their company, unless it is proven that the
former acted with the diligence of a good father
of a family to prevent such damages. The
primary liability is premised on the provisions of
Article 101 of the Revised Penal Code with
respect to damages ex delicto caused by their
children 9 years of age or under, or over 9 but
under 15 years of age, who acted without
discernment. With regard to their children over
9 but under 15 years of age, who acted with
discernment, or 15 years of age or over but
under 21 years of age, such primary liability
shall be imposed pursuant to Article 2180 of the
Civil Code. (Libi vs. IAC, G.R. No. 70890,
September 18, 1992)
NOTE: Parents and other persons exercising
parental authority shall be civilly liable for the
injuries and damages caused by the acts or
omissions of their unemancipated children living
in their company and under their parental
authority subject to the appropriate defenses
provided by law. (FC, Art. 221)
Vicarious liability of other persons exercising
parental authority
In default of the parents or a judicially appointed
guardian, parental authority shall be exercised
by the following persons in the order indicated:
1. Surviving grandparents;
2. Oldest sibling, over 21 years old, unless unfit
or unqualified; or
3. Child’s actual custodian, over 21 years old,
unless unfit or disqualified. (FC, Art. 216)
Adopted Children
Judicially adopted children are considered
legitimate children of their adopting parents.
(RA. 8552, Sec. 17)
Thus, adopters are civilly liable for the
tortious/criminal acts of their minor children
who live with them.
NOTE: Parental authority may not be given
retroactive effect so as to make the adopting
parents the indispensable parties in a damage
case filed against their adopted child, for acts
committed by the latter, when actual custody
was yet lodged with the biological parents.
(Tamargo v. CA, G.R. No. 85044, June 3, 1992)
Reversion of parental authority to biological
parents
If the adopter dies while the adopted child is still
a minor, parental authority should be deemed to
have reverted in favor of the biological parents.
(Bartolome v. SSS, G.R. No. 192531, November 12,
2014)
Illegitimate Child
As for an illegitimate child, if he is acknowledged
by the father and lives with the latter, the father
shall be responsible. However, if he is not
recognized by the putative father but is under
the custody and supervision of the mother, it is
the latter who is the one vicariously liable.
(Pineda, 2009)
GUARDIANS
VICARIOUS LIABILITY: GUARDIANS
Guardians are liable for damages caused by the
minors or incapacitated persons who are under
their authority and live in their company (NCC,
Art. 2180). If the minor or insane person causing
damage has no parents or guardian, the minor or
insane person shall be answerable with his own
property in an action against him where a
guardian ad litem shall be appointed. (NCC, Art.
2182)
NOTE: The rules on vicarious liability of parents
are applicable to vicarious liability of guardians.
De facto guardians covered by Art. 2180 of
the NCC
De facto guardians are relatives and neighbors
who take upon themselves the duty to care and
support orphaned children without passing
through judicial proceedings.
NOTE: They are liable for acts committed by
children while living with them and are below
21 years of age, the law being applied by
analogy. (Pineda, 2009)
PROVINCES, CITIES, AND MUNICIPALITIES
VICARIOUS LIABILITY: STATE

803
 Torts
Aspects of liability of the State
1. Public/Governmental – Where the State is
liable only for the tortious acts of its special
agents. The State has voluntarily assumed
liability for acts done through special agents.
(Pineda, 2009)
2. Private/Non-governmental – When the State
is engaged in private business or enterprise,
it becomes liable as an ordinary employer.
(NIA v. Fontanilla, G.R. No. 61045, December
1, 1989)
NOTE: The State is only liable for the negligent
acts of its officers, agents and employees when
they are acting as special agents.
Special Agent
A special agent is one who receives a definite
and fixed order or commission, foreign to the
exercise of the duties of his office.
An employee who on his own responsibility
performs functions inherent in his office and
naturally pertaining thereto is not a special
agent. (Meritt v. Government of the Philippine
Islands, G.R. No. 11154, March 21, 1916)
NOTE: Where the government commissions a
private individual for a special governmental
task, it is acting through a special agent within
the meaning of the provision. (Largo, 2007)
Liability of Provinces, Cities and
Municipalities
As for local government units, “provinces, cities
and municipalities shall be liable for damages for
the death of, or injuries suffered by, any person
by reason of the defective condition of roads,
streets, bridges, public buildings, and other
public works under their control or
supervision.” (NCC, Art. 2189)
In case where there is a “Management and
Operating Contract” between a local
government unit and a private corporation
Sta. Ana Public Market, despite the Management
and Operating Contract between respondent
City and Asiatic Integrated Corporation
remained under the control of the former. X X X
There is no argument that it is the duty of the
City of Manila to exercise reasonable care to
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
keep the public market reasonably safe for
people frequenting the place for their marketing
needs. X X X To recapitulate, it appears evident
that the City of Manila is likewise liable for
damages under Article 2189 of the Civil Code,
respondent City having retained control and
supervision over the Sta. Ana Public Market and
as tort-feasor under Article 2176 of the Civil
Code on quasi-delicts. (Jimenez v. City of Manila,
G.R. No. 71049, May 29, 1987)
NOTE: It is not even necessary for the defective
road or street to belong to the province, city or
municipality for liability to attach. The article
only requires that either control or
supervision is exercised over the defective road
or street. (Guilatco v. City of Dagupan, G.R. No.
61516, 21 Mar 1989)
Lack of knowledge not a defense
The LGU cannot be relieved of liability based on
its purported lack of knowledge of the
excavation and the condition of the road when
the accident occurred. Its obligation to maintain
the safe condition of the road within its territory
is a continuing one which is not suspended while
a street is being repaired. (Municipality of San
Juan v. CA, G.R. No. 121920, 9 Aug 2005)
TEACHERS AND HEADS OF ESTABLISHMENT
VICARIOUS LIABILITY: TEACHERS AND
HEADS OF ESTABLISHMENTS OF ARTS AND
TRADES
Teachers or directors of arts and trades are
liable for any damages caused by their pupils or
apprentices while they are under their custody.
In the case of Ylarde v. Aquino, G.R. L-33722, July
29, 1988, the teacher Edgardo Aquino, after
bringing his pupils to an excavation site dug by
them, left them all by themselves, and one of the
pupils fell into the pit. The teacher acted with
fault and gross negligence because a teacher
who stands in loco parentis to his pupils would
have made sure that the children are protected
from all harm in his company.
Application of vicarious liability under Art.
2180 of the NCC not limited to schools of arts
and trade
The application of Article 2180 of the New Civil
Code is not limited to schools of arts and trades.
804
 Civil Law
There is really no substantial distinction
between the academic and the nonacademic
schools insofar as torts committed by their
students are concerned. The same vigilance is
expected from the teacher over the students
under his control and supervision, whatever the
nature of the school where he is teaching. There
is no reason why different degrees of vigilance
should be exercised by the school authorities on
the basis only of the nature of their respective
schools. (Amadora v. CA, G.R. No. L-47745, April
15, 1988)
NOTE: Although Art. 2180 is applicable to all
schools, the distinction between an academic
school and an establishment of arts and trades is
still essential to distinguish the liability of the
teacher from that of the head of the
establishment.
Liability of the teacher as distinguished from
the head of the establishment
GR: Where the school is academic rather than
technical or vocational in nature, responsibility
for the tort committed by the student will attach
to the teacher in charge of such student.
XPN: In the case of establishments of arts and
trades, it is the head thereof, and only he, who
shall be held liable as an exception to the general
rule.
In other words, teachers in general shall be
liable for the acts of their students except where
the school is technical in nature, in which case it
is the head thereof who shall be answerable.
(Ibid.)
Basis of the teacher’s vicarious liability
They are acting in Loco Parentis (in place of
parents). However, teachers are not expected to
have the same measure of responsibility as that
imposed on parent for their influence over the
child is not equal in degree. The parent can
instill more lasting discipline on the child than
the teacher and so should be held to a greater
accountability than the teacher or the head for
the tort committed by the child. (Amadora v. CA,
G.R. No. L-47745, April 15, 1988)
Special Parental Authority under the Family
Code
Art. 218. The school, its administrators and
805
teachers, or the individual, entity or institution
engaged in child are shall have special parental
authority and responsibility over the minor child
while under their supervision, instruction or
custody.
Authority and responsibility shall apply to all
authorized activities whether inside or outside
the premises of the school, entity or institution.
Art. 219. Those given the authority and
responsibility under the preceding Article shall
be principally and solidarily liable for damages
caused by the acts or omissions of the
unemancipated minor. The parents, judicial
guardians or the persons exercising substitute
parental authority over said minor shall be
subsidiarily liable.
Rationale of vicarious liability of school
heads and teachers (2005 BAR)
The rationale of school heads and teachers’
liability for tortious acts of their pupils and
students, so long as they remain in custody, is
that they stand, to a certain extent, as to their
pupils and students, in loco parentis and are
called upon to “exercise reasonable supervision
over the conduct of the child.” This is expressly
provided for in Articles 349, 350 and 352 of the
Civil Code. (Pineda, 2009)
Age of student immaterial
Even if the student has already reached the age
of majority, the liability can be imputed to the
teacher-in-charge. Under Article 2180, age does
not matter. Unlike the parent who will be liable
only if the child is still a minor, the teacher is
held answerable by the law for the act of the
student regardless of the age of the student
liable. (Amadora v. CA, G.R. No. L-47745, April 15,
1988)
Limitation to the liability of teachers and
heads of Schools
Teachers and Heads of schools are only liable if
the students remain in schools. If they are no
longer in such premises, their responsibility
shall attach no more. Their parents become
responsible for them. (Pineda, 2009)
A student is in custody of the school
authorities
 Torts
The student is in the custody of the school school, its administrators and teachers, or the
authorities as long as he is under the control and individual, entity or institution engaged in child
influence of the school and within its premises, care shall have special parental authority and
whether the semester has not ended, or has responsibility over the minor child while under
ended or has not yet begun. The term “custody” their supervision, instruction or custody.
signifies that the student is within the control Authority and responsibility shall apply to all
and influence of the school authorities. The authorized activities whether inside or outside
teacher in charge is the one designated by the the premises of the school, entity or institution.
dean, principal, or other administrative superior
to exercise supervision over the pupils or Liability of the school
students in the specific classes or sections to
which they are assigned. It is not necessary that 1. Vicarious liability as an employer under Art.
at the time of the injury, the teacher is physically 2180 of the NCC;
present, and in a position to prevent it. 2. Direct liability:
a. for quasi-delicts under Art. 2176 of the
Article 218 of the Family Code v. Article 2180 NCC;
of the New Civil Code b. as an institution exercising special
parental authority over minor children
ARTICLE 218, ARTICLE 2180, under Art. 219 of the FC;
Family Code New Civil Code c. for breach of contract; or
School, its Teachers, head of
administrators, establishment in arts NOTE: When a student enrolls, a contract is
teachers engaged in and trades are made entered into between him and the school.
childcare are made expressly liable. Under this contract, the school is supposed
expressly liable. to ensure that adequate steps are taken to
provide an atmosphere conducive to study
Liability of school, its Neither such express and ensure the safety of the student while
administrators, and solidary nor subsidiary inside its premises. (Saludaga v. FEU, G.R.
teachers is solidary liability is stated. No. 179337, April 30, 2008) Thus, any quasi-
and parents are made delict committed by the school’s employee
subsidiary liable. against the student is also actionable under
breach of contractual obligations.
Students involved Students involved are
must be a minor. not necessarily 3. Subsidiary liability for felonies committed by
minors. their servants, pupils, workmen,
apprentices, or employees in the discharge
Defenses available of their duties, under Art. 103 of the RPC.

Their responsibility will cease when they prove STRICT LIABILITY

that they observed all the diligence of a good
father of a family to prevent damage. (NCC, Art.
2180) As for the employer, if he shows to the
satisfaction of the court that in the selection and
in the supervision of his employees he has
exercised the care and diligence of a good father
of a family, the presumption is overcome and he
is relieved from liability. (Layugan v. IAC, G.R. No.
L-49542, September 12, 1980)
Q: A 15-year-old high school student stabs his
classmate who is his rival for a girl, while
they were going out of the classroom after
their last class. Who may be held liable?
(2005 BAR)
A: Under Article 218 of the Family Code, the
ANIMALS
Possessor and User of an Animal
Under Article 2183 of the NCC, the possessor of
an animal or whoever may make use of the same
is responsible for the damage which it may
cause, although it may escape or be lost. This
responsibility shall cease only in case the
damage should come from force majeure or from
the fault of the person who has suffered damage.
According to Manresa, the obligation imposed by
Article 2183 of the Civil Code is not based on the
negligence or on the presumed lack of vigilance
of the possessor or user of the animal causing

UNIVERSITY OF SANTO TOMAS 806

2021 GOLDEN NOTES
 Civil Law
the damage. It is based on natural equity and on
the principle of social interest that he who
possesses animals for his utility, pleasure or
service must answer for the damage which such
animal may cause. (Vestil v. Intermediate
Appellate Court, G.R. No. 74431, November 6,
1989, 258-A PHIL 612-619)
The language of Art. 2183 reveals an evident
intent to make the possessor or whoever makes
use of the animal, liable independent of fault.
The only exception is when the damage was
caused by force majeure or by the person who
suffered the damage. Additionally, there is an
opinion to the effect that the owner or possessor
of the animal is still liable even if damage was
caused by the animal through the fault of third
persons. If the acts of a third person cannot be
foreseen or prevented, then the situation is
similar to that of force majeure and the
possessor is not liable. (Aquino, 2016)
In the case of Afialda v. Hisole, the animal was in
the custody and under the control of the
caretaker, who was paid for his work as such.
Obviously, the Court ruled that it was the
caretaker's business to try to prevent the animal
from causing injury or damage to anyone,
including himself. And being injured by the
animal under those circumstances, was one of
the risks of the occupation which he had
voluntarily assumed and for which he must take
the consequences. (Afialda v. Hisole, G.R. No. L-
2075, November 29, 1949, 85 PHIL 67-70)
NUISANCE
The general rule is that everyone is bound to
bear the habitual or customary inconveniences
that result from the proximity of others, and so
long as this level is not surpassed, he may not
complain against them. But if the prejudice
exceeds the inconveniences that such proximity
habitually brings, the neighbor who causes such
disturbance is held responsible for the resulting
damage, being guilty of causing nuisance.
There can be no doubt but that commercial and
industrial activities which are lawful in
themselves may become nuisances if they are so
offensive to the senses that they render the
enjoyment of life and property uncomfortable. It
is no defense that skill and care have been
exercised and the most improved methods and
appliances employed to prevent such result.
807
Of course, the creation of trifling annoyance and
inconvenience does not constitute an actionable
nuisance, and the locality and surroundings are
of importance. (Velasco v. Manila Electric Co., G.R.
No. L-18390, August 6, 1971, 148-B PHIL 204-
221)
Noise as Nuisance
The fact that the cause of the complaint must be
substantial has often led to expressions in the
opinions that to be a nuisance the noise must be
deafening or loud or excessive and
unreasonable. Usually it was shown to be of that
character.
The determining factor when noise alone is the
cause of complaint is not its intensity or volume.
It is that the noise is of such character as to
produce actual physical discomfort and
annoyance to a person of ordinary sensibilities,
rendering adjacent property less comfortable
and valuable. If the noise does that it can well be
said to be substantial and unreasonable in
degree; and reasonableness is a question of fact
dependent upon all the circumstances and
conditions.
There can be no fixed standard as to what kind
of noise constitutes a nuisance. In the absence of
evidence that the complainant and his family are
supersensitive to distracting noises, it is to be
assumed that they are persons of ordinary and
normal sensibilities. (Velasco v. Manila Electric
Co., G.R. No. L-18390, August 6, 1971, 148-B PHIL
204-221)
Classes of Nuisance
Nuisances may be divided into two classes:
(1) Nuisances per se; and
(2) Nuisances per accidens.
Nuisances per se are recognized as nuisances
under any and all circumstances. Nuisances per
accidens are nuisances only because of the
special circumstances and conditions
surrounding them. (Iloilo Ice and Cold Storage
Co. v. Municipal Council of Iloilo, G.R. No. 7012,
March 26, 1913, 24 PHIL 471-485)
Attractive Nuisance Doctrine
One who maintains on his premises dangerous
 Torts
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, is liable
to a child of tender years who is injured thereby,
even if the child is technically a trespasser in the
premises.
The principal reason for the doctrine is that the
condition or appliance in question although its
danger is apparent to those of age, 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. (Hidalgo Enterprises, Inc. v.
Balandan, G.R. No. L-3422, June 13, 1952, 91 PHIL
488-492; Jarco Marketing Corp. v. Court of
Appeals, G.R. No. 129792, December 21, 1999, 378
PHIL 991-1008)
Example: Swimming pool with “attractive floats
or paraphernalia.”
However, it should be noted that the attractive
nuisance doctrine, generally, is not applicable 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. (Hidalgo Enterprises, Inc. v.
Balandan, G.R. No. L-3422, [June 13, 1952], 91
PHIL 488-492)
Abatement of Nuisances per se
The general welfare clause authorizes the
abatement of nuisances without judicial
proceedings. This tenet applies to a nuisance per
se, or one which affects the immediate safety of
persons and property and may be summarily
abated under the undefined law of necessity.
(Monteverde v. Generoso, 52 Phil. 123, 1982;
Estate of Francisco v. Court of Appeals, G.R. No.
95279, July 25, 1991, 276 PHIL 649-656)
Abatement of Nuisance per accidens
If it be a nuisance per accidens, or by its nature, it
cannot be said to be injurious to rights of
property, health, or comfort of the community, it
may then be so proven in a hearing conducted
for that purpose. A nuisance per accidens is
not per se a nuisance warranting its summary
abatement without judicial intervention. (Estate
of Francisco v. Court of Appeals, G.R. No. 95279,
July 25, 1991, 276 PHIL 649-656)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Note: While the Sangguniang Bayan may
provide for the abatement of a nuisance (Local
Government Code, Sec. 149 [ee]), it cannot declare
a particular thing as a nuisance per se and order
its condemnation. The nuisance can only be so
adjudged by judicial determination.
Municipal councils do not have the power to find
as a fact that a particular thing is a nuisance
when such thing is not a nuisance per se; nor can
they authorize the extra judicial condemnation
and destruction of that as a nuisance which, in
its nature, situation or use is not such. These
things must be determined in the ordinary
courts of law. (Iloilo Cold Storage v. Municipal
Council, 24 Phil. 47, 1913; Estate of Francisco v.
Court of Appeals, G.R. No. 95279, July 25, 1991,
276 PHIL 649-656)
PRODUCTS LIABILITY
Manufacturers or Processors
Under Article 2187 of the NCC, manufacturers
and processors of foodstuffs, drinks, toilet
articles, and similar goods shall be liable for
death or injuries caused by any noxious or
harmful substances used, although no
contractual relation exists between them and the
consumers.
Consumer’s Act (R.A. No. 7394)
Section 97 of R.A. No. 7394 provides that any
Filipino or foreign manufacturer, producer, and
any importer, shall be liable for redress,
independently of fault, for damages caused to
consumers by defects resulting from design,
manufacture, construction, assembly and
erection, formulas and handling and making up,
presentation or packing of their products, as
well as for the insufficient or inadequate
information on the use and hazards thereof. (See
Sections 92 – 107 of R.A. No. 7394)
LEGAL INJURY
Concepts
Injury The illegal invasion of a legal right.
The loss, hurt, or harm which
Damage
results from the injury.
The recompense or compensation
Damages
awarded for the damage suffered.
808
 Civil Law
Damnum Absque Injuria
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 damnum absque
injuria.
In other words, in order that a plaintiff may
maintain an action for the injuries of which he
complains, he must establish that such injuries
resulted from a breach of duty which the
defendant owed to the plaintiff- a concurrence of
injury to the plaintiff and legal responsibility by
the person causing it.
The underlying basis for the award of tort
damages is the premise that an individual was
injured in contemplation of law. Thus, there
must first be a breach of some duty and the
imposition of liability for that breach before
damages may be awarded; and the breach of
such duty should be the proximate cause of the
injury. (Equitable Banking Corp. v. Calderon, G.R.
No. 156168, December 14, 2004, 487 PHIL 499-
511)
Right
A right is a legally enforceable claim of one
person against another, that the other shall do a
given act, or shall not do a given act. (Pineda,
2011)
Tort arising from Breach of Contract
A quasi-delict can be the cause for breaching a
contract that might thereby permit the
application of principles applicable to tort even
when there is a pre-existing contract between
the plaintiff and the defendant.
Where, without a pre-existing contract between
two parties, an act or omission can nonetheless
amount to an actionable tort by itself, the fact
that the parties are contractually bound is no bar
to the application of quasi-delict provisions to
the case.
This rule can govern only where the act or
omission complained of would constitute an
actionable tort independently of the contract.
809
(Far East Bank and Trust Company v. CA, G.R. No.
108164, February 23, 1995; Orient Freight
International, Inc. v. Keihin-Everett Forwarding
Company, Inc., G.R. No. 191937, August 9, 2017)
NOTE: The act that breaks the contract may be
also a tort. (Air France v. Carrascoso, G.R. No. L-
21438, September 28, 1966; Orient Freight
International, Inc. v. Keihin-Everett Forwarding
Company, Inc., G.R. No. 191937, August 9, 2017)
CLASSIFICATION OF TORTS
Torts are classified as follows:
1. Negligent Torts;
2. Intentional Torts; or
Intentional torts are independent civil liabilities
not arising from an act or omission complained
of as a felony. Intentional torts are found under
Articles 32 and 34 of the NCC. (See Safeguard
Security Agency, Inc. v. Tangco, G.R. No. 165732,
December 14, 2006, 540 PHIL 86-111)
a. Intentional Physical Harms
i. Battery
Damages for mental suffering are recoverable
without the necessity for showing actual
physical injury in a case of willful battery
because the basis of that action is the
unpermitted and intentional invasion of the
plaintiff's person and not the actual harm done
to the plaintiff's body.
Personal indignity is the essence of an action for
battery. Consequently, the defendant is liable not
only for contacts which do actual physical harm,
but also for those which are offensive and
insulting. (Fisher v. Carrousel Motor Hotel, Inc.,
424 S. W2d 627, 1967)
ii. Assault
Neither fear, nor terror, nor apprehension of
harm is an essential ingredient of the common
law crime of assault. Hence, the common law
conception is that fear on the part of the victim
need not be proved in the crime of assault.
(Commonwealth v. Slaney, 345 Mass. 135)
iii. False imprisonment
 Torts
False imprisonment is also known as “dignitary
tort.” It is found under Article 32(4) of the NCC,
and Articles 124 and 267 of the RPC.
Illegal serious detention under Article 267 of
the RPC, as amended, includes not only the
imprisonment of a person but also the
deprivation of her liberty in whatever form and
for whatever length of time. It includes a
situation where the victim cannot go out of
the place of confinement or detention or is
restricted or impeded in his liberty to move.
(People v. Bisda, G.R. No. 140895, July 17, 2003,
454 PHIL 194-240)
iv. Trespass to land
The court may award nominal damages in every
case where any property right has been
invaded.
In the case of National Power Corp. v. Spouses
Campos, Jr., the Court ruled that the petitioner, in
blatant disregard of the respondents'
proprietary right, trespassed the subject
property and conducted engineering surveys
thereon. Under the circumstances, the award of
nominal damages is likewise
warranted. (National Power Corp. v. Spouses
Campos, Jr., G.R. No. 143643, June 27, 2003, 453
PHIL 79-97)
v. Trespass to chattels
vi. Conversion
Conversion is an intentional exercise of
dominion or control over a chattel which so
seriously interferes with the right of another to
control it that the actor may justly be required to
pay the other the full value of the chattel.
(Restatement 2d on Torts, Section 22A)
In determining the seriousness of the
interference and the justice of requiring the
actor to pay the full value, the following factors
are important: (a) the extent and duration of the
actor’s exercise of dominion or control; (b) the
actor’s intent to assert a right in fact inconsistent
with the other’s right of control; (c) the actor’s
good faith; (d) the extent and duration of the
resulting interference with the other’s right of
control; (e) the harm done to the chattel; (f) the
inconvenience and expense caused to the other.
(Restatement 2d on Torts, Section 22A)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
b. Intentional Non-Physical Harms
i. Violation of personal dignity
Under Article 26 of the NCC, the rights of
persons are amply protected, and damages are
provided for violations of a person's dignity,
personality, privacy and peace of mind.
The violations mentioned in Articles 26 and
2219 of the NCC are not exclusive but are merely
examples and do not preclude other
similar or analogous acts. Damages therefore are
allowable for actions against a person's dignity,
such as profane, insulting, humiliating,
scandalous or abusive language.
In the case of Concepcion v. Court of Appeals,
there is no question that private respondent
suffered mental anguish, besmirched reputation,
wounded feelings and social humiliation as a
proximate result of petitioner's abusive,
scandalous and insulting language. (Concepcion
v. Court of Appeals, G.R. No. 120706, January 31,
2000, 381 PHIL 90-101)
ii. Violation of Privacy
Under Article 26 of the NCC, every person shall
respect the dignity, personality, privacy and
peace of mind of his neighbors and other
persons. The following and similar acts, though
they may not constitute a criminal offense, shall
produce a cause of action for damages,
prevention and other relief:
(1) Prying into the privacy of another's
residence;
(2) Meddling with or disturbing the private life
or family relations of another;
(3) Intriguing to cause another to be alienated
from his friends;
(4) Vexing or humiliating another on account of
his religious beliefs, lowly station in life, place of
birth, physical defect, or other personal
condition.
Generally, denuncia falsa or malicious
prosecution refers to unfounded criminal
actions (Madera vs. Lopez, L-37105, February 10,
1981, 102 SCRA 700). The term has been
expanded to include unfounded civil suits
instituted just to vex and humiliate the
810
 Civil Law
defendant despite the absence of a cause of
action or probable cause (Buchanan vs. Vda. de
Esteban, 32 Phil. 363, 365).
As observed by Chief Justice Fernando, the
expenses and annoyance of litigation form part
of the social burden of living in a society which
seeks to attain social control through law.
(Dioquino vs. Laureano, L-25906, May 28, 1970,
33 SCRA 65, 72 citing Petroleum Exploration vs.
Public Service Commission, 304 US 209)
A long catena of cases supports the proposition
that moral damages are not recoverable for
unsuccessful suits filed in good faith. (Equitable
Banking Corp. v. Intermediate Appellate Court,
G.R. No. 66070, October 31, 1984, 218 PHIL 135-
142)
iii. Infliction of emotional distress
Primarily, an "emotional distress" tort action is
personal in nature, i.e., it is a civil action filed by
an individual to assuage the injuries to his
emotional tranquility due to personal attacks on
his character.
Moreover, to recover for the intentional
infliction of emotional distress the plaintiff must
show that:
(a) The conduct of the defendant was
intentional or in reckless disregard of the
plaintiff;
(b) The conduct was extreme and outrageous;
(c) There was a causal connection between the
defendant's conduct and the plaintiff's mental
distress; and
(d) The plaintiff's mental distress was extreme
and severe. (MVRS Publications v. Islamic
Da'wah Council of the Philippines, G.R. No.
135306, January 28, 2003, 444 PHIL 230-308)
iv. Malicious prosecution
Malicious prosecution is when a person
directly insinuates or imputes to an innocent
person the commission of a crime and the
accused is compelled to defend himself in court.
While generally associated with unfounded
criminal actions, the term has been expanded to
include unfounded civil suits instituted just to
vex and humiliate the defendant despite the
811
absence of a cause of action or probable cause.
(Martires v. Cokieng, G.R. No. 150192, February
17, 2005)
A tort action for malicious prosecution has been
defined as “an action for damages brought by
one against another whom a criminal
prosecution, civil suit, or other legal proceedings
has been instituted maliciously and without
probable cause, after the termination of such
prosecution, suit or proceeding in favor of the
defendant therein. (Aquino, 2016)
This Court has drawn the four elements that
must be shown to concur to recover damages for
malicious prosecution. Therefore, for a malicious
prosecution suit to prosper, the plaintiff must
prove the following:
(1) the prosecution did occur, and the
defendant was himself the prosecutor or that
he instigated its commencement;
(2) the criminal action finally ended with an
acquittal;
(3) in bringing the action, the prosecutor acted
without probable cause; and
(4) the prosecution was impelled by legal
malice — an improper or a sinister motive.
The award of damages arising from malicious
prosecution is justified if and only if it is proved
that there was a misuse or abuse of judicial
processes. (Tan v. Valeriano, G.R. No. 185559,
August 2, 2017)
In the case of Manila Gas Corp. v. Court of
Appeals, the Court ruled that in order to
constitute malicious prosecution, there must be
proof that the prosecution was prompted by a
sinister design to vex and humiliate a person
that it was initiated deliberately by the
defendant knowing that his charges were false
and groundless. Concededly, the mere act of
submitting a case to the authorities for
prosecution does not make one liable for
malicious prosecution. (Manila Gas Corp. v. Court
of Appeals, G.R. No. L-44190, October 30, 1980,
188 PHIL 582-597)
v. Defamation
Defamation, which includes libel and slander,
means the offense of injuring a person's
 Torts
character, fame or reputation through false and
malicious statements. It is that which tends to
injure reputation or to diminish the esteem,
respect, good will or confidence in the plaintiff
or to excite derogatory feelings or opinions
about the plaintiff. It is the publication of
anything which is injurious to the good name or
reputation of another or tends to bring him into
disrepute. Defamation is an invasion of
a relational interest since it involves the opinion
which others in the community may have, or
tend to have, of the plaintiff.
It must be stressed that words which are merely
insulting are not actionable as libel or
slander per se, and mere words of general abuse
however opprobrious, ill-natured, or vexatious,
whether written or spoken, do not constitute a
basis for an action for defamation in the absence
of an allegation for special damages. The fact
that the language is offensive to the plaintiff
does not make it actionable by itself. (MVRS
Publications v. Islamic Da'wah Council of the
Philippines, G.R. No. 135306, January 28, 2003,
444 PHIL 230-308; Figueroa v. People, G.R. No.
159813, August 9, 2006, 498 SCRA 298)
vi. Fraud or Misrepresentation
As held in Jekshewitz v. Groswald, where a
person is induced by the fraudulent
representation of another to do an act which, in
consequence of such misrepresentation, he
believes to be neither illegal nor immoral, but
which is in fact a criminal offense, he has a right
of action against the person so inducing him for
damages sustained by him in consequence of his
having done such act. (Manuel v. People, G.R. No.
165842, November 29, 2005, 512 PHIL 818-851)
vii. Seduction
In the case of Pe v. Pe, the circumstances under
which defendant tried to win Lolita's affection
cannot lead to any other conclusion than that it
was he who, thru an ingenious scheme or
trickery, seduced the latter to the extent of
making her fall in love with him. This is shown
by the fact that defendant frequented the house
of Lolita on the pretext that he wanted her to
teach him how to pray the rosary. Because of the
frequency of his visits to the latter's family who
was allowed free access because he was a
collateral relative and was considered as a
member of her family, the two eventually fell in
love with each other and conducted clandestine
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
love affairs not only in Gasan but in Boac where
Lolita used to teach in a barrio school.
Indeed, no other conclusion can be drawn from
this chain of events than that defendant not only
deliberately, but through a clever strategy,
succeeded in winning the affection and love of
Lolita to the extent of having illicit relations with
her. The wrong he has caused her and her family
is indeed immeasurable considering the fact that
he is a married man. Verily, he has committed an
injury to Lolita's family in a manner contrary to
morals, good customs and public policy as
contemplated in Article 21 of the new Civil
Code. (Pe v. Pe, G.R. No. L-17396, May 30, 1962,
115 PHIL 186-191)
viii. Unjust dismissal
In the case of Quisaba v. Sta. Ines-Melale Veneer &
Plywood Inc, the Court ruled that although the
acts complained of seemingly appear to
constitute "matters involving employee-
employer relations" as Quisaba's dismissal was
the severance of a pre-existing employee-
employer relation, his complaint is grounded not
on his dismissal per se, as in fact he does not ask
for reinstatement or backwages, but on
the manner of his dismissal and the consequent
effects of such dismissal.
The "right" of the respondents to dismiss
Quisaba should not be confused with
the manner in which the right was exercised and
the effects flowing therefrom. If the dismissal
was done anti-socially or oppressively, as the
complaint alleges, then the respondents violated
Article 1701 of the Civil Code which prohibits
acts of oppression by either capital or labor
against the other, and Article 21, which makes a
person liable for damages if he wilfully causes
loss or injury to another in a manner that is
contrary to morals, good customs, or public
policy, the sanction for which, by way of moral
damages, is provided in Article 2219, No. 10.
(Quisaba v. Sta. Ines-Melale Veneer & Plywood,
Inc., G.R. No. L-38088, August 30, 1974, 157 PHIL
757-761)
ix. Violation of rights committed by
public officers
Under Article 27 of the NCC, any person
suffering material or moral loss because a public
servant or employee refuses or neglects, without
812
 Civil Law
just cause, to perform his official duty may file diligence which is required by the nature of the
an action for damages and other relief against obligation and corresponding to the
the latter, without prejudice to any disciplinary circumstances of the persons, time and place.
administrative action that may be taken. (NCC, Art. 1173)

In addition, under Article 32 of the same Code,
any public officer or employee, or any private
individual, who directly or indirectly obstructs,
defeats, violates, or in any manner impedes or
impairs any of the following rights and liberties
of another person under the said Article, shall be
liable to the latter for damages.
c. Interference with Relations
i. Family relations such as:
a. Alienation of Affection;
b. Loss of Consortium; or
c. Criminal Conversation (Adultery).
An actionable negligence may be culpa
contractual, culpa aquiliana, or criminal
negligence. Thus, an action for damages for
negligent act of the defendant may be based on
contract, quasi-delict, or delict. The bases for
liability are separate and distinct from each
other even if only one act is involved. (Aquino,
2017)
Motive NOT Material
Motive is not material on negligence cases. The
defendant may still be held liable even if the act
was meant to be a practical joke. (AQUINO, Torts
and Damages)

ii. Social relations such as: Culpa Aquiliana v. Culpa Contractual

a. Meddling with or disturbing Culpa Aquiliana Culpa Contractual

family relations found under Article The foundation of The liability is founded
26(2) of the NCC; or liability is independent on a contract.
b. Intriguing to cause another to be of a contract.
alienated from his friends found Negligence is direct, Negligence is merely
under Article 26(3) of the NCC. substantive, and incidental to the
independent. performance of the
iii. Economic relations such as: contractual obligation.
The defense of “good The defense of “good
a. Interference with contractual father of a family” is a father of a family” is
relations or tort interference found complete and proper not a complete
under Article 1314 of the NCC; defense insofar as defense in the
b. Business Interruption Damages; parents, guardians, selection of employees.
or employers are
c. Unfair Competition concerned.
. There is no There is presumption
iv. Political relations such as: presumption of of negligence as long
negligence. as it can be proved
a. Violation of right to suffrage; or The party injured must that there is a breach
b. Violation of other political rights prove the negligence of contract.
such as freedom of speech, press, of the defendant.
assembly, and religion.
Culpa Aquiliana v. Crimes
3. Strict Liability Torts
Culpa Aquiliana Crimes
a. Possessor and user of an animal There can be quasi- There must be a law
b. Nuisance delict as long as there punishing the act.
is fault or negligence
NEGLIGENT TORTS resulting in damage or
injury to another.
Negligence Criminal intent is not There must be a
necessary. criminal intent for
Negligence is the omission of that degree of criminal liability to

813
 Torts
exist.
Quasi-delict is Crime is a wrong 1. Simple negligence – Failure to give proper
wrongful act against a against the State or the attention to a task expected of him or her,
private individual. public interest. signifying a disregard of a duty resulting
The quantum of proof The guilt if the accused from carelessness or indifference.
for quasi-delict is must be proved
preponderance of beyond reasonable 2. Gross negligence – Refers to negligence
evidence. doubt. characterized by the want of even slight
The sanction is either The punishment is care, or by acting or omitting to act in a
reparation or either imprisonment, situation where there is a duty to act, not
indemnification of the fine, or both. (Pineda, inadvertently but wilfully and intentionally,
injury or damage. 2019) with a conscious indifference to the
consequences, insofar as other persons may
Test of negligence be affected. It is the omission of that care
that even inattentive and thoughtless men
The test is would a prudent man, in the position never fail to give to their own property.
of the tortfeasor, foresee harm to the person (Office of the Ombudsman v. Samson De Leon,
injured as a reasonable consequence of the G.R. No. 154083, February 27, 2013)
course about to be pursued? If so, the law
imposes a duty on the actor to take precaution Circumstances to be considered in
against its mischievous results, and failure to do determining whether an act is negligent
so constitutes negligence. (Picart v. Smith, G.R.
No. L-12219, March 15, 1918; Romulo Abrogar 1. Person Exposed to the Risk – A higher
and Erlinda Abrogar v. Cosmos Bottling Company degree of diligence is required if the person
and Intergames Inc., G.R. No. 164749, March 15, involved is a child.
2017) 2. Emergency – The actor confronted with an
emergency is not to be held up to the
NOTE: The determination of negligence is a standard of conduct normally applied to an
question of foresight on the part of the actor. individual who is in no such situation.
(Phil. Hawk Corp. v. Vivian Tan Lee, G.R. No. 3. Social Value or Utility of Action – Any act
166869, February 16, 2010) subjecting an innocent person to
unnecessary risk is a negligent act if the risk
Rule when negligence shows bad faith outweighs the advantage accruing to the
actor and even to the innocent person
When negligence shows bad faith, responsibility himself.
arising from fraud is demandable in all 4. Time of the day – May affect the diligence
obligations. (NCC, Art. 1171) Furthermore, in required of the actor (NCC, Art. 1173); e.g. a
case of fraud, bad faith, malice or wanton driver is required to exercise more
attitude, the obligor shall be responsible for all prudence when driving at night.
damages which may be reasonably attributed to 5. Gravity of the Harm to be Avoided – Even
the non-performance of the obligation. (NCC, Art. if the odds that an injury will result are not
2201) high, harm may still be considered
foreseeable if the gravity of harm to be
When is negligence excused avoided is great.
6. Alternative Cause of Action – If the
GR: Negligence is excused when events that alternative presented to the actor is too
transpired were unforeseen or, which though costly, the harm that may result may still be
foreseen, were inevitable. (NCC, Art. 1174) considered unforeseeable to a reasonable
man. More so if there is no alternative
XPN: thereto.
1. In cases specified by law; 7. Place – A man who should occasion to
2. When declared by stipulation; or discharge a gun on an open and extensive
3. When the nature of the obligation requires marsh, or in a forest would be required to
the assumption of risk. use less circumspection and care, than if he
were to do the same thing in an inhabited
Degrees of negligence town, village or city. (A Selection of Cases

UNIVERSITY OF SANTO TOMAS 814

2021 GOLDEN NOTES
 Civil Law
Illustrative of the English Law of Tort,
Kenny, 1928)
8. Violation of Rules and Statutes
a. Statutes
b. Administrative Rules
c. Private Rules of Conduct
9. Practice and Custom – A practice which is
dangerous to human life cannot ripen into a
custom which will protect anyone who
follows it. (Yamada v. Manila Railroad Co.,
G.R. No. 10073, December 24, 1915)
10. Physical Disability
GR: A weak or accident-prone person must
meet the standard of a reasonable man,
otherwise he will be considered as
negligent.
XPN: if the defect amounts to a real
disability, the standard of conduct is that of
a reasonable person under like disability,
e.g. the standard conduct of a blind person
becomes that of a reasonable person who is
blind. (Francisco v. Chemical Bulk Carriers
Incorporated, G.R. No. 193577, September 7,
2011)
Quantum of proof on negligence
The quantum of proof is preponderance of
evidence. [Rules of Court, Rule 133(1)]
Burden of proof
GR: Plaintiff alleging damage due to negligent
acts in his complaint has the burden of proving
such negligence.
XPN: When the rules or the law provide for
cases when negligence is presumed.
Disputable presumptions of negligence
1. Motor vehicle mishaps – a driver is presumed
negligent if he:
a. Was found guilty of reckless driving or
violating traffic regulations at least
twice within the preceding two months
(NCC, Art. 2184); or
b. Was violating any traffic regulation at
the time of the mishap. (NCC, Art. 2185)
2. Possession of dangerous weapons or
815
substances, results in death or injury, except
when the possession or use thereof is
indispensable in his occupation or business.
(NCC, Art. 2188)
3. Common carriers are presumed to have
been at fault or acted negligently in cases of
death or injuries to passengers. Unless they
prove that they observed extraordinary
diligence. (NCC, Art. 1733 & 1755)
Intoxication not negligence per se
Mere intoxication is not negligence per se nor
establishes want of ordinary care. But it may be
one of the circumstances to be considered to
prove negligence. (Wright v. MERALCO, G.R. No.
L-7760, October 1, 1914)
Doctrine of Comparative Negligence
The negligence of both the plaintiff and the
defendant are compared for the purpose of
reaching an equitable apportionment of their
respective liabilities for the damages caused and
suffered by the plaintiff. (Pineda, 2009)
The relative degree of negligence of the parties
is considered in determining whether, and to
what degree, either should be responsible for his
negligence (apportionment of damages).
NOTE: Under the modified form, the plaintiff can
recover only if his negligence is less than or
equals that of the defendant. Expressed in terms
of percentages, a plaintiff who is charged with
80% of the total negligence can recover only
20% of his damages. (De Leon, 2012)
GOOD FATHER OF A FAMILY OR
REASONABLY PRUDENT MAN
The general standard of test is Bonus Pater
Familias or that of a good father of a family. If the
law or contract does not state the diligence
which is to be observed in the performance, that
which is expected of a good father of a family
shall be required. [NCC, Art. 1173 (2)]
Concept of a good father of the family (pater
familias)
He is not and is not supposed to be omniscient of
the future; rather, he is one who takes
precautions against any harm when there is
something before him to suggest or warn him of
the danger or to foresee it. (Picart v. Smith, G.R.
No. L-12219, March 15, 1918; Al del Cruz v. Capt.
 Torts
Renato Octaviano and Wilma Octaviano, G.R. No.
219649, July 26, 2017)
The law requires a man to possess ordinary
capacity to avoid harming his neighbors unless a
clear and manifest incapacity is shown; but it
does not generally hold him liable for
unintentional injury unless, possessing such
capacity, he might ought to have foreseen the
danger. (Corliss v. Manila Railroad Co., G.R. No. L-
21291, March 28, 1969; Al del Cruz v. Capt.
Renato Octaviano and Wilma Octaviano, G.R. No.
219649, July 26, 2017)
Rule in case of fault or negligence of an
obligor
1. Art. 1173, NCC - Provides that the fault or
negligence of the obligor consists in the
omission of that diligence which is required
by the nature of the obligation and
corresponds with the circumstances of the
persons, of the time and of the place. When
negligence shows bad faith, the provisions of
Articles 1171 and 2201, paragraph 2 of the
NCC shall apply.
NOTE: Under Art. 1171 of the NCC, responsibility
arising from fraud is demandable in all
obligations. Any waiver of an action for future
fraud is void.
2. Art. 2201, NCC - In contracts and quasi-
contracts, the damages for which the obligor
who acted in good faith is liable shall be
those that are the natural and probable
consequences of the breach of the
obligation, and which the parties have
foreseen or could have reasonably foreseen
at the time the obligation was constituted.
NOTE: In case of fraud, bad faith, malice or
wanton attitude, the obligor shall be responsible
for all damages which may be reasonably
attributed to the non-performance of the
obligation. (Ibid.)
Concept of Good Faith
Good faith refers to the state of the mind which
is manifested by the acts of the individual
concerned. It consists of the intention to abstain
from taking an unconscionable and
unscrupulous advantage of another. (DBP v. CA,
et al., G.R. No. 137916, December 8, 2004)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Application of standard of diligence to
children
GR: The action of a child will not necessarily be
judged according to the standard of an adult.
XPN: If the minor is mature enough to
understand and appreciate the nature and
consequences of his actions. In such a case, he
shall be considered to have been negligent.
NOTE: The age of absolute irresponsibility is 15
years old and below. (Juvenile Justice and
Welfare Act of 2006, RA 9344)
Nevertheless, absence of negligence does not
absolutely excuse the child from liability, as his
properties, if any, can be held subsidiarily liable.
Nor will such absence of negligence excuse the
child’s parent from vicarious liability.
“Diligence before the fact”
The conduct that should be examined in
negligence cases is prior conduct or conduct
prior to the injury that resulted or, in proper
cases, the aggravation thereof.
STANDARD OF CARE
STANDARD OF CONDUCT or
DEGREE OF CARE REQUIRED
In General
If the law or contract does not state the diligence
which is to be observed in the performance, that
which is expected of a good father of a family
shall be required. [Article 1173(2)]
NOTE: Diligence of a good father of a family -
bonus pater familias - A reasonable man is
deemed to have knowledge of the facts that a
man should be expected to know based on
ordinary human experience. (PNR v. IAC, G.R. No.
7054, January 22, 1993; Philippine National
Railways and Virgilio Borja v. CA, et. al., G.R. No.
157658, October 15, 2007)
Persons who have Physical Disability
GR: A weak or accident prone person must come
up to the standard of a reasonable man,
otherwise, he will be considered as negligent.
XPN: If the defect amounts to a real disability,
the standard of conduct is that of a reasonable
person under like disability.
Experts and Professionals
816
 Civil Law
GR: They should exhibit the case and skill of one
who is ordinarily skilled in the particular field
that he is in.
NOTE: This rule does not apply solely or
exclusively to professionals who have
undergone formal education.
XPN: When the activity, by its very nature,
requires the exercise of a higher degree of
diligence
e.g. Banks; Common carriers
Insane Persons
The insanity of a person does not excuse him or
his guardian from liability based on quasi-delict
(NCC, Arts. 2180 & 2182). This means that the act
or omission of the person suffering from mental
defect will be judged using the standard test of a
reasonable man.
The bases for holding a permanently insane
person liable for his torts are as follows:
Where one of two innocent persons must suffer a
loss it should be borne by the one who
occasioned it;
To induce those interested in the estate of the
insane person (if he has one) to restrain and
control him; and
The fear that an insanity defense would lead to
false claims of insanity to avoid liability.
(Breunig v. American Family Insurance Co.,
173 N.W. 2d 619, February 3, 1970)
NOTE: Under the RPC, an insane person is
exempt from criminal liability. However, by
express provision of law, there may be civil
liability even when the actor is exempt from
criminal liability. An insane person is still liable
with his property for the consequences of his
acts, though they performed unwittingly. (US v.
Baggay, Jr. G.R. No. 6659, September 1, 1911)
Employers
Employers are required to exercise that degree
of care as mandated by the Labor Code or other
mandatory provisions for proper maintenance of
the workplace or adequate facilities to ensure
the safety of the employees.
817
NOTE: Failure of the employer to comply with
mandatory provisions may be considered
negligence per se.
Employees
Employees are bound to exercise due care in the
performance of their functions for the
employers. Liability may be based on negligence
committed while in the performance of the
duties of the employee. (Araneta v. De Joya, G.R.
No. L-25172, May 24, 1974)
NOTE: The existence of the contract constitutes
no bar to the commission of torts by one against
the other and the consequent recovery of
damages.
Owners, Proprietors and
Possessors of Property
GR: The owner has no duty to take reasonable
care towards a trespasser for his protection or
even to protect him from concealed danger.
XPNs:
1. Visitors – Owners of buildings or premises
owe a duty of care to visitors.
2. Tolerated Possession - Owner is still liable if
the plaintiff is inside his property by
tolerance or by implied permission.
However, common carriers may be held
liable for negligence to persons who stay in
their premises even if they are not
passengers.
3. Doctrine of Attractive Nuisance- 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 them from playing therefrom, is
liable to a child of tender years who is
injured thereby, even if the child is a
trespasser.
4. State of Necessity – A situation of present
danger to legally protected interests, in
which there is no other remedy than the
injuring of another’s also legally protected
interest.
Doctors
If a General Practitioner – Ordinary care and
diligence in the application of his knowledge and
 Torts
skill in the practice of his profession.
If a Specialist – The legal duty to the patient is
generally considered to be that of an average
physician.
Lawyers
An attorney is bound to exercise only a
reasonable degree of care and skill, having
reference to the business he undertakes to do.
(Adarne v. Aldaba, A.M. No. 801, June 27, 1978; Air
Philippines Corporation v. International Business
Aviation Services Phils., Inc., G.R. No. 151963,
September 9, 2004)
ordinary care of his concerns. (Rules of Court,
Rule 131, Sec. 3) There are however exceptions
when negligence is presumed:
1. Article 2184, NCC - It is disputably presumed
that a driver was negligent, if he had been
found guilty of reckless driving or violating
traffic regulations at least twice within the
next preceding two months.
2. Article 2185, NCC - Unless there is proof to
the contrary, it is presumed that a person
driving a motor vehicle has been negligent if
at the time of the mishap, he was violating
any traffic regulation.

UNREASONABLE RISK OF HARM NOTE: Proof of traffic violation is required.

A causal connection must exist between the
injury received and the violation of the
Elements to be considered to determine if a
traffic regulation. It must be proven that the
person has exposed himself to an
violation of the traffic regulation was the
unreasonable great risk
proximate or legal cause of the injury or that
it substantially contributed thereto.
1. Magnitude of the risk;
Negligence, consisting in whole or in part, of
2. Principal object;
violation of law, like any other negligence, is
3. Collateral object;
without legal consequence unless it is a
4. Utility of the risk; and
contributing cause of the injury. (Tison v.
5. Necessity of the risk
Pomasin, G.R. No. 173180, August 24, 2011)
If the magnitude of the risk is very great and the
3. Article 2188, NCC - There is prima facie
principal object, very valuable, yet the value of
presumption of negligence on the part of the
the collateral object and the great utility and
defendant if the death or injury results from
necessity of the risk counterbalanced those
his possession of dangerous weapons or
considerations, the risk is made reasonable.
substances, such as firearms and poison,
(Prosser and Keeton, Law of Torts, 1984 Ed.,
except when possession or use thereof is
p.173, citing Terry, Negligence, 24 Harv. L. Rev.
indispensable in his occupation or business.
40,42)

NOTE: In the Philippines, the courts do not use NOTE: Proof of possession of dangerous
weapons or substances is required.
any formula in determining if the defendant
committed a negligent act or omission. What
4.. Captain of the ship doctrine - A surgeon is
appears to be the norm is to give negligence a
likened to a captain of the ship, such that it
common sense, intuitive interpretation. (Aquino,
is his duty to control everything going on in
2005)
the operating room. The surgeon in charge
of an operation is liable for the negligence of
In the field of negligence, interests are to be
his assistants during the time when those
balanced only in the sense that the purposes of
assistants are under the surgeon’s control.
the actor, the nature of his act and the harm that
(Cantre v. Go, G.R. No. 160889, April 27, 2007)
may result from action or inaction are elements
to be considered. Some may not be considered
5. Article 1756, NCC - In case of death or
depending on the circumstances.
injuries of passengers, common carriers are
presumed to have been at fault or acted
PRESUMPTION OF NEGLIGENCE
negligently, unless they prove that they
(2000, 2009 BAR) observed extraordinary diligence prescribed
in Articles 1733 and 1755 of the NCC.
A person is generally presumed to have taken

UNIVERSITY OF SANTO TOMAS 818

2021 GOLDEN NOTES
 Civil Law
Q: Romeo L. Battung, Jr. (Battung) boarded
petitioner's (G.V. Florida Transport, Inc.)
bus. Battung was seated at the first row
behind the driver and slept during the ride.
When the bus reached the Philippine
Carabao Center in Muñoz, Nueva Ecija, the
bus driver, Duplio, stopped the bus and
alighted to check the tires. At this point, a
man who was seated at the fourth row of the
bus stood up, shot Battung at his head, and
then left with a companion. The bus
conductor, Daraoay, notified Duplio of the
incident and thereafter, brought Romeo to
the hospital, but the latter was pronounced
dead on arrival. Hence, respondents filed a
complaint for damages in the aggregate
amount of P1,826,000.00 based on a breach
of contract of carriage against petitioner,
Duplio, and Daraoay (petitioner, et al.)
before the RTC. Respondents contended that
as a common carrier, petitioner and its
employees are bound to observe
extraordinary diligence in ensuring the
safety of passengers; and in case of injuries
and/or death on the part of a passenger, they
are presumed to be at fault and, thus,
responsible therefor. RTC ruled in
respondents' favor. CA affirmed the ruling of
the RTC. Can the petitioner be held civilly
liable?
A: NO. Since Battung's death was caused by a co-
passenger, the applicable provision is Article
1763 of the Civil Code, which states that "a
common carrier is responsible for injuries
suffered by a passenger on account of the willful
acts or negligence of other passengers or of
strangers, if the common carrier's employees
through the exercise of the diligence of a good
father of a family could have prevented or
stopped the act or omission." Notably, for this
obligation, the law provides a lesser degree of
diligence, i.e., diligence of a good father of a
family, in assessing the existence of any
culpability on the common carrier's part.
In this case, records reveal that when the bus
stopped at San Jose City to let four (4) men ride
petitioner's bus (two [2] of which turned out to
be Battung's murderers), the bus driver, Duplio,
saw them get on the bus and even took note of
what they were wearing. Moreover, Duplio made
the bus conductor, Daraoay, approach these men
and have them pay the corresponding fare,
which Daraoay did. During the foregoing, both
Duplio and Daraoay observed nothing which
819
would rouse their suspicion that the men were
armed or were to carry out an unlawful activity.
With no such indication, there was no need for
them to conduct a more stringent search (i.e.,
bodily search) on the aforesaid men. By all
accounts, therefore, it cannot be concluded that
petitioner or any of its employees failed to
employ the diligence of a good father of a family
in relation to its responsibility under Article
1763 of the Civil Code. As such, petitioner cannot
altogether be held civilly liable.
NOTE: The negligence of the employee gives rise
to the presumption of negligence on the part of
the employer. This is the presumed negligence in
the selection and supervision of the employee.
(Poblete v. Fabros, G.R. No. L-29803, September
14, 1979; Armando Jose y Paz and Manila Central
Bus (MCL), represented by its General Manager
Mr. Danilo T. De Dios v. Court of Appeals, Rommel
Abraham, represented ny his father Felixberto
Abraham, Jose Macarubo and Mercedes
Macarubo, G.R. Nos. 118441-42, January 18, 2000)
Negligence is proven by
1. Direct evidence
2. Circumstantial evidence
3. Res Ipsa Loquitur
Q: On the night of January 6, 1998, a fire
broke out which burned down the house and
store of respondent Emilio and his son,
respondent Gilbert (the Alfeches), and the
adjacent watch repair shop owned by
respondent Manugas. It was admitted that
the cause of the fire was the constant
abrasion of VECO' s electric wire with M.
Lhuillier's signboard. The close proximity
and constant abrasion of the wire and
signboard was due to the transfer of the
VECO’s post which was made by reason of the
road-widening and the drainage construction
of the road. The signage was installed long
before the said projects were made. The CA
found that VECO’s negligence in the transfer
and installation of the posts and wires was
the proximate cause of the fire. Was VECO
negligent?
A: YES. VECO is a public utility tasked with
distributing electricity to consumers. It is its
duty to ensure that its posts are properly and
safely installed. As the holder of a public
franchise, it is to be presumed that it has the
necessary resources and expertise to enable a
 Torts
safe and effective installation of its facilities. By
installing its posts and wires haphazardly,
without regard to how its wires could come in
contact with a previously installed signage,
VECO failed to act in keeping with the diligence
required of it. Had it not been for the transfer,
VECO's wires would not have touched M.
Lhuillier's signage. (Visayan Electric Company,
Inc. V. Emilio G. Alfeche, Gilbert Alfeche,
Emmanuel Manugas, And M. Lhuillier Pawnshop
and Jewelry, G.R. No. 209910, November 29, 2017,
as penned by J. Leonen)
Q: On October 16, 2001, Keihin-Everett
entered into a Trucking Service Agreement
with Matsushita. These services were
subcontracted by Keihin-Everett to Orient
Freight. In April 2002, Matsushita called
Keihin-Everett's Sales Manager, Salud Rizada,
about a column in the April 19, 2002 issue of
the tabloid newspaper Tempo. This news
narrated the April 17, 2002 interception by
Caloocan City police of a stolen truck filled
with shipment of video monitors and CCTV
systems owned by Matsushita. When
contacted by Keihin-Everett about this news,
Orient Freight stated that the tabloid report
had blown the incident out of proportion.
They claimed that the incident simply
involved the breakdown and towing of the
truck. However, when the shipment arrived
in Yokohama, Japan on May 8, 2002, it was
discovered that 10 pallets of the shipment's
218 cartons, worth US$34,226.14, were
missing.
Keihin-Everett independently investigated
the incident. During its investigation, it was
found out that during the incident, Cudas told
Aquino to report engine trouble to Orient
Freight and Aquino also later on reported
that the truck was missing. When the truck
was intercepted by the police, Cudas escaped.
When confronted with Keihin-Everett's
findings, Orient Freight wrote back to admit
that its previous report was erroneous and
that pilferage was apparently proven. In a
letter, Matsushita terminated its In-House
Brokerage Service Agreement with Keihin-
Everett. Matsushita cited loss of confidence
for terminating the contract, stating that
Keihin-Everett's way of handling the incident
and its nondisclosure of this incident's
relevant facts "amounted to fraud and
signified an utter disregard of the rule of
law." Keihin-Everett demanded
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
P2,500,000.00 as indemnity for lost income.
It argued that Orient Freight's mishandling of
the situation caused the termination of
Keihin-Everett's contract with Matsushita.
When Orient Freight refused to pay, Keihin-
Everett filed a complaint for damages.
Was Orient Freight negligent for failing to
disclose the facts surrounding the hijacking
incident, which led to the termination of the
Trucking Service Agreement between Keihin-
Everett and Matsushita?
A: YES. Orient Freight's conduct showed its
negligent handling of the investigation and its
failure to timely disclose the facts of the incident
to Keihin-Everret and Matsushita. Orient Freight
was clearly negligent in failing to investigate
properly the incident and make a factual report
to Keihin and Matsushita. Orient Freight failed to
exercise due diligence in disclosing the true facts
of the incident to plaintiff Keihin and Matsushita.
As a result, Keihin suffered income losses by
reason of Matsushita's cancellation of their
contract which primarily was caused by the
negligence of Orient Freight. (Orient Freight
International, Inc. V. Keihin-Everett Forwarding
Company, Inc., G.R. No. 191937, August 09, 2017,
as penned by J. Leonen)
TORT CONCEPTS AND DOCTRINES
RES IPSA LOQUITUR
Literally, res ipsa loquitur means "the thing
speaks for itself." It is the rule that the fact of the
occurrence of an injury, taken with the
surrounding circumstances, may permit an
inference or raise a presumption of negligence,
or make out a plaintiff’s prima facie case, and
present a question of fact for defendant to meet
with an explanation. (Professional Services Inc. v.
Agana, G.R. No. 126297, January 31, 2007)
However, res ipsa loquitur is not a rule of
substantive law and, as such, does not create nor
constitute an independent or separate ground of
liability. Instead, it is considered as merely
evidentiary or in the nature of a procedural rule.
(Professional Services v. Agana, G.R. No. 126297,
January 31, 2007)
NOTE: It is also known as the “Doctrine of
Common Knowledge.”
Requisites for the application of the doctrine
820
 Civil Law
Resort to the doctrine may be allowed only
when:
1. The accident is of such character as to
warrant an inference that it would not have
happened except for the defendant’s
negligence;
2. The accident must have been caused by an
agency or instrumentality within the
exclusive management or control of the
person charged with the negligence
complained of; and
3. The accident must not have been due to any
voluntary action or contribution on the part
of the person injured. (Josefa v. MERALCO,
G.R. No. 182705, July 18, 2014)
Thus, it is not applicable when an unexplained
accident may be attributable to one of several
causes, for some of which the defendant could
not be responsible. (FGU Insurance Corp. v. G. P.
Sarmiento Trucking Co., G.R. No. 141910, August
6, 2002)
When doctrine is applicable
All that the plaintiff must prove is the accident
itself; no other proof of negligence is required
beyond the accident itself. It relates to the fact of
an injury that sets out an inference to the cause
thereof or establishes the plaintiff’s prima facie
case. The doctrine rests on inference and not on
presumption. (Perla Compania de Seguros, Inc. v.
Sps. Sarangaya, G.R. No. 147746, October 25,
2005)
Three uses and applications of the doctrine
1. In medical negligence cases;
2. In cases where the exercise of judicial
discretion is abused; and
3. In practical instances
Some cases where doctrine was held
inapplicable
1. Where there is direct proof of absence or
presence of negligence;
2. Where other causes, including the conduct
of the plaintiff and third persons, are not
sufficiently eliminated by the evidence; and
3. When one or more requisites are absent.
(Aquino, 2005)
DOCTRINE OF LAST CLEAR CHANCE
(DOCTRINE OF DISCOVERED PERIL or
821
DOCTRINE OF SUPERVENING NEGLIGENCE)
This is also called as the “Humanitarian
Negligence Doctrine.” Where both parties are
negligent but the negligent act of one succeeds
that of the other by an appreciable interval of
time, the one who has the last reasonable
opportunity to avoid the impending harm and
fails to do so, is chargeable with the
consequences, without reference to the prior
negligence of the other party. (Picart v. Smith,
G.R. No. L-12219, March 15, 1918; Greenstar
Express, Inc. v. Universal Robina Corporation, G.R.
No. 205090, October 17, 2016)
The doctrine of last clear chance is a theory
adopted to mitigate the harshness of the
contributory negligence of the plaintiff. (Phoenix
Construction Inc. v. IAC, G.R. No. L-65295, March
10, 1987; Nelen Lambert, assisted by her husband,
Glenroy Aloysuis Lambert v. Heirs of Ray Castillon,
represented by Marilou T. Castillon and Sergio
Labang, G.R. NO. 160709, February 23, 2005)
Requisites:
1. Plaintiff is placed in danger by his own
negligent acts and he is unable to get out
from such situation by any means;
2. Defendant knows that the plaintiff is in
danger and knows or should have known
that the plaintiff was unable to extricate
himself therefrom; and
3. Defendant had the last clear chance or
opportunity to avoid the accident through
the exercise of ordinary care but failed to do
so, and the accident occurred as a proximate
result of such failure. (Pineda, 2009)
Instances when doctrine not applicable
1. When the injury or accident cannot be
avoided by the application of all means at
hand after the peril has been discovered
(Pantranco North Expressway v. Baesa, G.R.
Nos. 79050-51, November 14, 1989; Cresencia
Achevara, Alfredo Achevara, and Benigno
Valdez v. Alvira Ramos, ohn Arnel Ramos, and
Khristine amille Ramos, G.R. No. 175172,
September 29, 2009);
2. If the defendant’s negligence is a concurrent
cause and which was still in operation up to
the time the injury was inflicted;
3. Where the plaintiff, a passenger, filed an
action against a carrier based on contract
(Bustamante v. CA, G.R. No. 89880, February
 Torts
6, 1991); total or partial collapse, if it should be due to the
4. If the actor, though negligent, was not aware lack of necessary repairs. (NCC, Art. 2190) With
of the danger or risk brought about by the respect to the defense of last clear chance, the
prior fraud or negligent act; same is not tenable as enunciated by the
5. In case of a collapse of a building or Supreme Court in De Roy v. CA (L-80718, January
structure (De Roy v. CA, G.R. No. 80718, 29, 1988), where it held that the doctrine of last
January 29, 1988); clear chance is not applicable in instances
6. Where both parties are negligent (Philippine covered by Art 2190 of the Civil Code. Further, in
National Railways v. Brunty, G.R. No. 169891, Phoenix Construction, Inc. v. IAC (G.R. L-65295,
November 2, 2006); March 10, 1987) the Supreme Court held that the
7. In case of collision, it applies in a suit role of the common law "last clear chance"
between the owners and drivers of colliding doctrine in relation to Art. 2179 of the Civil Code
vehicles and not where a passenger is merely to mitigate damages within the context
demands responsibility from the carrier to of contributory negligence.
enforce its contractual obligations. (Tiu v.
Arriesgado, G.R. No. 138060, September 1, DAMNUM ABSQUE INJURIA
2004) (DAMAGE WITHOUT PREJUDICE)
NOTE: There is a different rule in case of
Damnum absque injuria – The proper exercise
collision of vessels. The doctrine of last clear
of a lawful right cannot constitute a legal wrong
chance in tort is not applicable to collisions of
for which an action will lie, although the act may
vessels as sea under the Code of Commerce, and
result in damage to another, for no legal right
the case is deemed as if the collision is imputable
has been invaded. One may use any lawful
to both vessels; thus, each one of the vessels
means to accomplish a lawful purpose and
shall suffer her own damage, and both shall be
though the means adopted may cause damage to
solidarily liable for the damages occasioned to
another, no cause of action arises in the latter’s
their cargoes. (Arts. 827 & 828, Code of
favor. Any injury or damage occasioned thereby
Commerce; C.B. Williams v. Teodoro Yangco, G.R.
is damnum absque injuria. The courts can give
No. L-8325, March 10, 1914; Gargonio de Sarasola
no redress for hardship to an individual
v. Yu Biao Sontua, G.R. No. 22630. January 31,
resulting from action reasonably calculated to
1925)
achieve a lawful end by lawful means. (The
Orchard Golf & Country Club, Inc., et al. v. Yu and
Q: Mr. and Mrs. R own a burned-out building,
Yuhico, G.R. No. 191033, January 11, 2016)
the firewall of which collapsed and destroyed
the shop occupied by the family of Mr. and
NOTE: When the conjunction of damage and
Mrs. S, which resulted in injuries to said
wrong is wanting there is no damnum absque
couple and the death of their daughter. Mr.
injuria. (Lagon v. CA, G.R. No. 119107, March 18,
and Mrs. S had been warned by Mr. & Mrs. R
2005)
to vacate the shop in view of its proximity to
the weakened wall but the former failed to
The principle does not apply when the exercise
do so. Mr. & Mrs. S filed against Mr, and Mrs.
of this right is suspended or extinguished
R an action for recovery of damages the
pursuant to a court order. (Amonoy v. Gutierrez,
former suffered as a result of the collapse of
651 SCRA 731, 2001)
the firewall. In their defense, Mr. and Mrs. R
relied on the doctrine of last clear chance,
Liability without Fault different from
alleging that Mr. and Mrs. S had the last clear
Damnum Absque Injuria
chance of avoiding the accident, had they
heeded the former’s warning to vacate the
Liability without Fault includes:
shop, and therefore Mr. and Mrs. R’s prior
negligence should be disregarded. If you
1. Strict Liability – there is strict liability if one
were the judge, how would you decide the
is made independent of fault, negligence or
case? (1990 BAR)
intent after establishing certain facts
specified by law. It includes liability for
A: I would decide in favor of Mr. & Mrs. S. The
conversion and for injuries caused by
proprietor of a building or structure is
animals, ultra-hazardous activities and
responsible for the damages resulting from its
nuisance.

UNIVERSITY OF SANTO TOMAS 822

2021 GOLDEN NOTES
 Civil Law
Civil liability coexists with criminal
2. Product Liability – is the law which governs responsibility. In negligence cases the offended
the liability of manufacturers and sellers for party (or his heirs) has the option between an
damages resulting from defective products. action for enforcement of civil liability based on
(Aquino, 2005) culpa criminal under Art. 100 of the RPC, and an
action for recovery of damages based on culpa
PRESUMPTION OF REGULARITY aquiliana under Art. 2177 of the NCC.

Mistakes committed by public officers are not
actionable absent any clear showing of malice or
gross negligence amounting to bad Faith.
(Farolan v. Solmac Marketing Corp., G.R. No.
83589, March 13, 1991; Tomas Joson III v.
Commission on Audit, G.R. No. 223762, November
7, 2017)
Extent of recovery of damages
The action for enforcement of civil liability based
on culpa criminal Sec. 1 of Rule 111 of the ROC
deems simultaneously instituted with the
criminal action, unless expressly waived or
reserved for a separate application by the
offended party. Art. 2177 of the NCC, however
precludes recovery of damages twice for the
same negligent act or omission. (Padua v. Robles,
G.R. No. L-40486, August 29, 1975)

1. Recovery completely barred - When the
plaintiff’s own negligence was the
immediate and proximate cause of his
injury, he cannot recover damages. (NCC,
Art. 2179)
NOTE: What is barred by law is the double
recovery of damages, not the availment double
remedies.

NOTE: Where, in conjunction with the

occurrence, he (plaintiff) contributes only to his
own injury, he may recover the amount that the
defendant responsible for the event should pay
for such injury, less a sum deemed a suitable
equivalent for his own imprudence. (David
Taylor v. The Manila Electric Railroad and Light
Company, G.R. No. L-4977, March 22, 1910)

2. Mitigated damages – If the plaintiff’s

negligence was only contributory, the
immediate and proximate cause of the
injury being the defendants lack of due care,
he may recover damages, but the courts
shall mitigate the damages to be awarded.
(NCC, Art. 2179)

DOUBLE RECOVERY

Prohibition against Double Recovery (2003,

2006 BAR)

Responsibility for fault or negligence under

quasi-delict is entirely separate and distinct
from the civil liability arising from negligence
under the Penal Code. But the plaintiff cannot
recover damages twice for the same act or
omission of the defendant. (NCC, Art. 2177)

Application of the Prohibition on double

recovery rule

823
 Damages
DAMAGES violation of a legal duty.

GENERAL PRINCIPLES Example: damnum absque injuria. (Sps. Custodio

v. CA, G.R. No. 116100, February 9, 1996;
Carbonell v. Metropolitan Bank and Trust
Damages
Company, G.R. No. 178467, April 26, 2017)
In legal contemplation, the term “damages” is
Damages can only be paid with money
the sum of money which the law awards or
imposes as a pecuniary compensation, a
Damages can only be paid with money and not
recompense or satisfaction for an injury done or
“palay” because “palay” is not a legal tender
wrong sustained as a consequence either of a
currency in the Philippines. (Vda. Simeon
breach of a contractual obligation or a tortious
Borlado v. CA, G.R. No. 114118, August 28, 2001)
act. (MEA Builders, Inc. v. CA, G.R. No. 121484,
January 31, 2005)
NOTE: In actions for damages, the courts should
award an amount to the winning party and not
NOTE: A complaint for damages is personal in
its equivalent in property. (Ibid.)
nature (personal action).
Kinds of damages (MENTAL)
Damages v. Injury
1. Moral
Injury is the illegal invasion of a legal right;
2. Exemplary or corrective
damage is the loss, hurt, or harm which results
3. Nominal
from the injury; damages are the compensation
4. Temperate or moderate
awarded for the damage suffered. There can be
5. Actual or compensatory
damage without injury in those instances in
6. Liquidated
which the loss or harm was not the result of a

ACTUAL/ MORAL NOMINAL

COMPENSATORY
Actual or compensatory
damages simply make good or
replace the loss caused by the
wrong.
Claimant must produce
competent proof or the best
evidence obtainable such as
receipts to justify an award
therefore. Actual or
compensatory damages
cannot be presumed but must
be proved with reasonable
certainty. (People v. Ereo, G.R.
No. 124706, February 22,
2000)
GR: Actual damages must be
substantiated by
According to purpose
Awarded only to enable the Vindicating or recognizing the
injured party to obtain means, injured party’s right to a property
diversion or amusement that will that has been violated or invaded.
alleviate the moral suffering he (Tan v. Bantegui, G.R. No. 154027,
has undergone, by reason of October 24, 2005; Seven Brothers
defendants’ culpable action. Shipping Corporation v. DMC-
(Philippine Airlines v. CA, G.R. No. Construction Resources, Inc., G.R. No.
L-82619 September 15, 1993; 193914, November 26, 2014)
Fernando v. Northwest Airlines,
G.R. No. 212038, February 8, 2017)
According to manner of determination
No proof of pecuniary loss is No proof of pecuniary loss is
necessary. The assessment is left necessary. Proof that a legal right
to the discretion of the court has been violated is what is only
according to the circumstances of required. Usually awarded in the
each case. However, there must absence of proof of actual damages.
be proof that the defendant
caused physical suffering, mental
anguish, moral shock, etc.
(Mahinay v. Velasquez, G.R. No.
152753. January 13, 2004)
GR: Factual basis must be alleged.
Aside from the need for the
claimant to satisfactorily prove

UNIVERSITY OF SANTO TOMAS 824

2021 GOLDEN NOTES

documentary evidence, such
as receipts, in order to prove
expenses incurred as a result
of the death of the victim or
the physical injuries sustained
by the victim. (Philippine
Hawk Corporation v. Vivian
Tan Lee, G.R. No. 166869,
February 16, 2010)
XPN: Damages for loss of
earning capacity may be
awarded despite the absence
of documentary evidence
when:
the deceased is self-employed
and earning less than the
minimum wage under
current labor laws, in
which case, judicial notice
may be taken of the fact
that in the deceased's line
of work no documentary
evidence is available; or
the deceased is employed as a
daily wage worker earning
less than the minimum wage
under current labor laws.
(Ibid.)
Ordinary
NOTE: Ordinary Damages are
those generally breach of a
typical contract.
TEMPERATE
Temperate damages may be
recovered when the court finds
that some pecuniary loss has
been suffered but its amount
cannot, from the nature of the
case, be proved with certainty.
(Imperial v. Heirs of Bayaban, G.R.
No. 197626, October 3, 2018, as
penned by J. Leonen)
Civil Law
the existence of the factual basis
of the damages, it is also
necessary to prove its causal
relation to the defendant’s act.
(People v. Manero, G.R. Nos. 86883-
85, January 29, 1993; Mahinay v.
Velasquez, G.R. No. 152753,
January 13, 2004)
XPN: Criminal cases. Moral
damages may be awarded to the
victim in criminal proceedings in
such amount as the court deems
just without need for pleading or
proof of the basis thereof. (People
v. Paredes, G.R. No. 127569. July 30,
1998; People v. Martinez, G.R. No.
226394, March 07, 2018) The
amount of P50,000 is usually
awarded by the Court in case of
the occurrence of death.
Special/Ordinary
Special Special
NOTE: Special Damages are those
which exist because of special
circumstances and for which a
debtor in good faith can be held
liable if he had been previously
informed of such circumstances.
LIQUIDATED EXEMPLARY/
CORRECTIVE
According to purpose
Liquidated damages are Exemplary or corrective damages
frequently agreed upon by the are intended to serve as a
parties, either by way of penalty deterrent to serious wrong
or in order to avoid controversy doings, and as a vindication of
on the amount of damages. undue sufferings and wanton
invasion of the rights of an
injured party or a punishment for
those guilty of outrageous
conduct. (People v. Orilla, G.R. Nos.
148939-40, February 13, 2004)
825
 Damages

According to manner of determination

No proof of pecuniary loss is No proof of pecuniary loss is No proof of pecuniary loss is

necessary. When the court is
convinced that there has been a
pecuniary loss, the judge is
empowered to calculate
moderate damages rather than let
the complainant suffer without
redress. (GSIS v. Labung-Deang,
G.R. No. 135644, September 17,
2001)
Must be reasonable under the
circumstances. (Imperial v. Heirs
of Bayaban, G.R. No. 197626,
October 3, 2018, as penned by J.
Leonen)
necessary. If intended as a
penalty in obligations with a
penal clause, proof of actual
damages suffered by the creditor
is not necessary in order that the
penalty may be demanded. (NCC,
Art. 1228)
necessary.
1. That the claimant is entitled to
moral, temperate or
compensatory damages (NCC, Art.
2243; B. F. Metal v. Lomotan, G.R.
No. 170813, April 16, 2008); and
2. That the crime was committed
with one or more aggravating
circumstances (NCC, Art. 2230), or
the quasi-delict was committed
with gross negligence (NCC, Art.
2231), or in contracts and quasi-
contracts the act must be
accompanied by bad faith or done
in wanton, fraudulent, oppressive
or malevolent manner. (NCC, Art.
2232)

Special/Ordinary

Special Special Special

ACTUAL AND COMPENSATORY DAMAGES Kinds of Actual or compensatory damages

Actual damages are such compensation or 1. Damnum Emergens/Dano Emergente (actual

damages for an injury that will put the injured
party in the position in which he had been
before he was injured. They pertain to such
injuries or losses that are actually sustained and
susceptible of measurement. (Filipinas (Pre-Fab
Bldg.) Systems, Inc. v. MRT Development Corp.,
G.R. Nos. 167829-30, November 13, 2007)
NOTE: To recover damages, the amount of loss
must not only be capable of proof but must
actually be proven. (but must be pleaded and
proven in Court) (1991, 1996, 2004 BAR)
Article 2199 of the Civil Code expressly
mandates that “except as provided by law or by
stipulation, one is entitled to an adequate
compensation only for such pecuniary loss
suffered by him as he duly proved.”
It must be proven with a reasonable degree of
certainty, premised upon competent proof or the
best evidence obtainable. (Metro Rail Transit
Dev’t. Corp. v. Gammon Phils., Inc., G.R. No.
200401, Jan. 17, 2018)
damages) – all the natural and probable
consequence of the act or omission
complained of, classified as one for the loss
of what a person already possesses.
2. Lucrum Cessans/Lucro Cesante
(compensatory damages) – for failure to
receive, as benefit, that which would have
pertained to him (expected profits).
(Filipinas Synthetic v. De Los Santos, G.R. No.
152033, March 16, 2011)
NOTE: Both actual and compensatory damages
can be granted at the same time to the plaintiff
as provided under Article 2200. In other words,
there are two components to actual damages.
(RCPI v. CA, G.R. No. L-55194, February 26, 1981)
Purpose of the law in awarding actual
damages
Actual or compensatory damages proceed from a
sense of natural justice and are designed to
repair the wrong that has been done, to
compensate for the injury inflicted. (Kabisig Real
Wealth Dev., Inc. v. Young Builders Corp., G.R. No.

UNIVERSITY OF SANTO TOMAS 826

2021 GOLDEN NOTES
 Civil Law
212375, Jan. 25, 2017)
Q: Petitioner Wyeth Philippines, Inc. (Wyeth)
is the project owner of the "Dryer 3 and Wet
Process Superstructure Works.” In 2007,
Wyeth invited bidders to submit proposals
for its project. Respondent SKI Construction
Group, Inc. (SKI) submitted its qualified
proposal to undertake the project for
P242,800,000.00, and was later on awarded
the bid. Subsequently, the Project Manager
directed the cessation of all construction
activities. until further notice give SKI ample
time to address internal issues regarding its
workforce. . Wyeth wrote letter to Mapfre,
claiming on the bonds. Mapfre later
confirmed that Wyeth will not be barred
from pursuing its claims against the bonds.
However, Mapfre refused to pay the amount
under the payments bond. The parties failed
to reach a settlement, however, the parties
eventually agreed to resolve the dispute
through arbitration before the Construction
Industry Arbitration Commission
(Commission).
After the conduct of hearings, Arbitral
Tribunal held that while Wyeth suffered
pecuniary loss, the evidence it submitted
were not clear and convincing as to establish
actual damages. Hence, the Tribunal applied
Article 2224 of the Civil Codes and the
parties' agreement on liquidated damages as
measure for temperate damages. It awarded
Wyeth temperate damages amounting to
P24,280,000.00. Upon appeal, the Court of
Appeals held that that while SKI is entitled to
the value of rebars, formworks, and costs of
repair, the amount cannot be established
with certainty, thus, the Court of Appeals
only awarded SKI temperate damages. It also
held that the Arbitral Tribunal erred in
awarding temperate damages to Wyeth, and
instead awarded actual damages amounting
to P90,717,632.06.
a) Is Wyeth entitled to actual damages?
b) Is SKI entitled to temperate damages?
A:
a) NO. Actual damages are provided for under
Article 2199 of the Civil Code: “Article 2199.
Except as provided by law or by stipulation, one
is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has
827
duly proved. Such compensation is referred to as
actual or compensatory damages.”
Further, "[e]xcept as provided by law or by
stipulation, [a claimant] is entitled to an
adequate compensation only for pecuniary loss"
duly proven. Thus, actual damages must be
proven with a reasonable degree of certainty,
premised upon competent proof or the best
evidence obtainable" like official receipts and
invoices, as explained in Metro Rail Transit
Development Corp. v. Gammon Philippines.
Actual damages constitute compensation for
sustained measurable losses. It must be proven
with a reasonable degree of certainty, premised
upon competent proof or the best evidence
obtainable. It is never presumed or based on
personal knowledge of the court.
b) YES. Article 2224 of the Civil Code provides
for temperate damages, as follows: “Art. 2224.
Temperate or moderate damages, which are
more than nominal but less than compensatory
damages, may be recovered when the court finds
that some pecuniary loss has been suffered but
its amount cannot, from the nature of the case,
be proved with certainty.”
In concluding that respondent SKI's claims for
the value of rebars, formworks, safety harness
equipment, and costs of the repair were validly
proven, the Arbitral Tribunal thoroughly
examined and considered the evidence
presented by the parties. Thus, its evaluation of
the evidence and findings of fact must be upheld.
(Wyeth Philippines Inc. v. CIAC, et. al., G.R. No.
220045-48, June 22, 2020, as penned by J.
Leonen)
When victim is unknown
The fact that the victim remains unknown and
no heirs have come forward does not warrant
the elimination of civil indemnity. (People v. De
Guzman, G.R. No. 92537, April 25, 1994)
Proving the loss
GR: Loss must be proven with a reasonable
degree of certainty, premised upon competent
proof or best evidence obtainable of the actual
amount thereof before one can be entitled to
damages (PNOC Shipping and Transport Corp. v.
Court of Appeals, G.R. No. 107518, October 8,
1998)
 Damages
available; or
XPN: Loss need not be proved in the following
cases: 2. The deceased is employed as a daily wage
worker earning less than the minimum wage
1. Liquidated damages have been previously under current labor laws. (Philippine Hawk
agreed upon (NCC, Art. 2226); Corporation v. Vivian Tan Lee, G.R. No.
166869, February 16, 2010)
NOTE: Liquidated damages take the place of If amount admitted by a party
actual damages except when additional
damages are incurred. Even if there are no receipts and yet the amount
claimed is admitted by a party, it should be
2. Forfeiture of bonds in favor of the granted. (People v. Abolidor, G.R. No. 147231,
government for the purpose of promoting February 18, 2004)
public interest or policy (Far Eastern Surety
and Insurance Co. v. CA, G.R. No. L-12019, Docketing fees must be based on allegation of
October 16, 1958); actual damages
3. Loss is presumed (Manzanares v. Moreta,
G.R. No. L-12306, October 22, 1918); The amount of damages claimed must be alleged
4. When the penalty clause is agreed upon in not only in the body of the complaint, petition or
the contract between the parties (NCC, Art. answer but also in the prayer portion thereof.
1226); and (Siapno v. Manalo, G.R. No. 132260, August 30,
5. When death is caused within the 2005)
contemplation of Art. 2206. (Pineda, 2009)
“Such other relief as this Honorable Court
Civil liability ex delicto v. actual or may deem reasonable”
compensatory damages distinguished
The prayer for “such other relief as this
Civil Indemnity Actual or Compensatory Honorable Court may deem reasonable” may
Ex Delicto Damages include actual damages although not alleged in
To be recoverable must the answer, if and when they are proved. (Heirs
additionally be established of Basilisa Justiva v. Gustilo, G.R. No. L-16396,
Can be awarded January 31, 1963)
with reasonable degree of
without need of
certainty.
further proof NOTE: It is broad enough to comprehend an
than the fact of application as well for nominal damages and
(Metro Rail Transit Dev’t.
commission of even exemplary damages.
Corp. v. Gammon Phils., Inc.,
the felony.
G.R. No. 200401, January 17,
2018) Article 21 of NCC cannot be used as a basis for
award of actual damages
NOTE: Rule applies to civil and criminal cases.
(People v. Abaño y Cañares, G.R. No. 188323, Article 21 of the NCC cannot be used as a basis
February 21, 2011) for award of actual damages when there is a pre-
existing contractual relation between the
GR: Documentary evidence should be presented parties. (ACI Philippines, Inc. v. Coquia, G.R. No.
to substantiate the claim for damages for loss of 174466, July 14, 2008)
earning capacity.
Abrazaldo Doctrine
XPN: Damages for loss of earning capacity may
be awarded despite the absence of documentary Temperate damages may be awarded where the
evidence when: amount of the actual damages, the heirs are
entitled to, cannot be shown. Such temperate
1. The deceased is self-employed and earning damages, taking into account current
less than the minimum wage under current jurisprudence fixing the indemnity for death at
labor laws, in which case, judicial notice may P50,000, should be one half thereof, which is
be taken of the fact that in the deceased's P25,000. (People v. Abrazaldo, G.R. No. 124392,
line of work no documentary evidence is February 7, 2003)

UNIVERSITY OF SANTO TOMAS 828

2021 GOLDEN NOTES
 Civil Law
Coverage of actual damages
Aside from actual pecuniary loss, actual damages
also cover the following:
a. Loss or impairment of earning capacity in
cases of temporary or permanent personal
injury;
b. Injury to the plaintiff’s business standing or
commercial credit. (NCC, Art. 2205)
Loss or impairment of earning capacity
To be compensated for loss of earning capacity,
it is not necessary that the victim be gainfully
employed at the time of the injury or death.
Actual damages are awarded not for the loss of
earnings but for the loss of capacity to earn
money. (People v. Sanchez, G.R. Nos. 121039-45,
October 18, 2001)
Determination of amount of damages
recoverable
Much is left to the discretion of the court
considering the moral and material damages
involved. There can be no exact or uniform rule
for measuring the value of a human life. (Villa
Rey Transit, Inc., v. CA, G.R. No. L-25499, February
18, 1970)
The life expectancy of the deceased or of the
beneficiary, whichever is shorter, is an
important factor. Other factors that are usually
considered are:
1. Pecuniary loss to plaintiff or beneficiary;
2. Loss of support;
3. Loss of service;
4. Loss of society;
5. Mental suffering of beneficiaries; and
6. Medical and funeral expenses. (Ibid.)
NOTE: The formula that has gained acceptance
over time has limited recovery to net earning
capacity. The premise is obviously that net
earning capacity is the person’s capacity to
acquire money, less the necessary expense for
his own living. (Philtranco Service Enterprises v.
Felix Paras and Inland Trailways Inc., G.R. No.
161909, April 25, 2012)
Computation of Unearned Income
Formula:
829
Net Earning Capacity (x) = Life Expectancy X
(Gross Annual Income LESS Living Expenses).
(People v. Asilan, G.R. No. 188322, April 11, 2012)
Legend:
Net Earning Capacity = Life Expectancy x (Gross
Annual Income – Living Expenses)
Life Expectancy = 2/3 x (80 – Age of the
Deceased)
Living Expenses = 50% of gross annual income
Basis of Life Expectancy
Life expectancy should not be based on the
retirement age of government employees, which
is pegged at 65. In calculating the life expectancy
of an individual for the purpose of determining
loss of earning capacity under Art. 2206 (1), it is
assumed that the deceased would have earned
income even after retirement from a particular
job. (Smith Bell Dodwell Shipping Agency Corp. v.
Borja, G.R. No. 143008, June 10, 2002)
Heirs cannot claim as damages the full
amount of earnings of the deceased
Said damages consist, not of the full amount of
his earnings, but of the support they received or
would have received from him had he not died in
consequence of the negligence of the bus’s agent.
Stated otherwise, the amount recoverable is not
loss of the entire earning, but rather the loss of
that portion of the earnings which the
beneficiary would have received. In other words,
only net earnings, not gross earning, are to be
considered.
In fixing the amount of that support, the
"necessary expenses of his own living" should be
deducted from his earnings. Earning capacity, as
an element of damages to one's estate for his
death by wrongful act, is necessarily his net
earning capacity or his capacity to acquire
money, less the necessary expense for his own
living. (Villa Rey Transit, Inc. v. CA, et al., G.R. No.
L-25499, February 18, 1970; People of the
Philippines v. Jorie Wahiman y Rayos, G.R. No.
200942, June 16, 2015)
Medical Expenses are in the nature of actual
damages
Medical expenses are in the nature of actual
damages which should be duly proved and the
award for actual damages cannot be made on the
 Damages
basis of the doctor’s prescription alone. (People
v. Enguito, G.R. No. 128812, February 28, 2000)
Adjustment fees do not constitute actual
damages
Adjustment fees and expense of drivers in the
recovery of cargo lost at sea done voluntarily,
though unsuccessfully, does not constitute actual
damages. (Schmitz Transport & Brokerage Corp.
v. Transport Venture, Inc., G.R. No. 150255, April
22, 2005)
Injury to business standing and commercial
credit of plaintiff
Compensatory damages may be awarded in the
concept of temperate damages for injury to
business reputation or business standing, loss of
goodwill, and loss of customers who shifted their
patronage to competitors. (Article 2205; Coca –
Cola Bottlers Philippines Inc. v. Sps. Jose Bernardo
and Lilibeth Bernardo, doing business under the
name and style of “Jolly Beverage Enterprises,”
G.R. No. 190667, November 7, 2016)
ATTORNEY’S FEES AND
EXPENSES OF LITIGATION
Two concepts of Attorney’s fees
1. Ordinary – reasonable compensation paid to
a lawyer by this client for the legal services
he has rendered to the latter.
2. Extraordinary – awarded by the court to the
successful litigant to be paid by the losing
party as indemnity for damages. (Aquino v.
Casabar, G.R. No. 191470, January 26, 2015)
They are actual damages due to the plaintiff.
Payable not only to the lawyer but to the
client, unless they have agreed that the
award shall pertain to the lawyer as
additional compensation or as part thereof.
(Benedicto v. Villaflores, G.R. No. 185020,
October 6, 2010)
NOTE: In all cases, the attorney’s fees and
expenses of litigation must be reasonable.
(NCC, Art. 2208)
ORDINARY EXTRAORDINARY
Nature
The reasonable An indemnity for
compensation paid to damages ordered by
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
a lawyer for the legal the court to be paid by
services rendered to a the losing to the
client who has prevailing party in
engaged him. litigation.
Basis
The fact of In cases authorized by
employment of the law.
lawyer by the client.
To whom payable
Lawyer Client
Recovery of attorney’s fees as actual damages
(1991, 1994, 2002 BAR)
GR: Attorney’s fees cannot be recovered as
actual damages.
XPNs: (SWISS- MUD- ERC)
1. Stipulation between parties;
2. Recovery of Wages of household helpers,
laborers and skilled workers;
3. Actions for Indemnity under workmen's
compensation and employer liability laws;
4. Legal Support actions;
5. Separate civil action to recover civil liability
arising from crime;
6. Malicious prosecution;
7. Clearly Unfounded civil action or proceeding
against plaintiff;
8. When Double judicial costs are awarded;
9. When Exemplary damages are awarded;
10. Defendant acted in gross & evident bad faith
in Refusing to satisfy plaintiff's just &
demandable claim; and
11. When defendant's act or omission
Compelled plaintiff to litigate with third
persons or incur expenses to protect his
interest.
NOTE: It was held that, in respect of attorney’s
fees, where a claim therefore arises out of the
filing of the complaint, they too should be
considered as in the nature of a compulsory
counterclaim. They should be pleaded or prayed
for in the answer to the complaint in order to be
recoverable, otherwise, they would be barred.
(Tiu Po v. Bautista, G.R. No. L-55514, March 17,
1981; Lafarge Cement Philippines, Inc., et. al. v.
Continental Cement Corporation, et. al., G.R. No.
155173, November 23, 2004)
Furthermore, moral damages and attorney’s fees
cannot be consolidated for they are different in
nature and each must be separately determined.
(Philippine Veterans Bank v. NLRC, G.R. No.
130439, October 26, 1999) Attorney’s fees are
recoverable only in the concept of actual not
830
 Civil Law
moral damages. (Pedro Mirasol v. Hon. Rafael entitled to permanent and total disability
dela Cruz and Dominador Mendoza, G.R. No. L- benefits and was forced to litigate to protect his
32552, July 31, 1978) valid claim. Thus, the reinstatement of such
award is in order. (Ariel P. Horlador, v. Philippine
Attorneys’ fees are not available when the Transmarine Carriers, Inc.,
defendant employer is not guilty of bad faith. Marine*Shipmanagement, G.R. No. 236576,
(Dalusong v. Eagle Clark Shipping Philippines, September 05, 2018).
Inc., G.R. No. 204233, September 3, 2014)
EXTENT OR SCOPE OF ACTUAL DAMAGES
IN CONTRACTS AND QUASI-CONTRACTS
Q: Philippine Transmarine Carriers, Inc. for
and on behalf of its foreign principal,
Amount of actual damages
respondent Marine Shipmanagement Ltd.
hired petitioner as a Chief Cook while
The amount of actual damages should be that
carrying provisions, suddenly felt a severe
which would put the plaintiff in the same
pain on his waist, abdomen, and down to his
position as he would have been if he had not
left scrotum. As the pain persisted for a
sustained the wrong for which he is claiming
number of days, he was airlifted to a hospital
compensation or reparation:
in Belgium where he was diagnosed with
"infection with the need to rule out
1. Property
Epididymitis and Prostatitis" and advised to
undergo repatriation. Upon arrival in the
Damage to or loss of personal property - the
Philippines, petitioner claimed that he
plaintiff is entitled to their value at the
immediately reported to PTCI and asked for
time of the destruction, that is, normally,
referral for further treatment, but was
the sum of money which he would have
ignored. Thus, he filed a complaint for, inter
to pay in the market for identical or
alia, permanent and total disability benefits
essentially similar goods, plus in a
against PTCI, Marine, and respondent
proper case, damages for the loss of the
Captain Marlon L. Malanao as the crewing
use during the period before
manager (respondents). Was it proper for
replacement. (Marikina Auto Line v.
the CA to delete the award of attorney’s fees?
People G.R. No. 152040, March 31, 2006)
A: NO, the instances when these may be
Damage to or loss of profit-earning chattels -
awarded are enumerated in Article 2208 of the
what has to be assessed is the value of
Civil Code and is payable not to the lawyer but to
the chattel to its owner as a going
the client, unless the client and his lawyer have
concern at the time and place of the loss.
agreed that the award shall accrue to the lawyer
(PNOC Shipping v. CA, G.R. No. 107518,
as additional or part of
October 8, 1998; G.Q. Garments, Inc. v.
compensation. Particularly, Article 2208 of the
Angel Miranda, Florenda Miranda and
Civil Code reads:
Executive Machineries and Equipment
Corporation, G.R. No. 161722 July 20,
Article 2208. In the absence of stipulation,
2006)
attorney's fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:
Damage to or loss of real property – value at
the time of destruction, or market value,
(2) When the defendant's act or omission has
plus, in proper cases, damages for the
compelled the plaintiff to litigate with third
loss of use during the period before
persons or to incur expenses to protect his
replacement, value of use of premises, in
interest
case of mere deprivation of possession.
(8) In actions for indemnity under workmen's
2. Personal injury
compensation and employer's liability laws
Medical Expenses - plaintiff is entitled to the
In this case, suffice it to say that the CA erred in
amount of medical expenses for the
deleting the award of attorney's fees,
injury suffered as a result of the
considering that petitioner was found to be
defendant’s tortuous act.

831
 Damages
NOTE: A person is entitled to the physical
integrity of his or her body; if that integrity
is violated or diminished, actual injury is
suffered for which actual or compensatory
damages are due and assessable. (Gatchalian
v. Delim G.R. No. L-56487, October 21, 1991)
Rape - For simple rape or qualified rape,
where the penalty imposed is death but
reduced to reclusion perpetua because
of RA 9346, the civil indemnity is
₱100,000.00. (People v. Jugueta, G.R. No.
202124, April 5, 2016)
NOTE: Civil indemnity is mandatory upon
the finding of the fact of rape; it is distinct
from and should not be denominated as
moral damages which are based on different
jural foundations and assessed by the court
in the exercise of sound discretion. (People v.
Tabayan, G.R. No. 190620, June 18, 2014)
3. Death – P100,000 by way of civil indemnity
ex delicto. (People v. Jugueta, G.R. No. 202124,
April 5, 2016)
4. Physical Injuries – Civil indemnity of
P50,000.00 for the victims who suffered
mortal/fatal wounds and could have died if
not for a timely medical intervention, and a
civil indemnity of P25,000 for the victims
who suffered non-mortal/non-fatal injuries.
(ibid.)
Q: MV Lorcon Luzon, a commercial vessel
owned by Lorenzo Shipping, hit and rammed
National Power Corporation’s Power Barge
104. NPC submitted pieces of evidence to the
court as basis for actual damages it has
suffered. However, Lorenzo Shipping pointed
out that these pieces of evidence fall short of
the standard required for proving pecuniary
loss, which shall be the basis for awarding
actual damages. The CA awarded temperate
damages to NPC in lieu of actual damages as
the amount of damages was not proven by
NPC. Is Lorenzo Shipping liable for actual
damages?
A: NO. Article 2199 of the Civil Code spells out
the basic requirement that compensation by way
of actual damages is awarded only to the extent
that pecuniary loss is proven. NPC failed to
establish the precise amount of pecuniary loss it
suffered. Nevertheless, it remains that Power
Barge 104 sustained damage — which may be
reckoned financially — as a result of the MV
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Lorcon Luzon's ramming into it. National Power
Corporation suffered pecuniary loss, albeit its
precise extent or amount had not been
established. Accordingly, the Court of Appeals'
conclusion that National Power Corporation is
entitled to temperate damages should be
sustained. (Lorenzo Shipping Corporation v.
National Power Corporation, G.R. No. 181683,
October 07, 2015, as penned by J. Leonen)
Mitigation of Actual Damages
Actual damages can be mitigated in the following
cases:
1. For Contracts:
a. Violation of terms of the contract by the
plaintiff himself;
b. Enjoyment of benefit under the contract
by the plaintiff himself;
c. Defendant acted upon advice of counsel
in cases where the exemplary damages
are to be awarded such as under
Articles 2230, 2231 and 2232;
d. Defendant has done his best to lessen
the plaintiff’s injury or loss.
NOTE: Award of compensatory damages for
breach of contract may be executed pending
appeal, but not the moral and exemplary
damages which must await the final
determination of the main cases. (Radio
Communication of the Philippines, Inc. v.
Lantin, G.R. No. L-59311, January 31, 1985;
Lucita Tiorosio-Espinosa v. Hon. Hofileña-
Europa, et. al., G.R. No. 185746, January 20,
2016)
2. For Quasi-contracts:
a. In cases where exemplary damages are
to be awarded such as in Article 2232 of
the NCC;
b. Defendant has done his best to lessen
the plaintiff’s injury or loss.
3. For Quasi-delicts:
a. That the loss would have resulted in any
event because of the negligence or
omission of another, and where such
negligence or omission is the immediate
and proximate cause of the damage or
injury;
b. Defendant has done his best to lessen
832
 Civil Law
the plaintiff’s injury or loss. (Pineda,
2009)
4. For Crimes:
The damages to be adjudicated may be
respectively increased or lessened according to
the aggravating or mitigating circumstances.
(NCC, Art. 2204)
IN CRIMES AND QUASI-DELICTS
The amount of damages for death caused by a
crime or quasi-delict shall be at least P75,000,
even though there may have been mitigating
circumstances. (People v. Tabarnero, G.R. No.
168169, February 24, 2010)
In addition to the amount to be awarded, Art.
2206 of the NCC provides that the defendant
shall also be liable for the following:
1. Loss of the earning capacity of the deceased,
and the indemnity shall be paid to the heirs
of the latter; such indemnity shall in every
case be assessed and awarded by the court,
unless the deceased on account of
permanent physical disability not caused by
the defendant, had no earning capacity at
the time of his death;
2. If the deceased was obliged to give support
according to the provisions of Article 291,
the recipient who is not an heir called to the
decedent's inheritance by the law of testate
or intestate succession, may demand
support from the person causing the death,
for a period not exceeding five years, the
exact duration to be fixed by the court;
NOTE: The article only mentioned heir.
Consequently, it cannot speak of devisees
and legatees who are receiving support from
the deceased.
3. The spouse, legitimate and illegitimate
descendants and ascendants of the deceased
may demand moral damages for mental
anguish by reason of the death of the
deceased. (1992, 1993, 2007 BAR)
NOTE: In case of death caused by quasi-delict,
the brother of the deceased is not entitled to the
award of moral damages based on Article 2206
of the New Civil Code. (Sulpicio Lines Inc. v.
Curso, G.R. No. 157009, March 17, 2010)
833
Q: Rodolfo, Monalisa, Johanna and Abellana
arrived at the municipal wharf of Jetafe,
Bohol. They boarded a cargo truck which
would transfer them from the wharf to
Poblacion, Jetafe. While passengers were
getting on the truck, Simolde called Caballes,
the official truck driver. Caballes approached
Simolde but left the engine running. While
Simolde and Caballes were talking, Aparra,
chief diesel mechanic, started driving the
truck. Upon seeing the truck move, Caballes
rushed to the truck and sat beside Aparra.
However, instead of taking control of the
vehicle, Caballes allowed Aparra to drive.
Shortly thereafter, Aparra lost control of the
truck and they fell off the wharf.
Consequently, Rodolfo and Monalisa died
while Johanna and Abellana were injured.
Vivian, the widow of Rodolfo and the mother
of Johanna, filed a complaint.
A) Whether or not quasi-delict was
committed?
B) Whether or not loss of earning capacity
should be awarded to Vivian, wife of Rodolfo?
A:
A) YES. The requisites for quasi-delict are: (1)
damages to the plaintiff; (2) negligence, by act or
omission, of which defendant, or some person
for whose-acts he must respond, was guilty; and
(3) the connection of cause and effect between
such negligence and the damages. Caballes was
grossly negligent in allowing Aparra to drive the
truck despite being an inexperienced driver.
Aparra's inexperience caused the accident that
led to the deaths of Rodolfo and Monalisa. It is
undisputed that the deaths of Vivian's husband
and daughter caused damage to her. Clearly, the
requisites for a quasi-delict are present in this
case.
B) YES. Article 2206 provides that the amount
of damages for death caused by a crime or
quasi-delict shall be at least Three thousand
pesos [P50,000.00], even though there may have
been mitigating circumstances. In addition, the
defendant shall be liable, among others, for
the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the
heirs of the latter; such indemnity shall in every
case be assessed and awarded by the court,
unless the deceased on account of permanent
 Damages
physical disability not caused by the defendant,
had no earning capacity at the time of his death.
The indemnity for the deceased's lost earning
capacity is meant to compensate the heirs for the
income they would have received had the
deceased continued to live. (Vivian B. Torreon
and Felomina F. Abellana v. Generoso Aparra, Jr.,
Felix Caballes, and Carmelo Simolde, G.R. No.
188493, December 13, 2017, as penned by J.
Leonen)
MORAL DAMAGES
It includes physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social
humiliation, and similar injury. (NCC, Art. 2217)
Although incapable of pecuniary computation,
moral damages, nevertheless, must somehow be
proportional to and in approximation of the
suffering inflicted. Such damages, to be
recoverable, must be the proximate result of a
wrongful act or omission, the factual basis for
which is satisfactorily established by the
aggrieved party. (Expertravel & Tours, Inc. v.
Court of Appeals, G.R. No. 152392, May 26, 2005)
It is awarded to enable the injured party to
obtain means, diversions or amusement that will
serve to alleviate the moral suffering he has
undergone by reason of the defendant’s culpable
action. (Prudenciado v. Alliance Transport
System, Inc., G.R. No. L-33836, March 16, 1987;
Fernando v. Northwest Airlines, G.R. No. 212038,
February 8, 2017)
NOTE: A case of simple negligence does not
justify an award of moral damages. Such is
proper only in cases of gross negligence
amounting to bad faith. (Villanueva v. Salvador,
G.R. No. 139436, January 25, 2006)
Q: Rosalie Sy Ayson discovered that the Fil-
Estate and Fairways illegally entered into her
property when it constructed its golf course.
Despite receipt of a notice to vacate said
property, the latter still continued to
encroach the subject land. On the other hand,
Fil-Estate and Fairways contend that it was in
good faith in constructing the golf course. It
contended that a certain Villanueva, the
former owner of the subject land, gave
assurances that Ayson will agree to a land
swap which will be mutually beneficial for
the parties. Ayson thereafter filed a
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
complaint for damages. Assuming that the
case will prosper, what kind of damages is
she entitled to?
A: Ayson is entitled to recover moral and
exemplary damages. Moral damages are
designed to compensate and alleviate the
physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and
similar harm unjustly caused to a person.
Exemplary damages may be imposed by way of
example or correction for public good if the
guilty party acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner.
Here, Ayson can recover moral damages as she
was made to suffer sleepless nights and mental
anguish because her right as the owner of the
subject lot was violated by Fil-Estate in
constructing its golf course in the latter's
property. She is also entitled to exemplary
damages since despite the notice to vacate, the
latter still proceeded to construct its golf course.
(Rosalie Sy Ayson v. Fil-Estate Properties, Inc.
et.al., G.R. No. 223254, December 1, 2016)
NOTE: Moral damages apply both to natural and
juridical persons. Moral damages are generally
not awarded in favor of a juridical person, unless
it enjoys a good reputation that was debased by
the offending party resulting in social
humiliation. (ABS-CBN v. CA, 301 SCRA 589)
GR: A judicial person is generally not entitled to
moral damages because, unlike a natural person,
it cannot experience physical suffering or such
sentiments as wounded feelings, serious anxiety,
metal anguish or moral shock.
XPN: A corporation may have a good reputation
which, if besmirched, may also be a ground for
the award of moral damages. (Mambulao Lumber
Co. v. PNB, et al., G.R. No. L-22973, January 30,
1968; Herman Crystal, et. al. v. BPI, G.R. No.
172428, November 28, 2008)
NOTE: In cases of libel, slander, or any other
form of defamation under item 7 of Article 2219
(NCC):
This provision expressly authorizes the recovery
of moral damages in cases of libel, slander or any
other form of defamation. Article 2219(7) does
not qualify whether the plaintiff is a natural or
juridical person. Therefore, a juridical person
834
 Civil Law
such as a corporation can validly complain for
libel or any other form of defamation and claim
for moral damages. (Filipinas Broadcasting
Network Inc. v. AMEC-BCCM, G.R. No. 141994,
January 17, 2005)
Q: BNL Management owned six (6)
condominium units at the Imperial Bayfront
Tower Condominium. BNL Management,
through its president Romeo David (David),
wrote a letter and brought raised thier
concerns. It stated therein that if problems
remain unresolved, it will withhold all future
payments of association dues until the issue
are resolved satisfactorily. Sevilla sent a
letter to BNL Management containing a
breakdown of its arrears in the payment of
association dues. BNL Management received
the Second Notice of Billing informing it of its
pending arrears representing unpaid
association dues. The Second Notice also
contained a warning that after a third notice
had been sent, the Association would
terminate utility services. BNL Management
received the Third Notice of Billing, still, did
not pay the arrears. Because of this, the
Association's Board of Directors, who are the
respondents herein, resolved to disconnect
the electricity and water services in the six
(6) units owned by BNL Management. This
prompted BNL Management to file a
Complaint against Uy, et al. for damages. Is
BML Management entitled to moral
damages?
A: NO. Petitioner BNL Management, being a
corporation, is not entitled to moral damages.
There is no standing doctrine that corporations
are, as a matter of right, entitled to moral
damages. The existing rule is that moral
damages are not awarded to a corporation since
it is incapable of feelings or mental anguish.
Exceptions, if any, only apply pro hac vice. There
is no showing here that an exception should
apply pro hac vice in favor of petitioner BNL
Management. (BNL Management Corporation
and Romeo David v. Reynaldo Uy, Rodiel Baloy,
Atty. Lualhati Cruz, Alberto Wong, Teresita Pasia,
Roland Ingel, And Marissa Sevilla, G.R. No.
210297, April 03, 2019, as penned by J. Leonen)
Q: Mabunay who is a seafarer was hired by
Sharpe Sea. One day after boarding the ship,
Mabunay slipped and hit his back on the
purifier, while he was cleaning the second
floor of the engine room. Mabunay then
835
informed 2nd Engineer Castro who advised
him to continue with his assigned duties.
Despite the persistent pain in his back and
numbness in his legs, Mabunay continued
working for 3 days, until Chief Engineer
Manuel De Leon allowed him to have a
medical checkup when the ship docked in
Nanjing, China. He was diagnosed with chest
and spinal bone damage and was declared
unfit to work. He was then repatriated to
Manila. Mabunay reported to Sharpe Sea
office and was told to report to its company
designated physician. Mabunay underwent
surgery and was discharged from the
hospital. Mabunay filed a complaint against
Sharpe Sea for the payment of medical
expenses, total disability benefits, damages,
and attorney’s fees. LA ruled in favor of
Mabunay. NLRC affirmed LA’s ruling. MR was
filed. In its MR, Sharp Sea attached the
medical report showing the findings of the
company designated physician. The medical
report showed that Mabunay is diagnosed of
Grade 8 disability. The NLRC pointed out that
while Dr. Cruz's medical report might not
have been presented before the Labor
Arbiter, it was not disputed that Mabunay
was under the care of Dr. Cruz from the time
he was medically repatriated. Whether
Mabunay is entitled to moral and exemplary
damages when Sharp Sea withheld the
company physician’s medical report showing
that he was diagnosed of Grade 8 disability.
A: YES. Mabunay is entitled to moral and
exemplary damages because Sharp Sea was
found to be in bad faith. Bad faith is not simply
bad judgment or negligence. "It imports a
dishonest purpose or some moral obliquity and
conscious doing of wrong. It means a breach of a
known duty through some motive or interest or
ill-will that partakes of the nature of fraud."
SC ruled that by not timely releasing Dr. Cruz's
interim disability grading, petitioners revealed
their intention to leave respondent in the dark
regarding his future as a seafarer and forced him
to seek diagnosis from private physicians.
Petitioners' bad faith was further exacerbated
when they tried to invalidate the findings of
respondent's private physicians, for his
supposed failure to move for the appointment of
a third-party physician as required by the POEA-
SEC, despite their own deliberate concealment of
their physician's interim diagnosis from
respondent and the labor tribunals. (Sharpe Sea
 Damages
vs. Mabunay Jr., G.R. 206113, November 6, 2017,
as penned by J. Leonen)
Act or omission must be with bad faith
Moral damages are recoverable only if the party
from whom it is claimed has acted fraudulently
or in bad faith or in wanton disregard of his
contractual obligations. (Yamauchi v. Suñiga, G.R.
No. 199513, April 18, 2018)
Bad faith imports a dishonest purpose or some
moral obliquity and conscious doing of a wrong,
a breach of known duty through some motive or
interest or ill will that partakes of the nature of
fraud; it is a question of intention, which can be
inferred from one’s conduct and/or
contemporaneous statements. (Peralta v. Raval,
G.R. No. 188467, Mar. 29, 2017)
NOTE: Unless there is a clear showing of malice
or bad faith or gross negligence, a public officer
is not liable for moral and exemplary damages
for acts done in the performance of duties.
(Rebadulla v. Rep. of the Phils., G.R. No. 222159,
Jan. 31, 2018)
Elements required for recovery (1991, 2002,
2003 BAR)
1. An injury clearly sustained by the claimant;
2. A culpable act or omission factually
established;
3. The act or omission must be the proximate
result of the physical suffering, mental
anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock,
social humiliation and similar injury; and
wrongful act or omission of the defendant as
the proximate cause of the injury sustained
by the claimant; and
NOTE: The person claiming moral damages
must prove the existence of bad faith by
clear and convincing evidence for the law
always presumes good faith; it is not enough
that one merely suffered sleepless nights,
mental anguish, serious anxiety as the result
of the actuations of the other party. (Ong
Bun v. Bank of the Phil. Islands, G.R. No.
212362, March 14, 2018)
4. The award of damages predicated on any of
the cases stated in Art. 2219. (Amado v.
Salvador, G.R. No. 171401, December 13,
2007)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Court given discretion to determine moral
damages
Trial courts are given discretion to determine
moral damages and the Court of Appeals can
only modify or change the amount awarded
when they are palpably and scandalously
excessive “so as to indicate that it was the result
of passion, prejudice or corruption on the part of
the trial court.” (Yuchengco v. Manila Chronicle
Publishing Corp., G.R. No. 184315, November 25,
2009)
Moral damages are not punitive in nature. There
is no hard and fast rule in the determination of
what would be a fair amount of moral damages,
since each case must be governed by its own
peculiar circumstances. (PNB v. CA, G.R. No.
116181, January 6, 1997; Norma Mangaliag and
Narciso Solano v. Hon. Edelwina Atubig-Pastoral
and Apolinario Serquina, Jr., G.R. No. 143951,
October 25, 2005; Michael Guy v. Raffy Tulfo, et.
al., G.R. No. 21303, April 10, 2019)
When victim bearing a child
An award for the death of a person does not
cover the case of an unborn foetus that is not
endowed with personality. The damages
recoverable by the parents of an unborn child
are limited to moral damages for the illegal
arrest of the normal development of the foetus
on account of distress and anguish attendant to
its loss. (Geluz v. CA, G.R. No. L-16439, July 20,
1961)
Recovery of moral damages
GR: To recover moral damages, the plaintiff
must allege and prove:
1. The factual basis for moral damages; and
2. The causal relation to the defendant’s act
XPN: Moral damages may be awarded to the
victim in criminal proceedings without the need
for pleading of proof or the basis thereof.
NOTE: Moral damages are mandatory without
need of allegation and proof other than the death
of the victim, owing to the fact of the commission
of murder or homicide. (Espineli v. People, G.R.
No. 179535, June 9, 2014)
Award of moral damages to a corporation
GR: Juridical person is generally not entitled to
836
 Civil Law
moral damages because, unlike a natural person,
it cannot experience physical suffering or such
sentiments as wounded feelings, serious anxiety,
mental anguish or moral shock. (Filipinas
Broadcasting Network v. Ago Medical and
Educational Center-Bicol, G.R. No. 141994,
January 17, 2005)
XPN: A corporation may have a good reputation
which, if besmirched, may also be a ground for
the award of moral damages. (Ibid.)
Moral damages recoverable under culpa
contractual
GR: Moral damages are not recoverable in
actions for damages predicated on a breach of
contract.
XPNS: Moral damages may be awarded in culpa
contractual, involving common carriers in the
following instances:
a. Where the passenger died by reason of
negligence of the carrier (Art. 1764); or
b. Where it is proved that the carrier is guilty
of fraud or bad faith, even if the death does
not result. (Fores v. Miranda 105 Phil. 266;
Pineda, 2010; Sulpicio Lines, Inc., v. Napoleon
Sesante, G.R. No 172682, 27 July 2016)
NOTE: Even if the negligence of the bank is not
attended with malice and bad faith, moral
damages may be granted. (Cavite Development
Bank v. Lim, G.R. No. 131679, February 1, 2000)
Moral damages may be recovered in the
following and analogous cases (1996, 2002,
2004, 2006, 2009 BAR)
1. A criminal offense resulting in physical
injuries;
2. Quasi-delicts causing physical injuries;
3. Seduction, abduction, rape, or other
lascivious acts;
4. Adultery or concubinage;
5. Illegal or arbitrary detention or arrest;
6. Illegal search;
7. Libel, slander or any other form of
defamation;
8. Malicious prosecution;
9. Acts mentioned in Article 309; and
10. Actions referred to in Articles 21, 26, 27, 28,
29, 30, 32, 34, and 35 (NCC, Art. 2219).
NOTE: Art. 2219 of the NCC provides for
837
criminal offenses resulting from physical injuries
and quasi-delicts causing physical injuries.
Parents of the victim seduced, abducted, raped,
or abused, may also recover moral damages.
(NCC, Art. 2219) The prevailing jurisprudence is
that the award of moral damages should be
granted jointly to both the victim and her
parents. Stated differently, the parents are not
entitled to a separate award of moral damages.
(People v. Delen, G.R. No. 194446, Apil 21, 2014)
NOTE: The term ‘physical injury,’ as used in Art.
2219(1) of the NCC, includes death, and no proof
of pecuniary loss is necessary in order that such
damages may be adjudicated. (People v. Tambis,
G. R No. 124452, July 28, 1999)
Tortious acts referred to in chapter of human
relations of the NCC
The plaintiff may recover moral damages:
1. Willful acts contrary to morals, good
customs or public policy;
2. Disrespect to the dignity, personality,
privacy and peace of mind of neighbors and
other persons;
3. Refusal or neglect of a public servant to
perform his official duty without just cause;
4. Unfair competition in enterprise or in labor;
5. Civil action for damages against accused
acquitted on reasonable doubt;
6. Violation of civil rights;
7. Civil action for damages against city or
municipal police force; and
8. When the trial court finds no reasonable
ground to believe that a crime has been
committed after a preliminary investigation
or when the prosecutor refuses or fails to
institute criminal proceedings.
Moral damages may be awarded in appropriate
cases referred to in the chapter on human
relations of the Civil Code (Articles 19 to 36),
without need of proof that the wrongful act
complained of had caused any physical injury
upon the complainant. (Patricio v. Leviste, G.R.
No. L-51832, April 26, 1989)
Cases where moral damages is mandatory
without need of any proof
1. Rape cases
NOTE: Moral damages are automatically granted
 Damages
in a rape case without need of further proof
other than the fact of its commission. For it is
assumed that a rape victim has actually suffered
moral injuries entitling her to such an award.
(People v. Iroy, G.R. No. 187743, March 3, 2010)
2. Murder cases
NOTE: Same rule applies in cases of frustrated
murder.
3. Homicide
In robbery and other common crimes, the grant
of moral damages is not automatic, unlike in
rape cases. (People v. Taño, G.R. No. 133872, May
5, 2000)
Civil indemnity different from moral
damages in rape
In rape cases, civil indemnity is different from
moral damages. It is distinct from and should not
be denominated as moral damages which are
based on different jural foundations and
assessed by the court in the exercise of sound
discretion. (People v. Caldona, G.R. No. 126019,
March 1, 2001)
NOTE: In criminal proceedings for rape, plaintiff
need not prove the factual basis for moral
damages as well as the causal relation to the
defendant’s act.
Amount of award in qualified rape
For qualified rape, where the penalty imposed is
death but reduced to reclusion perpetua because
of RA 9346, the amount of damages to be
awarded are as follows:
1. Civil indemnity – P100,000.00;
2. Moral damages – P100,000.00;
3. Exemplary damages – P100,000.00. (People
v. Jugueta, G.R. No. 202124, April 5, 2016)
Psychologically incapacity and moral
damages
By declaring petitioner as psychologically
incapacitated, the possibility of awarding moral
damages was negated, which should have been
proved by specific evidence that it was done
deliberately. Thus, as the grant of moral damages
was not proper, it follows that the grant of
exemplary damages cannot stand since the Civil
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Code provides that exemplary damages are
imposed in addition to moral, temperate,
liquidated or compensatory damages.
(Buenaventura v. CA, G.R. No. 127358, March 31,
2005)
Q: An article written by Raffy Tulfo, and was
published in Abante Tonite, reported that a
certain Michael C. Guy (Guy), who was being
investigated for tax fraud, went to former
Department of Finance Secretary Juanita
Amatong (Secretary Amatong)'s house to ask
for help. Claiming that the article had tainted
his reputation, Guy filed a Complaint-
Affidavit against Tulfo and the following
representatives of Abante Tonite's publisher.
The RTC convicted Tulfo and Macasaet, et al.
of the crime of libel and ordered them to pay
Guy: (1) ₱5,000,000 as actual damages, and
(2) ₱5,000,000 as moral damages. The CA
affirmed the RTC’s decision, however,
modified it – awarding exemplary damages in
the amount of ₱500,000 and reduced moral
damages to ₱500,000. Later on, in its
Amended Decision, the CA deleted the
exemplary damages, as well as the actual
damages awarded by the RTC.
1. Is Guy entitled to actual damages?
2. Is Guy entitled to exemplary damages?
3. Is the reduction of moral damages
proper?
A:
1. NO. This Court has, time and again,
emphasized that actual damages cannot be
presumed and courts, in making an award,
must point out specific facts which could
afford a basis for measuring whatever
compensatory or actual damages are borne.
An award of actual damages is "dependent
upon competent proof of the damages
suffered and the actual amount thereof. The
award must be based on the evidence
presented, not on the personal knowledge of
the court; and certainly not on flimsy,
remote, speculative and unsubstantial
proof."
2. YES. Contrary to the Court of Appeals'
pronouncement, exemplary damages may be
awarded even in the absence of aggravating
circumstances. It may be awarded "where
the circumstances of the case show the
highly reprehensible or outrageous conduct
of the offender."
838
 Civil Law
3. YES. Article 2219 of the Civil Code
specifically states that moral damages may
be recovered in cases of libel, slander, or
defamation. The amount of moral damages
that courts may award depends upon the set
of circumstances for each case. There is no
fixed standard to determine the amount of
moral damages to be given. Courts are given
the discretion to fix the amount to be
awarded in favor of the injured party, so
long as there is sufficient basis for awarding
such amount. (Michael C. Guy V. Raffy Tulfo,
Allen Macasaet, Nicolas V. Quijano, Jr., Janet
Bay, Jesus P. Galang, Randy Hagos, Jeany
Lacorte, And Venus Tandoc, G.R. No. 213023,
April 10, 2019, as penned by J. Leonen)
NOMINAL DAMAGES
Nominal damages are adjudged in order that a
right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered
by him. (NCC, Art. 2221) (1991, 1994, 2005
BAR)
Nature of Nominal Damages
Nominal damages are small sums fixed by the
court without regard to the extent of the harm
done to the injured party. They are damages in
name only and are allowed simply in recognition
of a technical injury based on a violation of a
legal right. (Robes-Francisco Realty v. CFI, G.R. No.
L-41093 October 30, 1978)
Elements of Nominal Damages
1. Plaintiff has a right;
2. Such right is violated; and
3. The purpose of awarding damages is to
vindicate or recognize the right violated.
Cases where nominal damages are awarded
The court may award nominal damages in every
obligation arising from any source enumerated
in Article 1157, or in every case where any
property right has been invaded. (NCC, Art.
2222)
The adjudication of nominal damages shall
preclude further contest upon the right involved
and all accessory questions, as between the
839
parties to the suit, or their respective heirs and
assigns. (NCC, Article 2223)
NOTE: Nominal damages cannot co-exist with
compensatory damages. Nominal damages are
adjudged in order that a right of the plaintiff,
which has been violated or invaded by the
defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff
for any loss suffered by him. (LRTA v. Navidad,
G.R. No. 145804, February 6, 2003)
Nominal and temperate damages cannot be
awarded concurrently. The two awards are
incompatible. Nominal damages are given in
order that a right of plaintiff which has been
violated or invaded by the defendant, may be
vindicated or recognized. On the other hand,
temperate damages may be awarded when the
court finds that some pecuniary loss has been
suffered but its amount cannot be proved with
reasonable certainty. (Rabuya, 2017)
Q: On 15 March 2002, the annual meeting of
the stockholders of Philadelpia School, Inc.
(“PSI”) was held, wherein a new board of
directors was elected, a transfer of certain
shares was approved, and a 300% stock
dividend was distributed. During the
meeting, King was asked to leave the board
room because allegedly, he was not a PSI
stockholder, while Lim was allowed to vote
only for one share during the elections
despite the proxies he held for other
stockholders who were his brothers. Prior to
the meeting, the SEC and the RTC had
previously ordered that the 1997 General
Information Sheet (“GIS”) of which Lim and
King were listed as stockholders be used as
basis for the 2000 and 2001 elections of PSI
Board of Directors. Thus, on 26 March 2002,
Lim and King filed a petition before the RTC
of Quezon City, seeking to annul the
proceedings and acts resolved on the 15
March 2002 meeting.
Should King and Lim be awarded indemnity
for damages?
A: YES. King and Lim should be entitled to an
award of damages because they were
unjustifiably and obstinately refused recognition
of their shareholdings in PSI as well as
participation in the annual stockholders’
meeting. The right to vote is inherent in and
incidental to the ownership of a capital stock,
 Damages
and the deprivation of which is a violation of
property right that entitles the injured party to
an award of damages. Articles 2217 and 2220 of
the New Civil Code (“NCC”) allow recovery of
moral damages in case of willful injury to
property. The acts of the other stockholders who
refused to recognize the rights of the plaintiffs
caused mental anguish, serious anxiety and
social humiliation to the latter. Furthermore,
under Article 2224 of the NCC, temperate or
moderate damages, which are more than
nominal but less than compensatory damages,
may be recovered even though not specifically
prayed for in the complaint, when the court finds
that some pecuniary loss has been suffered but
its amount cannot, from the nature of the case,
be provided with certainty. Similarly, the award
of attorney’s fees and litigation expenses was
proper because plaintiffs were compelled to
litigate to protect or vindicate their
stockholders’ rights against the unlawful acts of
the other stockholders. (Lydia Lao, et al vs Yao
Bio Lim, et al, G.R. 201306, August 9, 2017, as
penned by Justice Leonen)
Award of nominal damages in labor
termination cases
Where an employee was terminated for a
caused, but the employer failed to comply with
the notice requirement, the employee is entitled
to the payment of nominal damages. (Agabon v.
National Labor Relations Commission, G.R. No.
158693, November 17, 2004) The nominal
damages awarded to the employees for a
dismissal based on just cause under Art. 282 of
the Labor Code without notice requirement was
P30, 000; while, where the dismissal of the
employees was based on authorized cause under
Art. 283 of the Labor Code, but without the
required notice, the amount was fixed at P50,
000. (Celebes Japan Foods Corporation v. Yermo,
G.R. No. G.R. No. 175855, October 2, 2009)
TEMPERATE OR MODERATE DAMAGES
Temperate damages are those damages, which
are more than nominal but less than
compensatory, and may be recovered when the
court finds that some pecuniary loss has been
suffered but its amount cannot be proved with
certainty. (NCC, Art. 2224)
Nature of Temperate Damages
The allowance of temperate damages when
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
actual damages were not adequately proven is
ultimately a rule drawn from equity, the
principle affording relief to those definitely
injured who are unable to prove how definite the
injury. (Equitable PCI Bank v. Tan, G.R. No.
165339, August 23, 2010)
Temperate damages may be awarded in the
following cases:
1. In lieu of actual damages; or
2. In lieu of loss of earning capacity.
Rationale behind the temperate or moderate
damages (1994 BAR)
The rationale behind temperate damages is
precisely that from the nature of the case,
definite proof of pecuniary loss cannot be
offered. When the court is convinced that there
has been such loss, the judge is empowered to
calculate moderate damages, rather than let the
complainant suffer without redress from the
defendant’s wrongful act. (GSIS v. Spouses
Labung-Deang, G.R. No. 135644, September 17,
2001)
Elements of Temperate Damages
1. Some pecuniary loss;
2. Loss is incapable of pecuniary estimation;
and
3. The damages awarded are reasonable.
Q: Nanito Evangelista filed a complaint for
damages against Andolong over the latter's
failure to give the former's share in the net
profits derived from their business. However,
this was evidenced solely by the
documentary exhibits which disclosed the
gross monthly revenue and not the actual
profit earned. During the course of the
proceedings, Andolong was declared in
default. Consequently, it was no longer
possible for Evangelista to prove the actual
profit earned since such documents were in
possession of Andolong. Can Evangelista
recover damages if the net profits can no
longer be ascertained?
A: YES. Evangelista can recover damages
although the exact amount of the net profits
remained unproven. This comes in the form of
temperate or moderate damages. Temperate
damages may be recovered when the court finds
that some pecuniary loss has been suffered but
its amount cannot, from the nature of the case,
840
 Civil Law
be provided with certainty. Consequently, in
computing the amount of temperate or
moderate damages, it is usually left to the
discretion of the courts, but the amount must be
reasonable, bearing in mind that temperate
damages should be more than nominal but less
than compensatory. (Nanito Evangelista V.
Spouses Nero Andolong Iii and Erlinda Andolong
et al., G.R. No. 221770, November 16, 2016)
Q: Alfredo and his family were sound asleep
in their home. At about 1:00 a.m., he was
roused from sleep by the sound of stones
hitting his house. Alfredo went to the living
room and peered through the jalousie
window. The terrace light allowed him to
recognize his neighbor and co-worker,
Bacerra. Just as he was about to leave,
Bacerra exclaimed, "Vulva of your mother,
Old Fred, I'll burn you now." At around
4:00a.m., he heard dogs barking outside.
Alfredo looked out the window and saw
Bacerra walking towards their nipa hut,
which was located around 10 meters from
their house. Bacerra paced in front of the
nipa hut and shook it. Moments later, Alfredo
saw the nipa hut burning. Alfredo sought
help from his neighbors to smother the fire.
Edgar contacted the authorities for
assistance, but it was too late. The nipa hut
and its contents were completely destroyed.
RTC held Baccera guilty, and awarded
₱50,000.00 to Alfredo as temperate damages.
Was the award of temperate damages
amounting to ₱50,000.00 proper?
A: YES. Under Article 2224 of the Civil Code,
temperate damages may be awarded when there
is a finding that "some pecuniary loss has been
suffered but its amount cannot, from the nature
of the case, be proved with certainty." The
amount of temperate damages to be awarded in
each case is discretionary upon the courts as
long as it is "reasonable under the
circumstances."
Private complainant clearly suffered some
pecuniary loss as a result of the burning of his
nipa hut. However, private complainant failed to
substantiate the actual damages that he suffered.
Nevertheless, he is entitled to be indemnified for
his loss. The award of temperate damages
amounting to ₱50,000.00 is proper and
reasonable under the circumstances. (Marlon
Bacerra Y Tabones V. People of The Philippines,
841
G.R. No. 204544, July 03, 2017, as penned by J.
Leonen)
Q: Alfredo and his family were sound asleep
in their home when he was roused from sleep
by the sound of stones hitting his house.
Alfredo went to the living room and peered
through the jalousie window. The terrace
light allowed him to recognize his neighbor
and co-worker, Bacerra.
Bacerra threw stones at Alfredo's house
while saying, "Vulva of your mother." Just as
he was about to leave, Bacerra exclaimed,
"[V]ulva of your mother, Old Fred, I'll bum
you now." Bacerra then left. Troubled by
Bacerra's threat, Alfredo waited for him to
return. Alfredo sat down beside the window.
At around 4:00a.m., he heard dogs barking
outside. Alfredo looked out the window and
saw Bacerra walking towards their nipa hut,
which was located around 10 meters from
their house.
Bacerra paced in front of the nipa hut and
shook it. Moments later, Alfredo saw the nipa
hut burning. Alfredo sought help from his
neighbors to smother the fire. Edgar
contacted the authorities for assistance, but
it was too late. The nipa hut and its contents
were completely destroyed. The local
authorities conducted an investigation on the
incident. Ultimately, the trial court and the
Court of Appeals found him guilty beyond
reasonable doubt of simple arson, and was
ordered to pay temperate damages of
P50,000 to Alfred. Is the award of temperate
damages proper?
A: YES. Under Article 2224 of the Civil Code,
temperate damages may be awarded when there
is a finding that "some pecuniary loss has been
suffered but its amount [cannot], from the
nature of the case, be proved with certainty."
The amount of temperate damages to be
awarded in each case is discretionary upon the
courts as long as it is "reasonable under the
circumstances."
Private complainant clearly suffered some
pecuniary loss as a result of the burning of his
nipa hut. However, private complainant failed to
substantiate the actual damages that he suffered.
Nevertheless, he is entitled to be indemnified for
his loss. The award of temperate damages
amounting to ₱50,000.00 is proper and
 Damages
reasonable under the circumstances. (Marlon covenanted pre- contract irrespective of the
Bacerra y Tabones vs, People of the Philippines, estimate of damage sustained. (De Leon,
G.R. No. 204544, July 3, 2017, as penned by J. damages. 2012)
Leonen)
Legal Results
LIQUIDATED DAMAGES There is no difference between a penalty and
liquidated damages, as far as legal results are
Liquidated damages are fixed damages concerned. (Lambert v. Fox, G.R. No. L-7991,
previously agreed by the parties to the contract January 29, 1914; Filinvest Land, Inc. v. CA, et. al.,
and payable to the innocent party in case of G.R. No. 138980, eptember 20, 2005)
breach by the other. (Pineda, 2009)
NOTE: Whether as a penalty or indemnity, it is
Liquidated damages are those that the parties necessary that there be a contract the violation
agree to be paid in case of a breach. Under of which give rise to the liquidate damages
Philippine laws, they are in the nature of stipulated upon. (Pineda, 2009)
penalties. They are attached to the obligation in
order to ensure performance. As a precondition Liquidated damages may be equitably
to such award, however, there must be proof of reduced when
the fact of delay in the performance of the
obligation. (Suatengco v. Reyes, G.R. No. 162729, 1. Iniquitous or unconscionable (NCC, Art.
December 17, 2008) 2227)
2. Partial or irregular performance
Nature of Liquidated Damages
When principal obligation is void
A stipulation on liquidated damages is a penalty
clause where the obligor assumes a greater The nullity of the principal obligation carries
liability in case of breach of an obligation. The with it that of the penal clause. (NCC, Art. 1230)
obligor is bound to pay the stipulated amount
without need for proof on the existence and on Rule governing in case of breach of contract
the measure of damages caused by the breach.
(Titan v. Uni-Field, G.R. No. 153874, March 1, When the breach of contract committed by the
2007) defendant is not the one contemplated by the
parties in agreeing upon the liquidated damages,
NOTE: Attorney’s fee is in the concept of actual the law shall determine the measure of damages,
damages except that when it is stipulated and and not the stipulation. (NCC, Art. 2228)
therefore in the form of liquidated damages no
proof of pecuniary loss is required. (NCC, Article EXEMPLARY OR CORRECTIVE DAMAGES
2216) (Santiago v. Dimayuga, G.R. No. L-17883,
December 30, 1961) Exemplary damages or corrective damages are
imposed, by way of example or correction for the
Liquidated damages v. Penalties public good, in addition to the moral, temperate,
liquidated or compensatory damages. (NCC, Art.
Liquidated Penalties 2229) (2003, 2005, 2009 BAR)
Damages
Purpose NOTE: They are also known as “punitive” or
It is a sum It is a sum inserted in a “vindictive” damages.
inserted in a contract as a punishment for
contract as a default, or by way of security Nature of exemplary damages
measure of for actual damages which
compensation may be sustained because of Exemplary damages are mere accessories to
for its breach. the non- performance of the other forms of damages except nominal
contract. damages. They are mere additions which may or
may not be granted at all depending upon the
Nature necessity of setting an example for public good
Its essence is a An agreement to pay a as a form of deterrent to the repetition of the
genuine stipulated sum on breach of same act by anyone. (Pineda, 2009)

UNIVERSITY OF SANTO TOMAS 842

2021 GOLDEN NOTES
 Civil Law
2011) Commercial manner.
Rationale behind exemplary damages Corp., G.R. No. (Pilipinas
126524, Makro, Inc. v.
The rationale behind exemplary damages is to November 29, Coco Charcoal
provide an example or correction for the public 2001) Phils., Inc., G.R.
good and not to enrich the victim. (Rana v. Wong, No. 196419,
G.R. No. 192861, June 30, 2014) Oct. 04, 2017)

Cases where exemplary damages may be NOTE: In quasi-contracts, award of exemplary

imposed as accessory damages damages is discretionary. (Ong Bun v. Bank of the
Phil. Islands, G.R. No. 212362, March 14, 2018)
GR: Exemplary damages cannot be recovered as
a matter of right. (NCC, Art. 2233) Q: Meralco was contracted to supply
XPN: They can be imposed in the following electricity to Marvex Industrial Corporation
cases: (Marvex) under an Agreement for Sale of
Electric Energy. It installed metering devices
1. Criminal offense – when the crime was at Marvex's premises. Marvex was billed
committed with one or more aggravating according to the monthly electric
circumstances (NCC, Art. 2230); consumption recorded in its meter. Meralco
2. Quasi-delicts – when the defendant acted service inspectors inspected Marvex's
with gross negligence (NCC, Art. 2231); electric metering facilities and found that the
3. Contracts and Quasi-contracts – when main meter terminal and cover seals had
defendant acted in wanton, fraudulent, been tampered with. During a second
reckless, oppressive, or malevolent manner. inspection, Meralco found that the metering
(NCC, Art. 2232) devices were tampered with again.
Subsequently, Meralco assessed Marvex a
Requirements for an award of exemplary differential billing. Meralco sent demand
damages letters and disconnected Marvex's electric
service when it did not pay. Nordec, the new
1. The claimant’s right to exemplary damages owner of Marvex, sued Meralco for damages
has been established; with prayer for preliminary mandatory
2. Their determination depends upon the injunction. It alleged that Meralco's service
amount of compensatory damages that may inspectors conducted the inspections without
be awarded to the claimant; and its consent or approval. Following the
3. The act must be accompanied by bad faith or inspections, Meralco's inspectors gave an
done in wanton, fraudulent, oppressive or unnamed Nordec employee a Power Field
malevolent manner. (Mendoza v. Spouses Order that did not mention the alleged
Gomez, G.R. No. 160110, June 18, 2014) defects in the metering devices. Nordec
further claimed that the parties exchanged
Award in Crime, Quasi-Delict, Contracts and letters on the alleged unregistered electric
Quasi-contracts bill, and that it requested a recomputation,
which Meralco denied in its letter. However,
Award in Award in Award in Meralco asked Nordec to show the basis for
Crime Quasi-Delict Contracts and its recomputation request, to which Nordec
Quasi- complied in its letter. Meralco required
Contracts Nordec to pay P371,919.58 for the
An May be May be unregistered electricity bill. Nordec then
aggravating granted if the awarded if the informed Meralco of the pending resolution
circumstance, defendant defendant is of the recomputation. Nordec claimed that
whether acted with found to have Meralco then disconnected its service
ordinary or gross acted in a without prior notice, resulting to loss of
qualifying. negligence. wanton, income and cancellation of other business
(People v. (BPI fraudulent, opportunities. Is Nordec Philippines is
Dadulla, G. R. Investment reckless, entitled to actual, temperate, moral or
No. 172321, Corp. v. D.G. oppressive, or exemplary damages, attorney's fees, and
February 9, Carreon malevolent legal interest?

843
 Damages
A: NO. The requirement in Article 2234 of the
Civil Code, which requires proof of entitlement
to moral, temperate or compensatory damages
before exemplary damages may be awarded.
Exemplary damages, which cannot be recovered
as a matter of right, may not be awarded if no
moral, temperate, or compensatory damages
have been granted. Since exemplary damages
cannot be awarded, the award of attorney's fees
should likewise be deleted.
Moral damages are also not proper, in line with
Manila Electric Company v. T.E.A.M. Electronics
Corporation:
As a rule, a corporation is not entitled to moral
damages because, not being a natural person, it
cannot experience physical suffering or
sentiments like wounded feelings, serious
anxiety, mental anguish and moral shock. Here,
the records are bereft of evidence that would
show that Nordec's name or reputation suffered
due to the disconnection of its electric supply.
Moreover, contrary to Nordec's claim, it cannot
be awarded temperate or moderate damages.
Under Article 2224 of the Civil Code. When the
court finds that a party fails to prove the fact of
pecuniary loss, and not just the amount of this
loss, then Article 2224 does not apply. Here, the
Court of Appeals found that Meralco's
disconnection had a "domino effect" on Nordec's
business, but that Nordec did not offer actual
proof of its losses. Nordec even admitted in its
petition for review that there was an "oversight"
on its part in "adducing proof of the accurate
amount of damages it sustained" due to
Meralco's acts. No pecuniary loss has been
established in this case, apart from the claim in
Nordec's complaint that the "serious anxiety" of
the disconnection had caused Nordec's president
to cancel business appointments, purchase
orders, and fail to fulfill contractual obligations,
among others.
In this instance, nominal damages may be
awarded. Nominal damages are awarded to
vindicate the violation of a right suffered by a
party, in an amount considered by the courts
reasonable under the circumstances. Meralco's
negligence in not providing Nordec sufficient
notice of disconnection of its electric supply,
especially when there was an ongoing dispute
between them concerning the recomputation of
the electricity bill to be paid, violated Nordec's
rights. Because of this, Nordec is entitled to
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
nominal damages in the amount of P30,000.00.
(Manila Electric Company, Vicente Montero, Mr.
Bondoc, And Mr. Bayona v. Nordec Philippines
And/Or Marvex Industrial Corp. Represented By
Its President, Dr. Potenciano R. Malvar, G.R.
196020, April 18, 2018, as penned by J. Leonen)
DAMAGES IN CASE OF DEATH
Damages that can be recovered in case of
death (MEA-I3)
1. Moral damages
2. Exemplary damages
3. Attorney's fees and expenses for litigation
4. Indemnity for death
5. Indemnity for loss of earning capacity
6. Interest in proper cases
Rules when crimes and quasi-delict has
caused death
The amount of damages for death caused by a
crime or quasi-delict shall be at least P75,000,
even though there may have been mitigating
circumstances. In addition:
1. The defendant shall be liable for the loss of
the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the
latter; such indemnity shall in every case be
assessed and awarded by the court, unless
the deceased on account of permanent
physical disability not caused by the
defendant, had no earning capacity at the
time of his death;
2. If the deceased was obliged to give support
according to the provisions of Article 291,
the recipient who is not an heir called to the
decedent's inheritance by the law of testate
or intestate succession, may demand
support from the person causing the death,
for a period not exceeding five years, the
exact duration to be fixed by the court;
3. The spouse, legitimate and illegitimate
descendants and ascendants of the deceased
may demand moral damages for mental
anguish by reason of the death of the
deceased. (NCC, Art. 2206)
NOTE:
Under Art. 2206 of the NCC, the amount of
damages for death caused by a crime or quasi-
delict is P3,000.00. At present, however, civil
indemnity for death has been increased to
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 Civil Law
P75,000. The same amount is awarded as moral
damages and exemplary damages, regardless of
the number of qualifying aggravating
cricumstances present. (People v. Roa, G.R. No.
225599, March 22, 2017)
The plaintiff is entitled to the amount that he
spent during the wake and funeral of the
deceased. However, it has been ruled that
expenses after the burial are not compensable.
GRADUATION OF DAMAGES
Rules in graduation of damages in torts cases
Generally, the degree of care required is
graduated according to the danger a person or
property attendant upon the activity which the
actor pursues or the instrumentality he uses.
The greater the danger the greater the degree of
care required. (Keppel Cebu Shipyard v. Pioneer
Insurance, G.R. Nos. 180880-81, September 25,
2009).
However, foreseeability is not the same as
probability. Even if there is lesser degree of
probability that damage will result, the damage
may still be considered foreseeable.
NOTE: The test, with respect to foreseeability, is
not the balance of probabilities, but the
existence, in the situation in hand, of some real
likelihood of some damage and the likelihood is
of such appreciable weight and moment to
induce, or which reasonably should induce,
action to avoid it on the part of a person or a
reasonably prudent mind.
1. That the plaintiff himself has contravened
the terms of the contract;
2. That the plaintiff has derived some benefit
as a result of the contract;
3. In cases where exemplary damages are to be
awarded, that the defendant acted upon the
advice of counsel;
4. That the loss would have resulted in any
event; and
5. That since the filing of the action, the
defendant has done his best to lessen the
plaintiff’s loss or injury. (NCC, Art. 2215)
Liquidated damages, whether intended as an
indemnity or a penalty, shall be equitably
reduced if they are iniquitous or unconscionable.
(NCC, Art. 2227)
NOTE: There may be a compromise upon the
civil liability arising from an offense; but such
compromise shall not extinguish the public
action for the imposition of the legal penalty.
(NCC, Art. 2034)
MISCELLANEOUS RULES
The injured party is obligated to undertake
measures that will alleviate and not aggravate
his condition after the infliction of the injury or
nuisance.
The party suffering loss or injury must exercise
the diligence of a good father of the family to
minimize the damages resulting from the act or
omission. (NCC, Art. 2203)

Rules in graduation of damages in crimes Co-existence of Damages

In crimes, the damages to be adjudicated may be Damages

Damages
respectively increased or lessened according to Damages that that must
that cannot
the aggravating or mitigating circumstances. must co-exist stand
co-exist
(NCC, Art. 2204) alone
Nominal Exemplary Nominal
Reduction of damages in quasi-delict cases Damages Damages must Damages
cannot co- co-exist with
In quasi-delict, the contributory negligence of exist with Moral,
the plaintiff shall reduce the damages he may Exemplary Temperate,
recover. (NCC, Art. 2214) Damages Liquidated or
Compensatory
Reduction of damages in contracts, quasi- Damages
contracts and quasi-delicts

The court can equitably mitigate the damages in

contracts, quasi-contracts and quasi-delicts in
the following instances other than in Art. 2214:

845