Professional Documents
Culture Documents
Academics Committee
Faculty of Civil Law
University of Santo Tomas
España, Manila 1008
All rights reserved by the Academics Committee of the Faculty of Civil Law of the
Pontifical and Royal University of Santo Tomas, the Catholic University of the
Philippines.
2019 Edition.
A copy of this material without the corresponding code either proceeds from an illegal
source or is in possession of one who has no authority to dispose the same.
No. ____________
TEAM: BAR-OPS
NICOLE MARIE A. CORTES CHAIRPERSON
MARYLOU RENZI M. OLOTEO VICE-CHAIRPERSON
CHRISTINE JOYCE P. ANDRES SECRETARY
KRIZA NIÑA B. MALALUAN ASST. SECRETARY
ELOUISA ANN DC. CARREON HEAD, PUBLIC RELATIONS OFFICER
CIARI T. MENDOZA ASST. HEAD, PUBLIC RELATIONS OFFICER
ELISHA ELAINE D. BAYOT HEAD, FINANCE COMMITTEE
JOSEPHINE GRACE W. ANG HEAD, HOTEL ACCOMODATIONS COMMITTEE
PATRICIA MAE D. GUILLERMO ASST. HEAD, HOTEL ACCOMODATIONS COMMITTEE
RAFAEL JEROME M. MENDOZA ASST. HEAD, HOTEL ACCOMODATIONS COMMITTEE
KHYNA MATHEA N. CANLAS ASST. HEAD, HOTEL ACCOMODATIONS, COMMITTEE
MARSHAN DEINN S. GUALBERTO ASST. HEAD, HOTEL ACCOMODATIONS, COMMITTEE
KIER JOHN V. UY LOGISTICS COMMITTEE
GLENN MATTHEW C. MANLAPID LOGISTICS COMMITTEE
VAN ANGELO K. RESPICIO LOGISTICS COMMITTEE
JAMES ROSS L. TAN LOGISTICS COMMITTEE
LOUELL JUDE B. QUE LOGISTICS COMMITTEE
MON FRANCIS A. TOLENTINO SENIOR MEMBER
CLARA LOUISSE J. YUMANG SENIOR MEMBER
JOCHRIS DANIEL Z. GUADES SENIOR MEMBER
JERREMIAH KRIZIAH B. BATALLER SENIOR MEMBER
MEMBERS
JOSHUA UROLAZA PATRICK RYUZAKI
PATRICIA ANN RECTO BEATRICE FANGON
DALE APAREJADO SHERLEEN ANNE DAMIAN
DANICE GAN PAULINE BODO
KAMILLE IMSON CHERIE BUZON
KEL MAGTIRA
CALOY DUNGAO
ACADEMIC OFFICIALS
For being our guideposts in understanding the intricate sphere of Civil Law.
-Academics Committee 2019
TABLE OF CONTENTS
*Based on 2019 Bar syllabus
PRESCRIPTION
PART IV - SUCCESSION
CONTRACTS
PART IX - PARTNERSHIP
PART X - AGENCY
Book II - Damages
Publication requirement
EFFECT AND APPLICATION OF LAWS
Publication is indispensable in every case, but the
legislature may in its discretion provide that the
Law usual fifteen-day period shall be shortened or
extended (Umali v. Estanislao, G.R. No. 104037,
It is a rule of conduct formulated and made May 29, 1992; Tañada v. Tuvera, G.R. No. L-63915,
obligatory by legitimate power of the state (Diaz, December 29, 1986).
2013).
Publication must be in full or it is no publication at
Effectivity of laws all since its purpose is to inform the public of the
contents of the law. The mere mention of the
Laws shall take effect after fifteen days following number of the presidential decree, the title of such
the completion of their publication either in the decree, its whereabouts, the supposed date of
Official Gazette, or in a newspaper of general effectivity, and in a mere supplement of the
circulation in the Philippines, unless it is Official Gazette cannot satisfy the publication
otherwise provided [New Civil Code (NCC), Art. 2, requirement. This is not even substantial
as amended by EO 200)]. compliance (Tañada v. Tuvera, G.R. No. L-63915,
December 29, 1986).
Effectivity: It depends on whether or not it has
provided a specific date for its effectivity: Indispensability of publication
1. If date is specified– Upon the lapse of the said GR: All laws are required to be published in full.
period following its complete publication and
not before. NOTE: The reason for this rule is that the basic
2. If no date is specified– 15-day period, which constitutional requirement of due process must be
may either be on the 15th or on the 16th day satisfied. (Rabuya, 2009). Without such notice and
depending on the language used by the publication, there would be no basis for the
Congress in fixing the effectivity date of the application of the maxim ignoratia legis non
statute (Rabuya, 2009). excusat (Rabuya, 2009).
a. 15th day - If the law declares that it shall XPNs to the Publication Requirement: O-R-L-I
become effective “15 days after its
publication” 1. Municipal Ordinances (governed by the Local
b. 16th day - If the law declares that it shall Government Code);
be effective “after 15 days following its 2. Rules and regulations which are internal in
publication” nature;
3. Letters of Instruction issued by administrative
3. If the law provides for immediate effectivity supervisors on internal rules and guidelines;
or upon approval – It is effective immediately 4. Interpretative regulations regulating only the
after its complete publication and not after personnel of administrative agency.
signing by the President.
4. If the law is voluminous– Reckoning shall XPNs to the XPNs: D-E-P
begin from the release of the last of the series.
Administrative rules and regulations that require
“Unless it is otherwise provided” provision on publication:
effectivity of laws
1. The purpose of which is to implement or
The clause "unless it is otherwise provided" enforce existing laws pursuant to a valid
refers to the date of effectivity and not to the Delegation;
requirement of publication itself. The requirement 2. Penal in nature;
of publication may not be omitted in any event. 3. It diminishes Existing rights of certain
This clause does not mean that the legislator may individuals.
make the law effective immediately upon
1
CIVIL LAW
NOTE: Circulars issued by the monetary board are prohibit any under pain of penalty. It does not
required to be published if they are meant not to regulate the conduct of persons or the public, in
merely “fill in details” of the Central Bank Act. As general. It need not be published (Honasan, II v.
a rule, circulars which prescribe a penalty for The Panel of Investigating Prosecutors of the DOJ,
violations should be published before coming into G.R. No. 159747, June 15, 2004).
effect. However, circulars which are mere
statements of general policies as to how the law Q: The Sangguniang Bayan of Hagonoy,
should be construed do not need publication in Bulacan enacted an ordinance which increased
the Official Gazette for their publication. the stall rentals of the market vendors in
Hagonoy. Art. 3 of the said ordinance provided
Where to publish that it shall take effect upon approval. The
ordinance was posted from November 4 to 25,
1. Official Gazette; or 1996. In the last week of November 1997,
2. Newspaper of general circulation in the petitioners were personally given copies and
Philippines were informed that it shall be enforced in
January 1998. The petitioners contended that
Newspaper of general circulation the subject ordinance was not published as
required by law. Did the ordinance comply
For a newspaper to be considered of general with the rule of publication?
circulation:
1. It must be published within the court’s A: YES. An ordinance which increased the stall
jurisdiction; rentals of the market vendors has complied with
2. It must be published at regular intervals the publication requirement when the same was
for disseminating local news and general posted in 3 conspicuous places (Sec. 188, Local
information; Government Code; Hagonoy v. Municipality, G.R. No.
3. It has a bona fide subscription list of 137621, February 6, 2002).
paying subscribers; and
4. It is not devoted to the interest or NOTE: Within ten (10) days after their approval,
published for the entertainment of a certified true copies of all provincial, city, and
particular class, profession, trade, calling, municipal tax ordinances or revenue measures
race or religious denomination (Alvarez v. shall be published in full for three (3) consecutive
People, G.R. No. 192591, June 29, 2011). days in a newspaper of local circulation: Provided,
however, That in provinces, cities and
Q: Honasan questions the authority and municipalities where there are no newspapers of
jurisdiction of the DOJ panel of prosecutors to local circulation, the same may be posted in at
conduct a preliminary investigation and to least two (2) conspicuous and publicly accessible
eventually file charges against him, claiming places (Sec. 188, Local Government Code).
that since he is a senator with a salary grade of
31, it is the Office of the Ombudsman, not the Exceptions to the publication requirement
DOJ, which has authority and jurisdiction to
conduct the preliminary investigation. DOJ 1. An interpretative regulation;
claims that it has concurrent jurisdiction, 2. A regulation that is merely internal in nature;
invoking an OMB-DOJ Joint Circular which and
outlines the authority and responsibilities 3. A letter of instruction issued by an
among prosecutors of the DOJ and the Office of administrative agency concerning rules or
the Ombudsman in the conduct of preliminary guidelines to be followed by subordinates in
investigations. Honasan counters that said the performance of their duties (Association of
circular is ineffective as it was never Southern Tagalog Electric Cooperatives, Inc. v.
published. Is OMB-DOJ Circular No. 95-001 Energy Regulatory Board, G.R. No. 192117,
ineffective because it was not published? September 18, 2012).
A: NO. OMB-DOJ Circular No. 95-001 is merely an Q: Judge Ferdinand Villanueva was appointed
internal circular between the two offices which as a presiding judge of MTC, Compostela-New
outlines the authority and responsibilities among Bataan. The following year, Judge Villanueva
prosecutors of the DOJ and of the Office of the applied as Presiding Judge in several Regional
Ombudsman in the conduct of preliminary Trial Courts. The Judicial and Bar Council
investigations. It does not contain any penal (JBC) then informed him that he was not
provision nor prescribe a mandatory act or included in the list. The JBC’s decision upheld
Q: “A” alleges violation of his right to due NOTE: The possession of the antichretic credit as
process considering that he is summoned to possession in good faith since a difficult question
attend the Senate hearings without being of law was involved – antichresis. In this case, the
apprised not only of his rights therein through parties were not very knowledgeable of the law
the publication of the Senate Rules of (Kasilag v. Rodriguez, G.R. No. 46623, December 7,
Procedure Governing Inquiries in Aid of 1939).
Legislation. Senate invoked the provisions of
R.A. No. 8792, otherwise known as the Laws covered
Electronic Commerce Act of 2000, to support
their claim of valid publication through the
3
CIVIL LAW
The laws referred to under Art. 3 of the NCC are Q: Eduardo was married to Ruby. He then met
those of the Philippine Laws and it applies to all Tina and proposed marriage, assuring her that
kinds of domestic laws, whether civil or penal, he was single. They got married and lived
substantive or remedial. However, the article is together. Tina, upon learning that Eduardo
limited to mandatory and prohibitory laws. It does had been previously married, charged
not include those which are merely permissive Eduardo for bigamy for which he was
(Rabuya, 2006). convicted. Eduardo testified that he declared
he was “single” because he believed in good
Non-applicability to foreign laws faith that his first wife was already dead,
having not heard from her for 20 years, and
Ignorance of a foreign law is a mistake of fact. that he did not know that he had to go to court
There is no presumption of knowledge of foreign to seek for the nullification of his first
laws. It must be alleged and proved as a matter of marriage before marrying Tina. Is Eduardo
fact; otherwise, the doctrine of processual liable for the crime of bigamy?
presumption will apply.
A: YES. Eduardo is presumed to have acted with
Doctrine of Processual Presumption malice or evil intent when he married
Tina. Mistake of fact or good faith of the accused is
In international law, the party who wants to have a valid defense in a prosecution for a felony by
a foreign law applied to a dispute or case has the dolo; such defense negates malice or criminal
burden of proving the foreign law. The foreign law intent. However, ignorance of the law is not an
is treated as a question of fact to be properly excuse because everyone is presumed to know the
pleaded and proved as the judge or labor arbiter law. Eduardo has the burden to prove that when
cannot take judicial notice of a foreign law. He is he married Tina, he has a well-grounded belief
presumed to know only domestic or forum law that his first wife was already dead. He should
(ATCI Overseas Corporation, et al. v. Echin, G.R. No. have adduced in evidence a decision of a
178551, October 11, 2010; See case of Del Socorro v. competent court declaring the presumptive death
Brinkman G.R. No. 193707 December 10, 2014). of his first wife as required by Art. 349 of the RPC,
in relation to Art. 41 of the FC. Such judicial
Mistake of fact v. Mistake of law declaration constitutes proof that Eduardo acted
in good faith, and would negate criminal intent on
BASIS MISTAKE OF MISTAKE OF his part when he married the private
FACT LAW complainant (Manuel v. People, G.R. No. 165842,
Want of Want of November 29, 2005).
knowledge of knowledge or
some fact or acquaintance Q: Complainants who were connected with the
facts with the laws of Daily Informer (a widely circulated newspaper
Want of
constituting or the land insofar in Western Visayas) were charged before the
knowledg
relating to the as they apply to MTC by Judge Pamonag of the crime of libel.
e pertains
subject matter the act, relation, Respondent judge conducted a preliminary
to
on hand. duty, or matter investigation and thereafter issued warrants
under for the arrest of the complainants.
consideration. Complainants filed an administrative case
against the judge for gross ignorance of the
When some Occurs when a law. They contended that the judge neither has
facts which person having authority to conduct a preliminary
really exist are full knowledge of investigation nor to issue warrants for their
unknown or the facts come to arrest. The judge said that it was his first libel
Nature of some fact is an erroneous case and that he issued the warrants in good
Mistake supposed to conclusion as to faith. Is the respondent guilty of gross
exist which its legal effects. ignorance of the law?
really does not
exist. A: YES. Judges are expected more than just
cursory acquaintance with statutes and
Good faith is an Not excusable, procedural rules. They must know the law and
Defense excuse. even if in good apply them properly in good faith. The provisions
faith. of Art. 360 of the RPC on the persons authorized
to conduct preliminary investigation in libel cases
Retroactive law The maxim means, “the law looks forward not
backward”. The retroactive application of a law
A legislative act that looks backward or usually divests rights that have already become
contemplates the past, affecting acts or facts that vested or impairs the obligations of contract and
existed before the act come into effect (Black’s hence, is unconstitutional (Chavez v. PEA, G.R. No.
Law Dictionary, 2009). 133250, May 6, 2003)
5
CIVIL LAW
MANDATORY AND PROHIBITORY LAWS the intentional doing of an act inconsistent with
claiming it (Cruz & Co., Inc. v. HR Construction
Mandatory law Corp., G.R. No. 187521, March 14, 2012).
A law or a provision in a statute is said to be 1. Natural Rights – Those which grow out
permissive or directory when it allows certain of the nature of man and depend upon
acts but does not command them (Black’s Law personality (e.g. right to life, liberty,
Dictionary, 2009). privacy, and good reputation);
2. Political Rights – Consist in the power to
Violation of Mandatory or Prohibitory Laws participate, directly or indirectly, in the
establishment or administration of
GR: Acts executed against the provisions of government (e.g. right of suffrage, right to
mandatory or prohibitory laws shall be void (NCC, hold public office, right of petition); and
Art. 5). 3. Civil Rights– Those that pertain to a
person by virtue of his citizenship in a
XPNs: When the law: state or community (e.g. property rights,
marriage, equal protection of laws,
1. Itself authorizes its validity (e.g. lotto, freedom of contract, trial by jury) (Pineda,
sweepstakes); 2009).
2. Makes the act valid but punishes the
violator (e.g. Marriage solemnized by a a. Rights of personality or human rights;
person not authorized to do so); b. Family rights; and
3. Makes the act merely voidable; c. Patrimonial rights:
4. Declares the nullity of an act but
recognizes its effects as legally existing i. Real rights;
(e.g. Child born after the annulment of ii. Personal rights (Rabuya, 2009).
marriage is considered legitimate).
Unwaivable rights
WAIVER OF RIGHTS
1. Right to live and right to future
Waiver support.
2. Right to personality and family rights.
It is a voluntary and intentional relinquishment or 3. Right to future inheritance.
abandonment of a known existing legal right,
advantage, benefit, claim or privilege, which NOTE: This is especially so if the waiver is
except for such waiver the party would have intended to prejudice creditors. Hence, if an
enjoyed. heir repudiates the inheritance to the
prejudice of his own creditors, the latter may
The voluntary abandonment or surrender, by a petition the court to authorize them to accept
capable person, of a right known by him to exist, it in the name of the heir (NCC, Art. 1052;
with the intent that such right shall be Albano, 2013).
surrendered and such person forever deprived of
its benefit; or such conduct as warrants an NOTE: If a candidate for mayor agrees to split
inference of the relinquishment of such right; or his term of office with the vice-mayor to
A person may waive any matter which affects his 1. The laws cover the same subject matter; and
property, and any alienable right or privilege of 2. The latter is repugnant to the earlier (Rabuya,
which he is the owner or which belongs to him or 2009).
to which he is legally entitled, whether secured by
contract, conferred with statute, or guaranteed by NOTE: Implied repeals are NOT to be favored
constitution, provided such rights and privileges because they rest only on the presumption that
rest in the individual, are intended for his sole because the old and the new laws are
benefit, do not infringe on the rights of others, and incompatible with each other, there is an intention
further provided the waiver of the right or to repeal the old (Rabuya, 2009).
privilege is not forbidden by law, and does not
contravene public policy (Cruz & Co., Inc. v. HR Instances of implied repeal
Construction Corp., G.R. No. 187521, March 14,
2012). 1. When the provisions in the two
acts on the same subject matter
Requisites of a valid waiver are irreconcilably contradictory,
in which case, the later act, to the
1. Waiving party must actually have the extent of the conflict, constitutes
right he is renouncing; an implied repeal of earlier one;
2. He must have full capacity to make the and
waiver; 2. When the later act covers the
3. Waiver must be clear and unequivocal; whole subject of the earlier one
4. Waiver must not be contrary to law, and is clearly intended as a
public order, public morals, etc; substitute; thus it will operate to
5. When formalities are required, they must repeal the earlier law (Carmelita
be complied with. Lledo v. Atty. Cesar V. Lledo, A.M.
No. P-95-1167, February 9, 2010).
Q: A student was granted a scholarship but
agreed not to transfer to another school unless Revival of repealed law
he would refund all the benefits he derived out
of his scholarship. Is the stipulation valid? BASIS EXPRESS IMPLIED
Why? REPEAL REPEAL
If the 1st law is If the 1st law is
A: NO. It is void because it is contrary to public expressly repealed by
policy and morals (Cui v. Arellano University, G.R. repealed by implication
L-15127, May 30, 1961). Manner of
the 2nd law and by the 2nd law
Repeal
the 2nd law is and the 2nd law
REPEAL OF LAWS repealed by is repealed by
the 3rd law. the 3rd law.
7
CIVIL LAW
The 1st law is The 1st law is should be deemed settled and closed to further
NOT revived revived unless argument.
Effect of
unless otherwise
Repeal
expressly provided. However, when in the light of changing conditions,
provided so. a rule has ceased to be beneficial to the society,
courts may depart from it.
Conflict between general and special laws
Obiter Dictum
If the general law was enacted prior to the special
law, the latter is considered the exception to the An opinion expressed by a court upon some
general law. If the general law was enacted after question of law which is not necessary to the
the special law, the special law remains. decision of the case before it. Such are not binding
as precedent (Rabuya, 2009).
XPNs:
DUTY TO RENDER JUDGMENT
1. There is an express declaration.
2. There is a clear, necessary and irreconcilable Rendering of judgment by reason of silence of
conflict. law
3. The subsequent general law covers the
whole subject and is clearly intended to No judge or court shall decline to render judgment
replace the special law on the matter by reason of the silence, obscurity or insufficiency
(Rabuya, 2009). of the laws (NCC, Art. 9). (2003 BAR)
Judicial decisions are evidence of what the laws 1. When there is no law exactly applicable to
mean. the point in controversy, the custom of
the place shall be applied and in default
The judicial decisions form part of the law of the thereof, the general principles of law;
land as of the date of the enactment of said law. 2. Decisions of foreign courts;
The Supreme Court’s interpretation merely 3. Opinions of known authors and
establishes the contemporaneous legislative professors;
intent that the construed law purports to carry 4. Applicable rules of statutory construction;
into effect. However, the decisions referred to in 5. Principles formulated in analogous cases.
Art. 8 of the NCC are only those enunciated by the
SC (Rabuya, 2009). PRESUMPTION AND APPLICABILITY OF
CUSTOM
When a doctrine is overruled and a different view
is adopted, the new doctrine should be applied Presumption in case of doubt in the
prospectively and should not prejudice parties interpretation of laws
who relied on the old doctrine.
In case of doubt in the interpretation or
Doctrine of Stare Decisis application of laws, it is presumed that the
lawmaking body intended right and justice to
It is adherence to judicial precedents. Once a prevail (NCC, Art. 10). (2003 BAR)
question of law has been examined and decided, it
NOTE: Provided said customs are not contrary to If the last day falls on a Sunday or a legal
law, public morals, etc. holiday
Non-applicability of customs in criminal cases If the act to be performed within the period is:
9
CIVIL LAW
2. From a contractual relationship – The Private International Law v. Public
act will still become due despite the fact International law
that the last day falls on a Sunday or a
legal holiday. Two views:
11
CIVIL LAW
When the proper foreign law has not been Comity - It is the recognition which one state
properly proved, the court of the forum may allows within its territory to the legislative,
presume that said foreign law is the same as the executive, or judicial acts of another state,
law of the forum that said court can now apply. It having due regard both to international duty
applies when the foreign law is not alleged or if and convenience and to the rights of its own
alleged, it is not proved. citizens or of other persons who are under the
protection of its laws (Agpalo. 2004).
Where a foreign law is not pleaded or, even if
pleaded, is not proved, the court of the forum may Kinds:
presume that the foreign law applicable to the a. Comity based on reciprocity
case is the same as the local or domestic law. b. Comity based on the persuasiveness of
the foreign judgment
Foreign laws do not prove themselves in our
jurisdiction and our courts are not authorized to 2. Theory of Vested Rights - Courts enforce not
take judicial notice of them. Like any other fact, the foreign law or foreign judgment but the
they must be alleged and proved. rights vested under such law or judgment.
Thus, rights acquired in one country must be
A Philippine court may take judicial notice of a recognized and legally protected in other
foreign law, as when the laws are already within countries. The forum will not apply the
its actual knowledge, such as when they are well foreign law but will simply recognize the right
and generally known or they have been actually vested by said law.
ruled upon in other cases before it and none of the
parties concerned claim otherwise (PCIB v. Escolin, 3. Theory of Local Law - This involves the
G.R Nos. L-27860 & 27896, September 30, 1975) appropriation of a foreign rule by the State of
the forum and transforming it into a domestic
CHOICE OF LAW rule. A foreign law is applied because our own
law, by applying a similar rule, requires us to
CHOICE OF LAW do so, as if the foreign law as become part of
our internal or domestic law.
Questions that Choice-of-applicable law seeks
4. Theory of Harmony of Law - Identical or
to answer
similar problems should be given identical
and similar solutions, thus resulting in
Important questions that choice-of-law
harmony of laws. The application of the same
problems seeks to answer
or similar solution prevents the bad practice
of forum shopping.
1. What legal system should control a given
situation where some of the significant
5. Theory of Justice - Choice of law should be
facts occurred in two or more states; and
determined by considerations of justice and
2. To what extent should the chosen
social expediency and should not be the result
system regulate the situation. (Saudi
of mechanical application of the rule or
Arabian Airlines v. CA, G.R. No. 122191,
principle of selection.
October 8, 1998)
Theories on why the foreign law may be given These are a provision found in our own law which
effect governs a factual situation possessed of a foreign
element. It is usually expressed in the form of an
1. Theory of Comity - The application of foreign abstract proposition that a given legal question is
legal systems in cases involving foreign governed by the law of a particular country
element is proper, otherwise, the non- (which may be an internal law or the proper
application would constitute a disregard of foreign law), to be ascertained in the manner
foreign sovereignty or lack of comity towards indicated in the provision (Sempio-diy, 2004).
other States.
Kinds of conflict rules
e.g., Article 15 and Art. 818 of the Civil Code In this case, the laws of Iraq bear substantial
only apply to Filipinos connection to the transaction, since one of the
parties is the Iraqi Government and the place of
2. All-sided rule – indicates whether to performance is in Iraq. Hence, the issue of
apply the local law or the proper foreign whether respondent VPECI defaulted in its
law. obligations may be determined by the laws of Iraq.
However, since that foreign law was not properly
Characterization (Doctrine of Qualification or pleaded or proved, the presumption of identity or
Classification) similarity, otherwise known as the processual
presumption, comes into play. Where foreign law
It is the process of deciding whether or not the is not pleaded or, even if pleaded, is not proved,
facts relate to the kind of question specified in a the presumption is that foreign law is the same as
conflits rule (Saudi Arabian Airlines v. CA, G.R. No. ours (Philippine Export and Foreign Loan
122191, October 8, 1998). Guarantee Corporation v. V.P. Eusebio Construction,
Inc. Et Al, G.R. No. 140047, July 13, 2004).
Steps in characterization
Q: A, a foreign corporation, won a collection
1. The determination of facts involved; case in Japan against B, a domestic corporation
2. The characterization of factual situation; doing business in Japan. A filed a suit for
3. The determination of conflicts rule which enforcement of the judgment in the RTC of
is to be applied Manila. B assails the judgment on the ground
4. The characterization of the point of that the Japanese court did not validly acquire
contact where the connecting factor; jurisdiction over B’s person since B was served
5. The characterization of the problem as with summons in the Philippines and not in
procedural or substantive; Japan. Is B correct?
6. The pleading and proving of the proper
foreign law and A: NO. It is settled that matters of remedy and
7. The application of the proper foreign law procedure such as those relating to the service of
to the problem (Paras, 1990). process upon a defendant are governed by the lex
fori or the internal law of the forum. In this case, it
Q: A (Iraqi government) granted B (Domestic is the procedural law of Japan where the judgment
corp.) a service contract for the construction of was rendered that determines the validity of the
build-ing in Iraq. The bond was guaranteed by extraterritorial service of process on B. As to what
C (Domestic corp.). When it was ascertained this law is a question of fact, not of law. It may not
that B will not be able to finish the project in be taken judicial notice of and must be pleaded
the scheduled agreement, C paid the bond for and proved like any other fact. B did not present
failure of B to complete such building. When C evidence as to what that Japanese procedural law
was claiming reimbursement, B refused to pay. is and to show that under it, the assailed
Thus a case was filed. Should Philippines law extraterritorial service is invalid. Accordingly, the
govern in determining B's default? presumption of validity and regularity of the
service of summons and the decision thereafter
A: YES. It must be noted that the service contract rendered by the Japanese court must stand.
between SOB and VPECI contains no express (Northwest Orient Airlines, Inc. v. Court of Appeals
choice of the law that would govern it. In the and C.F. Sharp & Company Inc., G.R. No. 112573,
United States and Europe, the two rules that now February 9, 1995)
seem to have emerged as "kings of the hill" are (1)
the parties may choose the governing law; and (2) DOMICILE AND CITIZENSHIP
in the absence of such a choice, the applicable law
is that of the State that "has the most significant CITIZENSHIP
relationship to the transaction and the parties."
Another authority proposed that all matters Personal law
relating to the time, place, and manner of
performance and valid excuses for non- The law which attaches to a person wherever he
performance are determined by the law of the may go and generally governs his status, capacity,
place of performance or lex loci solutionis, which is
13
CIVIL LAW
condition, family relations, and the consequences arrival, Asher Cheng filed a bond of P1,000 to
of his actuations (Sempio-Diy, 2004). undertake that Lau would depart the
Philippines on or before the expiration of her
Theories of personal law authorized period of stay or within the period
as in the discretion of the Commission of
1. The Nationality Theory or Personal Immigration might properly allow. After
Theory – the status and capacity of a repeated extensions, Lau was allowed to stay
person is determined by the law of his in the country until February 13, 1962. On
nationality or national law (Sempio-Diy, January 25, 1962, she contracted a marriage
2004). with Moy Ya Lim Yao, a Filipino citizen. Does
Lau, as an alien woman, may be deemed a
NOTE: The Philippines follows the Nationality citizen of the Philippines by virtue of her
Theory. marriage to a Filipino citizen?
2. Domiciliary Theory or Territorial Theory A: YES. An alien woman may be deemed a citizen
– the status and capacity of a person is of the Philippines by virtue of her marriage to a
determined by the law of his domicile Filipino citizen only if she possesses all the
(Ibid.). qualifications and none of the disqualifications
specified in the law, because these are the explicit
3. Situs or eclectic theory – the particular requisites provided by law for an alien to be
place or situs of an event or transaction is naturalized. Section 15 of the Revised
generally the controlling law (Ibid.). Naturalization Law (Commonwealth Act No. 473)
provides that “Any woman who is now or may
Problems in applying the nationality principle hereafter be married to a citizen of the
in dual or multiple citizenship Philippines, and who might herself be lawfully
naturalized shall be deemed a citizen of the
It arises from the concurrent application of jus soli Philippines.” Section 15 was obviously to accord
and jus sanguinis at birth or from a refusal of to an alien woman, by reason of her marriage to a
certain States to accept a full application of the Filipino, a privilege not similarly granted to other
doctrine of expatriation, from marriage, or from a aliens (Moy Ya Lim Yao “Alias” Edilberto Aguinaldo
formal and voluntary act. Lim And Lau Yuen Yeung v. Commissioner of
Immigration, G.R. No. L-21289 October 4, 1971).
1. In matters of status, a person is usually
considered by the forum as exclusively its Q: Ernesto S. Mercado and Eduardo Manzano
own national. His additional foreign were candidates for vice mayor of the City of
nationality is disregarded. Makati. Manzano won the elections, however
2. In case litigation arises in a third country, his proclamation was suspended because a
the law most consistently applied is that certain Ernesto Mamaril filed a petition for the
of the country of which the person is not disqualification and alleged that Manzano was
only a national but where he also has his not a citizen of the Philippines but of the US.
domicile or habitual residence, or in the COMELEC 2nd Division granted the petition
absence thereof, his residence. and cancelled the certificate of candidacy on
the grounds that dual citizens are disqualified
Theory of effective nationality from running any elective position under
Sec.40 of the LGC. But, COMELEC en banc
A third state shall recognize exclusively in its reversed the said decision. It found that
territory either the nationality of the country of Manzano acquired US citizenship by operation
which one is habitually and principally a resident, of the US Constitution. He was also a natural
or the nationality of the country with which in the born Filipino Citizen by operation of 1935
circumstances one appears to be in act most Constitution, as his father and mother were
closely connected (Hague Convention on Conflict Filipinos at the time of his birth. At the age of 6
Nationality Lawes, Art. 5). his parents brought him in the country and
registered his as an alien, but this however did
Q: On February 8, 1961, Lau Yuen Yeung not result in the loss of Phil. Citizenship, as he
applied for a passport visa to enter the did not renounce Phil. Citizenship and did not
Philippines as a non-immigrant. She stated take oath of allegiance to the US. A the age of
that she desired to take a pleasure trip to visit Majority, Manzano registered himself as a
her great grand uncle. On the date of her voter and voted in the elections of 1992, 1995
15
CIVIL LAW
Under Sec. 1(2), Art. IV of the Constitution, the one’s home – hat is, there should be
children of an alien and a Filipino citizen are “animus manendi” (intent to remain) or :
citizens of the Philippines. (Moy Ya Lim Yao “Alias” “animus non-revertendi” (intent not to
Edilberto Aguinaldo Lim and Lau Yuen Yeung v. return to the original abode).
Commissioner of Immigration, G.R. No. L-21289,
October 4, 1971) Legal classifications of domicile
3. If they are of age and have no guardians, Q: Does leasing a condominium unit shows an
their constructive domicile is their intention to establish not just a residence but a
domicile of choice before they became domicile of choice?
insane.
A: NO. While a lease contract may be indicative of
MARRIED WOMEN the petitioner’s intention to reside in a place, it
1. The constructive does not engender the kind of permanency
domicile of the wife required to prove abandonment of one’s original
is the domicile of domicile.
both spouses, unless
the law allows the To successfully effect a change of domicile,
wife to have a petitioner must prove an actual removal or an
separate domicile for actual change of domicile; a bona fide intention of
valid and compelling abandoning the former place of residence and
reasons. establishing a new one and definite acts which
correspond with the purpose. In the absence of
If the marriage is valid 2. If there is legal clear and positive proof, the domicile of origin
separation between should be deemed to continue (Agapito Aquino V.
the spouses, the wife COMELEC, Move Makati, Mateo Bedon and Juanito
can have her own Icaro, G.R. No. 120265, September 18, 1995).
domicile of choice.
Q: On January 26, 2010, Enrico Echiverri filed a
3. If there is a petition to exclude Luis Asistio from the
separation de facto, permanent list of voters of Caloocan City.
the wife can also Echiverri alleged that Asistio is not a resident
have a separate of Caloocan City, specifically not of 123
domicile. Interior P. Zamora St., Barangay 15, Caloocan
Apply the same rules City, the address stated in his Certificate of
when the marriage is Candidacy for Mayor in 2010 elections.
valid. However, after According to him, he found out that the
If the marriage is annulment, the wife Asistio’s address is non-existent. In defense,
voidable can freely select her Asistio alleged that he is a resident of No. 116,
own domicile of P. Zamaro St., Caloocan City, and a registered
choice. voter of Precinct No. 1811A because he
mistakenly relied on the address stated in the
The wife can have a contract of lease with Angelina dela Torre
domicile separate Tengco. Should Asistio be excluded from the
If the marriage is void permanent list of voters of Caloocan city for
from the husband.
failure to comply with the residency required
OTHER PERSONS by law?
His domicile is the one
Convict or prisoner
he had possessed
17
CIVIL LAW
A: NO. The residency requirement of a voter is at where they were solemnized and valid there as
least one year residence in the Philippines and at such, is also valid in the Philippines.
least six months in the place where the person
intends to vote. Residence, as used in the law pre- XPN: If the marriage is void under Philippine law,
scribing the qualifications for suffrage and for then marriage is void even if it is valid in the
elective office, is doctrinally settled to mean country where the marriage was solemnized, viz:
domicile, importing not only an intention to reside
in a fixed place but also personal presence in that 1. Those contracted by any party below 18
place, coupled with conduct indicative of such years of age even with the consent of
intention inferable from a person’s acts, activities, parents or guardians; [FC, Art. 35 (1)]
and utterances. Domicile denotes a fixed 2. Those bigamous or polygamous
permanent residence where, when absent for marriages not falling under Art. 41, FC;
business or pleasure, or for like reasons, one [FC, Art. 35 (4)]
intends to return. In the consideration of 3. Those contracted through mistake of one
circumstances obtaining in each particular case, contracting party as to the identity of the
three rules must be borne in mind, namely: (1) other; [FC, Art. 35 (5)]
that a person must have a residence or domicile 4. Those subsequent marriages that are
somewhere; (2) once established, it remains until void under Art. 53, FC; [FC, Art. 35 (6)]
a new one is acquired; and (3) that a person can 5. Marriage contracted by any party who, at
have but one residence or domicile at a time. the time of the celebration, was
psychologically incapacitated to comply
Asistio has always been a resident of Caloocan city with the essential marital obligations of
for more than 72 years. Asistio served in public marriage; (FC, Art. 36)
office of Caloocan City in 1992, 1995, 1998, 2004 6. Incestuous marriage; (FC, Art. 37) and
and 2007. In all of these occasions, Asistio cast his 7. Void ab initio marriages or reasons of
vote in the same city. Taking these circumstances, public policy. (FC, Art. 38)
it cannot be denied that Asistio has qualified, and
continues to qualify, as a voter of Caloocan city. Effect of laws, judgments promulgated or
There is no showing that he has established, or conventions agreed upon in a foreign country
that he had consciously and voluntarily on Philippine prohibitive laws
abandoned his residence in Caloocan City. Thus,
he should remain in the list of permanent voters of GR: Prohibitive laws concerning persons, their
Caloocan city (Luis Asistio v. Hon. Thelma Canlas acts, or property and laws which have for their
Trinidad-Pe Aguirre, G.R. No. 191124, April 27, object public order, public policy or good customs
2010). are not rendered ineffective by laws, judgments
promulgated or conventions agreed upon in
foreign country.
FAMILY LAW AND PERSONAL CAPACITY
XPN: Art. 26 par. 2 of the Family Code (FC), on
mixed marriages where the foreigner obtained a
Applicable Civil Code provisions divorce decree abroad and was thereby
capacitated to remarry.
1. Laws relating to family rights and duties,
or to the status, condiition, and legal Even though divorce is not recognized in the
capacity of persons are binding upon Philippines as a mode of terminating marriage,
citizens of the Philippines, even though still the marriage is terminated by virtue of a
living abroad (NCC, Art. 15) judgment of divorce and issuance of a divorce
2. All marriages solemnized outside the decree by a foreign court.
Philippines in accordance with the laws
in force in the country where they were Requirements for the application of par. 2 of
solemnized, and valid there as such, shall Art. 26 of the Family Code
also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) 1. It must be a case of mixed marriage (one party
and (6), 36, 37, and 38 (FC, Art. 26). is Filipino and the other is an alien);
2. The divorce must be obtained by the alien
GR: Under Article 26 of the Family Code, All spouse and not by the Filipino spouse; and
marriages solemnized outside the Philippines in
accordance with the laws in force in the country
19
CIVIL LAW
Lex loci improper discrimination, carrier
voluntati is liable for damages beyond
Persona
Contract of Lex loci s or those limited by Warsaw
l law of
loan: celebration lex loci Convention.
the
mutuum is intention
parties
is NOTE: If contracts involve encumbrances of
property, real or personal, apply lex situs. If
personal contracts, law on contracts will apply.
Contract of
loan: Lex
Lex situs Lex situs
commodatu situs SUCCESSION
m
21
CIVIL LAW
Transmission the lower court. Both parties failed to adduce
proof as to the law of Texas.
It is the process of applying the law of a foreign
state through the law of a second foreign state. Further, the Supreme Court held that for what the
Not the same as renvoi, Renvoi involves two laws Texas law is on the matter, is a question of fact to
while transmission involves three laws (Paras, be resolved by the evidence that would be
1990). presented in the probate court.
1. If revocation takes place in the Philippines, Any state whose national interests are adversely
whether the testator is domiciled in the affected by the crime may protect itself by
Philippines or in some other country, it is prosecuting and punishing the offender. The
valid if in accordance with Philippine laws. Philippines adheres to this theory to a limited
2. If revocation takes place outside the extent. States claim extraterritorial criminal
Philippinesm by a testator domiciled in the jurisdiction to punish crimes committed abroad
Philippines, it is valid when it is in which are prejudicial to their national security or
accordance with the laws of the vital interests, even where the offenses are
Philippines. perpetrated by non-nationals. Jurisdiction is
3. Revocation done outside the Philippines, vested in the state whose national interests are
by a testator who does not have his injured or national security compromised.
domicile in this country, is valid when it is
done according to the: Universality Principle
a. Law of the place where the will was A state has extraterritorial jurisdiction over all
made; or crimes regardless of where they are committed or
b. Law of the place where the testator who committed them, whether nationals or
had his domicile at the time of nonnationals. This is, however, generally
revocation. forbidden under international law. Jurisdiction is
vested with the state which has custody of
Rule if a person dies intestate offender who committed universal crimes such as
piracy, genocide, etc.
Follow lex nationali or the law of the nationality of
the decedent. Bigamy is punishable only when committed in
the Philippines
Extra-territoriality TORTS
23
CIVIL LAW
The tortuous act gives rise to an obligation, which 1. The defendant has been given reasonable
is transitory and follows the person committing notice and opportunity to be heard;
the tortuous act and may be enforced wherever he 2. There is adequate proof of foreign judgment;
may be found (Coquia, 2000). 3. The foreign judgment must have disposed of
the controversy on the merits and must be res
Philippine conflict rules on tort problems judicata, i.e., judgment on the merits is final,
issued by a foreign court having jurisdiction
If the tort law of the Philippines embodies a social over the subject matter and parties, and there
or economic policy, then the law of the forum on was identity of parties, subject matter, and the
torts shall be applied. cause of action
4. It must not be barred by prescription both in
If the Philippines has no concern or interest in the the state where it was promulgated and the
application of the internal law, and the other State where it is sought to be enforced;
have an interest, apply the law of such State. 5. State where the foreign judgment was
obtained allows recognition or enforcement of
NOTE: The state where an injury has occurred has Philippine judgments;
interest in compensating the injured party, while 6. If the foreign judgments is for a sum of money,
the state where the tortfeasor acted has an it must be fixed;
interest in regulating the conduct of persons 7. Foreign judgment must not be contrary to the
found in its territory. public policy or good morals of the country
where it is to be enforced;
8. Judgment must not have been obtained by
RECOGNITION AND ENFORCEMENT OF fraud, collusion, mistake of fact or law; and
FOREIGN JUDGMENT 9. It must be a judgment in civil or commercial
matters, including questions of status, not on
a criminal, revenue, or administrative matter.
Recognition of foreign Enforcement of
judgment foreign judgment
The defendant or the The plaintiff or Effects of a judgment or final order of a foreign
respondent is petitioner wants the tribunal or court in case the judgment is being
presenting the foreign court to positively carry sought in Philippine Courts
judgment merely as a out and make effective
defense, on the basis of the foreign judgment. 1. In a judgment or final order upon a
res judicata. specific thing, the judgment or final order
Invokes merely as Implies an act of is conclusive upon the title to the thing;
sense of justice. sovereignty and
2. In a judgment or final order against a
Needs no proceeding or Requires a separate
action but implies that action brought person, the judgment or final order is
presumptive evidence of a right as
the same has already precisely to make the
been filed against the foreign judgment between the parties and their successors
in interest by a subsequent title.
defendant who is effective
invoking the foreign
NOTE: In either case, the judgment or final order
judgment.
may be repelled by evidence of want of
Recognition is a passive Enforcement is an
jurisdiction, want of notice to a party, collusion,
effect of foreign active recognition and
fraud or clear mistake of law or fact (ROC, Rule 39,
judgment. implementation of the
Sec. 48).
foreign judgment from
the local court,
Q: The Special Sixth Division of the Court of
rendering the foreign
Appeals refused to recognize the Entry of
judgment and seeking
Appearance of Quasha Law Office as the new
its enforecement by the
counsel of Legend International Resorts,
sheriff on accordance
Limited (LIRL). It said that the appointment of
with the Rules of Court.
LIRL’s joint and several liquidators were made
pursuant to an Order of the Hong Kong Court.
Requisites for recognition or enforcement of a
Since it was a foreign judgment, Philippine
foreign judgment
Courts could not take judicial notice thereof as
the final orders of foreign tribunals could only
Q: Gerbert, a naturalized Canadian citizen, But while the law requires the entry of the divorce
married Daisylyn, a Filipino, but subsequently decree in the civil registry, the law and the sub-
left for Canada due to work and other mission of the decree by themselves do not ipso
professional commitments. When he returned facto authorize the decree’s registration. The law
to the Philippines, he discovered that Daisylyn should be read in relation with the requirement of
was already romantically involved with a judicial recognition of the foreign judgment
another man. Hurt and disappointed, Gerbert before it can be given res judicata effect. In the
returned to Canada and filed a petition for context of the present case, no judicial order as yet
divorce which was eventually granted. Two exists recognizing the foreign divorce decree.
years later, he has fallen in love with another Thus, the Pasig City Civil Registry Office acted
Filipina and wished to marry her. He went totally out of turn and without authority of law
then to the civil registry to register the divorce when it annotated the Canadian divorce decree on
decree of his marriage certificate with Gerbert and Daisylyn’s marriage certificate, on the
Daisylyn. However, despite the registration, an strength alone of the foreign decree presented by
official of NSO informed Gerbert that the Gerbert. For being contrary to law, the
former marriage still subsists under the registration of the foreign divorce decree without
25
CIVIL LAW
the requisite judicial recognition is patently void Article 19, 20 and 21 in the enforcement and
and cannot produce any legal effect (Corpuz v. Sto. sanctions of abuse of right
Tomas and the Solicitor General, G.R. No. 186571,
August 11, 2010). While Art. 19 lays down the rule of conduct for
the government of human relations, it does not
HUMAN RELATIONS provide a remedy (Rabuya, 2006).
Abuse of right (2006 BAR) Generally, an action for damages under either Art.
20 or Art. 21 of the NCC would be proper. Art. 21
A right, though by itself legal because recognized deals with acts contra bonus mores or contrary to
or granted by law as such, may become the source good morals and presupposes loss or injury,
of some illegality. When a right is exercised in a material or otherwise, which one may suffer as a
manner which does not conform to the norms result of such violation. Under Arts. 19 and 21, the
enshrined in Art. 19 and results in damage to act must be intentional (Rabuya, 2006).
another, a legal wrong is thereby committed for
which the wrongdoer must be held responsible. Article 20 speaks of the general sanction for all
other provisions of law which do not especially
This principle is based upon the famous maxim provide for their own sanction. Article 21 on the
summum jus summa injuria (the abuse of a right other hand, speaks of act which is legal but is
is the greatest possible wrong) (Arlegui v. CA, contrary to morals, good custom, public order or
G.R. No. 126437, March 6, 2002). public policy and is done with intent to injure.
Rationale: The exercise of a right ends when Sanction for abuse of right under Article 20 of
the right disappears, and it disappears when it the NCC
is abused, especially to the prejudice of others.
It cannot be said that a person exercises a right Generally, laws provide for their own sanctions
when he unnecessarily prejudices another or and methods of enforcement thereof. Article 20
offends morals or good customs. (Pineda, 2009) applies only in cases where the law does not
provide for its own sanctions.
Elements of abuse of right (L-B-P-A)
Every person who, contrary to law, wilfully or
1. There is a Legal right or duty; negligently causes damage to another shall
2. Such duty is exercised in Bad faith; indemnify the latter for the same (NCC, Art. 20).
3. It is for the sole intent of Prejudicing or The said article provides for a general sanction –
injuring another; indemnification for damages (Pineda, 2009).
4. The Absence of good faith is essential to (1996, 2006, 2009 Bar)
abuse of right (Rabuya, 2009).
In view of the general sanction provided for under
Principle of Damnum Absque Injuria Art. 20, a person however does not have an
absolute right to be indemnified, it is essential that
It means damage without injury. One who some right of his be impaired. Without such, he is
merely exercises one’s rights does no actionable not entitled to indemnification (Pineda, 2009).
injury and cannot be held liable for damages
(Amonoy v. Guitierrez, G.R. No. 140420, February Contra Bonus Mores (1996, 1998, 2006, 2009
15, 2001). Bar)
Injury is the illegal invasion of a legal right; Any person who wilfully causes loss or injury to
damage is the loss, hurt, or harm which results another in a manner that is contrary to morals,
from the injury; and damages are the recompense good customs or public policy shall compensate
or compensation awarded for the damage suffered the latter for the damage (NCC, Art. 21). It fills
(Panteleon v. American Express, G.R. No. 174269, countless gaps in the statutes, which leave so
August 25, 2010).Pantaleon many victims of moral wrongs helpless, even
though they suffered material and moral damages
There can be damage without injury in those (Tolentino, 1987).
instances in which the loss or harm was not the
result of a violation of a legal duty. In such cases, Elements of an action under Art. 21
the consequences must be borne by the injured
person alone (Ibid.) 1. There is an act which is legal;
27
CIVIL LAW
NOTE: To constitute seduction there must be and effective promotion of its business. (Locsin v.
some sufficient promise or inducement and the Mekeni Food Corporation, G.R. No. 192105, 09
woman must yield because of the promise or December 201) (Del Castillo, J.).
other inducement. If she consents merely from
carnal lust and the intercourse is from mutual Accion In Rem Verso
desire, there is no seduction.
It is an action for recovery of what has been paid
Prohibition against Unjust Enrichment or delivered without just cause or legal ground. If
a person acquires or comes into possession of
No one shall unjustly enrich himself at the something at the expense of another without just
expense of another (Pacific Merchandising Corp. v. or legal ground through an act or of performance
Consolacion Insurance and Surety Co., Inc., G.R. No. by another or any other means has the obligation
L-30204, October 29, 1976). to return the same (NCC, Art. 22).
NOTE: The article applies only if: Accion in rem verso is considered merely an
1. Someone acquires or comes into possession of auxiliary action, available only when there is no
“something” which means delivery or other remedy on contract, quasi-contract, crime,
acquisition of things”; and and quasi-delict. Hence, if there is an obtainable
2. Acquisition is undue and at the expense of action under any other institution of positive law,
another, which means without any just or that action must be resorted to, and the principle
legal ground. of accion in rem verso will not lie. (Shinryo
Philippines Company v. RRN Incorp. G.R. No.
Q: Mekeni Food Corp. offered its employee 172525, October 20, 2010)
Locsin a car plan. One-half of the cost of the
vehicle is to be paid by Mekeni and the other Requisites (E-L-W-A)
half is to be deducted from Locsin’s salary. The
car was an absolute necessity in Mekeni’s 1. The defendant has been Enriched;
business operations. Locsin paid for his 50% 2. The plaintiff has suffered a Loss;
share through monthly salary deductions. 3. The enrichment of the defendant is
Subsequently, Locsin resigned. By then, a total Without just or legal ground; and
of ₱112,500 had been deducted from his 4. The plaintiff has no other Action based on
monthly salary and applied as part of his share contract, quasi-contract, crime or quasi-
in the car plan. The vehicle remained in the delict.
ownership and possession of Mekeni, and so
Locsin sought reimbursement of his Accion in rem verso v. Solutio Debiti
amortization payments on the vehicle and
posits that if the amount is not reimbursed, In accion in rem verso, it is not necessary that
unjust enrichment would result, as the vehicle there should have been mistake in the payment
remained in the possession and ownership of unlike in solutio indebiti where mistake is an
Mekeni. Should the amortization payments be essential element (Rabuya, 2006).
refunded in favor of Locsin?
Accion in rem verso v. Unjust Enrichment
A: YES, the amortization payments must be
refunded in favor of Locsin. In the absence of An accion in rem verso is merely an auxiliary
specific terms and conditions governing a car plan action available only when there is no other
agreement between the employer and employee, remedy on contract, quasi-contract, crime, and
the employer may not retain the installment quasi-delict while unjust enrichment, wherein one
payments made by the employee on the car plan is unjustly enriched at the expense of or from the
and treat them as rents for the use of the service efforts or obligations of others, may be availed of
vehicle, in the event that the employee ceases his as a prerequisite for the enforcement of the
employment and is unable to complete the doctrine of restitution. (Shinryo Philippines
installment payments on the vehicle. The Company v. RRN Incorp. G.R. No. 172525, October
underlying reason is that the service vehicle was 20 2010)
precisely used in the employer's business; any
personal benefit obtained by the employee from Liability without fault or negligence
its use is merely incidental. Mekeni may not enrich
itself by charging Locsin for the use of its vehicle Even when an act or event causing damage to
which is otherwise absolutely necessary to the full another’s property was not due to the fault or
Elements
Suspension of Proceedings
29
CIVIL LAW
PERSONS AND FAMILY RELATIONS
Status
PERSONS AND PERSONALITY UNDER THE The status of a person is the legal condition or class to
CIVIL CODE which one belongs in a society (1 Viso 32, 2 Sanchez
Roman 110).
A person is every physical or moral, real or
juridical and legal being susceptible of rights and Civil personality
obligations or being the subject of legal relations
(Rabuya, 2006). It is merely the external manifestation of either juridical
capacity or capacity to act. Consequently, it may be
Persons v. Things defined as the aptitude of being the subject of rights and
obligations (2 Sanchez Roman 114-147).
A person is the subject of legal relations, while a
thing is the object of legal relations.
RESTRICTIONS ON CAPACITY TO ACT
Personality is the aptitube to be the subject,
active or passive, or juridical relations. One is a Restrictions on capacity to act (M-I-D-I-P-C)
person, while one has personality (Rabuya, 2006). (NCC, Art. 38)
The Civil Code provides that birth determines personality, a. Right to Support
but the conceived child shall be considered born for all b. To be Acknowledged
purposes that are favorable to it, provided it is born later c. To receive Donations (Rabuya, 2009)
with the conditions specified in Art. 41 (NCC, Art. 40).
(1999, 2003, 2008 BAR) DEATH
This provision has been superseded by Art. 5 of P.D. No. Civil personality ceases depending upon the
603 (The Child and Youth Welfare Code), which declares classification of persons
that the civil personality of the child shall commence
from the time of his conception, for all purposes 1. Natural persons – by death
favorable to him, subject to the requirements of Art. 41. 2. Juridical persons – by termination of existence
GR: Actual/Permanent Personality– Personality begins at Death extinguishes civil personality. However, the rights
birth, not at conception. and obligations of the deceased are not necessarily
extinguished by his death (Pineda, 2009).
XPN: Presumptive/Temporary – The law considers the
conceived child as born (Conceptus pro nato habetur) Rules to apply in case there is doubt as to who died
first
The provisional personality of a conceived child It depends on whether the parties are called to
(conceptus pro nato habetur) under Article 40, expressly succeed each other.
limits such provisional personality by imposing the
condition that the child should be subsequently born 1. If successional rights are involved– Art. 43 of the NCC:
alive: "Provided it be born later with the condition Survivorship Rule, and Rule 131, Sec. 3(kk):
specified in the following article" (Geluz v. CA, G.R. No. L- Presumption of simultaneous deaths between
16439, 20 July 1961). persons called to succeed each other, apply.
2. If no successional rights are involved – Rule 131,
“Born later in accordance with law” (1995, 1999, 2008 Sec. 3 (jj) of the Rules of Court applies
BAR) (Presumption ofsurvivorship).
A foetus with an intra-uterine life of: NOTE: Both are to be applied only in the absence of
1. Less than 7 months – Must survive for at least 24 facts.
31
CIVIL LAW
COMPARISON OF ART. 43 AND RULE 131 OF 1. The parties are heirs to one another;
THE RULES OF COURT 2. There is no proof as to who died first; and
3. There is doubt as to who died first.
Q: Jaime, who is 65, and his son,Willy, whois 25, died
in aplane crash. There is no proof as to who died first. PRESUMPTION OF SURVIVORSHIP UNDER THE
Jaime’s only surviving heir is his wife, Julia, who is also RULES OF COURT
Willy’s mother. Willy’s surviving heirs are his mother,
Julia, and his wife, Wilma. In the settlement of Jaime’s Requisites
estate, can Wilma successfully claim that her late
husband, Willy, had a hereditary share since he was much 1. There are two or more persons;
younger than his father and therefore, should be 2. They perish in the same calamity;
presumed to have survived longer? 3. It is not shown who died first; and
4. There are no particular circumstances from
A: NO, Wilma cannot successfully claim that Willy had a which it can be inferred that one died ahead
hereditary share in his father’s estate. of the other.
Two persons “who are called to succeed each other” are The presumption under the survivorship rule under
presumed to have died at the same time, in the absence the Rules of Court is that the survivorship shall be
of proof as to which of them died first (NCC, Art. 43). determined from the probabilities resulting from the
This presumption of simultaneous death applies in strength and age of the sexes according to the
cases involving the question of succession as between following rules:
the two who died, who in this case, are mutual heirs,
being father and son. Age/Sex of decedents at
Who is presumed
the time of death
Q: Suppose, Jaime had a life insurance policy with his to have survived
Decedent A Decedent B
wife Julia, and his son, Willy, as the beneficiaries. Can
Under 15 Under 15 Older
Wilma successfully claim that one-half of the proceeds
Above 60 Above 60 Younger
should belong to Willy’s estate? (1998 BAR)
Under 15 Above 60 Under 15 (younger)
Above 15 Above 15 Different sexes –
A: YES, Wilma can invoke the presumption of
survivorship and claim that one-half of the proceeds BUT under BUT under male
60 60
should belong to Willy’s estate, under Rule 131, Sec.3 (jj),
par. 5, Rules of Court, as the dispute does not involve Same sex – older
succession.
Under 15 OR Between 15 Between 15 and 60
Under this presumption, the person between the ages over 60 and 60
of 15 and 60 is deemed to have survived one whose
age was over 60 at the time of their deaths. The estate of NOTE: The statutory rules in the determination of
Willy endowed with juridical personality stands in sequence of death do not absolutely apply in a case
place and stead of Willy, as beneficiary. where indirect and/or inferential evidence
surrounding the circumstances of the deaths exists.
SURVIVORSHIP RULE UNDER THE NEW CIVIL CODE
Where there are facts, known or knowable, from which
a rational conclusion can be made, the presumption
If there is doubt as to who died first between 2 or more does not step in, and the rule of preponderance of
persons who are called to succeed each other, as to evidence controls. It is the "particular circumstances
which of them died first: from which survivorship can be inferred" that are
required to be certain as tested by the rules of evidence
1. Burden of Proof: Whoever alleges the death of one (Joaquin v. Navarro, G.R. No. L-5426, May 29, 1953).
prior to the other has the burden of proving such
claim. Q: At the age of 18, Marian found out that she was
2. Absent such proof: Presumption is they died at the pregnant. She insured her own life and named her
same time. There shall be no transmission of unborn child as her sole beneficiary. When she was
successional rights [Sec. 3(kk), Rule 131, Rules of already due to give birth, she and her boyfriend
Court]. (1998, 1999, 2000, 2008, 2009 Bar) Pietro, the father of her unborn child, were kidnapped
in a resort in Bataan. The military gave chase and
Conditions in the application of the survivorship rule after one week, they were found in abandoned hut in
Cavite. Marian and Pietro were hacked with bolos.
It applies when the following conditions are present:
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CIVIL LAW
opposite persons marriage already celebrated cannot be changed by a
sexes. regardless of sex. subsequent amendment to the law (Sta. Maria, 2010).
Dissolution Dissolved Can be
by only by dissolved ESSENTIAL REQUISITES OF VALID MARRIAGE
agreement death or through (1996, 2009 Bar)
annulment, express
never by provision 1. Legal capacity of the contracting parties who
mutual of the law, must be a male and a female;
agreement. through 2. Consent freely given in the presence of the
expiration solemnizing officer (FC, Art. 2).
of the term
for which Legal capacity of the parties to marry
the
contract 1. Age – at least 18 years of age
was
entered The attainment of the required minimum age for
into, or by marriage should be reckoned, not on the date of
mutual filing of the application for issuance of a marriage
agreement license, but on the date of the marriage. Pursuant to
by the Article 6 of the Family Code, parties may contract
parties marriage on the date of the solemnization of the
concerned. marriage, i.e., when they appear personally before
the solemnizing officer and declare in the presence of
not less than two witnesses of legal age that they
take each other as husband and wife (Rabuya, 2009).
Evidence of Marriage
2. Sex – between a male and a female
The best documentary evidence of a marriage is the
marriage contract. However, the failure to present it is not, Two females are incapable of entering into marriage.
however, proof that no marriage took place, as other There is no constitutional protection of the rights of
evidence may be presented to prove marriage marriage between two persons of the same sex
(Balogbog v. CA, G.R No. 83598, March 7, 1997). (Jones v. Hallahan, 501 S.W.2d 588, November 9,
1973).
The following may be presented as proof of marriage:
(a) testimony of a witness to the matrimony, (b) the 3. Lack of legal impediment to marry
couple’s public and open cohabitation as husband and wife
after the alleged wedlock, (c) the birth and baptismal The legal impediments which may affect legal
certificate of children born during such wedlock, and capacity are those mentioned in Articles 37 and 38 of
(d) the mention of such nuptial in subsequent the Family Code. Thus, the contracting parties are
documents (Sarmiento v. CA, G.R. No. 96740, March 25, not legally capacitated to marry each other.
1999).
Other requirements needed for the validity of
STATUS OF MARRIAGES such marriage depending upon the age of the
contracting party
I. Valid
II. Void
ADDITIONAL
III. Voidable AGE REQUIREMENTS
Status of Marriage in case of: That which takes place with the:
1. Absence of any of the essential requisites - Void 1. Personal appearance of the contracting parties
ab initio (FC, Art. 4). before the solemnizing officer;
2. Absence of any of the formal requisites – Void ab
initio(FC, Art. 4). NOTE: There is no marriage ceremony if what transpired
was a mere private act of signing a marriage contract by the
XPNs: Valid even in the absence of formal requisite: contracting parties, without the presence of the
solemnizing officer (Morigo v. People, G.R. No. 145226,
a. Marriages exempt from license requirement February 6, 2004).
b. Either or both parties believed in good faith that
the solemnizing officer had the proper authority 2. Their personal declaration that they shall take each
[FC, Art. 35 (2)]. other as husband and wife; and
3. In the presence of not less than 2 witnesses of legal
3. Defect in any of the essential requisites – age.
Voidable (FC, Art. 4).
4. Irregularity in any of the formal requisites - No particular form of ceremony or religious rite for
Valid, but the party responsible for such solemnization of the marriage is required by law (FC,
irregularity shall be civilly, criminally or Art. 6).
administratively liable (FC, Art. 4). The declaration of consent need not be vocally
expressed. It can be shown by other manifestations or signs
FORMAL REQUISITES OF A VALID MARRIAGE of approval and consent. It is the agreement itself, and not the
(C-A-L) form in which it is couched, which constitutes the contract
(1996, 2009 Bar) (Sta. Maria, 2010).
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CIVIL LAW
1. If performed in the Philippines – No, it is not NOTE: From the time of the effectivity of the Family Code
allowed, hencethemarriage isvoid. (August 3, 1988) up to the time of the effectivity of the
Local Government Code (January 1, 1992), mayors do
Philippine laws prohibit marriages by proxy. Since the not have the authority to solemnize marriage.
marriage is performed in the Philippines, Philippine laws
shall apply following the principle of lex loci 2. Marriages in articulo mortis:
celebrationis. a. Ship captain or airplane chief – provided
themarriageis performed:
“If valid where celebrated, it is also valid here.” This is i. During voyage, even during
the doctrine of “lex loci celebrationis”, the law of the stopovers
place of celebration (Paras, 2016). ii. Between passengers or crew members
(FC, Art. 31).
2. If performed abroad – Whether it is allowed or
not depends upon the law of the place where the Such authority may be exercised not only while the
marriage was celebrated (lex loci celebrationis). ship is at sea or the plane is in flight but also during
stop-overs at ports of call (Rabuya, 2018).
As to marriages between Filipinos - all marriages
solemnized outside the Philippines, in accordance with b. Military commander of a unit who is a
the laws enforced in said country where they are commissioned officer – provided the marriage is
solemnized, and valid there as such, shall also be valid performed (FC, Art. 32):
here in the country, except those prohibited under Art. i. In absence of chaplain;
35 (1), (2), (4), (5), (6), 36, 37 and 38 (FC,Art. 26). ii. Within zone of military operation;
iii. Between members of the armed forces
2. SOLEMNIZING AUTHORITY or civilians.
Persons authorized to solemnize marriage (1994 Duty of the solemnizing officer in a marriage in
1995, 1999 BAR) articulo mortis
The following are the persons authorized to The solemnizing officer in a marriage in articulo mortis
solemnize marriage depending upon the after solemnizing such marriage shall state in an affidavit
circumstances: executed before the local civil registrar or any other person
legally authorized to administer oaths, that the marriage
1. Under ordinary circumstances (FC, Art. 7): was performed in articulo mortis and that he took the
a. Incumbent judiciary member – Provided, necessary steps to ascertain the ages and
It is within the court’s jurisdiction. relationship of the contracting parties and the
absence of a legal impediment to the marriage (FC, Art.
NOTE: Where a judge solemnized a marriage outside 29).
his court’s jurisdiction, this is a mere irregularity in the
formal requisite, which while it may not affect the Effectofsolemnizingofficer’sfailuretoexecutean
validity of the marriage, may subject the officiating affidavit
official to administrative liability (Rabuya, 2009)
It willhave no effect asto thevalidityofthemarriage. The
b. Priest , rabbi, imam or minister of any marriage will still be valid.
church/religious sect duly authorized - by his
church or religious sect and registered with The local civil registrar is given the original of the affidavit
the civil registrar general, acting within the which takes the place of a marriage license (Paras, 2016).
limits of the written authority granted him by
his church or religious sect – Such affidavit is not an essential or formal requisite of
marriage, the same with a Marriage Contract. The
Provided at least one of the parties belongs signing of the marriage contract and the affidavit is only
to such church or religious sect. required for the purpose of evidencing the act, not a
requisite of marriage. It is the obligation of the
c. Consul general, consul or vice-consul – solemnizing officer. It does not affect the validity of
Provided both parties are Filipinos and marriage (De Loria v. Felix, G.R. No. L-9005, June 20,
marriage takes place abroad in the country 1958).
where the consul holds office (FC, Art. 10).
d. Mayors (LGC, Arts. 444 and 445) – Authorized venues of marriage
including “Acting Mayor”
a. Chambers of the judge or in open court; The requirement and issuance of marriage license is the
b. Church, chapel or temple; or, State’s demonstration of its involvement and participation
c. Office of the consul-general, consul or vice-consul in every marriage (Rabuya, 2018).
(FC, Art. 8).
What is required is the marriage license, not the
XPNs: marriage certificate. The latter is not an essential or
formal requisite; thus an oral solemnization is valid. In
1. Marriage at the point of death; fact, a marriage may be proved by oral evidence (Paras,
2. Marriage in remote places; 2016).
37
CIVIL LAW
Requirement in the application for marriage license solemnized in accordance with their customs, rites or
practices (FC, Art. 33);
Each of the contracting parties is required to file 2. Marriages in Articulo mortis
separately a sworn application for the issuance of a. In case either or both of the contracting
marriage license, specifying the following: parties are at the point of death (FC, Art.
27);
1. Full name of the contracting party; b. Solemnized by a ship captain or airplane
2. Place of birth; pilot
3. Age and date of birth; (FC, Art. 31); and
4. Civil status; c. Within zones of military operation (FC,
5. If previously married, how, when and where Art. 32).
the previous marriage was dissolved or
annulled; 3. Marriages in Remote places (FC, Art. 28)
6. Present residence and citizenship;
7. Degree of relationship of the contracting Remote Place - no means of transportation to enable
parties; the party to personally appear before the local civil
8. Full name, residence and citizenship of the registrar (Rabuya, 2018).
father;
9. Full name, residence and citizenship of the mother; 4. Marriages between parties Cohabiting for at least 5
and years and without legal impediment to marry
10. Full name, residence and citizenship of the guardian each other (FC, Art. 34);
or person having charge, in case the contracting 5. Marriages solemnized Outside the Philippines
party has neither father nor mother and is under the where no marriage license is required by the
age of twenty-one years (FC, Art. 11). country where it was solemnized.
When either or both of the contracting parties are citizens The requisites are:
of a foreign country, it shall be necessary for them to 1. Living together as husband and wife at least 5 years
submit a certificate of legal capacity to contract marriage, before the marriage.
issued by their respective diplomatic or consular officials.
The 5 year period must be characterized by:
Stateless persons or refugees from other country shall, in lieu a. Exclusivity – the partners must live together
of the certificate of legal capacity herein required, submit exclusively, with no other partners, during the
an affidavit stating the circumstances showing such whole 5-yearperiod.
capacity to contract marriage (FC, Art. 21). b. Continuity– such cohabitation was unbroken.
Marriage without the required certificate of legal NOTE: The period is counted from the date of
capacity to marry is valid celebration of marriage. It should be the years
immediately before the day of the marriage.
The status of the marriage celebrated on the basis of a
license issued without the required Certificate of Legal 2. No legal impediment to marry each other During the
Capacity is valid as this is merely an irregularity in period of cohabitation.
complying with a formal requirement of the law in
procuring a marriage license, which will not affect the NOTE: The five-year period of cohabitation must have
validity of the marriage (Garcia v. Recio, G.R. No. 138322, been a period of legal union had it not been for the absence
October 2, 2001). of marriage.
39
CIVIL LAW
no marriagetook place (Vda.De la Rosa v. Heirs of Vda. De 1. The existence of the pertinent provision of the
Damian, G.R. No. 103028, October 10, 1997). foreign marriage law.
2. The celebration or performance of the marriage
EFFECT OF MARRIAGE CELEBRATED ABROAD in accordance of said law.
AND FOREIGN DIVORCE
Requirements for the application of par. 2 of Art. 26 of the
Rules governing the validity of marriage (2002, Family Code
2004, 2006, 2009, 2010 Bar)
1. It must be a case of mixed marriage (one party
1. As to its extrinsic validity – Lex loci is Filipino and the other is an alien);
celebrationis 2. The divorce must be obtained by the alien
spouse and not by the Filipino spouse; and
NOTE: Locus regit actum (the act is governed by the law The divorce obtained by the alien spouse must
of the place where it is done) - is adhered to here in the capacitate him or her to remarry (Rabuya,
Philippines as regards the extrinsic validity of marriage. 2018).
2. As to its intrinsic validity – Personal law Q: Suppose in a valid mixed marriage the foreign
spouse obtained a divorce decree abroad and was
NOTE: Personal law may either be the national law or capacitated toremarry.
the law of the place where the person is domiciled.
a. May the Filipino spouse remarry despite the fact
If the person involved is a stateless person, domiciliary rule thatdivorceisnotvalidinthePhilippines?
applies, otherwise, lex nationalii applies. b. Will your answer be the same if it was a valid
marriage between Filipinos?
The 1st paragraph of Article 26 of the Family Code
(FC)on the validity of foreign marriages applies, A:
however, only to Filipinos. Foreign marriages of a. YES, the Filipino spouse may remarry. Divorce
foreigners or of a Filipino and a foreigner are governed validly obtained abroad by the alien spouse
by the Rules on Conflict of Laws (Sempio-Diy, 1995). capacitating him/her to remarry will likewise allow
the Filipino spouse to remarry (FC, Art. 26, 2nd par.).
Marriages between Filipinos solemnized abroad in
accordance with the law in force in said country NOTE:Under the nationality principle embodied in Art. 16
of the NCC, only Philippine nationals are covered by the
GR: Marriages between Filipinos solemnized outside policy against absolute divorces, the same being
the Philippines in accordance with the law of the considered contrary to our concept of public policy and
foreign country where it is celebrated, if valid there, morality. Nevertheless, aliens may obtain divorces abroad
shall be valid here as such. which may be recognized in the Philippines, provided they
are valid according to their national law (Van Dorn v.
XPNs: It shall be void, even if it is valid in the foreign Romillo, Jr., G.R. No. L- 68470, October 8, 1985).
country where the marriage was celebrated, if any of the
following circumstances are present: b. It depends. What is material in this case is the
citizenship of the spouse who obtained a divorce
1. Lack of legal capacity even with parental decree abroad at the time the decree was obtained and
consent (e.g. party is below 18); not their citizenship at the time the marriage was
2. Incestuous; celebrated. If the Filipino spouse was naturalized as a
3. Contracted through Mistake of one party as to citizen of a foreign country before he/she obtains a
the identity of the other; divorce decree and was thereafter capacitated to
4. Contracted following the annulment or remarry, the Filipino spouse will be capacitated to
declaration of nullity of a previous marriage remarry (Republic v. Orbecido, G.R. No. 154380,
but Before partition, etc.; October 5, 2005).
5. Bigamous or polygamous except as provided
in Art. 41 FC on terminable bigamous Q: A Filipina was married to an American who
marriages; obtained a divorce decree in the U.S. When the
6. Void due to Psychological incapacity; Filipina came back to the Philippines and started
7. Void for reasons of Public policy. her business, the American followed suit and
wanted to enforce his rights over the Filipina to
Requirements to prove a foreign marriage the extent of claiming his rights to administer the
properties of the woman, contending that they
41
CIVIL LAW
petition for recognition of the foreign divorce decree, as Marriage between Filipinos who are of the same sex
Luzviminda has yet to prove the fact of her. "Divorce by is VOID
Agreement" obtained in Nagoya City, Japan and its
conformity with prevailing Japanese laws on divorce. For a marriage to be valid, it must be between persons
Notably, the RTC did not rule on such issues. Since these of opposite sexes.
are questions which require an examination of various
factual matters, a remand to the court a quo is Although gay marriages are definitely not covered
warranted. (Morisono v. Morisono, G.R. No. 226013, July within the purview of Article 2 of the Family Code, the
2, 2018) emerging issue of transsexuals and intersexual gender
identities have called the attention of the Supreme
II. VOID MARRIAGES Court in the cases of Silverio v. Republic (G.R. No.
174689, October 22, 2007) and Republic v. Cagandahan
Marriages that are void ab initio(1993, 2004, 2005, (G.R. No. 166676, September 125, 2008), respectively
2006 BAR) (Sta. Maria, 2010).
1. Solemnized without License, except those Q: Sidley and Sol were married with one (1)
marriages that are exempt from the license daughter, Solenn. Sedfrey and Sonia were another
requirement; couple with one son, Sonny. Sol and Sedfrey both
2. Absence of any of the essential or formal perished in the same plane accident. Sidley and
requisites of marriage; Sonia met when the families of those who died sued
3. Solemnized by any person not legally Authorized the airlines and went through grief-counseling
to perform marriages unless such marriages were sessions. Years later, Sidney and Sonia got married.
contracted with either or both parties believing in At that time, Solenn was four (4) years old and
good faith that the solemnizing officer had the Sonny was five (5) years old. These two (2) were
legal authority to do so; then brought up in the same household. Fifteen (15)
4. Contracted through Mistake of one of the years later, Solenn and Sonny developed romantic
contracting parties as to the identity of the other; feelings towards each other, and eventually eloped.
5. Bigamous or polygamous marriages not falling On their own and against their parents’ wishes, they
under Article 41 of the Family Code or those procured a marriage license and got married in
allowed under special laws such as the Muslim church.
Code; a. Is the marriage of Solenn and Sonny valid,
6. Marriages contracted by any party below 18 years voidable or void?
of age even with the consent of parents or b. If the marriage is defective, can the marriage be
guardians; ratified by the free cohabitation of the spouses?
7. Marriages contracted by any party, who at the (2018 Bar)
time of the celebration of the marriage, was
Psychologically incapacitated, even if such A:
incapacity becomes manifest only after its a. The marriage is voidable. Under Article 14 of the
solemnization (FC, Art. 36); Family Code, if a party to the marriage is between
8. Incestuous Marriages (FC, Art. 37); the ages of eighteen and twenty-one; the consent of
9. Marriages declared void because they are contrary their father, mother, surviving parent or guardian,
to Public policy (FC, Art. 38); or persons having legal charge of them, in the order
10. Subsequent marriages which are void under Art. mentioned, is an additional requirement. In the
53; absence of such parental consent, the consent given
11. Marriages in jest; by the party between the ages of eighteen and
“Marriages in jest is a pretended one, legal in form twenty-one is considered defective. Also, under
but entered as a joke, with no real intentions of Article 4 of the Family Code, a defect in the essential
entering into the actual marriage status, and with requisites of marriage renders the marriage
a clear understanding that the parties would not voidable. In this case, Solenn and Sonny are
be bound (Republic of the Philippines v. Albios, G.R. nineteen and twenty years old respectively during
No. 198780, October 16, 2013); and the time of the celebration of their marriage. Thus,
12. Common-law marriages. the absence of parental consent renders the
marriage of Solenn and Sonny voidable.
1. ABSENCE OF ANY ESSENTIAL OR FORMAL b. Yes. Although voidable marriage, their marriage
REQUISITES OF 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
Q: Jennifer was registered as a female in her Q: Judge Palaypayon solemnized marriages even
Certificate of Live Birth. In her early years, she without the requisite of marriage license. Thus,
suffered from clitoral hypertrophy and was found some couples were able to get married by the
out that her ovarian structures had minimized. She simple expedient of paying the marriage fees. As a
also alleged that she has no breasts or consequence, their marriage contracts did not
menstruation. She was diagnosed to have reflect any marriage license number. In addition,
Congenital Adrenal Hyperplasia (CAH) a condition the judge did not sign their marriage contracts and
where persons thus afflicted possess secondary did not indicate the date of the solemnization, the
male characteristics because of too much secretion reason being that he allegedly had to wait for the
of androgen. She then alleged that for all interests marriage license to be submitted by the parties.
and appearances as well as in mind and emotion, Such marriage contracts were not filed with the
she has become a male person. What is Jennifer’s Local Civil Registry. Are such marriages valid?
gender or sex?
A: NO. A valid marriage license is necessary for the
A: MALE. Where the person is biologically or naturally validity of marriage, except in the cases provided for
intersex the determining factor in his gender therein. The absence of any of the essential or formal
classification would be what the individual, having requisites shall generally render the marriage void
reached the age of majority, with good reason thinks ab initio(Cosca v. Palaypayon, A.M. No. MTJ-
of his/her sex. Jennifer here thinks of himself as a male 92-721, September 30, 1994).
and considering that his body produces high levels of
androgen, there is preponderant biological support for Mistake to render the marriage void
considering him as being male. Sexual development in
cases of intersex persons makes the gender For marriage to be rendered void, the mistake in
classification at birth inconclusive. It is at maturity that identity must be with reference to the actual physical
the gender of such persons is fixed (Republic v. Jennifer identity of other party, not merely a mistake in the
Cagandahan, G.R. No. 166676, September 12, 2008). name, personal qualifications, character, social
standing,etc (Rabuya, 2018).
Marriage where one or both of the parties are below
18 years of age is VOID 2. PSYCHOLOGICAL INCAPACITY
Such marriage is void for lack of legal capacity even if the Psychological incapacity is “no less than a mental
parents consented to such marriage (Sempio-Dy, 1995). (not physical) incapacity that causes a party to be
truly (cognitive) of the basic marital covenants that
Validity of the marriage if it is a mixed marriage concomitantly must be assumed and discharged by
where the Filipino is 18 years old but the foreigner the parties to the marriage which include their
is below 17 years of age mutual obligations to live together, observe love,
respect, fidelity, and to render help and support”
43
CIVIL LAW
(Republic of the Philippines v. Iyoy, G.R. No. 152577, factual milieu and the appellate court must, as much as
September 21, 2005). possible, avoid substituting its own judgment for that of the
trial court.
Psychological incapacity does not refer to mental
incapacity tantamount to insanity. (Paras, 2016) By the very nature of Article 36 of the Family Code,
Clearly, the ground is restricted to psychological courts, despite having the primary task and burden of
incapacity to “comply with the essential marital decision- making, must not discount but, instead, must
obligations” (Sta. Maria, 2010). consider as decisive evidence the expert opinion on the
psychological and mental temperaments of the parties
In such case, the spouse declared to be psychologically (Kalaw v. Fernandez, G.R. No. 166357, January 15, 2015).
incapacitated cannot be held liable to pay moral
damages to the other spouse based on Articles 2217 and Requisites of Psychological Incapacity (1996, 1997, 2002,
21 of the NCC, which connotes (willfulness) of the acts 2006 Bar)
complained of, if the same acts constitutive of the
psychological incapacity were to be made the basis for the 3. Juridical antecedence s– Must be rooted in the
award of moral damages. It is contradictory to history of the party antedating the marriage,
characterize acts as a product of psychological although overt manifestations may arise only
incapacity, and hence beyond the control of the party after such marriage.
because of an innate inability, while at the same time 4. Gravity – grave enough to bring about the
considering the same set of acts as willful (Rabuya, disability of the party to assume the essential
2018). marital obligations.
5. Permanence or Incurability – must be
Constitutional provision on marriage vis-à-vis incurable or, if curable, the cure should be
validity of declarations of nullity of marriage based on beyond the means of the parties involved.
psychological incapacity
Proof of Psychological Incapacity
Q: Does a petition or declaration of nullity of
marriage based on Art. 36 of the FC destroy the The root cause of psychological incapacity must be:
constitutional mandate to protect the sanctity of a. Medically or clinically identified;
marriage and promoting such marriage as a b. Alleged in the complaint;
foundation of the family? c. Sufficiently proven by experts; and
d. Clearly explained in the decision.
A: NO. In dissolving marital bonds, the Court is not
demolishing the foundation of families, but it is actually NOTE: Expert evidence may be given by qualified
protecting the sanctity of marriage, because it refuses to psychiatrists and clinical psychologists.
allow a person afflicted with a psychological disorder, who
cannot comply with or assume the essential marital The physician’s examination is not required in
obligations, from remaining in that sacred bond. Article 36, establishing psychological incapacity as ground for
in classifying marriages contracted by a psychologically declaration of nullity
incapacitated person as a nullity, should be deemed as
an implement of this constitutional protection of marriage. If the totality of evidence presented is enough to
Given the avowed State interest in promoting marriage as sustain a finding of psychological incapacity,
the foundation of the family, which in turn serves as the physician’s examination of the person concerned
foundation of the nation, there is a corresponding interest need not be resorted to (Marcos v. Marcos, G.R. No.
for the State to defend against marriages ill-equipped to 136490, October 19, 2000; Glenn Viñas v. Mary Grace
promote family life. (Kalaw v. Fernandez, G.R. No. Parel-Viñas, G.R. No. 208790, January 21, 2015).
166357, January 14, 2015)
Guidelines set by the Court to aid it in its disposition
Determination of psychological incapacity is left solely of cases involving psychological incapacity
with the courts on a case- to-case basis
In the landmark case of Republic of the Philippines
Every court should approach the issue of nullity “not on the v. Court of Appeals and Molina, the Supreme Court
basis of a priori assumptions, predilections or enumerated the following guidelines in invoking and
generalizations, but according to its own facts” in proving psychological incapacity under Article 36 of
recognition of the verity that no case would be on “all the Family Code:
fours” with the next one in the field of psychological
incapacity as a ground for the nullity of marriage; hence, 1. Burden of proof to show the nullity of the
every “trial judge must take pains in examining the marriage belongs to the plaintiff;
45
CIVIL LAW
evidence as to psychological and emotional He had no stable job and merely worked in the
temperaments. The long-term effects of the gambling cockpits as "kristo" and "bangkero sa
respondent’s obsessive mahjong playing surely hantak." When he decided to join and train with
impacted her family life particularly on her very young the army, Natividad left their conjugal home and
children. Her willfully exposing her children to the sold their house without his consent. Thereafter,
culture of gambling on every occasion of her mahjong Natividad moved to Dipolog City where she lived
sessions was a very grave and serious act of with a certain Engineer Terez (Terez), and bore
subordinating their needs for parenting to the him a child named Julie Ann Terez. After
gratification of her own personal and escapist desires. The cohabiting with Terez, Natividad contracted a
respondent revealed her wanton disregard for her second marriage on January 11, 1991 with
children’s moral and mental development. This another man named Antonio Mondarez and has
disregard violated her duty as a parent to safeguard and lived since then with the latter in Cagayan de Oro
protect her children (Kalaw v. Fernandez, G.R. No. City. From the time Natividad abandoned them in
166357, January 14, 2015) 1972, Rodolfo was left to take care of Ma. Reynilda
and Ma. Rizza and he exerted earnest efforts to
Q: Was the Molina doctrine abandoned by the recent save their marriage which, however, proved
ruling in the abovementioned case of Kalaw vs. futile because of Natividad’s psychological
Fernandez(G.R.No.166357,January14,2015)? incapacity that appeared to be incurable. For her
part, Natividad failed to file her answer, as well as
A: NO. The Court in this case merely recognized the appear during trial, despite service of summons.
unintended consequences of strictly applying the Nonetheless, she informed the court that she
standards set in Molina. The resiliency with which the submitted herself for psychiatric examination to
concept (of psychological incapacity) should be applied and Dr. Cheryl T. Zalsos (Dr. Zalsos) in response to
the case-to-case basis by which the provision should Rodolfo’s claims. Rodolfo also underwent the
be interpreted, as so intended by its framers, had, same examination.
somehow, been rendered ineffectual by the
imposition of a set of strict standards in Molina. In In her two-page psychiatric evaluation report, Dr.
hindsight, it may have been inappropriate for the Court to Zalsos stated that both Rodolfo and Natividad
impose a rigid set of rules, as the one in Molina, in were psychologically incapacitated to comply
resolving all cases of psychological incapacity. The with the essential marital obligations, finding
unintended consequences of Molina has taken its toll on that both parties suffered from "utter emotional
people who have to live with deviant behavior, moral immaturity [which] is unusual and unacceptable
insanity and sociopathic personality anomaly, which, like behavior considered [as] deviant from persons
termites, consume little by little the very foundation who abide by established norms of conduct." As
of their families, our basic social institutions. Far from for Natividad, Dr. Zalsos also observed that she
what was intended by the Court, Molina has become a strait- lacked the willful cooperation of being a wife and
jacket, forcing all sizes to fit into and be bound by it. a mother to her two daughters. On February 10,
1999, the Office of the Solicitor General (OSG),
In the abovementioned case, the Supreme Court is representing petitioner Republic of the
not suggesting the abandonment of Molina. It simply Philippines (Republic), filed an opposition to the
declares that there is a need to emphasize other complaint, contending that the acts committed by
perspectives as well which should govern the Natividad did not demonstrate psychological
disposition of petitions for declaration of nullity incapacity as contemplated by law, but are mere
under Article 36. grounds for legal separation under the Family
Code. Should the marriage be dissolved?
Q: Rodolfo and Natividad were married. On
December 28, 1998, Rodolfo filed a verified A: NO. "Psychological incapacity," as a ground to nullify
complaint for declaration of nullity of marriage a marriage under Article 36 of the Family Code, should
before the RTC alleging that Natividad was refer to no less than a mental – not merely physical –
psychologically incapacitated to comply with her incapacity that causes a party to be truly incognitive of
essential marital obligations. In support of his the basic marital covenants that concomitantly must be
complaint, Rodolfo testified, among others, that assumed and discharged by the parties to the marriage
he first met Natividad when they were students at which, as so expressed in Article 68of the Family Code,
the Barangay High School of Sindangan, and he among others, include their mutual obligations to live
was forced to marry her barely three (3) months together, observe love, respect and fidelity and render
into their courtship in light of her accidental help and support. The RTC, as affirmed by the CA,
pregnancy. At the time of their marriage, he was heavily relied on the psychiatric evaluation report of Dr.
21 years old, while Natividad was 18 years of age. Zalsos which does not, however, explain in reasonable
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spouse. (Republic v. Romero II, G.R. No. 209180, February
26, 2016) During trial, Gina presented the findings of
Professor Emma Astudillo-Sanchez (Prof. Sanchez),
Q: Would the state of being of unsound mind or the the psychologist who conducted a psychological
concealment of drug addiction, habitual alcoholism, examination of the parties. She concluded that Gina
homosexuality or lesbianism be considered indicia of and Marjune's personality disorders "affected their
psychological incapacity, if existing at the inception of behaviors even before they contracted marriage
marriage? (2002 Bar) and, in the presence of situational factors, became
more evident during the time they were together
A: The state of being of unsound mind, the during the marriage. Is upholding the annulment
concealment of drug addiction, habitual alcoholism, based on the expert opinion of the psychologist
lesbianism or homosexuality may be indicia of sufficient proof of the presence of psychological
psychological incapacity, depending on the degree of incapacity?
severity of the disorder. However, the concealment of drug
addiction, habitual alcoholism, lesbianism or A: NO, the said report failed to show that these traits
homosexuality is a ground of annulment of marriage existed prior to Gina's marriage and that her alleged
(Santos v. CA, G.R. No. 112019, January 4, 1995). personality disorder is incurable or that the cure is
beyond her means. There was simply no discernible
Q: Art. 36 of the FC provides that a marriage explanation on the juridical antecedence or incurability
contracted by any party who, at the time of the of Gina's supposed condition. More significantly, the
celebration, was psychologically incapacitated to relation of such condition to Gina's inability to perform
comply with the essential marital obligations of her essential marital obligations was not sufficiently
marriage, shall be void. Choose the spouse listed shown. To reiterate, the psychological condition ought
below who is psychologically incapacitated. to pertain to personality disorders that are grave and
serious such that the party would be incapable of
a. Nagger carrying out the ordinary duties required in a marriage.
b. Gay or Lesbian Unfortunately, the Case Analysis Report fails to
c. Congenital sexual pervert demonstrate this crucial point. In determining the
d. Gambler existence of psychological incapacity, a clear and
e. Alcoholic (2006 Bar) understandable causation between the party's condition
and the party's inability to perform the essential marital
A: B and C. They may serve as indicia of psychological covenants must be shown A psychological report that is
incapacity, depending on the degree and severity of the essentially comprised of mere platitudes, however
disorder (Santos v. CA, G.R. No. 112019, January 4, 1995). speckled with technical jargon, would not cut the
If the condition of homosexuality, lesbianism or sexual marriage ties. (Republic v. Tecag, G.R. No. 229272,
perversion, existing at the inception of the marriage, is November 19, 2018)
of such a degree as to prevent any form of sexual intimacy,
any of them may qualify as a ground for psychological 3. INCESTUOUS MARRIAGES
incapacity. The law provides that the husband and wife are
obliged to live together, observe mutual love, respect and a. Between ascendants and descendants of any degree;
fidelity (FC, Art. 68). b. Between brothers and sisters whether of the full or
More than just showing the manifestations of half-blood (FC, Art. 37).
incapacity, the petitioner must show that the
respondent is incapacitated to comply with the NOTE: Regardless of whether the relationship between the
essential marital obligations of marriage and that it is also parties is legitimate or illegitimate.
essential that he must be shown to be incapable of doing so
due to some psychological, not physical illness Void marriages by reason of public policy (1999, 2007,
(Republic v. Quintero- Hamano, G.R. No. 149498, May 20, 2008 Bar)
2004).
Marriages between:
Q: After living together as husband and wife for two
(2) years, Gina and Marjune formalized their 1. Collateral blood relatives (legitimate or
marital union through civil rites. As months passed, Illegitimate) up to the 4th civildegree;
the communication between Gina and Marjune 2. Step-parents & step-children;
became less frequent until it ceased altogether. 3. Parents-in-law &children-in-law;
Thus, Gina filed a petition to declare her marriage
with Marjune null and void on the basis of the NOTE: The prohibition under Nos. 2 and 3 applies even
latter's psychological incapacity. after the termination of the marriage which is the very
NOTE: The list is EXCLUSIVE. If not falling within this Q: Arnold, a Filipino, and Britney, an American, both
enumeration, the marriage shall be valid. Such as residents of California, decided to get married in their
marriages between: local parish. Two years after their marriage, Britney
obtained a divorce in California. While in Boracay,
i. Adopted and Illegitimate child of the adopter; Arnold met Jenny, a Filipina, who was vacationing
ii. Step brother and step sister; there. Arnold fell in love with her. After a brief
iii. Brother-in-law and sister-in-law; courtship and complying with all the requirements,
iv. Parties who have been guilty of adultery or they got married in Hong Kong to avoid publicity, it
concubinage. being Arnold’s second marriage. Is his marriage with
Jenny valid? (2006 BAR)
Q: Amor gave birth to Thelma when she was 15 years
old. Thereafter, Amor met David and they got married A: YES. The marriage will not fall under Art. 35(4) of the
when she was 20 years old. David has a son, Julian, with Family Code on bigamous marriages provided that
his ex-girlfriend Sandra. Can Julian and Thelma get Britney obtained an absolute divorce, capacitating her
married? (2007 BAR) to remarry under her national law. Consequently, the
marriage between Arnold and Jenny may be valid as
A: The marriage between stepbrother and stepsister is void. long as it was solemnized and valid in accordance with
However, under the FC, the marriage may be valid. the laws of Hong Kong.
A subsequent void bigamous marriage contemplates a 1. Marriage between a Filipino and a foreigner and
situation where such subsequent marriage was procurement by the alien spouse of a valid
contracted at the time when the first marriage, which is divorce decree abroad, capacitating him/her to
valid in all respects, was still subsisting. A void remarry.
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CIVIL LAW
2. Terminable bigamous marriages (FC, Art. 41) enhances the welfare of the community (Eduardo Manuel v.
People, G.R. No. 165842, November 29, 2005).
Requisites for validity of subsequent marriage under
Art. 41 under the Family Code (B-A-D) Finality of judicial declaration of presumptive death
Before the celebration of the subsequent marriage: GR: The order of the trial court granting the petition for
judicial declaration of presumptive death under Article 41
1. The Absent spouse had been absent for 4 consecutive of the Family Code is immediately final and executory by
years (ordinary absence) or 2 consecutive years the express provision of Article 247 of the Family Code
(extra-ordinary absence); (Republic of the Philippines v. Bermudez-Lorino, G.R. No.
2. The present spouse has a well-founded Belief that the 160258, January 19, 2005).
absent spouse is already dead;
XPN: Under Article 41 of the Family Code, the losing party
NOTE: The Court in Cantor, pointed out the term, “well- in a summary proceeding for the declaration of
founded belief” has no exact definition under the law. In presumptive death may file a petition for certiorari with
fact, the Court notes such belief depends on the the CA on the ground that, in rendering judgment thereon,
circumstances of each particular case. Such belief must the trial court committed grave abuse of discretion
result from diligent efforts to locate the absent spouse. amounting to lack of jurisdiction. From the decision of the
Such diligence entails an active effort on the part of the CA, the aggrieved party may elevate the matter to this
present spouse to locate the missing one. The mere absence Court via a petition for review on certiorari under Rule 45
of a spouse, devoid of any attempt by the present spouse to of the Rules of Court (Republic of the Philippines v. Yolanda
locate the former, will not suffice. (Republic v. Catubag, G.R. Cadacio Granada, G.R. No.187512, June 13, 2012).
No. 210580, April 18,2018)
The declaration of presumptive death is without prejudice
3. There is judicial Declaration of presumptive death in a to the effect of reappearance of the absent spouse (Sta.
summary proceeding in accordance with Article 253 Maria, 2010). The declared presumption will still only be
of the Family Code. prima facie, and can be overthrown by evidence (People v.
Archilla, G.R. No. L-15632, February 28, 1961).
NOTE: If both spouses of subsequent marriage acted in bad
faith, such marriage is void ab initio. Effect if both parties in the subsequent marriage under
Article 41 acted in bad faith
Requisites for issuance of judicial declaration of
presumptive death 1. The subsequent marriage is void ab initio.
2. All donations propter nuptias made by one in favour
1. That the absent spouse has been missing for four of the other are revoked by operation of law.
consecutive years, or two consecutive years if the 3. All testamentary dispositions made by one in favour of
disappearance occurred where there is danger of the other are revoked by operation of law.
death under the circumstances laid down in Article 4. The parties shall be liable for the crime of bigamy
391 of the New Civil Code; (Rabuya, 2009).
2. That the present spouse wishes to remarry;
3. That the present spouse has well-founded belief that Termination of Subsequent Bigamous Marriage
the absentee is dead;
4. That the present spouse files a summary proceeding The recording of the affidavit of reappearance of the absent
for the declaration of presumptive death of the spouse in the civil registry of the residence of the parties to
absentee (Republic of the Philippines v. Nolasco, G.R. No. the subsequent marriage shall automatically terminate the
94053, March 17, 1993). terminable bigamous marriage (subsequent marriage)
unless there is a judgment annulling the previous marriage
The requirement for a judgment of the presumptive or declaring it void ab initio (FC, Art. 42).
death of the absent spouse is for the benefit of the
spouse present because she could be charged and In Art. 42, no judicial proceeding to annul a subsequent
convicted of bigamy if the defense of good faith based on marriage contracted under Art. 41 is necessary. Also, the
mere testimony is found incredible. It is also for the termination of the subsequent marriage by affidavit
protection of the State. The law regulating civil marriages provided for in Art. 42 does not preclude the filing of an
are necessary to serve the interest, safety, good order, action in court to prove the reappearance of the absentee
comfort or general welfare of the community and the and obtain a declaration of dissolution or termination of
parties can waive nothing essential to the validity of the the subsequent marriage (SSS v. Jarque Vda. De Bailon, G.R.
proceedings. A civil marriage anchors an ordered society No. 165545, March 24, 2006).
by encouraging stable relationships over transient ones; it
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CIVIL LAW
seek the help of the authorities or the AFP itself in finding JUDICIAL DECLARATION OF NULLITY OF
him (Republic v. Tampus, G.R. No. 214243, March 16, 2016). MARRIAGE
Q: When are non-bigamous subsequent marriages Necessity of Judicial Declaration of Nullity of Marriage
void?
The absolute nullity of a previous marriage may be invoked
A: The subsequent marriage of a person whose prior for purposes of remarriage on the basis solely of a final
marriage has been annulled but contracted said subsequent judgment declaring such previous marriage void (FC, Art.
marriage without compliance with Art. 52 (of the) FC, shall 40).
be VOID.
There has yet to be a judgment declaring it void, for it is
Before he contracts a subsequent marriage, he must first solely on the basis of that final judgment that a party can
comply with the requirement provided for in Art. 52, viz: remarry (Albano, 2013).
The recording in the civil registries and registries of Remarriage is not the sole purpose of declaration of nullity
properties of the following: 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
1. Judgment of annulment; with
2. Partition; any continuing uncertainty on the status of the second
3. Distribution of properties, and, marriage (G.R. No. 122749, Valdez v. Gomez- Valdez, July 31,
4. Delivery of presumptive legitimes. 1996; Albano, 2013).
Q: Ana Rivera had a husband, a Filipino citizen like her, Prescriptive Period
who was among the passengers on board a commercial
jet plane which crashed in the Atlantic Ocean ten (10) The time for filing an action or defense for the declaration
years earlier and had never been heard of ever since. of absolute nullity of marriage, whether in a direct or
Believing that her husband had died, Ana married collateral manner, does not prescribe (FC, Art. 39) (2002,
Adolf Cruz Staedler, a divorced German national born 2006 Bar).
of a German father and a Filipino mother residing in
Stuttgart. To avoid being required to submit the Any of the parties in a void marriage can file an action for
required certificate of capacity to marry from the the declaration of nullity of marriage even though such
German Embassy in Manila, Adolf stated in the party is the wrongdoer.
application for marriage license stating that Adolf was
a Filipino, the couple got married in a ceremony Effect of death of a party in a petition for declaration of
officiated by the Parish Priest of Calamba, Laguna in a nullity of marriages
beach in Nasugbu, Batangas, as the local parish priest
refused to solemnize marriage except in his church. Is 1. Before the entry of judgment – The court shall order
the marriage valid? (2008 Bar) the case closed and terminated without prejudice to
the settlement of estate in proper proceedings.
A: If the missing husband was in fact dead at the time the 2. After the entry of judgment – The decision shall be
second marriage was celebrated, the second marriage was binding upon the parties and their successors-in-
valid. Actual death of a spouse dissolves the marriage ipso interest in the settlement of the estate.
facto whether or not the surviving spouse had knowledge
of such fact. A declaration of presumptive death even if Petition for the declaration of nullity of marriage by
obtained will not make the marriage voidable because the heirs of a deceased person after his death
presumptive death will not prevail over the fact of death.
If the missing husband was in fact alive when the second The heirs cannot file for declaration of nullity of marriage.
marriage was celebrated, the second marriage was void ab The advent of the Rule on Declaration of Absolute Nullity of
initio because of a prior subsisting marriage. Had Ana Void Marriages marks the beginning of the end of the right
obtained a declaration of presumptive death, the second of the heirs of the deceased spouse to bring a nullity of
marriage would have been voidable. marriage case against the surviving spouse. The heirs can
still protect their successional right, for, compulsory or
In both cases, the fact that the German misrepresented his intestate heirs can still question the validity of the marriage
citizenship to avoid having to present his Certificate of of the spouses, not in a proceeding for declaration of nullity
Legal Capacity, or the holding of the ceremony outside the but upon the death of a spouse in a proceeding for the
church or beyond the territorial jurisdiction of the settlement of the estate of the deceased spouse filed in the
solemnizing officer, are all irregularities which do not affect regular courts.
the validity of the marriage.
A: NO, it retroacts to the date of the celebration of the EFFECTS OF JUDICIAL DECLARATION OF NULLITY OF
marriage. MARRIAGE
Although the judicial declaration of nullity of a marriage on 1. Status of the Children(1990, 2010 Bar)
the ground of psychological incapacity retroacts to the date
of the celebration of the marriage insofar as the vinculum GR: (Children conceived and born outside a valid marriage
between the parties is concerned, it must be noted that the or inside a void marriage are Illegitimate.)
marriage is not without legal consequences or effects. One
such consequence or effect is the incurring of criminal XPNs:
liability for bigamy. To hold otherwise would be to render i. Legitimate if the marriage is void:
nugatory the State’s penal laws on bigamy as it would allow 1. On the ground of psychological incapacity of
individuals to deliberately ensure that each marital either or both parties;
contract be flawed in some manner, and to thus escape the 2. Due to the non-compliance with the
consequences of contracting multiple marriages (Tenebro v. requirements set forth under Article 52 of the
CA, G.R. No. 150758, February 18, 2004). Family Code
Q: Is a decree of nullity of the first marriage required ii. Legitimate if the children were conceived or born
before a subsequent marriage can be entered into before the judgment of annulment or absolute nullity
validly? of the marriage under Article 36 has become final and
A: GR: Under the Art. 40 of the FC, the absolute nullity of a executory (FC, Art. 54, 1st sentence).
previous marriage may be invoked for purposes of iii. Legitimate if the children were conceived or born of
remarriage on the basis solely of a final judgment declaring the subsequent marriage under Article 53 (FC, Art. 54,
such previous marriage void. 2nd sentence).
XPN: If the second marriage, however, took place prior to 2. Property Relations
the effectivity of the FC, there is no need for judicial
declaration of nullity of the first marriage pursuant to the GR: Either Article 147 or 148 (Co- Ownership) of the
prevailing jurisprudence at that time (Rabuya, 2006). Family Code will apply.
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XPN: If the subsequent marriage is void due to non- 6. Parental Authority and Custody of Children
compliance with Article 40 of the Family Code, the property
relations of the void subsequent marriage will either be GR: Since the children are considered as illegitimate,
absolute community or conjugal partnership of gains. the parental authority and the custody of the children
will be exercised by their mother. The illegitimate father
3. Donations Propter Nuptias even if he admits paternity, will only have visitation
rights.
GR: Donations propter nuptias are revocable at the
instance of the donor. XPN: If the marriage is declared void by the reason of
psychological incapacity of either or both of the parties, the
XPNs: parental authority and the custody will be exercised by the
a. If the donation propter nuptias is embodied in a parent designated by the court.
marriage settlement, the donation is void under Article
86 par. 1 of the Family Code; Effects of Decree of Annulment
b. If the subsequent marriage is judiciallydeclared
void by reason of Article 40 of the Family Code, the 1. Termination of the marital bond, as if it had never
donation remains valid; been entered into, but the effects thereof are not
totally wiped out;
XPNto the XPN: If the donee spouse contracted the marriage 2. Children conceived or born before the judgment of
in bad faith, all donations are revoked by operation by annulment has become final and executory are
law. considered legitimate;
3. Absolute community property regime or the
c. When both parties to a subsequent marriage conjugal partnership property regime is
contracted in bad faith under Article 44 of the Family terminated or dissolved and the same shall be
Code, all donations propter nuptias are revoked liquidated in accordance with the provisions of
by operation by law. Arts. 102 and 129;
4. The innocent spouse may revoke the designation
4. Designation as Beneficiary in Insurance Policy of the other spouse who acted in bad faith as
beneficiary in the insurance policy whether or not
5. If the subsequent marriage is judicially declared the designation is revocable;
to void by reason of Article 40 of the Family Code, 5. The spouse who contracted the marriage in bad
the innocent spouse may revoke such faith shall be disqualified to inherit from the
designation if the beneficiary spouse acted in innocent spouse by testate and intestate
bad faith, even if such designation be stipulated as succession;
irrevocable Right to inherit 6. Donation propter nuptias.
a. Intestate Succession: The parties cannot
inherit from each other by way of intestate GR: It shall remain valid.
succession since they are no longer
considered as spouses; XPN:If the donee spouse acted in bad faith, the donor
b. Testate Succession: may revoke the donation.
GR: Any Testamentary provision by one in favor of Liquidation of Property if either spouse contracted
the other shall remain valid. the marriage in bad faith
XPNs:
His or her share of the net profits of the community
1. If the subsequent marriage is rendered void by property or conjugal partnership property shall be
non-compliance with Article40 oftheFamily Code, the forfeited in favor of the common children or if there be
spouse who contracted the subsequent marriage none, the children of the guilty spouse by previous
in bad faith is disqualified to inherit from the marriage or in default thereof, the innocent spouse.
innocent spouse.
2. If the marriage is void by reason of the bad faith of The final judgment of nullity or annulment shall
both parties under Article 41 of the Family Code, all provide thefollowing:
testamentary dispositions made by one in favor of the
otherarerevoked by operation of law. 1. Liquidation, partition and distribution of the
properties of the spouses;
NOTE: The parties are not disqualified to institute each 2. Custody and support of the common children; and
other as voluntary heir in their respective wills to be 3. Delivery of their presumptive legitimes.
executed after the judicial declaration of nullity
a. Cash
b. Property
c. Sound security
1. Judgement of Annulment
2. Partition
3. Distribution of properties; and
4. Delivery of presumptive legitime
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CIVIL LAW
Void v. Voidable Marriages
Either party was of Insane spouse: Through free GR: Sane spouse who had no At any time before the death
unsound mind cohabitation after coming knowledge of the other’s of either party
to reason. insanity
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CIVIL LAW
XPN: Any relative, guardian During a lucid interval or after
or person having legal charge regaining sanity
of the insane; or
Insane spouse during a lucid
interval or after regaining
sanity
Consentofeither party was Injured party: Through free Injured party Within 5 years after the
obtainedbyfraud cohabitation with full discovery of fraud
knowledge of the facts
constituting the fraud
Vices of consent such as force, Injured party: Through free Injured party Within 5 years from the time
intimidation or undue cohabitation after the vices the force, intimidation or
influence have ceased or disappeared. undue influence disappeared
or ceased
Impotence (impotencia May not be ratified but action Only the potent spouse can file Within 5 years after the
copulandi) and afflicted with may be barred by the action (,) and he or she celebration of marriage
STD found to be serious and prescription only, which is 5 must not havebeen awareof
appears to be incurable years after the marriage. the other’s impotency at the
time of the marriage.
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carries with it sterility, a sterile person is not necessarily condition and yet married her. After two (2) years of
impotent. (Paras, 2016) cohabiting with Yvette, and in his belief that she
would probably never be able to bear him a healthy
Requisites for impotence to be a ground for child, Joseph now wants to have his marriage with
annulment of marriage Yvette annulled on the ground that Yvette has STD.
Yvette opposes the suit contending that Joseph is
1. Exists at the time of the Celebration of marriage; estopped from seeking annulment of their marriage
2. Permanent (does not have to beabsolute); since he knew even before their marriage that she was
3. Incurable; afflicted with HIV virus. Can the action of Joseph for
4. Unknown to the other spouse; and, annulment of his marriage with Yvette prosper?
5. The other spouse must not also be Impotent.
A: NO. Concealment of a sexually transmitted disease may
Presumption of potency of one spouse annul the marriage if there was fraud existing in the party
concerned. In this case, there was no fraud because Joseph
GR:Presumption is in favor of potency. knew that Yvette was suffering from HIV when he married her
(FC, Art. 46, par. 3).
XPN: Doctrine of triennial cohabitation.
Art. 45 v. 46 of the FC on STD as ground for
Doctrine Triennial cohabitation annulment
If after 3 years of living together with her husband, the wife ARTICLE 45 ARTICLE 46
remained a virgin, the husband is presumed to be Affliction Concealment
impotent (Rabuya, 2018). The husband will have to Ground for Annulment
overcome this presumption. The fact of being afflicted The act of concealing
because it constitutes fraud
Relative impotency may now be invoked as a ground for
annulment. The Committee has decided to include Concealment
relative impotency of one party because there are cases
where a person is impotent with respect to his spouse but not Not necessarily Necessary
with other men or women (Sempio Diy, 1995). Nature of the Disease
Must be serious and incurable Doesnothaveto be serious
Q: The day after John and Marsha got married, John told and incurable
her that he was impotent. Marsha continued to live with
John for two years. Is Marsha now estopped from filing an PRESENCE OF PROSECUTOR
annulment case against John? (2007 Bar)
Role of the prosecutor or Solicitor General in cases of
A: NO. Unlike the other grounds for annulment of annulment and judicial declaration of nullity
voidable marriage which are subject to ratification by
continued cohabitation, the law does not allow The prosecutor or Solicitor General shall take steps to
ratification in case of impotency. prevent collusion between the parties and to take care that
evidence is not fabricated or suppressed. Even if there is
Requisites of affliction of a SEXUALLY TRANSMITTED no suppression of evidence, the public prosecutor has to
DISEASE (STD) as a ground for annulment make sure that the evidence to be presented or laid down
before the court is not fabricated. Only the active
1. One of the parties is afflicted with STD; participation of the public prosecutor or the Solicitor
2. STD mustbe: General will ensure that the interest of the State is
a. Existing at the time the marriage is represented and protected in proceedings fordeclaration
celebrated; of nullity of marriages by preventing the fabrication or
b. Serious; and suppression of evidence (FC, Art. 48).
c. Apparently Incurable;
NOTE: The non-intervention of the prosecutor is not fatal
3. The other spouse is not aware of the other’s affliction; to the validity of the proceedings in cases where the
and respondent in a petition for annulment vehemently
4. The injured party must be free from STD. opposed the same and where he does not allege that
evidence was suppressed or fabricated by any of the
Q: Yvette was found to be positive for HIV virus, parties (Tuason v. CA, G.R. No. 116607, April 10, 1996).
considered sexually transmissible, serious and
incurable. Her boyfriend Joseph was aware of her Collusion – Where for purposes of getting an annulment or
nullity decree, the parties come up with an
During the pendency of the action for annulment, 6. Physical violence or moral pressure to compel
declaration of absolute nullity of marriage or legal petitioner to change religious or political
separation, the Court shall, in the absence of adequate affiliation;
written agreement between the spouses, provide for the: 7. Bigamous marriage subsequently contracted by
respondent in the Philippines or abroad;
1. Support of the spouses; 8. Sexual infidelity or perversion;
2. Support and custody of the common children; 9. Lesbianism or homosexuality of respondent; and
3. Visitation rightsof the other parent (FC, Art.49).
NOTE: It must exist after celebration of marriage
Legal separation is a legal remedy available to parties in a Q: If a man commits several acts of sexual
valid but failed marriage for the purpose of obtaining a infidelity, particularly in 2002, 2003, 2004, 2005, does
decree from the court entitling him or her certain reliefs the prescriptive period to file for legal separation
such as the right to live separately from each other runfrom 2002?(2007 Bar)
(without affecting the marital bond that exists between
them), the dissolution and liquidation of their absolute A: The prescriptive period begins to run upon the
community or conjugal partnership property regime and commission of each act of infidelity. Every act of sexual
the custody of their minor children. infidelity committed by the man is a ground for legal
separation.
Nature of legal separation
Q: Lucita left the conjugal dwelling and filed a
An action for legal separation which involves nothing petition for legal separation due to the physical
more than bed-and-board separation of the spouses is violence, threats, intimidation and grossly abusive
purely personal. The Civil Code recognizes this by: conduct she had suffered at the hands of Ron, her
husband. Ron denied such and claimed that since it was
1. By allowing only the innocent spouse and no one Lucita who had left the conjugal abode, then the decree of
else to claim legal separation; legal separation should not be granted, following Art. 56
2. By providing that the spouses can, by their par. 4 of the FC which provides that legal separation
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shall be denied when both parties have given ground for c. Depriving or threatening to deprive the
legal separation. Should legal separation be denied woman orher child of a legal right;
onthebasisofRon’sclaimofmutual guilt? d. Preventing the woman in engaging in any
legitimate profession, occupation, business or
A: NO. Art. 56 par. 4 of the FC does not apply since the activity or controlling the victim’s own money
abandonment that is a ground for legal separation is or properties, or solely controlling the conjugal
abandonment without justifiable cause for more than one or common money, or properties;
year. In this case, Lucita left Ron due to his abusive e. Inflicting or threatening to inflict physical harm
conduct. Such act does not constitute the abandonment on oneself for the purpose of controlling her
contemplated in the said provision. Therefore, there is no actions or decisions;
mutual guilt between them as there is only one erring f. Causing or attempting to cause the woman or
spouse (Ong Eng Kiam v. CA, G.R No. 153206, October her child to engage in any sexual activity which
23, 2006). does not constitute rape, by:
i. Force, or
NOTE: No criminal conviction is necessary to issue a decree ii. Threat of force;
of legal separation. In legal separation, preponderance iii. Physical harm, or
of evidence is enough (Gandionco v. Penaranda, G.R. No. iv. Through intimidation directed against
79284, November 27, 1987). the woman or her child or her/his
immediate family;
Actsconsideredasactsof violence underR.A. 9262
8. Engaging in purposeful, knowing, or reckless
1. Causing, threatening to cause, or attempting to conduct, personally or through another that alarms
cause physical harm to the woman or her child; or causes substantial emotional or psychological
2. Threatening to cause the woman or her child distress to the woman or her child. This shall include,
physical harm; but not be limited to, the following acts:
3. Attempting to cause the woman or her child a. Stalking or following the woman or her child in
physical harm; public or private places;
4. Placing the woman or her child in fear of b. Peering in the window or lingering outside
imminent physical harm; the residence of the woman or her child;
5. Attempting to compel or compelling the woman c. Entering or remaining in the dwelling or on
or her child to: the property of the woman or her child against
her/his will;
a. Engage in conduct which the woman or her d. Destroying the property and personal
child has the right to desist from; or belongingness or inflicting harm to animals or
b. Desist from conduct which the woman or her pets ofthewoman orherchild;and
child has the right to engage in, e. Engaging in any form of harassment or violence;
6. Attempting to restrict or restricting the woman’s 9. Causing mental or emotional anguish, public
or her child’s freedom of movement or conduct by: ridicule or humiliation to the woman or her child,
including, but not limited to, repeated verbal and
a. Force, or emotional abuse, and denial of financial support or
b. Threat of force; custody of minor children of access to the woman’s
c. Physical, or Other harm, or child/children.
d. Threat of physical or other harm;
Protection Order
7. Intimidation directed against the woman or child.
This shall include, but not limited to, the following A protection order under R.A. 9262 is an order issued
acts committed with the purpose or effect of under this act for the purpose of preventing further acts
controlling or restricting the woman’s or her child’s of violence against a woman or her child and granting
movement or conduct: other necessary relief.
a. Threatening to deprive or actually depriving the The relief granted under a protection order serves
woman or her child of custody to her/his family; the purpose of safeguarding the victim from further
b. Depriving or threatening to deprive the harm, minimizing any disruption in the victim’s daily
woman or her children of financial support life, and facilitating the opportunity and ability of the
legally due her or her family, or deliberately victim to independently regain control over her life. The
providing the woman’s children insufficient provisions of the protection order shall be enforced
financial support; by law enforcement agencies. The protection orders
Who may file Petition for Protection orders Q: Rosa and Ariel were married in the Catholic
Church of Tarlac, Tarlac on January 5, 1988. In
1. The offended party; 1990, Ariel went to Saudi Arabia to work. There,
2. Parents or guardians of the offended party; after being converted into Islam, Ariel married
3. Ascendants, descendants or collateral relatives Mystica. Rosa learned of the second marriage of
within the fourth civil degree of consanguinity or Ariel on January 1, 1992 when Ariel returned to
affinity; the Philippines with Mystica. Rosa filed an action
4. Officers or social workers of the DSWD or social for legal separation on February 5, 1994.
workers of local government units (LGUs);
5. Police officers, preferably those in charge of a. Does Rosa have legal grounds to ask for
women and children’s desks; legal separation?
6. Punong barangay or Barangay Kagawad; b. Has the action prescribed? (1994 Bar)
7. Lawyer, counselor, therapist or healthcare
provider of the petitioner; A:
8. At least 2 concerned responsible citizens of the a. YES, the abandonment of Rosa by Ariel for
city or municipality where the violence against more than one (1) year is a ground for legal
women and their children occurred and who has separation unless upon returning to the
personal knowledge of the offense committed. Philippines, Rosa agrees to cohabit with Ariel
(Sec. 9. R.A. 9262) which is allowed under the Muslim Code. In
this case, there is condonation. The contracting
DEFENSES of a subsequent bigamous marriage whether in
the Philippines or abroad is a ground for legal
Grounds for denial of petition for legal separation separation under Art. 55 par. 7 of the FC.
(2006 Bar) Whether the second marriage is valid or not,
Ariel having converted into Islam, is
1. Condonation of the act complained of; immaterial.
2. Consent to the commission of the offense/act; b. NO. The aggrieved spouse must file the action
3. Connivance in the commission of the act; within 5 years from the occurrence of the
4. Collusion in the procurement of decree of LS; cause (FC, Art. 57). The subsequent marriage of
5. Mutual Guilt; Ariel could not have occurred earlier than
6. Prescription: 5 yrs from occurrence of cause; 1990, the time he went to Saudi Arabia. Hence,
7. Death of either party during the pendency of Rosa has until 1995 to bring the action under
the case (Lapuz-Sy v. Eufemio, G.R. No. L-31429, the FC.
January 31, 1972);
8. Reconciliation of the spouses during the COOLING-OFF PERIOD
pendency of the case (FC, Art. 56).
An action for legal separation shall be in no case tried before
Prescriptive period for filing a petition for legal 6 months has elapsed since the filing of the petition, to
separation enable the contending spouses to settle differences. In
other words, it is for possible reconciliation (FC, Art.
An action for legal separation shall be filed within five 58).
years from the time of the occurrence of the cause (FC,
Art. 57). GR: The 6 months cooling-off period is a mandatory
requirement. Petition shall not be granted if it is not
Failure to interpose prescription as a defense observed (Pacete v. Carriaga, G.R. No. L-53880, March 17,
1994).
When prescription was not interposed as a defense, the
courts can take cognizance thereof, because actions Note: Matters other than the merits of legal separation
seeking a decree of legal separation, or annulment of can be determined by the court without waiting for the
marriage, involve public interest and it is the policy of our lapse of the 6-month period.
law that no such decree be issued if any legal
obstacles thereto appear upon the record. XPN: There is no cooling-off period if the grounds
This is an exception to the Rules of Court provision alleged are those under R.A. 9262 (Anti-Violence against
that defenses not raised in the pleadings will not be
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Women and Children Act). The court can immediately itself– actio personalis moritur cum persona (Rabuya,
hear the case. 2009).
The Court is required to take steps toward the The court shall order the case closed and terminated
reconciliation of the spouses and must be fully satisfied without prejudice to the settlement of estate proper
that, despite such efforts, reconciliation is highly proceedings in the regular courts (Sec. 21, A.M. 02-11-
improbable (FC, Art. 59). 11- SC).
Rule in rendering a judgment of legal separation If the party dies after the entry of judgment, the same
based upon a stipulation of facts or confession of shall be binding upon the parties and their
judgment successors in interest in the settlement of the estate
in the regular courts (Sec. 21, A.M. 02-11-11-SC).
A decree of legal separation cannot be issued solely on
the basis of a stipulation of facts or a confession of Q: May the heirs of the deceased spouse continue the suit
judgment. The grounds for legal separation must be (petition for decree of legal separation) if the death of
proved. Neither confession of judgment nor summary the spouse takes place during the pendency of thesuit?
judgment is allowed. In any case, the court shall order
the prosecuting attorney or fiscal to take steps to A: NO. An action for legal separation is purely personal,
prevent collusion between the parties and to take care therefore, the death of one party to the action causes the
that the evidence is not fabricated or suppressed (FC, death of the action itself – action personalis moritur cum
Art. 60). persona.
What the law prohibits is a judgment based exclusively NOTE: In cases where one of the spouses is dead, or
or mainly on defendant’s confession (Ocampo v. where the deceased’s heirs continue the suit, separation of
Florenciano, property and any forfeiture of share already effected
G.R. No. L-13553, February 23, 1960). subsists, unless spouses agree to revive former property
regime.
Filing of petition for legal separation
EFFECTS OF LEGAL SEPARATION
Who may file Husband or wife
Within 5 years from the time of the 1. Spouses entitled to live separately but the
When to file occurrence of the cause marriage bond is not severed;
Family Court of the province or city 2. ACP/CPG shall be dissolved and liquidated. The share
Where to file where the petitioner or the respondent of the offending spouse in the net profits shall be
has been residing for at least 6 months forfeited in favour of:
prior to the date of filing or in case of a a. Common children,
non- resident, where he may be found b. In default of the common children, children of
in the Philippines, at the election of the the guilty spouse by a previous marriage,
petitioner c. In default of common children and the children
of the guilty spouse, innocent spouse;
EFFECTS OF FILING A PETITION FOR LEGAL
SEPARATION 3. Custody of minor children is awarded to the
(FC, ART. 61) innocent spouse (subject to FC, Art. 213);
4. Offending spouse is disqualified to inherit from
The spouses shall be entitled to live separately from innocent spouse by intestate succession;
each other.In the absence of a written agreement between 5. Provisions in the will of innocent spouse which
the parties, the court shall designate either the husband or favors offending spouse shall be revoked by
operation of law;
the wife or a 3rd person to administer the absolute
6. Innocent spouse may revoke donations he/she made
community or conjugal partnership property.
in favor of offending spouse; and
NOTE: Prescriptive period: 5 years from finality of
Effect of death of a party during pendency
decree of legal separation
Being personal in character, it follows that the death of
7. Innocent spouse may revoke designation of
one party to the action causes the death of the action
Since AIDS is a serious and incurable sexually The revocation of the donations shall be recorded in the
transmissible disease, the wife may file an action for registries of property in the places where the properties
annulment of the marriage on this ground whether are located. Alienations, liens and encumbrances
such fact was concealed or not from the wife, provided that registered in good faith before the recording of the
the disease was present at the time of the marriage. The complaint for revocation in the registries of property
marriage is voidable even though the husband was not shall be respected. The revocation of or change in the
aware that he had the disease at the time of marriage. designation of the insurance beneficiary shall take effect
upon written notification thereof to the insured.
b. SEPARATION OFPROPERTY The action to revoke the donation must be brought
within five years from the time the decree of legal
If the wife refuses to come home for three (3) months separation has become final (FC, Art. 64).
from the expiration of her contract, she is presumed to have
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EFFECTS OF RECONCILIATION Effects of reconciliation while the petition is being
heard by the court
As to the Decree:
If the spouses should reconcile, a corresponding joint
During the pendency of the case: manifestation under oath duly signed by them shall be
LS proceedings terminated at whatever stage filed with the court in the same proceeding for legal
separation.
After the issuance of the decree:
Final decree of LS to be set aside (FC, Art. 66). The legal separation proceedings, if still pending, shall
thereby be terminated at whatever stage.
As to the Property Regime:
GR: Donations propter nuptias are GR: Shall remain valid [FC, Art.43(3)].
revocable at the instance of the donor
XPN:
XPN: 1. If donee contracted the marriage in bad faith, such
ii. If the donation propter nuptias is embodied donations made to said donee shall be revoked by
in a marriage settlement, the donation is operation of law.
void under Article 86 par. 1 of the FC. 2.
iii. If the subsequent marriage is judicially 3. If both spouses to the marriage acted in bad faith,
Donations declared void by reason of Art. 40 of the FC, all donations propter nuptias shall be revoked by
propter the donation remains valid. operation of law.
nuptias
XPN to the XPN:
1. If the donee spouse contracted the marriage
in bad faith, all donations are revoked by
operation by law.
2.
3. 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 If one spouse acted in bad faith, innocent spouse may
declared by void by reason of Article 40 of the revoke his designation as beneficiary in the
Insurance FC, the innocent spouse may revoke such insurance policy even if such designation be
designation if the beneficiary spouse acted in stipulated as irrevocable [FC, Art.43(4)].
bad faith, even if such designation be stipulated
as irrevocable
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Intestate Succession: The parties cannot If one spouse acted in bad faith, innocent spouse may
inherit from each other by way of intestate revoke his designation as beneficiary in the
Succession succession since they are no longer considered insurance policy even if such designation be
as spouses. stipulated as irrevocable[FC, Art.43(4)].
XPN:
1. If the subsequent marriage is rendered void by
non- compliance with Article 40 of the Family
Code FC, the spouse who contracted the
subsequent marriage in bad faith is
disqualified to inherit from the innocent
spouse
2.
3. 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: In case of disagreement the Court shall decide. NOTE: The Court shall not grant the exemption if it is
not compatible with the solidarity of the family.
3. Jointly support the family (FC, Art. 70);
a. Expenses shall be paid from the community
property, PROPERTY RELATIONS OF THE SPOUSES
b. In the absence thereof from the income or fruits
of their separate properties,
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The property relations shall be governed by the ff. in the XPNs:
stated order: 1. For marriages contracted prior to the effectivity of the
FC on August 3, 1988, conjugal partnership of gains
1. Property relation agreed and embodied in the shall govern the property relations and Art. 116 of the
marriage settlement; NCC will apply. The provisions of the FC shall have no
2. Provisions of the FC; and retroactive effect because it shall impair vested rights.
3. Local custom (FC, Art. 74). 2. Subsequent marriage contracted within one year from
the death of the deceased spouse without liquidation
Commencement of Property Regime of the community property or conjugal partnership of
gains, either judicially or extra-judicially, as required
A property regime commences at the precise moment of under Arts.103 and 130 of the FC. In such case, a
the celebration of the marriage (i.e. actual time the marriage mandatory regime of complete separation of property
is celebrated on a certain date). shall govern the subsequent marriage (Rabuya, 2009).
Any stipulation, express or implied, for the Q: Marriage being a contract, may the parties enter into
commencement of the community regime at any other stipulations which will govern their marriage?
time shall be void (FC, Art. 88).
A: The nature, consequences and incidents of marriage are
Laws that will govern the property relations of the governed by law and not subject to stipulation between the
spouses spouses. This, however, is not an absolute rule. The law
allows the spouses to fix their property relations during the
GR: Philippine laws shall govern, regardless of place of marriage through a device known as “marriage settlement”
celebration of marriage and residence of spouses, in the subject only to the condition that whatever settlement they
absence of contrary stipulation in a marriage settlement may have must be within the limits provided by the Family
(FC, Art. 80). Code.
a. Where both spouses are aliens; It is a contract entered into by a man and a woman who
b. With respect to the extrinsic validity of intend or plan to get married fixing the property regime
contracts affecting property not situated in that will govern their present and future properties during
the Philippines, and executed in the country their marriage. It is also called as Ante-nuptial Agreement
where the property is located; or (Sempio-Diy, 1995).
c. With respect to extrinsic validity of contracts
entered into in the Philippines but affecting Requisites of a valid Marriage Settlement (FC, Art. 77)
property situated in a foreign country whose
laws require different formalities for its a. In Writing;
extrinsic validity (FC, Art. 80). b. Signed by the parties;
c. Executed before the celebration of marriage;
Rule on waiver of rights over the share in the d. Registration (to bind 3rd persons)
community or conjugal property
The provisions in the marriage settlement must be in
GR: Cannot be waived during the marriage. accordance with law, morals or public policy; otherwise
such agreement is void (Paras, 2008).
XPN: In case of judicial separation of property.
A marriage settlement need not be notarized. The law is
NOTE: The waiver must be in a public instrument and clear that the marriage settlements and any modification
recorded in the office of the local civil registrar where the thereof shall be in writing signed by the parties and
marriage contract was recorded as well as in the proper executed before the celebration of the marriage (FC, Art.
registry of property. 77). The law merely requires it to be in writing; it does not
require that it be in a public instrument for purposes of its
Property regime governing the property relations of validity (Albano, 2013).
spouses in the absence of marriage settlement or when
regime agreed upon is void (1992, 1995, 2005 Bar) The marriage settlements must be registered in the proper
local civil registry where the marriage contract was
GR: Absolute Community Property (FC, Art. 75) recorded as well as in the proper registries of property in
order that they may prejudice or bind third persons (FC,
Art. 77).
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present property without limit, provided there is sufficient solemnized on the
property left for their support and the legitimes are not fixed date(FC, Art.
impaired. 1149).
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CIVIL LAW
ACP v. CPG v. CSOP
NOTE: Transfer of administration of the exclusive The sale or encumbrance of a conjugal property
property of either spouses does not confer requires the consent of both the husband and the wife
ownership over the same (Rodriguez v. De la Cruz, G.R. (Guiang v. CA, G.R. No. 125172, June 26, 1998). The
No. 3629, September 28, 1907). absence of the consent of one renders the entire sale or
encumbrance null and void, including the portion of the
I. ABSOLUTE COMMUNITY OF PROPERTY conjugal property pertaining to the husband who
(ACP) contracted the sale. Neither would the conjugal
partnership be liable for the loan on the ground that it
A property regime wherein the spouses are considered co- redounded to the benefit of the family (Homeowners
owners of all property brought into the marriage, as well as Savings & Loan Bank v. Dailo, G.R. No. 153802, March
those acquired during the marriage, which are not 11, 2005).
otherwise excluded from the community either by the
provisions of the Family Code or by the marriage A wife, by affixing her signature to a deed of sale on the
settlement. (Rabuya, 2009) space provided for witnesses, is deemed to have given
her implied consent to the contract of sale. The consent
Laws that govern the absolute community of need not always be explicit or set forth in any particular
property document so long as it is shown by acts of the wife that
such consent or approval was in fact given (Pelayo v.
1. Family Code Perez, G.R. No. 141323, June 8, 2005).
2. Civil Code provisions on co-ownership
When the sale was entered into prior to the effectivity of the
Properties included in the absolute community 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
1. All the property owned by the spouses: provisions, the sale would have been merely
a. At the time of the celebration of the voidable, and not void.
marriage; or
b. Acquired thereafter; The use of the jurat, instead of an acknowledgment, does not
elevate the marital consent into the level of a public
2. Property acquired during the marriage by gratuitous document but instead consigns it to the status of a private
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CIVIL LAW
writing. Hence, the presumption of regularity does not 8. The value of what is donated or promised by
apply and the wife still needs to prove its genuineness and both spouses in favor of their common legitimate
authenticity as required under the rules of evidence (Pan children for the exclusive purpose of commencing
Pacific Industrial Sales Co., Inc. v. CA, G.R. No. 125283, or completing a professional or vocational course or
February 10, 2006). other activity for self- improvement;
9. Payment, in case of absence or insufficiency of
The fact that the document contains a jurat, and not an the exclusive property of the debtor-spouse, of:
acknowledgment, should not affect its genuineness or a. Ante-nuptial debts of either spouse which
that of the related document of conveyance itself, the did not redound to the benefit of the
Deed of Absolute Sale. In this instance, a jurat suffices as the family;
document only embodies the manifestation of the b. The support of illegitimate children of
spouse's consent, a mere appendage to the main either spouse;
document (Pan Pacific Industrial Sales Co., Inc. v. CA, G.R. c. Liabilities incurred by either spouse by
No. 125283, February 10, 2006). reason of a crime or quasi-delict;
A. CHARGES UPON AND OBLIGATIONS OF NOTE: The payment of which shall be considered as
THE ABSOLUTE COMMUNITY advances to be deducted from the share of the debtor-
PROPERTY spouse upon liquidation of the community
Charges upon the ACP 10. Expenses of litigation between the spouses.
However, if suit is found to be groundless, it cannot
1. The support of be charged against the ACP (FC, Art. 94).
a. The spouses
b. Their common children ACP v. CPG as to charges
c. Legitimate children of either spouse;
ACP (FC, Art. 94) CPG(FC, Art. 121)
NOTE: Support of illegitimate children of either spouse is Support of the spouses, their common children, and
chargeable to exclusive property of the illegitimate parent legitimate children of either spouse.
(FC, Art. 197). Debts and obligations contracted during
marriage:
2. All debts and obligations contracted during a. Bytheadministratorspouse designated inthe
the marriage by: marriage settlement/appointed by court/one
a. The designated administrator-spouse for the assuming sole administration;
benefit of the community b. By one without the consent of the other;
b. By both spouses c. By one with the consent of other; or
c. By one spouse with the consent of the other; d. By both spouses
e. For (a) and (b), creditor has the burden of
3. Debts and obligations contracted by either spouse proving benefit to the family and ACP/CPG
without the consent of the other to the extent that chargeable to the extent of benefit proven,
the family may have been benefited; otherwise, chargeable to the separate property of
4. All taxes, liens, charges and expenses, including the obligor spouse.
major or minor repairs, upon the community f. For (c) and (d), real (Rul) benefit to family is
property; presumed.
5. All taxes and expenses for mere preservation All taxes, liens, charges and expenses including minor
made during marriage upon the separate repairs upon ACP or CP.
property of either spouse used by the family; Expenses to enable either spouse to commence/complete
6. Expenses to enable either spouse to commence a professional, vocational or other activity for self-
or complete a professional or vocational course, or improvement.
other activity for self-improvement; Value donated/promised by both spouses in favor of
7. Ante-nuptial debts of either spouse insofar as common legitimate children for exclusive purpose of
they have redounded to the benefit of the family; commencing or completing professional or vocational
(2007 Bar) NOTE: For ante-nuptial debts, those course or other activity for self-improvement.
contracted by one spouse without the consent of the Expenses of litigation between spouses unless the suit is
other during the marriage and those contracted by found to be groundless.
the administrator-spouse, the burden of proof that
such debts were contracted for the benefit of the For illegitimate children, For illegitimate children,
community or of the family lies with the creditor- support from separate support from separate
party litigant claiming as much (Rabuya, 2009). property of person property of person
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CIVIL LAW
Court authorization is resorted to in cases where the governed by ACP whereby all the properties owned by the
spouse who does not give consent is incapacitated. If spouses at the time of the celebration of the marriage as
there is no showing that the spouse is incapacitated, well as whatever they may acquire during the marriage
court authorization cannot be sought (Manalo v. shall form part of the absolute community. In ACP, neither
Fernandez, G.R. No. 147928, January 23, 2002). spouse can sell or encumber property belonging to the ACP
without the consent of the other. Any sale or encumbrance
Disagreement in the administration of community made by one spouse without theconsent of the other shall be
property(FC, Art. 96) void although it is considered as a continuing offer on the
part of the consenting spouse upon authority of the
In case of disagreement, the decision of the husband shall court or written consent of the other spouse.
prevail but subject to recourse to the court by the wife for
proper remedy. Q: Does the prohibition cited above include lease by the
husband over properties of the community of
NOTE: Prescriptive period for recourse is within 5 years propertywithout the consentof the wife?
fromthedateofthe contract implementingsuch decision.
A: YES. In the contract of lease, the lessor transferred his
Sale or Disposition of Community Property 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
Alienation or encumbrance of community property the lessor uses the leased realty. Therefore, the lease is a
must have the written consent of the other spouse or the burden on the land. It is an encumbrance on the land.
authority of the court without which the disposition or Moreover, lease is not only an encumbrance but also a
encumbrance is VOID. However, the transaction shall be qualified alienation, with the lessee becoming, for all intents
construed as a continuing offer on the part of the and purposes, and subject to its terms, the owner of the thing
consenting spouse and the third person, and may be affected by the lease (Roxas v. CA, G.R. No. 92245, June 26,
perfected as a binding contract upon the acceptance by the 1991).
other spouse or authorization by the court before the
offer is withdrawn by either or both offerors (FC, Arts. 96 Donation of a community property by a spouse
and 124; Sps. Antonio and Luzviminda Guiang v. CA, et
al., G.R. No. 125172, June 26, 1998). GR: A spouse cannot donate any community property
without the consent of the other.
The absence of consent of one of the spouses renders the
entire sale null and void, including the sale of the portion XPN: Moderate donations for charity or on occasion of family
of the conjugal property pertaining to the spouse who rejoicing or distress (FC, Art. 98).
contracted the sale.
Separation in fact between husband and wife (FC, Art.
The consent of one spouse regarding the disposition does 100)
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 GR: Such separation does not affect the regime of
that such consent or approval was indeed given (Sps. absolute community
Cirelos v. Sps. Hernandez, et al. G.R. No. 146523, June
15, 2006). However, even if the other spouse actively XPNs:
participated in negotiating for the sale of the property, that 1. Spouse who leaves the conjugal home or refuses to live
other spouse's written consent to the sale is required by therein without just cause has no right to be
law for its validity. Being aware of a transaction is not supported;
consent (Jader-Manalo v. Camaisa, G.R. No. 147978, 2. When consent of one spouse to any transaction of the
January 23, 2002). other spouse is required by law, judicial
authorization must be obtained;
Q: Marco and Gina were married in 1989. In 1999, Gina 3. If community property is insufficient, the
left Marco and lived with another man, leaving the two separate property of both spouses shall be
children of school age with Marco. When Marco needed solidarily liablefor the support of the family.
money for their children’s education he sold a parcel of
land registered in his name, without Gina’s consent, Abandonment (1999, 2003 Bar)
which he purchased before his marriage. Is the sale by
Marco valid, void, or voidable? Explain with legal If a spouse without just cause abandons the other or fails
basis.(2015 BAR) to comply with his or her obligations to the family, the
aggrieved spouse may petition the courtfor:
A:Thesale is VOID. Thepartieswere married in 1989. In the 1. Receivership;
absence of a marriage settlement, the parties shall be 2. Judicial separation of property;
Presumption of Abandonment Upon lapse of the one-year period and liquidation is made,
any disposition or encumbrance involving the
A spouse is deemed to have abandoned the other when he community property of the terminated marriage shall
or she has left the conjugal dwelling without be void (FC, Art. 103).
intention of returning. The spouse who has left the
conjugal dwelling for a period of three months or has The reason for the law is that, the law seeks to protect
failed within the same period to give any information as to the children's interest in the first marriage (Albano,
his or her whereabouts shall be prima facie 2013).
presumed to have no intention of returning to the
conjugal dwelling (Pineda, 2008). 2. Legal separation;
3. Annulment;
The presumption is rebuttable by the presentation of 4. When the marriage is declared void under Art.40 of the
clear, strong and convincing evidence that the absent Family Code;
spouse did not intend to leave the present spouse and 5. Judicial separation of property during marriage (FC,
family (Pineda, 2008). Art. 99).
Prohibition against the sale of property between NOTE: The absolute community of property or the
spouses conjugal partnership is considered dissolved only
upon the issuance of the judicial decree of separation,
GR: Spouses cannot sell property to each other. not at the moment when the parties enter into a
compromise agreement in the course of the
XPNs: proceedings for separation of property (Albano,
1. When a separation of property was agreed upon in 2013).
the marriage settlement;
2. When there has been a judicial separation of property D. LIQUIDATION OF THE ABSOLUTE
under Articles 135 and 136 of the Family Code COMMUNITY ASSETS AND LIABILITIES
(NCC, Art. 1490).
Procedure in case of dissolution of ACP
NOTE: The proscription against the sale of property
between spouses under Art. 1490 of the New Civil Code 1. Inventory of all properties of the ACP, listing
applies even to common law relationships. In an earlier separately the communal properties from
ruling, the SC nullified a sale made by a husband in favor exclusive properties of each spouse;
of a concubine, after he had abandoned his family and 2. Payment of community debts;
left the conjugal home where his wife and children lived,
and from whence they derived their support, for being NOTE: First, pay out of the community assets. If not
contrary to morals and public policy. The sale was enough, husband and the wife are solidarily liable
regarded by the court as subversive of the stability of the for the unpaid balance with their separate
family, a basic social institution which public policy properties.
cherishes and protects (Ching v. CA, G.R. No. 165879,
November 10, 2006). 3. Delivery to each spouse of his/her remaining
exclusive properties;
C. DISSOLUTION OF ABSOLUTE COMMUNITY 4. Equal division of net community assets Unless there
REGIME is:
a. Anagreementforadifferentproportion;or
Dissolutionof Absolute Community Property (2009 b. A voluntary waiver of such share;
BAR)
5. Delivery of the presumptive legitimes of the
Absolute Community Property is terminated by: (FC, Art. common children;
99) 6. Adjudication of conjugal dwelling and custody of
common children (FC, Art. 102).
1. Death of either spouse;
Applicable procedure inthe dissolution of the ACP incase
NOTE: If the surviving spouse contracts another marriage themarriageisterminatedbydeath
without compliance with the foregoing requirement, a
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CIVIL LAW
Community property shall be liquidated in the same a. A property purchased before the marriage
proceeding for the settlement of the estate of the and fully paid during the marriage remains to
deceased. be a separate property of either spouse
(Lorenzo v. Nicolas, G.R. No. L-4085, July 30,
If no judicial proceeding is instituted, the surviving 1952).
spouse shall, judicially or extra-judicially, liquidate the b. Fruits and income of said properties shall be
community property within 1 year from the death of the included theconjugal partnership
deceased spouse (FC, Art. 103). c. Those included therein in the marriage
settlement, subject to the 1/5 limitation
Consequences of failure to liquidate within 1 year under Article 84 and the rule in Article
92(3) of the Family Code which apply by
1. Failure to liquidate the community property within analogy
1 year from the death of the deceased spouse
contrary to Art. 103 of the Family Code, would render 2. Those acquired during the marriage by gratuitous
any disposition or encumbrance involving title;
community property of the terminated marriage void.
2. If the surviving spouse contracts a subsequent NOTE:
marriage without compliance with the foregoing a. Pensions will not form part of the conjugal
requirements, the subsequent marriage shall be partnership of gains when it is given to
governed, mandatorily, by a regime of complete him voluntarily and he is not entitled as a
separation of property (Rabuya, 2006). matter of right such as a fruit of industry
or labor.
II. CONJUGAL PARTNERSHIP OF GAINS b. Proceeds of life insurance policy will not
(CPG) form part of the conjugal partnership of
gains when the beneficiary of the life
It is the property relation formed by the husband and the insurance is the estate and the premiums
wifeby placingin acommon fund: (FC, Art. 106) are sourced from the separate property of
the spouse.
1. The proceeds, product, fruits and income of their c. Retirement Benefits will not form part of
separate properties; the conjugal partnership of gains when it
2. Those acquired by either or both of them is given to him voluntarily and he is not
through: entitled as a matter of right such as a fruit
a. Effort; of industry or labor.
b. Chance.
3. Those acquired by right of redemption, barter or
Commencement of CPG exchange with exclusive property;
CPG shall commence at the precise moment when the NOTE: In right of redemption, for it to form part of
marriage ceremony is celebrated. the exclusive property of the spouse, the ownership
over such property must still pertain to the said
Law that governs the conjugal partnership spouse.
The rules on the contract of partnership in all that is not in 4. That purchased with exclusive money of either
conflict with what is expressly determined in the FC and by spouse.
the spouses in their marriage settlements (FC, Art. 108).
NOTE: The controlling factor is the source of the
Only inchoate right over conjugal property money used, or the money promised to be paid.
The interest of the spouses in the conjugal properties is only Alienation of exclusive properties of either
inchoate or a mere expectancy and does not ripen into title spouse
until it appears the dissolution and liquidation of the
partnership that there are net assets (Sempio-Diy, 1995). Either spouse may mortgage, encumber, alienate or
otherwise dispose of his or her exclusive property (FC, Art.
EXCLUSIVE PROPERTY OF THE SPOUSES (FC, 111 as amended by R.A. 10572).
ART. 109)
Rules in cases of improvement of exclusive
1. Those brought into the marriage as his/her own; property (FC, Art. 120)
1. Reverse accession – If the cost of the
NOTE:
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES 80
PERSONS AND FAMILY RELATIONS
improvement and the value of the improvement is administrator-spouse which does not benefit the
more than the value of the principal property at community;
the time of the improvement, the entire property 5. Debts contracted during the marriage without the
becomes conjugal. consent of the other which did not benefit the
family;
NOTE: For reverse accession to apply, the separate 6. Ante-nuptial debts by either spouse which did not
property must be owned by a spouse exclusively at benefit the family;
the time of the introduction of the improvement 7. Taxes incurred on the separate property which is
neither it will apply if the property is partly owned not used by the family;
by a spouse and partly owned by a third person. 8. Expenses incurred during the marriage on a
separate property if the property is not used by the
2. Accession– If the cost of the improvement and the family and not for its preservation.
value of the improvement is equal to or less than
the value of the principal property, the entire CONJUGAL PARTNERSHIP PROPERTY
property becomes the exclusive property of the
respective spouse. Composition of CPG (1995,1998,2004,2005, 2008
Bar) (FC, Art. 117)
NOTE: In either case, there shall be
reimbursement upon the liquidation of the conjugal 1. Those acquired by onerous title during the marriage
partnership and ownership of entire property with conjugal funds;
shall be vested only upon reimbursement.
NOTE: Requisites:
Q: A parcel of land is owned by the father of W. With his
permission, H and W constructed their house over the a. Acquisition is made during the marriage,
said parcel of land. After some time, the father of W b. Thru onerous title,
died leaving W as his sole heir. Who now owns the c. At the expense of common fund;
parcel of land and the improvements introduced by the
H and W? Assume that the property regime of the H and 2. Livestock in excess of what was brought to the
W is conjugal partnership of gains. marriage;
3. Those acquired by chance such as winnings in
A: The wife will now own both the parcel of land the gamblings and bettings (FC, Art. 117).
house introduced by H and W. Reverse Accession under
Article 120 of the Family Code will not apply since at the Property bought through installment (FC, Art. 118)
time of the introduction of the improvement the parcel
of land is owned by the father of W which she inherited Requisites:
it when her father died. What will apply here instead is 1. Property is bought on installment prior to the
the ordinary rule of accession. However, the conjugal marriage; and
partnership of gains will still enjoy the said property as 2. Paid partly from exclusive funds and partly from
a usufructuary and W will be the naked owner thereof. conjugal funds.
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Code. Is the property conjugal or paraphernal sine qua non to the operation of the presumption in
property of his latewife? favor of the conjugal partnership (Pintiano-Anno, v.
Anno, et al., G.R. No. 163743, January 27, 2006).
A: CONJUGAL. In this case, the provisions of the NCC would
apply since the purchase took place before the FC took Effect if properties were registered during the
effect. Under Art. 160 of the NCC, all property of the marriage
marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains The fact that the properties were registered in the name
exclusively to the husband or the wife. In this case, of the spouses is no proof that the properties were
there was no proof that the property had been acquired during the marriage. It is well-settled that the
acquired exclusively by Yamane's late wife. The mere registration does not confer title but merely confirms
registration of a property in the name of one spouse one already existing (Jocson v. CA, G.R. No. L-55322,
does not destroy its conjugal nature in the absence of February 16, 1989).
strong, clear and convincing evidence that it was
acquired using the exclusive funds of said spouse Q: H & W got married on October 1926. H
(Spouses Go v. Yamane, G.R. No. 160762, May 3, 2006). subsequently cohabited with X. During the
cohabitation of H with X, H acquired certain
3. Those obtained from labor, industry, work or properties and places his status as single. What is the
profession of either or both spouses; nature of said properties?
3. Fruits of conjugal property due or received during the
marriage and net fruits of separate property; A: THEY ARE CONJUGAL PROPERTIES. Whether a
property is conjugal or not is determined by law and not by
NOTE: Net fruits refer to the remainder of the fruits after the will of one of the spouses. No unilateral
deducting the amount necessary to cover the declaration by one spouse can change the character of
expenses of administration of said exclusive conjugal property. The clear intent of H in placing his
property. status as single is to exclude W from her lawful share in the
conjugal property. The law does not allow this. The
4. Share of either spouse in hiddentreasure; cohabitation of a spouse with another person, even for a
5. Those acquired through occupation such as hunting long period, does not sever the tie of a subsisting
orfishing; previous marriage.
Q: Dolores seeks to recover a parcel of land, alleging H and X’s cohabitation cannot work to the detriment of W as
that she and her husband acquired such during their thelegalspouse. The marriage of H and W continued to exist
marriage, that it formed part of their conjugal properties regardless of the fact that H was already living with X.
and that he sold it without her consent. She presents as Hence, all property acquired from the date of their
evidence their marriage contract and the initial tax marriage until the death of W are presumed conjugal. It was
declaration over the property. neither claimed nor proved that any of the subject
properties was acquired outside or beyond this period
A: RECOVERY IS NOT WARRANTED. The rule is all (Villanueva v. CA, G.R. No. 143286, April 14, 2004).
property of the marriage is presumed to be conjugal in
nature. However, for this presumption to apply, the party Q: Suppose a property was acquired by one spouse while
who invokes it must first prove that it was acquired they were living separately, is this property conjugal
during the marriage. Here, Dolores' evidence consisted ornot?
of her marriage contract and the initial tax declaration
over the property. She did not identify when she and A: It is presumed to be conjugal. All property acquired
her husband first occupied and possessed the land. during the marriage regardless of whether the spouses are
Neither did she present any witness to prove that they living together or not, are presumed to be conjugal
first occupied the property during their marriage and property (Flores v. Escudero, G.R. No. L-5302, March 11,
that they both worked on the land (Pintiano-Anno v. 1953).
Anno, G.R. No. 163743, January 27, 2006).
A. CHARGE UPON AND OBLIGATIONS OF
The presumption of conjugality of the properties of the THE CONJUGAL PARTNERSHIP OF GAINS
husband and wife applies only when there is proof that (CPG)
the property was acquired during the marriage. If there
is no showing as to when the properties alleged to be 1. Support of the spouses, their common children and
conjugal were acquired, the presumption does not apply the legitimate children of either spouse;
(Francisco v. CA, G.R. No. 102330, November 30, 1998). 2. Debts and obligations contracted by one without the
Proof of acquisition during the coverture is a condition consent of the other to the extent that the family
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1. Death of either spouse; partnership liabilities, the surviving spouse and the
2. Legal separation; children shall not be entitled to support.
3. Annulment or Declaration of Nullity;
4. Judicial separation of property during marriage Effects if the community property is not liquidated
(FC, Art. 126). (FC, Art. 130)
In the absence of a judicial settlement proceeding, the 2. As to kinds of property: (FC, Art. 144)
surviving spouse shall liquidate the community a. Present property
property either, judicially or extra-judicially within 1 b. Future property
year from the death of the deceased spouse. c. Both present and future property
If during the liquidation of the CP, the conjugal 1. By agreement through marriage settlement
partnership assets are less than the conjugal 2. By judicial order
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CIVIL LAW
IV. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE
BASIS ART. 147(1997, 2000, 2006, 2009, 2010 BAR) ART. 148(1992, 1998, 2000, 2006, 2009 Bar)
1. Parties without legal impediment to marry; With legal impediment caused by:
2. Void marriage on the ground of psychological 1. Adulterous relationships
Applicability incapacity. 2. Bigamous/polygamous marriages
3. Incestuous void marriages under Art. 37
4. Voidmarriagesby reason ofpublicpolicy (FC,
Art. 38).
1. The man and the woman must be capacitated to 1. The man and the woman must be
marry each other; incapacitated to marry each other or they do
2. live exclusively with each other ashusband and not live exclusively with each other as
As to requisites wife; and husband and wife; and
3. their union is without the benefit of marriage or 2. Theirunion iswithoutthebenefitofmarriage
their marriage is void (Mercado-Fehr v. Fehr, or their marriage is void (FC, Art. 148).
G.R. No. 152716, October 23, 2003
Salas, Jr. v. Aguila, G.R. No. 202370,
September 23, 2013).
Owned in equal shares Separately owned by theparties.Ifany is married,
Salaries & wages his/her salary pertains to the CPG of the legitimate
marriage.
Forfeiture 1. their common children If the party who acted in BF is not validly married
2. in caseof defaultof orwaiver by any or all of the to anotherorifboth parties arein BF, such sharebe
common children or their descendants, each forfeited in mannerprovided in the last par. of Art.
vacant share shall belong to the respective 147
surviving descendants
3. In the absence of descendants, such shareshall
belong to the innocent party.
Proof of actual Not necessary Necessary
contribution
A: I will grant the partial reconsideration. If the Co-ownership under Art. 148
marriage is declared void under Art. 36, the provisions of the
Family Code on liquidation, partition and distribution Co-ownership may ensue in case of cohabitation where,
of the properties on absolute community or conjugal for instance, one party has a pre-existing valid marriage,
partnership will not apply but rather Art 147 or Art. 148 provided that the parties prove their actual joint
contribution of money, property or industry and only to
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CIVIL LAW
the extent of their proportionate interest thereon Q: Benjamin is married to Azucena. While Azucena is out
(Francisco v. Master Iron Works Construction Corp., G.R. of country, Benjamin developed a romantic
No. 151967, February 16, 2005). relationship with Sally, but her father was against this. In
order to appease her father, Sally convinced Benjamin to
Q: Romeo and Juliet lived together as husband and wife sign a purported marriage contract. Eventually, their
without the benefit of marriage. During their relationship ended a few years later. Benjamin asked
cohabitation, they acquired a house. When they broke up, the court for the partition of the properties he acquired
they executed an agreement where he agreed to leave with Sally in accordance with Article 148 of the FC, for his
the house provided Juliet will pay his entire share in appointment as administrator of the properties
their properties. She failed to do so butshe also ignored during the pendency of the case. Among the 44
his demand for her to vacate. Romeo sued her for properties which were the subject of the partition, 7
ejectment which the court granted. Was the court were enumerated by Benjamin while Sally named 37
correct in granting the same? properties in her answer. Is Benjamin’s contention
correct?
A: NO. Under Art. 147 of the Family Code, the property is co-
owned by the parties. In the absence of proof to the A: YES. The property relations of Benjamin and Sally is
contrary, any property acquired by common-law spouses governed by Article 148 of the Family Code. They
during their cohabitation is presumed to have been cohabitated without the benefit of marriage. Thus, only
obtained thru their joint efforts and is owned by them in the properties acquired by them through their actual
equal shares. Their property relationship in such a case is joint contribution of money, property, or industry shall
essentially governed by the rules on co-ownership. Thus, be owned by them in common in proportion to their
Romeo cannot seek the ejectment of Juliet therefrom. As a co- respective contributions. Thus, the 37 properties being
owner, she is as much entitled to enjoy its possession and claimed by Sally is excluded as part of her conjugal
ownership as him (Abing v. CA, G.R. No. 146294, July 31, properties with Benjamin because Sally was not legally
2006). married to Benjamin. As regards the seven remaining
properties, only one of them is registered in the names
Q: Bert and Joe, both male and single, lived together of the parties as spouses. The other four were registered
as common law spouses and agreed to raise a son of in the name of either one of them with the description
Bert’s living brother as their child without legally “married to” and the last two were named to Sally as an
adopting him. Bert worked while Joe took care of individual. The words “married to” preceding the name
they were able to acquire real estate assets of a spouse are merely descriptive of the civil status of
registered in their names as co-owners. the registered owner, which do not prove co-ownership.
Unfortunately, Bert died of cardiac arrest, leaving Without proof of actual contribution from either or both
no will. Bert was survived by his biological siblings, spouses, there can be no co-ownership under Article
Joe and the boy. 148 of the Family Code (Go-Bangayan v. Bangayan, Jr.,
G.R. No. 201061, July 3, 2013).
a. Can Article 147 on co-ownership apply to Bert
and Joe, whereby all properties they acquired Retroactive application of Art. 148 of the Family Code
will be presumed to have been acquired by their joint
industry and shallbe ownedby them in equal shares? Although the adulterous cohabitation of the parties or the
b. If Bert and Joe had decided in the early years of acquisition of the property occurred before the
their cohabitation to jointly adopt the boy, would effectivity of the Family Code on August 3, 1998,
they have been legally allowed to do so? Explain Article 148 applies because the said provision was
with legal basis. intended precisely to fill up the hiatus in Article 144 of the
NCC. Before Article 148 of the Family Code was enacted,
A: there was no provision governing property relations of
a. NO, Article 147 of the Family Code cannot apply to couples living in a state of adultery or concubinage
Bert and Joe because the law only applies to a man and a (Atienza v. De Castro, G.R. No. 169698, November 29,
woman who are capacitated to marry each other who live 2006).
together as husband and wife without the benefit of
marriage or under a void marriage. In the case of Bert and THE FAMILY UNDER THE FAMILY CODE
Joe, they are both men so the law does not apply.
THE FAMILY AS AN INSTITUTION
b. NO, because joint adoption is allowed between
husband and wife. Even if Bert and Joe are cohabiting Being the foundation of the nation, it is a basic social
with each other, they are not vested with the right to institution which public policy cherishes and protects. (FC,
jointly adopt under the Family Code or even under the Art. 149).
Domestic Adoption Act (Sec. 7, R.A. 8552).
1. Family relations exists even if they are not living A: YES, Non-compliance with the earnest effort
together requirement under Article 151 of the Family Code is
2. Illegitimate children are not included in the not a jurisdictional defect which would authorize the
family relations under this Article because they courts to dismiss suits filed before them motu
have their own families. proprio. Rather, it merely partakes of a condition
3. Adopted children are included. (Minutes of precedent such that the non-compliance therewith
Committee Meeting of August 24, 1985) constitutes a ground for dismissal of a suit should the
same be invoked by the opposing party at the earliest
Rules governing family relations opportunity, as in a motion to dismiss or in the
answer. Otherwise, such ground is deemed waived.
Family relations are governed by law. No custom,
practice or agreement destructive of the family shall be If the respondents as parties-defendants could not,
recognized or given effect (FC, Art. 149). and did not, after filing their answer-to-petitioner’s
complainant, invoke the objection of absence of the
NOTE: Even if not all forms of extra-marital relations required allegation on earnest efforts at a
are punishable under penal law, the sanctity of marriage compromise, the appellate court unquestionably did
is constitutionally recognized and likewise affirmed by not have any authority or basis to motu propio order
our statutes as a special contract of permanent union. the dismissal of petitioner’s complaint (Moreno vs.
Accordingly, the Court has had little qualms with Kahn, G.R. No. 217744, July 30, 2018).
penalizing judicial employees for their dalliances with
married persons or for their own betrayals of the The following cannot be compromised:
marital vow of fidelity (Concerned Employee v. Glenda
Mayor, A.M. No. P- 02-1564, November 23, 2004). 1. Civil status of persons;
2. Validity of a marriage or legal separation;
Requisites before a suit between members of the 3. Any ground for legal separation;
same family may prosper 4. Future support;
5. Jurisdiction of courts; and
1. Earnest efforts toward a compromise have been 6. Future legitime (NCC, Art. 2035).
made;
2. Such efforts failed; NOTE: A sister-in-law or a brother-in-law is not covered
3. The fact that earnest efforts toward a by these two provisions. Being an exception to the
compromise have been made but the same have general rule, Art. 150 of the Family Code must be strictly
failed appears in the verified complaint or petition construed (Gayon v. Gayon, G.R. No. L-28394, November
(FC, Art. 151). 26, 1970).
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It is the dwelling house where the husband and wife and 2. They live in the FH; and
their family reside, and the land on which it is situated. 3. They are dependent for legal support upon the
It is constituted jointly by the husband and the wife or head of the family.
by an unmarried head of a family (FC, Art. 152).
Q: On March 30, 2000, Mariano died intestate and
Constitution of Family Home (FH) was survived by his wife, Leonora and children,
Danilo and Carlito. One of the properties he left was
The FH is deemed constituted on a house and lot from a piece of land in Alabang where he built his
the time it is occupied as a family residence, (FC Art. residential house. After his burial, Leonora and
153). Mariano’s children extra-judicially settled his
estate. Thereafter, Leonora and Danilo advised
Guidelines in the constitution of the Family Home Carlito of their intention to partition the property.
Carlito opposed invoking Art. 159 of the Family
1. FH is deemed constituted from the time of actual Code. Carlito alleged that since his minor child
occupation as a family residence; Lucas still resides in the premises, the family home
2. Only 1 FH may be constituted; continues until the minor beneficiary becomes of
3. Must be owned by the person constituting it; age. Is the contention of Carlito tenable? (2014 Bar)
4. Must be permanent;
5. Same rule applies to both valid and voidable A: NO. To qualify as beneficiary of the FH the person
marriages and even to common law spouses; (FC, must be among those mentioned under Art. 154 of the
Arts. 147 and 148) Family Code, he/she must be actually living in the FH
6. It continues despite death of one, both spouses, and must be dependent for legal support upon the head
or an unmarried head of the family for 10 years of the family (Patricio v. Darion, G.R. No. 170829,
or as long as there is a minor beneficiary (FC, Art November 20, 2006). While Lucas satisfies the first and
159). second requisites, he cannot, however, directly claim
legal support from his grandmother, Leonora because
The heirs cannot partition the same unless the court the person primarily obliged to give him support is his
finds compelling reasons therefor. This rule shall apply father Carlito. Thus, the partition may be successfully
regardless of whoever owns the property or constituted claimed by Leonora and Danilo. Occupancy of the FH
the FH (FC, Art 159). either by the owner thereof or by “any of its
beneficiaries” must be actual. That which is “actual” is
The FH must be part of the properties of the absolute something real, or actually existing, as opposed to
community or the conjugal partnership or the exclusive something merely possible, or to something which is
properties of either spouse, with the latter’s consent. It presumptive and constructive. Actual occupancy,
may also be constituted by an unmarried head of a however, need not be by the owner of the house. Rather,
family on his or her own property (FC, Art 156). the property may be occupied by the “beneficiaries”
enumerated by Art. 154 of the Family Code (Manacop v.
NOTE: Property that is subject of a conditional sale on CA, G.R. No. 97898, August 11, 1997).
instalments where ownership is reserved by the vendor
to guarantee payment of the purchase price may be NOTE: This enumeration may include the in-laws where
constituted as a FH. the FH is constituted jointly by the husband and wife.
But the law definitely excludes maids and overseers.
Beneficiaries of a Family Home (FC, Art. 154)
Effect of death of one or both spouses or of the
1. Husband and wife, or unmarried head of the family upon the family home
2. Unmarried head of the family,
3. Parents (may include parents-in-law), The FH shall continue despite the death of one or both
4. Ascendants, spouses or of the unmarried head of the family for a
5. Descendants period of 10 years or for as long as there is a minor
6. Brothers and sisters (legitimate or illegitimate) beneficiary and the heirs cannot partition the same
living in the FH and dependent on the head of unless the court finds compelling reasons therefor. This
the family for support. rule shall apply regardless of whoever owns the
property or constituted the FH (FC, Art. 159). (2010
Requisites to be considered as beneficiary (FC, Art BAR)
156)
Exemption of Family Home from execution, forced
1. They must be among the relationships enumerated sale or attachment
in Art. 154 of the Family Code;
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CIVIL LAW
NOTE: The actual value of the FH shall not exceed, at effectivity of the Family Code. Art. 162 simply means
the time of its constitution, the amount of P300,000 in that all existing family residences at the time of the
urban areas, and P200,000 in rural areas, or such effectivity of the Family Code are considered FH and are
amounts as may hereafter be fixed by law (FC, Art. 157). prospectively entitled to the benefits accorded to a
family home under the Family Code (Manacop v. CA, 277
Q: A complaint for damages was filed against SCRA 64, August 11, 1997).
Hinahon in 1986 when she incurred liabilities as
early as 1977, which action prospered in 1989. The NOTE: The Family Code does not have a retroactive
house and lot that she owned was levied upon and effect. Thus, prior to August 5, 1988, the procedure
sold at auction. She assails the levy and sale on the mandated by the Old Civil Code had to be followed for a
ground that it was her family home and therefore Family Home to be constituted as such. There being no
exempt from execution. Decide. proof that the subject property was judicially or
extrajudicially constituted as a family home, it follows
A: IT IS NOT EXEMPT. Under Art. 155 of the Family that petitioner cannot avail of the law’s protective mantle.
Code, the FH shall be exempt from execution, forced (Modequillo v. Breva, G.R. No. 86355, May 31, 1990)
sale, or attachment except for, among other things,
debts incurred prior to the constitution of the FH. The Requisites in the sale, alienation, donation, assignment
house and lot was not constituted as a FH, whether or encumbrance of the FH
judicially or extra-judicially, at the time that the debtor
incurred her debts. Under prevailing jurisprudence, it is The following must give their written consent:
deemed constituted as such by operation of law only 1. The person who constituted the FH;
upon the effectivity of the Family Code on August 3, 2. The spouse of the person who constituted the FH;
1988, thus, the debts were incurred before the 3. Majority of the beneficiaries of legal age.
constitution of the FH (Gomez-Salcedo, et al. v. Sta. Ines,
et al., G.R. No. 132537, October 14, 2005). NOTE: In case of conflict, the court shall decide.
Here, the complaint against Hinahon was instituted on Limitations on Family Home
June 17, 1986, to seek redress for damages suffered by
them due to acts and omissions committed by her as 1. Each family can have only one FH. After one FH
early as 1977. This means that Hinahon’s liability arose has been constituted, no other FH can be
long before the levied property was constituted as FH established without first dissolving the existing
by operation of law in August 1988. It is thus clear that one.
the liability incurred by Hinahon falls squarely under 2. FH can be constituted only on the dwelling place,
one of the instances when a FH may be the subject of and therefore in the locality where the family has
execution, forced sale, or attachment to answer for its domicile.
debts incurred prior to the constitution of the FH 3. The value of the FH must not exceed the limit
(Gomez-Salcedo, et al. v. Sta. Ines, et al., G.R. No. 132537, fixed by law (Tolentino, 2013).
October 14, 2005).
PATERNITY AND FILIATION
Q : Has the residential house and lot of Cesario
Montana which he and his family built in 1960 but Paternity is the civil status of a father with regard to the
which was not constituted as a family home, child.
whether judicially or extrajudicially, under the NCC
been constituted as a family home by operation of Filiation is the civil status of a child with regard to his
law under Art. 153 of the FC, and therefore, exempt parents.
from execution from a money judgement where the
debt or liability was incurred before the effectivity Filiation may be by nature or adoption, legitimate or
of the FC? illegitimate.
A : NO. Under Art. 162 of the Family Code, it is provided NOTE: Paternity or filiation is established by clear and
that “the provisions of this Chapter shall also govern convincing evidence (Constantino v. Mendez, G.R. No.
existing family residences insofar as said provisions are 57227, May 14, 1992).
applicable.” It does not mean that Arts. 152 and 153 of
the Family Code have a retroactive effect such that all Classifications of filiation (2009 Bar)
existing family residences are deemed to have been
constituted as a FH at the time of their occupation prior I. Natural
to the effectivity of the FX and are exempt from a. Legitimate – conceived OR born within a valid
execution for the payment of obligations before the marriage
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CIVIL LAW
shot Brad to death. She lost no time in marrying her the death
true love Roderick, without a marriage license, of
claiming that they have been continuously husband.
cohabiting for more than 5 years. Prescripti 1 year – husband GR: During the
on resides in the lifetime of the
1. What is the filial status of Laica? same municipality child
2. Can Laica bring an action to impugn her own or city where
status on the ground that based on DNA birth took place XPN: Lifetime
results, Roderick is her biological father? of the putative
(2008 Bar) 2 years – husband father.
does NOT reside
A: in the same In cases where
a) Having been born during the marriage of Faye municipality or the action is
and Brad, she is presumed to be the legitimate city for the
child of Faye and Brad. This presumption had recognition of
become conclusive because the period of time to 3 years – husband illegitimate
impugn her filiation had already prescribed. is living abroad child by “open
b) NO, she cannot impugn her own filiation. The law and continuous
does not allow a child to impugn his or her own possession” of
filiation. In the problem, Laica’s legitimate the status.
filiation was accorded to her by operation of law
which may be impugned only by Brad, or his Person/s who may attack the legitimacy of the child
heirs in the cases provided by law within the
prescriptive period. GR: Only the husband can contest the legitimacy of the
child.
Action to impugn legitimacy v. Action to claim
legitimacy XPNs: Heirs of the husband may impugn the filiation of
the child within the period prescribed in Art. 170 of the
BASIS ACTION TO ACTION TO Family Code only in the following cases:
IMPUGN CLAIM
LEGITIMACY LEGITIMACY 1. If the husband should die before the expiration of
(FC, ART. 166) (FC, ART. 173) the period fixed for bringing his action;
Remedy Action to impugn Action to claim 2. If he should die after the filing of the complaint,
legitimacy or legitimacy without having desisted therefrom; or
illegitimacy (compulsory 3. If the child was born after the death of the husband
recognition) (FC, Art. 171). (2008 BAR)
Real party GR: Husband GR: Child
in interest Prescriptive period for filing action impugning the
XPNs: Heirs, in XPNs: Heirs of legitimacy of the child (2010 BAR)
cases where: the child, in
1. Husband cases where: GR: The prescriptive period for filing action impugning
died 1. Child the legitimacy of the child shall be counted from the
before the died in knowledge of birth or its recording in the civil registry.
expiratio state
n of the of XPN: If the birth was:
period for insanit
bringing y 1. Concealed from; or
the 2. Child 2. Was unknown to the husband or his heirs, the
action; died periods shall be counted from the discovery or
2. Husband during knowledge of the birth of the child or of the act of
died after minori registration of said birth, whichever is earlier (FC,
filing the ty Art. 170).
complaint
, without NOTE: Must be Grounds in impugning legitimacy of a child (FC, Art.
having filed within 5 166)
desisted; years.
3. Child was Legitimacy of the child may be impugned only on the
born after following grounds:
Sterility is not synonymous with impotency. Sterility is 180 days after the celebration of the subsequent
the inability to procreate, while impotency is the marriage, even though it be born within 300 days after
the termination of the former marriage.
Illustrations:
Marriage Marriage
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CIVIL LAW
B. ILLEGITIMATE CHILDREN (2005, 2009, 2. Admission in public document OR private
2010 Bar) handwritten instrument is made by the father
1. Children conceived and born outside a valid NOTE: Provided that the father has the right to institute
marriage: an action before the regular courts to prove non-
2. Children born of couples who are not legally filiation during his lifetime.
married or of common law marriages;
3. Children born of incestuous marriage; ESTABLISHING ILLEGITIMATE FILIATION (1995,
4. Children born of bigamous marriage; 1999, 2005, 2010 Bar)
5. Children born of adulterous relations between
parents; Q: Julie had a relationship with a married man who
6. Children born of marriages which are void for had legitimate children. A son was born out of the
reasons of public policy under Art. 38, Family Code; illicit relationship in 1981. Although the putative
7. Children born of couples below 18 father did not recognize the child in his birth
8. Children born of void marriages under art. 35, certificate, he nevertheless provided the child with
except where the marriage is void for lack of all the support he needed and spent time regularly
authority on the part of the solemnizing officer, but with the child and his mother. When the man died in
the parties or either of them believed in good faith 2000, the child was already 18 years old so he filed a
that the solemnizing officer had authority, in which petition to be recognized as an illegitimate child of
case the marriage will be considered valid and the the putative father and sought to be given a share in
children will be considered legitimate. his putative father’s estate. The legitimate family
opposed, saying that under the FC his action cannot
Rights of an illegitimate child (1990, 2003, 2006, prosper because he did not bring the action for
2009, 2010 Bar) recognition during the lifetime of his putative
father.
1. They shall use the surname of the mother;
2. They shall be under the parental authority of the 1. If you were the judge, how would you rule?
mother; 2. Wishing to keep the peace, the child during the
3. They shall be entitled to support in conformity with pendency of the case decides to compromise
the FC, PROVIDED, only as to the separate property with his putative father’s family by abandoning
of the parent his petition in exchange for what he would have
4. They shall be entitled to a legitime which shall received as inheritance if he were recognized as
consist of ½ of the legitime of a legitimate child (FC, an illegitimate child. As the judge, would you
Art. 176). approve such compromise? (2015 Bar)
Q: Why is an illegitimate child of a woman, who gets A: Legitimation may be impugned only by those who are
married, allowed to bear the surname of her prejudiced in their rights, within 5 years from the time
subsequent spouse, while a legitimate child may their cause of action accrues, that is, from the death of
not? the putative parent.
A: To allow the child to adopt the surname of his NOTE: The right referred to are successional rights.
mother’s second husband, who is not his father could Hence, only those whose successional rights are directly
result in confusion in his paternity. It could also create affected may impugn the legitimation that took place.
the suspicion that the child, who was born during the
covertures of his mother with her first husband, was in Q: Roderick and Faye were high school sweethearts.
fact sired by the second husband, thus bringing his When Roderick was 18 and Faye, 16 years old, they
legitimate status into discredit (Republic v. Vicencio, G.R. started living together as husband and wife without
No. 88202. December 14, 1998). the benefit of marriage. When Faye reached 18
years of age, her parents forcibly took her back and
II. JUDICIAL arranged for her marriage to Brad. Although Faye
lived with Brad after the marriage, Roderick
A. LEGITIMATE CHILDREN continued to regularly visit Faye while Brad was
away at work. During their marriage, Faye gave
Legitimated children are those who, because of the birth to a baby girl, Laica. When Faye was 25 years
subsequent marriage of their parents to each other, are old, Brad discovered her continued liaison with
by legal fiction considered legitimate. Roderick and in one of their heated arguments, Faye
shot Brad to death. She lost no time in marrying her
Legitimation (2004, 2010 BAR) true love Roderick, without a marriage license,
claiming that they have been continuously
Legitimation is a remedy or process by means of which cohabiting for more than 5 years. Can Laica be
those who in fact not born in wedlock and should legitimated by the marriage of her biological
therefore be ordinarily illegitimate, are by fiction, parents? (2008 Bar)
considered legitimate.
A: NO, she cannot be legitimated by the marriage of her
It takes place by a subsequent valid marriage between biological parents. In the first place she is not, under the
parents. Furthermore, it shall retroact to the time of the law, the child of Roderick. In the second place, her
child’s birth (FC, Art 180). biological parents could not have validly married each
other at the time she was conceived and born simply
NOTE: The annulment of a voidable marriage shall not because Faye was still married to Roderick Brad at that
affect the legitimation (FC, Art. 178). time. Only children conceived or born outside of
wedlock of parents who, at the time of the conception of
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CIVIL LAW
the child were not disqualified by any impediment to marry each other, may be legitimated. (FC, Art. 177)
NOTE: Legitimated children shall enjoy the same rights as legitimate children. (FC, Art. 179)
Surname Bear the surnames of both parents NOTE: Under the amendatory provisions of
(mother and father) RA 9255, the use of illegitimate father's
surname is
permissive and not obligatory (Rabuya,
2008).
Receive support from: Receive support according to provision of
1. Parents; Family Code
2. Ascendants; and
Support 3. In proper cases, brothers and sisters
under Art. 174 of the Family Code.
Full Legitimes and other successional Share is equivalent to ½ of the share of a
Legitime rights under the New Civil Code legitimate child
The manner of claiming filiation is the same for both XPN: The right is transferred to his heirs when the child
legitimate and illegitimate children dies:
4. During minority or
Person/s who may file for claim legitimate filiation 5. In a state of insanity.
(FC, Art. 173) 6. After commencing the action for legitimacy
GR: The right of claiming legitimacy belongs to the child NOTE: Questioning legitimacy may not be collaterally
attacked. It can be impugned only in a direct action
XPN: The right is transferred to his heirs when the child
dies: 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 the
3. After commencing the action for legitimacy child
NOTE: Questioning legitimacy may not be collaterally
XPN: The right is transferred to his heirs when:
attacked. It can be impugned only in a direct action
1. During minority or
2. In a state of insanity.
Person/s who may file for claim illegitimate filiation
3. After commencing the action for illegitimate
filiation
GR: The right of claiming illegitimacy belongs to the
child
Prescription of action to claim legitimacy or
illegitimacy
XPN: The right is transferred to his heirs when:
1. During minority or
An action must be brought:
2. In a state of insanity.
3. By the child – during his lifetime
3. After commencing the action for illegitimate
4. By his heirs – within 5 years should the child dies
filiation
during minority, in a state of insanity or after
commencing the action for legitimacy
Prescription of action to claim legitimacy or
illegitimacy
NOTE: Provided that the action for illegitimacy is based
on admission of paternity or filiation in a birth
An action must be brought:
certificate or written instrument.
1. By the child – during his lifetime
However, if the action for illegitimacy is based on open
2. By his heirs – within 5 years should the child dies
and continuous possession of status of illegitimate
during minority, in a state of insanity or after
filiation or any other means allowed by the Rules of
commencing the action for legitimacy
Court and special laws, the action must be brought
during the lifetime of the alleged parent.
NOTE: Provided that the action for illegitimacy is based
on admission of paternity or filiation in a birth
Kinds of proof of filiation (1995, 1999, 2010 Bar)
certificate or written instrument.
Proof of filiation has two kinds (FC, Art 172, 1st par):
However, if the action for illegitimacy is based on open
1. Primary proof consists of the ff.:
and continuous possession of status of illegitimate
a. Record of birth appearing in civil registrar or
filiation or any other means allowed by the Rules of
final judgment;
Court and special laws, the action must be brought
b. Admission of legitimate filiation in public
during the lifetime of the alleged parent.
document or private handwritten
Paternity and filiation or the lack of the same is a
instrument signed by parent concerned.
relationship that must be judicially established and it is
2. Secondary consists of the ff. (FC, Art 172, 2nd
for the court to declare its existence or absence. It
par):
cannot be left to the will or agreement of the parties (De
a. Open and continuous possession of
Asis v. CA, G.R. 127578, February 15, 1999).
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CIVIL LAW
legitimacy; Prima facie case of sexual relations with the
b. Any means allowed by the Rules of Court putative father
and special laws.
A prima facie case exists if a woman declares —
NOTE: To prove open and continuous possession of the supported by corroborative proof — that she had sexual
status of an illegitimate child, there must be evidence of relations with the putative father; at this point, the
manifestation of the permanent intention of the burden of evidence shifts to the putative father. Further,
supposed father to consider the child as his, by the two affirmative defenses available to the putative
continuous and clear manifestations of parental father are:
affection and care, which cannot be attributed to pure
charity. 1. Incapability of sexual relations with the mother
due to either physical absence or impotency; or
Such acts must be of such a nature that they reveal not 2. That the mother had sexual relations with other
only the conviction of paternity, but also the apparent men at the time of conception (charles gotardo v.
desire to have and treat the child as such in all relations Divina buling, g.r. no. 165166, august 15, 2012).
in society and in life, not accidentally, but continuously
(Jison v. CA, G.R. No. 124853, February 24, 1998). Q: Rosanna, as surviving spouse, filed a claim for
death benefits with the SSS upon the death of her
Rules in proving filiation husband, Pablo. She indicated in her claim that the
decedent is also survived by their minor child, Lyn,
GR: Primary proof shall be used to prove filiation. who was born in 1991. The SSS granted her claim
but this was withdrawn after investigation, when a
XPN: In absence of primary proof, secondary proof may sister of the decedent informed the system that
be resorted to. Pablo could not have sired a child during his
lifetime because he was infertile. However in Lyn’s
Pictures or certificate of baptism do not constitute birth certificate, Pablo affixed his signature and he
authentic documents to prove the legitimate did not impugn Lyn’s legitimacy during his lifetime.
filiation of a child Was the SSS correct in withdrawing the death
benefits?
Pictures or canonical baptismal certificate do not
constitute the authentic documents to prove the A: NO. Children conceived or born during the marriage
legitimate filiation of a child. The baptismal certificate of of the parents are legitimate (FC, Art. 164). This
the child, standing alone, is not sufficient. It is not a presumption becomes conclusive in the absence of
record of birth. Neither is it a public instrument nor a proof that there is physical impossibility of access under
private handwritten instrument (Abelle v. Santiago, G.R. Art. 166 of the Family Code. Upon the expiration of the
No. L- 16307, April 30, 1963). periods for impugning legitimacy under Art. 170, and in
the proper cases under Art. 171, of the Family Code, the
Baptismal certificate does not prove filiation action to impugn would no longer be legally feasible and
the status conferred by the presumption becomes fixed
Just like in a birth certificate, the lack of participation of and unassailable. In this case, there is no showing that
the supposed father in the preparation of a baptismal Pablo, who has the right to impugn the legitimacy of
certificate renders this document incompetent to prove Lyn, challenged her status during his lifetime. There is
paternity. And “while a baptismal certificate may be adequate evidence to show that the child was in fact his
considered a public document, it can only serve as child, and this is the birth certificate where he affixed
evidence of the administration of the sacrament on the his signature (SSS v. Aguas, et al., G.R. No. 165546,
date specified but not the veracity of the entries with February 27, 2006).
respect to the child’s paternity. Thus, baptismal
certificates are per se inadmissible in evidence as proof Q: In an action for partition of estate, the trial court
of filiation and they cannot be admitted indirectly as dismissed it on the ground that the respondent, on
circumstantial evidence to prove the same” (Antonio the basis of her birth certificate, was in fact the
Perla v. Mirasol Baring and Randy B. Perla, G.R. No. illegitimate child of the deceased and therefore the
172471, November 12, 2012). latter's sole heir, to the exclusion of petitioners.
However, trial court failed to see that in said birth
NOTE: A will which was not presented for probate certificate, she was listed therein as “adopted.” Was
sufficiently establish filiation because it constitutes a the trial court correct in dismissing the action for
public document or private handwritten instrument partition?
signed by the parent concerned.
Q: Gerardo filed a complaint for bigamy against Ma. A: NO. Since the birth certificate was not signed by
Theresa, alleging that she had a previous subsisting Cher’s alleged parents but was merely signed by the
marriage when she married him. The trial court attending physician, such a certificate, although a public
nullified their marriage and declared that the son, who record of a private document is, under Sec. 23, Rule 132 of the
was born during their marriage and was registered Rules of Court, evidence only of the fact which gave rise to
as their son, as illegitimate. What is the status of the its execution, which is, the fact of birth of a child. A birth
child? certificate, in order to be considered as validating proof
of paternity and as an instrument of recognition, must be
A: The first marriage being found to be valid and signed by the father and mother jointly, or by the
subsisting, whereas that between Gerardo and Ma. mother alone if the father refuses. There having been no
Theresa was void and non-existent; the child should be convincing proof of respondent’s supposed legitimate
regarded as a legitimate child out of the first marriage. This relations with respect to the decedent, the presumption
is so because the child's best interests should be the of legitimacy under the law did not therefore arise in her
primordial consideration in this case. favour (Angeles v. Angeles- Maglaya, G.R. No. 153798,
September 2, 2005).
Q: Gerardo and Ma. Theresa, however, admitted that
the child was their son. Will this affect the status of the Q: On the basis of the physical presentation of the
child? plaintiff-minorbefore itandthe factthat thealleged father
had admitted having sexual intercourse with the child's
A: NO. The admission of the parties that the child was their mother, the trial court, in an action to prove filiation
son was in the nature of a compromise. The rule is that: with support, held that the plaintiff- minor is the child
the status and filiation of a child cannot be
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CIVIL LAW
of the defendant with the plaintiff- minor's mother. Nepomuceno v. Archbencel Ann Lopez, represented by
Wasthetrialcourtcorrect inholding such? her mother Araceli Lopez G.R. No. 181258, March 18,
2010).
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 ADOPTION
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 Adoption is the process of making a child, whether
child on the information of a third person. A related or not to the adopter, possess in general, the
baptismal certificate, while considered a public rights accorded to a legitimate child. It is a juridical act,
document, can only serve as evidence of the a proceeding in rem which creates between two
administration of the sacrament on the date specified persons a relationship similar to that which results from
therein but not the veracity of the entries with respect to legitimate paternity and filiation. The modern trend is
the child's paternity (Macadangdang v. CA,G.R. No. L- to consider adoption not merely as an act to establish a
49542, September 12, 1980). Thus, certificates issued relationship of paternity and filiation, but also as an act
by the local civil registrar and baptismal certificates which endows the child with a legitimate status (In the
are per se inadmissible in evidence as proof of filiation and Matter of the Adoption of Stephanie Nathy Astorga
they cannot be admitted indirectly as circumstantial Garcia, G.R. No. 148311, March 31, 2005).
evidence to prove the same (Jison v. CA, G.R. No.
124853, February 24, 1998; Cabatania v. CA, G.R. No. The relationship established by the adoption is limited
124814, October 21, 2004). to the adopting parents and does not extend to their
other relatives, except as expressly provided by law.
NOTE: In this age of genetic profiling and DNA analysis, Thus, the adopted child cannot be considered as a
the extremely subjective test of physical resemblance or relative of the ascendants and collaterals of the
similarity of features will not suffice as evidence to adopting parents, nor of the legitimate children which
prove paternity and filiation before courts of law. This they may have after the adoption, except that the law
only shows the very high standard of proof that a child imposes certain impediments to marriage by reason of
must present in order to establish filiation. adoption. Neither are the children of the adopted
considered descendants of the adopter.
Q: Ann Lopez, represented by her mother Araceli Lopez,
filed a complaint for recognition and support of Preference in adoption (AID)
filiation against Ben-Hur Nepomuceno. She assailed
that she is the illegitimate daughter of Nepomuceno 1. Adoption by the extended family;
submitting as evidence the handwritten note 2. Domestic Adoption;
allegedly written and signed by Nepomuceno. She 3. Inter-Country Adoption.
also demanded for financial support along with filial
recognition. Nepomuceno denied the assertions I. DOMESTIC ADOPTION ACT (R.A. 8552)
reasoning out that he was compelled to execute the
handwritten note due to the threats of the National Applies to adoption of Filipino children, where the
People’s Army. RTC ruled in favor of Ann. Is the trial entire adoption process beginning from the filing of the
court correct? petition up to the issuance of the adoption decree takes
place in the Philippines (Rabuya, 2009).
A: Ann’s demand for support is dependent on the
determination of her filiation. However, she relies only on A. WHEN ALLOWED
the handwritten note executed by petitioner. The note does
not contain any statement whatsoever about her filiation to Adoption need NOT be a last resort
petitioner. It is, therefore, not within the ambit of Article
172(2) vis-à-vis Art. 175 of the Family Code which admits as
B. WHO CAN ADOPT
competent evidence of illegitimate filiation an admission of
filiation in a private handwritten instrument signed by the
1. Filipino citizens;
parent concerned.
2. Aliens;
3. Guardians with respect to their ward.
The Court is mindful that the best interests of the child in
cases involving paternity and filiation should be advanced.
NOTE: A guardian may only adopt his ward after
It is, however, just as mindful of the disturbance that
termination of guardianship and clearance of his
unfounded paternity suits cause to the privacy and peace
financial accountabilities.
of the putative father’s legitimate family (Ben-Hur
NOTE: A reading of Arts. 27 and 28 of P.D. 603 clearly Q: Spouses Esteban decided to raise their two
shows that the temporary residence of the adopting nieces, Faith and Hope, both minors as their own
parents in a foreign country does not disqualify them children after their parents died in a vehicular
from adopting (Nieto v. Magat, G.R. No. L-62465, May 24, accident. Ten years after, Esteban died. Maria later on
1985). married her boss Daniel, a British National who had been
living in the Philippines for 2 years. With the permission
Qualifications of an alien who may adopt of Daniel, Maria filed a petition for the adoption of Faith
(Section 7 (b), Article 3, RA 8552) and Hope. She did not include Daniel as her co-
petitioner because for Maria, it was her former
1. Possesses same qualifications as those husband Esteban who has raised the kids. If you are the
enumerated for Filipino adopters; judge, how will youresolve the petition? (2014 BAR)
2. His country has diplomatic relations with the
Philippines; A: I will dismiss the petition. The husband and wife must
3. His government allows the adoptee to enter his jointly adopt and there are only three recognized
country as his adopted child; exceptions to the joint adoption: 1) one spouse seeks to
4. He has been certified by his diplomatic or adopt the legitimate child of the other; 2) if one spouse
consular office or any appropriate government seeks to adopt his or her own illegitimate child; 3) if the
agency that he has the legal capacity to adopt in spouses are legally separated. The case of Maria and
their country; Daniel does not fall under any of the exceptions,
accordingly the petition by the wife alone should be
GR: Has been living in the Philippines for at least 3 dismissed.
continuous years prior to the application for adoption
and maintains such residence until adoption decree has Q: Spouses Primo and Monina Lim, childless, were
been entered. entrusted with the custody of two minor children, the
parents of whom were unknown. Eager to have children
XPNs: of their own, the spouses made it appear that they were
i. He is a former Filipino who seeks to adopt a the children’s parents by naming them Michelle P.
relative within the 4th civil degree of Lim and Michael Jude Lim. Subsequently, Monina
consanguinity or affinity; married Angel Olario after Primo’s death. She decided to
ii. He is married to a Filipino and seeks to adopt adopt the children by availing the amnesty given under
jointly with his spouse a relative within the R.A. 8552 to those individuals who simulated the birth of
4th degree of consanguinity or affinity; a child. She filed separate petitions for the adoption of
iii. He is married to a Filipino and seeks to adopt Michelle, then 25 years old and Michael, 18. Both
the legitimate or illegitimate child of his Michelle and Michael gave consent to the adoption. The
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CIVIL LAW
trial court dismissed the petition and ruled that Monina by the adopter(s) as his/her own child since
should have filed the petition jointly with her new minority;
husband. Monina, in a Motion for Reconsideration 5. A child whose adoption has been previously
argues that mere consent of her husband would rescinded; or
suffice and that joint adoption is not needed, for the 6. A child whose biological or adoptive parent(s) has
adoptees are already emancipated. Is the trial court died: Provided, that no proceedings shall be
correct in dismissing the petitions for adoption? initiated within six (6) months from the time of
death of said parent(s) (Sec. 8, Art. 3, RA 8552).
A: YES. Section 7, Art. 3 of R.A. 8552 reads: Sec. 7 –
Husband and wife shall jointly adopt x x x. Child
The use of the word “shall” in the above-quoted A child is any person below 18 years old (Sec. 3, Art. 1, RA
provision means that joint adoption by the husband and the 8552)
wife is mandatory. This is in consonance with the concept
of joint parental authority over the child which is the ideal Child legally free for adoption
situation. As the child to be adopted is elevated to the
level of a legitimate child, it is but natural to require the A child voluntarily or involuntarily committed to the
spouses to adopt jointly. The rule also ensures harmony DSWD as dependent, abandoned or neglected pursuant
between the spouses. to the provisions of the Child and Youth Welfare Code
maybe subject of Inter-Country Adoption; provided that
The law is clear. There is no room for ambiguity. in case of a child shall be made not earlier that six (6)
Monina, having remarried at the time the petitions for months from the date the Deed of Voluntary
adoption were filed, must jointly adopt. Since the Commitment was executed by the child’s biological
petitions for adoption were filed only by Monina parent/s. A legally-free child is freed of his biological
herself, without joining her husband, Olario, the trial court parents, guardians, or adopters in case of rescission.
was correct in denying the petitions for adoption on this
ground (In Re: Petition for Adoption of Michelle P. Lim, NOTE: The prohibition against physical transfer shall
In Re: Petition for Adoption of Michael Jude P. Lim, not apply to adoption by a relative or children with
Monina P. Lim, G.R. Nos. 168992-93, May 21, 2009). special medical conditions (Rabuya, 2018).
Joint adoption when the adoptees are already Necessity of written consent for adoption under
emancipated domestic adoption
Even if emancipation terminates parental authority, the The written consent of the following is necessary for
adoptee is still considered a legitimate child of the adoption:
adopter with all the rights of a legitimate child such as:
a. Biological parent(s) of the child, if known, or the
(1) To bear the surname of the father and the mother; legal guardian, or the proper government
(2) To receive support from their parents; and (3) to instrumentality which has legal custody of the
be entitled to the legitime and other successional child;
rights. Conversely, the adoptive parents shall, with b. Adoptee, if ten (10) years of age or over;
respect to the adopted child, enjoy all the benefits c. Illegitimate sons/daughters, ten (10) years of
to which biological parents are entitled such as age or over, of the adopter if living with said
support and successional rights. adopter and the latter's spouse, if any;
d. Legitimate and adopted sons/daughters, ten
C. ADOPTEE (10) years of age or over, of the adopter(s) and
adoptee, if any;
1. Any person BELOW eighteen (18) years of age who e. Spouse, if any, of the person adopting or to be
has been administratively or judicially declared adopted (Sec. 9, Art. 3, RA 8552).
available for adoption;
2. The legitimate son/daughter of one spouse by the Q: Bernadette filed a petition for adoption of the three
other spouse; minor children of her late brother, Ian. She alleged that
3. An illegitimate son/daughter by a qualified adopter when her brother died, the children were left to thecareof
to improve his/her status to that of legitimacy; their paternal grandmother, becausetheir biological
4. A person of legal age if, prior to the adoption, said mother Amelia went to Italy to work and has allegedly
person has been consistently considered and abandoned her children. This grandmother died
treated however, and so she filed the petition for adoption.
The minors gave their written consent to the adoption
A: NO. The rule is adoption statutes must be liberally When the adopter has committed the following:
construed in order to give spirit to their humane and
salutary purpose which is to uplift the lives of 1. Sexual assault or violence committed against the
unfortunate, needy or orphaned children. However, the adoptee;
discretion to approve adoption proceedings on the part of the 2. Attempt on the life of the adoptee;
courts should not to be anchored solely on those 3. Repeated physical and verbal maltreatment by the
principles, but with due regard likewise to the natural adopter despite having undergone counseling;
rights of the parents over the child. The written consent of 4. Abandonment and failure to comply with
the biological parents is indispensable for the parental obligations;
validity of the decree of adoption. Indeed, the natural
right of a parent to his child requires that his consent must be Grounds by which an adopter may disinherit adoptee
obtained before his parental rights and duties may be
terminated and vested in the adoptive parents. In this a. Groundless accusation against the testator of a crime
case, petitioner failed to submit the written consent of punishable by 6 years or more imprisonment;
Amelia Ramos to the adoption. This is so under Sec. 9 (b) of b. Found guilty of attempt against the life of the
R.A. 8552, otherwise known as the Domestic Adoption Act of testator, his/her spouse, descendant or
1998. Bernadette failed in this respect, thus ascendant;
necessitating the dismissal of her petition for adoption c. Causes the testator to make changes or changes
(Landingin v. Republic, G.R. No. 164948, June 27, 2006). a testator’s will through violence, intimidation,
fraud orundue influence;
Effects of Domestic Adoption d. Maltreatment of the testator by word or deed;
e. Conviction of a crime which carries a penalty of civil
GR: Severance of all legal ties between the biological parents interdiction;
and the adoptee and the same shall then be vested on the f. Adultery or concubinage with the testator’s wife;
adopters (Sec. 16, Art. 5, RA 8552). g. Refusal without justifiable cause to support the
parent or ascendant;
XPN: In cases where the biological parent is the spouse h. Leads adishonorable ordisgraceful life.
of the adopter;
1. Deemed a legitimate child of the adopter Effects of rescission of the adoption under the
(Sec. 17, Article 5, RA 8552); Domestic Adoption Act of 1998 (R.A. 8552)
2. Acquires reciprocal rights and obligations arising
fromparent-child relationship; 1. If adoptee is still a minor or is incapacitated –
3. Right to use surname of adopter (NCC, Art. 365); Restoration of:
4. In legal and intestate succession, the adopters a. Parental authority of the
and the adoptee shall have reciprocal rights of adoptee’s biological parents, if known; or
succession without distinction from b. Custody of the DSWD;
legitimate filiation. However, if the adoptee
and his/her biological parents had left a will, the 2. Reciprocal rights and obligations of the adopters
law on testamentary succession shall govern (Sec. and adoptee to each other shall be extinguished;
18, Art. 5, RA 8552). 3. Court shall order the civil registrar to cancel the
amended certificate of birth of the adoptee and restore
Who may file the action for rescission of domestic his/heroriginal birth certificate;
adoption 4. Succession rights shall revert to its status prior to
adoption, but only as of the date of judgment of
The adoptee has the sole right to severe the legal ties judicial rescission;
created by adoption and the one who will file the action for 5. Vested rights acquired prior to judicial rescission
rescission. However, if the adoptee is still a minor or above shallberespected.(Sec. 20, Art. 6, RA 8552)
18 years of age but incapacitated, the Department of
Social and Welfare Development as the adoptee’s guardian Q: Despite several relationships with different
or counsel may assist the adoptee for rescinding the women, Andrew remained unmarried. His first
decree of adoption. relationship with Brenda produced a daughter, Amy,
now 30 years old. His second, with Carla, produced
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two sons: Jon and Ryan. His third, with Donna, bore him abroad where the petition is filed, the supervised
two daughters: Vina and Wilma. His fourth, while trial custody is undertaken, and the decree of adoption
Elena, bore him no children although Elena has a is issued outside the Philippines (Sec. 3(a), RA 8043).
daughter Jane, from a previous relationship. His last,
with Fe, produced no biological children but they A. WHEN ALLOWED
informally adopted without court proceedings, Sandy,
now 13 years old, whom they consider as their own. Adoption ONLY AS A LAST RESORT: No child shall be
Sandy was orphaned as a baby and was entrusted to matched to a foreign adoptive family unless it is
them by the midwife who attended to Sandy’s birth. All satisfactorily shown that the child cannot be adopted locally
the children, including Amy, now live with Andrew in (Sec. 11, Article 3, RA 8043)
his house.
B. WHO MAY ADOPT
a. Is there any legal obstacle to the legal adoptionof
Amy by Andrew? a. Any alien;
b. To the legal adoption of Sandy by Andrew b. Filipino citizen, both permanently residing
and Elena? abroad.
c. In his old age, can Andrew be legally entitled to
claim support from Amy, Jon, Ryan, d. Vina, Qualifications needed for a Filipino or alien to
Wilma and Sandy assuming that all of them adopt (Sec. 9, Article 3, RA 8043)
have the means to support him?
d. Can Amy, Jon, Ryan, Vina, Wilma and Sandy At least 27years old and16yearsolderthan the
legally claim support from each other? child to beadopted atthetimeof the application
e. Can Jon and Jane legally marry? (2008 Bar) unless:
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Distinction Between Domestic Adoption Act and Inter-country Adoption Act
When may adoption be resorted to Adoption need not be the last resort Adoption only as 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).
Who may adopt 1. Any FILIPINO CITIZEN 1. FILIPINO CITIZEN permanently
(regardless of where residing) residing abroad may file an
application for inter-country
b. Of legal age; adoption of a Filipino child if
c. At least sixteen (16) years older he/she:
than the adoptee, (may
bewaived when the adopter is a. Is at least twenty-seven
the biological parent of the (27) years of age;
adoptee, or is the spouse of the b. At least sixteen (16) years older
adoptee’s parent; than the child to be adopted, at
d. In possession of full civil the time of application unless
capacity and legal rights; the adopter is the parent by
e. Of good moral character, has nature of the child to be adopted
not been convicted of any crime or the spouse of such parent;
involving moral turpitude, c. Has the capacity to act and
emotionally and assume all rights and
psychologically capable of responsibilities of parental
caring for children; and authority under his national
f. Who is in a position to support laws, and has undergone the
and care for his/her children in appropriate counseling from an
keeping with the means of the accredited counselor in his/her
family. country;
d. Has not been convicted of a
2. Any ALIEN possessing the same crime involving moral turpitude;
qualifications as above stated for e. Is in a position to provide the
Filipino nationals, Provided; proper care and support to give
the necessary moral values and
a. That he/she has been living in example to all his children
the Philippine for at least three including the child to be
(3) continuous years prior to adopted;
the filing of the application for f. If married, his/her spouse must
adoption and maintains such jointly file for the adoption;
residence until the adoption g. Is eligible to adopt under his/her
decree is entered; national law;
b. That his/her country has h. Agrees to uphold the basic rights
diplomatic relations with the of the child as embodied under
Republic of the Philippines; Philippine laws, the U.N.
c. He/she has been certified by Convention on the Rights of the
his/her diplomatic or consular Child and to abide by the rules
office or any appropriate and regulations issued to
government agency that he/she implement the
has the legal capacity to adopt provisions of this Act;
in his/her country; i. Comes from a country with
d. That his/her government whom the Philippines
allows the adoptee to enter has diplomatic relations and
his/her country as his/her whose government maintains a
adopted son/daughter; and similarly Authorized and
Who may be adopted a. Any person below eighteen a. Filipino children [Sec. 3(a)];
(18) years of age who has b. Below 15 years of age
been administratively or [Sec. 3(b)]; and
judicially declared c. Who are legally free,
available for adoption; meaning children who have
b. The legitimate been voluntarily
son/daughter of one spouse or involuntarily committed
by the other spouse; to the DSWD [Sec. 3(f) and
c. An illegitimate Sec. 8)].
son/daughter by a qualified
adopter to improve his/her NOTE: IRR of 2004 adds that: Any
status to that of legitimacy; child who has been voluntarily or
d. A person of legal age if, involuntarily committed to the
prior to the adoption, said Department as dependent,
person abandoned or neglected pursuant
has been consistently to the provisions of the Child and
considered and treated by Youth Welfare Code may be the
the adopter(s) as his/her subject of Inter-Country Adoption
own child since minority; xxx (Sec. 26).
e. A child whose adoption
has been previously
rescinded; or
f. A child whose biological or
adoptive parent(s) has died:
Provided, That
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no proceedings shall be
initiated within six (6)
months from the time of
death of said parent(s)(Sec.
8).
Venue Petition for adoption shall be filed with Either with the Philippine RTC
Family Court of the province or city having jurisdiction over the child, or
where the prospective adoptive parents with the Inter-country Board
reside (Rule on Adoption, Sec. 6) through an intermediate agency, in
the country of the adoptive parents
(Sec. 10).
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NOTE: If the community property or the
SUPPORT conjugal partnership is insufficient to cover
them, the spouses shall be solidarily liable for
the unpaid balance with their separate
It comprises everything indispensable for sustenance, properties.
dwelling, clothing, medical attendance and
transportation, in keeping with the financial capacity of 2. Separate property of person- For the support of the
the family, including the education of the person following:
entitled to be supported until he completes his
education or training for some profession, trade or a. Illegitimate children;
vocation, even beyond the age of majority (FC, Art. 194). b. Legitimate ascendants;
(2010 Bar) c. Descendants, whether legitimate
or illegitimate;
Characteristics of support (PRIMPEN) d. Brothers and sisters, whether legitimately
or illegitimately related (Rabuya, 2009).
1. Personal;
2. Reciprocal on the part of those who are by law PERSONS OBLIGED TO GIVE SUPPORT
bound to support each other;
3. Intransmissible; Persons obliged to support each other (2008 Bar)
4. Mandatory;
5. Provisional character of support judgment; 1. Spouses;
6. Exempt from attachment or execution; and
7. Not subject to waiver or compensation NOTE: The spouse must be the legitimate spouse in
order to be entitled to support
COMPOSITION OF SUPPORT
2. Legitimate ascendants & descendants;
Support comprises everything indispensable for: 3. Parents and their legitimate children, and the
a. Sustenance; legitimate and illegitimate children of the latter;
b. Dwelling; 4. Parents and their illegitimate children, and the
c. Clothing; 5. legitimate and illegitimate children of the latter;
d. Medical attendance; 6. Legitimate brothers and sisters whether full or
e. Education – includes schooling or training for half- blood (FC, Art. 195).
some profession, trade or vocation, even beyond
the age of majority; NOTE: Brothers and sisters not legitimately related
f. Transportation – includes expenses going to and likewise bound to support each other. However, when
from school, or to from place of work. the need for support of the brother or sister, being of
age, is due to a cause imputable to the claimant’s fault
Kinds of support or negligence, in this case, the illegitimate brother or
sister has no right to be supported (FC, Art. 196;
1. Legal – required or given by law; Rabuya, 2009).
2. Judicial– required by court; May be:
a. Pendente lite Q: Rule when:
b. In a final judgment a. Two or more persons are obliged to give
3. Conventional – by agreement support;
b. Two or more recipients at the same time claim
Rules on support of illegitimate children of either support from the same persons who does not
spouse have sufficient means to satisfy all claims
SOURCES OF SUPPORT A: YES. There appears to be no dispute that the children are
DURING PENDING AFTER indeed the daughters of Federico by Belen. Under Art. 199 of
MARRIAGE LITIGATION LITIGATION the Family Code, “Whenever two or more persons are
Spouses obliged to give support, the liability shall devolve upon
From the ACP GR: No the following persons in the following order herein
community obligation to provided:
property GR: From the support
community 1. The spouse;
property assets XPN: If there is 2. The descendants in the nearest degree;
Legal 3. The ascendants in the nearest degree: and
XPN: If Art. Separation. In 4. The brothers and sisters.
203 applies, which case, the
that if the court may The obligation to give support rests principally on those
claimant require the more closely related to the recipient. However, the more
spouse is the guilty spouse remote relatives may be held to shoulder the
guilty spouse, to give responsibility should the claimant prove that those who
he/she is not support. are called upon to provide support do not have the means to
entitled to do so. Here, since it has been shown that the girls' father,
support. Federico, had no means to support them, then Francisco,
as the girls’ grandfather, should then extend the support
CPG needed by them.
NOTE: The second option in Art. 204 of the Family Code, that
Support is of taking in the family dwelling the recipient, is
considered an unavailing in this case since the filing of the case has
advance of evidently made the relations among the parties bitter and
such spouses’ unpleasant (Mangonon, et al. v. CA, et al., G.R. No. 125041,
share. June 30, 2006).
NOTE: The Q: Marcelo and Juana called Dr. Arturo to their house to
rule does not render medical assistance to their daughter-in- law
apply if the who was about to give birth to a child. He
spouses are performed the necessary operation. When Dr.
under ACP Arturo sought payment, Marcelo and Juana refused to
based on Art. pay him without giving any good reason. Who is bound
153. to pay the bill for the services rendered by Arturo?
Children
From the From the From the A: HER HUSBAND, not her father and mother- in-law. The
community community separate rendering of medical assistance in case of illness is
property property properties of comprised among the mutual obligations to which the
the spouses spouses are bound by way of mutual support (FC, Arts. 142
and 143). If every obligation consists in giving, doing
Liability to support (FC, Art. 199) or not doing something (NCC, Art. 1088), and spouses
are mutually bound to support each other, there can be
Theliability to support should beobserved in the following no question but that, when either of them by reason of
order: illness should be in need of medical assistance, the
a. Spouse; other is under the unavoidable obligation to furnish
b. Descendants in the nearest degree; the necessary services of a physician in order that
c. Ascendants in the nearest degree; health may be restored, and he or she may be freed from
d. Brothers and sisters. the sickness by which life is jeopardized (Pelayo v. Lauron,
G.R. No. L-4089, January 12, 1909).
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CIVIL LAW
Q: Cheryl married Edward Lim and they begot three Mutual support of the spouses after the final
children. Cheryl, Edward and their children lived at the judgment granting the petition for legal separation,
house of Edward’s parents, Prudencio and annulment and declaration of nullity of marriage
Filomena, together with Edward’s ailing
grandmother and her husband. Edward was GR: Spouses are no longer obliged to render mutual
employed with the family business, which provided him support after final judgment. The obligation of mutual
with a monthly salary of P6,000 and shouldered support ceases after final judgment.
the family expenses. Cheryl had no steady source of
income. Cheryl caught Edward in “a very compromising XPN: In case of legal separation the Court may order that
situation” with the midwife of Edward’s the guilty spouse shall give support to the innocent one.
grandmother. After a violent confrontation with
Edward, Cheryl left the Forbes Park residence. She Effect of adultery of the wife
subsequently sued, for herself and her children,
Edward, Edward’s parents and grandparents for Adultery of the wife is a valid defense in an action for
support. Edward and his parents were ordered by the support. If adultery is proved and sustained, it will
RTC to “jointly” provide, monthly support to Cheryl defeat the action for support. But if both are equally at fault,
and her children. Is the court’s judgment in making the principle of in pari delicto applies in which the
Edward’s parents concurrently liable with Edward to husband cannot avail of the defense of adultery.
provide support to Cheryl and her children correct?
Q: H and W are living separately. Both had been
A: YES. However, the Supreme Court modified the unfaithful to each other. After their separation, H had
appealed judgment by limiting liability of Edward’s been giving money to W for her support.
parents to the amount of monthly support needed by Subsequently, W brought an action against H for
Cheryl’s children. Edward’s parents are liable to separatemaintenance.Willtheactionprosper?
provide support but only to their grandchildren. By
statutory and jurisprudential mandate, the liability of A: YES. The principle of in pari delicto is applicable. Both
ascendants to provide legal support to their are at fault. Consequently, H cannot availof himself of the
descendants is beyond cavil. Petitioners themselves defense of adultery of W. Besides, the act of H in giving
admit as much — they limit their petition to the narrow money to W is implied condonation of the adultery of
question of when their liability is triggered, not if they are W (Amacen v. Baltazar, G.R. No. L-10028, May 28, 1958).
liable.
AMOUNT
There is no showing that private respondent is without
means to support his son; neither is there any evidence to Amount shall be in proportion to the resources or
prove that petitioner, as the paternal grandmother, was means of the giver and to the necessities of the recipient (FC,
willing to voluntarily provide for her grandson's legal Art. 201).
support. Cheryl is unable to discharge her obligation
to provide sufficient legal support to her children. It also Support may be decreased or increased
shows that Edward is unable to support his children. This proportionately according to the reduction or increase of
inability of Edward and Cheryl to sufficiently provide for the necessities of the recipient and the resources of the
their children shifts a portion of their obligation to the person obliged to furnish the same (FC, Art. 202).
ascendants in the nearest degree, both in the paternal
(petitioners) and maternal lines, following the ordering WHEN DEMANDABLE
in Article 199 (Spouses Lim v. Cheryl Lim, G.R. No.
163209, October 30, 2009). Theobligation to givesupport isdemandable fromthe time
the person who has a right to receive support needs it
SUPPORT DURING MARRIAGE LITIGATION for maintenance.
During the pendency of the action for annulment or The support shall be paid only from the date of judicial or
declaration of absolute nullity of marriage and action for extrajudicial demand.
legal separation, the court shall provide for the support
of the spouses and their common children in the absence The right to support does not arise from mere fact of
of a written agreement between the spouses. (FC, Art. relationship but from imperative necessity without which
49). it cannot be demanded. The law presumes that such
necessity does not exist unless support is demanded.
Sources of support shall be the properties of the
absolute community or conjugal partnership. Effect of Reaching Age of Majority
a. To give a fixed monthly allowance; or Q: Edward abandoned his legitimate children when they
b. To receive and maintain the recipient in the giver’s were minors. After 19 years from the time Edward
homeor family dwelling(FC, Art. 204). left them, they, through their mother, finally sued him for
support, which the court granted. The court ordered
If support is given by a stranger without the him to pay 2M pesos as support in arrears.
knowledge of the person obliged to give support;
Edward assails the grant of the support in arrears as
GR: The stranger shall have the right of erroneous since under Art. 203 of the FC, there was
reimbursement never any demand for support, judicial or extra-
judicial, from them. Is his contention right?
XPN: Unless it appears that he gave it without any
intention of being reimbursed (FC, Art. 206). A: NO. Edward could not possibly expect his daughtersto
demand support from him considering their tender
NOTE: If the person obliged to give support unjustly refuses years at the time that he abandoned them. In any event, the
or fails to give it when urgently needed, any third person mother of the girls had made the requisite demand for
may furnish support to the needy individual, with a material support although this was not in the
right of reimbursement (FC, Art. 207). standard form of a formal written demand. Asking one to
give support owing to the urgency of the situation is no less
ATTACHMENT a demand just because it came by way of a request or a plea
(Lacson v. Lacson, et al., G.R. No. 150644, August 28,
Attachment or execution of the right to receive support 2006).
(FC, Art. 208)
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Q: Noel helped Lea by extending financial help to consequences, be likewise compelled. DNA testing andits
support Lea’s children with Edward. May Noel seek results is now acceptable as object evidence without
reimbursement of his contributions? If yes, from running afoul self-incrimination rights of a person
whom may he do so? (Agustin v. CA, G.R. No. 162571, June 15, 2005)
A: The assailed order did not convert the action for XPN: In cases authorized by law such as in cases
support into one for recognition but merely allowed Fe to of adoption, guardianship and surrender to a
prove their cause of action. But even if the order children's home or an orphan institution (Santos
effectively integrated an action to compel recognition with v. CA, G.R. No. 113054, March 16, 1995).
an action for support, such was valid and in accordance
with jurisprudence. The integration of an action to compel 3. Purely personal;
recognition with an action to claim one’s inheritance is 4. Temporary.
allowed (Tayag v. CA, G.R. No. 95229, June 9, 1992). A
separate action will only result in a multiplicity of suits. Exercise of parental authority
Furthermore, the declaration of filiation is entirely
appropriate to the action for support (Agustin v. CA, G.R. The father and the mother shall jointly exercise parental
No. 162571, June 15, 2005). authority over the persons of their common children. In case
of disagreement, the father’s decision shall prevail unless
Q: Can DNA testing be ordered in a proceeding for support there is a judicial order to the contrary (FC, Art. 211).
without violating the constitutional right against self-
incrimination? If the child is illegitimate, parental authority is with the
mother.
A: YES. Compulsory DNA testing and the admissibility of the
results thereof as evidence are constitutional (People NOTE: Parental authority and responsibility are
v. Yatar, G.R. No. 150224, May 19, 2004). inalienable and may not be transferred or renounced
except in cases authorized by law. The right attached to
Moreover, it has mostly been in the areas of legality of parental authority, being purely personal, the law
searches and seizure and in the infringement of allows a waiver of parental authority only in cases of
privacy of communication where the constitutional right adoption, guardianship and surrender to a children's
to privacy has been critically at issue. home or an orphan institution (Arts. 222-224, FC; Act
No. 3094).
If, in a criminal case, an accused whose very life is at stake
can be compelled to submit to DNA testing, so much more Visitation rights
so may a party in a civil case, who does not face such dire
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Considerations in the designation of child custody the RTC (petition a quo). Upon reaching the CA it
remanded the case a quo for determination of who
The Court shall take into account all relevant should exercise custody over Queenie. Was such
considerations in the designation of the parent, especially the action proper?
choice of the child over seven years of age except when
the parent chosen is unfit. A: NO, CA erroneously applied Section 6 of Rule 99 of
the Rules of Court. This provision contemplates a
NOTE: The relevant Philippine law on child custody for situation in which the parents of the minor are married
spouses separated in fact or in law (Art. 213, 2nd par.) is to each other but are separated either by virtue of a
also undisputed: “no child under seven years of age shall be decree of legal separation or because they are living
separated from the mother x x x.”(This statutory separately de facto. In the present case, it has been
awarding of sole parental custody to the mother is established that petitioner and Respondent Loreta were
mandatory, grounded on sound policy consideration, never married. Hence, that portion of the CA Decision
subject only to a narrow exception not alleged to obtain allowing the child to choose which parent to live with is
here.) Clearly then, the Agreement’s object to establish a deleted, but without disregarding the obligation of
post-divorce joint custody regime between respondent and petitioner to support the child.
petitioner over their child under seven years old
contravenes Philippine law. The Philippine courts do not General rule is that the father and the mother shall
have the authority to enforce an agreement that is jointly exercise parental authority over the persons of
contrary to law, morals, good customs, public order, or their common children. However, insofar as illegitimate
public policy (Dacasin v. Dacasin, G.R. No. 168785, children are concerned, Article 176 of the Family Code
February 5, 2010). states that illegitimate children shall be under the
parental authority of their mother. Accordingly,
Q: If the parents are separated de facto, who mothers (such as Renalyn) are entitled to the sole
between them has custody over their child/ parental authority of their illegitimate children (such as
children? Queenie), notwithstanding the father's recognition of
the child. In the exercise of that authority, mothers are
A: In the absence of a judicial grant of custody to one consequently entitled to keep their illegitimate children
parent, both of them have custody over their in their company, and the Court will not deprive them of
child/children custody, absent any imperative cause showing the
mother's unfitness to exercise such authority and care.
The parent who has been deprived of the rightful (Masbate vs. Relucio, G.R. No. 235498, July 30, 2018)
custody of the child may resort to the remedy of habeas
corpus (Salientes v. Abanilla, G.R. No. 162734, August 29, SUBSTITUTE PARENTAL AUTHORITY
2006).
Substitute Parental Authority (2004 BAR)
NOTE: The general rule that children less than 7 years
of age shall not be separated from the mother finds its It is the parental authority which the persons
raison d'etre in the basic need of minor children for designated by law may exercise over the persons and
their mother's loving care. This is predicated on the property of unemancipated children in case of death,
"best interest of the child" principle which pervades not absence or unsuitability of both parents or in default of
only child custody cases but also those involving a judicially appointed guardian.
adoption, guardianship, support, personal status and
minors in conflict with the law (Pablo-Gualberto v. Order of substitute parental authority
Gualberto, G.R. No. 154994/G.R. No. 156254, June 28,
2005). 1. Surviving Grandparent;
Q: Queenie was born to Renalyn and Ricky James, NOTE: The law considers the natural love of a
who had been living together with Renalyn's parent to outweigh that of the grandparents, such
parents without the benefit of marriage. Three (3) that only when the parent present is shown to be
years later, the relationship ended. Renalyn went to unfit or unsuitable may the grandparents
Manila, supposedly leaving Queenie behind in the exercise substitute parental authority (Santos v.
care and custody of her father, Ricky James. Ricky CA, G.R. No. 113054, March 16, 1995).
James alleged that, the parents of Renalyn took
Queenie from the school where he had enrolled her. 2. Oldest brother or sister, over 21 years unless unfit
When asked to give Queenie back, Renalyn's ordisqualified;
parents refused. Consequently, Ricky James filed a 3. Actual Custodian over 21 year unless unfit or
petition for habeas corpus and child custody before disqualified (FC, Art. 216);
Special Parental Authority (2003, 2004, 2005, 2010 Right to Child’s Custody
Bar)
The right of parents to the custody of their minor
It is the parental authority granted by law to certain children is one of the natural rights incident to
persons, entities or institutions in view of their special parenthood, a right supported by law and sound public
relation to children under their supervision instruction policy. The right is an inherent one, which is not created
or custody. It is denominated as special because it is by the state or decisions of the courts, but derives from
limited and is present only when the child is under their the nature of the parental relationship (Sagala-Eslao v.
CA, G.R. No. 116773, January 16, 1997).
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Parents’ right to custody of the child 1. Parental authority may be suspended;
2. Parent concerned may be held criminally liable
GR: Parents are never deprived of the custody and care for violation of RA 7160 (Special Protection of
of their children. Children against Abuse, Exploitation and
Discrimination Act)
XPNS:
1. For cause; CHILD ABUSE LAW (R.A. 7610) SEC. 10
NOTE: the law presumes that the child’s welfare
will be best served in the care and control of his Section 10. Other Acts of Neglect, Abuse, Cruelty or
parents. Exploitation and Other Conditions Prejudicial to
the Child's Development. –
2. If in consideration of the child’s welfare or well-
being, custody may be given even to a non- a. Any person who shall commit any other acts of
relative. child abuse, cruelty or exploitation or to be
responsible for other conditions prejudicial to
Basis for the duty to provide support the child's development including those covered
by Article 59 of Presidential Decree No. 603,
Family ties or relationship, not parental authority. as amended, but not covered by the Revised
Penal Code, as amended, shall suffer the penalty
NOTE: The obligation of the parents to provide support of prision mayor in its minimum period.
is not coterminous with the exercise of parental b. Any person who shall keep or have in his
authority. company a minor, twelve (12) years or under or
who in ten (10) years or more his junior in any
Rule on the parent’s duty of representation public or private place, hotel, motel, beer
joint, discotheque, cabaret, pension house,
GR: Parents are duty-bound to represent their minor sauna or massage parlor, beach and/or other
children in all matters affecting their interests; tourist resort or similar places shall suffer the
NOTE: This duty extends to representation in court penalty of prision mayor in its maximum period and
litigations. a fine of not less than Fifty thousand pesos
(P50,000): Provided, That the provision shall not
XPN: A guardian ad litem may be appointed by the court apply to any person who is related within the
to represent the child when the best interest of the child fourth degree of consanguinity or affinity or
so requires. any bond recognized by law, local custom and
tradition or acts in the performance of a social,
Scope of the parent’s right to discipline the child moral or legal duty.
(FC, Art. 223) c. Any person who shall induce, deliver or offer a
minor to any one prohibited by the Act to keep or
Persons exercising parental authority may: have in his company a minor as provided in the
1. Impose discipline on minor children as may be preceding paragraph shall suffer the penalty of
required under the circumstances; prision mayor in its medium period and a fine of
2. Petition the court for the imposition of not less than Forty thousand pesos (P40,000);
appropriate disciplinary measures upon the Provided, however, That should the
child, which include the commitment of the child perpetrator be an ascendant, stepparent or
in entities or institutions engaged in child care or guardian of the minor, the penalty to be imposed
in children’s homes duly accredited by the proper shall be prision mayor in its maximum period, a
government agency. fine of not less than Fifty thousand pesos (P50,000),
and the loss of parental authority over the
NOTE: Such commitment must not exceed 30 days. minor.
d. Any person, owner, manager or one entrusted
Limitations on the exercise of the right to discipline with the operation of any public or private
the child and its consequences place of accommodation, whether for
occupancy, food, drink or otherwise, including
Persons exercising such right are not allowed to: residential places, who allows any person to
1. Treat the child with excessive harshness or take along with him to such place or places any
cruelty; or minor as described in the law shall be imposed a
2. Inflict corporal punishment. penalty of prision mayor in its medium period and
a fine of not less than Fifty thousand pesos
Otherwise, the following are its consequences: (P50,000), and the loss of the license to operate
The penalty for the commission of acts punishable Liability of persons exercising special parental
under Article 337, 339, 340 and 341 of Act No. 3815, as authority over the child (FC, Art. 219)
amended, the Revised Penal Code, for the crimes of
qualified seduction, acts of lasciviousness with the They are principally and solidarily liable for damages
consent of the offended party, corruption of minors, and caused by the acts or omissions of the child while under
white slave trade, respectively, shall be one (1) degree their supervision, instruction or custody.
higher than that imposed by law when the victim is
under twelve (12) years age. NOTE: Parents, judicial guardians or those exercising
substitute parental authority over the minor are
The victim of the acts committed under this section subsidiarily liable for said acts and omissions of the
shall be entrusted to the care of the Department of minor.
Social Welfare and Development (Sec. 10, R.A. 7610).
Q: Jayson and his classmates were conducting a science
Liabilities of Parents under Art. 59 of Presidential experiment about fusion of sulphur powder and iron
Decree No. 603 (Child and Youth Welfare Code) fillings under the tutelage of Tabugo, the subject
teacher and employee of St. Joseph College. Tabugo left
Article 59. Crimes. - Criminal liability shall attach to any her class while the experiment was ongoing without
parent who: having adequately secured the students from any
untoward incident or occurrence. In the middle of the
1. Conceals or abandons the child with intent to experiment, Jayson checked the result of the
make such child lose his civil status. experiment by looking into the test tube with
2. Abandons the child under such circumstances as magnifying glass and it was moved towards his eyes. At
to deprive him of the love, care and protection he that instance, the compound spurted from the test tube
needs. and several particles hit Jayson’s eyes. His left eye
3. Sells or abandons the child to another person for was chemically burned, for which he had to undergo
valuable consideration. surgery and spend for medication. Jayson filed a
4. Neglects the child by not giving him the complaint for damages against the school and Tabugo.
education which the family's station in life and Can the said school and its teacher, Tabugo, be held
financial conditions permit. liable for the unfortunate incident ofJayson?
5. Fails or refuses, without justifiable grounds, to
enroll the child as required by Article 72. A: YES. The proximate cause of the student’s injury was
6. Causes, abates, or permits the truancy of the child the concurrent failure of petitioners to prevent the
from the school where he is enrolled. "Truancy" foreseeable mishap that occurred during the conduct of
as here used means absence without cause for the science experiment. Petitioners were negligent by
more than twenty schooldays, not failing to exercise the higher degree of care, caution and
necessarilyconsecutive. foresight incumbent upon the school, its administrators
7. It shall be the duty of the teacher in charge to and teachers. Art. 218 of the Family Code, in relation to
report to the parents the absences of the child the Art. 2180 of the New Civil Code, bestows special
moment these exceed five schooldays. parental authority on a school, its administrators and
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teachers, or the individual, entity or institution engaged A parent is required to post a bond if the market value
in child care, and these persons have responsibility over of the property or the annual income of the child
the minor child while under their supervision, exceeds P50,000.
instruction or custody. Authority and responsibility
shall apply to all authorized activities whether inside or NOTE: The bond shall not be less than 10% of the value
outside the premises of the school, entity or institution. of the property or annual income (FC, Art. 225).
In this case, the petitioners’ negligence and failure to Rules regarding the use of the child’s property
exercise the requisite degree of care and caution was (Art. 226, FC)
demonstrated by the following: (i) petitioner school did
not take affirmative steps to avert damage and injury to 1. The property of minor children shall be devoted
its students although it had full information on the to their support and education unless the title or
nature of dangerous science experiments conducted by transfer provides otherwise.
the students during class; (ii) petitioner school did not 2. The parents have the right to use only the fruits
install safety measures to protect the students who and income of said property for the following
conduct experiments in class; (iii) petitioner school did purposes:
not provide protective gears and devices, specifically a. Primarily, to the child’s support;
goggles, to shield students from expected risks and b. Secondarily, to the collective daily needs of the
dangers; and (iv) petitioner Tabugo (the teacher) was family.
not inside the classroom the whole time her class
conducted the experiment, specifically, when the Rule on lease of property belonging to minor
accident involving the student occurred (St. Joseph’s children
College v. Miranda, G.R. No. 182353, June 29, 2010).
GR: The parents, as legal guardians of the minor’s
EFFECTS OF PARENTAL AUTHORITY UPON THE property, may validly lease the same, even without
PROPERTY OF THE CHILDREN court authorization, because lease has been considered
as an act of administration.
Legal guardianship can be exercised by the father or
mother, jointly, without need of court appointment over XPNs: Court authorization is required if:
the property of an unemancipated child.
1. If the lease will be recorded in the Registry of
NOTE: In case of disagreement, the father’s decision Property;
shall prevail unless there is a judicial order to the 2. If the lease is for a period of more than one year,
contrary (FC, Art. 229). because this is already deemed an act of dominion.
NOTE: If the person exercising Parental Authority has Emancipation takes place by attainment of majority at
subjected the child or allowed him to be subjected to the age of (18) eighteen years (FC, Art. 234 as amended
sexual abuse, he/she shall be permanently deprived of by RA 6809). (2010 Bar)
PA.
Effects of emancipation
If the ground for suspension of parental authority is
civil interdiction, the suspension is automatic so as its 1. Parental authority over the person and property of
reinstatement. the child is terminated.
2. Child shall be qualified and responsible for all acts
Revocation of suspension of Parental Authority and its of civil life, save exceptions established by existing
revival 3. Contracting marriage shall require parental consent
until the age of 21.
The suspension may be revoked and parental authority 4. The responsibility of parents or guardians for
revived by filing a case for the purpose, or in the same children and wards below 21 under the second and
proceeding if the court finds that the cause therefore third paragraphs of Art. 2180 of the New Civil Code
had ceased and will not be repeated. shall not be derogated.
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declared that Antonia Aruego is an illegitimate NOTE: In case of descendants of the same degree, or
daughter of the deceased with Luz Fabian while of brothers and sisters, the oldest shall be preferred.
Evelyn is not. Antonia and Evelyn contested the In case of ascendants, the paternal shall have a better
decision citing provisions of the Family Code right (NCC, Art. 305).
particularly Art. 127 on Filiation, Art.172 on
illegitimate children’s filiation, and Art.256 on the 2. Funeral shall be:
retroactivity of the code. Whether the provisions of a. In keeping with the social position of the
the Family Code can be applied retroactively and deceased;
will it impair the vested rights of the respondents? b. In accordance with the expressed wishes of
the deceased;
A: The action for compulsory recognition and c. In absence of the expressed wishes, his
enforcement of successional rights which was filed religious beliefs or affiliation shall
prior to the advent of the Family Code, must be determine;
governed by Art. 285 of the New Civil Code and not by d. In case of doubt, the form of funeral is to be
Art. 175, par. 2 of the Family Code. The present law decided upon by the person obliged to make
cannot be given retroactive effect insofar as the instant arrangements for the same, after consulting
case is concerned, as its application will prejudice the the other members of the family (NCC, Art.
vested right of private respondent to have her case 307).
decided under Art. 285 of the New Civil Code. The right
was vested to her by the fact that she filed her action 3. Any person who:
under the regime of the New Civil Code. Prescinding a. Shows disrespect to the dead, or
from this, the conclusion then ought to be that the b. Wrongfully interferes with a funeral shall be
action was not yet barred, notwithstanding the fact that liable to the family of the deceased for
it was brought when the putative father was already damages, material and moral (NCC, Art. 309).
deceased, since private respondent was then still a
minor when it was filed, an exception to the general rule 4. Funeral expenses are chargeable against the
provided under Art. 285 of the New Civil Code. Hence, property of the deceased. However, if the
the trial court, which acquired jurisdiction over the case deceased is one of the spouses, they are
by the filing of the complaint, never lost jurisdiction chargeable against the conjugal partnership
over the same despite the passage of E.O. No. 209, also property (NCC, Art. 310).
known as the Family Code of the Philippines (Aruego v.
CA, G.R. No. 112193, March 13, 1996). Q: Adriano and Rosario are married to each other.
However, their marriage turned into sour and they
NOTE: If an action for recognition was filed prior to the were eventually separated-in-fact. Years later,
effectivity of the FC, Art. 173 of the Family Code cannot Adriano met Fe which he courted and eventually
be given retroactive effect because it will prejudice the decided to live together as husband and wife while
vested rights of petitioners transmitted to them at the his marriage with Rosario is still subsisting. Adriano
time of the death of their father, Eutiquio Marquino. later died while Rosario and the rest of his family
"Vested right" is a right in property which has become are in the United States spending their Christmas
fixed and established and is no longer open to doubt or vacation. When Rosario learned of Adriano’s death,
controversy. It expresses the concept of present fixed she immediately called Fe for the delay of Adriano’s
interest, which in right reason and natural justice interment which was unheeded by Fe. The remains
should be protected against arbitrary State action of Adriano were interred at the mausoleum of Fe’s
(Marquino v. IAC, G.R. No. 72078, June 27, 1994). family allegedly according to Adriano’s oral request
from her. Who between Rosario and Fe is entitled to
the remains of Adriano?
FUNERALS
A: The law gives the right and duty to make funeral
arrangements to Rosario, she being the surviving legal
General Guidelines: wife of Atty. Adriano. The fact that she was living
separately from her husband and was in the United
1. Duty and right to make arrangements in funerals States when he died has no controlling significance. To
in accordance with Art. 199, FC: say that Rosario had, in effect, waived or renounced,
a. Spouse; expressly or impliedly, her right and duty to make
b. Descendants in the nearest degree; arrangements for the funeral of her deceased husband
c. Ascendants in the nearest degree; is baseless. The right and duty to make funeral
d. Brothers and sisters. arrangements, like any other right, will not be
considered as having been waived or renounced, except
FACTUAL SURNAME TO BE
USE OF SURNAMES CIRCUMSTANCE OF USED
THE WIFE
Valid marriage (before 1. First name and
Rule with regard to the use of surname by a child who is husband dies) (NCC, maiden name (her
(1) legitimate, (2) legitimated, (3) adopted and (4) Art. 370) maiden first name
illegitimate and surname) (FC,
Art. 370) +
CHILD SURNAME TO BE USED husband’s
CONCERNED surname.
Legitimate 2. Firstname +
Legitimated husband’s surname
Natural child 3. Husband’s full
acknowledged Father’s name + prefix
both parents indicating that is
Natural child by his wife (e.g., Mrs.)
legal fiction 4. Retain the use of
Natural child Recognizing parent her maiden name
acknowledged *Use of husband’s
by one parent surname is not a duty
Adopted Adopter’s but merely an option for
Illegitimate Mother’s or father’s if the wife.
requisites R.A. 9255 are Marriage Wife is the Shall resume using her
complied with is guilty party maiden name
annulled Wife is the Choices:
NOTE: An illegitimate child (NCC, Art. innocent 1. Resume using her
shall have the “option” to use 371) party maiden name
the surname of the father in 2. Continue using
the following instances: husband’s surname
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Art. 372) using the name and sought prior to the filing (Sec. 2, Rule 103, Rules of
surname employed by Court);
her prior to the legal B. Must not be filed within 30 days prior to an election
separation (Sec. 3, Rule 103, Rules of Court);
Widowed spouse (NCC, She may use deceased’s C. Petition must be verified (Sec. 2, Rule 103, Rules
Art. 373) husband’s surname as of Court).
though he is still living.
Divorced (at least if Choices same as Q: Virginia Remo, a Filipino citizen, is married
they allow it later or for widowed spouse. to Francisco Rallonza. In her passport, the
those who got divorced following entries appear: “Rallonza” as her
the Japanese surname, “Maria Virginia” as her given name,
occupation) and “Remo” as her middle name. Prior to the
expiration of her passport, Virginia applied for
Grounds for change of name which have been held the renewal of her passport with the DFA, with
valid a request to revert to her maiden name and
surname in the replacement passport.
1. One has continuously used and been known Virginia, relyingon Article 370 of the Civil
since childhood by a Filipino name and was Code, contends that the use of the husband’s
unaware of alien parentage; surname by the wife is permissive rather than
2. The change results as a legal consequence, as obligatory. Is Virginia correct ?
in legitimation;
3. There is a sincere desire to adopt a Filipino A: NO. A married woman has an option, but not a
name to erase signs of former alienage, all in duty, to use the surname of the husband in any of the
good faith and without prejudicing anyone; ways provided by Art. 370 of the New Civil Code.
4. The change will avoid confusion; However, R.A. 8239 or the Philippine Passport Act of
5. The new first name or surname has been 1996 limits the instances when a married woman
habitually and continuously used by the applicant may exercise the option to revert to the use
petitionerand is publicly known by that first of her maiden name. These are death of husband,
name or nickname (Pineda, 2010). divorce, annulment, and declaration of nullity of
6. The name is: marriage.
a. Ridiculous,
b. Extremely difficult to write or In case of renewal of passport, a married woman
pronounce; and may either adopt her husband’s surname or
c. Dishonorable. continuously use her maiden name. However, once
she opted to use her husband’s surname in her
Q: Can a person change his registered first original passport, she may not revert to the use of
name and sex on the basis of a sex her maiden name, except if any of the four grounds
reassignment? provided under R.A. 8239 is present.
A: NO. Before a person can legally change his given name, Further, even assuming R.A. 8239 conflicts with the
he must present proper or reasonable cause or any Civil Code, the provisions of R.A. 8239 which is a
compelling reason justifying such change. In addition, special law specifically dealing with passport
he must show that he will be prejudiced by the use of his issuance must prevail over the provisions of the Civil
true and official name. Under the Civil Register Law, a birth Code which is the general law on the use of
certificate is a historical record of the facts as they existed surnames. A basic tenet in statutory construction is
at the time of birth. Thus, the sex of a person is that a special law prevails over a general law (Remo v.
determined at birth, visually done by the birth Sec. of Foreign Affairs, G.R. No. 169202, March 5, 2010).
attendant (the physician or midwife) by examining
the genitals of the infant. Considering that there is no law Identity of names and surnames
legally recognizing sex reassignment, the determination of a
person’s sex made at the time of his or her birth, if not In case of identity of names and surnames, the younger
attended by error, is immutable (Silverio v. Republic, person shall be obliged to use such additional name or
G.R. No. 174689, October 22, 2007). surname as will avoid confusion (NCC, Art. 374).
Procedural requirements for a petition for change of In case of identity of names and surnames between
name ascendants and descendants, the word "Junior" can be
used only by a son. Grandsons and other direct male
A. 3 years residency in the province where the change is descendants shall either:
1. Actual use of another’s name by the defendant; Q: Does an illegitimate child have a middle name?
2. Use is unauthorized;
3. Use of another’s name is to designate A: NO. An illegitimate child whose filiation is not
personality or identify a person. recognized by the father bears only a given name and his
mother's surname, and does not have a middle name.
Remedies available to the person whose name has Itis only when the illegitimate child is legitimated by
been usurped the subsequent marriage of his parents or acknowledged
by the father in a public document or private handwritten
1. Civil – insofar as private persons are concerned: instrument that he bears both his mother's surname as his
a. Injunction middle name and his father's surname as his surname (In
b. Damages Re: Petition for Change of Name of Julian Wang v. Cebu
2. Criminal – when public affairs are prejudiced. Civil Registrar, G.R. No. 155966, March 30, 2005).
NOTE: If the purpose of the usurpation is to conceal ones Q: Honorato filled a petition to adopt his minor
true identity then, he is guilty of concealing true name illegitimae child Stephanie. Stephanie has been
under Art.178 of theRPC(Pineda, 2010). using her mother’s middle name and surname.
He prayed that Stephanie’s middle name be
It can also be a violation of CA 142 or the Anti-Alias changed from “Astorga” to “Garcia,” which is
Law. her mother’s surname and that her surname
“Garcia” be changed to “Catindig,” which is his
Use of another’s name is not always actionable surname. This the trial court denied. Was the
GR: The unauthorized or unlawful use of another trial court correct in denying Honorato’s
person’s surname gives a right of action to the latter request for Stephanie’s use of her mother’s
(NCC, Art. 378). surname as her middle name?
XPN: It is not actionable when it is used as stage,
screen or pen name. A: No. The name of a individual has two parts –
the given name or proper name and the surname
Provided: or family name. the given name may be freely
selected by the parents for the child, but the
1. Use is in good faith; surname to which the child is entitled is fixed by
2. No injury is caused to the rights of the person law. The Civil Code (Arts. 364 to 380) is silent as to
whose name was used; the use of a middle name. een Art. 176 of the
3. Use is motivated by: Family Code, as amended by R.A. 9225 (An Act
a. Modesty Allowing Illegitimate Children to Use the Surname
b. Desire to avoid unnecessary trouble of their Father) is siled as to what middle name a
c. Other reason not prohibited by law or morals. child may use.
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CIVIL LAW
Court found no reason why she should not be the request would be denied (In Re: Petition for
allowed to do so. change of name and/or correction/cancellation of
entry in civil registry of Julian Lin Carulasan Wang,
NOTE: The Supreme Court granted the petition for 2 G.R. No. 159966, March 30, 2005).
reasons:
NOTE: The touchstone for the grant of a change of
1. The adopted child's continued use of her name is that there be proper and reasonable cause
mother's surname as her middle name will for which the change is sought.
maintain her maternal lineage; and
2. It will also eliminate the stigma of her Q: Giana was born to Andy and Aimee, who at the
illegitimacy. time of Giana’s birth were not married to each
other. While Andy was single at that time, Aimee
The Supreme Court, in granting the petition, was still in the process of securing a judicial
predicated its ruling upon the statutory principle declaration of nullity on her marriage to her ex-
that adoption statutes, being humane and salutary, husband. Gianna’s birth certificate, which was
should be liberally construed to carry out the signed by both Andy and Aimee, registered the
beneficent purposes of adoption. The modern trend status of Gianna as “legitimate”, her surname
is to consider adoption not merely as an act to carrying that of Andy’s, and that her parents
establish a relationship of paternity and filiation, but were married to each other.
also as an act which endows a child with legitimate
status (In the Matter of the Adoption of Stephanie Can a judicial action for correction of entries in
Nathy Astorga Garcia, G.R. No. 148311, March 31, Gianna’s birth certificate be successfully
2005). maintained to:
Q: The petition filed by the parents in behalf of a. Change her status from “legitimate” to
their minor son Julian Lin Carulasan Wang “illegitimate”; and
sought the dropping of the latter's middle name, b. Change her surname from that of Andy’s
"Carulasan." The parents averred that their plan to Aimee’s maiden surname?
for Julian to study in Singapore and adjust to its c. Instead of a judicial action, can
culture necessitates the drop since in that administrative proceedings be brought
country, middle names or the mother's surname for the purpose of making the above
are not carried in a person's name. They corrections?
therefore anticipate that Julian may be subjected d. Assuming that Aimee is successful in
to discrimination on account of his middle name, declaring her former marriage void, and
which is difficult to pronounce in light of Andy and Aimee subsequently married
Singapore's Mandarin language which does not each other, would Gianna be legitimated?
have the letter "R" but if there is, Singaporeans (2008 Bar)
pronounce it as "L." Should the petition for the
dropping of his middle name be granted? A:
a. A judicial action cannot be maintained to
A: NO. Petitioners’ justification for seeking the change the status of Gianna from “legitimate”
change in the name of their child, that of to “illegitimate” child of Andy and Aimee.
convenience, was characterized by the Supreme While it is true that Gianna is the biological
Court as amorphous, to say the least, and would not daughter of Andy and Aimee conceived and
warrant a favorable ruling. As Julian is only a minor born without marriage between them,
and has yet to understand and appreciate the value Gianna is presumed, under the law as the
of any change in his name, it is best that the matter legitimate child of Aimee and her husband.
be left to his judgment and discretion when he This filiation may be impugned only by the
reaches legal age. husband. To correct the status of Gianna in
her birth certificate from “legitimate child of
The State has an interest in the names borne by Andy and Aimee” to “illegitimate child of
individuals and entities for purposes of Andy and Aimee” will amount to indirectly
identification, and that a change of name is a impugning her filiation as the child of
privilege and not a right, such that before a person Aimee’s husband in a proper action. What
can be allowed to change the name given him either cannot be done directly cannot be done
in his birth certificate or civil registry, he must show indirectly.
proper or reasonable cause, or any compelling b. A judicial action to change the surname of
reason which may justify such change. Otherwise, Gianna from the surname of Andy to the
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CIVIL LAW
Duty of the Court after appointing the representative NOTE: A judicial declaration of absence is
necessary for interested persons to be able to
The Court shall: protect their rights, interests and benefits in
1. Take the necessary measures to safeguard the rights connection with the person who has disappeared.
and interests of the absentee; It is also necessary to protect the interest of the
2. Specify the powers, obligations, and absentee. (Sta. Maria, Jr., 2010)
remuneration oftherepresentative;
3. Regulate the powers, obligations and ADMINISTRATION OF THE PROPERTY OF THE
remuneration according to the circumstances by ABSENTEE
the rules concerning guardians (NCC, Art. 382).
Administration of the property of the absentee
Order of preference in the appointment of a ceases when (NCC, Art. 389):
representative
1. Absentee appears personally or by means of an
1. Spouse present, except, when legally separated. agent.
2. In the absence of spouse, anycompetent person (NCC,
2. Death of the absentee is proved, and his testate
Art. 383). or intestate heirs appear.
3. A third person appears, showing by a proper
NOTE: The administrator of the absentee's property shall document that he has acquired the absentee's
be appointed in accordance with the same order. property by purchase or other title.
A: NO. Under the NCC, the presumption of death is Such a situation would be untenable and would
established by law and no court declaration is go against the objectives that the Family Code
needed for the presumption to arise. Moreover, it is wishes to achieve.
clear that a judicial declaration that a person is
presumptively dead, being a presumption juris b. NO. Under the NCC, the presumption of death is
tantum only, subject to contrary proof, cannot established by law and no court declaration is
become final. If a judicial decree declaring a person needed for the presumption to arise. For the
presumptively dead, cannot become final and purposes of the civil marriage law, Art. 83 of the
executory even after the lapse of the reglementary Civil Code, it is not necessary to have the former
period within which an appeal may be spouse judicially declared an absentee. The law
taken, then a petition for such a declaration is only requires that the former spouse has been
useless, unnecessary, superfluous and of no benefit absent for seven consecutive years at the time of
to the petitioner. the second marriage, that the spouse present
does not know his or her former spouse to be
Q: Juana married Arturo in January 1973. living, that such former spouse is generally
However, because the latter was unemployed the reputed to be dead and the spouse present so
spouses constantly argued. Thus, Arturo left the believes at the time of the celebration of the
conjugal dwelling on October 1975. Years passed marriage. Since death is presumed to have taken
without any word from Arturo. Juana didn’t hear place by the seventh year of absence, Arturo is to
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CIVIL LAW
be presumed dead starting October 1982.
Applicable laws
NCC, Arts. 390-396 Arts. 41-44, Family Code Rule 107, Rules of Court
Who may file petition
1. Spouse present;
2. Heirs instituted in the will;
Absentee’s co-heirs, Spouse present 3. Relatives who will succeed by
heirs, assigns, intestacy; or
representative or 4. Those who have over the property of
successors-in-interest the absentee some right
subordinated to the
condition of his death (Sec. 2, Rule 107).
Purpose of petition
For the purpose of To appoint an administrator over
To open succession contracting subsequent the properties of the absentee. This
marriage by spouse present is proper only where the absentee
has properties to be administered
When to file petition
GR: 4 consecutive years absence of
spouse – and the spouse present After 2 years:
GR: Absence of ten years. has a well-founded belief that the 1. From his disappearance and
absent spouse was already dead without any news about the
XPN: If he disappeared after absentee; or
the age of seventy-five years, XPN: 2 consecutive years absence 2. From the last news about
an absence of five years shall of spouse – In case of the absentee.
be sufficient in order that his disappearance where there is
succession may be opened danger of deathunder the After 5 years: If he left an administrator
circumstances set forth in the of his property (Sec. 2).
provisions of Article 391 of the
Civil Code (Art. 41, FC)
Effect of reappearance
If the absentee appears, or It does not automatically The trustee or administrator shall cease
without appearing his terminate the subsequent in the performance of his office, and the
existence is proved, he shall marriage. To cause the property shall be placed at the disposal
recover his property in the termination of the subsequent of those who may have a right thereto.
condition in which it may be marriage, the reappearance must
found, and the price of any be made in an affidavit of
property that may have been reappearance and the recording of
alienated or the property a sworn statement of the fact and
acquired therewith; but he circumstances of such
cannot claim either fruits or reappearance in the civil registry.
rents. (Art. 392, Civil Code)
If, however, there was previous
judgment annulling or declaring
the prior marriage void, then the
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.
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CIVIL LAW
PROPERTY
The human body is NOT a property
It is an object or a right which is appropriated or Under the R.A. 7170 or the Organ Donation Act of
susceptible of appropriation by man, with capacity 1991, donation of all or a part of a human body
to satisfy human wants and needs (Pineda, 1999). may only occur after a person’s “death” (i.e., the
irreversible cessation of circulatory and
NOTE: Property does not only cover material respiratory functions or the irreversible cessation
things because it mentions of rights which could of all functions of the entire brain, including the
either be classified as real or personal right. brain system) [Sec. 2(j), RA 7170, as amended]
1. Nature – Those which cannot be carried from A building, by itself, may be mortgaged apart from
place to place; the land on which it was built even if a mortgage
2. Incorporation – Those which are attached to of land necessarily includes, in the absence of
an immovable in a fixed manner and stipulation of the improvements thereon,
considered as an integral part thereof, buildings. Such a mortgage would still be a real
irrespective of its ownership; estate mortgage (REM) for the building would still
3. Destination – Things placed in buildings or on be considered immovable property even if dealt
lands by the owner of the immovable or his with separately and apart from the land (Yee v.
agent in such a manner that it reveals the Strong Machinery Company, G.R. No. 11658,
intention to attach them permanently thereto; February 15, 1918).
and
4. Analogy – Classified by express provision of A building can be the subject of a chattel
law. mortgage
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CIVIL LAW
a. By nature - If they are spontaneous Assessment Appeals v. Meralco, G.R. No. L-15334,
products of the soil; or January 31, 1964).
b. By incorporation - If they have been
planted through cultivation or labor. IMMOVABLE BY INCORPORATION & BY
2. A personal property. DESTINATION
The moment trees are detached or Par. 4, Art. 415. Statues, reliefs, paintings or
uprooted from the land it is considered as other objects for use or ornamentation, placed
personal property. in buildings or on lands by the owner of the
immovable in such a manner that it reveals the
NOTE: In case of uprooted timber, they intention to attach them permanently to the
are still not considered as personal tenements.
property because timber is an integral
part of the timber land. “Placed by the owner”
Growing fruits This means that the objects must be placed by the
owner of the immovable and not necessarily the
GR: Growing fruits are considered as real owner of the object.
property so long as they are still attached to the
soil. Once removed from the soil, they become Requisites
personal properties.
1. Placed by the owner or (by the tenant) as
XPN: Growing fruits may be exceptionally treated agent of the owner; and
as personal property pursuant to the provisions of 2. With the intention of attaching them
Art. 416(2) of the New Civil Code (Rabuya, 2008). permanently even if adherence will not
involve breakage or injury.
E.g.
1. For the purposes of sale of the whole or part Par. 3 distinguished from Par. 4
of the crops
2. For purposes of attachment and execution; PAR. 3 PAR. 4
and Cannot be separated Can be separated from
3. For applying the provisions of the Chattel from the immovable the immovable without
Mortgage Law. without breaking or breaking or
deterioration. deterioration.
IMMOVABLE BY INCORPORATION Need not be placed by Must be placed by the
the owner. owner of the
immovable, or by his
Par. 3, Art. 415. Everything attached to an agent whether express
immovable in a fixed manner, in such a way or implied.
that it cannot be separated therefrom without Real property by Real property by
breaking the material or deterioration of the incorporation. incorporation and
object. destination.
Since it is placed by a person having only a It is NOT considered an immovable property. The
temporary right, it does not become immobilized fact that machineries were bolted or cemented on
(Valdez v. Central Altagracia, 225 U.S. 58, 1912). real property mortgaged does not make them ipso
facto immovable under Art. 415 (3) and (5) as the
Where a tenant places the machinery under the parties intent has to be looked into.
express provision of lease that it shall become a
part of the land belonging to the owner upon the When immovable property by nature may be
termination of the lease without compensation to treated as a chattel
the lessee, the tenant acts as an agent of the owner
and the immobilization of the machineries arises Even if the properties appear to be immovable by
from the act of the owner in giving by contract a nature, nothing detracts the parties from treating
permanent destination to the machinery. (Ibid.) them as chattels to secure an obligation under the
principle of estoppel (Tsai v. CA, G.R. No. 120098,
Equipment and living quarters of the crew October 2, 2001).
permanently attached are immovable
properties Effect of temporary separation of movables
from the immovables to which they are
It is intended to meet the needs of the industry attached
being undertaken by MPC. The equipment
partakes of the nature of the immovable upon There are two views:
which it has been placed. 1. They continue to be regarded as
immovables; and
The living quarters, if attached to the immovable 2. Fact of separation determines the
platform with permanence, becomes an condition of the objects thus recovering
immovable as well. Permanence means they their condition as movables.
cannot be separated without destroying the
platform or the quarters. If the attachment is not Machines though essential and principal
permanent, or not merely superimposed on the elements of the industry are personal
platform, then the living quarters are movable properties when provided in the lease
properties (2007 Bar). agreement
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CIVIL LAW
These are immovables by destination. They are Running or Stagnant Waters – These waters
considered as real property if adhered to the soil refer to waters still running through the soil or
in a permanent manner. The animals in the houses ground in mines and quarries (Pineada, 2009).
are considered part of the immovable.
Par. 9, Art. 415. Docks and structure which,
Beehives, Fishponds Or Breeding Places of though floating, are intended by their nature
Similar Nature Are Real Property; Animals and object to remain at a fixed place on a river,
Contained Therein, Included lake or coast.
When purposely constructed or attached to the When power barges are classified as real
ground or on another immovable (like a tree- properties
wall), fishponds and other similar breeding places,
like cemented container where breeding of fishes Power barges are categorized as immovable
or crustaceans is done, are considered immovable property by destination, being in the nature of
property if the owner of the land or tenement machinery and other implements intended by the
intended them to be permanent owner for an industry or work which may be
carried on in a building or on a piece of land and
The animals in the animal houses, the pigeons in which tend directly to meet the needs of said
the pigeon houses, the bees in the beehives, the industry or work (Fels Energy, Inc. v. Province of
fish in the fishponds are included and considered Batangas, G.R. No. 168557, February 19, 2007).
part of the immovable property (Pineda, 2009).
Floating platform is an immovable property
Cages are not included
The platform is an immovable property by
It will be considered as personal property since destination. It was intended by the owner to
they can be moved from one place to another. remain at a fixed place on a river or coast. Art. 415
(9) of the NCC considers as real property “docks
Par. 7, Art. 415. Fertilizer actually used on a and structures which, though floating are
piece of land. intended by their nature and object to remain at a
fixed place on a river, lake, or coasts” (Fels Energy,
Fertilizers in sacks are not included Inc. v. The Province of Batangas, G.R. No. 168557,
February 16, 2007).
Fertilizers which are still in the sacks, although
there is intention to place them or use them on Vessels are considered personal property under
land, are movable. Only fertilizers actually used on the civil law and common law and occasionally
a piece of land are deemed immovable since it is referred to as peculiar kind of personal property.
already placed in the land and can never be It is essential that a record of documents affecting
separated from it. the title to a vessel be entered in the record of the
Collector of Customs at the port of entry (Code of
Par. 8, Art. 415. Mines, quarries and slag Commerce, Art. 585).
dumps, while the matter thereof forms part of
the bed, and waters either running or Par. 10, Art. 415. Contracts for public works
stagnant. and servitudes and other real rights over
immovable property.
By their nature, mines quarries and slag dumps
are immovable property. Immovable By Analogy
Mines - These are mineral lands where These properties refer to contracts for public
excavations are done to extract minerals such as works, servitudes and real rights over immovable
gold, ores etc. property (like usufruct). They are inseparable
from their sources which are immovable, Hence,
Quarries - These are lands where stones are for convenience, they are considered immovable
chipped of or where sand is being extracted. not by their nature, destination or incorporation
but by analogy. While no tangible, they have the
Slag dumps - They consist of waste and dirt taken characteristics of real property (Pineda, 2009).
from a mine and mounted on the surface of the
ground under excavation e.g. Contract over a construction of a bridge
(4) In general, all things which can be The business of providing telecommunication
transported from place to place without is a personal property
impairment of the real property to which they
are fixed. The business of providing telecommunication or
telephone service is likewise personal property
Art. 417 The following are also considered as which can be the object of theft under Art. 308 of
personal property: the RPC.
(1) Obligations and actions which have for Indeed, while it may be conceded that
their object movables or demandable sums; international long distance calls, the matter
and alleged to be stolen in the instant case, take the
form of electrical energy, it cannot be said that
(2) Shares of stock of agricultural, commercial such international long distance calls were
and industrial entities, although they may have personal properties belonging to PLDT since the
real estate latter could not have acquired ownership over
such calls. PLDT merely encodes, augments,
PERSONAL OR MOVABLE PROPERTY enhances, decodes and transmits said calls using
1995 Bar its complex communications infrastructure and
facilities (Laurel v. Abrogar, G.R. No. G.R. No.
Movable properties (SOFTSS) 155076, January 13, 2009).
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CIVIL LAW
Properties classified according to enter into co-production, joint ventures or
consumability production-sharing agreements with private
individuals or corporations for their exploration,
1. Consumable property – That which cannot development and utilization.
be used according to its nature without
being consumed or being eaten or used NOTE: In order to be classified as property of
up; and public dominion, an intention to devote it to
2. Non-consumable property – That which public use or to public service is sufficient and it is
can be used according to its nature not necessary that it must actually be used as
without being consumed or being eaten such.
or used up.
Art. 420. The following things are property of
Properties classified according to public dominion:
susceptibility to substitution
(1)Those intended for public use, such as
1. Fungible property – That property which roads, canals, rivers, torrents, ports and
belongs to a common genus permitting its bridges constructed by the State, banks,
substitution; and shores, roadsteads, and others of similar
2. Non- fungible property – That property character;
which is specified and not subject to
substitution. (2)Those which belong to the State, without
being for public use, and are intended for
NOTE: As to whether a property is fungible or some public service or for the development of
non-fungible is determined by the agreement the national wealth.
of the parties and not on the consumability of
the thing. Q: Iloc Bilag sold a sold to respondents
separately various portions of a 159,496-
Art. 419. Property is either of public dominion square meter parcel of land designated by the
or of private ownership Bureau of Lands as Approved Plan No. 544367,
Psu 189147 situated at Sitio Benin, Baguio City
CLASSIFICATION OF PROPERTY BY (subject lands), and that they registered
OWNERSHIP the corresponding Deeds of Sale with the
Register of Deeds of Baguio City. This land is
1. In relation to the State forms part of the Baguio Townsite Reservation
a. Public Dominion; and which is a public land. Respondents, alleged to
b. Patrimonial. have been harassed and threatened by
2. In relation to political subdivisions/local petitioners, filed a petition for Quieting of title
government unit with prayer of Preliminary Injunction before
a. Public use; and the RTC Br. 61 . Petitioners countered, among
b. Patrimonial. others, that RTC has no jurisdiction. Should the
3. In relation to private persons petition be granted?
a. Owned individually; and
b. Owned collectively. A: No. since the subject lands are untitled and
unregistered public lands, then petitioners
NOTE: Sacred and religious objects are considered correctly argued that it is the Director of Lands
outside the commerce of man. They are neither who has the authority to award their ownership.
public nor private party (Barlin v. Ramirez, G.R. No. Thus, the RTC Br. 61 correctly recognized its lack
L-2832, November 24, 1906). of power or authority to hear and resolve
respondents' action for quieting of title.
PUBLIC DOMINION
Kinds of property of public dominion (USD)
It means ownership by the public in general. It a. For public Use;
may also mean properties or things held by the b. Intended for public Service and not for
State by regalian right. public use; and
c. For the Development of the national
Properties classified as public dominion cannot be wealth (NCC, Art. 420).
alienated but are not totally outside the commerce
of man as the Constitution allows the State to
Art. 421. All other property of the State, which Property of municipal corporations
is not of the character stated in the preceding
article, is a patrimonial property. 1. Provincial roads;
2. City streets;
Patrimonial Property 3. Municipal streets;
4. Squares;
This is a property pertaining to the State which is 5. Fountains;
not intended for public use, public service, or for 6. Public waters;
the development of the national wealth. It is 7. Promenades; and
intended rather for the attainment of the 8. Public works for public service paid for by
economic ends of the State, that is, for its said provinces, cities, or municipalities
subsistence. (NCC, Art. 424).
Art. 422. Property of public dominion, when NOTE: All other property possessed by any of
no longer intended for public use or for public them are patrimonial.
service, shall form part of the patrimonial
property of the State. Charging of fees does not remove property as
public dominion
Conversion From Property of Public Dominion
To Patrimonial Property, How Effected. The charging of fees to the public does not
determine the character of the property whether
When no longer intended or operated for public it is of public dominion or not. The airport lands
use or public service, a property of public and buildings are devoted to public use because
dominion shall form part of the State’s patrimonial they are used by the public for international and
property as of the date the Government, through domestic travel and transportation. The terminal
the Executive or Legislative Departments, has fees MIAA charges to passengers, as well as the
formally declared that it is no longer needed for landing fees MIAA charges to airlines, constitute
said purposes (Ignacio vs. Director of Land [S.C], 58 the bulk of the income that maintains the
Off. Gaz. 2403 [1960]; Cebu Oxygen Acetylynne Co. operations of MIAA (Manila International Airport
vs. Bercilles, 66 SCRA 481). Authority v. CA, G.R. No. 155650, July 20, 2006).
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CIVIL LAW
Properties in private ownership of private Private ownership of land prohibited to Aliens;
persons or entities KRIVENKO DOCTRINE
All properties not belonging to the State or its General Rule: Aliens have no right to acquire any
political subdivision are properties of private public or private agricultural, commercial or
ownership pertaining to private persons, either residential lands in the Philippines.
individually or collectively.
XPN: Aliens may only acquire such lands by
Patrimonial property of the State hereditary succession (Krivenko vs Registry of
deeds, G.R. No. L-630, November 15, 1947).
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 Effect of a subsequent sale by the disqualified
or proprietary capacity. It is the property not alien vendee to a qualified Filipino citizen
devoted to public use, public service, or the
development of the national wealth. If land is invalidly transferred to an alien who
subsequently becomes a citizen or transfers it to a
An executive or legislative act is necessary to citizen, the flaw in the original transaction is
reclassify property into patrimonial. The considered cured and the title of the transferee is
conversion cannot be inferred from non-use. rendered valid.
NOTE: It may be disposed of by the State in the Thus, the subsequent transfer of the property to
same manner that private individuals dispose of qualified Filipinos may no longer be impugned on
their own property subject, however, to the basis of invalidity of the initial transfer. The
administrative laws and regulations. objective of the constitutional provision to keep
our lands in Filipino hands has been achieved (Lee
The fact that the Roppongi site has not been used v. Republic of the Philippines, G.R. No. 12819,
for a long time for actual Embassy service does October 3, 2001).
not automatically convert it to patrimonial
property. An abandonment of the intention to use NOTE: The constitutional proscription on alien
the Roppongi property for public service and to ownership of lands of the public or private domain
make it patrimonial property must be definite. was intended to protect lands from falling in the
Abandonment cannot be inferred from the non- hands of non-Filipinos (Lee v. Republic of the
use alone (Laurel vs Garcia, G.R. No. 92013, July 25, Philippines, G.R. No. 12819, October 3, 2001).
1990).
Regalian Doctrine: All lands not otherwise
Any such conversion happens only if the property appearing to be clearly within private ownership
is withdrawn from public use. Accordingly, the are presumed to be owned by the state (Pineda,
withdrawal of the property in question from 2009).
public use by the City of Cebu and its subsequent
sale to the petitioner is valid (Cebu Oxygen and Reversion - An action where the ultimate relief
Acetylene Co. v. Bercilles, 66 SCRA 481, August 29, sought is to revert the land back to the
1975). government under the Regalian Doctrine (Pineda,
2009).
Sewage system of a city is a patrimonial
property Art. 426. Whenever by provision of the law, or
an individual declacration, the expression
It is property of the city, purchased with private “immovable things or property,” or “movable
funds and not devoted to public use (it is for things or property, “is used, it shall be deemed
profit). It is therefore patrimonial under the Civil to include, respectively, the things
Code. Nor can the system be considered “public enumerated in Chapter 1 and in Chapter 2.
works for public service” under Art. 424 because
such classification is qualified by ejusdem generis; Whenever the word “muebles,” or “furniture,”
it must be of the same character as the preceding is used alone, it shall not be deemed to include
items (City of Cebu v. NAWASA, G.R. No. 12892, money, credits, commercial securities, stocks
April 20, 1960). and bonds, jewelry, scientific or artistic
collection, books medals, arms, clothing,
horses or carriages and their accessories,
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CIVIL LAW
1. Right to enjoy (jus utendi); (NCC, Art. 428) over the subject property (based on his
2. Right to the fruits (jus fruendi); consolidated title over the same) his incidental
3. Right to abuse (jus abutendi); right to possess the foreclosed property. To
4. Right to dispose (jus dispodendi); (NCC Art. reiterate, " [p]ossession being an essential right of
428) the owner with which he is able to exercise the
5. Right to recover (jus vindicandi); (NCC. Art. other attendant rights of ownership, after
428) consolidation of title[,] the purchaser in a
6. Right to accessories (jus accessiones); and foreclosure sale may demand possession as a
7. Right to possess (jus possidendi). matter of right."
8. Right to exclude (NCC, Art. 429)
9. Right to enclose (NCC, Art. 430) Thus, it is only upon a credible showing by a third
party claimant of his independent right over the
Lease merely follows the property as a lien or foreclosed property that the law's prima facie
encumbrance deference to the mortgagee's consolidated title
should not prevail. Verily, a mere claim of
Q: On April 15, 1991, Nicolasa authorized her ownership would not suffice. As jurisprudence
daughter, Carmelita, Artemio's sister, to prescribes, the demonstration by the third party-
mortgage the subject property to Jose, the claimant should be made within the context of an
predecessor-in-interest of Jose, Jose Jr. and adversarial hearing, where the basic principles of
Virginia in order to secure a loan in the Evidence and Civil Procedure ought to be
amount of P112,000.00. As Nicolasa failed to followed, such as: (1) it is the claimant who has
settle her loan obligation when it fell due, Jose, the burden of proving his claim; (2) the claim
led an application for extra-judicial must be established through a preponderance of
foreclosure of mortgage before the Regional evidence; and (3) evidence not presented or
Trial Court of Olongapo City, Branch 72 (RTC), formally offered cannot be admitted against the
docketed as Case No. 07-0-91. After the opposing party. In this case, none of these
requirements of posting, notices, and principles were followed for the CA considered
publication were complied with, the subject evidence that were not only submitted in a totally
property was sold at a public auction, where different case against an entirely different party,
Jose emerged as the highest bidder. A but are also innately inadequate to — at least —
Certificate of Sale was thus issued in his favor. prima facie show the source of the third party
The period of redemption expired without the claimant's independent title, all to the detriment
subject property being redeemed; hence, a of the mortgagee who had already consolidated
Final Bill of Sale was issued and registered in his title to the contested property.(Heirs of
Jose's name. Thereafter, the latter executed an Peñaflor v. Dela Cruz, G.R. No. 197797, August 8,
Affidavit of Consolidation of Ownership. This 2017)
notwithstanding, Nicolasa persisted in her
occupancy of the subject property and refused REMEDIES TO RECOVER POSSESSION
to deliver possession to Jose. Is the Writ of
Possession and Notice to Vacate issued by the Legal remedies to recover possession of one’s
RTC is valid? property
145
CIVIL LAW
v. Iloilo Santos Truckers, Inc., G.R. No. 224022, June the prospective buyer upon fulfillment of the
28, 2017) condition agreed upon, that is, full payment of the
purchase price. The Shelter Contract Award
RECOVERY OF POSSESSION OF MOVABLE granted to respondent expressly stipulates that
PROPERTY "upon completion of payment of the full payment,
the UNION shall execute a Deed of Transfer and
Replevin shall cause the issuance of the corresponding
Transfer Certificate of Title in favor of and in the
It is the remedy when the complaint prays for the name of the AWARDEE." It cannot be denied,
recovery of the possession of personal property. therefore, that the parties herein entered into a
contract to sell in the guise of a reimbursement
NOTE: A property validly deposited in custodia scheme requiring respondent to make monthly
legis cannot be subject of a replevin suit (Calub v. reimbursement payments which are, in actuality,
CA, G.R. No. 115634, April 27, 2000). installment payments for the value of the subject
house and lot.
RECOVERY OF POSSESSION OF IMMOVABLE
PROPERTY Accion publiciana
147
CIVIL LAW
her heirs share equally therein. Hence, while in contract was for a period of three years. When
the beginning, an implied trust was merely the contract expired, Francisco asked the
created between Felisa, as trustor, and Bella, spouses to peacefully vacate the premises. The
Delfin, Sr., and Felimon, Sr., as both trustees and spouses ignored the demand and continued
beneficiaries, the execution of the September 21, with the operation of the gasoline station.
1970 letter settled, once and for all, the nature of
the trust established between them as an express One month after, Francisco, with the aid of a
one, their true intention irrefutably extant group of armed men, caused the closure of the
thereon.(Wilson Go and Peter Go v. The Estate of gasoline station by constructing fences around
The Late Felisa Tamio De Buenaventura, G.R. No. it.
211972, July 22, 2015)
Was the act of Francisco and his men lawful?
Q: A contract of lease executed by Alava Why? (2014 Bar)
(lessor) and Anita Lao (lessee) was not
registered with the Register of Deeds. Aside A: NO, the act was not lawful. Even if the lessee’s
from Anita, Rudy Lao also leased a portion of right to occupy the premises has expired, the
the same property where he put up his lessor cannot physically oust the lessee from the
business. At that time, Rudy knew that Anita leased premises if the latter refuses to vacate. The
and her husband were the owners of the said lessor must go through the proper channels by
building. He also knew that she had leased filing an appropriate case for unlawful detainer or
that portion of the property, and that Jaime recovery of possession. Every possessor has a
Lao, their son, managed and maintained the right to be respected in his possession (NCC, Art.
building, as well as the business thereon. Rudy 539) and in no case can possession be acquired
eventually purchased the entire property from through force or intimidation as long as there is a
Alava. Rudy then filed a complaint for unlawful possessor who objects thereto (NCC, Art. 536). The
detainer against Jaime alleging that the latter act of Francisco is an abuse of rights because even
had occupied a portion of his property without if he has the right to recover possession of his
any lease agreement and without paying any property, he must act with justice and give the
rentals, and prayed that an order be rendered lessees their day in court and observe honesty and
directing Jaime to vacate the premises. Should good faith.
the complaint be dismissed?
DISTINCTION BETWEEN FORCIBLE ENTRY AND
A: YES. The records in this case show that the UNLAWFUL DETAINER
respondent has been in possession of the property
in question, not by mere tolerance or generosity of Forcible Entry Unlawful Detainer
Rudy, but as the manager of his mother, who
As to when possession became unlawful
conducted her business in the building which
stood on a portion of the property leased from Possession of the Possession is
Alava. Jaime’s possession was in behalf of his defendant is unlawful inceptively lawful but
mother, and not in his own right (Lao v. Lao, G.R. from the beginning as becomes illegal from the
No. 149599, May 16, 2005). he acquired possession time defendant
by; (FISTS) unlawfully withholds
Effect of non-registration of the contract of possession after the
lease a)Force; expiration or
b)Intimidation ; termination of his right
Although the lease contract was not filed with the c)Strategy; thereto.
Register of Deeds, nevertheless, the buyer of the d)Threat; or NOTE: The question of
property was bound by the terms and conditions e)Stealth. possession is
of said contract. The lease, in effect became a part primordial, while the
of the contract of sale. He had no cause of action issue of ownership is
for unlawful detainer against the lessee because of generally unessential in
the subsisting contract of lease; hence, he could unlawful detainer (Rosa
not file the complaint against her (Lao v. Lao, G.R. Rica Sales Center v. Sps.
No. 149599, May 16, 2005). Ong, G.R. 132197, August
16, 2005).
Q: Spouses Magtanggol managed and operated As to necessity of demand
a gasoline station on a 1,000 sq.m. lot which No previous demand for Demand is jurisdictional
they leased from Francisco Bigla-awa. The the defendant to vacate if the ground is non-
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CIVIL LAW
Extinguished by loss or Not so extinguished. This principle authorizes an owner or lawful
destruction of the thing Claim for damages may possessor of a property to use reasonable force to
still be pursued-in case prevent or repel an actual or threatened unlawful
of loss or destruction of physical invasion or usurpation of property (NCC,
the thing. Art. 429). There must be no delay in the pursuit,
otherwise, his recourse will be to go to the court
LIMITATIONS ON THE RIGHT OF OWNERSHIP for the recovery of property.
5. Those arising from Conflicts of private rights - German Management's drastic action of
Those which take place in accession continua; bulldozing and destroying the crops of private
6. Constitution - On the prohibition against the respondents on the basis of the doctrine of self-
acquisition of private lands by aliens; help was unavailing because the doctrine of self-
7. Acts in state of necessity – The law permits help can only be exercised at the time of actual or
injury or destruction of things owned by threatened dispossession which is absent in the
another provided this is necessary to avert a case at bar (German Mgmt. Services Inc. v. CA, G.R.
greater danger (with right to indemnity v. No. 76216, September 14, 1989).
principle of unjust enrichment); and
8. True owner must resort to judicial process – NOTE: The intruder must not have succeeded in
When thing is in possession of another; law its entry, for otherwise, he must resort to court
creates a disputable presumption of action; self-help cannot apply. One cannot put the
ownership to those in actual possession. law into his own hands. Art. 429 must be read in
(2008 Bar). relation to Art. 536.
Art. 429. The owner of lawful possessor of a “Sic utere tuo ut alienum non laedas”
thing has the right to exclude any person from The owner of a thing cannot make use thereof in
yhe enjoyment and disposal thereof. For this such manner as to injure the rights of a third
purpose, he may jse such force as may be person (NCC, Art. 431).
reasonably necessary to repel or prevent an
actual or threatened unlawful physical Property owner can use his property in any
invasion of usurpation of his property manner he desires provided he does not injure the
rights of others sic utere tuo ut alienum non
laedas (Pineda, 2009).
PRINCIPLE OF SELF-HELP
Limitation on the right of the owner to enclose Art. 434. In an action to recover, the property
or fence one’s land or tenement must be identified, and the plaintiff must rely
on the strength of his title and not on the
Every owner may enclose or fence his land or weakness of the defendant’s claim.
tenement by means of walls, ditches, live or dead
hedges or by any other means provided that in so Requisites For Action To Recover Property
fencing the property, no servitude or easement
constituted thereon should be impaired (Pineda, 1. To clearly identify the land he is claiming
2009). in accordance with the title or titles on which
he bases his right of ownership; and,
DOCTRINE OF STATE OF NECESSITY
2. To prove that he has a better title than the
The owner of a thing has no right to prohibit the defendant (Pineda, 2009).
interference of another with the same, if the
interference is necessary to avert an imminent
danger and the threatened damage, compared to Art. 435. No person shall be deprived of his
the damage arising to the owner from the property except by competent authority and
interference, is much greater. The owner may for public use and always upon payment of
demand from the person benefited indemnity for just compensation
the damage to him (NCC, Art. 432).
Should this requirement be not first complied
This principle authorized the destruction of with, the courts shall protect and, in a proper
property which is lesser in value to avert the case, restore the owner in his possession.
danger poised to another property of greater
value. Emminent Domain
Requisites of Doctrine of State of Necessity This is the superior right of the State to acquire
private property whether registered or not for
1. Interference necessary to avert an public use upon payment of just compensation.
imminent danger and the threatened
damage to the actor or a third person; It is one of the limitations on the right of
2. Damage to another is much greater than ownership in the pursuit of public interest.
the damage to the property. (Pineda, 2009)
Art. 433. Actual possession under claim of Elements of “Taking” Of Property For Purposes
ownership raises a disputable presumption of Of Eminent Domain
ownership. The true owner must resort to
judicial process for the recovery of the 1. The expropriator must enter a private
property. property;
2. The entrance into private property must be for
Disputable presumption of ownership more than a momentary period;
3. The entry into the property should be under
There is disputable presumption of ownership warrant or color of legal authority
when a person is in actual possession of the 4. The property must be devoted to a public use
property under the claim of ownership (Pineda, or otherwise informally appropriated or
2009). injuriously affected; and,
5. The utilization of the property for public use
Resort of the owner rebutting the presumption must be in such a way as to oust the owner and
deprive him of all beneficial enjoyment of the
Under Art. 433 the remedy is judicial process to property (National Power Corporation vs. Court of
recover the property of the person. Appeals, 254 SCRA 577)
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CIVIL LAW
Q: Alfredo Hababag, Sr. (Alfredo) was the particular case. They are: (a) the acquisition cost
owner of several parcels of agricultural land of the land; (b) the current value of like
situated in the Municipality of Gubat, properties; (c) the nature and actual use of the
Sorsogon. The aforesaid landholdings were property, and the income therefrom; (d) the
voluntarily offered for sale (VOS) to the owner's sworn valuation; (e) the tax declarations;
government under Republic Act No. (RA) 6657, (f) the assessment made by government
otherwise known as the "Comprehensive assessors; (g) the social and economic benefits
Agrarian Reform Law of 1988,". The Land Bank contributed by the farmers and the farmworkers,
of the Philippines (LBP) initially valued the and by the government to the property; and (h)
subject lands at P1,237,850.00, but Alfredo the nonpayment of taxes or loans secured from
rejected the valuation. After summary any government financing institution on the said
administrative proceedings for the land, if any. Corollarily, pursuant to its rule-
determination of the amount of just making power under Section 49 of the same law,
compensation, the Office of the Provincial the DAR translated these factors into a basic
Agrarian Reform Adjudicator (PARAD) of the formula, which courts have often referred to and
Department of Agrarian Reform (DAR) applied, as the CA did in this case. It, however,
Adjudication Board (DARAB) fixed the value of bears stressing that courts are not constrained to
the subject lands at adopt the said formula in every case since the
P1,292,553.20. Dissatisfied, Alfredo filed a determination of the amount of just compensation
Complaint for the determination of the amount essentially partakes the nature of a judicial
of just compensation before the RTC. RTC function. In this accord, courts may either adopt
rendered a Decision fixing the amount of just the DAR formula or proceed with its own
compensation of the subject lands at application for as long as the factors listed in
P5,653,940.00. RTC applied the Income Section 17 of RA 6657 have been duly considered.
Productivity Approach. CA set aside the RTC's
valuation for failure to give due consideration In keeping with these considerations, the Court
to the factors enumerated in Section 17 of RA finds the CA's valuation - which made use of the
6657 and the formula under DAR AO 6-92, as DAR formula - as reflective of the factors set forth
amended by DAR AO 11-94. Moreover, in Section 17 of RA 6657. Records disclose that the
contrary to the limitation imposed by DAR AO CA's computation, as adopted from the LBP's own
6-92 - i.e., that the computed value using the computation, is based on: (a) actual production
applicable formula shall not exceed the data; (b) the appropriate industry selling prices of
landowner's offer to sell - the CA found that the the products from the Philippine Coconut
amount as recomputed by the RTC was way Authority and the Bureau of Agricultural Statistics
beyond the landowner's offer of of Sorsogon; and (c) the actual uses of the
P1,750,000.00 as stated in the Claims property. Likewise, the (a) income from the
Valuation and Processing Form. Is the CA coconut fruit-bearing trees, as well as the
correct in setting aside the computation of unirrigated riceland, (b) cumulative cost of the
RTC? non-fruit-bearing trees; and (c) market value of
the cogonal land have been duly considered. The
A: Yes. Just compensation is defined as the full Court observes that the holistic data gathered
and fair equivalent of the property taken from its therefrom adequately consider the factors set
owner by the expropriator. It has been repeatedly forth in Section 17 of RA 6657, as well as the DAR
-stressed by this Court that the measure is not the formula. As such, the CA's computation, which was
taker's gain but the owner's loss. The word "just" derived from the same, must be sustained. Lest it
is used to intensify the meaning of the word be misunderstood, the ascertainment of just
"compensation" to convey the idea that the compensation on the basis of the landholdings'
equivalent to be rendered for the property to be nature, location, and market value, as well as the
taken shall be real, substantial, full [and] ample. volume and value of the produce is valid and
In this relation, the RTC, sitting as a Special accords with Section 17 of RA 6657 and the DAR
Agrarian Court, has been conferred with the formula, as in this case.
original and exclusive power to determine just
compensation for parcels of land acquired by the On the contrary, the Court finds the RTC's
State pursuant to the agrarian reform program. To valuation to be improper, as it contradicts the
guide the RTC in this function, Section 17 of RA definition of "market value" as crafted by
6657 enumerates the factors which must be taken established jurisprudence on expropriation. (Land
into consideration to accurately determine the Bank of the Philippines v. Alfredo Hababag, Sr.,
amount of just compensation to be awarded in a Substituted by his wife, Consolacion, and children,
153
CIVIL LAW
The RTC appointed a board of commissioners the parameters set by the law and its
to determine the just compensation for the implementing rules and regulations in order to
properties which, thereafter, submitted its ensure that they do not arbitrarily fix an amount
Commissioner's Report dated June 10, 2013, as just compensation that is contradictory to the
recommending the amounts of P7,000.00/sq. objectives of the law. Be that as it may, when
m. and P12,000.00/sq. m. as the just acting within the parameters set by the law itself,
compensation for the subject lots and the courts are not strictly bound to apply the formula
improvements thereon, respectively, and the to its minutest detail, particularly when faced with
payment of six percent (6%) legal interest situations that do not warrant the formula's strict
therefor, reckoned from the time of taking. application. Thus, the courts may, in the exercise
of their discretion, relax the formula's application,
A: No. The construction of the Mindanao Avenue subject to the jurisprudential limitation that the
Extension Project, Stage II-C (Valenzuela City to factual situation calls for it and the courts clearly
Caloocan City) involves the implementation of a explain the reason for such deviation.
national infrastructure project. Thus, for purposes
of determining the just compensation, RA 8974 In this case, the RTC and the CA upheld the
and its implementing rules and regulations (IRR), recommendation of the court-appointed
which were effective at the time of the filing of the commissioners, fixing the just compensation for
complaint, shall govern the improvements on the expropriated properties
at P12,000.00/sq. m., which merely considered
The replacement cost method is premised on the their location, classification, value declared by the
principle of substitution, which means that "all owner, and the zonal valuation of the subject lots.
things being equal, a rational, informed purchaser However, there is no competent evidence showing
would pay no more for a property than the cost of that it took into account the prevailing
building an acceptable substitute with like utility." construction costs and all other attendant costs
associated with the acquisition and installation of
The case of Republic v. Mupas (Mupas) instructs an acceptable substitute in place of the affected
that in using the replacement cost method to improvements/structures as required by the IRR.
ascertain the value of improvements, the courts Consequently, the Court cannot uphold and must,
may also consider the relevant standards perforce, set aside the said valuation as the just
provided under Section 5 of RA 8974, as well as compensation for the subject improvements.
equity consistent with the principle that eminent
domain is a concept of equity and fairness that In relation thereto, the Court deems it proper to
attempts to make the landowner whole. Thus, it is correct the award of legal interest to be imposed
not the amount of the owner's investment, but the on the unpaid balance of the just compensation,
"value of the interest" in land taken by eminent which shall be computed at the rate of twelve
domain, that is guaranteed to the owner. percent (12%) p.a. from the date of taking, i.e.,
from April 10, 2013 when the RTC issued a writ of
While there are various methods of appraising a possession in favor of petitioner, until June 30,
property using the cost approach, Mupas declared 2013. Thereafter, or beginning July 1, 2013, until
that the use of the depreciated replacement cost fully paid, the just compensation due respondent
method is consistent with the principle that the shall earn interest at the rate of six percent (6%)
property owner shall be compensated for his p.a., in line with the amendment introduced by
actual loss, bearing in mind that the concept of BSP-MB Circular No. 799, Series of 2013. (Republic
just compensation does not imply fairness to the v. Ng+, G.R. No. 229335, November 29, 2017)
property owner alone, but must likewise be just to
the public which ultimately bears the cost of Q: The Republic of the Philippines filed before
expropriation. The property owner is entitled to the RTC a complaint against an unknown
compensation only for what he actually loses, and owner for the expropriation of a lot located in
what he loses is only the actual value of the Barangay Ugong, Valenzuela City for the
property at the time of the taking. Hence, even as construction of the C-5 Northern Link Road
undervaluation would deprive the owner of his Project, otherwise known as North Luzon
property without due process, so too would its Expressway (NLEX) Segment 8.1, traversing
overvaluation unduly favor him to the prejudice of from Mindanao Avenue in Quezon City to the
the public. NLEX in Valenzuela City. Petitioner applied for
a writ of possession over the subject lot on May
It must be emphasized that in determining just 5, 2008, which was granted, and was
compensation, the courts must consider and apply required to deposit with the court the amount
155
CIVIL LAW
Treasure is understood, for legal purposes, as any The State is entitled to 75% share and the finder
hidden and unknown deposit of money, jewelry, to 25% (PD 7056-A).
or other precious objects, the lawful ownership of
which does not appear (NCC, Art. 439) (1997, The finder is not entitled to the hidden
2008, 2014 Bar). treasure if it was deliberately searched. (1976
Bar)
“Other precious objects”
It was not found by chance (NCC, Art. 438).
Under the ejusdem generis rule, the phrase should Moreover, treasure is defined as hidden and
be understood as being similar to money or unknown deposit of precious objects, the lawful
jewelry. ownership of which does not appear. There being
a tip, the deposit is known (NCC, Art. 439).
Oil or gold NOT considered as hidden treasure
Nature and ownership of the old notes and
These are natural resources. The Regalian coins
Doctrine applies and not the provisions on hidden
treasure. The ownership of the vault, together with the
notes and coins can now legally be considered as
Rule regarding discovery of hidden treasure hidden treasure because its ownership is no
(NCC, Art. 438 in relation to Art. 718) longer apparent. The contractor is not a
GR: If the finder is the owner of the land, building, trespasser and therefore entitled to one-half of the
or other property where it is found, the entire hidden treasure and the owner of the property is
hidden treasure belongs to him. entitled the other half (NCC, Art. 438). Since the
notes and coins have historical value, the
XPN: If the finder is not the owner or is a stranger government may acquire them at their just price
(includes the lessee or usufructuary, he is entitled which in turn will be divided equally between
to ½ thereof (NCC, Art. 566). them (NCC, Art. 438, par. 3). The vault has been
buried for about a century and the successor of
If the finder is married the bank which previously owned it cannot
succeed by inheritance to the property. (2008
If the finder is married, he or she gets one half of Bar)
the treasure or its value. His or her spouse is
entitled to share one-half of that share, it being a NOTE: Bills and notes found are not hidden
conjugal property (NCC, Art. 117, par. 4, FC). treasures. The owner can be traced through the
serial numbers.
Requisites in order that the finder be entitled
to any share in the hidden treasure (ACTA) Q: O, owner of Lot A, learning that Japanese
soldiers may have buried gold and other
1. Discovery was made on the property of treasures at the adjoining vacant Lot B,
Another, or of the State or any of its political belonging to Spouses X and Y, excavated in Lot
subdivisions; B where she succeeded in unearthing gold and
2. Made by Chance; and precious stones. How will the treasures found
3. He is not a Trespasser or Agent of the by O to be divided – (1) 100% to O as finder,
landowner (NCC, Art. 438, par. 2). (2) 50% to O and 50% to X and Y, (3) 50% to O
and 50% to the State (4) none of the above?
NOTE: If the things found be of interest to science (2010 Bar)
or the arts, the State may acquire them at their
just price, which shall be divided in conformity A: NONE OF THE ABOVE. The finding of the
with the rule stated (NCC, Art. 438). treasure was not by chance because O knew that
the treasure was in Lot B. While a trespasser is
“By chance” also not entitled to any share and there is no
indication in the problem whether or not O was a
The finder had no intention to search for the trespasser, O is not entitled to share because the
treasure. There is no agreement between the finding was not by chance.
owner of the property and the finder for the
search of the treasure.
ACCESSION
Yamashita treasure
It is that right of ownership of which an owner of a One who is NOT the owner, builder, planter or
thing has over the products of said thing sower.
(accession discreta), as well as to all things
inseparably attached or incorporated thereto Art. 444. Only such as are manifest or born are
whether naturally or artificially (accession considered as natural or industrial fruits.
continua) (Pineda, 2009).
Which respect to animals, it is sufficient that
Accession is NOT a mode of acquiring they are in the womb of the mother, although
ownership unborn.
It is not one of the modes enumerated under Art. Existence of the fruit
712 (different modes of acquiring ownership). It is,
therefore, safe to conclude that accession is not a It depends on the type of fruit:
mode of acquiring ownership. 1. Annual (must be planted every year/must
re-plant after harvest; rice, wheat, corn) –
Reason: Accession presupposes a previously deemed manifest the moment their
existing ownership by the owner over the seedlings appear; and
principal. Fundamentally, accession is a right 2. Perennial (only planted once and bear
implicitly included in ownership, without which it fruit for several seasons; mango and
will have no basis or existence (Paras, 2008). coconut trees) – deemed to exist only
when they actually appear.
NOTE: In general, the right to accession is
automatic (ipso jure), requiring no prior act on the Animal young
part of the owner or principal.
They are considered existing even if still in the
Art. 441. To the owner belongs: maternal womb. They should be considered
(1) The natural fruits; existing only at the commencement of the
(2) The industrial fruits; maximum ordinary period for gestation.
(3) The civil fruits.
Pratus sequitor ventrem – offspring follows the
ACCESSION DISCRETA mother
The right of accession with respect to what is This legal maxim means that the offspring follows
produced by the property. the dam (mother). The legal presumption, in the
absence of proof to the contrary, is that the calf, as
To the owner belongs the: well as its mother belongs to the owner of the
latter, by the right of accretion (US v. Caballero,
1. Natural fruits - The spontaneous products G.R. No. 8608, September 26, 1913). Thus, when the
of the soil, and the young and other ownership over the offspring of the animal when
products of animals; the male and female belongs to different owners,
2. Industrial fruits - Are those produced by the owner of the female was considered also the
lands of any kind through cultivation or owner of the young, unless there is a contrary
labor; custom or speculation.
3. Civil fruits - The rents of buildings, the
price of leases of lands and other Art. 445. Whatever is built, planted or sown
property and the amount of perpetual or on the land of another and the improvements
life annuities or other similar or repairs made thereon, belong to the owner
income (NCC, Art. 441-442). of the land, subject to the provisions of the
following articles.
Obligation of the owner who receives the fruit
from a third person When fruits are deemed to exist
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CIVIL LAW
1. Civil fruits accrue daily and are c. Specification.
considered personal property and may be
pro-rated; and Basic principles in accession continua
2. Natural and industrial fruits, while still (BADONG-E)
growing, are considered as real property;
ordinarily, they cannot be pro-rated. 1. He who is in Bad faith is liable for
damages.
Art. 446. All works, sowing, and planting are 2. Accessory follows the principal;
presumed made by the owner and at his 3. Union or incorporation must generally be
expense, unless the contrary is proved. effected in such a manner that to separate
the principal from the accessory would
Ownership of fruits result in substantial Damage to either or
diminish its value;
GR: Fruits belong to the owner (NCC, Art. 441). 4. To the Owner of the thing belongs the
extension or increases to such thing;
XPNS: If the thing is: (PULPA) 5. Bad faith of one party Neutralizes the bad
1. In possession of a Possessor in good faith faith of the other so that they shall be
(NCC, Art 546) (1992, 1996, 2000 Bar); considered in good faith;
before the possession is legally 6. He who is in Good faith may be held
interrupted; responsible but not penalized; and
2. Subject to a Usufruct (NCC, Art. 566); 7. No one shall unjustly Enrich himself at the
3. Lease of rural land; expense of another.
4. Pledged [NCC, Art. 1680 and Art. 2102(7)];
pledge is entitled to the fruits but has the FOR IMMOVABLES
obligation to compensate or set-off what
he receives with those which are owing to ACCESSION INDUSTRIAL
him; or
5. In possession of an Antichretic creditor Three kinds of industrial endeavors (BPS)
(NCC, Art. 2132).
1. Building – Erecting a structure or
GENERAL RULLES OF ACCESSION construction of any kind, with roof for
residential, office, social, commercial or
Accession exists only if separation is not feasible. other purposes;
Otherwise, separation may be demanded. 2. Planting – Setting into the soil or land
seeds or seedlings of trees such as
ACCESSION CONTINUA mangoes, coconuts, etc;
3. Sowing – The act of scattering or
It is the right pertaining to the owner of a thing spreading of germinated seeds
over everything incorporated or attached thereto indiscriminately or evenly through hand
either naturally or artificially; by external forces. or mechanical device.
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CIVIL LAW
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, Art. gathering and preservation (NCC,
544, par. 1). Art. 443).
Standing Crops
Planter in GF Planter in BF
Reimbursed for expenses, for Loses what is built, planted or
production, gathering and sown without right to indemnity
preservation (NCC, Art.443). (NCC, Art 449).
Planter
Entitled to reimbursement for the
necessary expenses of
preservation of the land. (NCC, Art.
452).
Owns fruits provided he pays Owns fruits (NCC, Art. 449).
planter expenses for production,
Landowner
gathering and preservation (NCC,
Art. 443).
Rule when the land owner is the builder, planter or sower (1999 Bar)
Rule when the land owner is NOT the builder, planter or sower
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CIVIL LAW
Rule when the land owner, builder, planter, sower and owner of materials are different persons
The parties shall agree upon the 2. Sells the land or rents it,
terms of the lease and in case of Builder or Planter cannot be
disagreement, the court shall fix obliged to buy the land if its
the terms thereof. value is considerably more
than that of the building or
trees.
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CIVIL LAW
Bad faith Good faith Good faith
1. Acquires improvements after If he pays the owner of the 1. Collect value of materials
paying indemnity and damages, materials, plants or seeds: primarily from builder, planter,
unless the latter decides to sower, subsidiarily from land
remove (NCC, Art. 454, 447 & 443); i. He may demand from the owner (NCC, Art. 455); or
and landowner the value of the 2. Remove the materials in any
materials and labor (NCC, Art event, with a right to be
2. Cannot compel builder, planter 455) and shall also be obliged indemnified for damages (NCC,
and sower to buy land. to the reparation of damages Art. 447).
(NCC, Art. 447); or
ii. Remove the materials in any
event, with a right to be
indemnified for damages (NCC,
Articles 454 and 447).
Bad faith Bad faith Good faith
The owner of the land shall answer Pay value of materials to its owner
subsidiarily for their value and only (NCC, Art. 455) 1. Collect value of materials
in the event that the one who made and primarily from builder,
use of them has no property with planter, sower, subsidiarily
which to pay (NCC, Art. 455). If the Land Owner: from land owner (NCC, Art.
455); or
and 1. Acquires the improvement,
Builder, Planter, or Sower may 2. Remove the materials in
Land Owner can either: (NCC, Art. demand from the landowner any event, with a right to be
448) the value of the materials and indemnified for damages
labor (NCC, Art 455). (NCC, Art. 447).
1. Acquire improvements after
paying indemnity for: And he has the right to retain the
a. Necessary expenses, and thing (and cannot be required to
b. Useful expenses which could pay rent) until indemnity is paid
either be: (Art. 546).
i. Original costs of
improvements If the useful improvements can be
ii. Increase in the value of removed without damage to the
the whole (NCC, Articles principal thing, the possessor in
546 and 443). good faith may remove them,
unless the person who recovers the
2. Sell the land to builder and planter or possession exercises option 2 (NCC,
collect rent from sower unless the Articles 547 and 447);
value of the land is considerably
greater than the building etc., 2. in Sells or rents it, Builder or Planter
which case, the builder and planter cannot be obliged to buy the land if
shall pay rent. its value is considerably more than
that of the building or trees.
The parties shall agree upon the
terms of the lease and in case of In such case, he shall pay
disagreement, the court shall fix the reasonable rent.
terms thereof.
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).
The parties shall agree upon the 4. Sells the land or rents it,
terms of the lease and in case of Builder or Planter cannot be
disagreement, the court shall fix obliged to buy the land if its
the terms thereof. value is considerably more
than that of the building or
trees.
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CIVIL LAW
b. Increase in the value of can be removed without agent of the owner of materials.
the whole (NCC, Articles damage to the principal thing,
546 and 443). the possessor in good faith Therefore, the provisions of
may remove them, unless the Article 449 of the Civil Code will
4. Sell the land to builder and person who recovers the apply by analogy. He is even
planter or collect rent from possession exercises the other liable for damages (Rabuya,
sower unless the value of the (NCC, Art. 547); or 2008).
land is considerably greater than
the building etc., in which case, 4. Sells or rents it, Builder or
the builder and planter shall pay Planter cannot be obliged to
rent. buy the land if its value is
considerably more than that
The parties shall agree upon the of the building or trees.
terms of the lease and in case of
disagreement, the court shall fix In such case, he shall pay
the terms thereof. reasonable rent.
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b. Order the demolition of work
or restoration to former 2. Recover necessary expenses for 2. Remove materials in any
condition and collect preservation of land without event if builder, planter,
damages in both cases (NCC, the right to retain the thing sower acquired materials.
Art. 450); or until the indemnity is paid
c. Sell the land to builder and (NCC, Art. 452 & 546);
planter or rent it to the
sower, and collect damages in 3. Pay value of materials to its
both cases (NCC, Art. 450) owner plus damages (NCC, Art.
(2008 Bar). 455); and
A: With respect to ₱150,000.00; a) As they were When the land’s value is considerably more than
married before the effectivity of the Family Code the improvement, the landowner cannot compel
of the Philippines and absent any showing of any the builder to buy the land. In such event, a “forced
pre-nuptial agreement between Erlinda and lease” is created and the court shall fix the terms
Pedro, it is safe to conclude that their property thereof in case the parties disagree thereon
relations were governed by the system of conjugal (Depra v. Dumalo, G.R. No. L-57348, May 16, 1985).
partnership of gains. Hence, pursuant to Article
12125 of the Family Code, the ₱l00,000.00 loan Rule when landowner sells the land to a third
obligation, including interest, if any, is chargeable person who is in bad faith
to Erlinda and Pedro's conjugal partnership as it
was a debt contracted by the both of them during Builder must go against the third person but if the
their marriage; and b) the liability for the said latter has paid the land owner, a case against such
₱50,000.00 will not fall on all petitioners, but only land owner may still be filed by the builder and
on Erlinda, as she was the only one among the the third person may file a third party complaint
petitioners who was involved in the said sale. against land owner.
However, with respect to ₱2,000,000.00, both
Teresita and Erlinda are in bad faith. Whenever Recourse left to the parties where the builder
both the landowner and the fails to pay the value of the land
builder/planter/sower are in good faith (or in bad
faith, pursuant to the afore-cited provision), the The Civil Code is silent on this point. Guidance
landowner is given two (2) options under Article may be had from these decisions:
44836 of the Civil Code, namely: (a) he may
appropriate the improvements for himself after 1. In Miranda v. Fadullon, G.R. No. L-8220,
reimbursing the buyer (the builder in good faith) October 29, 1955, the builder might be made
the necessary and useful expenses under Articles to pay rental only, leave things as they are,
54637 and 54838 of the Civil Code; or (b) he may and assume the relation of lessor and lessee;
sell the land to the buyer, unless its value is 2. In Ignacio v. Hilario, G.R. L-175, April 30, 1946,
considerably more than that of the improvements, owner of the land may have the improvement
in which case, the buyer shall pay reasonable rent. removed; or
Payment of ₱2,000,000.00 for the building is 3. In Bernardo v. Bataclan, G.R. No. L-44606,
subject at the option of the landowner. (Erlinda November 28, 1938, the land and
Dinglasan Delos Santos et al. v. Alberto Abejon and theimprovement may be sold in a public
the estate of Teresita Dinglasan Abejon, G.R. No. auction, applying the proceeds first to the
215820, March 20, 2017) payments of the value of the land, and the
excess if any, to be delivered to the owner of
When there is good faith on the part of both the house in payment thereof.
the owner of the land and the builder, planter
or sower Options available to the landowner if crops are
planted in good faith in his property (2000
The owner of the land only has the options of Bar)
paying the value of the building or selling the land.
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As to the pending crops planted in good faith, the value of the chapel with right of retention until he
landowner has the option of allowing the planter is reimbursed (NCC, Arts. 448, 546 & 547).
in good faith to continue the cultivation and to
harvest the crops, or to continue the cultivation (2) Bartolome loses whatever he built, without
and harvest the crops himself. In the latter option, any right to indemnify (NCC, Art. 449).
however, the landowner shall have the right to a
part of the expenses of cultivation and to a part of Q: Pecson owned a commercial lot on which he
the net harvest, both in proportion to the time of built a building. For failure to pay realty taxes,
possession (NCC, Art. 545). the lot was sold at public auction to
Nepomuceno, who in turn sold it to the
Q: Believing that a piece of land belonged to spouses Nuguid. The sale, however, does not
him, A erected thereon a building, using include the building. The spouses
materials belonging to C. the owner of the land, subsequently moved for the delivery of
B was aware of the construction being made by possession of the said lot and apartment.
A, but did not do anything to stop it. What are Pecson filed a motion to restore possession
the rights of A, B, and C, with respect to the pending determination of the value of the
building and as against each other? (1984 Bar) apartment.
A: B, regardless of his good or bad faith, becomes May Pecson claim payment of rentals?
the owner of the building (NCC, Arts. 445 and 448).
However, A, a builder in good faith will be entitled A: YES, Pecson is entitled to rentals by virtue of
to reimbursement of his necessary and useful his right of retention over the apartment. The
expenses, with right to retain the same until paid. construction of the apartment was undertaken at
He may also remove the construction, since B the time when Pecson was still the owner of the
acted in bad faith in not stopping the construction lot. When the Nuguids became the uncontested
(NCC, Arts. 454 and 447). C shall have the right to owner of the lot, the apartment was already in
reimbursement and may also remove them but existence and occupied by tenants.
only if he can do so without injury to the work
(NCC, Art. 447). NOTE: Art. 448 does not apply to cases where the
owner of the land is the builder but who later lost
Q: Suppose X was in good faith but Y knew that the land; not being applicable, the indemnity that
X was constructing on his (Y's) land but simply should be paid to the buyer must be the fair
kept quiet about it, thinking perhaps that he market value of the building and not just the cost
could get X's house later. What are the of construction thereof. To do otherwise would
respective rights of the parties over X's house unjustly enrich the new owner of the land.
in this case? (1999 Bar)
Pending complete reimbursement, may the
A: Since the lot owner Y is deemed to be in bad spouses Nuguid benefit from the
faith (Art. 453), X as the party in good faith may improvement?
(a) remove the house and demand indemnification
for damages suffered by him, or (b) demand A: NO. Since spouses Nuguid opted to appropriate
payment of the value of the house plus reparation the improvement for themselves when they
for damages (Art. 447, in relation to Art. 454). Y applied for a writ of execution despite knowledge
continues as owner of the lot and becomes, under that the auction sale did not include the apartment
the second option, owner of the house as well, building, they could not benefit from the lot’s
after he pays the sums demanded. improvement until they reimbursed the improver
in full, based on the current market value of the
Q: Bartolome constructed a chapel on the land property (Pecson v. CA, G.R. No. 115814, May 26,
of Eric. What are Bartolome’s rights if he were: 1995).
(1) possessor of the land in good faith, or (2) in
bad faith? (1996 Bar) The builder is entitled to a refund of the
expenses he incurred and not on the market
A: (1) A chapel is a useful improvement, value of the improvement (2000 Bar)
Bartolome may remove the chapel if it can be
removed without damage to the land, unless Eric Under Art. 448 in relation to Art. 546, the builder
chooses to acquire the chapel. In the latter case, in good faith is entitled to a refund of the
Bartolome has the right of reimbursement of the necessary and useful expenses incurred by him, or
the increase in value which the land may have
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parties must, therefore, be determined as if they deposit created by the current of water becomes
both had acted in good faith. When there has been manifest (Heirs of Navarro v. IAC, G.R. No. 68166,
bad faith, not only on the part of the person who February 12, 1997).
built, sowed, or planted on another's land, but also Man-made or artificial accretions to lands NOT
on the part of the owner of the latter, the rights of included
both shall be the same as if they had acted in good
faith. Therefore, the owner of the land on which The rule on alluvion does not apply to man-made
the building, sowing, or planting is done in good or artificial accretions to lands that adjoin canals
faith shall have a right to appropriate as his own or esteros or artificial drainage system (Ronquillo
the work, sowing, or planting after the indemnity v. CA, G.R. No 43346, March 20, 1991).
mentioned in articles 453 and 454, or, to oblige
the person who has built or planted, to pay him NOTE: If the deposits accumulate, not through the
the value of the land and to force the person who effects of the current of the water, but because of
sowed to pay the proper rent (Art. 453); the constructions made by the owner purely for
(Municipality of Oas vs Roa, G.R. No. L-2017, defensive purposes against the damaging action of
November 24, 1906). the water, the deposits are still deemed to be
alluvion and will belong to the riparian owner.
ACCESSION NATURAL
If the deposit is brought about by sea water
ALLUVION
When the sea moves towards the estate and the
Alluvium or alluvion (2001, 2003, 2008, 2009 tide invades it, the same becomes a foreshore land
BAR) which consequently becomes part of the public
domain. Thus, it belongs to the state.
It is the gradual deposit of sediment by natural
action of a current of fresh water (not sea water), Registration
the original identity of the deposit being lost.
Where it is by sea water, it belongs to the State Alluvial deposits must be registered. Though,
(Government of Philippine Islands v. Cabangis, G.R. automatically it is owned by the riparian owner
No. L-28379, March 27, 1929). (Heirs of Navarro v. IAC, G.R. No. 68166, February
12, 1997), it is still subject to acquisitive
NOTE: Art. 457 of NCC states “To the owners of prescription which may divest the riparian owner
the lands adjoining the banks of the rivers belongs the ownership over the accretion.
the accretion which they gradually receive from
the effects of the current of the waters. Failure to register
If all the requisites are present, the riparian owner 1. To compensate him for:
is automatically entitled to the accretion. a. Danger of loss that he suffers due to
the location of his land; and
NOTE: The alluvion starts to become the property b. The encumbrances and other
of the riparian owner from the time that the easements on his land
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CIVIL LAW
AVULSION Rule on avulsion of uprooted trees
It is the deposit of known (identifiable) portion of GR: The owner of the tree retains ownership.
land detached from the property of another which
is attached to the property of another as a result of XPN:
the effect of the current of a river, creek or torrent 1. The owner must claim them within a period of
(2001 Bar). six months; and
Whenever the current of a river, creek, or torrent NOTE: The claim does not require actual
segregates from an estate on its banks a known recovery. It can be recovered on the basis of
portion of land and transfers it to another estate, prescriptive period for acquiring movables
the owner of the land to which the segregated which is four years.
portion belonged retains the ownership of it,
provided that he removes the same within 2 years 2. If uprooted trees have been transplanted by
(NCC, Art. 459) (2001 Bar). the owner of the land which the trees may
have been cast and said trees have taken root
Alluvium v. Avulsion (2001 Bar) in said land, the owner of the trees, upon
making the claim, is required to refund the
ALLUVIUM AVULSION expenses incurred in gathering them or in
Gradual and Sudden or abrupt putting them in safe place, including the
imperceptible. process. expenses incurred by the owner of the land
Soil cannot be Identifiable and for the preservation of the trees (Rabuya,
identified. verifiable. 2008).
Belongs to the owner Belongs to the owner
of the property to from whose property Art. 463. Whenever the current of a river
which it is attached. it was detached. divides itself into branches, leaving a piece of
Merely an attachment. Detachment followed land or part thereof isolated, the owner of the
by attachment. land retains his ownership. He also retains it
if a portion of land is separated from the
Requisites of avulsion (CAI) estate by the current.
GR: Original owner retains title. Art. 465. Islands which through successive
accumulation of alluvial deposits are formed
XPNs: The owner must remove (not merely claim) in non-navigable and non-floatable rivers,
the transported portion within two years to retain belong to the owners of the margins or banks
ownership, otherwise, the land not removed shall nearest to each of them, or to the owners of
belong to the owner of the land to which it has both margins if the island is in the middle of
been adjudicated in case of: the river, in which case it shall be divided
longitudinally in halves. If a single island thus
1. Abandonment; or formed be more distant from one margin than
2. Expiration of two years, whether the failure to from the other, the owner of the nearer
remove be voluntary or involuntary, and margin shall be the sole owner thereof.
irrespective of the area of the portion known
to have been transferred. ISLANDS
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CIVIL LAW
1. That of greater value; accessory thing shall have a right to choose
2. If two things are of equal value – That of between the former paying him its value or
greater volume; that the thing belonging to him be separated,
3. If two things are of equal volume – That to even though for this purpose it be necessary
which the other has been united as an to destroy the principal thing; and in both
ornament, or for its use or perfection; and cases, furthermore, there shall be indemnity
4. That which has greater merits, utility and for damages.
volume if things (NCC, Art. 468).
If either one of the owners has made the
NOTE: In painting and sculpture, writings, incorporation with the knowledge and
printed matter, engraving and lithographs, the without the objection of the other, their
board, metal, stone, canvas, paper or respective rights shall be determined as
parchment shall be deemed the accessory though both acted in good faith.
thing (NCC, Art. 468).
Ownership when the adjunction involves three Rights of owners over the thing in adjunction
or more things
OWNER OF THE
If the adjunction involves three or more things, PRINCIPAL
ACCESSORY
the court should first distinguish the principal and Good faith
apply Art. 466 in an equitable manner such that 1. Acquire accessory 1. Receive payment for
the principal acquires the accessory, indemnifying and pay owner of value of accessory; or
the former owner thereof for its value. the accessory for 2. GR: Demand
its value; or separation provided
Art. 469. Whenever the things united can be 2. Demand the thing suffers no
separated without injury, their respective separation injury.
owners may demand their separation. provided the thing
suffers no injury. XPN: If accessory is
Nevertheless, in case the thing united for the more precious than
use, embellishment or perfection of the other, principal, he may
is much more precious than the principal demand separation
thing, the owner of the former may demand with or without injury
its separation, even though the thing to which to the thing.
it has been incorporated may suffer some Good faith Bad faith
injury. Acquire accessory Lose accessory and pay
w/o paying the owner damages.
of accessory and
Separation of things is allowed in the following entitled to damages.
cases: Bad faith Good faith
1. Pay value of 1. Receive payment and
1. Separation without injury; accessory and pay damages; or
2. Separation with injury – Accessory is damages; or 2. Have accessory
much more precious than the principal, 2. Have the things separated with or
the owner of the former may demand its separated, even without injury to
separation even though the principal may though there is principal and receive
suffer injury; injury to the damages.
3. Owner of the principal acted in Bad faith principal and pay
(NCC, Art. 469). damages.
Bad faith
Art. 470. Whenever the owner of the Same as though both acted in good faith.
accessory thing has made the incorporation
in bad faith, he shall lose the thing Art. 471. Whenever the owner of the material
incorporated and shall have the obligation to employed without his consent has a right to
indemnify the owner of the principal thing for an indemnity, he may demand that this
the damages he may have suffered. consist in the delivery of a thing equal in kind
and value, and in all other respects, to that
If the one who has acted in bad faith is the
employed, or else in the price thereof,
owner of the principal thing, the owner of the according to expert appraisal.
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CIVIL LAW
Specification (NCC, Art. 474) ADJUNCTION MIXTURE SPECIFICATION
It is the giving of new form to another’s material Involves at Involves at May involve one
through application of labor. The material least two least two thing (or more)
undergoes a transformation or change of identity. things. things. but form is
The labor is the principal and the material used is changed,
the accessory.
Accessory Co-ownership Accessory
Respective rights of the maker and the owner follows the results. follows the
of the materials in specification principal. principal.
Actions for quieting of title are not suits in rem; Persons who may file an action to quiet title
neither are they suits in personam. They are suits
against a particular person or persons in respect 1. Registered owner;
to the res and the judgement will apply only to the 2. A person who has an equitable right or
property in dispute. interest in the property; or
3. The State.
Classifications of actions
Q: Lim filed in the RTC in Cebu City a petition
1. Remedial action – one to remove cloud on for the reconstitution of the owner's duplicate
title; and copy of OCT No. RO-9969-(O-20449), alleging
2. Preventive action – one to prevent the casting that said OCT had been lost during World War
of a (threatened) cloud on the title. II by his mother, Luisa, who acquired title to it
by virtue of a deed of sale, albeit unregistered.
Scope of the action to quiet title On account of the Oños' opposition, and upon
order of the RTC, Lim converted the petition
Only real properties can be subject of an action for for reconstitution into a complaint for quieting
quieting of title (Pineda, 2009). of title. The Oños now contend that this action
for quieting of title should be disallowed
QUIETING OF TITLE : REQUIREMENTS because it constituted a collateral attack on
OCT No. RO-9969-(O-20449). Is their
Requisites for an action to quiet title (LCDR) contention correct?
1. Plaintiff must have a Legal or equitable A: NO. The attack is direct when the objective is to
title to, or interest in the real property annul or set aside such judgment, or enjoin its
which is the subject matter of the action; enforcement. On the other hand, the attack is
indirect or collateral when, in an action to obtain a
NOTE: He need not be in possession of different relief, an attack on the judgment is
said property (NCC, Art.477). nevertheless made as an incident thereof. The
averments readily show that the action was
2. There must be Cloud in such title; neither a direct nor a collateral attack for Lim was
3. Such cloud must be Due to some (IRCEP) asserting only that the existing title registered in
a. Instrument; the name of the petitioners' predecessors had
b. Record; become inoperative due to the conveyance in
c. Claim; favor of Lim's mother, and resultantly should be
d. Encumbrance; or cancelled (Oño vs Lim, G.R. No. 154270, March 09,
e. Proceeding which is apparently valid 2010).
but is in truth invalid, ineffective,
voidable or unenforceable, and is Art. 476. Whenever there is a cloud on title to
prejudicial to the plaintiff’s title; and real property or any interest therein, by
reason of any instrument, record, claim,
4. Plaintiff must encumbrance or proceeding which is
a. Return to the defendant all benefits apparently valid or effective but is in truth and
he may have received from the latter; in fact invalid, ineffective, voidable, or
or unenforceable, and may be prejudicial to said
b. Reimburse him for expenses that may title, an action may be brought to remove such
have redounded to his benefit. cloud or to quiet the title.
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property or any interest therein. ACTION TO ACTION TO REMOVE
QUIET TITLE CLOUD ON TITLE
As to purpose
Rules in actions for quieting of title To put an end to To procure the
vexatious litigation in cancellation; delivery;
1. These put an end to vexatious litigation in respect to the property release of an
respect to property involved; plaintiff involved. instrument,
asserts his own estate & generally encumbrance or claim,
declares that defendant’s claim is without which constitutes a
foundation; claim in plaintiff’s title,
2. Remedial in nature; and which may be used
3. Not suits in rem nor personam but suits to injure or to vex him
against a particular person or persons in in his enjoyment of his
respect to the res (quasi in rem); title.
4. May not be brought for the purpose of As to nature of the action
settling a boundary disputes. Remedial in nature, Preventive in nature, to
5. Applicable to real property or any interest involving a present remove a cloud which
therein; adverse claim. maybe used for future
6. An action to quiet title brought by the actions.
person in possession of the property is As to nature of claims
IMPRESCRIPTIBLE; and Plaintiff asserts own Plaintiff declares his
7. If he is not in possession, he must invoke claim and declares that own claim and title and
his remedy within the prescriptive the claim of the at the same time
period as follows; defendant is unfounded indicates the source
a) Ordinary prescription- 10 years and calls on the and nature of
b) Extraordinary prescription- 30 years. defendant to justify his defendant’s claim
claim on the property pointing its defect and
Requisites for existence of a cloud (ATP) that same may be prays for the
determined by the declaration of its
1. There is an Apparently valid or effective court. validity.
instrument; Filed against whom
Against people who Against defendant who
NOTE: They must appear valid or effective – have claims; claims are asserts claims based on
and extraneous evidence is needed to prove more general in nature an invalid instrument
their invalidity or ineffectivity. (but not apparent).
2. But such instrument is in Truth: Action to quiet title cannot be availed until the
a. Invalid;
donation has been first revoked
b. Ineffective;
c. Voidable; The barangay traces its claim of ownership over
d. Unenforceable; the disputed property to a valid contract of
e. Has been extinguished or terminated; or donation which is yet to be effectively revoked.
f. Has been barred by extinctive Such rightful claim does not constitute a cloud on
prescription. the supposed title of Edgardo over the same
3. Such instrument may be Prejudicial to the property removable by an action to quiet title
title. (Dolar v. Brgy. Lublub, G.R. No. 152663, November
18, 2005).
Purpose of an action to remove cloud on title
Art. 477. The plaintiff must have legal or
It is intended to procure the cancellation, or
equitable title to, or interest in the real
delivery of, release of an instrument,
property which is the subject matter of the
encumbrance, or claim constituting a claim on
action. He need not be in possession of said
plaintiff’s title, and which may be used to injure or
property.
vex him in the enjoyment of his title.
Indispensable Requirement For Action To
Action to quiet title v. Action to remove cloud
Quiet Title
on title
Laches
There is co-ownership whenever the ownership of
It is the failure or neglect, for unreasonable and an undivided thing or right belongs to different
unexplained length of time, to do that which by persons (NCC, Art. 484). It is the right of common
exercising due diligence, could or should have dominion which two or more persons have in a
been done earlier. spiritual (or ideal) part of the thing which is not
physically divided.
The negligence or omission to assert a right within
a reasonable time, warranting a presumption that CHARACTERISTICS OF CO-OWNERSHIP IN
the party entitled to assert it either has GENERAL
abandoned it or declined to assert it (Tijam v
Sibonghanoy, G.R. No. L-21450, April 15, 1968). 1. Plurality of subjects or owners;
2. There is no mutual representation by the
An action filed within the period of limitations co-owners;
may still be barred by laches (NCC, Articles 1431, 3. It exists for the common enjoyment of the
1433 and 1437). co-owners;
4. There is a single object which is not
Art. 482. If a building, wall, column, or any materially divided;
other construction is in danger of falling, the 5. It has no distinct legal personality; and
owner shall be obliged to demolish it or to 6. It is governed first of all by the contract of
execute the necessary work in order to the parties; otherwise, by special legal
prevent it from falling. provisions, and in default of such
provisions, by the provisions of Title III of
If the proprietor does not comply with this the New Civil Code on co-ownership.
obligation, the administrative authorities
may order the demolition of the structure at Legal effect of co-ownership
the expense of the owner, or take measures to
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CIVIL LAW
Co-ownership creates rights in favor of each one by accretion.
of the co-owners with respect to the property
owned in common.
As to minority or legal disability
The rights of a co-owner can be viewed in two
senses: In case of a minor who The legal disability of
is a co-owner, this does one joint owner benefits
1. His right over the thing owned in not benefit the others the others.
common is limited by the other co- for the purpose of
owner’s concomitant rights; or prescription.
2. His right over his ideal share or his Prescription
undivided interest over the same Prescription will
Prescription will not run
property; the individual co-owner has continue to run among
among them.
absolute control and ownership over his co-owners.
ideal share.
Co-ownership v. Partnership
Requisites of co-ownership (PUS)
ORDINARY
1. Plurality of owners; CO-OWNERSHIP
PARTNERSHIP
2. Unity of object, which is an undivided No legal personality Has legal personality.
thing or right; and
Can be created without Can be created only by
3. Each co-owner’s right must be limited
the formalities of a contract, express or
only to his ideal Share of the physical
contract implied
whole.
By contract or by will. By contract only.
NOTE: By the very nature of co-ownership, a Agreement to exist for No term limit is set by
co-owner cannot point to any specific portion more than 10 years is law.
of the property owned in common as his own void.
because his share remains intangible and ideal No mutual There is mutual
(Spouses Avila et al v. Spouses Barabat, GR. No. representation. representation.
141993, May 17, 2006). Not dissolved by the Dissolved by death or
death/incapacity of a co- incapacity of a partner.
Rules to govern in co-ownership owner.
A co-owner can dispose A partner cannot be
a. Contracts; of his share w/o the substituted without the
b. Special provision of law; and consent of the others consent of the others.
c. Provisions of the civil code. hence in a way a co-
owner is substituted.
Co-ownership v. Joint tenancy
Profits of a co-owner Profits may be
depend on his stipulated upon;
CO-OWNERSHIP JOINT OWNERSHIP proportionate share. (e.g., profit-sharing
Tenancy in common Joint Tenancy agreements).
As to the extent of ownership For collective For profit.
Each co-owner is the Each joint owner owns enjoyment.
owner of his own ideal the whole thing. No public instrument is May be made in any
share. needed even if the object form except when real
As to disposition of the co-ownership is property is contributed.
Each co-owner may Joint owner may not an immovable.
dispose of his undivided dispose of his own share
share without the other without the consent of Alienation of property co-owned
co-owners’ consent. all the rest, because he
really has no ideal When a co-owner sells the whole property as his,
share. the sale will affect only his own share but not
As to transfer of shares in case of death those of the other co-owners’ who did not consent
Upon the death of a co- Upon the death of a joint to the sale.
owner, his ideal share owner, his share goes to
goes to his heirs. the other joint owners A sale of the entire property by one co-owner
without the consent of the other co-owners is not
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES 182
PROPERTY
null and void but affects only his undivided share Interests are presumed equal, unless the contrary
and the transferee gets only what would is proved (NCC, Art. 485, par. 2).
correspond to his grantor in the partition of the
thing owned in common (Paulmitan v. CA, G.R. No. Q: JM and Kris are siblings. Kris is engaged in
51584, November 25, 1992). developing subdivisions and is frequently out
of the country. Kris opened a joint savings
Q: Is there such a thing as perpetual co- account at BPI with JM as the other party in the
ownership? account. Kris executed a Special Power of
Attorney in favor of JM giving him the power to
A: NO. Any of the co-owners may demand manage and use the funds for his projects in
partition any time. the country. JM withdrew P1,000,000 from the
joint savings account and deposited in his own
No co-owner ought to be compelled to stay in a co- account for the reason that he is going to use it
ownership indefinitely. He may insist the partition for the subdivision project in Marikina. Upon
of the property any time. Such action to demand knowledge of this withdrawal, Kris demanded
for partition does not prescribe (Patricio v. Dario, the return of the withdrawn cash as there was
G.R. No. 170829, November 20, 2006). no project in Marikina that needs funding. Kris
claims that he has all the right to recover the
A co-owner has a right to freely sell or dispose his money. Is his contention correct?
undivided share of interest but has no right to sell
a divided or definite part of a real estate owned in A: YES. Under a joint account setup, the depositors
common (Lopez v. Illustre,G.R. No. 2426, January are joint owners or co-owners of the said
24, 1906). account, and their share in the deposits shall be
presumed equal, unless the contrary is proved,
In a property co-owned by the compulsory heirs, pursuant to Art. 485 of NCC. Nevertheless, as
any act tantamount to partition such as identifying between the account holders, their right against
their shares and constructing their respective each other may depend on what they have agreed
houses automatically terminates co-ownership upon, and the purpose for which the account was
(Avila v. Sps. Arabat, G.R. No.141993, March 17, opened and how it will be operated.
2006).
JM’s right to obtain funds from the subject account
Duration of the co-ownership (2000, 2002, was conditioned on the necessity of funds for Kris'
2008 Bar) projects. Admittedly, at the time he withdrew the
amount of P1,000,000 from the subject account,
An agreement to keep the thing undivided for a there was no project being undertaken for Kris.
certain period of time, not exceeding ten years, While JM is a co-owner of the subject account as
shall be valid. This term may be extended by a far as the bank is concerned — and may, thus,
new agreement. validly deposit and/or withdraw funds without
the consent of his co-depositor, Kris — as between
A donor or testator may prohibit partition for a him and Kris, his authority to withdraw, as well as
period which shall not exceed twenty years (in the amount to be withdrawn, is circumscribed by
relation to NCC, Art. 1083). the purpose for which the subject account was
opened (Apique v. Fahnenstich, GR No 205705,
Neither shall there be any partition when it is August 5, 2015).
prohibited by law (NCC, Art. 494).
SOURCES OF CO-OWNERSHIP (LOST-C²)
Share of the co-owners in the benefits and
charges arising from the co-ownership 1. Law – e.g. Easement of party walls (NCC, Art.
658); co-ownership between a man and a
The share of the co-owners in the benefits and woman capacitated to marry each other (Art.
charges arising from the co-ownership shall be 147, FC); between a man and a woman not
proportional to their respective interests and any capacitated to marry each other (Art. 148, FC);
stipulation in a contract to the contrary shall be 2. Occupancy – e.g. When two persons gather
void (NCC, Art. 485, par. 1). Consequently, in order forest products or catch a wild animal;
to determine the share of the co-owners in the 3. Succession – e.g. Heirs of undivided property
benefits and charges, we must first determine before partition;
their respective interests in the co-ownership. 4. Testamentary (or mortis causa) / Donation
inter vivos – e.g. Where the donor prohibits
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partition of the property for a certain period General rights of each co-owner as to the thing
of time; owned in common (USA-COPE-P)
5. Contract; or
6. By Chance or fortuitous event – e.g. Hidden 1. To Use the thing according to the purpose
treasure intended provided that:
a. It is without prejudice to the interest of
NOTE: One who is merely related by affinity to the the co-ownership; and
decedent does not become a co-owner of the b. Without preventing the use of other co-
latter’s property. owners (NCC, Art. 486).
Q: Hilaria Bagayas, an adoptive child, filed a NOTE: The purpose of the co-ownership may
complaint against her siblings who excluded be changed by an agreement, express or
her from inheriting from the estate of their implied.
parents. She asked to include her as a
registered owner to the extent of one-third of 2. To Share in the benefits in proportion to his
the lands covered therein; citing Section 108 of interest, provided the charges are borne in the
PD No. 1529 or the “Property Registration same proportion (NCC, Art. 485);
Decree”. In an earlier complaint, she asked for
the annulment of a Deed of Absolute Sale in NOTE: A contrary stipulation is void. Hence,
favor of her brothers wherein the RTC found benefits cannot be stipulated upon by the co-
otherwise. They found that the lands where owners.
transferred to the brothers by the father’s
execution of the deed of sale before he died. Is 3. Each co-owner may bring an Action for
the dismissal of the earlier complaint on the ejectment (NCC, Art. 487);
ground that it is in the nature of a collateral
attack on the certificates of title constitutes a NOTE: Action for ejectment covers; forcible
bar to a subsequent petition under Section 108 entry, unlawful detainer, accion publiciana,
of PD No 1529? quieting of title, accion reivindicatoria, and
replevin.
A: It does not. Section 108 of PD No. 1529 in used
only for contemplating corrections or insertions of 4. To Compel other co-owners to contribute to
mistakes which are only clerical but certainly not expenses for preservation of the thing (NCC,
controversial issues. Although Hilaria Bagayas Art. 488) and to the taxes;
was able to prove that she is a legally adoptive 5. To Oppose to any act of alteration (NCC, Art.
child, the action is not proper. As her petition was 491) even if beneficial to the co-owners;
of an annulment of sale and partition. She must 6. To Protect against acts of majority which are
first prove that she is a co-owner of the estate and prejudicial to the minority (NCC, Art. 492, par.
conveyance of her lawful shares. However, she 3)
failed to do so. As regards to her citing of Section 7. To Exercise legal redemption;
108 of PD No. 1529, it was improper; as her intent 8. To ask for Partition (NCC, Art. 494);
for using it is as a mode of directly attacking the 9. Right to exempt himself from obligation of
certificates of title issued to the Bagayas brothers. paying necessary expenses and taxes by
It was ruled that it was not a direct attack, renouncing his share in the pro-indiviso
therefore cannot be used. The complaint is not interest; but cannot be made if prejudicial to
covered by the intention of the decree. co-ownership (NCC, Art.488);
10. Right to make repairs for preservation of
Art. 486. Each co-owner may use the thing things can be made at will of one co-owner;
owned in common, provided he does so in receive reimbursement therefrom; notice of
accordance with the purpose for which it is necessity of such repairs must be given to co-
intended and in such a way as not to injure the owners, if practicable (NCC, Art.489);
interest of the co-ownership or prevent the 11. Right to full ownership of his part and fruits.
other co-owners from using it according to (NCC, Art. 493);
their rights. The purpose of the co-ownership 12. Right to alienate, assign or mortgage own
may be changed by agreement, express or part; except personal rights like right to use
implied. and habitation (NCC, Art.493);
13. Right of pre-emption;
RIGHT OF CO-OWNERS 14. Right to be adjudicated thing (subject to right
of others to be indemnified); and
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management of which were left to the care of Q: Spouses Roque Magsano and Susana Capelo
Erna who was then residing in their ancestral (Sps. Magsano), the parents of Norma, et. al.,
home. The Melecio Heirs purportedly executed executed in favor of PSLB a Real Estate
a notarized Special Power of Attorney (SPA) Mortgage over their parcel of land as security
authorizing Erna to apply for a loan with RBCI for their loan. Sps. Magsano defaulted in their
and mortgage the subject properties. Erna obligation, causing the extra-judicial foreclose
defaulted in the loan payment causing RBCI to of the mortgaged property in which PSLB
extrajudicially foreclose the mortgaged emerged as the highest bidder. It subsequently
properties. demanded RBCI to release the sold the subject land to Sps. Manuel.
subject properties from the coverage of Erna's Thereafter, Sps. Magsano refused to vacate the
loan obligation to the extent of their shares premises despite PSLB’s demands; hence, the
and refused to vacate the premises. RBCI latter applied for and was granted a writ of
applied for and was issued a writ of possession and demolition. Norma et. al.
possession. The Melecio Heirs filed a sought to annul the Real Estate Mortgage. They
complaint in court alleging that the SPA averred that Roque Magsano passed away
submitted by Erna was spurious and their prior to the execution of the Real Estate
signatures appearing thereon were falsified. Is Mortgage; hence, the mortgage was void, and
the mortgage of the entire property valid? could not have conferred any right to PSLB
which it could pass to Sps. Manuel. PSLB and
A: No. Erna did not validly mortgage the entire the heirs of Sps. Manuel denied knowledge of
property. While Erna, as herself a co-owner, by the death of Roque, and averred that
virtue of Article 493 of the Civil Code, had the petitioners have no cause of action to seek the
right to mortgage or even sell her undivided annulment of the Real Estate Mortgage since
interest in the said properties, she, could not, they were not parties thereto.
however, dispose of or mortgage the subject
properties in their entirety without the consent of 1. Is the Real Estate Mortgage void?
the other co-owners. The settled rule is that 2. Are Sps. Manuel purchasers in
persons constituting a mortgage must be legally good faith?
authorized for the purpose. In the present case,
while Erna appears to be a co-owner of the A: 1. No. The validity of the Mortgage in favor of
mortgaged properties, she made it appear that she PSLD should be limited only to the Susana’s
was duly authorized to sell the entire properties portion. At the time the Mortgage was constituted,
by virtue of the notarized SPA . (Rural Bank of Roque was already deceased. Upon Roque’s death,
Cabadbaran, Inc. v. Jorgita A. Melecio-Yap et. al, the conjugal partnership between him and Susana
G.R. No. 178451, July 30, 2014). was dissolved. Thus, an implied co-ownership
arose among Susana and the other heirs of Roque
Q: Vda. Rosario is the registered owner of 4 with respect to his share in the assets of the
parcels of land, which she mortgaged to and conjugal partnership pending liquidation.
foreclosed. Upon the expiration of the
redemption period, she asked the assistance of While she herself as co-owner had the right to
Bobby Tan. Thereafter, she sold the lands to mortgage or even sell her undivided interest in
him. The children of Vda. Rosario said they are the subject property, she could not mortgage or
co-owners as they are inheritors of their otherwise dispose of the same in its entirety
deceased father, whose approval was needed without the consent of the other co-owners.
to dispose the subject properties. Are the
subject properties of conjugal in nature, thus 2. No. While the rule is that every person dealing
making the children of Vda. Rosario co- with registered land may safely rely on the
owners? correctness of the certificate of title issued
therefor and the law will in no way oblige him to
A: No. SC ruled that Vda. Rosario is the sole owner go beyond the certificate to determine the
of the parcel of lands. Conjugal partnership condition of the property, where the land sold is in
terminates upon the death of one spouse. Vda. the possession of a person other than the vendor,
Rosario was already a widow when she sold the as in this case, the purchaser must go beyond the
subjected lands to Bobby Tan. Therefore, at the certificate of title and make inquiries concerning
time of the sale, Vda. Rosario, a widow, can now the actual possessor (Norma C. Magsano, et. al. v.
dispose the properties on her own volition (Bobby Pangasinan Savings & Loan Bank, G.R. No. 215038,
Tan v. Grace Andrade, G.R. No. 171904, August 07, October 17, 2016).
2013).
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Refers to the Acts, by virtue of which, for which the property is given be directly to the
enjoyment, a co-owner, in advantage of the person misappropriating or
exploitation, opposition to the converting the property of another.
alteration of the thing expressed or tacit
which do not affect its agreement of all the co- RIGHT TO PARTITION
substance, form, or owners, and in
purpose. violation of their will, Rights of co-owners as to the ideal share of
changes the thing from each (FARTS)
the state in which the
others believe it would 1. Each has Full ownership of his part and of his
remain, or withdraws it share of the fruits and benefits;
from the use to which 2. Right to Alienate, dispose or encumber;
they believe it is 3. Right to Renounce part of his interest to
intended. reimburse necessary expenses incurred by
another co-owner;
Transitory in Permanent 4. Right to enter into Transaction affecting his
character. ideal share; and
Does not affect the Affects or relates to the NOTE: The transaction affects only his ideal
substance or form. substance or essence of share and not that of the other co-owners.
the thing.
5. Right to Substitute another person in its
enjoyment, except when personal rights are
In relation to the right Require the consent of involved.
of a co-owner, they all co-owners.
require the consent of NOTE: Personal rights or jus in personam is
the majority who the power belonging to one person to demand
represents the from another, as a definite passive subject-
controlling interest. debtor, the fulfillment of a prestation to give,
to do, or not to do (Paras, 2008).
Can be exercised by Must be exercised by
the co-owners the co-owners
Right to demand partition
through other themselves.
persons.
GR: Every co-owner has the right to demand
partition (NCC, Art. 494) (2000, 2002, 2008 Bar).
Effect of alteration without the express or
implied consent of co-owners XPNs: (EASI-PAUL)
1. When partition would render the thing
The co-owner who makes the alteration shall: Unserviceable;
2. When the thing is essentially Indivisible;
1. Lose what he has spent; 3. When partition is prohibited by Law by
2. Be obliged to demolish the improvements reason of their origin or juridical nature - e.g.
done; and party walls and fences;
3. Pay for the loss and damages the 4. When the co-owners Agree to keep the
community property or other co-owners property undivided for a period of time but
may have suffered. not more than 10 years;
5. When partition is Prohibited by the transferor
NOTE: Estoppel will operate against the co- (donor/testator) but not more than 20 years
owners who were aware of the execution of the (NCC, Art. 1083);
acts of alteration, but did not object thereto. They 6. When a co-owner possessed the property as
are deemed to have given their implied consent. an Exclusive owner for a period sufficient to
acquire it through prescription (acquisitive
Conversion prescription);
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CIVIL LAW
2. If no notice is given – creditors and/or Rights of third persons in case of partition
assignees may still question the partition (NCC, Art. 499)
madeon ground of fraud or for being
prejudicial to existing rights. 1. The partition of a thing owned in common
shall not prejudice third persons, who
NOTE: Third persons who have rights attached to shall retain the rights of mortgage,
the community property before its partition, shall servitude or any other real rights
retain such rights even after the partition of the belonging to them before the division was
property. The protection granted by law applies to made; and
both real and personal rights (Pineda, 2009). 2. Personal rights pertaining to them against
the co-ownership shall also remain in
Impugning partition already implemented force, notwithstanding the partition.
Acts of preservation may be made in the property Renunciation CANNOT be made without the
of the co-owners at the will of one of the co- consent of any unpaid creditor. This is because it
owners, but he must, if practicable, first notify the is in effect a novation by substitution. It will
others of the necessity of such repairs. prejudice the rights of the unpaid creditor.
Acts requiring the majority consent of the co- RIGHT OF REDEMPTION OF CO-OWNERS
owners SHARE
Minority may appeal to the court against the Effect of redemption by a co-owner
majority’s decision if the same is seriously
prejudicial. Redemption of the whole property by a co-owner
does not vest in him sole ownership over said
There is no majority unless the resolution is property. Redemption within the period
approved by the co-owners who represent the prescribed by law will inure to the benefit of all
controlling interest in the object of the co- co-owners. Hence, it will not put an end to existing
ownership [NCC, Art. 492(2)]. co-ownership (Mariano v. CA, GR. No. 101522, May
28, 1993).
WAIVER
Right of legal redemption cannot be exercised
A co-owner may opt not to contribute to the when there is no co-ownership
expenses for the preservation of the property
Once the property is subdivided and distributed
GR: YES, by renouncing his undivided interest among the co-owners, the community ceases to
equal to the amount of contribution. exist and there is no more reason to sustain any
XPN: If the waiver or renunciation is prejudicial to right of legal redemption. The exercise of this right
the co-ownership, otherwise he cannot exempt presupposes the existence of a co-ownership at
himself from the contribution (NCC, Art. 488). the time the conveyance is made by a co-owner
and when it is demanded by the other co-owners
NOTE: The value of the property at the time of the (Vda. de Ape v. CA, G.R. No. 133638, April 15, 2005).
renunciation will be the basis of the portion to be
renounced. A co-owner cannot alienate the shares of his
other co-owners
Failure or refusal of a co-owner to contribute
pro rata to his share in expenses NOT While a co-owner has the right to freely sell and
tantamount to renunciation dispose of his undivided interest, nevertheless, as
a co-owner, he cannot alienate the shares of his
There must be an express renunciation, otherwise other co-owners. The disposition made by Villaner
he is required to reimburse the others for the affects only his share pro indiviso, and the
expenses they incurred. transferee gets only what corresponds to his
Effect of renunciation grantor's share in the partition of the property
owned in common. The property being conjugal,
Since renunciation is intended as payment for Villaner's interest in it is the undivided one-half
expenses already made, it is in nature of dacion en portion. When his wife died, her rights to the
pago - there is a change in the object of the other half was vested to her heirs including
obligation (i.e. from sum of money to interest in Villaner and their 8 legitimate children (Acabal v.
the co-ownership). Consequently, the consent of Acabal, G.R. No. 148376, March 31, 2005).
the other co-owner who made the advances is
necessary (Tolentino, 2013). Status of the sale by a co-owner
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CIVIL LAW
A sale of the entire property by one co-owner 2. By judicial proceedings (NCC, Art. 496).
without the consent of the other co-owners is
valid. However, it will only affect the interest or Rule in case the co-owners cannot agree in the
share in the undivided property of the co-owner partition
who sold the same. The remedy is an action for
partition under Rule 69 of the Revised Rules of 1. If realty is involved, an action for partition
Court, the division of the common property (Rule 69, Rules of Court) against the co-
(Acabal v. Acabal, G.R. No. 148376, March 31, owners may be filed; and
2005). 2. In case of personalty and actual partition
could not be made, it may be sold under
TERMINATION/EXTINGUISHMENT the discretion of the court and the
proceeds be divided among the owners
Extinguishment of Co-ownership (CALSTEP) after deducting the necessary expenses.
1. Confusion or merger of the rights in one Rule in case the co-owners cannot agree as to
co-owner; the partition of a thing which is essentially
2. Acquisitive prescription in favor of a third indivisible
person or a co-owner who repudiates;
3. Loss or destruction of thing co-owned; 1. Firstly, the property may be allotted to
4. Sale of thing co-owned; one of the co-owners, who shall
5. Termination of period agreed upon; indemnify the other; or
6. Expropriation; or 2. Otherwise, it shall be sold, and the
7. Judicial or extra-judicial Partition. proceeds distributed (NCC, Art. 498).
1. It confers upon the co-owner exclusive 1. Ejectment – any of the co-owners may file
title over the property adjudicated to him such action.
(NCC, Art. 1091); and 2. Administration – majority of the co-
2. Possession of the co-owner over the owners shall decide.
property adjudicated to him shall be 3. Improvements – majority of the co-owners
deemed exclusive for the period during shall take part.
which the co-possession lasted (NCC, Art. 4. Alteration – all of the co-owners must
543) In other words, it is deemed agree.
continuous. 5. Preservation – any of the co-owners can
do so.
RIGHTS AGAINST INDIVIDUAL CO-OWNERS IN
CASE OF PARTITION
POSSESSION
Obligations of co-owners upon partition
(WARD)
It refers to the holding of a thing or the enjoyment
1. Mutual Accounting for benefits received,
of a right (NCC, Art. 523) (2007 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 1. Existence of the thing or right;
of negligence/fraud; and 2. Possession in fact or holding or control of
4. Reciprocal Warranty for defects of title
a thing or right;
and quality of the portion assigned to the 3. Animus possidendi or the deliberate
co-owner (NCC, Articles. 500-501). intention to possess; and
4. Possession is by Virtue of one’s own right,
PARTITION IN CASE CO-OWNERS CANNOT either as an owner or as a holder.
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
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Q: What is the doctrine of constructive proof that the holder has a claim of title over the
possession? property. The voluntary declaration of a piece of
property for taxation purposes manifests not
A: The possession of a part is a possession of only one’s sincere and honest desire to obtain
the whole. To be considered in possession, one title to the property and announces his adverse
need not have actual or physical occupation of claim against the State and all other interested
every square inch of the property at all times parties, but also the intention to contribute
(Habagat Grill v. DMC-Urban Property Developer, needed revenues to the Government. Such an act
Inc., G.R. No. 155110, March 31, 2005). strengthens one’s bona fide claim of acquisition of
ownership (Ganila v. CA, G.R. No. 150755, June 28,
Requisites of constructive possession 2005).
Tax declarations are not conclusive evidence Q: Respondents inherited the subject property
of ownership from Emiliana Bacalso, by virtue of Decree No.
98992. Sometime later, they found the heirs of
Although tax declarations or realty tax payment of Alejandra Delfin to be occupying the said
property are not conclusive evidence of property, to which they even constructed
ownership, nevertheless, they are good indicia of houses there. The heirs argued they have
possession in the concept of owner for no one in better right for it was inherited to them after it
his right mind would be paying taxes for a was bought by the predecessor from Emiliana
property that is not in his actual or at least Bacalso; also, they are the ones paying the
constructive possession. They constitute at least subject property’s realty taxes. Do the
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CIVIL LAW
d. Principal has intent and capacity to Minors or incapacitated persons may acquire the
possess possession of things; but they need the assistance
of their legal representatives for them to be able
3. Through a person without authority (but only to exercise the rights arising from the possession
if subsequently ratified) – acquisition of (NCC, Art. 535).
possession through a person who is not
clothed with authority by the supposed NOTE: Minors and incapacitated persons may
“principal.” acquire property or rights by prescription, either
personally or thru their parents, guardians, or
Requisites: legal representatives (NCC, Art. 1107).
a. Intent to possess for another the
“principal”; Nature of minors or incapacitated persons’
b. Capacity of the “principal” to possess; and possession
c. Ratification by “principal.”
Possession is allowed only in those matters where
NOTE: The ratification does not suppress the they have capacity to act (as in the case of
consequences of negotiorum gestio (Art. physical seizure of res nullius or donation of
2144). The principal is deemed to have personal property simultaneously delivered to
acquired possession from the time the gestor them) and NOT possession where juridical acts
had voluntarily took the management of the are imperative like the possession of land the
affairs of the former (Pineda, 2009). If the ownership of which he desires to test in court, for
stranger (gestor) had possessed it in his own in such a case, and in similar ones, the
name, it is he who had possession, and not intervention of the legal representatives or
the so-called “principal” (Paras, 2008). guardians is needed (Paras, 2008).
Acquisition of possession thru succession Acts which do not give rise to possession
(FATV)
One who succeeds by hereditary title shall not
suffer the consequences of the wrongful 1. Through Force or intimidation as long as
possession of the decedent, if it is not shown that there is a possessor who objects thereto
he was aware of the flaws affecting it; but the (NCC, Art. 536); (2006 Bar)
effects of possession in good faith shall not benefit 2. Through Acts executed clandestinely and
him except from the date of death of the decedent without the knowledge of the possessor
(NCC Art. 534). which means that:
a. Acts are not public; and
Effects b. Unknown to the owner or possessor
3. Acts merely Tolerated by the owner or
If the father or decedent was in bad faith, it does the lawful possessor; and
not necessarily mean that the son was also in bad 4. Acts executed by Violence (NCC, Art 537).
faith. The son is presumed to be in GOOD FAITH (2001, 2009 Bar)
(Arriola v. De la Serna, G.R. No. L-5397, December
17, 1909). However, since the father was in BAD Through Force or intimidation as long as there
FAITH, the consequences of the GOOD FAITH of is a possessor who objects thereto (NCC, Art.
the son should be counted only from the date of 536).
the decedent’s death.
NOTE: Impliedly, if at first there was objection but
NOTE: If the father had been in GOOD FAITH, the later on such objection ceases, the possession
article is not applicable, for the son would not begun by force or intimidation may be acquired
‘‘suffer.” In such a case, the possession of the (Paras, 2008).
father in GOOD FAITH is added to the possession
of the son in GOOD FAITH, and we cannot say that Through acts executed clandestinely and
the effects of possession in good faith shall without the knowledge of the possessor
commence only from the decedent’s death (Paras,
2008). NOTE: Clandestine possession by itself is hidden or
disguised possession
Acquisition of minors or incapacitated persons
Acts merely tolerated by the owner or the
lawful possessor.
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CIVIL LAW
1. At the date of summons; or Every possessor has a right to be respected in his
2. That of the answer if the date of summons possession; and should he be disturbed therein he
does not appear. shall be protected in or restored to said
possession by the means established by the laws
Effect of cessation of possession in good faith and the Rules of Court.
Possessor is now considered as a possessor in bad A possessor deprived of his possession through
faith and he may be required to pay rent or vacate forcible entry may within ten days from the filing
the property. In both cases he is required to pay of the complaint present a motion to secure from
damages to the lawful owner or possessor of the the competent court, in the action for forcible
property. entry, a writ of preliminary mandatory injunction
to restore him in his possession. The court shall
Q: A Deed of Sale was executed between Jose decide the motion within thirty (30) days from the
(seller) and Rosario (buyer). However, later fi ling thereof (NCC, Art. 539).
on, Jose could not continue the sale because he
sold the lot to Emma with whom he executed a Rights of a possessor
formal deed of sale. Informed that the sale in
favor of Emma was not registered, Rosario 1. To be respected in his possession;
registered her adverse claim. Later, Emma 2. To be protected in said possession by
registered her deed of sale and a TCT was legal means;
issued to her but with Rosario’s adverse claim. 3. To secure in an action for forcible entry
Emma then took possession of the lot. the proper writ to restore him in his
possession; and
a.) Who has a better right to the land? 4. To secure from a competent court in an
b.) Is Emma entitled to the improvements she action for forcible entry the Writ of
introduced in the lot? preliminary mandatory injunction to
restore him in his possession (NCC, Art.
A: 539).
a.) ROSARIO has a better right. Rosario’s prior
purchase of the land was made in good faith; Possession contemplated by law is legal
she was the only buyer at that time. Her good possession– thief cannot exercise possession. Such
faith did not cease after Jose told him of the possession is exercised by every possessor–in
second sale to Emma. In order to protect her good faith or bad faith.
right, Rosario registered her adverse claim.
Said recording is deemed to be in good faith “Every possessor’’ is protected under Art. 539,
and emphasized Emma’s bad faith (Carbonell whether in the concept of owner or in the concept
v. CA G.R. No. L-29972, January 26, 1976). of holder.
b.) NO. The possessor in bad faith has neither the NOTE: An adverse possession of property by
right of retention of useful improvements nor another is not an encumbrance in law, and does not
the right to demand refund for useful contradict the condition that the property be free
expenses (Art. 546 & 547; Carbonell v. CA G.R. from encumbrance. Likewise, the adverse
No. L-29972, January 26, 1976). possession is not a lien for a lien signifies a
security for a claim (Ozaeta v. Palanca, L-17455,
Mistake upon a doubtful or difficult question August. 31, 1964).
of law
Legal Means for Restoration of Possession
Mistake upon a doubtful or difficult question of
law may be the basis of good faith provided that A. Reasons for requiring legal means;
such ignorance is not gross and therefore
inexcusable (NCC, Art. 526.) Ignorance of the law 1. To prevent spoliation or a disregard of
may be based on an error of fact. (2008 Bar). public order;
2. To prevent deprivation of property
RIGHTS OF A POSSESSOR without due process of law; and
3. To prevent a person from taking the law
Right to be respected in possession into his own hand.
B. Thus,
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hand, respondent maintained that it was a. If a person possesses en concepto de
willing to pay rent, but was uncertain as to dueño — he may eventually become the
whom payment should be made. Respondent owner by prescription; and
consigned the amount of P521,396.89 b. Thus, a possessor merely in the concept of
equivalent for the rent of February 2007 to holder cannot acquire property by
March 2011 in the RTC. Petitioner averred that acquisitive prescription. (This is because
the amount was insufficient to cover the here the possession, far from being
unpaid rentals plus interests from February adverse, recognizes right of ownership in
2007 to May 2011. Petitioner clarified that his others. One cannot recognize the right of
earlier demand to pay was for the period of another and at the same time claim
February 2007 to May 2011. Thus, petitioner adverse possession which can ripen to
posited that respondent had continuously ownership through acquisitive
failed and refused to comply with the terms prescription. For prescription to set in,
and conditions of the lease contract the possession must be adverse, public
concerning the payment of monthly rental. and to the exclusion of all (Paras, 2008).
May petitioner eject respondent from the
subject land? Possession in the concept of a holder
A: Yes. For an unlawful detainer suit to prosper, a. Lessees or those merely permitted to
the plaintiff-lessor must show that: first, initially, occupy;
the defendant-lessee legally possessed the leased b. Trustees (including parents over the
premises by virtue of a subsisting lease properties of their unemancipated minor
contract; second, such possession eventually children or insane children (NCC, Art.
became illegal, either due to the latter's violation 1109); and husband and wife over each
of the provisions of the said lease contract or the other’s properties, as long as the marriage
termination thereof; third, the defendant-lessee lasts, and even if there be a separation of
remained in possession of the leased premises, property which had been agreed upon in
thus, effectively depriving the plaintiff-lessor a marriage settlement or by judicial
enjoyment thereof; and fourth, there must be a decree (NCC, Art. 1109);
demand both to pay or to comply and vacate and c. Antichretic creditors;
that the suit is brought within one (1) year from d. Agents;
the last demand. e. Attorneys (regarding their client’s
properties)
In this case, all requisites have been indubitably f. Depositaries; and
complied with, considering that at the time the g. Co-owners (unless the co-ownership is
suit was instituted on June 21, 2011: (a) there was clearly repudiated by unequivocal acts
a subsisting lease contract between petitioner and communicated to the other co-owners).
respondent; (b) , respondent was not updated in
its monthly rental payments, as there is no Presumption that possessor has a just title
evidence of such payment for the months of April,
May, and even June 2011-- said omission A possessor in the concept of owner has in his
constitutes a violation of the lease contract on the favor the legal presumption that he possesses
part of respondent; (c) respondent was still in with a just title and he cannot be obliged to show
possession of the subject land; and (d) the case or prove it (Art. 541).
was filed within one (1) year from petitioner's
letter dated May 24, 2011 demanding that Requirements under NCC, Art. 541 to raise the
respondent pay monthly rentals and at the same disputable presumption of ownership (of a
time, vacate the subject land (Teodorico Zaragoza thing or a right):
v. IloIlo Santos Truckers, Inc., G.R. No. 224022, June
28, 2017). a. One must be in possession (actual or
constructive).
Acquisitive prescription b. The possession must be in the concept of
owner (not mere holder).
Only the possession acquired and enjoyed in the
concept of owner can serve as a title for acquiring NOTE: A tenant cannot avail himself of
dominion (NCC, Art. 540). the presumption of just title because he is
not a possessor in the concept of owner)
Possession in the concept of an owner (Paras, 2008).
a. True and Valid Title The possession of real property presumes that of
the movables therein, as long as it is not shown or
Here, there was a mode of transferring ownership proved that they should be excluded (NCC, Art.
and the grantor was the owner. It is defined as a 542) (2008 Bar).
title which by itself is suffi cient to transfer
ownership without the necessity of letting the Applicability of the Article:
prescriptive period elapse. a. Whether the possessor be in good faith or
bad faith;
e.g. B bought a Ford Expedition Limited from S, the b. Whether the possession be in one’s own
owner thereof. Then S delivered the car to B. B name or in another’s; and
now has a true and valid title. c. Whether the possession be in concepto de
dueno or in the concept of holder. Thus,
b. Colorable Title the lessee of a building is presumed to be
the possessor of the movables found
That title where, although there was a mode of therein, for he who needs them is
transferring ownership, still something is wrong, supposed to have been the one who
because the grantor is NOT the owner. introduced the movables into the
building.
e.g. B bought a BMW car from S. S then delivered
the car to B. But it turns out that S never owned NOTE: By “real property’’ and “movables’’, the law
the car, and that somebody else was its owner. means only real or personal THINGS, not rights
Whether B was in good faith or in bad faith is (Paras, 2008).
immaterial in deciding if he (B) is the owner; what
is important is that he is not the owner because he Exclusive possession by a previous co-owner
did not acquire or purchase the property from the
owner, his title being merely “colorado’’ or Each one of the participants of a thing possessed
colorable. in common shall be deemed to have exclusively
possessed the part which may be allotted to him
NOTE: It must be remembered that: upon the division thereof, for the entire period
during which the co-possession lasted.
1. Ordinary prescription needs good faith Interruption in the possession of the whole or a
and just title, hence in the example given, part of a thing possessed in common shall be to
if B is in good faith, he may become owner the prejudice of all the possessors. However, in
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case of civil interruption, the Rules of Court shall Natural and industrial fruits are considered
apply (NCC, Art. 543). received from the time they are gathered or
severed.
Example of interruption in possession of the
WHOLE thing (NCC, Art. 543) Civil fruits are deemed to accrue daily and belong
to the possessor in good faith in that proportion
A, B, and C have been co-possessors of a piece of (NCC, Art. 544).
land since 2002. If in 2006, A, B, and C lose
possession over the whole land, it can be said that Right of a possessor in good faith to fruits
the three of them were in possession for only four already received
years.
First Paragraph: “A possessor in good faith is
Example of Interruption in possession of PART entitled to the fruits received before the possession
of the thing (NCC, Art. 543) is legally interrupted.’’
A and B have been co-possessors of a piece of land a. Reason for the law: Justice demands that
since 2002 thru a mutual agent X. In 2006, X lost the fruits be retained by the possessor
possession of one-fifth of the land. A’s and B’s who thought that he was really the owner
possession over the remaining four-fifth of the property, and who, because of such
continues, the interruption being limited only to thought had regulated his daily life,
one-fifth. income, and expenses by virtue of such
fruits. Moreover, the possessor should be
NOTE: If A and B had co-possessed the land in rewarded for having contributed to the
equal shares, the co-possession of the remaining INDUSTRIAL WEALTH, unlike the owner,
four-fifths will also be in equal shares. If A and B who by his presumed negligence, had
had co-possessed in the proportion of 3 to 1, their virtually discarded his property.
shares in the remaining four-fi fths would also be b. Fruits refer to natural, industrial, and civil
in the proportion of 3 to 1. In other words, there is fruits, not to other things. (If no actual
a PROPORTIONATE losing in the area possessed fruits are produced, reasonable rents—
(Paras, 2008). civil fruits—must be given).
c. Legal interruption happens when a
Rules to apply for civil interruption complaint is filed against him and he
receives the proper judicial summons
The “Rules of Court” applies (NCC, Art. 543): (Art. 1123). All fruits accrued and
received since said date must be turned
a. Civil interruption is produced by judicial over to the winner, that is, either the
summons to the possessor (NCC, Art. owner or the lawful possessor adjudged
1123); and as such by the court. Before legal
b. Judicial summons shall be deemed not to interruption, the fruits received are his
have been issued, and shall not give rise own. After the receipt of the judicial
to interruption: summons, the right to get the fruits not
1. If it should be void for lack of legal yet gathered ceases.
solemnities; d. The reason why fruits should be returned
2. If the plaintiff should desist from the from the TIME of legal interruption is that
complaint or should allow the it is ordinarily only from said date that the
proceedings to lapse; or possessor should be considered in BAD
3. If the possessor should be absolved FAITH. Therefore, should there be proof
from the complaint. In all these cases, that BAD FAITH had not set in even
the period of the interruption shall be BEFORE legal interruption, fruits should
counted FOR the prescription (NCC, be returned from that date of
Art. 1124). CONVERSION are not entitled to the
fruits. As a matter of fact, the law provides
RIGHTS OF POSSESSOR TO FRUITS that “the possessor in bad faith shall
reimburse the fruits received and those
Possessor in good faith is entitled to the fruits which the legitimate possessor (or
received before the possession is legally owner) could have received” (NCC, Art.
interrupted. 549). This is true whether the possession
in BAD faith was legally interrupted or
Second Paragraph: “Natural and industrial fruits A: The possessor shall have the right to a part of
are considered received from the time they are the expenses of cultivation, and to a part in the net
gathered or severed.” harvest both in proportion to the time of
possession (NCC, Art 545) (2000, 2008 Bar).
a. If at the time of legal interruption, the
crops are still growing, the rule on Q: A possessed in good faith a parcel of land. At
pending crops, not that on gathered crops, the time he received judicial summons to
should apply (NCC, Art. 545). answer a complaint filed by B, the crops still
b. If at the time of legal interruption, the growing had been there for two months.
crops have already been gathered, but are Harvest was made only after 4 more months
sold only after such interruption, the sale (For his crop needed a total of 6 months from
is immaterial, for the law requires only a planting to harvesting). How should said crops
gathering or severance, so Art. 544 be divided between A and B?
applies.
A: In the proportion of 2 to 4 (or 1 to 2), 2 for A
When civil fruits are deemed to accrue and 4 for B. This is what the law means when it
says that the net harvest shall be divided in
Third Paragraph: “Civil fruits are deemed to proportion to the time of possession (Paras, 2008).
accrue daily and belong to the possessor in good
faith in that proportion.’’ Sharing of expenses and charges
a. If civil fruits (like rents) are accrued daily, a. The expenses for cultivation shall also be
Art. 545 does not apply; and divided pro rata (2 to 4). The law says
b. Actual receipt of the rents is immaterial; “the possessor shall have a RIGHT to a
hence, even if received only, for example, part of the expenses for cultivation in
on the 30th of a month, all rents accrued proportion to the time of possession (This
before the 21st of the month (date for may in certain cases be UNFAIR because
example of legal interruption) should although he may have spent MORE than
belong to the possessor in good faith. the owner, still he will be entitled to a
reimbursement of LESS since his
RIGHT TO PENDING FRUITS possession is shorter. The better rule
would be for the expenses to be borne in
If at the time the good faith ceases, there should be proportion to what each receives from
any natural or industrial fruits, the possessor shall the harvest) (NCC, Art. 443). Otherwise,
have a right to a part of the expenses of unjust enrichment would result.
cultivation, and to a part of the net harvest, both in
proportion to the time of the possession. b. The charges (those incurred because of
the land and the fruits, like TAXES, or
The charges shall be divided on the same basis by INTEREST on MORTGAGES are what are
the two possessors. referred to as CHARGES, and not those
incurred on or in them, such as
The owner of the thing may, should he so desires, improvements) are also to be divided in
give the possessor in good faith the right to finish proportion to the time of possession (NCC,
the cultivation and gathering of the growing fruits, Art. 545, 2nd par.);(Paras, 2008).
as an indemnity for his part of the expenses of
cultivation and the net proceeds; the possessor in Options of the owner in case there are pending
good faith who for any reason whatever should fruits at the time good faith ceases
refuse to accept this concession, shall lose the
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1. To pay the possessor in good faith These expenses are not improvements but are
indemnity for his cultivation expenses incurred merely to protect the thing from
and charges and his share in the net becoming useless.
harvest; or
2. To allow the possessor in good faith to Sample of necessary expenses
FINISH the cultivation and gathering of
the growing crops, as an INDEMNITY for a. Those incurred for cultivation,
his part of the expenses of cultivation and production, and upkeep; or
the net proceeds (Paras, 2008). b. Those made for necessary repairs of a
house.
NOTE: If the possessor refuses, for any reason, to
finish the cultivation and gathering, he forfeits the Ordinary repairs are understood such as are
right to be indemnified in any other manner [NCC, required by the wear and tear due to the
Art. 545(3)]. natural use of the thing, and are indispensable
for its preservation (NCC, Art. 592). They do
Art. 545 applies only to a possessor in GOOD faith not increase the thing’s value; rather, they
for a possessor in bad faith has no right merely prevent the things from becoming
whatsoever to fruits already gathered nor to fruits useless.
still pending, except that in the former case
(gathered fruits), he gets back the necessary Urgent repairs — reparacion urgentisima —
expenses for production, gathering, and are also necessary expenses.
preservation of fruits (Art. 443). In the case of
pending fruits, the principle of accession applies, The following are NOT Necessary Expenses
and the law clearly states that he who plants or
sows in BAD FAITH on the land of another, loses a. Those incurred for the filling up with soil
whatever is planted or sown without right to of a vacant or deep lot (This is not also a
indemnity (Paras, 2008). repair since the term “repair” implies the
putting back into the condition in which it
Crops not yet manifest was originally, and not an improvement
in the condition thereof by adding
Art. 545 applies to pending crops. Suppose the something new thereto. The expenses are
crops have already been planted but are not yet indeed in the nature of USEFUL
manifest at the time there is a transfer of improvements;
possession, should the article also apply? It is b. A house constructed on land possessed by
submitted that the answer is YES, by the a stranger (not the owner), because the
application of the general rules stated in Art. 443 house cannot be said to preserve the land
(Paras, 2008). (the house is USEFUL);
c. Land taxes are, for the purposes of the
RIGHT TO BE REIMBURSED Article, not necessary expenses, for they
are needed, not for preservation of the
NECESSARY AND USEFUL EXPENSES land itself; but for its continued
possession. Failure to pay said taxes
Necessary expenses shall be refunded to every results not in destruction, but forfeiture,
possessor; but only the possessor in good faith therefore they should be merely
may retain the thing until he has been reimbursed considered CHARGES. Consequently, Art.
therefor. Useful expenses shall be refunded only to 545 regarding PRO RATING of charges
the possessor in good faith with the same right of should apply; and
retention, the person who has defeated him in the d. Unnecessary improvements on a parcel of
possession having the option of refunding the land purchased at a sheriff’s auction sale,
amount of the expenses or of paying the increase made just to prevent redemption from
in value which the thing may have acquired by taking place (Paras, 2008).
reason thereof (NCC, Art. 546).
Rights of a possessor (in the concept of owner)
Necessary expenses (1992, 1996, 2000 Bar) as to the necessary expenses
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injury curable by an ordinary repair does not ENTERS INTO POSSESSION (NCC,
defeat the right of removal, but the repairs should Art. 549).
be chargeable to the possessor, for it is he who
benefits by the removal and the object removed POSSESSOR IN BAD FAITH
(Paras, 2008).
The possessor in bad faith shall reimburse the
NOTE: This right of removal is subordinate to the fruits received and those which the legitimate
owner’s right to keep the improvements himself possessor could have received, and shall have a
by paying the expenses incurred or the right only to the expenses mentioned in paragraph
concomitant increase in the value of the property 1 of Art. 546 and in Art. 443. The expenses
caused by the improvements. incurred in improvements for pure luxury or mere
pleasure shall not be refunded to the possessor in
EXPENSES FOR PURE LUXURY bad faith; but he may remove the objects for
which such expenses have been incurred,
Expenses for pure luxury or mere pleasure shall provided that the thing suffers no injury thereby,
not be refunded to the possessor in good faith; but and that the lawful possessor does not prefer to
he may remove the ornaments with which he has retain them by paying the value they may have at
embellished the principal thing if it suffers no the time he enters into possession (NCC, Art. 549).
injury thereby, and if his successor in the
possession does not prefer to refund the amount Q: Who is a possessor in bad faith?
expended (NCC, Art. 548).
A: A possessor in bad faith is one who is aware
Luxurious expenses or expenses for pure luxury or that there exists in his title or mode of acquisition
mere pleasure (ornamental expenses) are expenses any flaw which invalidates it. Only personal
incurred for improvements introduced for pure knowledge of the flaw in one’s title or mode of
luxury or mere pleasure. acquisition can make him a possessor in bad faith.
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negligence, or after If a person loses possession for more than 10
service of summons. years, he loses possession de jure, or the real right
of possession (NCC, Art. 555). An accion publiciana
Possessor in good faith has the right of or reivindicatoria is still possible unless
retention until he has been fully reimbursed prescription, either ordinary or extraordinary, has
set in (Paras, 2008).
A possessor in good faith has the right of retention
of the property until he has been fully reimbursed NOTE: Acts merely tolerated, and those executed
for all the necessary and useful expenses made by clandestinely and without the knowledge of the
him on the property. Its object is to guarantee the possessor of a thing, or by violence, do not affect
reimbursement for the expenses, such as those for possession (NCC, Art. 537) (2001, 2009 Bar).
the preservation of the property, or for the
enhancement of its utility or productivity. It Abandonment
permits the actual possessor to remain in
possession while he has not been reimbursed by Abandonment involves a voluntary renunciation
the person who defeated him in the possession for of all rights over a thing. There must be an
those necessary expenses and useful intention to lose the thing.
improvements made by him on the thing
possessed (Ortiz v. Kayanan, G.R. No. L-32974, July Requisites
30, 1979).
1. The abandoner must have been a possessor in
Presumption of Possession during the the concept of owner (either an owner or
intervening period mere possessor may respectively abandon
either ownership or possession);
A present possessor who shows his possession at 2. The abandoner must have the capacity to
some previous time is presumed to have held renounce or to alienate (for abandonment is
possession also during the intermediate period, in the repudiation of property right);
the absence of proof to the contrary (NCC, Art 3. There must be physical relinquishment of the
554). thing or object; and
4. There must be no spes recuperandi
LOSS/TERMINATION OF POSSESSION (expectation to recover) and no more animus
revertendi (intention to return or get back)
Possession is lost through (PRADA) (Paras, 2008).
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GR: Doctrine of irrevindicability – The 3. Reimburse the expenses for publication if
possession of movable property acquired in good there was a public auction sale (Pineda,
faith is equivalent to title and the true owner 1999).
cannot recover such movable.
Summary of recovery or non-recovery
NOTE: This is merely presumptive as it can be principle
defeated by the true owner (NCC, Art. 559).
A. Owner MAY RECOVER WITHOUT
XPNs: REIMBURSEMENT:
1. When the owner has lost a movable; or 1. From possessor in bad faith; or
2. Has been unlawfully deprived of a movable. 2. From possessor in good faith (if owner
had LOST the property or been unlawfully
In which case the possessor cannot retain the deprived of it) (the acquisition being from
thing as against the owner, who may recover a private person) (NCC, Art. 559).
it without paying any indemnity
B. Owner MAY RECOVER but should
XPN to the XPNs: Where the movable is REIMBURSE:
acquired in good faith at a public sale, the If possessor acquired the object in good
owner must reimburse to recover [NCC, Art. faith at a PUBLIC SALE or AUCTION (NCC,
559(2)]. Art. 559). Because the publicity attendant
to a public sale should have been
Duty of a finder of a lost movable (NCC, Art. sufficient warning for the owner to come
719) forward and claim the property.
Whoever finds a lost movable, which is not a C. Owner CANNOT RECOVER, even if he offers to
treasure, must return it to its previous possessor. REIMBURSE (whether or not the owner had
If the latter is unknown, the finder shall lost or been unlawfully deprived):
immediately deposit it with the mayor of the city 1. If possessor had acquired it in good faith
or municipality where the finding has taken place. by purchase from a merchant’s store, or in
The mayor in turn must publicly announce the fairs, or markets in accordance with the
finding of the property for two consecutive weeks. Code of Commerce and special laws (NCC,
Art. 1505 and Code of Commerce, Art. 85
Authorized public auction of lost movable and Art. 86);
2. If owner “is by his conduct precluded from
If the movable cannot be kept without denying the seller’s authority to sell.”
deterioration, or without expenses which (ESTOPPEL) (NCC, Art. 1505); and
considerably diminish its value, it shall be sold at 3. If possessor had obtained the goods
public auction eight days after the publication. because he was an innocent purchaser for
value and holder of a NEGOTIABLE
Awarding of the lost movable to the finder document of title to the goods (NCC, Art.
1518) (Paras, 2008).
If the owner or previous possessor did not appear
after 6 months from the publication, the thing Q: Suppose recently stolen property is found in
found or its value or proceeds if there was a sale, possession of A, is A presumed to be the thief?
shall be awarded to the finder. The finder,
however, shall pay for the expenses incurred for A: YES, it is a disputable presumption “that a
the publication (NCC, Art. 719). person found in possession of a thing taken in the
doing of a recent wrongful act is the taker and
Duty of the owner who appeared doer of the whole act.’’ (Rules of Court, Rule 131,
Sec. 3[j]). It is true that one who possesses a
1. Give a reward to the finder equivalent to movable, acquired in good faith, has what is called
one-tenth (1/10) of the sum or of the an equivalent of title, but this is destroyed when it
price of the thing found (NCC, Art. 720); is proved that said movable belongs to somebody
2. Reimburse to the finder for the latter’s else who has lost it, or has been unlawfully
expenses incurred for the preservation of deprived of its possession (NCC, Art. 559) (Paras,
the thing (NCC, Art. 546) and expenses 2008).
spent for the location of the owner; and
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2. Natural – That which ordinarily is present, but b. Voluntary – Created by will of the parties
a contrary stipulation can eliminate it because either by act inter vivos (e.g. donation) or
it is not essential; by act mortis causa (e.g. in a last will and
a. The obligation of conserving or testament);
preserving the form and substance
(value) of the thing.; and c. Mixed– Created by both law and act of the
b. It is transmissible. person (e.g. acquired by prescription: I
possessed in good faith a parcel of land
3. Accidental – Those which may be present or which really belonged to another. Still in
absent depending upon the stipulation of good faith, I gave in my will to X, the
parties naked ownership of land and to Y, the
a. Whether it be pure or a conditional usufruct. In due time, Y may acquire the
usufruct; ownership of the usufruct by acquisitive
b. The number of years it will exist; prescription) (Paras, 2008).
c. Whether it is in favor of one person or d. Prescriptive – acquired by third persons
several, etc. through continuous use of the usufruct
for the period required by law.
Obligation to preserve the form and substance
of the thing in usufruct 2. As to the number of beneficiaries
a. Simple – If only one usufructuary enjoys
GR: The usufructuary is bound to preserve the the usufruct;
form and substance of the thing in usufruct. This is b. Multiple – If several usufructuaries enjoy
to prevent extraordinary exploitation, prevent the usufruct;
abuse of property and prevent impairment. i. Simultaneous – at the same time
ii. Successive – one after the other
XPN: In case of an abnormal usufruct, whereby
the law or the will of the parties may allow the NOTE: In case usufructuary is created by
modification of the substance of the thing. donation, apply Art. 756. If the usufruct is
testamentary, apply Rules on Fidei
Q: Chayong owned a parcel of land which she Commisary substitution under Art. 863
mortgaged to Michael. Upon the OCT was an and 869.
annotation of usufructuary rights in favor of
Cheddy. Is Michael obliged to investigate 3. As to the extent of object:
Chayong’s title? a. Total – constituted on the whole thing
b. Partial – constituted only on a part
A: NO. The annotation is not sufficient cause to
require Michael to investigate Chayong’s title 4. As to the subject matter:
because the latter’s ownership over the property a. Over things
remains unimpaired despite such encumbrance. i. Normal (or perfect or regular) –
Only the jus utendi and jus fruendi over the involves non-consumable things
property are transferred to the usufructuary. The where the form and substance
owner of the property maintains the jus are preserved; or
disponendi or the power to alienate, encumber, ii. Abnormal (or imperfect or
transform, and even destroy the same (Hemedes v. irregular) – Involves consumable
CA, G.R. Nos. 107132 & 108472, October 8, 1999). things – that which involves
things which would be useless to
KINDS OF USUFRUCT the usufructuary unless they are
consumed or expanded.
1. As to origin:
a. Legal – Created by law such as usufruct of b. Over rights – involves intangible
the parents over the property of their property; rights must not be personal or
unemancipated children; intransmissible in character so present or
future support cannot be an object of
NOTE: The right of the parents over the usufruct.
fruits and income of the child’s property
shall be limited primarily to the child’s 5. As to the effectivity or extinguishment:
support and secondarily to the collective a. Pure – no term or condition
daily needs of the family (FC, Art. 226).
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5. To Collect reimbursements from the owner a. Belong to the usufructuary;
for indispensable extra ordinary repairs, taxes b. Not bound to refund to the owner
on the capital he advanced, and damages the expenses of cultivation and
caused to him; production but without prejudice to
6. To Remove improvements made by him if the At the the right of third persons.
same will not injure the property; beginning c. BUT without prejudice to the right
7. To personally Enjoy the thing or lease it to of the of third persons. (Thus, if the fruits
another (NCC, Articles. 572-577) generally for usufruct had been planted by a possessor in
the same or shorter period as the usufruct; good faith, the pending crop
expenses and charges shall be pro-
NOTE: As to the thing itself, the usufructuary rated between said possessor and the
may lease the thing to another, even without usufructuary).
the consent of the owner.
Belong to the owner but he is bound
8. To Set-off the improvements he may have
to reimburse the usufructuary of the
made on the property against any damage to At the
ordinary cultivation expenses (NCC,
the same (NCC, Art. 580). termination
Art. 545) out of the fruits received
of the
(NCC, Art. 443). The right of innocent
Rule as to certain rights (rent, pension, usufruct
third parties should not be
benefits, rtc.)
prejudiced.
Whenever a usufruct is constituted on the right to
receive a rent or periodical pension, whether in NOTE: Civil fruits accrue daily; stock dividends
money or in fruits, or in the interest on bonds or and cash dividends are considered civil fruits.
securities payable to bearer, each payment due However, dividends declared from “capital stocks”
shall be considered as the proceeds of fruits of are not covered by usufruct because such are not
such right. Whenever it consists in the enjoyment declared from profits of the corporation.
of benefits accruing from a participation in any
industrial or commercial enterprise, the date of Aside from the right to the fruits, the usufructuary
the distribution of which is not fixed, such benefits has the right to the enjoyment (use, not
shall have the same character. In either case they ownership) of:
shall be distributed as civil fruits, and shall be
applied in the manner prescribed in the preceding a. Accessions (whether artificial or natural);
article (Paras, 2008). b. Servitudes and easements; and
c. All benefits inherent in the property (like
The things referred to in Art. 570 are considered the right to hunt and fish therein, the
civil fruits and shall be deemed to accrue right to construct rain water receptacles,
proportionately to the naked owner and etc.).
usufructuary, for the time the usufruct lasts.
Reason:
Rules if the finder of a hidden treasure is a
usufructuary The usufructuary, as a rule, is entitled to the:
If the finder is a usufructuary and he discovers it a. ENTIRE jus fruendi (including fruits of
by chance, the usufructuary shall be entitled to accessions); and
one half of the value thereof. The other half b. ENTIRE jus utendi (so he can make use for
belongs to the naked owner. example of an easement).
If the finder is a third person and he found hidden When the expenses of cultivation and
treasure by chance in the property under usufruct, production exceeds the proceeds of the
the usufructuary shall be considered a stranger. growing fruits
The finder gets half and the other half shall belong
to the naked owner.(Paras, 2008) If the expenses exceed the proceeds of the
growing fruits, the owner has no obligation to
Rights of a usufructuary on pending natural reimburse the difference (NCC, Art. 567).
and industrial fruits (NCC, Art. 567)
Limitations to Usufructuary Rights
Fruits
Rights of the usufructuary The usufructuary cannot:
Growing:
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demand reimbursement from the lessee, because Transfer of the usufruct
of the latter’s breach of the contract of lease. If the
usufructuary cannot pay the damage to the naked The transferee can enjoy the rights transferred to
owner, his bond shall be liable. This is precisely him by the usufructuary until the expiration of the
one reason for the requirement of a bond, NCC, usufruct. Transfer of usufructuary rights,
Art. 583). gratuitous or onerous, is co-terminous with the
term of usufruct.
b. Rights with Reference to the
USUFRUCTUARY RIGHT ITSELF Exercise of acts of ownership by a
usufructuary
The usufructuary may alienate (sell, donate,
bequeath, or devise) the usufructuary right GR: A usufructuary cannot exercise acts of
(except a legal usufruct, i.e., the usufruct which ownership such as alienation or conveyance.
parents have over the properties of their
unemancipated children, because said usufruct is XPNs: When what is to be alienated or conveyed is
to be used for certain obligations towards a:
children); or a usufruct granted a usufructuary in
consideration of his person; or a usufruct acquired 1. Consumable;
thru a caucion juratoria, for here, the need of the 2. Property intended for sale; or
usufructuary himself is the reason for the 3. Property which has been appraised when
enjoyment (NCC, Art. 587). delivered (NCC, Art. 574).
The usufructuary may pledge or mortgage the NOTE: If it has not yet been appraised or if it is not
usufructuary right (because he OWNS said right) a consumable, return the same quality (mutuum).
BUT he cannot pledge or mortgage the thing itself
because he does not own the thing [NCC, Art. Abnormal usufruct on consumable things
2085(2)]. Neither can he sell or in any way
alienate the thing itself, or future crops, for crops This is another instance of abnormal usufruct, and
pending at the termination of the usufruct belong is sometimes referred to as a “quasi-usufruct”
to the naked owner (NCC, ArtIcles 567 and 572 because the form and substance is not really
and Mortgage Law, Art. 106). preserved. Thus, this is really a SIMPLE loan. It has
--- been included however in the title on usufructs
Q: 120 hectares of land from the NHA property because in what are called UNIVERSAL
were reserved for the site of the National USUFRUCTS, both non-consumable and
Government Center. 7 hectares from which consumable properties are included. While we
were withdrawn from the operation. These seldom find usufructs on consumable properties
revoked lands were reserved (MSBF). alone, it is a fact that they indeed exist. Thus, the
However, MSBF occupied approximately 16 Supreme Court has held that even money may be
hectares and leased a portion thereof to the object of a usufruct (Paras, 2008).
Bulacan Garden Corporation (BGC). BGC
occupies 4,590 sqm. Implementing such RULES for this ‘QUASI-USUFRUCT’
revocation, NHA ordered BGC to vacate its
occupied area. BGC then filed a complaint for a. The usufructuary (debtor-borrower) can
injunction. Has BGC any right over the leased use them (as if he is the owner, with
premises? complete right of pledge or alienation).
b. BUT at the end of the usufruct, he must:
A: A usufructuary may lease the object held in 1. Pay the APPRAISED value (if
usufruct. The owner of the property must respect appraised when fi rst delivered); or
the lease entered into by the usufructuary so long 2. If there was no appraisal, return same
as the usufruct exists. MSBF was given a usufruct kind, quality, and quantity OR pay the
over only a 7-hectare area. NHA cannot evict BGC price current at the termination of the
if the 4,590 square meter portion MSBF leased to usufruct (therefore not at theoriginal
BGC is within the 7-hectare area held in usufruct price or value).
by MSBF. However, the NHA has the right to evict
BGC if BGC occupied a portion outside of the 7- Usufruct on fruit-bearing trees and shrubs
hectare area covered by MSBF's usufructuary
rights (NHA v. CA, G.R. No. 148830, April 13, 2005). The usufructuary of fruit-bearing trees and shrubs
may make use of the dead trunks, and even of
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Usufructuary of a part of common property 3. After the usufruct (like the duty to return
and indemnify in the proper cases).
The usufructuary of a part of a thing held in
common shall exercise all the rights pertaining to 1. Before the usufruct (NCC, Art. 583)
the owner thereof with respect to the a. Make an inventory; and
administration and the collection of fruits or b. Give security
interest. Should the co-ownership cease by reason
of the division of the thing held in common, the This article speaks of two obligations (inventory
usufruct of the part allotted to the co-owner shall and security). They are not necessary however
belong to the usufructuary (NCC, Art. 582). before the right to the usufruct begins; they are
merely necessary before physical possession and
A co-owner may give the usufruct of his share to enjoyment of the property can be had, thus if the
another, even without the consent of the others, usufructuary fails to give security (unless exempt)
unless personal considerations are present. (NCC, the usufruct still begins but the naked owner will
Art. 493). have the rights granted him under Art. 586 (Paras,
2008).
The usufructuary in such a case takes the owner’s
place as to: NOTE: The purpose of giving security is to insure
fulfillment by the usufruct of the obligation
a. Administration (management); and imposed upon him.
b. Collection of fruits or interest (NCC, Art.
582). (BUT not as to alienation, After the security has been given by the
disposition, or creation of any real right usufructuary, he shall have a right to all the
over the property, since these are strict proceeds and benefits from the day on which, in
acts of ownership, unless of course he is accordance with the title constituting the usufruct,
authorized by the naked owner) (Paras, he should have commenced to receive them
2008). (retroactive effect of security) (NCC, Art. 588).
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The usufructuary is obliged to make the ordinary The usufructuary has a right of retention even
repairs needed by the thing given in usufruct. It after the termination of the usufruct until he is
includes such as are required by the wear and tear reimbursed for the increase in value of the
due to the natural use of the thing and are property caused by extraordinary repairs for
indispensable for its preservation (NCC, Art. 592). preservation.
NOTE: If the naked owner demanded the repair Charges or taxes which the usufructuary must
and the usufructuary still fails to do so, the owner pay
may make them personally or thru another, at the
expense of the usufructuary (NCC, Art. 592). 1. The annual charges (in the fruits);
2. The annual taxes on the fruits; and
Extraordinary repairs (NCC, Art. 593)
Taxes imposed directly on the capital
It includes:
1. Those required by the wear and tear due to These shall be at the expense of the owner
the natural use of the thing but not provided they are not annual (Paras, 2008).
indispensable for its preservation.
Rules:
Liabilities: a. If paid by the naked owner, he can
a. The naked owner should be held liable, demand legal interest on the sum
whether or not he is notified by the paid; or
usufructuary; and b. If advanced by the usufructuary, he
b. The law does not require the naked shall recover the amount thereof at
owner to make them; what is important is the termination of the usufruct [NCC,
that he will bear the expenses made by Art. 597(2)].
the usufructuary. (Paras, 2008)
3. After the usufruct/ at the termination
2. Those caused by exceptional circumstances a. Return the thing in usufruct to the naked
and are indispensable for its preservation. owner unless there is a right of retention;
b. Pay legal interest for the time that the
Liabilities: usufruct lasts; and
a. The naked owner shall be held liable; c. Indemnify the naked owner for any losses
and due to his negligence or of his transferees.
b. The usufructuary is allowed to make
them with the right to get the increase NOTE: The usufructuary may be liable
in value and the right of retention at the for the damages suffered by the naked
termination of usufruct, provided there owner on account of fraud committed by
was notification by the usufructuary him or through his negligence.
and failure to repair by the naked
owner (Paras, 2008). XPN: the usufructuary is not liable for
deterioration due to:
3. Those caused by exceptional circumstances
but are not needed for its preservation. 1. Wear and tear; or
2. Fortuitous event.
Liabilities:
a. The naked owner is liable; and RIGHTS OF THE OWNER
b. The usufructuary cannot compel the
naked owner to make such repairs and he Rights of a naked owner and the limitations
is not allowed to make them even if the imposed upon him
naked owner has failed to make them
(Paras, 2008). RIGHTS LIMITATIONS
Can alienate the thing in
NOTE: Extraordinary repairs shall be at the Alienation
usufruct.
expense of the owner. The usufructuary is obliged Cannot alter the form and
to notify the owner when the need for such Alteration
substance.
repairs is urgent. Cannot do anything prejudicial
Enjoyment
to the usufructuary.
Right of retention of the usufructuary Construction Can construct any works and
Alienation by naked owner Effect of the death of the naked owner on the
usufruct
Since the jus disponendi and the title (dominium
directum) reside with the naked owner, he retains The usufruct does not terminate the usufruct. The
the right to ALIENATE the property BUT — naked owner’s rights are transmitted to his heirs.
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ends at the death of said person (NCC, Art. association covers public land (NHA v. CA, G.R. No.
606); or 148830, April 13, 2005).
c. In case the contrary intention clearly
appears. Usufruct on a building and/or land concerned
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Where the easement may be established on any of 5. Has two distinct tenements: dominant and
several tenements surrounding the dominant servient estate; and
estate, the one where the way is shortest and will 6. Cause must be perpetual.
cause the least damage should be chosen.
However, if these two circumstances do not Easement v. Usufruct
concur in a single tenement, the way which will
cause the least damage should be used, even if it BASIS EASEMENT USUFRUCT
will not be the shortest.
On real Real or
Constituted on
property personal
There can be no easement over another easement
for the reason that an easement may be Limited to a Includes all
constituted only on a corporeal immovable particular or uses and
property. An easement, although it is real right Use granted specific use of fruits.
over an immovable, is not a corporeal right. the servient
(1995 Bar) estate.
No possessory Involves a
Easement v. Servitude right over an right of
As to right of
immovable possession in
possession
EASEMENT SERVITUDE an immovable
An English law term. Used in civil law or movable.
countries. Not Extinguished
Real Real or personal extinguished by death of
As to effect of
by death of usufructuary.
The right enjoyed. Burden imposed upon death
dominant
another. owner.
Real right Real right
Characteristics of easement (NICE LIAR)
Nature of right whether or not whether or not
registered. registered.
1. A right limited by the Needs of the dominant
owner or estate, without possession; As to Transmissible Transmissible
2. Inseparable from the estate to which it is transmissibility
attached – cannot be alienated independently May be Cannot be
of the estate (NCC, Art. 617) (2001, 2010 constituted in constituted on
Bar); favor, or, an easement
3. Cannot consist in the doing of an act unless How it may be burdening, a but it may be
the act is accessory in relation to a real constituted piece of land constituted on
easement; held in the land
4. Involves two (2) neighboring Estates: the usufruct. burdened by
dominant estate to which the right belongs an easement.
and the servient estate upon which an
obligation rests; Q: Can there be an easement over a usufruct?
5. A Limitation on the servient owner’s rights of
ownership; A: There can be no easement over a usufruct.
6. Indivisible – not affected by the division of the Since an easement may be constituted only on a
estate between two or more persons (NCC, corporeal immovable property, no easement may
Art. 618); be constituted on a usufruct which is not a
7. It is enjoyed over Another immovable never corporeal right.
on one’s own property; and
8. A Real right but will affect third persons only Q: Can there be a usufruct over an easement?
when registered.
A: There can be no usufruct over an easement.
Essential qualities of easements While a usufruct may be created over a right, such
right must have an existence of its own
1. Incorporeal; independent of the property. A servitude cannot
2. Imposed upon corporeal property; be the object of a usufruct because it has no
3. Confers no right to a participation in the existence independent of the property to which it
profits arising from it; attaches.
4. Imposed for the benefit of corporeal property;
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2. He must Contribute to the necessary expenses
in case he uses the easement, unless 4. As to the right given
otherwise agreed upon [NCC, Art. 628(2)]. a. Right to partially use the servient estate;
b. Right to get specific materials or objects
CLASSIFICATIONS OF EASEMENT from the servient estate;
c. Right to participate in ownership; and
1. As to recipient of the benefit d. Right to impede or prevent the
a. Real (or predial) – The easement is in neighboring estate from performing a
favor of another immovable (NCC, Art. specific act of ownership (Paras, 2008).
613); and
5. As to source
NOTE: It requires two distinct immovable a. Legal – Those created by law for public
belonging to different owners to which it use or private interests;
relates. b. Voluntary - constituted by will or
agreement of the parties or by testator;
b. Personal – The easement is in favor of a and
community, or of one or more persons to
whom the encumbered estate does not NOTE: Like any other contract, a
belong e.g. easement of right of way for voluntary easement (of right-of-way)
passage of livestock (NCC, Art. 614). could be extinguished only by mutual
agreement or by renunciation of the
NOTE: In personal servitude the person owner of the dominant estate (La Vista
whose in favor the easement is Association v. CA, G.R. No. 95252,
constituted need not to b ethe owner of September 5, 1997).
any estate and does not require a
dominant estate because the person in c. Mixed – Created partly by agreement and
whose favor the easement is constituted partly by law.
need not to be the property owner.
6. As to the duty of the servient owner:
2. As to the manner of exercise a. Positive – Imposes upon the owner of the
servient estate the obligation of allowing
a. Continuous – Their use may or may not be something to be done or doing it himself;
incessant, without the intervention of any and
act of man. Eg. Easement of drainage (NCC,
Art. 615); and e.g. Right of way – imposes the duty to
allow the use of said way.
NOTE: For acquisitive prescription, the
easement of aqueduct and easement of b. Negative – Prohibits the owner of the
light and view are considered continuous. servient estate from doing something
which he could lawfully do if the
b. Discontinuous – Used at intervals and easement did not exist.
depend upon the acts of man. Eg.
Easement of right of way e.g. Easement of light and view – where
the owner is prohibited from obstructing
3. As to whether their existence is indicated the passage of light.
2. By Prescription of 10 years (2009 Bar) Easements are inseparable from the estate to
which they actively or passively pertain. The
NOTE: Prescription runs irrespective of good existence of apparent sign under Art. 624 is
faith or bad faith of the possessor and equivalent to a title. It is as if there is an implied
whether or not he has just title. The only contract between the two new owners that the
requirement is adverse possession. Only easement should be constituted, since no one
continuous and apparent easements can be objected to the continued existence of the
acquired by prescription (NCC, Art. 620). windows.
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Easements are extinguished (MEN-CRR) (2001, because the basis of this cause of extinguishment
2010 Bar): is a presumptive renunciation.
It is enough that the merger be with respect to the Legal easements are those imposed by law having
portion of the tenement that is affected by the for their object either public use of the interest of
servitude, or the part for the benefit of which it private persons. They shall be governed by the
was established. special laws and regulations relating thereto, and
in the absence thereof, by the Civil Code.
Where the merger is temporary or under
resolutory condition, there is at most a Public legal easement
suspension, but not an extinguishment of the Public legal easement is for public or communal
servitude. use.
Non-use must be due to voluntary abstention by Private legal easement is for the interest of private
the dominant owner, and not to fortuitous event, persons or for private use. It shall be governed by:
Subjacent Support
5. Drainage of Building;
----------
PROP
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EASEMENTS RELATING TO WATERS The banks of rivers and streams and the
shores of the seas and lakes throughout their
Different easements relating to waters: entire length and within a zone of three
(NBREWAC) meters in urban areas, 20 meters in
agricultural areas, and 40 meters in forest
A. Natural drainage (NCC, Art. 637); areas along their margins are subject to the
easement of public use in the interest of
Scope of easement of natural drainage recreation, navigation, floatage, fishing and
salvage.
Lower estates are obliged to receive the
waters which naturally and without the No person shall be allowed to stay in this zone
intervention of man descend from higher bigger than what is necessary for recreation,
estates, as well as the stones or earth which navigation, floatage, fishing or salvage or to
they carry with them (NCC, Art. 637) (2002 build structures of any kind (Art. 51, PD 1067)
Bar).
D. Easement of a Dam (NCC, Artsicles 639 and
NOTE: Art. 637 has already been superseded 647);
by Art. 50 of P.D. 1067 (Water Code of the
Philippines). A person may establish the easement of
abutment or of a dam provided that:
Duties of Servient Estate
1. The purpose is to divert or take water
The owner cannot construct works that would from a river or brook, or to use any other
impede the easement BUT he may regulate or continuous or discontinuous stream;
control the descent of water. 2. It is necessary to build a dam;
3. The person to construct it is not the
Duties of Dominant Estate owner of the banks or lots which must
support it; and
1. He cannot construct works which will increase 4. Payment of proper indemnity is made.
the burden, but he may construct works
preventing erosion; He must seek the permission of the owner
2. They must compensate the owners of the and in case of latter’s refusal, he must
servient estates if the waters are result of an secure authority from the proper
overflow from irrigation dams, or the result of administrative agency.
artificial descent done by man and damages
caused by reason thereof, E. Easement for drawing Water or for watering
animals (NCC, Arts. 640-641);
Prescription of easement of natural drainage
This is a combined easement for drawing of water
The easement of natural drainage prescribes by and right of way.
non-use for 10 years (Paras, 2008).
Requisites for easement for watering cattle
Indemnity in easement of natural drainage
1. It must be imposed for reasons of public
Art. 637 of the New Civil Code, which provides for use;
the easement of natural drainage, does not speak 2. It must be in favor of a town or village;
of any indemnity. It follows that no indemnity is and
required as long as the conditions laid down in the 3. Indemnity must be paid (NCC, Art. 640).
article are complied with (Paras, 2008).
NOTE: The right to make the water flow
B. Drainage of Buildings (NCC, Art. 674); thru or under intervening or lower
estates.
C. Easement on Riparian banks for navigation,
floatage, fishing, salvage, and tow path (NCC, Requisites for drawing water or for watering
Art. 638); of animals
NOTE: Easement of aqueduct is not G. Easement for the Construction of a Stop Lock or
acquirable by prescription after 10 years Sluice Gate (NCC, Art. 647)
because although it is continuous and
apparent in character, under the Water Code To make these structures in the bed of a
of the Philippines (P.D. 1067), all waters stream from which they needed water for
belong to the State; therefore, they cannot be irrigation or improvement of the dominant
the subject of acquisitive prescription (Jurado, estate will be drawn, it is required that the
2011). dominant owner pays the riparian owners
where the structures will be constructed for
It is an easement which gives right to make the damages caused to the latter and to other
water flow thru intervening estates in order irrigators who may sustain damages also.
that one may make use of said water.
However, unlike the easement for drawing Q: The original developer of Happy Glen Loop
water or for watering animals, the existence (HGL) loaned from T. P. Marcelo Realty
of the latter does not necessarily includes the Corporation. HGL failed to settle its debts so he
easement of aqueduct. assigned all his rights to Marcelo over several
parcels of land in the subdivision. Marcelo
Requisites for easement of aqueduct represented to lot buyers that a water facility
is available in the subdivision. Marcelo sold
1. Indemnity must be paid to the owners of the lot to Liwag who subsequently died. The
intervening estates and to the owners of wife of Liwag demanded the removal of the
lower estates upon which waters may overhead water tank over the parcel of land
filter or descend. contending that its existence is merely
tolerated. HGL Homeowners Association
NOTE: The amount usually depends on refused the demand contending that they have
duration and inconvenience caused. used continuously the facility for more than 30
years. Is there an established easement for
2. If for private interests, the easement water facility in the lot?
cannot be imposed on existing buildings,
courtyards, annexes, out-houses, orchards A: YES. The water facility is an encumbrance on
or gardens but can be on other things, like the lot of the Subdivision for the benefit of the
road, provided no injury is caused to said community. It is continuous and apparent,
properties. because it is used incessantly without human
intervention, and because it is continually kept in
3. There must be a proof: view by the overhead water tank, which reveals its
a. That the owner of the dominant estate use to the public. The easement of water facility
can dispose of the water ; has been voluntarily established either by
b. That the water is sufficient for the use Marcelo, the Subdivision owner and the original
which it is intended ; developer of the Subdivision. For more than 30
years, the facility was continuously used as the
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residents’ sole source of water (Liwag vs Happy 3. There must be no adequate Outlet to a public
Glen Loop Homeowners Association, Inc., G.R. No. highway [NCC, Art. 649, (1)];
136897, July 4, 2012). 4. The right of way must be absolutely
Necessary not mere convenience;
EASEMENT OF RIGHT OF WAY 5. The isolation must not be Due to the
1996, 2005, 2010 Bar claimant’s own act (NCC, Art. 649); and
6. There must be payment of proper Indemnity.
Easement of right of way is the right granted to a
person or class of persons to pass over the land of Least prejudicial to the servient estate (1996,
another by using a particular pathway therein, to 2000, 2005, 2010 Bar)
reach the former’s estates, which have no
adequate outlet to a public highway subject, “Least prejudicial” in determining the right of way
however to payment of indemnity to the owner of means it is the shortest way and the one which
the land burdened bu the right. (Pineda, 2009) will cause the least damage to the property to the
servient estate in favor of the dominant estate.
Right of way
Q: Lots A and B are owned by Demit while Lot C
It may refer either to the easement itself, or is owned by Dayum. Lot C has an existing right
simply, to the strip of land over which passage can of way. After inspection of the area, it has been
be done (Paras, 2008). found out that a fence and portion of the
residential house owned by Demit have
Q: May the easement of right of way be encroached a part of Dayum’s right of way.
acquired by prescription? Dayum demanded that Demit pay for the area
encroached or demolish the wall fence and
A: Easement of right of way cannot be acquired portion of the house which have been
by prescription because it is discontinuous or encroaching. Demit contends that as owner of
intermittent (Ronquillo, et al. v. Roco, G.R. No. L- Lot A and B, he is equally entitled to the road of
10619, February 28, 1958). right of way and proposed to buy the portion.
Is the contention of Demit correct?
Q: What kind of servitude in favor of the
government is a private owner required to A: NO. As the owner of the servient estate, Dayum
recognize? retained ownership of the road right of way even
assuming that said encumbrance was for the
A: The only servitude which he is required to benefit of Lots of Demit. The latter could not claim
recognize in favor of the government are: to own even a portion of the road right of way
because Art. 630 of the Civil Code expressly
1. The easement of a public highway; provides that "[t]he owner of the servient estate
2. Private way established by law; or retains ownership of the portion on which the
3. Any government canal or lateral that has easement is established, and may use the same in
been pre-existing at the time of the such manner as not to affect the exercise of the
registration of the land. easement." (Sps. Mercader v. Sps. Bardilas, G.R. No.
163157, June 27, 2016).
NOTE: If the easement is not pre-existing and is
sought to be imposed only after the land has been Q: What if the property is not the shortest way
registered under the Land Registration Act, but will cause the least damage to the servient
proper expropriation proceedings should be had, estate?
and just compensation paid to the registered
owner (Eslaban v. Vda De Onorio, G.R. No. 146062, A: The way which will cause the least damage
June 28, 2001). should be used even if it will not be the shortest.
Requisites for easement on right of way The easement of right of way shall be established
(POON-D) (1996, 2005, 2010 Bar) at the point least prejudicial to the servient estate
and where the distance from the dominant estate
1. The easement must be established at the to a public highway is the shortest. In case of
point least Prejudicial to the servient estate conflict, the criterion of least prejudice prevails
(NCC, Art. 649); over the criterion of shortest distance.
2. Claimant must be an Owner of enclosed
immovable or with real right;
Q: Spouses dela Cruz are occupants of a parcel Determination of proper indemnity to the
of land located at the back of Ramiscal’s servient estate
property. They use as their pathway, to and
from the nearest public highway from their If the passage is:
property, a long strip of land owned by a. Continuous and permanent – The indemnity
Ramiscal. They also enclosed such strip of land consists of the value of the land occupied plus
with a gate, fence, and roof. Ramiscal the amount of damages caused to the servient
demanded that the spouses demolish the estate; and
same. The spouses refused. Are the spouses b. Temporary – Indemnity consists in the
entitled to a right of way? payment of the damage caused.
A: NO. There is no voluntary nor legal easement Two instances where indemnity is not
established. The spouses failed to show that they required
entered into an agreement with Ramiscal to use
the pathway. Art 649 provides that the easement 1. When a piece of land acquired by sale,
of right of way is not compulsory if the isolation of exchange or partition is surrounded by other
the immovable is due to the proprietor’s own acts. estates of the vendor, exchanger or co-owner.
Mere convenience for the dominant estate is not In such case he shall be obliged to grant a
enough to serve as its basis. There should be no
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CIVIL LAW
right of way without indemnity (NCC, Art. Emma discovered that Felisa had granted a
652); or right of way over the land in favor of the land
2. When a piece of land acquired by donation of Georgina, which had no outlet to a public
surround the estate of the donor or grantor. highway, but the easement was not annotated
In such case, the donee or grantee shall be when the servient estate was registered under
obliged to grant a right of way without the Torrens system. Emma then filed a
indemnity (NCC, Art. 653). complaint for cancellation of the right of way,
on the ground that it had been extinguished by
NOTE: If it is the land donated that is such failure to annotate. How would you
surrounded by the estate of the donor or decide the controversy? (2001 Bar)
gantor, although the latter is obliged to grant
a right of way, he can demand the required A: The complaint for cancellation of easement of
indemnity (NCC, Art. 652). right of way must fail. The failure to annotate the
easement upon the title of the servient estate is
Measurement for the easement of right of way not among the grounds for extinguishing an
easement under Art. 631 of the NCC. Under Art.
The width of the easement shall be that which is 617, easements are inseparable from the estate to
sufficient for the needs of the dominant estate which they actively or passively belong. Once it
(NCC, Art. 651). attaches, it can only be extinguished under Art.
631, and they exist even if they are not stated or
Q: Can a dominant owner demand a driveway annotated as an encumbrance on the Torrens title
for his automobile? of the servient estate.
A: YES, due to necessity of motor vehicles in the Temporary easement of right of way
present age.
If it be indispensable for the construction, repair,
Liability for repairs and taxes improvement, alteration or beautification of a
building, to carry materials through the estate of
1. As to repairs, the dominant owner is liable for another, or to raise thereon scaffolding or other
necessary repairs; objects necessary for the work, the owner of such
2. As to proportionate share of the taxes, it shall estate shall be obliged to permit the act, after
be reimbursed by said owner to the receiving payment of the proper indemnity for the
proprietor of the servient estate. This applies damage caused him (NCC, Art. 656).
only to permanent easements (NCC, Art. 654).
Easement of right of way for the passage of
Special causes of extinguishment of right of livestock or sevidumbres pecurias
way
Governed by the ordinances and regulations
1. The opening of a public road giving access to relating thereto and in their absence, by the
isolated estate; or usages and customs of the place.
2. When the dominant estate is joined to another
estate (such as when the dominant owner Maximum width:
bought an adjacent estate) which is abutting a 1. Animal path – 75 meters;
public rode, the access being adequate and 2. Animal trail – 37 meters and 50 centimeters;
convenient (NCC, Art. 655). and
3. Cattle – 10 meters (unless prior to the old
Both cases must substantially meet the needs Civil Code, vested rights has been acquired to
of the dominant estate. Otherwise, the a greater width) (Paras, 2008).
easement may not be extinguished.
EASEMENTS OF PARTY WALL
NOTE: Said extinguishment is NOT automatic.
There must be a demand for extinguishment Easement of party wall
coupled with tender of indemnity by the servient
owner. The easement of party wall is also called
servidumbre de
Q: Emma bought a parcel of land from medianera.
Equitable-PCI Bank, which acquired the same
from Felisa, the original owner. Thereafter, Party wall defined
A: While it is called an easement by the law, the Every part-owner of a party has the right to
law in some articles refers to it as a case of co- increase the height of the party wall subject to the
ownership or part-ownership (NCC, Articles 662, following conditions:
665, 666). The truth is that, it is a compulsory kind
of co-ownership (FORGED INDIVISION) where the 1. The same shall be done at his expense;
shares of each owner cannot be separated 2. He shall pay for any damage which may be
physically (otherwise the wall would be caused by his work, even though such damage
destroyed), although said shares may in a sense be may be temporary; and
materially pointed out. Thus, each co-owner owns 3. If the party wall cannot bear the increased
the half nearest to him (Paras, 2008). height, the owner desiring to raise it shall be
The existence of an easement of party wall is obliged to reconstruct it at his own expense, If it
presumed, unless there is a title, or exterior sign, be necessary to make it thicker, he shall give space
or proof to the contrary: required from his own land.
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CIVIL LAW
bedroom through the partition wall, causing easement of light is necessarily included, as well as
cracks, as well as damage, to the paint and the the easement of altius non tollendi [not to build
wooden parquet floor. Sps. Sonkin repeatedly higher for the purpose of obstruction (Paras,
demanded that Sps. Vergara build a retaining 2008).
wall on their property in order to contain the
landfill that they had dumped thereon, but the When easement of light and view is positive
same went unheeded. Should moral damages and when negative
and attorney’s fees be awarded?
Positive — If the window is thru a party wall (NCC,
A: No. It is undisputed that the Sonkin property is Art. 668, par. 1). Therefore, the period of
lower in elevation than the Vergara property, and prescription commences from the time the
thus, it is legally obliged to receive the waters that window is opened.
flow from the latter, pursuant to Article 637 of the
Civil Code. The proximate cause of the damage NOTE: The mere opening of the window does
sustained by the house of Sps. Sonkin was the act not create the easement; it is only when after
of Sps. Vergara in dumping gravel and soil onto a sufficient lapse of time the window still
their property, thus, pushing the perimeter wall remains open, that the easement of light and
back and causing cracks thereon, as well as water view is created (NCC, Art. 668, par. 1).
seepage, the former is nevertheless guilty of Moreover, even if the window is on one’s own
contributory negligence for not only failing to wall, still the easement would be positive if
observe the two (2)-meter setback rule under the the window is on a balcony or projection
National Building Code, but also for disregarding extending over into the adjoining land (Paras,
the legal easement constituted over their 2008).
property. As such, Sps. Sonkin must necessarily Negative — If the window is thru one’s own wall,
and equally bear their own loss. In view of Sps. that is, thru a wall of the dominant estate (NCC,
Sonkin’s contributory negligence, the Court deems Art. 668, par. 2). Therefore, the time for the period
it appropriate to delete the award of moral of prescription should begin from the time of
damages in their favor. No attorney’s fees shall notarial prohibition upon the adjoining owner.
also be awarded because there is no bad faith “Formal prohibition’’ or “formal act’’ (under the
involved herein(Sps. Sonkin v Erlinda Vergara, G.R. old Civil Code, Art. 538) means not merely any
No. 193659, June 15, 2015) writing, but one executed in due form and/or with
solemnity — a public instrument (Laureana A. Cid
EASEMENT OF LIGHT AND VIEW v. Irene P. Javier, et al., L-14116, June 30, 1960).
No part-owner may, without the consent of the XPN: Even if the window is on the wall of the
others, open through the party wall any window dominant estate, still easement of light and view
or aperture of any kind (NCC, Art. 667). would be POSITIVE if the window is on the
balcony or extension extending over the land of
A window or opening in the dividing wall of the servient estate.
buildings is an exterior sign which rebuts the
presumption that the wall is a party wall; one part Thus, the period of prescription for the
owner may not, therefore, make any window or acquisition shall be counted from the time of:
opening of any kind thru a party wall without the
consent of others. 1. Opening of the window, if through a party
wall; or
The easement of LIGHT — “Jus luminum” The 2. The formal prohibition upon the
opening is for the purpose of admitting light and proprietor of the adjoining land, if window
not for viewing. is through a wall on the dominant estate.
(as in the case of small windows, not more than
30 cm. square, at the height of the ceiling joist, the Openings at height of ceiling joints to admit
purpose of which is to admit light, and a little air, light (NCC, Art. 669)
but not VIEW) (Paras. 2008).
When the distances in Art. 670 are not observed,
The easement of VIEW — “Servidumbre the owner of a wall which is not a party wall can
prospectus” The opening is for the purpose of make an opening for the purpose of admitting
viewing. (as in the case of full or regular windows light and air, but NOT for view.
overlooking the adjoining estate) (Incidentally,
although the principal purpose here is VIEW, the
1. The size must not exceed 30 centimeter Prescription may still be acquired as a negative
square; easement after ten years from the time of notarial
2. The opening must be at the height of the prohibition.
ceiling joists or immediately under the
ceiling; The distance referred to in Art. 670 shall be
3. There must be an iron grating imbedded measured in cases of direct views from the outer
in the wall; and line of the wall when the openings do not project,
4. There must be a wire screen. from the outer line of the latter when they do, and
in cases of oblique view from the dividing line
If the wall becomes a party wall – A part owner can between the two properties (NCC, Art. 671).
order the closure of the opening because no part
owner may make an opening through a party wall Where buildings are separated by a public way
without the consent of the others; it can also or alley (NCC, Art. 672)
obstruct the opening unless an easement.
The distance provided in Art. 670 is not
The openings allowed by Art. 669 are for the compulsory where there is a public way or alley
purpose of admitting light; hence they can be provided that it is not less than three meters wide,
made only in the walls of buildings. the minimum width is necessary for the sake of
privacy and safety.
NOTE: Art. 669 refers to restricted windows.
NOTE: The width of the alley is subject to special
Direct and oblique views (NCC, Articles 670- regulations and ordinances.
671) A private alley opened to the use of the general
public falls within the provision of Art. 672.
Articles 670 and 671 deal with regular, full
windows. Where easement of direct view had been
acquired (NCC, Art. 673)
Direct view - It is that which is obtained from a
wall parallel to the boundary line, such that from Whenever the easement of direct view has been
the opening in such wall it is possible to see the acquired by any such title, there is created a true
adjoining tenement without the necessity of easement. The owner of the servient estate cannot
putting out or turning one's head side. build thereon at less than a distance of three
meters from the boundary line.
Oblique view - It is obtained from a wall at an
angle with the boundary line; in order to see the NOTE: The title used in Art. 673 refers to any
adjoining tenement, it is necessary to turn one's modes of acquiring easements:
head to the left or to the right. 1. Contract;
2. Will;
Restrictions as to easement of views 3. Donation; or
4. Prescription.
1. Direct Views: The distance of two (2)
meters between the wall and the The distance may be increased or decreased by
boundary must be observed; and stipulation of the parties provided that in case of
2. Oblique Views: (Walls perpendicular or decrease, the minimum distance of two meters or
at an angle to the boundary line) must not sixty centimeters prescribed in Art. 670 must be
be 60 cm to the nearest edge of the observed, otherwise it is void. The said distances
window (NCC, Art. 670). involve considerations of public policy and the
general welfare; hence, they should not be
Any stipulation to the contrary is void (NCC, rendered ineffective by stipulation.
Art. 673).
EASEMENT OF DRAINAGE OF BUILDINGS
NOTE: When windows are opened at a distance
less than that prescribed by Art. 670 from the The owner of a building shall be obliged to
boundary lines, they constitute unlawful openings, construct its roof or covering in such manner that
the rain water shall fall on his own land or on a
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street or public place, and not on the land of his No person shall build any aqueduct, well, sewer,
neighbor, even though the adjacent land may furnace, forge, chimney, stable, depository of
belong to two or more persons, one of whom is corrosive substances, machinery, or factory which
the owner of the roof. Even if it should fall on his by reason of its nature or products is dangerous or
own land, the owner shall be obliged to collect the noxious, without observing the distances
water in such a way as not to cause damage to the prescribed by the regulations and customs of the
adjacent land or tenement (NCC, Art. 674). place, and without making the necessary
protective works, subject, in regard to the manner
NOTE: Art. 674 does not establish servitude but thereof, to the conditions prescribed by such
merely regulates the use of one's property. regulations. These prohibitions cannot be altered
or renounced by stipulation on the part of the
Easement to receive falling rain waters (NCC, adjoining proprietors (NCC, Art. 678).
Art. 675)
NOTE: The owner must take necessary protective
The owner of a tenement or a piece of land, works or other neighboring estates.
subject to the easement of receiving water falling
from roofs, may build in such manner as to receive Planting of trees
the water upon his own roof or give it another
outlet in accordance with local ordinances or Art. 679 establishes a negative easement. It
customs, and in such a way as not to cause any provides the minimum distances of trees and
nuisance or damage whatever to the dominant shrubs from the boundary line. They shall be
estate. regulated by the local ordinances and in the
absence thereof, by the customs of the place, and
Easement giving outlet to rain water where in default thereof, by art, 679.
house surrounded by other houses
Requisites: Distance in Planting of Trees under Article 679
1. There must be no adequate outlet to the of the New Civil Code.
rain water because the yard or court of a
house is surrounded by other houses; 1. The distance authorized by local ordinaces or
2. The outlet to the water must be at the customs of the place, if any; or
point where egress is easiest, and 2. If there are no ordinance or custom:
establishing a conduit for drainage; and
3. There must be payment of proper (a.) Atleast two (2) meters from the dividing line
indemnity (NCC, Art. 676). of the estate in case of tall trees; and
INTERMEDIATE DISTANCES AND WORKS FOR Q: Can the adjoining estate cut the roots and
CERTAIN CONSTRUCTIONS AND PLANTINGS the branches without the consent of the owner
of the tree?
Construction and plantings near fortified
places A: Right to cut roots can be exercised without
notice to the owner of the trees. BUT as to the
No constructions can be built or plantings made branches, it is necessary to ask that they be cut,
near fortified places or fortresses without and if the owner of the tree does not do so
compliance with the conditions required in special voluntarily, the court may authorize the
laws, ordinances, and regulations relating thereto neighboring owner to cut them.
(NCC, Art. 677).
Q: Does this right prescribe?
NOTE: Art. 677 establishes an easement in favor
of the State. The general prohibition is dictated by A: The right to cut does not prescribe so long as
the demands of national security. the owner tolerates the branches and roots
Construction of aqueduct, well, sewer, etc. invading his tenement. BUT the moment the
owner of the tenement demanded that the
NOTE: If the fruits fall on public property, the Notice to owners of adjacent lands
owner of the tree retains ownership.
Any proprietor intending to make any excavation
EASEMENT AGAINST NUISANCE contemplated in Articles 684-686 shall notify all
owners of adjacent lands.
Easement against nuisance is a negative easement
because the proprietor or possessor is prohibited The notice is mandatory except where there is
to do something which he could lawfully do were actual knowledge of the proposed excavation.
it not for the existence of the easement. However,
a nuisance involves any act or omission which is NOTE: The legal easement of lateral and subjacent
unlawful. support are NOT only applicable for buildings
already constructed at the time of the excavations
NOTE: The easement against nuisance is not an but also to future buildings that may be
easement at all but a restriction upon the constructed on the adjoining lands.
ownership and not every limitation on the right of
ownership is an easement. VOLUNTARY EASEMENT
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2. Personal servitudes: for anyone capacitated to existence of an easement before the Regional
accept. Trial Court (RTC) of Pasig City and prayed that
the easement be annotated in the title of the
Q: How are voluntary easements created and property foreclosed by NB. FMI further
what are the governing rules for such? claimed that when Mr. Bong installed the
pumps in his adjoining property, a voluntary
A: easement was constituted in favor of FMI.
1. If created by title (contract, will, etc.), the title
governs; and Will the action prosper? (2014 Bar)
2. If acquired by prescription, it is governed by
the manner or form of possession. A: NO, the action will not prosper. The essence of
a mortgage is that it immediately subjects the
NOTE: In both cases, the Civil Code will only property upon which it is imposed, and whoever
apply suppletorily. the possessor may be, to the fulfillment of the
obligation for whose security it was constituted.
When consent is necessary There was no voluntary easement in this case
because at the time the water pumps were
The owner of a property in usufruct may create constructed, the subject lot where the water
easements thereon without the consent of the pumps were constructed and the condominium
usufructuary provided the rights of the latter are belong to the same person. No one can have an
not impaired (NCC, Art. 689). easement over his own property (Bogo- Medellin v.
CA, G.R. No. 124699, July 31, 2003). Even of the
NOTE: Consent of both the naked owner and the assumption that an easement was created in favor
beneficial owner is necessary for the creation of of FMI that alone will not defeat the right of the
perpetual voluntary easement (NCC, Art. 690). mortgagee to enforce the security if the debtor
Expenses for work reuired for use and defaults.
preservation of the easement.
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CIVIL LAW
ATTRACTIVE NUISANCE 2. Abatement, without judicial proceedings
(NCC, Art. 705).
One who maintains on his premises dangerous
instrumentalities or appliances of a character NOTE: Any person injured by a private nuisance
likely to attract children in play, and who fails to may abate it by removing, or if necessary, by
exercise ordinary care to prevent children from destroying the thing which constitutes the
playing therewith or resorting thereto, is liable to nuisance, without committing a breach of the
a child of tender years who is injured thereby, peace or doing unnecessary injury. However, it is
even if the child is technically a trespasser in the indispensable that the procedure for extra-judicial
premises (Jarco Marketing Corp. v. CA, G.R. No. abatement of a public nuisance by a private
129792, December 21, 1999). person be followed (NCC, Art. 706).
NOTE: The doctrine of attractive nuisance does Liability for damages in case of extrajudicial
not generally apply to bodies of water, artificial as abatement of nuisance
well as natural in the absence of some unusual
condition or artificial feature other than the mere The private person or a public official
water and its location. extrajudicially abating a nuisance is liable for
damages to the owner of the thing abated, if he
PUBLIC NUISANCE AND PRIVATE NUISANCE causes unnecessary injury or if an alleged
nuisance is later declared by courts to be not a
Remedies against public nuisances real nuisance (NCC, Art. 707).
1. Prosecution under the RPC or any local The right to question the existence of a nuisance
ordinance; DOES NOT prescribe; it is imprescriptible.
2. Civil action; or
3. Abatement, without judicial proceeding (NCC, Q: Respondent Ernesto Lardizabal (Ernesto)
Art. 699) filed a complaint for demolition, before the
City Engineer's Office of Baguio City (City
Remedies against private nuisances Engineer's Office), questioning the ongoing
construction of a residential structure and
1. Civil action; or garage extension by petitioners on a parcel of
land. Upon investigation, the City Engineer's
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CIVIL LAW
5. There must be an Intention to acquire 5. Swarm of bees that has escaped from its
ownership. owner, under certain conditions (NCC, Art.
716);
Occupation v. Possession 6. Domesticated animals that have escaped from
their owners, under certain conditions (NCC,
BASIS OCCUPATION POSSESSION Art. 716);
7. Transfer of pigeons to another breeding place
Mode of Merely raises
without fraud or artifice (NCC, Art. 717); and
acquiring the
As regards 8. Transfer of fish to another breeding place
ownership. presumption of
acquisition without fraud or artifice (NCC, Art. 717).
ownership
of
when exercised
ownership Acquisition of ownership over a wild animal by
in the concept
occupation
of owner.
Involves only Any kind of Wild animals are considered res nullius when not
As to
corporeal property. yet captured. After its capture, animals that
property
personal escaped become res nullius again.
involved
property.
As regards Requires that the The property Straying Domesticated Animals
ownership object be without may be owned
of the thing an owner. by somebody. Domesticated animals, if they got strayed and
by another were caught by another, the owner may still claim
As regards There must be an May be had in them from the captor within 20 days reckoned
the intent to intent to acquire the concept of a from the date of occupation by the latter. Failure
acquire ownership. mere holder. to do so, they shall belong to the captor who kept
them.
May not take May exist w/o
As regards place w/o some occupation. Domesticated as distinguish from Domestic
possession form of Animals
possession.
Short duration. Generally Domesticated animals are wild animals but after
As to period
longer. capture had been tamed and become accustomed
As to Cannot lead to May lead to and friendly to people. On the other hand,
leading to another mode of another mode- Domestic Animals or tame animals are those born,
another acquisition. prescription. bred and raised under the care of men.
mode of
acquisition Q: When can land be the object of occupation?
2. Animals that are the object of hunting and Ownership of land cannot be acquired by
fishing (NCC, Art. 715); occupation
3. Hidden treasures – Only if the there is no
known owner thereof. This is possible only if When the land is without owner, it pertains to the
the treasure is found in places or things State. The State need not acquire abandoned lands
without owners (NCC, Art 718) by occupation because once the requisites of
4. Abandoned movables – A thing is abandoned abandonment had been fulfilled; automatically,
when: the reversion operates (Pineda, 2009).
a. The expectation to recover is gone (spes
recuperandi); and Abandoned land (one with an owner before)
b. The intent to return or have it returned is becomes patrimonial land of the State susceptible
given up (spes rivertandi).
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CIVIL LAW
A donation where the donor did not reserve certain conditions, 2. Gratuitous – Same
property or assets for himself in full ownership or limitations or charges form of that of
in usufruct sufficient for his support and all upon the donee, donations.
relatives legally dependent upon him is not void. It whose value is
is merely reducible to the extent that the support inferior to the
to himself and his relatives is impaired or donation given.
prejudiced (Pineda, 1999). Onerous
Imposes upon the Same as that of
Reversion in donation donee a reciprocal contracts.
obligation; Burdens,
It is a condition established in the deed of charges or services are
donation which has for its effect the restoration or equal or greater in
return of the property donated to the donor or his value to that of the
estate or in favor of other persons who must be donation.
living at the time of the donation for any cause or
circumstances (NCC, Art. 757). Kinds of donation according to perfection or
extinguishment
NOTE: If the reversion is in favor of other persons
who are not all living at the time of the donation, 1. Pure donation – It is one which is not subject
the reversion stipulated shall be void, but the to any condition;
donation shall remain valid. 2. Conditional –It is one wherein the donor
imposes on the donee a condition dependent
KINDS OF DONATION on the happening of a future event or past
event unknown to the parties; and
1. According to motive or cause: 3. With a Term – It is one wherein the donor
a. Simple; imposes on the donee a condition dependent
b. Remuneratory (1st kind); upon the happening of a future and certain
c. Remuneratory (2nd kind): Conditional or event.
Modal donations; or
d. Onerous donations. Effect of illegal or impossible conditions
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CIVIL LAW
Must comply Must comply 2. Partially onerous – When the burden is lesser
On with the with the than the value of the donation (Pineda, 1999).
formalities formalities of formalities of
donations. a will. Laws that apply to onerous donations
On when Acceptance After donor’s 1. Totally onerous – Rules on contracts.
acceptance is during donor’s death. 2. Partially onerous
made lifetime. a. Portion exceeding the value of the burden
Property Property – simple donations; and
On when
completely retained by b. Portion equivalent to the burden – law on
property is
conveyed to the donor contracts (Pineda, 1999).
conveyed to
the done. while he is still
the done
alive. Rules of contract govern the onerous portion of
On tax Donor’s tax Estate tax donation; rules of donation only apply to the
payable excess, if any. Since the donation imposed on the
donee the burden of redeeming the property
Test in Determining Whether the Donation is for value, the donation was onerous. As an
Mortis Cuasa or Inter Vivos endowment for a valuable consideration, it
partakes of the nature of an ordinary contract;
What is controlling is the nature of the act and its hence, the rules of contract will govern and Art.
effectivity. If the act is one of disposition, and 765 of the New Civil Code finds no application
effective independently of the donor’s death, it is a with respect to the onerous portion of the
donation inter vivos. If it is one of deposition, but donation. Insofar as the value of the land exceeds
its effectivity is dependent upon the death of the the redemption price paid for by the donee, a
donor, it is a mortis causa donation. donation exists, and the legal provisions on
donation apply (Calanasan v. Sps. Dolorito, G.R. No.
NOTE: The title given to a deed of donation is NOT 171937, November 15, 2013).
a determinative factor which makes the donation
inter vivos or mortis causa what is controlling is HOW MADE AND ACCEPTED
the provision stated in the deed and must be read
in its entirety. Persons who must accept the donation
If there is doubt on the nature of the donation, the The donee must accept the donation personally, or
doubt should be resolved in favour of donation through an authorized person with a special
inter vivos, rather than mortis causa to avoid power for the purpose, or with a general and
uncertainty as to the ownership of the property sufficient power, otherwise, the donation shall be
subject of the deedof donation. void (NCC, Art. 745) (2010 Bar).
ONEROUS DONATIONS (2007 Bar) Reason for the need for an acceptance
Onerous donation is a donation given for which Because the donee may not want to accept the
the donor received a valuable consideration which donor’s liberality or if donation is onerous, he may
is the equivalent of the property so donated. not agree with the burden imposed.
(Pineda, 2009)
Rule prior to knowledge of acceptance
Samples of Onerous Donations
Prior to learning of the acceptance, there is as yet
Where the condition is to take care of the donor’s no perfected donation (no donation at all), hence,
family in the future (Carlos v. Ramil, G.R. No. the donor may give the property to somebody
6736, September 5, 1911); or where the done must else, for he has not really parted with the
take care of the donor’s funeral expenses. Thus, disposition of the property.
even if real property is involved, it is not essential
to have a public instrument (Manalo v. De Mesa, When the donation and the acceptance are in
G.R. No. L-9449, February 12, 1915). the same instrument
Kinds of onerous donations
If the donation and the acceptance are in the same
1. Totally onerous – When the burden is equal to instrument, containing the signatures of both
or greater than the value of the property donor and donee, it is understood that there is
donated; and
UNIVERSITY OF SANTO TOMAS
2019 GOLDEN NOTES 248
PROPERTY
already knowledge of the acceptance, hence, the ii. The burdens assumed by the done.
donation is already perfected.
b. Acceptance may be made:
Donations made to incapacitated persons i. In the same instrument; or
ii. In another public instrument, notified
Donations made to incapacitated persons shall be to the donor in authentic form, and
void, though simulated under the guise of another noted in both deeds. Otherwise,
contract or through a person who is interposed donation is void.
(NCC, Art. 743).
Q: The Roman Catholic Church accepted a
Persons who must accept the donation made donation of a real property located in Lipa
in favor of a minor City. A deed of donation was executed, signed
by the donor, Don Mariano, and the donee, the
If the donation is pure and simple and does not Church, as represented by Fr. Damian. Before
require written acceptance, the minors can accept the deed could be notarized, Don Mariano
the donation by themselves. died. Is the donation valid? (2014 Bar)
If the donation needs written acceptance, it may A: The donation is VOID. The donation of an
be accepted by their guardian or legal immovable property must be in a public
representatives. instrument in order for it to be valid. In this case,
the donor died even before the notarization of the
PERFECTION OF DONATION deed of donation. Hence, it does not satisfy the
requirement of being in a public instrument for
Donation is perfected from the moment the donor the donation to be valid.
knows of the acceptance by the donee (NCC, Art.
734). QUALIFICATIONS OF DONOR/DONEE
2. As regards immovable property: (1993, Following the laws in contracts (which are of
2000, 2010 Bar) suppletory application to simple donations) said
a. Must be in a public instrument specifying donations should be merely considered voidable.
i. The property donated; and The same answer should be given in case there
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was vitiated consent (as in the case of fraud or unsound mind, but to people such as those
intimidation). mentioned in Art. 739 and husbands and wives
with respect to immoderate donations from each
Q: May an emancipated minor by himself other (donations of spouses inter se).
make donation mortis causa?
Natural and juridical persons may be donees
A: YES, because at the age of 17, a person of sound
mind can already make a valid will. Since the law does not distinguish, both natural
and juridical persons may become donees. An
Donation by a guardian or trustee unregistered partnership may become a donee
because it is a juridical or artificial person despite
Guardians and trustees may of course donate their its non-registration. But the conjugal partnership
own properties, unless they are otherwise itself, not being natural or juridical, cannot be a
disqualified by the law, but not the property donee. Instead, the donation should be given by
entrusted to them, for the simple reason that they the stranger to the husband and wife, the share of
are not the owners thereof. the husband being credited to his capital, and that
of the wife being considered part of her
Status of a donation of ward’s property by a paraphernal property.
guardian
EFFECT OF DONATION/LIMITATIONS
It is believed that such a donation, if made in the
guardian’s name is null and void. On the other IN GENERAL
hand, if made by the guardian in the name of, and
with the consent of the ward, it would be valid Rights and actions the donee acquires
provided judicial permission is obtained. This is
particularly true if the donation benefits, in some The donee is subrogated to the rights and actions
way, the ward. which in case of eviction would pertain to the
donor.
NOTE: When the donation is clearly in the interest
of the beneficiaries, it would be contrary to the Liability of donors for eviction of hidden
spirit and intent of the law to say it cannot be defects
done.
1. If the donation is simple or remunerative,
DONEE donor is not liable for eviction or hidden
defects because the donation is gratuitous,
All those who are not specially disqualified by law. unless the donor acted in bad faith; and
2. If the donation is onerous, the donor is liable
Q: May an unborn child be a donee or a donor? on his warranty against eviction and hidden
defects but only to the extent of the burden.
A: An unborn child may be a donee but not a
donor. Rules regarding the liability of the donee to
pay the debts of donor
As a donee, donations made to conceived and
unborn children may be accepted by those 1. Where donor imposes obligation upon the
persons who would legally represent them if they donee, (NCC, Art. 758) the donee is liable:
were already born (NCC, Art. 742). a. To pay only debts previously contracted;
and
NOTE: If the conceived child did not become a b. For debts subsequently contracted only
person, the donation is null and void. An unborn when there is an agreement to that effect.
child cannot be a donor because it is essential for a
person to be able to make a donation, he must NOTE: But he is not liable for debts in excess
have full civil capacity. of the value of donation received, unless the
contrary is intended.
When a person is “specially disqualified’’ to
accept a donation 2. Where there is no stipulation regarding the
payment of debts (NCC, Art. 759):
“Specially disqualified’’ does not refer to those a. Donee is generally not liable to pay
incapacitated to contract like minors or those of donor’s debts;
There is double donation when the same thing has Prohibition on donation inter vivos
been donated to two or more persons. 1. By persons guilty of Adultery or concubinage
at the time of donation (NCC, Art. 739);
The rule on double sale under Art. 1544 of NCC
shall be applicable. The action for declaration of nullity may be
Rule: First in time, stronger in right brought by the spouse of the donor or donee;
1. If movable, one who first take possession in and the guilt of the donor and donee may be
good faith. proved by preponderance of evidence. (NCC,
2. If immovable, one who recorded in registry of Art. 739)
property in good faith.
2. Those made between persons found guilty of
If no inscription, one who first took the same Criminal offense, in consideration
possession in good faith. thereof (NCC, Art. 739);
In absence thereof, one who can present NOTE: The phrase “found guilty of same
oldest title. offense” does NOT refer only to concubinage
and adultery.
EXCESSIVE/INOFFICIOUS
3. Those made to a public Officer or his wife,
Rule in case of an excessive or inofficious descendants and ascendants, by reason of his
donation office;
1. A donor may not donate more than what he Relative Incapacity to Succeed:
can give by will. If he donates more than what
he cannot give by will, the donation will 4. By individuals, associations or corporations
become excessive and to insist on it, the not permitted by Law to make donations
legitime of the compulsory heirs will be (NCC, Art. 1027);
impaired. Legitime is reserved for the 5. By a Ward to the guardian before the
compulsory heirs and the same cannot be approval of accounts (NCC, Art. 1027);
impaired or disposed of by the testator; and 6. By Spouses to each other during the marriage
2. The donee cannot receive by way of donation or to persons of whom the other spouse is a
more than what he may receive by will. If the presumptive heir (FC, Art. 87);
donee can receive by donation (devise or 7. To Relatives of such priest, etc. within the
legacy) more than what the testator is allowed fourth degree, or to the church to which such
by law to give, the donation is inofficious and priest belongs (NCC, Art. 1027);
it may be suppressed totally or reduced as to 8. To an Attesting witness to the execution of
its excess. donation, if there is any, or to the spouse,
parents or children or anyone claiming under
IN FRAUD OF CREDITORS them (NCC, Art. 1027);
9. To the Priest who heard the confession of the
Remedy in case of donations executed in fraud donor during the latter’s last illness, or the
of creditors minister of the gospel who extended spiritual
aid to him during the same period (NCC, Art.
1027); or
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10. To a Physician, surgeon, nurse, health officer grounds provided by law (NCC, Articles 760, 764
or druggist who took care of the donor during and 765).
his/her last illness (NCC, Art. 1027).
Revocation or reduction is NOT automatic.
REVOCATION OR REDUCTION
(1991, 2003, 2006 Bar) The emergence of the circumstances enumerated
in Art. 760 do not automatically revoke or reduce
GROUNDS FOR REVOCATION AND REDUCTION the donation. The revocation or reduction is
authorized only if the amount or value of the
Grounds for revocation of donation property donated exceeds the disposable free
portion.
1. Under Art. 760
a. Birth of a donor’s child or children Q: For purposes of prescription of action, what
(legitimate, legitimated, or illegitimate) is the rule in case of concurrence of two or
after the donation, even though born after more grounds for revocation or reduction?
his death;
b. Appearance of a donor’s child who is A: In the event that two or more causes are
missing and thought to be dead by the present, the earliest among them shall be the
donor; or starting point in the reckoning of the period of
c. Subsequent adoption by the donor of a prescription of the action.
minor child.
Execution of a donation subject to a condition
2. Under Art. 764 – When the donee fails to
comply with any of the conditions which the A donor may execute a donation subject to a
donor imposed upon the donee. condition, the non-fulfilment of which authorizes
the donor to go to court to seek its revocation (not
3. Under Art. 765 – By reason of ingratitude reduction).
a. If the donee should commit some offense
against the person, the honor or the Revocation of donation in a conditional
property of the donor, or of his wife or donation
children under his parental authority;
b. If the donee imputes to the donor any A donor cannot revoke a conditional donation
criminal offense, or any act involving unilaterally, that is, without going to court, even if
moral turpitude, even though he should the donee had breached any of the obligations
prove it, unless the crime or act has been imposed in the donation. A judicial action is
committed against the donee himself, his essential if the donee refuses to return the
wife or children under his authority; or property, or pay its value to the donor, or to
c. If he unduly refuses him support when latter’s heirs or assigns. However, the action must
the donee is legally or morally bound to be filed within the prescriptive period fixed by
give support to the donor. law, otherwise, it will be barred (Ongsiako v.
Ongsiako, G.R. No. 7510, March 30, 1957).
NOTE: The list of grounds for revocation by
reason of ingratitude under Art. 765 is Q: Can the creditors of the deceased file an
exclusive. action for reduction of inofficious donation?
Grounds for reduction of donation A: NO. Only compulsory heirs or their heirs and
successors in interest may sue for reduction of
The same grounds for revocation under Art. 760. inofficious donations. The remedy of the creditor
The donation shall be reduced insofar as it is to sue, during the lifetime of the donor, for the
exceeds the portion that may be freely disposed of annulment of inofficious donation made in fraud
by will, taking into account the whole estate of the of creditors (NCC, Art. 1387); or they can go
donor at the time of the birth, appearance, or against the estate of the deceased and not against
adoption of a child (NCC, Art. 761). the donees.
Period of prescription of action for revocation A: The right of action to revoke or reduce is
or reduction of donation transmitted to his heirs (Pineda, 1999).
BASIS PRESCIPTIVE RECKONING Q: Jose, single, donated a house and lot to his
PERIOD PERIOD only niece, Maria, who was of legal age and
From the birth who accepted the donation. The donation and
Birth of child Four years of the first Maria's acceptance thereof were evidenced by
child. a Deed of Donation. Maria then lived in the
From birth of house and lot donated to her, religiously
the legitimated paying real estate taxes thereon. Twelve years
child, not from later, when Jose had already passed away, a
Legitimation Four years
the date of woman claiming to be an illegitimate daughter
marriage of the of Jose filed a complaint against Maria.
parents. Claiming rights as an heir, the woman prayed
From the date that Maria be ordered to reconvey the house
the recognition and lot to Jose's estate. In her complaint she
Recognition of
of the child by alleged that the notary public who notarized
an
Four years any means the Deed of Donation had an expired notarial
illegitimate
enumerated in commission when the Deed of Donation was
child
Art. 712 of the executed by Jose. Can Maria be made to
Family Code. reconvey the property? What can she put up as
From the date a defense? (2015 Bar)
of filing of the
original A: NO. Maria cannot be compelled to reconvey the
petition for property. The Deed of Donation was void because
adoption, it was not considered a public document.
Adoption Four years
provided a However, a void donation can trigger acquisitive
decree of prescription (Solis v. CA, G.R. Nos. 46753-54, August
adoption is 25, 1989; Doliendo v. Biarnesa, G.R. No. 2765,
issued December 27, 1906). The void donation has a
thereafter. quality of titulo colorado enough for acquisitive
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prescription especially since 12 years had lapsed Waiver of actions to revoke donations
from the deed of donation.
The donor CANNOT make a renunciation of
Maria can set up the defense that the action has actions to revoke in advance. Such waiver is void.
prescribed. An action for revocation of the However, the donor may renounce an action to
donation on the ground that it impaired the revoke if the act of ingratitude had already been
legitime of a compulsory heir may only be filed done.
within ten (10) years from the time the cause of
action accrues which is at the time of the death of
Jose. The facts are not clear as to when Jose died PRESCRIPTION
but on the assumption that he died ten years prior
to the filing of the action, the same has clearly
prescribed. DEFINITION
INGRATITUDE
It is the means of acquiring ownership and other
Q: Are there any other grounds for revocation real rights or losing rights or action to enforce
of donation by reason of ingratitude other such rights through lapse of time in the manner
than those enumerated under Art. 765 of NCC?
and under the conditions laid down by law.
NOTE: The applicability of prescription is a
A: NONE. The grounds under Art. 765 are question of fact. It is evidentiary and has to be
exclusive. established by clear and convincing evidence.
NOTE: The rationale behind the article is that a Two concepts of prescription
person who has been favoured with kindness and
generosity has the moral obligation to be and 1. Acquisitive prescription/ Adverse Possession -
remain grateful to the befactor. It is a matter of It is the acquisition of ownership and other
tradition that generosoity must not be real rights through possession of a thing in
reciprocated with ungratefulness.
the manner and under the conditions
provided for by law.
Q: Suppose the husband of the donee had
maligned the donor, is there a ground for
a. Ordinary acquisitive prescription- requires
revocation by reason of ingratitude? possession of things in good faith and
with just title for the time fixed by law
A: None. The act must be imputable to the donee which is 10 years; and
himself and not to another (Pineda, 1999). b. Extraordinary acquisitive prescription- the
acquisition of ownership and other real
Mortgages and alienations effected before the rights without the need of title or of good
notation of the action for revocation
faith or any other condition and would
prescribe in 30 years (De Leon, 2011).
If there are mortgages and alienations effected
before the notation of the complaint for
Requisites of prescription as a mode of
revocation in the Registry of Property, such
acquiring ownership
alienations and mortgages shall remain valid and
must be respected (NCC, Art. 766).
1. Capacity to acquire by prescription;
2. A thing capable of acquisition by
NOTE: Alienations and mortgages after the prescription;
registration of the pendency of the complaint shall 3. Possession of the thing under certain
be void.
conditions; and
4. Lapse of time provided by law.
Remedy of the donor
Mere possession with a juridical title, such as
If the property is already transferred in the name by a usufructuary, a trustee, a lessee, an
of the buyer or mortgagee, the remedy of the
agent, or a pledge, not being in the concept of
donor is to recover the value of the property an owner cannot ripern into ownership by
determined as of the time of the donation (NCC,
acquisitive prescription unless the juridical
Art. 767). relation is just expressly repudiated ans such
repudiation hase been communicated to the
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CIVIL LAW
2. Inofficiousness for being in excess of what the donor can give by will (NCC, Art. 750, 771)
Within five years after Transmissible to donor’s Donation effective Donee appropriates
the donor’s death (NCC, heirs as donation shall during the donor’s fruits (NCC, Art. 441).
Articles 771 and 1149) be reduced as regards lifetime subject to
the excess at donor’s reduction only upon his
death (NCC, Art. 771). death with regard to the
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
reduction (NCC, Art.
Within four years from To children & Donation reduced to 441). When donation is
birth of first child, descendants of donor extent necessary to revoked for any of the
legitimation upon his death provide support (NCC, cause mentioned in Art.
(recognition), adoption, [NCC, Art. 763(2)]. Art. 750). 760, the donee shall not
judicial declaration of return the fruits except
filiation or receipt of info from the filing of the
of existence of the child complaint (NCC, Art.
believed to be dead 768).
(NCC, Art. 763).
4. Fraud against creditors (NCC, Art. 759)
Within four years from To creditor’s heirs or Property returned for Fruits shall be returned
perfection of donation successors-in-interest the benefit of creditors in case donee acted in
or from knowledge by (NCC, Art. 1178). subject to the rights of bad faith; if impossible
the creditor of the innocent third persons to return, indemnify the
donation (NCC, Art. (NCC, Art. 1387). donor’s creditor for
1389). damages (NCC, Art.
1388).
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waiver of defense and 1. Demand right of way;
cannot be raised for the 2. Abate public /private nuisance;
first time on trial or 3. Declare contract void;
appeal. 4. Recover property subject to expressed trust;
5. Probate of a will; and
Who may acquire by prescription (PSM) 6. Quiet title.
Note: The title for prescription must be true and Q: How about ownership and other real rights
valid (NCC, Art. 1130). over immovables?
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A: YES. While the action to demand partition of a Q: Anthony bought a piece of untitled
co‐owned property does not prescribe, a co‐owner agricultural land from Bert. Bert, in turn,
may acquire ownership thereof by prescription, acquired the property by forging Carlo’s
where there exists a clear repudiation of the co‐ signature in a deed of sale over the property.
ownership, and the co‐owners are apprised of the Carlo had been in possession of the property
claim of adverse and exclusive ownership. In this for eight years, declared it for tax purposes,
case, the respondents never possessed the lot, and religiously paid all taxes due on the
much less asserted their claim thereto until 1999 property. Anthony is not aware of the defect in
when they filed the complaint for partition. In Bert’s title, but has been in actual physical
contrast, Flores took possession of the lot after possession of the property from the time he
Emilio’s death and exercised acts of dominion bought it from Bert, who had never been in
thereon‐ tilling and cultivating the land, possession. Anthony has since then been in
introducing improvements, and enjoying the possession of the property for one year.
produce thereof. The statutory period of Can Anthony acquire ownership of the
prescription commenced in 1960 when Flores, property by acquisitive prescription? How
who had neither title nor good faith, secured a tax many more years does he have to possess it to
declaration in his name and may, therefore, be acquire ownership?
said to have adversely claimed ownership of the
lot. On said date, respondents were also deemed A: YES Anthony can acquire ownership of the
to have become aware of the adverse claim. property by ordinary acquisitive prescription
Flores’s possession thus ripened into ownership which requires just title and good faith (NCC, Art.
through acquisitive prescription after the lapse of 1117). There was just title because a deed of sale
30 years (Heirs of Restar v. Heirs of Cichon, G.R. No. was issued in his favor even though it was forged,
161720, November. 22, 2005). which fact he was not aware of. He needs to
possess the land in good faith and in the concept
Q: Sixto, owner of a parcel of land, died. He was of owner for a total of ten years in order to acquire
survived by his wife and three children. The ownership. Since Anthony possessed the land for
subject land was donated by his wife to only one year, he has not completed the ten‐year
Silverio, who immediately entered into period. Even if Anthony tacks the 8‐year period of
possession of the land, built a fence around it, possession by Carlo who in the deed of sale is
constructed a residential house, declared it for supposed to be his grantor or predecessor in
tax purposes and paid the taxes thereon, and interest [NCC, Art. 1138(1)], the period is still short
resided there until his death. After 45 years of ten years.
from the time of donation, Soledad, one of
Sixto’s children, filed a complaint for recovery If Carlo is able to legally recover his property,
of ownership, and possession against Silverio. can he require Anthony to account for all the
Who is the rightful owner of the land? fruits he has harvested from the property
while in possession?
A: Silverio became the rightful owner of the land
by extraordinary acquisitive prescription. In A: Since Anthony is a possessor in good faith,
extraordinary prescription ownership and other Anthony cannot be made to account for the fruits
real rights over immovable property are acquired he gathered before he was served with summons.
through uninterrupted adverse possession thereof A possessor in good faith is entitled to the fruits
for 30 years without need of title or of good faith. received before the possession was legally
When Soledad filed the case, Silverio was in interrupted by the service of summons (NCC, Art.
possession of the land for 45 years counted from 544). After Anthony was served with summons, he
the time of the donation. This is more than the became a possessor in bad faith and a builder,
required 30 years of uninterrupted adverse planter, sower in bad faith. He can also be made to
possession without just title and good faith. Such account for the fruits but he may deduct expenses
possession was public, adverse and in the concept for the production gathering and preservation of
of an owner. He declared the land for taxation the fruits (NCC, Art. 443).
purposes and religiously paid the realty taxes
thereon. Together with his actual possession of Q: If there are standing crops on the property
the land, these tax declarations constitute strong when Carlo recovers possession, can Carlo
evidence of ownership of the land occupied by appropriate them? (2008 Bar)
him (Calicdan v. Cendeña, G.R. No. 155080,
February. 5, 2004). A: The value of the standing crops must be
prorated depending upon the period of possession
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CIVIL LAW
public dominion acquisition does not
prescribe. 10 years from the day
Based on judgment judgment became final
NOTE: In contrast, where and executory (NCC,
private property is taken by Art. 1144)
the Government for public use Based upon an injury Four years
without first acquiring title to the rights of
thereto either through plaintiff
expropriation or negotiated Based on quasi‐ Four years (NCC, Art.
sale , the owner’s action to delicts 1146)
recover the land or the value
thereof does not prescribe. Forcible entry and One year
detainer
Prescription and laches cannot apply to registered Defamation One year (NCC, Art.
land covered by the Torrens system" because 1147)
"under the Property Registration Decree, no title
to registered land in derogation to that of the All other actions not Five years (NCC, Art.
registered owner shall be acquired by specified 1149)
prescription or adverse possession" (Jakosalem vs.
Barangan, G.R. No. 175025, February 15, 2012)
(Del Castillo, J.) INTERRUPTION
A:
ACTIONS PRESCRIPTIVE 1. When they are filed before the court;
PERIOD 2. When there is a written extrajudicial demand
Recover Movables Eight years (good by the creditors; or
faith)or Four years 3. When there is any written acknowledgment of
(bad faith) from the the debt by the debtor (NCC, Art. 1155)
time the possession is
lost (NCC, Art. 1140, Prescription where possession in Good Faith is
Pineda Succession and converted into possession in Bad Faith.
Prescription, p. 666,
2009). If the possession in good faith is later converted in
Recover Immovables 30 years (Recover to bad faith the prescriptibve period shall be
ownership) (NCC, Art. computed in the following manner:
1141).
Movables – The period of ordinary period is four
10 years (Recover real (4) years, while that of extraordinary prescription
right of possession) is eight (8) years. Since the period of
(NCC, Art. 555(4); and extraordinary prescription is two (2) times longer
Pineda Succession and than the ordinary prescription, the number of
Prescription, p. 667, years in ordinary period will be multiplied by 2 to
2009). get the period for extraordinary prescription.
Mortgage Action 10 years from default of
mortgagor (NCC, Art. Eg. If after two (2) years of possession in good faith
1142). of a movable property, the possession was
Based on written 10 years converted in bad faith. The 2 years would be
contract equivalent to 4 years possession in bad faith.
Note: If contract is oral
or quasi, prescriptive Immovable – The period for ordinary
period is six years (NCC, prescription in good faith is 10 years and 30 years
Art. 1145) for extraordinary or in bad faith. Since the
extraordinary prescription is three (3) times
Based on obligation 10 years from the time
created by law the right of action longer than the ordinary prescription it shall be
accrues multiplied by 3.
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CIVIL LAW
SUCCESSION Rules on properties acquired after the
execution of a will
GENERAL PROVISIONS
GR: Property acquired during the period between
the execution of the will and the death of the
Succession is a mode of acquisition by virtue of
testator will not pass under the provisions of the
which the property, rights and obligations to the
will but by the rules on legal succession.
extent of the value of the inheritance of a person,
Otherwise stated, the property will NOT form part
are transmitted through his death to another or
of the estate of the testator that will pass on to his
others either by his will or by operation of law
instituted heirs.
(NCC, Art. 774).
XPNs:
Requisites of succession (DATE)
1. When a contrary intention expressly appears
in the will (NCC, Art. 793), in which case the
1. Death of decedent;
property will be included in that portion of
2. Acceptance of the inheritance by the
the estate that will pass to the instituted heirs
successor;
by way of testamentary succession; and
3. Transmissible estate; and
2. If the property acquired after the execution of
4. Existence and capacity of successor,
the will is one which the testator has disposed
designated by decedent or law.
of under his will as a legacy or device, i.e., the
property did not belong to the testator at the
A decedent is a person whose property is
time he disposed of it as a device or as a
transmitted through succession whether or not he
legacy and he only acquired the same after
left a will. If the decedent left a will, he is also
making his will (NCC, Art. 930). In this case,
called a testator (NCC, Art. 775).
the legacy or device will be given effect even if
the will is silent with regard to such an
Inheritance includes all the property, rights and
intention on the part of the testator.
obligations of a person which are not extinguished
by his death (NCC, Art. 776).
Liability of the heirs for the obligations of the
decedent
The inheritance of a person includes not only the
property and the transmissible rights and
The heirs CANNOT be held personally liable with
obligations existing at the time of his death, but
their own individual properties for the debts or
also those which have accrued thereto since the
obligations left by the decedent. The responsibility
opening of the succession (NCC, Art. 781).
of the heirs for the debts of their decedent cannot
exceed the value of the inheritance they receive
Purely personal rights are extinguished by death.
from him. (Estate of K.H. Hemady v. Luzon Surety
Hence, they are not transmitted to the heirs.
Co., G.R. No. L-8437, November 28, 1956) It is only
after the debts are paid that the residue of the
The heirs succeed not only to the rights of the
estate is distributed among the successors.
deceased but also to his obligations.
Q: Before his death, A borrowed from X P1, 000
GR: Rights and obligations arising from contracts
as evidenced by a promissory note. A died
are binding upon the heirs.
without paying the debt. A left no property but
he is survived by his son, B, who is making
XPNs: When the rights and obligations arising are
good in the buy and sell business.
not transmissible by:
Subsequently, X brought an action against B
1. Their nature
for the collection of P1,000 plus legal interest
2. Stipulation
thereon on the ground that, since B is the only
3. Provision of law. (NCC, Art. 1311)
heir of A, he inherited from the latter not only
the latter’s property, but also all his rights and
Inheritance Succession obligations. Will the action prosper? Reason.
It is the objective A: NO. The heirs are not personally liable with
element of succession, It is the legal mode by their own individual properties for the monetary
to the mass or totality of which inheritance is obligations/debts left by the decedent. As a rule,
the estate of a deceased transmitted. the party’s contractual rights and obligations are
person. transmissible to the successors except when the
A contract of guaranty is NOT extinguished by GR: No contract may be entered into upon future
death inheritance [NCC, Art. 1347, (2)].
A: Her heirs may substitute her because the action Every renunciation or compromise as regards a
is not extinguished by her death. Since the rights future legitime between the person owing it and
to the succession are transmitted from the his compulsory heirs is void, and the latter may
moment of the deathof the decedent, the heirs claim the same upon the death of the former; but
become the absolute owners of his property, they must bring to collation whatever they may
subject to the rights and obligations of the have received by virtue of the renunciation or
decedent, and they cannot be deprived of their compromise (NCC, Art. 905).
rights thereto except by the methods provided for
by law. The right of the heirs to the property of the A future legitime is merely an expectancy, and the
deceased vests in them upon such death even before heir does not acquire any right over the same until
judicial declaration of their being heirs in the the death of the testator. Hence, juridically, there
testate or intestate proceedings. is nothing on which to compromise. Furthermore,
Art. 1347 of NCC expressly provides that, “no
When she died, her claim or right to the parcels of contract may be entered into upon future
land in litigation was not extinguished by her inheritance except in cases expressly authorized
death but was transmitted to her heirs upon her by law.”
death. Her heirs have thus acquired interest in the
properties in litigation and became parties in Actual delivery is NOT necessary for an heir to
interest in the case (Bonilla v. Barcena, et al., G.R. acquire ownership over an inherited property
No. L-41715, June 18, 1976).
The possession of hereditary property is deemed
Q: Can the heir enter into a contract of sale, transmitted to the heir without interruption and
conveyance or any disposition pertaining to from the moment of the death of the decedent, in
his interest in the inheritance even pending case the inheritance is transmitted.
the settlement of the estate?
Pending a proceeding determining the rightful
A: YES, because his hereditary share/interest in heirs, the prospective heirs can demand delivery
the decedent’s estate is transmitted or vested of their supposed inheritance because ownership
immediately from the moment of decedent’s passes to the heir at the very moment of death.
death. This is, however, subject to the outcome of
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CIVIL LAW
This is the basis of the heirs’ rights to the fruits is NOTE: If there is a doubt, as between two or more
the Right of Accession. persons who are called to succeed each other, as
to which of them died first, whoever alleges the
SUCCESSION OCCURS AT THE MOMENT OF death of one prior to the other, shall prove the
DEATH same; in the absence of proof, it is presumed that
they died at the same time and there shall be no
The rights to the succession are transmitted from transmission of rights from one to the other (NCC,
the moment of the death of the decedent (NCC, Art. Art. 43).
777). (2000 BAR)
KINDS OF SUCCESSION AND SUCCESSORS
The moment of death is the determining point
when the heirs acquire a definite right to the Kinds of succession
inheritance, whether such right is pure or
conditional. The possession of hereditary property a. Testamentary Succession - that which results
is therefore deemed transmitted to the heir from the designation of an heir, made in a will
without interruption and from the moment of executed in the form prescribed by law (NCC,
death of the decedent. Art. 779).
b. Legal or Intestate Succession - that which
The interest of the heir over the inheritance prior takes place if a person dies without a will, or
to the death of the decedent is merely inchoate or with a void will, or one which has
a mere expectancy. subsequently lost its validity.
c. Mixed Succession - that effected partly by will
It is immaterial whether a short or long period of and partly by operation of law (NCC, Art. 780).
time elapses between the death of the predecessor
and the entry in the possession of the properties Kinds of Heirs
of the inheritance, because the right is always
deemed to retroact to the moment of death. 1. Voluntary or Testamentary Heirs – called to
succeed by virtue of the will of the testator:
The law in force at the time of the decedent’s
death will determine who the heirs should be a. Devisee - persons to whom gifts of real
(Uson v. Del Rosario, G.R. No. L-4963, January 29, property are given by virtue of a will
1953). b. Legatee - persons to whom gifts of
personal property are given by virtue of a
Presumptive Death will
The absentee shall not be presumed dead for the NOTE: An heir is one who succeeds to the
purpose of opening his succession till after an whole (universal) or aliquot part of the estate.
absence of ten years. If he disappeared after the Devisee or legatee is one who succeeds to
age of seventy-five years, an absence of five years definite, specific, and individualized
shall be sufficient in order that his succession may properties.
be opened (NCC, Art. 390).
2. Compulsory Heir – called by law to succeed to a
The following shall be presumed dead for all portion of the testator’s estate known as legitime.
purposes, including the division of the estate They succeed by force of law to some portion of
among the heirs: the inheritance, in an amount predetermined by
law, of which they cannot be deprived by the
1. A person on board a vessel lost during a sea testator, except by a valid disinheritance.
voyage, or an aeroplane which is missing, who
has not been heard of for four years since the 3. Legal or Intestate Heir – those who succeed by
loss of the vessel or aeroplane; operation of law through intestate succession.
2. A person in the armed forces who has taken Those who succeed to the estate of the decedent
part in war, and has been missing for four who dies without a valid will, or to the portion of
years; such estate not disposed of by will.
3. A person who has been in danger of death
under other circumstances and his existence Distinctions between heirs and
has not been known for four years (NCC, Art. legatees/devisees
391).
BASIS HEIRS DEVISEES OR
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CIVIL LAW
prohibited, subject to the rule on disposicion depend upon the determination of the third
captatoria. person is the one that cannot be made. Hence, the
disposition itself is void.
7. Solemn or formal act – A will is executed in
accordance with formalities prescribed by The following, however may be entrusted to a
law. third person:
8. Dispositive of property – disposition of the
testator’s estate mortis causa. 1. Distribution of specific property or sums of
money that the testator may leave in general
Q: The document, a holographic one, contained to specified classes or causes.
only a clause of disinheritance of one of the 2. Designation of the persons, institutions or
testator’s son. Does the document meet the establishments to which such property or
definition of the will under Art. 783 of NCC sums are to be given or applied (NCC, Art.
although it does not contain any disposition of 786).
the estate of the deceased?
NOTE: Should the testator dispose of the whole or
A: The document, although it may initially come part of his property for prayers and pious works
across as mere disinheritance instrument, for the benefit of his soul, in general terms and
conforms to the formalities of holographic will. without specifying its application, the executor,
The disinheritance results in the disposition of the with the court's approval shall deliver one-half
property of the testator in favor of those who thereof or its proceeds to the church or
would succeed in the absence of the disinherited denomination to which the testator may belong, to
heir (Seangio v. Reyes, G.R. Nos. 140371–72, be used for such prayers and pious works, and the
November 27, 2006). other half to the State, for the purposes mentioned
in article 1013 (NCC, Art. 1029).
PERSONAL ACT;
NON-DELEGABILITY OF WILL-MAKING Testamentary provisions in favor of the poor in
general, without designation of particular persons
The making of a will is a strictly personal act; it or of any community, shall be deemed limited to
cannot be left in whole or in part to the discretion the poor living in the domicile of the testator at
of a third person, or accomplished through the the time of his death, unless it should clearly
instrumentality of an agent or attorney (NCC, Art. appear that his intention was otherwise (NCC, Art.
784). 1030).
The exercise of the disposing power is the act that If a testamentary disposition admits of different
cannot be delegated. But the mere mechanical act interpretations, in case of doubt, that
of drafting the will may be done by a third person interpretation by which the disposition is to be
as it does not constitute a delegation of the will or operative shall be preferred (NCC, Art. 788).
disposition.
Construing the provisions of a will, substance
Doctrine of Prohibited Designation rather than form must be regarded, and the
instrument should receive the most favorable
The following cannot be left to the discretion of a construction to accomplish the purpose intended
third person: by the testator.
Every devise or legacy shall cover all the interest Law governing the validity of wills
which the testator could devise or bequeath in the
property disposed of, unless it clearly appears BASIS AS TO TIME AS TO PLACE
from the will that he intended to convey a less Extrinsic the law in the will can be
interest (NCC, Art. 794). Validity - force at the executed in
refers to time of the accordance with the
Parol Evidence Rule in the interpretation of the forms making of formalities of the
wills and the will testator’s
solemnities nationality,
1. When there is an imperfect description, or when required by domicile, residence
no person or property exactly answers the law or the place where
description – mistakes and omissions must be the will was
corrected. executed depending
on the place where it
2. If the error appears from the context of the will is executed and the
or from extrinsic evidence, excluding the oral nationality of the
declarations of the testator as to his intention; and testator
when an uncertainty arises upon the face of the will, Intrinsic the law in the national law of
as to the application of any of its provisions – the Validity - force at the the testator
testator's intention is to be ascertained from the refers to time of the governs the intrinsic
words of the will, taking into consideration the the legality decedent’s validity of the will
circumstances under which it was made, of death regardless of the
excluding such oral declarations (NCC, Art.789). provisions place of execution.
in the will
Kinds of Ambiguities in a Will
PLACE OF APPLICABLE LAW(as
1. Latent (Intrinsic) – Ambiguities which are BASIS
EXECUTION to form)
not apparent on the face of a will but to
circumstances outside the will at the time the Philippines NCC
will was made. E.g. If it contains an imperfect Testator
description of person or property; No person is a 1. Law of the place of
Foreign
or property exactly answers the description. Filipino country execution
2. NCC
Example: Testator gives a legacy “to my cousin
Anna” and it will turn out that the testator has 1. NCC; or
Philippines
three cousins named “Anna” 2. National law
Testator
is an 1. National law;
2. Patent (Extrinsic) – when an uncertainty
alien Foreign 2. Law of the place of
arises upon the face of the will as to the
country residence;
application of any of its provisions (NCC, Art.
3. NCC
789).
Example: Testator gives a devise “to some of TESTAMENTARY CAPACITY AND INTENT
the eleven children of my only brother"
Testamentary capacity refers to the ability as
Steps in Resolving Ambiguities well as the power to make a will (2008 BAR).
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CIVIL LAW
testamentary capacity, it does not necessarily 1. Publicly known to be insane, one
follow that he has testamentary power. month or less, before making his
will; (NCC, Art. 800, par. 2)
In the Philippines, such distinction is lost 2. Under guardianship at the time of
altogether. The term testamentary power is the making of the will (Torres v.
sometimes understood to refer to the power of the Lopez, G.R. No. L-25966, November 1,
testator to designate the person or persons who 1926).
are to succeed him in his property and
transmissible rights and obligations. NOTE: Mere weakness of mind or partial
imbecility from disease of body or from age does
Requisites of Testamentary Capacity not necessarily render a person incapable of
making a will.
1. All persons not expressly prohibited by law
(NCC, Art. 796) SOUNDNESS OF MIND
2. At least 18 years of age; (NCC, Art. 797) and
3. Of sound mind (NCC, Art. 798) It is not necessary that the testator be in full
possession of all his reasoning faculties, or that his
NOTE: The ability as well as the power to make mind be wholly unbroken, unimpaired, or
a will must be present at the time of the execution unshattered by disease, injury or other cause.
of the will.
It is sufficient if the testator was able to know at
It is not necessary that the testator be in full the time of making the will to know the ff.:
possession of all his reasoning faculties or that his
mind be wholly unbroken, unimpaired or 1. Nature of the estate to be disposed of;
unshattered by disease, injury or other cause. 2. Proper objects of his bounty; and
3. Character of testamentary act. (NCC, Art.
To be of sound mind, it shall be sufficient if the 799)
testator was able at the time of making the will to
know the: A person suffering from civil interdiction is
qualified to make a will. He is deprived of the
a. nature of the estate to be disposed of; power to dispose of his properties through acts
b. proper objects of his bounty; and inter vivos but not through acts mortis causa (RPC,
c. character of the testamentary act Art. 34).
(NCC, Art. 799)
The burden of proving that the testator acted in
The requirement that the testator be of sound lucid interval lies on the person who maintains the
mind is essential only at the time of the making of validity of the will (NCC, Art. 800, par. 2).
the will (or execution).
Married woman
If he is not of sound mind at that time, the will is
invalid regardless of the state of mind before or A married woman may make a will without the
after such execution. consent of her husband, and without the authority
of the court (NCC, Art 802).
NOTE: If the testator was of sound mind at the
time of the making of the will, the will is valid even A married woman may dispose by will all her
if the testator should later on become insane and separate property as well as her share of the
die in that condition. Supervening incapacity does conjugal partnership or absolute community
not invalidate an effective will, nor is the will of an property (NCC, Art 803).
incapable validated by the supervening capacity
(NCC, Art. 801). FORMAL VALIDITY OF WILLS
GR: The law presumes that every person is of Kinds of Wills allowed under the NCC:
sound mind, in the absence of proof to the
contrary (NCC, Art. 800, par. 1). (1) Ordinary or Notarial will - requires an
attestation clause, an acknowledgement before a
XPNs: If the testator was: notary public;
Time criterion - law at the time of execution; Formal requirements common to both Notarial
subsequent laws cannot apply retroactively. and Holographic wills (2008 BAR)
Place criterion - Under Art 815-817 of NCC, five 1. Law governing extrinsic validity of wills;
(5) choices are available to the testator; the law of: 2. In writing;
A will made in the Philippines by a citizen or Formalities in the Execution of a Notarial Will
subject of another country, which is executed in (LaW-SPA2N2)
accordance with the law of the country of which
he is a citizen or subject, and which might be 1. In Writing;
proved and allowed by the law of his own country,
shall have the same effect as if executed Executed in a language or dialect known to
according to the laws of the Philippines (NCC, the testator;
Art. 817). (2002 BAR)
This rule is mandatory. Otherwise, the will is
A joint will executed by Filipinos in a foreign void (Suroza v. Honrado, Adm. Matter No.
country shall not be valid in the Philippines, 2026-CFI, December 19, 1981). It is also
even though authorized by the laws of the country applicable even if the provisions of the will
where they may have been executed (NCC, Art. are interpreted or explained to the testator.
819). A joint will is against the public policy of the
Philippines particularly the policy that the The fact that the will was executed in a
execution of a will is a strictly personal act. language known to the testator NEED NOT be
stated in the attestation clause. This fact can
GOVERNING LAW AS TO SUBSTANTIVE be established by extrinsic evidence or
VALIDITY evidence aliunde (Lopez v. Liboro, G.R. No. L-
1787, August 27, 1948).
Laws relating to family rights and duties, or to the
status, condition and legal capacity of persons are This rule does NOT apply to witnesses in a
binding upon citizens of the Philippines even notarial or attested will because the witnesses
though living abroad (NCC, Art. 15). do not need to know the contents of the will.
The attestation clause, on the other hand,
Matters pertaining to intestate and must be understood by the witnesses even if it
testamentary successions which are regulated is in a language not known to them. (Art. 805
by the national law of the deceased: (CIAO) of NCC states that the attestation clause need
not be in a language known to the witnesses).
1. Capacity to succeed
2. Intrinsic validity of testamentary provisions
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CIVIL LAW
Presumption that the testator knew the Two Requirements:
language in which the will was written is
present when: a. Attesting – an act of witnessing
b. Subscribing–an act of signing their
a. the will must be in a language or dialect names in the proper places of the will
generally spoken in the place of execution
b. the testator must be a native or resident Test for the Determination of the Presence
of said locality (Abangan v. Abangan, G.R. of Witnesses
No. 13431, Nov. 12, 1919).
In order that the witnessese be deemed
3. Subscribed at the end thereof by the testator present at the time of the execution of thewill,
himself or by the testator’s name written by it suffices that the witnesses were so situated
some other person in his presence, and by his in a manner that they had the opportunity to
express direction; see the testator sign the will. It is not
necessary that they actually saw the testator
The signature of the testator of the will must be at affix his/her signature o the will.
the end of the will, which may be at the logical end
(last testamentary disposition) or physical end The true test of presence of the testator and
(non dispositive provisions). the witnesses in the execution of a will is not
whether they actually saw each other sign, but
NOTE: In notarial wills, subscription by whether they might have seen each other sign
fingerprint is allowed as long as it is voluntarily had they chosen to do so considering their
made (Matias v. Salud, G.R. No. L-10751) but not in mental and physical condition and position
holographic wills given the explicit requirement with relation to each other at the moment of
for a holographic will to be entirely written, dated inscription of each signature.
and signed with the hand of the testator.
The question whether the testator and the
Cross as signature subscribing witnesses to an alleged will sign
the instrument in the presence of each other
GR: A cross is not a sufficient signature does not depend upon proof of the fact that
their eyes were actually cast upon the paper
XPNs: The cross appearing on the will is: at the moment of its subscription by each of
a. the customary, habitual signature of the them, but whether at that moment existing
testator or conditions and the position of the parties,
b. one of the ways the testator signs his with relation to each other, were such that by
signature. merely casting their eyes in the proper
direction they could have seen each other sign
The one who alleges that it is the customary, (Nera v. Rimando, G.R. No. L-5971, February 27,
habitual or one of the ways he sign his signature 1911).
has the burden of proof (Garcia v. Lacuesta, G.R.
No. L-4067, November 29, 1951). Actual seeing is not required, but the ability to
see each other by merely casting their eyes in
Signing by an Agent of the testator the proper direction and without any physical
obstruction to prevent his doing so (Jaboneta
a. must sign in testator’s presence, and v. Gustilo, G.R. No. 1641, January 19, 1906).
b. by the testator’s express direction
An attestation must state all the details the
The important thing is that it should clearly third paragraph of Article 805 of NCC
appear that the name of the testator was signed at requires. In the absence of the required
his express direction, in the presence of three avowal by the witnesses themselves, no
witnesses, and in the presence of the testator and attestation clause can be deemed embodied in
of each other (Barut v. Cabacungan, G.R. No. 6285, the Acknowledgement of the Deed of
February 15, 1912). Donation Mortis Causa (Echavez v. Dozen
Cons, G.R. No. 192916, October 11, 2010).
4. Attested and subscribed by three or more
credible witnesses in the presence of the The law is clear that the attestation must state
testator and of one another; the number of pages used upon which the will
is written. The purpose of the law is to
PURPOSE: to prevent the disappearance of the The signature of the witnesses must be at the
pages. bottom of the attestation clause. An unsigned
attestation clause cannot be considered as an act
a. Mandatory – the signing on every page in of the witnesses, since the omission of their
the witnesses’ presence signatures at the bottom thereof negatives their
b. Directory – the place of the signing (on participation (Cagro v. Cagro, G.R. No. L-5826, April
the left margin). The signature can be 29, 1953).
affixed anywhere on the page (Balane,
2016). Inasmuch as the signatures of the three witnesses
to the will do not appear at the bottom of the
If the entire document consists only of two sheets, attestation clause, although the page containing
the first containing the will and the second, the the same is signed by the witnesses on the left
attestation clause, there need not be any marginal hand margin, the will is fatally defective. The
signatures at all (Abangan v. Abangan, G.R. No. attestation clause is "a memorandum of the facts
13431, November 12, 1919). attending the execution of the will" required by
law to be made by the attesting witnesses, and it
A will was declared void which contained the must necessarily bear their signatures.
necessary signatures on the margin of each leaf
(folio), but not in the margin of each page The petitioner and appellee contends that
containing written matter (In the Matter of the signatures of the three witnesses on the left hand
Estate of Saguinsin. In the Matter of the Estate of margin conform substantially to the law and may
Saguinsin., G.R. No. L-15025, March 15, 1920). be deemed as their signatures to the attestation
clause. This is untenable, because said signatures
The signatures on the left-hand corner of every are in compliance with the legal mandate that the
page signify, among others, that the witnesses are will be signed on the left hand margin of all its
aware that the page they are signing forms part of pages. If an attestation clause not signed by the
the will. On the other hand, the signatures to the three witnesses at the bottom thereof, be
attestation clause establish that the witnesses admitted as sufficient, it would be easy to add
are referring to the statements contained in the such clause to a will on a subsequent occasion
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CIVIL LAW
and in the absence of the testator and any or from being presented as evidence (Gabucan v.
all of the witnesses (Cagro vs. Cagro, GR. No. L- Manta, G.R. No. L-51546, January 28, 1980).
5826 April 29, 1953).
SPECIAL RULES FOR HANDICAPPED
NOTE: An attested will need not be dated, but a TESTATORS
holographic will must be dated (NCC, Art. 810).
Rules if the Testator is Deaf or Mute
8. Must be acknowledged before a Notary public
by the testator and the witnesses (NCC, Art. 1. If the testator is able to read, he must
806). (2008 BAR) personally read the will; or
2. If the testator is unable to read, he must
The certification of acknowledgement need not be designate two persons to read it and
signed by the notary public in the presence of the communicate to him, in some practicable
testator and the witnesses (Javellana v. Ledesma, manner, the contents thereof (NCC, Art. 807).
G.R. No. L-7179, June 30, 1955).
Rules if the testator is blind
A jurat is insufficient as the law requires an
acknowledgment executed by the party before a The will shall be read to him twice, once by one of
notary public, not a declaration of the notary the subscribing witnesses, and another time by
public. the notary public before whom the will is
acknowledged (NCC, Art. 808). (2008 BAR)
The notary public before whom the will was
acknowledged cannot be considered as the third Purpose: The reading is mandatory for the
instrumental witness since he cannot purpose of making known to the testator the
acknowledge before himself having signed the provision of the will so that he may object if it is
will. He cannot split his personality into two so not in accordance with his wishes.
that one will appear before the other to
acknowledge his participation in the making of the Art. 808 of the NCC applies not only to blind
will. To permit such a situation to obtain would be testators but also to those who, for one reason or
sanctioning a sheer absurdity (Cruz v. Villasor, G.R. another, are incapable of reading their wills, either
No. L-32213, November 26, 1973). because of poor or defective eye sight or because
of illiteracy.
An acknowledgment is the act of one who has
executed a deed in going before some competent SUBSTANTIAL COMPLIANCE
officer or court and declaring it to be his act or
deed. It involves an extra step undertaken A will is not rendered invalid by reason of
whereby the signatory actually declares to the defects or imperfections in the form of
notary public that the same is his or her own free attestation or in the language used therein. In
act and deed. The acknowledgment in a notarial the absence of bad faith, forgery, or fraud, or
will has a two-fold purpose: (1) to safeguard the undue and improper pressure and influence,
testator’s wishes long after his demise and (2) to defects and imperfections in the form of
assure that his estate is administered in the attestation or in the language used therein shall
manner that he intends it to be done (Lee v. not render the will invalid if it is proved that the
Tambago, A.C. No. 5281, 12 February 2008). will was in fact executed and attested in
substantial compliance with all the requirements
The issue in this case is whether or not the will of Article 805 (NCC, Art 809).
“acknowledged” by the testatrix and the
instrumental witnesses before a notary public In cases of omissions in the will, if it can be
acting outside the place of his commission supplied by an examination of the will itself,
satisfies the requirement under Article 806 of the without the need of resorting to extrinsic evidence
NCC. Outside the place of his commission, he is it will not be fatal and, correspondingly, would be
bereft of power to perform any notarial act; he is allowed for probate.
not notary public. Any notarial act outside the
limits of his jurisdiction has no force and effect However, evidence aliunde are not allowed to fill a
(Guerrero v. Bihis, G.R. No. 174144, April 17, 2007). void in any part of the document or supply
missing details that should appear in the will
The absence of the documentary stamp does not itself. Those omissions which cannot be supplied
affect the validity of the will. It merely prevent it except by evidence aliunde would result in the
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CIVIL LAW
notarial will because the law allows a notarial will 2. Dated
to be written by someone else and in certain cases,
for the will to be read by someone else not the GR: The "date" in a holographic will should
testator. include the day, month, and year of its
execution.
NOTE: A will handwritten by a person other than
the testator is a not a valid holographic will, but it XPN: When there is no appearance of fraud,
may nonetheless be made valid by complying with bad faith, undue influence and pressure and
the requirements of a notarial will. the authenticity of the will is established and
the only issue is whether or not the date
Effects of Insertions or Interpolations appearing eg. “FEB. ‘61” on the holographic
will is a valid compliance with Art. 810 of NCC,
GR: When a number of erasures, corrections, probate of the holographic will should be
cancellation, or insertions are made by the allowed under the principle of substantial
testator in the will but the same have not been compliance (Roxas v. De Jesus, G.R. No. L-
noted or authenticated with his full signature, only 38338, January 28, 1985).
the particular words erased, corrected, altered
will be invalidated, not the entirety of the will. The law does not specify a particular location
where the date should be placed in the will.
XPNs: The only requirements are the date be in the
a. Where the change affects the essence of will itself and executed in the hand of the
the will of the testator such as where the testator (Labrador v. CA, G.R. Nos. 83843-44,
alteration partakes the effect of revoking April 5, 1990). Thus, it may be placed either at
a will; the beginning, in the middle, or at the end of
the will.
NOTE: When the holographic will had only
one substantial provision, which was altered 3. Signed by the hand of the testator himself
by substituting the original heir with another,
and the same did not carry the requisite full In a holographic will, the signature must be at
signature of the testator, the entirety of the the end of the will. This can be inferred from
will is voided or revoked. Art. 812 of the NCC by the reference to
dispositions “written below his signature.”
Reason: What was cancelled here was the This phrase implies that the signature is at the
very essence of the will; it amounted to the end of the will, and any disposition below it
revocation of the will. Therefore, neither the must further be signed and dated.
altered text nor the original unaltered text can
be given effect (Kalaw v. Relova, G.R. No. L- In a holographic will, the dispositions of the
40207, Sept. 28, 1984). testator written below his signature must be
dated and signed by him in order to make
Thus, unless the unauthenticated alterations, them valid as testamentary dispositions (NCC,
cancellations, or insertions were made on the Art. 812). If one disposition below the
date of the holographic will or on testator’s signature of the testator is not dated, even if
signature, their presence does not invalidate signed, that particular disposition is void,
the will itself. The lack of authentication will without affecting the validity of the others or
only result in disallowance of such changes of the will itself.
(Ajero v. CA, G.R. No. 106720, September 15,
1994). When a number of dispositions appearing in a
holographic will are signed without being
b. Where the alteration affects the date of dated, and the last disposition has a signature
the will or the signature of the testator, and a date, such date validates the
the whole will is void. dispositions preceding it, whatever be the
c. If the words written by a 3rd person were time of prior dispositions (NCC, Art. 813).
contemporaneous with the execution of
the will, even though authenticated by the NOTE: It is not required that the will be
testator, the entire will is void for executed on a single day, at one time and in
violation of the requisite that the the same ink. The unity of the act is not
holographic will must be entirely in the required in holographic wills.
testator’s handwriting.
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CIVIL LAW
prohibited, subject to the rule on disposition may prohibit partition for a period which
captatoria. shall not exceed twenty (20) years.
What the law expressly prohibits is the making of Q: Alden and Stela were both former Filipino
joint wills either for the testator’s reciprocal citizens. They were married in the Philippines
benefit or for the benefit of a third person (NCC, but they later migrated to the United States
Art. 818). In the case at bench, the Cunanan where they were naturalized as American
spouses executed separate wills. Since the two citizens. In their union they were able to
wills contain essentially the same provisions and accumulate several real properties both in the
pertain to properties which in all probability are US and in the Philippines. Unfortunately, they
conjugal in nature, practical considerations dictate were not blessed with children. In the US, they
their joint probate (Vda. de Perez v. Tolete, G.R. No. executed a joint will instituting as their
76714, June 2, 1994). common heirs to divide their combined estate
in equal shares, the five siblingsof Alden and
NOTE: While the execution of joint wills is the seven siblings of Stela. Alden passed away
absolutely prohibited under Philippine laws, the in 2013 and a year later, Stela also died. The
filing of a joint petition for the probate of two or siblings of Alden who were all citizens of the
more wills is allowed. Multiple wills may be US instituted probate proceedings in a US
submitted for probate in a single proceeding. court impleading the siblings of Stela who
were all in the Philippines.
Q: John and Paula, British citizens at birth,
acquired Philippine citizenship by a. Was the joint will executed by Alden and
naturalization after their marriage. During Stela who were both former Filipinos
their marriage the couple acquired substantial valid? Explain with legal basis.
landholdings in London and in Makati. Paula b. Can the joint will produce legal effect in
bore John three children, Peter, Paul and Mary. the Philippines with respect to the
In one of their trips to London, the couple properties and of Alden Stela found here?
executed a joint will appointing each other as If so, how?
their heirs and providing that upon the death c. Is the situation presented an example of
of the survivor between them the entire estate depecage? (2015 BAR)
would go to Peter and Paul only but the two
could not dispose of nor divide the London A:
estate as long as they live. John and Paula died a) YES, the joint will of Alden and Stela is
tragically in the London Subway terrorist considered valid. Being no longer Filipino
attack in 2005. Peter and Paul filed a petition citizens at the time they executed their joint
for probate of their parents’ will before a will, the prohibition under our Civil Code on
Makati Regional Trial Court. joint wills will no longer apply to Alden and
Stela. For as long as their will was executed in
a. Should the will be admitted to probate? accordance with the law of the place where
b. Are the testamentary dispositions valid? they reside, or the law of the country of which
c. Is the testamentary prohibition against the they are citizens or even in accordance with
division of the London estate valid? (2008 the Civil Code, a will executed by an alien is
BAR) considered valid in the Philippines (NCC, Art.
A: 816).
a. NO, the will cannot be admitted to probate. b) YES, the joint will of Alden and Stela can take
Joint wills are void under the Art. 818 of NCC. effect even with respect to the properties
Even if the joint will executed by Filipinos located in the Philippines because what
abroad were valid where it was executed, the governs the distribution of their estate is no
joint will is still not valid in the Philippines. longer Philippine law but their national law at
executed (NCC, Art. 819). the time of their demise. Hence, the joint will
b. If a will is void, all testamentary dispositions produces legal effect even with respect to the
contained therein are also void. Hence, all properties situated in the Philippines.
testamentary provisions contained in the void c) NO, because depecage is a process of applying
joint will are also void. rules of different states on the basis of the
c. NO, the testamentary prohibition against the precise issue involved. It is a conflict of laws
division by Peter and Paul of the London where different issues within a case may be
estate for as long as they live, is not valid. Art. governed by the laws of different states. In
494 of NCC provides that a donor or testator this case, no conflict of laws will arise because
If it provides for a full A will may be revoked by the testator at any time
disposition of the before his death. Any waiver or restriction of this
Does not, as a rule, testator’s estate, may right is void (NCC, Art. 828).
revoke entirely the revoke the whole prior
prior will. will by substituting a The testator’s right to revoke during his lifetime is
new and last disposition absolute because a will is ambulatory. It can
for the same. neither be waived nor restricted. As a matter of
fact, even if the will has already been admitted to
A prior will and a probate during the testator’s lifetime, it may still
A will and a codicil,
subsequent will, being be revoked. This necessarily follows from the
being regarded as a
two separate wills, may principle that “a testament is of force after men
single instrument are
be construed are dead; otherwise it is of no strength at all while
to be construed
independently of each the testator lives.”
together.
other.
Governing Law in case of Revocation
If the former will is a notarial will, it is not
required that the codicil be notarial in form as 1. If the revocation takes place in the
well. The law only requires that a codicil be in the Philippines, whether the testator is domiciled
form of a will. It does not require that it be of the in the Philippines or in some other country –
same kind as the will it is supplementing. What Philippine laws
matters is that the codicil complies with the 2. If the revocation takes place outside the
formalities required of a notarial will or Philippines:
holographic will, as the case may be. a. by a testator who is domiciled in the
Philippines – Philippine laws
INCORPORATION BY REFERENCE b. by a testator who is not domiciled in this
country:
Incorporation by reference is the incorporation i. Laws of the place where the will was
of an extrinsic document or paper into a will by made, or
reference so as to become a part thereof.
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ii. Laws of the place in which the testator the other are revoked by operation of law (FC,
had his domicile at the time of Art. 44).
revocation (NCC, Art. 829). 3. In case of annulment, the spouse who
contracted the marriage in bad faith shall be
Revocation based on a false or illegal cause is disqualified to inherit from the innocent
null and void. spouse by testate and intestate succession.
Hence, any disposition in the will of the
Requisites: innocent spouse in favor of the guilty spouse
a. The cause must be concrete, factual and not shall be revoked by operation of law [FC, Art.
purely subjective. 50 in relation to Art. 43(5)].
b. It must be false. 4. Upon issuance of the decree of legal
c. The testator must not know of its falsity. separation, provisions in favor of the
d. It must appear from the will that the testator offending spouse made in the will of the
is revoking because of the cause which is innocent spouse shall be revoked by
false. operation of law [FC, Art. 63 (4)].
5. In case of preterition of compulsory heirs in
If the revocation is based on a false or illegal the direct line, whether living at the time of
cause, it is null and void (NCC, Art. 833). the execution of the will or born after the
death of the testator. In such case, the
Institution of heir based on false cause as a preterition shall annul the institution of heir;
general rule does not affect the validity or efficacy but the devises and legacies shall be valid
of the institution and shall be considered as not insofar as they are not inofficious (NCC, Art.
written, unless it appears from the will that the 854).
testator would not have made such institution if 6. When the heir, devisee or legatee commits
he had known the falsity of such cause (NCC, Art. any of the acts of unworthiness which by
850). express provision of law will incapacitate him
to succeed. In such case, any testamentary
Modes of Revoking a Will disposition in favor of such heir, devisee or
legatee is revoked (NCC, Art. 1032).
1. By implication of law; 7. When in the testator’s will there is a legacy of
2. By some will, codicil, or other writing a credit against a third person or of the
executed as provided in case of wills; or remission of a debt of the legatee, and
3. By physical destruction through burning, subsequently, after the execution of the will,
cancelation or obliteration (NCC, Art. 830). the testator brings an action against the
debtor for the payment of his debt. In such
Revocation by Implication of law case, the legacy is revoked (NCC, Art. 935 and
936).
It takes place when certain acts or events take 8. When the testator (a) transforms the thing
place subsequent to the making of a will, which bequeathed in such a manner that it does not
nullify or render inoperative either the will itself retain either the form or denomination it had,
or some testamentary disposition therein. or (b) when he alienates by any title or for
any cause the thing bequeathed or any part
Instances when revocation by implication of thereof, or (c) when the thing bequeathed is
law takes place totally lost during the testator’s lifetime or
after his death without the heir’s fault. In such
1. Upon the termination of the subsequent cases, the legacy is revoked (NCC, Art. 957;
marriage in Article 41 of the FC through the Rabuya, 2009).
filing of the affidavit of reappearance, the
spouse who contracted the marriage in bad Requisites of Revocation by Subsequent will or
faith shall be disqualified to inherit from the codicil
innocent spouse by testate and intestate
succession. Hence, any testamentary 1. The subsequent instrument must comply with
disposition in the will of the innocent spouse the formal requirements of a will;
in favor of the guilty spouse shall be revoked 2. The testator must possess testamentary
by implication of law (FC, Art. 43, par. 5). capacity;
2. If both spouses of the subsequent marriage 3. The subsequent instrument must either
referred in Art. 41 of the FC acted in bad faith, contain a revocatory clause or be
testamentary dispositions by one in favor of
1. Express - by providing for a revocatory clause; NOTE: It is not necessary that the will be totally
2. Implied - provisions are completely destroyed. It is sufficient if on the face of the will,
inconsistent with previous will. there is shown some sign of the physical act of
destruction. (Maloto v. CA, G.R. No. 76464,
The will containing the revocatory clause must February 29, 1988).
itself be valid, and admitted to probate, otherwise,
there is no revocation. Revocation by physical destruction must be
coupled with animus revocandi.
Principle of Instanter
The physical act of destruction of a will, like
1. The express revocation of the 1st will renders it burning, does not per se constitute an effective
void because the revocatory clause of the 2nd will, revocation, unless the destruction is coupled with
not being testamentary in character, operates to animus revocandi on the part of the testator
revoke the 1st will instantly upon the execution of (Maloto v. CA, G.R. No. 76464, February 29, 1988).
the will containing it.
The physical destruction NEED NOT be done by
2. In implied revocation, the first will is not the testator himself.
instantly revoked by the second will because the
inconsistent testamentary dispositions of the It may be performed by another person under his
latter do not take effect immediately but only after express direction and in his presence. If the
the death of the testator. destruction done by a person other than the
testator is made not in his presence or not upon
The fact that the subsequent will is posterior and his express direction, there is no revocation.
incompatible with the first does not mean that the
first is entirely revoked because the revocation Q: In 1919, Miguel executed a will. In the post
may be total or partial. Therefore it is possible for mortem probate, there was a testimony to the
a prior will to subsist with a subsequent will even effect that the will was in the testator’s
if they are incompatible. possession in 1919, but it can no longer be
found. Is the will revoked?
NOTE: In case of inconsistent wills, the
subsequent will prevails over the prior will A: YES, the Doctrine of Presumed Revocation
because it is the latest expression of testamentary applies. Where a will which cannot be found, is
intent of the testator. shown to have been in the possession of the
testator when last seen, the presumption is, in the
A revocation made in a subsequent will shall take absence of other competent evidence, that the
effect even if the new will should become same was cancelled or destroyed. The same
inoperative by reason of the incapacity of the presumption arises where it is shown that the
heirs, devisees or legatees designated therein, or testator had ready access to the will and it cannot
by their renunciation (NCC, Art. 832). be found after his death (Gago v. Mamuyac G.R. No.
26317, January 29, 1927).
Ways of Revocation by Physically Destroying a
Will (BTCO) NOTE: The presumption is not conclusive and
anyone may prove the contrary to rebut the
1. Burning presumption.
2. Tearing
3. Cancelling Doctrine of Dependent Relative Revocation
4. Obliterating
Where the testator’s act of destruction is
Requisites of Revocation by Physical Act of connected with the making of another will, so as
Destruction (OTAP) fairly to raise the inference that the testator meant
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the revocation of the old to depend upon the 1. By Reproduction - the contents of a previous
efficacy of the new disposition, the revocation will will are reproduced in a subsequent will (NCC,
be conditional and dependent upon the efficacy of Art. 835)
the new disposition; and if, for any reason, the 2. By Execution of a Codicil - such codicil
new will intended to be made as a substitute is referring to the previous will to be
inoperative, the revocation fails and the original republished (NCC, Art. 836)
will remains in full force.
NOTE: There can be NO republication by
But a mere intent to make at some time a will in execution of a codicil if the previous will is void as
place of that which is destroyed will not render to its form. If the previous will is void as to its
the destruction conditional. It must appear that form, it can only be republished by reproducing
the revocation is dependent upon the valid the provisions thereof in a subsequent will.
execution of a new will.
Revival of Wills is the process of renewing the
The theory on which this principle is predicated is operative force of a will which had once been
that the testator did not intend to die intestate. revoked by the testator.
And this intention is clearly manifest when he
executed two wills on two different occasions and Rule on revival of wills
instituted his wife as his universal heir. There can
therefore be no mistake as to his intention of 1. If there is an EXPRESS REVOCATION - If after
dying testate (Molo v. Molo, G.R. No. L-2538, making a will, the testator makes a second
September 21, 1951). will expressly revoking the first, the
revocation of the second will does not
NOTE: Failure of the new testamentary revive the first will, which can be revived
disposition upon whose validity the revocation only by another will or codicil (NCC, Art. 837).
depends is equivalent to the non-fulfillment of a 2. If there is an IMPLIED REVOCATION - The
suspensive condition and thus prevents the revocation of the second will which
revocation of the original will. impliedly revoked the first will revives the
latter.
Q: Mr. Reyes executed a will completely valid
as to form. A week later, however, he executed INSTITUTION OF HEIRS
another will which expressly revoked his first
will, upon which he tore his first will to pieces. Institution of heirs is an act by virtue of which a
Upon the death of Mr. Reyes, his second will testator designates in his will the person or
was presented for probate by his heirs, but it persons who are to succeed him in his property
was denied due to formal defects. Assuming and transmissible rights and obligations (NCC, Art.
that a copy of the first will is available, may it 840).
now be admitted to probate and given effect?
Why? (2003 BAR) Institution of heirs cannot be allowed to affect the
legitimes of the compulsory heirs.
A: YES, the first will may be admitted to probate
and given effect because the will that was There can be an instituted heir only in
supposed to revoke the same was never admitted testamentary succession.
to probate on account of formal defects.
Admission to probate of the subsequent revoking There can be a valid will even if it contains only a
will is one of the requisites for express revocation provision for disinheritance or if only legacies and
to take place. devises are contained in the will even though it
does not contain an institution of heir, or such
REPUBLICATION AND REVIVAL OF WILLS institution should not comprise the entire estate,
and even though the person so instituted should
Republication of wills is the re-execution or the not accept the inheritance or should be
re-establishment by a testator of a will which is incapacitated to succeed (NCC, Art. 841).
void or a will which the testator had once revoked.
Requisites of a Valid Institution
Two ways of Republishing Wills
1. The will must be extrinsically valid;
Three Principles in the Institution of Heirs NOTE: A conceived child, although as yet unborn,
has a limited and provisional personality
1. Equality – heirs who are instituted without a (Quimiguing v. Icao, G.R. No. 26795, July 31, 1970).
designation of shares inherit in equal parts. Its personality is essentially limited because it is
only for purposes favorable to the child (NCC, Art.
NOTE: Applies only when the heirs are of the 40). Its personality is provisional because it
same class or same juridical condition and depends upon the child being born alive later
involves only the free portion. under the following conditions:
As between a compulsory heir and a 1. The child must be alive for at least 24
voluntary heir and they are instituted without hours from complete delivery, if it had an
any designation of shares, the legitime must intra-uterine life of less than 7 months.
first be respected and the free portion shall 2. If the child had an intra-uterine life of at
then be equally divided between them. least 7 months, it is enough that the child
is alive upon delivery (NCC, Art. 41).
2. Individuality – heirs collectively instituted
are deemed individually instituted unless Disposition in favor of an Unknown Person
contrary intent is proven.
GR: Every disposition in favor of an unknown
NOTE: Art. 847 of the NCC provides that when person shall be void.
the testator institutes some heirs individually
and others collectively as when he says, “I XPNs:
designate my heirs A and B, and the children 1. If the identity can become certain by some
or C,” those collectively designated shall be event or circumstance, the disposition is valid.
considered as individually instituted, unless it It is important, however, that the event or
clearly appears that the intention of the circumstance must appear in the will itself; it
testator was otherwise. cannot be shown by extrinsic evidence, either
oral or documentary.
3. Simultaneity – when several heirs are 2. A disposition in favor of a definite class or
instituted, they are instituted simultaneously group of persons shall be valid.
and not successively, unless the contrary is
proved. Evidence aliunde CANNOT be presented to
identify the unknown person. The determinate
Designation of Heir event or circumstance, sufficient to indicate with
certainty the person whom the testator wants to
Generally, an heir must be designated by his name favor, must appear in the will itself; it cannot be
and surname. This rule, however, is not shown by extrinsic evidence, either oral or
mandatory. Even when the name of the heir has documentary.
been omitted but the testator has designated the
heir in such a manner that there can be no doubt If there is merely a latent ambiguity as to the
as to who has been instituted, the institution is identity of the heir, extrinsic evidence other than
valid. the oral declaration of the testator may be used,
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but if his identity is unknown, extrinsic evidence is GR: The testator CANNOT impose any charge,
not allowed. condition or substitution whatsoever upon the
legitimes. If a charge condition or substitution is
Effect if the institution of heir is based on a imposed, it shall be considered as not imposed.
false cause
XPN: Testator can validly impose a prohibition
GR: The institution of heir is valid. The false cause against the partition of the legitimes for a period
shall be considered simply as not written. not exceeding 20 years.
XPN: If from the will itself, it appears that the NOTE: The legitime passes by strict operation of
testator would not have made the institution if he law, independently of the testator’s will. As such,
had known the falsity of the cause, the institution any condition, burden, or substitution upon the
shall be void. same is merely considered by law as not imposed
(NCC, Art. 872).
NOTE: The rule is, if the revocation is based on a
false or illegal cause, it is null and void (NCC, Art. Conditions on the Prohibition to Marry
833) while institution of heir based on false cause
as a general rule does not affect the validity or GR: An absolute condition not to contract a first or
efficacy of the institution (NCC, Art. 850). subsequent marriage is not a valid condition and
shall be considered as not written (NCC, Art. 874).
Kinds of institution However, the validity of the disposition itself shall
not be affected.
1. With a condition
2. With a term XPN: If such condition was imposed on the widow
3. For a certain purpose or cause (modal or widower by the deceased spouse or by the
Institution) latter’s ascendants or descendants, in which case,
the condition is valid (NCC, Art. 874).
Conditional Institution of heirs
If the prohibition is relative with respect to
Condition is a future or uncertain event or a past persons, time or place, such conditions is valid and
event unknown to the parties, upon which the must be complied with unless the testator renders
performance of an obligation depends. it impossible for the heir to marry at all.
Conditions, terms and modes are not presumed, Disposition Captatoria is any disposition made
they must be clearly expressed in the will. The upon the condition that the heir shall make some
condition must fairly appear from the language of provision in his will in favor of the testator or of
the will. Otherwise, it shall be considered pure. any other person shall be void (NCC, Art. 875).
Here, both the condition and the disposition are
Kinds of Condition void but the validity of the other provisions,
including the will itself, shall not be affected.
RESOLUTORY SUSPENSIVE
CONDITION CONDITION Reason for the prohibition: Disposition captatoria is
incompatible with good faith and with the nature
The disposition becomes of testaments; it is immoral and contrary to the
The effectivity f the freedom to make wills.
effective upon the death
disposition is
of the testator but is
suspended until the Effect of a Suspensive Condition
extinguished upon the
fulfillment of the
happening of the
condition. 1. Heir, Devisee, or legatee acquires no rights
condition.
until the condition is fulfilled.
2. If he dies before the condition is fulfilled, he
Effect of Impossible Condition on the
transmits no rights to his heirs, even though
Testamentary Disposition
he survived the testator.
3. Once the condition is fulfilled, its effects
Impossible conditions and those contrary to law
retroact to the moment of the death of the
or good customs shall be considered as not
testator.
imposed and shall in no manner prejudice the
heir, even if the testator should otherwise provide
(NCC, Art. 873).
A disposition with a suspensive term does not Instances when caucion muciana is needed
prevent the instituted heir from acquiring his
rights and transmitting them to his heirs even 1. Suspensive term - the legal heir shall be
before the arrival of the term. considered as called to the succession until the
arrival of the period. But he shall not enter into
Reason: The right of the heir instituted subject to possession of the property until after having
a term is vested at the time of the testator's death given sufficient security, with the intervention
- he will just wait for the term to expire. of the instituted heir [NCC, Art. 885 (2)].
2. Negative potestative condition - If the
If the heir dies after the testator but before the potestative condition imposed upon the heir is
term expires, he transmits his rights to his own negative, or consists in not doing or not giving
heirs because of the vested right. something, he shall comply by giving a security
that he will not do or give that which has been
prohibited by the testator, and that in case of
SUSPENSIVE contravention he will return whatever he may
SUSPENSIVE TERM
CONDITION
have received, together with its fruits and
The instituted heir does interests (NCC, Art. 879)
The right of the heir not acquire any
instituted subject to a successional right upon NOTE: If the heirs do not post the required bond
term is vested at the the death of the testator in case of a suspensive term or a negative
time of the testator’s as long as the condition potestative condition, the estate shall be placed
death. Hence, if he dies is not yet fulfilled. under administration (NCC, Art. 880).
after the testator but Hence, upon the death
before the term expires, of the instituted heir, 3. Mode - That which has been left in this manner
he can transmit his prior to the fulfillment may be claimed at once provided that the
rights to his own heirs. of the condition, no instituted heir or his heirs give security for
right is transmitted to compliance with the wishes of the testator and
for the return of anything he or they may
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CIVIL LAW
receive, together with its fruits and interests, if In a modal institution, the testator states the
he or they should disregard this obligation (NCC, object of the institution, the purpose or
Art. 882). (2002 BAR) application of the property left by the testator, or
the charge imposed by the testator upon the heir.
Modal Institution of heirs A mode imposes an obligation upon the heir or
legatee but it does not affect the efficacy of his
A mode is an obligation imposed upon the heir to rights to the succession. The condition suspends
do or to give something but does not obligate; and the mode obligates but
does not suspend (Rabadilla v. CA, G.R. No. 113725,
Modal institution – statement of: June 29, 2000).
NOTE: If a compulsory heir has already Omission of an adopted child in a will also
received a donation from the testator, there is amount to preterition
no preterition.
An adopted child is by legal fiction considered a
Reason: A donation to a compulsory heir is compulsory heir in the direct line. An adopted
considered an advance of the inheritance. person is given the same rights and duties as if he
is a legitimate child of the adopter and makes the
3. The heir will receive nothing by way of adopted person a legal heir of the adopter (Acain
intestate succession. (e.g. if the heir is not v. IAC, G.R. No. 72706, October 27, 1987).
mentioned in the will nor a recipient of a
donation inter vivos and all of the estate is Compulsory Heirs in the Direct Line
disposed by will)
1. Legitimate children and descendants with
To constitute preterition, the omission must be respect to their legitimate parents or
total and complete, such that nothing must be ascendants;
given to the compulsory heir (Aznar v. Duncan, 2. Legitimate parents of ascendants, with
G.R. No. L-24365, June 30, 1966). respect to their legitimate children and
descendants;
Effects of Preterition 3. Illegitimate children;
4. The father or mother of illegitimate children.
1. Preterition annuls the institution of heirs;
2. Devices and legacies are valid insofar as they Where the deceased left no descendants,
are not inofficious; legitimate or illegitimate, but she left forced heirs
3. If the omitted compulsory heir dies before the in the direct ascending line— her parents, and
testator, the institution shall be effectual, her holographic will does not explicitly
without prejudice to the right of disinherit them but simply omits their names
representation. altogether, the case is one of preterition of the
parents, not a case of ineffective disinheritance
Example: X has two legitimate children: A (Nuguid vs. Nuguid, et al., GR No. L-23445 June 23,
and B. X makes a will which results in the 1966).
preterition of A. A predeceases X but leaves a
legitimate child A-1, who is himself Exclusion of an Heir in the Extrajudicial
completely omitted from the inheritance (A-1 Settlement of Estate
being entitled to succeed X by
representation). There is preterition, not Q: Virginia P. Viado died intestate in 1982. Her
because A was preterited but because A-1 was part in the conjugal property was transmitted
preterited (Balane, 2010). In such case, the to her heirs—her husband Julian and their
descendant of A, A-1, can now file an action to children Nilo Viado, Rebecca Viado, Leah Viado
annul the institution of heirs. and Delia Viado. The inheritance, which vested
from the moment of death of the decedent,
Preterition annuls the institution of an heir and remained under a co-ownership regime among
annulment throws open to intestate succession the heirs until partition. The heirs later on
the entire inheritance. The only provisions which executed a deed of extrajudicial settlement to
do not result in intestacy are the legacies and the exclusion of Delia Viado, alleged to be a
devises made in the will for they should stand retardate. Can Delia Viado rescind the
valid and respected, except insofar as the extrajudicial settlement among other heirs?
legitimes are concerned (Acain v. IAC, G.R. No.
72706, October 27, 1987). A: No. The exclusion of petitioner Delia Viado
from the deed of extrajudicial settlement verily
Omission of an illegitimate child in a will has the effect of preterition. This kind of
amounts to preterition preterition, however, in the absence of proof of
fraud and bad faith, does not justify a collateral
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attack on Transfer Certificate of Title. The relief a) If by mistake or inadvertence, there is true
instead rests on Article 1104 of the NCC to the preterition and total intestacy results.
effect that where the preterition is not attended b) If the omission is intentional, the effect
by bad faith and fraud, the partition shall not be would be a defective disinheritance
rescinded but the preterited heir shall be paid covered by Art. 918 of the NCC in which
the value of the share pertaining to her. (Non case the institution of heir is not wholly
vs. Court of Appeals, G.R. No. 137287 February 15, void but only in so far as it prejudices the
2000) legitime of the person disinherited.
In both cases, the omitted heir and the imperfectly NOTE: An heir who repudiated his inheritance,
disinherited heir get at least their legitimes. may represent the person whose inheritance he
has renounced (NCC, Art. 976). The reason for this
Both legacies and devises remain valid insofar as
is found under Art. 971 of the NCC: “the
the legitime has not been impaired.
representative does not succeed the person
represented but the one whom the person
The mere fact that an heir was omitted in a represented would have succeeded. “
will, does NOT automatically equate to
preterition. RIGHT OF REPRESENTATION
One must distinguish whether the omission of a Right of representation is the right created by
forced heir in the will of the testator is by mistake fiction of law, by virtue of which, the
or in advertence or voluntary or intentional: representative is raised to the place and degree of
The right of representation is allowed in Any compulsory heir to whom the testator has left
compulsory succession with respect to the by any title less than the legitime belonging to him
legitime, in case the compulsory heir in the may demand that the same be fully satisfied (NCC,
descending line dies before the testator or Art. 906). (2001, 2010 BAR)
becomes incapacitated to succeed.
NOTE: Testamentary dispositions that impair or
Heirs who repudiated their share MAY NOT be diminish the legitime of the compulsory heirs shall
represented. A voluntary heir MAY NOT also be be reduced on petition of the same, insofar as they
represented. may be inofficious or excessive (NCC, Art. 907).
Rules in case of representation If the testator has instituted only one heir, and the
institution is limited to an aliquot part of the
It shall take place in cases of: inheritance - legal succession takes place with
respect to the remainder of the estate (NCC, Art.
a. Death 851).
b. Incapacity
c. Disinheritance If the testator instituted several heirs as sole heirs
but allotted only an aliquot part of the inheritance
Representation applies only to those acquired by and together they do not cover the whole
virtue of the law (legitime, intestate share, in case inheritance, or the whole free portion - each part
of reserva troncal). shall be increased proportionately (NCC, Art. 852).
No representation in cases of repudiation. If each of the instituted heirs has been given an
aliquot part of the inheritance and the parts
Representation only occurs in the direct together exceed the whole inheritance, or the
descending line and never in the ascending. whole free portion, as the case may be - each part
shall be reduced proportionately (NCC, Art. 853).
In the direct collateral line, the right of
representation only takes place in favor of SUBSTITUTION OF HEIRS
children of brothers or sisters, whether full or
half-blood. Substitution is the appointment of another heir
so that he may enter into the inheritance in
The representation obtains degree by degree, and default of the heir originally instituted (NCC, Art
no jump is made. 857). (2002 BAR)
Outline of Rules (Balane, 2010) The concept of substitution applies in cases if the
heir or heirs instituted should die before the
Death Incapacity Renunciation Disinheritance
testator or should not wish, or should be
incapacitated to accept the inheritance.
Compulsory Heir
If the Substitute Dies Ahead of the Testator
1. TN 1. TN 1. TN 1. TN
2. R 2. R 2. No R 2. R The substitute who dies ahead of the testator
prevents him from acquiring any rights, since
Voluntary Heir there is no substitution to speak of.
1. TN 1. TN 1. TN Not
2. No R 2. No R 2. No R applicable Kinds of substitution
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CIVIL LAW
a. Predeceases the testator; 1. There must be a first heir or fiduciary who
b. repudiates the inheritance; or takes the property upon the testator’s death;
c. is incapacitated to succeed 2. An absolute obligation is imposed upon the
fiduciary to preserve and to transmit to a
NOTE: Simple substitution without a second heir the property at a given time;
statement of the causes, to which it refers, 3. There is a second heir who takes the
shall comprise the 3 above mentioned property subsequently from the fiduciary
situations unless the testator has provided and must be one degree from the first heir;
otherwise. and
4. The first and second heir must both be living
2. Brief/compendious – when two or more and qualified at the time of the death of the
persons are substituted for one; and one testator.
person for two or more heirs.
NOTE: It should be imposed on the free portion
3. Reciprocal – one heir is designated as a and not on the legitime. Fideicommissary
substitute for an instituted heir while the substitution can never burden the legitime
latter is simultaneously instituted as a (NCC, Art. 864).
substitute for the former.
Meaning of "One degree"
GR: The substitute shall be subject to the
same charges and conditions imposed upon It refers to the degree of relationship; it means
the instituted heir. “one generation”. As such, the fideicommissary
can only be either a parent or child of the first heir
XPNs: (Palacios v. Ramirez, G.R. No. L-27952, February 15,
1. If the testator has expressly provided 1982).
the contrary
2. If the charges or conditions are The relationship is always counted from the first
personally applicable only to the heir heir. However, fideicommissary substitutions are
instituted (NCC, Art 862). also limited to one transmission. There can only
be one fideicommissary transmission such that
4. Fideicommissary Substitution (Indirect after the first, there can be no second
Substitution)– It is a substitution by virtue of fideicommissary substitution.
which the fiduciary or first heir instituted is
entrusted with the obligation to preserve and Both the first and second heir must be living
to transmit to a second heir the whole or part and qualified at the time of the death of the
of the inheritance. It shall be valid provided testator
such substitution does not go beyond one
degree from the heir originally instituted, and The fideicommissary inherits not from the first
provided further, that the fiduciary or first heir but from the testator, thus, the requirement
heir and the second heir are living at the time that the fideicommissary be alive or at least
of the death of the testator (NCC, Art. 863). conceived at the time of the testator’s death.
(2002, 2008 BAR)
Effect if the fideicommissary predeceases the
Parties to a Fideicommissary Substitution and fiduciary
their Obligations
If the fideicommissary predeceases the fiduciary,
PARTIES OBLIGATIONS but survives the testator, his rights pass to his
own heirs.
He has the obligation to
First heir or NOTE: The first heir receives property, either
preserve and transmit the
fiduciary upon the death of the testator or upon the
inheritance.
fulfillment of any suspensive condition imposed
Second heir or by the will.
He eventually receives the
fideicommissar
property from the fiduciary.
y The first heir is almost like a usufructuary with
right to enjoy the property. Thus, like a
Elements of Fideicommissary Substitution usufructuary, he cannot alienate the property. The
1. Primary rule – the period indicated by the Express obligation to preserve and transmit
testator the property
2. Secondary rule – if the testator did not
indicate a period, then the fiduciary’s lifetime The obligation to preserve and transmit must be
given clearly and expressly:
Delivery of the property to the fideicommissary 1. by giving it a name “fideicommissary
heir substitution” or
2. by imposing upon the first heir the absolute
GR: The fiduciary should deliver the property obligation to preserve and deliver the
intact and undiminished to the property to the second heir.
fideicommissary heir upon arrival of the
period. Remedy of the fideicommissary to protect
himself against alienation to an innocent third
XPN: The only deductions allowed, in the absence person
of a contrary provision in the will are:
1. Legitimate expenses If the first heir was able to register the property in
2. Credits his name, the fideicommissary should annotate his
3. Improvements claim on the land on the title to protect himself
against any alienation in favor of innocent third
The coverage of legitimate expenses and parties.
improvements are limited to necessary and
usefulexpenses, but not to ornamental expenses. When the property passes to the fideicommissary,
there is no more prohibition to alienate.
Distinctions between a fiduciary in
fideicommissary substitution and a trustee in If the testator gives the usufruct to different
a trust persons successively, the provisions on
fideicommissary substitution also apply.
FIDUCIARY TRUSTEE
Different dispositions related or analogous to
Can only be designated May be designated fideicommissary substitutions which the law
expressly by means of either expressly by considers as void (NCC, Art. 867)
a will acts inter vivos or
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CIVIL LAW
1. Fideicommissary substitutions which are not property as Ruffa’s heir. The transfer of the
made in an express manner, either by giving property from Scarlet to Ruffa (as Scarlet’s
them this name, or imposing upon the heir) is what allows Ruffa’s mother to inherit
fiduciary the absolute obligation to deliver the the property which she would otherwise be
property to a second heir. disqualified to inherit under Article 992 of
2. Provisions which contain a perpetual the NCC.
prohibition to alienate and even a temporary
one, beyond the limit fixed in Art. 863 of the c.) One requirement of a valid fideicommissary
NCC (20 years) (NCC, Art.870) substitution is that both heirs should be alive
3. Those which impose upon the heir the charge at the time of the testator’s death. Ruffa
of paying to various persons successively, predeceasing Raymond means that the
beyond the limit prescribed in Art. 863 of the fideicommissary substitution is no longer
NCC, a certain income or pension. valid. In this regard, the only way by which
4. Those which leave to a person the whole or Scarlet can inherit the property directly from
part of the hereditary property in order that Raymond is by legal succession. Her right to
he may apply or invest the same according to do so, however, is negated by (1) the
secret instructions communicated to him by presence of Raymond and Ruffa’s mother
the testator. who necessarily excludes her; and (2) the
provisions of Art. 992 of the NCC.
The nullity of the fideicommissary substitution
DOES NOT prejudice the validity of the institution LEGITIME
of the heirs first designated; the fideicommissary
clause shall simply be considered as not written Legitime is that part of the testator's property
(NCC, Art. 868). which he cannot dispose of because the law has
reserved it for certain heirs who are, therefore,
Q: Raymond, single, named his sister Ruffa in called compulsory heirs. (NCC, Art. 886). (2003
his will as a devisee of a parcel of land which BAR)
he owned. The will imposed upon Ruffa the
obligation of preserving the land and It is mandatory on the part of the testator to
transferring it, upon her death, to her reserve that part of the estate to the legitime.
illegitimate daughter Scarlet who was then
only one year old. Raymond later died, leaving Determination of the Legitime
behind his widowed mother, Ruffa and Scarlet.
a. Is the condition imposed upon Ruffa to To determine the legitime, the value of the
preserve the property and to transmit it property left at the death of the testator shall be
upon her death to Scarlet, valid? considered, deducting all debts and charges,
b. If Scarlet predeceases Ruffa, who inherits which shall not include those imposed in the will.
the property?
c. If Ruffa predeceases Raymond, can Scarlet Donations given to children shall be charged to
inherit the property directly from the legitime (NCC, Art. 908).
Raymond? (2008 BAR)
Kinds of Legitime
A:
a.) When an obligation to preserve and transmit 1. Fixed – If the amount (fractional part) does
the property to Scarlet was imposed on not vary or change regardless of whether
Ruffa, the testator Raymond intended to there are concurring compulsory heirs or
create a fideicommissary substitution where not.
Ruffa is the fiduciary and Scarlet is the a. legitimate children and descendants
fideicommissary. Having complied with the (legitimate children’s legitime is always ½)
requirements of Art. 863 and 869 of the NCC, (2003, 2005, 2010 BAR)
the fideicommissary substitution is valid. b. legitimate parents and ascendants (When
there are no legitimate children and
b.) If Scarlet predeceases Ruffa, the latter as the descendants [NCC, Art. 887 (1)].
former’s heir, will be entitled to the property.
But since it is also Ruffa’s death which will 2. Variable – If the amount changes or varies in
trigger the fideicommissary substitution, the accordance with whom the compulsory heir
practical effect of her death would be to concur.
allow her (Ruffa’s) mother to inherit the
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CIVIL LAW
4. If all the legitimate children repudiate their The renunciation or compromise of future
legitimes, the next generation of legitimate legitime is prohibited and considered null and
descendants, succeed in their own right. void.
1. Rule of proximity– the nearer excludes the Donations given to children shall be charged to
more remote their legitimes (NCC, Art. 909). (2000 BAR)
2. Division by line
3. Equal division within the line Reason: Donations to the compulsory heirs are
advances to the legitimes.
Limitations on the Testator’s Rights of
Ownership NOTE: Donations inter vivos to strangers shall be
charged to the free portion.
The testator CANNOT make donations inter vivos
which upon the legitime or which are inofficious. TABLE OF LEGITIMES
NOTE: The prohibition does not cover an onerous WHEN SURVIVING SPOUSE ALONE
disposition (sale) because this involves an
exchange of values. ½ of the hereditary estate (Free portion = ½)
Rules on the donations made by the testator in Surviving spouse where the
favor of his children, legitimate and marriage was solemnized under
illegitimate, and strangers and those which are articulo mortis and the deceased
inofficious: died within 3 months from the 1/3 of the
time of marriage. hereditary
1. Donations given to children shall be charged estate (Free
to their legitimes (NCC, Art. 909 par. 1). NOTE: The deceased was the portion =2/3)
2. Donations made to strangers shall be charged spouse who was at the point of
to that part of the estate of which the testator death at the time of marriage
could have disposed by his last will (NCC, Art. (Tolentino, Civil Code, 1992 ed.)
909 par. 2).
Surviving spouse where the
3. Insofar as they may be inofficious or may
marriage was solemnized under
exceed the disposable portion, they shall be
articulo mortis and the deceased ½ of the
reduced according to the rules established by
died within 3 months from the hereditary
this Code (NCC, Art. 909 par. 3).
time of marriage but the parties estate (Free
4. Donations which an illegitimate child may
have been living as husband portion = ½)
have received during the lifetime of his father
and wife for more than 5 years
or mother shall be charged to his legitime.
prior to the marriage.
Should they exceed the portion that can be
freely disposed of, they shall be reduced in the PRIMARY HEIRS CONCUR WITH CONCURRING
manner prescribed by this Code (NCC, Art. COMPULSORY HEIRS (2005, 2010 BAR)
910).
Legitimate child = ½ of the
Remedies of a compulsory heir whose legitime hereditary
One
has been impaired estate
legitimate
child and
1. In case of preterition – annulment of Surviving spouse = ¼ of the
the
institution of heir and reduction of devises hereditary
surviving
and legacies estate
spouse
2. In case of partial impairment – completion of
legitime Free portion =¼
3. In case of inofficious donation – collation
Two or Legitimate children = ½ of the
more hereditary
legitimate estatein
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CIVIL LAW
1. the total legitime of the illegitimate children
estate shall not exceed the free portion.
2. the legitime of the surviving spouse must be
Illegitimate children = ¼ of first fully satisfied (NCC, Art. 895)
the
hereditary estate in equal COLLATION
shares
Collation is the process of adding the value of the
Free portion =¼ thing donated to the net value of hereditary estate.
(2001, 2010 BAR)
Legitimate parents = ½ of
the hereditary To collate is to bring back or return to the
estate hereditary mass, in fact or fiction, property which
came from the estate of the decedent, during his
Illegitimate children = ¼ of lifetime, but which the law considers as an
Legitimate the hereditary advance from the inheritance.
parents, surviving estate in equal
spouse, and shares Collation is applicable to both donations to
illegitimate compulsory heirs and donations to strangers.
children Surviving spouse = 1/8
of the GR: Compulsory heirs are obliged to collate.
hereditary
estate XPNs:
1. When testator should have so expressly
Free portion = 1/8 provided;
2. When compulsory heir repudiates his
Parents = excluded inheritance
The legitime of the illegitimate children shall be NOTE: Only the value of the thing donated shall be
taken from the portion of the estate at the free brought to collation. This value must be the value
disposal of the testator, provided: of the thing at the time of the donation.
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CIVIL LAW
COMPULSORY HEIRS COMPULSORY HEIRS additional act on the part of either the child or the
(1) Legitimate and their (4) Legitimate parents parents.
descendants; and ascendants; NOTE:
Inherit only in default Children conceived and born outside of wedlock of
(2)Surviving of No. (1); parents who, at the time of the conception of the
Spouse(Legitimate); former, were not disqualified by any impediment
(5) Illegitimate Parents to marry each other, or were so disqualified only
(3)Illegitimate Children (no other descandants) because either or both of them were below
and their descendants eighteen (18) years of age, may be legitimated (FC,
NOTE: They inherit Art. 177 as amended by R.A. 9858). For purposes of
NOTE: Nos. 2 and 3 are only in default of Nos. succession, the opening of succession must
concurring compulsory (1) and (3) happen after the effectivity of R.A. 9858;
heirs. otherwise, the child will be considered as
illegitimate.
Compulsory Heirs Inherit Either:
NOTE: Under the Family Code, there is no more
1. in their own right; or distinction between acknowledged natural
2. by right of representation children and illegitimate children. They are all
considered as illegitimate.
Adopted Child is a Compulsory Heir
Compulsory heirs of a person who is illegitimate:
Legitimate children include adopted children and
legitimated children. 1. Legitimate children and descendants;
2. Illegitimate children and descendants;
Under R.A. 8552 or the Domestic Adoption Law, 3. In default of the foregoing, parents only;
adopted children have the same rights granted to 4. Surviving spouse.
the legitimate children. Adopted children, for all
intents and purposes are considered as legitimate Parents and ascendants are secondary
children. The relationship, however, does not compulsory heirs. They inherit in default of
extend to other relatives of the adopter, thus, legitimate children and descendants.
disqualifying the adopted from directly inheriting
from the adopter’s ascendants. GR: The presence of the illegitimate children of
the decedent DOES NOT exclude parents and
Since the adopted child enjoys successional rights ascendants.Parents and ascendants concur
as a legitimate child, then he excludes the with the illegitimate children of the decedent.
adopter’s parents and ascendants.
XPN: If the decedent is illegitimate, his illegitimate
Formal or judicial adoption is necessary children exclude the illegitimate parents and
before the adopted child can inherit from the ascendants.
adopter because adoption is a juridical act, a
proceeding in rem, which creates between two Common law spouse NOT a compulsory heir
persons a relationship similar to that which
results from legitimate paternity and filiation. A common law spouse CANNOT be a compulsory
heir. There must be a valid marriage between the
Without the benefit of formal (judicial) adoption, decedent and the surviving spouse. If the marriage
the adopted child is neither a compulsory nor a is null and void, the surviving spouse cannot
legal heir. Hence, he is not entitled to inherit. inherit.
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CIVIL LAW
brother or sister by gratuitous title when the This reservable character of the property will, as a
recipient does not give anything in return; rule, terminate upon the death of the ascendant-
2. That said descendant (praepositus) died reservista. Thus, if we extend the example by
without an issue; presupposing that M died in 1977, A and B, uncles
3. That the same property (called “reserva”) is of the propositus, P, in the paternal line, can claim
inherited by another ascendant (called the property as their own in accordance with the
“reservista”) by operation of law (either provision of Art. 891 of the Code (Jurado, 2009).
through intestate or compulsory succession)
from the praepositus; and Reserva troncal DOES NOT exist in an
4. That there are living relatives within the third illegitimate or adoptive relationship. It only
degree counted from the praepositus and exists in the legitimate family (Centeno v. Centeno,
belonging to the same line from where the G.R. No. 28265, November 5, 1928; id, p. 635).
property originally came (called
“reservatarios”) (NCC, Art. 891; Chua v. CFI of Causes for the extinguishment of the reserva
Negros Occidental, G.R. No. L-29901, August 31, (LD2R2 PC)
1977; Rabuya, 2009).
1. Death of the reservista
Graphical Example of Art. 891 of NCC 2. Death of all the relatives within the third
degree prior to the death of the reservista
3. Accidental Loss of all the reservable
properties
4. Renunciation or waiver by all the
reservatatios provided that no other
reservatario is born subsequently
5. Registration under Act 496 without the
reservable character being annotated if it falls
into the hands of a buyer in good faith for
value
6. By Prescription – reservista seeks to acquire
Before his death in 1950, GF donated a parcel of (30 years – immovable; 8 years- movable)
land to his grandson, P, the only child of his 7. Confusion or merger of rights, as when the
deceased son, F. P died intestate in 1960 without reservatarios acquire the reservista’s right by
any heir in the direct descending line, as a a contract inter vivos.
consequence of which the land passed to his
mother, M, in accordance with the laws of Reserva Minima distinguished from Reserva
intestate succession. Maxima
Is the property reservable? It is evident that the RESERVA MINIMA RESERVA MAXIMA
property in this particular case is reservable,
because all of the requisites for reservation are All of the properties
present. In the first place, M, who is the ascendant All of the properties
which the descendant
reservista, had acquired the property by operation which the descendant
had previously acquired
of law from her descendant, P; in the second place, had previously
by gratuitous title from
P, who is the descendant-propositus, had acquired by gratuitous
another ascendant or
previously acquired the property by gratuitous title from another
from a brother or sister
title from another ascendant, his grandfather, GF, ascendant or from a
must be considered as
who is the origin of the said property; and in the brother or sister must
passing to the
third place, the descendant had died without any be included in the
ascendant- reservista
legitimate issue in the direct descending line who ascendants legitime
partly by operation of
could inherit from him. Consequently, from the insofar as such legitime
law and partly by force
time of the death of the descendant-propositus, P, can contain.
of the descendant’s will.
in 1960, the ascendant, M, who acquired the
property, is obliged to reserve it for the benefit of
Q: A son received from his mother P200,000 by
relatives of the propositus who are within the
virtue of a will. The son had properties of his
third degree and who belong to the line from
own amounting to P400,000. When the son
which the said property came.
died without issue, he left a will giving all his
estate to his father. How much is the
reservable property?
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CIVIL LAW
NOTE: The relationship between the
reservista and the propositus must be NOTE: It is further required that the
legitimate. reservatario should be related by blood not
If he inherited the property from the only from the propositus but also to the other
propositus, not by legal succession or by descendant, or brother, or sister, from whom
virtue of legitime, there is no obligation to the property came. Only then can he be
reserve. considered as belonging to the “line from
which the property came.”
The reservista owns the reservable property.
The reservista is an absolute or full owner, Persons Qualified as Reservatarios
subject to a resolutory condition. If the
resolutory condition is fulfilled, the (1) First degree relatives — This can only
reservista’s ownership of the property is refer to the legitimate father or mother of the
terminated. descendant-propositus, since it is evident that
when an ascendant inherits from a
Resolutory condition: If at the time of the descendant either as a compulsory heir or as
reservista’s death, there still exist relatives an intestate heir, it is because the descendant
within the third degree (reservatarios) of the has no legitimate descendants of his own, or,
propositus and belonging to the line from if he has, they cannot inherit from him
which the property came. because of disinheritance, incapacity or
repudiation.
NOTE: The reservable property is not part of (2) Second degree relatives — This can only
the estate of the reservista. refer to the grandparents as well as to the
brothers and sisters of the full or half blood of
The reservista can alienate the property. the descendant-propositus belonging to the
Unlike in fideicommissary substitution where line from which the reservable property came.
the fiduciary heir cannot alienate the property (3) Third degree relatives – This can only
because he is merely considered a usufruct, refer to the greatgrandparents, uncles or
the reservista can alienate the property being aunts (brothers and sisters of the full or half
the owner thereof but subject to the blood of the propositus’ father or mother), and
reservation. nephews or nieces (children of the propositus’
brothers or sisters of the full or half blood)
GR: The reservista is required to furnish a belonging to the line from which the
bond, security or mortgage to guarantee the reservable property came (Jurado, 2009).
safe delivery later on to the reservatarios of
the properties concerned, in the proper cases. Q : Does the reserva mentioned in Art. 891 of
the Civil Code apply in favor of all the relatives
XPN: The bond, security or mortgage is not within the 3rd degree belonging to the line
needed when the property has been from which the property came, whether they
registered or annotated in the certificate of be legitimate or illegitimate ?
title as subject to reserva troncal.
A : The reserva favors only the legitimate relatives
NOTE: Upon the reservista’s death the (Nieva v Alcala, G.R. No. L-13386 October 27,
ownership of the reserved properties is 1920) and even then, preference is given to the
automatically vested to the reservatarios who direct line as against the collateral lines and the
are alive. Hence, the reservista cannot dispose rule of nearer excludes farther also applies
the reserved property by will if there are (Florentino v Florentino, G.R. No. L-
reservatarios existing at the time of his death. 14856 November 15, 1919).
Furthermore, even assuming that the properties NOTE: If the reservista has no cash when he dies,
are reservable, it cannot be reserved in favour of and the reservable property is money the reserves
the petitioners because they are not qualified can either:
reservatarios. Petitioners are not relatives
within the third degree of Gregoria from whom 1) select equivalent property from the estate; or
the properties came. The person from whom the 2) demand the sale of sufficient property so that
degree should be reckoned is the cash may be obtained (Paras, 2016).
descendant/prepositus — the one at the end of
the line from which the property came and upon Requisites for passing of title to the
whom the property last revolved by descent. It is reservatarios
Gregoria in this case. Petitioners are Gregoria’s
fourth degree relatives, being her first cousins. 1. Death of the reservista; and
First cousins of the prepositus are fourth
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CIVIL LAW
2. The fact that the reservatarios survived the Total exclusion to the inheritance, means loss of
reservista. the legitime, right to intestate succession and of
any disposition in a prior will.
The reservatario acquires the right over the
reservable property upon the death of the Disinheritance, however, is without prejudice to
reservista. The reservatario nearest the decedent the right of representation of the children and
propositus becomes, automatically and by descendants of the person disinherited.
operation of law, the absolute owner of the
reservable property (Cano v. Director of Lands, G.R. But the disinherited parent shall not have the
No. L-10701, January 16, 1959). usufruct or administration of the property which
constitutes the legitime.
There is right of representation in reserva troncal
but the representative must also be within the NOTE: Parents no longer enjoy the right of
third degree from the propositus (Florentino v. usufruct over the properties of their children
Florentino, G.R. No. 14856, November 15, 1919). under the Family Code.
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CIVIL LAW
Suppose the legatee or devisee acquired the NOTE: The order of preference mentioned above
property after the will has been executed is applicable when :
1. If he acquired it by gratuitous title, then the 1. The estate is insufficient to cover all devises or
legacy or devise is void. legacies ; and
2. When the reason for the reduction is not the
Reason: The purpose of the testator that the impairment of legitimes ; e.g., there are no
property would go to the devisee or legatee legitimes because there are no compulsory heirs
has already been accomplished with no or the legitimes have already been satisfie through
expense to the legatee or devisee. donations inter vivos.
2. If he acquired it by onerous title, the legacy or Distinction between Art. 911 and Art. 950 of
devise is valid and the estate may be required NCC
to reimburse the amount.
ORDER OF
Suppose the property bequeathed or devised ORDER OF PREFERENCE
PREFERENCE UNDER
has been pledged or mortgaged UNDER ART. 950
ART. 911
GR: The pledge or mortgage must be paid by the 1. Remuneratory
estate. LDPO:
legacies or devises;
1. Legitime of
2. Preferential legacies
XPN: If the testator provides otherwise. However, compulsory heirs;
or devises;
any other charge such as easements and 2. Donations inter
3. Legacy for support;
usufruct, with which the thing bequeathed is vivos;
4. Legacy for education;
burdened, shall be respected by the legatee or 3. Preferential
5. Legacies or devises of
devisee. legacies or devises;
a specific, determinate
4. All Other legacies
thing which forms a
A legacy of credit takes place when the testator or devises pro rata
part of the estate;
bequeaths to another a credit against a third 5.
6. All others pro rata
person. In effect, it is a novation of the credit by
the subrogation of the legatee in the place of the
NOTE: Article 911 will apply if the reductions
original creditor.
have to be made because the legitimes have been
impaired. Article 950 will apply if the reason for
A legacy of remission is a testamentary
reduction is not the impairment of legitimes.
disposition of a debt in favor of the debtor. The
legacy is valid only to the extent of the amount of
Grounds for the revocation of legacy or devise
the credit existing at the time of the testator's
death. In effect, the debt is extinguished.
1. Transformation of the thing in such a manner
that it does not retain either the form or the
GR: A legacy or devise to a creditor will not be
denomination it had.
imputed to the debt.
2. Alienation of the thing bequeathed.
XPN: It will be imputed to the debt if the testator
so provides, and if the debt exceeds the legacy or
GR: The alienation revokes the legacy/devise
devise, the excess may be demanded as an
even if for any reason the thing reverts to the
obligation of the estate.
testator.
Order of Payment of Legacies and Devises
XPNS:
a. If the reversion is caused by the
1. Remuneratory legacies or devises
annulment of the alienation and the cause
2. Legacies or devises declared by testator to be
for the annulment was vitiation of
preferential
consent on the grantor’s part, either by
3. Legacies for support
reason of incapacity or of duress.
4. Legacies for education
(Fernandez vs Dimagiba, 21 SCRA 428)
5. Legacies or devises of a specific determinate
thing which forms part of the estate
3. Total loss of the thing bequeathed.
6. All others pro rata
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CIVIL LAW
c. Excluded by everyone from the illegitimate child; the other
(Balane, 2010) illegitimate descendants are not so entitled.
1. legitimate children and descendants; Q: Bert and Joe, both male and single, lived
2. legitimate parents and ascendants; together as common law spouses and agreed
3. illegitimate children; to raise a son of Bert's living brother as their
4. the surviving spouse; child without legally adopting him. Bert
5. collaterals up to the fifth degree; and worked while Joe took care of their home and
6. State (Rabuya, 2009) the boy. In their 20 years of cohabitation they
were able to acquire real estate assets
Order of intestate succession to an illegitimate registered in their names as co-owners.
child Unfortunately, Bert died of cardiac arrest,
leaving no will. Bert was survived by his
1. The legitimate children and descendants of a biological siblings, Joe, and the boy.
person who is an illegitimate child are
preferred over other intestate heirs, without Q: What are the successional rights of the boy
prejudice to the right of concurrence of Bert Joe and raised as their son? (2015 BAR)
illegitimate children and the surviving spouse.
2. In the absence of legitimate children and A : Neither of the two will inherit from Bert. Joe
descendants, the illegitimate children (of the cannot inherit because the law does not recognize
illegitimate child) and their descendants the right of a stranger to inherit from the decedent
succeed to the entire estate, without prejudice in the absence of a will. Their cohabitation will
to the concurrent right of the surviving not vest Joe with the right to inherit from Bert.
spouse. The child will likewise not inherit from Bert
3. In the absence of children and descendants, because of the lack of formal adoption of the child.
whether legitimate or illegitimate, the third in A mere ward or “ampon” has no right to inherit
the order of succession to the estate of the from the adopting parents (Manuel v. Ferrer, G.R.
illegitimate child is his illegitimate parents. If No. 117246, August 21, 1995).
both parents survive and are entitled to
succeed, they divide the estate share and TABLE OF INTESTATE SHARES
share alike. Although the law is silent, if the
surviving spouse of the illegitimate child Legitimate Children The whole estate divided
concurs with the illegitimate parents, the alone equally
surviving spouse shall be entitled to one-half
of the estate while the illegitimate parents get The whole estate, each
the other half. Legitimate children
illegitimate child getting ½
and Illegitimate
share of one legitimate
NOTE: In the ascending line, only the children
child
illegitimate parents are entitled to inherit
Legitimate children The whole estate, divided
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CIVIL LAW
Uncles and Aunts = instance of an interested
excluded party, or motu propio,
Nephews and Nephews and nieces = court may order creation
nieces with Uncles whole estate per capita, of a permanent trust for
and aunts but observing the 2:1 the benefit of the
proportion for the full and institutions concerned
half blood
An illegitimate sibling of the decedent can be An illegitimate child has no right to inherit ab
represented. An illegitimate brother or sister of intestato from the legitimate children and
the deceased can be represented by his children, relatives of his father or mother; nor shall such
without prejudice to the application of the Iron children or relatives inherit in the same manner
Curtain Rule (Tolentino, Civil Code, 1992 ed., p. from the illegitimate child (NCC, Art. 992)
451)
RATIO: There is a barrier recognized by law
The right of representation does NOT apply to between the legitimate relatives and the
adopted children. The right of representation illegitimate child so that one cannot inherit from
cannot be invoked by adopted children because the other.
they cannot represent their adopting parents to
the inheritance of the latter’s parents. NOTE: The iron curtain rule only applies in
intestate succession.
Reason: The right of representation cannot be
invoked by adopted children because the legal Application of iron curtain rule and right of
relationship created by adoption is strictly representation distinguished
between the adopter and the adopted. It does not
extend to the relatives of either party. RIGHT OF
IRON CURTAIN RULE
REPRESENTATION
NOTE: Under R.A. 8552 or the Domestic
Adoption Law, the adopted child and the Prohibits absolutely a Right created by fiction
adopting parents have reciprocal successional succession ab intestato of law where the
rights. between the representative is raised
illegitimate child and to the place and degree
Rule on Equal Division of Lines the legitimate children of the person
and relatives of the represented, and
GR: Intestate heirs equal in degree inherit in equal father or mother of said acquires the rights
shares. illegitimate child. which the latter would
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CIVIL LAW
have if he were living
NOTE: Iron curtain rule or could have inherited.
imposes a limitation on
right of representation.
Applies to both
Applies only in
intestate and testate
intestate succession
succession
Legit X† Illegit Y†
Predeceased D Predeceased D
Since X and Y both predeceased D, only X1 can represent X. X2 cannot by virtue of the iron curtain rule. Both Y1
and Y2 can represent Y
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CIVIL LAW
The right of representation is not available to share, or who died before the testator, is added or
illegitimate descendants of legitimate children in incorporated to that of his co-heir, co-devisees, or
the inheritance of a legitimate grandparent. It may co-legatees (NCC, Art. 1015).
be argued, as done by petitioners, that the
illegitimate descendant of a legitimate child is Basis: Accretion is a right based on the presumed
entitled to represent by virtue of the provisions of will of the deceased that he prefers to give certain
Article 982, which provides that “the grand properties to certain individuals rather than to his
children and other descendants shall inherit by legal heirs. Accretion is preferred over intestacy.
right of representation.” Such a conclusion is
erroneous. It would allow intestate succession by Requisites of Accretion
an illegitimate child to the legitimate parent of his
father or mother, a situation which would set at In order that the right of accretion may take place
naught the provisions of Article 992 of the NCC. in a testamentary succession, it shall be necessary:
Article 982 of the NCC is inapplicable to instant
case because Article 992 prohibits absolutely a 1. That two or more persons be called to the same
succession ab intestato between the illegitimate inheritance, or to the same portion thereof, pro
child and the legitimate children and relatives of indiviso; and
the father or mother (Diaz vs. Intermediate 2. That one of the persons thus called die before
Appellate Court, No. L-66574 June 17, 1987). the testator, or renounce the inheritance, or be
incapacitated to receive it (NCC, Art. 1016)
Law on succession is animated by a uniform
general intent, and no part should be rendered In testamentary succession, accretion takes
inoperative by, but must be construed in relation place in case of:
to, any other part as to produce a harmonious
whole.— The rule in Art. 992 of the NCC has 1. Predecease ;
consistently been applied by the Court in several 2. Incapacity ;
other cases. Thus, it has ruled that 3. Renunciation;
4. Non-fulfillment of the suspensive condition
a. where the illegitimate child had half imposed upon instituted heir ; and
brothers who were legitimate, the latter 5. Ineffective testamentary disposition
had no right to the former’s inheritance;
b. the legitimate collateral relatives of the In intestate succession, accretion takes place
mother cannot succeed from her in case of:
illegitimate child;
c. a natural child cannot represent his 1. Predecease of legal heir;
natural father in the succession to the 2. Incapacity of legal heir ; and
estate of the legitimate grandparent; 3. Repudiation by legal heir
d. the natural daughter cannot succeed to
the estate of her deceased uncle who is a NOTE: Accretion takes place only if there is no
legitimate brother of her natural father; representation. In renunciation, there is always
and accretion.
e. an illegitimate child has no right to inherit
ab intestato from the legitimate children Reason: No representation in renunciation.
and relatives of his father (Manuel vs.
Ferrer, 247 SCRA 476, G.R. No. 117246 Substitution, representation and accretion in
August 21, 1995). testate and intestate succession distinguished:
TESTAMENTARY
PROVISIONS COMMON TO TESTATE AND INTESTATE SUCCESSION
SUCCESSION
INTESTATE SUCCESSION
In case of predecease and incapacity
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CIVIL LAW
it be born later under the conditions prescribed in 2. The Relatives of such priest or minister of the
Article 41 of the NCC (NCC, Art. 1025). (2007 gospel within the fourth degree, the church,
BAR) order, chapter, community, organization, or
institution to which such priest or minister
PERSONS INCAPABLE OF SUCCEEDING may belong;
3. A Guardian with respect to testamentary
Absolute incapacity to succeed means that the dispositions given by a ward in his favor
person is incapacitated to succeed in any form, before the final accounts of the guardianship
whether by testate or intestate succession. have been approved, even if the testator
should die after the approval thereof;
Persons who are absolutely incapacitated to nevertheless, any provision made by the ward
succeed: in favor of the guardian when the latter is his
ascendants, descendant, brother, sister, or
1. Those not living at the time of death of the spouse, shall be valid;
testator 4. Any attesting Witness to the execution of a
2. Those who cannot be identified (NCC, Art. will, the spouse, parents, or children, or any
845). one claiming under such witness, spouse,
3. Those who are not permitted by law to parents, or children;
inherit. (NCC, Art. 1027)
NOTE: Numbers 1 to 4 do not apply to
Determination of the Capacity to Succeed legitimes.
GR: In order to judge the capacity of the heir, 5. Any Physician, surgeon, nurse, health officer
devisee, or legatee, his qualification at the time of or druggist who took care of the testator
the death of the decedent shall be the criterion. during his last illness;
The governing law in determining the capacity to Requisites for a priest to be disqualified from
succeed of the heir, devisee, legatee is the law of inheriting
the nation of the decedent. (1998, 2004 BAR)
1. The will was made during the last illness of
RELATIVE INCAPACITY TO SUCCEED the testator;
2. The spiritual ministration must have been
Relative incapacity to succeed means the person extended during the last illness;
is incapacitated to succeed because of some 3. The will was executed during or after the
special relation to the testator. spiritual ministration.
Grounds for Relative Incapacity to Succeed Q: If the confession was made before the will
(UMA) was made, can the priest inherit upon the
death of the sick person, if:
1. Undue influence or interest (NCC, Art. 1027) a. The priest is the son of the sick
2. Morality or public policy (NCC, Art. 739) person?
3. Acts of unworthiness (NCC, Art. 1032) b. The priest was the sick person’s
brother?
The following are incapacitated to succeed
based on undue influence or interest (PRG- A:
WPI) a. YES.He can get the legitime.
1. The Priest who heard the confession of the NOTE: A priest is incapacitated to succeed
testator during his last illness, or the minister when the confession is made prior to or
of the gospel who extended spiritual aid to simultaneously with the making of a will.
him during the same period; The disqualification applies only to testamentary
dispositions.
Requisites for the disqualification of physician NOTE: Grounds 1, 2, 3, 5 and 6 are the same
grounds as in disinheritance.Numbers 6, 7 and 8
1. The will was made during the last illness cover six (6) acts which relate to wills:
2. The sick person must have been taken cared of
during his last illness 1. Causing the testator to make a will
3. Medical attendance was made 2. Causing the testator to change an existing
4. The will was executed during or after he was will
being cared of. 3. Preventing the decedent from making a
will
The following are incapacitated to succeed 4. Preventing the testator from revoking his
based on morality or public policy (ACO) will
5. Supplanting, concealing, or altering the
1. Persons guilty of Adultery or concubinage testator's will.
with the testator at the time of the making of 6. Falsifying or forging a supposed will of
the will the decedent.
2. Persons guilty of the same Criminal offense, in
consideration thereof UNWORTHINESS vs. DISINHERITANCE
3. A publicofficer or his wife, descendants and
ascendants, by reason of his Office (Art. 1028 DISINHERITAN UNWORTHINE
in relation to Art. 739 of NCC). (2000 BAR) CE SS
The following are incapacitated to succeed by Exclusion from
reason of unworthiness (P-CAV-AFP-F) the entire
Effects on Deprivation of a inheritance.
1. Parents who have abandoned their children the compulsory heir However,
or induced their daughters to lead a corrupt inheritance of his legitime. donations inter
or immoral life, or attempted against their vivos are not
virtues affected.
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CIVIL LAW
Reconciliation 3. When renunciation is in favor of all heirs
between the indiscriminately for consideration
offender and the 4. Other tacit acts of acceptance:
If the testator a. Heir demands partition of the inheritance
offended party
pardons the act b. Heir alienates some objects of the
deprives the
Effects of of inheritance
latter of the
pardon or unworthiness, c. Acts of preservation or administration if,
right to
reconciliatio the cause of through such acts, the title or capacity of
disinherit and
n unworthiness the heir has been assumed
renders
shall be without d. Under Art. 1057 of the NCC, failure to
ineffectual any
effect. signify acceptance or repudiation within
disinheritance
that may have 30 days after an order of distribution by
been made. the probate court.
1. When the heir sells, donates, or assigns his PARTITION AND DISTRIBUTION OF ESTATE
rights
2. When the heir renounces it for the benefit of Partition, in general, is the separation, division
one or more heirs and assignment of a thing held in common among
1. By the decedent himself during his lifetime by Nevertheless, if any of the heirs should demand
an act that the thing be sold at public auction and that
2. inter vivos or by will strangers be allowed to bid, this must be done
3. By a third person designated by the decedent or (NCC, Art. 1086).
by the heirs themselves
4. By a competent court in accordance with the Heir selling his hereditary rights to a stranger
New Rules of Court
Should any of the heirs sell his hereditary rights to
Partition may be demanded by: a stranger before the partition, any or all of the co-
heirs may be subrogated to the rights of the
1. Compulsory heir purchaser by reimbursing him for the price of the
2. Voluntary heir sale, provided they do so within the period of one
3. Legatee or devisee (1) month from the time they were notified in
4. Person who has acquired an interest in the writing of the sale by the vendor (NCC, Art. 1088).
estate
Rescission and Nullity of Partition
Partition cannot be demanded when (PAPU)
A partition may be rescinded or annulled for the
1. Expressly Prohibited by testator for a period same causes as contracts (NCC, Art. 1097).
not more than 20 years
2. Co-heirs Agreed that estate not be divided for It may also be rescinded on account of lesion,
period not more than 10 years, renewable for when any one of the co-heirs received things
another 10 years whose value is less, by at least 1/4, than the share
3. Prohibited by law to which he is entitled, considering the value of
4. To partition estate would render it the things at the time they were adjudicated (NCC,
Unserviceable for use for which it was intended Art. 1098).
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CIVIL LAW
OBLIGATIONS 1. Juridical tie or vinculum juris or efficient cause
- the efficient cause by virtue of which the
debtor becomes bound to perform the
prestation (Pineda, 2000).
GENERAL PRINCIPLES
NOTE: The vinculum juris is established by:
a. Law;
An obligation is a juridical necessity to give, to do, b. Bilateral acts;
or not to do (Art. 1156). c. Unilateral acts (Tolentino, 2002).
It is a juridical relation or a juridical necessity 2. Active subject [creditor (CR) or obligee] - The
whereby a person (creditor) may demand from person demanding the performance of the
another (debtor) the observance of a obligation. It is he in whose favor the
determinative conduct (giving, doing, or not obligation is constituted, established, or
doing), and in case of breach, may demand created (Pineda, 2000).
satisfaction from the assets of the latter (Makati
Stock Exchange v. Campos, G.R. No. 138814, April 3. Passive subject [debtor (DR) or obligor] - The
16, 2009). person bound to perform the prestation to
give, to do, or not to do (Pineda, 2000).
It is a juridical necessity because in case of non-
compliance, the courts of justice may be called 4. Object or prestation - The subject matter of the
upon by the aggrieved party to enforce its obligation which has a corresponding
fulfillment or, in default thereof, the economic economic value or susceptible of pecuniary
value that it represents. substitution in case of noncompliance. It is a
conduct that may consist of giving, doing, or
Art. 1156 refers only to civil obligations which are not doing something (Pineda, 2000).
enforceable in court when breached. It does not
cover natural obligations (Arts. 1423 -1430) NOTE: In order to be valid, the object or
because the latter are obligations that cannot be prestation must be:
enforced in court on equity and natural law and 1. Licit or lawful;
not on positive law (Pineda, 2000). 2. Possible, physically, & judicially;
3. Determinate or determinable; and
When there is a right, there is a corresponding 4. Pecuniary value or possible equivalent in
obligation. Right is the active aspect while money.
obligation is the passive aspect. Thus, the concepts
of credit and debt are two distinct aspects of Absence of any of the first three makes the object
unitary concept of obligation (Pineda, 2000). void.
GR: The law does not require any form in NOTE: Some writers add a fifth one: the form in
obligations arising from contracts for their validity which the obligation is manifested. This element,
or binding force (Art. 1356). however, cannot be considered as essential. There
is no particular form required to make obligations
XPNs: binding, except in certain rare cases (Tolentino,
1) When the form is essential to the validity 1991).
of the contract as required by law (Art.
1346);
2) When the contract is unenforceable
unless it is in a certain form, such as those
under the Statute of Frauds as formulated
in Art. 1403.
ELEMENTS OF AN OBLIGATION
321
CIVIL LAW
a right of action to enforce their Obligations derived from law are not presumed.
performance, but after voluntary Only those expressly determined in the Code or in
fulfillment by the obligor, they authorize special laws are demandable and shall be
retention of what has been delivered regulated by the precepts of the law which
rendered by reason thereof. establishes them and as to what has not been
foreseen by the provisions of Book IV of NCC (NCC,
Moral – cannot be enforced by action but are Art. 1158).
binding on the party who makes it in conscience
and natural law. 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.
SOURCES OF OBLIGATIONS 18; Paras, 2008).
Note: Actually, there are only two sources (i.e., law 1. Arises from law if it establishes obligation;
and contracts) because obligations arising from 2. Arises from the act itself if the law merely
quasi-contracts, delicts, and quasi-delicts are recognizes the existence of an obligation
generated by an act (Manresa).
imposed by law (Leung Ben v. O’Brien, 38 Phil.
182).
e.g.
1. According to Art. 2014 of the NCC, a loser in a
Time of perfection
game of chance may recover his loss from the
winner, with legal interest from the time he
GR:
3. Law – from the time designated by the law paid the amount lost (Leung Ben v. O’Brien,
creating or regulating them; G.R. No. L-13602, April 6, 1918);
2. The obligation of the spouses to support each
4. Contracts –from the time of the perfection of
the contract. other;
3. The obligation of the employers under the
e.g. meeting of the minds Worker’s Compensation Act;
4. The obligations of the owners of the dominant
and servient estates in legal easements and
XPNs:
others scattered in the NCC and in special
a. When the parties made a stipulation on
laws (Jurado, 2009);
the right of the creditor to the fruits of the
5. The obligation to pay taxes (Rabuya, 2017).
thing;
b. When the obligation is subject to a
suspensive condition, from which it arises OBLIGATION EX CONTRACTU
upon fulfillment of the condition;
Requisites of a contractual obligation
c. When the obligation is with a period;
there is already an existing obligation, but
it is only demandable when the period 1. It must contain all the essential requisites of a
expires or becomes due. contract (NCC, Art. 1318); and
2. It must not be contrary to law, morals, good
customs, public order, and public policy (NCC,
5. Quasi Contracts, delicts, quasi-delicts – from
the time designated by the law creating or Art. 1306).
regulating them.
Rules governing the obligations arising from
OBLIGATION EX LEGE contracts
323
CIVIL LAW
quasi-contract, crime or quasi-delict (Rabuya, XPNs: When the offended party:
2017).
1. Waives the civil action;
Rule in case of excess of payment of interest 2. Reserves the right to institute it separately;
and
If the borrower pays interest when there has been 3. Institutes the civil action prior to the criminal
no stipulation therefor, the provisions of the Code action (Rule 111, Sec. 1, Rules of Court).
concerning solutio indebiti, or natural obligations,
shall be applied, as the case may be. Scope of civil liability (IRR)
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CIVIL LAW
Criminal Take care of
As to The civil
liability is not the thing with
availability of liability can be
subject to a the proper
a compromise compromised.
compromise. diligence of a If the object is
good father of generic, but the
As to the Guilt must be Guilt may be a family unless source is
quantum of proved beyond proved by Required
the law specified or
evidence is reasonable preponderance diligence to be
requires or delimited, the
required doubt. of evidence. observed
parties obligation is to
stipulate preserve the
NOTE: Inasmuch as civil liability co-exists with another source.
criminal responsibility in negligence cases, the standard of
offended party has the option between an action care (NCC,
for enforcement of civil liability based on culpa Art.1163).
criminal under Art. 100 of the RPC and an action
for recovery of damages based on culpa aquiliana Delivery of
Deliver all
under NCC, Art. 2177. another thing
accessions,
within the
accessories,
same genus as
and fruits of
the thing
NATURE AND EFFECTS OF OBLIGATIONS the thing even
What delivery promised if
though they
comprises of such thing is
may not have
damaged due
Types of real obligations been
to lack of care
mentioned
or a general
1. Determinate/specific – Particularly designated (NCC, Art.
breach is
or physically segregated from all others of the 1166).
committed.
same class;
2. Indeterminate/Generic – Is designated merely Pay damages in Pay damages in
by its class or genus; case of breach case of breach
3. Delimited generic – Generic objects confined of obligation by of obligation by
to a particular class (Tolentino, 2002); reason of reason of
e.g. An obligation to deliver one of my horses. Effect of delay, fraud, delay, fraud,
breach of negligence, negligence,
Obligations of a debtor in an obligation to obligation contravention contravention
deliver of the tenor of the tenor
thereof thereof
The obligations of the debtor (in an obligation to (NCC, Art. (NCC, Art.
deliver) depends upon the kind thing involved: 1170). 1170).
Obligation is
BASIS SPECIFIC GENERIC not
Fortuitous extinguished
Deliver the Effect of
event (genus
thing which is fortuitous
extinguishes nunquam
neither of event
the obligation. peruit – genus
superior nor
Deliver the never
inferior quality
What the thing agreed perishes).
if quality and
obligation upon
circumstances
consists of (NCC, Art. Remedies of the creditor in case of failure to
have not been
1165). deliver the thing due
stated by the
parties.
(NCC, Art. The following are the remedies of the creditor in
1246). case of failure to deliver the thing due (Pineda,
2000)
SPECIFIC GENERIC
NOTE: In an obligation to deliver a specific thing, Binding and enforceable Directed against the
the creditor has the right to demand preservation only against a particular whole
of the thing, its accessions, accessories, and the person. World.
fruits. The creditor is entitled to the fruits and
interests from the time the obligation to deliver Principle of “balancing of equities” in actions
the thing arise. for specific performance
Right of the creditor to the fruits In decreeing specific performance, equity requires
not only that the contract be just and equitable in
The creditor has a right to the fruits of the thing its provisions, but that the consequences of
from the time the obligation to deliver it arises. specific performance likewise be just and
However, he shall acquire no real right over it equitable. The general rule is that this equitable
until the same has been delivered to him (NCC, Art. relief will not be granted if, under the
1164). circumstances of the case, the result of the specific
performance of the contract would be harsh,
SOURCE OF WHEN OBLIGATION inequitable, and oppressive or result in an
OBLIGATION ARISES unconscionable advantage to the plaintiff (Agcaoili
v. GSIS, G.R. No. 30056, August 30, 1988).
Based on specific
Law, quasi-delict, quasi- Types of personal obligations
provisions of applicable
contract, or crime.
law.
1. Positive - To do;
Subject to a suspensive From the happening of 2. Negative - Not to do.
condition. the condition.
Remedies in personal obligations
From the constitution,
Subject to a supensive
creation or perfection of
term/period. 1. Positive personal obligations
obligation. a. Not purely personal act – To have obligation
From the constitution, executed at debtor's expense plus damages;
Pure creation or perfection of b. Purely personal act - Damages only.
the obligation.
When positive personal obligations
considered breached:
Nature of the right of the creditor with respect a. If the debtor fails to perform the
to fruits obligation; or
b. Even in case of performance but the same
1. Before delivery – Personal right; is done either in a poor manner or in
2. After delivery – Real right.
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CIVIL LAW
contravention of the tenor of the obligation If a person obliged to do something fails to do it,
(NCC, Art. 1167). or if he does it in contravention of the tenor of the
obligation or what has been poorly done be
2. Negative personal obligation – To have the undone, the same shall be executed at his cost
prohibited thing undone at the expense of the (NCC, Art. 1167).
debtor plus damages. However, if thing cannot
be physically or legally undone, only damages When the obligation consists in not doing, and the
may be demanded (8 Manresa 58). obligor does what has been forbidden him, it shall
also be undone at his expense (NCC, Art.1168).
Specific performance is not a remedy in
positive personal obligations Instances where the remedy under Art. 1168 is
not available
If specific performance will be allowed, it will
amount to involuntary servitude which is 1. Where the effects of the act which is forbidden
prohibited by the Constitution (Pineda, 2000). are definite in character – Even if it is possible
for the creditor to ask that the act be undone
BREACHES OF OBLIGATIONS at the expense of the debtor, consequences
contrary to the object of the obligation will
Degree of diligence required have been produced which are permanent in
character.
1. That agreed upon; 2. Where it would be physically or legally
2. In the absence of such, that which is required impossible to undo what has been undone –
by the law; Because of:
a. The very nature of the act itself;
GR: In the absence of the foregoing, diligence b. A provision of law; or
of a good father of a family c. Conflicting rights of third persons.
That reasonable diligence which an ordinary In reciprocal obligations, neither party incurs in
prudent person would have done under the same delay if the other does not comply or is not ready
circumstances. to comply in a proper manner with what is
incumbent upon him. From the moment one of the
Forms of breach of obligations parties fulfills his obligations, delay by the other
begins (NCC, Art. 1169). (2002 Bar)
1. Voluntary – Debtor is liable for damages if he
is guilty of: Kinds of delay
a. Default (mora)
b. Fraud (dolo) 2. Ordinary delay – This is the mere failure to
c. Negligence (culpa) perform an obligation at the stipulated time.
d. Breach through contravention of the 3. Extraordinary delay or legal delay – This delay
tenor thereof (NCC, Art. 1170). already equates to non-fulfillment of the
obligation and arises after the extrajudicial or
2. Involuntary – Debtor is unable to perform the judicial demand has been made upon the
obligation due to fortuitous event thus not debtor (Pineda, 2000).
liable for damages.
Kinds of legal delay or default
Effects of breach of obligation
1 Mora solvendi – Default on the part of the
debtor/obligor
2. Mora accipiendi – Default on the part of the Instances when demand by the creditor is not
creditor/oblige; necessary in order that delay may exist
4. Compensatio morae – Default on the part of
both the debtor and creditor in reciprocal GR: No demand = no default [NCC, Art. 1169 (2)].
obligations.
XPNs: Demand by the creditor shall not be
Causes of cessation of the effects of mora necessary in order that delay may exist when:
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CIVIL LAW
Debtor’s liability may be mitigated even if he is If neither party complies with his prestation,
guilty of delay default of one compensates for the default of the
other.
If the debtor can prove that loss would
nevertheless transpire even if he had not been in Rules on compensatio morae
default, the court may equitably mitigate his
liability [NCC, Art. 2215(4); Pineda, 2000] Unilateral Reciprocal
Obligations Obligations
MORA ACCIPIENDI
Default or delay
Requisites begins from
extrajudicial or Delay by the other
1. Offer of Performance by a capacitated debtor; Time judicial demand – party begins from
2. Offer must be to Comply with the prestation of mere expiration of the moment one of
as it should be performed; and delay the period fixed is the parties fulfills
3. Refusal of the creditor without just cause not enough in his obligation.
(Pantaleon v. Amex, supra). order that debtor
may incur delay.
Effects of mora accipiendi
a. The obligation
1 Responsibility of debtor is limited to fraud or the law
and gross negligence; expressly so
2 Debtor is exempted from risk of loss of thing; dictates;
creditor bears risk of loss;
3 Expenses by debtor for preservation of thing b. Time is of the
after delay is chargeable to creditor; essence;
4 If the obligation bears interest, debtor does When different
not have to pay it from time of delay; c.Demand would dates for the
5 Creditor liable for damages; and XPNs be useless, as performance of
6 Debtor may relieve himself of obligation by debtor has obligation is fixed
consigning the thing. rendered it by the parties.
beyond his power
COMPENSATIO MORAE to perform; or
One party incurs in delay from the moment the Basis Fraud in the Fraud in the
other party fulfills his obligation, while he himself performance perfection
does not comply or is not ready to comply in a It occurs after
proper manner with what is incumbent upon him. the valid
execution of It occurs before or
Demand is only necessary in order for a party to the contract. It simultaneous with
incur delay when the respective obligations are to Time of
is employed in the creation or
be performed on separate dates. occurrence
the perfection of the
performance obligation.
Effect of non-compliance of both parties in of a pre-
reciprocal obligations existing
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CIVIL LAW
BASIS FRAUD NEGLIGENCE Q: Wenifredo Salvaña was driving the bus
owned by Bachelor Express, Inc./Ceres Liner,
There is no Inc. along the national highway when he
deliberate overtook a PUJ jeepney while negotiating a
There is intention to blind curve in a descending road causing him
As to the to intrude into the opposite lane and bump the
deliberate cause damage
intention to 10-wheeler Hino dump truck of petitioner
intention to or injury even
cause damage Cresencio Baño running uphill from the
cause damage. if the act was
done opposite direction. The collision resulted in
voluntarily. damage to both vehicles, the subsequent death
of the truck driver, Amancio Asumbrado, and
As to the Liability serious physical injuries to bus driver Salvaña.
Liability may
mitigation of cannot be A complaint for quasi-delict was filed against
be mitigated.
liability mitigated. Salvaña for negligently driving the bus causing
it to collide with the dump truck. Respondents
GR: Waiver for denied liability, claiming that prior to the
future collision the bus was running out of control
negligence may
because of a problem in the steering wheel
be allowed in system which could not have been avoided
certain cases.
despite their maintenance efforts. Instead,
As to the Waiver for they claimed that Asumbrado had the last
XPN: Nature of
waiver of future fraud is clear chance to avoid the collision had he not
the obligation driven the dump truck at a very fast speed.
future fraud void.
or public policy
Was Salvaña grossly negligent?
requires
extraordinary A: Yes. When bus driver Salvaña overtook the
diligence. (e.g.
jeepney in front of him, he was rounding a blind
common
curve along a descending road. Considering the
carrier).
road condition and that there was only one lane
on each side of the center line for the movement of
NOTE: When negligence is so gross that it traffic in opposite directions, it would have been
amounts to wanton attitude on the part of the more prudent for him to confine his bus to its
debtor or such negligence shows bad faith, the proper place. Having thus encroached on the
laws in case of fraud shall apply. opposite lane in the process of overtaking the
jeepney, without ascertaining that it was clear of
Effect of good faith or bad faith of the obligor oncoming traffic that resulted in the collision with
the approaching dump truck driven by deceased
If the obligor acted in good faith, he is responsible Asumbrado, Salvaña was grossly negligent in
for the natural and probable consequences of the driving his bus. He was remiss in his duty to
breach of contract and which the parties have determine that the road was clear and not to
reasonably foreseen at the time of the constitution proceed if he could not do so in safety (Cresencio
of the obligation. Baño v. Bachelor Express, GR No. 191703, March 12,
2012).
If the obligor is guilty of fraud, bad faith, malice or
wanton attitude, he shall be responsible for all Kinds of negligence or culpa
damages which may be reasonably attributed to
the non-performance of the obligation. 1. Culpa contractual (contractual negligence) -
Negligence which results from the breach of
Contributory negligence of the creditor contract;
2. Culpa aquiliana (civil negligence or tort or
GR: It reduces or mitigates the damages which he quasi-delict) Acts or omissions that cause
can recover. damage to another, there being no contractual
relation between the parties (NCC, Art. 2176);
XPN: If the negligent act or omission of the and
creditor is the proximate cause of the event which 3. Culpa criminal (criminal negligence) – Those
led to the damage or injury complained of, he which results in the commission of a crime or
cannot recover. a delict.
FORTUITOUS EVENT / CASO FORTUITO NOTE: The fortuitous event must not only be the
proximate cause but it must also be the only and
sole cause. Contributory negligence of the debtor
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CIVIL LAW
renders him liable despite the fortuitous event Q: MIAA entered into a compromise agreement
(Pineda, 2000). with ALA. MIAA failed to pay within the period
stipulated. Thus, ALA filed a motion for
If the negligence was the proximate cause, the execution to enforce its claim. MIAA filed a
obligation is not extinguished. It is converted into comment and attributed the delays to its being
a monetary obligation for damages. a government agency and the Christmas rush.
Is the delay of payment a fortuitous event?
Difficulty to foresee
A: NO. The act-of-God doctrine requires all human
The mere difficulty to foresee the happening is not agencies to be excluded from creating the cause of
impossibility to foresee the same (Republic v. the mischief. Such doctrine cannot be invoked to
Luzon Stevedoring Corp., G.R. No. L-21749, protect a person who has failed to take steps to
September 29, 1967). forestall the possible adverse consequences of loss
or injury. Since the delay in payment in the
Liability for loss due to fortuitous event present case was partly a result of human
participation - whether from active intervention
GR: There is no liability for loss in case of or neglect - the whole occurrence was humanized
fortuitous event. and was therefore outside the ambit of a caso
fortuito.
XPNs: (LaNS-PC-BaG)
First, processing claims against the government
1. Law; are certainly not only foreseeable and expectable,
2. Nature of the obligation requires the but also dependent upon the human will. Second,
assumption of risk; the Christmas season is not a caso fortuito, but a
3. Stipulation; regularly occurring event. Third, the occurrence of
4. The debtor is guilty of dolo, malice or bad the Christmas season did not at all render
faith, has Promised the same thing to two or impossible the normal fulfillment of the
more persons who does not have the same obligation. Fourth, MIAA cannot argue that it is
interest (NCC, Art. 1165); free from any participation in the delay. It should
5. The debtor Contributed to the loss (Tan v. have laid out on the compromise table the
Inchausti & Co., G.R. No. 6092, March 8, 1912); problems that would be caused by a deadline
6. The possessor is in Bad faith (NCC, Art. 552); falling during the Christmas season. Furthermore,
or it should have explained to ALA the process
7. The obligor is Guilty of fraud, negligence or involved for the payment of ALA’s claim (MIAA v.
delay or if he contravened the tenor of the Ala Industries Corp., G.R. No. 147349, February 13,
obligation (Juan Nakpil v. United Construction 2004).
Co., Inc. v. CA, G.R. No. L-47851, April 15, 1988).
Effects of fortuitous events
Act of God v. Act of Man
1. On determinate obligation – The obligation is
ACT OF GOD ACT OF MAN extinguished.
2. On generic obligation – The obligation is not
Fortuitous event Force majeure extinguished (genus nun quam peruit – genus
never perishes).
Event caused by the
Event which is legitimate or Q. Kristina brought her diamond ring for
absolutely independent illegitimate acts of cleaning to a jewelry shop which failed to
of human intervention persons other than the fuilfill its promise to return such ring in
obligor February 1, 1999. Kristina went back to the
shop on February 6, 1999 but she was
e.g. Earthquakes, e.g. Armed invasion,
informed that the ring was stolen by a thief the
storms, floods, robbery, war (Pineda,
night before. Kristina filed an action for
epidemics 2000).
damages against the jewelry shop which put
up the defense of force majeure. Will the action
NOTE: There is no essential difference between prosper or not? (2000 Bar)
fortuitous event and force majuere; they both
refer to causes independent of the will of the A : YES. The action will prosper. Since the
obligor (Tolentino, 2002). defendant was already in default for not having
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CIVIL LAW
debtor by the creditor to enforce the former’s will belong to Jebson. It was also allowed to
rights except: sell its allocated units under such terms as it
a. Personal rights of the debtor; may deem fit, subject to the condition that the
b. Rights inherent in the person of the price agreed upon was with the conformity of
debtor; Sps. Salonga. Thereafter, Jebson entered into a
c. Properties exempt from execution. Contract to Sell with Buenviaje over one of its
e.g. family home units without the conformity of Sps. Salonga.
Buenviaje was able to fully pay for Jebson’s
3. Accion pauliana (rescissory action) – An unit through a swapping arrangement which
action to impugn or assail the acts done or allows the vendee to convey certain properties
contracts entered into by the debtor in fraud as consideration for the sale. Despite this full
of his creditor. payment, Jebson was unable to complete said
unit. This prompted Buenviaje to demand the
NOTE: Resort to the remedies must be in the unit’s immediate completion and delivery.
order stated above (NCC, Art. 1177). Jebson having failed to comply with the
demand, Buenviaje filed an action before the
Q: Sacramento Steel Corporation (SSC) HLURB against Jebson and Sps. Salonga for
executed 5 separate deeds of chattel mortgage specific performance praying for the unit’s
constituted over various equipment for completion and delivery and rescission in the
International Exchange Bank (IEB) which alternative. Jebson, in its defense, claimed that
subsequently, SSC defaulted in the payment of they were not able to secure the necessary
its obligations. IEB’s demand for payment went permits because Sps. Salonga stubbornly
unheeded. Meanwhile, Metropolitan Bank and refused to cause the consolidation and
Trust Company (Metro Bank) filed a motion partition of the parcels of land. Sps. Salonga
for intervention as a creditor of SSC.which it averred that they were not liable to the
contends that the mortgage contracts between complainants since there was no privity of
IEB and SSC were entered into to defraud the contract between them, adding that the
latter’s creditors. Thus, it prayed for the contracts to sell were unenforceable against
rescission of the chattel mortgaged executed them as they were entered into by Jebson
by SSC in favor of IEB. Will the action to rescind without their conformity, in violation of the
the mortgage prosper? JVA. HLURB rescinded the Contract to Sell and
held Sps. Salonga Solidarily liable with Jebson.
A: NO. Jurisprudence is clear that the following HLURB-BOC reversed the former ruling and
successive measures must be taken by a creditor instead rescinded the swapping arrangement
before he may bring an action for rescission of an and maintaining the validity of the Contract to
allegedly fraudulent contract: (1) exhaust the Sell, thereby granting specific performance
properties of the debtor through levying by instead. Is the grant of the remedy of specific
attachment and execution upon all the property of performance in Buenviaje's favor proper?
the debtor, except such as are exempt by law from
execution; (2) exercise all the rights and actions of A: Yes. As between the two remedies made
the debtor, save those personal to him (acción available to him, Buenviaje, had, in fact, chosen the
subrogatoria); and (3) seek rescission of the remedy of specific performance and therefore,
contracts executed by the debtor in fraud of their ought to be bound by the choice he had made. To
rights (acción pauliana). It is thus apparent that an add, the fundamental rule is that reliefs granted a
action to rescind, or an acción pauliana, must be of litigant are limited to those specifically prayed for
last resort, availed of only after the creditor has in the complaint. Buenviaje's alternative prayer
exhausted all the properties of the debtor not for resolution is textually consistent with that
exempt from execution or after all other legal portion of Article 1191 of the Civil Code which
remedies have been exhausted and have been states that an injured party "may also seek
proven futile (Metropolitan Bank and Trust rescission, even after he has chosen fulfillment, if
Company v. International Exchange Bank, G.R. No. the latter should become impossible."
176008, August 10, 2011). Nevertheless, the impossibility of fulfillment was
not sufficiently demonstrated in the proceedings
Q: Jebson entered into a Joint Venture conducted in this case.
Agreement (JVA) with Sps. Salonga which
obligated the former to construct ten (10) Besides, mutual restitution is the proper
residential units on the latter’s three parcels of consequence of the remedy of resolution. It cannot
land. Out of the ten (10) units, seven (7) units arise - as it is, in fact, theoretically incompatible -
1. Positive personal obligation: GR: The injured party can only choose either
a. If not purely personal – Substitute fulfillment or rescission of the obligation, and not
performance; the obligation shall be both.
executed at debtor’s cost if he fails to do it
(NCC, Art. 1167).
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CIVIL LAW
XPN: If fulfillment has become impossible, Art. of the Offsetting Agreement. Can the
1191 allows the injured party to seek rescission agreement be rescinded?
even after he has chosen fulfillment (Ayson-Simon
v. Adamos and Feria, G.R. No. L-39378, August 28, A: YES, because the provisions of the offsetting
1984). agreement are reciprocal in nature. Art. 1191 of
the Civil Code provides the remedy of rescission
Q: Pikian Mining Company (PMI) entered into (more appropriately, the term is "resolution") in
an Operating Agreement (OA) with Golden case of reciprocal obligations, where one of the
Valley Exploration, Inc. (GVEI), granting the obligors fails to comply with that is incumbent
latter "full, exclusive and irrevocable upon him (Vermen Realty Development Corp. v. CA
possession, use, occupancy, and control over and Seneca Hardware Co., Inc., G.R. No. 101762, July
the mining claims and the processing and 6, 1993).
marketing of the products for a period of 25
years.” Later, PMC extra-judicially rescinded Q: Ong and spouses Robles executed an
the OA upon GVEI’s violation of Section 5.01, "agreement of purchase and sale" of two
Article V thereof. GVEI contested PMC’s extra- parcels of land. Ong partially paid the spouses
judicial rescission of the OA averring therein by depositing sums of money with the BPI in
that its obligation to pay royalties to PMC accordance with their stipulation that Ong pay
arises only when the mining claims are placed the loan of the spouse with BPI. To answer for
in commercial production which condition has Ong’s balance, he issued 4 post-dated checks
not yet taken place. PMC no longer responded which were dishonored. Ong failed to replace
to GVEI’s letter. Is the rescission of the the checks and to pay the loan in full. Can the
Operating Agreement valid? contract entered into by Ong and the spouses
be rescinded?
A: Yes. The rescission is valid. As a general rule,
the power to rescind an obligation must be A: NO. The agreement of the parties in this case
invoked judicially and cannot be exercised solely may be set aside, but not because of a breach on
on a party’s own judgment that the other has the part of Ong for failure to complete payment of
committed a breach of the obligation. This is so the purchase price. Rather, his failure to do so
because rescission of a contract will not be brought about a situation which prevented the
permitted for a slight or casual breach, but only obligation of the spouses to convey title from
for such substantial and fundamental violations as acquiring an obligatory force.
would defeat the very object of the parties in
making the agreement. As a well-established The agreement of purchase and sale shows that it
exception, however, an injured party need not is in the nature of a contract to sell. Ong’s failure
resort to court action in order to rescind a to complete payment of the purchase price is a
contract when the contract itself provides that it non-fulfillment of the condition of full payment
may be revoked or cancelled upon violation of its which rendered the contract to sell ineffective and
terms and conditions. PMC’s unilateral rescission without force and effect. The breach contemplated
of the Operating Agreement (OA) due to GVEI’s in Art. 1191 is the obligor’s failure to comply with
non-payment of royalties considering the parties’ an obligation. In this case, Ong’s failure to pay is
express stipulation in the OA that said agreement not even a breach but merely an event which
may be cancelled on such ground. (Golden Valley prevents the vendor’s obligation to convey title
Exploration, Inc. v. Pinkian Mining Company, G.R. from acquiring binding force. (Jaime G. Ong vs. The
No. 190080, June 11, 2014) Honorable Court Of Appeals, Spouses Miguel K.
Robles And Alejandro M. Robles, G.R. No. 97347, July
Q: Vermen and Seneca entered into an 6, 1999).
"offsetting agreement", where Seneca is
obliged to deliver construction materials to Q: Petitioners and respondents entered into a
Vermen, who is obliged to pay Seneca and to Contract to Sell (subject contract) over the
deliver possession of 2 condominium units to subject land. The subject contract
Seneca upon its completion. Seneca filed a provides, inter alia, that: (a) the consideration
complaint for rescission of the offsetting for the sale is P33,155,000.00 payable as
against Vermen alleging that the latter had follows: down payment in the amount of
stopped issuing purchase orders of P11,604,250.00 inclusive of the amount of
construction materials without valid reason, P2,000,000.00 previously paid by respondents
thus resulting in the stoppage of deliveries of as earnest money/reservation fee, and the
construction materials on its part, in violation remaining balance of P21,550,750.00 payable
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CIVIL LAW
4. Exemplary; An action where the creditor files in court for the
5. Nominal; rescission of acts or contracts entered into by the
6. Temperate; debtor designed to defraud the former (NCC, Art.
7. Actual; 1177).
8. Liquidated.
NOTE: When the creditor could not collect in any
SUBSIDIARY REMEDIES manner, accion pauliana may be resorted by him
to rescind a fraudulent alienation of property
ACCION SUBROGATORIA (Regalado, v. Luchsinger and Co., 5 Phil 625, GR L-
2250, February 17, 1906).
An action whereby the creditor, whose claim has
not been fully satisfied, may go after the defendant Requisites (PAPIL)
debtor’s debtor (third person) (NCC, Art. 1177).
1. Defendant must be Indebted to plaintiff;
Accion subrogatoria is different and distinct from 2. The fraudulent act performed by the debtor
active subjective subrogation governed by Articles subsequent to the contract gives Advantage to
1300 to 1304. In the latter, there is change of another;
creditors whereas in the former there is no change 3. The creditor is Prejudiced by such act;
of creditors; the creditor merely acts in the name 4. The creditor must have Pursued all properties
and for the account of the debtor after exhausting of the debtor subject to execution; and
the assets of the latter but not enough to satisfy 5. The creditor has no other Legal remedy.
the claims of the creditor.
e.g. Alienations of property, payment of debts
Requisites (IPIN) which are not due, renunciation of rights such as
the right of usufruct or an inheritance, assignment
1. The debtor’s assets must be Insufficient to of credit, and remission of debts.
satisfy claims against him;
2. The creditor must have Pursued all properties ACCION DIRECTA
of the debtor subject to execution;
3. The right of action must Not be purely Accion directa
personal; and
4. The debtor whose right of action is exercised The right of a person to go directly against
must be Indebted to the creditor. another who is not a privy to the contract (NCC,
Articles 1652, 1608, 1729 and 1893).
Effects of subrogatory action
NOTE:
1. The creditor may exercise the subrogatory 1. Subsidiary liability of sublessee for the rent
action in behalf of the debtor not only up to (NCC, Art. 1652);
the amount of his credit but in its totality. 2. Right of sellers a retro to redeem property
from persons other than the buyer a retro
NOTE: The excess (if any) must be returned to (NCC, Art. 1608);
the debtor. 3. Subsidiary liability of owners to laborers and
material men (NCC, Art. 1729); and
2. The bringing of action does not entitle the 4. The principal may sue the substitute of the
creditor to preference. agent with respect to the obligations which
the substitute has contracted under the
3. The defendant (the debtor of the debtor) may substitution (NCC, Art. 1893).
avail himself of all defenses available against
the creditor.
KINDS OF CIVIL OBLIGATIONS
NOTE: In order to exercise action subrogatoria, a
previous approval of the court is not necessary
(Tolentino, 1991). PURE AND CONDITIONAL OBLIGATION
ACCION PAULIANA Pure obligation
Accion pauliana An obligation whose performance does not
depend upon a future or uncertain event, or upon
It has two requisites: first, futurity; and second, It will happen at May or may
uncertainty. an exact date or not happen.
As to at an indefinite
Uncertain but past event as a condition fulfillment time but is
definite to
An uncertain but past event itself can never arrive.
constitute a condition because in order to be
Futurity and Futurity and
classified as a condition, the requisites of futurity
and uncertainty are required. Neither can it Characteristic certainty. uncertainty.
constitute a term or period because in order to be
classified as a term or period, the requisites of
futurity and certainty are required. But the proof No effect upon May give rise
or ascertainment of the fact or event, as the existence of to an
The effect of its
distinguished from the fact or event itself may the obligation obligation
happening to
either constitute a condition or a term depending but only in its (suspensive)
the obligation
upon the circumstances of each case (Jurado, demandability. or the
2009). cessation of
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CIVIL LAW
one already condition unless contrary to the intention
existing of the parties (NCC, Art. 1187).
(resolutory).
2. Personal obligations – the court determines
the retroactive effect of the condition fulfilled
(NCC, Art. 1187).
Valid. But the Annulled Rights of the parties before the fulfillment of
If fulfillment is the condition
court is
dependent
empowered to
upon the sole
fix the duration 1. Creditor – May bring the appropriate actions
will of the for the preservation of his right (NCC, Art.
of the period.
debtor
1188), such as:
Requisites for the application of Art. 1189 Suspensive conditionv. Resolutory condition
(SuRF LIDS)
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CIVIL LAW
that the latter would build upon the land a school, 1182 extends only to conditions which are
the condition imposed was not a condition potestative to the obligor or debtor. Besides, the
precedent or a suspensive condition but creditor is naturally interested in the fulfillment of
resolutory. It is not correct to say that the school the condition since it is only by such fulfillment
house (or the establishment and use of a medical that the obligation arises or becomes effective
college in this case) had to be constructed before (Jurado, 2009 citing NCC, Art. 1181 and Manresa).
the donation became effective, that is, before the
donee could become the owner of the land, Causal condition
otherwise, it would be invading the property
rights of the donor. The donation had to be valid It is the performance or the fulfillment of the
before the fulfillment of the condition. If there was condition which depends upon chance and/or the
no fulfillment or compliance with the condition, will of a third person.
the donation may now be revoked and all rights
which the donee may have acquired under it shall Mixed condition
be deemed lost and extinguished (Central
Philippine University v. CA, G.R. No. 112127, July 17, It is the performance or fulfillment of the
1995). condition which depends partly upon the will of a
party to the obligation and partly upon chance
Negative resolutory condition and/or the will of a third person.
An act, which if not done, would give rise to a NOTE: Casual and mixed conditions are valid,
cause of action against the obligor. It contemplates unlike purely potestative conditions.
a situation where rights are already acquired but
subject to an obligation, the non-fulfillment of Q: Suppose that the debtor executed a
which does not affect the rights already acquired promissory note promising to pay his
but merely gives a cause of action in favor of the obligation to the creditor as soon as he has
other party. In a contract of sale, the buyer’s non- received funds derived from the sale of his
payment of the price is a negative resolutory property in a certain place, is the condition
condition. In such case, the seller has lost and potestative or mixed?
cannot recover the ownership of the property
unless he takes action to set aside the contract of A: In the case of Hermosa v. Longara (93 Phil. 971,
sale (Heirs of Atienza v. Espidol, G.R. No. 180665, G.R. L-5267, October 27, 1953), the condition is
August 11, 2010). mixed because its fulfillment depends not only
upon the will of the debtor but also upon the
Potestative Condition (1997, 2000, 2003 Bar) concurrence of other factors, such as the
acceptability of the price and other conditions of
A condition which depends upon the will of one of the sale, as well as the presence of a buyer, ready,
the contracting parties (NCC, Art. 1182). able, and willing to purchase the property.
Effects of potestative conditions upon the Impossible conditions (1997, 2007 Bar)
obligation
GR: Impossible conditions annul the obligation
If the condition is potestative in the sense that its which depends upon the parties but not of a third
fulfillment depends exclusively upon the will of person.
the debtor, and the same is suspensive, both the
condition and obligation are VOID. XPNs:
1. Pre-existing obligation;
However, if the condition is a pre-existing one or 2. Obligation is divisible;
the condition is resolutory, only the condition is 3. In simple or remuneratory donations;
void, leaving the obligation itself valid because 4. In case of conditions not to do an impossible
what is left to the sole will of the debtor is not the thing; and
existence or the fulfillment of the obligation but 5. In testamentary dispositions.
merely its extinguishment.
NOTE: In the foregoing, the obligations remain
If the condition is potestative in the sense that its valid, only the condition is void and deemed to
fulfillment depends exclusively upon the will of have not been imposed. It is applicable only to
the creditor, the obligation shall be valid. This is so obligations not to do and gratuitous obligations.
because the provision of the first sentence of Art.
Requisites of a valid period or term XPN: When it appears from the tenor of the period
or other circumstances that it was established for
1. Future; the benefit of one of the parties (NCC, Art.1196).
2. Certain; and
3. Possible, legally, and physically (Paras, 2008). Effect of the term or period
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It only relieves the contracting parties from the prestations due or to deliver a thing as a
fulfillment of their respective obligation during substitute for the principal.
the term or period.
Conjunctive obligation
Instances where the court may fix the period
(1991, 1997, 2003 Bar) An obligation where the debtor has to perform
several prestations; it is extinguished only by the
1. If the obligation does not fix a period, but performance of all of them.
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.
Alternative obligation
Facultative obligation
Culpable loss obliges the debtor to Culpable loss of any object due will give
Effect of culpable loss deliver a substitute prestation without rise to liability to the debtor.
liability to the debtor.
When substitution has been made and The creditor shall have the right of
communicated to the creditor, the indemnity for damages when, through
obligor is liable for the loss of the thing the fault of the debtor only, all things
Liability of the debtor on account of delay, negligence, or fraud. which are alternatively the object of the
obligation have been lost, or the
compliance of the obligation has
become impossible.
If the principal obligation is void, the If one prestation is void, the others that
Void prestation creditor cannot compel delivery of the are free from any vices of consent
substitute. preserve the validity of the obligation.
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Right to choose prestation in an alternative When choice the choice is rendered impossible
obligation through the creditor’s fault, the debtor may bring
an action to rescind the contract with damages
GR: The right of choice belongs to the debtor. (NCC, Art. 1203).
Other terms for joint obligations are: (a) joint XPNs: The obligation shall only be solidary when:
simply; (b) mancomunada; or (c) pro rata. (LEN-CJ)
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CIVIL LAW
Co., solidarily liable upon a marine insurance (ICTSI) a supply contract of 700 cubic meters
policy with its disclosed foreign principal? of purified water per day. Accordingly, MRII
commenced supplying water to ICTSI on
A: NO. Art. 1207 of the Civil Code clearly provides February 22, 2007, and in tum, the latter
that "there is a solidary liability only when the religiously paid MRII the corresponding
obligation expressly so states, or when the law or monthly fees. Despite the foregoing, MRII
the nature of the obligation requires solidarity." allegedly never paid Germo his rightful
The well-entrenched rule is that solidary commissions amounting to P2,225,969.56 as of
obligation cannot lightly be inferred. It must be December 2009, inclusive of interest. Initially,
positively and clearly expressed (Smith, Bell & Co., Germo filed a complaint before the National
Inc. v. CA, G.R. No. 110668, February 6, 1997). Labor Relations Commission (NLRC), but the
same was dismissed for lack of jurisdiction
Q: The labor arbiter rendered a decision, the due to the absence of employer-employee
fallo of which states the following respondents relationship between him and MRII. Germo
as liable, namely: FCMC, Sicat, Gonzales, Chiu filed the instant complaint praying that MRII
Chin Gin, Lo Kuan Chin, and INIMACO. INIMACO and Tompar be made to pay him for unpaid
questions the execution, alleging that the alias commissions with legal interest from the time
writ of execution altered and changed the they were due until fully paid, moral damages,
tenor of the decision by changing their liability exemplary damages, and the costs of suit.
from joint to solidary, by the insertion of the
words "AND/OR". Is the liability of INIMACO MRII and Tompar averred, among others,
pursuant to the decision of the labor arbiter that: (a) there was no employer-employee
solidary or not? relationship between MRII and Germo as the
latter was hired as a mere
A: INIMACO's liability is not solidary but consultant; (b) Germo failed to prove that the
merely joint. Well-entrenched is the rule that ICTSI account materialized through his efforts
solidary obligation cannot lightly be inferred. as he did not submit the required periodic
There is a solidary liability only when the reports of his negotiations with prospective
obligation expressly so states, when the law so clients; and (c) ICTSI became MRII's client
provides or when the nature of the obligation so through the efforts of a certain Ed Fornes. Are
requires. MRII and Tompar, as the CEO and President,
solidarily liable to pay Germo?
In the dispositive portion of the labor arbiter, the
word "solidary" does not appear. The said fallo A: No. It is a basic rule that a corporation is a
expressly states the following respondents therein juridical entity which is vested with legal and
as liable, namely: Filipinas Carbon Mining personality separate and distinct from those
Corporation, Sicat, Gonzales, Chiu Chin Gin, Lo acting for and in behalf of, and from the people
Kuan Chin, and INIMACO. Nor can it be inferred comprising it. As a general rule, directors, officers,
therefrom that the liability of the six respondents or employees of a corporation cannot be held
in the case below is solidary, thus their liability personally liable for the obligations incurred by
should merely be joint (INIMACO v. NLRC, G.R. No. the corporation, unless it can be shown that such
101723, May 11, 2000). director/officer/employee is guilty of negligence
or bad faith, and that the same was clearly and
Q: Mactan Rock Industries, through its convincingly proven.
President and Chief Executive Officer Tompar,
entered into a Technical Consultancy Before a director or officer of a corporation can be
Agreement (TCA) with Germo, whereby the held personally liable for corporate obligations,
parties agreed, inter alia, that: (a) Germo shall the following requisites must concur: (1) the
stand as MRII's marketing consultant who complainant must allege in the complaint that the
shall take charge of negotiating, perfecting director or officer assented to patently unlawful
sales, orders, contracts, or services of MRII, but acts of the corporation, or that the officer was
there shall be no employer-employee guilty of gross negligence or bad faith; and (2) the
relationship between them; and (b) Germo complainant must clearly and convincingly prove
shall be paid on a purely commission basis, such unlawful acts, negligence or bad faith. In this
including a monthly allowance of P5,000.00. case, Tompar's assent to patently unlawful acts of
During the effectivity of the TCA, Germo the MRII or that his acts were tainted by gross
successfully negotiated and closed with negligence or bad faith was not alleged in Germo's
International Container Terminal Services, Inc. complaint, much less proven in the course of trial.
In this case, DMI is not an indispensable party Effects of different permutations of joint
because petitioner can claim indemnity directly indivisible obligations
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CIVIL LAW
1. If there are two or more debtors, compliance 1. Since it is a reciprocal agency, the death of a
with the obligation requires the concurrence solidary creditor does not transmit the
of all the debtors, although each for his own solidarity to each of his heirs but to all of them
share. The obligation can be enforced only by taken together;
preceding against all of the debtors; 2. Each creditor represents the others in the act
2. If there are two or more creditors, the of receiving payment, and in all other acts
concurrence or collective act of all the which tend to secure the credit or make it
creditors, although each of his own share, is more advantageous. Hence, if he receives only
also necessary for the enforcement of the a partial payment, he must divide it among the
obligation; other creditors. He can interrupt the period of
3. Each credit is distinct from one another; prescription or render the debtor in default,
therefore a joint debtor cannot be required to for the benefit of all other creditors;
pay for the share of another with debtor, 3. One creditor, however, does not represent the
although he may pay if he wants to. others in such acts as novation (even if the
credit becomes more advantageous),
In case of insolvency of one of the debtors, the compensation and remission. In these cases,
others shall not be liable for his shares. To hold even if the debtor is released, the other
otherwise would destroy the joint character of the creditors can still enforce their rights against
obligation (NCC, Art. 1209). the creditor who made the novation,
compensation or remission;
Effect of breach of a joint indivisible obligation 4. The creditor and its benefits are divided
by one debtor equally among the creditors, unless there is an
agreement among them to divide differently.
If one of the joint debtors fails to comply with his Hence, once the credit is collected, an
undertaking, and the obligation can no longer be accounting and a distribution of the amount
fulfilled or performed, it will then be converted collected should follow ;
into one of indemnity for damages. Innocent joint 5. The debtor may pay to any solidary creditor,
debtor shall not contribute to the indemnity but if a judicial demand is made on him, he
beyond his corresponding share of the obligation. must pay only to the plaintiff; and
6. Each creditor may renounce his right even
SOLIDARY OBLIGATIONS against the will of the debtor, and the latter
need not thereafter pay the obligation to the
Each one of the debtors is obliged to pay the entire former.
obligation, and each one of the creditors has the
right to demand from any of the debtors the Passive solidarity
payment or fulfillment of the entire obligation.
In passive solidarity, the essence is that each
Kinds of solidary obligation debtor can be made to answer for the others, with
the right on the part of the debtor-payor to
1. Passive – Solidarity on the part of the debtors; recover from the others their respective shares. In
2. Active – Solidarity on the part of the so far as the payment is concerned, this kind of
creditors ; solidarity is similar to a mutual guaranty. Its
3. Mixed – Solidarity on both sides. effects are as follows:
JUDICIAL EFFECTS OF ACTIVE AND PASSIVE 1. Each debtor can be required to pay the entire
SOLIDARITY obligation; but after the payment, he can
(TOLENTINO, 2002) recover from the co-debtors their respective
shares;
Active solidarity 2. The debtor who is required to pay may set up
by way of compensation his own claim against
The essence of active solidarity consists in the the creditor, in this case, the effect is the same
authority of each creditor to claim and enforce the as that of payment;
rights of all, with the resulting obligation of paying 3. The total remission of a debt in favor of a
every one what belongs to him; there is no debtor releases all the debtors; but when this
merger, much less a renunciation of rights, but remission affects only the share of one debtor,
only mutual representation. It is thus essentially a the other debtors are still liable for the
mutual agency. Its juridical effects may be balance of the obligation;
summarized as follows:
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CIVIL LAW
Since the insolvent debtor's share which Joey In cases of solidary creditors, one may act for
paid was P100,000, and there are only two all
remaining debtors - namely Joey and Jojo -
these two shall share equally the burden of Each one of the solidary creditors may execute
reimbursement. Jojo may thus be compelled acts which may be useful or beneficial to the
by Joey to contribute P50,000. others, but he may not do anything which may be
prejudicial to them (NCC, Art. 1212).
Q: Iya and Betty owed Jun P500,000 for
advancing their equity in a corporation they NOTE: Prejudicial acts may still have valid legal
joined as incorporators. Iya and Betty bound effects, but the performing creditor shall be liable
themselves solidarily liable for the debt. Later, to his co-creditors (Pineda, 2000).
Iya and Jun became sweethearts so Jun
condoned the debt of P500,000. May Iya Effects of assignment of rights in a solidary
demand from Betty P250,000 as her share in obligation
the debt? Explain with legal basis? (2015 Bar)
GR: A solidary creditor cannot assign his right
A: NO. Iya may not demand the P250,000 from because it is predicated upon mutual confidence,
Betty because the entire obligation has been meaning personal qualification of each creditor
condoned by the creditor Jun. In a solidary had been taken into consideration when the
obligation, the remission of the whole obligation obligation was constituted (NCC, Art. 1213).
obtained by one of the solidary debtors does not
entitle him to reimbursement from his co-debtors. XPNs:
(NCC, Art. 1220). 1. Assignment to co-creditor; or
2. Assignment is with consent of co-creditor.
Q: Juancho, Don, and Pedro borrowed
P150,000 from their friend Cita to put up an DIVISIBLE AND INDIVISIBLE OBLIGATIONS
internet café, orally promising to pay her the
full amount after one year. Because of their Divisible obligations
lack of business know-how, their business
collapsed. Juancho and Don ended up Those which have as their object a prestation
penniless but Pedro was able to borrow money which is susceptible of partial performance with
and put up a restaurant which did well. Can the essence of the obligation being changed.
Cita demand that Pedro pay the entire
obligation since he, together with the two Indivisible obligations
others, promised to pay the full amount after
one year? Defend your answer (2015 BAR). Those which have as their object a prestation
which is not susceptible of partial performance,
A: NO. The obligation in this case is presumed to because otherwise the essence of the obligation
be joint. The concurrence of two or more creditors will be changed. The obligation is clearly
or two or more debtors in one and the same indivisible because the performance of the
obligation does not imply that each one of the contract cannot be done in parts, otherwise, the
former has the right to demand, or that each one value of what is transferred is diminished
of the latter is bound to render the entire (Nazareno v. CA, G.R. No. 138842, October 18,
compliance of the prestation (NCC, Art. 1207). In a 2000).
joint obligation, there is no mutual agency among
the joint debtors such that if one of them is Divisible v. Indivisible obligations
insolvent the others shall not be liable for his
share. DIVISIBLE INDIVISIBLE
To whom payment should be made in a Susceptibility of an Non-susceptibility to be
solidary obligation obligation to be performed partially.
performed partially. Partial performance is
GR: To any of the solidary creditors. tantamount to non-
performance.
XPN: If demand, judicial or extra-judicial, has been
made by one of the creditors, payment should be
NOTE: The divisibility of the object does not
made to him (NCC, Art. 1214).
necessarily determine the divisibility of the
When the object of the obligation involves: OBLIGATIONS WITH A PENAL CLAUSE
1.Certain number of days of work; An obligation with a penal clause is one with an
2.Accomplishment of work by metrical unit; accessory undertaking by virtue of which the
3.Analogous things which are by their nature obligor assumes a greater liability in case of
susceptible of partial performance (NCC, Art. breach of the obligations (Jurado, 2009).
1225).
Penal clause
Factors to determine whether an obligation is
divisible of indivisible A penal clause is an accessory undertaking to
asume greater liability in case of breach. It is
a) The will or intention of the parties (express or attached to an obligation in order to insure
implied); performance. The penalty is generally a sum of
b) The objective or purpose of the stipulated money. But it can also be any othe thing stipulated
prestation; by the parties, inlcuding an act or abstention.
c) The nature of the thing; and
d) The provisions of law affecting the prestation. Double functions:
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CIVIL LAW
a. Legal - it is legal when it is constituted by Effect of incorporating a penal clause in an
law. obligation
b. Conventional - it is constituted by
agreement of the parties. GR: The penalty fixed by the parties is a
compensation or substitute for damages in case of
2. As to purpose breach.
a. Compensatory - it is compensatory when
it is established for the purpose of XPNs: Damages shall still be paid even if there is a
indemnifying the damages suffered by the penal clause if:
obligee or creditor in case of breach of the
obligation. 1. There is a stipulation to the contrary;
b. Punitive - it is punitive when it is 2. The debtor refuses to pay the agreed penalty;
established for the purpose of punishing or
the obligor or debtor in case of breach of 3. The debtor is guilty of fraud in the fulfillment
the obligation. of the obligation (NCC, Art. 1126).
NOTE: The creditor need not present proof of A: Only when the non-performance is due to the
actual damages suffered by him in order that the fault or fraud of the debtor. But the creditor does
penalty may be demanded (NCC, Art. 1228). In this not have to prove that there was fault or fraud of
jurisdiction, there is no difference between a the debtor. The non-performance gives rise to the
penalty and liquidated damages, so far as the presumption of fault; and in order to avoid the
results are concerned. Whatever differences exist payment of penalty, the debtor has the burden of
between them, as a matter of language, they are proving an excuse – either that the failure of the
legally treated the same (Rabuya, 2017).
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CIVIL LAW
2. Novation of the obligation; and Kinds of payment
3. Obligation is facultative.
1. Normal - When the debtor voluntarily performs
NOTE: In an obligation to do or not to do, an act or the prestation stipulated;
forbearance cannot be substituted by another act 2. Abnormal - When he is forced by means of a
or forbearance against the obligee’s will. judicial proceeding, either to comply with the
prestation or to pay the indemnity (Tolentino,
Indivisibility 1991).
To imply that creditors accept partial payment as NOTE: The rules on payment by a third person
complete performance of their obligation, their (NCC, Article. 1236 to 1238) cannot be applied to
acceptance must be made under circumstances the case of a third person who pays the
that indicate their intention to consider the redemption price in sales with right of repurchase.
performance complete and to renounce their This is so because the vendor a retro is not a
claim arising from the defect. debtor within the meaning of the law (Jurado,
2010).
NOTE: While Art. 1248 of the Civil Code states
that creditors cannot be compelled to accept Rights of a third person who made the
partial payments, it does not prohibit them from payment
accepting such payments (Selegna Management
and Development Corp. v. UCPB, G.R. No. 165662, 1. If the payment was made with knowledge and
May 3, 2006). consent of the debtor:
a. Can recover entire amount paid (absolute
Requisites of a valid payment reimbursement); or
b. Can be subrogated to all rights of the
1. The person who pays the debt must be creditor.
the debtor;
2. The person to whom payment is made 2. If the payment was made without knowledge or
must be the creditor; against the will of the debtor – Can recover
3. The thing to be paid or to be delivered only insofar as payment has been beneficial to
must be the precise thing or the thing the debtor (right of conditional
required to be delivered by the creditor; reimbursement).
4. The manner (if expreslly agreed upon),
time, and place of payment, etc.; and NOTE: Payment made by a third person who does
5. Acceptance by the creditor. not intend to be reimbursed by the debtor is
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CIVIL LAW
2. There must be some difference between the A: YES. MBTC was a purchaser in good faith.
prestation due and that which is given in MBTC had no knowledge of the stipulation in the
substitution (aliud pro alio); and lease contract. Although the same lease was
3. There must be an agreement between the registered and duly annotated, MBTC was charged
creditor and debtor that the obligation is with constructive knowledge only of the fact of
immediately extinguished by reason of the lease of the land and not of the specific provision
performance of a prestation different from stipulating transfer of ownership of the building to
that due (Caltex Philippines, Inc. v. IAC, G.R. No. the Jaymes upon termination of the lease. While
72703, November 13, 1992). the alienation was in violation of the stipulation in
the lease contract between the Jaymes and
Q: Lopez obtained a loan in the amount of Asiancars, MBTC’s own rights could not be
P20,000.00 from the Prudential Bank. He prejudiced by Asiancars’ actions unknown to
executed a surety bond in which he, as MBTC. Thus, the transfer of the building in favor of
principal, and PHILAMGEN as surety, bound MBTC was valid and binding (Jayme v. CA, G.R. No.
themselves jointly and severally for the 128669, October 4, 2002).
payment of the sum. He also executed a deed of
assignment of 4,000 shares of the Baguio Assignment of credit
Military Institution in favor of PHILAMGEN. Is
the stock assignment made by Lopez dation in An agreement by virtue of which the owner of a
payment or pledge? credit, known as the assignor, by a legal cause,
such as sale, dation in payment, exchange or
A: The stock assignment constitutes a pledge and donation, and without the consent of the debtor,
not a dacion en pago. Dation in payment is the transfers his credit and accessory rights to
delivery and transmission of ownership of a thing another, known as the assignee. The assignee
by the debtor to the creditor as an accepted acquires the power to enforce it to the same
equivalent of the performance of the obligation. extent as the assignor could enforce it against the
Lopez’s loan has not yet matured when he debtor. It may be in the form of a sale, but at times
"alienated" his 4,000 shares of stock to Philamgen. it may constitute a dation in payment, such as
Lopez's obligation would arise only when he when a debtor, in order to obtain a release from
would default in the payment of the principal his debt, assigns to his creditor a credit he has
obligation which is the loan and Philamgen had to against a third person. As a dation in payment, the
pay for it. Since it is contrary to the nature and assignment of credit operates as a mode of
concept of dation in payment, the same could not extinguishing the obligation; the delivery and
have been constituted when the stock assignment transmission of ownership of a thing (in this case,
was executed. In case of doubt as to whether a the credit due from a third person) by the debtor
transaction is a pledge or a dation in payment, the to the creditor is accepted as the equivalent of the
presumption is in favor of pledge, the latter being performance of the obligation.
the lesser transmission of rights and interests
(Lopez v. CA, G.R. No. L-33157, June 29, 1982). FORM OF PAYMENT
Q: Cebu Asiancars Inc., with the conformity of 1. Payment in cash – all monetary obligations
the lessor, used the leased premises as a shall be settled in Philippine currency.
collateral to secure payment of a loan which However, the parties may agree that the
Asiancars may obtain from any bank, provided obligation be settled in another currency at
that the proceeds of the loan shall be used the time of payment (R.A. 8183, Sec. 1).
solely for the construction of a building which,
upon the termination of the lease or the 2. Payment in check or other negotiable
voluntary surrender of the leased premises instrument – not considered payment, they
before the expiration of the contract, shall are not considered legal tender and may be
automatically become the property of the refused by the creditor except when:
lessor. Meeting financial difficulties and a. the document has been encashed; or
incurring an outstanding balance on the loan, b. it has been impaired through the fault of
Asiancars conveyed ownership of the building the creditor (NCC, Art. 1249).
on the leased premises to MBTC, by way of
"dacion en pago."Is the dacion en pago by PAYMENT IN CASH
Asiancars in favor of MBTC valid? (2008 Bar)
Legal tender
The legal tender covers all notes and coins issued A: (1) Only when it is cashed, or (2) when through
by the Bangko Sentral ng Pilipinas and guaranteed the fault of the creditor, they have been impaired
by the Republic of the Philippines. The amount of [NCC, Art. 1249 (2)].
coins that may be accepted as legal tender are:
A check does not constitute a legal tender, thus a
1. One-Peso, Five-Pesos, 10-Pesos coins in creditor may validly refuse it. However, this does
amount not exceeding P1,000.00 not prevent a creditor from accepting a check as
2. 25 centavos or less – in amount not exceeding payment – the creditor has the option and the
P100. 00 (BSP Circular No. 537, Series of 2006, discretion of refusing or accepting it (Far East
July 18, 2006). Bank & Trust Company v. Diaz Realty, Inc., G.R. No.
138588, August 23, 2001).
Q: Northwest Airlines, through its Japan
Branch, entered into an International NOTE: While it is true that the delivery of a check
Passenger Sales Agency Agreement with CF produces the effect of payment only when it is
Sharp, authorizing the latter to sell its air cashed, pursuant to Art. 1249 of the CC, the rule is
transport tickets. CF Sharp failed to remit the otherwise if the debtor is prejudiced by the
proceeds of the ticket sales, thus, Northwest creditor's unreasonable delay in presentment.
Airlines filed a collection suit before the Tokyo The payee of a check would be a creditor under
District Court which rendered judgment this provision and if its non-payment is caused by
ordering CF Sharp to pay 83,158,195 Yen and his negligence, payment will be deemed effected
damages for the delay at the rate of 6% per and the obligation for which the check was given
annum. Unable to execute the decision in as conditional payment will be discharged (Papa v.
Japan, Northwest Airlines filed a case to Valencia & Co., Inc., G.R. No. 105188, January 23,
enforce said foreign judgment with the RTC of 1998).
Manila. What is the rate of exchange that
should be applied for the payment of the Q: Diaz & Company obtained a loan from
amount? Pacific Banking Corp which was secured by a
real estate mortgage. ABC rented an office
A: The repeal of R.A.529 by R.A. 8183 has the space in the building constructed on the
effect of removing the prohibition on the properties covered by the mortgage contract.
stipulation of currency other than Philippine The parties then agreed that the monthly
currency, such that obligations or transactions rentals shall be paid directly to the mortgagee
may now be paid in the currency agreed upon by for the lessor's account. Thereafter, FEBTC
the parties. Just like R.A. 529, however, the new purchased the credit of Diaz & Company in
law does not provide for the applicable rate of favor of PaBC, but it was only after two years
exchange for the conversion of foreign currency- that Diaz was informed about it. Diaz asked the
incurred obligations in their peso equivalent. It FEBTC to make an accounting of the monthly
follows, therefore, that the jurisprudence rental payments made by Allied Bank. Diaz
established in R.A. 529 regarding the rate of tendered to FEBTC the amount of P1, 450, 000.
conversion remains applicable. Thus, in Asia 00 through an Interbank check, in order to
World Recruitment, Inc. v. National Labor Relations prevent the imposition of additional interests,
Commission(GR 113363, August 24, 1999), the SC, penalties and surcharges on its loan but FEBTC
applying RA 8183, sustained the ruling of the did not accept it as payment, instead, Diaz was
NLRC that obligations in foreign currency may be asked to deposit the amount with the FEBTC’s
discharged in Philippine currency based on the Davao City Branch Office. Was there a valid
prevailing rate at the time of payment. It is just and tender of payment?
fair to preserve the real value of the foreign
exchange-incurred obligation to the date of its A: YES. True, jurisprudence holds that, in general,
payment (C.F. Sharp & Cp., Inc. v. Northwest a check does not constitute legal tender, and that a
Airlines, Inc., G.R. No. 133498, April 18, 2002). creditor may validly refuse it. It must be
emphasized, however, that this dictum does not
PAYMENT BY NEGOTIABLE INSTRUMENT prevent a creditor from accepting a check as
(2008 BAR) payment. In other words, the creditor has the
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CIVIL LAW
option and the discretion of refusing or accepting it XPN: If there is no express designation or
(FEBTC v. Diaz Realty Inc., G.R. No. 138588, August stipulation in the obligation:
23, 2001).
1. At the place where the thing might be at the
Burden of proving payment in an action for time the obligation was constituted – If the
sum of money obligation is to deliver a determinate thing;
2. At the domicile of the debtor – In any other case
The party who pleads payment as a defense has (NCC, Art. 1251).
the burden of proving that such payment has, in
fact, been made. NOTE: Governs only unilateral obligations since
reciprocal obligations are governed by special
EXTRAORDINARY INFLATION OR DEFLATION rules (Jurado, 2010).
(2001 Bar)
Moreover, if the debtor changes his domicile in
Extraordinary inflation bad faith or after he has incurred in delay, the
additional expenses shall be borne by him.
Exists when there is a decrease or increase in the
purchasing power of the Philippine currency The foregoing are without prejudice, however, to
which is unusual or beyond the common the venue under the Rules of Court.
fluctuation in the value of said currency and such
decrease or increase could not have been APPLICATION OF PAYMENTS
reasonably foreseen or was manifestly beyond the
contemplation of the parties at the time of the It is the designation of the debt to which the
establishment of the obligation (Tolentino, 2002). payment must be applied when the debtor has
several obligations of the same kind in favor of the
In case an extraordinary inflation or deflation of same creditor (NCC, Art. 1252).
the currency stipulated should supervene, the
value of the currency at the time of the Requisites:
establishment of the obligation shall be the basis
of payment, unless there is an agreement to the 1. There is only one debtor and creditor;
contrary (NCC, Art. 1250). 2. The debtor owes the creditor two or more
debts;
When the currency is devaluated in terms beyond 3. Debts are of the same kind or identical
what could have been reasonably forseen by the nature;
parties, the doctrine of unforseen risks can be e.g. both debts are money obligations
applied, and the effects of the devaluation should obtained on different dates;
not be borne by the creditor alone. The 4. All debts are due and demandable, except:
revaluation of the credit in such cases must be a. When there is mutual agreement
made according to the principles of good faith and between the parties (Tolentino,
in view of the circumstances of each particular 2002);
case, recognizing the real value of the credit as in b. The application is made by the
consonance with the intent of the parties. party for whose benefit the term
has been constituted [NCC, Art.
NOTE: Requisites for application of Art. 1250, NCC 1252(1]).
(Rabuya, 2017).
5. The payment made is not sufficient to
1. That there was an official declaration of extra- cover all obligations. Right of the debtor
ordinary inflation or deflation from the BSP; in the application of payments.
2. That the obligation was contractual in nature;
and GR: The law grants the debtor a preferential right
3. That the parties expressly agreed to consider to choose the debt to which his payment is to be
the effects of the extraordinary inflation or applied. But the right of the debtor is not absolute;
deflation. he cannot impair the rights granted by law to the
creditor (Tolentino, 2002).
PLACE OF PAYMENT
XPN: Debtor’s failure to ascertain which debt his
GR: Payment must be made in the place payment is to be applied. – The right of the debtor
designated in the obligation (NCC, Art. 1251). to choose to which debt his payment will be
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CIVIL LAW
Not necessarily in state Debtor must be partially Tender of payment is a preparatory act which
of financial difficulty. or relatively insolvent. precedes consignation. The tender of payment by
itself does not cause the extinguishment of the
obligation unless completed by consignation.
Object (Tolentino, 1991).
Thing delivered is Universality or property
considered as equivalent of debtor is what is Consignation
of performance. ceded.
Act of depositing the object of the obligation with
the court or competent authority after the creditor
Extent of the extinguishment
has unjustifiably refused to accept the same or is
Payment extinguishes Merely releases debtor not in a position to accept it due to certain reasons
obligation to the extent of for net proceeds of or circumstances (Pineda, 2000).
the value of the thing things ceded or assigned,
delivered as agreed upon, unless there is contrary NOTE: Once the consignation has been duly made,
proved or implied from intention. the debtor may ask the judge to order the
the conduct of the cancellation of the obligation (NCC, Art. 1260).
creditor.
Requisites of consignation
Ownership
1. There was a debt due ;
Ownership is transferred Ownership is not 2. The consignation of due obligation was made
to CR upon delivery. transferred. because of some legal cause provided under
NCC, Art. 1256;
Novation 3. The previous notice of the consignation had
been given to the person interested in the
An act of novation. Not an act of novation. performance of the obligation;
4. The amount or thing due was placed at the
Presumption of insolvency disposal of the court; and
5. That after the consignation had been made
Does not presuppose Presupposes insolvency. the persons interested were notified thereof.
insolvency.
TENDER OF PAYMENT AND CONSIGNATION NOTE: Requirement No. 5 may be complied
Tender of payment with by the service of summons upon the
defendant creditor together with a copy of teh
The definitive act of offering to the creditor what complaint.
is due to him together with the demand that the
creditor accepts the same (FEBTC v. Diaz Realty After this notice, the creditor may:
Inc., G.R. No. 138588, August 23, 2001). (a) Accept the thing or amount deposited, in
which case the matter of the payment is
Tender of payment is the manifestation by debtors terminated;
of their desire to comply with or to pay their (b) Refuse to accept the thing or amount, in
obligation (Sps. Benos v. Sps. Lawilao, G.R. No. which case a trial must be held to determine
172259, December 5, 2006). the validity of consignation.
NOTE: If the creditor refuses the tender of The creditor may neither accept nor refuse in
payment without just cause, the debtors are which case the debtor may ask the court to
discharged from the obligation by the cancel the obligation after showing that the
consignation of the sum due (Sps. Benos v. Sps. requisites of consignation have been complied
Lawilao, G.R. No. 172259, December 5, 2006). with (NCC, Art. 1260).
There must be a fusion of intent, ability, and NOTE: Tender of payment must be valid and
capability to make good such offer, which must be unconditional (Sps. Rayos v. Reyes, G.R. No.
absolute and must cover the amount due (FEBTC 150913, February 20, 2003).
v. Diaz RealtyInc., G.R. No. 138588, August 23,
2001). Substantial compliance is not enough. The
giving of notice to the persons interested in
the performance of the obligation is
Consignation is necessarily judicial. Art. 1258 NOTE: The expenses of consignation, when
of the CC specifically provides that properly made, shall be charged against the
consignation shall be made by depositing the creditor (NCC, Art. 1259).
thing or things due at the disposal of judicial
authority. The said provision clearly Right of the debtor to withdraw the thing
precludes consignation in venues other than deposited
the courts (Sps. Oscar and Thelma Cacayorin v.
Armed Forces and Police Mutual Benefit Before the creditor has accepted the consignation,
Association, Inc., G.R. No. 171298, April 15, or before a judicial declaration that the
2013). consignation has been properly made, the debtor
may withdraw the thing or the sum deposited,
Consignation and tender of payment must not allowing the obligation to remain in force (NCC,
be encumbered by conditions (Sps. Rayos v. Art.1260).
Reyes, G.R. No. 150913, February 20, 2003).
NOTE: If, the consignation having been made, the
Q: Dorotea leased portions of her 2,000 sq. m. creditor should authorize the debtor to withdraw
lot to Monet, Kathy, Celia and Ruth for five (5) the same, he shall lose every preference which he
years. Two (2) years before the expiration of may have over the thing. The co-debtors,
the lease contract, Dorotea sold the property guarantors and sureties shall be released (NCC,
to PM Realty and Development Corp. The Art. 1261).
following month, Dorotea and PM Realty
stopped accepting rental payments from all Tender of Payment v. Consignation
the lessees because they wanted to terminate
the lease contracts. Due to the refusal to accept TENDER OF PAYMENT CONSIGNATION
rental payments, the lessees, Ruth, et al., filed a
complaint for consignation of the rentals Nature
before the RTC of Manila without notifying
Dorotea. Is the consignation valid? (2014 Bar) Antecedent of Principal or
consignation or consummating act for
A: NO. Art. 1257 of the Civil Code provides that in preliminary act to the extinguishment of
order that the consignation of the thing due may consignation. the obligation.
release the obligor, it must first be announced to
Effect
the persons interested in the fulfillment of the
obligation. Moreover, Art. 1258 of the same code It does not by itself It extinguishes the
provides that consignation having been made, the extinguish the obligation when
interested parties shall also be notified thereof. In obligation. declared valid.
this case Dorotea, an interested party, was not
notified of the consignation. The consignation is Character
therefore not valid for non-compliance with NCC,
Art. 1257. Extrajudicial. Judicial for it requires
the filing of a complaint
Effectivity of consignation as payment in court (Pineda, 2000).
GR: Consignation shall produce effects of payment Q: In an ejectment case, X refused to vacate the
only if there is a valid tender of payment. land alleging that Y had sold to him the
additional area, the payment of which would
XPNs: It shall, however, not produce the same be effected five years after the execution of a
effect in the following cases. When: (ARTIT) formal deed of sale. However, the parties failed
1. Creditor is Absent or unknown, or doesn’t to execute a deed of sale. During the pendency
appear at place of payment; of the action, X deposited the payment for the
2. Creditor Refuses to issue a receipt without additional area with the court. Is there a valid
just cause; consignation?
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CIVIL LAW
A: NO. Under Art. 1257 of the CC, consignation is When a thing is considered lost (DOPE)
proper only in cases where an existing obligation
is due. In this case, the contracting parties agreed 1. It Disappears in such a way that its existence
that full payment of purchase price shall be due is unknown;
and payable within five years from the execution 2. It goes Out of commerce;
of a formal deed of sale. At the time Rodriguez 3. It Perishes; or
deposited the amount in court, no formal deed of 4. Its Existence is unknown or if known, it
sale had yet been executed by the parties, and, cannot be recovered.
therefore, the five-year period during which the
purchase price should be paid had not Effect of loss of the thing/object of the
commenced. In short, the purchase price was not obligation
yet due and payable (Heirs of San Andres v.
Rodriguez, G.R. No. 135634, May 31, 2000). If the obligation is a:
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CIVIL LAW
A: NO. The payment of lease rentals does not Requisites of condonation (GAIDE)
involve a prestation “to do” envisaged in Articles
1266 and 1267. Art. 1267 speaks of a prestation 1. Must be Gratuitous;
involving service which has been rendered 2. Acceptance by the debtor;
difficult by unforeseen subsequent events as to be 3. Must not be Inofficious;
manifestly beyond the contemplation of the 4. Formalities provided by law on Donations
parties. Additionally, the Asian Currency Crisis must be complied with if condonation is
befell from July 1997 and for some time express; and
thereafter, but Comglasco cannot be permitted to 5. An Existing demandable debt at the time the
blame its difficulties on the said regional economic remission is made.
phenomenon because it entered into the subject
lease only on August 2000, more than three years NOTE: Remission or condonation of a debt is in
after it began, and by then Comglasco had known reality a donation (Jurado, 2010).
what business risks it assumed when it opened a
new shop in Iloilo City (Comglasco Corp. v. Santos Form of express remission
Car Check Center Corp., G.R. No. 202989, March 25,
2015). It must comply with the forms of donation (NCC,
Art. 1270).
Debt which proceeds from a criminal offense
Form of implied remission
GR: Debtor shall not be exempted from the
payment of his obligation regardless of the cause The Code is silent with respect to the form of
of the loss. implied remission. There must be acceptance by
the obligor or debtor (Jurado, 2010).
XPN: The thing having been offered by debtor to
the person who should receive it, the latter Manner and kinds of remission:
refused without justification to accept it (NCC, Art.
1268). 1. Total – Refers to the remission of the whole of
the obligation;
NOTE: Offer referred in Art. 1268 is different from 2. Partial – Remission of the part of the
consignation; the former refers to extinguishment obligation: to the amount of indebtedness or
of obligation through loss while the latter refers to to an accessory obligation only (such as
the payment of the obligation. pledge or interest), or to some other aspect of
the obligation (such as solidary);
Creditor’s right of action 3. Inter vivos - Effective during the lifetime of the
creditor;
The obligation, having been extinguished by 4. Mortis causa - Effective upon death of the
the loss of the thing, the creditor shall have all the creditor. In this case, the remission must be
rights of action which the debtor may have against contained in a will or testament (Tolentino,
third persons by reason of the loss (NCC, Art. 1991);
1269). 5. Express – When it is made formally, it should
be in accordance with the forms of ordinary
This refers not only the rights and actions which donations with regard to acceptance, amount,
the debtor may have against third persons, but and revocation; and
also to any indemnity which the debtor may have 6. Implied – When it can be inferred from the
already received. acts of the parties
1. The document evidencing the credit must have CONFUSION OR MERGER OF RIGHTS
been delivered by the creditor to the debtor;
2. The document must be a private document;
and
There is a confusion when there is a meeting in
3. The delivery must be voluntary (NCC, Art. one person of the qualities of a creditor and
1271). debtor of the same obligation (4 Sanchez Roman
421).
NOTE: If the document is public, the
presumption does not arise considering the fact Requisites of confusion or merger of rights
that the public character of the document would
always protect the interest of the creditor 1. It must take place between the creditor and
(Jurado, 2010). the principal debtor (NCC, Art. 1276);
2. The very same obligation must be involved
Effect of remission in general
(for if the debtor acquires rights from the
creditor, but not the particular obligation in
It extinguishes the obligation in its entirety or in question, there will be no merger);
the part or aspect thereof to which the remission
3. The confusion must be total or as regards
refers (Jurado, 2010). with the entire obligation.
Effect of the remission of the principal debt Effect of confusion or merger of rights
with respect to the accessory obligation and
vice versa The creditor and debtor becomes the same person
involving the same obligation. Hence, the
The renunciation of the principal debt shall obligation is extinguished (NCC, Art. 1275).
extinguish the accessory but the waiver of the
latter shall leave the former in force (NCC, Art. There can be partial confusion
1273).
It will be definite and complete up to the extent of
NOTE: It is presumed that the accessory
the concurrent amount or value, but the
obligation of pledge has been remitted when the
remaining obligation subsists (Pineda, 2000).
thing pledged, after its delivery to the creditor, is
found in the possession of the debtor, or of a third
Effect of confusion or merger in relation to the
person who owns the thing (NCC, Art. 1274). guarantors
Effect of inofficious condonation
1. Merger which takes place in the person of the
principal debtor or principal creditor benefits
It may be totally revoked or reduced depending on
the guarantors. The contract of guaranty is
whether or not it is totally or only partly extinguished;
inofficious (Pineda, 2000).
2. Confusion which takes place in the person of
any of the guarantors does not extinguish the
The obligation remitted is considered inofficious if
obligation (NCC, Art. 1276).
it impairs the legitime of the compulsory heirs
(NCC, Art. 752).
Effect of confusion or merger in one debtor or
creditor in a joint obligation
Acceptance by the debtor
GR: Joint obligation is not extinguished since
The acceptance by the debtor is required. There
confusion is not definite and complete with regard
can be no unilateral condonation. This is because to the entire obligation. A part of the obligation
condonation or remission is an act of liberality. It still remains outstanding.
is a donation of an existing credit, considered a
property right, in favor of the debtor, it is required XPN: Obligation is extinguished with respect only
that the debtor gives his consent thereto by
to the share corresponding to the debtor or
making an acceptance. If there is no acceptance, creditor concerned. In effect, there is only partial
there is no condonation (Pineda, 2009).
extinguishment of the entire obligation (NCC, Art.
1277; Pineda, 2000).
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CIVIL LAW
Effect of confusion or merger in one debtor or communicated in due time to the debtor
creditor in a solidary obligation (neither debt is garnished) (NCC, Art. 1279);
and
If a solidary debtor had paid the entire obligation, 6. Compensation must not be prohibited by law.
the obligation is totally extinguished without (NCC, Art. 1290).
prejudice to the rights of the solidary debtor who
paid, to proceed against his solidary co-debtors NOTE: When all the requisites mentioned in Art.
for the latter’s individual contribution or liability 1279 of the CC are present, compensation takes
(NCC, Art. 1215). effect by operation of law, and extinguishes both
debts to the concurrent amount, even though the
Revocation of confusion or merger of rights creditors and debtors are not aware of the
compensation (NCC, Art. 1290).
If the act which created the confusion is revoked
for some causes such as rescission of contracts or Effects of compensation:
nullity of the will or contract, the confusion or
merger is also revoked. The subject obligation is 1. Both debts are extinguished;
revived in the same condition as it was before the 2. Interests stop accruing on the extinguished
confusion. obligation or the part extinguished;
3. The period of prescription stops with respect
NOTE: During such interregnum, the running of to the obligation or part extinguished; and
the period of prescription of the obligation is 4. All accessory obligations of the principal
suspended. (Pineda, 2000) obligation which has been extinguished are
alsoextinguished (4 Salvat 353).
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CIVIL LAW
Capacity of Debtor must Need not to be pleaded; It must be pleaded to be
parties not have takes place by effectual.
necessary capacity to operation of law and
Reason: dispose of extinguishes
As to the
Compensation the thing reciprocally the two
necessity of the
operates by law, paid; debts as soon as they
capacity of the
not by the act of creditor exist simultaneously, to
parties
the parties. must have the amount of their
capacity to respective sums.
receive
payment. Generally, both debts Does not require that
must be liquidated. debts are liquidated.
There can be The
partial performanc Legal or conventional Judicial compensation
As the extinguishment e must be compensation governed provided that the
susceptibility of the obligation. complete by the Civil Code. requirements of Rules
of partial and of Court, particularly on
extinguishmen indivisible Counterclaims and/or
t unless Cross-claims are
waived by observed.
the creditor.
Debts or obligations not subject to
Legal Takes effect compensation
compensation by the act of
As to the
takes place by the parties 1. Debts or obligations arising from contracts of
operation of
operation of law and involves depositum (NCC, Art. 1287);
extinguishing
without delivery or 2. Debts arising from obligations of a depositary;
the obligation
simultaneous action. 3. Debts arising from obligations of a bailee in
delivery. commodatum;
Parties must be It is not 4. Claims for support due by gratuitous title;
mutually debtors necessary 5. Obligations arising from criminal offenses
and creditors of that the (NCC, Art. 1288); and
As to the 6. Certain obligations in favor of government.
each other. parties be
relationship of
mutually
the parties e.g. Taxes, fees, duties, and others of a similar
debtors and
creditors of nature.
each other.
There can be no off-setting of taxes against the
claims that the taxpayer may have against the
Compensation v. Confusion government. A person cannot refuse to pay a tax
on the ground that the government owes him an
COMPENSATION CONFUSION amount equal to or greater than the tax being
(NCC, Articles. 1278- (NCC, Articles. 1275- collected. Internal revenue taxes cannot be the
1279) 1277) subject of compensation because government and
taxpayer are not mutually creditors and debtors of
Two persons who are One person where each other. Taxes are not in the nature of
mutual debtors and qualities of debtor and contracts between parties (Francia v. IAC, G.R. No.
creditors of each other. creditor are merged. L-67649, June 28, 1988).
At least two obligations. One obligation.
NOTE: Compensation takes place by operation of
law, even though the debts may be payable at
Compensation v. Counterclaim or Set-off different places, but there shall be an indemnity
for expenses of exchange or transportation to the
COUNTERCLAIM / place of payment (NCC, Art. 1286).
COMPENSATION
SET-OFF
Q: When is compensation not proper?
373
CIVIL LAW
One of the parties has a choice of claiming or amount of the loan, it amounted to a new
opposing the compensation but waives his contract or novation, and had the effect of
objection thereto such as an obligation of such extinguishing the security since he did not give
party is with a period for his benefit alone and he his consent (as owner of the property under
renounces the period to make the obligation the real estate mortgage) thereto.
become due.
a. Can XYZ Bank validly assert legal
Facultative compensation is unilateral and does compensation?
not require mutual agreement; voluntary or b. Can Ricardo’s property be foreclosed to
conventional compensation requires mutual pay the full balance of the loan?
consent. c. Does Ricardo have basis under the Civil
Code for claiming that the original
e.g. X owes Y P100,000 demandable and due on contract was novated? (2008 Bar)
April 1, 2012. Y owes X P100, 000 demandable A:
and due on or before April 15, 2012. Y, who was a. NO. XYZ Bank may validly assert the partial
given the benefit of the term, may claim compensation of both debts, but it should be
compensation on April 1, 2012. On the other hand, facultative compensation because not all of
X, who demands compensation, can be properly the five requisites of legal compensation are
opposed by Y because Y could not be made to pay present (NCC, Art. 1279). The payment of the
until April 15, 2012. rentals by XYZ Bank is not yet due, but the
principal obligation of loan where both
NOTE: Compensation can be renounced either at Eduardo and Ricardo are bound solidarily and
the time an obligation is contracted or afterwards therefore any of them is bound principally to
(Tolentino, 1991). It can be renounced expressly or pay the entire loan, is due and demandable
impliedly. without need of demand. XYZ Bank may
declare its obligation to pay rentals as already
Examples of implied renunciation: due and demand payment from any of the two
debtors.
1. By not setting it up in the litigation;
2. By consenting to the assignment of credit b. NO, because there was no prior demand on
under NCC,Art. 1285; or Ricardo, depriving him of the right to
3. By paying debt voluntarily, with knowledge reasonably block the foreclosure by payment.
that it has been extinguished by compensation The waiver of prior demand in the PN is
(Tolentino, 1991). against public policy and violates the right to
due process. Without demand, there is no
Q: Eduardo was granted a loan by XYZ Bank for default and the foreclosure is null and void.
the purpose of improving a building which XYZ Since the mortgage, insofar as Ricardo is
leased from him. Eduardo executed the concerned is not violated, a requirement
promissory note in favor of the bank, with his under Act 3135 for a valid foreclosure of real
friend Ricardo as cosignatory. In the PN, they estate mortgage is absent.
both acknowledged that they are “individually
and collectively” liable and waived the need In the case of DBP v. Licuanan (, February 26,
for prior demand. To secure the PN, Ricardo 2007), it was held that: “the issue of whether
executed a real estate mortgage on his own demand was made before the foreclosure was
property. When Eduardo defaulted on the PN, effected is essential. If demand was made and
XYZ stopped payment of rentals on the duly received by the respondents and the
building on the ground that legal latter still did not pay, then they were already
compensation had set in. Since there was still a in default and foreclosure was proper.
balance due on the PN after applying the However, if demand was not made, then the
rentals, XYZ foreclosed the real estate loans had not yet become due and
mortgage over Ricardo’s property. Ricardo demandable. This meant that the respondents
opposed the foreclosure on the ground that he had not defaulted in their payment and the
is only a co-signatory; that no demand was foreclosure was premature.”
made upon him for payment, and assuming he c. NO. Since none of the three kinds of novation
is liable, his liability should not go beyond half is applicable. There is no objective novation,
of the balance of the loan. Further, Ricardo whether express or implied, because there is
said that when the bank invoked no change in the object or principal conditions
compensation between the rentals and the of the obligation. There is no substitution of
375
CIVIL LAW
4. Substantial difference of the old and new 1. As to essence
obligation – on every point incompatible with a. Objective or real novation – Changing the
each other (implied novation); and object or principal conditions of the
5. Valid New obligation. obligation (NCC, Art. 1291).
NOTE: If the new obligation is void, the NOTE: In payment of sum of money, the
original one shall subsist as there is no first obligation is not novated by a second
novation. However, even if the new obligation obligation that:
turns out to be void, the original obligation (1) Expressly recognizes the first
does not subsist if the parties clearly intended obligation;
that the former relation should be (2) Changes only the terms of payment;
extinguished in any event (NCC, Art. 1297). (3) Adds other obligation not
incompatible with the old ones; or
Presumption of novation (4) Merely supplements the first one.
The test of incompatibility between the old and NOTE: If it is the creditor who initiated
the new obligations is to determine whether or the change of debtor, it is considered
not both of them can stand together, each having expromission
its own independence. If they can stand together,
there is no incompatibility; consequently, there is ii. Subrogating a third person to the
no novation. If they cannot stand together, there is rights of the creditor (active
incompatibility; consequently, there is novation novation)
(Borja v. Mariano, G.R. No. L-44041,
October 28, 1938). c. Mixed – Combination of the objective and
subjective novation.
NOTE: Novation is never presumed and the
animus novandi (intent to make a new obligation) 3. As to form of their constitution
whether totally or partially, must appear by a. Express – The parties declared in
express agreement of the parties or by their acts unequivocal terms that the obligation is
that are too clear and unequivocal to be mistaken. extinguished by the new obligation.
b. Implied – No express declaration that the
Two-fold functions of novation old obligation is extinguished by the new
one. The old and new obligation is
1. It extinguishes the old obligation; and incompatible on every material point
2. Creates a new obligation in lieu of the old one. (NCC, Art. 1292).
1. With the debtor’s consent – Right of Insolvency of the new debtor in expromission
reimbursement and subrogation.
If substitution is without the knowledge or against
2. Without the consent of the old debtor or the will of the debtor, the new debtor’s insolvency
against his will – Right to beneficial or non-fulfillment of the obligation shall not give
reimbursement. rise to any liability on the part of the original
debtor. (NCC, Art. 1294).
Novation by substitution of debtor
NOTE: If the old debtor gave his consent and the
The consent of the creditor is mandatory both in new debtor could not fulfill the obligation, the old
delegacion and expromission (NCC, Art. 1293). It debtor should be liable for the payment of his
may be express or implied from his acts but not original obligation.
from his mere acceptance of payment by a third
party, for there is no true transfer of debt. SUMMARY
NOTE: Creditor’s consent or acceptance of the
substitution of the old debtor by a new one may EXPROMISSIO
be given at anytime and in any form while the DELEGACION
N
agreement of the debtor subsists (Asia Banking
Corp. v. Elser, G.R. No. L-30266, March 25, 1929).
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CIVIL LAW
Person who the new debtor – the new
initiated the Old debtor Third person was already debtor’s
substitution existing and insolvency or
known to the non-fulfillment
It may be express or implied original debtor of the
Consent of the from his acts but not from his at the time of obligation shall
creditor mere acceptance of payment by a the delegation not give rise to
third party. of the debt to any liability on
the new the part of the
With the With or without
debtor. original debtor.
consent of the the knowledge
Consent of the old debtor of the debtor or
old debtor (since he against the will Q: Metro Corporation obtained a loan from
initiated the of the old Allied Bank covered by promissory notes,
substitution). debtor. letters of credit, and trust receipts. By way of
security, Metro’s officers individually executed
Consent is a continuing guaranty in favor of Allied Bank.
needed but it Metro’s officers failed to settle their
Consent of need not be Consent is obligations prompting Allied Bank to demand
third person given needed. for payment to no avail. In order to settle their
simultaneously debts, they offered the sale of Metro’s
. remaining assets (machines and equipment) to
the Bank which the latter refused. Meanwhile,
Intention of Released from the obligation
Starpeak Corporation, acting through Allied
substitution with the consent of the creditor.
Bank’s counsel, entered into an agreement
With the with Metro to buy the machines that were
debtor’s consent reduced to mere scraps of metals. Starpeak,
– right of unfortunately, reneged on its obligation to
reimbursement Metro. In this regard, Metro asseverates that
With the their failure to pay their outstanding loan
and
debtor’s obligations to Allied Bank must be considered
subrogation.
consent – right as force majeure, and since Allied Bank was the
Rights of the
of party, through their counsel, that accepted the
new debtor Without the
reimbursement terms and conditions of payment proposed by
consent of the
and Starpeak, petitioners must therefore be
old debtor or
subrogation. deemed to have settled their obligations to
against his will
– right to Allied Bank.
beneficial
reimbursement. Were the loan obligations under the
promissory notes, letters of credit, and trust
Shall not revive With the receipts have already been extinguished?
the action of debtor’s consent
the latter - If the old A: No. Article 1231 of the New Civil Code states
against the debtor gave his that obligations are extinguished either by
original consent and the payment or performance, the loss of the thing due,
obligor. new debtor the condonation or remission of the debt, the
Insolvency or could not fulfill confusion or merger of the rights of creditor and
nonfulfillmen Original debtor the obligation, debtor, compensation or novation.
t of the shall be held the old debtor
obligation of liable: should be liable Starpeak and Metro’s agreement is a sale of assets
the new 1. Insolvency for the payment contract, while Metro’s obligations to Allied Bank
debtor was already of his original arose from various loan transactions. Absent any
existing and obligation. showing that the terms and conditions of the
of public latter transactions have been, in any way,
knowledge, Without the modified or novated by the terms and conditions
or known to consent of the in the Starpeak-Metro agreement, said contracts
the debtor. old debtor or should be treated separately and distinctly from
Insolvency of against his will each other, such that the existence, performance
The performance or breach of the agreement Buddy filed a complaint for collection of the
bears no relation to the performance or breach of balance of the obligation and damages against
the subject loan transactions, they being separate J.C. JC denied any liability claiming that its
and distinct sources of obligations. Metro’s loan obligation was extinguished by reason of
obligations to Allied Bank remain subsisting for novation which took place when MSI accepted
the basic reason that the former has not been able partial payments from Amoroso on its behalf.
to prove that the same had already been paid or,
in any way, extinguished (Metro Concast Steel Was the obligation of JC to MSI extinguished by
Corporation, Spouses Jose S. Dychiao And Tiuoh novation? Why? (2014 Bar)
Yan, Spouses Guillermo And Mercedes Dychiao, And
Spouses Vicente And Filomena Dychiao vs. Allied A: NO. Under Art. 1292 of the NCC, in order that
Bank Corporation, G.R. No. 177921, December 4, an obligation may be extinguished by another
2013). which substitute the same, it is imperative that it
be so declared in unequivocal terms, or that the
Q: SDIC issued to Danilo a Diners Card (credit old and the new obligations be on every point be
card) with Jeannete as his surety. Danilo used incompatible with each other. Novation by
this card and initially paid his obligations to substitution of the debtor requires the consent of
SDIC. Thereafter, Danilo wrote SDIC a letter the creditor as provided in Art. 1293. This
requesting it to upgrade his Regular Diners requirement is not present in this case.
Club Card to a Diamond (Edition) one. As a
requirement of SDIC, Danilo secured from In Magdalena Estates Inc., vs. Rodriguez (G.R. No.
Jeanette her approval and the latter obliged. L-18411, December 17, 1966) it was ruled that the
Danilo's request was granted and he was mere fact that the creditor received payment from
issued a Diamond (Edition) Diners Club Card. a third person does not constitute novation and
Danilo had incurred credit charged plus does not extinguish the obligation of the original
appropriate interest and service charge. debtor. Thus, the obligation of JC to MSI subsists.
However, he defaulted in the payment of this
obligation. Was the upgrading a novation of Effects of novation
the original agreement governing the use of
Danilo Alto's first credit card, as to extinguish 1. Extinguishment of principal also extinguishes
that obligation? the accessory, except:
a. Mortgagor, pledgor, surety or guarantor
A: YES. Novation, as a mode of extinguishing agrees to be bound by the new obligation
obligations, may be done in two ways: by explicit (Tolentino, 1999); or
declaration, or by material incompatibility. b. Stipulation made in favor of a third
There is no doubt that the upgrading was a person such as stipulation pour atrui
novation of the original agreement covering the (NCC, Art. 1311) unless beneficiary
first credit card issued to Danilo Alto, basically consents to the novation (NCC, Art. 1296).
since it was committed with the intent of
cancelling and replacing the said card. However, 2. If old obligation is:
the novation did not serve to release Jeanette from a. Void – Novation is void (NCC, Art. 1298)
her surety obligations because in the surety b. Voidable – Novation is valid provided that
undertaking she expressly waived discharge in the annulment may be claimed only by
case of change or novation in the agreement the debtor or when ratification validates
governing the use of the first credit card (Molino v. acts (NCC, Art. 1298).
Security Diners International Corp., G.R. No. c. If the old obligation was subject to a
136780, August 16, 2001). suspensive or resolutory condition, the
new obligation shall be under the same
Q: J. C. Construction bought steel bars from condition, unless it is otherwise
Matibay Steel Industries (MSI) which is owned stipulated. (NCC, Art. 1299).
by Buddy Batungbacal. J.C. failed to pay the
purchased materials worth P500,000 on due 3. If old obligation is conditional and the new
date. J.C. persuaded its client Amoroso with obligation is pure:
whom it had receivables to pay its obligation
to MSI. Amoroso agreed and paid MSI the
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CIVIL LAW
a. If resolutory and it occurred – Old It is the active subjective novation characterized
obligation already extinguished; no new by the transfer to a third person of all rights
obligation since nothing to novate. appertaining to the creditor in the transaction
b. If suspensive and it did not occur – It is as concerned including the right to proceed against
if there is no obligation; thus, there is the guarantors or possessors of mortgages and
nothing to novate. similar others subject to any applicable legal
provision or any stipulation agreed upon by the
4. If the new obligation is: parties in conventional subrogation.
a. Void – Original one shall subsist, unless
the parties intended that the former NOTE: Whoever pays on behalf of the debtor
relation should be extinguished in any without the knowledge or against the will of the
event (NCC, Art. 1297). latter cannot compel the creditor to subrogate him
b. Voidable – Novation can take place, except in his rights, such as those arising from a
when such new obligation is annulled. In mortgage, guaranty, or penalty (NCC, Art. 1237).
such case, old obligation shall subsist.
c. Pure obligation – Conditions of old Kinds of subrogation
obligation deemed attached to the new,
unless otherwise stipulated (Tolentino, 1. As to their creation
1999). a. Legal subrogation – Constituted by virtue
d. Conditional Obligation: of a law (NCC, Articles 1300 and 1302);
i. If resolutory – Valid until the b. Voluntary or conventional subrogation –
happening of the condition (NCC, Art. Created by the parties by their voluntary
1181). agreement (NCC, Art. 1300);
ii. If suspensive and did not materialize –
No novation, old obligation is NOTE: Conventional subrogation of a third
enforced. person requires the consent of the original
(NCC, Art. 1181). parties and of the third person (NCC, Art.
1301);
NOTE: Novation does not extinguish criminal
liability (PNB v. Soriano, G.R. No. 164051, October 2. As to their extent
3, 2012) a. Total subrogation – Credits or rights of
the creditor in the transaction are totally
Q: Will a contract of suretyship, which is transferred to the third person.
secondary to a principal obligation, be b. Partial subrogation – Only part of the
extinguished when novation occurs? credit or rights of the creditor in the
transaction are transferred to the third
A: It depends. A surety is released from its person.
obligation when there is a material alteration of
the principal contract in connection with which NOTE: A creditor, to whom partial payment
the bond is given, such as a change which imposes has been made, may exercise his right for the
a new obligation on the promising party, or which remainder and he shall be preferred to the
takes away some obligation already imposed, or person who has been subrogated in his place
one which changes the legal effect of the original in virtue of the partial payment of the same
contract and not merely its form (Philippine credit (NCC, Art. 1304).
Charter Insurance Corporation v. Petroleum
Distributors & Service Corporation, G.R. No. 180898, Presumption of legal subrogation
April 18, 2012). Furthermore, a surety is not
released by a change in the contract, which does GR: Legal subrogation is not presumed (NCC, Art.
not have the effect of making its obligation more 1300).
onerous (Stronghold Insurance Company, Inc. v.
Tokyu Construction Company, G.R. Nos. 158820-21, XPN: In cases expressly mentioned in the law:
June 5, 2009). As such, a contract is only
extinguished by novation when there is a material 1. When a creditor pays another creditor who is
alteration in the principal contract or if it has the preferred, even without the debtor’s
effect of making the obligation more onerous. knowledge;
2. When a third person, not interested in the
Subrogation obligation, pays with the express or tacit
approval of the debtor;
ASSIGNMENT
CONVENTIONAL GENERAL PROVISIONS
BASIS OF CREDITS
SUBROGATION
OR RIGHTS
Governing Article 1300- Article 1624- A contract is a meeting of minds between two
law 1304 1627 persons whereby one binds himself, with respect
to the other, to give something or to render some
It extinguishes The transfer
service (NCC, Art. 1305).
the original of the credit
obligation and or right does
A contract is a meeting of the minds between two
creates a new not extinguish
or more parties, whereby one party binds himself
one. or modify the
with respect to the other, or where both parties
Effect obligation.
bind themselves reciprocally, in favor of one
The transferee
another, to fulfill a prestation to give, to do or not
becomes the
to do. (Pineda, 2009)
new creditor
for the same
Meeting of minds
obligation.
The consent of The consent of Speaks of the intention of the parties in entering
the debtor is the debtor is into the contract respecting the subject matter and
necessary (NCC, not necessary. the consideration thereof. As a rule therefore, a
Need for Art. 1301). Notification is contract is perfected by mere consent. It does not
consent of enough for the require any special form, as a rule, and is binding
debtor validity of the from the moment that the essential requisites are
assignment present. Thus, the meeting of the minds between
(NCC, Art. the parties rise to the binding contract althought
1626). they have not affixed their signature to its written
form (Rabuya, 2017).
Begins from the Begins from Obligation v. Contract
Effectivity moment of notification of
subrogation. the debtor. While a contract is one of the sources of
obligations, an obligation is the legal tie or
The defect in the The defect in relations itself that exists after a contract has been
old obligation the credit or entered into.
may be cured rights is not
Curability of
such that the cured by its Hence, there can be no contract if there is no
defect or vice
new obligation mere obligation. But an obligation may exist without a
becomes valid. assignment to contract (De Leon, 2010).
a third person.
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CIVIL LAW
it does not contain (Cuizon v. CA, G.R. No. 102096, NOTE : Determine whether a contract
August 22, 1996). terminates upon the death of one of the
parties
STAGES IN THE MAKING OF A CONTRACT
2. Stipulation pour autrui (stipulation in
Three stages in the making of a contract (CPC) : favor of a third person) – benefits clearly
and deliberately conferred by parties to a
1. Conception or Generation – the first stage contract upon third persons (NCC, Art.
where the parties begin their initial negotiation 1311) and which stipulation is merely
and bargaining for the formation of the contract part of a contract entered into by the
ending at the moment of agreement of the parties. parties, neither of whom acted as agents
2. Perfection or Birth – Here, the parties had a of the third person and which favor can
meeting of minds as to the object, cause or be demanded by the third person if duly
consideration and other terms and conditions of accepted by him before it could be
the contract. revoked;
3. Consumation or fulfillment – This the last
stage which consists in their performance or Requisites of stipulation pour atrui:
fulfillment by the parties of their obligations
under the term of the perfected contract. a. Stipulation in favor of a third person;
b. Stipulation is just part and not the
CHARACTERISTICS OF A CONTRACT whole obligations of the contract;
c. Contracting parties must have clearly
The following are the characteristics of a contract and deliberately conferred a favor
(AMOR): upon third person;
d. Favor or benefit conferred is not just
1. Autonomy (NCC, Art. 1306); an incidental benefit or interest;
2. Mutuality (NCC, Art. 1308); e. Third person must have
3. Obligatoriness and consensuality (NCC, Art. communicated his acceptance; and
1315); f. Neither of the contracting parties
4. Relativity (NCC, Art. 1311) bears the legal representation of the
5. Consensuality (NCC, Art. 1315) third person (Young v. Court of
Appeals, G.R. No. 79518, January 13,
RELATIVITY OF CONTRACTS 1989).
(1991, 1996, 2002 BAR)
NOTE: The fairest test to determine whether
Principle of relativity or Principle of limited the interest of third person in a contract is a
effectivity of contracts (2011 BAR) stipulation pour autrui or merely an
incidental interest, is to rely upon the
GR: Contracts take effect only between the parties intention of the parties as disclosed by their
or their assigns and heirs. contract. In applying this test, it matters not
whether the stipulation is in the nature of a
Res inter alios acta aliis neque nocit prodest (a gift or whether there is an obligation owing
thing done between others does not harm or from the promise to the third person (Rabuya,
benefit others) – a contract can only obligate the 2017).
parties who entered into it, or their successors
who assumed their personalities, and that, 3. Third persons coming into possession of the
concomitantly, a contract can neither favor nor object of the contract creating real rights
prejudice third persons (Vitug, 2006). subject to the provisions of Mortgage Law and
the Land Registration Law (NCC, Art. 1312);
NOTE: With respect to the heir, he shall not be 4. Contracts entered into in fraud of creditors;
liable beyond the value of the property he (NCC, Art. 1313);
received from the decedent (NCC, Art. 1311). 5. When a third person induces a party to violate
the contract (NCC, Art. 1314). (1991, 1998
XPNs: BAR)
1. Rights and obligations that are not
transmissible by their nature, or by the NOTE: This tort or wrongful conduct is known
stipulation or by provisions of law (NCC, as “interference with contractual relations.”
Art. 1311);
Thus, third person and the breaching party is The Compromise Agreement executed between
liable for damages. It is based on quasi-delict Benedicto and PCGG do not contain any express
and their liability is solidary. stipulation that confers the benefit of absolute
immunity to Africa. Absent any express stipulation
NOTE: A third person can be held liable for in favor of a third person, the rule on relativity of
tort intereference even if he does not know contract must be applied i.e., that the contract only
the identity of one of the contracting parties. takes effect between the parties, their assigns or
The interference with lawful contracts by heirs (Republic of the Philippines v. Legal Heirs of
strangers thereto gives rise to an action for Jose L. Africa, G.R. No. 205722, August 19, 2015).
damage in favor of the injured person. The
law does not require that the responsible Q: Fieldmen's Insurance issued, in favor of
person shall have known the identity of the MYT, a common carrier, accident insurance
injured person (Rabuya, 2017). policy. 50% of the premium was paid by the
driver. The policy indicated that the Company
Q: PCGG filed a complaint for reconveyance, will indemnify the driver of the vehicle or his
reversion, accounting, restitution, and representatives upon his death. While the
damages before the Sandigan Bayan against policy was in force, the taxicab driven by
Ferdinand and Imelda Marcos, and several of Carlito, met with an accident. Carlito died. MYT
their cronies including Benedicto and Africa. and Carlito's parents filed a complaint against
PCGG, through its Chairman, David M. Castro, the company to collect the proceeds of the
entered into a Compromise Agreement with policy. Fieldmen’s admitted the existence
Benedicto where the latter undertook to cede thereof, but pleaded lack of cause of action on
to the government properties listed in the the part of the parents. Decide.
agreement and transfer to the government
whatever rights he may have in the assets of A: Carlito’s parents who, admittedly, are his
the corporations listed in the same agreement. sole heirs have a direct cause of action against
The SB dismissed the case against Africa and the Company. This is so because pursuant to the
ruled that since that act being complained of stipulations, the Company will also indemnify
constituted a quasi-delict or tort and the third parties. The policy under consideration is
obligation of the defendants were solidary typical of contracts pour autrui, this character
therefore the obligation of Africa has been being made more manifest by the fact that the
extinguished by the Compromise Agreement. deceased driver paid 50% of the premiums
Did the Compromise Agreement between PCGG (Coquia v. Fieldmen’s Insurance Co., Inc.,G.R. No. L-
and Benedicto extinguish the liability of 23276, November 29, 1968).
Africa?
OBLIGATORY FORCE OF CONTRACTS
A: NO. A stipulation pour autrui to be appreciated,
it is indispensable that there be a stipulation Contracts shall be obligatory, in whatever form
deliberately conferring a benefit or favor to a third they may have been entered into, provided all the
person. The requisites of a stipulation pour autrui essential requisites for validity are present (NCC,
are the following: Art. 1356).
1. There is a stipulation in favor of a third Obligations arising from contracts have the force
person; of law between the contracting parties and should
2. The stipulation is a part, not the whole, of the be complied with in good faith. (NCC, Art. 1159)
contract;
3. The contracting parties clearly and This provision must fall within the other
deliberately conferred a favor to the third characteristic of a contract
person — the favor is not an incidental
benefit;
383
CIVIL LAW
NOTE: Obligations arising from contracts have the assigned its receivables from FBDC to him.
force of law between the contracting parties and Despite Fong’s repeated requests, FBDC
should be complied with in good faith (NCC, Art. refused to deliver to Fong the amount assigned
1159). by MS Maxco. Is FBDC bound by the assignment
between MS Maxco and Fong?
Requisites for the application of the principle
A: No. Obligations arising from contracts have the
Before a contract may be considered obligatory, it force of law between the contracting parties and
is necessary that: should be complied with in good faith. The Court
1. It is perfected; finds that MS Maxco, as the Trade Contractor,
2. It is valid; and cannot assign or transfer any of its rights,
3. It is enforceable (Rabuya, 2017). obligations, or liabilities under the Trade Contract
without the written consent of FBDC. ( Dort
Q: Villamor borrowed a large amount from Bonifacio Dev’t Corp., vs. Valentin L. Fong, G.R. No.
Borromeo, for which he mortgaged his 209370, March 25, 2015) (Perlas-Bernabe,J.)
property but subsequently defaulted.
Borromeo pressed him for settlement. The Q: Sps. Tanchuling and Cantela executed the
latter instead offered to execute a promissory subject deed covering two (2) parcels of land.
note containing a promise to pay his debt as On the face of the subject deed, the sum of
soon as he is able, even after 10 years and that F400,000.00 appears as the consideration for
he waives his right to prescription. What are Cantela's purported purchase. After the
the effects of said the stipulation to the action subject deed's execution, Vicente delivered the
for collection filed by Borromeo? owner's copies of the TCTs to Cantela, although
it is undisputed that none of the parties are in
A: NONE. The rule is that a lawful promise made actual physical possession of the properties.
for a lawful consideration is not invalid merely When Sps. Tanchuling tried to recover the
because an unlawful promise was made at the TCTs from Cantela, the latter refused,
same time and for the same consideration. This prompting them to file a Complaint for
rule applies although the invalidity is due to Annulment of Deed of Sale and Delivery of the
violation of a statutory provision, unless the [Owner's] Duplicate Copy of the [TCTs] with
statute expressly or by necessary implication Preliminary Prohibitory and Mandatory
declares the entire contract void. Thus, even with Injunction before the RTC. They alleged that
such waiver of prescription, considering that it the subject deed was absolutely simulated,
was the intent of the parties to effectuate the hence, null and void, given that: there was no
terms of the promissory note, there is no legal actual consideration paid by Cantela to them;
obstacle to the action for collection filed by and the subject deed was executed to merely
Borromeo (Borromeo v. CA, G.R. No. L-22962, show to their neighbors that they are the true
September 28, 1972). owners of the properties. However, Cantela
NOTE: Where an agreement founded on a legal insisted that the sale of the properties to him
consideration contains several promises, or a was valid as he bought the same for the price
promise to do several things, and a part only of the of P400,000.00. He further averred that the
things to be done are illegal, the promises which undated deed was surreptitiously inserted by
can be separated, or the promise, so far as it can Sps. Tanchuling in the copies of the subject
be separated, from the illegality, may be valid deed presented to him for signing. Is the
(Borromeo v. CA, G.R. No. L-22962, subject deed simulated?
September 28, 1972).
A: Yes. In this case, the subject deed was
Q: FBDC entered into a Trade Contract with MS absolutely simulated. The parties never intended
Maxco Company, Inc. (MS Maxco) for the to be bound by any sale agreement. Instead, the
execution of the structural and partial subject deed was executed merely as a front to
architectural works of one of its condominium show the public that Sps. Tanchuling were the
projects. The Trade Contract likewise owners of the properties in order to deter the
provided that MS Maxco is prohibited from group of John Mercado from illegally selling the
assigning or transferring any of its rights, same. Moreover, there was actually no exchange
obligations, or liabilities under the said of money between the parties. (Renee B.
Contract without the written consent of FBDC. Tangchuling vs. Sotero C. Cantela, G.R. No. 209284,
FBDC received a letter from the counsel of November 20, 2015) (Perlas-Bernabe,J.)
Fong informing it that MS Maxco had already
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CIVIL LAW
contrary to law, morals, good customs, public Liability of heirs for the obligation contracted
order or public policy (NCC, Art. 1306). by the decedent
NOTE: Courts cannot make for the parties better The heirs are liable for the obligation contracted
or more equitable agreements than they by the decedent when the rights and obligations
themselves have been satisfied to make, or arising from the contract are transmissible:
rewrite contracts because they operate harshly or 2. By their nature;
inequitably as to one of the parties, or alter them 3. By stipulation; or
for the benefit of one party and to the detriment of 4. By provision of law (NCC, Art. 1311).
the other, or by construction, relieve one of the
parties from terms which he voluntarily Requisites in order that a third person may
consented to, or impose on him those which he demand the fulfillment of the contract
did not (Angel Bautista v. Court of Appeals, G.R. No.
123655, January 19, 2000). 1. The contracting parties must have clearly and
deliberately conferred a favor upon the third
An agreement to pay unconscionable interests on person;
a loan is against morals. (Medel, et al. vs. Ca, 299 2. The third person’s interest or benefit in such
SCRA 481) fulfillment must not be merely incidental; and
3. Such third person communicated his
PERFECTION BY MERE CONSENT acceptance to the obligor before the
stipulations in his favor are revoked.
Contracts are perfected by mere consent, and
from that moment the parties are bound not only
to the fulfillment of what has been expressly ESSENTIAL REQUISITES OF A CONTRACT
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) ELEMENTS OF A CONTRACT
Note: This refers to consensual contracts.
1. Natural Elements – Those which are derived
However, real contracts are perfected by delivery
from the very nature of the contract, and as a
and formal contracts are perfected upon
consequence, ordinarily accompany the same.
compliance.
2. Essential Elements – Those without which
there can be no contract.
EFFECT OF CONTRACTS 3. Accidental Elements – those which exist only
when the contracting parties expressly
Contracts take effect only between the parties, and provide for them (De Leon, 2010).
their assigns and heirs, the latter being liable only
to the extent of the property received from the ESSENTIAL REQUISITES OF A CONTRACT (2005
decedent (NCC, Art. 1311). BAR)
Persons affected by a contract
The following are the essential requisites of
GR: contracts (COC):
4. Parties to the contract; and their
5. Corresponding successors. 1. Consent;
2. Object or subject matter; and
XPNs: 3. Cause or consideration (NCC, Art 1318). (See
1. Contracts containing a stipulation in favor of a Cathay Pacific v. Vasquez, 2003)
third person (pour autrui) [NCC, Art. 1311
(2)]; NOTE: These three requisites are, therefore, the
2. Contracts containing real rights (NCC, Art. essential elements of a consensual contract. In real
1312); contracts, however, in addition to the above, the
3. Contracts entered into to defraud creditors delivery of the object of the contract is required as
(NCC, Art. 1313); a further requisite.
4. Contracts which have been violated at the
inducement of 3rd persons (NCC, Art. 1314); CONSENT (2005 BAR)
5. Quasi-contract of negotiorum gestio (NCC, Art.
2150). Consent is manifested by the meeting of the offer
and the acceptance upon the thing and the cause
1. Legal capacity of the contracting parties; 1. The one offering must have a serious
intention to become bound by his offer;
NOTE: The parties must have full civil 2. The terms of the offer must be reasonably
capacity. Hence, if any one party to a certain, definite and complete, so that the
supposed contract was already dead at the parties and the court can ascertain the terms
time of its execution, such contract is of the offer; and
undoubtedly simulated and false and, 3. The offer must be communicated by the
therefore, null and void by reason of its offeror to the offeree, resulting in the offeree’s
having been made after the death of the party knowledge of the offer (Rabuya, 2017).
who appears as one of the contracting parties
therein. The death of a person terminates Q: The husband assumed sole administration
contractual capacity (Milagros De Belen Vda. of the family’s mango plantation since his wife
De Cabalu, et. al. v. Sps. Renato Dolores Tabu worked abroad. Subsequently, without his
and Laxamana, G.R. No. 188417, September 24, wife’s knowledge, the husband entered into an
2012). antichretic transaction with a company, giving
it possession and management of the
2. Manifestation of the conformity of the plantation with power to harvest and sell the
contracting parties; fruits and to apply the proceeds to the
payment of a loan he got. What is the standing
Note: Manifestation may be in writing bearing of the contract? (2011 BAR)
the signature or marks of the parties, or it A: It is considered a continuing offer by the
may be implied from the conduct of the parties; perfected only upon the wife’s acceptance
parties like the acceptance of payment. or the court’s authorization.
3. Parties’ Conformity to the object, cause, terms NOTE: The person making the offer may fix the
and condition of the contract must be time, place and manner of acceptance, all of which
intelligent, spontaneous and free from all must be complied with (NCC, Art. 1321).
vices of consent; and
Rules on complex offer
NOTE: Intelligence in consent is vitiated by
error; freedom by violence, intimidation or 1. Offers are interrelated – contract is perfected
undue influence; and spontaneity by fraud. if all the offers are accepted
2. Offers are not interrelated – single acceptance
4. The conformity must be Real. of each offer results in a perfected contract
unless the offeror has made it clear that one is
Offer dependent upon the other and acceptance of
both is necessary.
An offer is defined as an expression of willingness
to contract on certain terms, made with the Rules on advertisements as offers
intention that it shall become binding as soon as it
is accepted by the person to whom it is addressed 1. Business advertisements – not a definite offer,
(Rabuya, 2017 citing G. H. Treitel, The Law of but mere invitation to make an offer, unless it
Contract, 10th Ed., p.8). appears otherwise (NCC, Art. 1325).
387
CIVIL LAW
Note: If the advertisement contains all the 1. Stated fixed period in the offer
necessary date need in a contract, its a definite a. Must be made within the period given by
offer for the sale of the thing advertised. the offeror.
Otherwise, it is not a definite offer, it is a mere b. As to withdrawal of the offer:
invitation to make offer.
GR: It can be made by communicating
2. Advertisement for bidders – simply invitation such withdrawal at any time before the
to make proposals and advertiser is not acceptance is made
bound to accept the highest or lowest bidder,
unless the contrary appears (NCC, Art. 1326). XPN: When the option is founded upon a
consideration (something paid or
Grounds that would render the offer promised since partial payment of the
ineffective purchase price is considered as proof of
the perfection of the contract). (NCC, Art
1. Death, civil interdiction, insanity or 1324)
insolvency of either party before acceptance is
conveyed; 2. No stated period
2. Express or implied revocation of the offer by a. Offer is made to a person present –
the offeree; acceptance must be made immediately.
3. Qualified or conditional acceptance of the b. Offer is made to a person absent –
offer, which becomes counter-offer; acceptance may be made within such time
4. Subject matter becomes illegal or impossible that, under normal circumstances, an
before acceptance is communicated; answer can be expected from him.
5. Period given to the offeree to signify his
acceptance has already lapsed. Note: If there was an acceptance already, the
offeror cannot just withdraw his offer unilaterally.
Requisites of a valid acceptance He will be liable for damages. (Pineda, 2009)
An acceptance may be express or implied (NCC, Persons incapacitated to give consent (DIM)
Art. 1320).
1. Deaf-mutes who do not know how to read
Mirror Image Rule in law on contracts and write (illiterates);
2. Insane or demented persons, unless the
This is a common law concept which states that in contract was entered into during a lucid
order for there to be an acceptance, the offeree interval;
must accept the terms as stated in the offer. Our 3. Minors (NCC, Art. 1327) except:
courts also adhere to the “mirror-image rule.”
Thus, it has been ruled that acceptance must be a. Contracts for necessaries (NCC, Art.
identical in all respects with that of the offer so as 1489);
to produce consent of meeting of the minds b. Contracts by guardians or legal
(Rabuya, 2017 citing ABS-CBN v. CA. 301 SCRA 592- representatives and the court having
593, 1999). jurisdiction had approved the same;
d. Contracts of deposit with the Postal Kinds of mistakes of fact which vitiate consent
Savings Bank provided that the minor is
over 7 years of age; 1. Mistake as to the nature of the contract ;
e. Contract of an insurance for life, health 2 Mistake as to object of the contract ;
and the accident on the minor’s life. 3. Mistake as to the quality or principal conditions
f. Upon reaching age of majority – they of the thing ;
ratify the same. 4. Mistake or error in quantity ;
5. Mistake as to identy of the person ;
NOTE: Because the law incapacitates them to give Mistake as to the identity or qualifications of one
their consent to a contract, the only way by which of the parties will vitiate consent only when such
any one of those enumerated above can enter into identity or qualifications have been the principal
a contract is to act through a parent or guardian. If cause of the contract.
this requirement is not complied with, the result is
a defective contract. If only one of the contracting For mistake (as to the qualification of one of the
parties is incapacitated to give his consent, the parties) to vitiate consent, two requisites must
contract is voidable. If both of them are concur:
incapacitated to give their consent, the contract is
unenforceable [NCC, Art. 1390(1), NCC, Art. a. The mistake must be either with regard to
1403(3)]. the identity or with regard to the
qualification of one of the contracting
Vices of consent (MI-VUF) parties; and
b. The identity or qualification must have been
1. Mistake the principal consideration for the
2. Intimidation celebration of the contract (The Roman
3. Violence Catholic Church v. Regino Pante, G.R. No.
4. Undue influence 174118, April 11, 2012).
5. Fraud
Q: Leonardo is the only legitimate child of the
NOTE: A threat to enforce a just or legal claim late spouses Tomasina and Balbino. She only
through a competent authority does not amount finished Grade three and did not understand
to intimidation nor vitiate consent (NCC, Art. English. The Sebastians, on the other hand, are
1335). illegitimate children. She filed an action to
declare the nullity of the extrajudicial
Mistake settlement of the estate of her parents, which
she was made to sign without the contents
GR: Mistake as a vice of consent refers to mistake thereof, which were in English, explained to
of facts and not of law, thus rendering the contract her. She claims that her consent was vitiated
voidable (Jurado, 2010). because she was deceived into signing the
extrajudicial settlement. Is the extra-judicial
XPN: When mistake of law involves mutual error settlement of estate of Tomasina valid?
as to the legal effect of an agreement when the
real purpose of the parties is frustrate (NCC, Art. A: NO. When one of the parties is unable to read,
1334). or if the contract is in a language not understood
by him, and mistake or fraud is alleged, the person
Mistake Distinguished from Ignorance enforcing the contract must show that the terms
thereof have been fully explained to the former
Mistake is a false impression on something, while (Art. 1332). Leonardo was not in a position to give
Ignorance is absence of any notion or impression her free, voluntary and spontaneous consent
about a particular thing. without having the document, which was in
English, explained to her. Therefore, the consent
Requisites: of Leonardo was invalidated by a substantial
mistake or error, rendering the agreement
1. Mistake must be with respect to the legal effect voidable. The extrajudicial partition between the
of the agreement; Sebastians and Leonardo should be annulled and
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CIVIL LAW
set aside on the ground of mistake (Leonardo v. 1. Physical force employed must be serious or
CA, G.R. No. 125485, September 13, 2004). irresistible; and
2. The determining cause for the party upon
Note: Burden rests upon the party who seeks to whom it is employed in entering into the
enforce the contract to show that the other party contract.
fully understood the contents of the document.
(Mayor vs. Belen, 430 SCRA 561) A threat to enforce one’s claim through competent
authority, if the claim is just or legal, does not
Mutual Error vititate consent. [NCC, Art. 1335(4)]
Mutual Error as to the legal effect of an agreement NOTE: Violence or intimidation shall annul the
when the real purpose of the parties is frustrated, obligation, although it may have been employed
may vititate consent. (NCC, Art. 1334) by a third person who did not take part in the
contract (NCC, Art. 1336).
Legal effect refers to the rights of the parties as
stated in legal provisions. Undue influence
1. it was applied or utilized by one A: Santos was not guilty of fraud nor bad faith in
contracting party upon the other claiming that there was implied renewal of his
2. it must be serious deception contract of lease with his lessor. The letter given
3. it must have induced the victim to enter by the lessor led Santos to believe and conclude
the contract without which he would not that his lease contract was impliedly renewed and
have agreed to. that formal renewal thereof would be made upon
4. It must have resulted in damage or injury. the arrival of Tanya Madrigal. Thus, from the start,
it was known to both parties that, insofar as the
Kinds of Fraud agreement regarding the transfer of Santos’
leasehold right to Samson was concerned, the
1. Fraud in the perfection of the contract object thereof relates to a future right. It is a
a. Causal fraud (dolo causante) conditional contract, the efficacy of which depends
b. Incidental fraud (dolo incidente) upon an expectancy the formal renewal of the
lease contract between Santos and lessor. The
2. Fraud in the performance of an obligation efficacy of the contract between the parties was
(NCC, Art. 1170). thus made dependent upon the happening of this
Requisites: suspensive condition (Samson v. CA, G.R. No.
108245, November 25, 1994).
(ALREADY MENTIONED ABOVE)
Acts considered not fraudulent
Dolo Causante v. Dolo Incidente
1. The usual exaggerations in trade and the
BASIS DOLO DOLO other party had an opportunity to know the
CAUSANTE INCIDENTE facts are not themselves fraudulent (NCC, Art.
(Art. 1338) (Art 1344) 1340). Principle of Tolerated Fraud ;
Gravity of Serious in Not serious 2. A mere expression of an opinion does not
Fraud character signify fraud, unless made by an expert and
Efficient Efficient cause Not the the other party had relied on the former’s
Cause which induces efficient cause special knowledge (NCC, Art. 1341. Expert
the party to Opinion);
enter into a 3. Misrepresentation by a third person does not
contract vitiate consent, unless such misrepresentation
Effect on the Renders the Does not affect has created substantial mistake and the same
Status of the contract the validity of is mutual (NCC, Art. 1342);
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CIVIL LAW
4. Misrepresentation made in good faith is not beneficial to them. As to third persons with
fraudulent but may constitute error (NCC, Art. notice of the simulation, they acquire no
1343). better right to the simulated contract than the
original parties to the same.
Note: The contract just the same is voidable, not
because of the misrepresentation but because of The primary consideration in determining the
substantial error. true nature of a contract is the intention of the
parties. Such intention is determined from the
Note: in order that frud may make a contract express terms of their agreement as well as from
voidable, it should be serious and should not gave their contemporaneous and subsequent acts
been employer by both cotracting parties. (NCC, Art (Tating v. Tating Marcella, et al., G.R. No. 155208,
1344) March 27, 2007).
They lack the element of true consent. A: Yes. Simulation of a contract may be absolute
or relative. The former takes place when the
2. Relative (disimulados) – The contracting parties do not intend to be bound at all; the latter,
parties conceal their true agreement (NCC, when the parties conceal their true agreement.
Art. 1345); binds the parties to their real The fact of executing the contract to comply with
agreement when it does not prejudice third the requirement to put up a lottery stall makes the
persons or is not intended for any purpose contract absolutely simulated as there was no
contrary to law, morals, good customs, public intention between the parties to enter into the
order or public policy (NCC, Art. 1346). If the contract of lease (Robert and Nenita De Leon vs.
concealed contract is lawful, it is absolutely Gilbert and Analyn Dela Llana, G.R. No. 21227,
enforceable, provided it has all the essential February 11, 2015). (Perlas-Bernabe,J.)
requisites: consent, object, and cause (NCC,
Arts. 1345-1346). May the owner-simulator recover ?
As to third persons without notice, the If the absolutely simulated contract does not have
apparent contract is valid for purposes any illegal purpose, the interested party may
393
CIVIL LAW
therefore, in a fictitious and simulated contract is 1. Under Art. 130 of the Family Code, which
consent which is essential to a valid and allows the future spouses to give or donate to
enforceable contract (The Manila Banking each other in their marriage settlement their
Corporation v. Edmundo Silverio, G.R. No. 132887, future property to take effect upon the death
August 11, 2005). of the donor and to the extent laid down by
the provisions of the NCC relating to
testamentary succession; and
OBJECTS, CAUSE AND FORM OF CONTRACTS 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
OBJECT the legitime of the compulsory heirs is not
prejudiced (Jurado,2009; De Leon 2010).
It is the subject matter of the contract. It can be a
thing, right or service arising from a contract. NOTE: Except in cases authorized by law, future
inheritance cannot be an object of contract
because its extent, amount or quantity is not
Note: rights which are not intransmissible can
only be the object of the contract. (NCC, Art. 1347) determinable (Sta. Maria, 2003).
CAUSE
Requisites of an object (DELiCT)
1. Determinate as to kind (even if not Cause is the essential reason which moves the
determinate, provided it is possible to parties to enter into the contract It is the
immediate, direct and proximate reason which
determine the same without the need of a new
contract); justifies the creation of an obligation through the
will of the contracting parties.
2. Existing or the potentiality to exist
subsequent to the contract;
3. Must be LIcit; Requisites of a cause
4. Within the Commerce of man; and
It must:
5. Transmissible.
1. Exist;
2. Be true; and
NOTE: The most evident and fundamental
3. Be licit.
requisite in order that a thing, right or service may
be the object of a contract, is that it should be in
NOTE: Although the cause is not stated in the
existence at the moment of the celebration of the
contract, or at least, it can exist subsequently or in contract, it is presumed that it exists and is lawful
the future (De Leon, 2010). unless the debtor proves the contrary. (NCC, art.
1354)
Object of contracts
Kinds of cause
GR: All things or services may be the object of
1. Cause of onerous contracts – the prestation or
contracts.
promise of a thing or service by the other.
e. g. Contract of Sale.
XPNs:
2. Cause of remuneratory contracts– the service
1. Things outside the commerce of men (NCC,
or benefit remunerated.
Art. 1347);
e. g. Donation in consideration of a past
2. Intransmissible rights;
3. Future inheritance, except in cases expressly service which does not constitute a
authorized by law; demandable debt.
3. Cause of gratuitous contracts – the mere
4. Services which are contrary to law, morals,
good customs, public order or public policy; liberality of the donor or benefactor.
5. Impossible things or services; and 4. Accessory – identical with cause of principal
6. Objects which are not possible of contract, the loan which it derived its life and
determination as to their kind. existence
e.g. mortgage or pledge.
Exceptions to the rule that no person can enter
(This must be included in Interpretation of
into a contract with regard to future
inheritance Contracts)
As to its Always known May be known XPNs: When the law requires a contract be in
knowability to the other writing for its:
1. Absence of cause – confers no right and The parties may required to observe the form
produces no legal effect. required for their convenience
2. Failure of cause – does not render the contract
void. The contracting parties may compel each other to
3. Illegality of cause – contract is null and void. observe the required form once the contract has
4. Falsity of cause – contract is void; unless the been perfected and is enforceable under the
parties show that there is another cause statute of frauds.
which is true and lawful.
5. Lesion or inadequacy of cause – does not This one of the rights of the creditor.
invalidate the contract, unless:
a. there is fraud, mistake, or undue The right to demand the execute of the document
influence; required under Art.1358 is not imprescriptible. It
b. when the parties intended a donation or is subject to prescription. It must be pursued
some other contract; or within the period prescribed by law which is five
c. in cases specified by law (5) years. (Pineda, 2009)
e.g. contracts entered by guardian when NOTE : the right must be exercised once the
ward suffers lesion of more than 25% and contract has been perfected, otherwise, the
with court approval, otherwise, if there is exercise will be considered as premature.
395
CIVIL LAW
Q: On March 3, 2003, Aguinaldo led a Articles 1357 and 1358 (1) of the Civil Code (Sps.
complaint for annulment of sale, cancellation Aguinaldo vs. Torres Jr., G.R. No. 225808, September
of title, and damages against Torres before the 11, 2017). (Perlas-Bernabe, J.)
RTC. They claimed that they are the registered
owners of three lots situated in Tanza, Cavite Formalities required in specific contracts
(subject properties). Sometime in December
2000, they discovered that the titles to the 1. Donations
subject properties were transferred to Torres a. Personal property – if value exceeds
who, in bad faith, and through fraud, deceit, 5,000, the donation and acceptance must
and stealth, caused the execution of a Deed of both be written (NCC, Art. 748).
Absolute Sale dated July 21, 1979 (1979 deed b. Real property:
of sale), purportedly selling the subject
properties to him. i. Donation must be in a public
instrument, specifying therein the
Torres led his Answer with Counterclaim, property donated and value of charges
denying participation in the execution of the which donee must satisfy.
1979 deed of sale, and averring that the ii. Acceptance must be written, either in
subject properties were validly sold by the same deed of donation or in a
Aguinaldo to him through a Deed of Absolute separate instrument.
Sale dated March 10, 1991 (1991 deed of sale). iii. If acceptance is in a separate
He claimed that Aguinaldo caused the instrument, the donor shall be notified
registration of the 1979 deed of sale with the thereof in authentic form, and this step
Register of Deeds of Trece Martires City, and shall be noted in both instruments
the transfer of title in his name, hence, they are (NCC, Art. 749).
estopped from impugning the validity of his
title. Moreover, the action has prescribed, 2. Partnership where real property
having been led beyond four (4) years from contributed
discovery of the averred fraud, reckoned from a. There must be a public instrument
the registration of the said deed on March 26, regarding the partnership;
1991. He further alleged that Aguinaldo only b. The inventory of the realty must be
led the instant baseless suit to harass him in made, signed by the parties and attached
view of their acrimonious relationship, and to the public instrument (NCC, Art. 1773).
thus, interposed a counterclaim for moral
damages and attorney's fees. Is there a valid Antichresis - the amount of the principal and
conveyance of the subject properties to Torres interest must be in writing (NCC, Art. 2134).
and directing Aguinaldo to execute a
registrable deed of conveyance in his favor 3. Agency to sell real property or an interest
within thirty (30) days from the finality of the therein - authority of the agent must be in
decision. writing (NCC, Art. 1874).
4. Stipulation to charge interest - interest
A: Yes. Although the improper notarization of the must be stipulated in writing (NCC, Art. 1956).
1991 deed of sale did not affect the validity of the 5. Stipulation limiting common carrier's duty
sale of the subject properties to respondent, the of extraordinary diligence to ordinary
same, however, rendered the said deed diligence:
unregistrable, since notarization is essential to the a. Must be in writing, signed by shipper or
registrability of deeds and conveyances. Bearing owner;
in mind that the legal requirement that the sale of b. Supported by valuable consideration
real property must appear in a public instrument other than the service rendered by the
is merely a coercive means granted to the common carrier;
contracting parties to enable them to reciprocally c. Reasonable, just and not contrary to
compel the observance of the prescribed form, public policy (NCC, Art. 1744).
and considering that the existence of the sale of
the subject properties in respondent's favor had 6. Chattel mortgage - personal property must
been duly established, the Court upholds the CA's be recorded in the Chattel Mortgage Register.
directive for petitioners to execute a registrable (NCC, Art. 2140).
deed of conveyance in respondent's favor within
thirty (30) days from finality of the decision, in Contracts which must be in writing to be valid
accordance with the prescribed form under
1. Donation of real properties (NCC, Art. 719); (a) Where the law requires a document to be in
2. Partnership where immovable property or writing, that requirement is met by an
real rights are contributed to the common electronic document if the said electronic
fund (NCC, Arts. 1171 & 1773); document maintains its integrity and
3. Acts and contracts which have for their object reliability and can be authenticated so as to be
the creation, transmission, modification or usable for subsequent reference, in that;
extinguishment of real rights over immovable
property; sale of real property or of an (i) The electronic document has
interest therein is governed by Arts. 1403, No. remained complete and unaltered,
2, and 1405 [NCC, Art. 1358(1)]; apart from the addition of any
4. The cession, repudiation or renunciation of endorsement and any authorized
hereditary rights or of those of the conjugal change, or any change which arises in
partnership of gains [NCC, Art. 1358(2)]; the normal course of communication,
5. The power to administer property or any storage and display; and
other power which has for its object an act (ii) The electronic document is reliable in
appearing or which should appear in a public the light of the purpose for which it
document or should prejudice a third person; was generated and in the light of all
[NCC, Art. 1358(3)]; relevant circumstances.
6. The cession of actions or rights proceeding
from an act appearing in a public document (b) Paragraph (a) applies whether the
[NCC, Art. 1358(4)]. requirement therein is in the form of an
obligation or whether the law simply provides
NOTE : Article 1358 of the Civil Code which consequences for the document not being
requres the embodiement of certain contracts in a presented or retained in its original form.
public instrament is only for convenience, and
registration of the instrument only adversely, (c) Where the law requires that a document be
afficts third parties. Formal requirements are, presented or retained in its original form, that
therefore, for the benefit of third parties. Non- requirement is met by an electronic document
compliance therewith does adversely affect the if —
validity of the contract nor the contractual rights
and obligations of the parties (Fule vs. CA, 286 CRA (i) There exists a reliable assurance as to
700) the integrity of the document from
the time when it was fi rst generated
Contracts that must be registered in its final form; and
1. Chattel mortgages (NCC, Art. 2140). That document is capable of being displayed to the
NOTE: In accordance with Article 2125 of the person to whom it is to be presented. It is
Civil Code, an unregistered chattel mortgage expressly provided, that no provision of the Act
is binding between the parties because shall apply to vary any and all requirements of
registration is necessary only for the purpose existing laws on formalities required in the
of binding third persons (Filipinas Marble execution of documents for their validity.
397
CIVIL LAW
According to their relation to other contracts:
2. Real contracts are those which require for 3. Accessory Contracts – those which can exist
their perfection both the consent of the only as a consequence of, or in relation with,
another prior contract.
parties and the delivery of the object by one
party to the other. e.g. Pledge, Mortgage.
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CIVIL LAW
for reformation of an instrument must be brought 6. When the contract is unenforceable because
within the period prescribed by law, otherwise, it of failure to comply with the statute of frauds.
will be barred by the mere lapse of time (Bentir v.
Leanda, G.R. 128991, April 12, 2000). Prescriptive period in reformation of
instruments
Reformation of instruments; when allowed
10 years from the date of the execution of the
1. Mutual mistake. – When the mutual mistake of instrument
the parties causes the failure of the
instrument to disclose their agreement (NCC, NOTE:The prescriptive period within which to
Art. 1361); bring an action to set aside or reform a simulated
or fictitious written deed of pacto de retro sale
Requisites: starts only when the alleged vendees made known
a. The mistake should be of fact; their intention by overt acts not to abide by the
b. The same should be proved by clear and true agreement, and not from the date of
convincing evidence; and execution of contract (Conde v. Cuenca, G.R. No. L-
c. the mistake should be common to both 643, 1956).
parties to the instrument (BPI v. Fidelity
Surety, Co. 51 Phil 57). Persons who can ask for the reformation of the
instrument
2. Mistake on one party and fraud on the other. –
In such a way that the instrument does not It may be ordered at the instance of:
show their true intention, the party mistaken 1. Either party or his successors in interest
or defrauded may ask for the reformation of (if the mistake is mutual);
the instrument (NCC, Art. 1362); 2. Upon petition of the injured party; or
3. Mistake on one party and concealment on the 3. His heirs and assigns.
other. – When one party was mistaken and the
other knew or believed that the instrument NOTE: In reformation of contracts, what is
did not state their real agreement, but reformed is not the contract itself, but the
concealed that fact from the former (NCC, Art. instrument embodying the contract. It follows that
1363); whether the contract is disadvantageous or not is
4. Ignorance, lack of skill, negligence or bad faith. irrelevant to reformation and therefore, cannot be
– When through the ignorance, lack of skill, an element in the determination of the period for
negligence or bad faith on the part of the prescription of theaction to reform (Pineda, 2000).
person drafting the instrument or of the clerk
or typist, the instrument does not express the An action for reformation of an instrument may be
true intention of the parties (NCC, Art. 1364); brought under Rule 63 (Declaratory Relief and
5. Right of repurchase. – If the parties agree upon Similar Remedies) of the New Rules of Court.
the mortgage or pledge of real or personal
property, but the instrument states that the
property is sold absolutely or with a right of INTERPRETATION OF CONTRACTS
repurchase (NCC, Art. 1365).
If some stipulation of any contract should admit of The interpretation of obscure words or
several meanings, it shall be understood as stipulations in a contract shall not favor the party
bearing that import which is most adequate to who caused the obscurity (NCC, Art. 1377).
render it effectual (NCC, Art. 1373).
When it is absolutely impossible to settle doubts
Principle of effectiveness in contract by the rules established in the preceding articles,
interpretation and the doubts refer to incidental circumstances
of a gratuitous contract, the least transmission of
Pursuant to this principle, where two rights and interest shall prevail. If the contract is
interpretations of the same contract language are onerous, the doubt shall be settled in favor of the
possible, one interpretation having the effect of greatest reciprocity of interests.
rendering the contract meaningless while the
other would give effect to the contract as a whole, If the doubts are cast upon the principal object of
the latter interpretation must be adopted (PNB v. the contract in such a way that it cannot be known
Utility Assurance & Surety, Co., Inc., 177 SCRA 393, what may have been the intention or will of the
1989). parties, the contract shall be null and void (NCC,
Art. 1378).
The various stipulations of a contract shall be
interpreted together, attributing to the doubtful The principles of interpretation stated in Rule 123
ones that sense which may result from all of them of the Rules of Court shall likewise be observed in
taken jointly (NCC, Art. 1374). the construction of contracts (NCC, Art. 1378).
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CIVIL LAW
establish a creditor-debtor relationship A: NO. With the execution of separate mortgage
between them? contracts for the two (2) loans, it is clear that the
intention of the parties was to limit the mortgage
A: YES. Gloria signed the application for credit to the loan for which it was constituted. The mere
facilities indicating that a trust receipt would fact that the mortgage constituted on the property
serve as collateral for the credit line. Gloria, as covered by TCT No. T-66139 made no mention of
"dealer," signed together with Quirino the list of the pre-existing loan could only strongly indicate
their assets that they tendered to PPI "to support that each of the loans of the Spouses Alonday had
our credit application in connection with our been treated separately by the parties themselves,
participation to your Special Credit and this sufficiently explained why the loans had
Scheme." Gloria further signed the Trust been secured by different mortgages. Another
Receipt/SCS documents defining her obligations indication that the second mortgage did not
under the agreement, and also the invoices extend to the agricultural loan was the fact that
pursuant to the agreement with PPI, indicating her the second mortgage was entered into in
having received PPI products on various dates. connection only with the commercial loan (PNB v.
These established circumstances comprised by the Heirs of Alonday, G.R. No. 171865, October 12,
contemporaneous and subsequent acts of Gloria 2016) (Bersamin, J.).
and Quirino that manifested their intention to
enter into the creditor-debtor relationship with
PPI show that the Spouses Dela Cruz are fully
liable to PPI. The law of contracts provides that in
determining the intention of the parties, their
contemporaneous and subsequent acts shall be
principally considered. Consequently, the written
terms of their contract with PPI, being clear upon
the intention of the contracting parties, should be
literally applied. Her act of signing the application
signified her agreement to be bound by the terms
of the application (Spouses Dela Cruz v. Planters
Planters Products, Inc., G.R. No. 158649, February
18, 2013) (Bersamin, J.).
Q: The spouses Alonday obtained an
agricultural loan of P28, 000. 00 from the PNB
Digos branch and secured the obligation by
constituting a real estate mortgage on their
parcel of land. Thereafter, spouses Alonday
again obtained a commercial loan from the
petitioner and constituted a real estate
mortgage over their 598 square meter
residential lot. After paying in full their
commercial loan, the children of the Spouses
Alonday demanded the release of the
mortgage over the property. The PNB
informed them, however, that the mortgage
could not be released because the agricultural
loan had not yet been fully paid, and that as the
consequence of the failure to pay, it had
foreclosed the mortgage over the property.
According to PNB, the deed of mortgage
relating to the property covered included an
"all-embracing clause" whereby the mortgage
secured not only the commercial loan
contracted with its Davao City Branch but also
the earlier agricultural loan contracted with
its Digos Branch. Does the “all-embracing
clause” cover both loans?
DEFECTIVE CONTRACTS
VOID
BASIS RESCISSIBLE VOIDABLE UNENFORCEABLE
/INEXISTENT
Valid & legally Valid & legally Inoperative until ratified; not None
enforceable until enforceable until enforceable in court without
Legal effect
judicially judicially proper ratification.
rescinded. annulled.
Rescission or Annulment of Only personal defense Declaration of
Remedy rescissory action. contract. nullity of
contract.
Action for Action for Action for recovery; specific Action for
rescission annulment performance or damages declaration of
Susceptibility prescribes after 4 prescribes after 4 prescribes nullity or putting
prescription years. years. (10 years if based on a written of defense of
contract; 6 years if unwritten). nullity does not
prescribe.
403
CIVIL LAW
NOTE: C, D and E are contracts which are
not necessarily entered into by persons
RESCISSIBLE CONTRACTS
exercising fiduciary capacity. In Art. 1381
(1 & 2), the contract must be of
administration and representation.
These are contracts validly constituted but
nevertheless maybe set aside due to a particular 3. Payments made in state of insolvency (NCC,
economic damage or lesion caused to either to one Art. 1382):
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 a. Plaintiff has no other means to maintain
damage caused (NCC, Art. 1381). reparation;
b. Plaintiff must be able to return whatever
Contracts that may be rescinded he may be obliged to return due to
rescission;
1. Under Art. 1381, those c. The things must not have been passed to
2. third persons in good faith;
a. Entered into by guardians whenever the d. It must be made within 4 years (NCC, Art
wards whom they represent suffer lesion 1382).
by more than ¼ of value of the property
[NCC, Art. 1381(1)]; Characteristics of rescissible contract
If a guardian alienates properties of the 1. It has all the elements of a valid contract.
ward without judicial approval, the 2. It has a defect consisting of an injury
contract is ”unenforceable” for lack of (generally in the form of economic damage or
authority. (NCC, Art. 1403,par. 1) lesion, fraud, and alienation of the property)
b. Agreed upon in representation of to one of the contracting parties or to a third
absentees, if absentee suffers lesion by person.
more than ¼ of value of property [NCC, 3. It is valid and effective until rescinded.
Art. 1381(2)]; 4. It can be attacked only directly.
c. Contracts where rescission is based on 5. It is susceptible of convalidation only by
fraud committed on creditor and cannot prescription (De Leon, 2010).
collect the claim due (accion pauliana)
[NCC, Art. 1381(3)]; Nature of an action for rescission
NOTE: Contracts which are rescissible The action for rescission is subsidiary. It cannot be
under the third paragraph of Art. 1381 instituted except when the party suffering damage
are valid contracts, although undertaken has no other legal means to obtain reparation for
in fraud of creditors. If the contract is the same (NCC, Art. 1383). Hence, it must be
‘‘absolutely simulated’’, the contract is not availed of as the last resort, availed only after all
merely rescissible but inexistent, legal remedies have been exhausted and proven
although undertaken as well in fraud of futile (Khe Hong Cheng v. CA, G.R. No. 144169,
creditors (MBC v. Silverio, 466 SCRA 438, March 28, 2001).
August 11, 2005). In the former, the
remedy is rescission; in the latter, the Rationale: In order not to disturb other contracts
remedy is an action to declare the and to comply with the principle of relativity of
contract inexistent which action is contracts.
imprescriptible (Rabuya, 2017).
However, if it can be proven that the property
d. Contracts where the object involved is the alienated was the only property of the debtor at
subject of litigation; contract entered into the time of the transaction, the action for
by defendant without knowledge or rescission is certainly maintainable because it is
approval of litigants or judicial authority clear that the creditor has no other remedy under
[NCC, Art. 1381(4)]; the circumstances. (Pineda,2009 citing Regalado
e. Payment by an insolvent – on debts which vs. Luchsinger, 5 Phil. 625)
are not yet due; prejudices the claim of
others (NCC, Art. 1382); NOTE: Rescission shall be only to the extent
f. Provided for by law (NCC, Arts. 1526, necessary to cover the damages (NCC, Art. 1384).
1534, 1538, 1539, 1542, 1556, 1560, 1567
& 1659).
405
CIVIL LAW
on the ground of lesion, it is indispensable that the 3. The creditor cannot in any legal manner
following requisites must concur: collect his credit (subsidiary character of
rescission);
1. The contract must be entered into by the 4. The object of the contract must not be
guardian in behalf of his ward or by the legally in possession of a third person in
legal representative in behalf of an good faith.
absentee.
2. The ward or absentee suffered lesion of NOTE: If the object of the contract is legally in the
more than 1/4 of the value of the possession of a third person who did not act in
property which is object of the contract. bad faith, the remedy available to the creditor is to
3. The contract must be entered into proceed against the person causing the loss for
without judicial approval. damages. Such person is solidarily liable with that
4. There must be no other legal means for of transferring creditor as both of them are guilty
obtaining reparation for the lesion. of fraud.
5. The person bringing the action must be
able to return whatever he may be The action to rescind contracts in fraud of
obliged to restore. creditors is known as accion pauliana. For this
6. The object of the contract must not be action to prosper, the following requisites must be
legally in the possession of a third person present:
who did not act in bad faith.
a) The plaintiff asking for rescission has a
Statutory presumptions of Fraud in Article credit prior to the alienation;
1387 b) The debtor has made a subsequent
contract conveying a patrimonial benefit to
1. Alienation by gratuitous title. a third person;
When a debtor donates his property c) The creditor has no other legal remedy to
without reserving sufficient property to satisfy his claim;
pay all his pre-existing debts, the law d) The act being impugned is fraudulent;
presumes that the gratuitous dispositions e) The third person who received the
are made in fraud of creditors. property conveyed, if it is by onerous title,
2. Alienation by onerous title. has been an accomplice in fraud (Siguan vs
The contract is presumed fraudulent if at Lim, G.R. No. 134685, November 19, 1999).
the time of alienation, some judgement
has been rendred against him, whether it Badges of fraud
is on appeal or has already become final
and executory; or some writ of 1. Consideration for the conveyance of the
attachment has been issued against him property is inadequate or fictitious;
in any case. 2. Transfer was made by the debtor after a suit
has commenced and during its pending against
NOTE: The decision or writ of attachment need him;
not refer to the very property subject of 3. Sale upon credit by an insolvent debtor;
alienation. The person who obtained the 4. The presence of evidence of large indebtedness
judgement or writ of attachment need not be the or complete insolvency of the debtor;
same person seeking the rescission. 5. Transfer of all his property by a debtor when
he is financially embarrassed or insolvent;
These presumptions are rebuttable, which means, 6. Transfer is made between father and son,
they may be overcome by clear, strong and where there are present some or any of the
convincing evidence. above circumstances; and
7. Failure of the vendee to take exclusive
Requisites before a contract entered into in possession of the property (Oria v. McMicking,
fraud of the creditors may be rescinded 21 Phil. 243, G. R. No. 7003, January 18, 1912).
407
CIVIL LAW
contract. By seeking rescission, a seller necessarily allowed to retain the money at the same time
offers to return what he has received from the appropriate the proceeds of the second sale made
buyer. Such a seller may not take back his offer if to another (Goldenrod, Inc. v. CA, G.R. No. 126812,
the court deems it equitable, to prevent unjust November 24, 1998).
enrichment and ensure restitution, to put the
money in judicial deposit.
VOIDABLE CONTRACTS (BAR 2004)
NOTE: In this case, it was just, equitable and
proper for the trial court to order the deposit of
the down payment to prevent unjust enrichment Voidable contracts are those where consent is
by Reyes at the expense of Lim. Depositing the vitiated either by the incapacity of one of the
down payment in court ensure its restitution to its
contracting parties or by mistake, violence,
rightful owner. Lim, on the other hand, has intimidation, undue influence or fraud. These
nothing to refund, as he has not received anything contracts are binding, unless they are annulled by
under the contract to sell (Reyes v. Lim, Keng and a proper action in court. It is susceptible of
Harrison Lumber, Inc., G.R. No. 134241, August 11,
ratification (NCC, Art. 1390).
2003).
--- NOTE: Annulment may be had even if there be no
Q: Goldenrod offered to buy a mortgaged
damage to the contracting parties.
property owned by Barreto Realty to which it
paid an earnest money amounting to P1 Characteristics of a voidable contract
million. It was agreed upon that Goldenrod
would pay the outstanding obligations of
1. Effective until set aside;
Barreto Realty with UCPB. However, 2. Can be; and
Goldenrod did not pay UCPB because of the
(the word should be ”ratified ”)
bank’s denial of its request for the extension to 3. Can be assailed only by the party whose
pay the obligation. Thereafter, Goldenrod, consent was defective or his heirs or assigns.
through its broker, informed Barreto Realty
that it could not go through with the purchase
NOTE: Third persons may assail if they are
of the property and also demanded the refund
prejudiced. (Development Bank vs. CA, 96 SCRA
of the earnest money it paid. In the absence of
342)
a specific stipulation, may the seller of real
estate unilaterally rescind the contract and as 4. A voidable contract, unlike an unenforceable
a consequence keep the earnest money to
and void contracts may be attacked indirectly
answer for damages in the event the sale fails or collaterally, by way of defense to an action
due to the fault of the prospective buyer? under the contract by way of a counterclaim
(De Leon, 2016).
A: NO. Goldenrod and Barretto Realty did not
intend that the earnest money or advance
Classes of voidable contracts
payment would be forfeited when the buyer
should fail to pay the balance of the price,
1. Those where one of the parties is incapable of
especially in the absence of a clear and express
giving consent; and
agreement thereon.
NOTE: If both parties are incapacitated to give
Moreover, Goldenrod resorted to extrajudicial
consent, the contract is unenforceable and not
rescission of its agreement with Barretto Realty.
merely voidable.
Under Article 1385, rescission creates the 2. Those where the consent is vitiated by
obligation to return the things which were the mistake, violence, intimidation, undue
object of the contract together with their fruits
influence or fraud (NCC, Art. 1390).
and interest. Therefore, by virtue of the
extrajudicial rescission of the contract to sell by Who may institute an action for annulment
Goldenrod without opposition from Barretto
Realty, which in turn, sold the property to other 1. Real party in interest. – All who are
persons, Barretto Realty, had the obligation to
principally or subsidiarily liable ; and
return the earnest money which formed part of 2. One not responsible for the defect of the
the purchase price plus legal interest from the
contract.
date it received notice of rescission. It would be
most inequitable if Barretto Realty would be
1. If contract not yet consummated – parties shall NOTE: If the right of action is based upon the
be released from the obligations arising incapacity of any one of the contracting parties, the
therefrom. loss of the thing shall not be an obstacle to the
success of the action, unless it took place through
2. If contract has already been consummated – the fraud or fault of the plaintiff (NCC, Art. 1401).
rules provided in Arts. 1398-1402 shall
govern. Prescriptive period for an annulment of a
voidable contract
a. Restitution
The action for annulment shall be brought within
GR: Mutual restitution. – the contracting 4 years, reckoned from:
parties shall restore to each other things 1. In cases of intimidation, violence or undue
which have been the subject matter of the influence, from the time the defect of the
contract, with their fruits and the price consent ceases;
with its interest except in case provided 2. In case of mistake or fraud, from the time of
by law. In an obligation to render the discovery of the same;
services, the value thereof shall be the 3. And when the action refers to contracts
basis for damages (NCC, Art. 1398). entered into by minors or other incapacitated
persons, from the time the guardianship
Note: No restitution. – The party ceases (NCC, Art. 1391).
incapacitated is not obliged to make any
restitution except insofar as he has been Ratification
benefited by the thing or the price
received by him (NCC, Art. 1399). It is the act or means by virtue of which, efficacy is
given to a contract which suffers from a vice of
XPN : If and when the application of curable nullity (Manresa).
mutual restitution will result in unjust
enrichment of one party at the expense of NOTE: Ratification extinguishes the action to
another. (4 Tolentino, 607, [1991]) annul a voidable contract (NCC, Art. 1392).
1. Prescription – the action for annulment must NOTE: Ratification entered into by the
be commenced within 4 years depending on incapacitated person may be effected by the
the ground stated. guardian of the incapacitated person (NCC,
Art. 1394). However, this rule does not pertain
NOTE: If the action has prescribed, the to a rescissible contract entered into by the
contract can no longer be set aside (Villanueva guardian in behalf of his ward.
v. Villanueva, 91 Phil 43).
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CIVIL LAW
The right to ratify is transmitted to the heirs of the Confirmation v. Recognition
party entitled to such right (Tolentino, 2002).
CONFIRMATION RECOGNITION
Party who may ratify
It is an act by which It is an act whereby a defect
1. In contracts entered into by incapacitated a voidable contract is of proof is cured such as
persons. cured of its vice or when an oral contract is
(a) guardian ; defect. put into writing or when a
(b) injured party himself, provided he is private instrument is
already capacitated. converted into a public
2. In contracts voidable on the ground of instrument (Luna v.
mistake. – party whose consent was vitiated Linatoc, G.R. No. L-48403,
(De Leon, 2016). October 28, 1942).
Kinds of ratification
Voidable contract v. Rescissible contract
1. Express –the desire of the innocent party to
BASIS VOIDABLE RESCISSIBLE
convalidate the contract, or his waiver or
As to the kind Defect is Defect is
renunciation of his right to annul the contract
of defect intrinsic external
is clearly manifested verbally or formally in
present
writing (Pineda, 2000).
2. Implied (tacit) – it is the knowledge of the As to the Vitiated The damage or
reason which renders the contract voidable source of consent makes prejudice
defect the contract suffered by
and such reason having ceased, the person
who has a right to invoke it should execute an voidable one of the
act which necessarily implies an intention to contracting
parties or a
waive his right (NCC, Art. 1393).
third person
makes the
Effects of ratification
contract
rescissible
Ratification cleanses the contract from all its
defects from the moment it was constituted, As to the Damage is Damage /
thereby extinguishing the action to annul a necessity of immaterial prejudice is
voidable contract. It results therefore that after a damage material
contract is validly ratified, no action to annul the As to the Annulability of Rescissibility
same can be maintained based upon defects source of the contract is of the contract
relating to its original validity (Rabuya, 2017). remedy based on law is based on
equity
Retroactivity in ratification of contracts As to the kind Public interest Private
of interest the predominates interest
GR: Retroactivity applies in ratification of predominates predominates
contracts. As to the Susceptible of Not
susceptibility ratification susceptible of
XPN: When the rights of innocent third persons of ratification ratification
will be prejudiced, ratification will not take effect. As to whether It is a sanction It is a remedy
a sanction or
NOTE: Ratification does not require the a remedy
conformity of the contracting party who has no As to who can Only parties to Third persons
right to bring the action for annulment. avail the the contract who are
remedies can assail it affected may
file the action
As to the kind It is a principal It is a
of action action subsidiary
action
411
CIVIL LAW
It is to prevent fraud and perjury in the 3. It is exclusive as it applies only to the
enforcement of obligations depending for their agreements or contracts enumerated in Art.
evidence on the unassisted memory of witnesses, 1403.
by requiring certain enumerated contracts and 4. The defense of Statute of Frauds may be
transactions to be evidenced by a writing signed waived.
by the party to be charged (Swedish Match, AB v. 5. It is a personal defense; it cannot be assailed
CA, G.R. No. 128120, October 20, 2004). by third persons.
6. Contracts infringing the Statute of Frauds are
NOTE: The statute of Frauds simply provides the not void; they are merely unenforceable.
method by which the contracts enumerated 7. It is a Rule of Exclusion as it excludes oral
therein may be proved. It does not declare the said testimony.
contracts are invalid because they are not reduced 8. It does not determine the credibility or weight
to writing. A contract exists and is valid even of evidence. It merely concerns itself with the
though it is not clothed with the necessary form admissibility.
(De Leon, 2010). 9. It does not apply if the claim is that the
contract does not express the true agreement
Contracts or agreements covered by the of the parties (Paras, 2008).
Statute of Frauds
Q: Cenido, as an heir of Aparato and claiming
1. An agreement that by its terms is not to be to be the owner of a house and lot, filed a
performed within a year from the making complaint for ejectment against spouses
thereof; Apacionado. On the other hand, spouses
2. A special promise to answer for the debt, Apacionado alleged that they are the owners of
default or miscarriage of another; the house and lot which are unregistered
3. An agreement made in consideration of purchased by them from its previous owner,
marriage, other than a mutual promise to Aparato. Their claim is anchored on a 1-page
marry; typewritten document entitled
4. An agreement for the sale of goods, chattels or "Pagpapatunay," executed by Aparato. Is the
things in action, at a price not less than 500 “Pagpapatunay” entered into by Bonifacio and
pesos, unless the buyer accepts and receives spouse Apacionado valid and enforceable?
part of such goods and chattels, or the
evidences, or some of them, of such things in A: YES, it is valid and enforceable. Generally,
action, or pay at the time some part of the contracts are obligatory, in whatever form such
purchase money; but when a sale is made by contracts may have been entered into, provided
an auction and entry is made by the all the essential requisites for their validity are
auctioneer in his sales book, at the time of the present. When, however, the law requires that a
sale, of the amount and kind of property sold, contract be in some form for it to be valid or
terms of sale, price, names of the purchasers enforceable, that requirement must be complied
and person on whose account the sale is with.
made, it is a sufficient memorandum;
5. An agreement for the leasing for a longer The sale of real property should be in writing and
period than one (1) year, or for the sale of real subscribed by the party charged for it to be
property or of an interest therein; enforceable. The "Pagpapatunay" is in writing and
6. A representation as to the credit of a third subscribed by Aparato, hence, it is enforceable
person (NCC, Art. 1403). under the Statute of Frauds. Not having been
subscribed and sworn to before a notary public,
NOTE: The enumeration is EXCLUSIVE. however, the "Pagpapatunay" is not a public
document, and therefore does not comply with
Fundamental principles governing Statute of par. 1, Art. 1358.
Frauds
Moreover, the requirement of a public document
1. It only applies to executory contracts and not in Article 1358 is not for the validity of the
partially or completely executed. instrument but for its efficacy. Although a
2. It cannot apply if the action is neither for conveyance of land is not made in a public
damages because of violation of an agreement document, it does not affect the validity of such
nor for the specific performance of said conveyance. The private conveyance of the house
agreement. and lot is therefore valid between Aparato and the
spouses. For greater efficacy of the contract,
1. A contract entered into in the name of another In general, void and inexistent contracts may be
by one who has no authority, legal defined as those which lack absolutely either in
representation or who acted beyond his fact and or in law one or some or all of those
powers shall be unenforceable, unless it is
elements which are essential for its validity.
ratified expressly or impliedly, by the person Void contracts are those which have no force and
on whose behalf it has been executed, before
effect from the beginning and which cannot be
it is revoked by the other contracting party ratified or validated by lapse of time (Pineda,
(NCC, Art. 1317). 2000).
2. Contracts infringing the Statute of Frauds are
ratified:
NOTE: The principle of in pari delicto is applicable
a. By failure to object to the
in cases of void contracts but not in inexistent
representation of oral evidence to
contracts. Consequently, void contracts may
prove the same; or
produce effects (NCC, Arts. 1411-1412), but
b. By the acceptance of benefits under inexistent contracts do not produce any effect
them; the contract is already
whatsoever (Jurado, 2009).
executed. (NCC, Art. 1317).
c. By cross-examining the witness who Characteristics of void/inexistent contracts
is testifying on the oral contract.
(Pineda, 2009 citing Abrenica vs. 1. It produces no legal force and effect;
Gonda, 24 Phil. 739)
2. It cannot be cured or validated by
prescription or ratification (NCC, Art. 1409);
3. In a contract where both parties are incapable
3. The right to set up the defense of illegality
of giving consent, express or implied
cannot be waived (NCC, Art. 1409).
ratification by the parents or guardian, as the
4. The defense of illegality of contracts is not
case may be, of one of the contracting parties,
available to third persons whose interests are
or one of the contracting parties upon
not directly affected (NCC, Art. 1421).
attaining capacity, shall give the contract the
5. Cannot give rise to a valid contract (NCC, Art.
same effect as if only one of them is 1422).
incapacitated. Hence, the contract becomes 6. Can be assailed either directly or collaterally.
voidable and the rules on voidable contracts
7. Parties to a void agreement cannot expect the
should govern. aid of the law. (in pari delicto)
If the ratification is made by the parents or NOTE : In case of a divisible contract, if the illegal
guardians as the case may be, of both terms can be separated from the legal ones, the
contracting parties, or both of the contracting
latter may be enforced. (Art. 1420)
parties upon attaining capacity, the contract
shall be validated from the inception (Jurado,
Reiteration
2011).
413
CIVIL LAW
GR: They produce no legal effect whatsoever in b. Pactum de non alienando – an agreement
accordance with the principle quod nullum est prohibiting the owner from alienating the
nullum producit effectum (Jurado, 2011). mortgaged immovable.
c. Pactum leonina – a stipulation in a
XPN: In case of pari delicto since it will refuse legal partnership agreement which excludes one or
remedy to either party to an illegal agreement and more partners from any share in the profits or
leaves them to where they were. Hence, if a void losses.
contract is already executed, neither of the parties d. Illegal or illicit contracts (e.g. contract to sell
can recover from each other. marijuana)
NOTE: A party has a right to unilaterally cancel
and treat as avoided a void contract. However, an Q: Judie sold one-half of their lot to Guiang
action to declare its inexistence is necessary to under a deed of transfer of rights without the
allow restitution of what has been given under it consent and over the objection of his wife,
(Fuentes v. Roca, 618 SCRA 702, [2010]). Gilda and just after the latter left for abroad.
When Gilda returned home and found that
Effect of Laches. only her son, Junie, was staying in their house.
She then gathered her other children, Joji and
GR: The action or defense for the declaration of Harriet and went to stay in their house. For
the ineistnce of a contract does not prescribe. (Art. staying in their alleged property, the spouses
1410) Guiang complained before the barangay
authorities for trespassing.
XPN : When there is laches on the part of the
party assailing this contract. Is the deed of transfer of rights executed by
Judie Corpuz and the spouses Guiang void or
Lache is neglignece or ommission to assert a right voidable?
within the reasonable time, warranting a
presmption that the party entitled to assert it A: It is void. Gilda’s consent to the contract of sale
either has abandoned it or declined to assert it. of their conjugal property was totally inexistent or
(Lim Tay vs. Court of Appeals, 293 SCRA 634) absent. Thus, said contract properly falls within
the ambit of Article 124 of the FC.
The prevailing doctrine is that the right to have a
contract declared void ab initio may be barred by The particular provision in the old Civil Code
laches although not barred by prescription. which provides a remedy for the wife within 10
(Jurado, 2009) years during the marriage to annul the
encumbrance made by the husband was not
Kinds of void contracts carried over to the Family Code. It is thus clear
that any alienation or encumbrance made after
Those lacking in essential elements: the Family Code took effect by the husband of the
a. Those whose cause, object or purpose is conjugal partnership property without the
contrary to law, morals, good customs, public consent of the wife is null and void (Spouses
order or public policy: illicit cause, or object; Guiang v. CA, G.R. No. 125172, June 26, 1998).
b. Those which are absolutely simulated or
fictitious: no cause; Q: On July 6, 1976, Honorio and Vicente
c. Those whose cause or object did not exist at executed a deed of exchange. Under this
the time of the transaction: no cause or instrument, Vicente agreed to convey his
object; 64.22-square-meter lot to Honorio, in
d. Those whose object is outside the commerce exchange for a 500-square-meter property.
of man: no object; The contract was entered into without the
e. Those which contemplate an impossible consent of Honorio’s wife. Is the deed of
service: no object; exchange null and void?
f. Those where the intention of parties relative
to principal object of the contract cannot be A: The deed is valid until and unless annulled.
ascertained. The deed was entered into on July 6, 1976, while
the Family Code took effect only on August 3,
Contracts prohibited by law 1998. Laws should be applied prospectively only,
a. Pactum commisorium – the creditor unless a legislative intent to give them retroactive
appropriates to himself the things given by effect is expressly declared or is necessarily
way of pledge or mortgage to fulfill the debt. implied from the language used. Hence, the
415
CIVIL LAW
As to the Defense may
It is not
susceptibility It is subject to be invoked
subject to Defense may be
to ratification. only by the
ratification. availed of by
ratification parties
anybody,
(those
It can be whether he is a
principally
As to the easily As to the set-up party to the
and
capacity of assailed by of defense contract or not
It cannot be subsidiarily
third third persons as long as his
assailed by third liable) or
persons to whose interest is
persons. their
assail the interests are directly affected
successors in
contract directly (NCC, Art. 1421).
interest and
affected. privies.
Void contract v. Voidable contract (2004 BAR) Void contract v. Rescissible contract
417
CIVIL LAW
Cannot be legal effect relation or
enforced in affection
court because
the obligee has
no right of
action to
compel its As to the Within the Within the
As to the performance Can be applicability domain of the domain of
availability of but after enforced in of the law law morals
enforcement voluntary court because
of the fulfilment by the obligee has As to the effect
Performance
of the When fulfilled
obligation in the obligor, a right of does not
courts they authorize action performance produces mora
produce legal
the retention of of the legal effects
effects
what may have obigation
been delivered As to
or rendered by Cannot be
susceptibility Can be ratified
reason thereof ratified
to ratification
(Ncc, Art.
1423).
NOTE: A natural obligation can be guaranteed
(Rabuya, 2017 citing NCC, Art. 2052).
Conversion of natural obligation to civil
obligation
ESTOPPEL
Natural obligations may be converted into civil
obligations by acts of novation. Thus, a prescribed
debt is turned into civil obligation when the
debtor renounces the defense of prescription or An admission or representation rendered
by signing a document recognizing such with a conclusive upon the person making it, and cannot
promise to pay the debt at some future time. The be denied or disproved as against the person
natural obligation becomes a valid cause for a civil relying thereon (NCC, Art. 1431).
obligation after it has been affirmed or ratified
anew by the debtor (Pineda, 2009). Estoppel is effective only between the parties
thereto or their successors in interest (NCC, Art.
Natural obligation v. Moral obligation 1439).
Estoppel by acceptance of benefits A: There are three kinds of estoppels, to wit: (1)
estoppel in pais; (2) estoppel by deed; and (3)
It refers to a type of estoppel in pais which arises estoppel by laches. Under the first kind, a person
when a party, by accepting benefits derived from a is considered in estoppel if by his conduct,
certain act or transaction, intentionally or through representations, admissions or silence when he
culpable negligence, induces another to believe ought to speak out, whether intentionally or
certain facts to exist and such other relies and act through culpable negligence, "causes another to
on such belief, as a consequence of which he believe certain facts to exist and such other
would be prejudiced if the former is permitted to rightfully relies and acts on such belief, as a
deny the existence of such facts (Jurado, 2009). consequence of which he would be prejudiced if
the former is permitted to deny the existence of
Illustration: such facts." Under estoppel by deed, a party to a
deed and his privies are precluded from denying
Article 1438 provides that one who has allowed any material fact stated in the deed as against the
another to assume apparent ownership of other party and his privies. Under estoppel by
personal property for the purpose of making any laches, an equitable estoppel, a person who has
transfer of it, cannot, if he received the sum for failed or neglected to assert a right for an
which a pledge has been constituted, set up his unreasonable and unexplained length of time is
own title to defeat the pledge of the property, presumed to have abandoned or otherwise
made by the other to a pledgee who received the declined to assert such right and cannot later on
same in good faith and for value. seek to enforce the same, to the prejudice of the
other party, who has no notice or knowledge that
Estoppel by silence or inaction the former would assert such rights and whose
condition has so changed that the latter cannot,
without injury or prejudice, be restored to his
419
CIVIL LAW
former state (Jose Go et al., v. BSP, G.R. No. 202262, Not statutory Statutory
July 8, 2015) (Bersamin, J.).
Applies in equity Applies at law
LACHES (2000, 2002 BAR
(Stale Demands) Not based on fixed of
Based on fixed of time
time
The failure or neglect, for an unreasonable length
of time, to do that which by exercising due NOTE: The doctrine of laches is inapplicable when
diligence could or should have been done earlier; the claim was filed within the prescriptive period
it is negligence or omission to assert a right within set forth under the law (Pineda, 2000).
a reasonable time, warranting a presumption that
the party entitled to assert it either has
abandoned it or declined to assert it. It is also
known as stale demands (Lim Tay v. CA, 293 SCRA
34, G.R. No. 126891, August 5, 1998; Pineda, 2000).
Laches v. Prescription
LACHES PRESCRIPTION
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CIVIL LAW
parties (De Leon, 2014); or positive acts expressed, are
b. Implied trust, or one which comes of the parties, deducible from
into being by operation of law (NCC, by some the nature of
Arts. 1447-1457) (De Leon, 2014); this writing or the transaction
latter trust being either: deed or will or by operation of
1) resulting trust; and by words law as matters
2) constructive trust evidencing an of equity,
intention to independently
2. As to Effectivity- From the viewpoint of whether create a trust. of the particular
they become effective after the death of the trustor intention of the
or during his life, they may be either (De Leon, parties.
2014): Parole An express An implied
evidence trust trust
a. testamentary trust- one which is to take concerning an concerning an
effect upon the trustor's death. It is immovable or immovable or
usually included as part of the will and any interest any interest
does not have a separate trust deed therein therein may be
(Lorenzo vs. Posadas, 64 Phil. 353, 1937), cannot be proved by
(De Leon, 2014). proved by parole
b. inter vivos trust or "living trust"- one parole evidence. (NCC,
established effective during the owner's evidence Art. 1457)
life. The grantor executes a "trust deed," (NCC, Art.
and once the trust is created, legal title to 1443).
the trust property passes to the named Laches or An action to An action to
trustee with duty to administer the extinctive enforce an enforce an
property for the benefit of the prescription express trust, implied trust
beneficiary (De Leon, 2014). so long as even when
there is no there is no
3. As to Revocability- From the viewpoint of whether express express
they may be revoked by the trustor, they may be repudiation of repudiation of
either: the trust by the trust by the
a. Revocable trust- one which can be the trustee trustee and
revoked or cancelled by the trustor or and made made known to
another individual given the power; or known to the the beneficiary,
b. Irrevocable trust- one which may not be beneficiary, may be barred
terminated during the specified term of cannot be by laches or by
the trust. barred by extinctive
laches or prescription.
NOTE: Whether a trust is revocable or irrevocable extinctive
depends on the wordings or language used in the prescription.
creation of the trust. It will be presumed revocable
unless the creator has expressed a contrary EXPRESS TRUST
intention in the trust deed (De Leon, 2014).
One which come into existence only by the
KINDS OF TRUST execution of an intention to create it by the trustor
or the parties (De Leon, 2014).
Express trust v. Implied trust
Elements of express trust
BASIS EXPRESS IMPLIED
TRUST TRUST 1. A competent trustor and trustee;
Definition Created by the Comes into 2. An ascertainable trust res; and
(NCC, Art. intention of being by 3. Sufficiently certain beneficiaries
1441) the trustor or operation of
of the parties. law. It may be NOTE: All of the above elements are required to
either resulting be established (De Leon, 2014).
or constructive.
Manner of Created by the Those which, Evidence to prove express trust
creation direct and without being
423
CIVIL LAW
1. Resulting trust – broadly defined as a trust provision of Art. 1450 of the Civil Code is
which is raised or created by the act or applicable. It must be observed, however, that the
construction of law, but in its more restricted mortgage of the property by “Y” to the bank is
sense, it is a trust raised by implication of law perfectly valid inasmuch as the bank was not
and presumed always to have been aware of any flaw or defect in the title or mode of
contemplated by the parties, the intention as to acquisition by “Y” since the right of “X” has not
which is to be found in the nature of their been annotated in the Certificate of Title.
transaction, but not expressed in the deed or Consequently, the only way by which I would be
instrument of conveyance (Ramos v. Ramos, 61 able to help “X” would be to advice him to redeem
SCRA 284). the mortgaged property from the bank. After this
is done, “X” can then institute an action to compel
Examples of resulting trust “Y’ to reconvey the property to him pursuant to
Art. 1450 of the Civil Code. In this action for
a. There is an implied trust when property is reconveyance, the amount paid by “X” to the bank
sold, and the legal estate is granted to one in redeeming the property can then be applied to
party but the price is by another for the the payment of his debt to “Y.” If there is an excess,
purpose of having the beneficial interest of he can recover the amount from “Y” (Jurado,
the property. The former is the trustee, Comments and Jurisprudence on Obligations and
while the latter is the beneficiary. However, Contracts, pg. 662).
if the person to whom the title is conveyed is
a child, legitimate or illegitimate, of the one d. If two or more persons agree to purchase
paying the price of the sale, no trust is property and by common consent the legal
implied by law, it being disputably title is taken in the name of one of them for
presumed that there is a gift in favor of the the benefit of all, a trust is created by force
child (NCC, Art. 1448). of law in favor of the others in proportion to
b. There is also an implied trust when a the interest of each (NCC, Art. 1452).
donation is made to a person but it appears e. When property is conveyed to a person in
that although the legal estate is transmitted reliance upon his declared intention to hold
to the done, he nevertheless is either to have it for, or transfer it to another or the grantor,
no beneficial interest or only a part thereof there is an implied trust in favor of the
(NCC, Art. 1449). person whose benefit contemplated (NCC.
c. If the price of a sale of property is loaned or Art. 1453).
paid by one person for the benefit of another
and the conveyance is made to the lender or 2. Constructive trust – a trust raised by
payor to secure the payment of the debt, a construction of law or arising by operation of
trust arises by operation of law in favor of law. It is a trust not created by any words,
the person to whom the money is loaned or either expressly or impliedly evincing a direct
for whom it is paid. The latter may redeem intention to create a trust, but by the
the property and compel a conveyance construction of equity in order to satisfy the
thereof to him (NCC, Art. 1450). demands of justice. It does not arise by
agreement or intention but by operation of
Q: “X” being unable to pay the purchase price law (Ramos v. Ramos, 61 SCRA 284).
of a house and lot for his residence has
requested “Y,” and “Y” agreed to lend him the NOTE: A constructive trust is not a trust in a
money under one condition, that the technical sense (Ramos v. Ramos, 61 SCRA 284). It
Certificate of Title be transferred to him, in Y’s is substantially an equitable remedy against unjust
own name for his protection and as security of enrichment (Sumaoang v. Judge, RTC, 215 SCRA
the loan. Later on “Y” mortgaged the property 136, 1992).
to the bank without the knowledge of “X.”
When the mortgage became due, “Y” did not NOTE: It is otherwise known in American law as a
redeem the mortgage and the property was trust ex maleficio, trust ex delicto, and de son tort
advertised for sale. “X” retained you as his (Sumaoang vs. Judge, RTC, 215 SCRA 136, 1992).
lawyer. What advise would you give your client
and what legal ground provided by the Code Q: Explain the following concepts and
would you assert to defend his rights? Give doctrines and give an example of each:
reasons. (1959 BAR)
a. Concept of trust de son tort
A: It is clear that in the instant problem, the (Constructive trust) (2007 BAR)
An action for reconveyance of real property based Express repudiation of the trust by the trustee is
not required. All that is required is that he must
upon a constructive or implied trust, resulting from
fraud, may be barred by the statute of limitations. set up a title which is adverse to that of the
An action may be filed from the discovery of the beneficiary. In other words, the normal requisites
fraud. In some cases, the discovery is deemed to for extraordinary acquisitive prescription must be
have taken place when new certificates of title present (Jurado, Comments and Jurisprudence on
were issued exclusively in the name of another Obligations and Contracts, pg. 666).
person. (Gerona v. De Guzman, 11 SCRA 153, May
29, 1964) Conversion of implied trust to express trust
425
CIVIL LAW
SALES The contract of sale is void.
The contract of sale is perfected at the moment Instances where the Statute of Frauds is not
there is a meeting of minds upon the thing which essential for the enforceability of a contract of
is the object of the contract and upon the price. sale
From that moment, parties may reciprocally 1. When there is a note or memorandum in
demand performance, subject to the provisions of writing and subscribed to by the party or his
the law governing the forms of contracts. agent (contains essential terms of the contract);
2. When there has been partial
Formal requirement for the validity of a performance/execution (seller delivers with the
contract of sale intent to transfer title/receives price);
3. When there has been failure to object to
GR: A contract of sale may be made in writing, or presentation of evidence aliunde as to the
by word of mouth, or partly in writing and partly existence of a contract without being in writing
by word of mouth, or may be inferred from the and which is covered by the Statute of Frauds;
conduct of the parties (NCC, Art. 1483). Contracts 4. When sales are effected through electronic
shall be obligatory, in whatever form they have commerce (Villanueva, 2014).
been entered into, provided all the essential
requisites for their validity are present. NOTE: Rules on forms, and of validity and
enforceability of contracts of sale, are strictly kept
XPNs: within the contractual relationship of the seller
a) If the law requires a document or other special and buyer pursuant to the characteristic of
form, the contracting parties may compel each relativity of every contract, and do not necessarily
other to observe that form (NCC, Art. 1357). apply to third parties whose rights may be
b) Under Statute of Frauds, the following affected by the terms of a sale.
contracts must be in writing; otherwise, they
shall be unenforceable: KINDS OF CONTRACT OF SALE
427
CIVIL LAW
NOTE: An intangible object is a chose in It is conditional where the sale contemplates a
action. contingency, and in general, where the contract is
subject to certain conditions, usually in the case of
4. Validity or defect of the transaction: the vendee, the full payment of the agreed
a. Valid; purchase price and in the case of the vendor, the
b. Rescissible; fulfillment of certain warranties (De Leon, 2013).
c. Voidable;
d. Unenforceable; and Conditional sale v. Absolute sale (2001 BAR)
e. Void.
BASIS CONDITIONAL ABSOLUTE
5. Legality of the object: SALE SALE
a. Licit object; and The seller is The title to the
b. Illicit object. granted the right property is not
to unilaterally reserved to the
6. Presence or absence of conditions: rescind the seller or if the
a. Absolute; and contract seller is not
b. Conditional. Definition predicated on the granted the
fulfillment or non- right to rescind
7. Wholesale or retail: fulfillment, as the the contract
a. Wholesale; or case may be, of the based on the
b. Retail. prescribed fulfillment or
condition. non-fulfillment,
8. Proximate inducement for the sale: as the case may
a. Sale by description; be, of the
b. Sale by sample; and prescribed
c. Sale by description and sample. condition.
429
CIVIL LAW
Seller needs to be owner Lessor need not
As to of thing to transfer be owner.
Real contract Personal contract ownership.
Contract
Q: Dolores Ventura entered into a Contract to Instances when a contract to sell may be
Sell with spouses Eustacio and Trinidad resorted to:
Endaya for the purchase of two parcels of land
located in Marian Road II, Marian Park, 1. Where subject matter is indeterminate (NCC,
Parañaque City. The contract to sell provides Arts. 1458 & 1460);
that the purchase price of P347,760.00 shall be 2. Sale of future goods except future inheritance
paid by Dolores through: (a) down payment of (NCC, Art. 1462);
P103,284.00 upon execution of the contract; 3. Stipulation that deed of sale & corresponding
and (b) the balance of P244,476.00 within a certificate of sale would be issued only after
15-year period, plus 12% interest per annum full payment (David v. Tiongson, G.R. No.
on the outstanding balance and 12% interest 108169, August 25, 1999).
per annum on arrearages.
Contract to Sell v. Conditional Contract of Sale
Dolores’ children, Frederick Ventura, Marites
Ventura-Roxas, and Philip Ventura filed a BASIS CONTRACT TO CONDITIONAL
Complaint and, thereafter, an Amended SELL CONTRACT OF
Complaint for specific performance, seeking to SALE
compel Sps. Endaya to execute a deed of sale The prospective The first element
over the subject properties. They argued that seller does not of consent is
their parents’ close friendship with Sps. as yet agree or present,
Endaya, allowed widowed Dolores to pay the consent to although it is
downpayment stated in the contract to sell transfer conditioned
and, instead, allowed her to pay amounts as ownership of upon the
her means would permit. The total payments the property happening of a
made by Dolores and petitioners amounted to subject of the contingent
P952,152.00, more than the agreed purchase contract to sell event, which
price of P347,760.00, including the 12% until the may or may not
interest p.a. thereon computed on the As to happening of an occur.
outstanding balance. consent event, which
may be the full
When Dolores’ children demanded the payment of the
execution of the corresponding deed of sale, purchase price.
Sps. Endaya refused. Should Sps. Endaya What the seller
execute a deed of sale over the subject agrees or
properties in favor of Dolores’ children? obliges himself
to do is to fulfill
his promise to
A: No. Spouses Endaya had no obligation to sell the subject
petitioners to execute a deed of sale over the property when
subject properties. A contract to sell is defined as a the entire
bilateral contract whereby the prospective seller, amount of the
while expressly reserving the ownership of the purchase price
subject property despite delivery thereof to the is delivered to
prospective buyer, binds himself to sell the said him.
property exclusively to the latter upon his
431
CIVIL LAW
Upon the If the suspensive intending buyer. reconveyance of
fulfillment of condition is the property
the suspensive fulfilled, the subject of the
condition, contract of sale sale.
which is the full is thereby
payment of the perfected, such (Reyes v. Tuparan, G.R. No. 188064, June 1, 2011;
purchase price, that if there had Coronel v. CA, G.R. No. 103577, October 7, 1996).
ownership will already been
not previous Contract of sale v. Contract to sell (2001 BAR,
automatically delivery of the 2017 BAR)
As to effect transfer to the property subject
of buyer although of the sale to the BASIS CONTRACT OF CONTRACT
fulfillment the property buyer, SALE TO SELL
of may have been ownership
suspensive previously thereto Ownership is Ownership is
condition delivered to automatically transferred to transferred
him. The transfers to the the buyer upon upon full
prospective buyer by delivery of the payment of
seller still has to operation of law object to him. the purchase
convey title to without any price.
the prospective further act As regards
NOTE: Vendor
buyer by having to be transfer of
has lost and NOTE: Prior
entering into a performed by ownership
cannot recover to full
contract of the seller. ownership until payment,
absolute sale. and unless the ownership is
contract is retained by
There being no Upon the resolved or the seller.
previous sale of fulfillment of the rescinded.
the property, a suspensive
third person condition, the There are two
buying such sale becomes contracts:
property absolute and this
despite the will definitely 1. The
fulfillment of affect the seller’s contract to sell
the suspensive title thereto. The
condition such second buyer of NOTE:
as the full the property Preparatory
payment of the who may have There is only sale
purchase price, had actual or As to one contract
cannot be constructive numbers of executed 2. The deed of
As to effect
deemed a buyer knowledge of contracts between the absolute sale
of sale of
in bad such defect in involved seller and the
property
faith. There is the seller’s title, buyer. NOTE: The
to third
no double sale or at least was principal
persons
in such charged with the contract is
case. Title to obligation to executed after
the property discover such full payment
will transfer to defect, cannot be of the
the buyer after a registrant in purchase
registration good faith. Such price.
because there is second buyer
no defect in the cannot defeat Non-payment of
owner-seller’s the first buyer’s the price is a Full payment
title per se, but title. In case a resolutory of the price is
the latter, of title is issued to Payment as a
condition. a positive
course, may be the second condition
suspensive
sued for buyer, the first Vendor loses condition.
damages by the buyer may seek ownership over
433
CIVIL LAW
a. To prevent a spouse from defrauding his RELATIVE INCAPACITY
creditors by transferring his properties to
the other spouse; Persons who are relatively incapacitated to
b. To avoid a situation where the dominant enter into a contract of sale
spouse would unduly take advantage of the
weaker spouse; 1. Spouses (NCC, Art. 1490);
c. To avoid an indirect violation of the 2. Agents, Guardians, Executors and
prohibition against donations between Administrators;
spouses under Article 133 of the Civil Code 3. Public Officers and Employees;
(Medina v. Collector of Internal Revenue, G.R. 4. Court Officers and Employees, and
No. L-15113, January 28, 1961). 5. Others specially disqualified by law (NCC, Art.
1491).
4. Sale between guardians and wards – the
contract is void and not merely voidable. The RELATIVELY
PROPERTY STATUS RATIFICAT
prohibition exists only when the guardianship INCAPACITA
INVOLVED OF SALE ION
TED TO BUY
exists.
5. Sale between agents and principals
Property Can be
GR: Art. 1491 (2) of NCC entrusted ratified
to them for after the
XPN: The prohibition does not apply if the administrat inhibition
principal consents to the sale of the property in ion or sale. has
Un-
the hands of the agent or administrator. Agents ceased.
enforcea
XPN: When
ble
Also, after the termination of the affairs of the principal Reason:
agency, the prohibition no longer applies. The gave his the only
transaction may be ratified by way of a new consent. wrong
contract which will become valid only from its that
execution and will not retroact to the date of subsists is
the first contract. Property of the
the ward private
6. Sale between executors and administrators of during wrong to
estate of the deceased [NCC, Art. 1491 (3)]. Guardian period of the ward,
But hereditary rights are not included in the guardiansh principal
prohibition. ip or estate;
7. Sale involving property of the government and can
[NCC, Art. 1491(4)]. be
The nullity of such prohibited contracts is condoned
definite and permanent and cannot be cured by by the
ratification. The public interest and public private
policy remain paramount and do not permit of parties
compromise or ratification. themselve
8. Sale of property in litigation [NCC, Art. 1491(5)] s.
Nullity is permanent. Prohibition applies only Voidable
to a sale or assignment to the lawyer by a client NOTE:
of the property which is the object of litigation Property of Contracts
Executors
(Rabuya, 2017). the estate entered
and
under by
administra-
ABSOLUTE INCAPACITY administrat guardian
tors
ion. in behalf
Persons who are absolutely incapacitated to of ward
enter into a contract of sale are
rescissibl
1. Unemancipated minors (NCC, Art. 1327); and e if ward
2. Insane or demented persons, and deaf-mutes suffers
who do not know how to write (NCC, Art. lesion by
1327). more than
¼ of
value of
435
CIVIL LAW
Persons who has the right to assail the validity 1. Perfection stage: valid – buyer acquires title
of the transaction between spouses of goods.
2. Consummation stage: valid – If the title has
The following are the only persons who can not yet been avoided at the time of sale and
question the sale between spouses: the buyer must buy the goods under the
following conditions:
1. The heirs of either of the spouses who have a. In good faith;
been prejudiced; b. For Value;
2. Prior creditors; and c. Without notice of seller’s defect of
3. The State when it comes to the payment of the title (NCC, Art. 1506).
proper taxes due on the transaction.
NOTE: Art. 1506 is predicated on the
Q: The stipulation between the lawyer and principle that where loss has happened
counsel is as follows, “the attorney’s fees of the which must fall on one of two innocent
Atty. X will be ½ of whatever the client might persons, it should be borne by him, who is
recover from his share in the property subject the occasion of the loss (De Leon, 2005).
of the litigation.” Is the stipulation valid?
SUBJECT MATTER
A: YES. The stipulation made is one of a
contingent fee which is allowed by the CPE and Requisites of a proper objects of sale
the CPR. It does not violate the prohibition of
acquisition of property subject of the litigation by 1. THINGS
the lawyer provided for in the Civil Code since the a. Determinate or determinable
prohibition applies only to a sale or assignment to b. Lawful or licit
the lawyer by his client during the pendency of the c. Should not be impossible (within the
litigation. The transfer actually takes effect after commerce of men)
the finality of the judgment and not during the
pendency of the case. As such it is valid stipulation 2. RIGHTS
between the lawyer and client.
GR: Must be transmissible.
SPECIAL DISQUALIFICATIONS e.g. right of redemption, right of usufruct, sale
of credit, right to inheritance already
Persons specially disqualified by law to enter assigned, etc.
into contracts of sale (ALIEN-UnOS)
XPNs:
1. ALIENs who are disqualified to purchase a. FUTURE INHERITANCE – cannot be
private agricultural lands (Art. XII Secs. 3&7, the subject of sale;
1987 Constitution).
2. Unpaid seller having a right of lien or having b. SERVICE
stopped the goods in transit is prohibited Reason: They are not determinate
from buying the goods either directly or things and no transfer of ownership
indirectly in the resale of the same at is available but it can be the object of
public/private sale which he may make [NCC, certain contracts such as contract for
Art. 1533(5); Art. 1476(4)]. a piece of work (Pineda, 2010).
3. The Officer holding the execution or deputy
cannot become a purchaser or be interested The subject matter of sale must be
directly or indirectly on any purchase at an determinate or at least determinable.
execution (Sec. 21 Rule 39, Rules of Court).
4. In Sale by auction, seller cannot bid unless A. When a thing is determinate
notice has been given that such sale is subject
to a right to bid in behalf of the seller (NCC, A thing is determinate when it is particularly
Art. 1476). designated or physically segregated from all
others of the same class.
SALE BY A PERSON HAVING A VOIDABLE TITLE
The requisite that a thing be determinate is
Effect of a sale made by the seller with satisfied if at the time the contract is entered into,
voidable title over the object the thing is capable of being made determinate
The boundaries of the land stated in the contract b. No rescission is allowed where the thing is
determine the effects and scope of the sale, NOT legally in the possession of a 3rd person
the area. who did not act in bad faith.
The vendors are obligated to deliver all the land 5. Things subject to Resolutory Condition
included within the boundaries, regardless of e.g. Things acquired under legal or
whether the real area should be greater or smaller conventional right of redemption, or subject
than that recited in the deed. This is particularly to reserva truncal (NCC, Art. 1465).
true where the area is described as "humigit 6. Indeterminate Quantity of Subject Matter
kumulang," that is, more or less (Semira v. CA, G.R.
No. 76031, March 2, 1994). NOTE: The fact that the quantity is not
determinate shall not be an obstacle to the
Q: Lino entered into a contract to sell with existence of the contract provided it is
Ramon, undertaking to convey to the latter possible to determine the same without need
one of the five lots he owns, without specifying of a new contract (NCC, Art. 1349).
which lot it was, for the price of P1 million.
Later, the parties could not agree which of five Emptio Rei Speratae v. Emptio Spei
lots he owned Lino undertook to sell to Ramon.
What is the standing of the contract? (2011 EMPTIO REI
BASIS EMPTIO SPEI
BAR) SPERATAE
Sale of thing Sale of mere
A: It is a void contract since the particular lot having hope or
sold cannot be determined. Definition potential expectancy.
existence.
KINDS OF OBJECT OF SALE
Uncertainty is Uncertainty is
1. Existing Goods - Owned or possessed by w/ regard to w/ regard to
seller at the time of perfection. Uncertainty quantity & existence of
2. Future Goods - Goods to be manufactured, quality. thing.
raised, acquired by seller after perfection of
the contract or whose acquisition by seller Contract deals Contract deals
depends upon a contingency (NCC, Art. 1462). Object of the
w/ future w/ present
3. Sale of Undivided Interest or Share Sale
thing. thing – hope or
437
CIVIL LAW
expectancy. This rule is in accord with a well-known principle
of law that one cannot transmit or dispose of that
Sale is valid Sale is valid which he does not have — nemo dat quod non-
only if the even though habet.
expected thing expected thing
will exist. So does not come NOTE: Future inheritance cannot be the subject of
that if the into existence sale.
condition is as long as the
not fulfilled, if hope itself Legal effect of sale by a non-owner
the thing does validly existed
not come into e.g. lotto GR: The buyer acquires no better title to the goods
existence, the than the seller had; caveat emptor (buyer beware).
contract NOTE: Sale of
cannot have a vain hope or XPNs:
the effect for expectancy 1. Estoppel or when the owner of the goods is by
lack of an however, is his conduct precluded from denying the
essential void (NCC, Art. seller’s authority to sell;
requisite. 1461). 2. When the contrary is provided for in recording
Effectivity laws;
Although the
vendee may 3. When the sale is made under statutory power
have reserve of sale or under the order of a court of
his right to competent jurisdiction;
claim 4. When the sale is made in a merchant’s store in
indemnity accordance with the Code of Commerce and
from the special laws;
vendor in the 5. When a person who is not the owner sells and
event that the delivers a thing, and subsequently acquired
latter knew title thereto;
that the thing 6. When the seller has a voidable title which has
could not not been avoided at the time of the sale;
come into 7. Sale by co-owner of the whole property or a
existence definite portion thereof;
(Rabuya, 8. Special rights of unpaid seller.
2017).
Instances when the Civil Code recognizes sale
NOTE: The presumption is emptio rei speratae. of things not actually or already owned by the
seller at the time of sale
SALE BY A PERSON WHO DOES NOT OWN THE
THING SOLD 1. Sale of a thing having potential existence (NCC,
Art.1461);
Ownership is not required at the time of 2. Sale of future goods (NCC, Art. 1462);
perfection in order for the sale to be valid. 3. Contract for the delivery at a certain price of an
Ownership is material only at the time of delivery article, which the seller in the ordinary course
but only for the purpose of transferring ownership of business manufactures/ procures for the
and does not affect the validity of the contract of general market, whether the same is on hand
sale. at the time or not (NCC, Art. 1467).
Obligations of the seller (DDTWTP) NOTE: There is NO effect on the contract of sale in
case of breach in the agreed manner of payment.
1. Deliver the thing sold (NCC, Arts. Payment of the price has nothing to do with the
1458&1459); perfection of the contract (Sps. Bernardo
2. Deliver fruits & accessions/accessories Buenaventura and Consolacion Joaqui v. CA, GR No.
accruing from perfection of sale; 126376, November 20, 2003).
3. Transfer the ownership;
4. Warranties; When price is certain
5. Take care of the thing, pending delivery, with
proper diligence; 1. If there is a stipulation;
6. Pay for the expenses of the deed of sale 2. If it be with reference to another thing certain;
unless there is a stipulation to the contrary. 3. If the determination of the price is left to the
judgment of specified person(s) (NCC,Art.
Obligation of the seller in terms of the nature 1469);
of the subject matter of the sale or
4. By reference to certain fact(s) as referred to in
When the subject matter of the sale is a Art. 1472.
DETERMINATE or SPECIFIC THING, the seller
439
CIVIL LAW
NOTE: If the price is based on estimates, it is XPNs:
uncertain. 1. When the third person acts in bad faith or
by mistake; and
Simulated Price 2. When the third person disregards the
specific instructions or the procedure
The price is simulated when neither party had the marked out by the parties.
intention that the amount will be paid (Yu Bun
Guan v. Ong, G.R. No. 144735, October 18, 2001). Gross inadequacy of price
XPN: If it can be shown to be a donation or Effect of Gross Inadequacy of Price (NCC, Art.
another contract (NCC, Art. 1471). 1470)
Admission by the vendee that he did not pay any GR: It does not affect the validity of the sale.
centavo for the property makes the sale void
(Labagala v. Santiago, G.R. No. 132305, December XPN: (CoRDS)
4, 2001).
1. If Consent is vitiated (may be annulled or
When price of securities, grains, liquids and presumed to be equitable mortgage);
things is considered certain 2. If the parties intended a Donation or
some other act/ contract;
1. When the price fixed is that which the thing 3. If the price is so low as to be “Shocking to
would have on a definite day, or in a particular the conscience”; and
exchange or market; 4. If in the event of Resale, a better price can
2. When the amount is fixed above or below the be obtained.
price of such day, or in such exchange or
market, provided said amount be certain (NCC, Annulment of sale NOT the remedy in a
Art. 1472). simulated sale
3. When it is by reference to another certain
thing (NCC, Art. 1469). Where the deed of sale states that the purchase
price has been paid but in fact has never been
NOTE: Art. 1469 is not allowed for the paid, the deed of sale is null and void ab initio for
determination of the subject matter of the sale. lack of consideration. Moreover, Art. 1471 of the
Civil Code, provides that “if the price is simulated,
Fixing of the price CANNOT be left to the the sale is void” (Catindig v. Vda. de Meneses, Roxas
discretion of one of the contracting parties v. CA, G.R. No. 165851& G.R. No. 165851, February
2, 2011).
GR: The price cannot be fixed unilaterally by one
of the contracting parties. WHEN NO PRICE IS AGREED UPON BY THE
PARTIES
XPN: If the price fixed by one of the parties is
accepted by the other, the sale is perfected. Effect of failure to determine the price
Effect when the price is unilaterally fixed by 1. Where contract is executory – ineffective.
one of the contracting parties without consent 2. Where the thing has been delivered to and
of the other party appropriated by the buyer – the buyer must
pay a reasonable price therefore.
There is no meeting of the minds. The sale is
inefficacious (Pineda, 2010). Q: Nante, a registered owner of a parcel of land
in Quezon City, sold the property to Monica
Effect when the price is fixed by the third under a deed of sale which reads as follows:
person designated
“That for and in consideration of the sum of
GR: Price fixed by a third person designated by P500,000, value to be paid and delivered to
the parties is binding upon them. me, and receipt of which shall be
A: NO. The deed itself states that for consideration 1. With separate consideration:
received, he sells, transfers, and conveys the land a. Contract is valid;
to Monica an there was delivery of the property to b. Offeror cannot withdraw offer until after
the latter. The contract is clearly one of sale as expiration of the option; and
there was no reservation of ownership on the part c. Is subject to rescission and damages but
of the seller Nante. The non-payment of the price not specific performance.
in a contract of sale would only entitle the seller to
rescind the contract but it does not thereby 2. Without separate consideration:
prevent the transfer of ownership particularly so a. The option contract is not deemed
as in this case, where there was already delivery perfected; and
to the buyer. b. Offer may be withdrawn at any time prior
to acceptance.
OPTION CONTRACT (2002, 2005 BAR)
NOTE: Even though the option was not supported
A contract by which the owner of the property by a consideration, the moment it was accepted,
agrees with another person that he shall have the contract of sale is perfected (NCC, Art. 1324).
right to buy his property at a fixed price within a
certain time. It is binding upon the promissor if An option imposes no binding obligation on the
the promise is supported by a consideration person holding the option aside from the
distinct from the price. An option contract is consideration for the offer. Until accepted, it is not
likewise a separate and distinct contract from a treated as a sale (Tayag v. Lacson, G.R. No. 134971,
contract of sale. March 25, 2004).
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sale itself. matter. period contemplated could the owner validly offer
to sell the property to a third person, again, under
Elements of a Valid Option Contract the same terms as offered to the optionee
(Paranaque Kings Enterprises, Inc. vs. CA GR No.
3. Consent; 111538, February 26, 1997).
2. Subject Matter - An option right to an
unaccepted unilateral offer to sell/ accepted Effect of sale of a property in violation of the
unilateral promise to sell or an unaccepted right of first refusal
unilateral offer to buy/ accepted unilateral
promise to buy a determinate or determinable The resulting contract is RESCISSIBLE by the
object for a price certain including the manner person in whose favor the right of first refusal was
of payment (Villanueva, 2009); and given and even though no particular price is stated
3. Prestation – A consideration separate and in the covenant granting the right of first refusal,
distinct from the purchase price for the option the same price by which the third-party buyer
given. (Villanueva, 2009). bought the property shall be deemed to be the
price by which the right of first refusal shall
Obligations of the offeror therefore be exercisable (Equitorial Realty
Development, Inc. v. Mayfair Theater, Inc., G.R. No.
3. Not to offer to any third party the sale of the 106063, November 21, 1996).
object of the option during the option period;
4. Not to withdraw the offer or option during the Q: Dux leased his house to Iris for a period of 2
option period; years, at the rate of P25,000.00 monthly,
5. To hold the subject matter for sale to the payable annually in advance. The contract
offeree in the event that the latter exercises his stipulated that it may be renewed for another
option during the option period. 2-year period upon mutual agreement of the
parties.
Effect of acceptance and withdrawal of the
offer The contract also granted Iris the right of first
refusal to purchase the property at any time
If the offer had already been accepted and such during the lease, if Dux decides to sell the
acceptance has been communicated before the property at the same price that the property is
withdrawal is communicated, the acceptance offered for sale to a third party.
creates a perfected contract, even if no
consideration was as yet paid for the option. In 23 months after execution of the lease
which case, if the offeror does not perform his contract, Dux sold breach of her right of first
obligations under the perfected contract, he shall refusal. Dux said there was no breach because
be liable for all consequences arising from the the property was sold to his mother who is not
breach thereof based on any of the available a third party. Iris filed an action to rescind the
remedies such as specific performance, or sale and to compel Dux to sell the property to
rescission with damages in both cases. her at the same price. Alternatively, she asked
the court to extend the lease for another 2
Right of first refusal years on the same terms. Can Iris seek
rescission of the sale of the property to Dux's
It is a contractual grant, not of the sale of a mother? (2008 BAR)
property, but of the first priority to buy the
property in the event the owner sells the same. A: YES. The right of first refusal is included in the
contract signed by the parties. Only if the lessee
NOTE: Where a time is stated in an offer for its failed to exercise the right of first refusal could the
acceptance, the offer is terminated at the lessor lawfully sell the subject property to others,
expiration of the time given for its acceptance under no less than the same terms and conditions
(Pineda, 2010). previously offered to the lessee. Granting that the
mother is not a third party, this would make her
Basis of the right of first refusal privy to the agreement of Dux and Iris, aware of
the right of first refusal. This makes the mother a
It is based on the current offer to sell of the seller buyer in bad faith, hence giving more ground for
or offer to purchase of any prospective buyer. rescission of the sale to her (Equitorial Realty
Only after the optionee fails to exercise its right of Development, Inc. v. Mayfair Theater, Inc., G.R. No.
first priority under the same terms and within the 106063, November 21, 1996).
Subjectivity Not subject to Subject to XPN: When the contract of lease granted the
to Specific specific specific lessee the right to assign the lease, the assignee
Performance performance. performance. would be entitled to exercise such right as he
steps into the shoes of the original assignee
Right of first refusal must be contained in a (Villanueva, 2009).
written contract
Q: Tess leased her 1,500 sq. m. Lot in Antipolo
The right of first refusal be embodied in a written City to Ruth for a period of three (3) years to
contract and the grant of such right must be clear February 2013.
and express.
On March 19, 2011, Tess sent a letter to Ruth,
NOTE: It is applicable only to executory contracts part of which read as follows:
and not to contracts which are totally or partially
performed. “I am offering you to buy the property you are
presently leasing at P5,000.00 per sq.m. or of
Q: Pozzolanic entered a long-term contract total of P7,500,00.00. You can pay the contract
with the National Power Corporation (NPC) for price by installment for two (2) years without
the purchase of all fly ash to be produced by interest.
the latter’s future power plants. In the
contract, NPC granted Pozzolanic a right of I will give you a period of one (1) year from the
first refusal to purchase the fly ash that may be receipt of this letter to decide whether you will
generated in the future. When NPC’s two new buy the property.”
power plants started operation, it published
an invitation to interested buyers for the After the expiration of the lease contract, Tess
purchase of the fly ash. Pozzolanic sent letters sold the property to her niece for a total
to NPC reminding its right of first refusal. NPC consideration of P4 Million. Ruth filed a
deferred its public bidding with the first power complaint for the annulment of the sale,
plant’s fly ash but it nevertheless continued reconveyance and damages against Tess and
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CIVIL LAW
her niece. Ruth alleged that the sale of the 1. Part of the purchase price – earnest money is
leased property violated her right to buy deducted from the total price; and
under the principle of right of first refusal. Is 2. Proof of perfection of the contract (NCC, Art.
the allegation of Ruth tenable? (2014 BAR) 1482).
A: NO, the allegation of Ruth is not tenable. The Effect of rescission on earnest money received
letter written by Tess did not grant a right of first
refusal to Ruth. At most, it is to be construed as an When the seller seeks to rescind the sale, he is
option contract whereby Ruth was given the right obliged to return the thing which was the object of
to buy or not to buy the leased property. An option the contract along with fruits and interest (NCC,
is itself not a purchase but it merely secures the Art. 1385).
privilege to buy. However, the option is not valid
because it was not supported by cause or Option money v. Earnest money
consideration distinct from the price of the
property (Art. 1479). Also, Ruth does not appear to BASIS EARNEST
OPTION MONEY
have exercised her option before the offer was MONEY
withdrawn by the subsequent sale of the property Money given as Forms part of
to the niece of Tess. distinct the purchase
As to Money consideration price.
OPTION MONEY vis-a-vis EARNEST MONEY Given for an option
contract.
Option money
Applies to a sale Given only
It is the distinct consideration in case of an option As to not yet when there is
contract. It does not form part of the purchase Perfection perfected. already a
price hence, it cannot be recovered if the buyer sale.
did not continue with the sale (NCC, Art. 1479). Obligation of Prospective When given,
the buyer buyer is not the buyer is
NOTE: Option contract’s distinguishing upon required to buy. bound to pay
characteristic is that it imposes no binding payment of the balance.
obligation on the person holding the option, aside consideration
from the consideration for the offer (Limson v. CA, If buyer does not If sale did not
G.R. No. 135929, April 20, 2001). decide to buy, it materialize, it
cannot be must be
Consideration of payment as option money As to recovered. returned.
Recovery (Villanueva,
Payment is considered option money when it is 2014; Pineda,
given as a separate and distinct consideration 2010).
from the purchase price.
Ownership is Title passes
Earnest money or “arras” (2002 BAR) reserved to the to the buyer
As to
seller and is not upon
This is the money given to the seller by the Transfer of
to pass until full delivery of
prospective buyer to show that the latter is truly Ownership
payment. the thing
interested in buying the property, and its aim is to sold.
bind the bargain (Pineda, 2010). Specific Specific
Effect of Non- performance. performance
It is actually a partial payment of the purchase payment and
price and is considered as proof of the perfection rescission.
of the contract (De Leon, 2011)
Remedy when seller refuses to complete the
NOTE: Option money may become earnest money sale transaction despite down payment of the
if the parties agree (De Leon, 2011). buyer
Significance of giving an earnest money The action for specific performance will lie. There
is a perfected contract of sale because there was a
It is considered as: binding agreement of sale, not just an option
Seller’s refusal to proceed with the sale despite The buyer is deemed to have accepted the
down payment of buyer on the ground that the goods
transaction is disadvantageous to him (seller)
1. When he communicates to the seller that he
Seller cannot justify his refusal to proceed with has accepted them;
the sale by the fact that the deal is financially 2. When the goods have been delivered and he
disadvantageous to him. Having made a bad does any act inconsistent with the ownership
bargain is not a legal ground for pulling out of a of the seller; and
binding contract of sale, in the absence of some 3. When, after the lapse of reasonable time, he
actionable wrong by the other party (Vales v. Villa, retains the goods without intimating to the
G.R. No. 10028, December 16, 1916). seller that he rejected them (NCC, Art. 1585).
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CIVIL LAW
ordered a stop-payment on his deposit and there is a MEETING OF MUTUAL DELIVERY by
proposed in his April 26, 1988 letter to Msgr. MINDS upon the things the contracting parties
Cirilos that the property be instead transferred to promised by each of the things promised
SSE, a subjective novation took place. The party in consideration
proposed substitution of Licup by SSE opened the of the other
negotiation stage for a new contract of sale as
between SSE and the owners (Starbright Sales v. Q: When is ownership deemed transferred?
Phil. Realty Corp., et. al, G.R. No. 177936, January
18, 2012). A: The thing shall be understood as delivered
when it is placed in the control and possession of
Q: Spouses Biong and Linda wanted to sell the vendee.
their house. They found a prospective buyer,
Ray. Linda negotiated with Ray for the sale of NOTE: The most that a sale does is to create the
the property. They agreed on a fair price of P2 obligation to transfer ownership. It is only the title
Million. Ray sent Linda a letter confirming his while the mode of transferring ownership is
intention to buy the property. Later, another delivery.
couple, Bernie and Elena, offered a similar
house at a lower price of P 1.5 Million. But Ray Effect of Delivery
insisted on buying the house of Biong and
Linda for sentimental reasons. Ray prepared a GR: Title /ownership is transferred
deed of sale to be signed by the couple and a
manager's check for P2 Million. After receiving XPN: When the contrary is stipulated as in the
the P2 Million, Biong signed the deed of sale. case of:
However, Linda was not able to sign it because
she was abroad. On her return, she refused to 1. Pactum reservatii in domini – Agreement that
sign the document saying she changed her ownership will remain with seller until full
mind. Linda filed suit for nullification of the payment of price (contract to sell);
deed of sale and for moral and exemplary 2. Sale on acceptance/approval;
damages against Ray. Will the suit prosper? 3. Sale on return; or
(2006 BAR) 4. There is implied reservation of ownership
A: NO, the suit will not prosper. The contract of NOTE: Seller bears expenses of delivery.
sale was perfected when Linda and Ray agreed on
the object of the sale and the price (Art. 1475). Kinds of Delivery
There is therefore consent on her part as the
consent need not be given in any specific form. 1. ACTUAL or REAL – Thing sold is placed under
Hence, her consent may be given by implication, the control and possession of buyer/agent;
especially since she was aware of, and 2. CONSTRUCTIVE or LEGAL – Does not confer
participated in the sale of the property (Pelayo v. physical possession of the thing, but by
CA, G.R. No. 141323, June 8, 2005). Her action for construction of law, is equivalent to acts of
moral and exemplary damages will also not real delivery.
prosper because the case does not fall under any
of those mentioned in Art. 2219 and 2232 of the Requisites:
Civil Code.
a. The seller must have control over the
CONSUMMATION STAGE IN A CONTRACT OF thing;
SALE b. The buyer must be put under control;
c. There must be intention to deliver the
Consummation stage in a contract of sale takes thing for purposes of ownership.
place by the delivery of the thing together with the i. Tradicion Symbolica – delivery of
payment of the price. certain symbols representing the
thing;
NOTE: The ownership of the thing is acquired by ii. Tradicion Instrumental – delivery of
the buyer in any of the ways specified by law or in the instrument of conveyance;
any manner agreed upon by the parties. iii. Traditio Longa Manu – Delivery of
thing by mere agreement; when seller
PERFECTION CONSUMMATION points to the property without need
From the moment From the time of of actually delivering;
3. QUASI-TRADITION – delivery of rights, 1. FAS (Free along Side) – when goods are
credits or incorporeal property, made by: delivered alongside the ship, there is already
a. Placing titles of ownership in the hands of delivery to the buyer. The seller pays all
the buyer; and charges and is subject to risk until the goods
b. Allowing buyer to make use of rights. are placed alongside the vessel (Villanueva,
2009).
4. TRADITION BY OPERATION OF LAW – 2. FOB (Free on Board) – when goods are
Execution of a public instrument is equivalent delivered at the point of shipment, delivery to
to delivery. But to be effective, it is necessary carrier by placing the goods on vessel is
that the seller have such control over the delivery to buyer. The seller shall bear all
thing sold that, at the moment of sale, its expenses until the goods are delivered,
material delivery could have been made. depending on whether the goods are to be
delivered “f.o.b.” at the point of shipment or at
GR: There is presumption of delivery. the point of destination (Villanueva,2009).
3. CIF (Cost, Insurance, Freight)
XPN: a. When buyer pays for services of carrier,
a. Contrary stipulation; delivery to carrier is delivery to buyer,
b. When at the time of execution, subject carrier acts as an agent of the buyer;
matter was not subject to the control b. When buyer pays seller the price – from
of seller; the moment the vessel is at the port of
c. Seller has no capacity to deliver at destination, there is already delivery to
time of execution; and buyer.
d. Such capacity should subsist for a
reasonable time after execution of 4. COD (Collect on Delivery) – the carrier acts
instrument. for the seller in collecting the purchase price,
which the buyer must pay to obtain
Delivery deemed effective possession of the goods.
Delivery should be coupled with intention of Seller’s duties after delivery to the carrier
delivering the thing, and acceptance on the part of
the buyer to give legal effect of the act. Without 1. To enter on behalf of the buyer into such
such intention, there is no such tradition. contract reasonable under the circumstances;
Delivery of incorporeal property and
2. To give notice to the buyer regarding
1. When sale is made through a public necessity of insuring the goods.
instrument (NCC, Art. 1498);
2. By placing the titles of ownership in the Effect of delivery through a carrier
possession of the buyer;
3. When buyer uses and enjoys the rights GR: If the seller is authorized, delivery to carrier is
pertaining to the incorporeal property with considered delivery to the buyer. The premise
the consent of the seller (NCC, Art. 1501). being that the carrier acts as an agent of the buyer
(Villanueva, 2009).
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CIVIL LAW
NOTE: Here, the carrier is deemed the bailee of 3. Disturbance or danger is caused by the seller;
the buyer and the seller is deemed the agent of the 4. If the disturbance is a mere act of trespass; or
buyer in employing the carrier (Rabuya, 2017). 5. Upon full payment of the price.
1. If the buyer has not paid the price; NOTE: Thus, even with such refusal of acceptance,
2. No period for payment has been fixed in the delivery (actual/constructive), will produce its
contract; legal effects (e.g. transferring the risk of loss of the
3. A period for payment has been fixed in the subject matter to the buyer who has become the
contract but the buyer has lost the right to owner thereof) (Villanueva, 2004).
make use of the time.
Under Art. 1588 of the Civil Code, when the
Suspension of payment by the buyer (NCC, buyer’s refusal to accept the goods is without just
Art.1590) cause, the title thereto passes to him from the
GR: moment they are placed at his disposal
1. If he is disturbed in the possession or (Villanueva, 2004).
ownership of the thing bought; or
2. If he has well-grounded fear that his WHEN DELIVERY DOES NOT TRANSFER TITLE
possession or ownership would be disturbed
by a vindicatory action or foreclosure of 1. Sale on TRIAL, APPROVAL, OR SATISFACTION
mortgage. (NCC, Art. 1502);
2. When there is an EXPRESS RESERVATION;
XPNs: a. If it was stipulated that ownership shall
1. Seller gives security for the return of the price not pass to the purchaser until he has
in a proper case; fully paid the price (NCC, Art. 1478).
2. A stipulation that notwithstanding any such
contingency, the buyer must make payment; 3. When there is an IMPLIED RESERVATION;
7. ON SALE or RETURN – The ownership passes There is double sale when the same object of the
to buyer upon delivery, but he may revest sale is sold to different vendees (NCC, Art. 1544).
ownership in the seller by returning or
tendering the goods within the time fixed in Requisites of Double Sales (NCC, Art. 1544)
the contract or within reasonable time (NCC,
Art. 1502). 1. 2 or more sales transactions must constitute
valid sales transactions;
Sale on trial, approval or satisfaction 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
1. When buyer signifies approval or acceptance ownership of the subject matter must each
to the seller or does any act adopting the represent conflicting interests; and
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 expiration 2017 citing Cheng v Genato, 1998).
of the period fixed or of reasonable time
(NCC, Art. 1502). Rules on preference (NCC, Art. 1544)
Rules in case of sale on trial, approval or 1. MOVABLE – Owner who is first to possess in
satisfaction good faith;
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CIVIL LAW
it does not affect innocent third persons (De Leon, Q: Does prior registration by the second buyer
2011). Article 1544 of the Civil Code does not of a property subject of a double sale confer
apply to contract to sell. ownership or preferred right in his favor over
that of the first buyer?
Purchaser in good faith
A: Principle of caveat emptor – buyer beware
1. Buys the property without notice that some
other person has a right to, or interest in such It literally means, ‘Let the buyer beware’. The rule
property; and requires the purchaser to be aware of the
2. Pays a full and fair price for the same at the supposed title of the vendor and one who buys
time of such purchase, or before he has notice without checking the vendor’s title takes all the
of the claim or interest of some other person risks and losses consequent to such failure
in the property (Agricultural and Home (Agcaoili, 2015).
Extension Development Group v. CA, G.R. No.
92319, September 3, 1992). Application of caveat emptor in particular sale
transactions
NOTE: Partial payment is not enough. Full
payment is a requirement for purposes of 1. Sales of animals (NCC, Art. 1574);
acquiring right over the rules of double sale. 2. Double sales (NCC, Art. 1544);
3. In sheriff’s sales; and
NOTE: This principle applies in a situation where 4. Tax sales.
not all the requisites are present which would
warrant the application of Art. 1544 of NCC. The NOTE: In the above sales, there is no warranty of
only requisite of this rule is priority in time. In title or quality on the part of the seller. The
other words, the only one who can invoke this is purchaser who buys without checking the title of
the first vendee. Undisputedly, he is a purchaser in the vendor is assuming all risks of eviction.
good faith because at the time he brought the real
property, there was still no sale to a second In sheriff’s sales, the sheriff does not guarantee
vendee (Rabuya, 2017). the title to real property and it is not incumbent
upon him to place the buyer in possession of such
Rule on double sale regarding immovable property (Pineda, 2010).
GR: Apply Art.1544 of NCC or the rule on Caveat emptor NOT applicable in sales of
preference registered land
XPN: Sale of registered lands – apply Torrens The purchaser of a registered land under the
System Torrens system is merely charged with notice of
the burdens and claims on the property which are
Principle of prius tempore, potior jure - first in inscribed on the face of certificate of title (Pineda,
time, stronger in right 2010).
Knowledge by the first buyer of the second sale Application of caveat emptor in judicial sales
cannot defeat the first buyer’s rights except when
the second buyer first registers in good faith the Caveat emptor is applicable in judicial sales. The
second sale. Conversely, knowledge gained by the purchaser in a judicial sale acquires no higher or
second buyer of the first sale defeats his rights better title or right than that of the judgment
even if he is first to register, since such knowledge debtor. If it happens that the judgment debtor has
taints his registration with bad faith to merit the no right, interest, or lien on and to the property
protection of Art. 1544 (2nd par.) of NCC, the sold, the purchaser acquires none (Pineda, 2010).
second realty buyer must act in good faith in
registering his deed of sale (Diaz, 2006). Effect of subsequent foreclosure to a prior
purchaser in good faith (2008 BAR)
NOTE: Where one sale is absolute and the other is
a pacto de retro transaction where the period to The purchaser in good faith has better title to the
redeem has not yet expired, Art. 1544 of NCC will property sold even if subsequently foreclosed by a
not apply (Pineda, 2010). mortgagor. Under the Torrens System, a buyer of
registered lands is not required by law to inquire
further than what the Torrens certificate indicates
Effect when the loss occurred before In the absence of stipulation: there are two
perfection conflicting views:
GR: The thing perishes with the owner – Res perit First view: Res perit creditori or buyer bears the
domino (NCC, Art. 1504). (1999 BAR) risk of loss (Paras, Vitug, Padilla and De Leon).
NOTE: The seller still owns the thing because NOTE: Pursuant to Article 1537 of the Civil Code,
there is no delivery or transfer of ownership yet. the vendee must also bear the resulting
Hence, the seller bears the risk of loss (Villanueva, disadvantages before the delivery but after the
2004). contract has been perfected. This theory is an
exception to the rule of resperit domino. On the
Effect when the loss occurred at the time of other hand, pursuant to Article 1262 of the Civil
perfection of the contract of sale Code, if the thing is lost or destroyed without the
fault of the seller, the obligation to deliver is
GR: Contract is considered void or inexistent extinguished but the obligation to pay subsist
because the object did not exist at the time of the (Pineda, 2010).
transaction. (Pineda, 2010)
Second view: Res perit domino or seller bears the
XPN: In case of partial loss, the buyer may choose risk of loss (Tolentino, Jurado, Baviera, and
between withdrawing from the contract and Villanueva).
demanding the remaining part. If he chooses the
latter, he shall pay the remaining part’s In reciprocal obligations, the extinguishment of
corresponding price in proportion to the total sum the obligation due to loss of the thing affects both
agreed upon (NCC, Art. 1493). debtor and creditor; the entire juridical relation is
extinguished. Under this view, the rule on loss
Options of the buyer with regard to the sale in under Article 1189 of the Civil Code would be
the total or partial loss or deterioration of a different from the rule on deterioration – the loss
would be for the account of the seller, while
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CIVIL LAW
deterioration would be for the account of the INSTALLMENT SALES LAW or “RECTO LAW”
buyer (Tolentino, 2002). (1999, 2000 BAR)
This view would make Articles 1480 and 1538 of Installment Sales Law
the Civil Code consistent with the provisions of
Article 1504 of the Civil Code (Villanueva, 2009). Commonly known as the “RECTO LAW”. It is
embodied in Art. 1484 of the NCC, which provides
Ownership is transferred only after delivery, for the remedies of a seller in the contracts of sale
further, the contract is reciprocal. If the vendee of personal property by installments.
cannot have the thing, it is illogical and unjust to
make him pay the price (Pineda, 2010). NOTE: Art. 1484 of the NCC incorporates the
provisions of Act No. 4122 passed by the
Effect when loss occurred after delivery Philippine Legislature on Dec. 9, 1939, known as
the "Installment Sales Law" or the "Recto Law,"
GR: Res perit domino applies – the buyer is now which then amended Art. 1454 of the Civil Code of
the owner, hence, the buyer bears the risk of loss 1889.
(NCC, Art. 1504).
Application of Recto Law
XPNs:
1. Where the delivery has been made either to This law covers contracts of sale of personal
the buyer or to the bailee for the buyer, but property by installment (Act No. 4122). It is also
ownership in the goods has been retained by applied to contracts purporting to be leases of
the seller merely to secure performance by personal property with option to buy, when the
the buyer of his obligations under the lessor has deprived the lessee of the possession or
contract; and enjoyment of the thing (PCI Leasing and Finance
2. Where actual delivery has been delayed Inc. v. Giraffe- X Creative Imaging, Inc., G.R. No.
through the fault of either the buyer or seller, 142618, July 12, 2007).
the goods are at the risk of the party at fault
[NCC, Art. 1504 (1) (2)]. NOTE: Recto Law applies only to sale payable in
installments and not to a sale where there is an
Person who bears the risk of loss or initial payment and the balance is payable in the
deterioration future, because such is a straight sale, not a sale by
installments.
SELLER is the owner so seller
BEFORE
bears risk of loss. Requisites of Recto Law
PERFECTION
Contract shall be without any 1. Valid contract of sale;
AT effect – the SELLER bears the loss 2. Subject matter is personal property;
PERFECTION since the buyer is relieved of his 3. Payable in installments; and
obligation under the contract. 4. In the case of the second and third remedies,
AFTER 2 CONFLICTING VIEWS that there has been a failure to pay two or
PERFECTION Deterioration & fruits – Buyer more installments (NCC, Art. 1484).
BUT BEFORE bears loss (Tolentino, 2002).
DELIVERY Alternative remedies in case of sale of
Buyer becomes the owner so personal property in installments
BUYER bears risk of loss.
AFTER 1. Specific Performance: Exact fulfillment
DELIVERY Delivery extinguish ownership should the buyer fail to pay
vis-a-vis the seller & creates a new
one in favor of the buyer. GR: If availed of, the unpaid seller cannot
anymore choose other remedies.
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CIVIL LAW
for specific performance. A contends that this installments - was entered into by the parties with
is a violation of the Recto law since the respondent standing as the debtor-mortgagor and
foreclosure of the chattel bars subsequent petitioner as the creditor-mortgagee.
recovery. Is this correct?
Thus, ESB is justified in filing his Complaint before
A: NO. A is not correct in invoking the Recto law the RTC seeking for either the recovery of
since it is only applicable in case of sale of possession of the subject vehicle so that it can
personal property through installment. In the exercise its rights as a mortgagee, i.e., to conduct
given case, the amount being claimed by A was to foreclosure proceedings over said vehicle; or in
be paid 2 years thereafter as a lump sum, not the event that the subject vehicle cannot be
through installments. Moreover, the transaction is recovered, to compel respondent to pay the
a loan not a sale. outstanding balance of her loan. Since it is
undisputed that ESB had regained possession of
Recto Law does NOT cover a contract to sell of the subject vehicle, it is only appropriate that
movables foreclosure proceedings be commenced in
accordance with the provisions of "The Chattel
There will be nothing to rescind if the suspensive Mortgage Law," as intended. Otherwise, Palces
condition (payment of full purchase price) upon will be placed in an unjust position where she is
which the contract is based fails to materialize deprived of possession of the subject vehicle while
(Villanueva, 2009). her outstanding debt remains unpaid, either in full
or in part, all to the undue advantage of petitioner
Q: Palces purchased a Hyundai Starex through - a situation which law and equity will never
a loan granted by Equitable Savings Bank permit (Equitable Savings Bank v. Palces, G.R. No.
(ESB). In connection therewith, Palces 214752, March 9, 2016).
executed a Promissory' Note with Chattel
Mortgage in favor of the ESB. Eventually, REALTY INSTALLMENT BUYER ACT or
Palces failed to pay the monthly installments “MACEDA LAW” (2000, 2002 BAR)
prompting ESB to demand for the payment of
the entire balance which remained unheeded. Realty Installment Buyer Act
Thus, ESB filed a case for Recovery of
Possession with Replevin with Alternative Commonly known as the “MACEDA LAW.” It is
Prayer for Sum of Money. In order to update embodied in R.A. 6552 which provides for certain
her installment payments, Palces paid ESB protection to particular buyers of real estate
P70,000 on March 8, 2007 and P33,000 on payable on installments. The law declares as
March 20, 2007 (March 2007 payments). "public policy to protect buyers of real estate on
Despite the aforesaid payments, ESB filed the installment payments against onerous and
instant complaint, resulting in the sheriff oppressive conditions.
taking possession of the subject vehicle. The
RTC ruled in favor of ESB. The CA affirmed the NOTE: The purpose of the law is to protect buyers
RTC ruling; however, it ordered ESB to return in installment against oppressive conditions.
the amounts paid on March 2007 by Palces. It
ruled that, under Article 1484 of the Civil Code, Transactions/sale covered by the Maceda Law
ESB had already waived its right to recover any
unpaid installments when it sought a writ of The law involves the sale of immovables on
replevin in order to regain possession of the installment (Maceda Law, RA 6552).
subject vehicle. As such, petitioner is no longer
entitled to receive respondent's late partial 1. Coverage: Residential Real Estate (Villanueva,
payments. Is the CA’s ruling correct? 2009).
2. Excluded:
A: No. In this case, there was no vendor-vendee a. Industrial lots;
relationship between respondent and petitioner. A b. Commercial buildings (and commercial lots
judicious perusal of the records would reveal that by implication);
respondent never bought the subject vehicle from c. Sale to tenants under agrarian laws; and
petitioner but from a third party, and merely d. Sale of lands payable in straight terms (Sec. 3,
sought financing from petitioner for its full RA 6552).
purchase price. Indubitably, a loan contract with
the accessory chattel mortgage contract - and not NOTE: The list is not exclusive (Villanueva, 2009).
a contract of sale of personal property in
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CIVIL LAW
For 46 months, Priscilla paid the monthly Optimum issued a Notice of Delinquency and
installments religiously, but on the 47th and Cancellation of the Contract to Sell on April
48th months, she failed to pay. On the 49th 10, 2006 for the spouses’ failure to pay their
month, she tried to pay the installments due monthly payments. Thereafter, a final
but the vendor refused to receive the Demand Letter dated May 25, 2006 was
payments tendered by her. issued by Optimum requesting the Sps.
Jovellanos to vacate and deliver the
The following month, the vendor sent her a properties which, however, remained
notice that it was rescinding the Deed off unheeded. This prompted Optimum to file an
Conditional Sale pursuant to the stipulation unlawful detainer case against the spouses.
for automatic rescission, and demanded that Was the cancellation of the contract to sell
she vacate the premises. She replied that the valid?
contract cannot be rescinded without judicial
demand or notarial act pursuant to Article A: Yes. The Maceda Law, R.A. No. 6552,
1592 of the Civil Code. (2000, 2014 BAR) recognizes in conditional sales of all kinds of
real estate (industrial, commercial, residential)
a) Is Article 1592 applicable? the right of the seller to cancel the contract upon
b) Can the vendor rescind the contract? non-payment of an installment by the buyer,
which is simply an event that prevents the
A: obligation of the vendor to convey title from
a) NO. Article 1592 of the Civil Code does not acquiring binding force. It also provides the
apply to a conditional sale. Article1592 of right of the buyer on installments in case he
NCC applies only to a contract of sale and defaults in the payment of succeeding
not to a Deed of Conditional Sale where the installments. Three (3) requisites before the
seller has reserved title to the property until seller may actually cancel the contract must
full payment of the purchase price. The law exist: first, the seller shall give the buyer a 60-
applicable is the Maceda Law (Valarao v. CA, day grace period to be reckoned from the date
G.R. No. 130347, March 3, 1999). the installment became due; second, the seller
must give the buyer a notice of
b) NO, the vendor cannot rescind the contract cancellation/demand for rescission by notarial
under the circumstances. Under the Maceda act if the buyer fails to pay the installments due
Law, which is the law applicable, the seller at the expiration of the said grace period; and
on installment may not rescind the contract third, the seller may actually cancel the contract
till after the lapse of the mandatory grace only after thirty (30) days from the buyer’s
period of 30 days for every one year of receipt of the said notice of
installment payments, and only after 30 days cancellation/demand for rescission by notarial
from notice of cancellation or demand for act.
rescission by a notarial act. In this case, the
refusal of the seller to accept payment from It was only after the expiration of the thirty-day
the buyer on the 49th month was not justified (30) period did Optimum treat the contract to
because the buyer was entitled to 60 days sell as effectively cancelled – making as it did a
grace period and the payment was final demand upon Sps. Jovellanos to vacate the
tendered within that period. Moreover, the subject property only on May 25, 2006. Thus,
notice of rescission served by the seller on based on the foregoing, there was a valid and
the buyer was not effective because the notice effective cancellation of the Contract to Sell and
was not by a notarial act. Besides, the seller since Sps. Jovellanos had already lost their right
may still pay within 30 days from such to retain possession of the subject property as a
notarial notice before rescission may be consequence of such cancellation, their refusal
effected. All these requirements for a valid to vacate and turn over possession to Optimum
rescission were not complied with by the makes out a valid case for unlawful detainer
seller. Hence, the rescission is invalid. (Optimum Development Bank v. Jovellanos, G.R.
No. 189145, December 4, 2013).
Q: Spouses Jovellanos entered into a Contract
to Sell with Palmera Homes for the purchase REMEDIES OF AN UNPAID SELLER
of a residential house and lot payable for a
period of 10 years. Later, Palmera Homes Unpaid Seller
assigned all its rights, title, and interest in
favor of Optimum Bank. After some time, One is considered as unpaid seller when:
NOTE: The measure of damages is the 2. Stoppage in Transitu (NCC, Art. 1530)
estimated loss directly and naturally
resulting in the ordinary course of Requisites: (I-SCENT-U)
events from the buyer’s breach of a. Insolvent buyer;
contract. b. The sale of goods must be on Credit;
c. Seller must Surrender the negotiable
document of title, if any;
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CIVIL LAW
d. Seller must bear the Expenses of conveyed and assigned a parcel of land
delivery of the goods after the covered by TCT No. 2468 in favor of the
exercise of the right; Vendee."
e. Seller must either actually take
possession of the goods sold or give After delivery of the initial payment of
Notice of his claim to the carrier or P100,000.00, Monica immediately took
other person in possession; possession of the property. Five (5) months
f. Goods must be in Transit; and after, Monica failed to pay the remaining
g. Unpaid seller. balance of the purchase price. Nante filed an
action for the recovery of possession of the
NOTE: Buyer’s insolvency need not be property. Nante alleged that the agreement
judicially declared. A person is insolvent was one to sell, which was not consummated
who either has ceased to pay his debts as the full contract price was not paid. Is the
in the ordinary course of business or contention of Nante tenable? (2014 BAR)
cannot pay his debts as they become
due, whether insolvency proceedings A: NO. The contention of Nante is not tenable. The
have been commenced or not. [NCC, Art. deed itself states that for consideration received,
1636(2)]. he sells, transfers, and conveys the land to Monica
and there was delivery of the property to the
3. Special Right to Resell the Goods latter. The contract is clearly one of sale as there
(NCC, Art. 1533) was no reservation of ownership on the part of the
Exercised when: seller Nante. The non-payment of the price in a
a. Goods are perishable, contract of sale would only entitle the seller to
b. Stipulated the right of resale in case rescind the contract but it does not thereby
of default, or prevent the transfer of ownership particularly so
c. Buyer in default for unreasonable as in this case, where there was already delivery
time. to the buyer.
4. Special Right to Rescind (NCC, Art. Instances when possessory lien is lost
1597)
1. Seller delivers without reserving ownership
Requisites: in goods or right to possess them;
a. Goods have not been delivered to 2. Buyer or agent lawfully obtains possession of
the buyer; goods; or
b. Buyer has repudiated the contract 3. Waiver (NCC, Art. 1529).
of sale; or
c. Has manifested his inability to NOTE: Seller loses lien when he parts with good
perform his obligations (but still, stoppage in transitu can be exercised).
thereunder; or
d. Has committed a breach thereof, Right of stoppage in transitu
which must be substantial.
The seller may resume possession of the goods at
NOTE: Here, the seller may thereafter any time while they are in transit, and he will then
totally rescind the contract of sale by become entitled to the same rights in regard to the
giving notice of his election to do so to the goods as he would have had if he had never parted
buyer. with the possession (NCC, Art. 1530).
Q: Nante, a registered owner of a parcel of land Thereafter, the seller may exercise the following
in Quezon City, sold the property to Monica rights:
under a deed of sale which reads as follows: a. Right of lien; NCC, Art. 1527
b. Right to resell; NCC, Art. 1533; and
"That for and in consideration of the sum of c. Right to rescind the transfer of title (NCC,
P500,000.00, value to be paid and delivered to Art. 1534).
me, and receipt of which shall be
acknowledged by me to the full satisfaction of Goods considered to be in transit
Monica, referred to as Vendee, I hereby sell,
transfer, cede, convey, and assign, as by these
presents, I do have sold, transferred, ceded,
Goods deemed to be no longer in transit 1. Where the goods are of perishable in nature;
2. Where the seller has expressly reserves the
1. After delivery to the buyer or his agent; right of resale in case the buyer should make
2. If the buyer/agent obtains possession of the default; or
goods at a point before the destination 3. Where the buyer has been in default in payment
originally fixed; of the price for unreasonable time [NCC, Art.
3. If the carrier or the bailee acknowledges that 1533(1)].
he holds the goods in behalf of the buyer/ his
agent; Notice to the defaulting buyer
4. If the carrier or bailee wrongfully refuses to
deliver the goods to the buyer or his agent GR: Notice to the defaulting buyer NOT required
(Villanueva, 2009). in the resale of goods
Enforcement of right to stoppage in transitu XPN: Where the right to resell is not based on the
perishable nature of the goods or upon an express
The seller may: provision of the sale.
1. Take actual possession of the goods; and
2. Give notice of his claim to the carrier or other NOTE: Notice of time and place of resale is not
bailee who is in possession of the goods (NCC, essential to the validity of such resale (NCC, Art.
Art. 1532). 1533).
Effect of the exercise of this right Effect of exercising the special right to rescind
1. The goods are no longer in transit; The unpaid seller shall not be liable to the buyer
2. Contract of carriage end. The carrier now upon the sale, but may recover from the buyer
becomes a mere bailee, and will be liable as damages for any loss occasioned by the breach of
such; and the sale (NCC, Art. 1534).
3. Seller would have the same rights to the
goods as if he had never had never parted Cases in which it is allowed:
possession with it (NCC, Arts. 1530 & 1531).
1. Where the seller has expressly reserved the
Seller’s knowledge of the buyer’s insolvency right to rescind in case the buyer should make
default; or
The seller cannot exercise the right to stoppage in 2. Where the buyer has been in default in the
transit because he is under estoppel. He assumed payment of the price for unreasonable length of
the risk. time [NCC, Art. 1534(1)].
The unpaid seller shall not be liable to the original I. Immovables in general
buyer upon the sale or for any profit made by such
resale, but may recover from the buyer damages
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CIVIL LAW
1. Disturbed in possession or with knowledge that the seller is not going to
reasonable grounds to fear disturbance deliver all the goods contracted for; and
– Suspend payment. 3. If, however, the buyer has used or disposed of
the goods delivered before he knows that the
2. In case of subdivision or condominium seller is not going to perform his contract in
projects – If real estate developer fails full, the buyer shall not be liable for more than
to comply with obligation according to the fair value to him of the goods so received
approved plan: (NCC, Art. 1522).
a. Rescind; or
b. Suspend payment until seller Rule when the seller delivers goods greater
complies. than what he has contracted to sell
II. Movables 1. The buyer may accept only the goods which
were included in the contract and reject the
1. Failure of seller to deliver – Action for excess; or
specific performance without giving the 2. The buyer may accept the entire goods
seller the option of retaining the goods delivered and he shall pay for them at the
on payments of damages. contract rate (NCC, Art. 1522).
2. Breach of seller’s warranty – The buyer
may, at his election, avail of the Rule when the seller delivers goods which are
following remedies: mixed with other goods of different
a. Accept goods & set up breach of description not included in the contract
warranty by way of recoupment in
diminution or extinction of the 1. The buyer may accept the goods which are in
price; accordance with the contract and reject the
b. Accept goods & maintain action rest (NCC, Art. 1522); or
against seller for damages; 2. The buyer may also accept them all if he so
c. Refuse to accept goods & maintain desires, but he must pay for them all.
action against seller for damages;
d. Rescind contract of sale & refuse to Rule if the subject matter is indivisible
receive goods/return them when
already received and recover the The buyer may reject the whole of the goods (NCC,
price or any part which has been Art. 1522).
paid.
Duty of the seller with regard to accessions
3. Disturbed in possession or with and accessories
reasonable grounds to fear disturbance
– Suspend payment. The seller has the duty to preserve the thing and
its accessions and accessories from the time of the
NOTE: When the buyer has claimed and been perfection of the contract of sale (NCC, Art. 1537).
granted a remedy in any of these ways, no
other remedy can thereafter be granted, But all the fruits shall pertain to the vendee from
without prejudice to the buyer’s right to the day on which the contract was perfected.
rescind, even if previously he has chosen
specific performance when fulfillment has NOTE: In case of loss or deterioration, the seller is
become impossible [Villanueva, 2011; in liable for damages or the buyer may seek
relation to NCC, Art. 1191(2)]. rescission with damages. However, if loss or
deterioration is due to a fortuitous event, the
PERFORMANCE OF CONTRACT seller is not liable (NCC, Art. 1538).
Rule when the seller delivers goods lesser than Rule when the sale of immovable is by unit of
what he has contracted to sell measure or number
1. The buyer may reject the goods delivered and GR: The seller must deliver all that may have been
he shall have no liability; stated in the contract.
2. The buyer may accept the goods delivered,
but he will pay the contract rate, if he has XPN: If impossible to deliver all, the buyer may
choose between:
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CIVIL LAW
expressed warranty that the thing is free from Effects of waiver of an implied warranty
all burdens and encumbrances
1. Seller in bad faith and there is waiver against
4. Warranty against Hidden Defects (NCC, Art. eviction –void.
1561) 2. When buyer without knowledge of a
particular risk, made general renunciation of
Requisites: (HENNAS) warranty – is not a waiver but merely limits
a. Defect is important or Serious; liability of seller in case of eviction.
i. The thing sold is unfit for the use 3. When buyer with knowledge of risk of
which it is intended; and eviction assumed its consequences and made
ii. Diminishes its fitness for such use or a waiver – seller not liable (applicable only to
to such an extent that the buyer waiver of warranty against eviction).
would not have acquired it had he
been aware thereof. WARRANTY AGAINST EVICTION
Where the cause of action is to hold the seller The buyer shall have the right to demand the R-I-
of a vehicle for breach of implied warranty C-E with damages from seller:
Under Article 1599 of the Civil Code, once an 1. The Return of the value which the thing sold
express warranty is breached, the buyer can had at the time of the eviction, be it greater or
accept or keep the goods and maintain an action lesser than the price of the sale;
against the seller for damages. In the absence of 2. The Income or fruits, if he has been ordered to
an existing express warranty a complaint for deliver them to the party who won the suit
damages may be anchored on the enforcement of against him;
an implied warranty against hidden defects. 3. The Costs of suit which caused the eviction,
However, this right must be exercised within six and, in a proper case, those of suit brought
(6) months from the delivery of the thing sold, else against the vendor for the warranty;
his cause of action had become time-barred 4. The Expenses of contract if buyer has paid
(De Guzman v. Toyota Cubao, G.R. No. 141480, them; and
November 29, 2006). 5. The damages, interests and ornamental
expenses if sale was made in bad faith (NCC,
Art. 1555).
Purchaser must be aware of the title of the vendor Redhibitory defect on animals (NCC, Art. 1576)
(Caveat Emptor).
If the hidden defect of animals, even in case a
Rights of buyer in case of partial eviction professional inspection has been made, should be
of such a nature that expert knowledge is not
1. Restitution (with obligation to return the sufficient to discover it, the defect shall be
thing w/o other encumbrances than those considered as redhibitory.
which it had when he acquired it); and
2. Enforcement of warranty against eviction Void sale of animal (NCC, Art. 1575)
(Paras, 2013 and NCC, Art. 1556).
The sale is void if animal is:
Inapplicability of rescission 1. Suffering from contagious diseases; or
2. Unfit for the use or service for which they
GR: Rescission is not a remedy in case of eviction were purchased as indicated in the
because rescission contemplates that the one contract.
demanding it is able to return whatever he has
received under the contract. Since the vendee can Responsibility of a vendor for hidden defects
no longer restore the subject matter of the sale to
the vendor, rescission cannot be carried out (NCC, If the hidden defects which the thing sold may
Art. 1385). have:
1. Render it unfit for the use for which it is
XPN: The buyer may demand rescission in case of intended; or
partial eviction, because there still remains a 2. Diminish its fitness for such use to such
portion of the thing sold (De Leon, 2009). an extent that had the vendee been aware
thereof, he would not have acquired it or
WARRANTY AGAINST HIDDEN DEFECT would have given a lower price for it
(NCC, Art. 1561).
Hidden defect (NCC, Art.1561)
Extent of warranty by the seller against hidden
One which is unknown or could not have been defects
known to the buyer (Diaz, 2006.)
The seller is responsible to the vendee for any
NOTE: Seller does not warrant patent defect. hidden faults or defects in the thing sold, even
Reason: caveat emptor (buyer beware). though he was not aware thereof.
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CIVIL LAW
1. If the thing should be lost in consequence of the REMEDIES IN CASE OF BREACH OF WARRANTY
hidden faults, and seller was aware of them –
he shall: Remedies of the buyer in case of breach of
a. bear the loss; warranty
b. return the price; and
c. refund the expenses of the contract 1. Accept goods and set up breach of warranty
with damages. by way of recoupment in diminution or
extinction or the price;
2. If the thing is lost and seller was not aware of 2. Accept goods and maintain action against
the hidden faults – he shall: seller for damages;
a. return the price and interest; and 3. Refuse to accept goods and maintain action
b. reimburse the expenses of the against seller for damages; or
contract which the buyer might have 4. Rescind contract of sale and refuse to receive
paid, but not for damages (Villanueva, goods/return them when already received.
2004).
Remedies of the buyer in case of breach of
Prescriptive period: six (6) months from date of warranty NOT absolute
the delivery of the thing sold (NCC, Art. 1571).
The vendee's remedies against a vendor with
Remedies of the buyer in case of sale of things respect to the warranties against hidden defects
with hidden defects (NCC, Art. 1567) or encumbrances upon the thing sold, in the case
of Arts. 1561, 1562, 1564, 1565 and 1566 of the
The vendee may elect between: Civil Code, may either be to withdraw from the
1. Withdrawing from the contract, or contract or demand a proportionate reduction of
2. Demanding a proportionate reduction of the price, with damages in either case.
the price, with damages in either case.
The vendee may also ask for the annulment of the
Waiver of warranty against eviction contract upon proof of error or fraud, in which
case the ordinary rule on obligations shall be
There is waiver of warranty against eviction when applicable; responsibility arising from fraud is
the lessee has inspected the premises and decides demandable in all obligations and any waiver of
to consummate the contract based on such an action for future fraud is void. Responsibility
inspection. Under Arts. 1561 and 1653 of the Civil arising from negligence is also demandable in any
Code, the lessor is responsible for warranty obligation, but such liability may be regulated by
against hidden defects, but he is not answerable the courts, according to the circumstances.
for patent defects or those, which are visible, and
which can be seen upon inspection (Jon and The vendor could likewise be liable for quasi-delict
Marissa De Ysasi v. Arturo and Estela Arceo, G.R. under Article 2176 of the Civil Code, and an action
No. 136586, November 22, 2001). based thereon may be brought by the vendee
(Coca-Cola Bottlers Philippines, Inc. v. CA, G.R. No.
Specific implied warranties in sale of goods 110295, October 18, 1993).
(NCC, Art. 1562)
Instances when the buyer cannot rescind the
1. Warranty of fitness sale in case there is a breach of warranty
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CIVIL LAW
parties may stipulate on the right of repurchase in Parole evidence in proving right of repurchase
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 parole
persons. (Pineda, 2010). evidence when the contract of sale has been
reduced in writing (Mactan Cebu International
Pre-emption v. Redemption Airport Authority v. CA, G.R. No. 121506, October
30, 1996).
PRE-EMPTION REDEMPTION
As to when it arises Effect on the reserved right to repurchase if
the principal contract of sale is void
Arises before sale Arises after sale
Since the underlying contract of sale was
inoperative and consequently void, then the right
As to availability of rescission
of repurchase reserved would also be void
Rescission inapplicable. There can be
(Villanueva, 2009).
rescission of original
sale.
EQUITABLE MORTGAGE
As to whom the action is directed One which lacks the proper formalities, form or
Action is directed Action is directed words or other requisites prescribed by law for a
against prospective against buyer. mortgage, but shows the intention of the parties to
seller. make the property subject of the contract as
security for a debt and contains nothing
CONVENTIONAL REDEMPTION impossible or contrary to law (Cachola v. CA, G.R.
No. 97822, May 7, 1992; NCC, Art. 1602).
Seller reserves the right to repurchase thing sold
coupled with obligation to return the purchase Essential requisites of equitable mortgage
price of the sale, expenses incurred under the
contract, other legitimate payments and, 1. Parties entered into a contract of sale;
necessary & useful expenses made on the thing 2. Their intention was to secure an existing debt
sold (Art. 1601 in relation to Art. 1616 of the Civil by way of a mortgage.
Code).
Presumption of an equitable mortgage (2005
Other person can exercise the right to BAR)
repurchase
A sale with conventional redemption is deemed to
The right to repurchase may be exercised by any be an equitable mortgage in any of the following
person to whom the right of repurchase may be cases (NCC, Art. 1602) (AIR-STAR)
transferred, or in case of legal redemption, by the
person so entitled by law (Villanueva, 2009). 1. Price of the sale with right to repurchase is
unusually Inadequate;
NOTE: Right to repurchase must be reserved at 2. Seller Remains in possession as lessee or
the time of perfection of sale (Pineda, 2010). otherwise;
3. Upon or after the expiration of the right to
Reservation of right to repurchase repurchase Another instrument extending the
period of redemption or granting a new
The right to repurchase is reserved by a period is executed;
stipulation to that effect in the contract of sale. 4. Purchaser Retains for himself a part of the
Because it is not a right granted to the vendor by purchase price;
the vendee, but is a right reserved by the vendor. 5. Seller binds himself to pay the Taxes on the
thing sold;
Reservation CANNOT be made in an instrument 6. In any other case where the real intention of
different from that of the contract of sale. Once the the parties is that the transaction shall Secure
instrument of absolute sale is executed, and any the payment of a debt or the performance of
right thereafter granted the vendor in a separate any other obligation; or
instrument cannot be a right of repurchase but 7. Art. 1602 shall also apply to a contract
some other right like the option to buy in the purporting to be an Absolute sale (Art. 1604).
instant case (Villanueva, 2009). (2005 BAR)
A: No. The fact that Prisco surrendered possession A stipulation for automatic vesting of title over the
and cultivation of the subject land to Ernesto, not security in the creditor in case of debtor’s default
for a mere temporary period, but for a period of (Villanueva, 2009).
11 years without any justifiable reason. Such act
constituted abandonment despite his avowed The creditor cannot appropriate the things given
intent to resume possession of the land upon by way of pledge or mortgage or dispose of them,
payment of the loan. It is a ground for cancellation otherwise that would result in pactum
by the DARAB of an award to the agrarian reform commissorium. The proper remedy is foreclosure
beneficiary. Consequently, respondent and/or of the mortgage. If there is no foreclosure, the
Prisco's heirs had lost any right to redeem the debtors retain the ownership (Vasquez v. CA, G.R.
subject landholding (Gua-An v. Quirino, G.R. No. No. 144882, February 4, 2005).
198770, November 12, 2012).
Elements of pactum commissorium
Inadequacy of price and Equitable Mortgage
1. There should be a pledge or mortgage
Inadequacy of price does NOT constitute proof wherein property is pledged or mortgaged by
sufficient to declare a contract as one of equitable way of security for the payment of the
mortgage. Mere inadequacy of the price is not principal obligation; and
sufficient. The price must be grossly inadequate, 2. There should be a stipulation for an automatic
or purely shocking to the conscience (Diaz, 2010). appropriation by the creditor of the thing
pledged or mortgaged in the event of
The decisive factor in evaluating whether a nonpayment of the principal obligation within
deed absolute in form is a mortgage the stipulated period (Sps. Pen v. Sps. Julian,
G.R. No. 160408, January 11, 2016) (Bersamin,
The intention of the parties, such as the relative J.).
situation of the parties at that time, the attitude
acts, conduct, declarations of the parties, the NOTE: Article 2088 of the Civil Code prohibits the
negotiations between them leading to the deed, creditor from appropriating the things given by
and generally, all pertinent facts having a way of pledge or mortgage, or from disposing of
tendency to fix and determine the real nature of them; any stipulation to the contrary is null and
their design and understanding is the decisive void.
467
CIVIL LAW
REDEMPTION v. OPTION TO BUY judgment on the basis that contract was a sale
with pacto de retro; and
REDEMPTION OPTION TO BUY
As to nature Rationale: No redemption due to erroneous
Forms part of the contract Principal and belief that it is equitable mortgage which can
of sale. preparatory be extinguished by paying the loan.
contract.
The right must be 4. When period has expired & seller allowed the
imbedded in a contract of May exist prior to period of redemption to expire – seller is at
sale upon its perfection. or after the fault for not having exercised his rights so
perfection of the should not be granted a new period.
sale, or be
imbedded in NOTE: Tender of payment is sufficient but it is not
another contract in itself a payment that relieves the seller from his
upon perfection. liability to pay the redemption price.
NOTE: Art. 1623 of the Civil Code does not Basis of legal redemption
prescribe any distinctive method for notifying the
redemptioner. It is created partly for reason of public policy and
partly for the benefit and convenience of the
Tender of payment NOT necessary for redemptioner to afford him a way out of what
redemption to take effect might be a disagreeable or inconvenient
association into which he has been in trust. It is
Tender of payment is not necessary and offer to intended to minimize co-ownership (Pineda,
redeem is enough only when the amount of 2010).
repurchase is uncertain and depends upon an
accounting of the vendee who has not yet made Running of period of legal redemption
such accounting (Tolentino, 1999).
The right of legal redemption shall not be
Effect of failure to redeem exercised except within 30 days from the notice in
writing by the prospective seller, or seller, as the
There must be judicial order before ownership of case may be. The deed of sale shall not be
real property is consolidated to the buyer a retro. recorded in the Registry of Property unless
accompanied by an affidavit of the seller that he
Vendor a retro CANNOT be compelled to has given written notice thereof to all possible
redeem redemptioners (NCC, Art. 1623).
469
CIVIL LAW
Redemption presupposes that the property was The contract for the assignment or transfer of
already sold or transferred to another. In pre- credit and other incorporeal rights is perfected
emption, the right is present before the sale; there from the moment the parties agree upon the
is a right to purchase ahead of or before it can be credit or right assigned and upon the price even if
sold or transferred to other persons. neither has been delivered (NCC, Art. 1475).
e.g. Whenever a piece of urban land which is so However, the assignee will acquire ownership
small and so situated that a major portion thereof only upon delivery (De Leon, 2011).
cannot be used for any practical purpose within a
reasonable time, having been bought merely for Effects of Assignment
speculation, is about to be re-sold, the owner of
any adjoining land has a right of pre-emption at a 1. Transfers the right to collect the full value of
reasonable price (NCC, Art. 1620). the credit, even if he paid a price less than
such value;
Pre-emption v. Redemption 2. Transfers all accessory rights;
3. Debtor can set up against the assignee all the
PRE-EMPTION REDEMPTION defenses he could have set up against the
assignor.
Arises before sale Arises after sale
Effectivity against Third Persons
No rescission because There can be rescission
no sale yet exists. of the original sale. If personal property is involved — a public
Action Is directed Action is directed against instrument is needed to make the assignment
against the the buyer. effective against third persons.
prospective seller.
If real property is involved –– registration in the
Registry of Property would be needed.
ASSIGNMENT OF CREDITS
NOTE: The assignee merely steps into the shoes of
the assignor, the former acquiring the credit
subject to defenses (e.g. fraud, prescription, etc.)
Assignment is the process of transferring
available to the debtor against the assignor. The
gratuitously or onerously the right of the assignor
to the assignee, who would then be allowed to assignee is deemed subrogated to the rights as
well as to the obligations of the seller. He cannot
proceed against the debtor (Paras, 2008).
acquire greater rights than those pertaining to the
The assignment involves no transfer of ownership assignor (De Leon, 2011).
but merely effects the transfer of rights which the
assignor has at the time to the assignee. Accessory Rights included in the Assignment of
a Credit (NCC, Art. 1627)
It is an agreement by virtue of which the owner of
1. Guaranty;
a credit, known as the assignor, by a legal cause,
2. Mortgage;
such as sale, dacion en pago, exchange or donation,
3. Pledge; and
and without the consent of the debtor, transfers
4. Preference.
his credit and accessory rights to another, known
as the assignee, who acquires the power to
Effect of Assignment of Credit on Debtor
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 The “meeting of the minds” in assignment
contemplates that between the assignor of the
7, 2001).
NOTE: In assignments, a consideration is not credit and his assignee, there being no necessity
always a requisite, unlike in sale. Thus, an for the consent of the debtor. It is sufficient that
assignee may maintain an action based on his title the assignment be brought to the debtor’s
and it is immaterial whether or not he paid any knowledge in order to be binding upon him (C & C
Commercial Corp. v. Philippine National Bank, G.R.
consideration therefor. Furthermore, in an
assignment, title is transferred but possession No. L-42449 July 5, 1989).
need not be delivered.
Effect of payment by the debtor after
Perfection of contract for assignment of credit assignment of credit
Reason: First, to prevent fraud which may be THE SUBDIVISION AND CONDOMINIUM
committed by feigning the solvency of the debtor BUYER’S PROTECTIVE DECREE (PD 957)
at the time of the assignment when in fact he is
insolvent. Second, to oblige the assignee to exert Date of Approval: July 12, 1976
efforts in the recovery of the credit and thereby
avoid that by his oversight, the assignor may The purpose is to afford its inhabitants the
suffer (De Leon, 2011). requirements of a decent human settlement and to
If the assignor in good faith is liable for a provide them with ample opportunities for
warranty, he is liable only for the expenses of the improving their quality of life (De Leon, 2011).
contract, and any other legitimate payments made
by reason of the assignment. On the other hand, an PD 957
assignor in bad faith who breaches such
warranties, shall in addition be liable to pay for P.D. No. 957 was promulgated to encompass all
the necessary and useful expenses, plus damages questions regarding subdivisions and
(NCC, Art. 1628). condominiums. It is aimed at providing for an
appropriate government agency, the HLURB, to
Liabilities of the assignor of credit which all parties aggrieved in the implementation
of its provisions and the enforcement of
contractual rights with respect to said category of
471
CIVIL LAW
real estate may take recourse (Arranza vs. B.F. “Sale” or “Sell” defined under the Decree
Homes, Inc., G.R. No. 131683, June 19, 2000).
It shall include:
The regulatory functions of the NHA are now 1. Every disposition, or attempt to dispose, for a
transferred to the Housing and Land Use valuable consideration, of a subdivision lot,
Regulatory Board (HLURB). including the building and other improvements
thereof, if any, in a subdivision project or a
NOTE: Under E.O. 648 of 1981, the condominium unit in a condominium project;
implementation of P.D. 957 was transferred from 2. Contract to sell;
the National Housing Authority (NHA) to the 3. Contract of purchase and sale;
Housing and Land Regulatory Board (HLURB). 4. Exchange;
5. Attempt to sell;
The law recognized that subdivision and 6. Option of sale or purchase;
condominium development involves public 7. Solicitation of a sale;
interest and welfare and should be brought to a 8. Offer to sell, directly or by an agent, or by a
body, like the HLURB, that has technical circular, letter, advertisement or otherwise;
expertise. In the exercise of its powers, the HLURB and
is empowered to interpret and apply contracts, 9. A. privilege given to a member of a cooperative,
and determine the rights of private parties under corporation, partnership, or any association
these contracts. This ancillary power, generally and/or
judicial, is now no longer with the regular courts B. the issuance of a certificate or receipt
(Chua v. Ang, G.R. No. 156164, September 4, 2009). evidencing or giving the right of participation
in, or right to, any land in consideration of
NOTE: Not every case involving buyers and sellers payment of the membership fee or dues
of real estate may be filed with the HLURB. Its (Deemed sale).
jurisdiction is limited to those cases filed by the
buyer or owner of a subdivision or condominium “Buy” and “purchase” defined under the
and based on any of the causes of action Decree
enumerated under Section 1 of P.D. No. 1344, and
which jurisdictional facts must be clearly alleged It shall include any contract to buy, purchase, or
in the complaint (Delos Santos v. Sarmiento, G.R. otherwise acquire for a valuable consideration a
No. 154877, March 27, 2007). subdivision lot, including the building and other
improvements, if any, in a subdivision project or a
Quasi-judicial authority of HLURB (Sec. 1, P.D. condominium unit in a condominium project.
1344)
Subdivision project
(URS)
1. Unsound real estate business practices; A tract or a parcel of land registered under Act No.
2. Claims involving refund and any other 496 which is partitioned primarily for residential
claims filed by subdivision lot or purposes into individual lots with or without
condominium unit buyer against the project improvements thereon, and offered to the public
owner, developer, dealer, broker, or for sale, in cash or in installment terms.
salesman; and
3. Cases involving specific performance of NOTE: It shall include all residential, commercial,
contractual and statutory obligations filed industrial and recreational areas as well as open
by buyers of subdivision lots or spaces and other community and public areas in
condominium units against the owner, the project.
developer, dealer, broker or salesman.
Subdivision lot
HLURB has no jurisdiction to impose criminal
penalties Any of the lots, whether residential, commercial,
industrial, or recreational, in a subdivision project.
What the Decree provides is the authority of the
HLURB to impose administrative fines under Complex subdivision plan
Section 38, as implemented by the Rules
Implementing the Subdivision and Condominium A subdivision plan of a registered land wherein a
Buyer’s Protective Decree (Chua v. Ang, G.R. No. street, passageway or open space is delineated on
156164, September 4, 2009). the plan.
473
CIVIL LAW
Q: After issuance of the registration certificate, 2. The HLURB may motu proprio suspend the
may the owner or dealer already sell license to sell if, in its opinion, any
subdivision lots or condominium units? information in the registration statement filed
by the owner or dealer is or has become
A: NO. He must first obtain a license to sell the misleading, incorrect, inadequate or
project within two weeks from the registration of incomplete or the sale or offering for a sale of
such project. the subdivision or condominium project may
work or tend to work a fraud upon
Issuance of license to sell prospective buyers.
A: NO, such forfeiture is not allowed. Such buyer Notice NOT required in the demand of refund
may, at his option, be reimbursed the total amount
paid including amortization interests but Section 23 of PD 957 does not require that a
excluding delinquency interests, with interest notice be given first by the buyer to the seller
thereon at the legal rate. before a demand for refund can be made as the
notice and demand can be made in the same letter
NOTE: Sections 23 and 24 of Pres. Decree 957, or communication (Villanueva, 2009).
provide that no installment payments made by the
buyer in a subdivision or condominium project for Q: Ernesto Marcelo sold the lot where the
the lot or unit he contracts to buy shall be water tank of the subdivision, Happy Glen
forfeited in favor of the owner or developer when Loop, is located for almost 30 years to
the buyer, after due notice to the owner or Hermogenes Liwag, president of the
developer desists from further payment due to the Homeowner’s association of the said
failure of the owner or developer to develop the subdivision. Is the sale of the lot where the
subdivision or condominium project according to water tank was located valid?
the approved plans and within the time limit for
475
CIVIL LAW
A: NO. Taking into consideration the intention of contemplated in Sections 2 and 5 of the
the law to create and maintain a healthy Condominium Act:
environment in human settlements, the location of
the water facility in the Subdivision must form 1. Where the land and other common areas in
part of the area reserved for open space. the condominium project are held by the
owners of separate units as co-owners
The law expressly provides that open spaces in thereof; or
subdivisions are reserved for public use and are
beyond the commerce of man. The sale of the In such a situation, there is co-ownership
subject parcel of land by the subdivision owner or among the unit owners, with respect to the
developer to Hermogenes was contrary to law undivided interest in the land and common
(Liwag v. Happy Glen Loop Homeowners areas.
Association, Inc., G.R. No. 189755, July 4, 2012).
2. Where the land and other common areas are
THE CONDOMINIUM ACT (RA 4726) to be held by the condominium corporation.
Date of Approval: June 18, 1966 In which case, the owners of the individual
units are automatically considered members
Condominium or shareholders of the corporation. Under the
provisions of the Condominium Act, the
It is an interest in real property consisting of undivided interest in the common areas or the
separate interest in a unit in a residential, shareholding in the common areas is
industrial or commercial building and an inseparable from the unit to which it is only
undivided interest in common, directly or an appurtenant (Rabuya, 2008).
indirectly, in the land on which it is located and in
other common areas of the building. Restrictions as regards ownership of
condominium units
It may include, in addition, a separate interest in
other portions of such real property (Sec. 2, RA 1. As regards individuals:
4726).
No condominium unit shall be conveyed or
Q: When is ownership acquired? transferred to the persons other than:
a. Filipino citizens; or
A: A purchaser of a unit who has not paid the full b. Corporations at least 60% of capital
purchase price thereof is not the owner of the unit stock of which belong to Filipino citizens.
and consequently is not a shareholder of the
Condominium Corporation. XPN: In cases of hereditary succession.
477
CIVIL LAW
Registration of declaration of restrictions and Q: May a condominium corporation sell,
its effect exchange, lease or otherwise dispose of the
common areas owned or held by it in the
The owner of a project shall, prior to the condominium project?
conveyance of any condominium therein, register
a declaration of restrictions relating to such A:
project. GR: During its existence, it cannot do so, especially
when the master deed contains a requirement that
Such restrictions shall constitute a lien upon each the property should first be offered to the other
condominium in the project, and shall insure to condominium owners within a reasonable time
and bind all condominium owners in the project. before offering it to third parties, then it may not.
NOTE: Such liens, unless otherwise provided, may XPN: If authorized by the affirmative vote of a
be enforced by any condominium owner in the simple majority of the register owners, subject to
project or by the management body of such prior notifications to all registered owners and
project. only upon the final approval of the Housing and
Land Use Regulatory Board (Sec. 2, Republic Act
Q: May the management body acquire and No. 7899).
hold, for the benefit of the condominium
owners, tangible and intangible personal Assessment as lien upon unit (Sec. 20, RA 4726)
property and dispose of the same by sale or
otherwise? An assessment upon any condominium made in
accordance with a duly registered declaration of
A: YES, unless otherwise provided for by the restrictions shall be an obligation of the owner
declaration of restrictions. thereof at the time the assessment is made. The
amount of any such assessment plus any other
NOTE: The beneficial interest in such personal charges thereon, such as interests, cost (including
property shall be owned by the condominium attorney’s fees) and penalties, as such as may be
owners in the same proportion as their respective provided for in the declaration of restrictions,
interests in the common areas. shall be and become a lien upon the condominium
assessed when the management body causes a
A transfer of a condominium shall transfer to the notice of assessment to be registered with the
transferee ownership of the transferor's beneficial Registered of Deeds of the city or province where
interest in such personal property. such condominium project is located. Such lien
shall be superior to all other liens registered
Condominium Corporation subsequent to the registration of said notice of
assessment except real property tax liens and may
A corporation specially formed for the purpose, in be enforced in the same manner provided for by
which the holders of separate interest shall law for the judicial or extra-judicial foreclosure of
automatically be members or shareholders, to the mortgages of real property (Rabuya, 2008).
exclusion of others, in proportion to the
appurtenant interest of their respective units in Rule as regards enforcement of the lien
the common areas.
NOTE: As regards title to the common areas, Such liens may be enforced in the same manner
including the land, or the appurtenant interests in provided for by law for the judicial or extra-
such areas, these may be held by a condominium judicial foreclosure of mortgages of real property.
corporation.
Q: Can the management body bid in the
Term of a condominium corporation foreclosure sale based on the lien for unpaid
assessments?
Co-terminus with the duration of the
condominium project, the provisions of the A: GR: YES, the management body shall have
Corporation Law to the contrary notwithstanding. power to bid at foreclosure sale (Sec. 20, par. 3, RA
4726).
479
CIVIL LAW
If the term is fixed but indefinite, the NOTE: In lease of
court will fix the term under the law of things, the transfer
obligations and contracts; and which one of the parties
obligates himself to
8. Lessor need not be the owner. make is not one of
ownership over the
NOTE: A usufructuary may thus lease the thing but merely the
premises in favor of a stranger, such lease to end enjoyment or use
at the time that the usufruct itself ends. thereof (Rabuya, 2017).
Transfer is temporary. Transfer is permanent,
Consideration of Lease unless subject to a
resolutory condition.
The cause of a contract of lease of things must be a
price certain generally called “rent” in money or The lessor need not be The seller must be the
its equivalent, or some other prestation which the the owner. owner or at least
lessee binds himself to undertake. The important authorized by the
thing is that what is given by the lessee has value owner to transfer
(De Leon, 2005). ownership, of the thing
sold at the time it is
Rent delivered.
The compensation either in money, provisions, The price of the subject The price of the thing is
chattels, or labor, received by the lessor from the matter is usually not usually fixed in the
lessee (Tolentino and Manio v. Gonzalez Sy Chiam, mentioned, being contract.
G.R. No. 26085, August 12, 1927). immaterial.
Rent under Rent Control Act NOTE: A lease of personal property with option to
buy (at a nominal amount) (Art. 1485 of NCC) at
It is the amount paid for the use or occupancy of a the end of the lease can be considered a sale
residential unit whether payment is made on a (Abella v. Gonzaga, 56 Phil. 132; U.S. Com. Co. v.
monthly or other basis (Sec. 4, RA 934, Rent Halili, 49 O.G. 2281; Viuda de Jose v. Barrueco, 67
Control Act). Phil. 191)
Owner has the right to fix the rent because the Lease v. Usufruct
contract is consensual and not imposed by law,
but increasing the rent is not an absolute right of LEASE USUFRUCT
the lessor. The new rate must be reasonable and Real right only in the Always a real right.
in no case shall the lessor be allowed to increase case of the lease of real
the rental when the term has not yet expired, property where the
unless, the tenant consents (Paras, 2008). lease is registered.
Form of Lease Contract The lessor may or may The creator of the right
not be the owner. must be the owner or
GR: Lease may be made orally. one duly authorized by
him.
XPN: If the lease of real property is made for more
than one year, it must be in writing, in compliance The lessor has the The owner has the
with the Statute of Frauds [NCC, Art. 1403 (2)(e)]. active obligation to passive duty to allow
maintain the lessee in the usufructuary to
Distinctions between ‘Lease of Things’ and the enjoyment or use of enjoy or use the same.
‘Other Contracts’ the property.
Lease v. Sale The lessee generally The usufructuary pays
pays no taxes. the annual charges and
LEASE SALE taxes on the fruits.
Only the enjoyment or Ownership is
use is transferred. transferred. The lessee generally The usufructuary is
has no obligation to pay obliged to make the
Generally covers As a rule covers all The result is generally The result is generally
particular uses limited possible uses of the not important, hence important; the price is
by the contract. property. the laborer is entitled not payable until the
to be paid even if there work is completed, and
Lease v. Commodatum is destruction of the said price cannot be
work through lawfully demanded if
LEASE COMMODATUM fortuitous event or the the work is destroyed
Onerous contract, Essentially gratuitous. result intended not before it is finished and
although the rent may attained. accepted.
subsequently be
condoned or remitted. There is a price certain (compensation);
The relation of principal and agent does not exist
Not essentially Purely personal in between the lessor and lessee.
personal in character character, and
and, therefore, the right consequently, the death Lease of Services v. Agency
may be transmitted to of either the bailor or
the heirs. the bailee extinguishes LEASE OF SERVICES AGENCY
the contract.
The basis is It is representation.
employment.
Consensual contract. Real contract as it is
perfected only upon
The lessor performs a The agent executes a
delivery of the object
material act for the juridical act for and in
thereof.
benefit of his employer behalf of his principal.
without representation
Both contracts consist in the transmission of the
of the latter.
enjoyment or use of a thing to another.
The work or service It is presumed for a
Lease of Work v. Lease of Service
must be for a price or compensation.
compensation.
LEASE OF WORK LEASE OF SERVICE
The object is the It is the performance of The will of both parties The will of one is
execution of a piece of some service or an is necessary for the sufficient.
work for an employer employer by a extinguishment of the
by an independent househelper or laborer relationship.
contractor. or for a passenger or
owner of goods by
Only two persons are Three persons: the
common carrier.
involved: the lessor principal, the agent and
and lessee. the third person with
In both kinds of lease, the employer or passenger whom the agent has
or owner of goods binds himself to pay some contracted.
remuneration or compensation in favor of the
independent contractor, employee, or common
The risk of loss before The risk is borne by the
carrier and the relation of principal and agent
delivery is borne by principal since the agent
does not exist between the parties.
the independent acts merely as his
481
CIVIL LAW
contractor, esp. in the representative. NOTE: A price certain exists when the same can
lease of work for a be ascertained according to the customs and
fixed price. usages of the place.
In the lease of work, The agent is not, unless Lease of Consumable Goods
the independent he expressly binds
contractor is himself or exceeds the GR: Consumable goods cannot be the subject
personally liable for limits of his authority. matter of a contract of lease of things (NCC, Art.
his contracts with third 1648, 1st part).
persons.
In the lease of service, The agent exercises Reason: To use or enjoy them, they will have to
the lessor ordinarily discretionary powers. be consumed. This cannot be done by the
performs only lessee since ownership over them is NOT
ministerial duties. transferred to him by the contract of lease.
2. Where the agreement may be implied NOTE: The prohibition applies even to
One who performs work or service in favor of common law spouses. For otherwise said
another who impliedly consents thereto and spouses would be placed in a better position
who benefits thereby, is entitled to than legitimate spouses.
compensation by virtue of an innominate
contract of facio ut des (I give that you may 2. Persons referred to under Art. 1491 of NCC
do) or of the case of services tacitly contracted are disqualified because of fiduciary
in which case the courts will fix the relationships.
reasonable worth of the services rendered.
NOTE: While foreigners in general cannot buy
3. Where no rate or amount is fixed in the rural or urban lands, they may become lessees
contract thereof since the reason for the law —
The contract is nevertheless valid if the fiduciary relationship — does not exist in this
amount can be ascertained in the light of the case (Smith, Bell and Co. v. Reg. of Deeds, G.R.
customs and usages of the place, or by No. L-7084, October 27, 1954).
findings of fact on the basis of evidence Hence, foreigners may lease land from others
submitted in case of disagreement. (NCC, Art. 1643).
A lessee is stopped from asserting title to the thing If a lease is to be recorded, the following persons
leased as against the lessor (NCC, Art. 1436), or to must have special power of attorney to constitute
deny the lessor’s title, or to assert a better title not the lease:
only in himself, but also in some third person,
including the State while he remains in possession 1. Husband – with respect to the paraphernal
of the leased property and until he surrenders real estate of the wife;
possession to the lessor (VSC Commercial 2. Father or guardian – with respect to the
Enterprises, Inc. v. CA, G.R. No. 121159, December property of the minor or the ward;
16, 2002). 3. Manager or administrator – with respect to
the property under his administration.
This estoppel applies even though the lessor had
no title at the time the relation of lessor and lessee NOTE: The “manager” here may be:
was created. It may be asserted not only by the a. The administrator of conjugal property
original lessor, but also by those who succeed to (Rodriguez v. Borromeo, G.R. No. L-17772,
his title (Geminiano v. CA, G.R. No. 120303, July 24, June 9, 1922);
1996). b. The administrator of a co-ownership
(Melencio v. Dy Tiao Lay, G.R. No. L-
Q: Fred sold to Juan a parcel of land, belonging 32047, November 1, 1930); or
to his minor son, Lino, then under his c. The administrator of state patrimonial
guardianship, without judicial approval. After property (Tipton v. Andueza, G.R. No. L-
the sale, Juan immediately took possession of 2220, April 4, 1906).
the land, built a house and religiously paid the
taxes thereon. Nine years thereafter, Lino, no Q: A husband was properly given by his wife
longer a minor, rented the ground floor of the the authority to administer her paraphernal
house built by Juan. Lino paid the rent for the real property. Does this necessarily mean that
first month, then stopped paying. Two years just because the husband is now the
thereafter, when pressed for payment of the administrator, he can lease said property
accrued rent, Lino refused, claiming without any further authority?
ownership over the property, alleging that the
sale of the property to Juan while he was a A: It depends.
minor without the approval of the
guardianship court rendered the sale null and 1. If the lease will be for one year or less, no other
void. Is the claim of Lino valid and authority is required;
meritorious? Explain. (1987 BAR) 2. If the lease on the real property will be for
more than a year, then a special power of
A: NO. Lino’s claim is not valid and not attorney (aside from the public instrument
meritorious because Lino is in estoppel. A lessee transferring administration) is required (NCC,
cannot assail the right and title of the lessor and Art.1878); or
483
CIVIL LAW
3. Furthermore, whether it be a) or b), if the lease NOTE: But if the sale is fictitious and was only
is to be recorded, there must be a special resorted to for the purpose of extinguishing the
power of attorney (NCC, Art. 1647). lease, the supposed vendee cannot terminate
the lease. The sale is presumed fictitious if at
NOTE: If it is the wife who is administering her that time the supposed vendee demands the
paraphernal real property, the husband has no termination of the lease, the sale is not
authority whatsoever, to lease, in any way, or recorded in the Registry of Property (Art. 1676,
administer the property. 3rd paragraph, NCC).
Q: If a father, who is administering the real 4. If the stranger knows of the existence of the
estate of his minor son, wants to record the lease, but has been led to believe that the
lease, should he ask for judicial permission? lease would expire very soon, or before the
new lease in favor of him begins (when in fact
A: YES. A father who is administering the real this was not true), the stranger can still be
estate of his minor son should ask for judicial considered innocent (Quimson v. Suarez, G.R.
permission if he wants to record the lease (Art. No. L-21381, April 5, 1924).
1647). But even if no judicial authorization is
asked, such defect cannot be invoked by a lessee Rules on lease of things when lessee is an alien
who has dealt with him (Summers v. Mahinay, [CA]
40 O.G. [11th S] No. 18). Only the son or his own 1. Personal property – 99 year limit applies;
heirs may question the validity of the transaction. 2. Aliens cannot lease public lands, and cannot
acquire private lands except through
Q: Is lease a real or a personal right? succession;
3. If lease of real property (private lands),
A: Generally, it is a personal right. But it partakes maximum of 25 years renewable for another
of the nature of a real right if: 25 years (PD 713).; and
4. Under the Investor’s Lease Act of 1995 (ILA),
a. the lease of real property is for more than the 25 year period was extended to 50 years
one year; provided the following conditions are met:
b. the lease of real property is registered a. Lessee must make investments;
regardless of duration. b. Lease is approved by DTI; and
c. If terms are violated, DTI can terminate it.
NOTE: In both cases a special power of
attorney is required because these are NOTE: The Investor’s Lease Act of 1995 (ILA) did
acts of strict dominion, and not merely of not do away with P.D. 713, under ILA the consent
administration [NCC, Arts. 1647 & of DTI is required, while in P.D. 713 no consent is
1878(8)]. required.
Effects if the lease of real property is not Right of a purchaser of a leased property
registered
GR: Purchaser of thing leased can terminate the
1. The lease is not binding on innocent third lease.
persons such as a purchaser (Salonga, et al. v.
Acuña, C.A., 54 O.G. 2943); XPNs:
2. Naturally, such an innocent third person is 1. Lease is recorded in Registry of Property;
allowed to terminate the lease in case he buys 2. There is a stipulation in the contract of sale
the property from the owner-lessor. (NCC, Art. that the purchaser shall respect the lease;
1676) (2009 BAR); 3. Purchaser knows the existence of the lease;
3. When a third person already knows of the 4. Sale is fictitious; or
existence and duration of the lease, he is bound 5. Sale is made with a right of repurchase.
by such lease even if it has not been recorded.
The reason is simple: actual knowledge is, for Term of lease contract
this purpose, equivalent to registration
(Quimson v. Suarez, G.R. No. L-21381, April 5, GR: The law does not allow perpetual lease. There
1924; and Gustilo v. Maravilla, G.R. No. L-23386, must be a period which may either be definite or
December 12, 1925); and indefinite.
485
CIVIL LAW
These relationships co-exist and are intimately thing leased in accordance with the agreement
related to each other but are distinct from one between the lessor and the lessee or with the
another (Albano, 2013). nature of the property. It is not necessary that the
sublessor be joined as a defendant (NCC, Art.
Q: Alfonso was the owner of a building being 1651).
leased to Beatriz. The contract allowed
subleasing of the building, thus, Beatriz This is true, notwithstanding the fact that the
subleased it to Charlie. Charlie directly paid sublessee is not a party to the lease contract
his rent to Alfonso after the lease expired. Was (Paras, 2008).
Charlie correct?
Subsidiary liability of sublessee to lessor
A: NO. There are two (2) distinct leases involved, (1999 BAR)
the principal lease and the sublease. In such
agreement, the personality of the lessee does not 1. Remedy to collect rents from the sublessee
pass on to or is acquired by the sublessee. Thus, The law grants the lessor the right to demand
the payment to the lessor was not payment to the payment from the sublessee the rents which the
sublessor. Alfonso was a stranger to the sublease sublessor failed to pay the lessor. The demand
agreement (Blas v. CA, G.R. No. 82813, December to pay rents made by the lessor on the sublessee
14, 1989). does not exempt the latter from his obligation to
pay the sublessor the rents which said sublessee
Sublease v. Assignment (1990, 1994, 2005 failed to pay the lessor.
BAR)
Purpose: To prevent a situation where the
SUBLEASE ASSIGNMENT lessee collects rents from the sublessee but does
The lessee retains an The lessee makes an not pay his rents to the lessor.
interest in the lease; absolute transfer of his
he remains a party to interest as lessee; thus, 2. Amount of rent recoverable
the contract. he dissociates himself The liability of the sublessee is limited to the
from the original amount of rent due from him to the sublessor
contract of lease. under the terms of the sublease at the time of
the extrajudicial demand by the lessor. Future
The sublessee does The assignee has a rents cannot be recovered. He is liable to the
not have any direct direct action against lessor only for rents the lessee failed to pay the
action against the the lessor. lessor.
lessor.
NOTE: The liability of the sublessee is
Can be done even Cannot be done unless subsidiary.
without the the lessor consents.
permission of the 3. Liability for rents paid in advance
lessor unless there be The sublessee continues to be subsidiarily liable
an express to the lessor for any rent unpaid by the lessee.
prohibition. The rule is to avoid collusion between the lessee
and the sublessee.
Liability of Sublessee towards Lessor (1999,
2000 BAR) Warranty of the lessor
Although the sublessee is not a party to the 1. That he has a right to lease the thing;
contract of lease, the sublessee is still directly 2. That the lessee shall enjoy the legal and
liable to the lessor for acts appertaining to the use peaceful possession of the thing;
and preservation of the property. This is of course 3. That the thing is fit for the use for which it is
in addition to the sublessee’s obligation to the intended;
sublessor. Note also that the liability for rent is 4. That the thing is free from any hidden fault or
given in Art. 1652 of NCC (Paras, 2008). defect (De Leon, 2005).
Direct Action by the Lessor (Accion Directa) In case of eviction of the lessee, and the return of
the rents paid is required, a reduction shall be
The lessor may bring an action directly against the made taking into account the period during which
sublessee if he does not use and preserve the the lessee enjoyed the thing.
487
CIVIL LAW
lessee can file a direct action against the 1. The lease is extinguished if the thing is totally
trespasser such as forcible entry or illegal destroyed;
detainer. 2. The lessee cannot compel the lessor to
reconstruct the destroyed property;
4. Duty not to Alter Form 3. The lessee of the lot and building which has
The lessor has also the duty not to alter the been totally destroyed by fortuitous event
form of the thing leased as to impair the use of cannot be considered as lessee of the land after
the said thing to which it is devoted under the the building had been totally destroyed by the
terms of the lease (NCC, Art. 1661). fortuitous event (Roces v. Rickards, [C.A.] 45
O.G. [Supp.] 97); and
Rules if urgent repairs are necessary (NCC, Art. 4. While the land has not been affected,
1662) consideration should be taken of the fact that
generally the land was leased only as an
1. If repairs last for NOT MORE THAN 40 days incident to the lease of the building (Rohde
Lessee is obligated to tolerate the work, Shotwell v. Manila Motors Co., Inc., G.R. No. L-
although it may be annoying to him and 7637, December 29, 1956).
although during the same time he may be
deprived of a part of the premise. Partial Destruction
2. If repairs last for 40 DAYS OR MORE
Lessee can ask for reduction of the rent in Lease is not extinguished. The lessee is given the
proportion to the time (including the 1st 40 option to choose between a proportionate
days and the part of the property of which he is reduction of the rent and rescission of the lease.
deprived). Once the choice of the lessee has been
communicated to the lessor, the former cannot
NOTE: In either case, rescission may be availed change it (NCC, Art.1201).
of if the main purpose of the lease is to provide
a dwelling place and the property becomes If reduction of rent is chosen, the same shall be
uninhabitable. retroactive to the date the partial destruction
occurred. In case of rescission, the general rule is
Effects if the lessor fails to make urgent repairs that it will not be granted for slight or trivial
causes. The partial destruction, under the
The lessee may: circumstances, should be important or substantial
1. Order repairs at the lessor’s cost; as to defeat the purpose of the lessee in entering
2. Sue for damages; into the contract of lease.
3. Suspend the payment of the rent; or
4. Ask for rescission, in case of substantial NOTE: The choice is on the LESSEE and not to the
damage to him lessor.
If the contract of lease is silent as to who will When lessee may suspend payment of rent
pay for repair expenses
1. When lessor fails to undertake necessary
1. Major repairs – Shouldered by the lessor; and repairs.
2. Minor repairs – Shouldered by the lessee. 2. When lessor fails to maintain the lessee in
peaceful and adequate enjoyment of the
Remedy of the lessee if the lessor fails to make property leased.
major or necessary repairs
Effectivity of the suspension
Lessee may ask for:
1. In the case of repairs, from the time he made
1. Rescission of contract and indemnification for the demand for said repairs, and the demand
damages; or went unheeded; or
2. Indemnification only, while the contract 2. In the case of eviction, from the time the final
remains in force (NCC, Art. 1659). judgment for eviction becomes effective.
489
CIVIL LAW
subleased the land to Conrad for a period of 2 whole would be leased to him (B) for a period
years at a monthly rental of P1,500.00. On of ten years from January 1, 1985 to December
December 31, 1992, Joel assigned the lease to 31, 1995 at a rental of P100,000 a year. To
his compadre, Ernie, who acted on the belief such condition, A agreed. On December 20,
that Joel was the rightful owner and possessor 1990, the building was totally burned. Soon
of the said lot. Joel has been faithfully paying thereafter, A’s workers cleared the debris and
the stipulated rentals to Victor. When Victor started construction of a new building. B then
learned on May 15, 1992 about the sublease served notice upon A that he would occupy the
and assignment, he sued Joel, Conrad and building being constructed upon completion,
Ernie for rescission of the contract of lease and for the unexpired portion of the lease term,
for damages. explaining that he had spent partly for the
construction of the building that was burned. A
1. Will the action prosper? If so, against rejected B’s demand. Did A do right in rejecting
whom? Explain. B’s demand? (1993 BAR)
2. In case of rescission, discuss the rights and
obligations of the parties. (2005 BAR) A: YES. A was correct in rejecting the demand of B.
As a result of the total destruction of the building
A: by fortuitous event, the lease was extinguished
1. YES, the action for rescission of the lease will (NCC, Art. 1655).
prosper because Joel cannot assign the lease to
Ernie without the consent of Victor. (NCC, Art. Grounds for judicial ejectment under the
1649) But Joel may sublet to Conrad because Rental Reform Act of 2002
there is no express prohibition (NCC, Art. 1650;
Alipio v. CA, G.R. No. 134100, September 29, 1. Assignment of lease or subleasing of residential
2000). units in whole or in part, including the
acceptance of boarders or bedspacers, without
Victor can rescind the contract of lease with Joel, the written consent of the lessor; or
and the assignment of the lease to Ernie, on the
ground of violation of law and of contract. The 2. Rental payment in arrears for 3 months;
sub-lease to Conrad remained valid for 2 years Provided, that in case of refusal by the lessor to
from January 1, 1991, and had not yet lapsed accept the payment of the rent, the lessee may
when the action was filed on May 15, 1992. deposit the amount in court or with the city or
municipal treasurer, as the case may be, or in
2. In case of rescission, the rights and obligations the bank in the name of and with notice to the
of the parties should be as follows: At the time lessor, within one month after the refusal of the
that Victor filed suit on May 15, 1992, the lessor to accept payment.
assignment had not yet lapsed. It would lapse on
December 1, 1994, the very same date that the Q: Jane leased a truck to Ed for 2 years. After 1
5-year basic lease would expire. Since the year from delivery, the truck was destroyed by
assignment is void, Victor can get the property a strong typhoon. What is the effect of the
back because of the violation of the lease. Both destruction of the truck with respect to the
Joel and Ernie have to surrender possession and lease?
are liable for damages. But Conrad has not yet
incurred any liability on the sublease which still A: It depends. If the thing leased is totally
subsisted at the time of the filing of the action destroyed by a fortuitous event, the lease is
on May 15, 1992. extinguished. If the destruction is partial, the
lessee may choose between: proportional
Ernie can file a cross-claim against Joel for reduction of rent or, rescission of lease (NCC, Art.
damages on account of the rescission of the 1655).
contract of assignment. Conrad can file a
counter-claim against Victor for damages for NOTE: On the part of the lessor, instead of
lack of causes of action at the time of the filing of rescinding the contract, he may directly file an
the suit. action for ejectment against the lessee.
Q: A is the owner of a lot on which he If the aggrieved party has chosen the option of
constructed a building in the total cost of P10, rescission under Art. 1659 of NCC, the court has
000,000. Of that amount B contributed no discretion to grant the non-fulfillment in an
P5,000,000 provided that the building as a ordinary obligation under Art. 1191 of NCC.
Two Kinds of trespass with Respect to the DURATION AND TERMINATION OF LEASE
Property Leased
When lease is supposed to end
1. Mere act of trespass (disturbance in fact)
The physical enjoyment is reduced and may 1. When the lease was made for a DETERMINATE
take place in a case of forcible entry. The third TIME, the lease ends on the DAY FIXED,
person claims no right whatever (Paras, without need of a demand (NCC, Art. 1669); or
2008).
2. If the understanding between the parties as to
NOTE: If the leased premises are the term of the lease was vague and uncertain,
expropriated and the tenant is evicted from it cannot be said that a definite period was
the premises, the lessor is not liable for agreed upon; hence the proper Article to
damages. The lessee must look to the apply would be Art. 1687 of NCC (Guitarte v.
expropriator for his compensation (Sayo v. Sabaco, et al., G.R. No. L-3688-91, March 28,
Manila Railroad Co., G.R. No. 17357, June 21, 1960).
1922).
NOTE: Under Article 1687 of NCC, if the period for
2. Trespass in law (disturbance in law) the lease has not been fixed, it is understood to be
A third person claims a LEGAL right to enjoy from year to year, if the rent agreed upon is
the premises. The lessor is responsible for annual; from month to month, if it is monthly;
trespass in law (Paras, 2008). from week to week, if the rent is weekly; and from
day to day, if the rent is to be paid daily.
Lessee is presumed at fault in case of loss or
deterioration of the property Q: May the courts fix a different period for the
lease?
This presumption is rebuttable. The burden of
proof is on the LESSEE to show that the loss or A: YES. Even though a monthly rent is paid, and no
deterioration is not due to his own fault, such as period for the lease has been set, the courts may
when the deterioration resulted from lapse of fix a longer term for the lease after the lessee has
time, ordinary wear and tear, or from inevitable occupied the premises for over one year. If the
cause (NCC, Art. 1665). rent is weekly, the courts may likewise determine
a longer period after the lessee has been in
491
CIVIL LAW
possession for over six months. In case of daily When the parties have stipulated on the
rent, the courts may also fix a longer period after period of the lease, upon its expiration the
the lessee has stayed in the place for over one Court cannot extend the period since it has no
month (NCC, Art. 1687). authority to do so.
Effects of the implied new lease Rule if lessor objects to lessee’s continued
possession
1. The period of the new lease is not that stated in
the original contract, but the time in Arts. 1682 Note that under Art. 1671 of NCC, there are three
and 1687 of NCC (month to month, year to requisites:
year, etc.); and
2. Other terms of the original contract are revived 1. The contract has expired;
(Paras, 2008). 2. The lessee continues enjoying the thing; and
3. The lessor has objected to this enjoyment.
Terms which are revived
If the three requisites are present, the lessee shall
The original terms of the original contract which be considered a possessor in BAD FAITH.
are revived are only those which are germane to
the lessee’s right of continued enjoyment of the If the lessee still makes a construction after he has
property leased or related to such possession, become a possessor in bad faith, he may be
such as the amount of rental, the date when it compelled:
must be paid, the care of the property, the
responsibility for repairs, etc. 1. To forfeit the construction without indemnity;
2. To buy the land regardless of whether or not
NOTE: No such presumption may be indulged in its value is considerably more than the value
with respect to special agreements which by their of the construction; or
nature are foreign to the right of occupation or 3. To demolish the construction at his expense.
enjoyment inherent in a contract of lease.
e.g. preferential right given to the lessee to NOTE: In any of the 3 cases hereinabove referred
purchase the leased property. to, he will still be subject to the payment of
damages (Arts. 449-451 of NCC).
Requisites for an implied renewal of lease
Judicial Grounds for Ejectment of Lessees
1. The term of the original contract of lease must (1994, 2004 BAR) (ENVI)
have already expired;
2. The lessee continues enjoying the thing leased 1. Expiration of period of the lease
for at least 15 days;
3. The continuation of the occupation by the The period of the lease contract may be:
lessee is with the acquiescence of the lessor; a. Conventional – when the period is by
and agreement of the parties; or
4. The lessor or lessee has not previously given a b. Legal – when the period is fixed by law
notice to vacate. under Arts. 1682 and 1687 of NCC;
493
CIVIL LAW
GR: Upon the expiration of the period, the lease The LESSOR is entitled to a writ of preliminary
contract is terminated. If a determinate time injunction to restore him in his possession in case
was stipulated, the lease ceases without need of the higher court is satisfied that the lessee’s
a demand (NCC, Art. 1669). appeal is frivolous or dilatory (i.e., without merit)
or the lessor’s appeal is prima facie meritorious.
XPN: In case of implied new lease. After
termination of the lease, the lessor is free to Reason: The remedy is intended “to put an end to
dispose of the property in favor of another the present state of the law which unjustly allows
lessee. The payment of all rents then due will be the lessee to continue in possession during an
immaterial. As long as the period has expired, appeal’’ (Report of the Code Commission).
the lessee can be ejected.
Use by lessee of legal period
2. Non-payment of the rentals agreed upon
The lessee is entitled to periods agreed upon in
One of the principal obligations of the lessee is the lease contract (conventional) or those
to pay the rentals agreed upon (NCC, Art. 1657 established in Articles 1682 and 1687 of NCC
par. 1). It is the cause or consideration for the (implied new lease).
use and enjoyment of the property leased. Non-
payment of the rentals after a demand therefor However, these rights are restricted if there are
is a justifiable ground for the lessor to rescind grounds or causes for the ejectment of the lessee
the contract and eject the lessee. under Art. 1673 of NCC. To enjoy peace, the lessee
must be faithful to his obligations as such.
3. Violation of any condition
When the lessee is guilty of a cause of ejectment
Any violation of the terms and conditions of a under Art. 1673 of NCC, he is also deprived of the
contract of lease, whether it is essential or right to enjoy the period of grace under Art. 1687
accidental in nature, will constitute a violation of NCC.
of the lease contract and will justify the filing of
an ejectment case against the lessee. Effect of Sale of Leased Property on the Lease
Contract
The theory that a lease could continue for an
indefinite term as long as the lessee pays the 1. The purchaser shall respect the lease in the
rentals had already been rejected by the SC following situations:
because the validity or compliance of contracts a. When the lease is registered with the
cannot be left to the will of one of the parties proper Register of Deeds;
(NCC, Art. 1308). b. When the deed of sale provides for the
recognition and respect of the lease by the
Where the contract of lease prohibits the lessee purchaser until termination of the period;
from introducing improvements and making c. When the purchaser has actual knowledge
repairs and the lessee did so, he violated this of the existence of the lease.; or
condition. This violation is a basis for d. The lease cannot also be terminated by the
ejectment. purchaser in a fictitious sale and by the
purchaser in a sale with pacto de retro until
4. Improper use or enjoyment of the property the expiration of the period to redeem. Only
leased a purchaser in good faith of the leased
property is granted protection by the law.
The lessee is obliged to use the thing leased as
a diligent good father of a family. If due to 2. In any other case, the purchaser is not obliged
improper use of the property, the same is lost, to respect the lease contract. He has the
destroyed or deteriorated, the lessor may option to continue or discontinue the lease.
immediately file a suit for restitution or
ejectment. He need not wait for the expiration The sale of a leased property places the
of the period of the lease. vendee into the shoes of the original lessor to
whom the lessee bound himself to pay.
Preliminary mandatory injunction to restore
possession pending appeal (NCC, Art. 1674) Right of lessee if new owner terminates the
unrecorded lease
Effect: The false “vendee” cannot terminate the Expenses incurred which cater only to the
lease even if the same is unrecorded. personal comfort, convenience or enjoyment of a
person.
Reason: To discourage the practice which has
developed in recent years of fictitiously selling the The lessee has no right of reimbursement for
premises in order to oust the lessee before the ornamental expenses. He may remove them
termination of the lease (Code Commission). provided he does not cause any damage to the
thing leased. The lessor, if he so desires, may
Rights of the lessee who introduced retain them after paying their value to the lessee
improvements (1990, 1996 BAR) at the time the lease is extinguish
495
CIVIL LAW
Arts. 1767, 1797-98);
PARTNERSHIP 2. The partnership has a juridical personality
separate and distinct from that of each of the
partners. Such juridical personality shall be
CONTRACT OF PARTNERSHIP automatically acquired despite the failure to
register in the SEC (NCC, Art. 1768);
Partnership 3. Partners have equal rights in the
management and conduct of the partnership
It is a contract whereby two or more persons bind business (NCC, Art. 1803);
themselves to contribute money, property, or 4. Every partner is an agent of the partnership,
industry to a common fund, with the intention of and entitled to bind the other partners by his
dividing the profits among themselves (NCC, Art. acts, for the purpose of its business (NCC, Art.
1767). 1818). He may also be liable for the entire
partnership obligations;
NOTE: Two or more persons may also form a 5. All partners are personally liable for the
partnership for the exercise of a profession (NCC, debts of the partnership with their separate
Art. 1767). property (NCC, Arts. 1816, 1822-24) except
limited partners are not bound beyond the
Essential elements of partnership amount of their investment (NCC, Art. 1843);
6. A fiduciary relation exists between the
1. Agreement to contribute money, property or partners
industry to a common fund (mutual (NCC, Art. 1807); and
contribution to a common stock); and 7. On dissolution, the partnership is not
2. Intention to divide the profits among the terminated, but continues until the winding
contracting parties (joint interest in the up of partnership is completed (NCC, Art.
profits) (Evangelista v. Collector of Internal 1829).
Revenue, G.R. No. L-9996, October 15, 1987).
1957 NOTE: These incidents may be modified by
stipulation of the partners subject to the rights of
Characteristics of partnership third persons dealing with the partnership.
1. Bilateral – It is entered into by two or more Q: TRUE or FALSE. An oral partnership is valid
persons and the rights and obligations (2009 BAR).
arising therefrom are always reciprocal;
2. Onerous – Each of the parties aspires to A: TRUE. An oral contract of partnership is valid
procure for himself a benefit through the even though not in writing. However, if it involves
giving of something; contribution of an immovable property or a real
3. Nominate – It has a special name or right, an oral contract of partnership is void. In
designation in our law; such a case, the contract of partnership to be valid,
4. Consensual – Perfected by mere consent, must be in a public instrument (NCC, Art. 1771),
upon the express or implied agreement of and the inventory of said property signed by the
two or more persons; parties must be attached to said public instrument
5. Commutative – The undertaking of each of (NCC, Art. 1773; Litonjua, Jr. v. Litonjua, Sr., G.R.
the partners is considered as the equivalent Nos. 166299-300, December 13, 2005)
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 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).
497
CIVIL LAW
NOTE: If an unlawful
partnership is dissolved
by a judicial decree, the
profits shall be
confiscated in favor of the
State.
Liability In case of a general GR: The obligation to
partner, his separate and third persons is limited to
personal property shall the assets of the
also be liable if the assets corporation.
of the partnership is not XPN: Partner binds
sufficient to satisfy the himself solidarily liable
obligation to third
persons.
The property used becomes the property The property used remains
Transfer of property of the business entity and hence of all undivided property of its
the contributor.
Partners.
A partner acting in pursuance of the firm None of the co-venturers can
business, binds not only himself as a bind the joint venture or his
Power principal, but as their agent as well, also co-venturers.
the partnership and the partners.
A partnership acquires personality after A joint venture has no legal
following the requisites required by law. personality.
499
CIVIL LAW
property to become subject to risks not Necessity of judicial decree to dissolve an
contemplated by the stockholders when they unlawful partnership
originally invested in the corporation (Mendiola vs
CA, GR.No.159333, July 31, 2006). Judicial decree is not necessary to dissolve an
unlawful partnership; however, it may sometimes
Principle of delectus personae be advisable that a judicial decree of dissolution be
secured for the convenience and peace of mind of
No one can become a member of the partnership the parties (De Leon, 2010).
association without the consent of all the partners.
This rule is inherent in every partnership. Intention to divide the profits
RATIO: This is because of the mutual trust among The sharing in profits is merely presumptive and
the partners and that this is a case of subjective not conclusive evidence of partnership. There are
novation. There is subjective novation when there numerous instances of parties who have a
is a change in the parties to a contract. Their common interest in the profits and losses of an
consent thereto is necessary in order to bind them enterprise but who are not partners. Thus, if the
(Albano, 2013). division of profits is merely used as guide to
determine the compensation due to one of the
NOTE: Even if a partner will associate another parties, such is not a partner (De Leon, 2010).
person in his share in the partnership, the
associate shall not be admitted into the Q: To form a lending business, it was verbally
partnership without the consent of all the agreed that Noynoy would act as financier
partners, even if the partner having an associate while Cory and Kris would take charge of
should be a manager (NCC, Art. 1804). This solicitation of members and collection of loan
element of delectus personae, however, is true only payments. The parties executed the 'Articles of
in the case of a general partner, but not as regards Agreement' where Noynoy would receive 70%
a limited partner. of the profits while Cory and Kris would earn
15% each. Later, Noynoy filed a complaint
A partnership may be formed even if the against Cory and Kris for misappropriation of
common fund is comprised entirely of funds allegedly in their capacities as Noynoy’s
borrowed or loaned money employees. In their answer, Cory and Kris
asserted that they were partners and not mere
A partnership may be deemed to exist among employees of Noynoy. What kind of
parties who agree to borrow money to pursue a relationship existed between the parties?
business and to divide the profits or losses that
may arise therefrom, even if it is shown that they A: A partnership was formed among the parties.
have not contributed any capital of their own to a The "Articles of Agreement" stipulated that the
"common fund." Their contribution may be in the signatories shall share in the profits of the
form of credit or industry, not necessarily cash or business in a 70-15-15 manner, with Noynoy
fixed assets. Being partners, they are all liable for getting the lion's share. This stipulation clearly
debts incurred by or on behalf of the partnership. proved the establishment of a partnership (Santos
(Lim Tong Lim v. Philippine Fishing Gear Industries, v. Spouses Reyes, G.R. No.135813, October 25, 2001).
Inc., G.R. No. 136448, November 3, 1999)
Q: Jose conveyed his lots in favor of his four
Consequences of a partnership formed for an sons in order for them to build their
unlawful purpose residences. His sons sold the lots since they
found the respective lots impractical for
1. The contract is void ab initio and the residential purposes because of high costs of
partnership never existed in the eyes of the construction. They derived profits from the
law; sale and paid income tax. The sons were
2. The profits shall be confiscated in favor of required to pay corporate income tax and
the government; income tax deficiency, on the theory that they
3. The instruments or tools and proceeds of formed an unregistered partnership or joint
the crime shall also be forfeited in favor of venture taxable as a corporation. Did the
the government; and siblings form a partnership?
4. The contributions of the partners shall not
be confiscated unless they fall under No. 3 A: NO. The original purpose was to divide the lots
(De Leon, 2010). for residential purposes. If later, they found out
The definition of partnership under Art. 1767 GR: No special form is required for its validity or
refers to “profits” only and is silent as to “losses.” existence. (NCC, Art. 1771) The contract may be
The reason is that the object of partnership is made orally or in writing regardless of the value of
primarily the sharing of profits, while the the contributions. (2009 Bar)
distribution of losses is but a “consequence of the
same.” The right to share in the profits carries NOTE: An agreement to enter in a partnership at a
with it the duty to contribute to the losses, of any. future time, which “by its terms is not performed
within a year from the making thereof” is covered
NOTE: The partnership relation is not the contract by the Statute of Frauds [NCC, Art. 1403(2)(a)].
itself, but the result of the contract. The relation is Such agreement is unenforceable unless the same
evidenced by the terms of the contract which may be in writing or at least evidenced by some note or
be oral or written, express or implied from the memorandum thereof subscribed by the parties.
acts and declarations of the parties, subject to the (De Leon, 2010)
provisions of Articles 1771-1773 and to the
Statute of Frauds (De Leon, 2010). XPN: If property or real rights have been
contributed to the partnership:
FORMATION OF PARTNERSHIP
1. Personal property
It is created by agreement of the parties a. Less than P3,000 – may be oral
(consensual). There is no such thing as a b. P 3,000 or more – must be:
partnership created by law or by operation or i. In a public instrument; and
implication of law alone (De Leon, 2010). ii. Registered with Securities and
Exchange Commission (NCC, Art.
Articles of partnership 1772).
While partnership relation may be informally 2. Real property or real rights – must be:
created and its existence proved by manifestations a. In a public instrument (NCC. Art. 1771)
of the parties, it is customary to embody the terms (2009 Bar)
of the association in a written document known as b. With an inventory of said property
“Articles of Partnership” stating the name, nature i. Signed by the parties
or purpose and location of the firm, and defining, ii. Attached to the public instrument
among others, the powers, rights, duties, and (NCC, Art. 1773)
liabilities of the partners among themselves, their iii. Registered in the Registry of
contributions, the manner by which the profits Property of the province, where the
and losses are to be shared, and the procedure for real property is found to bind third
dissolving the partnership (De Leon, 2010). persons (Paras, 1969).
501
CIVIL LAW
juridical personality (Paras, 1969). Meaning of “cuentas en participacion”
Where capital of the partnership consists of Under the Code of Commerce, “cuentas en
money or personal property amounting to Php participacion” means a sort of an accidental
3000 or more partnership constituted in such a manner that its
existence was only known to those who had an
The failure to register the contract of partnership interest in the same, there being no mutual
does not invalidate the same as among the agreement between the partners, and without a
partners, so long as the contract has the essential corporate name indicating to the public in some
requisites, because the main purpose of way that there were other people besides the one
registration is to give notice to third parties, and it who ostensibly managed and conducted the
can be assumed that the members themselves business, governed under Art. 239 of the Code of
knew of the contents of their contract. Non- Commerce (Bourns v. Carman, G.R. No. L- 2880,
compliance with this directory provision of the December 4, 1906).
law will not invalidate the
partnership. Q: Henry and Lyons are engaged in real estate
business and are co-owners of a parcel of land.
Registration is merely for administration and Henry, with the consent of Lyons, mortgaged
licensing purposes; hence, it shall not affect the the property to raise the funds sufficient to
liability of the partnership and the members buy and develop the San Juan Estate. Lyons
thereof to third persons [NCC, Art. 1772(2)]. expressed his desire not to be part of the
development project, but Henry, pursued the
A void partnership under Art.1773, in relation to business alone. When the business prospered,
Art. 1771, may still be considered by the courts as Lyons demanded for a share in the business. Is
an ordinary contract as regards the parties thereto Lyons entitled to the shares in San Juan Estate?
from which rights and obligations to each other
may be inferred and enforced (Torres v. CA, G.R. No. A: NO. Lyons himself manifested his desire not to
134559, December 9, 1999). be part of the development project. Thus, no
partnership was formed. The mortgage of the land
Q: A and B are co-owners of an inherited was immaterial to the existence of the
property. They agreed to use the said common partnership. It is clear that Henry, in buying the
properties and the income derived therefrom San Juan Estate, was not acting for any
as a common fund with the intention to partnership composed of himself and Lyons, and
produce profits for them in proportion to their the law cannot be distorted into a proposition
respective shares in the inheritance as which would make Lyons a participant in this
determined in a project of partition. What is deal contrary to his express determination
the effect of such agreement on the existing co- (Lyons v. Rosenstock, G.R. No. 35469, March 17,
ownership? 1932).
It is a kind of partnership where the partners may However, when a partnership is shown to exist,
stipulate some other date for the commencement the presumption is that it continues in the absence
of the partnership. Persons who enter into a of evidence to the contrary, and the burden of
future partnership do not become partners until proof is on the person asserting its termination
or unless the agreed time has arrived or the (De Leon, 2014).
contingency has happened (De Leon, 2010).
NOTE: The use of the term “partner” in popular
As long as the agreement for a partnership sense, or as a matter of business convenience, will
remains inchoate or unperformed, the partnership not necessarily import an intention that a legal
is not consummated (De Leon, 2010). partnership should result. But while the use of
“partnership” or “partners” in an alleged oral
RULES TO DETERMINE EXISTENCE OF agreement claimed to have constituted
PARTNERSHIP partnership is not conclusive that partnership did
not exist, non-use of such terms is entitled to
1. Except as provided by Art. 1825 of the NCC weight. Legal intention is the crux of partnership.
(partnership by estoppel), persons who are (De Leon, 2014).
not partners as to each other are not
partners as to third persons; CLASSIFICATIONS OF PARTNERSHIP
2. Co-ownership or co-possession does not of
itself establish a partnership, whether such 1. Object
co-owners or co-possessors do or do not a. Universal partnership
share any profits made by the use of the i. Of all present property (NCC, Art.
property; 1778) – The partners contribute all
3. The sharing of gross returns does not of the property which actually belongs
itself establish a partnership, whether or not to them to a common fund, with the
the persons sharing them have a joint or intention of dividing the same
common right or interest in any property among themselves, as well as all
from which the returns are derived; profits they may acquire therewith.
4. The receipt by a person of a share of the The following become the common
profits of a business is prima facie evidence fund of all the partners:
that he is a partner in the business, but no Property which belonged to
such inference shall be drawn if such profits each of the partners at the time
were received in payment: of the constitution of the
a. As a debt by installments or otherwise; partnership
b. As wages of an employee or rent to a Profits which they may acquire
landlord; from all property contributed
c. As an annuity to a widow or
representative of a deceased partner; ii. Of all profits (NCC, Art. 1780) –
d. As interest on a loan, though the Comprises all that the partners may
amount of payment varies with the acquire by their industry or work
profits of the business; during the existence of the
e. As the consideration for the sale for the partnership as well as the usufruct
sale of a goodwill of a business or other of all movable or immovable
property by instalments or otherwise property which each of the partner
(NCC, Art. 1769). may possess at the time of the
celebration of the contract of
NOTE: In sub-paragraphs a–e, the profits in the partnership.
business are not shared as profits of a partner as a
partner, but in some other respects or for some
other purpose. b. Particular partnership – It is one which
has for its object, determinate things,
Burden of proving the existence of a their use and fruits, or a specific
partnership undertaking or the exercise of a
profession or a vocation (NCC, Art. 1783).
It rests on the party having the affirmative of that
issue. The existence of a partnership must be 2. Liability of partners
503
CIVIL LAW
a. General partnership – One where all When two or more persons attempt to
partners are general partners who are create a partnership but fail to comply
liable even with respect to their with the legal personalities essential for
individual properties, after the assets of juridical personality, the law considers
the partnership have been exhausted them as partners, and the association is a
(Paras, 1969). partnership insofar as it is favorable to
b. Limited partnership – One formed by two third persons, by reason of the equitable
or more persons having as members one principle of estoppel (MacDonald et. al. v.
or more general partners and one or Nat’l. City Bank of New York, G.R. No. L-
more limited partners, the latter not 7991, May 21, 1956).
being personally liable for the obligations
of the partnership (NCC, Art. 1843). 6. Publicity
a. Secret partnership – Partnership that is
3. Duration not known to many but only as to its
a. Partnership at will – the partnership has an partners.
indefinite term and it would dissolved b. Notorious or open partnership – It is
only when an act or cause of dissolution known not only to the partners, but to
happens or arises. the public as well.
b. Partnership with a fixed period or
Partnership for a Particular Undertaking 7. Purpose
– the partnerships are automatically a. Commercial or trading – One formed for
dissolved upon the expiration of the the transaction of business.
stipulated term or the achievement of b. Professional or non-trading – One formed
the particular undertaking stipulated in for the exercise of a profession (De Leon,
the contract of partnership. 2014).
505
CIVIL LAW
When manner No participation firm name, surname of a
of management in management. shall be subject general partner;
has not agreed to the liability2. Prior to the time
Right in upon, all of a partner when the limited
Management general (NCC, Art. partner became
partners have 1815). such, the business
an equal right had been
in the carried on
management of under a name in
the business. which his
surname
Contribution Money, Cash or property appeared.
property or only, not NOTE: A limited
industry. services. partner whose
surname appears
in a partnership
name is liable as a
general partner to
partnership
creditors who
Proper party to Not proper party extend credit to
If Proper proceedings to proceedings the partnership
Party to by/against by/against without actual
Proceedings partnership. partnership, knowledge that
By or Against unless: he is not a general
Partnership 1. He is also a partner (NCC, Art.
general partner; 1846).
or Prohibition a. The No prohibition
2. Where the object to Engage capitalist against
of the proceeding in Other partner engaging in
is to enforce a Business cannot business.
limited engage for
partner’s right or their own
liability to the account in
partnership. any
Assignment of Interest is not Interest is freely operation
interest assignable assignable. which is of
without the kind
consent of o
other partners. f
business
i
n
which
Firm Name It must operate It must also
t
under a firmoperate under a
he
name, whichfirm name,
partnership
may or mayfollowed by the
is engaged,
not include the word “Limited.”
unless
name of one or
there is a
more of the GR: The surname
stipulation
partners. of a limited
to the
partner shall not
contrary.
NOTE: Those, appear in the
who, not being partnership
b. If he is an
members of the name.
industrial
partnership,
partner- in
include their XPNs:
any
names in the 1. It is also the
Partnership at will
Retirement, Does not have One in which no fixed term is specified and is not
Effect of death, sameeffect; formed for a particular undertaking or venture
Death, insolvency, Rights are which may be terminated anytime by mutual
Insolvency, insanity of Transferred to agreement of the partners, or by the will of any
Retirement, general legal one partner alone; or one for a fixed term or
Insanity partner representative particular undertaking which is continued by the
dissolves . partners after the termination of such term or
partnership particular undertaking without express
. agreement (De Leon, 2014).
Creation As a rule, it Created by the
Maybe members after Termination or dissolution of partnership at
constituted substantial will
in any form, compliance in
by contract good faith of A partnership at will may be lawfully terminated
or the or dissolved at any time by the express will of all
conduct of requirements or any of the partners.
the parties. set forth by
law. The partner who wants the partnership dissolved
Compositio/ Composed Composed of must do so in good faith, not that the attendance of
Membershi only of at least one bad faith can prevent the dissolution of the
p general general partnership, but to avoid the liability for damages
partners. partner and to other partners.
one limited
partner. Q: A, B, and C entered into a partnership to
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
PARTNERSHIP WITH A FIXED TERM v.
dissolving the partnership. They in fact opened
PARTNERSHIP AT WILL
a branch of the restaurant, incurring
obligations in the process. Creditors started
Partnership with a fixed term demanding for the payment of their
obligations.
It is one in which the term of its existence has been
agreed upon by the partners either: a. Who are liable for the settlement of the
partnership’s obligations? Explain.
1. Expressly – There is a definite period b. What are the creditors’ recourse/s?
2. Impliedly – A particular enterprise or Explain. (2010 Bar)
transaction is undertaken
A:
The mere expectation that the business would be a. The two remaining partners, A and B,
successful and that the partners would be able to are liable. When any partner dies and the business
recoup their investment is not sufficient to create is continued without any settlement of accounts as
a partnership for a term. between him or his estate, the surviving partners
are held liable for continuing the business despite
Fixing the term of the partnership contract the death of C. (Arts. 1841, 1785(2) & 1833)
The partners may fix in their contract any term b. Creditors can file the appropriate
and they shall be bound to remain under such a actions, for instance, an action for the collection of
relation for the duration of the term.
507
CIVIL LAW
sum of money against the “partnership at will” Partnership Tort
and if there are no sufficient funds, the creditors
may go after the private properties of A and B. There is a partnership tort where:
(NCC, Art. 816) Creditors may also sue the estate of 1. By any wrongful act or omission of any
C. The estate is not excused from the liabilities of partner, acting in the ordinary course of
the partnership even if C is dead already but only business of the partnership or with authority
up to the time that he remained a partner. (NCC, of his co-partners, loss or injury is caused to
Arts. 1829, 1835(2), Testate Estate of Mota v. any person, not being a partner in the
Serra, G.R. No. L-22825, February 14, 1925) partnership;
However, the liability of C’s individual property 2. One partner, acting within the scope of his
shall be subject first to the payment of his apparent authority, receives money or
separate debts. (NCC, Article 1835) property from a third person, and misapplies
it; or
PARTNERSHIP BY ESTOPPEL 3. The partnership, in the course of its business,
receives money or property, and it is
It is one who, by words or conduct does any of the misapplied by any partner while it is in the
following: custody of the partnership.
1. Directly represents himself to anyone as a NOTE: Partners are solidarily liable with the
partner in an existing partnership or in a partnership for any penalty or damage arising
non-existing partnership. from a partnership tort.
2. Indirectly represents himself by consenting
to another representing him as a partner in PROFESSIONAL PARTNERSHIP
an existing partnership or in a non-existing
partnership. It is a partnership formed by persons for the sole
purpose of exercising their common profession,
Elements before a partner can be held liable no part of the income of which is derived from
on the ground of estoppel engaging in any trade or business.
Without specification of their respective duties Q: Azucena and Pedro acquired a parcel of land
and without stipulation requiring unanimity of and a building. Azucena obtained a loan from
action Tai Tong Co., secured by a mortgage which was
GR: Each may separately execute all acts of executed over the land and building. Arsenio,
administration (unlimited power to administer). representative of Tai Tong, insured it with
Travellers Multi Indemnity Corporation. The
XPN: If any of the managers opposes, decision of building and the contents thereof were razed
the majority prevails. by fire. Travellers failed to pay the insurance.
Hence, Azucena and Pedro filed a case against
NOTE: In case of tie– Decision of the controlling Travellers wherein Tai Tong intervened
interest (who are also managers) shall prevail. claiming entitlement to the proceeds from
Travellers. Who is entitled to the proceeds of
With stipulation that none of the managing the policy?
partners shall act without the consent of the
others A: Tai Tong is entitled to the insurance proceeds.
Arsenio contracted the insurance policy on behalf
of Tai Tong. As the managing partner of the
509
CIVIL LAW
partnership, he may execute all acts of partnership aside from capital
administration including the right to sue debtors contribution);
of the partnership in case of their failure to pay 2. Answer for obligations the partner may have
their obligations when it became due and contracted in good faith in the interest of the
demandable. Or at the very least, Arsenio is an partnership business;
agent of the partnership. Being an agent, it is 3. Answer for risks in consequence of its
understood that he acted for and in behalf of the management (NCC, Art. 1796).
firm (Tai Tong Chuache & Co. v. Insurance
Commissioner, G.R. No. L-55397, February 29, RIGHTS AND OBLIGATIONS OF PARTNERS
1988). AMONG THEMSELVES
511
CIVIL LAW
The law safeguards the interests of the Q: Joe and Rudy formed a partnership to
partnership by preventing the possibility of their operate a car repair shop in Quezon City. Joe
being subordinated by the managing partner to provided the capital while Rudy contributed
his own interest to the prejudice of the other his labor and industry. On one side of their
partners (De Leon, 2010). shop, Joe opened and operated a coffee shop,
while on the other side, Rudy put up a car
Obligation of a partner who receives share of accessories store. May they engage in such
partnership credit separate businesses? Why? (2001 Bar)
To bring to the partnership capital what he has A: Joe, the capitalist partner, may engage in the
received even though he may have given receipt restaurant business because it is not the same
for his share only. kind of business the partnership is engaged in. On
the other hand, Rudy may not engage in any other
Requisites: business unless their partnership expressly
1. A partner has received in whole or in part, his permits him to do so because as an industrial
share of the partnership credit; partner, he has to devote his full time to the
2. Other partners have not collected their business of the partnership (NCC, Art. 1789).
shares;
3. Partnership debtor has become insolvent. Rule with regard to the obligation of a partner
as to damages suffered by the partnership
Liability of a person who has not directly through his fault
transacted in behalf of an unincorporated
association for a contract entered into by such GR: Every partner is responsible to the
association partnership for damages suffered by it through his
fault and he cannot compensate them with the
The liability for a contract entered into on behalf profits and benefits which he may have earned for
of an unincorporated association or ostensible the partnership by his industry.
corporation may lie in a person who may not have
directly transacted on its behalf, but reaped XPN: The courts may equitably lessen this
benefits from that contract (Lim Tong Lim v. responsibility if through the partner’s
Philippine Fishing Gear Industries Inc., G.R. No. extraordinary efforts in other activities of the
136448, November 3, 1999). partnership, unusual profit has been realized
(NCC, Art. 1794).
Rules regarding the prohibition to engage in
another business Set-off of damages caused by a partner
INDUSTRIAL PARTNER CAPITALIST PARTNER GR: The damages caused by a partner to the
Prohibition partnership cannot be offset by the profits of
benefits which he may have earned for the
Relative: Cannot
partnership by his industry.
Absolute: Cannot engage in business
engage in business (with same kind of
Ratio: The partner has the obligation to secure
for himself unless the business with the
benefits for the partnership. Hence, the profits
partnership partnership) for his
which he may have earned pertain as a matter of
expressly permits own account, unless
law or right, to the partnership
him to do so. there is a stipulation
to the contrary.
XPN: If unusual profits are realized through the
Remedy
extraordinary efforts of the partner at fault, the
Capitalist partners Capitalist partner, courts may equitably mitigate or lessen his
may: who violated shall: liability for damages. This rule rests on equity.
1. Exclude him from the 1. Bring to the common
firm, or fund any profits Note that even in this case, the partner at fault is
2. Avail themselves of accruing to him from not allowed to compensate such damages with the
the benefits which he said transaction; and profits earned. The law does not specify as to
may have obtained; Personally bears all when profits may be considered “unusual.” The
Damages, in either losses (NCC, Art. question depends upon the circumstances of the
case (NCC, Art. 1789). 1808). (2001 Bar) particular case.
(2001 Bar)
Duty to keep partnership book belongs to Duty of a partner to act with utmost good faith
managing or active partner towards co-partners continues even after
dissolution
The duty to keep true and correct books showing
the firm’s accounts, such books being at all times The duty of a partner to act with utmost good faith
open to inspection of all members of the firm, towards his co-partners continues throughout the
primarily rests on the managing or active partner entire life of the partnership even after dissolution
or the particular partner given record-keeping for whatever reason or whatever means, until the
duties (Art. 1805 NCC, De Leon, 2014). relationship is terminated, i.e., the winding up of
partnership affairs is completed (De Leon, 2014).
Duty of the partners with respect to
information affecting the partnership Failure to disclose facts, when there is a duty to
reveal them, as when parties are bound by
Partners shall render on demand true and full confidential relations, constitutes fraud (Art.
information of all things affecting the partnership 1339).
to:
1. Any partner; or RIGHTS OF PARTNERS
2. Legal representative of any deceased or any
partner under legal disability (NCC, Art. 1. Right to reimbursement for amounts advanced
1806). to the partnership and to indemnification for
risks in consequence of management (NCC,
NOTE: Under the same principle of mutual trust Art. 1796);
and confidence among partners, there must be no 2. Right on the distribution of profits and losses
concealment between them in all matters affecting (NCC, Art. 1797);
the partnership. The information, to be sure, must 3. Right to associate another person with him in
be used only for a partnership purpose (De Leon, his share without the consent of the other
2014). partners (NCC, Art. 1804);
Q: P and G are partners engaged in real estate NOTE: Such partnership formed between a
business. P received information that someone member of a partnership and a third person for a
is interested to buy a parcel of land owned by division of the profits coming to him from the
the partnership. P did not disclose this partnership enterprise is termed subpartnership
material fact to G. Instead, he induced G to sell (De Leon, 2010).
to him his share in nominal price. Thereafter,
P sold the entire property to the buyer and 4. Right to free access and to inspect and copy at
made huge profit. G sued P seeking damages any reasonable hour the partnership books
alleging deceit by P. The latter, as defense, (NCC, Art. 1805);
countered that G did not ask him about any 5. Right to formal account as to partnership
interested purchaser of the lot. Is P liable for affairs:
damages? Decide. a. If he is wrongfully excluded from the
partnership business or possession of its
A: YES. P should not have concealed the fact that property by his co-partners;
there was a buyer interested to purchase the b. If the right exist under the terms of any
firm’s property. Good faith not only requires that a agreement;
partner should not make any false concealment to c. Duty to account as provided by Art.
his partner, but also abstain from concealment 1807;
(Poss v. Gottlieb, 193 NYS 418, 421). d. Whenever there are circumstances
render it just and reasonable;
Accountability of partners to each other as
fiduciary 6. Right to have the partnership dissolved; and
Every partner must account to the partnership for 7. Property rights of a partner (NCC, Art. 1810).
513
CIVIL LAW
Rule as to formal accounting during the losses
existence of the partnership
a. Distribution of profits
GR: During the existence of the partnership, a The partners share in the profits
partner is not entitled to a formal account of according to their agreement.
partnership affairs. In the absence of such:
• Capitalist partner – in proportion to his
XPN: However, in special and unusual situations contribution
enumerated under Art. 1809, the justification for a • Industrial partner – what is just and
formal accounting even before dissolution of the equitable under the circumstances
partnership cannot be doubted. An example under
No. (4) of Art. 1809 is where a partner has been NOTE: If the industrial partner has contributed
assigned abroad for a long period of time in capital other than his services, he shall also
connection with the partnership business and the receive a share in the profits in proportion to his
partnership books during such period being in the capital.
possession of the other partners.
b. Distribution of losses
Partners’ inspection rights The partners share in the losses
according to their agreement.
The partners’ inspection rights are not absolute. He In the absence of such, according to their
can be restrained from using the information agreement as to profits.
gathered for other than partnership purpose. In the absence of profit agreement, in
proportion to his capital contribution.
“Any reasonable hour”
Q: “X” used his savings from his salaries
The rights of the partners with respect to amounting to a little more than P2,000 as
partnership books can be exercised at “any capital in establishing a restaurant. “Y” gave
reasonable hour” (Art. 1805). This phrase has been the amount of P4,000 to “X” as “financial
interpreted to mean reasonable hours on business assistance” with the understanding that “Y”
days throughout the year and not merely during would be entitled to 22% of the annual profits
some arbitrary period of a few days chosen by the derived from the operation of the restaurant.
managing partners (Pardo v. The Hercules Lumber After the lapse of 22 years, “Y” filed a case
Co. Inc., G.R. No. L-22442, August 1, 1924). demanding his share in the said profits. “X”
denied that there was a partnership and raised
Action for accounting the issue of prescription as “Y” did not assert
his rights anytime within ten (10) years from
An action for accounting, asking that the assets of the start of the operation of the restaurant. Is
the partnership be accounted for, sold and “Y” a partner of “X” in the business? Why?
distributed according to the agreement of the What is the nature of the right to demand one’s
partners is a personal action which under the share in the profits of a partnership? Does this
Rules of Court, may be commenced and tried right prescribe? (1989 Bar)
where the defendant resides or may be found or
where the plaintiffs reside, at the election of the A: YES, because there is an agreement to
latter. contribute to a common fund and intent to divide
profits. It is founded upon an express trust. It is
NOTE: The fact that some of the assets of the imprescriptible unless repudiated.
partnership are real property does not materially
change the nature of the action. It is an action in Rule regarding a stipulation excluding a
personam because it is an action against a person partner in the sharing of profits and losses
for the performance of a personal duty on his part,
and not an action in rem where the action is against GR: Such stipulation is void (NCC, Art. 1799).
the thing itself. It is only incidental that part of the
assets of the partnership subject to accounting or XPN: Industrial partner is not liable for losses
under liquidation happen to be real property (NCC, Art. 1797(2)). However, he is not exempted
(Emnace v. CA, G.R. No. 126334, November 23, from liability insofar as third persons are
2001). concerned.
Rules regarding distribution of profits and NOTE: Loss is different from liability.
Related rights to the property rights of a Q: Rosa received from Jois money, with the
partner express obligation to act as Jois’ agent in
purchasing local cigarettes, to resell them to
1. Right to the partnership and to several stores, and to give Jois the commission
indemnification for risks in consequence of corresponding to the profits received.
management (NCC, Art. 1796); However, Rosa misappropriated and
2. The right of access and inspection of converted the said amount due to Jois to her
partnership books (NCC, Art. 1805); personal use and benefit. Jois filed a case of
3. The right to true and full information of all estafa against Rosa. Can Rosa deny liability on
things affecting the partnership (NCC, Art. the ground that a partnership was formed
1806); between her and Rosa?
4. The right to a formal account of partnership
affairs under certain circumstances (NCC, A: NO. Even assuming that a contract of
Art. 1809); and partnership was indeed entered into by and
5. The right to have the partnership dissolved between the parties, when a partner receives any
also under certain conditions (NCC Arts. money or property for a specific purpose (such as
1830-1831; De Leon, 2010). that obtaining in the instant case) and he later
misappropriates the same, he is guilty of estafa
Nature of a partner's right in specific (Liwanag v. CA, G.R. No. 114398, October 24, 1997).
partnership property
OBLIGATIONS OF PARTNERSHIP/ PARTNERS
1. Equal right to possession for partnership TO THIRD PERSONS
purposes;
2. Right is not assignable, except in connection 1. Every partnership shall operate under a firm
with assignment of rights of all partners in name (NCC, Art. 1815).
the same property; 2. All partners shall be liable for contractual
3. Right is limited to his share of what remains obligations of the partnership with their
after partnership debts have been paid; property, after all partnership assets have
4. Right is not subject to attachment or been exhausted:
execution except on a claim against the a. Pro rata
partnership; b. Subsidiary (NCC, Art. 1816) (1993, 2010
5. Right is not subject to legal support Bar)
XPN: All partners shall be liable
Effects of assignment of partner’s whole solidarily with the partnership for
interest in the partnership everything chargeable to the
partnership under Art. 1822 and
1. Rights withheld from the assignee: 1823 (NCC, Art. 1824).
Such assignment does not grant the assignee the
right to: NOTE: Any stipulation against the liability
a. To interfere in the management laid down in Art. 1816 shall be void except as
b. To require any information or account among the partners (NCC, Art. 1817).
c. To inspect partnership books
3. Partner as an agent of the partnership (NCC,
2. Rights of assignee on partner’s interest: Art. 1818) (1994 Bar)
a. To receive in accordance with his contract 4. Conveyance of real property belonging to the
the profits accruing to the assigning partnership (NCC, Art. 1819)
partner 5. Admission or representation made by any
b. To avail himself of the usual remedies partner concerning partnership affairs
provided by law in the event of fraud in within the scope of his authority is evidence
the management against the partnership (NCC, Art. 1820)
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CIVIL LAW
6. Notice to partner of any matter relating to termination of the particular undertaking
partnership affairs operates as notice to specified in the agreement does not extinguish
partnership except in case of fraud: obligations, which must be liquidated during the
a. Knowledge of partner acting in the “winding up" of the partnership affairs (Art. 1829
particular matter acquired while a & 1830, par. 1-a).
partner
b. Knowledge of the partner acting in the Importance of having a firm name
particular matter then present to his
mind A partnership must have a firm name under which
c. Knowledge of any other partner who it will operate. It is necessary to distinguish the
reasonably could and should have partnership which has a distinct and separate
communicated it to the acting partner juridical personality from the individuals
(NCC, Art. 1821) composing the partnership and from other
partnerships and entities (De Leon, 2010).
7. Partners and the partnership are solidarily
liable to 3rd persons for the partner's tort or Liability for the inclusion of name in the firm
breach of trust (NCC, Art. 1822-24) name
8. Liability of incoming partner is limited to:
a. His share in the partnership property Persons who, not being partners, include their
for existing obligations names in the firm name do not acquire the rights
b. His separate property for subsequent of a partner but under Art. 1815, they shall be
obligations (NCC, Art. 1826) subject to the liability of a partner (Art. 1816)
insofar as third persons without notice are
9. Creditors of partnership are preferred in concerned (De Leon, 2010).
partnership property & may attach partner's
share in partnership assets (NCC, Art. 1827) Remedies available to the creditors of a
partner
NOTE: On solidary liability, Art. 1816 should be
construed together with Art. 1824 (in connection 1. Separate or individual creditors should first
with Arts. 1822 & 1823). While the liability of the secure a judgment on their credit; and
partners is merely joint in transactions entered 2. Apply to the proper court for a charging order
into by the partnership, a third person who subjecting the interest of the debtor-partner
transacted with said partnership may hold the in the partnership for the payment of the
partners solidarily liable for the whole obligation unsatisfied amount of the judgment debt with
if the case of the third person falls under Articles interest thereon (De Leon, 2014).
1822 and 1823 (Munasque v. CA, G.R. No. L-39780, NOTE: The court may resort to other courses of
November 11, 1985). action provided in Art. 1814 of the NCC, (i.e.,
appointment of receiver, sale of the interest, etc.)
Q: A, B and C formed a partnership for the if the judgment debt remains unsatisfied,
purpose of contracting with the Government in notwithstanding the issuance of charging order
the construction of one of its bridges. On June (De Leon, 2014).
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)
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Title in name of 1 Conveyance will only is dissolved.
or more or all pass
partners or 3rd equitable interest,
person in trust for provided: Causes of dissolution (NCC, Art. 1830)
partnership; 1. The act is one within
Conveyance executed the authority of the 1. Without violating the agreement:
in partnership name partner, and a. Termination of the definite term or
or in name of 2. Conveyance was done specific undertaking
partners in the usual way of the b. Express will of any partner in good faith,
business (De Leon, when there is no definite term and no
2014). specified undertaking
Title in the names Conveyance will pass c. Express will of all partners (except those
of all the partners; all the who have assigned their interests or
Conveyance rights in such property suffered them to be charged for their
executed by all the (De separate debts) either before or after the
partners Leon, 2014). termination of any specified term or
particular undertaking
d. Expulsion of any partner in good faith of
DISSOLUTION AND WINDING UP
a member
DISSOLUTION (2010 Bar) 2. Violating the agreement
3. Unlawfulness of the business
Final stages of partnership 4. Loss
a. Specific thing promised as contribution is
1. Dissolution; lost or perished before delivery
2. Winding up; and b. Loss of a specific thing contributed
3. Termination before or after delivery, if only the use of
such is contributed
Dissolution, winding-up, and termination
NOTE: The partnership shall not be dissolved by
Dissolution Winding the loss of the thing when it occurs after the
Termination
up partnership has acquired the ownership thereof.
A change in the Settling the Point in time
relation of partnership When all 5. Death of any of the partners
the business or partnership 6. Insolvency of any partner or of the
partners caused affairs after affairs are partnership
by dissolution. wound up or 7. Civil interdiction of any partner
any partner completed; the 8. By decree of court under Art. 1831
ceasing end of the a. . A partner has been declared insane or
to be associated partnership life. of unsound mind
in b. A partner becomes in any other way
carrying on incapable of performing his part of the
the partnership contract
business. c. A partner has been guilty of such
It is that point It is the final It signifies the conduct as tends to affect prejudicially
in time when step after end of the the carrying on of the business
the partners dissolution partnership life. d. A partner wilfully or persistently
cease to carry in the It takes place commits a breach of the partnership
on the termination After both agreement
business of the dissolution and e. . The business of the partnership can
together. It partnership. winding up have only be carried on at a loss
represents the occurred. f. Other circumstances render a
demise of a dissolution equitable
partnership.
Thus, any time Effects of dissolution (2010 BAR)
a partner leaves
the business, 1. Partnership is not terminated;
the partnership 2. Partnership continues for a limited purpose;
As to previous obligations, the dissolution of NOTE: Subject to the qualifications set forth in
partnership does not mean that the partners can Articles 1833 and 1834 in relation to Article 1832:
evade previous obligations entered into (Testate of
Motta v. Serra, G.R. No. L-22825, February 14, 1. In so far as the partners themselves are
1925). concerned– The authority of any partner to
bind the partnership by a new contract is
As to new obligations, the dissolution spares the immediately terminated when the dissolution
former partners from new obligations entered is not by the act, insolvency, or death of a
into by the partnership without their consent, partner.
implied or express, unless the obligation are 2. When the dissolution is by the act, insolvency,
essential for the winding up of partnership affairs or death, the termination of authority
(Ibid.). depends upon whether or not the partner had
knowledge or notice of dissolution (NCC, Art.
NOTE: The dissolution of a partnership must not 1833) (2010 Bar).
be understood in the absolute and strict sense so
that at the termination of the object for which it Q: Tomas, Rene and Jose entered into a
was created the partnership is extinguished, partnership under the firm name “Manila
pending the winding up of some incidents and Lumber.” Subsequently, upon mutual
obligations of the partnership, but in such case, the agreement, Tomas withdrew from the
partnership will be reputed as existing until the partnership and the partnership was
juridical relations arising out of the contract are dissolved. However, the remaining partners,
dissolved (Testate of Motta v. Serra, G.R. No. L- Rene and Jose, did not terminate the business
22825, February 14, 1925). of “Manila Lumber.” Instead of winding up the
business of the partnership and liquidating its
Dissolution does not automatically result in the assets, Rene and Jose continued the business
termination of the legal personality of the in the name of “Manila Lumber” apparently
partnership, nor the relations of the partners without objection from Tomas. The
among themselves who remain as co-partners withdrawal of Tomas from the partnership
until the partnership is terminated (De Leon, was not published in the newspapers. Could
2005). Tomas be held liable for any obligation or
indebtedness Rene and Jose might incur while
A partner cannot be expelled from the doing business in the name of “Manila Lumber”
partnership without agreement thereto. after his withdrawal from the partnership?
Explain. (1987 Bar)
In the absence of an express agreement to that
effect, there exists no right or power of any A: YES. Tomas can be held liable under the
member, or even a majority of the members, to doctrine of estoppel. But as regards the parties
expel all other members of the firm at will. Nor among themselves, only Rene and Jose are liable.
can they at will forfeit the share or interest of a Tomas cannot be held liable since there was no
member or members and compel him or them to proper notification or publication. In the event
quit the firm, even paying what is due him. that Tomas is made to pay the liability to third
person, he has the right to seek reimbursement
The expulsion has the effect of decreasing the from Rene and Jose.
number of the partners, hence, the dissolution.
The expulsion must be made in good faith. The Q: The articles of co-partnership provide that
partner expelled in bad faith can claim damages. in case of death of one partner, the partnership
(De Leon, 2010). shall not be dissolved but shall be continued
by the deceased partner’s heirs. When H, a
Effect of dissolution on the authority of a partner, died, his wife, W, took over the
partner management of some of the real properties
with permission of the surviving partner, X,
GR: The partnership ceases to be a going concern. but her name was not included in the
partnership name. She eventually sold these
XPN: The partner’s power of representation is real properties after a few years. X now claims
confined only to acts incident to winding up or that W did not have the authority to manage
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CIVIL LAW
and sell those properties as she was not a regularly carried on (Art. 1834, par 1
partner. Is the sale valid? nos. 1-2).
A: YES. The widow was not a mere agent, because XPNs: Partner cannot bind the partnership
she had become a partner upon her husband's anymore after dissolution:
death, as expressly provided by the articles of co-
partnership, and by authorizing the widow to 1. Where dissolution is due to unlawfulness to
manage partnership property, X recognized her as carry on business; or
a general partner with authority to administer and 2. Where partner has become insolvent; or
alienate partnership property. It is immaterial that 3. Act is not appropriate for winding up or for
W's name was not included in the firm name, since completing unfinished transactions; or
no conversion of status is involved, and the 4. Partner is unauthorized to wind up
articles of co-partnership expressly contemplated partnership affairs, except by transaction with
the admission of the partner's heirs into the one who:
partnership (Goquiolay v. Sycip, G.R. No. L-11840, a. Had extended credit to partnership prior
December 16, 1963). to dissolution; AND Had no knowledge or
notice of dissolution; or
Liability of a partner where the dissolution is b. Did not extend credit to partnership prior
caused by the act, death or insolvency of a to dissolution; Had known partnership
partner prior to dissolution; AND Had no
knowledge/notice of dissolution/fact of
GR: Each partner is liable to his co-partners for his dissolution not advertised in a
share of any liability created by any partner for the newspaper of general circulation in the
partnership, as if the partnership had not been place where partnership is regularly
dissolved. carried on (Art. 1834(3)); or
XPNs: Partners shall not be liable when: 5. Completely new transactions which would
1. The dissolution, being by act of any bind the partnership if dissolution had not
partner, the partner acting for the partnership taken place with third persons in bad faith.
had knowledge of the dissolution; or
2. The dissolution, being by the death or Q: Does the dissolution of a partnership
insolvency of a partner, the partner acting for discharge existing liability of a partner?
the partnership had knowledge or notice of the
death or insolvency (NCC, Art. 1833). (2010 A:
Bar) GR: Dissolution does not discharge the existing
liability of a partner (Art. 1835(1)).
Q: After the dissolution of a partnership, can a
partner still bind the partnership? XPN: Said liability is discharged when there is an
agreement between:
A: 1. Partner himself;
GR: A partner continues to bind partnership even 2. Person/s continuing the business; and
after dissolution in the following cases: 3. Partnership creditors [NCC, Art. 1835(2)].
1. Transactions to wind up partnership
affairs or to complete transactions Liability of the estate of a deceased partner.
unfinished at dissolution;
2. Transactions which would bind In accordance with Article 1816, the individual
partnership if dissolution had not taken property of a deceased partner shall be liable for
place, provided the other party/obligee: all obligations of the partnership incurred while
a. Had extended credit to partnership he was a partner. Note that the individual
prior to dissolution; and had no creditors of the deceased partner are to be
knowledge/notice of dissolution; or preferred over partnership creditors with respect
b. Did not extend credit to partnership; to the separate property of said deceased partner
Had known partnership prior to (De Leon, 2010).
dissolution; AND Had no
knowledge/notice of dissolution/fact Order of priority in the distribution of assets
of dissolution not advertised in a during the dissolution of a limited partnership
newspaper of general circulation in
the place where partnership is In setting accounts after dissolution, the liabilities
521
CIVIL LAW
that: less any damage caused by
the dissolution to his co-
1. Partnership creditors have preference in partners, ascertained and
partnership assets. paid in cash, or secured by
2. Separate or individual creditors have bond approved by the court;
preference in separate or individual and
properties. To be released from all
3. Anything left from either goes to the other. existing and future liabilities
of the partnership (De Leon,
NOTE: The doctrine of marshalling of assets 2014).
involves the ranking of assets in a certain order
toward the payment of outstanding debts (De Rights of injured partner where partnership
Leon, 2010). contract is rescinded
Rights of a partner where dissolution is not in 1. Right of a lien on, or retention of, the surplus of
contravention of the agreement partnership property after satisfying
partnership liabilities for any sum of money
Unless otherwise agreed, the rights of each partner paid or contributed by him;
are as follows: 2. Right of subrogation in place of partnership
1. To have the partnership property creditors after payment of partnership
applied to discharge the liabilities of partnership; liabilities; and
and 3. Right of indemnification by the guilty partner
2. To have the surplus, if any, applied, to against all debts and liabilities of the
pay in cash the net amount owing to the respective partnership (De Leon, 2014).
partners (De Leon, 2014).
Settlement of accounts between partners
Rights of a partner where dissolution is in
contravention of the agreement 1. Assets of the partnership include:
a. Partnership property (including
The rights of a partner vary depending upon goodwill)
whether he is the innocent or guilty partner. b. Contributions of the partners
1. Rights of partner who has not caused the
dissolution wrongfully: 2. Order of application of the assets:
a. To have partnership property a. First, those owing to partnership
applied for the payment of its liabilities and creditors
to receive in cash his share of the surplus b. Second, those owing to partners
b. To be indemnified for the damages other than for capital and profits such as
caused by the partner guilty of wrongful loans given by the partners or advances for
dissolution business expenses
c. To continue the business in the c. Third, those owing for the return of
same name during the agreed term of the the capital contributed by the partners
partnership, by themselves or jointly with d. Fourth, the share of the profits, if
others any, due to each partner (De Leon, 2014).
d. To possess partnership property
should they decide to continue the business Q: A partnership was formed with Magdusa as
the manager. During the existence of the
2. Rights of partner who has wrongfully caused partnership, two partners expressed their
the dissolution: desire to withdraw from the firm. Magdusa
a. If the business is not continued by determined the value of the partners share
the other partners, to have the partnership which were embodied in the document drawn
property applied to discharge its liabilities in the handwriting of Magdusa but was not
and to receive in cash his share of the signed by all of the partners. Later, the
surplus less damages caused by his withdrawing partners demanded for payment
wrongful dissolution but were refused. Considering that not all
b. If the business is continued: partners intervened in the distribution of all
To have the value of his or part of the partnership assets, should the
interest in the partnership at action prosper?
the time of the dissolution,
Effects when the business of a dissolved A: Prescription has not yet set in. Prescription of
partnership is continued the said right starts to run only upon the
dissolution of the partnership when the final
1. Creditors of old partnership are also creditors accounting is done. Contrary to Emnace’s
of the new partnership who continues the protestations, prescription had not even begun to
business of the old one without liquidation of run in the absence of a final accounting. The right to
the partnership affairs. demand an accounting accrues at the date of
2. Creditors have an equitable lien on the dissolution in the absence of any agreement to the
consideration paid to the retiring/deceased contrary. When a final accounting is made, it is
partner by the purchaser when only then that prescription begins to run (Emnace
retiring/deceased partner sold his interest v. CA, G.R. No. 126334, November 23, 2001).
without final settlement with creditors.
3. Rights of retiring/estate of deceased partner: LIMITED PARTNERSHIP
a. To have the value of his interest
ascertained as of the date of dissolution; It is one formed by two or more persons having as
and members one or more general partners and one or
b. To receive as ordinary creditor the value more limited partners, the latter not being
of his share in the dissolved partnership personally liable for partnership debts (NCC, Art.
with interest or profits attributable to 1843).
use of his right, at his option.
Characteristics of limited partnership
NOTE: The right to demand on accounting of the
value of his interest accrues to any partner or his 1. It is formed by compliance with the
legal representative after dissolution in the statutory requirements.
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CIVIL LAW
2. One or more general partners control the partnership
business and are personally liable to
creditors. 1. When the partnership is dissolved
3. One or more limited partners contribute to 2. When all the limited partners ceased to be
the capital and share in the profits but do not such (NCC, Art. 1864).
participate in the management of the
business and are not personally liable for Instances when a certificate or articles of
partnership obligations beyond their capital limited partnership can be amended
contributions.
4. The limited partners may ask for the return 1. It must fall under the following changes and
of their capital contributions under conditions:
conditions prescribed by law. a. There is a change in the name of the
5. Partnership debts are paid out of common partnership or in the amount or character of
fund and the individual properties of general the contribution of any limited partner;
partners (De Leon, 2014). b. A person is substituted as a limited
partner;
Consequences of separate personality of c. An additional limited partner is admitted;
limited partnership d. A person is admitted as a general partner;
e. A general partner retires, dies, becomes
The personality of a limited partnership being insolvent or insane, or is sentenced to
different from that of its members, it must, on civil interdiction and the business is
general principle, answer for, and suffer, continued under Article 1860;
the consequence of its acts as such an entity f. There is a change in the character of the
capable of being the subject of rights and business of the partnership;
obligations. If the limited partnership failed to pay g. There is a false or erroneous statement in
its obligations, this partnership must suffer the the certificate;
consequences of such a failure, and must be h. There is a change in the time as stated in
adjudged insolvent (Campos Rueda & Co. v. Pacific the certificate for the dissolution of the
Commercial Co., et. al, G.R. No. L- 18703, August 28, partnership or for the return of a
1922). contribution;
i. A time is fixed for the dissolution of the
FORMATION AND AMENDMENT OF LIMITED partnership, or the return of a
PARTNERSHIP contribution, no time having been
specified in the certificate;
Essential requirements for the formation of j. The members desire to make a change in
limited partnership any other statement in the certificate in
order that it shall accurately represent the
1. Certificate of articles of limited partnership agreement among them (NCC, Art. 1864).
which states the matters enumerated in Art.
1844, must be signed and sworn; and 2. Must be signed and sworn to by all of the
members including the new members if some
NOTE: Among the contents of the Certificate of added; in case of substitution, the assigning
Articles of Partnership should be the name of the limited partner must also sign.
partnership, adding thereto the word “limited”. 3. Must be recorded in the SEC.
2. Certificate must be filed for record in the Instances when a general partner needs
office of the SEC (De Leon, 2014). consent or ratification of all the limited
partners
NOTE: Strict compliance with legal requirements
is not necessary. It is sufficient that there is When he:
substantial compliance in good faith. If there is no 1. Does any act in contravention of the
substantial compliance, the partnership becomes certificate;
general partnership as far as third persons are 2. Does any act which would make it
concerned, in which the member are liable as impossible to carry on the ordinary business
general partners (Jo Chun v. Pacific Commercial of the partnership;
Co., G.R. No. 19892, September 6, 1923). 3. Confesses judgment against partnership;
4. Possesses partnership property / assigns
Cancellation of certificate or articles of limited rights in specific partnership property other
RIGHTS AND OBLIGATIONS OF A LIMITED XPN: Those liabilities which he was ignorant of at
PARTNER the time that he became a limited partner and
which could not be ascertained from the
Rights of a limited partner (NCC, Art. 1851) certificate
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CIVIL LAW
assets of the partnership are sufficient to pay b. When he allows his surname to appear
such liabilities; in the firm name;
2. The consent of all the members (general and c. When he fails to have a false statement
limited partners) has been obtained except in the certificate corrected, knowing it
when the return may be rightfully demanded; to be false;
and d. When he takes part in the control of the
3. The certificate of limited partnership is business;
cancelled or amended. e. When he receives partnership property
as collateral security, payment,
When return of contribution is a matter of conveyance, or release in fraud of
right partnership creditors;
f. When there is failure to substantially
When all liabilities of the partnership, except comply with the legal requirements
liabilities to general partners and to limited governing the formation of limited
partners on account of their contributions, have partnerships.
been paid or there remains property of the
partnership sufficient to pay them and the 3. To separate creditors
certificate is cancelled or so amended as to set
forth the withdrawal or reduction: As in a general partnership, the creditor of a
limited partner may, in addition to other remedies
1. On the dissolution of the partnership; allowed under existing laws, apply to the proper
2. Upon the arrival of the date specified in the court for a charging order subjecting the interest
certificate for the return; or in the partnership of the debtor partner for the
3. After the expiration of 6- month notice in payment of his obligation (De Leon, 2014).
writing given by him to the other partners if
no time is fixed in the certificate for the Requisites for waiver or compromise of
return of the contribution or for the liabilities
dissolution of the partnership.
The waiver or compromise:
NOTE: Even if a limited partner has contributed 1. Is made with the consent of all partners; and
property, he has only the right to demand and 2. Does not prejudice partnership creditors
receive cash for his contribution. The exceptions who extended credit or whose claims arose
are: before the cancellation or amendment of the
certificate.
1. When there is stipulation to the contrary in
the certificate; or When may a limited partner have the
2. When all the partners (general and limited partnership dissolved
partners) consent to the return other than in
the form of cash (De Leon 2014). 1. When his demand for the return of his
contribution is denied although he has a
Liabilities of a limited partner right to such return; or
2. When his contribution is not paid although
1. To the partnership he is entitled to its return because the other
liabilities of the partnership have not been
Since limited partners are not principals in the paid or the partnership property is
transaction of a partnership, their liability as a insufficient for their payment.
rule, is to the partnership, not to the creditors of
the partnership. The general partners cannot, Effect of retirement, death, civil interdiction,
however waive any liability of the limited partners insanity or insolvency of a partner
to the prejudice of such creditors.
1. General partner - The partnership is
2. To the partnership creditors and other dissolved (NCC, Art. 1860) unless the
partners business is continued by the remaining
general partners:
a. A limited partner is liable for a. Under the right stated in the certificate;
partnership obligations when he or
contributed services instead of only b. With the consent of all the partners.
money or property to the partnership;
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CIVIL LAW
7. Creditors of partnership are preferred in payment of his obligation.
partnership property & may attach partner's
share in partnership assets. AGENCY
Other obligations
1. Duty to render on demand true and full
information affecting partnership to any partner DEFINITION OF AGENCY
or legal representative of any deceased partner or
of any partner under legal disability.
2. Duty to account to the partnership as fiduciary.
Contract of agency (2000, 2003 BAR)
LIMITED PARTNER
Rights By the contract of agency, a person binds himself
1. To have partnership books kept at principal place to render some service or to do something in
of business. representation or on behalf of another, with the
2. To inspect/copy books at reasonable hours. consent or authority of the latter (NCC, Art. 1868).
3. To have on demand true and full information of all
things affecting partnership. NOTE: The essence of agency is representation.
4. To have formal account of partnership affairs For a Contract of Agency to exist, it is essential that
whenever circumstances render it just and the principal consents that the agent shall act on
reasonable. the former’s behalf and the agent consents so as to
5. To ask for dissolution and winding up by decree of act (Rabuya, 2017).
court.
6. To receive share of profits/other compensation by
way of income. NATURE, FORMS AND KINDS OF AGENCY
7. To receive return of contributions, provided the
partnership assets are in excess of all its liabilities.
Obligations
Characteristics of a contract of agency
To the partnership
1. Bilateral – If it is for compensation, it gives
Since limited partners are not principals in the rise to reciprocal rights and obligations.
transaction of a partnership, their liability as a 2. Unilateral – If gratuitous, it creates
rule, is to the partnership, not to the creditors of obligations for only one of the parties.
the partnership. The general partners cannot, 3. Nominate – It has its own name.
however waive any liability of the limited partners 4. Consensual – It is perfected by mere consent.
to the prejudice of such creditors. 5. Principal – It can stand by itself without need
To the partnership creditors and other of another contract.
partners 6. Preparatory and Progressive – It is entered
into as a means for other purposes that deal
1. A limited partner is liable for partnership with the public in a particular manner: for
obligations when he contributed services instead the agent to enter into juridical acts with the
of only money or property to the partnership. public in the name of the principal.
2. When he allows his surname to appear in the firm (Villanueva and Villanueva-Tiansay, 2015).
name. 7. Generally onerous
3. When he fails to have a false statement in the 8. Representative relation- the agent acts for
certificate corrected, knowing it to be false. and on behalf of the principal on matters
4. When he takes part in the control of the business within the scope of his authority and said
5. When he receives partnership property as acts have the same legal effect as if they were
collateral security, payment, conveyance, or personally executed by the principal
release in fraud of partnership creditors. (Rabuya, 2017).
6. When there is failure to substantially comply with 9. Fiduciary and Revocable- for the creation of
the legal requirements governing the formation of legal relationship of representation by the
limited partnerships. agent on behalf of the principal, the powers
To separate creditors of the former are essentially derived from the
latter. Neither the principal nor the agent can
As in a general partnership, the creditor of a be legally made to remain in the relationship
limited partner may, in addition to other remedies when they choose to have it terminated.
allowed under existing laws, apply to the proper
court for a charging order subjecting the interest Classifications of Agency
in the partnership of the debtor partner for the
3. As to extent of business of the principal XPN: When the law requires a specific form. i.e. –
a. General – Agency comprises all the when sale of land or any interest therein is through
business of the principal (NCC, Art. 1876). an agent, the authority of the latter must be in
b. Special– Agency comprises one or more writing; otherwise, the sale shall be void (NCC, Art.
specific transactions (NCC, Art. 1876). 1874). (2010 BAR).
529
CIVIL LAW
1. Natural or juridical person; and information, as where he is informed by way
2. He must have capacity to act. of confidential information.
3. The person claiming the benefit of the rule
NOTE: If a person is capacitated to act for himself colludes with the agent to defraud the
or his own right, he can act through an agent. principal (De Leon, 2010).
Insofar as third persons are concerned, it is NOTE: The theory of imputed knowledge ascribes
enough that the principal is capacitated. But the knowledge of the agent to the principal, not the
insofar as his obligations to his principal are other way around. The knowledge of the principal
concerned, the agent must be able to bind himself. cannot be imputed to his agent (Sunace
International Management Services, Inc. v. NLRC,
Kinds of principal G.R. No. 161757, January 25, 2006).
Two or more persons appoint an agent for a Rule with regard to the execution of the agency
common transaction or undertaking (NCC, Art.
1915). GR: The agent is bound by his acceptance to carry
out the agency, in accordance with the instruction
Requisites for solidary liability of joint of the principal and is liable for damages which,
principals through his non- performance, the principal may
suffer (NCC, Arts. 1884 & 1887).
1. There are two or more principals.
2. They have all concurred in the appointment XPN: If its execution could manifestly result in
of the same agent. loss or damage to the principal (NCC, Art. 1888).
3. Agent is appointed for a common
transaction or undertaking (De Leon, 2010). Responsibility of two or more agents
appointed simultaneously
Theory of imputed knowledge
GR: They are jointly liable.
The importance of the duty to give information of
material facts becomes readily apparent when it is XPN: Solidarity has been expressly stipulated.
borne in mind that knowledge of the agent is Each of the agents becomes solidarily liable for:
imputed to the principal even though the agent
never communicated such knowledge to the 1. The non-fulfilment of the agency
principal (De Leon, 2010). 2. Fault or negligence of his fellow agent
531
CIVIL LAW
the manufacturer's suggested prices plus 10%. represent ts the only the court
All unsold units at the end of the year shall be principal but also the
bought back by the manufacturer at the same heirs and
price they were ordered. The manufacturer creditors of the
shall hold the distributor free and harmless estate.
from any claim for defects in the units. Is the As to the Agent Judicial
agreement one for sale or agency? (2000 BAR) requirement of does not Administrator
bond file a files a bond
A: The contract is one of agency not sale. The bond
notion of sale is negated by the following indicia: As to control of Agent is His acts are
(1) the price is fixed by the manufacturer with the the controlle subject to
10% mark-up constituting the commission; (2) agent/Administr d by the specific orders
the manufacturer reacquires the unsold units at ator principal from the court.
exactly the same price; and through
(2)warranty for the units was borne by the the
manufacturer. The foregoing indicia negate sale agreeme
because they indicate that ownership over the nt
units was never intended to transfer to the
distributor. Agency v. Lease of Services
533
CIVIL LAW
If the two contracts are incompatible with each action at law against a purchaser merely because
other, the one of prior date shall be preferred. This he is entitled to have his compensation or
is subject however to the rule on double sale advances paid out of the purchase price before
under Art. 1544 of the NCC. payment to the principal (Uy v. CA,
G.R. No. 120465, September 9, 1999).
NOTE: Rules of preference in double sale:
1. Personal property – possessor in good OBLIGATIONS OF AGENT
faith
RESPONSIBILITIES AND OBLIGATIONS OF AN
2. Real property AGENT
a. Registrant in good faith
b. Possessor in good faith Specific obligations of an agent to the principal
c. Person with the oldest title in good faith
(NCC, Art. 1544). 1. Carry out the agency (NCC, Art. 1884);
2. Answer for damages which through his non-
If agent acted in good faith, the principal shall be performance the principal may suffer (Ibid.);
liable for damages to the third person whose 3. Finish the business already begun on the death
contract must be rejected. If agent is in bad faith, of the principal (Ibid.);
he alone shall be liable (NCC, Art. 1917). 4. Observe the diligence of a good father of a
family in the custody and preservation of the
A person acting as an agent cannot escape goods forwarded to him by the owner in case
criminal liability by virtue of the contract of he declines an agency, until an agent is
agency appointed (NCC, Art. 1885);
The law on agency has no application in criminal NOTE: The owner shall as soon as practicable
cases. When a person participates in the either appoint an agent or take charge of the
commission of a crime, he cannot escape goods (NCC, Art. 1885).
punishment on the ground that he simply acted as
an agent of another party (Ong v. CA, G.R. No. 5. Advance the necessary funds should there be
119858, April 29, 2003). a stipulation to do so except when the
principal is insolvent (NCC, Art. 1886);
An agent cannot maintain an action against 6. Act in accordance with the instructions of the
persons with whom they contracted on behalf principal (NCC, Art. 1887);
of his principal. 7. Not to carry out the agency if its execution
would manifestly result in loss or damage to
Agents are not a party with respect to that the principal (NCC, Art. 1888);
contract between his principal and third persons. 8. Answer for damages if there being a conflict
As agents, they only render some service or do between his interests and those of the
something in representation or on behalf of principal, he should prefer his own (NCC, Art.
their principals. The rendering of such service did 1889);
not make them parties to the contracts of sale 9. Not to loan to himself if he has been
executed in behalf of the latter. authorized to lend money at interest (NCC,
Art. 1890);
The fact that an agent who makes a contract for 10. Render an account of his transactions and to
his principal will gain or suffer loss by the deliver to the principal whatever he may have
performance or non-performance of the contract received by virtue of the agency, even though
by the principal or by the other party thereto does it may not be owing to the principal (NCC, Art.
not entitle him to maintain an action on his own 1891);
behalf against the other party for its breach.
NOTE: Every stipulation exempting the agent
An agent entitled to receive a commission from his from the obligation to render an account shall be
principal upon the performance of a contract which void [NCC, Art. 1891(2]).
he has made on his principal's account does not,
from this fact alone, have any claim against the 11. Distinguish goods by countermarks and
other party for breach of the contract, either in an designate the merchandise respectively
action on the contract or otherwise. belonging to each principal, in the case of a
commission agent who handles goods of the
An agent who is not a promisee cannot maintain an same kind and mark, which belong to
Private directions which the principal may give In case of breach of loyalty, the agent is NOT
the agent in regard to the manner of performing entitled to commission
his duties as such agent but of which a third party
is ignorant. They are said to be secret if the The forfeiture of the commission will take place
principal intended them not to be made known to regardless of whether the principal suffers any
such party (De Leon, 2010). injury by reason of such breach of loyalty. It does
not even matter if the agency is for a gratuitous
Obligation of a person who declines an agency one, or that the principal obtained better results,
or that usage and customs allow a receipt of such a
A person who declines an agency is till bound to bonus.
observe the diligence of a good father of the family
in the custody and preservation of goods NOTE: An agent has an absolute duty to make a
forwarded to him by the owner. This is based on full disclosure or accounting to his principal of all
equity. (De Leon, 2010). transactions and material facts that may have
some relevance with the agency (Domingo v.
Authority v. Principal’s instructions Domingo, G.R. No. L-30573, October 29, 1971).
535
CIVIL LAW
In behalf of the principal, within the scope of Principal is liable for damages.
authority
1. Binds principal;
2. Agent not personally liable EXPRESS v. IMPLIED AGENCY
Without or beyond scope of authority
Contract is unenforceable as against the principal BASIS EXPRESS AGENCY IMPLIED
but binds the agent to the third person. AGENCY
One where the One which is
Binding on the principal when: agent has been implied from the
1. Ratified or actually acts of the
2. The principal allowed the agent to act as As to authorized by the principal.
though he had full powers. definition principal, either
Within the scope of authority but in the agent’s orally or in
name writing.
1. Not binding on the principal;
2. Principal has no cause of action against the When it is directly When it is
conferred by incidental
3rd parties and vice versa
to the
words. transaction or
When the transaction involves things belonging to
reasonably
the principal, his remedy is to sue the agent for
necessary to
damages because of failure to comply with the
accomplish the
agency.
As to purpose of the
Within the scope of the written power of
authority agency, and
attorney but agent has actually exceeded his
therefore, the
authority according to an understanding
principal is
between him and the principal
deemed to have
1. Insofar as 3rd persons are concerned (not actually intended
required to inquire further than the terms of the the agent to
written power), agent acted within scope of his possess.
authority;
2. Principal is estopped. Scope of the agent’s authority as to third
With improper motives persons
Motive is immaterial; as long as within the scope
of authority, valid. It includes not only the actual authorization
With misrepresentations by the agent conferred upon the agent by his principal but also
that which is apparent or impliedly delegated to
1. Authorized – principal still liable him (De Leon, 2010).
2. Beyond the scope of the agent’s authority
Q: When is a third person required to inquire
GR: Principal not liable into the authority of the agent?
It is when one leads another to believe that a A: While the Republic or the government is
certain person is his agent, when as a matter of usually not estopped by the mistake or error on the
fact such is not true, and the latter acts on such part of its officials or agents, the Republic cannot
misrepresentation, the former cannot disclaim now take refuge in the rule as it does not afford a
liability, for he has created an agency by estoppel blanket or absolute immunity. Our
537
CIVIL LAW
pronouncement in Republic v. CA is instructive: the the paries (Pacific Commercial Co. v. Yatco, 68 Phil.
Solicitor-General may not be excused from its 398, 1939).
shortcomings by invoking the doctrine as if it
were some magic incantation that could benignly, Rules
if arbitrarily, condone and erase its errors.
1. Efficient and procuring cause – a principle in
The rule on non-estoppel of the government is not the law on agency whereby the broker, to be
designed to perpetrate an injustice. In general, the entitled to compensation, must be the efficient
rules on appeal are created and enforced to agent or procuring cause of the sale;
ensure the orderly administration of justice. The 2. Ready-willing-and-able Rule – a principle which
judicial machinery would run aground if late states that for a broker to be entitled to
petitions, like the present one, are allowed on the commission, he must provide a person who is
flimsy excuse that the attending lawyer was ready, willing and able both to accept and live
grossly lacking in vigilance (Leca Realty Corp. v. up to the terms offered by his principal
Republic, G.R. Nos. 155605 & 160179, September 27, (Albano, 2013).
2006). 3. Procuring Cause - Procuring cause is meant to
be the proximate cause. The term procuring
Implied agency v. Agency by estoppel cause, in describing a brokers activity,
refers to a cause originating a series of
BASIS IMPLIED AGENCY BY events which, without break in their continuity,
AGENCY ESTOPPEL result in accomplishment of prime objective of
As to Agent is a If caused by the the employment of the broker producing a
liability true agent, “agent”, he is not purchaser ready, willing and able to buy real
between with rights considered a true estate on the owners terms. A broker will be
principal and duties of agent, hence, he regarded as the procuring cause of a sale, so as
and agent an agent. has no rights as to be entitled to commission, if his efforts are
such. the foundation on which the negotiations
As to The principal 1. If caused by the resulting in a sale are begun. The broker must
liability to is always principal, he is be the efficient agent or the procuring cause of
third liable; liable, but only if the sale. The means employed by him and his
persons The agent is the 3rd person efforts must result in the sale. He must find the
never acted on the purchaser, and the sale must proceed from his
personally misrepresenta efforts acting as broker (Medrano, et. al. v. CA,
liable. tion; et. al., G.R. No. 150678, February 18, 2005).
2. If caused by the
agent alone, only Factorage
the agent
is liable. It is the compensation of a factor or commission
agent.
Commission agent
Ordinary commission
He is one engaged in the purchase and sale of
personal property for a principal, which, for this It is the compensation for the sale of goods which
purpose, has to be placed in his possession and at are placed in the agent’s possession or at his
his disposal. disposal.
He is a middleman or intermediary who in behalf of It is the fee which is given in return for the risk
others and for a commission or fee negotiates that the agent has to bear in the collection of
contracts/transactions relating to real or personal credits.
property.
The purpose of the guarantee commission is to
NOTE: Distinguished from an agent: An agent is compensate the agent for the risks he will have to
authorized to enter into judicial acts in behalf of bear in the collection of the credit due the
the principal but a true broker is merely an principal (De, Leon, 2014).
intermediary between the parties and he has no
power to enter into a contract in behalf od any of Del credere agent
Refers to those acts which do not imply the A special power of attorney is required (1992,
authority to alienate for the exercise of which an 2004 BAR)
express power is necessary (De Leon, 2014).
1. To create or convey real rights over
NOTE: Payment is an act of administration when immovable property;
it is made in the ordinary course of management 2. To enter into any contract by which the
(Art. 1878; De Leon, 2014). ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
The making of customary gifts for charity, or those consideration;
made to employees in the business managed by 3. To loan or borrow money, unless the latter act
the agent are considered acts of administration be urgent and indispensable for the
(NCC, Art. 1878; De Leon, 2014). preservation of the things which are under
administration;
Q: P granted to A a special power to mortgage 4. To lease any real property to another person
the former’s real estate. By virtue of said for more than one year;
power, A secured a loan from C secured by a 5. To make such payments as are not usually
mortgage on said real estate. Is P personally considered as acts of administration;
liable for said loan? 6. To obligate principal as guarantor or surety;
7. To bind the principal to render some service
A: NO. A special power to mortgage property is without compensation;
limited to such authority to mortgage and does not 8. To bind the principal in a contract of
bind the grantor personally to other obligations partnership;
contracted by the grantee in the absence of any 9. To ratify obligations contracted before the
ratification or other similar act that would estop agency;
the grantor from questioning or disowning such 10. To accept or repudiate an inheritance;
other obligations contracted by the grantee. 11. To effect novation which put an end to
obligations already in existence at the time
AGENCY REQUIRING SPECIAL POWER OF the agency was constituted;
ATTORNEY 12. To make gifts, except customary ones for
charity or those made to employees in the
Special power of attorney (SPA) business managed by the agent;
13. To compromise, to submit questions to
It is an instrument in writing by which one person, arbitration, to renounce the right to appeal
as principal, appoints another as his agent and from a judgment, to waive objections to the
confers upon him the authority to perform certain venue of an action or to abandon a
specified acts or kinds of acts on behalf of the prescription already acquired;
principal with a primary purpose to evidence 14. Any other act of strict dominion; and
agent’s authority to third parties with whom the 15. To waive an obligation gratuitously (NCC, Art.
agent deals (De Leon, 2014). 1878).
539
CIVIL LAW
1. A special power to sell excludes the power to principal has had a reasonable opportunity to take
mortgage (NCC, Art. 1879); the necessary steps like the appointment of a new
2. A special power to mortgage does not include agent to remedy the situation caused by the
the power to sell (Ibid); and withdrawal (NCC, Art. 1929); and
3. A special power to compromise does not
authorize submission to arbitration (NCC, Art. In case a person declines an agency, he is bound to
1880). observe the diligence of good father of the family
in the custody and preservation of the goods
NOTE: The scope of the agent’s authority is what forwarded to him by the owner until the latter
appears in the written terms of the power of should appoint an agent (NCC, Art. 1885).
attorney. While third persons are bound to inquire
into the extent or scope of the agent’s authority, NOTE: The law reconciles the interests of the
they are not required to go beyond the terms of agent with those of the principal, and if it permits
the written power of attorney. Third persons the withdrawal of the agent, it is on the condition
cannot be adversely affected by an understanding that no damage results to the principal, and if the
between the principal and his agent as to the limit agent desires to be relieved of the obligation of
of the latter’s authority. In the same way, third making reparation when he withdraws for a just
persons need not concern themselves with cause, he must continue to act so that no injury
instruction given by the principal to his agent may be caused to the principal (De Leon, 2010).
outside of the written power of attorney (Siredy
Enterprises, Inc. v. CA, G.R. No. 129039, September OBLIGATIONS OF THE PRINCIPAL
27, 2002).
RIGHTS AND OBLIGATIONS OF THE PRINCIPAL
Q: X was the owner of an unregistered parcel (2004 Bar)
of land in Cabanatuan City. As she was abroad,
she advised her sister Y via overseas call to sell Obligations of the principal to the agent
the land and sign a contract of sale on her
behalf. Y thus sold the land to B1 on March 31, 1. Comply with all obligations which the agent
2001 and executed a deed of absolute sale on may have contracted within the scope of his
behalf of X. B1 fully paid the purchase price. B2, authority [NCC, Art. 1910(1)].
unaware of the sale of the land to B1, signified 2. Advance to the agent, should the latter so
to Y his interest to buy it but asked Y for her request, the sums necessary for the
authority from X. Without informing X that she execution of the agency (NCC, Art. 1912).
had sold the land to B1, Y sought X for a 3. Reimburse the agent for all advances made
written authority to sell. X e-mailed Y an by him, even if the business or undertaking
authority to sell the land. Y thereafter sold the was not successful, provided the agent is
land on May 1, 2001 to B2 on monthly free from fault (Ibid.).
installment basis for two years, the first 4. Indemnify the agent for all damages which
installment to be paid at the end of May 2001. the execution of the agency may have caused
Who between B1 and B2 has a better right the latter without fault or negligence on his
over the land? Explain. (2010 BAR) part (NCC, Art. 1913).
5. Pay the agent the compensation agreed
A: B-2 has a better title. This is not a case of upon, or if no compensation was specified,
double sale since the first sale was void. The law the reasonable value of the agent’s services
provides that when a sale of a piece of land or any (De Leon, 2014).
interest therein is through an agent, the authority
of the latter shall be in writing; otherwise, the sale Liability for the expenses incurred by the
shall be void (NCC, Art. 1874). The property was agent
sold by Y to B1 without any written authority
from the owner X. Hence, the sale to B1 was void. GR: Principal is liable for the expenses incurred by
the agents.
AGENCY BY OPERATION OF LAW
XPNs:
Instances where an agency is created by 1. If the agent acted in contravention of the
operation of law principal's instructions, unless principal
should wish to avail himself of the benefits
When the agent withdraws from the agency for a derived from the contract;
valid reason, he must continue to act until the 2. When the expenses were due to the fault of the
Liability for tort committed by the agent Acts that may be ratified
1. Void acts
GR: Where the fault or crime committed by the 2. Voidable acts
agent is not in the performance of an obligation of 3. Unrevoked acts – a principal must ratify his
the principal, the latter is not bound by the illicit agent’s unauthorized contact before it is
acts of the agent, even if it is done in connection revoked by the other contracting party
with the agency. 4. Criminal acts
5. Tortious acts
XPNs:
1. Where the tort was committed by the agent IRREVOCABLE AGENCY
because of defective instructions from the
principal or due to lack of necessary GR: Agency is revocable at will by the principal
vigilance or supervision on his part; or (NCC, Art. 1919).
2. When the tort consists in the performance of
an act which is within the powers of an XPNs: An agency is irrevocable:
agent but becomes criminal only because of
the manner in which the agent has 1. If a bilateral contract depends upon it.
performed it; the principal is civilly liable to 2. If it is the means of fulfilling an obligation
3rd persons who acted in good faith. already contracted.
3. If partner is appointed manager and his
Q: CX executed a special power of attorney removal from the management is unjustifiable
authorizing DY to secure a loan from any bank (NCC, Art 1927); (2010 BAR)
and to mortgage his property covered by the 4. If it has been constituted in the common
owner’s certificate of title. In securing a loan interest of the principal and the agent, or in
from bank, DY did not specify that he was the interest of a third person who has
acting for CX in the transaction with said bank. accepted the stipulation in his favor (NCC, Art.
Is CX liable for the bank loan? Why or why not? 1930).
Justify your answer. (2004 BAR) 5. Stipulation pour atrui (NCC, Art. 1311).
A: While as a general rule the principal is not liable XPN to the XPN: When the agent acts to defraud
for the contract entered into by his agent in case the principal.
the agent acted in his own name without
541
CIVIL LAW
NOTE: The agent may withdraw from the agency 2. Agency is coupled with an interest in the
by giving due notice to the principal. If the latter subject matter of the agency (e.g. power of
should suffer any damage by reason of the sale in a mortgage).
withdrawal, the agent must indemnify him
therefor, unless the agent should base his Kinds of revocation
withdrawal upon the impossibility of continuing
the performance of the agency without grave Revocation may either be express or implied (De
detriment to himself (NCC, Art. 1928). Leon, 2010; NCC, Art. 1920)
The agent, even if he should withdraw from the A contract of agency is impliedly revoked
agency for a valid reason, must continue to act when the principal:
until the principal has had reasonable opportunity
to take the necessary steps to meet the situation 1. Appoints a new agent for the same business
(NCC, Art. 1929). or transaction (NCC, Art. 1923);
2. Directly manages the business entrusted to
MODES OF EXTINGUISHMENT the agent (NCC, Art. 1924); or
3. After granting general power of attorney to
1. By its revocation; an agent, grants a special one to another
2. By the withdrawal of the agent; agent which results in the revocation of the
3. By the death, civil interdiction, insanity or former as regards the special matter
insolvency of the principal or of the agent; involved in the latter (NCC, Art.1926).
4. By the dissolution of the firm or corporation
which entrusted or accepted the agency; NOTE: A special power of attorney is not revoked
5. By the accomplishment of the object or by a subsequent general power of attorney given
purpose of the agency; to another agent, unless that the latter refers also
6. By the expiration of the period for which the to the act authorized under the special power
agency was constituted. (Art. 1919, NCC) (Tolentino, 1992).
NOTE: The list is not exclusive; May also be Revocation of agency when the agent is
extinguished by the modes of extinguishment of appointed by two or more principals
obligations in general whenever they are
applicable, like loss of the thing and novation. When two or more principals have granted a
power of attorney for a common transaction, any
Agency may be terminated: one of them may revoke the same without the
consent of the others (NCC, Art. 1925).
1. by agreement (Nos. 1 and 4);
2. by the subsequent acts of the parties which Necessity of notice of revocation
may be either:
a. by the act of both parties or by mutual 1. As to the agent – Express notice is not
consent; or always necessary; sufficient notice if the
b. by unilateral act of one of them (Nos. 3 party to be notified actually knows, or has
and 5); reason to know, a fact indicating that his
authority has been terminated/suspended;
3. by operation of law (Nos. 2 and 6) (De Leon, revocation without notice to the agent will
2014). not render invalid an act done in pursuance
of the authority (De Leon 2014).
Heirs continuing the contract of agency 2. As to 3rd persons – Express notice is
necessary.
GR: Heirs cannot continue the contract of agency. a. As to former customers – Actual notice
must be given to them because they
Ratio: The agency calls for personal services on the always assume the continuance of the
part of the agent since it is founded on a fiduciary agency relationship (NCC, Art. 1873).
relationship; rights and obligations b. As to other persons – Notice by
intransmissible. publication is enough (NCC, Art. 1922).
543
CIVIL LAW
GR: The agency is terminated by the death of the Go Chan, G.R. No. L-24332, January 31, 1978).
principal even if the
agency is for a definite period (NCC, Art. 1919). Change of circumstance surrounding the
transaction
XPN:
1. If it has been constituted in common GR: The authority of the agent is terminated.
interest of the principal and the agent or in the
interest of the third person who accepted the XPNs:
stipulation in his favour (NCC, Art. 1930); and 1. If the original circumstances are restored
2. Anything done by the agent, without the within a reasonable period of time, the agent's
knowledge of the death of the principal or on any authority may be revived;
other cause which extinguishes the agency is valid 2. Where the agent has reasonable doubts as
and shall be fully effective with respect to third to whether the principal would desire him to
persons who may have contracted with him in act, his authority will not be terminated if he
good faith (NCC, Art. 1931). acts reasonably; or
3. Where the principal and agent are in close
NOTE: The death of the principal extinguishes the daily contact, the agent's authority to act will
agency; but in the same way that revocation of the not terminate upon a change of circumstances
agency does not prejudice third persons who have if the agent knows the principal is aware of the
dealt with the agent in good faith without notice of change and does not give him new instructions
the revocation (NCC, Arts. 1921 & 1922) such third (De Leon, 2010).
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 cause which extinguishes the agency
(Hererra v. Luy Kim Guan, G.R. No. L-17043,
January 31, 1961).
Death of Agent
It includes all transactions involving the purchase Generally, no fiduciary relationship is created by
or loan of goods, service, or money in the present bailment. No trustee-beneficiary relationship is
with a promise to pay or deliver in the future. created.
1. As contracts of security 1. Bailor – The giver; the party who delivers the
a. Contracts of real security – These are possession or custody of the thing bailed; and
contracts supported by collateral/s or 2. Bailee – The recipient; the party who receives
burdened by an encumbrance on the possession or custody of the thing thus
property such as mortgage and pledge; delivered.
and
b. Contracts of personal security – These are Contractual bailments with reference to
contracts where performance by the compensation
principal debtor is not supported by
collateral/s but only by a promise to pay 1. For the sole benefit of the bailor (gratuitous)
or by the personal undertaking or e.g. gratuitous deposit
commitment of another person such as in 2. For the sole benefit of the bailee (gratuitous)
surety or guaranty. e.g. commodatum, mutuum
3. For the benefit of both parties (mutual-benefit
2. As to their existence bailments)
a. Principal contracts – They can exist alone. e.g. deposit for compensation, involuntary
Their existence do not depend on the deposit, pledge and bailments for hire:
existence of another contract; and
(e.g. commodatum and mutuum) a. Hire of things – for temporary use of the
b. Accessory contracts – they have to depend hirer
on another contract. These accessory b. Hire of service – for some work or labor
contracts depend on the existence of a upon it by the bailee
principal contract of loan; c. Hire of carriage of goods – for carriage
(e.g. guaranty proper, suretyship, pledge, d. Hire of custody – for storage
mortgage and antichresis).
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1. As to the borrower, the acquisition of the
thing; and
LOAN 2. As to the lender, the right to demand its return
or its equivalent.
Art. 1933. By the contract of loan, one of the 1. Commodatum – The object is generally not
parties delivers to another, either something consumable; and
not consumable so that the latter may use the 2. Mutuum – The object is consumable.
same for a certain time and return it, in which
case the contract is called a commodatum; or Consumable things and Non-consumable
money or other consumable thing, upon the things
condition that the same amount of the same
kind and quality shall be paid, in which case A thing is consumable when it cannot be used in a
the contract is simply called a loan or mutuum. manner appropriate to its nature without being
consumed (NCC, Art. 418).
Commodatum is essentially gratuitous. e.g. food, firewood, gasoline
Simple loan may be gratuitous or with a
stipulation to pay interest. On the other hand, a non-consumable thing is a
movable thing which can be used in a manner
In commodatum the bailor retains the appropriate to its nature without it being
ownership of the thing loaned, while in simple consumed (NCC, Art. 418).
loan, ownership passes to the borrower. e.g. car, television, radio
1. Commodatum – where the bailor (lender) Fungibles are usually determined by number,
delivers to the bailee (borrower) a non- weight, or measure.
consumable thing so that the latter may use it
for a given time and return the same thing (i.e. Irreplaceability of non-fungible thing
identical thing); and
2. Mutuum or Simple Loan – where the lender GR: Non-fungible things are irreplaceable. They
delivers to the borrower money or other must be returned to the lender after the purpose
consumable thing upon the condition that the of the loan had been accomplished.
latter shall pay same amount of the same kind
and quality. XPN: Non-fungible things may be replaced by
agreement of the parties. In such case, the contract
Commodatum is a loan of use (because there is a is barter and not loan.
transfer of the use of the thing borrowed) while
mutuum is a loan of consumption (because there is EFFECTS OF GUARANTY BETWEEN THE
a transfer of the ownership of the thing, which is GUARANTOR AND THE CREDITOR
generaly received for consumption).
Action of the creditor against the debtor
Cause or Consideration in a contract of loan
XPN: If the benefit of excussion is not available, GR: The guarantor who pays for a debtor must be
the guarantor can be sued jointly with the debtor. indemnified by the latter.
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CIVIL LAW
the creditor had against the debtor [NCC, Art. 4. When the debt has become demandable by
2067(1)]. reason of the expiration of the period of
payment;
If the guarantor pays without notice to the debtor, 5. After the lapse of ten years, when the
the debtor may interpose against the guarantor principal obligation has no fixed period for
defenses available to the debtor as against the its maturity, unless it be of such nature that
creditor at the time payment was made. it cannot be extinguished except within a
period longer than ten years;
Notification of payment made by the guarantor 6. If there are reasonable grounds to fear that
the principal debtor intends to abscond; or
GR: Guarantor must first notify the debtor before 7. If the principal debtor is in imminent
paying, otherwise, if the debtor pays again, the danger of becoming insolvent.
guarantor can only collect from the creditor and
the guarantor will have no cause of action against NOTE: In all these cases, the cause of action of the
the debtor even if the creditor becomes insolvent guarantor is either to obtain release from the
(NCC, Art. 2070). guaranty, or to demand a security that shall
protect him from any proceedings by the creditor
XPN: Guarantor may still recover from debtor if and from the danger of insolvency of the debtor
the following circumstances concur: (NCC, Art. 2071).
GR: It is not limited to a single transaction but (a) Direct – extinguishment of the guaranty
contemplates a future course of dealings, covering independently of the principal obligation.
a series of transactions generally for an indefinite (b) Indirect – extinguishment which arises from
time or until revoked. the extinction of the principal obligation.
XPN: A chattel mortgage can only cover Grounds for extinguishing a contract of
obligations existing at the time the mortgage is guaranty:
constituted and not to obligations subsequent to
the execution of the mortgage. 1. Principal obligation is extinguished;
2. Same causes as all other obligations;
XPN to the XPN: In case of stocks in department
stores, drug stores, etc. a. Payment or performance;
b. Loss of the thing due;
Q: PAGRICO submitted a Surety Bond issued by c. By condonation or remission of the
R&B Surety to secure an increase in its credit debt;
line with PNB. For consideration of the Surety d. By confusion or merger of the rights of
Bond, Cochingyan and Villanueva entered into the creditor and debtor;
an Indemnity Agreement with R&B Surety and e. By compensation;
bound themselves jointly and severally to the f. By novation;
terms and conditions of the Surety Bond. When Other causes such as annulment,
PAGRICO defaulted, PNB demanded payment rescission, fulfillment of a resolutory
to R&B Surety; R&B Surety, in turn, demanded condition and prescription.
payment to Cochingyan and Villanueva. R&B
sued them. Villanueva argued that the 3. Release by acceptance of property by the
complaint was premature because PNB had creditor;
not yet proceeded against R&B Surety to
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CIVIL LAW
If the creditor accepts payment in form of A bond, when required by law, is commonly
immovable or immovable property, there is a understood to mean an undertaking that is
novation on the subject matter. sufficiently secured, and not cash or currency.
(Comm. of Customs v. Alikpula, G.R. No. L-32542,
NOTE: Eviction revives the principal obligation, November 26, 1970).
but not the guaranty, for the creditor here took the
risk (Paras, 2008) Bondsman
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).
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CIVIL LAW
GR: A third person who pledged and mortgaged The liability of an accommodation mortgagor
his property is not liable for any deficiency. extends up to the loan value of their mortgaged
property and not to the entire loan itself. Should
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CIVIL LAW
there be any deficiency, the creditor has recourse Q: ABC loaned to MNO P40,000 for which the
on the principal debtor, not against latter pledged 400 shares of stock in XYZ Inc.
accommodation mortgage (Rabuya, 2017). It was agreed that if the pledgor failed to pay
the loan with 10% yearly interest within four
NOTE: Accommodation is also applicable to years, the pledgee is authorized to foreclose on
pledge since the law provides that “third parties the shares of stock. As required, MNO
who are not parties to the principal obligation delivered possession of the shares to ABC with
may secure the latter by pledging or mortgaging the understanding that the shares would be
their own property” (NCC, Art. 2085). It is also returned to MNO upon the payment of the
applicable to antichresis since Art. 2139 of the loan. However, the loan was not paid on time.
New Civil Code states that the last paragraph of A month after 4 years, may the shares of stock
Art. 2085 shall be applicable to a contract of pledged be deemed owned by ABC or not?
antichresis. Reason. (2004 Bar)
NOTE: What are prohibited are those stipulations A: NO, Y would not become the owner of the land.
executed or made simultaneously with the The stipulation is in the nature of Pactum
original contract, and not those subsequently commissorium which is prohibited by law. The
entered into. property should be sold at public auction and the
proceeds thereof applied to the indebtedness. Any
Pactum Commissorium when allowed excess shall be given to the mortgagor.
The law on pledge allows an exception to the Q: Suppose in the preceding question, the
prohibition against pactum commissorium. Under agreement between X and Y was that if X failed
Article 2112, If at the first auction, the thing is not to pay the mortgage debt on time, the debt
sold, there will be anothere setting for the second shall be paid with the land mortgaged by X to
auction followung the same formalities. If there is Y. Would your answer be the same as in the
still no sale effected, the pledgee is now allowed to preceding question? Explain. (1999 Bar)
appropriate the thing pledge. The act of
appropriation ipso jure transfers ownership of the A: NO, the answer would not be the same. This is a
thing to the pledgee. (PINEDA) valid stipulation and does not constitute pactum
commissorium. In pactum commissorium, the
This is not against the law, since what the law acquisition is automatic without need of any
prohibits is only the acquisition by the creditor of further action. In the instant problem another act
the property mortgaged after non-payment of is required to be performed, namely, the
debt, and the above stated article simply conveyance of the property as payment (dacion en
authorizes him to sel lit with the aforesaid pago).
consitions, which authorization is inherent in the
ownership and not against morals and public PLEDGE
order. (PARAS)
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CIVIL LAW
any, to the 3. Persons constituting the pledge have the
principal. free disposal of their property, and in the
Pledgor can Mortgagor absence thereof, that they be legally
sell the can sell the authorized for the purpose (NCC, Art. 2085);
thing property and
pledged mortgaged 4. That the thing pledged be placed in the
Authority to Sell only with even possession of the creditor, or of a third
the consent without the person by common agreement (NCC, Art.
of the consent of 2093).
pledgee. the
mortgagee. NOTE: If Art. 2093 is not complied with, the
pledge is void.
Nature of pledge
Continuous possession is required in pledge
It is a real contract which are not perfected until
delivery of the object of the obligation (NCC, Art. The mere taking of the property is not enough in
1316). pledge. There must be continuous possession of
the thing. However, the pledgee is allowed to
NOTE: A promise to constitute a pledge or temporarily entrust the physical possession of the
mortgage, if accepted, gives rise only to a personal thing pledged to the pledgor without invalidating
right binding upon the parties and creates no real the contract. But here, the pledgor would be in
right in the property (NCC, Art. 2092). What exists possession as a mere trustee and his possession is
is only a right of action to compel the fulfillment of subject to the order of the pledgee.
the promise but there is no pledge yet.
When possession or delivery of the thing
Characteristics: pledged was not made
NOTE: A thing lawfully pledged to one creditor, Pledge must be embodied in a public
cannot be pledged to another as long as the first instrument to affect third persons
pledge subsists (Mission de San Vicente v. Reyes,
G.R. No. 5508, August 14, 1911). The requisite in Art. 2096 that the pledge must be
in a public instrument does not affect its validity.
Requisites of a contract of pledge (1991, 1994, It is still valid between the parties, but it will not
1996, 1999, 2001 Bar) bind third person if the said provision is not
complied with.
1. Constituted to secure the fulfillment of a
principal obligation (NCC, Art. 2085); Requisites to bind third persons in a contract
2. Pledgor is the absolute owner of the thing of pledge
pledged; (NCC, Art. 2085);
1. A description of the thing pledged; and GR: Constructive or symbolic delivery of the thing
2. Statement of date when the pledge was is not sufficient to constitute pledge.
executed (NCC, Art. 2096).
XPN: If the pledge consists of goods stored in a
Effect if no public instrument is made warehouse for purposes, of showing the pledgee’s
control over the goods, the delivery to him of the
When the contarct of pledge is not recorded in a keys to the warehouse is sufficient delivery of
public instrument, it is void as against third possession (constructive or symbolic delivery).
person; the buyer of the thing pledged is a third
person within the meaning of this article. The type of delivery will depend upon the nature
and peculiar circumstances of each case
Q: Juniat, et al. executed a Chattel Mortgage (Yuliongsiu v. PNB, G.R. No. L-19227, February 17,
over several motorized sewing machines and 1968).
other equipment in favor of Union Bank to
secure its obligation but the loan remains Pledge of incorporeal rights
unpaid so the bank filed before the RTC the
issuance of writs of preliminary attachment Incorporeal rights evidenced by proper document
and replevin. Nonwoven, the possessor of the can be pledged. It is, however, required that the
mortgaged properties, contends that the actual instrument be delivered to the pledgee.
unnotarized Chattel Mortgage executed has no More, if the instrument is a negotiable document,
binding effect on it and it has a better title it must be endorsed (NCC, Art. 2095).
over the properties because these were
assigned/pledged by Juniat pursuant to their A pledge certificate by itself is not a negotiable
Agreement. Thereafter, Union Bank sold the instrument, and therefore even if delevired and
mortgaged properties. Both the Chattel endorsed to an assignee, he would have no right to
Mortgage in favor of Union Bank and the redeem the property, ubless the creditor-pledgee
Agreement in favor of Nonwoven were not consents.
notarized. Can Nonwoven claim that it has the
better right over the proceeds of the sale of the Q: Pablo owns a tractor which he left with his
subject properties? son Mike for safekeeping. Mike then offered
the said tractor to Calibo as security for the
A: NO. Nonwoven is not entitled to the proceeds of payment of his debt. When Pablo came back
the sale of the attached properties because it and learned that the tractor was in the custody
failed to show that it has a better title over the of Calibo, he demanded its return. Calibo,
same. Under Article 2096 of the Civil Code, a however, refused. Calibo alleged that the
pledge shall not take effect against third persons if tractor was pledged to him, and in the
a description of the thing pledged and the date of alternative, the tractor was left with him in the
the pledge do not appear in a public instrument. concept of deposit and he may validly hold on
Hence, just like the chattel mortgage executed in to it until Mike pays his obligation. Is Calibo
favor of Union Bank, the pledge executed by Juniat correct?
in favor of Nonwoven cannot bind Union Bank.
However, since the Chattel Mortgage in favor of A: NO. There is no valid pledge because Mike is
Union Bank was executed earlier, it has a better not the absolute owner of the property pledged.
right over the motorized sewing machines and He who is not the owner or proprietor of the
equipment under the doctrine of "first in time, property pledged or mortgaged to guarantee the
stronger in right" (prius tempore, potior jure). fulfillment of a principal obligation, cannot legally
(Union Bank of the Philippines v. Alain, G.R. No. constitute such a guaranty as may validly bind the
171569, August 1, 2011) (Del Castillo, J.). property in favor of his creditor, and the pledgee
or mortgagee in such a case acquires no right
Effect of undated instrument of pledge whatsoever in the property pledged or mortgaged.
There is likewise no valid deposit, in this case,
An undated instrument of pledge cannot ripen where the principal purpose for receiving the
into a valid pledge (Betita v. Ganzon, G.R. No. L- object is not safekeeping (Calibo Jr. v. CA, G.R. No.
24137, March 29, 1926). 120528, January 29, 2001).
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CIVIL LAW
Right of an owner of personal property made to sign an agreement that if she cannot
pledged without authority pay her debt within six months, Jane could
immediately appropriate the jewelry for
An owner of personal property pledged without herself. After six months, Donna failed to pay.
authority may invoke Art. 559 of the New Civil Jane then displayed the earrings and ring set
Code. The defense that pawnshop owner acquired in her jewelry shop located in a mall. A buyer,
ownership of the thing in good faith is not Juana, bought the jewelry set for P300,000.00.
available.
a. Was the agreement which Donna signed
Art. 559 reads: with Jane valid? Explain with legal basis.
b. Can Donna redeem the jewelry set from
“The possession of movable property acquired in Juana by paying the amount she owed Jane
good faith is equivalent to a title. Nevertheless, one to Juana? Explain with legal basis.
who has lost any movable or has been unlawfully c. Give an example of a pledge created by
deprived thereof, may recover it from the person in operation of law.
possession of the same.
A:
If the possessor of a movable lost or of which the a. NO. To appropriate the jewelry upon default
owner has been unlawfully deprived, has acquired it of Donna is considered Pactum commissorium
in good faith at a public sale, the owner cannot and it is considered void by law (NCC, Art.
obtain its return without reimbursing the price paid 2088).
therefore” b. NO, Donna cannot redeem it from Juana
because the pledge contract is between her
NOTE: A pledge or mortgage executed by one who and Jane. Juana is not a party to the pledge
is not the owner of the property pledged or contract (NCC, Art. 1311).
mortgaged is without legal existence and c. One example of a pledge created by operation
registration cannot validate it (Philippine National of law is the right of the depositary to retain
Bank v. Rocha G.R. No. L-32260, December 29, the thing deposited until the depositor shall
1930). have paid him whatever may be due to the
depositary by reason of the deposit. Another
When two or more things are pledged is the right of the agent to retain the thing
which is the object of the agency until the
When two or more things are pledged, the pledgee principal reimburses him the expenses
may choose which he will cause to be sold, unless incurred in the execution of the agency (NCC,
there is a stipulation to the contrary (NCC, first Art. 1914).
sentence, Art. 2119).
RIGHTS AND OBLIGATIONS OF PLEDGOR AND
The restriction on the right of the pledgee under PLEDGEE
the 1st sentence of Art. 2119 is that he may only
demand the sale of only as many of the things as Parties in a contract of pledge
are necessary for the payment of the debt (NCC,
second sentence, Art. 2119). 1. Pledgor – The debtor; the one who delivers
the thing pledged to the creditor; and
Prohibition on double pledge 2. Pledgee – The creditor; the one who
receives the thing pledged.
A property already pledged cannot be pledged
again while the first pledge is still subsisting Rights of a pledgee
(Mission de San Vicente v. Reyes, G.R. No. L-
5508, August 14, 1911). 1. To retain the thing until debt is paid (NCC,
Art. 2098);
NOTE: A property which has been lawfully pledge 2. To possess the thing (NCC, Art. 2098);
to a creditor cannot be pledge to another so long 3. To be reimbursed for the expenses made for
as the first one subsits, because the thing pledged the preservation of the thing pledged (NCC,
cannot be delivered to the second creditor since it Art. 2099);
will remain in the possession of the first creditor. 4. To apply fruits, interests, or earnings of the
pledge to the interest, if any then to the
Q: Donna pledged a set of diamond ring and principal of the credit [NCC, Art. 2102(2)];
earrings to Jane for P200,000.00 She was
9. To bid at public auction, unless he is only the 5. To advise pledgor of the result of the public
bidder (NCC, Art. 2113); auction (NCC, Art. 2116);
10. To collect and receive amount due on credit 6. Return the thing pledged upon payment of
pledged (NCC, Art. 2118); debt; and
11. To choose which of several things pledged 7. Advise pledgor of danger to the thing.
will be sold (NCC, Art. 2119);
12. To retain excess value in the public sale; When the thing pledged is expropriated by the
13. To retain thing until after full payment of the State
debt; and
14. To object the alienation of the thing. The debtor is no longer the owner of the thing in
case the same is expropriated by the State as
NOTE: The pledgee cannot deposit the thing ownership is transferred to the expropriating
pledged with a third person unless there is a authority.
stipulation authorizing him to do so. If deposit
with a third person is allowed, the pledgee is liable The price paid for the expropriated property shall
for the loss if he deposited the thing with a person be applied to the payment of the principal
who is manifestly careless or unfit. The pledgee is obligation, the interests and other expenses due to
also responsible for the acts of his agents or the pledgee. If there is any excess, the same shall
employees with respect to the thing pledged be delivered to the pledger.
(Rabuya, 2017).
NOTE: The pledgee is liable for the loss or Return of the pledge, when demandable
deterioration of the thing by reason of fraud,
negligence, delay, or violation of the terms of GR: A debtor cannot ask for the return of the thing
the contract. pledged against the will of the creditor (NCC, Art.
2105).
2. GR: The pledgee cannot deposit the thing
pledged to a third person. XPNs:
1. If the debtor has paid the debt and its
XPN: Unless there is stipulation to the interest, with expenses in a proper case (NCC,
contract (NCC, Art. 2100). Art. 2105); and
2. If there are reasonable grounds to fear the
NOTE: Pledgee is liable for the loss or destruction or impairment of the thing
deterioration of the thing pledged caused by pledged, without the fault of the pledgee, the
pledgor may demand the return of the thing,
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CIVIL LAW
upon offering another thing in pledge, pledgor or owner, in any of the following
provided the latter is of the same kind as the circumstances:
former and not of inferior quality, and
without prejudice to the right of the pledgee 1. If the thing is found in the possession of the
under the provisions of the following article. pledgor or owner after the pledge had been
perfected; or
The pledgee is bound to advise the pledgor, 2. If the thing is found in the possession of a
without delay, of any danger to the thing third person who received it from the
pledged (NCC, Art. 2107). pledgor or owner after the perfection of the
pledge [NCC, Art. 2110(2)].
NOTE: If the obligation is with a term, there can
be no demand of the property until after the term NOTE: It is presumed that the accessory
had arrived. The prescriptive period for the obligation of pledge has been remitted when the
recovery of the property begins from the time the thing pledged, after its delivery to the creditor, is
debt is extinguished by payment and demand for found in the possession of the debtor, or of a third
return of the property is made (Sarmiento v. person who owns the thing (NCC, Art. 1274).
Javellana, G.R. No. L-18500, October 2, 1922).
Renunciation of the pledge by the pledgee
When the pledgee may cause the sale of the
thing even if the obligation is not yet due The renunciation or abandonment of the pledge
by the pledgee requires a statement in writing to
If, without the fault of the pledgee, there is a that effect (NCC, first sentence, Art. 2111).
danger of destruction, impairment, or diminution
in value of the thing pledged, he may cause the An oral waiver is not sufficient. But if the pledgee
same to be sold at public auction. The proceeds of orally renounces the pledge, and returnd the thing
the auction shall be security for the principal pledged to the pledger, the pledge is thereby
obligation in the same manner as the thing extinguish not because of Article 2111, but
originally pledged (NCC, Art. 2108). because of Article 2110, first paragraph.
NOTE: The sale contemplated in this article is a NOTE: The renunciation of the pledge is not
“public sale” contrary to law, public order, public policy, morals
or good customs. Further, Art. 1356 of the NCC,
Rights of the creditor who is deceived on the which speaks of the form of contracts, must be
substance or quality of the thing pledged complied with.
Return of the thing pledged Even if the thing was not returned, as long as
there is an effective renunciation, abandonment or
The return of the thing pledged to the pledgor by waiver, the pledge is already extinguished even if
the pledgee shall extinguish the pledge. Any the thing is not returned. The pledgor will be
stipulation to the contrary shall be void (NCC, Art. considered as a depositor and the pledgee shall
2110). become a depositary of the thing. Accordingly, the
law on deposit will apply.
Presumption of return to the pledgor/owner
by the pledgee Q: Santos made time deposits with OBM. IRC,
through its president Santos, applied for a loan
There is a prima facie presumption that the thing with PNB. To secure the loan, Santos executed
pledged has been returned by the pledgee to the a Deed of Assignment of the time deposits in
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CIVIL LAW
If the debtor failed to pay on maturity date, the 1. It extinguishes the principal obligation;
thing pledged or mortgaged may be sold at public
auction as provided by law so that the proceeds NOTE: The extinction is automatic regardless
may be used for payment of the obligation. of whether or not the proceeds realized from
the public auction sale are more or less than
Options of an unpaid creditor the amounts of the principal obligation and
other incidental expenses.
1. Foreclose the thing pledged; or
2. Abandon the pledge and file a claim for 2. If the price of the sale is more than the
collection (NCC, Art. 2087). amount of the debt, the excess will go the
pledgee; and
Procedure for the public sale of a thing
pledged NOTE: This is to compensate him for the
eventuality where the purchase price is
1. The obligation must be due and unpaid; lesser than the amount of the debt, wherein
2. The sale of the thing pledged must be at he cannot retrieve any deficiency unless
public auction; there is a contrary agreement.
3. There must be notice to the pledgor and
owner, stating the amount for which the 3. If the price of the sale is less than the amount
sale is to be held; and of the debt, the pledgee is not entitled to
4. The sale must be conducted by Notary recover the deficiency in all cases even if there
Public (De Leon, 2013). is a stipulation to that effect (NCC, Art. 2115).
Who can bid in a public auction NOTE: By electing to sell the thing pledged
instead of suing on the principal obligation,
The following can bid in the public auction the creditor waives any other remedy and
must abide by the results of the sale.
1. The public;
2. Pledgor/owner/debtor – They shall be Effect when the thing pledged was not sold at
preferred if same terms as the highest bidder the first public auction
is offered; and
3. Pledgee/creditor – He must not be the only When the property was not sold at the first
bidder, otherwise, his bid is invalid and void. auction (such as when there are no participating
bidders), there will be another setting for the
Nature of the bids at the public auction second auction following the same formalities.
All bids at the public auction shall offer to pay the If no sale was effected in the second public
purchase price at once. If any other bid is auction, the pledge is allowed to appropriate the
accepted, the pledgee is deemed to have been thing pledged.
received the purchase price, as far as the pledgor
or owner is concerned (NCC, Art. 2114). NOTE: This is an exception to the prohibition
against Pactum commissorium.
The bids must be for CASH for the said bids “shall
offer to pay the purchase price at once”. Checks Deed of acquittance
cannot be accepted as payment for the purchase
price because they are not legal tenders. They A deed of acquittance is a document of the release
produce the effect of payment ONLY after they or discharge of the pledgor from the entire
have been encashed. obligation including interests and expenses. This
shall be executed by 1the pledgee after
Third person paying pledgor’s debt appropriating the thing in case a no sale was made
. in a second auction.
Any third person who has any right in or to the
thing pledged may satisfy the principal obligation Application of the proceeds of the sale
as soon as the latter becomes due and demandable
(NCC, Art. 2117). The pledgee may collect and receive the amount
due when what has been pledged is a “credit.” He
Effect of sale of the thing pledged shall apply the same to the payment of his claim,
3. It is indivisible;
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CIVIL LAW
4. It is inseparable; Requisites for a valid constitution of a real
mortgage (1991, 1994, 1996, 1999, 2001 Bar)
NOTE: The mortgage adheres to the property,
regardless of who its owner may The following requisites are essential to the
subsequently be (McCullough v. Veloso, 46Phil. contract of mortgage:
1).
1. That they be constituted to secure the
5. It is real property; fulfillment of a principal olbligation;
6. It is subsidiary;
2. That the pledger or mortgagor be the absolute
NOTE: Once the obligation has been paid or owner of the thing pledge;
satisfied, the property must be released from
the encumbrance imposed.The mortagage is 3. That the person constituting the mortgage have
answerable only if the principal obligation is the free disposal of their property, and in the
not paid. absence thereof, that they be legally authorized
for the purpose;
7. It is a limitation on ownership;
8. It can secure all kinds of obligations; 4. It must appear in a public instrument (NCC, Art.
9. The property cannot be appropriated; and 2125); and
10. The mortgage is a lien.
5. Recording in the Registry of Property is
Laws that govern contract of real mortgage necessary to bind third persons.
There is no There is
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CIVIL LAW
Prohibition against encumbrance of mortgagee in good faith is nonetheless entitled to
mortgaged land, without mortgagors’ consent protection” (De Leon, 2013).
In this case, rights over the property, which came The doctrine does not apply to a situation where
into existence after the execution of the deed, the title is still in the name of the rightful owner
cannot be annotated as an adverse claim on the and the mortgagor is a different person
title of the land over the mortgagee’s opposition pretending to be the owner. In such a case, the
(Rivera v. Peña, G.R. No. L-11781, March 24, 1961). mortgagee is not an innocent mortgagee for value
and the registered owner will generally not lose
Subsequent registration of an adverse claim his title (Ereña vs. Querrer-Kauffman, G.R. No.
16585, June 22, 2006).
A prior registration of a lien creates a preference.
Hence, the subsequent annotation of an adverse Alienation or assignment of mortgage credit
claim cannot defeat the rights of the mortgagee or
the purchase at the auction sale whose rights are The mortgage credit may be alienated or assigned
derived from a prior mortgage validly registered. to a third person, in whole or in part, with the
formalities required by law (NCC, Art. 2128).
Extent of Mortgage
NOTE: Even if the alienation is not registered, it
GR: Mortgage extends to the following: would still be valid as between the parties (Lopez
v. Alvarez, GR No. L-3438, October 12, 1907).
1. Natural accessions;
2. Improvements; Stipulations on mortgage contract
3. Growing fruits;
4. Rents or income not yet received when the 1. Including after-acquired properties
obligation becomes due; and
5. Amount of indemnity granted or owing to the Status: Valid
proprietor from: Purpose: To maintain, to the extent of the
allowed by the circumstances, the original
a. Insurance proceeds; or value of the property given as a security.
b. Expropriation price (NCC, Art. 2127). Such stipulation is common where the
properties given as collateral are perishable
Reason: Ownership of such accessions and or subject of inevitable wear and tear.
accessories and improvements subsequently
introduced also belongs to the mortgagor who is 2. Blanket or Dragnet Clause
the owner of the principal (Castro, Jr. v. Court of
Appeals, G.R. No. 97401, December 6, 1995). Status: Valid
567
CIVIL LAW
The sale of the property does not affect the 2.
Institute a real action to foreclose on the
right of the registered mortgagee to foreclose mortgaged property.
on the same even if the ownership has been NOTE: The remedies are alternative, not
transferred to another. cumulative.
A stipulation stating that on the occasion of 1. Judicial – Governed by Rule 68, Rules of Court;
the mortgagor’s default, the whole sum 2. Extrajudicial – The mortgagee is given a SPA
remaining unpaid automatically becomes due to sell the mortgaged property (Act No. 3135).
and payable.
Judicial foreclosure v. Extrajudicial foreclosure
7. Stipulation of Upset Price or TIPO (1999 Bar)
The creditor may claim from the third person in Order of the Foreclosure does
possession of the mortgaged property, the court cuts off not cut off the
payment of the part of the credit secured by the Cutting off
all rights of the rights of all
property which the third party possesses, in terms of rights
parties parties involved
and with the formalities which the law establishes impleaded
(NCC, Art. 2129). GR: No right of
redemption
FORECLOSURE OF REAL ESTATE MORTGAGE XPN: If
Right of mortgagee is a There is right of
Causes of Action of Mortgage-Creditor Redemption bank, quasi- redemption
bank, or trust
Mortgage-creditor has a single cause of action entity
against the mortgage-debtor, which is to recover
the debt, but he has the option to either:
Equity of There is equity No equity of
1. File a personal action for collection of Redemption of redemption redemption
sum of money; or
569
CIVIL LAW
lien. Being so, the judgment rendered therein may XPN: When the mortgage was executed by a third
be enforced by a writ of execution. The action may person to secure the obligation of a debtor, such
be prosecuted by the interested person against third person not having assumed personal liability
the executor or administrator independently of for the payment of the debt, the extent of recovery
the testate or intestate proceedings of the in the judgment foreclosure shall be limited to the
settlement of the mortgagor’s estate “for the purchase price at the foreclosure sale. The remedy
reason that such claims cannot in any just sense of the mortgagee in such case is to proceed against
be considered claims against the estate, but the the debtor in an ordinary action for sum of money
right to subject specific property to the claim to recover the balance of debt due (Rabuya, 2017).
arises from the contract of the debtor whereby he
has during life set aside certain property for its EXTRAJUDICIAL FORECLOSURE
payment, and such property does not, except in so
far as its value may exceed the debt, belong to the An extrajudicial foreclosure may only be effected
estate” (Testamentaria de Don Amadeo Matute if in the mortgage contract covering a real estate, a
Olave v. Canlas, G.R. No. L-12709, February 28, clause is incorporated therein giving the
1962). mortgagee the power, upon default of the debtor,
to foreclose the mortgage by an extrajudicial sale
Remedies of the mortgagee in case of death of of the mortgage property (Act No. 3135, Sec. 1, as
the debtor amended by Act No. 4148).
No sale can be legally made outside the NOTE: Unless the parties stipulate, personal
province in which the property sold is notice to the mortgagor in extrajudicial
situated, such sale shall be made in said place proceedings is not necessary because Sec. 3 of Act
or in the municipal building of the No. 3135 only requires the posting of notice of the
municipality in which the property or part sale in three public places and the publication of
thereof is situated (Act No. 3135, Sec. 2). that notice in a newspaper of general circulation
(Ramirez v. The Manila Banking Corp., G.R. No.
5. The clerk of court shall issue a certificate of 198800, December 11, 2013).
payment indicating the amount of
indebtedness, the filing fees collected, the Requisites for a newspaper to be deemed of
mortgages sought to be foreclosed, the general circulation
description of the real estates and their
respective locations; a. It must be published for the
6. The certificate of sale must be approved by the dissemination of local news and general
Executive Judge; and information;
7. After the redemption has expired, the clerk of b. It must have a bona fide subscription list
court shall archive the records. of paying subscribers;
c. It must be published at regular intervals;
NOTE: The law covers only real estate b. It must be available to the public in
mortgages. It is intended merely to regulate general and not just to a select few chosen
the extrajudicial sale of the property by the publisher, otherwise, the precise
mortgaged if and when the mortgagee is given objective of publication of notice of sale
a special power or express authority to do so will not be realized; and
in the deed itself or in a document annexed c. It must not be devoted to the interests or
thereto (Luna v. Encarnacion, G.R. No. L-4637, published for the entertainment of a
June 30, 1952; Ponce de Leon v. Rehabilitation particular profession, trade, calling, race
Finance Corp., G.R. No. L-24571, December 18, or religion.
1970).
Q: MBTC granted a loan to spouses Peñafiel,
The authority to sell, is not extinguished by who mortgaged their two parcels of land in
the death of either mortgagor or mortgagee. It Mandaluyong. The spouses defaulted in the
is an essential and insparable part of a payment. MBTC instituted an extrajudicial
foreclosure proceeding under Act No. 3135.
571
CIVIL LAW
The Notice of Sale was published in Maharlika enjoin the implementation of a writ of possession.
Pilipinas, which has no business permit in Once the writ of possession has been issued, the
Mandaluyong and its list of subscribers shows trial court has no alternative but to enforce the
that there were no subscribers from writ without delay (Sps. Ong v. CA, G.R. No. 121494,
Mandaluyong. Did MBTC comply with the June 8, 2000).
publication requirement under Section 3, Act
No. 3135? Effect of inadequacy of price in foreclosure
sale
A: NO. Maharlika Pilipinas is not a newspaper of
general circulation in Mandaluyong where the GR: When there is a right to redeem, inadequacy
property is located. To be a newspaper of general of price is immaterial because the judgment
circulation, it is enough that it is published for the debtor may reacquire the property easier at a low
dissemination of local news and general price or sell his right to redeem (PNB v. CA, G.R.
information, that it has a bona fide subscription No. 121739, June 14, 1999).
list of paying subscribers, and that it is published
at regular intervals. The newspaper must be XPN: When the price is so inadequate as to shock
available to the public in general, and not just to a the conscience of the court taking into
select few chosen by the publisher. Otherwise, the consideration the peculiarly circumstances
precise objective of publishing the notice of sale in attendant thereto (United Coconut Planters Bank v.
the newspaper will not be realized (Metropolitan CA, G.R. No. 155912, August 17, 2007).
Bank and Trust Company, Inc. v. Eugenio Peñafiel,
G.R. No. 173976, February 27, 2009). RECOVERY OF DEFICIENCY
GR: A certificate of posting is not required, much The mortgagee is specifically given the right to
less considered indispensable for the validity of a claim for the deficiency (Rules of Court, Sec. 6, Rule
foreclosure sale under Act No. 3135. 68).
Burden of proving non-compliance with the While Act No. 3135 governing extrajudicial
publication and posting requirements foreclosures of mortgage does not give a
mortgagee the right to recover deficiency after the
Foreclosure proceedings have in their favor the public auction sale, neither does it expressly or
presumption of regularity (Union Bank of the impliedly prohibit such recovery.
Philippines v. CA, G.R. No. 164910, September 30,
2005). NOTE: In both judicial and extrajudicial
foreclosure, when a third person is the mortgagor,
Enjoining the implementation of writ he is not liable for any deficiency in the absence of
possession a contrary stipulation.
As a rule, any question regarding the validity of Action for recovery of deficiency
the mortgage or its foreclosure cannot be a legal
ground for refusing the issuance of a writ of If the deficiency is embodied in a judgment, it is
possession. Regardless of whether or not there is a referred to as deficiency judgment.
pending suit for annulment of the mortgage or the
foreclosure itself, the purchaser is entitled to a NOTE: The action prescribes ten (10) years from
writ of possession, without prejudice to the the time the right of action accrues (NCC, Art.
outcome of the case. Hence, an injunction to 1142(2)).
prohibit the issuance of writ of possession is
entirely out of place. Prohibition does not lie to REDEMPTION OF MORTGAGE
573
CIVIL LAW
1. Must be made within twelve (12) months foreclosure with the applicable Register of
from the time of the registration of the sale in Deeds.
the Office of the Registry of Property;
2. Payment of the purchase price of the property For purposes of reckoning the one-year
plus 1% interest per month together with the redemption period in case of individual
taxes thereon, if any, paid by the purchaser mortgagors, or the three-month
with the same rate of interest computed from reckoning period for juridical
the date of registration of the sale; persons/mortgagors the same shall be
3. Written notice of the redemption must be reckoned from the date of confirmation of
served on the officer who made the sale and a the auction sale which is the date when
duplicate filed with the proper Register of the certificate of title is issued (BIR RMC
Deeds (Rosales v. Yboa, G.R. No. L-42282, No. 15-2008, August 15, 2008).
February 28, 1983); and
4. Tender of payment within the prescribed 2. Judicial – within the period of 90-120 days
period to make the redemption for future from the date of the service of the order of
enforcement (Sec. 26, Act No. 3135; Sec. 8, Rule foreclosure or even thereafter but before the
39, Rules of Court). order of the confirmation of the sale (Rules of
Court, Secs. 2 &3, Rule 28)
NOTE: The filing of a court action to enforce
redemption, being equivalent to a formal offer to NOTE: Allowing redemption after the lapse
redeem, would have the effect of “freezing” the of the statutory period, when the buyer at the
expiration of the one-year period (Heirs of foreclosure sale does not object but even
Quisumbing v. PNB, G.R. No. 178242, January 20, consents to the redemption, will uphold the
2009). policy of the law which is to aid rather than
defeat the right of redemption (Ramirez v. CA,
Summary of Redemption Period G.R. No. 98147, March 5, 1993)
2. When mortgagee is a bank (General Banking A writ of possession is an order whereby a sheriff
Law, 2000): is commanded to place in possession of real or
a. Amount fixed by the court or amount due personal property, the person entitled thereto
under the mortgage deed; such as when the property is extrajudicially
b. Interest; foreclosed.
c. Cost and expenses.
NOTE: The right of the applicant or subsequent
Redemption price in this case is reduced by the purchased for the issuance of a writ of possession
income received from the property. never prescribes (Ching v. Family Savings Bank,
G.R. No. 167835, November 15, 2010).
Rentals received by the Purchaser
1. Before expiration of redemption period –
The purchaser or redemptioner shall not be possession can be availed of as long as an ex
entitled to receive the rents, earnings and income parte motion under oath is filed and a bond in
of the property sold on execution or the value of accordance with Sec. 7 of Act No. 3135 is
the use and occupation thereof while the property posted (Philippine Bank of Communications v.
is in the possession of the tenant. It shall belong to Yeung, G.R. No. 179691, December 4, 2013).
the judgment obligor until the expiration of the 2. After lapse of redemption period – purchaser
period of redemption. is not obliged to bring a separate suit for
possession. He must invoke the aid of the
Rights of persons with subordinate interest courts and ask a writ of possession (Javelosa v.
CA, G.R. No. 124292, December 10, 1996).
1. Mortgagor’s equity of redemption before
foreclosure – a second mortgagee acquires No bond is required of the purchaser after
only the equity of redemption vested in the the redemption period if the property is not
mortgagor and his rights are strictly redeemed.
subordinate to the superior lien of the first
mortgagee (Sun Life Assurance Co. of Canada v. Suspension of the implementation of the writ
Diez, G.R. No. L-29027, October 25, 1928); of possession is not allowed after the
2. Mortgagor’s right of redemption after redemption period.
foreclosure – his remedy is limited to the right
to redeem by paying off the debt secured by NOTE: After consolidation of title in the
the first mortgage (Tizon v. Valdez and purchaser’s name for failure of the mortgagor
Morales, G.R. No. L-24797, March 16, 1926); to redeem the property, the purchaser’s right
3. The second mortgagee is entitled, under the to possession ripens into absolute right of a
mortgage constituted in his favor to the confirmed owner
payment of his credit the excess of the
proceeds of the auction sale, after covering When writ of possession not available:
the mortgagor’s obligations to the first
mortgagee; 1. Where mortgaged property under lease
4. To be made defendant in an action for previously registered in the Registry of
foreclosure of the mortgage; and, Property or despite non-registration, the
mortgagee has prior knowledge of the
NOTE: The effect of the failure of the existence and duration of the lease (Ibasco v.
mortgagee to implead a subordinate lien- Caguioa, G.R. No. L62619, August 19, 1986);
holder or subsequent purchase or both is to 2. Where the mortgagor refuses to surrender
render the foreclosure ineffective against property sold. The remedy is to file an
them. ordinary action for the recovery of possession
in order that the mortgagor may be given
5. To question the legality of the foreclosure opportunity to be heard; and
proceedings or the effect of the alleged lack of 3. When third party is in actual possession
notice to them of such foreclosure (G. Puyat & adverse to the judgment debtor (Rules of
Sons v. PNC, G.R. No. L-16843, April 30, 1962). Court, Sec. 36, Rule 39; Act No. 3135, Sec. 6).
575
CIVIL LAW
Period of redemption is not a prescriptive period of redemption. The purchaser at the
period foreclosure sale merely acquires an inchoate right
to the property which could ripen into ownership
The period of redemption is not a prescriptive only upon the lapse of the redemption period
period but a condition precedent provided by law without his credit having been discharged, it is
to restrict the right of the person exercising illogical to hold that during that same period of
redemption. twelve months the mortgagor was "divested" of
his ownership, since the absurd result would be
If a person exercising the right of redemption has that the land will consequently be without an
offered to redeem the property within the period owner although it remains registered in the name
fixed, he is considered to have complied with the of the mortgagor. Such mortgage does not involve
condition precedent prescribed by law and may a transfer, cession or conveyance of the property
thereafter bring an action to enforce redemption. but only constitutes a lien thereon (Medida v. CA,
G.R. No. 98334, May 8, 1992).
If, on the other hand, the period is allowed to lapse
before the right of redemption is exercised, then Q: DBP guaranteed LCD’s loan. When LCD
the action to enforce redemption will not prosper, defaulted, DBP paid it and sought
even if the action is brought within the ordinary reimbursement. LCD failed to reimburse DBP,
prescriptive period. hence DBP extrajudicially foreclosed the REM,
where it was the highest bidder. The Sheriff’s
Effect of Failure to Redeem certificate of sale was annotated in the
certificate of titles on April 30, 1976. La
Act No. 3135 provides that if the mortgagor or Campana failed to redeem the properties. The
successors-in-interest fail to redeem within the court, among others, ordered LCD to pay such
redemption period, the title over the property sums of money unlawfully collected or
consolidates in the purchaser. received by way of rentals and/or fruits from
the subject properties to DBP. When should
The consolidation confirms the purchaser as the the period for the remittance of
owner entitled to the possession of the property. collected/received rentals/fruits from the
The mortgagor, by failing to redeem loses all properties, of LCD to DBP start?
interest in the property (United Coconut Planters
Bank v. Lumbo, GR. No. 162757, December 11, A: In foreclosure proceedings, the buyer becomes
2013). the absolute owner of the property purchased if it
is not redeemed during the prescribed period of
Q: D obtained a loan from C secured by a REM redemption, which is one year from the date of
over a parcel of land. When D defaulted, C registration of the sale. The Sheriff’s certificate of
extrajudicially foreclosed the property. C was sale was annotated in the certificate of titles on
declared the highest bidder in the auction. On April 30, 1976. DBP became the absolute owner of
October 29, 1993, C caused the registration of the properties on May 1, 1977. Thus, the period to
the certificate of sale. On November 9, 1994 D be considered in determining the amount of
filed a complaint for annulment of the collection should start from May 1, 1997 up to the
extrajudicial foreclosure and auction sale. Can time when the possession of the properties are
D redeem the property beyond the one year actually and completely surrendered to DBP (La
redemption period? Campana Development Corporation v. DBP, G.R. No.
146157, February 13, 2009).
A: NO. D lost any right or interest over the subject
property primarily because of his failure to Options in case of death of debtor
redeem the same in the manner and within the
period prescribed by law. His belated attempt to A secured creditor holding a real estate mortgage
question the legality and validity of the has three distinct, independent, and mutually
foreclosure proceedings and public auction must exclusive remedies that can be alternatively
accordingly fail (Sps. Landrito v. CA, G.R. No. pursuer in case the mortgagor dies:
133079, August 9, 2005).
1. To waive the mortgage and claim the entire
A mortgagor, whose property has been debt from the estate of the mortgagor as an
extrajudicially foreclosed and sold, can validly ordinary claim;
execute a mortgage contract over the same 2. To foreclose the mortgage judicially and prove
property in favor of a third party during the any deficiency as an ordinary claim; and
Antichresis is a contract whereby the creditor 2. Delivery of the immovable is necessary for the
acquires the right to receive the fruits of an creditor to receive the fruits and not that the
immovable of the debtor, with the obligation to contract shall be binding;
apply them to the payment of interest, if owing, 3. Amount of principal and interest must be
and thereafter to the principal of his credit (NCC, specified in writing (NCC, Art. 2134); (1995,
Art. 2132). (1995, 1996, 2007 BAR) 2007 BAR)
4. Express agreement that debtor will give
Characteristics of antichresis possession to the creditor and that the
creditor will apply the fruits to the interest
1. Accessory contract; and then to the principal (NCC, Art. 2134).
2. Formal contract – the amount of the principal NOTE: The fruits of the immovable which is
and of the interest must both be in writing the object of the antichresis must be
(NCC, Art. 2134); appraised at their actual market value at the
time of the application (NCC, Art. 2138). The
NOTE: Delivery of possession of the property delivered stands as a security for the
immovable is not essential to the perfection of payment of the obligation of the debtor in
the contract of antichresis so that this antichresis. Hence, the debtor cannot demand
contract is classified as consensual contract. its return until the debt is totally paid.
Nevertheless, the creditor takes and retains
possession of the property until payment of Q: The spouses Adolfo were the original
debt (Rabuya, 2017). registered owners of a lot. This property was
mortgaged to the then Rehabilitation Finance
3. It deals only with immovable property; Corporation (now Development Bank of the
4. It is a real right; Philippines or DBP) and upon default in the
5. The creditor has the right to receive the fruits payment of the loan obligation, was foreclosed
of the immovable; and ownership was consolidated in DBP's
6. It can guarantee all kinds of valid obligations name Serafin Adolfo, Sr., however,
(NCC, Arts. 2091 & 2139);and repurchased the same on December 1, 1971, a
7. Indivisible in nature (NCC, Art. 2090). year after his wife died in 1970. Sometime in
1975, Adolfo allegedly mortgaged the subject
NOTE: It is not essential that the loan should earn property for the sum of P12,500.00 to Aniceto
interest in order that it can be guaranteed with a Bangis who immediately took possession of
contract of antichresis. Antichresis is susceptible the land. The said transaction was, however,
of guaranteeing all kinds of obligations, pure or not reduced into writing. When Adolfo died,
his heirs executed a Deed of Extrajudicial
577
CIVIL LAW
Partition covering the subject property. The property; does creates real
Heirs of Adolfo expressed their intention to not produce a right against
redeem the mortgaged property from Bangis real right unless the property.
but the latter refused, claiming that the registered in the
transaction between him and Adolfo was one Registry
of sale. The RTC and CA ruled that the contract Property.
between the plaintiffs and defendants as a
mere mortgage or antichresis and since the Creditor obliged Creditor has no
defendants have been in the possession of the to pay the taxes such obligation.
property in 1975 up to the present time Obligation and charges
enjoying all its fruits or income. Was the to pay upon the estate
transaction one of sale, or a mortgage or taxes unless stipulated
antichresis? otherwise.
NOTE: In this case, the Rules of Court on the Remedy of the creditor in case of nonpayment
rules on foreclosure of mortgages shall apply of his credit
4. Preference to the proceeds of the sale of the Creditor does not acquire ownership of the real
thing; and estate since what was transferred is not the
5. To be reimbursed for his expense for ownership but merely the right to receive fruits
machinery and other improvements on the (NCC, Art. 2132).
land, and for the sums paid as land taxes.
1. File an action for specific performance; or
Obligations of an antichretic creditor 2. File a petition for the public sale of the
property (Barretto v. Barretto, G.R. No. 11933,
1. Pay the taxes and charges assessable against December 1, 1917).
the property like real estate taxes and others
(NCC, Art. 2136), unless there is stipulation to NOTE: Parties may agree on an extrajudicial
the contrary; foreclosure in the same manner as they are
allowed in contracts of mortgage and pledge
NOTE: The creditor has to pay the taxes even (Tavera v. El Hogar Filipino, Inc., G.R. No. L-45963,
if the fruits be insufficient. If he does not pay October 12, 1939).
taxes, he is, by law, required to pay indemnity
for damages to the debtor (Pando v. Gimenez, A stipulation authorizing the antichretic creditor
G.R. No. 31816, February 15, 1930). Creditor to appropriate the property upon non-payment of
may avoid such obligation by compelling the the debt within the period agreed upon is void
debtor to reacquire enjoyment of the (NCC, Art. 2088).
property, unless there is a stipulation to the
contrary [NCC, Art. 2136(2)]. Availability of acquisitive prescription to the
antichretic creditor
2. Bear the necessary expenses for the
preservation and repair of the property; The creditor in an antichresis and his successors-
3. Apply the fruits received for payment of the in-interest cannot ordinarily acquire by
outstanding interests, if any, and thereafter of prescription (Valencia v. Valencia, 42 Phil. 177,
the principal (NCC, Art. 2132); 1921). Possession of the property is not in the
579
CIVIL LAW
concept of an owner but that of a mere holder Right of purchaser at the auction sale over the
during the existence of the contract (Ramirez v. foreclosed property
CA, G.R. No. L-38185, September 24, 1986).
The purchaser at the auction sale concerned
REDEMPTION UNDER SEC. 47 OF R.A. NO. 8791 whether in a judicial or extrajudicial foreclosure
or THE GENERAL BANKING ACT OF 2000 shall have the right to enter upon and take
possession of such property immediately after the
When applicable date of the confirmation of the auction sale and
administer the same in accordance with law.
In the event of foreclosure, judicial or
extrajudicial, of any mortgage on real estate which Loan distinguished from credit, discount, rent,
is security for any loan or other credit barter and deposit
accommodation granted .
CREDIT LOAN
NOTE: Any petition in court to enjoin or restrain Ability to borrow money Delivery by one party
the conduct of the foreclosure proceedings by virtue of the and the receipt by the
instituted pursuant to Sec. 47 of the General confidence reposed by other party of a given
Banking Act shall be given due course only upon the lender unto him that sum of money, upon an
the filing by petitioner of a bond in the amount he will pay what he has agreement, expressed
fixed by the court conditioned that he will pay all promised. or implied, to repay the
damages which the bank may suffer by the sum loaned, with or
enjoining or the restraint of the foreclosure The concession of without interest.
proceeding. “credit” necessarily
involves the granting of
Who may exercise the right of redemption “loans” up to the time
limit of the amount fixed
The mortgagor or debtor whose real property has in the “credit”(People v.
been sold for the full or partial payment of his Concepcion, G.R. No. L-
obligation. 18535, August 15, 1922).
DISCOUNT LOAN
When redemption is made Interest is deducted in Interest is taken at the
advance. expiration of a credit.
It must be made within one year after the sale of Always on double-name Generally on a single-
the real estate. paper. name paper.
RENT LOAN
NOTE: Notwithstanding Act 3135, juridical The owner of property The thing loaned
persons whose property is being sold pursuant to does not lose the becomes the property
an extrajudicial foreclosure, shall have the right to ownership; he loses his of the obligor.
redeem the property in accordance with Sec. 47 of control over the
the General Banking Act until, but not after, the property rented during
registration of the certificate of foreclosure sale the period of contract.
with the applicable Register of Deeds which in no
case shall be more than three months after Landlord-tenant Obligor-obligee
foreclosure, whichever is earlier. Owners of relationship. relationship.
property that has been sold in a foreclosure sale BARTER LOAN
prior to the effectivity of the General Banking Act
Subject matter are non- Subject matter is
shall retain their redemption rights until their fungible things. money or other
expiration. fungible things.
Always onerous. May be gratuitous or
How redemption is made
onerous.
By paying the amount due under the mortgage
There is a mutual sale In mutuum, there is
deed, with interest thereon at rate specified in the
resulting in the transfer transfer of ownership,
mortgage, and all the costs and expenses incurred
of ownership on both there is no sale.
by the bank or institution from the sale and
sides.
custody of said property less the income derived
therefrom.
The parties do not In commodatum, the
return the things subject bailee returns the
581
CIVIL LAW
2. As to Lease of the thing subject of 1. Bailor/Comodatario/Commodans – The
commodatum giver/ lender – the party who delivers the
possession or custody of the thing bailed;
GR: The bailee can neither lend nor lease the and
object of the contract to a third person. 2. Bailee/Comodante/Commodatarius – The
recipient/ borrower; the party who
XPN: Members of the bailee’s household may receives the possession or custody of the
make use of the thing loaned because thing thus delivered.
members of the bailee’s household are not
considered as third persons. Liability when there are two or more bailees
NOTE: Household members are those When there are two or more bailees to whom a
permanently living or residing within the thing is loaned in the same contract, they are
same residence including the household liable solidarily (NCC, Art. 1945). Their liability is
helpers. solidary in order to protect the bailor’s rights over
the thing loaned. The law presumes that the bailor
XPN to the XPN: Contrary stipulation; or takes into account the personal integrity and
when the nature of the thing forbids such use. responsibility of all the bailees, therefore, he could
not have constituted commodatum if there was
3. As to right of retention only one bailee.
GR: The bailee cannot exercise the right of Q: Following the principle of autonomy of
retention against the bailor. contracts, may the parties to a contract of
commodatum validly stipulate that the liability
XPN: However, he can exercise the right of of the bailees shall be joint?
retention on the account of damages suffered
by the bailee because of flaws that the bailor A: NO. Article 1245 of the New Civil Code
knew of but did not disclose to the bailee. expressly provides that in a contract of
commodatum, when there are two or more bailees
Use of fruits of the property by the bailee to whom a thing is loaned in the same contract,
they are liable solidarily. It constitutes as an
The bailee in commodatum acquires only the use exception to the general rule of “joint obligations”
of the thing loaned but not its fruits (NCC, Art. where there are two or more debtors, who concur
1935) (Bar). in one and same obligation under Articles 1207
and 1208. Solidarity is provided to safeguard
A stipulation that the bailee may make use of the effectively the rights of the bailor over the thing
fruits of the thing loaned is valid. It is understood loaned.
that the enjoyment of the fruits must only be
incidental to the use of the thing. It should not be Art. 1936. Consumable goods may be the
the main cause; otherwise, the contract is not a subject of commodatum if the purpose of the
commodatum but a usufruct (NCC, Art. 1940) contract is not the consumption of the object,
(Bar). as when it is merely for exhibition.
The stipulation that the bailee may make use of Subject matter of commodatum
the fruits of the thing loaned will not impair the
essence of commodatum because the actual cause GR: Under Art. 1933 of the New Civil Code, the
or consideration therefore is still the liberality of subject matter of commodatum must be non-
the bailor or lender. consumable because the thing must be returned.
Both movable and immovable property may be GR: the bailee is not entitled to the use or
the object of commodatum (NCC, Art. 1937). enjoyment of the fruits of the thing loaned. The
fruits belong to the owner.
Example of commodatum involving land
XPN: If there is a stipulation to that effect, the
A borrowed B’s land so that he can erect thereon a bailee may make use of the fruits of the thing.
small barong-barong to be used for the time that A
works in B’s province. If there is no rental this is a OBLIGATIONS OF THE BAILOR
case of commodatum, but if rental is paid, this
would be a lease (Paras, 2008). 1. To allow the bailee the use of the thing
loaned for the duration of the period
NOTE: In Producers Bank of the Philippines v CA, stipulated or until the accomplishment of the
the loan involving money was classified as purpose (NCC, Art. 1946);
commodatum instead of mutuum because the 2. To refund the extraordinary expenses the
lender agreed to deposit his money in the savings bailee incurred for the preservation of the
account of the borrower especially for the purpose thing;
of making it appear that the latter had sufficient
capitalization for incorporation, with the promise GR: The bailee must bring to the knowledge
that the amount shall not be removed and shall be of the bailor such expenses before incurring
returned within a specific period (Rabuya, 2017). the same.
Contracts must be interpreted by their XPN: In case there is urgency and delay
constitutive elements as defined and denominated would cause imminent danger.
by the law and not by the name given by the
parties (Mina v. Pascual G.R. No. L-8321, October If the extraordinary expenses arise on the
14, 1913). occasion of the actual use of the thing loaned
by the bailee, the expenses shall be borne by
Art. 1938. The bailor in commodatum need not the bailor and bailee equally, even though the
be the owner of the thing loaned. bailee is without fault (NCC, Art. 1949).
Art. 1939. Commodatum is purely personal in 3. To be liable for damages for known hidden
character. Consequently: defects (NCC, Art 1951); and
4. Cannot exempt himself from payment of
(1) The death of either the bailor or the expenses or damages by abandonment of the
bailee extinguishes the contract; thing to bailee (NCC, Art. 1952).
(2) The bailee can neither lend nor lease the Liability of the bailor for hidden defects
object of the contract to a third person.
However, the members of the bailee's Requisites:
household may make use of the thing loaned,
unless there is a stipulation to the contrary, or 1. There was a flaw or defect in the thing
unless the nature of the thing forbids such use. loaned;
2. The flaw or defect is hidden;
3. The bailor is aware thereof;
GR: Being personal to the borrower or bailee, the 4. He does not advise the bailee of the same;
use of the object cannot be ceded to a third and
person. 5. The bailee suffers damages by reason of said
flaw or defect (NCC, Art. 1951).
XPN: Members of the household of the bailee
subject to the following conditions: NOTE: If the bailor is not aware of such flaws,
then he is not liable. If the defect is known to the
1. There is no agreement or stipulation to bailee or the same is patent and obvious, the
the contrary, and bailor is not liable (Rabuya, 2017).
2. The nature of the object forbids such use
583
CIVIL LAW
The obligation of the gratuitous lender goes no GR: The return of the thing loaned may be
further than this, and he cannot be made liable for demanded by the bailor only (1) after the
not communicating anything which he did not expiration of the period stipulated or (2) after the
know, whether he ought to have known it or not. accomplishment of the use for which it is
constituted.
Cause of action against bailor who did not
disclose flaw or defect XPNs:
The cause of action against the bailor who did not 1. In case of urgent need by the bailor;
disclose the flaw or defect is action for recovery of 2. In case of precarium – the bailor may demand
damages on the ground of quasi-delict because of the thing at will, and the contractual relation
negligence or bad faith. is called a precarium, in the following cases:
(1) If neither the duration of the contract nor
Q: Before he left for Riyadh to work, Pedro left the use to which the thing loaned should be
his Adventure van to Tito, with the devoted, has been stipulated; or (2) If the use
understanding that the latter could use it for of the thing is merely tolerated by the owner
one year for his own use while Pedro works in (NCC, Art. 1947); and
Riyadh. He did not tell Tito that the brakes of 3. If the bailee commits an act of ingratitude
the van were faulty. Tito had the van tuned up specified in Article 765 to the bailor (NCC,
and the brakes repaired spending a total Art. 1948), to wit:
amount of P15,000.00. Tito later discovered a. If the bailee should commit some offenses
that the van consumed too much fuel. To make against the person, honor or the property of
up for the expenses, he leased it to Annabelle. the bailor, or his wife or children under his
Two months later, Pedro returned to the parental authority;
Philippines and asked Tito to return the van. b. If the bailee imputes to the bailor any
Unfortunately, while being driven by Tito, the criminal offense, or any act involving moral
van was accidentally damaged by a cargo truck turpitude, even though he should prove it,
without his fault. unless the crime or the act has been
committed against the bailee, his wife or
Who shall bear the P15,000.00 spent for the children under his authority; or
repair of the van? (Bar 2005) c. If the bailee unduly refuses the bailor
support when the bailee is legally or morally
A: Tito must bear the P15,000.00 expenses for the bound to give support to the bailor.
van. Generally, extraordinary expenses for the
preservation of the thing loaned are paid by the NOTE: The rationale for the application of
bailor, he being the owner of the thing loaned. In Art. 765 of the New Civil Code which
this case however, Tito should bear the expenses refers to donations is the fact that
because he incurred the expenses without first commodatum, like donation, is gratuitous
informing Pedro about it. Neither was the repair in nature. The bailee who commits any of
shown to be urgent. Under Art. 1949, bailor the acts of ingratitude makes himself
generally bears the extraordinary expenses for the unworthy of the trust reposed upon him
preservation of the thing and should refund the by the bailor.
said expenses if made by the bailee, provided, the
bailee brings the same to the attention of the Q: If the contract of commodatum is a
bailor before incurring them, except only if the precarium, will Art. 1942 (1) and (2) of the
repair is urgent that reply cannot be awaited. New Civil Code still apply?
Effect if both parties know the defect A: IT DEPENDS. If there has been a demand on
the part of the bailor before the loss of the thing
The effect if both parties are aware of the flaws or under the circumstances set forth under Article
defects is that the bailee is deemed to have 1942 (1) and (2) and the bailee did not return the
assumed a risk. The bailor is not liable for the thing, then the latter is liable. However, if there
damages suffered by the bailee by reason thereof. has been no demand on the part of the bailor and
the thing was lost, the bailor is estopped and
RIGHTS OF THE BAILOR cannot hold the bailee liable for under a contract
of precarium, the use of the thing by the bailee
Demand the return of the thing loaned (2005 depends on the pleasure of the bailor and no time
Bar) is fixed for such use. Hence, demand on the part of
Bailor and ownership of the thing loaned Bailee is not liable for the
deterioration of the thing loaned
The bailor in commodatum need not be the owner As to the caused by the ordinary wear and
of the thing loaned. It is sufficient that he has deterioration tear of the same (NCC, Art. 1943).
possessory interest over subject matter (Art. of the thing
1938). All that is required is that the bailor has the loaned NOTE: When there are two or
right to the use of the property which he is more bailees, their liability is
lending, and that be allowed to alienate this right solidary.
to use.
RIGHTS OF A BAILEE
The rationale for this is the fact that commodatum
does not involve transmission of ownership 1. Use of the thing;
(Rabuya, 2017). 2. Make use of the fruits of the thing when
such right is stipulated in the contract;
NOTE: A mere lessee or usufructuary may 3. Not answerable for the deterioration of the
gratuitously give the use of the thing leased or in thing loaned due to the use thereof and
usufruct, provided there is no prohibition against without his fault; and
such. 4. Right of retention for damages due to
hidden defects or flaws of the thing of
OBLIGATIONS OF THE BAILEE which he was not advised by the bailor.
Pay for the ordinary expenses for Q: Art. 1178 of the NCC provides that all rights
As to
the use and preservation of the acquired by virtue of an obligation are
ordinary
thing (NCC, Art. 1941). transmissible. Is the right to use the thing by
expenses
virtue of a contract of commodatum
Liable for loss even through transmissible?
fortuitous event when: (2000
Bar) A: NO, it is not transmissible for two reasons:
When being able to save either of 1. Art. 1178 of the New Civil Code provides
the thing borrowed or his own that the transmissibility of said acquired
thing, he chose to save the latter; rights are either subject to the laws or to a
Reason: bailee’s ingratitude contrary stipulation; and
2. Art. 1939 of the New Civil Code provides
He keeps it longer than the that a contract of commodatum is purely
period stipulated, or after the personal in character. (Bar)
accomplishment of its use (in
As to the loss default); To rule otherwise would be to run counter to the
of the thing Reason: Bailee incurs delay (NCC, purely personal character of the commodatum and
in case of Art. 1169) to the proviso that transmissibility is subject to
fortuitous the law governing such obligations.
event The thing loaned has been
delivered with appraisal of its Commodatum v. Lease
value;
Reason: Otherwise, the parties COMMODATUM LEASE
would not have appraised the Real contract Consensual
thing
Object is a non- Object may even be
When he lends or leases it to consumable and non work or service.
third persons who are not fungible thing.
members of his household; Essentially gratuitous Onerous
Reason: Commodatum is a purely If the bailor is not Provisions governing
personal contract aware of the flaws, he warranty are made
is not liable for the applicable.
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CIVIL LAW
resulting danger Each one of the debtors is obliged to pay the entire
caused by such. obligation, and where each one of the creditors
has the right to demand from any of the debtors,
Art. 1943. The bailee does not answer for the the payment or fulfillment of the entire obligation
deterioration of the thing loaned due only to (Art. 1207)
the use thereof and without his fault.
Kinds of Solidary Obligation:
Deterioration
1. Passive Obligation – which is the
The lowering of the value or character of a thing. It solidarity on the part of the debtors;
normally occurs b reason of ordinary wear and 2. Active Solidarity – which is the solidarity
tear. on the part of the creditors
GR: There is no right of retention in commodatum. Rules on who shall pay ordinary,
The bailee cannot retain the thing loaned on the extraordinary expenses and other expenses
ground that the bailor owes the bailee (NCC, Art.
1944). 1. Ordinary expenses – For both the use and
preservation of the thing, it shall be paid or
XPN: The bailee has the right of retention for shouldered by the bailee (NCC, Art. 194)
claims of damages which the bailee incurred or (2005 Bar).
suffered by reason of the hidden defects or flaws 2. Extraordinary expenses (2005 Bar)
of the thing loaned, of which he was not informed a. Preservation – The bailor, provided the
or advised by the bailor (NCC, Art. 1951). bailee brings the same to the knowledge
of the bailor before incurring them,
The reason for the general rule that there is no except when they are so urgent that the
right of retention is that “bailment implies a trust reply to the notification cannot be
that as soon as the time has expired or the awaited without danger (NCC, Art. 1949).
purpose accomplished, the bailed property must b. Incurred during actual use –
be returned to the bailor”. Also, Art. 1287 provides GR: Borne equally by the bailor and
that compensation shall not be proper when one bailee.
of the debts arises from the obligations of a bailee XPN: Stipulation to the contrary (NCC, Art.
in commodatum. 1949).
Q: Suppose during the said retention of the 3. Other expenses – The bailee (NCC, Art. 1950).
bailee by reason of hidden defects, the thing is
lost due to a fortuitous event. Can the bailor Q: What if the bailee is entitled to payment or
hold the bailee liable for said loss based on Art. reimbursement of expenses incurred or
1942(2) of the New Civil Code? damages suffered and the bailor offers the
thing loaned as payment for said expenses or
A: NO. The bailee cannot be held liable for the loss. damages, would such offer be valid or not, in
Art. 1942(2) of the NCC contemplates wrongful view of the prohibition under Art. 1952 which
retention or a situation where the bailee is not states that the bailor cannot exempt himself
entitled to retain the thing loaned. from the payment of expenses or damages by
abandoning the thing to the bailee?
NOTE: Article 1942(2) of the NCC provides that
the bailee is liable for the loss of the thing, even if A: The offer is not valid. It may be considered as
it should be through a fortuitous event if he keeps dation in payment. In this case, the abandonment
it longer than the period stipulated, or after the done by the bailor was made in favor of the bailee
accomplishment of the use for which the for the payment of the expenses incurred by the
commodatum has been constituted. latter, hence, a violation of what the law has
expressly prohibited under Art. 1952 of the NCC.
Art. 1945. When there are two or more bailees
to whom a thing is loaned in the same contract, Entitlement for reimbursement
they are liable solidarily.
The bailee is not entitled to reimbursement for the
Solidary Obligatiion expenses he incurred if, for the purpose of making
587
CIVIL LAW
Destruction of the thing loaned risk of loss
In case of urgent Only after the
The destruction of the thing loaned does not need even before expiration of
extinguish one’s obligation in a simple loan the expiration of the term.
because his obligation is not to return the thing When to term (the
loaned but to pay a generic thing. return contract is in the
meantime
Commodatum v. Mutuum (1996, 2004 Bar) suspended).
589
CIVIL LAW
payment therefor. WTCI demanded for with twelve percent (12%) interest per annum
payment but the Province of Cebu still refused from December 2007 until fully paid and
to pay. Thus, it filed a complaint for collection P20,000.00 as attorney's fees. Is the 12%
of sum of money before the RTC. RTC ruled in interest imposed by the Court valid?
favor of WTCI. CA affirmed the RTC's Order but
reduced the interest rate to 6% per annum. A: Yes. Anent monetary interest, the parties are
What is the nature of Province of Cebu’s free to stipulate their preferred rate. However,
liability? courts are allowed to equitably temper interest
rates that are found to be excessive, iniquitous,
A: The liability of the Province of Cebu to WTCI is unconscionable, and/or exorbitant, such as
not in the nature of a forbearance of money as it stipulated interest rates of three percent (3%) per
does not involve an acquiescence to the month or higher. In such instances, it is well to
temporary use of WTCI's money, goods or credits. clarify that only the unconscionable interest rate
Rather, this case involves WTCI's performance of a is nullified and deemed not written in the
particular service, i.e., the performance of contract; whereas the parties' agreement on the
additional works on CICC, consisting of site payment of interest on the principal loan
development, additional structural, architectural, obligation subsists. It is as if the parties failed to
plumbing, and electrical works thereon. specify the interest rate to be imposed on the
principal amount, in which case the legal rate of
Verily, the Court has repeatedly recognized that interest prevailing at the time the agreement was
liabilities arising from construction contracts do entered into is applied by the Court. This is
not partake of loans or forbearance of money but because, according to jurisprudence, the legal rate
are in the nature of contracts of service. In Federal of interest is the presumptive reasonable
Builders, Inc. v. Foundation Specialists, Inc., the compensation for borrowed money.
Court ruled that the liability arising from the non-
payment for the construction works, specifically In this case, petitioners and respondent entered
the construction of a diaphragm wall, capping into a loan obligation and clearly stipulated for the
beam, and guide walls of the Trafalgar Plaza in payment of monetary interest. However, the
Makati City, do not partake of a loan or stipulated interest of ten percent (10%) per
forbearance of money but is more in the nature of month was found to be unconscionable, and thus,
a contract of service. The Court, therefore, the courts a quo struck down the same and pegged
sustains the CA's ruling that the rate of legal a new monetary interest of twelve percent (12%)
interest imposable on the liability of the Province per annum, which was the prevailing legal rate of
of Cebu to WTCI is 6% per annum. (WT interest for loans and forbearances of money at
Construction, Inc. v. The Province of Cebu, G.R. No. the time the loan was contracted on December 6,
208984, September 16, 2015) 2004. (Catalina F. Isla, Elizabeth Isla, and Gilbert F.
Isla v. Genevira P. Estorga, G.R. No. 233974, July 2,
Q: Petitioners Isla obtained a loan in the 2018)
amount of P100,000.00 from respondent,
payable anytime from six (6) months to one Q: Santos owned three (3) parcels of
(1) year and subject to interest at the rate of agricultural land devoted to corn. In 1984, the
ten percent (10%) per month, payable on or subject lands were placed under the
before the end of each month. When government's Operation Land Transfer
petitioners failed to pay the said loan, Program pursuant to Presidential Decree (PD)
respondent sought assistance from the No. 27, and distributed to the farmer-
barangay, and consequently, a Kasulatan ng beneficiaries who were issued the
Pautang dated December 8, 2005 was corresponding Emancipation Patents. The
executed. Petitioners, however, failed to Department of Agrarian Reform (DAR) fixed
comply with its terms, prompting respondent the just compensation using the formula
to send a demand letter dated November 16, provided under Executive Order No. (EO) 228.
2006. Once more, petitioners failed to comply The LBP allowed Santos to collect the initial
with the demand, causing respondent to file a valuation for Land 3. It withheld the release of
Petition for Judicial Foreclosure against them the valuation for Lands 1 and 2 until the
before the RTC. Petitioners maintained that submission of the certificates of title. Santos
the stipulated interest of ten percent (10%) was then issued Agrarian Reform (AR) Bonds
per month was exorbitant and grossly representing the initial valuation of Land 3
unconscionable. The RTC directed petitioners and the six percent (6%) increment. Finding
to pay respondent the amounts of P100,000.00 the valuation unreasonable, Santos filed three
591
CIVIL LAW
property as a security for a debt, and contains principle of solution indebiti applies in case of
nothing impossible or contrary to law. erroneous payment of undue interest (Siga-an
v. Villanueva, G.R. No. 173227, January 20,
Interest in equitable mortgage 2009).
Recovery of unstipulated interest XPN: Unless the same can be established with
reasonable certainty (Atlantic Gulf and Pacific
A payment for unstipulated interest can be Company of Manila, Inc. v. CA, G.R. Nos. 114841-42,
recovered if paid by mistake, the debtor may August 23, 1995).
recover as in the case of solutio indebiti or undue
payment. However if payment is made voluntarily, Running of interest on unliquidated claims
no recovery can be made as in the case of natural
obligation (NCC, Art. 1960). If the interest is adjudged on unliquidated claim
but the pleadings in court did not spell out said
Q: Siga-an granted a loan to Villanueva in amount with certitude, the legal interest thereon
the amount of P540,000.00. Such agreement shall run only from the promulgation of judgment
was not reduced to writing. Siga-an demanded of said court, it being at that stage that the
interest which was paid by Villanueva in cash quantification of damages may be deemed to have
and checks. The total amount Villanueva paid been reasonably ascertained (Ibid.).
accumulated to P1,200,000.00. Upon advice of
her lawyer, Villanueva demanded for the The actual base for computing legal interest shall
return of the excess amount of P660,000.00 be the amount as finally adjudged by the Supreme
which was ignored by Siga-an. Court (Ibid.).
593
CIVIL LAW
giving time for the payment of a debt is, in The Supreme Court said nothing in Circular 905
substance, a loan. suspending Usury Law that grants the lender the
authority to raise interest rates to levels which
Compounding of interest will either enslave their borrowers or lead to a
hemorrhaging of their assets (Almeda v. CA, G.R.
There must first be a stipulation of payment of No. 113412, April 17, 1996).
interest and this interest may earn interest only
when it is judicially demanded, although the When Usury Law does not apply
obligation is silent upon this point (NCC, Art.
2212). 1. A contract for the lease of property is not a
loan; hence, the rental paid is not governed by
Rule on compounding of interest the Usury Law (Tolentino v. Gonzales, 50 Phil. 5,
G.R. No. 26085, August 12, 1927); or
GR: Accrued interest (interest due and unpaid)
shall not earn interest. 2. The increase of the price of a thing sold on
credit over its cash sale price is not interest
XPNS: When: within the purview of the Usury Law, if the sale
is made in good faith and not as a mere pretext
1. There is express stipulation made by the to cover a usurious loan (Manila Trading v.
parties -that the interest due and unpaid Tamaraw, G.R. No. L-22995, February 28, 1925).
shall be added to the principal obligation Such price is the selling price for a sale made
and the resulting total amount shall earn on the installment plan. Rationale behind the
interest (Art. 1959); or invalidity of unconscionable interest rate in a
2. Judicial demand has been made upon the loan despite the suspension of the Usury law.
borrower (NCC, Art. 2212).
Courts may simply reduce unreasonable
NOTE: Such accrued interest will bear interest at interests
the legal rate (NCC, Art. 2212) unless, a different
rate is stipulated (Hodges v. Regalado, 69 Phil. Interest stipulated by the contracting parties is
588). valid however if the interest rate agreed upon is
iniquitous and unconscionable, the courts may
Increase in Interest Rates reduce the same as reason and equity demand
(Imperial v. Jaucian, G.R No. 149004, April 14,
No increase in interest shall be due unless such 2004).
increase has also been expressly stipulated
(Security Bank &Trust Co. v RTC, G.R. No. 113926, In the case of Medel v. CA, G.R. No. 131622,
October 23, 1996; Spouses Toring v. Ganzon-Olan November 27, 1998, the court ruled that while
G.R. No. 168782, October 10, 2008). stipulated interest of 5.5% per month on a loan is
usurious pursuant to CBC No. 905, the same must
The unilateral determination and imposition of be equitably reduced for being iniquitous,
increased rates is violative of the principle of unconscionable and exorbitant. It is contrary to
mutuality of contracts ordained in Article 1308 of morals. It was reduced to 12% per annum in
the Civil Code. One-sided impositions do not have consonant with justice and fair play.
the force of law between the parties, because such
impositions are not based on the parties’ essential Floating interest
equality (NSBCI v. PNB, G.R. No. 148753, July 30,
2004). Floating interest is the interest stipulated by
banks which is not fixed and made to depend upon
Governing rule on usurious transactions the prevailing market conditions, considering the
fluctuating economic conditions.
CB Circular No. 905 has expressly removed the
interest ceilings prescribed by Usury Law, thus, A stipulation for floating interest is not valid. A
the said law has become legally non-existent. stipulation for a floating rate of interest in a letter
of credit in which there is no reference rate set
NOTE: It did not repeal or amend the usury law either by it or by the Central Bank, leaving the
but merely suspended its effectivity. determination thereof to the sole will and control
of the lender bank is invalid. While it may be
acceptable for practical reasons given the
595
CIVIL LAW
deposit, the subject matter may be a real things deposited with pay interest. There can
property; or each other (except by be compensation of
mutual agreement). credits.
3. Purpose is for the safekeeping of the thing
deposited (NCC, Art. 1962). This must be the DEPOSIT COMMODATUM
principal purpose and not only secondary; Principal Purpose
Safekeeping Transfer of use
NOTE: If safekeeping is merely secondary,
Use of the thing.
the contract is not a deposit but some other
contract.
Nature
May be gratuitous or Always gratuitous by its
4. It is gratuitous, unless there is a:
onerous. essence.
a. Contrary agreement;
b. The depositary is engaged in the business of Object
storing goods, like a warehouseman (NCC, In extra-judicial Both movable and
Art. 1965); or deposit, only movables immovable property
c. Where the property is saved from may be objects thereof. may be objects thereof.
destruction without knowledge of the owner,
the latter is bound to pay the other person Demandability
just compensation (as in case of involuntary Depositor can demand Return of the thing
deposit). the thing at will. cannot be demanded
until the lapse of the
NOTE: Deposit shall be considered as a loan period.
if there is a stipulation for the payment of
interest (Aquino v. Deala, 63 Phil. 582, October DEPOSIT LEASE
21, 1936). The reason is that interest can only Principal Purpose
arise from a contract of loan (mutuum). Safekeeping. Use of the thing.
The depositor need not be the owner of the thing 1. Depositary – to whom the thing is
deposited because the purpose of the contract is deposited; and
safekeeping and not transfer of ownership (NCC, 2. Depositor – the one who deposits the thing.
Art. 1984).
Effects of incapacity of the depositary or
NOTE: A deposit may also be made by two or depositor
more persons each of whom believes himself
597
CIVIL LAW
1. If the depositary is capacitated, he is subject a. When at the time of deposit, the depositor
to all the obligations of a depositary whether was not aware of the dangerous character
the depositor is capacitated or not (NCC, Art. of the thing or was not expected to know
1970); and it;
b. When the depositor notified the
NOTE: Under the law, “persons who are depositary; or
capable cannot allege the incapacity of those c. When the depositary was aware of it
with whom they contracted” (NCC, Art. 1397). without advice from the depositor.
2. If the depositary is incapacitated, he does not 3. In case of an onerous deposit, to pay the
incur the obligation of a depositary. However, compensation agreed upon as consideration
he is liable to (1) return the deposited while for the deposit.
still in his possession; or (2) pay the depositor
the amount by which he may have benefited Diligence required in a contract of deposit
himself with the thing or its price subject to
the right of any third person who acquired the The diligence required of a depositary is that
thing in good faith, in which case the agreed upon by the parties, who may limit or
depositor may only bring an action against expand the degree of diligence required. In the
him for its recovery (NCC, Art. 1971). absence of any stipulation, the degree of diligence
required is lower if the deposit is gratuitous and
As to depositor: higher if the deposit is with compensation (NCC,
Art. 1972). Ordinarily, the depositary must
He can exercise a reinvindicatory action at any exercise over the thing deposited the same
time either against the depositary, if the thing diligence he would exercise over his property.
deposited is still in the latter’s possession against
a third person who acquired the thing provided Loss through force majeure or expropriation
that such third person acted in bad faith. If the
thing can no longer be restored, the depositor will If the depositary by force majeure or government
have the right to demand payment by which the order loses the thing and receives money or
depositary may have enriched himself with the another thing in its place, he shall deliver the sum
thing or its price. or other thing to the depositor (NCC, Art. 1990).
The depositor’s heir who in good faith may have Accordingly, anyone of the depositors, by himself
sold the thing he did not know was deposited, and on behalf of the others, may ask the
shall only be bound to return the price he may restitution of the thing deposited in such case,
have received or to assign his right of action delivery to a single depositor will suffice to
against the buyer in case the price has not been discharge the depositary from the obligation even
paid him (NCC, Art. 1991). as far as the other depositors are concerned
(Rabuya, 2017).
The provision applies only when the depositary
has died and left heir/s who took possession of Proving the ownership of the thing deposited
the thing in the concept of an owner and sold it in
good faith to a third person. GR: The depositary cannot demand that the
depositor should prove his ownership of the thing
NOTE: The word “depositor’s” in this part should deposited.
be read as “depositary’s” (De Leon, 2013). If the
heir acted in bad faith he is liable for damages. The XPN: Should he discover that the thing has been
sale or appropriation of the thing deposited stolen and who its true owner is, he must advise
constitutes estafa [(RPC, Art. 315 (b)]. the latter of the deposit.
When there are two or more depositors, if they XPN: In the absence of stipulation, at the place
are not solidary, and the thing admits of division, where the thing deposited might be, even if it
each one cannot demand more than his share should not be the same place where the original
(NCC, Art. 1985). deposit was made provided the transfer was
accomplished without malice on the part of the
depositary (NCC, Art. 1987).
599
CIVIL LAW
When it must be returned There is a freedom of action which is implied in
the phrase “delivery is made by the will of the
GR: The thing deposited should be returned upon depositor,” unlike in the case of a necessary
demand or at will, whether or not a period has deposit. In other words, the depositor in a
been stipulated. voluntary deposit is free to choose the depositary.
XPNs to XPN: Even in case of loss through 1. The keepers of hotels or inns shall be held
fortuitous event, still liable if: responsible for loss of thing in case of deposit
a. If it is so stipulated; when both are present:
b. He uses the thing without depositor’s a. They have been previously informed by
permission; guest about the effects the latter brought
c. He delays its return; or in; and
d. He allows others to use it (even if he b. The guest has taken precautions
himself is authorized to use it) (NCC, Art. prescribed for their safekeeping.
1979).
2. They are liable regardless of the degree of care
9. Return the thing deposited with all its exercised when:
fruits, accessions, and accessories (NCC, Art. a. Loss or injury is caused by his employees
1983); and or even by strangers (NCC, Art. 2000); or
b. Loss is caused by act of thief or robber
10. Pay interest on sums converted to personal when there is no use of arms or
use if the deposit consists of money. irresistible force (NCC, Art. 2001).
Extinguishment of voluntary deposit 3. The keepers of hotels or inns are not liable for
loss of thing in case of deposit when:
1. Loss or destruction of thing deposited; a. Loss or injury is caused by force majeure
2. In gratuitous deposit, upon death of either (NCC, Art. 2000);
depositor or depositary (NCC, Art. 1995); or b. Loss due to the acts of guests, his family,
3. Other causes. his employees, or visitors (NCC, Art.
e.g. return of thing, novation, expiration of 2002); and
the term, fulfillment of resolutory condition c. Loss arises from the character of the
goods (NCC, Art. 2002).
NECESSARY DEPOSIT (2007 BAR)
NOTE: Liability by the hotel or innkeeper
A necessary (involuntary) deposit is one wherein commences as soon as there is evident intention
the deposit is not made by the will of the on the part of the travellers to avail himself of the
depositor but created by force of the law or on accommodations of the hotel or inn. It does not
occasion of a calamity. matter whether compensation has already been
paid or not, whether the guest has already
When is deposit considered as necessary partaken of food and drink or not (Paras, 2008).
601
CIVIL LAW
stipulation between the hotel keeper and the therefor constitutes estafa [RPC, Art. 135, Sec.
guest whereby the responsibility of the former (2)(e)].
(NCC, Arts. 1998-2001) is suppressed or
diminished shall be void (NCC, Art. 2003). The Where goods are brought to the inn with notice or
hotel or inn keepers are still liable regardless of knowledge on the part of the innkeeper that they
the posting of notices exempting themselves from are the property of a third person, no lien
any liability. attaches, except under a statute extending lien to
property under control of guest (Rabuya, 2017).
Extent of liability of the hotel keepers in case
of loss JUDICIAL DEPOSIT
1. It covers liability in hotel rooms which come Judicial deposit (sequestration) takes place when
under the term “baggage” or articles such as an attachment or seizure of property in litigation
clothing as are ordinarily used by travelers; is ordered by a court (NCC, Art. 2005).
and
2. It includes lost or damages in hotels annexes It is auxiliary to a case pending in court. The
such as vehicles in the hotel’s garage. purpose is to maintain the status quo during the
pendency of the litigation or to insure the right of
Q: Venus was the owner of Suzuki Grand Vitara the parties to the property in case of a favorable
which was insured with Pioneer Insurance for judgment (De Leon, 2013).
loss and damage. When she arrived and
checked in at Heaven’s Hotel before midnight, Object of judicial deposit
its parking attendant, John, got the key to said
Vitara. At about one in the morning, Venus was The object of judicial sequestration may be
awakened in her room by a telephone call movables or immovable (NCC, Art. 2006).
from the Hotel Chief Security Officer who
informed her that her Vitara was carnapped Q: When will the properties sequestered cease
while it was parked unattended at the parking to be in custodia legis?
area of the bank near the hotel. May the
insurance company, by right of subrogation, A: They cease to be in custodia legis when the
recover from the hotel the damages it paid to insolvency proceedings of a partnership
Venus? terminated because the assignee in insolvency has
returned the remaining assets to the firm, said
A: YES. The contract of necessary deposit existed properties cease to be in custodia legis (Ng Cho
between the insured Venus and the hotel. Article Cio, et al. v. Ng Diong & Hodges, L-14832, January
1962, in relation to Article 1998, of the Civil Code 28, 1961).
defines this contract. Plainly, Venus deposited for
safekeeping her vehicle through the hotel’s Obligation of depositary of sequestered
employee. From Venus’ delivery, when she handed property
the keys to John, the contract was perfected. Thus,
there is the obligation of safely keeping it and The depositary of sequestered property is the
returning it. Ultimately, the hotel is liable for the person appointed by the court (NCC, Art. 2007). He
loss of Venus’ vehicle (Durban Apartments has the obligation to take care of the property
Corporation v. Pioneer Insurance Surety with the diligence of a good father of a family
Corporation, G.R. No. 179419, January 12, 2011). (NCC, Art. 2008) and he may not be relieved of his
responsibility until the litigation is ended or the
Right to retain given to hotel-keeper or inn- court so orders (NCC, Art. 2007; De Leon, 2013).
keeper
Applicable Law
The hotel-keeper has a right to retain the things
brought into the hotel by the guest, as a security The law on judicial deposit is remedial or
for credits on account of lodging, and supplies procedural in nature. Hence, the Rules of Court are
usually furnished to hotel guests (NCC, Art. 2004). applicable. The relevant provisions of the Rules of
Court are Rule 57 (Preliminary Attachment), Rule
NOTE: This is in the nature of the pledge created 59 (Receivership), and Rule 60 (Replevin). Rule 127
by operation of law. The act of obtaining food or provides for attachment in criminal cases (De
accommodation in a hotel or inn without paying Leon, 2013).
603
CIVIL LAW
(UMC), Rodrigo T. Janeo, Jr., Gerardo Gelle, an independent liability as a regular
Nissan Cagayan de Oro Distributors, Inc., agreement to pay the party to the contract.
Jefferson U. Rolida, and Peter Yap. The obligation of the
temporary restraining order (TRO) prayed for principal if he fails to
was eventually issued by the RTC upon the do so.
posting by NSSC and Orimaco of a
P1,000,000.00 injunction bond issued by their Guarantor is Surety is primarily
surety, CGAC. The TRO enjoined respondents secondarily liable. liable.
from selling, dealing, and marketing all models
of motor vehicles and spare parts of Nissan, Guarantor binds Surety undertakes to
and from terminating the dealer agreement himself to pay if the pay if principal
between UMC and NSSC and restrained UMC principal cannot pay. does not pay.
from supplying and doing trading transactions
with NCOD, which, in turn, was enjoined from Insurer of solvency of Insurer of the debt.
entering and doing business on Nissan debtor.
Products within the dealership territory of
NSSC as defined in the Dealer Agreement. The Guarantor can avail of Surety cannot avail of
TRO was eventually converted into a writ of the benefit of the benefit of
preliminary injunction. Respondents filed a excussion and division excussion and division.
petition for certiorari and prohibition before in case creditor
the CA and assail the issuance of the aforesaid proceeds against him.
injunctive writ. The CA rendered a Decision
holding that the RTC committed grave abuse of Similarity between guaranty and suretyship
discretion in issuing the writ absent a clear
legal right thereto on the part of NSSC and Both guarantor and surety promise or undertake
Orimaco. Consequently, the Writ of to answer for the debt, default or miscarriage of
Preliminary Injunction issued by the RTC was another person.
ordered dissolved. Respondents filed an
application for damages against the injunction Guaranty v. Warranty
bond issued by CGAC in the amount of
P1,000,000.00. Is CGAC liable? GUARANTY WARRANTY
A contract by which a An undertaking that
A. Yes. That CGAC’s financial standing differs from person is bound to the title, quality or
that of NSSC does not negate the order of another for the quantity of the subject
execution pending appeal. As the latter’s surety, fulfillment of a matter of a contract is
CGAC is considered by law as being the same party promise or what it is represented
as the debtor in relation to whatever is adjudged undertaking of a third to be, and relates to
touching the obligation of the latter, and their person. some agreement made
liabilities are interwoven as to be inseparable. ordinarily by the party
Verily, in a contract of suretyship, one lends his who makes the
credit by joining in the principal debtor’s warranty.
obligation so as to render himself directly and
primarily responsible with him, and without NOTE: In case of guaranty, the guarantor must be
reference to the solvency of the principal. Thus, a person distinct from the debtor because a
execution pending appeal against NSSC means that person cannot be the personal guarantor of
the same course of action is warranted against its himself. A person cannot be both the primary
surety, CGAC. The same reason stands for CGAC’s debtor and the guarantor of his own debt as this is
other principal, Orimaco, who was determined to inconsistent with the very purpose of a guarantee
have permanently left the country with his family which is for the creditor to proceed against a third
to evade execution of any judgment against him. person if the debtor defaults in his obligation.
(Centennial Guaranty Corporation v. Universal
Motors Corporation, G.R. No. 189358, October 8, Unilateral character of guaranty
2014)
The contract of guaranty may be undertaken
Guaranty v. Suretyship (1992, 1997, 2010 Bar) without the knowledge of the principal debtor. It
exists for the benefit of the creditor and not for the
GUARANTY SURETYSHIP benefit of the principal who is not a party to the
Liability depends upon Surety assumes contract of guaranty. The creditor has every right
NOTE: A guarantor can recover from the debtor 4. As to scope and extent
what the former had to pay the creditor, even if a. Definite – One where the guaranty is
the guaranty was without the debtor’s consent or limited to the principal obligation only, or
against his will, but the recovery will only be to to a specific portion thereof (NCC, Art,
the extent that the debtor had been benefited 2055, par. 2); or
(NCC, Arts.1236 and 1237; De Guzman v. Santos, b. Indefinite or simple – One where the
G.R. No. 45571; June 30, 1939). guaranty included all the accessory
obligations of the principal, e.g. costs,
Gratuitous character of guaranty including judicial costs.
605
CIVIL LAW
A valid principal obligation necessary in contract surety; terms cannot be extended beyond the
of guaranty since guaranty is an accessory stipulation.
contract, it is an indispensable condition for its
existence that there must be a principal obligation. XPN: In cases of compensated sureties.
Hence, if the principal obligation is void, it is also
void. RATIO: A contract of guaranty is unilateral
Statute of fraud in a contract of guaranty NOTE: The qualifications need only be present at
the time of the perfection of the contract. The
A contract of guaranty must be expressed and in creditor can naturally waive the requirements, for
writing [NCC, Art. 1403(2)]; otherwise, it is right in general is waivable (Paras, 2008).
unenforceable unless ratified. It need not be in a
public instrument. Loss of qualification of the guarantor
NOTE: The statute of Frauds does not require that GR: The qualification of the guarantor is lost
the contract of guaranty itself be in writing. What through conviction of a crime involving
it requires to be in writing in order for the dishonesty or insolvency.
contract of guaranty to be enforceable is the
undertelling or special promise of guarantor, XPN: When the creditor had been selected by the
which must be signed by him (Rabuya, 2017). creditor. The supervening loss of required
qualifications will not generally end the guaranty.
Acceptance of the creditor in a contract of However, the creditor is given the right to demand
guaranty substitution of guarantor (NCC, Art. 2057).
GR: The acceptance of the creditor is not essential Married woman as a guarantor
in contract of guaranty.
GR: A married woman can be a guarantor without
XPN: When there is a mere offer of a guaranty or a the consent of her husband but binds only her
conditional guaranty wherein the obligation does separate property (FC, Art. 145).
not become binding until it is accepted by the
creditor and notice of such acceptance is given to XPNs:
the guarantor. 1. If with her husband’s consent, it binds the
community or conjugal partnership property.
Construction of a contract of guaranty or 2. Without husband’s consent, in cases provided
surety for by law, such as when the guaranty has
redounded to the benefit of the family.
GR: In case of doubt, a contract of guaranty or
surety should be strictly construed against the Rights of a third person (guarantor or surety)
creditor and liberal in favor of the guarantor or who pays for the debt guaranteed or secured
607
CIVIL LAW
609
CIVIL LAW
Refers to a period when as far back as memory Cruz citing Duffy & Eagleson on The Transfer of
can go, certain ICCs/IPs are known to have Land Act, G.R. No. 5246, September 16, 1910).
occupied, possessed in the concept of owner, and
utilized a defined territory devolved to them, by Purpose of registration
operation of customary law or inherited from
their ancestors, in accordance with their customs To quiet title to land and to stop forever any
and traditions [R.A. 8371, Sec. 3(p)]. question of legality of title. The Torrens system
aims to decree land titles that shall be final,
Q: Socorro Orcullo was a grantee of a Free irrevocable, and indisputable, and to relieve the
Patent for a parcel of land in Cebu. land of the burden of known and unknown claims
Subsequently, the subject lot was sold to SAAD (J. Agcaoli, Property Registration Decree & Related
Agro-Industries, Inc. by one of Orcullo’s heirs. Laws : Land Titles and Deeds, 2011).
Yet, the Solicitor General filed a complaint for
the annulment of the title and reversion of the NOTE: The government has adopted the Torrens
said lot on the ground that the issuance of the system due to its being the most effective measure
free patent and title was irregular and to guarantee the integrity of land titles and to
erroneous, following the discovery that the lot protect their indefeasibility once the claim of
is allegedly part of the timberland and forest ownership is established and recognized
reserve. Decide on the case. (Casimiro Development Corporation v. Nato Mateo,
G.R. No. 175485, July 27, 2011).
A: In instances where a parcel of land considered
to be inalienable land of the public domain is Nature land registration proceedings under
found under private ownership, the Torrens System
the Government is allowed by law to file an
action for reversion in which the ultimate relief The Torrens system is judicial in character and
sought is to revert the land to the government not merely administrative. Judicial proceedings
pursuant to the Regalian doctrine. for the registration of lands throughout the
Philippines shall be in rem and shall be based on
Nevertheless, in applying the Regalian Doctrine, the generally accepted principles underlying the
the paramount considerations of fairness and due Torrens system (P.D. 1529, Sec. 2).
process must be observed in every claim of right
by the Government against one of its citizens. Accordingly, all other interested persons are
Respondent Orcullo in this case failed to show that notified of the proceedings by publication of the
the subject lot is part of timberland or forest notice of initial hearing. They also and have the
reserve it adverted to (Saad Agro-Industries, Inc. v. right to appear in opposition to such application.
Republic of the Philippines, G.R. No. 152570,
September 27, 2006). A decree of registration that has become final shall
be deemed conclusive not only on the questions
actually contested and determined but also upon
THE TORRENS SYSTEM OF REGISTRATION all matters that might be litigated or decided in
the land registration proceedings.
XPN: MeTCs, MTCCs, MTCs and MCTCs have Kinds of original registration
delegated jurisdiction to hear and determine
cadastral or land registration cases in the (a) Judicial/Voluntary/Ordinary - filing with
following instances: the proper court an application by the private
individual himself; and
a. Where the lot sought to be registered is (b) Administrative/Involuntary/Cadastral -
not the subject of controversy; or compulsory registration initiated by the
b. Where the lot is contested but the value government, to adjudicate ownership of land
thereof does not exceed P100,000.00, and involuntary on the part of the claimants,
such value to be ascertained by the but they are compelled to substantiate their
affidavit of the claimant or by the claim or interest through an answer.
agreement of the respective claimants, if
there be more than one, or from the Who may apply for registration
corresponding tax declaration of the real
property (Sec. 34, B.P. 129, as amended 1. Those who by themselves or their
by Sec. 4, R.A. No. 7691) predecessors-in-interest have been in open,
continuous, exclusive, and notorious
2. Department of Environment and Natural possession and occupation of alienable and
Resources (DENR); disposable lands of the public domain under a
3. Department of Justice (DOJ) through the bona fide claim of ownership since June 12,
Land Registration Authority (LRA) and its 1945, or earlier (OCENPO);
Register of Deeds; 2. Those who have acquired ownership over
4. Department of Land Reform (DLR); and private lands by prescription under the
5. Department of Agriculture (DAR). provisions of existing laws;
3. Those who have acquired ownership of
private lands or abandoned river beds by
ORIGINAL REGISTRATION right of accession or accretion under the
existing laws; and
4. Those who have acquired ownership of land
Laws that govern land registration by any other manner provided for by law.
1. Property Registration Decree (P.D. 1529, as Where the land is owned in common, all the co-
amended); owners shall file the application jointly (P.D. 1529,
Sec. 14).
NOTE: P.D. 1529 amended and superseded
Q: Rosario filed her application for land
C.A. No. 496, otherwise known as the then
Land Registration Act. registration of a rice land that she had
inherited, owning and possessing it openly,
publicly, uninterruptedly, adversely against
2. Cadastral Act (Act 2259, as amended);
the whole world, and in the concept of owner
3. Public Land Act (C.A. No. 141, as amended);
since then. This was opposed by the The
4. Emancipation Decree (P.D. 27, as amended);
Republic opposed claiming that Rosario failed
5. Comprehensive Agrarian Reform Law of 1988
to occupy and possess the land for at least 30
(R.A. 6657); and
6. Indigenous Peoples Rights Act (R.A. 8371). years immediately preceding the filing of the
application; and that the land applied for,
being a portion of a river control system, that
Original registration
could not be subject of appropriation or land
A proceeding filed in the MTC where there is no registration. Is land subject of application
controversy or opposition, or contested lots susceptible of private acquisition?
where the value of which does not exceed
A: NO. The land of the public domain, to be the
P100,000.00 (Sec. 4, R.A. 7691) or in the RTC (as a
land registration court) when the value exceeds subject of appropriation, must be declared
alienable and disposable either by the President
P100,000 to determine title or ownership of land
on the basis of an application for registration or or the Secretary of the DENR. Unless public land is
shown to have been reclassified or alienated to a
611
CIVIL LAW
private person by the State, it remains part of the 2. Trust
inalienable public domain. Indeed, occupation GR: Trustee may apply for registration.
thereof in the concept of owner, no matter how
long, cannot ripen into ownership and be XPN: Unless prohibited by the instrument
registered as a title (Republic vs. De Joson, G.R. No. creating the trust.
163767, March 10, 2014)
NOTE: Trusteeship or trust is a fiduciary
Q: Mario applied for registration of his land. He relationship with respect to property which
claims that he bought the land from Eduardo involves the existence of equitable duties
who also claims that his great grandfather imposed upon the holder of the title to the
owned the land. Mario submitted a CENRO property to deal with it for the benefit of
from DENR stating that the land is alienable another.
and disposable in 1982. However, the Republic
appealed claiming that Mario did not adhere to 3. Reserva troncal
the requirements of time required by the law
and he failed to proof that the land is an Reservista has the right to apply for
alienable and disposable land. The Court ruled registration but the reservable character of
in favor of the Republic stating that the the property will be annotated in the title.
possession of the land before it is declared
alienable and disposable cannot be included in NOTE: In reserva troncal, the ascendant who
the computation of possession of the land, inherits from his descendant any property
thus, Mario did not adhere to the period which the latter may have acquired by
required by law. Can Mario register his land? gratuitous title from another ascendant, or a
brother or sister, is obliged to reserve such
A: NO. Mario failed to present sufficient evidence property as he may have acquired by
to establish that they and their predecessors-in- operation of law for the benefit of relatives
interest had been in possession of the land since who are within the third degree and who
June 12, 1945. Without satisfying the requisite belong to the line from which said property
character and period of possession—possession came.
and occupation that is open, continuous, exclusive,
and notorious since June 12, 1945, or earlier—the Q: Banco Filipino needs to acquire new real
land cannot be considered ipso jure converted to properties to open new branch sites during the
private property even upon the subsequent expansion of its operations. However, Sections
declaration of it as alienable and disposable. 25(a) and 34 of RA 337 imposed a limit to a
Prescription never began to run against the State, bank’s real estate investment to only 50% of
such that the land has remained ineligible for its capital assets. By doing so, three of its
registration under Sec. 14(1) of the Property major stockholders, organized and
Registration Decree. Likewise, the land continues incorporated Tala Realty that will “warehouse”
to be ineligible for land registration under Sec. several of its properties; the latter will
14(2) of the Property Registration Decree unless purchase and hold the real properties of Banco
Congress enacts a law or the President issues a Filipino in trust. Sometime later, Tala Realty
proclamation declaring the land as no longer denied the trust agreement, asserted
intended for public service or for the development ownership, and claimed full title over the
of the national wealth (Malabanan v. Republic, G.R. properties, which prompted Banco Filipino to
No. 179987, September 3, 2013) (Bersamin, J.). file complaints for reconveyance against Tala
Realty. Will the reconveyance complaints filed
Persons qualified for registration in case the by Banco Filipino before the courts a quo can
land is subject to: be allowed to prosper?
XPN : Where at the time the corporation acquired Possession of land is adverse when it is open and
land, its predecessor-in-interest had been in notorious. It is open when it is patent, visible, and
possession and occupation thereof in the manner apparent and it is notorious when it is so
and for the period prescribed by law as to entitle conspicuous that it is generally known and talked
him to registration in his name, then the of by public or the people in the neighborhood.
proscription against corporation acquiring
alienable lands of the public domain except Q: An Emancipation Patent OCT was issued in
through lease does not apply for the land was no Remy’s favor. However, Madarieta filed a
longer public land but private property. complaint for annulment and cancellation of
the OCT against Remy before the DARAB,
Q: Noynoy, Erap, Manny and Gibo are co- alleging that the Department of Agrarian
owners of a parcel of land. May Manny seek Reform mistakenly included her husband’s lot
registration in his name of the land in its as part of Luspo’s property where Remy’s
entirety? house was constructed. What is the nature of
Remy’s possession of the subject land?
A: NO. Since a co-owner cannot be considered a
true owner of a specific portion until division or A: Remy possessed the subject land in the concept
partition is effected, he cannot file an application of an owner. No objection was interposed against
for registration of the whole area without joining his possession of the subject land and Remy did
the co-owners as applicants. not employ fraud in the issuance of the
emancipation patent and title. In fact, Madarieta
Q: In 1998, Iglesia ni Cristo filed its application faulted the DAR, not him (Rementizo v. Heirs of
for Registration of Title before the MCTC which Vda. De Madarieta, G.R. No. 170318, January 15,
the Republic opposed. The cadastral court 2009).
held that the essential elements for judicial
confirmation of an imperfect title over the Sec. 14(1) v. Sec. 14(2) of P.D. 1529
subject lot have been complied with. The CA
also held that the INC has been in continuous, In Malabanan v. Republic, the Court clarified the
open, and peaceful possession and occupation difference between Sec. 14(1) and Sec. 14(2) of
of the lot for more than 40 years. May a judicial P.D. 1529.
confirmation of imperfect title prosper when
the subject property has been declared as SEC. 14(1) SEC. 14(2)
alienable only after June 12, 1945?
613
CIVIL LAW
Registration of Free Patent To any Does not own
Registration of title on
property on the basis of Natural Born more than 12
the basis of possession.
prescription. Citizen of the hectares of land;
Deals with possession Involves prescription as Philippines. Has continuously
and occupation in the a mode of acquiring occupied and
concept of an owner. ownership. cultivated, either
Extended under the by himself or his
Available both by P.D.
aegis of the P.D. 1529 predecessors-in-
1529 and the Civil
and the Public Land Act interest tract/s of
Code.
(PLA). agricultural public
Under Sec. 48(b) of the The 30-year period land subject to
PLA, as amended by involves extraordinary disposition.
R.A. 1472, the 30-year prescription under the
period is in relation to Civil Code, particularly
possession without Art. 1113 in relation to
regard to the Civil Code. Art. 1137. Sales Patent Citizens of the To have at least
Philippines of 1/5 of the land
ACQUISITION OF TITLE BY LAW lawful age or broken and
such citizens cultivated within
1. Free patents based on Public Land Act; not of lawful five years from the
2. Title to accretion in river banks; age who is date of the award;
3. Reclamation; or head of a and
4. Title by escheat (Rules of Court, Rule 91). family may Shall have
purchase established actual
PATENTS UNDER THE PUBLIC LAND ACT public occupancy,
agricultural cultivation and
KIND OF TO WHOM land of not improvement of at
REQUIREMENTS more than 12 least 1/5 of the
PATENT GRANTED
hectares. land until the date
Homestead To any Does not own of such final
Patent Filipino more than 24 payment.
Citizen over hectares of land in
the age of 18 the Philippines or Special To non- Sec. of the DILG
years or head has not benefitted Patent Christian shall certify that
of a family. from any Filipinos the majority of the
gratuitous under Sec. 84 non-Christian
allotment of more of the Public inhabitants of any
than 24 hectares; Land Act. given reservation
Must have resided have advanced
continuously for sufficiently in
at least one year civilization.
in the
municipality Acquisition of patents
where the land is
situated; 1. By succession (testate or intestate)
Must have a. By descent – Title is acquired when an
cultivated at least heir succeeds the deceased owner
1/5 of the land whether by testate or intestate; and
applied for. 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.
615
CIVIL LAW
(Filinvest Land, Inc., Efren C. Gutierre v. Abdul lands of the public domain (Heirs of Simplicio
Backy, Abehera, Baiya, Edris, et al. G.R. No. 174715. Santiago v. Heirs of Mariano Santiago, G.R. No.
October 11, 2012). 151440, June 17, 2003).
1. A natural-born citizen of the Philippines; Reclamation is the act of filling up of parts of the
2. Is not the owner of more than 12 hectares of sea for conversion to land.
land;
3. Has continuously occupied and cultivated, NOTE: It must be initially owned by the
either by himself or through his predecessors- government. It may be subsequently transferred
in-interest, a tract or tracts of agricultural to private owners.
public land subject to disposition, for at least
30 years prior to the effectivity of Republic Q: Who may undertake reclamation projects?
Act No. 6940; and
4. Has paid the real taxes thereon while the A: Only the national government may engage in
same has not been occupied by any person. reclamation projects.
NOTE : Once a patent is registered and the Q: To whom does a reclaimed area belong?
corresponding certificate of title is issued, the land
covered thereby ceases to be part of public A: Under the Regalian Doctrine, the State owns all
domain and becomes private property, and the waters
Torrens Title issued pursuant to the patent and lands of the public domain, including those
becomes indefeasible upon the expiration of one physically reclaimed.
year from the date of such issuance.
UNDER C.A. 141
XPN: A title emanating from a free patent which
was secured through fraud does not become Persons qualified for registration under Public
indefeasible. Land Act or C.A. No. 141
Reason: The patent from whence the title sprung Those who by themselves or through their
is itself void and of no effect whatsoever. The predecessors-in-interest have been in open,
registration of a patent under the Torrens System continuous, exclusive and notorious possession
does not by itself vest title; it merely confirms the and occupation of alienable and disposable
registrant’s already existing one. Verily, agricultural lands of the public domain, under a
registration under the Torrens System is not a bona fide claim of acquisition or ownership, since
mode of acquiring ownership. June 12, 1945, except when prevented by war or
force majeure.
NOTE: Nonetheless, a free patent that was
fraudulently acquired, and the certificate of title Requisites:
issued pursuant to the same, may only be assailed
by the government in an action for reversion 1. The applicant must be a Filipino citizen;
pursuant to Sec. 101 of the Public Land Act (Nancy 2. He must have, by himself or through his
T. Lorzano v. Juan Tabayag, Jr., G.R. No. 189647, predecessors in-interest, possessed and
February 6, 2012). occupied an alienable and disposable
agricultural portion of the public domain;
Free patent issued over a private land 3. Such possession and occupation must have
been open, continuous, exclusive, notorious
The settled rule is that a free patent issued over a and in the concept of owner, since June, 12,
private land is null and void, and produces no 1945; and
legal effect whatsoever. Private ownership of 4. The application must be filed with the proper
land-as when there is a prima facie proof of court.
ownership like a duly registered possessory
information or a clear showing of open, Public land
continuous, exclusive, and notorious possession,
by present or previous occupants-is not affected The term is uniformly used to describe so much of
by the issuance of a free patent over the same the national domain under the legislative power of
land, because the Public Land Law applies only to
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acquired it from its predecessors-in-interest. (a) For purposes of confirmation of imperfect
Decide. title, I will consider the provisions of C.A. No. 141
as well as the Property Registration Decree or P.D.
A: Lands that fall under Sec. 48, C.A. No. 141 1529. C.A. No. 141 provides two requisites for
are effectively segregated from the public judicial confirmation of imperfect title namely: (1)
domain by virtue of acquisitive prescription. Open, open and continuous, exclusive and notorious
exclusive and undisputed possession of alienable possession and occupation of the land by himself
public land for the period prescribed by C.A. No. or through his predecessor in interest under bona
141 ipso jure converts such land into private land. fide claim of ownership since June 12, 1945; and
Judicial confirmation in such cases is only a (2) the classification of the land as alienable and
formality that merely confirms the earlier disposable land of the public domain. (Secretary of
conversion of the land into private land, the DENR v. Yap, G.R. No. 167707, October 8, 2008).
conversion having occurred in law from the
moment the required period of possession The Property Registration Decree or P.D. 1529
became complete. provides that those who by themselves or their
predecessors-in-interest have been in open,
Under C.A. No. 141, the reckoning point is June 12, continuous, exclusive and notorious possession
1945. If the predecessors-in-interest of Manna and occupation of alienable and disposable lands
Properties have been in possession of the land in of the public domain under a bona fide claim of
question since this date, or earlier, Manna ownership since June 12, 1945 or earlier. Since
Properties may rightfully apply for confirmation Manuel’s father Michael had been in open,
of title to the land. Manna Properties, a private continuous, exclusive and notorious possession of
corporation, may apply for judicial confirmation of the land since 1935, and that the land was
the land without need of a separate confirmation declared alienable in the same year, his possession
proceeding for its predecessors-in-interest first has ripened into ownership which entitles him or
(Republic v. Manna Properties Inc., G.R. No. 146527, his successor Manuel to file an application for
January 31, 2005). judicial confirmation of imperfect title.
Q: Manuel was born on 12 March 1940 in a (b) I have to prove that the land was already
1,000-square meter property where he grew declared alienable at the time that Manuel or his
up helping his father, Michael, cultivate the father Michael took possession of the land and
land. Michael has lived on the property since that their possession was open, continuous,
the land was opened for settlement at about exclusive and notorious which started prior to or
the time of the Commonwealth government in on June 12, 1945 as required by C.A. No. 141. To
1935, but for some reason never secured any prove the first requisite, the original classification
title to the property other than a tax of the land as approved by the DENR Secretary
declaration in his name. He has held the (Republic v. T.A.N. Properties, Inc., G.R. No. 154953,
property through the years in the concept of June 26, 2008) or in lieu thereof, a Certification by
an owner and his stay was uncontested by the DENR Regional office attesting to the alienable
others. He has also conscientiously and and disposable character of the land must have to
continuously paid the realty taxes on the land. be submitted (Republic v. Serrano G.R. No. 183063,
February 24, 2010). I also have to file together
Michael died in 2000 and Manuel-as Michael’s with the application for registration all original
only son and heir-now wants to secure and muniments of title or copies thereof and a survey
register title to the land in his own name. He plan of the land approved by the Bureau of Lands
consults you for legal advice as he wants to in accordance with Sec. 17 of P.D. 1529. Manuel
perfect his title to the land and secure its may also submit the tax declarations and tax
registration in his name. payment receipts which have been ruled to be
good indications of possession in the concept of
a. What are the laws that you need to consider owner (Republic v. Candy Maker, Inc., G.R. No.
in advising Manuel on how he can perfect 163766, June 22, 2006).
his title and register the land in his name?
Explain the relevance of these laws to your Persons qualified for judicial confirmation
projected course of action.
b. What do you have to prove to secure 1. Filipino citizens who by themselves or
Manuel's objectives and what through their predecessors-in-interest have
documentation are necessary? (2013 Bar) been in open, continuous, exclusive and
A: notorious possession and occupation of
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CIVIL LAW
A different rule obtains for forest lands, such as 6. Service of notice by sheriff upon contiguous
those which form part of a reservation for owners, occupants and those known to have
provincial park purposes, the possession of which interest in the property;
cannot ripen into ownership. It is elementary in 7. Filing of answer or opposition to the
the law governing natural resources that forest application by any person whether named in
land cannot be owned by private persons. As held the notice or not;
in Palomo v. CA, forest land is not registrable and 8. Hearing of case by court;
possession thereof, no matter how lengthy, cannot 9. Promulgation of judgment by court;
convert it into private property, unless such lands 10. Issuance of a decree by court declaring the
are reclassified and considered disposable and decision final, and instructing the NALDTRA
alienable. In the case at bar, the property in to issue a decree of confirmation and
question was undisputedly classified as registration;
disposable and alienable; hence, the ruling in 11. Entry of decree of registration in NALDTRA;
Palomo is inapplicable (Palomo v. CA, G.R. No. 12. Sending of copy of the decree of registration
95608, January 21, 1997). to corresponding RD; and
13. Transcription of decree of registration in the
NOTE : The law does not require that the land registration book and issuance of owner’s
subject of registration should have been alienable duplicate original certificate of title (OCT) of
and disposable during the entire period of applicant by RD, upon payment of prescribed
possession, or since June 12, 1945. It is sufficient fees.
that the land is already declared as alienable and
disposable land at the time the application for NOTE: After judgment has become final and
registration is filed so as to entitle the possessor executory, the issuance of decree and OCT is
to registration (Malabanan v. Republic, G.R. No. ministerial on the part of LRA and RD.
179987, April 29, 2009). It must be stressed,
however, that the applicant for land registration Application of Rules of Court in land
must have been in possession of the land sought to registration proceedings
be registered since June 12, 1945 or earlier.
The Rules of Court could be applied in land
REGISTRATION PROCESS AND REQUIREMENTS registration proceedings in a suppletory character
or whenever practicable or convenient.
Modes of registering land titles
NOTE: Motion to intervene in a land registration
There are two modes: case is not allowed.
1. Original registration proceedings under the
Property Registration Decree (P.D. 1529); and APPLICATION
2. Confirmation of imperfect or incomplete title
under Sec. 48(b) of the Public Land Act, as Form of the application for registration or
amended. judicial confirmation
NOTE: MeTC, MCTC, and MTC has jurisdiction to Clearly, the law itself, Sec. 34 of B.P. Blg. 129,
decide cadastral and land registration cases, already provides the specific instances when first
provided: level courts may exercise their delegated
jurisdiction.
1. There is no controversy or opposition
(uncontested lots); or Q: Leonor Santos filed an application for
2. Value of contested lots does not exceed P100, registration with the CFI of Rizal. The Director
000 (R.A. 7691, Sec. 4). of Lands opposed. Notices were given and the
case was set for hearing. Later, the court
In other cases, the RTC has jurisdiction. issued an order dismissing the application on
the basis of a report from the LRC that a
NOTE: Appeal is taken to the Court of Appeals. “homestead patent was issued (to Julio
Delgado) by the Director of Lands during the
NOTE: The value of the property is ascertained in pendency of the registration proceedings.” Was
three ways: the court divested of its jurisdiction by a
subsequent administrative act consisting in the
(1) By the affidavit of the claimant; issuance by the Director of Lands of a
(2) By agreement of the respective claimants, homestead patent covering the same land
if there are more than one; or subject of the registration case?
(3) From the corresponding tax declaration
of the real property (B.P. 129, Sec. 34). A: NO. In her application for registration, Santos
alleged, among other matters, that she is the
Q: Bantigue Corp. filed with the RTC an owner in fee simple of the land. Since the
application for registration over a lot with an existence or non-existence of applicant’s
assessed value of P14,920. However, the RTC registrable title is decisive of the validity or nullity
motu proprio remanded the case to the MTC of the homestead patent, the court’s jurisdiction
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could not have been divested by the homestead NOTE: The requirement of mailing and posting
patent's issuance. are mandatory.
Proceedings for land registration are in rem, New publication necessary to include
whereas proceedings for acquisition of homestead additional area
patent are not. A homestead patent, therefore,
does not finally dispose of the public or private If amendment of the application is made to
character of the land as far as courts acting upon include additional area, a new publication of the
proceedings in rem are concerned (De los Angeles amended application must be made, but not when
v. Santos, G.R. No. L-19615, December 24, 1964). the amendment consists in the exclusion of a
portion form the area originally applied for (Benin
Sec. 2, P.D. 1529 has eliminated the distinction v. Tuason, G.R. No. L-26127, June 28, 1974).
between the court’s general jurisdiction and
limited jurisdiction. Purpose of the publication requirement
NOTE: Publication in the Official Gazette does not GR: If it is later shown that the decree of
dispense with the requirement of notice by registration had included land or lands not
mailing and posting. included in the publication, then the registration
proceedings and the decree of registration must
Lack of personal notice does not vitiate the be declared null and void–but only insofar–as the
proceedings land not included in the publication concerned.
But the proceedings and the decree of registration,
Land registration proceedings are proceedings in relating to the lands that were included in the
rem, not in personam, and therefore it is not publication, are valid.
necessary to give personal notice to the owners or
claimants of the land sought to be registered, in XPN: If the difference is not as substantial as
order to vest the courts power or authority over would affect the identity of the land, failure to
the res. Notice of hearing by proper publication in publish the bigger area (insubstantial inclusion)
the Official Gazette is sufficient to clothe the court does not perforce affect the court’s jurisdiction.
with jurisdiction, and the mere fact that a person
purporting to have a legitimate claim in the Q: When may an amendment of the application
property did not receive persoanl notice is not be made?
sufficient ground to invalidate the proceedings
(Adez Realty Inc. v. CA, G.R. No. 100643, December A: Amendments to the application including
12, 1995). joinder, substitution, or discontinuance as to the
parties may be allowed by the court at any stage of
Defective publication the proceedings upon just and reasonable terms
(P.D. 1529, Sec. 19).
There is a defective publication in the following
instances: Necessity of publication and notice in the
amended application
1. Where what was published in the Official
Gazette is the description of a bigger lot which GR: Publication and notice are necessary where
includes the lands subject of registration. the amendment to the application consists in:
623
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NOTE: In this case, the jurisdiction of the Any person claiming an interest, whether named
court is not affected by the failure of filing a in the notice or not, may appear and file an
new application. opposition on or before the date of initial hearing,
or within such further time as may be allowed by
2. If the amendments to the application involves the court.
joinder, substitution or discontinuance as to
the parties; and Procedure to oppose the application
NOTE: This may be allowed by the court at The opposition shall state all the objections to the
any stage of the proceedings upon just and application and shall set forth the interest claimed
equitable terms. by the party filing the same and apply for the
remedy desired, and shall be signed and sworn to
3. If the amendment is due to change of name of by him or by some other duly authorized person
the applicant. (P.D. No. 1529, Sec. 25).
The law does not require that the application for Any person whether named in the notice or not,
registration be amended by substituting the provided, his claim of interest in the property
‘buyer’ or the ‘person to whom the property has applied for is based on a right of dominion or
been conveyed’ for the applicant. Neither does it some other real right independent of, and not
require that the ‘buyer’ or the ‘person to whom subordinate to, the rights of the government.
the property has been conveyed’ be a party to the
case. He may thus be a total stranger to the land Persons who may oppose in specific cases
registration proceedings.
1. A homesteader who has not yet been issued
Requirements his title but who had fulfilled all the
conditions required by law to entitle him to a
1. That the instrument be presented to the court patent;
by the interested party together with a motion 2. A purchaser of friar land who is deemed to
that the same be considered in relation with the have an equitable title to the land even before
application; and the issuance of the patent;
2. That prior notice be given to the parties to the 3. Persons who claim to be in possession of a
case (Mendoza v. CA, G.R. No. L-36637, July 14, tract of public land and have applied with the
1978). Bureau of Lands for its purchase;
4. The Government relative to the right of
OPPOSITION foreshore lessees of public land as the latter’s
right is not based on dominion or real right
Persons who may oppose the application for independent of the right of the government;
registration or
5. An awardee in a sales application who, by
virtue of the award, is authorized to take
625
CIVIL LAW
estoppel does not operate against the government 6. Investigation reports of Bureau of Lands
for the acts of its agents. investigator; or
7. Legislative act, or by statute.
Q: If an order of general default is issued, may
the court automatically grant the application? NOTE: The Court held that the CENRO/PENRO
certification is not sufficient evidence of the facts
A: NO. Even in the absence of an adverse claim, stated therein (Gaerlan v. Republic, G.R. No.
the applicant still has to prove that he possesses 192717, March 12, 2014).
all the qualifications and none of the
disqualifications to obtain the title. If he fails to do “In Republic v. Hanover Worldwide Trading
so, his application will not be granted. Corporation, the Court declared that the CENRO is
not the official repository or legal custodian of the
Q: Can a party who has been declared in issuances of the DENR Secretary declaring the
default appeal from the judgment by default alienability and disposability of public lands. Thus,
without first filing a motion to set aside the the CENRO Certification should be accompanied
order of default? by an official publication of the DENR Secretary's
issuance declaring the land alienable and
A: YES. As held in the case of Martinez v. Republic: disposable” (Republic v. Aboitiz, G.R. No. 174626,
“If it cannot be made any clearer, we hold that a October 23, 2013).
defendant party declared in default retains the
right to appeal from the judgment by default on Q: The Cenizas applied for registration of their
the ground that the plaintiff failed to prove the title over a parcel of public land which they
material allegations of the complaint, or that the inherited. Without presenting proof that the
decision is contrary to law, even without need of land in question is classified as alienable or
the prior filing of a motion to set aside the order of disposable, the court granted the application,
default. We reaffirm that the Lim Toco doctrine, holding that mere possession for a period as
denying such right to appeal unless the order of provided for by law would automatically
default has been set aside, was no longer entitle the possessor the right to register
controlling in this jurisdiction upon the effectivity public land in his name. Was the court ruling
of the 1964 Rules of Court, and up to this day” correct?
(Martinez v. Republic, G.R. No. 160895, October 30,
2005). A: NO. Mere possession for a period required by
law is not enough. The applicant has to establish
EVIDENCE REQUIRED IN LAND REGISTRATION first the disposable and alienable character of the
public land, otherwise, public lands, regardless of
Proof of: their classification, can be subject of registration
of private titles, as long as the applicant shows
1. Declassification – The land applied for has that he meets the required years of possession.
been declassified from the forest or timber The applicant must establish the existence of a
zone and is a public agricultural land, is positive act of the government, such as a
alienable and disposable, or otherwise capable presidential proclamation or an executive order;
of registration; administrative action; reports of Bureau of Lands
2. Identity of the land; and investigators and a legislative act or a statute
3. Possession and occupation of the land for the (Republic v. Ceniza, G.R. No. 127060, November 19,
length of time and in the manner required by 2002).
law.
Proof to establish the identity of the land
Proof to establish declassification of land sought to be registered
627
CIVIL LAW
years, said tax declaration being only for the paying taxes for a property that is not in his
year 1994 and the property tax receipts actual or constructive possession (Charles L.
presented by them were all of recent dates. Ong v. Republic of the Philippines, G.R. No.
Are the said pieces of evidence sufficient to 175746, March 12, 2008 and Republic of the
establish actual possession of land for the Philippines v. Teodoro P. Rizalvo, Jr. G.R. No.
period required by law thus warranting the 172011, March 7, 2011).
grant of the application?
Delayed declaration of property for tax
A: NO. Their bare assertions of possession and purposes negates a claim of continuous,
occupation by their predecessors-in-interest are exclusive, and interrupted possession in the
hardly the “well-nigh incontrovertible” evidence concept of an owner (Regalado v. Republic, G.R.
required in cases of this nature. Proof of specific No. 168155, February 15, 2007).
acts of ownership must be presented to
substantiate their claim. They cannot just offer Mere failure of the owner of the land to pay the
general statements which are mere conclusions of realty tax does not warrant a conclusion that
law than factual evidence of possession. there was abandonment of his right to the
property.
Actual possession of a land consists in the
manifestation of acts of dominion over it of such a 3. Other kinds of proof
nature as a party would naturally exercise over his e.g. Testimonial evidence (i.e. accretion is on a
own property (Republic v. Alconaba, G.R. No. land adjacent to a river);
155012, April 14, 2004).
NOTE: Any evidence that accretion was formed
NOTE: “Well-nigh incontrovertible evidence” through human intervention negates the claim.
refers to the degree of proof of registrable rights
required by law in registration proceedings. 4. Presidential issuances and legislative acts.
Proof to establish private ownership of land NOTE: It is constitutive of a “fee simple” title or
absolute title in favor of the grantee.
1. Spanish title;
Q: Ildefonso died leaving a parcel of land in
NOTE: Spanish titles are no longer admissible favor of her granddaughter Paraguya covered
as proof of ownership in land registration by a titulo posesorio issued sometime in 1983
proceedings filed after August 16, 1976. or 1985 in the name of the former. However,
Paraguya found that a title on the same land
2. Tax declaration and tax payments; was issued in the name of Escurel, the
administrator of her grandfather’s estate. To
Tax declarations and receipts are not protect her rights, she sought the annulment of
conclusive evidence of ownership. At most, Escurel’s title alleging that such was obtained
they constitute mere prima facie proofs of through fraud and deceit. In defense, Escurel
ownership of the property for which taxes have stated that she acquired the title through her
been paid. In the absence of actual, public and father who applied for a free patent over the
adverse possession, the declaration of the land subject properties, resulting in the issuance of
for tax purposes does not prove ownership. Free Patent No. V-3 005844 under OCT No. P-
They may be good supporting or collaborating 17792 in her name. Should the trial court give
evidence together with other acts of possession due course to Paraguya’s complaint?
and ownership; but by themselves, tax
declarations are inadequate to establish A: No. Paraguya’s complaint for annulment of title
possession of the property in the nature and should be dismissed altogether since she merely
for the period required by statute for acquiring relied on the titulo posesorio issued in favor
imperfect or incomplete title to the land (Tan v. Ildefonso sometime in 1983 or 1985. Based on
Republic, G.R. No. 177797, December 4, 2008). Section 1 of PD 892, entitled "Discontinuance of
the Spanish Mortgage System of Registration and
NOTE: While tax declarations are not of the Use of Spanish Titles as Evidence in Land
conclusive proof of ownership, they constitute Registration Proceedings," Spanish titles can no
good indicia of possession in the concept of longer be used as evidence of ownership after six
owner and a claim of title over the subject (6) months from the effectivity of the law, or
property for no one in his right mind would be starting August 16, 1976. (Laura Paraguya v.
629
CIVIL LAW
NOTE: The principle of res judicata applies to all after the decision adjudicating the title becomes
cases and proceedings, including land registration final and executory, and it is on the basis of said
and cadastral proceedings (Aring v. Original, G.R. decree that the Register of Deeds concerned issues
No. L-18464, December 29, 1962). the corresponding certificate of title (Director of
Lands v. Reyes, G.R. No. L-27594, November 28,
Contents of judgment in land registration 1975).
proceedings
No period within which decree may be issued
When judgment is rendered in favor of the
plaintiff, the court shall order the entry of a new The fact that no decree has as yet been issued
certificate of title and the cancellation of the cannot divest the applicant of his title to and
original certificate and owner’s duplicate of the ownership of the land in question. There is nothing
former registered owner. in the law that limits the period within which the
court may issue a decree. The reason is that the
NOTE: A judgment in rem is binding upon the judgment is merely declaratory in character and
whole world, such as a judgment in a land does not need to be enforced against the adverse
registration case or probate of a will; and a party (Del Rosario v. Limcaoco, G.R. No. 177392,
judgment in personam is binding upon the parties November 26, 2012).
and their successors-in-interest but not upon
strangers. From another perspective, the judgment does not
have to be executed by motion or enforced by
A judgment directing a party to deliver possession action within the purview of Rule 39 of the 1997
of a property to another is in personam. Rules of Civil Procedure (Republic v. Nillas, G.R. No.
An action for declaration of nullity of title and 159595, January 23, 2007).
recovery of ownership of real property, or
reconveyance, is a real action but it is an action in Decree of registration
personam, for it only binds the parties impleaded
although it concerns the right to a tangible thing It is a document prepared in the prescribed form
(Muoz v. Yabut, G.R. No. 142676, June 6, 2011). by the LRA Administrator, signed by him in the
name of the court, embodying the final disposition
Motion for execution of judgment not required of the land by the court and such other data found
in the record, including the name and other
Upon finality of judgment in land registration personal circumstances of the applicant, the
cases, the winning party does not file a motion for technical description of the property, liens and
execution as in ordinary civil actions. Instead, he encumbrances affecting it, and such other matters
files a petition with the land registration court for as determined by the court in its judgment.
the issuance of an order directing the Land
Registration Authority to issue a decree of Q: In a land registration case, the court
registration, a copy of which is then sent to the rendered a decision granting Reyes’
Register of Deeds for inscription in the application, hence the Director of Lands
registration book, and issuance of the original appealed. Reyes moved for the issuance of a
certificate of title. decree of registration pending appeal. May his
motion be granted?
The LRA merely issues an order for the issuance of
a decree of registration and the corresponding A: NO. Innocent purchasers may be misled into
certificate of title in the name of such applicant purchasing real properties upon reliance on a
(Top Management Programs Corp. v. Fajardo, G.R. judgment which may be reversed on appeal. A
No.150462, June 15, 2011). Torrens title issued on the basis of a judgment
that is not final is a nullity as it violates the explicit
Execution pending appeal not required provisions of the LRA, which requires that a
decree shall be issued only after the decision
Execution pending appeal is not applicable in a adjudicating the title becomes final and executor
land registration proceeding and the certificate of (Director of Lands v. Reyes, G.R. No. L-27594,
title thereby issued is null and void. November 28, 1975).
A Torrens title issued on the basis of a judgment
that is not final is a nullity, as it is violative of the Scope of decree of registration
explicit provisions of the Land Registration Act
which requires that a decree shall be issued only
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CIVIL LAW
3. In a judicial foreclosure of mortgage, a quasi in the foreclosure sale, upon which it is based,
rem proceeding, provided that the mortgagor was infirm. Is said ruling correct?
is in possession of the mortgaged realty and no
third person, not a party to the foreclosure suit A: NO. Any question regarding the regularity and
had intervened; and validity of the sale, as well as the consequent
4. In execution sales. cancellation of the writ, is to be determined in a
subsequent proceeding as outlined in Sec. 8, Act
Issuance of writ of possession not ministerial 3135, as amended by Act 4118. Such question is
where third party is in adverse possession or not to be raised as a justification for opposing the
is not a privy to the debtor issuance of the writ of possession, since, under the
Act, the proceeding is ex parte.
GR : A purchaser in a public auction sale of a
foreclosed property is entitled to a writ of As the purchaser of the properties in the extra-
possession. judicial foreclosure sale, PNCB is entitled to a writ
of possession. The basis of this right to possession
XPN : The possession of the property shall be is the purchaser’s ownership of the property.
given to the purchaser or last redemptioner unless Mere filing of an ex parte motion for the issuance
a third party is actually holding the property of the writ of possession would suffice, and no
adverse to the judgment obligor (Sec. 3, Rule 39, bond is required (Sulit v. CA, G.R. No. 119247,
Rules of Court). February 17, 1997; Agcaoili, 2008).
NOTE : The phrase ‘a third party who is actually Q: If the court granted the registration, must
holding the property adversely to the judgment the applicant move for the issuance of a writ of
obligor’ contemplates a situation in which a third possession in case he is deprived of possession
party holds the property by adverse title or right, over the land subject of the registration
such as that of a co-owner, tenant or usufructuary. proceedings?
The co-owner, agricultural tenant, and
usufructuary possess the property in their own A: YES, if it is against:
right, and they are not merely the successor or 1. The person who has been defeated in a
transferee of the right of possession of another co- registration case; or
owner or the owner of the property. Notably, the 2. Any person adversely occupying the land or
property should not only be possessed by a third any portion thereof during the land
party, but also held by the third party adversely to registration proceedings up to the issuance of
the judgment obligor (Marquez v. Alindog, G.R. No the final decree.
184045, January 22, 2014).
However, if it is against persons who took
Q: How may possession of property be possession of the land AFTER final adjudication of
obtained? the same in a registration proceeding, in which
case, the remedy is to file a separate action for:
A: Possession of the property may be obtained by
filing an ex parte motion with the RTC court of the 1. Unlawful entry;
province or place where the property is situated. 2. Unlawful detainer; or
Upon filing of the motion and the required bond, it 3. Reinvindicatory action, as the case may be, and
becomes a ministerial duty of the court to order only after a favorable judgment can the
the issuance of a writ of possession in favor of the prevailing party secure a writ of possession
purchaser. After the expiration of the one-year (Bernas v. Nuevo, G.R. No. L-58438, January 31,
period without redemption being effected by the 1984).
property owner, the right of the purchaser to the
possession of the foreclosed property becomes Prescription of a writ of possession
absolute (Laureano v. Bormaheco Inc., G.R. No.
137619, February 6, 2001). GR: A petition for the issuance of a writ of
possession does not prescribe.
Q: PNCB purchased a parcel of land in a
foreclosure sale and applied for a writ of XPN: If a party has once made use of the benefit of
possession after the lapse of more than one a writ of possession, he may not ask for it again, if
year. On appeal, however, it was held that the afterwards he loses possession of the property
writ of possession cannot be issued because obtained by virtue of the original writ.
DECREE OF CONFIRMATION AND EFFECT: It was as if no title was ever issued in this
REGISTRATION case to the petitioner and therefore this is hardly
the occasion to talk of collateral attack against a
It is issued by LRA after finality of judgment, and title (Heirs of Leoncio C. Oliveros, represented by
contains technical description of the land. It is Aurora B. Oliveros, et al. vs San Miguel Corporation,
subject only to an appeal. et al., G.R. No. 173531, February 1, 2012).
It is conclusive evidence of the ownership of the Q: In a case for recovery of possession based
land referred to therein and becomes indefeasible on ownership, is a third-party complaint to
and incontrovertible after one year from the nullify the title of the third-party defendant
issuance of the decree. considered a direct attack on the title?
Decree of confirmation and registration v. A: YES. If the object of the third-party complaint is
Decree of registration to nullify the title of the third-party defendant, the
third-party complaint constitutes a direct-attack
DECREE OF DECREE OF on the title because the same is in the nature of an
CONFIRMATION AND REGISTRATION OF original complaint for cancellation of title.
REGISTRATION OF TITLE
TITLE Q: If an attack is made thru a counterclaim,
should it be disregarded for being a collateral
Issued pursuant to the Issued pursuant to the attack?
Public Land Act, where Property Registration
the presumption is that Decree, where there A: NO. A counterclaim is also considered an
the land applied for already exists a title original complaint, and as such, the attack on the
pertains to the State, which is confirmed by title is direct and not collateral.
and the occupants and the court (Limcoma
possessors only claim Multi-Purpose Q: Mr. and Mrs. Roman and Mr. and Mrs. Cruz
an interest in the same Cooperative v. Republic, filed an application for registration of a parcel
by virtue of their G.R. No. 167652, July 10, of land which after due proceedings was
imperfect title or 2007). granted by the RTC acting as a land
continuous, open, and registration court. However, before the decree
notorious possession. 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
Doctrine of non-collateral attack of a decree or
expressly undertook to submit the deed of sale
title
to the land registration court so that the title
to the property would be directly issued in
A decree of registration or a registered title cannot
Juan's name.
be impugned, enlarged, altered, modified, or
diminished either in collateral or direct
a. Is such stipulation valid?
proceeding, after the lapse of one year from the
b. Distinguish a direct attack from a
date of its entry.
collateral attack on a title.
c. If the title in (a) is issued in the names of
XPN: Fake or non-existent titles.
the original sellers, would a motion filed
by Juan in the same case to correct or
NOTE: An oppositor cannot simply invoke the
amend the title in order to reflect his name
nullity of the title as a defense as it partakes
the nature of a collateral attack. The opponent
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as owner considered be collateral attack? Affidavits of merit required to prove FAMEn
(2015 Bar)
1. Affidavit setting forth the facts and
A: circumstances alleged to constitute such
a. YES, because when one who is not the owner fraud, accident, mistake, or execusable
of the property sells or alienates it and later negligence;
the seller or grantor acquires title, such title
passes by operation of law to the buyer or Reason: It is to enable the court to determine
grantee (NCC, Art. 1434). if the movant’s claim of fraud, etc. is not mere
b. A direct attack on a title is one where the conclusion but is indeed borne our by the
action filed is precisely for the purpose of relevant facts (Yap v. Tanada, G.R. No. L-32917,
pointing out the defects in the title with a July 19, 1988).
prayer that it be declared void. A collateral
attack is one where the action is not instituted 2. Affidavit setting forth the facts claimed to
for the purpose of attacking the title but the constitute the movant’s meritorious cause
nullity of the title is raised as a defense in a of action or defense.
different action.
c. NO, because Juan is not attacking the title but Reason: It would be useless, a waste of time,
merely invoking his right as transferee. Hence, to set aside the judgment and reopen the case
it does not involve a collateral attack on the to allow the movant to adduce evidence when
title. he has no valid cause of action or meritorious
defense (Yap v. Tanada, G.R. No. L-32917, July
19, 1988).
REVIEW OF DECREE OF REGISTRATION
EXTRINSIC FRAUD INTRINSIC FRAUD
refers to any fraudulent refers to acts of a party
Available remedies to question the validity of act of the successful in a litigation during
judgment in a registration case party in a litigation the trial, such as the
which is committed use of forged
1. New trial or reconsideration (Rule 37, Rules of outside the trial of a instruments or
Court); case against the perjured testimony,
2. Appeal to the CA or SC in the manner as defeated party, or his which did not affect the
ordinary actions (Section 33, PD 1529); agents, attorneys or presentation of the
3. Relief of judgment (Rule 38, Rules of Court); witnesses, whereby said case, but did prevent a
4. Annulment of judgment (Rule 37, Rules of defeated party is fair and just
Court); prevented from determination of the
5. Claim under Assurance Fund (Section 95, PD presenting fully and case.
1529); fairly his side of the
6. Review of Decree of Registration (Section 32, PD case.
1529); Fraud in the Not fraud in the
7. Reversion (Section 101, CA 141); procurement of procurement of
8. Action for reconveyance; judgment. jugment.
9. Cancellation of title;
10. Quieting of Title; Q: What kind of accident does the law
11. Criminal prosecution under the Revised Penal contemplate?
Code.
A: It must appear that there was accident or
MOTION FOR NEW TRIAL surprise which ordinary prudence could not have
guarded against, and by reason of which the party
Grounds applying has probably been impaired in his rights.
Illness constitutes accident over which a party has
1. (FAMEn) - extrinsic Fraud, accident, nocontrol. Failure to attend trial for lack of
mistake, or excusable negligence; advance notice justifies new trial (Agcaoili, 2015).
2. Newly discovered evidence, which he
could not, with reasonable diligence, have Q: What kind of mistake does the law
discovered, and produced at the trial, and contemplate?
which if presented would probably alter
the result;
NOTE: A party who has filed a timely motion for PETITION FOR RELIEF FROM JUDGMENT
new trial cannot file a petition for relief after his
motion has been denied. These two remedies are Grounds: (FAMEn)
exclusive of each other. He should appeal from the
judgment and question such denial. Relief will not 1. Fraud;
be granted to a party who seeks to be relieved 2. Accident;
from the effects of a judgment when the loss of the 3. Mistake; and
remedy at law was due to his own negligence, or a 4. Excusable negligence.
mistaken mode of procedure (Feria and Noche,
Civil Procedure, Vol. I, 644). Period to file
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CIVIL LAW
Requirements for its validity prejudice to the original action being refiled in the
proper court.
1. Accompanied with affidavits showing the However, where the judgment or final order or
fraud, accident, mistake, or excusable resolution is set aside on the ground of extrinsic
negligence relied upon; fraud, the court may on motion order the trial
2. The facts constituting the petitioner’s court to try the case as if a timely motion for new
good and substantial cause of action or trial had been granted therein (Section 7, Rule 47).
defense, as the case may be; and
3. Verification. CLAIM AGAINST THE ASSURANCE FUND
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CIVIL LAW
some other person has a right to, or interest in, the conjugal partnership between him and Susana
such property, and pays a full and fair price for the was dissolved. Thus, an implied co-ownership
same, at the time of such purchase, or before he arose among Susana and the other heirs of Roque
has notice of the claim or interest of some other with respect to his share in the assets of the
person in the property. Good faith is the opposite conjugal partnership pending liquidation.
of fraud and of bad faith, and its non-existence While she herself as co-owner had the right to
must be established by competent proof. Sans mortgage or even sell her undivided interest in
such proof, a buyer is deemed to be in good faith the subject property, she could not mortgage or
and his interest in the subject property will not be otherwise dispose of the same in its entirety
disturbed. A purchaser of a registered property without the consent of the other co-owners.
can rely on the guarantee afforded by pertinent
laws on registration that he can take and hold it 2. No. While the rule is that every person dealing
free from any and all prior liens and claims except with registered land may safely rely on the
those set forth in or preserved against the correctness of the certificate of title issued
certificate of title [Philippine Charity Sweepstakes therefor and the law will in no way oblige him to
Office (PCSO) v. New Dagupan Metro Gas go beyond the certificate to determine the
Corporation, et al.; G.R. No. 173171, July 11, 2012]. condition of the property, where the land sold is in
the possession of a person other than the vendor,
NOTE: An innocent purchaser for value includes a as in this case, the purchaser must go beyond the
lessee, mortgagee, or other encumbrances for certificate of title and make inquiries concerning
value. the actual possessor.
Purchaser in good faith and for value is the same Here, Norma, et. al. were in possession of the
as a purchaser for value. subject property when Sps. Manuel bought the
same. There is no showing that Sps. Manuel
Q: Spouses Roque Magsano and Susana Capelo inspected the property and inquired into the
(Sps. Magsano), the parents of Norma, et. al., nature of petitioners' possession and/or the
executed in favor of PSLB a Real Estate extent of their possessory rights as a measure of
Mortgage over their parcel of land as security precaution (Norma Magsano v. Pangasinan Savings
for their loan. Sps. Magsano defaulted in their & Loan Bank, G.R. No. 215038, October 17, 2016).
obligation, causing the extra-judicial foreclose [Perlas-Bernabe]
of the mortgaged property in which PSLB
emerged as the highest bidder. It subsequently A forged deed may be the root of a valid title
sold the subject land to Sps. Manuel.
Thereafter, Sps. Magsano refused to vacate the GR: A forged or fraudulent deed is a nullity and
premises despite PSLB’s demands; hence, the conveys no title.
latter applied for and was granted a writ of
possession and demolition. Norma et. al. XPN: If the certificate of title has already been
sought to annul the Real Estate Mortgage. They transferred from the name of the true owner to
averred that Roque Magsano passed away the name of the forger or the name indicated by
prior to the execution of the Real Estate the forger, and while it remained that way, the
Mortgage; hence, the mortgage was void, and land was subsequently sold to an innocent
could not have conferred any right to PSLB purchaser (Muoz v. Yabut, G.R. No. 142676, June 6,
which it could pass to Sps. Manuel. PSLB and 2011).
the heirs of Sps. Manuel denied knowledge of
the death of Roque, and averred that Q: If the land subject of the dispute was not
petitioners have no cause of action to seek the brought under the operation of the Torrens
annulment of the Real Estate Mortgage since system, will the concept of an innocent
they were not parties thereto. purchaser for value apply?
3. Is the Real Estate Mortgage void? A: NO. If the land in question was not brought
4. Are Sps. Manuel purchasers in under the operation of Torrens system because
good faith? the original certificate of title is null and void ab
initio, the concept of an innocent purchaser for
A: 1. No. The validity of the Mortgage in favor of value does not apply.
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,
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CIVIL LAW
title. The underlying principle is that no one can and Delos Reyes are likewise void, including
give what one does not have. Moreover, in order the sale made by the Burgos siblings to their
for the holder of a certificate for value issued by aunt, Leonarda.
virtue of the registration of a voluntary
instrument may be considered a holder in good b. The evidence shows that the Rufloe caused a
faith for value, the instrument registered should notice of adverse claim to be annotated on the
not be forged. When the instrument presented is title of Delos Reyes as early as November 5,
forged, even if accompanied by the owner’s 1979. The annotation of an adverse claim is a
duplicate certificate of title, the registered owner measure designed to protect the interest of a
does not thereby lose his title, and neither does person over a piece of real property, and
the assignee in the forged deed acquire any right serves as a notice and warning to third parties
or title to the property (Mahilum v. Spouses Ilano, dealing with said property that someone is
G.R. No. 197923, June 22, 2015) claiming an interest on the same or may have
a better right than the registered owner
Q: Spouses Rufloe acquired a parcel of land thereof. Despite the notice of adverse claim,
located at Muntinlupa. However, in 1978 Delos the Burgos siblings still purchased the
Reyes forged the signatures of the spouses in property in question. Equally significant is the
Deed of Sale to make it appear that the fact that Delos Reyes was not in possession of
disputed property was sold to her by the the subject property when she sold the same
former. On the basis of the said deed of sale, to the Burgos siblings. Leonarda cannot be
Delos Reyes succeeded in obtaining title in her categorized as a purchaser in good
name. Hence, the Rufloes filed a complaint for faith. Since it was the Rufloes who continued
damages against Delos Reyes alleging that the to have actual possession of the property,
Deed of Sale was falsified as their signatures Leonarda should have investigated the nature
appearing thereon was forged. of their possession (Adoracion Rosales Rufloe,
et al., v. Leonarda Burgos et al., G.R. No.
During the pendency of the case, Delos Reyes 143573, January 30, 2009).
sold the subject property to the Burgos
siblings who then sold the same to their aunt, Q: Cipriano, one of Pablo’s heirs, executed an
Leonarda Burgos. However, the sale in favor of extrajudicial settlement of a sole heir and
Leonarda was not registered. Thus, no title confirmation of sales, declaring himself as the
was issued in her name. The subject property only heir and confirmed the sales made in
remained in the name of the Burgos siblings favor of the spouses Rodolfo. Consequently, a
who also continued paying the real estate certificate of title was issued in the name of the
taxes thereon. spouses, who then sold the property to
Guaranteed Homes. Pablo’s other descendants
a. Are the sales of the subject property by seek reconveyance of the property sold to the
Delos Reyes to the Burgos siblings and the spouses alleging that the extrajudicial
subsequent sale to Leonarda valid and settlement was forged. Who is the rightful
binding? owner of the property?
b. Are the respondents considered as
innocent purchasers in good faith and for A: Guaranteed Homes is the rightful owner,
value despite the forged deed of sale of even assuming that the extrajudicial settlement
their transferor Delos Reyes? was a forgery. Generally a forged or fraudulent
deed is a nullity and conveys no title. There are,
A: however, instances when such a fraudulent
a. The forged deed of sale was null and void document may become the root of a valid title.
and conveyed no title. It is a well-settled One such instance is where the certificate of title
principle that no one can give what one does was already transferred from the name of the true
not have, nemo dat quod non habet. One can owner to the forger, and while it remained that
sell only what one owns or is authorized to way, the land was subsequently sold to an
sell, and the buyer can acquire no more right innocent purchaser. For then, the vendee had the
than what the seller can transfer legally. Due right to rely upon what appeared in the certificate.
to the forged deed of sale, Delos Reyes
acquired no right over the subject property Also, the extrajudicial settlement was recorded in
which she could convey to the Burgos the Register of Deeds. Registration in the public
siblings. All the transactions subsequent to registry is notice to the whole world (Guaranteed
the falsified sale between the spouses Rufloe Homes, Inc. v. Heirs of Valdez, Heirs of Tugade,
B bought the land relying on A's title, and NOTE: The State is not barred by res judicata nor
thereafter got a TCT in his name. It was only estoppel in instituting an action for reversion.
then that the spouses X and Y learned that
their land had been titled in B's name. May RECONVEYANCE
said spouses file an action for reconveyance of
the land in question against B? Reason (1999 Who institutes the action
Bar).
It is granted to the rightful owner of land which
A: The action of X and Y against B for has been wrongfully or erroneously registered in
reconveyance of the land will not prosper the name of another to compel the latter to
because B has acquired a clean title to the transfer or reconvey the land to him.
property being an innocent purchaser for value.
When to file
A forged deed is an absolute nullity and conveys
no title. The fact that the forged deed was A landowner whose property was wrongfully or
registered and a certificate of title was issued in erroneously registered under the Torrens system
his name, did not operate to vest upon A may bring an action, after one year from the
ownership over the property of X and Y. The issuance of the decree, for the reconveyance of the
registration of the forged deed will not cure the subject property. Such an action does not aim or
infirmity. However, once the title to the land is purport to re-open the registration proceeding
registered in the name of the forger and title to the and set aside the decree of registration, but only to
land thereafter falls into the hands of an innocent show that the person who secured the registration
purchaser for value, the latter acquires a clean title of the questioned property is not the real owner
thereto. A buyer of a registered land is not thereof (Agcaoili, 2015).
required to explore beyond what the record in the
registry indicates on its face in quest for any ACTION FOR ACTION FOR
hidden defect or inchoate right which may REVERSION RECONVEYANCE
subsequently defeat his right thereto. This is the The State files the It is granted to the
"mirror principle" of the Torrens system which action through the rightful owner of land
makes it possible for a forged deed to be the root Solicitor General. which has been
of a good title. wrongfully or
erroneously registered
REVERSION in the name of another.
Public domain Registered property
Subject of Reversion The State is not barred Persons qualified to file
by res judicata nor an action for
Reversion connotes restoration of public land estoppel in instituting reconveyance can be
fraudulently awarded or disposed of to the mass an action for reversion. barred by res judicata
of the public domain and may again be the subject and estoppel.
of disposition in the manner prescribed by law to
qualified applicants. It is instituted by the QUIETING OF TITLE
government, through the Solicitor General. But an
action for cancellation, not reversion, is proper Whenever there is a cloud on title to real property
where private land had been subsequently titled, or any interest therein, by reason of any
and the party plaintiff in this case is the prior instrument, record, claim, encumbrance or
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CIVIL LAW
proceedings which is apparently valid or effective cadastral court to register under the Torrens
but is in truth and in fact invalid, ineffective, system.
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 CERTIFICATE OF TITLE
be brought to prevent a cloud from being cast
upon title to real property or any interest therein It is the transcript of the decree of registration
(Art. 476, Civil Code). made by the Register of Deeds in the registry. It
accumulates in one document a precise and
Cloud on the title correct statement of the exact status of the fee
simple title which an owner possesses.
A cloud on title is an outstanding claim or
encumbrance which, if valid, would affect or Registration is the operative act which gives
impair the title of the owner of a particular estate, validity to the transfer or creates a lien upon the
and on its face has that effect, but can be shown by land. A certificate of title serves as an evidence of
extrinsic proof to be invalid or inapplicable to the
an indefeasible and incontrovertible title to the
estate in question. The remedy for removing a property in favor of the person whose name
cloud on title is usually the means of an action to appears therein (Spouses Vilbar v. Opinion, G.R. No.
quiet title (Black’s Law Dictionary, 6th Ed., 255).
176043, January 15, 2014).
CADASTRAL LAND REGISTRATION NOTE: A certificate of title is different from a title.
Title constitutes a just cause of exclusive
It is a proceeding in rem, initiated by the filing of a
possession or the foundation of ownership of
petition for registration by the government, not by property. A certificate of title is merely an
the persons claiming ownership of the land
evidence of ownership and not the title to the land
subject thereof, and the latter are, on the pain of itself (Castillo v. Escutin, G.R. No. 171056, March 13,
losing their claim thereto, in effect compelled to go 2009).
to court to make known their claim or interest
therein, and to substantiate such claim or interest.
Types of certificates of title
Purpose of cadastral registration
1. Original Certificate of Title (OCT) – The first
title issued in the name of the registered
Here, the government does not seek the owner by the Register of Deeds covering a
registration of land in its name. The objective of
parcel of land which had been registered
the proceeding is the adjudication of title to the under the Torrens system by virtue of a
lands or lots involved in said proceeding. judicial or administrative proceeding. It
Furthermore, it is to serve public interest by
consists of one original copy filed in the
requiring that the titles to the lands be settled and Register of Deeds, and the owner’s duplicate
adjudicated (Act. No. 2259, Sec. 1).
certificate delivered to the owner; and
Extent of authority of cadastral courts
2. Transfer Certificate of Title (TCT) – The title
issued by the Register of Deeds in favor of a
The cadastral court is not limited to merely
transferee to whom the ownership of a
adjudication of ownership in favor of one or more
registered land has been transferred by any
claimants. If there are no successful claimants, the
legal mode of conveyance.
property is declared public land.
Difference between title over land, land title,
Cadastral courts do not have the power to certificate of title and deed
determine and adjudicate title to a lot already
covered by homestead patent to a person other
than a patentee. TITLE LAND TITLE
A juridical act or deed The evidence of the
Cadastral court possesses no authority to award
which is not sufficient owner’s right or extent
damages.
by itself to transfer of interest, by which he
ownership but provides can maintain control,
NOTE: A parcel of forest land is within the
only for a juridical and as a rule, assert
exclusive jurisdiction of the Bureau of Forestry
justification to effect the right to exclusive
and beyond the power and jurisdiction of the
acquisition or transfer possession and
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CIVIL LAW
5. Intellectual creation; the Torrens certificate and tax declarations in
6. Prescription; and her name. Is Filomena the lawful owner of such
7. Succession. property?
NOTE: Registration of a piece of land under the A: NO. A Torrens certificate does not create or
Torrens System does not create or vest title, vest title, but is merely an evidence of an
because it is not a mode of acquiring ownership. indefeasible and incontrovertible title to the
Thus, notwithstanding the indefeasibility of the property in favor of the person whose name
Torrens title, the registered owner may still be appears therein. Land registration under the
compelled to reconvey the registered property to Torrens system was never intended to be a means
its true owners (Heirs of Tanyag v. Gabriel, et. al., of acquiring ownership.
G.R. No. 175763, April 11, 2012).
Neither does the existence of tax declarations
Possession v. Occupation create or vest title. It is not a conclusive evidence
of ownership, but a proof that the holder has a
POSSESSION OCCUPATION claim of title over the property (Larena v. Mapili,
et. al., G.R. No. 146341, August 7, 2003).
Applies to a property Applies only to a
with or without an property without an Q: In 1929, an OCT covering the lot in
owner. owner. controversy was issued in the name of Maria
Ramos, Heirs of Maligaso’s aunt. In 1965,
By itself does not confer Confers ownership by Maria sold it to the Spouses Encinas which led
ownership. itself. to the issuance of a TCT in favor of the latter.
There can be possession There can be no
30 years from the time they purchased the lot,
without ownership. occupation without
Spouses Encinas issued two demand letters to
ownership.
the Heirs of Maligaso asking them to vacate the
contested area but they refused to leave.
Acquisition of land titles Hence, the Spouses Encinas filed a complaint
for unlawful detainer against them. According
1. Public grant; to the Heirs, however, their occupation
2. Emancipation patent or grant; remained undisturbed for more than 30 years
3. Reclamation; and the Spouses’ failure to detail and specify
5. Adverse possession / acquisitive prescription; the Heirs’ supposedly tolerated possession
6. Private grant or voluntary transfer; suggest that they are aware of their claim over
7. Accretion; the subject area. Decide with reason.
8. Involuntary alienation; and
9. Descent or devise. A: The validity of Spouses’ certificate of title
cannot be attacked by the Heirs in this case for
Torrens Title ejectment. Under Sec. 48 of P.D. No. 1529, a
certificate of title shall not be subject to collateral
A certificate of ownership issued under the attack. It cannot be altered, modified or cancelled,
Torrens system of registration by the government, except in a direct proceeding for that purpose in
through the Register of Deeds (RD) naming and accordance with law. Whether or not petitioner
declaring the owner in fee simple of the real has the right to claim ownership over the property
property described therein, free from all liens & is beyond the power of the trial court to determine
encumbrances, except as may be expressly noted in an action for unlawful detainer.
there or otherwise reserved by law. As ruled in Spouses Ragudo v. Fabella Estate
Tenants Association, Inc., laches does not operate
Q: Filomena allegedly bought a parcel of to deprive the registered owner of a parcel of land
unregistered land from Hipolito. When she had of his right to recover possession thereof (Heirs of
the property titled and declared for tax Jose Maligaso, Sr., etc. v. Sps. Simon D. Encinas and
purposes, she sold it. The Mapili’s question the Esperanza E. Encinas, G.R. No. 182716, June 20,
transfer, saying that Filomena falsely stated in 2012).
her Affidavit that Hipolito sold it to her in
1949, since by that time, he is already dead. Probative value of a Torrens title
Filomena maintains that she is the lawful
owner of the land by virtue of the issuance of
A Torrens certificate is an evidence of indefeasible A: Ruben has the right to possession. A title
title of property in favor of the person whose issued under the Torrens system is entitled to all
name appears therein–such holder is entitled to the attributes of property ownership, which
the possession of the property until his title is necessarily includes possession. Ruben is correct
nullified. that as a Torrens title holder over the subject
properties, he is the rightful owner and is entitled
Q: Hadji Serad filed an action to quiet title with to possession thereof. In this case, the Quitclaim
damages with the RTC. Accordingly, Datu executed by the elder Corpuz in favor of Ruben
Kiram with several armed men, forcibly and was executed made ahead of the Deed of Sale of
unlawfully entered his property and destroyed Spouses Agustin. Thus, the sale of the subject
the nursery buildings, cabbage seedlings and properties by Ruben’s father to Spouses cannot be
other improvements. Datu Kiram however considered as a prior interest at the time Ruben
denied the material allegations of Hadji Serad, came to know of the transaction (Ruben C. Corpuz
asserting that he and his predecessors-in- v. Spouses Hilarion Agustin and Justa Agustin, G.R.
interest are the ones who had been in open, No. 183822, January 18, 2012).
public, continuous, and exclusive possession of
the property in dispute. He also alleged that he Rules regarding the indefeasibility and
inherited the land in 1952 from his father and incontrovertibility of Torrens Title
had been in adverse possession and ownership
of the subject lot, cultivating and planting trees 1. The certificate of title serves as evidence of an
and plants. He also declared the land for indefeasible title to the property in favor of
taxation purposes and paid real estate taxes. the person whose name appears therein;
Who is the rightful owner of the subject 2. After the expiration of the one year period
property? from the issuance of the decree of registration
upon which it is based, it becomes
A: Hadji Serad is the rightful owner. incontrovertible; and
The Torrens title is conclusive evidence with 3. Decree of registration and the certificate of
respect to the ownership of the land described title issued pursuant thereto may be attacked
therein, and other matters which can be litigated on the ground of actual fraud within one year
and decided in land registration proceedings. Tax from the date of its entry and such an attack
declarations and tax receipts cannot prevail over a must be direct and not by a collateral
certificate of title which is an incontrovertible proceeding. The validity of the certificate of
proof of ownership. An original certificate of title title in this regard can be threshed out only in
issued by the Register of Deeds under an an action expressly filed for the purpose.
administrative proceeding is as indefeasible as a
certificate of title issued under judicial NOTE: The defense of indefeasibility of a Torrens
proceedings. Thus, Hadji Serad’s Torrens title is a title does not extend to a transferee who takes it
valid evidence of his ownership of the land in with notice of a flaw in the title of his
dispute (Datu Kiram Sampaco v. Hadji Serad transferor. To be effective, the inscription in the
Mingca Lantud, G.R. No. 163551, July 18, 2011). registry must have been made in good faith. A
holder in bad faith of a certificate of title is not
Q: Ruben filed a complaint against Spouses entitled to the protection of the law, for the law
Agustin alleging that he is the registered cannot be used as a shield for fraud (Adoracion
owner of two parcels of land. Accordingly, his Rosales Rufloe, et al., v. Leonarda Burgos et al., G.R.
father bought it from Elias and then allowed No. 143573, January 30, 2009).
spouses Agustin to occupy the subject
properties. Despite demand to vacate, the Q: There is no specific provision in the Public
Agustins refused to leave the premises. Land Law (C.A. No. 141, as amended) or the
Land Registration Act (Act 496), now P.D.
Ruben alleged that he has better right to 1529, fixing the one year period within which
possess the property having acquired the same the public land patent is open to review on the
from his father through a Deed of Quitclaim in ground of actual fraud as in Sec. 38 of the Land
645
CIVIL LAW
Registration Act, now Sec. 32 of P.D. 1529, and 2. The owner still holds a valid and existing
clothing a public land patent certificate of title certificate of title covering the same property,
with indefeasibility. What is the effect of such because the law protects the lawful holder of
absence? a registered title over the transfer of a vendor
bereft of any transmissible right;
A: NONE. The rule on indefeasibility of certificates 3. The purchaser is in bad faith;
of title was applied by the Court in Public Land 4. The purchaser purchases land with a
Patents because such application is in consonance certificate of title containing a notice of lis
with the spirit and intent of homestead laws. pendens;
5. There are sufficiently strong indications to
The pertinent pronouncements in cases clearly impel closer inquiry into the location,
reveal that Sec. 38 of the Land Registration Act, boundaries and condition of the lot;
now Sec. 32 of P.D. 1529 was applied by 6. The purchaser had full knowledge of flaws
implication to the patent issued by the Director of and defects in the title; or
Lands duly approved by the Secretary of Natural 7. A person buys land not from the registered
Resources, under the signature of the President of owner but from whose rights to the land has
the Philippines in accordance with law. been merely annotated on the certificate of
title.
The date of issuance of the patent, therefore,
corresponds to the date of the issuance of the Q: Cipriana Delgado was the registered owner
decree in ordinary registration cases because the of the lot in controversy. She and her husband
decree finally awards the land applied for sold the property to Cecilia where it was
registration to the party entitled to it, and the agreed that the latter shall make partial
patent issued by the Director of Lands equally and payments from time to time and pay the
finally grants, awards, and conveys the land balance when the Spouses are ready to execute
applied for to the applicant. the deed of sale and transfer title to her. After
paying the total amount and being ready to
NOTE: A certificate of title issued under an pay the balance, Cecilia demanded the
administrative proceeding pursuant to a execution of the deed which was refused.
homestead patent is as indefeasible as a certificate Cecilia learned of the sale of the property to
of title issued under a judicial registration the Dys and its subsequent mortgage to
proceeding, provided the land covered by said petitioner Philippine Banking Corporation
certificate is a disposable public land within the (Philbank). Thus, a complaint for annulment of
contemplation of the Public Land Law. the Certificate of title and for specific
performance and/or reconveyance with
Mirror doctrine damages was filed against Spouses Delgado,
the Dys and Philbank. However, Philbank
All persons dealing with a property covered by contends that it is a mortgagee in good faith. Is
Torrens certificate of title are not required to go the bank’s contention correct?
beyond what appears on the face of the title.
Where there is nothing on the certificate of title to A: NO. Primarily, it bears noting that the doctrine
indicate any cloud or vice in the ownership of the of “mortgagee in good faith” is based on the rule
property, or any encumbrance thereon, the that all persons dealing with property covered by
purchaser is not required to explore further than a Torrens Certificate of Title are not required to go
what the Torrens title upon its face indicates in beyond what appears on the face of the title. In the
quest for any hidden defect or inchoate right that case of banks and other financial institutions,
may defeat his right thereto (Chua v. Soriano, however, greater care and due diligence are
GR.No. 150066, April 13, 2007). required since they are imbued with public
interest, failing which renders the mortgagee in
Application of mirror doctrine bad faith. Thus, before approving a loan
application, it is a standard operating practice for
GR: Mirror Doctrine applies when title over a land these institutions to conduct an ocular inspection
is registered under the Torrens system. of the property offered for mortgage and to verify
the genuineness of the title to determine the real
XPN: Mirror Doctrine cannot be invoked where: owner(s) thereof. The apparent purpose of an
1. The purchaser or mortgagee is a ocular inspection is to protect the “true owner” of
bank/financing institution; the property as well as innocent third parties with
a right, interest or claim thereon from a usurper
The classification of lands of the publc domain is Persons qualified to acquire private lands
an exclusive prerogative of the executive
department and not of the courts. In the absence 1. Filipino citizens;
of such classification, the lands remain as
unclassified until it is released therefrom and NOTE: Naturalized Filipino citizens can
rendered open to disposition (Valiao v. Republic, acquire private lands. They are considered
G.R. No. 170757, November 28, 2011). Filipino citizens under Art. IV of the 1987
Constitution.
NOTE: Pursuant to the Regalian Doctrine, all lands
of the public domain belong to the State. Hence, 2. Filipino corporations and associations as
"all lands not appearing to be clearly under defined in Sec. 2, Art. XII of the Constitution;
private ownership are presumed to belong to the and by exception;
State. Also, public lands remain part of the
inalienable land of the public domain unless the NOTE : Only Filipino citizens or corporations
State is shown to have reclassified or alienated at least 60% of its capital is owned by
them to private persons." To prove that a land is Filipinos are qualified to acquire or hold
alienable, the existence of a positive act of the lands of the public domain.
government, such as presidential proclamation or
an executive order; an administrative action; 3. Aliens but only by hereditary succession; and
investigation reports of Bureau of Lands 4. A natural-born citizen of the Philippines who
investigators; and a legislative act or a statute has lost citizenship may be a transferee of
declaring the land as alienable and disposable private lands subject to the limitations
must be established (Republic v. Cortez, G.R. No. provided by law (Sec. 8, Art. XII, 1987
197472, September 7, 2015) Constitution).
Alienable and disposable lands of the State fall Former Filipinos who became aliens may also
into two categories: acquire private lands. It is provided under R.A. no
9225 (Citizenship Retention and Re-acquisition Act
(a) Patrimonial lands of the State, or those of 2003), which declares that natural-born citizens
classified as lands of private ownership under Art. of the Philippines who have lost their Philippine
425 of the Civil Code, without limitation; and citizenship by reason of their naturalization as
(b) Lands of the public domain, or the public lands citizens of foreign country are hereby deemed to
as provided by the Constitution, but with the have re-acquired Philippine citizenship upon
limitation that the lands must only be agricultural. taking their oath of allegiance to the Republic of
the Philippines and shall enjoy full civil and
Consequently, lands classified as forest or timber, political rights and be subject to all attendant
mineral, or national parks are not susceptible of liabilities and responsibilities under existing laws
alienation or disposition unless they are of the Philippines.
reclassified as agricultural (Malabanan v. Republic,
G.R. No. 179987, September 3, 2013). NOTE: Filipino citizens can both acquire or hold
lands of public domain.
Secondary classification
647
CIVIL LAW
The time to determine whether a person acquiring who has lost his Philippine citizenship may be a
land is qualified is at the time the right to own is transferee of private lands, subject to limitations
acquired and not the time to register ownership provided by law (Republic v. CA and Lapina, G.R.
(Director of Lands v. IAC and Acme, G.R. No. 73002, No. 108998, August 24, 1994).
December 29, 1986).
Q: Julian and respondens own a 227,270-
Acquisition of private land by an alien square meter parcel of land, covered by TCT
No. 8027[5] (subject land). Julian who owns
GR: An alien cannot acquire private lands. 8/14 of the subject land sold some portions to
various buyers, including Gaspar Genorga, the
XPN: By way of hereditary succession. husband of petitioner. However, buyers cannot
register their respective sale because Julian
Aliens may not acquire private or public failed to surrender the TCT NO. 8027 to them.
agricultural lands and all acquisitions made in This prompts them to file a case for the
contravention of the prohibitions since the surrender of the owner’s duplicate copy of the
fundamental law became effective are null and TCT Mo. 8027 which the court granted. The
void per se and ab initio. The prohibition is a said decision became final and executory but
declaration of imperative national policy remained unexecuted. Thus, in an Order, the
(Krivenko v. Register of Deeds, G.R. No. L-630, RTC declared TCT No. 8027 null and void,
November 15, 1957). resulting in the issuance of a new one, bearing
annotations of the buyers' adverse claims. The
The constitutional ban against foreigners apply new owner's duplicate copy of TCT No. 8027
only to ownership of Philippine land and not to (subject owner's duplicate title) was given to
the improvements built thereon (Beumer v. petitioner in 2009. On April 22, 2013,
Amores, G.R. No. 195670, December 3, 2012). respondents filed a Complaint against
petitioner before the court a quo, seeking the
NOTE: Under R.A. No. 4726, foreign nationals can surrender of the subject owner's duplicate title
own Philippine real estate through the purchase of with damages. Petitioner averred that their
condominium units or townhouses. It expressly possession of the subject owner's duplicate
allows foreigners to acquire condominium units title was by virtue of a court decision, and for
and shares in condominium corporations up to the legitimate purpose of registering the sales
not more than 40% of the total and outstanding in their favor and the issuance of titles in their
capital stock of a Filipino owned or controlled names, they should be allowed to retain
corporation. The land is owned by the possession until the completion of the
condominium corporation and the unit owner is requirements therefor. Is the petitioner
simply a member in this condominium correct?
corporation.
A: No. Notably, from the time petitioner received
Q: Spouses Pinoy and Pinay, both natural-born possession of the subject owner's duplicate
Filipino citizens, purchased property in the title in 2009, a considerable amount of time
Philippines. However, they sought its had passed until she submitted the same to
registration when they were already the RD-Naga on September 13, 2013. But even
naturalized as Canadian citizens. Should the up to the time she filed the instant petition
registration be denied on the ground that they before the Court on May 6, 2016, she failed to
cannot do so being foreign nationals? show any sufficient justification for the
continued failure of the concerned buyers to
A: NO. For the purpose of transfer and/or comply with the requirements for the
acquisition of a parcel of residential land, it is not registration of their respective deeds of sale
significant whether they are no longer Filipino and the issuance of certificates of title in their
citizens at the time they purchased or registered names to warrant a preferential right to the
the parcels of land in question. What is important possession of the subject owner's duplicate
is that they were formerly natural-born citizens of title as against respondents who undisputedly
the Philippines, and as transferees of a private own the bigger portion of the subject land
land, they could apply for registration in (Remedios Genorga v. Heirs of Julian Meliton,
accordance with the mandate of Sec. 8, Art. XII of G.R. No. 224515, July 03, 2017). [Perlas-
the Constitution which states that Bernabe]
notwithstanding the provisions of Sec. 7 of this
Article, a natural-born citizen of the Philippines
649
CIVIL LAW
2. Limited to 1,000 hectares; and VOLUNTARY DEALINGS
3. Applies to both Filipinos and foreign
corporations. Mortgages and leases
Q: May a corporation apply for registration of a GR: The mortgagor should be the absolute owner
parcel of land? of the property to be mortgaged; otherwise, the
mortgage is considered null and void.
A: YES, through lease not exceeding 1,000
hectares. The lease shall not exceed 25 years and XPN: Doctrine of mortgagee in good faith. All
is renewable for not more than 25 years (Sec. 3, persons dealing with property covered by a
Art. XII, 1987 Constitution). Torrens Certificate of Title, as buyers or
mortgagees, are not required to go beyond what
NOTE: Determinative of this issue is the character appears on the face of the title. This is the same
of the parcels of land–whether they were still rule that underlies the principle of innocent
public or already private–when the registration purchasers for value. The prevailing jurisprudence
proceedings were commenced. If they are already is that a mortgagee has a right to rely in good faith
private lands, the constitutional prohibition on the certificate of title of the mortgagor to the
against acquisitions by a private corporation property given as security and in the absence of
would not apply. any sign that might arouse suspicion, has no
obligation to undertake further investigation.
Hence, even if the mortgagor is not the rightful
SUBSEQUENT REGISTRATION 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
It is where incidental matters after original
registration may be brought before the land Bank, G.R. No. 140528, December 7, 2011).
registration court by way of motion or petition
filed by the registered owner or a party in interest. NOTE : The subsequent nullification of the
mortgagor’s title will not nullify the mortgage
(Gonzales v. IAC, G.R. No. L-69622, January 29,
Q: After registering his land, what conveyances
1988).
may the registered owner do?
651
CIVIL LAW
The reconstitution or reconstruction of a Requisites for the issuance of an order for
certificate of title literally denoted restoration of reconstitution
the instrument which is supposed to have been
lost or destroyed in its original form and 1. That the certificate of title had been lost or
condition. It does not resolve or determine the destroyed;
ownership of the land covered by the lost or 2. That the documents presented by petitioner
destroyed title. Restitution is proper only when it are sufficient and proper to warrant
is satisfacorily shown that the title sought to be reconstitution of the lost or destroyed
reconstituted is lost or no longer available. certificate of title;
3. That the petitioner is the registered owner of
Q: Homer and Ma. Susana Dagondon, as the property or had an interest therein;
attorneys-in-fact of Jover P. Dagondon, prayed 4. That the certificate of title was in force at the
for the reconstitution of the Original time it was lost or destroyed; and
Certificate of Title (OCT) of Lot No. 84. In their 5. That the description, area and boundaries of
petition, they alleged that the subject property the property are substantially the same as
had no existing OCT and that it was probably those contained in the lost or destroyed
destroyed or dilapidated during the eruption certificate of title (Republic of the Philippines v.
of Hiboc-Hiboc Volcano or World War II. The Apolinaria Catarroja, et al., G.R. No. 171774,
Republic prayed for the dismissal of the February 12, 2010).
petition for insufficiency in form and
substance, considering that respondents failed Jurisdictional requirements in petitions for
to establish the existence of the very Torrens reconstitution of title
Title (OCT) which they sought to reconstitute.
Is the Republic correct? Notice thereof shall be:
1. Published twice in successive issues of the
A: Yes. The reconstitution of a certificate of title Official Gazette;
denotes restoration in the original form and 2. Posted on the main entrance of the provincial
condition of a lost or destroyed instrument building and of the municipal building of the
attesting the title of a person to a piece of land. municipality or city, where the land is situated;
The purpose of the reconstitution of title is to and
have, after observing the procedures prescribed 3. Sent by registered mail to every person named
by law, the title reproduced in exactly the same in said notice.
way it has been when the loss or destruction
occurred. RA 26 presupposes that the property NOTE: The above requirements are mandatory
whose title is sought to be reconstituted has and jurisdictional.
already been brought under the provisions of the
Torrens System. Q: Alleging that the original copy of a 240,269
square meter property was destroyed by the
In the case at bar, respondents miserably failed to fire, Gertrudes Susi filed a petition for
adduce clear and convincing proof that an OCT reconstitution of title to cover the property on
covering Lot 84 had previously been issued. basis of his owner's copy. In opposing the
Accordingly, there is no title pertaining to Lot 84 petition, the LRA filed a Manifestation
which could be reconstituted, re-issued, or questioning the reconstitution considering
restored. Guided by the foregoing, judicial that the claim was anchored on the owner's
reconstitution of title under Section 2 of RA 26 is duplicate certificate which bore a different
clearly improper in this case (Republic v. Homer serial number. Having duly complied with the
and Ma. Susana Dagondon, G.R. No. 210540, April publication and posting requirement, the trial
19, 2016). [Perlas-Bernabe] court set the case for hearing and granted the
same. Should the petition for reconstitution be
Q: May a writ of possession be issued in a granted?
petition for reconstitution?
A: No. It is well to point out that the trial courts
A: NO, because reconstitution does not adjudicate hearing reconstitution petitions under RA 26 are
ownership over the property. A writ of possession duty-bound to take into account the LRA's report.
is issued to place the applicant-owner in Notably, since the serial number of the owner's
possession. duplicate did not bear a similar serial number
from the subject lot, the same should have been
denied by the trial court for failure to comply with
653
CIVIL LAW
Q: Catarroja et al. filed a petition for Sebastian. After Sebastian paid all the
reconstitution of title covering two lots in corresponding tax and capital gains, the
Cavite which they inherited from their parents. Register of Deeds required her to present a
Allegedly, the LRA issued a certification Special Power of Attorney executed by Nelson
confirming that the land registration court which authorized the agent, Lamberto, to sell
issued a Decree covering the lots. A copy of the the property to former. When Sebastian
decree however was no longer available in the requested for the document, Nelson did not
record. It was also claimed that the owner’s comply. It was only upon the latter’s inquiry
duplicate copy of the title had been lost while with the Register of Deeds that Nelson had in
with their parents. If you were the judge, will fact executed an Affidavit of Loss which
you grant the petition for reconstitution of subsequently resulted to an issuance of a
title? second owner’s copy covering the subject lot.
Sebastian filed a petition for annulment of
A: In Republic v. Intermediate Appellate Court, judgment to nullify the decision issuing a new
applied the principle of ejusdem generis in owner’s duplicate copy. Should the petition for
interpreting Sec. 2(f) of R.A. 26. “Any other annulment of judgment be granted?
document” refers to reliable documents of the
kind described in the preceding A: Yes. It has been consistently ruled that when
enumerations. This Court is not convinced that the owner’s duplicate certificate of title was not
the following documents (Microfilm printouts of actually lost or destroyed, but is in fact in the
Official Gazette. A certification by the LRA and possession of another person, the reconstituted
from the Register of Deeds, a Report of the LRA title is void because the court that rendered the
and an Affidavit of Loss) of the Catarrojas fall in order of reconstitution had no jurisdiction over
the same class as those enumerated in paragraphs the subject matter of the case. In this case, the
(a) to (e). None of them proves that a certificate of owner’s duplicate copy was in truth and in fact in
title had in fact been issued in the name of their the possession of Spouses Cruz, contrary to their
parents. Accordingly, the documents must come claim in the lower court. Consequently, the
from official sources which recognize the judgment of the lower court should be annulled on
ownership of the owner and his predecessors-in- the ground of lack of jurisdiction (Joy Vanessa
interest. None of the documents presented in this Sebastian v. Spouses Nelson and Cristina Cruz, G.R.
case fit such description (Republic of the No. 220940, March 20, 2016). [Perlas-Bernabe]
Philippines v. Apolinaria Catarroja, et al., G.R. No.
171774, February 12, 2010). Persons entitled to a Duplicate Certificate of
Title
Where reconstituted title is a nullity, the order
for reconstitution may be attacked at any time. 1. Registered owner; and
2. Each co-owner.
A reconstitution of Torrens title, whether judicial
or administrative, cannot proceed once it is shown Requirements for the replacement of lost
that another Torrens title has already been issued duplicate certificate of title
to another person over the same property. The
reconstituting body or court has no jurisdiction to 1. Due notice under oath shall be sent by the
issue another Torrens title over the same property owner or by someone in his behalf to the
to the petitioner. The existence of a prior title ipso Register of Deeds of the province or city
facto nullifies the reconstitution proceedings. The where the land lies as soon as the loss or theft
proper recourse is to assail directly in a is discovered;
proceeding before the regional trial court the 2. Petition for replacement should be filed with
validity of the Torrens title already issued to the the RTC of the province or city where the land
other person (Justice Carpio’s separate concurring lies;
opinion, Manotok v. Barque, GR. No. 162335, 3. Notice to Solicitor General by petitioner is not
December 18, 2008). imposed by law but it is the Register of Deeds
who should request for representation by the
NOTE : Petition for reconstitution can be barred Solicitor General; and
by laches. 4. A proceeding where the certificate of title was
not in fact lost or destroyed is null and void
Q: Spouses Cruz are the registered owners of a for lack of jurisdiction and the newly issued
parcel of land. Nelson Cruz, through his father, duplicate is null and void.
Lamberto, sold the subject lot in favor of Joy
655
CIVIL LAW
deleted. Did the Makati City RTC gravely abuse 2. Such right or interest arose subsequent to the
its discretion in issuing the Assailed Orders? date of original registration; or
3. No other provision is made in the decree for
A: YES. Attachment is defined as a provisional the registration of such right or claim.
remedy by which the property of an adverse party
is taken into legal custody, either at the Formal requisites of an adverse claim for
commencement of an action or at any time purposes of registration
thereafter, as a security for the satisfaction of any
judgment that may be recovered by the plaintiff or 1. Adverse claimant must state the following in
any proper party. Case law instructs that an writing:
attachment is a proceeding in rem, and, hence, is a. His alleged right or interest;
against the particular property, enforceable b. How and under whom such alleged right
against the whole world. Accordingly, the of interest is acquired;
attaching creditor acquires a specific lien on the c. Description of the land in which the right
attached property which nothing can or interest is claimed; and
subsequently destroy except the very dissolution d. Certificate of title number.
of the attachment or levy itself. Such a proceeding,
in effect, means that the property attached is an 2. Such statement must be signed and sworn to
indebted thing and a virtual condemnation of it to before a notary public or other officer
pay the owner's debt. The lien continues until the authorized to administer oath; and
debt is paid, or sale is had under execution issued 3. Claimant shall state his residence or place to
on the judgment, or until the judgment is satisfied, which all notices may be served upon him.
or the attachment discharged or vacated in some
manner provided by law (Ligon v. RTC Makati, G.R. Registration of adverse claim
No. 190028, February 26, 2014). [Perlas-Bernabe]
By filing a sworn statement with the Register of
Effect of the non-recording of a writ of Deeds of the province where the property is
attachment located, setting forth the basis of the claimed right
together with other data pertinent thereto. The
An attachment levied on real state not duly duty of the Register of Deeds to record the same
recorded in the Registry of Property is not an on the title is ministerial.
encumbrance on the attached property, nor can
such attachment unrecorded in the registry, serve NOTE: Entry of the adverse claim filed on the day
as a ground for decreeing the annulment of the book is sufficient without the same being
sale of the property at the request of another annotated at the back of the corresponding
creditor. certificate of title (Director of Lands v. Reyes, G.R.
No. L-27594, November 28, 1975).
Adverse claim
Effect of the registration of an adverse claim
It is a notice to third persons that someone is
claiming an interest on the property or has a It renders the adverse claim effective and any
better right than the registered owner thereof, transaction regarding the disputed land shall be
and that any transaction regarding the disputed subject to the outcome of the dispute.
land is subject to the outcome of the dispute.
Effect of non-registration of an adverse claim
Purpose of annotating the adverse claim
The effect of non-registration or invalid
The purpose of annotating the adverse claim on registration of an adverse claim renders it
the title of the disputed land is to apprise third ineffective for the purpose of protecting the
persons that there is a controversy over the claimant’s right or interest on the disputed land,
ownership of the land and to preserve and protect and could not thus prejudice any right that may
the right of the adverse claimant during the have arisen thereafter in favor of third parties.
pendency of the controversy.
Limitations to the registration of an adverse
Instances when a claim of interest is adverse claim
Q: May the RD cancel an adverse claim? Q: When may a notice of lis pendens be made
and when may it not be resorted to?
A: NO. The RD cannot, on its own, automatically
cancel the adverse claim. A:
NOTE: Before the lapse of 30-day period, the NOTICE OF LIS PENDENS
claimant may file a sworn petition withdrawing
his adverse claim, or a petition for cancellation of When applicable When Inapplicable
adverse claim may be filed in the proper Regional
Trial Court. (1) Recover possession (1) Preliminary
of real estate; attachments;
Q: What must an interested party do if he (2) Quieting of title; (2) Levy or
seeks the cancellation of a registered adverse (3) Remove clouds upon execution;
claim? title; (3) Proceedings on
(4) For partition; or probate or wills;
A: The interested party must file with the proper (5) Any other (4) Administration
court a petition for cancellation of adverse claim, proceeding of any of the real estate
and a hearing must also first be conducted. kind in court directly of deceased
affecting title to the person; or
Notice of lis pendens land or its use or (5) Proceedings for
occupation or the the recovery of
Lis pendens literally means a pending suit. The building thereon. money
doctrine of lis pendens refers to the jurisdiction, judgments.
power or control which a court acquires over
657
CIVIL LAW
Effects of the annotation of notice of lis
pendens
NON-REGISTRABLE PROPERTIES
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 Non-registrable lands
final judgment by successive alienation; and
2. It binds a purchaser, bona fide or not, of the These are properties of public dominion which,
land subject of the litigation to the judgment under existing legislation, are not the subject of
or decree that the court will promulgate private ownership and are reserved for public
subsequently. purposes.
Notice of lis pendens negates good faith NOTE: The properties of public dominion are not
susceptible to acquisitive prescription and only
One who deals with property subject of a notice of properties of the State that are no longer
lis pendens cannot invoke the right of a purchaser earmarked for public use, otherwise known as
in good faith—neither can he acquire better rights patrimonial, may be acquired by prescription. In
than those of his predecessor-in-interest. Heirs of Mario Malabanan v. Republic, the Supreme
Court, in observance of the foregoing, clarified the
Q: When may a notice of lis pendens be import of Sec. 14(2) and made the following
cancelled? declarations:
A: A notice of lis pendens may be cancelled in the a. The prescriptive period for purposes of
following cases before final judgment upon order acquiring an imperfect title over a property of
of the court: the State shall commence to run from the date
an official declaration is issued that such
1. When it is shown that the notice is for the property is no longer intended for public
purpose of molesting the adverse party; service or the development of national
2. Where the evidence so far presented by the wealth; and
plaintiff does not bear out the main b. Prescription will not run as against the State
allegations of the complaint; even if the property has been previously
3. When it is shown that it is not necessary to classified as alienable and disposable as it is
protect the right of the party who caused the that official declaration that converts the
registration thereof; property to patrimonial (Republic of the
4. Where the continuances of the trial are Philippines v. Metro Index Realty and
unnecessarily delaying the determination of Development Corporation, G.R. No. 198585, July
the case to the prejudice of the defendant; 2, 2012).
5. Upon verified petition of the party who
caused the registration thereof; or Reason behind their non-registrability
6. It is deemed cancelled after final judgment in
favor of defendant, or other disposition of the Property of the public domain is beyond the
action, such as to terminate all rights of the commerce of man and not susceptible of private
plaintiff to the property involved. appropriation and acquisitive prescription.
Occupation thereof in the concept of owner no
Q: When is a notice of lis pendens deemed matter how long cannot ripen into ownership and
cancelled? be registered as a title (Valiao v. Republic, G.R. No.
170757, November 28, 2011).
A: Under Sec. 77 of P.D. 1529, a notice of lis
pendens shall be deemed cancelled only upon the Non-Registrable Lands
registration of a certificate of the clerk of court in
which the action or proceeding was pending 1. Property of public domain or those intended
stating the manner of disposal thereof if there was for public use, public service or development
a final judgment in favor of the defendant or the of the national wealth;
action was disposed of terminating finally all 2. Forest or timber lands;
rights of the plaintiff over the property in 3. Water sheds;
litigation (Isabelita Cunanan et al., v. Jumping Jap 4. Mangrove swamps;
Trading Corporation et al., G.R. No. 173834, April 5. Mineral lands;
24, 2009). 6. National parks and plazas;
A: NO. A forested area classified as forest land of Mangrove swamps form part of the public forests
the public domain does not lose such classification and, therefore, not subject to disposition until and
simply because loggers or settlers may have unless they are first released as forest land and
stripped it of its forest cover. Parcels of land classified as alienable agricultural land (Director of
classified as forest land may actually be covered Forestry v. Villareal, G.R. No. L-32266, February 27,
with grass or planted with crops 1989).
by kaingin cultivators or other farmers. Forest
lands do not have to be on mountains or in out-of- Mineral lands
the-way places. The classification of land is
descriptive of its legal nature or status and does Mineral land means any land where mineral
not have to be descriptive of what the land resources are found. Mineral resources, on the
actually looks like (Heirs of Jose Amunategui v. other hand, mean any concentration of
Director of Forestry, G.R. No. L-27873, November 9, mineral/rocks with potential economic value.
1983).
NOTE : Possession of mineral land, no matter how
Foreshore land long, does not confer possessory rights.
A strip of land that lies between the high and low Q: Can land be partly mineral and partly
water marks and is alternately wet and dry agricultural?
according to the flow of tide. It is that part of the
land adjacent to the sea, which is alternately A: NO. The rights over the land are indivisible and
covered by the ordinary flow of tides. that the land itself cannot be half agricultural and
half mineral. The classification of land must be
659
CIVIL LAW
categorical; the land must be either completely
mineral or completely agricultural.
Watershed
Watershed reservation
661
CIVIL LAW
contractual or obligations arising from Note: Damage incurred without the presence of
law under Article 31 of the New Civil the other elements does not constitute a cause of
Code (such as breach of contract or tort), action being merley damnum absque injuria
intentional torts under Articles 32 and 34, (AQUINO, Torts and Damages)
and culpa aquiliana under Article 2176 of
the New Civil Code.
b. Where the injured party is granted a right QUASI-DELICT
to file an action independent and distinct
from the criminal action under Article 33
of the New Civil Code (in cases of Whoever by act or omission causes damage to
defamation, fraud and physical injuries). another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or
NOTE: Either of these liabilities may be enforced negligence, if there is no pre-existing contractual
against the offender subject to the caveat under relation between the parties, is quasi-delict or
Article 2177 of the New Civil Code that the culpa aquilana (Art. 2176, NCC).
plaintiff cannot recover damages twice for the
same act or omission of the defendant (Santos v. Elements of Quasi-Delict (1993, 1997, 2006,
Pizardo, G.R. No. 151452, July 29, 2005). 2007, 2010 BAR)
Tortious Act 1. Damage to the plaintiff; NOTE: It is the
loss, hurt or harm which results from
It is a wrongful act. It is the commission or injury. It differs from damages which
omission of an act by one, without right, whereby
term refers to the recompense or
another receives, some direct or indirect injury, in compensation awarded for the damage
person, property, or reputation (De Leon, 2012).
suffered (So Ping Bun v. CA, G.R. No.
120554, September 21, 1999).
GR: An action for damages can only be maintained 2. Negligence, by act or omission, of which
by the person directly injured, not by one alleging defendant, or some person for whose acts,
the collateral injury.
must respond, was guilty; and
3. Connection of cause and effect between
XPN: There are instances where injury to one may
such negligence and damage (Dra. Leila A.
operate as an injury to another, e.g. a lone parent
Llano v. Rebecca Biong, G.R. No. 182356,
cannot sue for the injury suffered by his child, but December 4, 2013).
may maintain an action in his own right for any
damages suffered as a result of the injury. NOTE: In civil cases, a party who alleges a fact has
the burden of proving it by preponderance of
Remedies for Torts (CPR):
evidence or greater weight of credible evidence.
1. Compensatory – actions for sum of money for
Prescription of an action based on quasi-delict
the damage suffered.
2. Preventive – prayer for injunction, a writ of
An action based on quasi-delictmust be instituted
preliminary injunction, and a temporary
within four (4) years (NCC, Art. 1146).
restraining order, enjoining the defendant
from continuing the doing of the tortious
Act
conduct.
3. Restitution – to return gains that the
It is any bodily movement tending to produce
defendant wrongfully obtained by tort. some effect in the external world, it being
unnecessary that the same be actually produced,
Cause of Action in Tort
as the possibility of its production is sufficient
(People v. Gonzales, G.R. No. 80762, March 19,
Elements: (ROW) 1990).
1. A legal Right in favor of a person Fault
2. A correlative legal Obligation on the part of
the defendant to respect such right. It is a condition where a person acts in a way or
3, A Wrong, an act or omission in violation of
manner contrary to what normally should have
such right with consequent injury. been done (Pineda, 2009).
NOTE: The existence of negligence in a given case Persons Vicariously Liable (F-GOES-T)
is not determined by reference to the personal
judgment of the actor in the situation before him. 1. Father, or in case of death or incapacity,
The law considers what would be reckless, mother:
blameworthy, or negligent in the man of ordinary a. Damage caused by minor children
intelligence and prudence and determines liability b. Living in their company
by that (Ibid.).
2. Guardians:
Rule when negligence shows bad faith a. For minors or incapacitated persons
b. Under their authority
When negligence shows bad faith, responsibility c. Living in their company
arising from fraud is demandable in all
obligations (NCC, Art. 1171). Furthermore, in case 3. Owners and managers of establishments:
of fraud, bad faith, malice or wanton attitude, the a. For their employees
obligor shall be responsible for all damages b. In the service of the branches in which
which may be reasonably attributed to the non- they are employed, or;
performance of the obligation (NCC, Art. 2201). c. On the occasion of their functions
663
CIVIL LAW
The actual tortfeasor is not exempted from results to a third person from the joint wrongful
liability act of the wrongdoers (De Leon, 2012).
The minor, ward, employee, special agent, pupil, Test for Joint Tortfeasors
students and apprentices who actually committed Whether the plaintiff has a single cause of action
the delictual acts are not exempted by the law against such tortfeasors, or whether he has only
from personal responsibility. They may be sued several causes of action against each of them.
and made liable alone as when the person
responsible for them or vicarious obligor proves Liability of Joint Tortfeasors
that he exercised the diligence of a good father of a
family or when the minor or insane person has no The responsibility of two or more persons who
parents or guardians. In the latter instance, they are liable for quasi-delict is solidary (NCC, Art.
are answerable with their own property (Pineda, 2194). Each are liable as principals, to the same
2009). extent and in the same manner as if they had
performed the wrongful act themselves (Ruks
Common Defenses Konsult and Construction v. Adworld Sign and
Advertising Corp., G.R. No. 204866, January 21,
The vicarious liability shall cease when the 2015).
defendants prove that they observed all the
diligence of a good father of a family to prevent Liability of the owner of a vehicle in case of an
damage (NCC, Art. 2180; Cuadra v. Monfort, G.R. No. accident (1996, 1998, 2002, 2009 BAR)
L-24101 September 30, 1970).
In motor vehicle mishaps, the owner is solidarily
Principle of Vicarious Liability or Law on liable with his driver, if the former, who was in the
Imputed Negligence (2001-2006, 2009, 2010 vehicle, could have, by the use of the due diligence,
BAR) prevented the misfortune. It is disputably
presumed that a driver was negligent, if he had
The obligation imposed by Article 2176 of the NCC been found guilty or reckless driving or violating
for quasi-delicts is demandable not only for one's traffic regulations at least twice within the next
own acts or omissions, but also for those persons preceding two months (NCC, Art. 2184).
for whom one is responsible (NCC, Art. 2180).
Car owner not present in the vehicle
THE TORTFEASOR If the car owner is not present in the vehicle and
the driver was negligent, the injured party may
still sue b said owner under Article 2180 par. (5)
Persons liable for quasi-delict of the New Civil Code for imputed liability.
Every person legally responsible is liable for a tort NOTE: Employers shall be liable for the damages
committed by him provided it is the p-proximate caused by their employees and household helpers
cause of an injury to another. (DE LEON, Torts and acting within the scope of their assigned tasks,
Damages) even though the former are not engaged in any
business or industry (NCC, Article 2180 par. 5).
Defendants in tort cases can either be natural or
artificial beings. If no knowledge of owner of vehicle not liable
Pursuant to vicarious liability, a corporation may An owner of a vehicle cannot be held liable for an
be held directly and primary liable for tortious accident involving the said vehicle if the same was
acts of its officers or employees (NCC, Art. 2180). driven without his consent or knowledge and by a
person not employed by him (Duavit v. CA, G.R. No.
82318, May 18, 1989).
Joint Tortfeasors
Liability of proprietors of buildings
Two or more persons who act together in
committing a wrong, or contribute to its 1. The proprietor of a building or structure is
commission, or assist or participate therein responsible for the damages resulting from its
actively and with common intent, so that injury total or partial collapse, if it should be due to
1. The collapse of the building must be within 15 If several persons jointly commit a tort, the
years from the completion of the structure. plaintiff or person injured, has his election to sue
all or some of the parties jointly, or one of them
NOTE: The collapse is by reason of a defect in separately, because the tort is in its nature a
the engineer or architect’s plans and separate act of each individual (Dean Worcester v.
specifications, or due to the defects in the Ocampo, G.R. No. 5932, February 27, 1912).
ground
In case of injury to a passenger due to the
2. The prescriptive period is 10 years following negligence of the driver of the bus on which he
the collapse. was riding and of the driver of another vehicle, the
3. The liability applies to collapse or ruin, not to drivers as well as the owners of the two vehicles
minor defects. are jointly and severally liable for damages (Tiu v.
4. Even if payment has been made, an action is Arriesgado, G.R. No. 138060, September 1, 2004).
still possible.
ACT OR OMISSION AND ITS MODALITIES
NOTE: Acceptance of the building, after
completion, does not imply waiver of any of Quasi-Delict
the cause of action by reason of any defect.
Whoever by act or omission causes damage to
5. If the engineer or architect supervises the another, there being fault or negligence, is obliged
construction, he shall be solidarily liable with to pay for the damage done. Such fault or
the contractor. negligence, if there is no pre-existing contractual
relation between the parties is called a quasi-
NOTE: The contractor is likewise responsible delict (NCC, Art. 2176).
for the damages if the edifice falls, within the
same period, on account of defects in the NOTE: While it may be true that the pre-existing
construction or the use of materials of inferior contract between the parties may, as a general
quality furnished by him, or due to any rule, bar the applicability of the law on quasi-
violation of the terms of the contract. delict, the liability may itself be deemed to arise
from quasi-delict, i.e., the acts which breaks the
When a building collapses during an contract may also be a quasi-delict (Coca-Cola
earthquake Bottlers Philippines, Inc. v. Court of Appeals, G.R. No.
110295, 18 October 1993).
GR: No one can be held liable in view of the
fortuitous event if the proximate cause of the Elements of Quasi-Delict (1993, 1997, 2006,
collapse of the building is an earthquake. 2007, 2010 BAR)
665
CIVIL LAW
2. Negligence, by act or omission, of which c. Tolerated Possession- Owner is liable if
defendant, or some person for whose acts, the plaintiff is inside his property by
must respond, was guilty; and tolerance or by implied permission.
3. Connection of cause and effect between such (AQUINO, Torts and Damages)
negligence and damage (FGU Insurance Corp. d. State of Necessity- A situation of present
v. CA, G.R. No. 118889, March 23, 1998). danger to legally protected interests,
NOTE: An action based on quasi-delict must be where the only remedy is injuring
instituted within four (4) years. another’s legally protected.
It is any bodily movement tending to produce It is one affected by public interest. Banks are
some effect in the external world, it being expected to exercise the highest degree of
unnecessary that the same be actually produced, diligence in the selection and supervision of their
as the possibility of its production is sufficient employees. (Bank of the Philippine Islands v. CA)
(People v. Gonzales, G.R. No. 80762, March 19,
1990). 3.Duty of Common Carriers
Example: Swimming pool with attractive A hospital has the duty to see that it meets the
floats or paraphernalia. standards of responsibilities for the care of
patients. Such duty includes the proper
Note: Generally not applicable to bodies of supervision of members of its medical staff.
natural or artificial water in the absence of (Professional Services, Inc. v. Agana)
any artificial feature other than mere water.
667
CIVIL LAW
latter who is the one vicariously liable (Pineda, To make the employer liable under Art. 2180 of
2009). the NCC, it must be established that the injurious
or tortious act was committed at the time the
VICARIOUS LIABILITY: GUARDIANS employee was performing his functions (Marquez
v. Castillo, G.R. No. 46237, September 27, 1939).
Guardians are liable for damages caused by the
minors or incapacitated persons who are under NOTE: However, a manager who is not an owner
their authority and live in their company (NCC, but who assumes the responsibility of supervision
Art. 2180). over the employees of the owner may be held
liable for the acts of the employees (Pineda, 2009).
If the minor or insane person causing damage has
no parents or guardian, the minor or insane One who hires an independent contractor but
person shall be answerable with his own property controls the latter’s work is responsible also for
in an action against him where a guardian ad litem his negligence. (Cuison v. Norton and Harrison co.,
shall be appointed (NCC, Art. 2182). G.R. No. L-32774)
NOTE: The rules on vicarious liability of parents Requisites before an employer may be held
are applicable to vicarious liability of guardians. liable under Article 2180 (4) for the act of its
employees
De facto guardians covered by Art. 2180 of the
NCC 1. The employee was chosen by the employer
personally or through another;
De facto guardians are relatives and neighbors 2. The service is to be rendered in accordance
who take upon themselves the duty to care and with orders which the employer has the
support orphaned children without passing authority to give all times; and
through judicial proceedings. 3. That the illicit act of the employee was on the
occasion or by reason of the functions
NOTE: They are liable for acts committed by entrusted to him (Jayme v. Apostol, G.R. No.
children while living with them and are below 21 163609, November 27, 2008).
years of age, the law being applied by analogy
(Pineda, 2009). VICARIOUS LIABILITY: EMPLOYERS
Employers shall be liable for the damages caused Presumption on the negligence of the
by their employees and household helpers acting employer
within the scope of their assigned tasks, even
though the former are not engaged in any The negligence of the employee is presumed to be
business or industry [Ibid. (5)]. (2005 BAR) the negligence of the employer because the
employer is supposed to exercise supervision over
Owners and managers the work of the employees. This liability of the
employer is primary and direct (Standard Vacuum
The terms “owners and managers” are used in the Oil Co. vs. Tan and Court of Appeals, G.R. No. L-
sense of “employer” and do not include the 13048. February 27, 1960).
manager of a corporation who himself is just an
employee (Phil. Rabbit Bus Lines v. Phil. American Once the employee’s fault is established, the
Forwarders, Inc., G.R. No. L-25142, March 25, 1975). employer can then be made liable on the basis of
the presumption that the employer failed to
exercise diligentissimi patris familias (diligence of
Covers negligent acts of Covers negligent acts of When a criminal case is filed against the offender,
employees committed employees acting before the employer’s subsidiary liability is
either in the service of within the scope of exacted, there must be proof that:
the branches or in the their assigned tasks.
occasion of their 1. They are indeed the employer of the convicted
functions. employee;
2. The former are engaged in some kind of
Remedies of the injured party in pursuing the industry;
civil liability of the employer for the acts of his 3. The crime was committed by the employees
employees in the discharge of their duties; and
4. That the execution against the latter has not
1. If he chooses to file a civil action for damages been satisfied due to insolvency (Philippine
based on quasi-delict under Article 2180 of the Rabbit Bus Lines, Inc. v. People, G.R. No.
New Civil Code and succeeds in proving the 147703, April 14, 2004).
negligence of the employee, the liability of the
employer is primary, direct and solidary. It is NOTE: The determination of these conditions may
not conditioned on the insolvency of the be done in the same criminal action in which the
employee (Metro Manila Transit Corp. v. CA, employee’s liability, criminal and civil, has been
G.R. No. 118069, November 16, 1998). pronounced, in a hearing set for that precise
2. If he chooses to file a criminal case against the purpose, with due notice to the employer, as part
offender and was found guilty beyond of the proceedings for the execution of the
reasonable doubt, the civil liability of the judgement [Rabuya (2017), citing Calang v. People,
employer is subsidiary. The employer cannot 626 SCRA 679, 2010)].
use as a defense the exercise of the diligence
of a good father of a family. Vicarious liability Owners and Managers of
Establishment V. Vicarious liability of
NOTE: Once there is a conviction for a felony, final Employers
in character, the employer under Article 103 of
the RPC, is subsidiary liable, if it be shown that the Q: OJ was employed as a professional driver of
commission thereof was in the discharge of the MM Transit bus owned by Mr. BT. In the course
duties of the employee. A previous dismissal of an of his work, OJ hit a pedestrian who was
action based on culpa aquiliana could not be a bar seriously injured and later died in the hospital
to the enforcement of the subsidiary liability as a result of the accident. The victim’s heirs
required by Art. 103 of the RPC (Jocson, et al. v. sued the driver and the owner of the bus for
Glorioso, G.R. No. L-22686, January 30, 1968). damages. Is there a presumption in this case,
that Mr. BT, the owner, had been negligent? If
Vicarious liability Owners and Managers of so, is the presumption absolute or not? (2004
Establishment under Article 2180(5) (1991, BAR)
2001 BAR)
A: YES, there is a presumption of negligence on
GR: It is required that the employee must be the part of the employer. However, such
performing his assigned task at the time that the presumption is rebuttable. The liability of the
injury is caused. 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
669
CIVIL LAW
employee causes damage due to his own However, evidence that by using the employer’s
negligence while performing his own duties, there vehicle to go to and from meals, an employee is
arises the juris tantum presumption that the enabled to reduce his time-off and so devote more
employer is negligent, rebuttable only by proof of time to the performance of his duties, supports the
observance of the diligence of a good father of a finding that an employee is acting within the
family (Delsan Transport Lines v. C & A scope of his employment while so driving the
Construction, G.R. No. 156034, October 1, 2003). vehicle (Ibid.).
Likewise, if the driver is charged and convicted in
a criminal case for criminal negligence, BT is Defenses available to an employer
subsidiarily liable for the damages arising from
the criminal act. 1. Exercise of due diligence in the selection and
supervision of its employees (except in
Q: After working overtime up to midnight, criminal action); and
Alberto, an executive of an insurance company NOTE: In the selection of prospective
drove a company vehicle to a favorite Videoke employees, employers are required to
bar where he had some drinks and sang some examine them as their qualifications,
songs with friends to "unwind." At 2:00 a.m., he experience, and service records. On the other
drove home, but in doing so, he bumped a hand, with respect to the supervision of
tricycle, resulting in the death of its driver. employees, employers should formulate
May the insurance company be held liable for standard operating procedures, monitor their
the negligent act of Alberto? Why? (2001 BAR) implementation, and impose disciplinary
measures for breaches thereof. To establish
A: NO. The insurance company is not liable these factors in a trial involving the issue of
because when the accident occurred, Alberto was vicarious liability, employees must submit
not acting within the assigned tasks of his concrete proof, including documentary
employment. evidence (Metro Manila Transit v. CA, G.R. No.
141089, August 1, 2002).
It is true that under Art. 2180(5), employers are
liable for damages caused by their employees who 2. The act or omission was made outside
were acting within the scope of their assigned working hours and in violation of company’s
tasks. However, the mere fact that Alberto was rules and regulations.
using a service vehicle of the employer at the time
of the injurious accident does not necessarily Q: Would the defense of due diligence in the
mean that he was operating the vehicle within the selection and supervision of the employee be
scope of his employment. In Castilex Industrial available to the employer in both instances?
Corporation v. Vasquez, G.R. No. 132266, December (1997 BAR)
21, 1999, the Supreme Court held that
notwithstanding the fact that the employee did A: NO. The defense of diligence in the selection
some overtime work for the company, the former and supervision of the employee under Article
was, nevertheless, engaged in his own affairs or 2180 of the New Civil Code is available only to
carrying out a personal purpose when he went to those primarily liable thereunder, but not to those
a restaurant at 2:00 a.m. after coming out from subsidiary liable under Article 103 of the Revised
work. The time of the accident (also 2:00 a.m.) Penal Code (Yumul v. Juliano, G.R. No. 47690, April,
was outside normal working hours. 28, 1941).
When the employee is considered to be acting Employer’s liability under Art. 2180, NCC v.
within the scope of employment Employer’s liability under Art. 100, RPC
An employee who uses his employer’s vehicle in NEW CIVIL CODE RPC
going from his work to a place where he intends to Liability is direct, Liability is subsidiary.
eat or in returning to work from a meal is not primary, and solidary -
ordinarily acting within the scope of his the employer may be
employment in the absence of evidence of some sued even without
special business benefit to the employer (Castilex suing the employee.
Industrial Corporation v. Vasquez, G.R. No. 132266,
December 21, 1999). Diligence of a good Diligence of a good
father of a family is a father of a family is not
defense. a defense.
2. NO, Benjamin cannot raise the defense that Aspects of liability of the State
the vehicle is not registered in his name. His
liability, vicarious in character, is based on 1. Public/Governmental – Where the State is
Article 2180 because he is the father of a liable only for the tortious acts of its special
minor who caused damage due to negligence. agents. The State has voluntarily assumed
While the suit will prosper against the liability for acts done through special agents
registered owner, it is the actual owner of the (Pineda, 2009).
private vehicle who is ultimately liable (See 2. Private/Non-governmental – When the State is
Duavit v.CA, G.R. No. L-29759, May 18, 1989). engaged in private business or enterprise, it
The purpose of car registration is to reduce becomes liable as an ordinary employer (NIA
difficulty in identifying the party liable in case v. Fontanilla, G.R. No. 61045, December 1,
of accidents (Villanueva v. Domingo, G.R. No. 1989).
144274, September 14, 2004).
671
CIVIL LAW
NOTE: The State is only liable for the negligent In the case of Ylarde v. Aquino, G.R. L-33722, July
acts of its officers, agents and employees when 29, 1988, the teacher Edgardo Aquino, after
they are acting as special agents. bringing his pupils to an excavation site dug by
them, left them all by themselves, and one of the
Special Agent pupils fell into the pit. The teacher acted with fault
and gross negligence because a teacher who
A special agent is one who receives a definite and stands in loco parentis to his pupils would have
fixed order or commission, foreign to the exercise made sure that the children are protected from all
of the duties of his office. harm in his company.
An employee who on his own responsibility Application of vicarious liability under Art.
performs functions inherent in his office and 2180 of the NCC not limited to schools of arts
naturally pertaining thereto is not a special agent and trade
(Meritt v. Government of the Philippine Islands, G.R.
No. 11154, March 21, 1916). The application of Article 2180 of the New Civil
Code is not limited to schools of arts and trades.
NOTE: Where the government commissions a There is really no substantial distinction between
private individual for a special governmental task, the academic and the nonacademic schools insofar
it is acting through a special agent within the as torts committed by their students are
meaning of the provision (Largo, 2007). concerned. The same vigilance is expected from
the teacher over the students under his control
Liability of Provinces, Cities and Municipalities and supervision, whatever the nature of the school
where he is teaching. There is no reason why
As for local government units, “provinces, cities different degrees of vigilance should be exercised
and municipalities shall be liable for damages for by the school authorities on the basis only of the
the death of, or injuries suffered by, any person by nature of their respective schools (Amadora v. CA,
reason of the defective condition of roads, streets, G.R. No. L-47745, April 15, 1988).
bridges, public buildings, and other public works
under their control or supervision” (NCC, Art. NOTE: Although Art. 2180 is applicable to all
2189). schools, the distinction between an academic
school and an establishment of arts and trades is
NOTE: It is not even necessary for the defective still essential to distinguish the liability of the
road or street to belong to the province, city or teacher from that of the head of the establishment.
municipality for liability to attach. The article only
requires that either control or supervision is Liability of the teacher as distinguished from
exercised over the defective road or street the head of the establishment
(Guilatco v. City of Dagupan, G.R. No. 61516, 21 Mar
1989). GR: Where the school is academic rather than
technical or vocational in nature, responsibility for
Lack of knowledge not a defense the tort committed by the student will attach to
the teacher in charge of such student.
The LGU cannot be relieved of liability based on its
purported lack of knowledge of the excavation and XPN: In the case of establishments of arts and
the condition of the road when the accident trades, it is the head thereof, and only he, who
occurred. Its obligation to maintain the safe shall be held liable as an exception to the general
condition of the road within its territory is a rule.
continuing one which is not suspended while a
street is being repaired (Municipality of San Juan v. In other words, teachers in general shall be liable
CA, G.R. No. 121920, 9 Aug 2005). for the acts of their students except where the
school is technical in nature, in which case it is the
VICARIOUS LIABILITY: TEACHERS AND HEADS head thereof who shall be answerable (Ibid.).
OF ESTABLISHMENTS OF ARTS AND TRADES
Basis of the teacher’s vicarious liability
Teachers or directors of arts and trades are liable
for any damages caused by their pupils or They are acting in Loco Parentis (in place of
apprentices while they are under their custody. parents). However, teachers are not expected to
have the same measure of responsibility as that
imposed on parent for their influence over the
673
CIVIL LAW
Q: A 15-year-old high school student stabs his Application of proximate cause
classmate who is his rival for a girl, while they
were going out of the classroom after their last The doctrine of proximate cause is applicable only
class. Who may be held liable? (2005 BAR) in actions for quasi-delict, not in actions involving
breach of contract.
A: Under Article 218 of the Family Code, the
school, its administrators and teachers, or the The doctrine is a device for imputing liability to a
individual, entity or institution engaged in child person where there is no relation between him
care shall have special parental authority and and another party. In such a case, the obligation is
responsibility over the minor child while under created by law itself. But, where there is a pre-
their supervision, instruction or custody. existing contractual relation between the parties,
Authority and responsibility shall apply to all it is the parties themselves who create the
authorized activities whether inside or outside the obligation, and the function of the law is merely to
premises of the school, entity or institution. regulate the relation thus created (Calalas v. CA,
G.R. No. 122039. May 31, 2000).
Liability of the school
Principle of concurrent causes
1. Vicarious liability as an employer under Art.
2180 of the NCC; Where the concurrent or successive negligent acts
2. Direct liability: or omissions of two or more persons, although
a. for quasi-delicts under Art. 2176 of the acting independently, are in combination with the
NCC; direct and proximate cause of a single injury to a
b. as an institution exercising special third person, and it is impossible to determine
parental authority over minor children what proportion each contributed to the injury,
under Art. 219 of the FC; either of them is responsible for the whole injury,
c. for breach of contract; or even though his act alone might not have caused
the entire injury (Sabido v. Custodio, G.R. No. L-
NOTE: When a student enrolls, a contract is 21512, August 31, 1966).
entered into between him and the school.
Under this contract, the school is supposed to Efficient Intervening Cause (Novus Actus
ensure that adequate steps are taken to Interviens)
provide an atmosphere conducive to study
and ensure the safety of the student while An efficient intervening cause is one which
inside its premises (Saludaga v. FEU, G.R. No. destroys the causal connection between the
179337, April 30, 2008). Thus, any quasi-delict negligent act and the injury and thereby negatives
committed by the school’s employee against liability (Morril v. Morril, 60 ALR 102, 104 NJL 557).
the student is also actionable under breach of
contractual obligations. When Efficient Intervening Cause is not
applicable
3. Subsidiary liability for felonies committed by
their servants, pupils, workmen, apprentices, There is no efficient intervening cause if the force
or employees in the discharge of their duties, created by the negligent act or omission have
under Art. 103 of the RPC. either:
CLASSIFICATION OF TORTS
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 Torts are classified as either:
of duty which the defendant owed to the plaintiff-
a concurrence of injury to the plaintiff and legal 1. Negligent Torts;
responsibility by the person causing it. 2. Intentional Torts; or
a. Intentional Physical Harms
The underlying basis for the award of tort i. Battery
damages is the premise that an individual was ii. Assault
injured in contemplation of law. Thus, there must iii. False imprisonment
first be a breach of some duty and the imposition iv. Trespass to land
of liability for that breach before damages may be v. Trespass to chattels
awarded; and the breach of such duty should be vi. Conversion
the proximate cause of the injury (Equitable
Banking Corp. v. Calderon, G.R. No. 156168. b. Intentional Non-Physical Harms
December 14, 2004). i. Violation of personal dignity
ii. Infliction of emotional distress
Injury, Damage and Damages iii. Malicious prosecution
iv. Defamation
Injury The illegal invasion of a legal right. v. Fraud or Misrepresentation
The loss, hurt, or harm which results vi. Seduction
Damage vii. Unjust dismissal
from the injury.
The recompense or compensation viii. Violation of rights committed by
Damages public officers
awarded for the damage suffered.
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iv. Political relations Culpa Aquilana v. Crimes
1. Person Exposed to the Risk – A higher degree The quantum of proof is preponderance of
of diligence is required if the person involved evidence [Rules of Court, Rule 133(1)].
is a child.
2. Emergency – The actor confronted with an Burden of proof
emergency is not to be held up to the standard
of conduct normally applied to an individual GR: Plaintiff alleging damage due to negligent acts
who is in no such situation. in his complaint has the burden of proving such
3. Social Value or Utility of Action – Any act negligence.
subjecting an innocent person to unnecessary
risk is a negligent act if the risk outweighs the XPN: When the rules or the law provide for cases
advantage accruing to the actor and even to when negligence is presumed.
the innocent person himself.
4. Time of the day – May affect the diligence Disputable presumptions of negligence
required of the actor (NCC, Art. 1173); e.g. a
driver is required to exercise more prudence 1. Motor vehicle mishaps – a driver is presumed
when driving at night. negligent if he:
5. Gravity of the Harm to be Avoided – Even if the a. was found guilty of reckless driving or
odds that an injury will result are not high, violating traffic regulations at least twice
harm may still be considered foreseeable if within the preceding two months (NCC,
the gravity of harm to be avoided is great. Art. 2184); or
6. Alternative Cause of Action – If the alternative b. was violating any traffic regulation at the
presented to the actor is too costly, the harm time of the mishap (NCC, Art. 2185).
that may result may still be considered
unforeseeable to a reasonable man. More so if 2. Possession of dangerous weapons or
there is no alternative thereto. substances, results in death or injury, except
7. Place – A man who should occasion to when the possession or use thereof is
discharge a gun on an open and extensive indispensable in his occupation or business
marsh, or in a forest would be required to use (NCC, Art. 2188).
less circumspection and care, than if he were 3. Common carriers are presumed to have been
to do the same thing in an inhabited town, at fault or acted negligently in cases of death
village or city (A Selection of Cases Illustrative or injuries to passengers. Unless they prove
of the English Law of Tort, Kenny, 1928). that they observed extraordinary diligence
8. Violation of Rules and Statutes (NCC, Art. 1733 & 1755).
a. Statutes
b. Administrative Rules Intoxication not negligence per se
c. Private Rules of Conduct
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Mere intoxication is not negligence per se nor 1. Art. 1173, NCC - Provides that the fault or
establishes want of ordinary care. But it may be negligence of the obligor consists in the
one of the circumstances to be considered to omission of that diligence which is required
prove negligence (Wright v. MERALCO, G.R. No. L- by the nature of the obligation and
7760, October 1, 1914). corresponds with the circumstances of the
persons, of the time and of the place. When
Doctrine of Comparative Negligence negligence shows bad faith, the provisions of
Articles 1171 and 2201, paragraph 2 of the
The negligence of both the plaintiff and the NCC shall apply.
defendant are compared for the purpose of
reaching an equitable apportionment of their NOTE: Under Art. 1171 of the NCC,
respective liabilities for the damages caused and responsibility arising from fraud is
suffered by the plaintiff (Pineda, 2009). demandable in all obligations. Any waiver of
an action for future fraud is void.
The relative degree of negligence of the parties is
considered in determining whether, and to what 2. Art. 2201, NCC - In contracts and quasi-
degree, either should be responsible for his contracts, the damages for which the obligor
negligence (apportionment of damages). who acted in good faith is liable shall be those
that are the natural and probable
NOTE: Under the modified form, the plaintiff can consequences of the breach of the obligation,
recover only if his negligence is less than or equals and which the parties have foreseen or could
that of the defendant. Expressed in terms of have reasonably foreseen at the time the
percentages, a plaintiff who is charged with 80% obligation was constituted.
of the total negligence can recover only 20% of his NOTE: In case of fraud, bad faith, malice or
damages (De Leon, 2012). wanton attitude, the obligor shall be
responsible for all damages which may be
GOOD FATHER OF A FAMILY OR reasonably attributed to the non-performance
REASONABLY PRUDENT MAN of the obligation (Ibid.)
He is not and is not supposed to be omniscient of GR: The action of a child will not necessarily be
the future; rather, he is one who takes precautions judged according to the standard of an adult.
against any harm when there is something before
him to suggest or warn him of the danger or to XPN: If the minor is mature enough to understand
foresee it (Picart v. Smith, G.R. No. L-12219, March and appreciate the nature and consequences of his
15, 1918). actions. In such a case, he shall be considered to
have been negligent.
The law requires a man to possess ordinary
capacity to avoid harming his neighbors unless a NOTE: The age of absolute irresponsibility is 15
clear and manifest incapacity is shown; but it does years old and below. (Juvenile Justice and Welfare
not generally hold him liable for unintentional Act of 2006, RA 9344).
injury unless, possessing such capacity, he might
ought to have foreseen the danger (Corliss v. Nevertheless, absence of negligence does not
Manila Railroad Co., G.R. No. L-21291, March 28, absolutely excuse the child from liability, as his
1969). properties, if any, can be held subsidiarily liable.
Nor will such absence of negligence excuse the
Rule in case of fault or negligence of an obligor child’s parent from vicarious liability.
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persons who stay in their premises even if In the field of negligence, interests are to be
they are not passengers. balanced only in the sense that the purposes of the
3. Doctrine of Attractive Nuisance- One who actor, the nature of his act and the harm that may
maintains on his premises dangerous result from action or inaction are elements to be
instrumentalities or appliances of a character considered. Some may not be considered
likely to attract children in play, and who fails depending on the circumstances.
to exercise ordinary care to prevent them
from playing therefrom is liable to a child of PRESUMPTION OF NEGLIGENCE (2000, 2009
tender years who is injured thereby, even if BAR)
the child is a trespasser.
A person is generally presumed to have taken
4. State of Necessity – A situation of present ordinary care of his concerns (Rules of Court, Rule
danger to legally protected interests, in which 131, Sec. 3). There are however exceptions when
there is no other remedy than the injuring of negligence is presumed:
another’s also legally protected interest.
1. Article 2184, NCC - It is disputably presumed
Doctors that a driver was negligent, if he had been
If a General Practitioner – Ordinary care and found guilty of reckless driving or violating
diligence in the application of his knowledge and traffic regulations at least twice within the
skill in the practice of his profession. next preceding two months.
2. Article 2185, NCC - Unless there is proof to the
If a Specialist – The legal duty to the patient is contrary, it is presumed that a person driving
generally considered to be that of an average a motor vehicle has been negligent if at the
physician. time of the mishap, he was violating any
traffic regulation.
Lawyers
An attorney is bound to exercise only a reasonable NOTE: Proof of traffic violation is required. A
degree of care and skill, having reference to the causal connection must exist between the
business he undertakes to do (Adarne v. Aldaba, injury received and the violation of the traffic
A.M. No. 801, June 27, 1978). regulation. It must be proven that the
violation of the traffic regulation was the
UNREASONABLE RISK OF HARM proximate or legal cause of the injury or that
it substantially contributed thereto.
Elements to be considered to determine if a Negligence, consisting in whole or in part, of
person has exposed himself to an violation of law, like any other negligence, is
unreasonable great risk without legal consequence unless it is a
contributing cause of the injury (Tison v.
1. Magnitude of the risk; Pomasin, G.R. No. 173180, August 24, 2011).
2. Principal object;
3. Collateral object; 3. Article 2188, NCC - There is prima facie
4. Utility of the risk; and presumption of negligence on the part of the
5. Necessity of the risk defendant if the death or injury results from
his possession of dangerous weapons or
If the magnitude of the risk is very great and the substances, such as firearms and poison,
principal object, very valuable, yet the value of the except when possession or use thereof is
collateral object and the great utility and necessity indispensable in his occupation or business.
of the risk counterbalanced those considerations,
the risk is made reasonable (Prosser and Keeton, NOTE: Proof of possession of dangerous
Law of Torts, 1984 Ed., p.173, citing Terry, weapons or substances is required.
Negligence, 24 Harv. L. Rev. 40,42).
4.. Captain of the ship doctrine - A surgeon is
NOTE: In the Philippines, the courts do not use likened to a captain of the ship, such that it is
any formula in determining if the defendant his duty to control everything going on in the
committed a negligent act or omission. What operating room. The surgeon in charge of an
appears to be the norm is to give negligence a operation is liable for the negligence of his
common sense, intuitive interpretation (Aquino, assistants during the time when those
2005). assistants are under the surgeon’s control
(Cantre v. Go, G.R. No. 160889, April 27, 2007).
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Resort to the doctrine may be allowed only when: that of the other by an appreciable interval of
time, the one who has the last reasonable
1. The accident is of such character as to opportunity to avoid the impending harm and fails
warrant an inference that it would not have to do so, is chargeable with the consequences,
happened except for the defendant’s without reference to the prior negligence of the
negligence; other party (Picart v. Smith, G.R. No. L-12219,
2. The accident must have been caused by an March 15, 1918).
agency or instrumentality within the exclusive The doctrine of last clear chance is a theory
management or control of the person charged adopted to mitigate the harshness of the
with the negligence complained of; and contributory negligence of the plaintiff (Phoenix
3. The accident must not have been due to any Construction Inc. v. IAC, G.R. No. L-65295, March 10,
voluntary action or contribution on the part of 1987).
the person injured (Josefa v. MERALCO, G.R.
No. 182705, July 18, 2014). Requisites:
Thus, it is not applicable when an unexplained 1. Plaintiff is placed in danger by his own
accident may be attributable to one of several negligent acts and he is unable to get out from
causes, for some of which the defendant could not such situation by any means;
be responsible (FGU Insurance Corp. v. G. P. 2. Defendant knows that the plaintiff is in
Sarmiento Trucking Co., G.R. No. 141910, August 6, danger and knows or should have known that
2002). the plaintiff was unable to extricate himself
therefrom; and
When doctrine is applicable 3. Defendant had the last clear chance or
opportunity to avoid the accident through the
All that the plaintiff must prove is the accident exercise of ordinary care but failed to do so,
itself; no other proof of negligence is required and the accident occurred as a proximate
beyond the accident itself. It relates to the fact of result of such failure (Pineda, 2009).
an injury that sets out an inference to the cause
thereof or establishes the plaintiff’s prima facie Instances when doctrine not applicable
case. The doctrine rests on inference and not on
presumption (Perla Compania de Seguros, Inc. v. 1. When the injury or accident cannot be
Sps. Sarangaya, G.R. No. 147746, October 25, 2005). avoided by the application of all means at
hand after the peril has been discovered
Three uses and applications of the doctrine (Pantranco North Expressway v. Baesa, G.R.
Nos. 79050-51, November 14, 1989);
1. In medical negligence cases; 2. If the defendant’s negligence is a concurrent
2. In cases where the exercise of judicial cause and which was still in operation up to
discretion is abused; and the time the injury was inflicted;
3. In practical instances 3. Where the plaintiff, a passenger, filed an
action against a carrier based on contract
Some cases where doctrine was held (Bustamante v. CA, G.R. No. 89880, February 6,
inapplicable 1991);
4. If the actor, though negligent, was not aware
1. Where there is direct proof of absence or of the danger or risk brought about by the
presence of negligence; prior fraud or negligent act;
2. Where other causes, including the conduct of 5. In case of a collapse of a building or structure
the plaintiff and third persons, are not (De Roy v. CA, G.R. No. 80718, January 29,
sufficiently eliminated by the evidence; and 1988);
3. When one or more requisites are absent 6. Where both parties are negligent (Philippine
(Aquino, 2005). National Railways v. Brunty, G.R. No. 169891,
November 2, 2006);
DOCTRINE OF LAST CLEAR CHANCE 7. In case of collision, it applies in a suit between
(DOCTRINE OF DISCOVERED PERIL or the owners and drivers of colliding vehicles
DOCTRINE OF SUPERVENING NEGLIGENCE) and not where a passenger demands
responsibility from the carrier to enforce its
This is also called as the “Humanitarian contractual obligations (Tiu v. Arriesgado, G.R.
Negligence Doctrine.” Where both parties are No. 138060, September 1, 2004).
negligent but the negligent act of one succeeds
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CIVIL LAW
caused by animals, ultra-hazardous Builders, Inc. v. CA, G.R. No. 121484, January 31,
activities and nuisance. 2005).
b. Product Liability – is the law which
governs the liability of manufacturers and NOTE: A complaint for damages is personal in
sellers for damages resulting from nature (personal action).
defective products (Aquino, 2005).
Damages v. Injury
PRESUMPTION OF REGULARITY
Mistakes committed by public officers are not Injury is the illegal invasion of a legal right;
actionable absent any clear showing of malice or damage is the loss, hurt, or harm which results
gross negligence amounting to bad faith (Farolan from the injury; damages are the compensation
v. Solmac Marketing Corp., G.R. No. 83589, March awarded for the damage suffered. There can be
13, 1991). damage without injury in those instances in which
the loss or harm was not the result of a violation
Extent of recovery of damages of a legal duty. Example: damnum absque injuria
(Sps. Custodio v. CA, G.R. No. 116100, February 9,
1. Recovery completely barred - When the 1996).
plaintiff’s own negligence was the immediate
and proximate cause of his injury, he cannot Damages can only be paid with money
recover damages (NCC, Art. 2179).
2. Mitigated damages – If the plaintiff’s Damages can only be paid with money and not
negligence was only contributory, the “palay” because “palay” is not a legal tender
immediate and proximate cause of the injury currency in the Philippines (Vda. Simeon Borlado
being the defendants lack of due care, he may v. CA, G.R. No. 114118, August 28, 2001).
recover damages, but the courts shall mitigate
the damages to be awarded (Ibid.). NOTE: In actions for damages, the courts should
award an amount to the winning party and not its
DOUBLE RECOVERY equivalent in property (Ibid.).
DAMAGES
GENERAL PRINCIPLES
Damages
ACTUAL/
MORAL NOMINAL
COMPENSATORY
According to purpose
Actual or compensatory damages simply Awarded only to enable the injured Vindicating or
make good or replace the loss caused by party to obtain means, diversion or recognizing the injured
the wrong. amusement that will alleviate the moral party’s right to a
suffering he has undergone, by reason of property that has been
defendants’ culpable action violated or invaded
(Philippine Airlines v. CA, G.R. No. L- (Tan v. Bantegui, G.R.
82619 September 15, 1993). No. 154027, October 24,
2005).
According to manner of determination
Claimant must produce competent proof No proof of pecuniary loss is necessary. No proof of pecuniary
or the best evidence obtainable such asThe assessment is left to the discretion loss is necessary. Proof
receipts to justify an award therefore.of the court according to the that a legal right has
Actual or compensatory damages cannot circumstances of each case. However, been violated is what is
be presumed but must be proved with there must be proof that the defendant only required. Usually
reasonable certainty (People v. Ereo, G.R.
caused physical suffering, mental awarded in the absence
No. 124706, February 22, 2000). anguish, moral shock, etc (Mahinay v. of proof of actual
Velasquez, G.R. No. 152753. January 13, damages.
GR: Actual damages must be 2004).
substantiated by documentary evidence,
such as receipts, in order to prove GR: Factual basis must be alleged. Aside
expenses incurred as a result of the from the need for the claimant to
death of the victim or the physical satisfactorily prove the existence of the
injuries sustained by the victim factual basis of the damages, it is also
(Philippine Hawk Corporation v. Vivian necessary to prove its causal relation to
Tan Lee, G.R. No. 166869, February 16, the defendant’s act (People v. Manero,
2010). G.R. Nos. 86883-85, January 29, 1993).
Special/Ordinary
Ordinary Special Special
NOTE: Ordinary Damages are those NOTE: Special Damages are those which
generally inherent in a breach of a exist because of special circumstances
typical contract. and for which a debtor in good faith can
be held liable if he had been previously
informed of such circumstances.
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EXEMPLARY/
TEMPERATE LIQUIDATED
CORRECTIVE
According to purpose
Temperate damages may be Liquidated damages are frequently Exemplary or corrective damages are
recovered when the court finds that agreed upon by the parties, either by intended to serve as a deterrent to
some pecuniary loss has been way of penalty or in order to avoid serious wrong doings, and as a
suffered but its amount cannot, from controversy on the amount of vindication of undue sufferings and
the nature of the case, be proved with damages. wanton invasion of the rights of an
certainty. injured party or a punishment for
those guilty of outrageous conduct
(People v. Orilla, G.R. Nos. 148939-40,
February 13, 2004).
Special/Ordinary
When victim is unknown XPN: Damages for loss of earning capacity may be
awarded despite the absence of documentary
The fact that the victim remains unknown and no evidence when:
heirs have come forward does not warrant the
elimination of civil indemnity (People v. De 1. The deceased is self-employed and earning
Guzman, G.R. No. 92537, April 25, 1994). less than the minimum wage under current
labor laws, in which case, judicial notice may
Proving the loss be taken of the fact that in the deceased's line
of work no documentary evidence is available;
GR: Loss must be proved before one can be or
entitled to damages
2. The deceased is employed as a daily wage
XPN: Loss need not be proved in the following worker earning less than the minimum wage
cases: under current labor laws (Philippine Hawk
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CIVIL LAW
Corporation v. Vivian Tan Lee, G.R. No. 166869, a. Loss or impairment of earning capacity
February 16, 2010). in cases of temporary or permanent
personal injury;
If amount admitted by a party
b. Injury to the plaintiff’s business
Even if there are no receipts and yet the amount standing or commercial credit (NCC, Art.
claimed is admitted by a party, it should be 2205).
granted (People v. Abolidor, G.R. No. 147231,
February 18, 2004). Loss or impairment of earning capacity
Docketing fees must be based on allegation of To be compensated for loss of earning capacity, it
actual damages is not necessary that the victim be gainfully
employed at the time of the injury or death. Actual
The amount of damages claimed must be alleged, damages are awarded not for the loss of earnings
not only in the body of the complaint, petition or but for the loss of capacity to earn money (People
answer, but also in the prayer portion thereof v. Sanchez, G.R. Nos. 121039-45, October 18, 2001).
(Siapno v. Manalo, G.R. No. 132260, August 30,
2005). Determination of amount of damages
recoverable
“Such other relief as this Honorable Court may
deem reasonable” Much is left to the discretion of the court
considering the moral and material damages
The prayer for “such other relief as this Honorable involved. There can be no exact or uniform rule
Court may deem reasonable” may include actual for measuring the value of a human life (Villa Rey
damages although not alleged in the answer, if and Transit, Inc., v. CA, G.R. No. L-25499, February 18,
when they are proved (Heirs of Basilisa Justiva v. 1970).
Gustilo, G.R. No. L-16396, January 31, 1963).
The life expectancy of the deceased or of the
NOTE: It is broad enough to comprehend an beneficiary, whichever is shorter, is an important
application as well for nominal damages and even factor. Other factors that are usually considered
exemplary damages. are:
Article 21 of NCC cannot be used as a basis for 1. Pecuniary loss to plaintiff or beneficiary;
award of actual damages 2. Loss of support;
3. Loss of service;
Article 21 of the NCC cannot be used as a basis for 4. Loss of society;
award of actual damages when there is a pre- 5. Mental suffering of beneficiaries; and
existing contractual relation between the parties 6. Medical and funeral expenses (Ibid.).
(ACI Philippines, Inc. v. Coquia, G.R. No. 174466, July
14, 2008). NOTE: The formula that has gained acceptance
over time has limited recovery to net earning
Abrazaldo Doctrine capacity. The premise is obviously that net
earning capacity is the person’s capacity to
Temperate damages may be awarded where the acquire money, less the necessary expense for his
amount of the actual damages, the heirs are own living (Philtranco Service Enterprises v. Felix
entitled to, cannot be shown. Such temperate Paras and Inland Trailways Inc., G.R. No. 161909,
damages, taking into account current April 25, 2012).
jurisprudence fixing the indemnity for death at
P50,000, should be one half thereof, which is Computation of Unearned Income
P25,000. (People v. Abrazaldo, G.R. No. 124392,
February 7, 2003). Formula:
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CIVIL LAW
GR: Attorney’s fees cannot be recovered as actual the CA to delete the award of attoryney’s fees?
damages.
A: No, the instances when these may be awarded
XPNs: (SWISS- MUD- ERC) are enumerated in Article 2208 of the Civil Code
1. Stipulation between parties; and is payable not to the lawyer but to the client,
2. Recovery of Wages of household helpers, unless the client and his lawyer have agreed that
laborers and skilled workers; the award shall accrue to the lawyer as additional
3. Actions for Indemnity under workmen's or part of compensation.28 Particularly, Article
compensation and employer liability laws; 2208 of the Civil Code reads:
4. Legal Support actions; Article 2208. In the absence of stipulation,
5. Separate civil action to recover civil liability attorney's fees and expenses of litigation, other
arising from crime; than judicial costs, cannot be recovered, except:
6. Malicious prosecution;
(2) When the defendant's act or omission has
7. Clearly Unfounded civil action or proceeding compelled the plaintiff to litigate with third
against plaintiff; persons or to incur expenses to protect his
8. When Double judicial costs are awarded; interest;;(8) In actions for indemnity under
9. When Exemplary damages are awarded; workmen's compensation and employer's liability
10. Defendant acted in gross & evident bad faith laws;
in Refusing to satisfy plaintiff's just &
demandable claim; and In this case, suffice it to say that the CA erred in
11. When defendant's act or omission Compelled deleting the award of attorney's fees, considering
plaintiff to litigate with third persons or incur that petitioner was found to be entitled to
expenses to protect his interest permanent and total disability benefits and was
forced to litigate to protect his valid claim. Thus,
NOTE: If not pleaded and prayed for in the the reinstatement of such award is in order.
complaint, attorney’s fees are barred (Tin Po v. (ARIEL P. HORLADOR, v. PHILIPPINE
Bautista, G.R. No. L-55514, March 17, 1981). TRANSMARINE CARRIERS,
INC.,MARINE*SHIPMANAGEMENT, G.R. No. 236576,
Furthermore, moral damages and attorney’s fees September 05, 2018)
cannot be consolidated for they are different in
nature and each must be separately determined EXTENT OR SCOPE OF ACTUAL DAMAGES
(Philippine Veterans Bank v. NLRC, G.R. No. 130439, IN CONTRACTS AND QUASI-CONTRACTS
October 26, 1999).
Amount of actual damages
Attorneys’ fees is not available when the
defendant employer is not guilty of bad faith The amount of actual damages should be that
(Dalusong v. Eagle Clark Shipping Philippines, Inc., which would put the plaintiff in the same position
G.R. No. 204233, September 3, 2014). as he would have been if he had not sustained the
wrong for which he is claiming compensation or
Q: Philippine Transmarine Carriers, Inc. for and on reparation:
behalf of its foreign principal, respondent Marine
Shipmanagement Ltd. hired petitioner as a Chief 1. Property
Cook while carrying provisions, suddenly felt a a) Damage to or loss of personal property -
severe pain on his waist, abdomen, and down to the plaintiff is entitled to their value at the
his left scrotum. As the pain persisted for a time of the destruction, that is, normally,
number of days, he was airlifted to a hospital in the sum of money which he would have to
Belgium where he was diagnosed with "infection pay in the market for identical or
with the need to rule out Epididymitis and essentially similar goods, plus in a proper
Prostatitis" and advised to undergo case, damages for the loss of the use
repatriation.8 Upon arrival in the Philippines, during the period before replacement
petitioner claimed that he immediately reported (Marikina Auto Line v. People G.R. No.
to PTCI and asked for referral for further 152040, March 31, 2006).
treatment, but was ignored. Thus, he filed a b) Damage to or loss of profit-earning
complaint for, inter alia, permanent and total chattels - what has to be assessed is the
disability benefits against PTCI, Marine, and value of the chattel to its owner as a going
respondent Captain Marlon L. Malanao as the concern at the time and place of the loss
crewing manager (respondents). Was it proper for
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CIVIL LAW
2. If the deceased was obliged to give support A: Ayson is entitled to recover moral and
according to the provisions of Article 291, the exemplary damages. Moral damages are designed
recipient who is not an heir called to the to compensate and alleviate the physical suffering,
decedent's inheritance by the law of testate or mental anguish, fright, serious anxiety,
intestate succession, may demand support besmirched reputation, wounded feelings, moral
from the person causing the death, for a shock, social humiliation, and similar harm
period not exceeding five years, the exact unjustly caused to a person. Exemplary damages
duration to be fixed by the court; may be imposed by way of example or correction
for public good if the guilty party acted in a
NOTE: The article only mentioned heir. wanton, fraudulent, reckless, oppressive or
Consequently, it cannot speak of devisees and malevolent manner.
legatees who are receiving support from the
deceased. Here, Ayson can recover moral damages as she
was made to suffer sleepless nights and mental
3. The spouse, legitimate and illegitimate anguish because her right as the owner of the
descendants and ascendants of the deceased subject lot was violated by Fil-Estate in
may demand moral damages for mental constructing its golf course in the latter's
anguish by reason of the death of the property. She is also entitled to exemplary
deceased (1992, 1993, 2007 BAR). damages since despite the notice to vacate, the
latter still proceeded to construct its golf course.
NOTE: In case of death caused by quasi-delict, the (ROSALIE SY AYSON v. FIL-ESTATE PROPERTIES,
brother of the deceased is not entitled to the INC. et.al., G.R. No. 223254, December 1, 2016)
award of moral damages based on Article 2206 of
the New Civil Code (Sulpicio Lines Inc. v. Curso, G.R. NOTE: Moral damages apply both to natural and
No. 157009, March 17, 2010). 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
MORAL DAMAGES offending party resulting in social humiliation (
ABSCBN v. CA, 301 SCRA 589).
Trial courts are given discretion to determine GR: Moral damages are not recoverable in actions
moral damages and the Court of Appeals can only for damages predicated on a breach of contract.
modify or change the amount awarded when they
are palpably and scandalously excessive “so as to XPNS: Moral damages may be awarded in culpa
indicate that it was the result of passion, prejudice contractual, involving common carriers in the
or corruption on the part of the trial court” following instances:
(Yuchengco v. Manila Chronicle Publishing Corp.,
G.R. No. 184315, November 25, 2009). a. Where the passenger died by reason of
negligence of the carrier (Art. 1764);
There is no hard and fast rule in the determination b. Where it is proved that the carrier is
of what would be a fair amount of moral damages, guilty of fraud or bad faith, even if the
since each case must be governed by its own death does not result (Fores v. Miranda
peculiar circumstances (PNB v. CA, G.R. No. 105 Phil. 266; Pineda, 2010; Sulpicio Lines,
116181, January 6, 1997). Inc., v. Napoleon Sesante, G.R. No 172682,
27 July 2016)
When victim bearing a child
XPN to XPN: Even if death or injury does not
An award for the death of a person does not cover result, there is fraud or bad faith on the part of the
the case of an unborn foetus that is not endowed defendant (Sulpicio Lines, Inc., v. Curso, G.R. No.
with personality. The damages recoverable by the 157009, March 17, 2010)
parents of an unborn child are limited to moral
damages for the illegal arrest of the normal NOTE: Even if the negligence of the bank is not
development of the foetus on account of distress attended with malice and bad faith, moral
and anguish attendant to its loss (Geluz v. CA, G.R. damages may be granted (Cavite Development
No. L-16439, July 20, 1961). Bank v. Lim, G.R. No. 131679, February 1, 2000).
XPN: A corporation may have a good reputation Parents of the victim seduced, abducted, raped, or
which, if besmirched, may also be a ground for the abused, may also recover moral damages (NCC,
award of moral damages (Ibid.). 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
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separate award of moral damages (People v. Delen, In rape cases, civil indemnity is different from
G.R. No. 194446, Apil 21, 2014). moral damages. It is distinct from and should not
be denominated as moral damages which are
NOTE: The term ‘physical injury,’ as used in Art. based on different jural foundations and assessed
2219(1) of the NCC, includes death, and no proof by the court in the exercise of sound discretion
of pecuniary loss is necessary in order that such (People v. Caldona, G.R. No. 126019, March 1,
damages may be adjudicated. (People v. Tambis, G. 2001).
R No. 124452, July 28, 1999).
NOTE: In criminal proceedings for rape, plaintiff
Tortious acts referred to in chapter of human need not prove the factual basis for moral
relations of the NCC damages as well as the causal relation to the
defendant’s act.
The plaintiff may recover moral damages:
1. Willful acts contrary to morals, good customs Amount of award in qualified rape
or public policy;
2. Disrespect to the dignity, personality, privacy For qualified rape, where the penalty imposed is
and peace of mind of neighbors and other death but reduced to reclusion perpetua because
persons; of RA 9346, the amount of damages to be awarded
3. Refusal or neglect of a public servant to are as follows:
perform his official duty without just cause; 1. Civil indemnity – P100,000.00;
4. Unfair competition in enterprise or in labor; 2. Moral damages – P100,000.00;
5. Civil action for damages against accused 3. Exemplary damages – P100,000.00
acquitted on reasonable doubt; (People v. Jugueta, G.R. No. 202124, April 5, 2016).
6. Violation of civil rights;
7. Civil action for damages against city or Psychologically incapacity and moral damages
municipal police force; and
8. When the trial court finds no reasonable By declaring petitioner as psychologically
ground to believe that a crime has been incapacitated, the possibility of awarding moral
committed after a preliminary investigation damages was negated, which should have been
or when the prosecutor refuses or fails to proved by specific evidence that it was done
institute criminal proceedings. deliberately. Thus, as the grant of moral damages
was
Moral damages may be awarded in appropriate not proper, it follows that the grant of exemplary
cases referred to in the chapter on human damages cannot stand since the Civil Code
relations of the Civil Code (Articles 19 to 36), provides that exemplary damages are imposed in
without need of proof that the wrongful act addition to moral, temperate, liquidated or
complained of had caused any physical injury compensatory damages (Buenaventura v. CA, G.R.
upon the complainant (Patricio v. Leviste, G.R. No. No. 127358, March 31, 2005).
L-51832, April 26, 1989).
The adjudication of nominal damages shall The allowance of temperate damages when actual
preclude further contest upon the right involved damages were not adequately proven is ultimately
and all accessory questions, as between the a rule drawn from equity, the principle affording
parties to the suit, or their respective heirs and relief to those definitely injured who are unable to
assigns (NCC, Article 2223). prove how definite the injury (Equitable PCI Bank
v. Tan, G.R. No. 165339, August 23, 2010).
NOTE: Nominal damages cannot co-exist with
compensatory damages. Nominal damages are Temperate damages may be awarded in the
adjudged in order that a right of the plaintiff, following cases:
which has been violated or invaded by the 1. In lieu of actual damages; or
defendant, may be vindicated or recognized, and 2. In lieu of loss of earning capacity.
not for the purpose of indemnifying the plaintiff
for any loss suffered by him (LRTA v. Navidad, G.R. Rationale behind the temperate or moderate
No. 145804, February 6, 2003). damages (1994 BAR)
Nominal and temperate damages cannot be The rationale behind temperate damages is
awarded concurrently. The two awards are precisely that from the nature of the case, definite
incompatible. Nominal damages are given in order proof of pecuniary loss cannot be offered. When
that a right of plaintiff which has been violated or the court is convinced that there has been such
invaded by the defendant, may be loss, the judge is empowered to calculate
vindicated or recognized. On the other hand, moderate damages, rather than let the
temperate damages may be awarded when the complainant suffer without redress from the
court finds that some pecuniary loss has been defendant’s wrongful act (GSIS v. Spouses Labung-
suffered but its amount cannot be proved with Deang, G.R. No. 135644, September 17, 2001).
reasonable certainty (Rabuya, 2017).
Elements of Temperate Damages
Award of nominal damages in labor
termination cases 1. Some pecuniary loss;
2. Loss is incapable of pecuniary estimation; and
Where an employee was terminated for a caused, 3. The damages awarded are reasonable.
but the employer failed to comply with the notice
requirement, the employee is entitled to the Q: Nanito Evangelista filed a complaint
payment of nominal damages (Agabon v. National for damages against Andolong over the
Labor Relations Commission, G.R. No. 158693, latter's failure to give the former's share in
November 17, 2004). The nominal damages the net profits derived from their business.
awarded to the employees for a dismissal based However, this was evidenced solely by the
on just cause under Art. 282 of the Labor Code documentary exhibits which disclosed the
without notice requirement was P30, 000; while, gross monthly revenue and not the actual
where the dismissal of the employees was based profit earned. During the course of the
on authorized cause under Art. 283 of the Labor proceedings, Andolong was declared in
Code, but without the required notice, the amount default. Consequently, it was no longer
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possible for Evangelista to prove the actual December 30, 1961).
profit earned since such documents were
in possession of Andolong. Can Evangelista Liquidated damages v. Penalties
recover damages if the net profits can no
longer be ascertained? Liquidated Damages Penalties
Purpose
A: Yes. Evangelista can recover damages It is a sum inserted in a It is a sum inserted in a
although the exact amount of the net profits contract as a measure of contract as a
remained unproven. This comes in the form of compensation for its punishment for default,
temperate or moderate damages. Temperate breach. or by way of security
damages may be recovered when the court for actual damages
finds that some pecuniary loss has been which may be
suffered but its amount cannot, from the sustained because of
nature of the case, be provided with certainty. the non- performance
Consequently, in computing the amount of of the contract.
temperate or moderate damages, it is usually
left to the discretion of the courts, but the Nature
amount must be reasonable, bearing in mind Its essence is a genuine An agreement to pay a
that temperate damages should be more than covenanted pre- stipulated sum on
nominal but less than compensatory. (NANITO estimate of damages. breach of contract
EVANGELISTA v. SPOUSES NERO ANDOLONG irrespective of the
III AND ERLINDA ANDOLONG et.al., G.R. No. damage sustained (De
221770, November 16, 2016) Leon, 2012).
Legal Results
LIQUIDATED DAMAGES There is no difference between a penalty and
liquidated damages, as far as legal results are
concerned (Lambert v. Fox, G.R. No. L-7991,
Liquidated damages are fixed damages previously January 29, 1914).
agreed by the parties to the contract and payable
to the innocent party in case of breach by the NOTE: Whether as a penalty or indemnity, it is
other (Pineda, 2009). necessary that there be a contract the violation of
which give rise to the liquidate damages
Liquidated damages are those that the parties stipulated upon (Pineda, 2009).
agree to be paid in case of a breach. Under
Philippine laws, they are in the nature of penalties. Liquidated damages may be equitably reduced
They are attached to the obligation in order to when
ensure performance. As a precondition to such
award, however, there must be proof of the fact of 1. Iniquitous or unconscionable (NCC, Art. 2227)
delay in the performance of the obligation 2. Partial or irregular performance
(Suatengco v. Reyes, G.R. No. 162729, December 17,
2008). When principal obligation is void
Nature of Liquidated Damages The nullity of the penal clause does not carry with
it that of the principal obligation.
A stipulation on liquidated damages is a penalty
clause where the obligor assumes a greater The nullity of the principal obligation carries with
liability in case of breach of an obligation. The 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 the Rule governing in case of breach of contract
measure of damages caused by the breach (Titan
v. Uni-Field, G.R. No. 153874, March 1, 2007). When the breach of contract committed by the
defendant is not the one contemplated by the
NOTE: Attorney’s fee is in the concept of actual parties in agreeing upon the liquidated damages,
damages except that when it is stipulated and the law shall determine the measure of damages,
therefore in the form of liquidated damages no and not the stipulation (NCC, Art. 2228).
proof of pecuniary loss is required (NCC, Article
2216) (Santiago v. Dimayuga, G.R. No. L-17883,
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latter; such indemnity shall in every case be Reduction of damages in quasi-delict cases
assessed and awarded by the court, unless the
deceased on account of permanent physical In quasi-delict, the contributory negligence of the
disability not caused by the defendant, had no plaintiff shall reduce the damages he may recover
earning capacity at the time of his death; (NCC, Art. 2214).
2. If the deceased was obliged to give support
according to the provisions of Article 291, the Reduction of damages in contracts, quasi-
recipient who is not an heir called to the contracts and quasi-delicts
decedent's inheritance by the law of testate or
intestate succession, may demand support The court can equitably mitigate the damages in
from the person causing the death, for a contracts, quasi-contracts and quasi-delicts in the
period not exceeding five years, the exact following instances other than in Art. 2214:
duration to be fixed by the court;
3. The spouse, legitimate and illegitimate 1. That the plaintiff himself has contravened the
descendants and ascendants of the deceased terms of the contract;
may demand moral damages for mental 2. That the plaintiff has derived some benefit as
anguish by reason of the death of the a result of the contract;
deceased (NCC, Art. 2206). 3. In cases where exemplary damages are to be
awarded, that the defendant acted upon the
NOTE: The plaintiff is entitled to the amount that advice of counsel;
he spent during the wake and funeral of the 4. That the loss would have resulted in any
deceased. However, it has been ruled that event; and
expenses after the burial are not compensable. 5. That since the filing of the action, the
defendant has done his best to lessen the
GRADUATION OF DAMAGES plaintiff’s loss or injury (NCC, Art. 2215).